actual costs of bio vs oil based

[CoJoNEs]

I was talking to someone about biodiesel vs diesel and he is confused (so am I) about the costs of producing bio.

I am hoping that people much smarter then I can help sort this out.
crude oil prices are at $32/bbl
current soybean oil prices are at $0.20 per pound (roughly being $70/bbl)

Just based on those numbers alone how can soy make biodiesel at the same cost as diesel?

I am sure I am missing lots of info on how its actually produced but I cant seem to find comparisons anywhere and really want to find out.

 

[Dante]

I think most commercial biodiesel is a byproduct of something else. For example, I have read that World Energy's biodiesel is a byproduct of Proctor & Gambel's soap production.

 

[Weisse Bora]

I think most commercial biodiesel is a byproduct of something else. For example, I have read that World Energy's biodiesel is a byproduct of Proctor & Gambel's soap production.

Not so. Soap is just the sodium (or potassium) salt of a fatty acid. BD is a methyl ester of a fatty acid. Now you make some soap when you use NaOH to make BD...

To the original post, if you look at the cost of soybeans per bushel and try to derive the cost of soy oil, you have to look at the value of the defatted soybean meal (animal food, tofu etc) and the cost of extracting the oil.

Naturally, ramping the production of soybeans up for more oil production will also drive the price of defatted meal down reducing profitability of the additional oil production per unit produced.

It is this complexity which hampers the increase of soy oil production, not some conspiracy by "big oil" to maintain market share.

 

[l_c]

Don't forget, the vegetable oils that should be bought for
biofuel production are those which are least usable or surplus
from any ag/food industry. I mean that they ought to look for
cheap stock, undesirable or surplus/waste from the normal crop
processing, the quality can be lower than the normal grade used
in food industries. Therefore I wouldn't assume the price
figures mentioned above ... the cost of the vegetable stuff for
biofuel should be way lower than what crude oil costs;

 

[Weisse Bora]

Petroluem has had 100 years of infrastructure development making price competetion between BD and petro impossible.

 

[l_c]

I don't agree that price competition is so crucial ...
for now, the end-user mileage from B20 is superior to
that from gasoline, so the per-mile cost is more telling
than the per-gallon cost. About infrastructure, those
petroleum refineries are there but the delivery infra-
structure is pretty flexible. Biofuel refineries seem
to be a lot quicker to get into operation, they can
start smaller (than fossil-fuel refineries), and can be
located in more places since they handle fewer volatile
and carcinogenic components.

 

[goat21]

All of you are right. Oil from the ground is concentrated energy. The infrastrucutre is well developed and efficient after 100 years and a few wars where oil featured in the outcome. Most of the oil in the ground is owned by nation states who might or not might want to produce it. They can use it to help their society or destroy others. Read Yergin's The Prize for the best oil history and future of it.

Veg oil, animal fats, etc. all are less concentrated with some significant issues related to their production and processing. In the US or Europe, it is unlikely that ethanol or biodiesel will go beyond 1-20% of the existing petroleum products. All this is fine, since both industries are compatible. Energy to move us around and help us create wealth. We all agree on that. If it costs more to make biofuels than petroleum costs, then what is wrong with that? Petroleum is strategic and so in agriculture. All our industries, even ones we think have a low environmental impact, do have a cost. With biofuels, all we are doing is trying to lower the cost. The chips in this computer where made with some of the most toxic chemicals know to man (e.g., hydrogen fluoride) so we must look beyond the minor arguments and see the major. Biofuels make us less dependent upon parts of the world that use the money we give them for fuel to destroy our society. We must focus on the grand struggles, not the minor issues.