BlueFire Ethanol Fuels, Inc. (OTCBB: BFRE) CEO Arnold Klann writes to the BlueFire Ethanol Fuels, Inc. shareholders.

In light of recent market activity I felt it pertinent to update the BlueFire shareholders on BlueFire's progress and views of the recent sharp decline in stock price.

BlueFire cannot attribute the stock decline to a single cause but the overall market decline, traditional producer shortfalls and aggressive selling of the company's stock may have all influenced the stock price.

BlueFire continues to achieve its milestones in development and deployment of its proprietary cellulose to ethanol technology. Our first facility, located in Lancaster, is on target to break ground in the fourth quarter this year with completion and start of production in the third quarter of 2008. The Lancaster facility is the first of the previously announced 20 plants in our 8 year deployment strategy. The El Sobrante facility licensing and permitting is on schedule for a second quarter 2008 ground breaking. Funding for the Lancaster facility is proceeding on schedule.

The recent sharp decline in stock price does not reflect where we are currently as a company, nor any of the future possibility of a technology which could help to free the United States of its dependence on foreign oil. As BlueFire continues to hit milestones and targets we are confident our stock price will reflect the company's operations and successes. Although we cannot predict market trends, as we progress to one of the national exchanges our stock will trade more in line with overall market volatility and pricing.

Thank you for your continued support. We look forward to updating you on the deployment of our revolutionary technology as we move toward our first domestic production facility.

In closing, we at BlueFire will continue to strive to build shareholder equity by forging strategic industry relationships, continuing our facility development and deployment and closing in on our goal to not only be the worlds largest and lowest cost cellulose to ethanol producer, but the lowest cost producer of ethanol period.

Arnold R. Klann