PITTSBURGH (AP) – Last fall, Ed Vescovi planned to restart a dormant biodiesel plant in Beaver County.

The market for biofuel was shaky. But a new owner, Weavertown Environmental, pledged to get the plant going after purchasing it in 2013. Vescovi was hoping to begin production before the end of last year.

Then, oil prices plummeted, pushing down the price of regular diesel.

“You wouldn’t get anybody to really buy (biodiesel) if you’re still selling it for $4 a gallon,” said Ed Vescovi, who Weavertown hired to run the plant. “You can buy diesel fuel for $3 a gallon. How do you compete?”

Weavertown put the project on hold rather than suffer along with other producers who have seen their profits plummet in a challenging environment for biofuels, the petroleum alternatives made from corn, soybean oil and other crops.

Cheap oil has squeezed the industry’s profits even as it encounters larger questions about its impact on food prices and environmental benefits. Government mandates have supported its growth – production of biodiesel has increased from 112 million gallons in 2005 to 1.8 billion in 2013 – but inexpensive oil could increase pressure to reduce mandates.

Those mandates have been questioned amid criticism that biofuels drive up food prices. Besides being a common side-dish for many Americans’ meals, corn is used as a sweetener in packaged foods and beverages and as feed grain for livestock. And competition from ethanol producers forces prices up when growers can’t keep up with demand.

Ethanol demand

Corn-based ethanol is a more widely used alternative fuel than biodiesel, which is made from recycled vegetable oil and animal fat, and is coming off of a record year for production.

Ethanol makers enjoyed fattened margins amid low corn prices, but they are feeling pinched now.

“Prices have come down sharply,” said Robert Wisner, a biofuels economist at Iowa State University. “The trend has been down along with gasoline and crude oil.”

Wholesale prices for ethanol have fallen 37 percent since July, to $1.31 in January, Wisner said.

Government mandates for production have propped up the industry. But some environmental groups have called for abolishing those supports amid concerns about the effects on the nation’s food supply.