Biodiesel Changes

What a weird time to be in the biodiesel business…

After watching diesel fuel prices nearly hit $5.00 a gallon on the east coast, they’re now dropping down below $3.50 a gallon at the pumps.   Congress just passed the energy bill, which now makes all biodiesel feedstocks eligible for a $1.00 per gallon credit.  Translation – the waste vegetable oil renderers and brokers can now charge more for WVO because we can get a $1 per gallon credit instead of $.50 per gallon.  Thanks.

The biodiesel blenders credit was designed to make biodiesel “more affordable” as a subsidy to help the general public be encouraged to use biodiesel as an alternative diesel fuel.  The fear at the time it was created was that the biodiesel plants would take the credit and not pass it along to the consumers.  Instead, the feedstock suppliers are charging more per gallon than they used to, thus taking the credit internally without having to do all the paperwork that we blenders have to file.  Nice.   Perhaps I should have started a crushing plant instead of a biodiesel plant…

The odd thing is soybean oil (‘bean oil’) is coming down in price.  It was over .60/lb ($4.56/gallon) earlier this year, now it’s down to .35/lb ($2.66/gallon).   WVO is currently supposed to be going for .20/lb ($1.52/gallon), yet we’re currently getting offers at around .29 – .31 per lb.  We’re not buying.  

There’s a squeeze going on right now.  The economy has been tanking, and there’s a struggle right now between falling fuel prices and falling feedstock prices.  Our biodiesel price has come down too, but we never really jacked it up that high this summer like some plants did.  Still, it’s a wait and see situation to determine where the feedstock and chemical prices are going to fall.  Stay tuned.  It should be very interesting.

Posted in Biodiesel.