Portland's Grease Wars: Battling for Biodiesel-Bound Cooking Oil

biodieselpumpUsed-cooking-oil, the golden-brown waste product left over from making French-fries, doesn’t strike most of us as a particularly valuable commodity.

But recycled grease represents a source of cheap energy to some, one that can be converted to biodiesel or used directly as a substitute for diesel fuel. Having collected waste oil for both of these ends, I can tell you I’ve always had a nagging suspicion that one day the ‘free’ ride would come to a screeching halt. It just wasn’t clear how soon it would end.

Some parts of the country are now facing fierce competition over this generally unknown but ubiquitous local resource. The Associated Press has dubbed it the “Grease Wars”:

Recycled cooking oil has traditionally been sold for use in cattle feed and cosmetics. But the segment going to biofuels has grown in recent years to account for about 20 percent of the used oil market, said Tyson Keever, co-founder of Sequential Pacific Biofuels, the state’s largest manufacturer of biodiesel.

Portland’s oil peddlers are now fighting over grease worth as much as $1.20 a gallon. “You have processors now in the metro area who are looking at using that grease for biodiesel primarily,” said Mike McCallum, president and CEO of the Oregon Restaurant Association. “There are restaurants who are being solicited for the use of the grease and are getting some money for it.” The result in the long run may be more expensive biodiesel at the pump.

This sounds a lot like the European Union’s problems (see yesterday’s post), and it’s a big deal for biodiesel producers in the Pacific Northwest, where a large proportion of business depends on a cheap supply of waste cooking oil. Most restaurants in my experience will gladly (and freely) part with used cooking oil, since grease collection is a waste disposal service that usually costs them money. All it takes to disrupt this mutually beneficial and economical arrangement is the recognition that waste oil, or ‘yellow grease’, is a valuable commodity.

“It’s going to drive the cost of biodiesel sky-high,” said Loren Fennell, founder of the Alternative Energy Coalition, who collected used oil for years for Portland biodiesel cooperatives before quitting due to the increased competition. “I don’t know how people can (collect) it by buckets or barrels any more,” he said.

Someone is going to lose out here, and it’s likely going to be biodiesel manufacturers, since their major competition (chemical companies) may be better equipped to pay for the oil. In Oregon, biodiesel sells for around $3.30 a gallon but is eligible for a fifty-cent state tax credit, dropping the price to a modest $2.80 per gallon. Profit margins in the industry are slim, but since Oregonians have historically been willing to pay a premium for biodiesel there may be room for price fluctuation.

I called Sequential Biofuels, the major biodiesel producer in Oregon, to ask them exactly what proportion of their biodiesel comes from waste oil. It turns out that last year, Sequential’s production plant in Salem (which collects oil from Kettle Foods, among other places), produced one million gallons of biodiesel, ninety-percent of which came from recycled waste grease. They sell a good deal more than that, though, and to make up the difference Sequential imports soybean oil in tank-cars from the Midwest. The company has plans to expand to a five-million gallon capacity this year.

Used-cooking-oil biodesel is the most sustainable biofuel widely available, since it’s essentially a recycled waste stream. But turning all of Oregon’s cooking oil into biodiesel wouldn’t make up for a significant proportion of fuel usage. As Sequential points out, each Oregonian contributes only one gallon of used cooking oil to the waste grease supply each year.

Backyard biodiesel home-brewers shouldn’t despair, however, since it’s only the largest metropolitan areas that seem to be hitting the grease-ceiling so far. Enjoy your free ride a little longer…

Related Posts:

Europe Faces Biodiesel Feedstock Crunch

Associate Press via GreaseWorks (Nov. 18, 2007): Biodiesel craze turns fryer grease to gold

Photo Credit: Clayton B. Cornell


In a past life, Clayton was a professional blogger and editor of Gas 2.0, Important Media’s blog covering the future of sustainable transportation. He was also the Managing Editor for GO Media, the predecessor to Important Media.