A Biodiesel as an Alternative to Gasoline

As the world's natural resources become scarce or too expensive, the world has begun to use substitute resources. One resource that is being used in place of gasoline is biodiesel. A renewable fuel, produced from agricultural resources such as vegetable oils, biodiesel has more than one good thing going for it. It reduces the emission of gases responsible for global warming, promotes rural development, contributes toward the goal of energy security, is renewable, and reduces pollution. Biodiesel provides better engine performance and lubrication.

Using biodiesel causes less maintenance issues than normal fuel, but can release deposits that can accumulate on tank walls and pipes from previous diesel fuel, which can initially cause fuel filter clogs. Changing the fuel filter after the first tank of biodiesel should fix any problem this causes. Also, biodiesel can degrade rubber fuel system components, such as hoses and pump seals. As an alternative to diesel, it can help reduce U.S. dependence on foreign oil. Biodiesel also provides significant greenhouse gas (GHG) emission reductions. The use of biodiesel also reduces emissions of carbon monoxide, particulate matter (PM), and sulfates, as well as hydrocarbon and air toxics emissions. The basis for the trends in consumption patterns includes the ever increasing prices of fuel globally, the tax incentives offered by the government and supply and demand.

As the government aggressively pursues targets; enacts investor-friendly tax incentives for production and blending; helps promote research & development in new biodiesel feed stocks such as algae biodiesel, the consumer awareness for biodiesel will increase as will the need. Global usage is affected by the government enacting new alternative fuel policies and targets to offset energy security and environmental concerns. More benefits of using biodiesel include stimulating the economy, reduce emissions, and increase our energy independence. The Supply and demand equation is determined by three major things, government incentive, raw material prices and petroleum prices. These three things will determine economic viability of biodiesel. How much biodiesel can be produced without production becoming uneconomic? Currently expansion in production capacity is being observed not only in developed countries such as Germany, Italy, France, and the United States but also in developing countries such as Brazil, Argentina, Indonesia, and Malaysia. If too much is produced and the demand is low, we really won't be helping the economy.

However a short in the production supply could make demand very high. The market for biodiesel is slow at the present time but this is partially due to the relative prices of biodiesel versus diesel fuels and the reluctance of engine manufacturers to approve usage of the fuel until recently. This should be a minor glitch as new quality standards are being accepted and engine manufacturers are extending warranties. Globally, the use of biodiesel is being promoted and production is up but without continued government support and technological improvements, we may have a higher supply and lower demand situation. This is something that I will probably look into more as the market changes. Economics is defined as the study of the way in which goods and services are produced and distributed, and income generated and allocated. Microeconomics is defined as the study of the behavior of small economic units, such as that of individual consumers or households.

A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services offered by suppliers increases, and vice versa. Law of Demand A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service decreases, and vice versa.

References

  • Business Wire 2007. Global Biofuel Trends Multiply in Numbers, Finds Market Study from Emerging Markets Online. Retrieved February 29, 2008 from http://www.allbusiness.com/management/3987847-1.html
  • U.S. Environmental Protection Agency. Smartway Grow and Go. Retrieved February 29, 2008 from http://www.epa.gov/smartway/growandgo/documents/factsheet-biodiesel.htm