Subsidies for biofuels and crops in the United States play a big part in market viability because they can drastically alter the final retail price of a biofuel. Current combined subsidies for BD blending can total up to $1.50 per gallon sold, which directly reduces the price at the pump. In addition to subsidy for blending, crops used as source stock for BD production can also be subsidized. For example, producers of soy beans in the United States may be subsidized at a rate of $0.44 per bushel if target market prices are not met. This legislation artificially keeps market prices low for some biofuel sources because crops can be sold profitably at lower prices. Cheaper materials reduce production costs, and ultimately allow end products to be profitably sold at lower retail prices. The same legislation that subsidizes biofuels directly can also indirectly subsidize production of a biofuel by making competing products more expensive.
