Biodiesel to drive up the price of cooking oil

If you think the high price of gas has been irritating, wait until you see the cost of french fries.

The popularity of biodiesel--made from vegetable matter intead of fossil fuels--"will tighten the supply of vegetable oils," William Camp, executive vice president of Archer Daniels Midland, said during a presentation at the ThinkEquity Partners Growth Conference in San Francisco.

Because agricultural prices typically fluctuate with supply levels, the vegetable oil shortage could cause food prices to rise.

Martin Tobias, CEO of Seattle-based biodiesel start-up Imperium Renewables, agreed. Vegetable oil prices have declined in the past three weeks because projected demand for biodiesel has come down from the speculative levels achieved a few weeks ago. Nonetheless, lowered levels of projected demand still seem destined to make supply difficult.

"I do think there will be a crimp in vegetable oil supplies in three to five years," said Tobias, who once worked at Microsoft.

According to Camp, part of the problem is the amount of oil required. It takes 7.5 pounds of oil to make one gallon of biodiesel.

Next, add the expansion plans. Archer Daniels Midland has already installed capacity to produce 300 million gallons of biodiesel in Europe and 135 million gallons in the U.S. It plans to open a plant to turn soybeans into biodiesel in Missouri and one to turn canola oil into biodiesel in North Dakota. Oils currently exported for food will get consumed domestically as fuel, Camp predicted.

Imperium says it will be capable of producing 100 million gallons per year by the second quarter of next year and is in the midst of negotiating the purchase of large tracts of land for refining biodiesel in North and South America.

Biodiesel's growing share
Right now, biodiesel doesn't total so much as a rounding error in the overall diesel market, Tobias said. About 62 billion gallons of diesel are consumed annually in the U.S. and 85 billion gallons are consumed in Europe. The total worldwide biodiesel production is 75 million gallons.

Biodiesel, however, should grow to 2 billion gallons in the U.S and 2.5 billion gallons in Europe by 2010, he said. Regulations reducing greenhouse gases are driving demand in both markets. At the tailpipe, biodiesel puts out 43 percent less carbon monoxide and 55 percent fewer particulates.

Biodiesel, if made correctly, can also be less expensive than standard diesel, Tobias said. Most biodiesel manufacturers churn out the fuel for about $64 a barrel. A barrel of Imperium is equivalent to a barrel of crude at $54.5. Next year, Imperium will drop prices to $30 to $40 a barrel. The government currently pays a 99 cents-per-gallon subsidy to biodiesel manufacturers.

"We've been cheaper than diesel for the year," he said. "At $30 to $40 crude equivalent, we should be able to compete with crude all day long."

Imperium's prices are lower because they can use a variety of feedstocks. The company can make biodiesel out of palm, canola or soybean oil. Palm is the cheapest to buy, but the refining is a bit more complex.

Also, Imperium produces its biodiesel in a pressurized vat rather than an open vat, as some providers do. And by locating its plants near seaports, the company puts its biodiesel on tankers and ships it more cheaply. Refiners in the Midwest have to rely on trucks.

Biodiesel, Tobias further asserted, is a better alternative than ethanol. The capital expenditure is about 50 cents per gallon for biodiesel and $2 per gallon for ethanol. Biodiesel is also compatible with existing diesel trucks and buses. Gas-powered cars can handle only a small amount of ethanol and only a few high-ethanol cars are on the market.

Next year, European car manufacturers will bring to the U.S. more clean diesel cars, which produce fewer fumes than conventional diesel-engine cars. Clean diesels can also run on biodiesel, producing even fewer fumes.

"A clean diesel gets better mileage than a hybrid," he said.

[mattofasia]

Does this mean we will be competing with our cars for food?

just a question- I like soya milk. Does this mean that soon we could be creating new masses of starving people so your SUV's can continue inching forward.
Also I was reading recently about various Palm oil plantations in Malaysia causing the deaths of indiginous people, burning the rainforests and helping to endanger the Sumatran tiger...
Does anyone else care to try BIKING to work or am I just a loony?

[imacpwr]

FAT Americans need to switch to a Mediterranean diet anyway

Come on FAT America, burn up the vegetable oil in your car and
burn up the calories by switching to a heathier Mediterranean diet
with olive oil..!! The change will do you good..

[imacpwr]

FAT Americans need to switch to a Mediterranean diet..!!

