DieselGreen Summer 2009 Update

Hello everyone,

With each week bringing another bankruptcy or bailout, it should come as no surprise that local businesses are being impacted as well. Our business has never been easy, and with the worst regulatory climate in the country for biodiesel, we’re faced with unparalleled challenges. Today we are announcing some changes to our business that we hope will enable us to survive this downturn and thrive when it’s over.

Effective immediately, we no longer offer conversion services to install Greasecar kits on customer’s cars.

Due to the regulatory requirements imposed by the health department, it’s been very difficult for us to do dewatering and filtering of veg oil onsite. We have been using a third party for some time, who has been remodeling their facility and stopped production of oil for the past few months. We are happy to announce that our contract renderer is back online and we have vegetable oil available again! We offer this dewatered oil, filtered to 5 microns, at Ecowise and at our own shop. The other good news in this area is that we have constructed our own facility to do the dewatering and filtering, which is in the final application process with the health department. Over the next few months, we expect to take back control of this process, which will help us stay afloat.

Effective today, our satellite stations at Geogrowers, El Sol Logistics, and Oaxacan Tamaleo are closing down permanently. Folks out in the rural areas served by these stations are more price sensitive than our urban customers, and while we have some loyal customers who will be disappointed, these stations just don’t work for us.

As of July 1st, we moved NEXT DOOR to our current location, into what used to be Chavez Motors. The new place lacks the large warehouse we used for vegetable oil conversions, but has the special building we need to do the oil processing.

We’ve been experimenting with biodiesel production on our own and had great results! We used a new biodiesel process called hydrodynamic cavitation, which is the underlying physics behind milk homogenization (among other things). This innovative process allows for biodiesel production at room temperature, in less time, with lower quality oil, using less methanol.

We wrote a piece of software called Biodiesel Control Center to manage our business. This software is a ‘web app’ that is intended to run a business like ours, including grease collection, task management, and ultimately biodiesel production and distribution. We were fortunate to get some great press on the software, and have had inquiries from around the country from biodiesel businesses struggling with the same issues we had when we wrote it.

I just got back from the Collective Biodiesel Conference in Washington DC. For the fourth year, I presented our evolving business plan, networked with old friends and met new ones, and participated in a lobbying effort to educate Congress on biodiesel issues. The key issue we talked about is that the biodiesel tax credit ($1 per gallon) is tied to being blended with diesel – a HUGE problem for our industry that has plagued us since 2005. This rule is set to be overturned and the credit given to biodiesel producers, independent of blending with diesel. This has the effect of eliminating “B99” forever and letting us sell B100 as a motor fuel with the credit intact. The credit is also going up to $1.10 for small producers (which we always work with), and being extended 5 years. The bill is called the Biodiesel Tax Incentive Reform and Extension Act of 2009. If you speak to your congressman or senator, please ask for their support on this issue.

This follows our own legislature session, in which the biodiesel industry scored a few key victories. First, all state fleets are required to use alternative fuels at least 50% of the time in 80% of their vehicles, and for the first time biodiesel is an official alternative fuel – even at just B20. Second, and more important, TCEQ, who has attempted to ban biodiesel blends in most cases in the most populous counties in Texas, has been forced to go to EPA for an official ruling on the issue. We are confident that when this ruling comes back from EPA, our position (that biodiesel is NOT bad for the environment!) will be supported, and the TCEQ’s ridiculous rule will be rescinded.

