Betting on Biodiesel

Kansas refinery has nation's first soy biodiesel blend rack. Bill Spiegel

Published on: Apr 14, 2004

The nation's first preblended soy biodiesel loading rack was dedicated last week at a CHS refinery in McPherson, Kansas. The facility automatically blends B2 biodiesel, which is a blend of 2% soybean oil and 98% conventional diesel.

B2 blends are popular with the nation's farmers, nearly 50% of whom use a soybiodiesel blend on their farms. However, 80% of those farmers who do not use soy biodiesel have difficulty finding the product. This biodiesel blend rack should help, says Mark Fenner, CHS regional sales manager.

"In the past, fuel distributors had to obtain biodiesel components – pure biodiesel and petroleum diesel fuel from separate terminals and blend the fuel themselves," Fenner says. "This system integrates biodiesel into the existing petroleum infrastructure that distributors have relied on for years. Now a distributor can pull up to this terminal and fill up with pre-blended fuel."

The benefits of soybiodiesel are many – increased lubricity, cleaner burning fuel and decreased reliance on foreign oil, for starters. And, it offers a market for U.S. soybeans, says Harold Kraus, a farmer near Hays, Kansas and member of the National Biodiesel Board.

According to Hays, Kansas farmer Harold Kraus, a member of the National Biodiesel Board, if every U.S. farmer and rancher used a blend of B2 soybiodiesel, 50 million bushels of soybeans would be consumed.

"I'm a proud user of B2," Kraus says. "If every farmer used B2 on their farms, we would use 50 million bushels of soybeans per year."

Fenner says soybiodiesel still costs about three cents per gallon more at the pump compared to conventional road diesel. "Until there is a tax incentive to bring the price of soybiodiesel in line with conventional diesel, I don't see fleets using biodiesel," Fenner says.

Legislation in Congress could help offer incentive, says Jenna Higgins, with the National Biodiesel Board. The Senate has approved an excise tax credit that would refund one penny per percent of soybean oil added to a gallon of diesel. That would refund two cents per gallon to a distributor like CHS, Higgins says, which would bring the price for biodiesel in line with conventional diesel and likely make the product available to more customers. The bill reaches the House this summer, Higgins says.

The McPherson refinery is the first in the nation to have preblended biodiesel available. CHS plans to open additional preblended fuel systems in Council Bluffs, Iowa and McFarland, Wisconsin, in the next few weeks.

The nation's farmers and ranchers use some 3.5 billion gallons of diesel each year. Only the trucking industry uses more, says Greg Anderson, a Nebraksa farmer and vice chairman of the United Soybean Board.

"But one-third of the nation's farmers don't use soy biodiesel. Most cite a lack of availability. But I find that if we ask, and ask, your local fuel provider will try and get it," Anderson says.

For a list of local soy biodiesel outlets, log onto: www.biodiesel.org.