Food for Fuel, Again.

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