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28 FEBRUARY 2016 | FUEL OIL NEWS | www.fueloilnews.com GASOLINE Gasoline also has a few bullish trends. "Gasoline is also a bit different," Levine said. "Demand is looking good and prices are low, so we might see some rise in prices as we go into the spring turnaround. Nothing massive, but I do think enough that being a buyer of the crack spread makes sense." "Gasoline was the bright spot of 2015," Milne said. "Crack spreads were good for refiners trying to capture that demand and everything was looking good and then we come out... with this report from EIA that challenges those beliefs. It suggests a huge drop in demand and a big jump in inventories and we saw gasoline sell down to a seven-year low as a result. So that's negative." Milne does see gasoline being supportive going into 2016. He notes that the auto industry saw record sales in 2015 between low gas prices, low interest rates and what was seen as an improving employment picture. He noted that new data has even come out suggesting that millennials might be putting down the game controllers and mobile phones and getting behind the wheel a little bit more than was anticipated. BIOFUELS With biofuels, recent announcements out of Washington set the tone. Sprague offered the following: With regard to bio fuels, the year-end reinstatement of the blend- ers' tax credit assures that bio-blends are here for the foreseeable future although lower overall energy prices relative to the higher cost of producing bio-fuels makes it unlikely that the role of bio-fuels will grow to any appreciable degree—short of increased retailer demand or state and/or federal mandates requiring larger blend percentages. On the production side, there are challenges closer to home. "U.S. producers and marketers are all anticipating the competi- tive threat Argentinian supply represents," said Steve McCracken, AMERIgreen's CEO of distributor energy services. "Market participants peg late Q1/early Q2 timeframe for this product to land in U.S. port terminals. As we are (hopefully) holding onto a strong 2nd half of a winter season, market direction for RIN and net biodiesel values will emerge. With heating oil suppressed, we'll likely still see discretionary blend margins but not at steep discount or with widespread availability as in years past. "Price parity (and favorability) with distillates has seen record adoption growth among blenders, marketers and therefore consumers. While an excellent distillate blend- stock, biodiesel's real value to the industry is as a catalyst and equipment enhancement additive. In addition to marketers looking for a pricing edge, diesel motors and heating equip- ment respond exceptionally well to biodiesel blends. With increasing efforts to limit and diminish emissions, consumers can achieve and exceed emissions goals by simply blending biodiesel. Marketers see a discount on the gallon, users expe- rience steep savings in cost avoidance. No new equipment or modifications or conversions. No fueling infrastructure instal- lation for CNG or LNG. "Biodiesel can and will save a few points on the gallon for blenders and we'll see favorable net biodiesel values this year. The long-term market outlook for distillates is much clearer (and positive) as long as biodiesel remains a part of the equa- tion. For the sake of the deal and the long-term stability of the industry let us not be disillusioned by the idea of only saving a few pennies on the gallon and focus also on sustaining the mar- ket by committing to increased blends, extending life of diesel and heating equipment, maintaining downstream pull for the benefit of a thriving distillate market." While this season's weather is tough on dealers, and these prices can be tough on traders, the upside for consumers is hard to deny. "It's hard to get really enthusiastic about any of these prices—really," said Levine. "But as a consumer I couldn't be happier. It leaves money available to purchase other things and from a broader economic point of view low energy prices are very good." | F O N