Wisconsin Ag Connection - National/World News - NBB: Biodiesel Production Nowhere Near Capacity Yet

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NBB: Biodiesel Production Nowhere Near Capacity Yet
USAgNet - 12/28/2007

The biodiesel industry is currently producing at less than one quarter capacity, due mostly to underutilization by petroleum blenders and continuing high vegetable oil and fat prices. As of September 2007, the National Biodiesel Board reports that America's biodiesel industry had 1.85 billion gallons per year capacity. However, according to Amber Thurlo Pearson, NBB communications specialist, this capacity is not being utilized by the petroleum industry.

Soybean oil prices in the mid- to high 40-cent range is one of the biggest contributors to tight margins and biodiesel production cutbacks. Recent passage of the Energy Independence and Security Act of 2007, however, expands the Renewable Fuels Standard (RFS), which will require 500 million gallons of biodiesel to be used or blended in 2009.

In 2007, the United States produced 400 million gallons of biodiesel, or about 22 percent of production capacity. The year before, the industry had a production capacity of 580 million gallons and sold 250 million gallons, or 43 percent of capacity.

Pearson points out that many biodiesel producers build plants larger than what they will initially produce to make it more economically feasible to expand production in the future. It will be difficult to predict the cost of a barrel of oil and the cost of production of biodiesel, says Pearson, but the industry anticipates continued growth throughout 2008.