As President of the San Francisco Biofuels Co-op, I am often asked, why is the price of biodiesel so high and why have prices stayed high after the introduction of the federal excise tax credits.
The short answer is supply and demand. Demand for biodiesel has increased greatly over the last year. Supply, while increasing rapidly, has not increased rapidly enough to keep up with demand. Northern California fits this profile, but has the added complication of lack of local production. All of our biodiesel has to be brought in via truck or railcar, which further increases the price.
Here is the current pricing breakdown:
SFBC Fuel Pricing
Wholesale Price to Our Local B99.9 Fuel Distributor $ 2.855
California Diesel Fuel Tax $ 0.180
California Sales Tax (8.5% of price not including CA diesel fuel tax) $ 0.291
Federal Excise Tax $ 0.244
Less, IRS Tax Credit $ (0.500)
Total $ 3.070
Price to SF Biofuels $ 3.450
Distributors Margin $ 0.380
SF Biofuels Mark-up $ 0.150
Sweat Equity Price $ 3.600
SF Biofuels additional Non-sweat equity mark-up $ 0.250
Non-Sweat Price $ 3.850
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3 comments:
The biodiesel is made from waste cooking oil, so the credit is $0.50. It is blended to B99.9, so I guess the actual number is 99.9% of 50 cents, but I rounded up for simplicity.
You are correct. We are being hosed. The price should not be where it is at, but we currently have no production here in Northern California, and we have high demand, so we are forced with this unfortunate market dynamic. Several producers should be coming on line here in 3-9 months, so things should improve. In the meantime, we are shopping for a better price from a different producer.
My brother and I are working on building a BioDiesel Plant. We are looking for a source of WVO. If anyone can help us out we would appreciate it. We can be contacted at Info@parrabiofuels.com thanks
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