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What is Fuel Conversion Price? A Comprehensive Legal Overview
Definition & Meaning
The term "fuel conversion price" refers to the price set by the Secretary of Agriculture for agricultural commodities. This price is established to ensure that gasoline-alcohol mixtures, which use alcohol derived from these commodities, can compete with the price of unleaded gasoline at the refinery. The calculation of this price takes into account several factors, including:
Differences in octane ratings.
The energy value of the commodity.
The value of recoverable byproducts from the commodity.
Direct costs and capital recovery for a grain alcohol distillery producing forty million gallons of alcohol annually.
Federal taxes and incentives related to alcohol used as fuel.
Table of content
Legal Use & context
The fuel conversion price is primarily used in agricultural and energy law. It plays a significant role in determining the economic viability of biofuels, particularly those derived from agricultural products. Legal practitioners may encounter this term in contexts involving:
Regulatory compliance for biofuel production.
Contracts related to agricultural commodities.
Federal and state incentives for renewable energy.
Users can manage related legal matters by utilizing templates provided by US Legal Forms, which are drafted by qualified attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A distillery producing alcohol from corn may use the fuel conversion price to set competitive pricing for its ethanol, ensuring that it aligns with market prices for gasoline.
Example 2: A farmer considering the sale of their corn for fuel production can evaluate the fuel conversion price to determine potential profitability. (hypothetical example)
Relevant laws & statutes
The primary legal reference for the fuel conversion price is found in:
7 USCS § 4005 - This statute outlines the definition and calculation of the fuel conversion price.
Comparison with related terms
Term
Definition
Fuel Conversion Price
The price set for agricultural commodities to ensure competitiveness with gasoline prices.
Market Price
The current price at which a commodity is bought and sold in the market, not specifically adjusted for fuel use.
Subsidy
Financial assistance provided by the government to support a commodity's price or production.
Common misunderstandings
What to do if this term applies to you
If you are involved in the production or sale of biofuels, consider the following steps:
Review the current fuel conversion price to assess your pricing strategy.
Consult with a legal professional to understand how this term affects your business operations.
Explore US Legal Forms for templates that can assist in contracts or compliance documentation related to biofuel production.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Varies based on production costs and market conditions.
Jurisdiction
Federal and state regulations apply.
Possible Penalties
Non-compliance with regulations can lead to fines.
Key takeaways
Frequently asked questions
The fuel conversion price is the price set for agricultural commodities to ensure that gasoline-alcohol mixtures are competitively priced against unleaded gasoline.
The Secretary of Agriculture determines the fuel conversion price based on various economic factors.
It helps farmers assess the profitability of selling their crops for biofuel production.
Yes, US Legal Forms offers templates that can assist with contracts and compliance related to biofuels.
For complex issues related to biofuels and regulations, consulting a legal professional is recommended.