[Law is not justice but process]

As with so many environmental miracles, this one has feet of clay. The hoped-for tax credit did not come through and apparently the cost projections were a bit off (for instance, since there is still a market for turkey guts as feed, they now have to pay $40 a ton or so for their feedstock): the result is production costs more in the $80 per barrel range. Perhaps a bit more work on the efficiency and economics can make this work. As of now, it is just not profitable.

See this link for details:

http://www.fortune.com/fortune/smallbusiness/articles/0,15114,1018747,00.html

[delacoert]

...feet of clay
...cost projections were a bit off
...$40 a ton or so for their feedstock
Perhaps a bit more work on the efficiency and economics can make this work

You're being incredibly optimistic.

You say, "$40 a ton or so," when feed stock was reported as $30 to $40 a ton, so it's more like "$30 a ton or so." (That nuance has a 20% favorable effect on the numbers.)

The article says 2 barrels of light crude per ton of ofal are produced when it's more like 1.5+ barrels. (That's more favorable shading of the numbers on the order of 20%.)

The article compares the $80/barrel production cost of the light crude with the $50/barrel selling price of diesel. This has two big misrepresentations in one comparison:

1. Comparing production costs with selling prices is an outrageous misrepresentation. (The shading of the numbers here really pi$$es me off - it's a really big effect, but it's impossible to prove how much the profit ought to be. Right now CWT is selling their product at a 50% loss!)

2. The light crude will require further refining to bring it to "diesel quality", which costs more money and reduces the volume. (That's more shading of the numbers on the order of 25-50%.)

Even if you use the shaded numbers, the cost of the light crude, if the olaf were free, would still be $60/barrel.

To go from free olaf all the way to bio-diesel probably results in production costs of $100+/barrel. And that's not even talking about the problems with bio-diesel, i.e., it doesn't store well because it readily oxidizes to form gums.

The discussion of a $1/gallon government subsidy that gets tossed in the article is obviously important to investers, but it's infuriating bull5hit to tax payers and consumers. The only honest way to compare is real production costs.

The other problem with the discussion in this thread is the suggestion that other agricultural waste and sewage could just be substituted for the ofal. Well there's a reason they don't use the other stuff - the production costs are even higher.

The most honest characterization offered in this article was the phrase "improbable alchemy," and even that is off target. The technology is real, not alchemy. The problem is that snake-oil salesmen find a way to make money selling something that doesn't work as promised, and there's plenty of wide-eyed (Wilbanks-faced) suckers who just gotta believe it's true.