In simple terms, biodiesel is the product you get when a vegetable oil or animal fat is chemically reacted with an alcohol to produce a new compound that is known as a fatty acid alkyl ester. A catalyst such as sodium or potassium hydroxide is required. Glycerol is produced as a byproduct. The approximate proportions of the reaction are:

100 lbs of oil + 10 lbs of methanol ---> 100 lbs of biodiesel + 10 lbs of glycerol

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Vegetable Oil Production (Billion pounds/yr)
Soybean .................... 18.340
Peanuts .................... 0.220
Sunflower .................. 1.000
Cottonseed ................. 1.010
Corn ....................... 2.420
Others ..................... 0.669
Total Veg. Oil ............ 23.659

Animal Fats ............. (Billion pounds/yr)
Edible Tallow .............. 1.625
Inedible tallow ............ 3.859
Lard & Grease .............. 1.306
Yellow Grease .............. 2.633
Poultry Fat ................ 2.215
Total Animal Fat .......... 11.638

As can be seen, in the United States, soybean oil dominates the vegetable oil market comprising over 75% of the total vegetable oil volume. Animal fats total almost 50% of the of the vegetable oil market. The combined vegetable oil and animal fat production of 35.3 billion pounds per year. At about 7.6 pounds per gallon of oil, this production would equal 4.64 billion gallons of biodiesel. Table 2, shown below, provides the total consumption of on-highway diesel fuel from 1996 to 2000.

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On-highway Diesel (billion gallons)
1996 ..................\t26.96
1997 ..................\t28.61
1998 ..................\t30.15
1999 ..................\t32.06
2000 ..................\t33.13

It is obvious that biodiesel is not going to completely replace petroleum-based diesel fuel in the near future. If all of the vegetable oil and animal fat were used to produce biodiesel, we could only replace about 15% of the current demand for on-highway diesel fuel.