U.S. Senate Democrats could this week revive a vote to end debate on the tax package that contains a provision to extend expiring tax breaks on the $1/gal biodiesel credit.

        Time is short, however, and the controversial package could just as easily put off a cloture vote until after the August recess, given the adamant positions already being taken by House Democrats, who have said they won't even bring the tax extender bill to the floor if it is not offset.

        S. 3335, introduced in the Senate last week by Finance Committee Chairman Max Baucus (D-Mont.), includes $16.8 billion over 10 years in energy-related incentives and one-year extensions of the research and development tax credit and other business benefits, as well as a closely-watched fix on the federal alternative-minimum tax.

        Ethanol prices took a precipitous dive in every tracked rack market last week driven by a double-whammy of plunges in the two commodities ethanol most closely tracks.

        Prices plummeted by 34 to 36 ¢, on average, with most of the delta borne out in Gulf and Southeast markets. The national average as tracked by EBN took a 12.8% hit, falling 35 ¢ lower to $2.38/gal.

        “It was a tough one to get a finger on,” said one market source, “[Last week] was just a wild ride.”

        The drop in ethanol prices mirrored falls in the price of crude and corn futures that were nearly as dramatic. Friday marked the third consecutive day that crude-oil futures remained below the $130-a-barrel mark, as investors worried that the U.S. economic slowdown would continue to pare oil demand.

        Massachusetts Gov. Deval Patrick signed into law Monday a bill that requires that all diesel and home heating oil sold in the state contain at least 5% biodiesel by 2013.

        The biodiesel requirement of the new Clean Energy Biofuels Act starts at 2% in 2010, and ramps up to 5% by 2013. The state Department of Energy Resources has authority to delay the minimum content requirements if there are no biofuels available that meet those standards.

        Significantly, the state will grant preferential tax treatment to non-corn based alternatives to ethanol and waive the existing 23¢/gal gasoline tax on fuel made from cellulosic ethanol – the first provision of this kind in any state.

        The bill also requires that Massachusetts to develop, as a successor to minimum percentage requirements, a Low Carbon Fuel Standard (LCFS) that would reduce greenhouse gas emissions from the transportation sector by 10%. The law makes Massachusetts the second state, after California, to require the development of an LCFS.

        VeraSun Energy has decided business conditions have improved enough to start up its postponed ethanol plant in Hankinson, in southeastern North Dakota.

        Start-up of the 110 million gal/year plant was delayed last month due to what Brookings, S.D.-based VeraSun said described as in the market.

        “The decision to begin production at Hankinson is based on a number of factors, including an improved margin environment as well as other business considerations unique to the facility,” VeraSun Chief Executive Don Endres said in a statement.

        VeraSun said the Hankinson plant will process about 39 million bushels of corn a year and produce about 350,000 tons of distillers grains for livestock feed.

        Putting somewhat of a damper on VeraSun's announcement, however, was an assessment by Standard & Poor's Ratings Services, which said last week that the Hankinson would not affect the company's junk-grade 'B+' corporate credit rating, at least not immediately.

        The rating remains on ‘CreditWatch’ with negative implications, S&P said.