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Think $4 Gas Is Bad? Try $6 Biodiesel

Think $4 per gallon gas is bad? Try $6 per gallon biodiesel. While the prices for gas and diesel have been climbing higher and higher, biodiesel prices have been rising, too, crunching biodiesel makers and making large diesel purchasers rethink making the switch to biodiesel. Seattle-based biodiesel maker Imperium Renewables has had a 2 million gallon deal with King County Metro Transit put on “an indefinite pause” because the price has jumped so much since the agreement was signed less than a year ago, the Seattle Times reports.

Biodiesel prices are being pushed up by a confluence of events. With oil nearing $140 a barrel, all of the petroleum-powered biodiesel processing steps have become that much more expensive. Increased demand, including municipal contracts like that of King County, have pushed up prices. Also, farmers have been increasingly turning to the more profitable business of producing corn for ethanol, as opposed to growing soybeans for biodiesel, which has been shrinking the biodiesel supply. The Seattle Times estimates it takes $4.66 worth of soy to make one gallon of biodiesel, which doesn’t include any processing costs. Meanwhile, petro-diesel prices are around $4.80 a gallon.

Such market fluctuations will wreak havoc on young startups that don’t have the capital to weather the storm. Imperium’s move to withdraw its IPO earlier this year was likely a good one. (Even if Imperium’s former CEO, Martin Tobias, doesn’t think so). But unless diesel prices start climbing even faster or soy prices drop, the gulf between petro- and biodiesel could continue to grow. We’ll keep an eye out for more large contracted fleet customers backing out of their biodiesel deals.

10 Responses to “Think $4 Gas Is Bad? Try $6 Biodiesel”

  1. Not very cool. Hopfully the soy will rebound. I build biodiesel processors which turn waste vegetable oil into biodiesel. It is really amazing how simple the process is, as well as saving the customer $2-3 per gallon at the pumps. Algae biodiesel looks even more promising. As the other poster said, we just need to keep moving in the right direction. A person with a processor can still make 60 gallon batches of biodiesel for well under $2.50 a gallon if they get their waste veggie oil for free.

  2. alonso

    I would like to see some math behind that statement, it is up to the Biodiesel producer managing skills to reduce costs and to be up to date with technology. I believe Methanol represents the highest cost on producing biodiesel, if methanol rises biodiesel will too

  3. This string caught my attention, but still a little surprised there isn’t as many comments as I expected. I’ll keep checking back since this is a hot topic for me personally.

  4. This makes no sense, since ethanol is half the cost of gasoline at the pump in Brazil. The problem here is not biodiesel, it’s the source of its raw material and its means of production. Switch to hemp, problem over! For reasons anyone on this blog should know by now, otherwise they have not been paying attention to the politics.

  5. Biodiesel in Phoenix is still around 20 cents cheaper per gallon than regular petro diesel. It has been creeping up along with diesel though, I wouldn’t be surprised if it surpasses diesel and becomes as expensive as this article suggests.