Waste Vegetable Oil Pricing & Biodiesel

At the start of 2011 the US Federal Government reinstated the dollar per gallon tax credit for commercial Biodiesel producers. The EPA also released a policy called RFS 2 as well. Combined, these two events have created incredible demand for waste vegetable oil in the commercial arena causing the value of waste vegetable oil on the commercial market to sky-rocket.

How Much Is Waste Vegetable Oil Really Worth?
Glad you asked…according to the latest data from the USDA National Weekly Round-up Report, waste vegetable oil, commonly referred to as “Yellow Grease” in the industry, is worth $0.44 per pound. WVO weighs about 7.5 pounds per gallon which puts the price of WVO right at $3.30 per gallon (and no, that’s not a typo–it really is that high).

Why WVO Is Worth So Much
We believe that the main reason WVO is currently selling so high is because Biodiesel plants are willing to pay top dollar for WVO because they’re selling every drop they can make…as fast as they can make it plus they’re getting a dollar per gallon from the US Federal Government and in some cases are netting upwards of an additional $2.12 per gallon from something called a RIN (Renewable Information Number–from the EPA RFS2 Policy).

So before they’ve even sold a drop of fuel, it’s possible for a Biodiesel plant to make $3.12 per gallon IN ADDITION to what they will sell the Biodiesel for on the open market.

So How Might This Effect Homebrewers?
With WVO prices so high, many commercial oil collectors are now starting to pay restaurants for their oil. Because this is happening it can mean that the restaurants you collect oil from may be getting solicited by other companies willing to pay them for the good stuff.

With the economy in tough times and restaurants looking to make an extra buck wherever they can, you may soon find yourself in a very tricky situation of convincing a restaurant to stay with you vs giving their oil to another oil collector.

How To Keep Your Restaurants Giving You Their Oil
It’s all about the value proposition you bring to the table. In other words, you have to answer the question “Why should I give my oil to you and not someone else?” better than anyone else.

Here’s a few idea’s you can use to build your own value proposition that I’ve garnered from those I speak to day in and day out.

1. Educate a restaurant on where the oil goes
– This could be as simple as showing that when the oil is given to you it stays in their community vs being sold out of state and in some cases out of the country.
– Share with them how you use the oil to make Biodiesel and how Biodiesel benefits their community by improving the environment, the air we breath, the reduction in foreign oil, and on and on and on (see where I’m going?)
– We’ve even used flyers and brochures (see our example here)

2. Give the restaurant something in return
– Eat at their restaurant regularly (and make sure they’re aware that you do!) Bring your friends & family there as well.
– Make soap out of your Biodiesel glycerin or even from some of the oil you collect and give it to the restaurant to use
– Create a decal for the restaurant to display that indicates that their oil is being used responsibly and benefiting the community
– Advertise the restaurant on your website or any way you can. (I even knew one Biodieseler that would make up magnetic signs with the restaurants name and would put them on the back of his tailgate under a decal that said, “This truck powered by grease from….” The restaurants LOVED it! Free advertising!
– Let them know that you appreciate them and that they’re helping to keep the oil in their community.
– Power wash the back of their restaurant on a regular basis to keep it clean. You wouldn’t believe how many restaurants will LOVE this type of service and will forgo being paid by another collector simply because you’re willing to do this

3. Be Professional
– Treat the oil collection like a business.
– Be punctual, be clean, and be polite to the restaurant staff & patrons.
– Keep on top of your collection barrels. Don’t ever let them get too full and if they call you to come & get the oil, do it as soon as possible!
– Remember, you may be competing with several other companies or individuals that want that restaurants oil. Doing everything you can to keep your restaurant happy can mean the difference between getting oil regularly and coming up empty handed

Dealing With Oil Theft
With the value of waste vegetable oil being so high, we’re also seeing a rise in oil theft among home brewers and commercial oil collectors. Thieves know it’s worth money and are going to great lengths to get it.

  

To combat this, be sure your oil collection container is secured in the best way possible. This could include adding a locking lid to your oil collection drum; chaining the drum to a post (yes, people really do steal drums), or just asking the restaurant staff to be on the lookout for potential thieves.

Another way to combat theft is to collect the oil from your drums more often. Keep the drum from getting as full as the rest of the surrounding drums and thieves may just “move on to greener pastures” (or drums that have more oil in them).

Also consider locating your drums in difficult to access areas such as behind chained fences or in an area that may be difficult for a thief to get to.

Some collectors have even been able to get the restaurants to put the oil back in cubies (5 gallon carboys) and keep them in the restaurant for pickup. While this might mean more work for the Biodieseler to pick up the oil more often, it means that when they get to the restaurant, the oil is there.

If you do have theft going on in your containers, an easy way to figure out who’s doing it is to purchase and mount a motion activated camera near your collection barrel. Then, if theft occurs, pull the photos off the camera and see if you’ve caught your thief. Just be sure to secure the camera well enough that the thief doesn’t haul off your camera too.

We’ve heard that you can pick up a wild-life motion activated camera fairly inexpensively from a local hunting outlet such as Cabella’s. Hopefully, you’ll never have to deal with theft, but, if it does occur, you’re now armed with some tips & tricks for preventing it.

As the price of waste vegetable oil goes up, so will the demand for the oil. Hopefully, you’ll now be ready to deal with it should you end up competing with another collector. Just remember to keep offering value to your oil sources, keep it professional, and work at it and the oil will hopefully continue to flow!

About Utah Biodiesel Supply

Utah Biodiesel Supply is an industry leader in offering innovative ways to empower our customers to produce Biodiesel. From free online instructional videos on how to get started making this great renewable fuel to promotional items to help our customers proclaim their energy independence, Utah Biodiesel Supply has it covered. With the widest selection available of Biodiesel equipment, supplies, and promotional items, you're sure to learn something new about Biodiesel every time you visit.

13 comments on “Waste Vegetable Oil Pricing & Biodiesel

  1. Does this mean that restaurants pay biodiesel factories $3.30 per gallon to dispose of yellow grease or do biodiesel factories pay $3.30 per gallon to restaurants to get yellow grease?

  2. It means restaurants are being paid as little as possible and the oil collection companies are being paid by the Biodiesel companies sometimes upwards of $3.30/gallon for the yellow grease. The oil collection companies are the ones making all that money.

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    • I would love to discuss this with you. I am in the process of incorporating a non-profit in North Carolina. I would greatly appreciate a conversation with you in the future. Skype, Google +, etc.

        • Can you please tell me who are
          the buyers of waste vegetable
          oil. I want to export it from Ghana. I can supply palm oil, coconut oil, palm kernel oil and Shea butter oil.
          this product can be produce to meet your specifications. hope to hear from a prospective buyer soon. cofierichard@gmaill. com

  5. Everyone is stating that veggie oil is selling so high $.44 per pound= $3.30 per gallon. Unbelievable, where are these people that are buying this product for that amount?????

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