Truckers dislike biodiesel bill

By FRITZ BUSCH

Journal Staff Writer

NEW ULM -- A legislative proposal to mandate mixing soybean oil in all diesel fuel sold in Minnesota has the ire of local and state trucking officials.

The bill will be heard today in the Minnesota House Environmental Committee. It has already passed the House Agriculture Committee. It is currently sitting in the Senate Tax Committee, already passing the Agriculture and Environmental Committees.

The legislation would require a two percent biodiesel blend as of Jan. 1, 2002. The blend requirement would climb to five percent biodiesel by Jan. 1, 2006.

Rick Schugel, Vice President of Operations for J&R Schugel Trucking Inc., is concerned about the effects of a fuel price increase anticipated by the mandate.

"Truckers are already operating in a suppressed economy," Schugel said. "About 6,000 truckers went out of business across the country last year. It has a lot to do with fuel price increases, insurance costs and driver shortages."

Schugel supports soybean farmers but he has to consider what is best for the trucking industry. He doesn't want higher fuel costs.

Minnesota Valley Transportation Inc. owner Francis Schumacher doesn't like the fact the legislation will mandate that all diesel fuel sold in the state will be biodiesel.

"It (biodiesel) should just be put on the market, not mandated," Schumacher said. "If a guy wants to use it fine, but don't force it on somebody. Newer diesel engines should be able to handle it better than the older ones."

Schumacher received a letter from Caterpillar that biodiesel fuel provides five to seven percent less energy per gallon compared to conventional diesel.

Schumacher said he is also concerned about biodiesel fuel freezing at 15 degrees above F. and fuel filters plugging up because biodiesel is more solvent than conventional diesel fuel.

Minnesota Truckers Association President John Hausladen said the biodiesel legislation is opposed by truckers, railroads, the petroleum marketers association, the service station association, and Northwest Airlines.

"A large group thinks the mandate is a bad idea," Hausladen said. "It's going to increase costs to users. Conservatively, 2-6 cents a gallon, plus another 2-3 cents for infrastructure costs to make it all happen."

The legislation will affect everybody that uses diesel -- school buses, municipalities, transit systems, farmers and their off-road equipment, and others.

Hausladen said the legislation could have a devastating effect on truck stops near the Minnesota border.

"Truckers make fuel-buying decisions based on cents on the gallon," Hausladen said. "Truckers will buy fuel outside the state."

Hausladen said supply disruptions caused diesel fuel and gasoline price increases last summer. He fears the same thing could happen with biodiesel mandates.

He doesn't like the mandate part of the legislation either.

"The State is forcing the transfer of funds from one sector of the economy to another," Hausladen said. "We have no capacity to handle it yet in Minnesota either. We are a buyer in a seller's market. At least at first, we'd have to buy it at whatever the seller wants to charge."

The biodiesel legislation is good farm politics but bad public policy, according to Minnesota Trucking Association Vice Chairman Bill Frank.

"This state runs on diesel fuel," Frank said. "In fact, 67 percent of all communities are served exclusively by truck."

There is not the supply or adequate infrastructure to produce it today, Frank told the Senate Agriculture Policy Committee last month.

Cost increases or supply disruptions would have a disastrous effect on the state's transportation industry, including movement of all agricultural products, according to Canadian Pacific Railway Public Affairs Assistant Director John Bergene.

District 23 Sen. Dennis Frederickson (R-New Ulm), said enough biodiesel will be available if its use were required.

"We'd see farmer-owned plants to produce it, like the way ethanol is being produced," Frederickson said. "There has been lots of research done. In committee testimony, we learned about tests at the University of Minnesota and Hennepin County.

Frederickson said the legislation appears to be a "win-win" situation for soybean farmers and clean air despite a slight performance reduction in diesel engines and increased costs of operation.

"There is conflicting data on performance and cost," Frederickson said. "The differences do not appear to be significant."

Biodiesel proponents claim it is safer to make than conventional diesel and that the mandate could raise the price of soybeans 2-6 cents per bushel.

Other pluses of biodiesel include increased lubricity, decreased smoke, soot, carbon monoxide, and toxicity.

When burned in diesel engines, biodiesel smells like fried chips instead of the pungent odor of conventional diesel when it is burned.

Biodiesel would also decrease the demand for foreign oil and have a positive impact on the U.S. balance of trade and rural economies, according to its supporters.

District 23A Rep. James Clark (R- New Ulm) was on the House floor Monday and not available for comment.