As a maker of homemade biodiesel I have noticed that it is becoming increasingly hard to find supplies of used cooking oil at a reasonable price. Competition for the commodity is growing rapidly leading to a rapid increase in its cost. Gone are the days when you could get it for free. Thieves are taking advantage of used cooking oil too, mainly because it is not hard to find buyers who will pay a high price. The following article illustrates this well.
Dirty greasy money
DAVID HUTTON
From Saturday's Globe and Mail
August 1, 2008 at 11:20 PM EDT
Toronto
— Vern McArthur was driving his unmarked van through Toronto's back
alleys last month, vacuuming out 55-gallon drums of used fryer grease.
But when Mr. McArthur, the owner of VMC Disposal Services of Halton,
stopped for a regular pickup at a downtown diner, the containers were
mysteriously missing, with only a trail of grease covering the nearby
pavement.
The grease bandits had struck again. Days later, the containers were
found in a back alley two blocks away, where thieves had evidently
stashed them before siphoning out more than 400 litres.
“I see it all the time now,” said Mr. McArthur, the latest entrepreneur
to smell eco-profit in the dirty business of grease collection.
“Thieves are beating us to a lot of our grease. We're showing up and
they're empty.”
On the surface, it might seem absurd: Grease is waste, not liquid gold.
But, increasingly, grease is the word: Processed fryer oil, commonly
known as yellow grease or waste vegetable oil, has grown valuable in a
world desperately searching for fuel alternatives. Its value has
doubled in the past year, driven by the ever-escalating price of oil,
making it a popular form of biodiesel to fuel vehicles.
In Toronto, the grease industry is thriving like nowhere else in
Canada, Mr. McArthur said, because of the competition from biodiesel
startups and the high number of restaurants in the city.
There are at least 10 companies fighting with each other to get
contracts with restaurants for their waste oil, and more
grease-collecting biodiesel startups coming on board each month, he
said. In Western Canada, by contrast, one company owns virtually the
entire market.
The demand for grease is also driving collection companies to new ends to win over businesses and smother competition.
“It's cutthroat out there,” Mr. McArthur said. “I'm afraid I'm going to
show up at one of my restaurants and there's going to be cement in my
barrels.”
Restaurant grease is another trash-turned-treasure in Canada's thriving underworld economy.
Recently, manhole covers have been pried off the holes with picks or
crowbars, then allegedly resold for scrap metal. Toronto's enterprising
metal thieves have been reselling copper wire to scrap-metal yards for
decades.
The grease industry, an offshoot of the rendering and biodiesel
industries, has become so competitive that all the major local
grease-collection companies complain of a spate of used-cooking-oil
heists from their waste-oil containers. Mr. McArthur suspects that the
thefts may be coming from black-marketeers or a minority of drivers who
use filtered grease to fuel their converted biodiesel vehicles.
There are a growing number of such do-it-yourself environmentalists
getting into the grease game: Anyone with a diesel vehicle can buy kits
on the Internet, starting at around $1,000, to convert their engines to
run on filtered fryer oil.
Jim Long is vice-president of rendering for Rothsay Biodiesel, a
subsidiary of Maple Leaf Foods, one of Toronto's main grease
collectors, with contracts for major fast-food chains and restaurants.
He said the company has “several” investigations under way and has
retained the services of a private surveillance team to find the
thieves in some of the grease dumpsters hit most often.
“There has been a noticeable impact [on] volume,” Mr. Long said. “Theft
of any kind will not be tolerated, and we continue to investigate
incidents and work with the authorities. … Thieves are not only
stealing from the approved service provider but also from the
restaurant owner.”
Yellow grease comes from soy oil, canola oil and other oils used for
cooking. In the past, its value has been as an additive to help
manufacture soap, makeup, clothing, rubber and detergents. But its main
use, historically, has been as a livestock-feed additive because it
makes the food less dusty and more appetizing for farm animals.
In 2000, yellow grease was trading for around seven cents a pound. Last
week, its price was more than 39 cents a pound, or around $3.60 (U.S.)
a gallon. In Canada, that amounts to around $1 a litre. That would make
the 5,000-gallon haul from a fast-food court, for instance, worth
around $18,000 if the grease were pure. Even one of Mr. McArthur's
55-gallon drums would likely net $200 or more.
