thousands now make fuel in their garages from the oil left after frying french fries or scrounging around restaurants and food factories
This resource has been thrown out to date because it had no value. If enough people begin to want it, nobody will throw it out anymore, they will save it and sell it to the highest bidder.
There goes your price advantage.
Somebody came up with a commercial pilot project to convert turkey and chicken carcass waste into oil. It worked, too, but the economics were dependent on the feedstock being free for the hauling.
When they found out the waste was being reprocessed for profit, the owners of the waste demanded to be paid, and the profitability of the process disappeared.
Stupid on the part of the turkey ranchers, who are now not only not being paid for the waste, but once again have to pay to haul it away.
When they found out the waste was being reprocessed for profit, the owners of the waste demanded to be paid, and the profitability of the process disappeared.
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People can be amazing, once while enjoying a beer in a freind's backyard I spotted a large black cherry tree. I casually mentioned that I would like to cut it up into boards. Well, came the reply, I have been wanting to get rid of it but the best offer I have had was to cut it down and charge me $400.00. I offered to remove the tree for free and he quickly accepted. As I was hauling the logs off he was curious about just what I intended to do so I explained that I would use the best parts to make cabinet grade boards. He asked if it was worth the trouble and I told him that I expected to end up with at least one thousand dollars worth of cherry boards and he seemed happy that I was getting something for my trouble. Later on he told me that he mentioned this to his wife and she seemed to think that I should have paid them something for the tree which they were only too eager to be rid of. If I had offered to remove it for a hundred dollars and never said it was any good for anything other than firewood she would have been perfectly happpy with that. I recommend that everyone find and read Aesop's "dog in the manger" fable and ponder on it.
Assuming the latter problem can be palliated to a sufficient degree, the price of the input will sooner or later (sooner, in my view) stabilise at a low level. There is no economic reason why turkey growers should continue to pay for offal disposal; there is only dog-in-the-manger pique.
Grant, generously, that the cost of production of light oil from such a plant runs $18/bbl using 'free' input, 42.8 cents/gal (the plant, one of ConAgra's joint projects, says COP is about $15/bbl). Given that 200K lbs of turkey offal, processed, yields about 600 bbl, 25200 gal, of what is effectively #2 oil, and given that average-grade diesel weighs approx. 7.1 lbs/gal, the plant could easily afford to pay 5.25 cents/lb for the offal, and wind up with a **total** production cost, before taxes, distribution, and profit, of just 80 cents/gal for the product.
Add the others in (depending on how greedy the gov'ts involved will be) and you get something like 1.15/gal for light #2, in distributors' hands (i.e. shipped once -- this stuff can be piped, btw, which should keep shipping costs lowish). Put another 15 cents on it for the distributors' profit when selling to homeowners/local businesses, and you've got 1.30/gal for a final consumption price. It might be more efficient just to sell the turkey biodiesel as motor fuel rather than as heating fuel; transport costs would certainly be lower. And, all this assumes, remember, that the actual COP is 20% higher than the plant's stated COP, so the real-world price is almost surely lower than this 1.30 figure when the plant pays a nickel or so per pound for the input.
Front-month #2 oil on NYMEX closed at 1.95/gal Friday. This price differential between turkey (et al) biodiesel and #2 will do nothing but decrease in future, too, as economies of scale kick in. The downside to turkey biodiesel is that there's not enough available input to produce, ever, more than 8-10% of the mkt demand.
Unless, of course, we start using chicken offal, and hog waste, and other inputs that we have entirely TOO much of and don't know what to do with.