A major factor in determining the market viability of a biofuel is the production cost. The more expensive the production, the higher the price of the end product. In 1995 the US Department of Energy Aquatic Species Program (ASP) concluded that algae based biodiesel could potentially be cost competitive at three times the current price of oil, or $20/barrel.1 The optimistic cost of production for a barrel of oil equivalent, which would require improvements over 1995 production methods, was $59.1 Since 1995, production methods have improved, there are additional technologies available to generate revenue from byproducts, and additional government subsidies are available. Because production costs have decreased, additional subsidies have been introduced, and the price of oil is higher, biodiesel can now be sold at a price that is more cost competitive with petrodiesel.
