The PJ Tatler

Thieves stealing US oil reserves

And by “oil,” I am of course referring to the leftover cooking oil and grease stored behind restaurants, which thanks to rising gas prices has suddenly become popular as a source for biodiesel:

Slick-fingered Bay Area thieves are stealing restaurants’ used kitchen grease, a product that six years ago was so worthless that some restaurant owners would illegally dump it down the drain instead of paying for proper disposal.

The leftover cooking oil, yellow grease, is the easiest material to turn into biodiesel. And as the alternative fuel’s popularity has increased, so has its selling price, making it a target for thieves willing to go through the trouble of pumping or siphoning the grease out of storage barrels.

“It’s liquid gold,” said Daniel Rugg, director of engineering at the Four Seasons hotel in East Palo Alto, where security guards frequently chase away would-be grease thieves.

In 2006, processed or “finished” yellow grease sold for 11.5 cents a pound, said Don DeSmet, vice president of the western region of Darling International, a large grease hauler and renderer. In 2011, the price was 42 cents a pound – a price jump that gave the waste product a new allure.

“People started stealing it like it was nobody’s business,” Levenson said.

Last month, the grease was selling for about 32 cents a pound.

Thieves with a truck, a pump and a handful of 50-gallon barrels can make a few thousand dollars a week.

While some grease thieves are amateurs pilfering barrels with ladles and hoses, others are professional haulers, officials said. Because they’re licensed, it’s hard to prove what has been stolen and hard to punish renderers for buying stolen goods.

Renderers can process the grease with an alcohol to make biodiesel or use it to make animal feed and other products.

The federal government should closely study this news as a picture-perfect example of how a market economy works. If you create an artificial shortage of one product — as the government has done with its refusal to increase or take advantage of North American oil fields — then alternative substitutes will see a price rise as well.

Shortsighted “green economists” were saying just a few years ago that biodiesel was a logical substitute for petroleum-based fuels, since the raw material for biodiesel — leftover kitchen grease — was free!

Well, in a very short period of time, leftover grease went from having negative value — i.e. you had to pay someone to dispose of it for you — to being free, to costing 11.5 cents a pound, to costing 42 cents a pound. Why? Because the price of traditional gas at the pump has gone up. If gas cost substantially less than biodiesel, then there’d be no profit in kitchen grease, and no one would steal it — which is the way things were until recently.

If we take a step back, we can see how this principle applies to all forms of “alternative” fuels. If the only way to make “green energy” economically viable is to intentionally inflate the cost of petroleum-based fuels, then even when we adopt some alternative energy source, its cost will remain inflated to the consumer, due to supply-and-demand pressures on the energy market as a whole. And then poor people, who can least afford the cascading effects of price-increases across the economic landscape due to higher energy costs, will suffer.

Look, I’m all in favor of alternative energy sources, if they can diminish our dependence on foreign oil. But they need to enter the market and become competitive on their own merits and cost. Our fantasies of subsidizing our way to energy independence run straight into the brick wall of market economics; as this story proves, the overall energy market — petroleum-based, alternative, what-have-you — is a unified economic entity, and when you inflate the cost of gas, you inflate the cost of everything, including “green fuels” like kitchen grease.