Come on FAT America, burn up the vegetable oil in your car and
burn up the calories by switching to a heathier Mediterranean diet
with olive oil..!! The change will do you good..

[Jerkmenistan]

Good to hear

I seriously doubt that biodiesel will drive up the price of cooking oil. Why? Because biodiesel can be made from new or used cooking oil (the latter needing to be filtered of particulate matter). Likewise, cooking oil can come from a variety of renewable sources. Instead of paying farmers NOT to plant particular crops, the free market can and should dictate what they plant. If there is a solid market for cooking oil, farmers will plant more and more of the crop.

[batzel]

7.5 POUNDS??? Oh wait

SEVEN AND A HALF POUNDS to make ONE GALLON?! Oh, wait. The article says vegetable oil weighs about 7.6 pounds per gallon. So...

OH MY GOD! It takes a WHOLE GALLON of vegetable oil to make a mere GALLON of biodiesel!

Please. I detest this sort of "hype". Knock it off. No one thinks a gallon of biodiesel comes from thin air. The article here makes it sound horrible by comparing apples to oranges.

[ramonklown]

petrobras biodiesel on all gas stations

petrobras has just included it's biodiesel on all gas stations and can be used right away with buses and trucks. Next step will be to make a "out of the industry plant" solution for all of the alternatives around now.

The best way to make biodiesel is not with products that make part of cooking oil but instead alternatives which can be best used just for this purpose like Brazil's doing, in this case the mamona.

Best

[David Arbogast]

Biodiesel scam.

they currently churn out biodiesel for $64/barrel, with a .99 subsidy per gallon.

In other words, a barrel of biodiesel costs $105.58 while crude is still under $60/barrel.

Now... how about adding a little for profits?

The costs are hidden, but make no mistake... you are paying for it in taxes. And when the subsidies are canceled or dry up... get prepared to spend a lot more for biodiesel.

Its a neat fuel source, and one that we should make available. But it isn't got to be an economic boon, and we simply don't have the capacity to do everything with biodiesel. It will probably be a small part of the energy solution, but it isn't going to dominate... not while crude is still cheap.

[Central_office_tech]

All the talk about how this costs more or is a scam

Look people, at least someone is doing something. Do you really think as the oil drys up it will stay at $64 a barrle? Supply and demand. The middle east has 30 years left. 30 years is our life time. Then what, texas, deep sea drilling, alask, wild life reserves? Maybe this will not "fix" the energey crisis that is coming. But look at it like this.

Someone is doing something besides complaining. We have a cleaner fule source and it is renewable. Now maybe with further advances in automotive technology cars can travel longer/further with less. Maybe the process is refined, maybe another energy source comes to light. In the mean time, this is one of the better solutions and people stand to make mucho money for it. You could try to think of ways to solve its flaws. Patent them and make money. Or you can sit on c|net and complain.

[Below Meigh]

Ode To Frank Herbert

Those who control the Spice, er, oil, er, fat, control the _____!

I said this when the biodiesel promoters were quoted, "My friend works as a manager at n-named restaurant chain and let's me take away the waste fat for free. My only cost is initial startup, chemical for processing (lye...) and labor..."

And I said, no, it won't be free for long as the franchises and oil distributors (ADM...) will regulate the waste product. No more free ride once they realize they can profit from waste.

if you don't control the product, you might as well be buying it.

Think and protect. Get regulations to prevent control and monopolies on sources (solar, batteries, ...) else you will be a victim...of ignorance and greed.

[disco-legend-zeke]

Cooking Oil Minus Glycerine = Biodiesel.

Glycerine is a very Costly Ingredient in Skin Care Products.

Diesel engines can also be tuned to burn raw oils. A further economy of local repurposing of Solar Produced Oils, savings in transportation costs.

In the cotton growing areas of the country, cottonseed oil is a byproduct of fiber production, pure food grade cottonseed oil sold for 26 cents a pound delivered in the 2005 crop cycle. That's about $2 a gallon.

I am particularly fond of another oil, PALM oil, due to its very high productivity, as well as the palm tree's ability to grow in salty water, making energy culture possible in areas where nothing else will grow.

Both palm oil and cottonseed oil are pretty unhealthy from a cholesterol standpoint, so removing them from the food chain by price competition has a side health benefit.

