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

The Food for Fuel Myth – Part Deux

Watching the soybean oil and yellow grease prices today, I am struck by the fact that we’re supposed to be in the “Memorial Day Squeeze” right now with gas prices peaking and all energy costs surging. Instead, while it’s true that gas and diesel prices are up about 20 cents since the beginning of the year, it’s nowhere near as much as predicted.

Why? Because we still have a surplus of crude here in the US, with tankers of it parked out in the Gulf of Mexico. So why is soybean oil at .41/lb ($3.11 per gal) and Yellow Grease at .28/lb ($2.13 per gal)? Greed.

I don’t hear the media chiming away at the party line about how biodiesel and ethanol are driving up fuel prices this year. Again, why? Because most of the biodiesel and ethanol plants are shut down in 2009 because feedstock prices are too high, and fuel prices are too low. So apparently the “Food vs. Fuel” argument has lost a good bit of its steam. It’s not true this year… It wasn’t true last year. It was just circumstances that permitted the Ag industry to jack up prices and make extra profits. Good for you guys.

Now as the government claims to be pushing renewable fuels and trying to save the environment and become less dependent upon foreign fuel imports, we have no resources to do it that are priced reasonably.

The problem appears to be obvious. So why is nothing being done?

Somebody help, please…