Web exclusive posted July 1, 2008 at 3:59 p.m. CST
In an effort to bring order and efficiency in the chaotic world of the ethanol and biodiesel industries, U.S. Biofuels Exchange Inc. has established a new Internet-based biofuels marketplace intended to link producers of all sizes with more buyers and sellers of their product.
According to James Kaufman, a U.S. Biofuels Exchange board member, the platform will be a similar model employed by eBay which has a rating system to easily track and follow transactions. In late June, U.S. Biofuels Exchange announced it has retained an experienced software engineer and web development specialist to expedite the completion of it’s Web site that will feature real time pricing, quantities and matching of producers, sellers and buyers.
Kaufman said the goal of U.S. Biofuels Exchange is to provide both ethanol and biodiesel producers a reliable electronic trading and transaction tool that will attract more purchasers that would otherwise not be accomplished by “back room” deals currently being conducted today. These “back room” deals are especially prevalent in the biodiesel industry, which hampers market efficiency and growth to promote usage of the product by consumers.
“The efficiency in the [biofuels] marketplace doesn’t exist because there are too many ‘back room’ small deals and no central exchange,” he said. “The demand is so heavy for both the cost savings and ‘green’ aspect that a lot of times somebody makes a promise to sell it in the same state and they’d rather get more for it. So this will be a way to put it out on the marketplace without anyone even knowing it’s them.”
Kaufman said that the U.S. Biofuels Exchange trading and transaction platform will also allow smaller ethanol and biodiesel producers looking for equal value and treatment to channel their specific product into larger markets.
“Rather than having to sell at 80 percent of its value three months down the road while they’re making it, they now have a spot market they can go to and where buyers are looking for the best price, closes distances and so forth,” he said.
Kaufman won’t disclose how U.S. Biofuels Exchange would create the proprietary platform, “but it will be proprietary in every sense how the transactions go through, how trades are traded and how we keep it extremely fair,” he said. Kaufman also won’t disclose an exact fee for each transaction, but he said it will likely charge a nominal flat rate in the lowest basis point in order to stimulate transaction activity across both industries.
Although the electronic platform is not currently operational, U.S. Biofuels Exchange intends to conduct beta tests on its database this summer in a trial run and anticipates going live with transaction activity this fall, Kaufman said.
U.S. Biofuels Exchange, formerly Diamond I Inc., currently trades on the over-the-counter bulletin board (OTCBB) as DMOI. It changed its corporate name to “better link its name to its main business focus”. Kaufman credits the creation of U.S. Biofuels Exchange to its chairman Tom Gray and its affiliated petroleum marketing companies who bring a wealth of savvy and expertise that should promote enhanced market fluidity with the biofuels marketplace.
“Our goal is to assist all sizes of ethanol and biodiesel producers and give them a place where they can get the most of their product and enable them to connect them to more buyers so they don’t have the risk of having one buyer that buys their entire product,” Kaufman said. “Our initial response and interest in this has been tremendous.”
For more information on U.S. Biofuels Exchange and its services, visit https://usbiofuelsexchange.net/?page_id=2.
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