Javier, Ella Marie S.Tanganco, Lauren Ej U.2025-01-312025-01-312009-12https://selib.upd.edu.ph/etdir/handle/123456789/4333With the passage of the Biofuels Act of 2006 which strongly encourages the usage of biodiesel for Filipino motorists, the authors decided to conduct a study to test the economic viability of biodiesel, involving the use of CME for the production of diesel blends in the Philippines, using time series data from 1989 up to 2008 of the different factors involved - Diesel Prices, Diesel Consumption, Philippine GDP, RBD Oil Prices, and C02 Emissions. This paper focuses on two aspects. The first involves the prices of diesel and diesel blends as both are substitutes of one another. The second involves the social costs imposed by diesel usage to the environment, specifically on health and the national economy. Land displacement and rise in food commodity prices are also discussed. Monte Carlo Simulation is used to predict future stochastic diesel and diesel blended fuel prices for the next 5, 10, 15 and 20 years using the combination 95% diesel and 5% CME, as it is the highest mix a transportation engine can accommodate without alteration. Results obtained were compared. Marginal social costs for market, mostly agricultural and coastal zones, and non- market, health and the ecosystem, were computed using a math model. Results ~e added to the simulated prices and were evaluated. Considering only the private factors, results show that diesel blend prices are higher than diesel most of the time by as much as Php1.OO per liter. When marginal social costs are taken into account, the use of a 5% CME-diesel blend is still not viable as its price is still higher than diesel fuels. To future researchers, the authors recommend that further studies consider other ingredients, such as palm oil or jathropa, to assess the viability of biodiesel. In addition to that, studies on the use of bioethanol should also be conducted.enGreen energyBiofuelsRenewable energySustainable fuelEnergy economicsEnergy industryThesis