The growing interest of the US energy sector in biofuels has caused an inflation in the price of vegetable oils and could push up the price of the famous donuts.
Will Oil Industry Companies Deprive Americans of Their Precious Donuts? It is in any case the cry of alarm pushed by the manufacturers of this cookie symbol of America.
In question, the significant use of stocks of vegetable oils by ExxonMobil and other oil groups such as Marathon Petroleum. These companies have started to increase their supply of biofuels, many of which are made from edible oils extracted from plants or animal fats.
This diversification of the oil industry is notably motivated by financial incentives from the US government in this area. Decided under the Obama administration to meet its ecological ambitions and came into effect at the end of last year, the Biorefinery Assistance Program offers loan guarantees of up to $ 250 million for development, construction and maintenance. modernization of bio fuel refineries. This program did not fail to provoke the rush of majors from oil to the new black gold.
But the energy sector’s appetite for vegetable oils is taking its toll in agricultural markets. The US Department of Agriculture predicts the price of soybean oil will average 65 cents per pound this year, more than double the price two years ago.
This inflation is causing trouble in the agri-food sector, a major consumer of vegetable oils. “ We support renewable fuels and the green agenda, but soybean oil prices have tripled. Our members fear that they will no longer be able to buy oilSaid Robb MacKie, CEO of the American Bakers Association, one of the leading unions in the baking industry.
Its leaders recently met with officials from the US Environmental Protection Agency to call for a review of the biofuels program.
The Krispy Kreme restaurant chain, which specializes in making and selling donuts, is not immune to these supply issues. “I have to admit that the pressure on commodities in the short term has been nothing short of extraordinary CFO Josh Charlesworth told analysts.
The chain expects its prices to rise during the month of September. Its CEO, Mike Tattersfield, was however reassuring. “We sell donuts by the dozen so we are careful to keep the price affordable. For a dozen donuts, the price increase will not really be visible” did he declare.
But this statement may seem a bit optimistic as the motor fuel companies are not going to forget about vegetable oils right away. Chevron said last week that it plans to invest $ 600 million in a soybean oil project with Bunge, the world’s largest oilseed processor. The two companies wish to create a “ reliable supply chain from farmer to refueling station “.