Replacing Oil

High soybean costs are making are stalling the rapidly growing biodiesel industry. Soy oil prices are so high that biodiesel produced from the crop can’t compete with the price of ordinary diesel fuel. This might be good news for farmers who are now earning twice as much per acre of corn and soy they plant, but for companies like Renewable Energy Group skyrocketing soy and corn prices could be disastrous. That is unless they find a cheaper way to make biodiesel.

Instead of trimming the fat, they dump it in to the biodiesel plant. According to Gary Haer, VP of sales and marketing for REG, the Iowa biofuel manufacturer now runs animal fats in more than half of it’s plants. Apparently it works as well and the soy produced fuel, although it tends to gel up at colder temperatures.

Can you believe this stuff is getting more expensive?

The animal fat solution isn’t exactly without it’s problems. In addition to not dealing well with cold temperatures, the fat itself is rising in price. The price of rendered animal fat doubled in 2007 and is expected to increase in price from 8-9% this year according to the US Dept. of Agriculture.