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Alternative Diesel Fuels (Biodiesel, WVO, SVO, BTL, GTL etc) Discussions about alternative fuels for use in our TDI's. This includes biodiesel WVO (Waste Vegetable Oil), SVO (Straight Vegetable Oil), BTL (Biomass to Liquid), GTL (Gas to Liquids) etc. Please note the Fuel Disclaimer.

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Old June 22nd, 2008, 15:19   #1
mel72349
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Default Alternative fuels are cheap, but there's a hitch

Alternative fules are cheap, but there's a hitch
By Tom Pelton | Baltimore Sun | June 22, 2008

With fuel prices soaring, Mark Nagurney thought he had figured out a clever way to drive free - and save the Earth at the same time. The 49-year-old Laurel physicist is one of thousands nationally who have converted their diesel cars and trucks to run on straight vegetable oil.

But in burning a cleaner fuel than diesel, Nagurney never imagined he'd end up on the wrong side of federal environmental laws. Or break Maryland's fuel tax regulations, which require even folks driving on grease thrown away by fast-food restaurants to get a "special fuel" license, obtain a $1,000 bond from an insurance company, file monthly forms and pay the same 24 cents per gallon tax as drivers using diesel.

Nagurney finds the tax rules misguided. "Let's get renewable energy going," he said.

After hearing about vehicle conversion from some co-workers, the strait-laced Republican defense contractor paid a mechanic $2,500 last October to convert his gray 1996 Volkswagon Passat so it can run on either vegetable oil or diesel. Nagurney gets waste oil free from a Chinese restaurant in his neighborhood and thinks it's a great way to recycle and save money at the same time.

He's part of a small but growing number of people nationally who have embraced straight vegetable oil fuel - or "SVO" - as an alternative energy source that helps to free America from foreign petroleum.

The numbers are uncertain, but advocates estimate that thousands of people are converting their vehicles, with mechanic shops springing up that specialize in the conversions. One company, Golden Fuel of Springfield, Mo., has seen a 400 percent increase in sales of kits to convert diesel vehicles to run on SVO, with 200 sold so far this year and 150 orders pending.

But these motorists are running afoul of federal and state government agencies whose jobs are to collect taxes from drivers to pay for road maintenance and make sure that fuels don't pollute the air.

Maryland drivers face a $1,000 fine for driving on vegetable fuel if they don't first register with the state and file monthly reports and payments, according to Chuck Ulm, assistant director of motor vehicle taxes in the state comptroller's office.

"They would be operating without paying the motor vehicle tax as required by law," Ulm said. "It would be illegal."

A spokesman for Comptroller Peter Franchot said Franchot generally supports the use of alternative fuels as a way to help end the nation's dependence on foreign oil and reduce greenhouse gas emissions.

But, said spokesman Warren Hansen, "at this point, the legislature has not changed the way this fuel is taxed or regulated, so we are just enforcing the laws that are currently on the books."

He said Franchot would support a change in the law to encourage the use of vegetable oil fuel, perhaps through the creation of a tax credit, although the drivers would still have to pay taxes and register.

But a tax credit in Maryland would have little effect if driving while green is illegal at the federal level. Catherine C. Milbourn, spokeswoman for the U.S. Environmental Protection Agency, said federal laws prohibit running vehicles on used vegetable oil.

"All fuels have to be tested before they can be used in a vehicle, because when something goes into the engine and is burned up, something comes out of the tailpipe. And we want to make sure it doesn't harm the environment in any way," Milbourn said. "Vegetable fuel has not been registered as a motor vehicle fuel."

Garages or companies that convert vehicles to run on vegetable oil can be subject to federal fines of $32,500 per violation, she said. People who convert their cars to run on it face fines of up to $2,750.

The EPA has not fined anyone for this, but the federal agency is inspecting and investigating people for not following these rules, said Roxanne Smith, another EPA spokeswoman.

Scientists have concluded that burning vegetable oil releases less soot, carbon monoxide and other air pollutants than petroleum fuel - but about 5 percent more nitrogen oxide, which contributes to smog. SVO produces about the same amount of carbon dioxide as diesel.

Still, Forrest Gregg, an author who recently published a book called SVO: Powering Your Vehicle with Straight Vegetable Oil, said that vegetable oil is considered better than diesel fuel from a global-warming perspective. This is because the plants recently drew the same carbon dioxide out of the atmosphere, he said, so returning it is part of a natural cycle.

A regional Golden Fuel franchise, Massa Green Enterprises of Sterling, Va., installs the SVO conversion kits at a cost of $3,500 for a car to $10,000 for a large truck. "Our business has gone through the roof with the increase in price of diesel at the pump," said Dan Cozart, general manager of Massa Green.

One of those who bought a system is Nagurney. He popped open the trunk of his Passat to show the 12-gallon plastic tank that holds the vegetable oil. A heater keeps the oil from congealing in cold weather. The mechanic ran tubes from the tank to the engine, which still has a normal diesel tank and can run on standard diesel as well.

