Dual EE said:
The cost of biodiesel is higher.
You're right, Dual EE... every time I check, B100 is more expensive than dino diesel.
BUT... I've always suspected that this price difference is artificial and prolly temporary, rather than reflecting a higher cost to manufacture the stuff.
Why 'artificial'? Well, first off, if I'm sellin biodiesel I'm sure as heck going to sell it for as high a price as I can get... i. e. , I'm not going to sell it for cheaper than dino, even if it costs me less than dino to make it. But that only explains why its not cheaper than dino, not why its more expensive. To answer that, I think we have to consider three factors:
1. The technology is pretty new, so everybody who's making biodiesel has just recently shelled out big bucks for their shiny new facilities... gotta earn back that capital investment as fast as you can. In contrast, dino refiners are using facilities that were paid off years or decades ago, for the most part.
2. The suppliers know perfectly well that today, people who buy biodiesel are mostly
true believers... either 'tree-huggers' like me, or 'Made In America' types like Cowboy Medic. We're willing to pay a premium because biodiesel gives us a warm fuzzy feeling. The wise capitalist prices his product at whatever the market will bear... so as long as the market for biodiesel is dominated by true believers, the vendors will charge a premium price because they can.
3. Today biodiesel supplies are limited, because there aren't a lot of facilities for making it. Those limited supplies rule out price wars as a good business strategy. Sure, maybe I could sell you biodiesel for 25 cents/gal less than the Shell station across the street can sell you dino diesel... but my inventory would run out quickly and I'd be out of business, whereas Shell can keep pumping. Not a real sharp business strategy, unfortunately.
But like I say, this is all temporary. Once the initial capital investments are paid off, once folks who don't give a flying fig about trees or the American economy learn about and are willing to burn biodiesel, and once inventory starts building up, then I really believe we'll see the price become quite competitive. I'm no economist, but I suspect biodiesel has some huge cost advantages: you have no exploration costs and no risk of dry holes, your 'reserves' will never run out, your raw materials aren't located in massively inconvenient locations such as the middle of the North Sea, you're not at the mercy of unstable or corrupt foreign governments, you don't have to ship the stuff half-way around the planet, you don't have to pay huge insurance premiums to protect you against Exxon Valdez-type oil spills, etc.