Biodiesel Blues? Well, Not Really.

Biodiesel fuel, unlike ULSD (ultra low sulfur (petro-)diesel), is a renewable fuel made from vegetable oil. US production has grown significantly in the past 5 years. Production is now up to 250 million gallons a year in 2006. That would seem large except that the US consumes about 40 Billion gallons of diesel fuel a year. Hence, it is currently only one percent of the total market.

The DOE ran a study that concluded that biodiesel prices are about the same as petro-diesel prices. They are. They also said production is really not large enough (yet) to significantly reduce our dependence on imported fuel. It isn't. In addition, quantities of the fuel are too small to justify pipeline distribution. Instead, it is shipped by railcar or tanker truck. That is costlier than via pipeline.

In my view, biodiesel is slowly slaying the dragons that a new product has to slay in order to get established. It has slain the cold weather problem dragon. It is slaying the quality control problem. It has slaying the "I don't want to be first to use it" dragon. Right now, marketers of biodiesel need to cover their costs and the risks of doing business. Hence biodiesel prices have varied between 5 cents above or below petro-diesel.

I know "business is business" but if I have to pay about $3 a gallon for either fuel, I would rather buy the one that

a) keeps my money in the USA or at least North America,
b) is somewhat cleaner than petro-diesel (lower hydrocarbons) and
c) is renewable.
d) increases fuel lubricity (reduces fuel system wear)

Call it the "feel good" effect. At a nickel a gallon, 100 gallons costs an extra $5. Can't even buy a pack of smokes for that amount. Wouldn't want to anyway.

[Source: Transport Topics]

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