The basic economic concept of substitute goods concludes that when one good raises in price, the demand for its substitute goods goes up. Since BD is a substitute good for petroleum based diesel, demand for BD goes up as the price of PD increases. Since 64% of the retail price of PD is crude oil, increases in the price of a barrel of oil directly lead to increased prices at the pump. Because the price of PD increases with oil, the demand for BD also increase. Alternatively, if the price of BD increases then the demand for PD also goes up. To remain cost competitive in the market, BD must remain at or below the price of PD.
