Ultra Green Energy Services gets Oxford, Conn., a nice biodiesel price

By Nicholas Zeman | September 18, 2009
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Posted September 23, 2009

Providing "floating" biodiesel prices has allowed Ultra Green Energy Services of Chicago to create some enticing deals for would-be buyers, said Michael Cooper, vice president of sales and trading for UGES. The city of Oxford, Conn., recently negotiated with UGES to supply the city works and appliances with B5. UGES reported that its selling price of $2.35 per gallon was more than a dollar less than what the city was paying under a previous contract.

"Most other [distributors] offer a fixed price for diesel fuel," Cooper said. "But our price is always NYMEX heating oil…plus."

The transportation example: a trader prices out 42,000 gallons of biodiesel in Chicago at $1.80 a gallon, and by the time the rail car has gotten to a Boston distribution terminal the bottom has fallen out of the market and FAME is at $1.60. "I haven't lost that 20 cents," said Cooper, "because our price [x + heating oil] floats."

Managing risk in that way also limits the traders upside rewards. "If it goes up to $2 we don't benefit from that either," Cooper said. "Floating our price is just one of the ways we manage our risk."

UGES uses only methyl esters made from recycled fats and cooking oils in its name-branded Ultra Green Biodiesel, which is cost effective because FAME has lower commodity risk, more regional production and lower distribution costs, the company stated after delivering its first load to the Oxford Municipal Garage last week.

"I hope all the towns and cities in Connecticut understand that they can both control costs and use clean burning biodiesel blends," said Danny Falcone, USEG's wholesale manager. "This is a win for everybody-for the next three years the town gets a better product at better price, and all the town's buildings will use clean burning Bioheat."
 
 
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