Energy in America: California Drivers Cutting Out Middle Man to Buy Fuel Straight from Manufacturer

Like many Americans seeking relief from surging gas prices at the pump, California resident Josiah Adams switched from a gas-guzzling car to a diesel truck.

"We are officially gasoline free, and it feels really good," Adams says.

But now, by switching from diesel to eco-friendly biodiesel, he's saving even more by buying fuel straight from the manufacturer.

Some energy analysts predict it's the start of a trend, with dozens of refineries across the U.S. cutting out the middle man and selling biodiesel direct, for less.

It's a business model that’s working well for Sirona Fuels, based in Oakland, Calif.

Each month, the facility produces 50,000 gallons of biodiesel from used-cooking oil collected from local schools and restaurants. That cuts down on production costs.

After two years of selling only to distributors and retailers, Sirona recently opened its pumps to motorists, mostly locals, which reduces distribution and transportation costs.

"Every single day we get new customers rolling in," says Paul Lacourciere, CEO of Sirona Fuels. "Within the first ten days we sold over a thousand gallons of fuel to all new customers."

By reducing manufacturing costs and relying on community contributions, Sirona can offer biodiesel at a discount -- as much as $.25 less per gallon than what diesel is being sold for at a regular gas station. "As long as I can continue to get support from local businesses to recycle their oil at my plant, I can keep prices below the petroleum diesel prices," Lacourciere says.

But industry analysts offer caution: As good as the price may be, this fuel isn't for everyone, and drivers need to make sure they won't hurt their car by filling up at biodiesel-direct stations.

The car must have a diesel-powered engine, and that's just for starters, says Bob Gough, director of Renewables for OPIS (Oil Price Information Service).

"You have to think about more than just price. You have to ask, am I voiding my warranty? Am I going to have problems down the road with my engine? Is the product of good quality? And am I meeting all state/federal clean air specs?" said Gough.

As more drivers get serious about alternative fuels, Sirona Fuels believes factory-direct sales will become more commonplace.

"As the price goes up, and the more we can hold our price down, more people are going to switch over," says Lacourciere. He adds the biggest benefit is a local one: keeping jobs and dollars in the community.