NATSO, the national association representing truckstops and travel plazas, is urging Congressional leaders to support Sen. Charles Grassley’s (R-IA) amendment to the Small Business Lending Act of 2010 and extend the biodiesel tax credit through Dec. 31, 2010.

In a letter addressed to members of the Senate, NATSO, along with the National Association of Convenience Stores, the Petroleum Marketers Association of America and the Society of Independent Gasoline Marketers of America, said the “blender tax credit is critically important to the survival of the nation’s biodiesel producers and fuel blenders.”

“It is vital that Congress reinstate the biodiesel tax credit to ensure a healthy biodiesel market for producers and consumers,” said NATSO president & CEO Lisa Mullings. “The lapse of this credit and drastic cuts in production are undermining fuel retailers’ commitment to offering alternative fuels to the public and to investing in biodiesel infrastructure. The expiration of the tax credit has put thousands of jobs at stake and threatens the industry’s ability to meet the mandated renewable fuels standard.”

Since the $1 per gallon biodiesel tax credit expired, U.S. biodiesel production has plummeted by more than 80%, said NATSO. At the same time, motorists are changing buying habits as the price of biodiesel surpasses other fuels. The $1 per gallon blender tax credit makes biodiesel cost competitive with conventional diesel fuel, the association pointed out. The expiration of the tax credit, coupled with sagging consumer demand, has caused many producers to shut down or severely scale back production, NATSO claimed.

NATSO warned that “failure to reinstate the tax credit could force fuel blenders and producers to lay off employees or push them into failure. When the tax credit expired, many fuel blenders and producers continued to pass the $1/per gallon credit on to customers based on an assurance that the credit would not lapse and would cover all of 2010.”

On the other hand, said NATSO, extending the tax credit “will increase biodiesel production while spurring retail investment in the infrastructure necessary to supply biodiesel to commercial carriers and the motoring public.”