Biodiesel's growing market ignites battle for used oil

November 19, 2007

Biodiesel's growing market ignites battle for used oil

By Libby Tucker
Daily Journal of Commerce

PORTLAND - They're calling it the grease wars.

Competition for used cooking oil among grease haulers has intensified as biodiesel demand grows, and some Portland restaurants that once paid to have their fatty leftovers carted away are now charging collectors.

Recycled cooking oil historically has 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 may be more expensive biodiesel at the pump.

"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 because of the increased competition.

Used cooking oil is the cheapest and most sustainable way to make biodiesel because no new resources are used in growing feedstock, according to a new biofuels report by the Oregon Environmental Council.

But the region's supply of fryer grease is limited.

Each Oregonian contributes about a gallon of used cooking oil a year to the grease market, according to SeQuential Pacific.

If all of the used grease went to biodiesel production, the state's producers would have only half of what they need to meet demand for the fuel.

Restaurants, the biggest source of used cooking oil, get rid of about 40 gallons of grease per month. Large restaurant chains represent the choicest source of oil for grease peddlers.

"You've had a big move of people collecting waste grease offering to pay," said Mark Fitz of StarOil Co. "It's not a friendly environment."

Beaverton-based Shari's, a chain of 99 restaurants in three states, has several collectors competing for the used oil from its fryers, said David Archer, a Shari's spokesman. After a switch to trans-fat-free oils because of recent health concerns, Shari's "seized the opportunity" to sell its used oil to be turned into biodiesel, he said.

"Adding trans-fat-free oil has a higher cost, so if you can make some of that cost back ... it's a nice incentive there," Archer said.

Smaller restaurants, however, still mostly rely on backyard biodiesel producers to pick up their used oil and haven't found the need to charge for the low price they'd get.

"I have so much oil," said David MacKay, owner of Portland fish house Halibut's. "If they don't take it, I'll dump it on the grass."

That restaurants can charge for grease collection signals the higher commodity price of yellow grease, the purified version of used cooking oil, said Tom Cook, president of the National Renderers Association.

The rising demand for biofuel feedstock, such as corn and canola, has led to a tighter national vegetable oil market, he said, and trickles down to the waste oil demand as well