This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
10/04/2005
Minnesota Acts First
The squeeze on the pumps has sparked consumers’ interest in other resources for fuel. As the price of gas continues to increase there is an ever more urgent search for an alternative to keep Americans moving. In an article found on cnn.com Minnesota has become the first state to require that diesels use a mix of diesel and biodiesel. The mix only has to have 2% biodiesel but it is a step in the right direction. But the major hurdle this industry will have to leap over is getting their costs down to where they are more competitive with fossil fuels. I wonder how long it will take before we are all driving cars powered by something that was grown by a farmer.
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3 comments:
The "first step" of the statewide B2 mandate has already yielded progress toward renewable, cleaner burning fuels in Minnesota. Biodiesiel blend of 5%, 10%, 20% and higher are now available at both the wholesale and retail outlets through the state. Sales and demand of these fuels are up, as is sales and demand for E85 (85% ethanol) fuel.
See more at www.CleanAirChoice.org
Glass half empty or half full...I have seen a lot on biodisel in the press lately. but of course I look for stories on the topic...If you drive a gas burner (as I do), than biodiesel won't help us fight pain at the pump. The trucking industry fought like hell against the MN mandate (fear of the unknown, I guess) and got soundly beat.
Biodiesel is growing faster (much faster) than ethanol fuel...we don't have sales figures yet, but I expect they will be jawdropping. Big ag businesses like Cargil and ADM are jumping into biodiesel in a big way, they certainly smell of profit.
Best thing is, it moves us closer to cleaner-burning, renewable fuels.
-1 on Savannah's post for an uninformative link.
I think the post gives this away as a get-rich-quick scheme for politically connected farmers. Think about it: in farm country, bio-diesel is still more expensive than regular diesel, so they have to require people to buy it! This is little more than legalized theft.
Liz, you're suspicious of the wrong people. It is the bio-diesel people who are charging whatever they want for their product - and they've got government muscle behind them to make you buy it at the price they set. The oil companies are the competition that would either push them out of business, or force them into using their political power to get business that they can't get on their own.
Connor is telling the truth that bio-diesel can be very cheap. This is largely a result of it being unregulated in many states. It also isn't legal to take it across most state lines, because of differences in environmental regulations. In our area, there are problems with ranchers from Arizona preferentially using U.S. 89 instead of I-15 because there is less chance of getting caught using fuel that pollutes too much.
Both Morgan and Conner are missing the big picture. Big oil has a distribution system that cost a lot to build, and they have the advantage of being able to have their gas on your corner. The alternative with bio-diesel is to drive out into the sticks to Jim Bob's pig farm and hope he has bio-diesel for you that day. The point is that bio-diesel is not a viable alternative because the opportunity costs are too high. With bio-diesel, you pay for most of those out of pocket. With big oil, they are all included in one fixed price, which is and will continue to be lower than the alternatives.
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