The Price of Fuel

While it is probably best not to get us started on this subject, we thought it would be a good idea to publish our guidelines on how pricing is established.

For many years we sold our biodiesel for 3.50 a gallon.  We did that when petroleum diesel was 1.59, 2.54, 3.36 etc.  In a world that is generally quoted out four decimal places, in which prices change in the morning and again in the afternoon, we were content with never changing our price.  We were simply 3.50.

3.50 works well and is a fair price, as long as petroleum diesel is less expensive.  We don’t need to bore you with how we make a premium product, that is cleaner burning, is made in America from renewable sources and requires no war to be procured.

Rather, we would like to simply point out that our production is so small compared to consumption that whenever we price our product for less money than petroleum diesel we get wiped out in five minutes.

It’s that simple.  There’s no need for sanctimonious hippy diatribes.  Just hard cold supply and demand.  We have to keep our product at a price that is higher than petroleum if we want to maintain fuel for our members.

Which means we occasionally move our price.  What we do is check the website of the Energy Information Administration, and if petroleum diesel is markedly higher than us, we increase our price by .25 a gallon.  If petroleum diesel falls back in price, we will too, as long as we can stay slightly higher than petroleum.

There are rare occasions when we might be slightly less money than petroleum, but that is largely because we hate changing the price.  Here is a more detailed discussion of pricing–complete with a bunch of member comments and suggestions as to how price should be determined.

For an excellent look at the costs of biodiesel production, check out this obsolete presentation from our 2008 Annual Meeting.  The data is out of date–but the logic is pristine, and the graph is wonderful.

If you want cheap fuel, that comes from Libya.  Or Iraq.  If you want the good stuff join us–but be prepared to pay more for your fuel.

11 Responses to The Price of Fuel

  1. Bert Coffer says:

    Do you sell straight WVO?

  2. Interesting article on your pricing! Thanks for sharing!

    -Danielle N. Gibeson
    Promethean Biofuels Cooperative Corporation
    27635 Diaz Road
    Temecula, CA 92592

    “Seeking oil, selling biodiesel!”

  3. Good deal. I’d also add that depending upon location there is a federal and state sales tax included in the $3.50 price per gallon. Here in Louisiana they still tax the biodiesel on the state level… some states have removed the additional state tax to help out the small backyard biodiesel brewers.

    -Backyard Biodiesel, L.L.C.
    1441 Canal St.
    New Orleans, LA 70112

    http://www.backyardbiodiesel.com
    Facility
    3125 S. Burnside Ave.
    Gonzales, LA 70737

    “Got Grease? Get Backyard Biodiesel”

  4. Pricing it higher than fossil fuels, “to keep from getting wiped out”, is both ignorant, and illogical from a business perspective and from an environmental standpoint.

    To say you want to be green, and then sell your product hgiher than petroleum, which has the effect that more consumers will buy petroleum, neither helps the environment nor reduces fossil fuel usage.

    This in effect reduces demand for your product yes, which helps keep your tanks full, but it also reduces your overall profit as well. Not a good idea from a business perspective. I mean are full tanks what a “business” actually wnats. I own a business and the last thing i want is product on my shelves. Thats why product on hand is always in the “liability” column on your accounting spreadheet!

    Besides, what the majority of american people want is not “green” fuel, we want “cheap” fuel. If you want war to stop over oil, give us a cheaper alternative. Most americans are quite addept at turning a blind eye to most of what our government does, as long as we get our resources cheap.

    There are plenty of poeple, such as myself however, which are trying to be green, do not agree with war for fuel, and beleive that our government is screwing us every chance they get. (federal income tax, OPEC pricing, etc.)..Howewver, most of us can barely pay the petroleum pricing at the pump, let alone your inflated pricing for a product which is both CHEAPER to produce and whose raw components are CHEAPER to procure.

    Sounds to me like another OPEC in the making, just what we need…..

