Biofuel plants can't compete with falling price of diesel

At least a third of all biodiesel plants across the nation have ceased operation, and production this year is expected to be no more than half last year’s total of 700 million gallons.

“It’s a tough climate for biofuels,” said Diane Mulloy, president of Milagro Biofuels.

That climate has been shaped by the vagaries of the commodities market, oil prices, federal energy policy and trade decisions made by foreign governments.
Biodiesel typically is blended in 20-80 mix with regular diesel. Although biodiesel consistently has cost more than regular diesel, the difference generally has been small enough that many motorists have been willing to use it because the fuel’s benefits to the environment, national security and engine maintenance.

But in recent months the cost of the biodiesel feedstock — soybean oil or animal products such as poultry fat, pig tallow and catfish oil — has remained high while the price of regular diesel has plummeted.

Last week, the average diesel price across the U.S. was about $2.23 a gallon — less than half the $4.50 charged a year ago. The “rack” price of diesel at the refinery — now about $1.60 a gallon — is well below the $2.80 it costs to make biodiesel using animal fats, industry officials say.

“The feedstock price is so high and the price of diesel is so low, they can’t really make any money. There’s no market,” said Tim Schnippert, executive director of the West Tennessee Clean Cities Coalition, a federally supported group that promotes alternative fuels.

Commercial Appeal