Nagurney said he struck up a deal with a local Chinese restaurant to take its used oil for free. The restaurant would normally have to pay to have it hauled away. He leaves the restaurant 4.5 gallon plastic containers with spouts, and the restaurant staff fills them with old grease.

About once every two weeks, he drives by to pick up the containers from the kitchen - usually buying a soda and some food to be friendly.

The government's view of all this, in terms of taxes, is puzzling to him. "Whatever they tell me to do, I will gladly do," he said. "But I think this is double taxation, if restaurants are paying sales tax on vegetable oil when they buy it, and then I have to pay taxes on it a second time when I burn the used oil as fuel."

He said the savings that come from using SVO are substantial.

"It's wonderful," he said, driving around Laurel recently, a sweet smell coming from his tailpipe. "My wife and I went on a trip to Williamsburg, Va., two weeks ago, and we drove 400 miles but only paid $4.50 for fuel. It would have cost us about $45 for diesel."

tom.pelton@baltsun.com

http://www.baltimoresun.com/news/loc...,7770381.story
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Old June 22nd, 2008, 16:43   #2
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Folks who call that "double taxation" may want to check again; most restaurants are tax exempt for items to be used in the preparation of food to be sold. Food distributors don't collect sales taxes.
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Old June 22nd, 2008, 17:35   #3
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Originally Posted by TurbinePower
Folks who call that "double taxation" may want to check again; most restaurants are tax exempt for items to be used in the preparation of food to be sold. Food distributors don't collect sales taxes.
Uh, TurbinePower, my friend, you need to realize that while you may be right about restaurants in South Carolina, this has nothing to do with the situation in Maryland, or any other state for that matter. The sales taxes in South Carolina do not apply in any other state, and other states have different regulations on that score. I am not familiar with the fine points of Maryland's sales tax laws, but I do know that when I moved from Ohio to Virginia, I was shocked to find that while in Ohio EVERYTHING I bought for my business, goods for sale as well as tools used in the business were all exempt from sales taxes. But in Virginia, only goods for resale were exempt, I was required to pay sales taxes on office supplies, tools, and anything else that did not go directly into product shipped out the door and billed to customers.

So it may very well be that fellow quoted in the article is correct in stating that the oil may be taxed when sold to the restaurant in the first place.
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Old June 22nd, 2008, 19:18   #4
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Originally Posted by naturist
Uh, TurbinePower, my friend, you need to realize that while you may be right about restaurants in South Carolina, this has nothing to do with the situation in Maryland, or any other state for that matter. The sales taxes in South Carolina do not apply in any other state, and other states have different regulations on that score. I am not familiar with the fine points of Maryland's sales tax laws, but I do know that when I moved from Ohio to Virginia, I was shocked to find that while in Ohio EVERYTHING I bought for my business, goods for sale as well as tools used in the business were all exempt from sales taxes. But in Virginia, only goods for resale were exempt, I was required to pay sales taxes on office supplies, tools, and anything else that did not go directly into product shipped out the door and billed to customers.

So it may very well be that fellow quoted in the article is correct in stating that the oil may be taxed when sold to the restaurant in the first place.
Right, right, my mistake. Thank you for pointing that out for me. But at the same time, it's still not double-taxation.

You have a product, vegetable oil. You buy it as a restaurant, and may or may not be charged a sales tax. We'll assume that you are.

You use your oil, and you send it off to be disposed of in some fashion.

If it goes a renderer, it gets converted by a process to become something else. Glycerin for makeup, animal feed additive, whatever. These products are again sales taxed, but it's not double taxation because you have a new product.

If it goes to a greaser or a biodiesel producer, it is again run through a process. A greaser filters, dewaters, and if it's a high acid or chemically tainted batch of grease he may even water wash and dewater it once more. A biodieseler filters, heats, transesterifies (and some esterify, too), and then cleans. Either way, what comes out is a new product, for a different purpose than the initial oil. Fuel, in these two cases.

In all three cases, the item in question has been altered in such a way as to make it suitable for purposes other than its initial form of sale, and therefore it it perfectly legitimate to tax it's new purpose.

Now, you might say that there is the case of the individual who buys their oil new, doesn't process it at all, and uses it as fuel. They're getting charged sales tax and a fuel tax, right? That's gotta be double taxation!

Really this is wrong again. In this case, you're paying taxes for a sale and a privilage. You pay sales tax on the oil you bought, just like everything else you buy. Some states apply sales tax to all purchases, including fuel.

But the "fuel tax" that you pay isn't a sales tax on fuel. It's a roadway usage tax. Adding it into your fuel purchases is just a method of paying your taxes, rather than logging your mileage and sending in a check quarterly. It's actually quite a neat system to make sure that folks pay a tax in proportion to their roadway usage and the subsequent impact of that usage. Travel more distance or drive a heavier vehicle, you burn more fuel and you pay more tax to account for the extra wear and tear damage you're doing to the roadways.