    Truth is if your price was at least the SAME as fossil fuel, i would use it exclusively in my ford F-250 diesel. I would also go buy my wife a diesel car just so we could use it. To pay inflated prices for a cheaper product is just retarded though, and i can’t justify it when im trying to save to put kids through college, feed my family, and pay my mortgage..

    So, thanks for nothing, your greed has overcome your chances at really helping people, the environment, and your community.

    • Blaine says:

      Dittoe with an f350.

    • Treble says:

      Mr. Murphy is dead on. If you would continually get wiped out, target your production to a company that uses diesel and consumes about the same amount as what you can produce, and strike a deal with them for something that you need in order to increase your production (like expanding to use additional feedstocks like algae, etc). This model is a dead-end because you have a limited supply of restaurant grease, and a limited number of folks who let emotion drive their buying habits instead of basic economics like supply and demand for the money they’re able to produce.

      • Jim Jameson says:

        I agree, Just bought a Defender and need to fill up the 100 gallon tank. Figured I would give biofuels a try, but since its over 1 dollar more expensive then regular diesel I think I will just stick to the cheaper one.

  5. Rich Lyman says:

    Mr. Murphy is spot on. Biodiesel can be purchased for $2.50/gallon in Charlotte (March, 2013). Therefore, it makes perfect economic and ennironmental sense to use it in lieu of diesel. While your cause is noble, your price is not. With the tax credits available for biodiesel production to lower the cost, you should be passing those on to the consumer.

  6. Liedeke says:

    I just purchased a diesel for two reasons: (1) I have an hour commute to a low-paying job and wanted better fuel mileage than I was getting in my gas guzzler; and (2) I was eager to start using biodiesel fuel. However, when I came to your website to check the biodiesel pump locations I was shocked to find that I would have to both pay a Coop fee AND pay a significantly higher fuel price than what I pay now for regular diesel. Shouldn’t joining a Coop provide the benefit of a cheaper fuel?

    I understand that your prices are based on your limitations but then in order to really make a difference the focus clearly should be placed on eliminating those limitations in order to provide biodiesel at a competitive price. To only provide clean, war-free fuel to those who are financially well-off seems awfully counterintuitive. What a disappointment for a poor single mom like me who wants so desperately to go biodiesel but cannot afford to. I must say that with what I know about the cost to produce biodiesel I am very surprised and saddened by this.

  7. Tarus says:

    Leideke – I’ve been a lurker around this project for many years, and I can tell you that the price is simply the result of what it costs to manufacture. The people at Piedmont are not highly paid, and some of the needed work is provided by volunteers. If Piedmont were to sell fuel at or below cost, it would not be sustainable and the business would close.

    So instead of thinking about joining the Co-op to get cheaper fuel, think of joining the Co-op to get fuel at all. As far as I know there are few options for locally produced fuel derived from waste streams. In the past years I’ve watched a number of biodiesel operations cease but Piedmont is still around, so they are doing something right.

    When I went from my Ford pickup getting 20 mpg to my Jetta getting 50 mpg, not only did I save enough to cover the difference in the price of fuel, I saved enough to buy biodiesel. Perhaps you should compare the cost per mile of your gas guzzler to the cost per mile of your diesel vehicle and see if that helps in your decision.

    Only buy spending a little more now can we generate enough demand for lower cost fuel later.

    • No these guys must not be doing something right, check out the price of Bio D in NC/SC. Are these companies still are making money? Well they’re still in business. This sounds like the hippies are getting greedy and joining the hippie cause has cost, that’s why the eco-hippies are better than the rest of us oil burners. I would run Bio D in small amounts if it cost more that Dino D, for the lubrication, but there’s no way I would run any more than 10% Bio D if it cost more than Dino D. Simple economics folks
      http://www.trianglebiofuels.com/ $3.65 for B99 on road / $3.02 for B99 off road
      http://midlandsbiofuels.com/ $3.60 for B100

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