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Feedstock's costs comprise 80% of biodiesel production and investment analysts have stated that palm oil diesel can remain lucrative only if palm oil, a raw material for biodiesel, is below US$450/ton (Foo, 2007). From 2006, the price of palm oil has increased to US$556/ton (Thukral, 2007). Moreover, regular diesel prices have dropped by 23% (Reuters, 2006)

It seems that investors should worry about investing in biodiesel, which business is yet to be well-established. The delisting of British Biofuels Corporation (Hille et al., 2007) and operations below 50% capacity for Peter Cremer's plant due to present costs (EEI, 2007) point towards a doubtful future.

Nonetheless, any price hike is temporary and is bound to fall. In the long run, although profits of biodiesel production will be affected by the fluctuating prices, financial instruments can be considered to hedge any feedstock price increase. Government subsidies will provide relief to tide over difficult times as in the case of Wilmar International's biodiesel business which expects $45 million profit despite negative margins (Leng, 2007). Hedging from volatile supplies and variable prices can take the form of feedstock cultivation, embracing emerging technology to improve production efficiency and using jatropha which price is half that of palm oil while its yield is much higher than soybeans (Seng, 2007).

Even if biodiesel production is infeasible, the production plants can be adapted into refineries at low costs (Leng, 2007). Besides, profitability can be enhanced with other income streams from side-products as mentioned earlier.

- Premium pricing drawback-
Biodiesel is expected to be more costly for consumers as it carries a premium for being a clean and renewable fuel to petroleum. It is predicted the demand will not be as high as expected. However, compulsory rules on blending in foreign countries, as mentioned earlier, will compel biodiesel consumption.

While there are concerns that costs is raised with the retrofitting of vehicles to run on biodiesel, most vehicles today can actually process blended diesel. Experts state that biodiesel and petroleum diesel cost the same at about US$600/tonne (Channel NewsAsia, 2007). Furthermore, biodiesel blending bodes well for countries, where people are increasing aware of protecting the Earth.

-Conclusion-
In all, America should invest in bio diesel in a big way mainly because of the global push for cleaner fuel and the favorable American conditions to do so. Potential

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