Going Biodiesel Is No Cheap Alternative
The retail cost of highway diesel fuel is $3.99 per gallon—thanks to tough environmental rules and strong global demand, especially in Europe. The national average retail price of diesel hit an all-time high for five weeks in a row, is above $4 per gallon in plenty of places, and is up 50 percent over one year ago.
I thought this might make it a good market for biodiesel, the alternative fuel blended from vegetable or plant oils, but then I saw Autobloggreen's report on a Minnesota biodiesel plant that was halting production, at least temporarily, because of skyrocketing soybean oil costs.
Guess what? Petroleum prices have yanked farm prices up right along with them, because of rising farm energy costs and rising use of biofuels. By now, everyone knows about corn prices and ethanol, but keep in mind that when farmers turn soy acres to corn for ethanol, that means higher prices for soy—the most common feedstock for biodiesel in the United States. So the rising petroleum tide lifts all alternative boats.
Spencer Kelly, ethanol and biodiesel editor for the Oil Price Information Service, the private tracking firm, says that the average rack price—that's wholesale—for biodiesel has been running about $4.64 per gallon. Compare that with the wholesale price of highway diesel—$3.31 per gallon. Even if the seller passed along to the buyer the entire $1-per-gallon federal subsidy, biodiesel would still be more expensive than the diesel made from crude oil.
"You'd think this is a perfect environment for biodiesel, but no—it still can't compete with petroleum, even in this market," Kelly says. And that situation is not likely to get better soon. That's because, as Kelly points out, even though biodiesel prices have gone up substantially, "it's still unprofitable for producers, because of the feedstock costs." At current soy oil prices, Kelly says, a producer is paying $3.90 per gallon in feedstock costs—substantially more than the wholesale price of petroleum diesel. Many producers, like the SoyMor plant in Minnesota, have shut down or pulled back on production. "Production is way below capacity," Kelly says.
So the price landscape for biodiesel has gotten even worse than it was just before Iraq war, when I wrote about how difficult it was for an Arizona businessman who wanted to go green, when biodiesel cost 70 cents per gallon more than petroleum diesel. (By the way, it is quaint to look at what the price of petroleum diesel when that story was written in February 2003: about $1.70 per gallon. It's up 135 percent since then.)
Biodiesel use continues to grow, driven both by federal policy and by those who feel it will make a positive environmental difference. Most recently, grocery chain Safeway announced it will convert its entire 1,000-truck fleet to a 20 percent blend of biodiesel—aiming to reduce its carbon dioxide emissions by 75 million pounds, the equivalent of taking nearly 7,500 passenger cars off the road each year. Safeway has acknowledged it is paying a higher price for the fuel alternative but views the cost difference as "manageable." Yet for the nation as a whole, the quest continues for a manageable alternative fuel future, and that can't happen without alternatives that are cheaper than oil.
Tags: gas prices | alternative fuels
Tools: 
Share
|
| Comments (15)
Reader Comments
Algae as biodiesel
We MUST push this as the only real choice for the long run.
It will sustain ALL our diesel needs. There are many companies and universities to show this, all we need is to push it in any possible way as the norm. Plus the money to be made, and freeing up our industry at the same time will make this fuel issue a thing of the past.
I research biodiesel with algae everyday. Let's not drop the ball.
Amendment: Algae as biodiesel
Soy: 50 gallons or so an acre (harvested once a year)
Algae: 1000s of gallons an acre, constantly being processed (algae doubles it's weight in a day)
Algae can be grown using wastewater, saltwater, and can use the CO2 from Coal Plants to offset pollution.
A true win-win situation.
