Triangle Biofuels Blog

With the recent crazy pricing for Waste Vegetable Oil (WVO), we have begun to analyze looking at alternative feedstocks (remember when WVO was an alternative feedstock?). I developed a spreadsheet where I could plug in the price per lb of the feedstock and the conversion efficiency of that feedstock based upon FFA, moisture, and glycerin value. What I quickly discovered was that virgin soy currently has a higher value than WVO as a biodiesel feedstock! Don’t believe me? Follow the math.

Assumptions:
Crude Degummed Soybean Oil – < 1% FFA, < 1% MIU
WVO Yellow Grease – 7% FFA, < 4% MIU

Looking at the material costs only, not overhead (additives, labor, production costs),  the table below shows the cost of the feedstock, raw materials and the costs needed due to the conversion factor of the feedstock (due to the impurities in the WVO, and it takes more methanol and catalyst to process WVO).

So far this makes sense, Soy costs more, so it costs more to make biodiesel.  Right?  But wait.  The value of B100 (as of today) made from soy is more than WVO, and the glycerin purity is higher and worth more.  Thus, per gallon, the total value per gallon of soy biodiesel is higher than WVO.

So something is clearly wrong when the Jacobsen report is showing WVO at .28 per lb for WVO and Virgin Soy is at .40.  This, at a time when B99 biodiesel is selling cheaper than petroleum diesel fuel.   Something is very wrong in Kansas, and our congress just sit on their hands.  So, for now, we’re buying Soy.  If you’re selling WVO, get your pricing right, or don’t bother calling us.

Soybean Oil for Biodiesel Feedstock.

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Well, it’s March, and the biodiesel tax credit has been in limbo for it’s third month, with no real idea when it will be reinstated.

Given the media hype in the recent past about renewable fuels causing food prices to skyrocket, you’d think that the market would breathe a huge sigh of relief and that commodity food prices would have plummeted to the bottom.  After all, almost 85% of the biodiesel plants in the USA are either idled or out of business. So where’s the pressure to keep price up, right?

Well, as of today, soybean oil is $.40 /lb. That’s $3.00 per gallon. Waste Vegetable Oil (WVO), another biodiesel feedstock, is $.26 / lb, or $1.95 per gallon. The average price per gallon for biodiesel right now is just slightly more than petroleum diesel, at around $2.25. What were prices for soybean oil and WVO back in March of last year? Around $.32 / lb for soybean oil, and around $.21 lb for WVO.

So who’s driving the price of raw feedstock materials up?  Not biodiesel, that’s for sure.   To me, it looks like the agricultural and food industries, just like they were before. They are currently exporting oils to Asia and South America. That’s good for everybody, except biodiesel. But yet the public perception when I talk to people is that we’re driving the price of food up.   Alternative feedstocks, such as algae oil, hold high hope for renewable fuels.   It provides a cheaper feedstock for us, and shuts up the critics of current feedstock supplies, unless they find something wrong with algae…

Soybean Oil Price Graph 2009

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Well, just as the NBB predicted, the Senate and House delays on reinstating the federal tax credit for biodiesel has caused the biodiesel industry to grind to a halt. I got a call yesterday from another company in NC that is going out of business. That makes three total within 6 months.

We’re still here. We’re still producing biodiesel every day, although in much less capacity than before. As far as I can tell, we’re the only biodiesel plant in North Carolina that is still actively producing truckload quantities of biodiesel. Our price is still roughly the same, about $.60 per gallon higher than petroleum diesel fuel.

North Carolina could help by adding additional tax incentives to biodiesel like many other states already do, but so far, nothing appears to be happening at the state level. We’re hearing rumblings that the US Senate may be getting something approved in the next several weeks. What we’re hoping for is a multi-year tax incentive that is retroactive back to January 1st. Anything less than that puts us right back in the same situation next year and will only further to inhibit the growth of renewable fuels like biodiesel.

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