Why is biodiesel growth accelerating in the US? Three reasons: 1. weakness in refinery capability 2. fuel traders betting that there will be future shortages, so they buy contracts to increase reserves causing temporary shortages and increased fuel price. 3. Environmental and political delays that slow down the extraction of shell and tar oil. Advocates of biodiesel like the fuel because of lower emissions (no sulfer, lower Nitride Oxide, and less complex hydrocarbon chains), economic benefits for agricultural corporations and special interest groups, and lubricating affect of engine parts. Customers appreciate a lower purchasing cost than diesel. Producers appreciate government subsidies, tax breaks, product incentives that allow the producer to sale an more expensive product for a lower price. Political support for biodiesel has brought attention and financial backing too bring the product too market. The fast growth profile associated with biodiesel will stretch debt limits. The banking system will need to be able to provide the stability for biodiesel to get established and accepted in the market. This will probably mean additional government assurances and financial reinforcement to give the appearance of confidence in this sector. Energy is a cyclic investment with strong peaks that gain interest but followed by long periods of disinterest. The energy sector is associated with heavy liabilities that eventually move investment close to the mean. As energy valuations move closer too the mean, biodiesel will experience more pressure to become competitive against oil. A handful of large Oil companies with their vast reserves of cash may/may not decide to keep alternate fuels alive. Oil companies will experience pressure from their shareholders either invest the cash reserves into infrastructure and alternate fuels or dividend payments. Oil companies can use Biodiesel as an environment friendlier fuel, as a marketing promotion.[Learn More ...]

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