With crude oil, gasoline, fossil diesel, soybean oil, shelled corn, ethanol, and DDGS all in the same $/MMBTU units, they can be graphed on the same chart. Crude oil prices serve as a good benchmark for energy prices. The y-axis scale for $/MMBTU are the same for most charts so the charts can be compared.

The general trend in these graphs is that since October 2007 the weekly prices have been increasing. Compared to diesel fuel, soybean oil, and biodiesel fuel prices, the crude oil price series looks almost flat.

Biodiesel fuel burns cleaner than fossil diesel, so there are environmental benefits that are not captured in $/MMBTU. It displaces fossil diesel with local energy, which reduces foreign demand – so it may eventually lower crude oil demand and price. The proverbial ‘fly in the vegetable oil’ though is that the price of vegetable oil is driven by food uses of vegetable oil. The energy uses are competing with food uses of the oil, and in this case the food uses are driving the boat.

Soybean oil is the feedstock for biodiesel fuel in a similar way the crude oil is an ingredient for diesel fuel. This chart of energy values for crude oil, diesel fuel, vegetable oil and biodiesel fuel shows that for much of 2008 soybean oil has had a higher energy value than diesel fuel itself. Low energy values are desired for commodities being purchased. So it is a problem that diesel fuel has a lower energy value than either biodiesel fuel OR the ingredient/feedstock used to make biodiesel fuel.

There is has been a shift away from using virgin, food-grade soybean oil for biodiesel, to using waste fats and oils. These are not as easy to work with as the food-grade oils, but they do not have to compete for the food uses of vegetable oil. In time if the biodiesel shifts away from food-grade soybean oil, comparing these energy values may not be relevant. It works for now.

The biodiesel prices I use are reported by USDA-Agricultural Marketing Service (AMS) from Iowa and do not have tax credits reflected in the price.