Trump’s “America First” polices are adding fuel to an already red-hot grease fire.
It was a Southern-fried crime caper. More than a ton of used cooking oil had vanished from foul-smelling barrels stored behind the fried chicken shacks, Chinese takeouts, and greasy spoons of Knoxville, Tennessee.
The cooking oil crime spree lasted a month before police caught the “thievin’ grease bandits,” nabbing two men seen siphoning the nasty stuff from some vats behind a local strip mall. “I have a list of 46 locations that have been hit in the past month,” one cooking oil recycler told local media. “This kind of theft is a very big problem.” And, according to most experts, it’s only going to get worse.
There’s a thriving black market for used cooking oil in the US, where government regulations on renewable fuels is driving up demand for so-called “yellow grease”—a key ingredient in biodiesel. Prices for yellow grease rose 230 percent since 2000 as oil refineries used 3.84 million pounds of the stuff every single day. And where there’s demand, there’s temptation.
“It’s like crack money,” Sumit Majumdar, the president of Buffalo Biodiesel Inc., told Bloomberg. “There’s an actual market for stolen oil. It’s almost like a pawn shop or scrap-metal business.”
Illegal cooking oil is a $75 million USD (Rp 1 trillion) industry in the US, according to estimates by the National Renderers Association. Most of the pilfered grease ends up in oil refineries, where it’s used to create the biodiesel needed to meet a growing demand for renewable fuel.
Bloomberg reports that US oil companies will use a record 2 billion gallons of biodiesel this year to comply with government mandates—which is an insane amount when you consider that’s up from the nearly zero gallons used ten years ago. The demand is driving diesel prices up, and with higher diesel prices comes higher prices for yellow grease.
And now, prices for yellow grease might go even higher. Biodiesel producers in the US and European Union have accused producers in Argentina and Indonesia of engaging in dumping practices.
“There is a reasonable indication that a US industry is materially injured by reason of imports of biodiesel from Argentina and Indonesia that are allegedly subsidized and sold in the United States at less than fair value,” the US trade commission wrote in its complaint.
The EU had made similar claims back in 2013, slapping Indonesian biodiesel producers with a 22-25.7 percent import duty that caused exports to drop by as much as 96.5 percent by 2015, according to data released by the Indonesian Ministry of Trade. The Indonesian government was preparing to challenge the EU’s tariffs with the World Trade Organization (WTO) when the US issued its own petition.
That petition seemingly caught the eye of US President Donald Trump, a man obsessed with punishing other countries for unfair trade practices. Suddenly Indonesia was listed alongside 15 other countries in an executive order targeting “cheating foreign importers.” Trump demanded an investigation into potential “violations of US trade and customs laws,” and collect $2.3 billion USD (Rp 30.7 trillion) in unpaid anti-dumping duties.
Indonesian officials expected an “America First” policy from Trump. But they didn’t expect “Indonesia never.”
“At this time of global economic uncertainty we are puzzled with the signal being sent from Washington, including the inclusion of Indonesia as a country causing a huge deficit with the US and the filing of an anti-dumping petition for biodiesel,” Iman Pambagyo, the trade ministry’s director general for international trade negotiation, told Bloomberg. “It really concerns us.”
But if there’s one thing Trump and former US President Barack Obama share, it’s a soft spot for Indonesia. It was one of the first countries visited by US Vice President Mike Pence, calming concerns here of a trade war with the US. Indonesian palm oil and biodiesel lobbyists urged President Joko Widodo to bring up the biodiesel issue with Pence. Indonesian business leaders meeting with the US delegation said the issue was at the top of their agenda.
“This is one of the issues that we have asked the trade ministry to bring to the meeting [with Pence],” Paulus Tjakrawan, a director at the Indonesia Biofuel Producers Association, told Reuters. “Our hope is for the government to be firm… otherwise we will be taken advantage of.”
But without a resolution on the biodiesel dumping allegations, prices in the US will continue to rise. And that golden oil bubbling in the deep frier may soon be worth its weight in… well, gold.