There is still plenty of work to be done in the area of oil producing aquatic plants (which would clean wastewaters while making oils.)

Farming IS solar energy collection, after all.

[td001]

undercutting alt energy

Cheap crude is the achilies heel of any alternative energy source. Oil is expensive when we have no alternative, but dirt cheap if you are not paying for scarcity. Oil companies and producers could make profits down to below $20 a barrel- so it can always undercut alt energy, but only to the extent there is a threat to its dominance.
We as a country need to decide to phase out oil- its dirty and represents an economic subsidy to people who hate us. We have to just suck up this short term hit to our economy because we will be much better off in the long term.

[heystoopid]

Oh well

Oh well, it may have some positive benefits, for by selling farmgate produce into alternate market streams, it may go a long way into eliminate the current one buyer lowest price paid control(in many cases trans national corporations actually so dominate and control the wholesale market side with monopolies that force payments below actual local farm real growing costs)!

Two examples of this, are the United Fruit Packing Coy's deceitful operations in South America(even got the legendary Gipper to make a fake B grade propaganda movie at one time for them!, and has been known to use the CIA, to overthrow legitmately elected democratic governments that seek to end their market control as happened in Panama!), and also Nestle's sheer size costs Coffee growers so much money that in certain countries it is far easier to make a peso from illicit drug crops than legitimate farm produce, that is purchased by foreign corporations knowingly underpaying farm growing costs!

Brazil, has shown that by extensive utilization of Sugar Cane to produce ethanol for car use, that has broken the back of the World Bank's very deliberate drive to make very cheap overproduction food crops and bought below real cost in third world countries the wholesale price for sugar, which is very heavilly utilised in all processed foods sold in Western supermarkets(upto 50% by weight in certain foods, and we wonder why both obesity and Diabetes type 2 are in such epidemic proportions in the western developed countries)

The modern trans national food corporations have become so large and dominate the market for food in such a manner, that here in the west we pay trillions in extra taxes, just to merely subsidise the farmer , whilst these companies use their operations in such a manner to avoid paying all legitimate local taxes, using very dodgy accounting supported by trans national accounting firms! So sadly the ordinary man in the street is also forced to pay for their missing taxes as well!

Only time will tell, will all farm subsidies and consequent food mountains and the waste support excessive taxes be terminated with prejudice!

What price a choice?

[sloanerg]

What about the cost or the non cost

Biodiesel can also can be recovered from used cooking oils, here in Australia it is a high cost to get Waste Oil removal from the Fast Food and Food Processing Factories. All the Biodiesel suppliers offer this service free to these users and manufacturers.Spin off is this is cheaper and does not present problems with contamination at landfill sites. Biodiesel is the answer, don't let
the Oil Companies "Spin Doctors" do the diagnostics. Diesel Valhalla !

[kyt1080]

7.5 lbs < 1 Gal Is this author dumb?

Is this just media sensationalism?

7.5 lbs = 7.5 pints
8 pints = 1 gallon

So it takes LESS vegetable oil to make the equivalent amount of biodiesal.

[dmm]

Biodiesel good but not the solution

As I've said many times on these forums, the only REAL, LONG-TERM solution to our energy problems is greatly reduced consumption of energy. That doesn't mean we have to go back to the Stone Age, but it does mean we need to do things like 1) live close to work, or at least carpool; 2) videoconference rather than travel far to meet in person; 3) drive vehicles that are not built like souped-up tanks; 4) live in smaller houses; 5) control suburban sprawl; 6) patronize local stores; 7) mandate sidewalks and bike lanes; 8) force new housing developments to include areas for sidewalk-accessible food shopping, schools, libraries, recreation centers, worship facilities, and residential-friendly businesses; 9) link everything with good public transport; and 10) make existing cities (which often already have many fuel-friendly attributes) more enticing by reducing crime and improving their schools and other infrastructure.

Since we are a capitalist, supply-and-demand country, the easiest way to achieve this is to impose a very high federal tax on all fuels (like $1/gallon for gasoline). This would be made revenue-neutral by increasing the personal exemption amount for income tax. The justification for the high fuel tax is that a large part of our military's job is protecting the supply of Middle East oil, and so fuel users should primarily pay for it. As fuel use came down, we could safely reduce the military budget, and use that money for other things (preferably research into energy conservation and alternative energy sources, but I wouldn't rule out education and Social Security).

