BULK BUYING & DISTRIBUTION
Leading this group discussion are :
BBC quickly learned that demand for biodiesel was greater than their production capacity. Without advertising, they were receiving many more requests for fuel than they could fulfill by producing their own. It seems that many people want to know how to make biodiesel, but don't want to make a commitment to help with production, due to the time required.
BBC's production has peaked at about 100 gallons per month. The primary limitation is human energy to do the necessary labor, particularly collection of used vegetable oil. Finding sources for free oil is not a problem.
The solution is to buy in bulk. A significant benefit is the purchasing power of a community. The bulk buying program is currently handling 1,000 (one thousand) gallons a month.
BBC buys biodiesel from Yokayo Biofuels, in Ukiah.
This is a good relationship because they share similar philosophy and goals, namely the promotion of sustainability, and doing business with that objective in mind.
BBC operations are based out of the Ecology Center. The intention is to keep operations fairly small, because the Ecology Center doesn't wish to become a "gas station".
Another reason to do bulk buying is that a storage tank has less stringent permitting requirements than a production facility.
Find a location for storage where there will be as few issues with local authorities as possible.
Be smart about approaching your City and County. In Laytonville, Mendocino County, local biodiesel producers made a presentation to the County Supervisors. This helped to get good co-operation from the authorities, including a change in zoning for their facility, with classification of biodiesel as non-toxic and non-hazardous.
Biodiesel is safe, but will degrade some materials. Therefore do not place tank on an asphalt surface, because biodiesel will melt it.
BBC has three tanks, 330 gallons each, made of heavy duty polyethylene. A metal tank is recommended, because it can be pressure tested, and is the fuel industry standard.
BBC has completed three cycles of buying and distribution to date (Sept. 2003).
Members pay in advance. 23 people bought last time. Collection of money is time consuming. It is worth considering ways to improve efficiency of getting payments from members.
They have a network of 5 distribution points, which they call "sites". These sites are typically a residential driveway or garage. Each site has a Site Coordinator, who is responsible for getting fuel from the central storage, by transferring to containers which are kept at the site. Members provide their own 5 gallon containers (Jerry cans/Carboys).
Fuel transfer is key in making the co-op work. It is legal for anyone to transport up to 100 gallons of fuel in their truck. It is recommended to use several containers to keep the total under 100 gallons. Remember, a full 55 gallon drum will weigh about 500 pounds.
Try to have a regular turnover of fuel to keep your supply fresh. Biodiesel can be stored for up to six months.
Yokayo have been providing distribution of biodiesel, which they buy from a producer in southern California. Yokayo are now in the process of becoming a producer. There is very little profit in operating as a strictly biodiesel distribution company.
Companies that provide fuel distribution services are known as "petroleum jobbers".
More co-ops are needed to improve availability to consumers. BBC is well organized. Other co-ops have failed because they focused on just production.
BBC is a role model for a successful co-op. Key elements are :
1. focused departments for Production (small scale homebrewing), Education (biofuel advocacy), and Distribution
2. effective distibution network.
Concerns / areas for improvement
Poor accuracy of measurements during distribution have resulted in an average loss of 10% of the fuel in each buying cycle.
( i.e. about 100 gallons per 1,000).
BBC has not put a mark-up in price on the fuel. This leaves no budget for contingency needs, such as new equipment.
A solution to this might be a fee to join the co-op, or an annual membership fee, or simply a mark-up on cost of fuel to members.
BBC buys at $2.30-$2.50 per gallon (including non-profit discount). This relatively high cost reflects the high quality of the product. Cheap producers are probably not washing the fuel adequately to come close to ASTM standards. For some engines (e.g. electronically controlled, TDI engines), it is important to use fuel which meets ASTM standards. The most expensive ingredient in the production of biodiesel is methanol.
The role of the Site Coordinator is the crucial link between the central storage (Ecology Center) and the end-user. If this task is not performed in a timely manner the distribution network may break down, because the end-user is tempted to go directly to central storage to get their fuel. Solutions : keep tasks of Site Coordinator manageable, keep number of members for each site small; provide incentives for Site Coordinators such as price breaks on fuel; improve communication and training for members.
Good distribution is important because the limitation on central storage means the co-op cannot order and receive more fuel until central storage is empty. Fuel producers have an incentive to help co-ops become better distributors.
A location where members can drive up to the main tank at central storage may be an advantage, allowing streamlining of distribution, but storage locations in urban areas can be expensive to rent or lease.
Improve outreach by translating promotional materials into other languages. Do direct community outreach, such as painting murals featuring biofuels.
As organizations grow, beware of difficulty in maintaining values and focus. In order to keep effective democracy in the group it's good to grow to a certain size, then spin off other groups. Co-ops can be open with each other in sharing information.
Notes by David, Lisa, and edited by Daniel.