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World - What is going on with the fuel price? (01/2015)

During the last weeks we got many of questions about the further development of renewable fuels, while we are experiencing a significant decrease of the crude oil price at this moment. What does it all mean to us? First of all: Even cheap crude oil price doesn't make it any more sustainable or carbon neutral. Negative results for all of us still the same. At the moment the price is even far away from covering the most of exploration cost not talking about realistic production cost, they never got covered in the past and will not in the future. In general this low crude oil price reflects an on-going market conflict especially between North America and Saudi Arabia. North American companies try to get their shares on the market with oil coming from fracking or oil sand. As a result of that Saudi Arabia sales a lot of relative cheap oil to get the world market price below the production cost of fracking or exploration from oil sand which are mostly above USD 60-100. They even avoid to set lower production limits to stabilize the oil price regarding to the relative low world economy. Negative side effects are other struggling oil based economies like Russia or countries in Central and South America. They have difficulties to pay back their depts, because they don’t make enough money on oil at the moment. All this will lead finally to a point that more costly sources will give up and get properly overtaken by the cheaper once. First indicators of that we already saw last week. Major oil equipment and source managing companies did start cutting jobs, like Civeo corp. or Halliburton. Finally this process will bring the oil price back to where it was in the past. What is the actual effect to our biofuel. We see there mostly two groups of customers: Environmentally and financially motived people. Luckily today the first group is the major part of our customers. They just happy with building up their relatively independent fuel source not looking on the swinging crude oil price on the next filling stations. They enjoy the sustainability, the improvement of local economy and properly a long term benefit. But from our point of view we are happy even with the other group so far, because it mostly based on waste vegetable oil. Originally this source was more or less for free. Over the time collecting companies were established and try to make this bigger and bigger. Many of them became simply subcontractors of the petrol industry by supplying an extra fuel source. The present crude oil price seems to make many of them unprofitable. So they gave up and left pretty much waste cooking oil again to the original single collectors or small local groups, which are mostly our customers. In general we are learning from all this that we really have to keep this business local, try to build up real local cycles, because this will keep the money local and give benefits to local economies. This total different structure compare to existing fuel supplying structures seems the only profitable solution for biofuels, because it uses local sources without wasting part of it in transportation, extravagant fuel handling, etc. So we still pretty optimistic for the future…and we will keep doing our part in this in 2015 as well. Stay with us :-)