The story itself is right on the money, mind you -- I highly recommend reading it -- but the title, "An Oil Quandary: Costly Fuel Means Costly Calories", is bass-ackwards. That title, probably courtesy of an editor, rather than the reporters, would be accurate for ethanol but has the effect before the cause for vegetable oil-based biodiesel.
Indeed, the story is the same as the one Bio-era has been telling for the last year. "Chomp! Chomp! Fueling a new agribusiness", written (mostly by Jim Newcomb) for CLSA, nailed all the trends early on; rising income, rising meat consumption, grain use for food and feed, water supply issues, carbon emissions, and government mandates for biofuel use. It all adds up to a big mess, for the time being.
As I wrote last year while in Hong Kong (See "Asia Biofuels Travelblog, Pt. 2"), after having just been on the ground in Malaysia and Singapore, food use has driven the price of of palm and other vegetable oils well above the wholesale price for finished petrodiesel. Planting more oil palms, even if done on land that has already been cleared (i.e., not on virgin jungle or on drained peat bogs), is unlikely to ease price pressures because demand is climbing much faster than supply could possibly keep up (see the "Travelblog" post for some rough numbers). In other words, there is plenty of price pressure to keep cutting down forests and draining peat bogs, carbon emissions be damned. Prices are probably going to stay high for quite a while.
As the NYT story notes, biodiesel refineries are sitting idle all over the place because the feedstock is way too expensive to turn into fuel. Far better, and more profitable, to eat it. The heart of the matter is that, as the Times says, "Huge demand for biofuels has created tension between using land to produce fuel and using it for food." The arable land is the key issue, and the only way the ongoing collision between food and fuel is going to be resolved is by using non-food feedstock to make fuel, to grow that feedstock on land that cannot be used to produce food at market prices, and produce biofuels using new technologies. Synthetic biology, various grasses, and sugar from Brazil seem to be the way to go (see my earlier posts "The Need for Fuels Produced Using Synthetic Biology" and "The Intersection of Biofuels and Synthetic Biology"). Hmmm...I still need to post something about switchgrass, miscanthus, and prairies. Maybe next week.
I'm headed to Houston on Monday for a Roundtable on biofuels run by Bio-era, "Biotech Biofuels & the Future of the Oil Industry". Companies in the oil industry, agbiotech, and synthetic biology will all be there. Should be interesting.