US biodiesel operating rates plunge near zero - sources

05 January 2010 21:21  [Source: ICIS news]

US biodiesel op rates near zeroHOUSTON (ICIS news)--Operating rates for the US biodiesel industry is approaching "zero percent” as Congress waits on a vote to extend a blending tax credit that would help producers make sales, sources said on Tuesday.

Biodiesel refining in the country ground to a halt after the Senate said it would not vote on extending a $1/gal (€0.18/litre) blending tax credit until members returned from Christmas break. Without that credit, biodiesel producers cannot sell their material at prices competitive with traditional diesel.

That has left producers cutting back on operating costs and waiting to see how long they can last until lawmakers act, said National Biodiesel Board (NBB) spokesman Michael Frohlich.

“Right now, a lot of companies are going to idle,” Frohlich said. “The production is almost zero. They’re trying to hold on to keep their employees as long as they can.”

Frohlich said action on the tax-extenders bill in the Senate was not expected until the end of January at the earliest. The House passed a similar bill in December.

Some material is still being produced to meet individual state mandates, but the combined 84m gal/year (318m litres/year) needed for Minnesota, Pennsylvania and Oregon is but a sliver of the total 2.9bn/gal year US capacity.

At the industry’s peak in mid 2008, US biodiesel refiners were producing nearly 80m gal/month. Production then contracted dramatically after Europe shut its doors to US biodiesel imports, and the credit crunch caused many cash-strapped refiners to cease operations.

Production in September was 47m gal, down 35% from 72m gal during the same month the year before, according to Energy Information Administration (EIA) data.

“Plants are mothballed,” said one renewable fuel trader who requested anonymity because he was not authorised to speak to the media. “There are offers [of pure biodiesel] right now, but they will only be filled if suppliers have an order.”

($1 = €0.69)

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