Hard to believe that came from a right-wing Republican, huh?

[Björn Lundahl]

People do not realize that gas does not, suddenly run out, in a free market

Gas does not suddenly, in a free market run out. Prices today reflect ?expectations? of the available supply and demand for goods and services ?today and tomorrow?. If, for instance, the expectation is that oil supply will decrease or will be less than demand in ten years time, it will influence oil prices today. Prices today will go up. People will have the incentive to conserve (demand will decrease) and to develop new alternatives. Actually, we are probably conserving too much, because of OPEC and Governments taxations are keeping prices higher than they otherwise would be. ?That oil soon runs out? is a political slogan that keeps coming up to keep politicians busy. This political slogan sounds true and will, therefore, ?in the political market? sell. Only true markets can handle this sort of complex things. Compared to markets, Governments are too simple minded and primitive, because of the fact; they lack the essential tools that are needed to solve these kind of ?problems?. They primitively, for example, regulate car manufacturers (and in the end consumers) to produce cars which improve gas mileage and impose upon people speed limits, without knowing if these actions are good or bad. Only markets can tell if conservations are good or bad, because market prices gives people the necessary signals of supply and demand, and people can therefore compare these prices to their own values if they are profitable or not to realize. The essential tools that are needed (which Governments are always lacking) are, as mentioned, ?market forces and the market price mechanism?. Without these mechanisms nothing can be done. For example, a scientist will not reach the truth in trying to calculate physical available quantities and compare that to what he expects physical demand will be. It is silly, it is static and mechanistic. Every individual and every business around the whole world, with all different knowledge?s, all the time, and in all possible situations, and which are directly influenced of higher prices, will conserve and try out alternatives. Even people and businesses that are not directly influenced of higher oil prices, also, have incentives to find out alternatives. These things happen all the time with all goods, services, capital and raw materials, and it run smoothly without us even noticing it. If Governments were going to replace the markets, we would probably end up with no available goods and services at all! In a sense, this would solve the ?conservation problem? (joke). To make an example of this lack of knowledge and the belief that you can ignore markets, look at the so called ?Club of Rome?, a group that made fools of themselves in the 70s with their book
?Limits to growth? (http://www.answers.com/the+club+of+rome?gwp=11&ver=2.0.0.453&method=3). If they were right, we would probably barely, even, live today!

Björn Lundahl
Göteborg Sweden

[thedreaming]

Why do we even bother?

Biodiesel is made from used cooking oil and I've even seen regular diesel engines running on just regular cooking oil, without modifications. Now, here's my question: Why is it that all of the sudden we have a "cooking oil shortage" and the price of cooking oil is going to go up because of it? Are they kidding?

The moment we find something that's simple and can save people money at the pump by making it themselves and they just had to find some way of making it too expensive to use!

It's like they don't want us to ever stop using gas. We'll be slaves to oil from overseas forever, or until the supply of oil runs out.

[schubb]

agricultural subsidies

Well, that means that the gov't can stop with agricultural subsidies and all those being paid not to farm can go back to it.

Too much of this money is already going to big farms as it is, not the family types that it should be going to.

[Sedan2]

Deregulate Energy!

The trick is in the balance, isn't it?

Decentralize energy! Bio-diesel lends itself perfectly to this because it is not an all or nothing solution. Many governmental fleets are now running on B-20. They report excellent results with improved lubricity.
An added benefit of the diesel engine is that it's 30% more efficient than a gas engine. This has to be worth some consideration. The diesel engine invented by Rudolph Diesel was originally designed to run on non petroleum products. Products found on the farm.

I would like to see a diesel - electric, plug in type. this would give you the first 40 miles from your ordinary house charge. We have had diesel electric in subs since WW 1. I'm sure we have come a long way in the technology since then.

There are so many things that can be done, a simple light bulb can save millions of barrels. We are in the information age many jobs today don't require a 5 day physical presents. Think of all the fuel that can be saved by telecommuting and filling out reports from your computer. This would also take a tremendous strain off the current infrastructure.

[nwachai]

Let's look for domestic sources of oil

Then let's go for domestic sources of oil. The so-called alternative fuels will have adverse impacts on food security. I like the work being done by the Consumer Alliance for Energy Security, http://www.secureourenergy.com, in lobbying Congress to enact laws to allow the drilling of oil and gas from the Gulf Coast of the United States.
James