New biodiesel plant in Mexico, Mo.

MEXICO, Mo. -- Missouri's largest biodiesel plant opened here Tuesday, with farmers and politicians calling it a boon to the rural economy and small step toward the goal of reducing oil imports.

The $30 million plant will produce about 30 million gallons annually of biodiesel, a fuel made from vegetable oil and other additives.

Like corn-based ethanol, investment in biodeisel has grown rapidly this year because of rising gas prices and support from the 2005 Energy Policy Act.

Republican Sens. Jim Talent and Kit Bond said at an opening ceremony for the plant that new crop-based fuel refineries will help breathe life into towns like Mexico.

The seat of rural Audrain County, Mexico has seen a decline in its manufacturing base as decades-old brick-making companies have shuttered their factories.

"This is the poster child for value-added agriculture," Talent said, using the industry term for raising more profitable crops.

Bond said developing crop-based fuel refineries in the Midwest will bolster national security by reducing dependence on oil imported from the Middle East, or countries like Venezuela.

"Gas prices are falling right now, but there's no reason to be lulled into a false sense of security," Bond said.

There are four more large-scale biodiesel plants on the drawing board in Missouri, said Dale Ludwig, executive director of the Missouri Soybean Association.

Two plants, including one in Kansas City, are just beginning construction. Financing is being raised for the other two, he said. Webb said the biodiesel industry won't likely grow as large as the ethanol industry.

That's partly because ethanol can be made from far more crops than biodiesel, but also because diesel fuel is used less than gasoline, he said.

He estimated that between one and two billion gallons of biodiesel would be used annually within a decade in the United States, compared to 10 to 15 billion gallons of ethanol. Use of the fuels is being driven by the Energy Policy Act. The bill set a new standard requiring the U.S. to use 7 billion gallons of renewable fuels by 2012.

National Biodiesel Board chief executive officer Joseph Jobe said earlier this month at a renewable fuels conference in St. Louis that the industry is doubling or tripling production every day.