The U. S. biodiesel industry is rapidly expanding due to energy production concerns, environmental concerns, and recent legislation. The most common type of biodiesel in the United States is derived from soybean oil. Soybeans are a major crop in North Dakota and could easily supply a 5 million gallon per year biodiesel facility. Potential market segments of a biodiesel facility in North Dakota include agriculture, construction, and state fleet sectors based on current diesel use. However, with existing technology and no subsidy, biodiesel operation and investment costs for a North Dakota facility are not competitive with petroleum diesel. Using soybean oil prices of 17 cents to 25 cents per pound, the per gallon cost of producing diesel in southeastern North Dakota ranges between $2.02 and $2.64, while the wholesale price for regular diesel is $0.91. The cost of producing biodiesel is highly dependent on the price and availability of soybean oil. While biodiesel production technology is feasible and fairly simple, producing biodiesel in North Dakota is not economically feasible at least in the foreseeable future.