News

Traders, marketers, producers and other stakeholders of the US biodiesel industry have converged on Tampa, Fla., this week for the 2016 National Biodiesel Conference to review the last year and look ahead to what 2016 brings. Despite spending 2015 awash in uncertainty due to the US Environmental Protection Agency’s delayed decision on the Renewable Fuel Standard blending mandates, the biodiesel industry ended the year with a few key victories. First, the EPA in late November finally released the blending mandates for 2014, 2015 and 2016, giving the industry guidance into how much biodiesel will be required to be blended into US fuel stocks. Second, the industry for the first time in three years enters 2016 with the federal $1/gal blenders tax credit already in place. Congress reinstated the credit in December through the end of 2016. Finally, biodiesel production remains strong. Data released by the EPA late last week showed that biomass-based diesel volumes reached 1.814 billion gallons, breaking the previous record of 1.79 billion gallons set in 2013. That number far outpaces the 1.73 billion gallons called for in the 2015 RFS mandate. Furthermore, the RFS mandates call for an increase of biodiesel to 1.9 billion gallons in 2016 and 2 billion gallons in 2017. Joe Jobe, the chief executive officer of the National Biodiesel Board, told reporters on Tuesday in Tampa that domestic producers have more than 3 billion gallons of standing production capacity registered with the EPA. But while the industry has secured some milestones, all is not well. The free fall in oil prices and refined products continues to impact the biodiesel industry. Each drop puts biodiesel at a competitive disadvantage to diesel fuel. NYMEX ultra-low sulfur diesel futures fell to 86.57 cents/gal on Jan. 21, the lowest level in more than 10 years. Meanwhile, feedstock soybean oil futures remain in the 30 cents/lb range. The difference between the feedstocks and heating oil futures means that the boho factor, which measures the relationship between biodiesel and diesel fuel that producers use to determine margins, has jumped dramatically in recent weeks. On Jan. 20, the boho factor reached $1.33/gal, the highest level since June 1, 2011. Low ULSD futures put biodiesel at a competitive disadvantage. It doesn’t make financial sense to obligated parties when diesel fuel is so cheap. Obligated parties often find it more prudent to buy Renewable Identification ...