The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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FUELS 14 JUNE 2015 | FUEL OIL NEWS | www.fueloilnews.com BY GREGG HENNIGAN FOR REG Diversifying Renewable Profits In heating oil offseason, look to biodiesel H eating oil is, for the most part, a cold-weather product. By the time the grass is green and swimming pools are open, many heating oil companies are done supplying fuel for a few months. In the summer, their focus is on fleet and equipment maintenance, budgeting, forecasting and other duties. Some do sell fuel, but it's often larger companies, and they tend to stick to diesel, gasoline or propane. There is an opportunity, however, to tap another resource that can help a company diversify and, potentially, achieve higher margins. And it's a product that already is increasingly being associated with heating oil: biodiesel. "If you have the assets and you have the storage facilities, or if you can add them, then you really should be talking to somebody about biodiesel to help you evolve your heat- ing oil business," said Barry Knox, director of blended fuel sales at Renewable Energy Group, Inc., a leading producer of advanced biofuels. BIODEISEL AND HEATING OIL Heating oil is a petroleum product, and the industry has seen a shift in recent years toward cleaner-burning fuels to reduce harmful emissions. Consumers want it, and in some cases local and state governments have gone along. Biodiesel has stepped in as a cleaner alternative. Traditional heating oil blended with biodiesel, known as Bioheat™ blend- ed fuel, has lower emissions than petroleum diesel and has very low sulfur content. Bioheat blended fuels usually have between 2 and 5% bio- diesel, referred to as B2 and B5, although many buildings are heated with B20 blends and even higher. So, heating oil suppliers are well aware of biodiesel, and many already offer the renewable fuel. An opportunity exists for them to diversify into the transportation fuel market during the heat- ing oil offseason by offering biodiesel blends for on-road use. SUMMER BLENDING BENEFITS There are several reasons why this would be beneficial. For one, diesel fuel consumption is increasing, especially in passenger vehicles. The U.S. Energy Information Administration has forecast that drivers will consume 17.1% more diesel fuel by 2023 and 26% more by 2040. The trend has already started. Diesel car and SUV registrations in the U.S. increased 24.3% from 2010 through 2012, compared with a 2.75% rise for all car and SUV registrations, according to a Diesel Technology Forum analysis. The CAFE standards coming over the next decade will require significantly improved fuel economy among cars and light-duty vehicles, and diesel-powered passenger vehicles are up to 40% more fuel efficient than gasoline cars. Biodiesel is a cleaner alternative, reducing net carbon dioxide emissions by 78% on average compared with petroleum diesel. On a related note, more and more drivers care about the environment. They want clean fuel and improved fuel economy, and heating oil suppliers that add biodiesel-blended transporta- tion fuel can tap into that customer base. "It's really about options," Knox said. "As we look to what the energy solution is going to be, the next generation is really concerned about being good stewards of the environment and having a greener alternative and a lower carbon footprint."