Biodiesel Growth, Obstacles Highlighted

STREATOR, Ill. (DTN) -- Biodiesel is creating new markets in fuel and bioheat heating oil which marketers can capitalize on, according to Mike Devine, New England sale and marketing consultant for Amerigreen Energy Inc.

He spoke Tuesday afternoon as part of the Biodiesel Magazine webinar, "Biodiesel Distribution: Progress, Obstacles and Opportunities."

He said consumer interest in biodiesel in numerous surveys show between a five-to-one and a 10-to-one positive consumer attitude for use of blending of biodiesel into petroleum.

"Biodiesel is now creating new markets, new sales and additional market opportunities for terminal operators and distribution," Devine said.

The ASTM specs of D7467 for fuel and D396 for heating oil up to 20% blends have helped create new markets, he said.

Markets include municipalities, power generation, underground operations, military uses, agricultural and off road uses, generators, locomotive and home heating oil markets in Northeast," Devine said. "Bioheat generates the movement of millions of gallons moving into markets. [Biodiesel] is a new margin-maker for petroleum distributors."

He said growth in the U.S. biodiesel industry has been significant over the last 10 years, climbing from a 20-million-gallon industry to 1.8 billion gallons.

The market is, however, challenged by lower crude oil prices that have reduced the cost of petroleum diesel.

"The severe drop in the price of a barrel [of crude oil] changed these dynamics, adversely affecting the price of biodiesel," Devine said. "With $45 barrel crude, the BoHo spread (the difference between soybean oil and ULSD futures) is 45 cents with bean oil over heating oil," he said. "And there has been a 40-cent decline of RINs over the past 90 days. So what do we do now?"

He said create markets by talking about the benefits of biodiesel.

"Biodiesel creates American jobs," he said. "In recent a study the U.S. biodiesel industry supports 62,000 jobs."

In addition, B20 blends of biodiesel reduce greenhouse gasses by 15%, which is key at a time when the political climate is focused on curtailing climate change and global warming, he said.

He said in addition, "Two percent biodiesel blends provides lubricity benefits you might find in over the counter additive packages."

"Successful biodiesel distribution requires marketing, some investment and outreach to marketplace," he added.

"We have seen increased sales margins for our distributors by blending biodiesel."

He said the way to market biodiesel blends in petroleum is to concentrate on the environmental benefits.

"Move the optics of petroleum products from being part of problem to part of the solution with biodiesel blending," he added.

Myke Feinman can be reached at myke.feinman@dtn.com

(BM/AG)

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