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Factors in Biodiesel Pricing

As the expansion of the use of alternative fuels continues, there have been questions about the reasons why biodiesel pricing is at the current level. Actually, there are a number of factors that help to dictate the costs of biodiesel fuel. Here are a couple of examples.

One of the main factors to influence the cost to the public for biodiesel products is the resources needed to produce this alternate fuel. Simply put, there are not that many facilities that are dedicated to the production of biodiesel. Because of the lack of any true mass production, at least in comparison to the many refineries that make gasoline production possible, there is no chance to lower the overall cost for producing a gallon of biodiesel fuel by means of volume production.

Another reason is directly connected to the production issue. In order for production to increase, there must be an increase in the number of retail outlets for the product. There are only a few places in the United States where biodiesel can be purchased. Even if the fuel were available in more locations, there are still only a few auto manufacturers that have made their engines biodiesel friendly. Before we will see a significant change in the current charges for a gallon of biodiesel fuel, there must be consumer demand for the product.

There are a host of other factors that also come into play. Ongoing research in how to keep some types of biodiesel fuel more stable are needed. Public relations efforts to educate people on the benefits of using biodiesel fuels also come into play. Finding ways to more efficiently remove free fatty acids and lower the sulfur content of biodiesel also will impact the cost and the efficiency of the fuel. As biodiesel is refined and there is a higher volume of production and an increase in outlets for consumers, then we will begin to see some changes in the current biodiesel prices.

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