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Ask AP: Commercial biodiesel, the nations cash
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    Let’s say everyone in the country woke up one day and decided to take their money out of the bank and bury it in the yard. Does the nation’s banking system have enough cash to convert everyone’s virtual money into bills and coins?
    Curiosity about cash supplies inspired one of three questions in this edition of ‘‘Ask AP,’’ a weekly Q&A column where AP journalists respond to readers’ questions about the news.
    If you have your own news-related question that you’d like to see answered by an AP reporter or editor, send it to newsquestions(at)ap.org, with ‘‘Ask AP’’ in the subject line. And please include your full name and hometown so they can be published with your question.
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    Is anyone refining used cooking oil from restaurants into biodiesel fuel on a commercial basis? Myrtle Beach has over 1,900 restaurants. That is a lot of potential power for diesel vehicles.
    Philip Blackwelder
    Myrtle Beach, S.C.
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    OK, so gas tanks weren’t designed to smell like French fries, but the concept of running a car on vegetable oil was actually envisioned by Dr. Rudolf Diesel — yes, that Diesel — back in 1895.
    Characters in small towns across the U.S. have been using biodiesel for years, driving their pickup trucks around town to collect leftover fry and chicken grease for eventual use in their gas tanks.
    The concept has moved to a commercial scale, though on a relatively small basis.
    Oakland, Calif.-based Blue Sky Bio-fuels recycles waste cooking oil into biodiesel to power fleet trucks and school buses.
    In Sedgwick, Kan., Healy Biodiesel Inc. sells biodiesel made from cooking oil collected from local restaurants, and Standard Biodiesel in Seattle provides renewable diesel to be used in engines, generators and furnaces.
    A larger commercial venture in the works is the Bermuda Biodiesel Project, which is looking to produce 500,000 gallons of fuel from used cooking oil supplied by the more than 400 restaurants in Bermuda.
    The process is not too complex. Grease is transformed into fuel through a chemical process called transesterification, which removes glycerine and adds methanol to the oil, leaving a thinner product that can power a diesel engine.
    To manufacture the renewable fuel legally, biodiesel producers must register with the U.S. Environmental Protection Agency.
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    Dirk Lammers
    AP Energy Writer
    Sioux Falls, S.D.
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    Since so many of us now use direct deposit, debit cards and other forms of electronic funds, is there actually enough cash to replace all of the funds on deposit? If everyone decided to withdraw their bank deposits and stuff them in their mattresses, is sufficient money available in vaults somewhere?
    John Blakely
    Dublin, Ohio
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    No, the nation’s banks don’t collectively have that amount of cash. Given the extremely low probability that bank customers would simultaneously withdraw all their money, it would be a waste of taxpayers’ money to print and store the trillions of dollars that would be required to match these holdings.
    Instead, the Federal Reserve carefully manages currency inventories to meet the public’s demand for cash and maintains substantial contingency inventories of cash for use during emergencies. Since the Fed began operating in 1914, it has always met the public’s demand for cash.
    The federal government has a number of safeguards that make its unlikely that bank customers would withdraw all funds in checking and savings accounts at the same time. For instance, the Federal Deposit Insurance Corporation insures deposits up to $100,000. In addition, many forms of payment exist other than cash, including checks as well as debit and credit cards.
    Jeannine Aversa
    AP Economics Writer
    Washington
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    With all the talk about drilling off the U.S. coasts for more oil, what guarantee do U.S. citizens have that all that oil would go to us? Wouldn’t the corporations doing the drilling sell the oil to the highest bidders on the international market? Would it really affect domestic prices for home heating oil or gasoline?
    B.T. Corwin
    Boynton Beach, Fla.
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    The U.S. Minerals Management Service estimates that undiscovered fields in the Outer Continental Shelf — the majority of which is now closed to drilling — contain 86 billion barrels of oil and 420 trillion cubic feet of natural gas.
    If some or all of those areas were opened to drilling, there’s no guarantee the oil would end up in the U.S. market. However, energy experts say much of it would remain close to home because of the added expense of shipping it to foreign markets.
    ‘‘Typically, what you’re trying to do is get the product from the wellhead to the wheel in the most cost-effective manner,’’ said Kenneth Medlock, an energy fellow and adjunct economics professor at Rice University. ‘‘So if you produce it in the Gulf of Mexico and can get it to the wheel of a driver in Texas, that’s much closer than producing it in the Gulf and getting it to the wheel of someone in China.’’
    How the increased production would affect prices is hard to say. One factor would be how much new oil is produced. And even if the Outer Continental Shelf were opened today, it could take years before any of that oil reaches U.S. markets because of the time-intensive process of finding and producing new fields.
    John Porretto
    AP Business Writer
    Houston
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    Have questions of your own? Send them to newsquestions(at)ap.org.

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