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BIODIESEL MEASURE DEFERRED UNTIL NEXT LEGISLATIVE SESSION

By Wes Clement/OF THE COMMERCIAL STAFF
Thursday, March 26, 2009 11:39 PM CDT

A bill that would require diesel sold in Arkansas to contain five percent biodiesel will be held until the next state legislative session.

House Bill 1790, introduced by State Rep. Tiffany Rogers (D-Stuttgart), would establish “the B5 standard,” requiring all diesel fuel sold in Arkansas to contain at least five percent biodiesel by volume as a means of stimulating job growth.

Committee study

Rep. Eddie Cheatham (D-Crossett) said Thursday the bill would be studied by the joint committee on energy between sessions to determine its potential impact on fuel prices. Trucking companies, he said, had expressed concerns about greater fuel costs.

A recent study by the University of Arkansas at Little Rock Institute of Economic Advancement found the B5 standard would likely create 1,500 new jobs statewide with average wages of $37,000. The overall economic impact of such a requirement is expected to be $359 million annually.

“It would boost the price of diesel, no question,” said Tom Knight, Arkansas Terminaling and Trading vice president of trading and supply. Arkansas Terminaling is among the fuel wholesalers supplying gasoline and diesel to Southeast Arkansas.

Knight said Arkansas’ wholesale terminals generally are not equipped with blending facilities and while the state could produce adequate quantities of biodiesel, the requirement would be uneconomical.

Greg Hamilton, a researcher of the UALR Institute of Economic Advancement, agreed the requirement would apply some upward pressure to diesel prices.

“Truckers may be paying a little more at the pump, but one argument is most diesel is brought into the state and not produced locally,” Hamilton said. “Now, there would be a component that could be created here and that would be an incredible revenue for the state that we don’t have.”

He commented the economic impact estimates resulting from the study were conservatively calculated.

Arkansas’ biodiesel industry has grown in the past few years. Four production plants are either operating or nearing start-up in the state. A fifth is partially constructed and a sixth is being planned.

FutureFuel Chemical of Batesville and Pinnacle Biofuels of Crossett are already producing biodiesel that could be used by the state’s retailers. Arkansas SoyEnergy Group of DeWitt and Delta American Fuel of Helena-West Helena are expected to begin operation next month.

A biodiesel facility near Arkansas City is partially constructed and Natural Fuels of Corning (near Pocahontas) is being planned.

“The combined capacity of the four plants operating or nearing start-up is 120 million gallons of 100 percent biodiesel,” Rich Byers, biofuels manager of FutureFuel Chemical, said. The B5 standard, he said, would require about 60 million gallons of biodiesel annually.

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