Biodiesel pricing going up by $1 per gallon due to tax credit loss

February 22, 2010

Dear customers,

As you may know, the biodiesel industry receives a $1 per gallon federal excise tax credit. Without it, there would never have been a viable biodiesel industry to begin with, because the price of feedstock (vegetable oil) has generally been high enough to make the production of biodiesel higher than that of petroleum diesel.

Unfortunately, this tax credit expired at the end of 2009 and has not yet been renewed. We were fortunate to buy a large volume before the end of the year, and have not yet had to deal with the implications of the credit loss. We had high hopes the credit would be renewed by now, but the most recent legislation to renew it had the biodiesel portion removed by Senate Majority Leader Harry Reid. There is currently no bill before the Congress that would renew it.

Although we expect it to be renewed, we are now faced with a gap – our 2009 supply is running out and we’ll need to buy new fuel without the credit. This will cause a penny for penny increase at the pump, starting as soon as next week.

Some of you may know that DieselGreen collects used cooking oil from restaurants all over Austin. Many people assume that we are making biodiesel ourselves, but this is not true. All of the oil we collect goes to Pacific Biodiesel, in Hillsboro, TX, where they turn it into fuel for us. Although providing our own feedstock cuts down on our final price, the credit goes to the producer, which lowers our cost by that very same $1 per gallon. Please be assured that nobody is price gouging and that our entire industry is truly in peril. Community-scale businesses like ours only survive with the core customer base such as yourselves, willing to pay more for an environmentally friendly fuel that is made in the US, lowers our dependence on foreign oil, reduces emissions significantly, and turns a waste stream into energy.

I invite you to contact me personally to answer any questions you have. I hope that you will ride out this difficult time with us, and that the credit will be reinstated as soon as possible.

Thank you so much for your support and your business,

Jason Burroughs

DieselGreen Fuels

(512) 873-4882

Jason@DieselGreenFuels.com

8 thoughts on “Biodiesel pricing going up by $1 per gallon due to tax credit loss

  1. It is a pity that the price of biodiesel goes up, but going to ecowise and filling up with your brew is kind of romantic and idealistic,
    in my opinion.
    People will look back on that one day with nostalgia, like they look back on the armadillo worldheadquarters and liberty lunch.
    So, I’ll stick with it. good luck, friendly greetings, hans rademaker

  2. I completely understand the need to increase price to account for the loss of the excise tax credit and am willing to continue to buy the fuel as long as it is available at Eco-Wise. What I’m wondering now is why the price has gone up $2 instead of $1. I know it’s a pain, but if you could explain the rough cost breakdown of the current $4.75 per gallon price, that will help me (and others) understand the challenges you face bringing this fuel to the market.

    Thanks!

  3. Hi Jason,
    On March 10, the US senate passed HR 4213, reinstating the tax credit retroactively from 12/31/2009 until 12/31/2010.
    You can look it up:
    http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR04213:@@@L&summ2=m&

    see Title IV: Energy Provisions – (Sec. 401)…

    Although the congress might not pass the bill, that seems highly unlikely.
    Get your producer up to snuff on this issue- he should not be including the $1 per gallon charge in his pricing.

    Producers here in the mid-Atlantic region have been slow to adapt to this reality, too.

    Environment-conscious consumers need our help, as fuel sellers, on this issue. Let’s protect them from absurdly high prices!

    Peace and good luck,
    Mark

  4. H.R. 4213:

    It looks better than I thought:

    HR 4213, aka
    American Workers, State, and Business Relief Act of 2010

    passed House 12/9/2009
    passed Senate 3/10/2010

    Reinstates the tax credit from 12/31/2009-12/31/2010, retroactively. Sweet!

  5. I understand that the fuel currently sold at Diesel Green’s only retail location (Eco-Wise) was purchased at a high price so the price will stay high until the fuel is sold and new fuel is purchased – but again, I fail to understand why a $1 increase (due to the loss of the tax credit) results in a fuel price of $4.84. Before the price jump several months ago, I’ve mentioned to the staff at Eco-Wise that I’ll support them even if the price went to around $4 (the price was around $2.79 per gallon at the time), but at nearly $5 for the last several months – I’ve been forced to splash blend with petroleum diesel because I can’t pay $100 every week to fuel up. I’m trying to do my part, but no one at Eco-Wise seems to be able to explain the extra costs (which will at least psychologically help me with the new pricing).

  6. Anyone know if the price of B100 has fallen at this location ? I can’t afford $5 per gallon fuel.

    I remember reading only a few years ago the B20 was widely available in Austin. At the time I was living in Oregon, where you can get B20 all over the place for about 10-20 cents more per gallon than plain diesel. Still can, actually.

    The current state of Biodiesel is pitiful in Texas, even Austin.

    I won’t be purchasing it for $5 a gallon, I just can’t with the high cost of living and low wages in this town.

  7. Why, oh why, are you still charging so much for your fuel? The biodiesel tax credit you discuss in this post from FEBRUARY passed the house in December 2009 and the senate in March 2010. Can you give us an reasonable explanation for this price gouging?

    As you all have taken over waste oil collection in the Austin area, there are a number of us who would like to let the locally owned restaurants know about this situation so that we might acquire their waste oil directly and not have to factor in the ‘surcharge’ you seem to want to leave in place indefinitely.

    Please explain!!!!

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