February 22, 2010
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,