Rising Gas Prices Create Smoking Hot Demand for Used Cooking Oil

Source: People’s Fuel Cooperative

Thefts of used cooking oil from restaurants have risen as the price of gas has increased.

In today’s economy, it’s tough enough being a restaurant owner, but now you have to safeguard your garbage, too.

From California to Maine, thefts of used cooking oil are on the rise across the U.S. — driven by the rising price of oil that make biofuels more cost competitive with fossil fuels. Like thieves who ransack foreclosed homes for copper wire, higher prices for used cooking oil can attract people with a hunger for crime as well as dinner.

The old cooking oil, which has been used for decades in the chemical and animal feed industries, is now a hot commodity, as biodiesel manufacturers also fight for the well-done raw materials for their industry. Biodiesel is gaining in popularity as a transportation fuel. The largest consumers are fleet operators, including municipal buses and courier firms like FedEx.

The last time cooking oil rustlers were so active was in the summer of 2008 — the last time gasoline prices hit $4.

Which explains the recent spate of thefts of used cooking oil in Essex, Mass.

In many restaurants, cooking oil and other trash is often stowed away from the main restaurant operations, for the most part, unguarded. Like at Essex’s Windward Grille.

“The place is outside and open, anyone really could come and take it,” said Vickie Kennesick, manager at the Windward Grille, one of three restaurants stripped of their oil last December.

It's in the open because it's picked up with the rest of the recyclables, such as cardboard, glass and aluminum. Waste companies are currently selling the used oil for 15 cents per pound, versus 5 cents per pound in 2005.

Once the product is converted to yellow grease — the commodity version of cooking oil — it can be sold for 30 to 40 cents per pound, vs. 25 cents per pound in 2010, according to USDA figures.

The National Biodiesel Board says U.S. biodiesel production tripled for several years in the early 2000s, and capacity is now well above 1 billion gallons annually.

All of this not-quite-black gold means security has become an issue for restaurant owners. The irony: Despite now having to pay more to secure their trash, restaurant owners don’t get paid for the old oil, receiving rebates off future oil purchases or waste removal instead.

Often, said Chris Moyer, senior program manager for environmental initiatives at the National Restaurant Association, the only benefit to recycling the oil is being a good citizen, helping to reduce the amount of waste in their communities.

“Our membership wants to recycle, they want to compost,” he said of the nation’s restaurant owners. “One of our industry imperatives is (environmental) sustainability.”

But all these good intentions are costing restaurants.

Moyer has heard stories about restaurants having cooking oil stolen, and said the solution is to keep recyclables like cooking oil, “under lock and key, inside if possible.” This means that, in a razor-thin-margin business, in a still-tight economy, restaurant owns need to spend more money. Indeed, several restaurant suppliers say theft-proof lids for grease containers and locks for recycling bins have become popular items in the past year.

Restaurant owners could avoid all this trouble and just pour the oil down the drain, but that wouldn't be good for the environment, or the plumbing.

Wesley Caddell, co-owner of San Francisco-based biodiesel distributor People’s Fuel Cooperative, says his firm works with the San Francisco Public Utilities Commission to find markets for biofuels refined from used oils picked up in the city’s “SF Greasecycle” waste fats and oils collection program.

It’s an easy way to be a good neighbor, he said, since pouring oil and grease down the city’s drains costs taxpayers $3.5 million annually to unclog and repair.

So safe, responsible disposal of used cooking oil has become one more cost of doing business.

For the most part, the thieves are not big processors, but smaller producers. In fact, the oil collection and biodiesel refining sectors are still dominated by small operators, and this fragmentation could be spurring more thefts.

Caddell said small biodiesel producers depend upon finding used oils wherever they can, since they compete against big industrial consumers of used oil, like animal feed makers. He said that “it’s a battle” today to get the oil “as cheap as you can.”

And because biodiesel recipes are readily available online, do-it-yourselfers who’ve converted their cars to biodiesel are also often on the prowl for used cooking oil.

While the Windward Grille theft was a bit disconcerting, Kennesick said the theft wasn’t noticed by the restaurant until trash day.

“We didn’t really know it was disappearing until the company that collects the oil said ‘Hey, there isn’t any,’” she says.

A man was arrested a week later by police who saw him draining oil from another Essex restaurant waste oil storage container. It’s still unknown whether he was connected to the December thefts.

“Bottom line, it’s worth money,” said Phil Bruno, general manager at waste oil recycler American By-Products from nearby Lynn, Mass., told a local news station. “There’s a lot of people who think they’re going to get rich or save a fortune…running their diesel vehicles on cooking oil after it’s processed.”

And while used oil may be the hot new thing for crooks, NRA’s Moyer said these crimes of opportunity “will always be with us.”

“It’s one of those things that never goes away,” he said, adding that restaurants, with their cash volumes, expensive inventories and welcoming environs, will always be a target for thieves.

“There’s value in that oil,” says Caddell. “In this day and age, there’s no such thing as waste.”

Email us at [e-mail]

Follow us on Twitter @SmallBizCNBC