Biodiesel $6, diesel $4.80

So far, 2008 has been a brawny year for the biofuels industry, taking all kind of flak for high food prices, shortages, and questionable emissions reductions.

Still, with skyrocketing oil prices driving up the cost of gas and diesel, you might think that biofuel suppliers would be raking in some serious profits — but you’d be dead wrong. Instead, it turns out that the supply of fuel crops is even more fickle than the supply of crude being pumped out of the ground. Imagine that.

In specific, biodiesel has got the short end of the stick. The rising popularity of ethanol has driven corn prices to new record highs, which has encouraged farmers to ditch soybeans in favor of planting more corn. Soybean oil is

the primary ingredient of biodiesel, and just like crude it has nearly doubled in price. The new costs have biodiesel producers looking at a losing equation.

It now costs $4.66 for the amount of soybean oil to produce 1 gallon of biodiesel, which puts biodiesel at around $6 a gallon — well above regular diesel. That, mixed with increasing questions about whether biofuels are a smart way to fight against climate change and foreign oil have caused a lot of consumers to reconsider their enthusiasm by soybean potential. Some major biodiesel buyers, like Washington’s King County Metro, have put their biodiesel buying on an indefinite pause — waiting to see what happens with the price and science of crop diesel.

[via Earth2Tech]

[Source] Josh Loposer