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Biodiesel Tax Credit Lapses, Leaving Questions on Fuel Supply
Before the Senate adjourned Dec. 24, the chamber failed to approve legislation that would extend the $1 per gallon tax credit for the production of biodiesel. The tax credit, which enables biodiesel to more effectively compete with conventional diesel, has broad bipartisan support, but the Senate’s sole focus on health care reform legislation resulted in the credit’s expiration. Senate leaders are expected to address the issue when Congress returns later this month, and it is expected that the $1 per gallon credit will be renewed at least through the end of 2010. It is also possible that the credit could be made retroactive to Jan. 1 to enable biodiesel blended and produced during this time to remain eligible for the credit.

Until an extension of the tax credit can be signed into law, however, many truckstops may see a sharp drop in the availability of biodiesel, along with sharp increases in prices. The severity of this problem will largely be determined by the length it takes Congress to fully approve an extension of the tax credit.