In this lucrative market, grease-collection companies are doing their best to stifle competition.
Last year, just after Mr. McArthur made his move into the grease
market, his phone rang. The call was from another grease-collection
company and the message was clear: Watch your back.
“They asked what I thought I was doing treading on their territory,”
Mr. McArthur said. “They told me, plain and simple: ‘We're out to get
you. You won't survive.' ”
The owner of another Toronto-based grease-collection start-up, who
asked to remain anonymous, said he believes that he has been targeted
by other companies since entering the industry. He converts the grease
to biodiesel at home. His efforts to get oil have been stifled by other
companies. In mid-July, he scoured downtown Toronto for restaurants
willing to give him their oil. Within a day of striking deals with some
family restaurants, a second company had moved in, paying as much as
$45 per barrel, effectively pricing him out of the market.
But he has adapted. He said he has been stealing business away from
other companies by intercepting the waste oil before it gets dumped in
their containers. There's a loophole in contracts signed with
restaurants, he said, so he has struck side deals with owners to get
the grease in what he considers a “legal” way.
“It's not theirs until it gets into the collection bins,” he said. “The
gloves are off, all bets are off, they'd have no problem slitting my
throat, metaphorically speaking, for the grease, so I have to do what I
can.”
Mr. Long, though, balked at that practice and said it's an example of
another unregulated company capitalizing on the hot market. They'll
soon fizzle out, he said.
“I don't think companies like that are going to last,” he said. “Our
expectation is that when the markets recede, which they have
historically done in the past, we will see a decline in the number of
smaller collectors.”
Toronto's big grease players deny trying to intimidate smaller
start-ups. Joel Ste-Marie, the vice-president of restaurant services
for Montreal-based Sanimax, which owns a large share of the Toronto
market, converting grease to biodiesel, animal feed and soap, admits
that the business is becoming increasingly competitive, but he said his
company has not changed its practices.
“A lot of these new companies are taking a street-fighting-type
approach,” he said. “The competition is putting pressure on the
industry, but we're not doing anything different out there.”
Mr. Ste-Marie said the company has considered several options to deal
with increased theft. But it is nearly impossible to prove, barring
setting up cameras in back alleys, staking out fried-chicken
restaurants at 4 a.m. or hiring a private investigator.
Those on the front lines said restaurant owners are still amenable, for
the most part. Chantale Doyle, a long-time waste-vegetable-oil driver
from Toronto, who recently drove her Volkswagen van across North
America on biofuel, said she has not experienced much resistance from
restaurants, which are usually happy to get rid of their grease.
“When I have been turned down, it is usually because the person who
collected the grease before me left a mess at the grease dumpster,” she
said.
Restaurateurs, for their part, have noticed the increased competition.
Rob Erlich, co-owner of Toronto's Duff's Famous Wings, said he switched
companies last month to a local start-up biodiesel firm. Grease was
being spilled over the back alley because the previous company was
neglecting the drums.
The new company pays him by the litre for the oil. His two Duff's Wings
locations, one on Bayview Avenue and the other on College Street,
create some of the most sought-after grease in the city because of the
high-quality oil they use, Mr. McArthur said. Mr. Erlich estimated that
they create 1,400 litres of used cooking oil each week and require
frequent pickup.
Mr. McArthur is stockpiling the oil, removing excess water and gunk,
turning it into biodiesel, and beginning to sell it to farmers and
agricultural firms who use it to fuel their tractors. He has had
inquires from companies in Pakistan, India and Africa, which are
scouring the globe for bulk yellow-grease supply. The grease can also
be sold on Internet trading websites, he noted.
Some companies, such as Mr. McArthur's, don't pay restaurant owners for
the grease, but play up the environmental benefits of using it for
biofuel. That's changing, however. Two years ago, restaurants paid to
have their grease hauled away, but most companies now offer them five
to 10 cents a litre for it. Earlier this year, Mr. McArthur said, a
Toronto restaurant-chain owner looking to capitalize on the grease
market began attempting to process the oil at his uncle's farm, then
sell it to biodiesel firms in bulk. A week later, the owner called him
back.
“He just couldn't handle the smell,” Mr. McArthur said. “At the end of
the day, you're covered in grease and you can't get rid of the smell of
French fries. … It's a disgusting business, it really is.”