Their product now is cheaper than the stuff that comes out of the ground.
"We're selling our biodiesel for less than petroleum diesel out of the rack," said Tyson Keever of SeQuential Biofuels, the state's largest biodiesel producer. "Our phone is ringing off the hook as the (oil) price goes up," he told Portland's Daily Journal of Commerce newspaper.
Biodiesel sold for 20 to 30 cents a gallon more than regular diesel as recently as March. It is made from vegetable oil, including used oil from fast-food restaurants.
The blend B99, of 99 percent biodiesel with 1 percent diesel fuel, was $2.77 a gallon, two cents cheaper than regular low-sulfur diesel, Monday at Carson Oil in Portland.
Demand for the renewable fuel in the state has risen with oil prices, which many expect to keep climbing.
Carson Oil just arranged with a Minnesota producer to sell its soy-based biodiesel in Oregon.
It has reserved 15 million gallons a year, which it will bring into the region's first biodiesel terminal at the Port of Vancouver, Wash., just across the Columbia River from Portland.
In-state production is about 2 million gallons per year, according to SeQuential Biofuels.
In the past month SeQuential has sold out of biodiesel as fast as it can produce it.
The company broke ground April 17 for its own fuel station in Eugene and added three more pumps around the state last month. More are planned.
Small biodiesel co-ops are seeing an increase in membership as gasoline prices climb.
Members of Go Biodiesel, a Portland co-op, pay $100 to join and work six hours a month for the right to buy pure biodiesel at $2.25 a gallon. The group has about 100 members.
"We see a lot more interest in people joining up in the co-op," said Brian Jamison, president of Go Biodiesel's board of directors.
Biodiesel distributors, heavily invested in building an infrastructure in Oregon, hope high oil prices will help them grow.
The cheaper price "will allow a lot of people to make that jump to biodiesel and feel comfortable about it," said Mark Fitz, general manager of Portland's StarOilco, one of Oregon's first distributors to offer biodiesel.
"When (oil) prices get this high, it's hitting agricultural users right below the belt," Fitz said. "We're delivering the biodiesel portion of (the blends) at cost, making less money than we would on normal diesel" to promote the fuel to farmers.
(Copyright 2006 by The Associated Press. All Rights Reserved.)