Hi Morgan,
The common process of converting waste fry oil involves removing glycerine from the triglyceride molecule, which is what vegetable and animal oils are largely composed of, and converting it to a straight chain hydrocarbon, similar to petroleum oils. In order to do that, usually sodium methoxide or potassium methoxide is used to strip off the glycerol. Any excess sodium hydroxide that remains in the fuel will eventually peel the paint off anything it touches.Â
If biodiesel is well made, the sodium hydroxide will be neutralized in the final washing step, however many people just dump it in their fuel tank as soon as the oil has been separated from glycerine.
There's lots of good information here:
http://www.journeytoforever.org/biodiesel_make.html#processQuinn