Any person in the energy industry with real power reading this, please look into this, and help us live in a more stable world (and make money doing it)
Biodiesel
There is no doubt that all currently commercial sources for biodiesel are extremely finite. It is the government meddling that have created a market that would not otherwise have existed. America was built on ingenuity and "Cream rising to the top" but the BOZO's in power now (from george bush and including Barack, hillary and mccain) do not have a clue as to what to do keep pushing the biofuel wagon out. We are a nation that consumes (wastes) too much fuel. Take E85; those vehicles waste 35% more fuel when operating on E85 so what does detroit (morons) give us? they turn the biggest gas guzzlers (Pickups and SUVS) into E85 nightmares and the government gives them a complete pass (CAFE standards). If Americans want to regain the supremecy we should enjoy we must first stop bankrolling lobbyists dreams like ethanol and biodiesel and use our natural resources (like coal) to free us from the middle east and chavez. Do not think for one minute that people working for the government can help us as their only working for the government because they are not empolyable in the private sector.
Ethanol a total waste
I have seen consistent complaints from consumers for mileage loss between a 10 to 15% loss. I go through a tank of gas much faster. If I was losing what the government claims because ethanol has a lower energy value of 30 percent which with ethanol added to gasoline at 10% would be a 3 percent mileage loss, I would never notice it. What I’m wondering is if anyone is reaching the conclusion I am which is that if we're adding 10 percent ethanol to gasoline and losing between 10 and 15 percent mileage, well do the math. If this country has been throwing away 10 and 15% mileage while also paying for the ethanol industry to pretend it's producing fuel, well it is no wonder the economy is falling apart.
bobbyfontaine@verizon.net
Green Patriot
We will be doing a radio show at www.webtalkradio.net on biodiesel interviewing Joe Gershen, of Tellurian Biodiesel. Visit our site at www.greenpatriot.us for a link to our show. I like the algae idea and will talk to Gershen about it.
Jatropha as Bio-diesel
After having watched the price of corn, soy, and beats take off to the moon and beyond, I went searching for a logical alternative to the known bio fuels. This led me to the Jatropha plant and it's seeds. It seems that Jatropha seeds are just now becoming known to the general public as a distinct break from corn and soy and a different direction than ethanol as it concerns bio-diesel. Being from Minnesota and having been following the closing of one of our E plants, this has been a touchy subject around these parts.
I took a look at what companies are handling the Jetropha plant and which ones seem to be ahead of the curve. This led me to Amelot Holdings Inc. (AMHD). I've done research on the company and they are ahead of the curve where it concerns the processing of the plant seed itself. They have found a way to expend upto 30% more out of the seeds crude bio-diesel then their competitors. This in turn means a higher yield per seed thus leading to less waste. They have partnered with Pan-Am Biofuels and together they have found ways to use the stock to produce a form of insecticide that is part of the seed as well as other uses. Futhermore, it seems that with the mention of Jatropha on CNBC on 3/26/2008, that Jatropha as a feasible bio-diesel may have hit the big time.
Lending to the article that leads to this posting, for the forseen future it appears that corn, soy and all the other feedstocks are going to head higher. This in turn means that all the other choices for bio-diesel will very soon find themselves priced right out of the market. Jatropha on the other hand, can be grown in almost any terrain from the most barron to the most tropical. Since it is such a strong plant, it lends itself to cheaper prices in the future for the Jatropha seed while the others go higher AND with a yield rate of 40 to 50 years, it will be a farmers delight when year after year they have a crop that will sell on the market even when their grandkids take over the business. I hope the United States as well as the world will soon open their eyes to this plant that just might save the Bio-diesel industry.
Bio-Diesel
One last thing, I hope when you do your show David Steinman, that you will ask about Jatropha. I believe you will find your listeners may have interest. I will be posting the website of your radio broadcast into the msg boards I attend. Thanks again.
Greenstar and algae biodiesel
Buy Greenstar stock -- a public corporation that has innovated a system for refining biodiesel from algae.
http://www.greenstarusa.com/
alternatives
Checkout a great alternative.
