ALGAE OIL
There was a time when biodiesel, like solar energy and wind power, was an expensive exotic energy source that could not compete with traditional, inexpensive power. Today, wind power is a common sight in many locations. Solar energy has state and federal legislation supporting its installation. The robust growth of biodiesel, to more than 75 million gallons in 2005, is widely expected to continue. In November, 2006, Archer Daniels Midland projected a 350 percent increase in biodiesel production in the next five years.
An overall driving force of this growth is found in the global realization that the world has reached Peak Oil. This notion is reinforced by crude oil eclipsing the $150 per barrel mark in the summer of 2008. With increasing demand growth from both developed and developing countries, and dwindling world-wide reserves, economists do not foresee a return to less than $50 crude.
It was once believed the biodiesel price-drivers were more closely aligned with the price of butter than the price of petroleum. The reality is that oil is king. A price trend overlay of West Texas Intermediate crude, light Saudi crude, natural gas, liquefied natural gas and, surprisingly, virtually all of the alternative oil products look identical. Alternative oil seed producers, from the sellers of the seed, the farmers, the crushers, the haulers – virtually every individual involved in the production of the once stable oil seed – want in on the action, resulting in an unprecedented rise in the price of oilseed. This meteoric rise has affected the price of food grade products. Algae present an opportunity to take advantage of this feeding frenzy with a superior product, costs that can be controlled, and a relatively small amount of sub-par, non-agricultural land. Other advantages include limited additional water, limited energy consumption, limited support inputs, no displaced food crops, and geographic flexibility.
New legislative action is encouraging algae production with tax credits for production, tax credits for waste utilization, increased tax credits for alternate energy and other economic incentives. Other considerations include a record volume production of corn, 20 percent more corn than the highest production year ever and still the price of corn has more than doubled, rain forests slashed an burned resulting in the world’s largest ever amount of palm oil, already the most prominent oil on the planet and the price goes from less than $200 per metric ton to more than a $1,500 per ton.
The drive for national fuel independence is not the reason for such dramatic increases. While such an impact would be welcomed, the real drive for alternative oil sources is increased demand half-a-world away in China and India. It is important to realize that the world’s largest oil company, Exxon, had billions of dollars of profits but the US market only accounted for three percent (3%) or the world market.