Year of the Hurricane

By | November 13, 2008
The Chinese calendar says 2008 was the Year of the Rat. For the biodiesel industry, one could say it has been the Year of the Hurricane.

At press time, Hurricanes Ike and Gustav may have been the only physical manifestations to impact our industry during a stormy year, but our industry has been through a figurative tempest as well. Crude oil and feedstock prices went full circle, leaving biodiesel producers reeling. At the beginning of fiscal year 2007, prices had been on a sharp 12-month upward trend. The trend topped out at a whopping 150 percent increase, reaching a plateau during the third quarter then taking a nosedive in the fourth quarter.

Never has it been so clear that our industry operates in the unpredictable delta between the highly volatile energy and agricultural commodity markets, which are today inextricably linked. Meanwhile, the U.S. biodiesel industry faced huge public policy challenges during a presidential election year, compounded by difficult and complex trade issues.

Biodiesel also came under attack by large food companies. Like pirates creating a diversion for pilfering, the Grocery Manufacturers Association launched a sustained anti-biofuels attack, blaming them for an increase in the cost of food, which happens to correspond to their record-high profits. We were hit with wave upon wave of attacks on "food versus fuel" before it was exposed that the negative coverage was the result of a carefully orchestrated-and highly funded-GMA campaign.

The credit crisis and economic meltdown has not spared the biodiesel industry. Biodiesel operations are capital intensive, and the choking off of credit strikes at the very heart of production operations.

It is hard to admire a rainbow while still enduring gale force winds, but there are several bright spots shining through the cracks in the cloud cover. First, a year ago, NBB members identified eight top public policy priorities. Even during the political madness of an election year, we achieved all of them making us "8-for-8 in '08."

As for countering the GMA attacks, soybean farmers have once again come to the aid of the biodiesel industry, funding a new project for fiscal year '09 to amplify our efforts to counter the misinformation campaign and get out the truth. While our funding will never match the $15 million that GMA is reportedly spending, we do have the truth on our side.

We also have messengers from federal, economic and scientific communities that agree, and that is worth a lot.

Although the economy will likely continue to struggle, our industry can take heart in being part of the solution. There are 176 biodiesel plants churning out domestically produced fuel, and every one of them creates green jobs here at home while reducing our national trade and energy deficits. In addition, biodiesel achieved a historic level of credibility in July when B5 was balloted into the definition of diesel fuel, opening the way for universal acceptance, fungibility, pipeline movements and larger volume markets, just in time for the implementation of the new renewable fuels standard. Consumer and original equipment manufacturer (OEM) confidence in biodiesel will continue to grow, thanks to the passage of a biodiesel specification for blends of B6-B20. This technical achievement is a beacon for greater OEM acceptance of B20.

Hurricanes lose their strength as they move over land. Meteorologists say that despite their destructive forces, hurricanes ultimately help maintain equilibrium in the Earth's troposphere and preserve a relatively stable and warm temperature worldwide. I am hopeful the literal and figurative hurricanes that we have endured this year represent part of a longer-term cycle that will ultimately make us stronger and healthier as an industry.

Sincerely,
Joe Jobe
Chief Executive Officer
National Biodiesel Board
 
 
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