National Biodiesel Board CEO predicts biodiesel plant construction slowdown after period of “irrational exhuberance”

In Illinois, the CEO of the National Biodiesel Board told Reuters that there would be a “cooling off peiod” in biodiesel capacity development following a period of “irrational exhuberance”. Joe Jobe said in an interview that fast-rising feedstock prices are the problem, which have reduced biodiesel margins to an average of minus 30 cents a gallon. Soybean oil has risen to 54 cents a pound this week, more than double the price in 2005. Meanwhile, Jobe said that 100 new plants have been built in the past two years, bringing the total industry production to 450 million gallons in 2007, up from 25 million in 2004.

Last month in Illinois, construction was halted at the North Prairie Productions biodiesel plant owing to high soybean oil prices. The company is planning a strategic review before potentially resuming construction efforts.

The shutdown continues a trend which has affected at least ten biodiesel plants worldwide.

In November, the Freedom Fuels biodiesel plant in Mason City has shut down production due to the high cost of soybean oil. The plant has a capacity of 30 Mgy of biodiesel, and hopes to resume production in November. Four people were laid off from their jobs as a result of the shut down. Rising soybean prices shuttered two Texas biodiesel plants. Grainnet.com reported recently on two plant shutdowns in Pennsylvania, where state production has dropped to 5% of capacity.

Meanwhile, high feedstock prices combined with increased fuel taxes have reduced German biodiesel production to 10 percent of capacity.

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