Biodiesel Grows To Commodity Status


Any product that becomes "commoditized" is going to be subject to short-term price swings, and occasionally to spikes and crashes. It's a rule that applies to any up and coming green product just as much as it does to the Iron Age stuff. This means food based ethanol and biodiesel are beholden to the same forces that have kept cash crop farmers teetering on the edge of economic survival for generations. Before modern "futures markets" were invented, US farmers formed "The Grange" to avoid getting screwed by downstream distributors and speculators. This was back in the era when Woody Guthrie sang, "Taxes on the farmer feeds us all." Distribution and processing co-ops were and still are another method of coping with price swings. Recently, the Big Suits have figured out that ethanol is a boom oportunity, and are offering to buy out Mid-western ethanol plants that were originally formed as locally controlled co-operative ventures. Boostrapped biodiesel operations may be in a similar situation soon. According to Inside Green Tech , "A newly published report heralds tough times for biodiesel producers in the near future. "With capacity growing at 115% per year, the world is expected to run into overcapacity during 2007, even though growth in biodiesel consumption is expected to peak in 2006—2007 ". Hmmm. Several exciting and high mileage new diesel models of passenger cars and trucks are expected to enter the US market starting in early 2008, which would, if sales are high enough, drive up petro- and bio-diesel demand soon after. We know that success of the prospective new models is not assured. But here's the thing. Gasoline prices are currently down, while petro-diesel is up, due to the added costs of meeting low sulfur standards. In whose interest is it to indicate a short-term price fall off projection that does not accommodate the potential demand created by the new, highly efficient and relatively clean diesel designs?

Sometimes, when the wind is high, you have to hug a tree to hold your footing. Especially when the climate is changing.

Image credit: SoyPower

==== UPDATE ===
Via GreenWire: "Next year's farm bill reauthorization will be a forum for efforts to bolster biofuels production. Biofuels support -- more a regional issue than a partisan one -- has strong backing from farm state Democrats and Republicans alike, and biofuels' cachet has soared with energy prices and security concerns over petroleum imports".