Feb 28, 2008

The price of biodiesel

Fellow Biodiesel Drivers ::

We have all noticed the increase in fuel prices over the last six months. During this period, SeQuential and our network of distributors have not changed margins on biodiesel, meaning that these price increases are from the increased costs for producing biodiesel.


About 40% of the biodiesel SeQuential distributes comes from recycled cooking oil and most of the rest comes from soybean oil grown in the Midwest. This will continue to be the case in the short term, as local production from recycled oil increases; as Oregon production of oilseed crops increases (currently about 10% of our supply); and as technology companies develop alternative feedstocks, such as algae. As demand for soybean oil has increased of late, so has the price. In addition, a major ingredient in biodiesel production is methanol, which increased in price by about 300% since September 2007. We will do everything we can to get price relief.


We understand that these price increases are hard on your wallet, so we want to take a moment to say that we appreciate your dedication to and support of biofuels. We are all in this together, and together, we are growing a renewable fuels industry and bringing better fuel options to Oregon.

17 comments:

Anonymous said...

Keep up the good work!!! Any chance of entering the California market?

Sasha Friedman said...

Thanks for the support! SeQuential is focusing on Oregon for the time being, but there are probably some distributors in your area.

Check out biodiesel.org and e85refueling.com for a state-by-state list of stations.

Sasha

Michael said...

I have noticed a slight decrease in the price in methanol , is that an indication that we will see a decrease in price?

Sasha Friedman said...

You are correct - the bulk price of methanol has dropped slightly since its peak in Dec / Jan. Price effects are always delayed as companies move thru their current supply; it will be interesting to see what happens.

That said, the price of everything else is still rising... except the dollar which is falling...

We all are hoping for cheaper fuel, but I can't promise anything.

Anonymous said...

I've been a loyal customer for over 2 years now, but yesterday's fill-up here in Portland shocked me. At my last fill-up the price for B50 was $3.69, which I swallowed hard and paid, even though PD was much less at the time. Yesterday B99 was $4.60! I know demand in Portland is way up. I also understand the whole methanol situation and the oil stocks issue. I have been under the assumption for the past two years that your production capacity would be rising to meet demand, but it seems not to be the case. I'm sorry to say that I won't be able to continue paying $4.60 per gallon much longer. I'll either have to put my money in the oil companies coffers and buy regular diesel or look to other sources of biodiesel. Please keep us posted on your efforts to keep the prices down.

Anonymous said...

I second this - $4.60 is going out of spec for my wallet. I know there's a 50¢/gallon credit for b99 from the state, but I'm concerned that this is somehow being used to justify the price increase. I hope it's not, but it's a little suspicious when the price jumps from $3.49 to $4.60 in the space of 3 months... Even normal gasoline doesn't fly up like that on such short notice!

I don't want to impugne any company's character, and I totally understand the shortages... but I really hope that distributors like SeQuential and others recognize that the 50¢/gal. credit is an *incentive* for us poor slobs trying to be environmentally friendly. The credit shouldn't be - and I SINCERELY HOPE it's not - being used in any way to justify higher pricing. End 2¢.

Sasha Friedman said...

You can be sure that we'll keep you up to date on where the price of biodiesel is going.

You can also be assured that the Oregon tax incentives are not being misused - the entire nation is experiencing price increases. In fact, even before you factor in the tax credit, Oregon has some of the least expensive biodiesel available in the Northwest. (Not to imply that I think $4.60 / gallon is cheap.)

The bulk price in Seattle is about $0.30 / gallon higher than the bulk price in Portland. Factor in the $0.50 / gallon tax credit and we're $0.80 / gallon cheaper than them...

Richard said...

Ditto to the above comments from anonymous... Was hoping to see bio to actually become cheaper as diesel crosses the $4 threshold this year. We'll remain loyal customers as long as we can (2 bio cars), but are beginning to feel the strain at $4.60. Another significant jump in price and I think you will lose us and many other of your customers I've talked to at the Portland pumps.

Anonymous said...

Something still isn't adding up somewhere.

Is the price of biodiesel tied somehow to the price of regular diesel? The biodiesel price always seems to jump at the same proportion as the diesel price.

Second, why did a 5% addition of biodiesel to regular diesel result in an immediate 40-50cent cost increase the price of diesel? Percentage wise this just does not make sense. Before the 5% biodiesel blend the cost for diesel was about 40-50 below the cost of regular gas. Now the cost is about 70cents above the cost of gas. That's a large increase in percentage way out of proportion to 5%.

The result of this for me is that not only can I no longer afford biodiesel - my preferred choice, but I can no longer afford regular diesel either. (so blending is no longer an option to help keep the price down and still have a positive impact). This means I am now considering going back to having a gas car, or ?!

Anonymous said...

won;t be long before the price of diesel surpasses that of bio-d again.

time o go back to my pedal power vehicle a.k.a. bike/

Sasha Friedman said...

