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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18 MAY 2014 | FUEL OIL NEWS | www.fueloilnews.com FUELS By Darrin Cline, for renewable energy group Summer biodiesel blends Biodiesel Opens Market Opportunities for Heating Oil Marketers L onger days and warmer temperatures have tradition- ally meant more versatility in biodiesel blending and retail options. As late spring rolls into summer, retail- ers have capitalized on the opportunity to explore an array of summer biodiesel fuel blending offerings. With recent advancements in quality control, including the ASTM D6751 and related BQ-9000® standards, biodiesel has proven its viability as a year-round fuel source. Even so, many retailers and consumers tend to prefer higher-percent- age biodiesel blends as the thermometer rises. "Many people capitalize on these opportunities because they see the advantages of reduced emissions and other environmental benefits, as well as the improved margins that come with higher-percentage biodiesel blended fuels. It leads to positive blending economics and is an opportunity for business owners to differentiate themselves in a challenging marketplace," said Renewable Energy Group, Inc Director of Sales and Marketing Jon Scharingson. COMMUNICAtINg WIth CONSUMErS During the winter months, many blenders and retailers in cooler regions will offer a B2 or B5 biodiesel blended fuel. As summer sets in and the temperature steadily rises, blend levels typically rise accordingly. Retailers and consumers often find the transitions to be easier if done incrementally. A switch to a B6 blended fuel may initially spark customer interest, but will not be a sub- stantial change over the long term. However, once a comfort level is achieved with B6, then the percentages can be pro- gressively heightened to B10, B12, B15 and ultimately B20. "We recommend that retailers do their homework and proactively ensure that they are receiving a quality blended product from a reliable supplier, and that it will effectively work at their location. They then need to communicate this message to their customers, especially if they begin to sell higher percentage biodiesel blended fuel," Scharingson said. Labelling becomes another area of consideration for par- ties that choose to offer higher percentage biodiesel blends. For biodiesel that is blended at a B5 level or below, it is considered ultra-low sulfur diesel — ULSD No. 2 — and does not require any specialized labelling at the pump. However, if they are offering biodiesel blends above that threshold, retailers must label each pump the fuel is 6% to 20% biodiesel. SUMMEr bLENdINg bENEFItS The aforementioned enhanced margins are also a significant influencer for retailers. "In the summertime, blending economics is one of the pri- mary motivating factors. It makes more sense for retailers to blend biodiesel at these higher levels and maximize their mar- gins when the warmer weather is available," Scharingson said. Biodiesel's green energy gains are better realized through summer blending. States across the country are aiming at improving air quality, with reduced sulfur emissions being a significant component. With biodiesel as a sulfur-free energy source, every percentage point of biodiesel that is added to transportation fuel means lower sulfur output from each engine. CApItALIzINg ON CApItAL A transition to on-road biodiesel offerings for compa- nies already engaged in marketing home heating oil can be a simple way to appeal to a new market. As the heating oil fuel specification and the ULSD No. 2 specification become identical over time, it creates an opportunity for heating oil suppliers to enter the transportation fuel sector. With the storage, blending and fleet technology already at their disposal, heating oil distributors are positioned to capitalize on the benefits of biodiesel blended fuel in the transporta- tion market. "If a company has been blending B2, B5 or even B10 Bioheat™ fuel oil in the winter months, it's a very easy transi- tion to be selling biodiesel blends for transportation fuel in the summertime. They've already made the investment in the infrastructures, so they might as well take advantage of the new opportunity," Scharingson said. Once the framework is in place, there is no substantial capital required to alternate or increase blends. For first-time retailers making the switch to biodiesel blended transporta- tion fuel, the biggest challenge to conquer is calling on a new market segment — transportation fuel clientele — rather than the home heating oil market. Blending and retailing higher percentage biodiesel is an eas- ily accessible avenue for long-standing alternative marketers, heating oil retailers or even those entirely new to the biodiesel industry. Through diligent research and explaining the benefits of biodiesel blends to consumers, retailers that choose to capital- ize on summer blending opportunities further realize the positive benefits of offering alternative fuel sources. l F O N