If you're travelling down the highway it doesn't matter what fuel you're running, you still need to pay that roadway usage tax to pay for the impact you have on the roads.


Personally, I think that folks who try to say that alternative fuels shouldn't be taxed (for whatever reason) are really just greedy. It's not enough that their fuel is significantly cheaper in a monetary sense, they have to have it for free. They have to get out of paying for anything, simply because they're "helping the environment."

From what I've seen, most folks get into the alternative fuels, especially SVO and biodiesel, 'cause it's cheap. Green be hanged!
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Old June 22nd, 2008, 19:29   #5
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pure Bull****.. I know the guy in this article.. He called the Maryland comptroller to ask what he needed to do to pay road tax and they told him they are not set up for this and the small amounts he was using are of no concern to them. No road taxes are collected for propane or Hybrids either..

I hope they don't make an example of him..
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Old June 22nd, 2008, 22:16   #6
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Hybrids pay their tax when they buy gas.
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Old June 23rd, 2008, 03:45   #7
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When/how will they charge plug ins road tax?
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Old June 23rd, 2008, 04:54   #8
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Exactly! When electric vehicles start roaming the streets in greater quantities, where will the revenue come from? As far as I'm concerned, there should be no discernable difference between using WVO and electricity to drive (except for emmisions)
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When/how will they charge plug ins road tax?
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Old June 23rd, 2008, 06:18   #9
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There will be a little chip in your car and it will tell the PTB everything your vehicle is doing no matter what's fueling it, then make a withdrawl from your bank to cover your road tax.
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Old June 23rd, 2008, 06:50   #10
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Hybrids pay their tax when they buy gas.
WVO converted vehicles pay their taxes when they buy D2 to run on until they reach operating temp..
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Old June 23rd, 2008, 07:53   #11
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Tell that to the judge.
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Old June 23rd, 2008, 09:30   #12
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Originally Posted by feverwilly
WVO converted vehicles pay their taxes when they buy D2 to run on until they reach operating temp..
They pay no taxes on the WVO. Hybrids pay tax on all the energy they use - the batteries are charged by burning the gasoline they paid taxes on.
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Old June 23rd, 2008, 10:25   #13
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Tell it to the judge, might need to to get some of these stupid laws off the books.. get them thrown out as unconstutional.

You are reusing a product that was sold, already taxed, used and discarded and now you should pay a road tax on every gallon you use.. ie 24 cents?

What about those Hybrids that are plugging in (no road tax)
Those that run propane (no road tax)
Bicycles (no road taxes)
Horse driven carriages (no road tax)

Should the tax be a per gallon or per use thing? Motorcycles use less fuel then cars why do they pay less in road taxes? As cars get better fuel economy now the states will have less road tax revenue and are going to have to go to a per mile system. In parts of europe already you buy seperate stickers that allow you to use the highways or your license plate is photographed and a calculation is made and you are sent a bill. There is talk of using the EZ Pass system (a transponder) that tracks your usage and you are taxed accordingly. The problem with that system I'm sure it will be in addition to existing taxes and not in lieu of..
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Old June 23rd, 2008, 11:35   #14
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If it goes to a greaser or a biodiesel producer, it is again run through a process. A greaser filters, dewaters, and if it's a high acid or chemically tainted batch of grease he may even water wash and dewater it once more. A biodieseler filters, heats, transesterifies (and some esterify, too), and then cleans. Either way, what comes out is a new product, for a different purpose than the initial oil. Fuel, in these two cases.

In all three cases, the item in question has been altered in such a way as to make it suitable for purposes other than its initial form of sale, and therefore it it perfectly legitimate to tax it's new purpose.
Not going to argue the merits of whether or not you should be paying road tax, but I don't believe that I have a "new" product once I have filtered and dewatered my oil. All I am doing is filtering out food/particles and removing water. What I am left with is still used cooking oil. If a painter pours their paint through a filter before putting it on the wall, it's still the same paint?
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Old June 23rd, 2008, 13:30   #15
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The theory behind road tax is that the more fuel you use, the more tax you pay. It seems pretty reasonable - if you drive a lot, or drive a big heavy vehicle, you are getting more use of the road and inflicting more damage on it as well.

It really has nothing to do with new fuel or old fuel. It's just an attempt to fairly collect funds for the highways. (At least in theory.)

I believe electric vehicles have an official exemption, this may also be true of natural gas and propane fueled cars. Plug in hybrids are almost non-existant. Bicycles and pedestrians pay no raod tax, probably a good use of tax policy. How many horse carts are there outside of Central Park and Amish country?

Personally, I would be wiling to pay road tax on my WVO. I just don't know how to do it.
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