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High Cost Closes Biodiesel Company - 3/22/08

Biodiesel has been hailed as one of the future fuels, but the company BioEnergy of America in Edison went out of business last month. Even with crude oil over $100 a barrel they could not stay afloat, leaving behind an unfinished plant that would have produced up to 80 million gallons of biodiesel a year.

BioEnergy produced biodiesel from soybeans and other oils. BioEnergy says they produced 15 percent of all the biodiesel sold in the U.S. in 2005.

BioEnergy spent $6 million to build a half finished 89,000 square foot plant, but because of the soaring price of soybeans and soybean oil, it caused a creditor to stop lending them money.

The raw material for vegetable feedstock cost about $5.35 per gallon. After production cost and profit is added the biodiesel would be around $6.15 per gallon making it higher than petroleum diesel.

Marty Burroso, CEO of Bio Holdings, a biodiesel producer uses lower cost animal greases and uses cooking oil to produce up to 50 million gallons of biodiesel a year. They are able to make biodiesel at a profit. Burroso’s target market is electric power generation.

Federal subsidies and the popularity of alternatives to oil have led to the construction of over 100 biodiesel plants in the last two years. 450 million gallons of biodiesel were sold in the U.S. in 2007.

Shakeouts most likely will continue in the biodiesel market from people with the lack of experience running the systems or lacking the fundamentals of running a profitable business.

The future of biodiesel and ethanol will be producing the fuels from sources not related to people food.

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