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How does the fact that wvo may go rancid effect its use as a Diesel fuel? I certainly wouldn't use it to cook frys in but I can't believe that a Diesel engine knows the difference between fresh and rancid oil.
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Rancidity can cause two things, one of which affects its use as a fuel. The first problem is that unsaturated fats can have random unpleasant molecules connect to the empty positions that would normally be filled by hydrogen atoms (on hydrogenated fats). These random molecules smell and taste bad. Yuck.
The other problem is that it can cause polymerization of the oil. Boiled linseed oil is in fact intentionally polymerized oil, which is why it is so good for wood, the polymers form a varnish which is protective for wood. However, that same polymer varnish that is so good for wood is terrible for your engine. In fact, polymerized oil and biodiesel has caused most of the unpleasant problems you may have heard associated with those fuels. Fortunately there are simple ways to avoid the problems (not removing Vitamin E from oils before processing, for instance), but when it happens, it is always bad.
If your WVO has gone rancid, it may be prone to polymerization, which is something you really want to avoid.
However, like mentioned, there are things you can do to keep it stable for quite a long time.
peace,
sam