As Fuel Prices Rise, Biodiesel Production Margins Widen

by Ron Kotrba (Biodiesel Magazine) Crude oil prices recently reached a four-year high, helping drive up biodiesel fuel prices and improve biodiesel manufacturing margins.

As in the U.S., where off-road diesel is taxed less than on-road diesel, agricultural diesel in Europe also receives tax privileges. The difference, however, according to Dieter Bockey of UFOP, is that in Europe the volume of tax-reduced diesel is limited for farmers to the size of the farm.

“The farmer buys the fully taxed diesel, and he gets back the corresponding share of the tax upon request the following year,” Bockey told Biodiesel Magazine. Bockey added that the legal basis for this is an EU energy tax directive that empowers the member states to reimburse up to 100 percent.

“This is the reason why the tax on diesel in Germany is about 26 [euro] cents per liter whereas in France it is only less than 6 cents,” Bockey said. Furthermore, in the U.S., all off-road diesel is dyed red, but in Europe only heating oil is dyed with Solvent Yellow 124.

According to UFOP, the four-year high in crude oil prices has caused agricultural diesel prices to rise to 87.50 euro cents per liter.

“In March, agricultural diesel and biodiesel stood at the same level, whereas rapeseed oil fuel has been cheaper than agricultural diesel since the end of 2017,” the organization stated.

The term “rapeseed oil fuel” refers to straight vegetable oil—a nontransesterified or nonhydrotreated vegetable oil—used as a fuel. READ MORE