The price jump petroleum diesel is due to many factors. Portland's 5% biodiesel mandate is not causing the price spikes.

While covering all the reasons would require a full blog post (coming soon), the short answer is:

$113 for a barrel of crude oil.

Sharply rising demand in developing nations (China, India).

No new petroleum production infrastructure: more demand, no new supply.

Anonymous said...

I've been a bit perplexed by this whole pricing as of recently as well. I've been a strong advocate and customer for the past 4 years or so. I drive an old Mercedes and dig these cars so much I even helped my girlfriend acquire one as well. So, now we have two BD cars and I'm sitting here scratching my head wondering what is going on with the pricing and if I have chosen poorly.

For a solid 2 years, the price remained fixed at $3.25. Then it started creeping upwards. Now we are in the $4.60 range. It was my hope that the cost of BD would go down as more folks started using it and more production facilities started ramping it up. Unfortunately, the opposite seems to be happening.

I want to believe that SQ Biofuels is not taking advantage of the consumers, but I have to scratch my head and say hmmmm as I see the cost of BD seemingly follow the cost of diesel, but 40-50 cents more expensive and all of this seemed to start around the time OR introduced a 50 cent per gallon tax break. Hmmmm.....

Why does the price of 99.9% BioDiesel have anything to do with the cost of a barrel of crude oil??

I have been reassuring myself that at least I'm not supporting foreign oil, etc, nor contributing to the food crisis, as I'm purchasing fuel grown from soybeans here in OR. Or, at least, that's what SQ Biofuels is advertising. Now I'm reading in the intro post to this blog thread that "about 40% of the biodiesel SeQuential distributes comes from recycled cooking oil and most of the rest comes from soybean oil grown in the Midwest. This will continue to be the case in the short term, as local production from recycled oil increases; as Oregon production of oilseed crops increases (currently about 10% of our supply)." Huh?? If only 10% is coming from OR, then why is SQ Biofuels advertising their fuel as grown in OR?????

I'm going to hold my course right now, because I believe this is good technology that will excel with further research and development so long as human greed does not muck it up, and frankly, the current eco-alternatives are not all that great. At the same time, this is all making me re-think my approach to powering my vehicles and if this trend continues I will have to more strongly consider jumping ship which would be a shame for several reasons. Will I stick with my BioDiesel Mercedes when they come out with that 100 mpg vehicle, even if it is a plastic piece of crap? It will certainly be hard to justify sticking with it at these prices.....

So, yes, please further explain in detail the complexities that are causing the current price challenges.

I do also want to say thank you for all that you do. While I'm a little ruffled at the moment, I still remain very grateful for this company's commitment to being a pioneer in this area. Thank you!!!

Sasha Friedman said...

SeQuential's fuel sources:

Biodiesel
50% Midwest soy
40% Used Cooking Oil (from Oregon)
10% Oregon Grown Canola

Ethanol
100% Oregon made from Midwest corn


In graphical form, see:
http://www.sqbiofuels.com/faq_general.html

Anonymous said...

I've been filling my '73 Mercedes-Benz 220D with B99 Biodiesel for over a year now. I purchase it at Marc Nelson Oil Products in Salem, who gets its supply of B99 from SQBiofuels if I'm not mistaken. In September '07 I moved to San Diego and when I left, the cost of BD at MNOP in Salem was $3.25/gal. I used Biodiesel in San Diego from a different company where the cost went from $3.30/gal to $4.69/gal from September to May. Now I just moved back to Salem and went to Marc Nelson to fill up with B99 and I willingly paid $5.09/gal. I was quite shocked to find that the price had rose over 60% in 9 months. As far as I know MNOP is the only place in Salem where B99 retails. I will continue to fill up my car with biodiesel because I firmly believe that it is a positive alternative to petroleum fuel, but with prices considerably higher that petroleum diesel, it makes that decision increasingly more difficult. I find myself considering selling my BioBenz and buying a cost effective gasoline car, which is not something I want to do. I don't want to feel like a sell-out and compromise my ethical standards to save a few bucks for fuel, so for now, I'm just seeking ways to drive less. Any comments on why B99 is more in Salem than in Portland when SQBiofuels is based in Salem?

Anonymous said...

correction on my last comment: buying a gas car is sommething I DO NOT want to do.

Sasha Friedman said...

The price increase did happen very quickly - all of us have been shocked by it.

The short answer on Salem / Portland price difference is that due to logistics and blenders certification, MNOP usually pulls fuel from Portland, adding freight cost.

You might want to check out the Flower Power Coop in Salem - they just got their blenders certification and will be able to pull directly from the SQPB plant. (Plus you get the great community aspect of a Coop.)

To find out how to join the Flower Power Coop, call James Santana at 971.285.7744.

Sasha

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