Happy New Year? Oil & Biodiesel Feedstock Prices Open Year at Record Highs

Jeff Pieterick, President, WBA
from Wisconsin Biodiesel Association Newsletter
December 20, 2007
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Happy New Year ?

Hoo, boy! 2008 began with crude oil breaching the $100 mark. This was immediately followed by record prices in the edible oils markets here and overseas.

Futures prices on soy, palm, and other edible oils now closely track crude oil prices in recognition that these commodities are also used in the production of biodiesel. If biodiesel production is in fact driving this upward surge, it cannot be sustained at levels that preclude the industry from accessing them due to prohibitive cost. Then again, it's been shown that commodity speculators can often remain irrational much longer than commodity buyers can sustain. Biodiesel producers throughout the country thus continue to limit expansion projects or suspend operations altogether as they wait out the markets.

The resulting reduction in actual consumption of these oils - along with the increased crop yields in soybean production and an increase of acreage planted for soybean and other oil crops - will create pressure for downward adjustments in the markets. Meanwhile, it is important for the future of our domestic renewable fuels industry to research, develop, and produce alternative feedstocks for biodiesel. Camelina, canola, and jatropha are only the beginning of possibilities to be explored.

The "Holy Grail" for biodiesel, however, may be found in the commercial viability of algae as a feedstock for biodiesel.

Read more of the WBA Op/Ed article here>>