May 22, 2008

High Prices are Bad for Business

As all of you know, the price of biodiesel at the pump has hit record highs. Over the past few months by phone, email, blog responses, and in person, most people have been asking me "why?"

It is a complicated issue - take a look at previous posts - but there is one large piece that I've been leaving out:
the impact high prices have had on SeQuential.

On the financial side of things,
we have lost volume and customers. Some people are driving less and others have gone back to petroleum fuels. The price increases have reflected the rising cost of biodiesel - not rising profit margins. The lost volume means SeQuential is struggling .

On the other side of things, I have heard disbelief at the speed and intensity of price increases; questions on price gouging and comparisons to big oil have been made.
This stings - SeQuential is a very small company (there are six of us in full-time administrative positions); both as a company and as individuals, we are committed to making cleaner burning, renewable fuels available. This is not an easy task given who and what we are up against and the only way we can do this is with help from our customers.

We are in business to make a difference: to move towards energy independence, to clean up the air, to give people a choice when they fuel their cars. Stay with the right biofuels. When you fuel up with SeQuential, you are supporting a different kind of fuel and a different kind of fuel company: local, cleaner, better.

17 comments:

Anonymous said...

Hard to argue with people driving less, but I can't fathom going from B99 -> D2 due to the price.
After the $0.50/gal tax credit the price is the same. Or does Oregon not do this anymore?

Sasha Friedman said...

First off, I want to thank everyone who has sent in emails of support - it has been a rough couple of weeks and it is great to hear from everyone!

I agree with the above commenter - it is hard to argue with people driving less - conservation is key to extending limited resources.

The tax credit is still in effect, but it doesn't ease the immediate pain at the pump since you have to wait until the end of the year to claim the credit.

Sasha

Anonymous said...

Hang in there Sequential - you are doing a good thing, and that is hardly ever an easy road... Keep it up, take care, and God Bless.

Gary H. said...

We can only hope for a repeat of the not too distant past when biodiesel was cheaper petrodiesel.

At least I can feel better knowing that my money is going to a local company and farmers rather than add to the $40B profits of the oil giants.

Sasha Friedman said...

Just for the record - this post was written 5/16/08, not 5/16/10 - I post-dated the post so it would stay at the top of the list.

Alex said...

It seems to me that the future of biodiesel lies in two key approaches... getting a lot more mileage out of a gallon, i.e. biodiesel-electric hybrids, etc., and fundamentally altering the current means of production. From what I have read, algae based biodiesel offers the benefits of higher yields, a non- food based source, and the capability to grow in brackish water(and not compete for our ultimately limited supply of freshwater on the planet). It also seems to be the only chance of bringing the price per gallon back to economically sustainable levels (which, by the way, petro-fuels have also exceeded recently). Obviously Sequential is very aware of this, so without giving up any business secrets, when can we expect to see algae bio here in Oregon?

Sasha Friedman said...

SeQuential is eagerly awaiting a supplier of algae biodiesel, but we have not seen anyone who can produce it in large enough volume, let alone at a competitive price.

Algae biodiesel is the "next gen" biodiesel technology that the industry is the most excited about. A ton of research was done on it and industry rumors are that it is getting close to being market ready.

The main hurdle, like everything else in the world, is cost.

Algae research was started by the Dept of Energy in the 70's after the oil crisis. Cheap gas in the early 90's took away all the funding for the research and it hasn't been until recently that the research has started up again.

Recent news:
The "Algal Biomass Organization" was just launched - the second industry trade group in the US.

The "2008 Algae Biomass Summit" is being held in Seattle in October: www.algalbiomass.org

veeg2 said...

City of Eugene said that they couldn't run there buses on biodiesel because they bought it at premium to fosil fuel diesel..is this the real cause for loss of major customers? At city club eugene meeting sequential said the price swings was due to canola market price swings but this site says biodiesel is 90% from recovered cooking oil. What is the true source of biodiesel at sequential?

Sasha Friedman said...

Price is definitely a factor in people's decisions to stop using biodiesel.

The prices of all oils, from used cooking oil to canola oil, are high right now - SeQuential's biodiesel is sourced from approximately:

90% Used Cooking Oil
10% Canola Oil

Anonymous said...

I have hung in as long as I could. The last time I went by to fill up, the price of B99 at Jay's was $5.66. I just couldn't do it when D2 was $4.29 just a few blocks away. That is too much to take. I'll be back on B99 once the prices come back down.

Hangin' in there said...

Do you have any idea as to when the current retail price spread between biodiesel and petrodiesel will come down? Currently, Jay's Garage in Portland, Oregon is selling B99 at about $5.40 a gallon. I can buy petrodiesel (essentially B5 in Portland) for $3.50 a gallon. I want to continue using biodiesel and I would like to continue to support your company. It would be helpful to know whether the new Salem production facility will reduce your cost of production, and whether some of that reduction might be passed on to the consumer. Also, with colder weather coming, what do you expect the B50 blend to sell for at the pump? Wanting you to succeed,

Sasha Friedman said...

All biodiesel pumps in Portland are independently owned; the only location SeQuential has price control over is the SeQuential Station in Eugene.

Price will vary from location to location - check out:
http://www.sqbiofuels.com/locations.htm
for a complete list of pumps and contact information.

Prices should be falling as the expanded SeQuential-Pacific facility comes online - high prices are bad for business and we will do all we can to ease the pain at the pump!

Sasha

Hangin' in there said...

Jay's Garage in SE Portland is now serving up B20 at $3.69/gallon, compared to $3.35/gallon for B5 at a local Shell station in SE Portland. At such a small premium for B20, I'll definitely be buying it.

Thanks for doing all you can to keep biodiesel affordable. Hopefully, by the time "B99 Season" returns at the end of winter, it will again be competitive with B5. I much prefer the aroma of biodiesel to petro!

Keep up your good work,

Sasha Friedman said...

We're thrilled as well to see the prices lowering - thanks for hanging in there!

Gary H. said...

That's good to know. My last invoice from Star Oilco was something around $5.31 for B99 and $3.40ish for dino juice on the same day.

With the new facility coming online, I hope prices can continue to go lower.

Anonymous said...

Jubitz in North Portland has B20 for way cheaper than Jay's... I paid $2.59 last week. I know people have mixed feelings about them because of the "Jubitz exception" to Portland's B5 rule (they can sell 100% reg. diesel if they also carry B20), but it's easily the best price in town, and if that keeps more people running bio, I'd say that's a good thing.

ri stewart said...

Thank Goddess I saw the ridiculousness of unsustainable biofuels while the getting out was good!

I know of nobody that was using biofuels 3 years ago that are still using them today.