Election may help determine future of area fuel companies future

Published 12:00 am Sunday, August 10, 2008

NATCHEZ — In 2011 Rentech plans to be producing 25,000 barrels of fuel in Natchez, but it’s the man sitting in the White House who may just help determine where that fuel goes.

Rentech’s Senior Vice President of Corporate Communications and Government Affairs Tom Sayles said the next president has the ability to play an important role in Rentech’s future.

The need for a renewable fuel source has been discussed for years, but recent high gas prices have made it an election issue.

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Both Sen. John McCain and Sen. Barack Obama have called for a decreased dependency on foreign oil and both say they support technology to produce renewable energy.

Rentech wants Adams County to play a role as a large-scale producer of renewable fuel.

While Sayles said Rentech is not jointly supporting a specific candidate, the company is pleased to see that both candidates have acknowledged a need to develop technology to produce clean renewable fuels.

“Both support alternative fuels and both could benefit our industry and our company,” he said. “And that plays into what we’re doing.”

Sayles said staff members for both candidates have met with Rentech representatives in Washington, D.C., and were receptive to Rentech’s future plans.

And Sayles and other local fuel manufacturers have a good idea of what action they want to see taken by the next president.

Sayles said ideally the next president would implement a set of incentives to aid alternative fuel producers. Clint Vegas President of Delta Bio Fuels in Natchez said he would prefer to see mandates in place to aid fuel production.

Mississippi Sate University’s associate professor of political science and public administration Jerry Emison said the best alternative policy will likely incorporate aspects of both.

“I am guessing that a reasonable alternative energy package is going to involve both incentives and mandates,” Emison said. “I think the more sophisticated question is what the overall composition of the portfolio will be, how much of that will be mandates or incentives.”

Sayles said he would like to see changes in tax incentives that would extend the soon to expire .50 cents per gallon tax credit for companies manufacturing biofuels and incentives to implement government-backed loans for companies like Rentech.

But on the top of Sayles’ wish list is an alteration in the way the Department of Defense, specifically the U.S. Air Force, can enter into contracts.

“We would like to see them get long-term contracts,” he said. “That would really help our industry.”

In the past Rentech has said the Air Force is one of the groups that has expressed an interest in the jet fuel the company plans to produce.

If Rentech can secure a long-term contract with the Air Force, it would have the potential to provide much needed financing to the company.

“It makes us bankable,” Sayles said.

And Sayles said the contract would be good for the Air Force as well.

Sayles said since 1997 the military’s cost to purchase has risen 400 percent.

Since Rentech believes they will be able to make jet fuel from municipal waste, natural gas and petroleum byproducts they say they’ll be able to offer their product at a reduced price.

And since their product is not dependent on foreign oil, it’s subject to massive price fluctuations, Sayles said.

“The military’s cost to acquire fuel has increased dramatically in the past several years. At current prices, we believe expanded contracting authority would provide them an opportunity to reduce the cost and volatility of prices,” he said.

Vegas’ company makes biodiesel from soybeans and produces approximately 100 million gallons of fuel per year.

He said he would like to see mandates that essentially lock incentives that are already in place, like the tax credit Sayles spoke about.

“I think the first thing (the president) could do is confirm that we are going to go down a renewable path and that it’s not going to get yanked out from under us.”

The current tax credit is only scheduled to continue until Jan. 1.

“We’ve invested millions and millions of dollars, and they can’t even pass that it will be moved for the next year or two. Our whole industry could be wiped,” Vegas said.

And that’s why he likes mandates.

“What I would much rather see is some mandates — this is the way it’s going to be. Now let’s get it done.”

But how easily those incentives or mandates will be passed, or even what shape they will take, remains to be seen.

Though the man at behind the oval office desk can’t create incentives or mandates on his own, he can carry swaying power with Congress. And, regardless of who wins, alternative fuel management will need to include cross-party cooperation, Emison said.

“If McCain becomes President, and Congress continues to be democratically controlled, McCain is going to have to negotiate that out with a party that has preferences more to the mandates,” he said.

Rentech stockholder Steven Burns, said the next president must be able to work across party lines it get viable alternative energy solutions up and running.

“They have to have a give and take from both sides of the aisle,” he said.

And Burns, like Emison, Sayles and Vegas, said the need for cooperation and a viable energy plan is now.

“We need a solid policy,” he said of a plan to reduce foreign oil use. “We need to be open minded.”