The biodiesel industry is currently producing at less than one quarter capacity, due mostly to underutilization by petroleum blenders and continuing high vegetable oil and fat prices. As of September 2007, the National Biodiesel Board reports that America's biodiesel industry had 1.85 billion gallons per year capacity. However, according to Amber Thurlo Pearson, NBB communications specialist, this capacity is not being utilized by the petroleum industry.
The story goes on to point out that the newly enacted Renewable Fuels Standard (RFS) requires 500 million gallons of biodiesel to be used in 2009. It seems pretty obvious that oil companies won't blend ethanol and biodiesel unless forced to.