- Biodiesel was actually one of the first fuels tested by early automobile innovators as an alternative to gasoline, according to BiodieselAtHome. When Rudolph Diesel invented the diesel engine in the 1890s, he used peanut oil for fuel. However, it was the price advantage of petroleum diesel at the time that eventually won out over biodiesel.
- The intended use for making biodiesel can impact the cost of making it and selling it. Sellable homemade biodiesel must meet Department of Energy standards, according to the Alternative Fuels and Advanced Vehicles Data Center. Making your own biodiesel may offer some short-term cost advantages, but it could also damage your engine if not properly formulated.
- Producing biodiesel requires chemical, oil and equipment costs, according to BiodieselFuelOnline. The average production process requires oil, lye and an alcohol compound; methanol is the preferred alcohol choice. As of October 2009, lye costs about $5 per pound, and even cheaper if you make larger purchases, and methanol retails for around $2.35 per gallon.
For oil, you can use an agricultural source of virgin or waste oil, typically found in restaurants, according to Wilson College's biodiesel production program. Spent grease from restaurants is typically free and the preferred choice among biodiesel enthusiasts.
Equipment may be the biggest hurdle to producing biodiesel. You can make your processor, but this requires extra time and knowledge to learn how to build one. Small processing plants sold online can run into the thousands of dollars. - The benefits of making biodiesel usually outweigh the costs to produce the fuel. Wilson College reports that once you have the necessary equipment, biodiesel can cost as little as $1 per gallon. Between November 2008 and November 2009, diesel gasoline cost fluctuated between $2 and $5 a gallon, according to Energy Information Statistics. The savings of making biodiesel add up quickly the more you drive. In addition, biodiesel is much better for the environment than regular diesel and reduces the amount of oil waste generated.
- Biodiesel is becoming one of the most popular choices for drivers, likely because of its portability. Just about any diesel engine can run on biodiesel, negating the need for new infrastructure necessary for other alternative fuels like hydrogen. The Department of Energy reports that the size of the biodiesel industry tripled in 2004 and 2005, and then doubled in 2006. In addition, the United States offers several tax incentives for producers of biodiesel. Soybeans, a common plant oil source, has excess capacity that should further lower biodiesel prices in the future.
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