<a href="http://thrillicios.com/diesel46.php">cheap biodiesel alternative</a>
RE your comment "Guess what? Petroleum prices have yanked farm prices up right along with them, because of rising farm energy costs and rising use of biofuels." You apparently don't understand commodity markets very well. Biodiesel prices are high because of worldwide supply and demand for soy, not because petroleum prices raise the cost of farming. Farmers don't set the price for their products based on how much it takes them to produce it, the markets tell farmers how much they will pay for the crops that a farmer might grow! While it's true higher fuel and fertilizer costs affect farmer's margins, they don't influence prices. Petroleum is a commodity and its prices are set the same way. The same forces that have led us to $100 crude oil (i.e., our own enormous and wasteful energy habits, and the recent increase in demand from the growing economies of India and China) are also placing much higher demands on food oils and grain crops,. That higher demand, coupled with with the ridiculous US mandates for more ethanol have lead us to $6 corn and $12 soybeans. But also note that US biodiesel use is trivial, and has much less effect on prices than ethanol has on corn (and indirectly, on soybeans). Prices for corn and soybeans would probably be going up even if biofuel mandates didn't exist, but the mandates just make things even worse. Forget about jatropha and algae for the next decade, if ever. The folks promoting those 'solutions' are the same ones who were pushing corn ethanol and cellulosic a few years ago - they always have their 'silver bullet' solution when it reality, they just don't appreciate how difficult it is to produce huge volumes of fuel 24/7/365.
Fuel Prices and Demand
I'm paying $3.78/gallon for biodiesel, that is not bad compared with $4.10/gallon for dino diesel (and that's for crappy low-cetane petro fuel). Since my vehicle gets 40mpg and I use my bicycle for short trips to the store and whatnot, I'm not really affected by the fuel prices.
I watch those enraptured faces of young voters who claim to 'want change', yet can't articulate how it's to be achieved. Don't they teach economics anymore? Has everyone forgotten that only by reducing the purchase of scarce commodities can buyers impact prices?
Why?
Why produce biodiesel that takes 1.5 gallons of fuel to produce 1 gallon? That makes no sense at all.
unability
Biodiesel will most likely never be able to fully support our fuel needs but we can not just rely on fossil fuels that much is true. But riding a bike to work is not possible for everyone. Even flying a plane uses a lot of fuel. It is also true that algae biofuels are very productive but we dont have the money to create a enough of these large production plants to satisfy our needs. Bifuel is more of a temporary alternate ful right now becuase there will be too many long term problems. With corn biofuel you use presiouce resources that could be used for feed but if you grow something else there you also have less feed so really we will not be able to satisfy our fuel hunger with just biofuel. Wind energy and hydro energy need to be looked into as well.
By the way I'm only 14
unability
Biodiesel will most likely never be able to fully support our fuel needs but we can not just rely on fossil fuels that much is true. But riding a bike to work is not possible for everyone. Even flying a plane uses a lot of fuel. It is also true that algae biofuels are very productive but we dont have the money to create a enough of these large production plants to satisfy our needs. Bifuel is more of a temporary alternate ful right now becuase there will be too many long term problems. With corn biofuel you use presiouce resources that could be used for feed but if you grow something else there you also have less feed so really we will not be able to satisfy our fuel hunger with just biofuel. Wind energy and hydro energy need to be looked into as well.
By the way I'm only 14
Add your thoughts
Your comment will be posted immediately, unless it is spam or contains profanity. For more information, please see our comment guidelines.advertisement
biodiesel feedstock
Although petrodiesel prices have increased 135% in 5 years, soy oil has increased by 1,500% in just 3 years. Feedstock oil can account for more than 90% of a biodiesel plant's recurring costs. Right now, my only solution (I build, own and operate biodiesel plants) is to use waste cooking oil or grow jatropha (oilseed tree) in the tropics. Although I'm active in both of these arenas, their isn't a lot of waste cooking oil and when I make biodiesel in West Africa and other tropical countries the fuel stays there. My only hope for making biodiesel in volume in the States is by using algae, but that's at least a few years away.
It's basic supply and demand, as long as biodiesel works as well as petrodiesel there's no reason to sell it for less. If you priced biodiesel below petrodiesel it would be instantly consumed and there would be constant shortages. It's the same way with feedstock oil, if someone will pay more the price naturally goes up.
Mar 25, 2008 21:08:25 PM [permalink] [report comment]