There are hidden costs of petroleum that we don't see.

from... http://www.iags.org/n1030034.htm

NDCF report: the hidden cost of imported oil

The National Defense Council Foundation (NDCF), an Alexandria, Virginia-based research and educational institution has completed its year-long analysis of the “hidden cost” of imported oil. The NDCF project represents the most comprehensive investigation of the military and economic penalty our undue dependence on imported oil exacts from the U.S. economy. Included in this economic toll are:

Almost $49.1 billion in annual defense outlays to maintain the capability to defend the flow of Persian Gulf Oil – the equivalent of adding $1.17 to the price of a gallon of gasoline;
The loss of 828,400 jobs in the U.S. economy;
The loss of $159.9 billion in GNP annually;
The loss of $13.4 billion in federal and state revenues annually;
Total economic penalties of from $297.2 to $304.9 billion annually. If reflected at the gasoline pump, these “hidden costs” would raise the price of a gallon of gasoline to over $5.28, a fill-up would be over $105.

If biodiesel got the same subsidies the petroleum industry got, or if we actually payed the real price of oil at the pump, biodiesel would be competetive. But since the gov't is more concerned with big $$ special interest groups than the planet, or the regular peons that live on it, neither will happen.

-Shawn