Finally, I’d like to explain to everyone exactly what our business does. We have evolved from a coop in 2005, into a biodiesel distributor in 2006, an oil collector/renderer in 2007, did the conversions to run on vegoil, and have now solidified on a specific plan:

  • Using a 2000 gallon vacuum truck, DieselGreen collects used cooking oil from area restaurants. This service, dubbed Fryer to Fuel, takes the oil from almost 200 restaurants from San Antonio to Taylor, and all parts in between.
  • This oil is taken to Pacific Biodiesel, the nation’s most experienced and respected biodiesel producer. They have a plant in Hillsboro, about 130 miles north of Austin.
  • Pacific takes our oil and turns it into biodiesel, and ensures it meets the ASTM specification for biodiesel.
  • Using a 2000 gallon fuel truck, we pick up this biodiesel and bring it back to our shop. From there, we provide fuel to Ecowise for retail sale. We also have a variety of fleet customers who use clean burning biodiesel instead of diesel fuel for their equipment.
  • We are working on a retail pump for our location to service those customers on the east side who have trouble making it to Ecowise. This location will sell both vegetable oil and biodiesel.
  • We’re working on Biodiesel Control Center, hoping to license it to folks around the country.
  • We’re sitting on a cutting edge biodiesel production process, considering our options to license the technology, offer a kit, or work with a third party to develop a set of plans for DIY’ers.

I’m also personally involved in a couple of other biodiesel projects:

What we need:

  • First and foremost, we need your support! Keep using biodiesel, keep telling your auto dealer you want more diesel choices, keep telling your elected representatives to support LOCAL FUEL!
  • We need lots more restaurants. We pay for referrals, so let us know if you are involved in the restaurant business or know someone who is.
  • I’m seeking a PHP developer to help with the software. There is no funding for pay, but possible ownership potential for the right person.
  • I’m seeking a part time driver to collect oil and drive it to our biodiesel producer. Hours are 15-30 per week, pay is $10 per hour, Class B CDL required. Schedule is very flexible, with oil collection being done at any hour of day or night in most cases.

The current price of biodiesel (B100) at Ecowise is $2.84 and vegetable oil is at $2.15 – both include the federal road taxes.

Thanks for your support!

Jason Burroughs
Managing Partner, DieselGreen Fuels
http://www.dieselgreenfuels.com
512-992-8677 mobile
512-287-4229 fax

7 thoughts on “DieselGreen Summer 2009 Update

  1. Thanks for the update Jason, I’m in Houston but support all you do, and I just wish to say keep up the good fight.
    My family plan on moving to the Austin area in the next year and i will certainly look you up.

  2. Great job Jason! I’m so excited for you and your business. I wish I could have been a part of all this, but things are tough for my family right now. I will keep an eye out for restaurants in the meantime.

  3. I’ve been out of the loop for a while so the answer to this may be obvious to everybody else. Why does the health department care about or even have jurisdiction over vegetable oil that is used as fuel and not human consumption?

  4. Jason, glad to see your strategy and the business continue to grow and mature.

    Filled up today at Ecowise — the VO was incredibly clean!

    Thanks!

  5. Willie – the health department doesn’t have a separate category for non-food oil collection. The only way to get them to consider it differently would be to lobby the state legislature for a new set of rules for companies collecting the oil and not putting it into the food supply. Based on the license as it is today, we *could* legally sell it to a cattlefeed or other rendering company and they would assume it has had certain things done to it for safety (heated to 180+ degrees, etc). It’s a really limiting thing and no hope of changing it in the near term future – so we have to suck it up and just follow the rules.

    Chris – glad to hear the oil was good quality! After having none for so long, we took great pains to ensure the new process would result in as low water content and “crud” as possible, and I think we got it right. We have plenty for bulk delivery now, so let me know if you’re looking for a fill up – great to hear from you!

  6. It’s be great if you could arrange some sort of midtown retail outlet too. I have to work north and frequently need fuel while I’m up there. Not that way north would be that great a market for biodiesel, but I bet the 2222/Burnet/45th area would have a reasonable demand.

  7. Hi Rache – I agree! We used to have Junior’s Beer and Wine, but they had a neighbor find a loophole to disallow their tank.

    We are always on the lookout for new stations, and the Hyde Park and campus areas are exactly where we would like to be.

    If you or anyone reading knows a business owner in that area that would be interested in hosting a tank, we offer a completely free tank and pump, and split profits from the fuel sales. It requires about a 5×10 spot for the tank and enough room for vehicles to get in and out.

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