Price of biodiesel?

starm · Coal Joined: Dec 02, 2004 Posts: 10

I was wondering why biodiesel is more expensive than petroleum diesel? I mean soy oil is much cheaper than petroleum oil. If you look on the futures market, (http://www.cbot.com/) youâ€™ll see that soy oil sells at 21 cents a litre which is equal to 33.40 per barrel of oil. Yet biodiesel is almost twice expensive as petroleum diesel at the pump. Is biodiesel much more expensive to refine? With a price of 33.40 a barrel I just donâ€™t understand why the whole world is not rapidly switching to vegetable oil right now?

marek · Posted: Thu Dec 02, 2004 6:47 am Post subject:

Biodiesel is made from fatty acid esters that come from vegetable oil. To break down the fat molecule and extract the acids and separate them from glycerin, you need to use lye and methanol. Methanol is costly so the resulting biodiesel cannot be cheap.

pip · Posted: Thu Dec 02, 2004 8:46 am Post subject:

If the whole world rapidly switched to soy oil, the price would no longer be $33.40/bbl.
_________________
The road goes on forever and the party never ends - REK

Dvanharn

Found this interesting site on soybean production. My math & economics skills are old, weak and slow, but perhaps a resident wizard could extrapolate some macro figures from these micro figures for the costs of soybean production. (I don't have time to muddle through right now, and have to go to work at a local alternative energy company where we do PV, wind, hydro and flat-plate thermal.)

Of course, after producing the beans, the "refining" of biodiesel on a large scale is a additional challenge. Perhaps someone has already done calcs on large-scale biodiesel production, but like many other things we discuss here, the issue becomes more complex the further you dig into it.

I hope to buy a VW Jetta TDI station wagon and run it on biodiesel. We have a local biodiesel distributor (an organic farm supply company) with a 500 gallon tank, but that is nothing compared with the total gasoline storage at the 6 or 7 gas stations in town.

Soybean Production & Management FAQ

starm · Coal Joined: Dec 02, 2004 Posts: 10

Ok Someone blamed the high price on ethanol so I looked it up. On the futures market ethanot sells for $9500 for 7750 gallons which is equivalent to $52 a barrel. (I think I read the chart right I'm not sure: http://www.nybot.com/). Now if you consider that biodiesel is made from 10% ethanol and 90% oil, the price of the liquid to make biodiesel should be 52*.10 + 33.40*.90 =$35 per barrel. This still doesn't account for high biodiesel price.

BorneoRagnarok · Posted: Thu Dec 02, 2004 8:07 pm Post subject:

Starm, how dare you to treat Soya Bean as biodiesel. Mad

That's my favourite drink after I quit drinking milk due to mad cow scares and recommendation from http://www.notmilk.com
I can boast that this year 2004 I only had 2 Panadol for whole year and no other drugs due to the goodness of vegetarian foods plus soya milk with less sugar plus more physical training to prepare for Peak Oil.

According to this site, soya bean only yields 446 litres per hectare compare to 5950 litres per hectare for oil palm. (Vegetable oil)

http://journeytoforever.org/biodiesel_yield.html

No idea about the price of biodiesel but it must be based on the yields/ hectare. From the list above it seem like oil palm provide the best yields per hectare.

mikela · Posted: Thu Dec 02, 2004 10:16 pm Post subject:

starm · Coal Joined: Dec 02, 2004 Posts: 10

Why are you guys talking about crop yeilds. I gave you the price of soy oil and ethanol and I was asking why biodiesel is so expensive. Is the cost in refining? I understand that crop yeild is going to become important if there is massive adoption of biodiesel but I'm talking about current prices. I'd like an explanation. I'd like someone to break up the price of biodiesel in its different componants.

Does anyone know why it's so expensive?

pilferage · Posted: Thu Dec 02, 2004 11:34 pm Post subject:

I think it has more to do with demand. If just a few people are buying it then a company producing it will charge more per unit because they can't sell as much...
I've heard of a wide range of pos biodiesel prices ranging from $1.61 a gallon to ~$3.50 a gallon, so it seems like some of the producers are jacking up the price substantially from inital cost because it's a niche market...
kinda like rice cakes! Laughing

BorneoRagnarok · Posted: Fri Dec 03, 2004 1:23 am Post subject:

Starm, sorry to let off the steam. I cannot imagine our Asian staples food or drink become biodiesel. That's why biodiesel cannot scale. It will made Irish potato famine look like walk in the park with 3 servant girls. Razz

http://www.energy.state.or.us/biomass/Cost.htm

bentstrider · Posted: Fri Dec 03, 2004 1:50 am Post subject:

Hey ragnarok.
I was born in Illinois, but both my parents are from Borneo.
I understand soy milk is a tasty drink being I've had it on many occasions thanks to the Asian stores in LA.
As far as ethanol and biodiesel goes, I was thinking about turning massive rice crops into jet fuel.
Many have already mentioned hemp(grows like wildfire in Illinois) and other smoke-able dope as good fuel producing plants.
I was guessing rice would be good since it seems to come out by the assload.

starm · Coal Joined: Dec 02, 2004 Posts: 10

What? You have to go to the asian store to get soy milk? Here in canada there's always AT LEAST a few shelves of soymilk in all the grocery stores. Most grocery store have about 4 meters of an aisle just for soy milk.

I understand that large scale adoption of biodiesel could be bad for the environment and for the poor. But I am still wondering about the cost of production. I want to understand the economics of it. I don't understand that biodiesel which needs cheaper raw materiels to produce than petro-diesel is more expensive. I mean the distillation of petrodiesel seems to be a process that is much more complicated than the refining of biodiesel which pretty much amounts to simply mixing it with ethanol or methanol (and a catalyst) and waiting.

starm · Coal Joined: Dec 02, 2004 Posts: 10

Than again I also don't understand that water which literally falls from the sky can be sold to a higher price than gasoline which has to be shipped from the middle east and refined in complicated process yet...

bentstrider · Posted: Fri Dec 03, 2004 9:36 pm Post subject:

Here's why it won't be produced as much.
Too much thumb-twidling and looming over computer models to be done.
Rather than just simply and slowly phasing out petro-diesel with biodiesel.
Now you may be right about soymilk in the regular grocery stores, I just never bothered to look. But it's not like I drink it everyday.
I usually pop multi-vitamin pills and eat junk food all the time.

Carmiac · Tar Sands Joined: Jul 20, 2004 Posts: 73

The real problem with your $35 price is you are forgetting to add in a few things, such as processing costs, transportation and profit. Boidiesel production is quite simple for small batches but does not scale up particularly well, so large scale production costs are quite high.
Remember, it only costs the oil companies $6-$10/bbl to produce oil, but the sale price is several times that. I would expect that oil would need to be ~$100/bbl before large scale production would make economic sense. Not long from now it might happen, but not yet.