Biodiesel Price Increases

Here's a note LC Biofuels sent to its customers about the recent biodiesel price increases; some quick highlights:

• virgin soybean oil's price has tripled in the past year
• lots of biodiesel plants have ceased production until prices fall

Alas.

Dear LC Biofuels BUG Members,

Thanks for all the emails and phone calls voicing your concerns over the ever increasing price of biodiesel. The price increase is as frustrating for us as it is all of you, if not more. Though it seems the price of biodiesel is tied to petroleum diesel there are many other factors that drive the price up more significantly. Feedstock prices, production costs, transportation, and the weakening of the dollar all contribute to the high price of biodiesel.

The primary culprit is the high price of feedstock used to make the fuel. Our prices are dictated mostly by the CBOT (Chicago Board of Trade) and what soybean oil, tallow, rendered products and all the other feedstocks used in biodiesel production are being traded for. Over the past year we have seen the price of soybean oil triple. Two weeks ago, it reached a high of $0.70 per lb, or $5.25 per gallon to the producer. Add another dollar to that for production and shipping and you realize what virgin soy biodiesel would go for. The reason soy prices have increased the way they have is the U.S. is exporting the oil to other countries at a premium. With the low cost of the dollar, countries like China, who produce thousands of products that require soy oil in the ingredients, are happy to pay a premium for the oil since the dollar is so cheap. The traders are happy to drive the price up to pad their pockets as well.

This price increase has caused many biodiesel plants to cease production until prices come back down. With plants going off line every month, we have seen prices go up and up to the distributor. We tried to hold off on raising our prices by thinking the price increase was short term, but we now realize it is not. As soon as our costs begin to decrease you will certainly see it at the pump.

To help ease the pain of increasing costs we are offering $.05 off the posted price at the pump for prepayments of $200.00 or more payable by check or money order to LC Biofuels, LLC.

We value our customers and are striving to make biodiesel a mainstream product. We appreciate all feedback and support. Please give us a call with any other questions or concerns. Thanks again.

LC Biofuels response to the FUD

Lance from LC Biofuels (where I've been filling up on b20 in South Lake Tahoe this winter) sent out the following email to LC's customers, in response to the recent FUD about biofuel sustainability:

Due to the recent concern over the sustainability of biofuels, we would like to address our Biodiesel User Group Members about LC Biofuels position on sustainable biodiesel.

Our premium quality biodiesel is made in the US from a blend of 80% American grown soy bean oil and 20% recycled oils. This blend yields the highest quality biodiesel available with recycled feedstock without sacrificing low cold flow properties. We pledge to never source foreign grown feedstock's such as palm oil and South American soy that is unsustainable and environmentally destructive. We also pledge to use the most sustainable and locally produced biodiesel as it becomes available. The biodiesel industry is still in its infancy, however there are many alternative feedstock's and production companies that will be available to us in the near future.

LC Biofuels, LLC position on Sustainable Biodiesel reflects that of the National Biodiesel Board, of which we have been a Member since 2005.

1. LC Biofuels only sources biodiesel from a blend of 80% U.S. grown Soy and 20% recycled oils.

2. We oppose the use of non-sustainable agriculture practices worldwide in biodiesel production.

3. We support efforts to ensure that biodiesel produced and sold in the U.S. comes from sustainable resources.

4. In the United States , more than 80% of estimated 2007 biodiesel production came from soybean oil. The rest was divided among other feedstock's such as recycled cooking oil, fats, and vegetable oils from other oilseed crops.

5. The U.S. Department of Agriculture (USDA) reports that U.S. acreage for crop production has not increased since 1959. Major land use changes are not expected due to Biofuels.

6. The U.S. is the largest exporter of soybeans in the world, making the importation of soybeans from countries with non-sustainable agricultural practices less likely. Other nations have already been increasing soybean production for decades.

7. According to a USDA/DOE life cycle study, soy-based biodiesel has a 78% carbon dioxide reduction. This takes into account the planting and harvesting of the soybeans, producing the fuel and delivering it to the pump. A 2007 update to the study found that for every unit of fossil energy it takes to make biodiesel, 3.5 units of energy are gained.

8. According to U.S. Census data, the country currently has the equivalent of more than 400 million gallons of soybean oil sitting in inventory. The 2009 RFS goal is the use of 500 million gallons of biomass-based diesel, which includes biodiesel. Soybean oil only represents half of the available domestic raw materials for biodiesel available in the U.S.

Additionally, the NBB has feedstock development programs in place to further increase the efficiency and diversity of the raw materials that are used for biodiesel production. These initiatives have the potential to recycle commercial and agricultural wastes, bring sustainable agriculture to non-productive lands, increase crop yields, and further lower pesticide and fertilizer applications. Arid variety crops, algae, waste greases, and other feedstock's on the horizon have great potential to expand available material for biodiesel in a sustainable manner.

For more information please contact LC Biofuels, LLC at 510-232-0416 or visit www.lcbiofuels.com or www.biodiesel.org