You could not walk into a biofuel store today to purchase a gallon of advanced fuel, because such stores don’t yet exist. But if they did, customers would pay a hefty premium as things stand now. This is because the current demand for these fuels is anemic, so any company would be forced to charge a high rate per gallon: small-scale production incurs higher costs. This is called an economy of scale, indicating the greater savings realized by mass production. The infrastructure for fossil fuels is extensive. Accordingly, the cost remains very low by comparison with advanced biofuels. This ratio precludes meaningful purchasing of biofuels by private customers. For a start-up biofuel company to succeed as anything more than a well-funded biology hobby, a trigger of some sort—such as the U.S. Navy’s commitment—must catalyze further investment in the product.
The trigger will cause a chain reaction in which more biofuels become available on the market while their price gradually decreases. As the use of these fuels in different areas becomes more attractive, more third-party buyers will appear. Then companies can expand production yet again—by this time, other intrepid, biologically adept individuals will have started their own businesses, thus spurring competition in the market and flooding the streets with increasingly less-expensive biofuels until a rough equilibrium is established (full disclosure: one of the coauthors is the CEO of Energy Pioneer, a company dedicated to innovative power-saving solutions).