Earth Energy Alliance CEO

The Human Element

Published in Oil & Energy Magazine, March 2010

Diverse people from different jobsWhy Oilheat and Biodiesel Will Survive

From time to time after the workday is done, I will take the opportunity to watch CNBC and other financial networks and try to get a better handle on what’s happening in the stock market.

Unfortunately, I am by no means a savvy investor, I just like to check on the progress or decline of my 401(k) on the hopes that I might be able to retire one day. While I listen to all the talking heads, I consistently hear the investment credo advice of “buy low and sell high.” I don’t always seem to follow this sage investment advice, however this approach makes me stop and think about today’s current state of the heating oil and biodiesel industries.

“Great as it was to be informed of the automakers’ decisions to integrate biodiesel into their future fleets and the petroleum industry’s investment strategies to incorporate biodiesel into their respective business plans, it was Bioheat that was the star that created the buzz at the 2010 National Biodiesel Board Conference and Expo.”

Yesterday I returned from the National Biodiesel Board’s (NBB) Annual Convention
and Expo, which was held in Grapevine, Texas. The attendance of the event was not as
robust as it had been in previous years. One might blame the lower attendance on the
fact that the biodiesel industry did not have a Renewable Fuel Standard (RFS II) ruling in
place a week prior to the conference.

Absent at this time is also the biodiesel federal excise tax incentive of $1 per gallon, which was allowed to expire on Dec. 31, 2009. Fortunately, the Wednesday prior to the conference, the RFS II ruling was released in a very favorable manner that included many of the feedstocks that today make up the fuel currently being produced by the biodiesel industry.

Once the conference began, it became apparent who was at this year’s conference as opposed to who was not. Coleman Jones, the biofuels director for General Motors, took this opportunity to announce that the GM heavy-duty trucks for 2011 will be capable of using a B20 biodiesel blend for all their new models. Ford Motor Company had previously announced and approved B20 blends for many of their truck models prior to the conference. Chrysler was the first of the big three to endorse the use of B20 blends for some of their current models in production. This signified a commitment by the three major United States automakers to integrate biodiesel into their domestic auto and truck lines moving forward in 2011 and beyond.

One of the most interesting panel discussions at the conference was a roundtable discussion that included executives from Marathon Petroleum Company, Morgan Stanley Capital Group, Magellan Midstream Partners, Kinder Morgan Pipeline and Northville Products and Services. The panel discussion centered around each company’s business plans and strategies to integrate biodiesel blends into the pipelines at a future time and, ultimately, throughout the fuel distribution system for the movement of distillate fuels in North America. Once the discussion ended, it left no doubt that biodiesel was here to stay and the future for biodiesel and Bioheat® seemed to be very secure.

Optimism resonated throughout the conference as the days progressed. Great as it was to be informed of the automakers’ decisions to integrate biodiesel into their future fleets and the petroleum industry’s investment strategies to incorporate biodiesel into their respective business plans, it was Bioheat that was the star that created the buzz at the 2010 National Biodiesel Board Conference and Expo.

Richard Sweetser, who represented the National Oilheat Research Alliance (NORA), provided an in-depth analysis of the environmental benefits of integrating biodiesel with ultra-low sulfur diesel (ULSD). Changes to the current heating oil specification allow Oilheat to create a pathway for a cleaner and greener fuel than that of natural gas. Sweetser provided the audience with examples of the great synergies between the heating oil industry and the biodiesel industry and spoke of the great importance of this collaborative partnership between Oilheat and biodiesel.

Dr. Thomas Butcher of Brookhaven National Laboratory provided a technical pathway for the future of ULSD and biodiesel by detailing the efficiency possibilities of integrating higher blends of biodiesel with ultra-low sulfur diesel in a high-condensing boiler, with efficiency levels rising to 95 percent. Dr. Butcher also spoke about the collaborative efforts of NORA and the National Biodiesel Board in creating the Bioheat Technical Steering Committee, which he serves as a technical adviser. A captivated audience listened intently as he spoke about the future possibilities of utilizing B100 biodiesel as a possible primary heating fuel for the Oilheat markets by 2050.

I had the pleasure of presenting a less technical view of the partnerships of these industries. My point was simple: Bioheat will be successful because of our improved environmental footprint and the economic realities facing both the biodiesel and heating oil industries. I firmly believe and stated at the conference that the Oilheat and biodiesel industries share many common interests and goals.

Our collective success resides in “the human element,” the thousands of farmers, food processors, and the 7,000 women and men who make up the Oilheat marketers. We may not have the collective financial resources of natural gas, but we have thousands of independently owned businesses whose collective “human element” will provide an army of voices moving these collective industries forward together as a dynamic strategic partnership.

As I write this article today, the biodiesel industry is absent of its $1 per gallon excise tax credit and NORA is absent of its reauthorization. To some, this would appear to be a very bleak picture for this critical strategic partnership. If I were an individual investor and could purchase stock on this collective collaboration of these industries, I would take a large position and buy, buy, buy!

A one-dollar billThere is no reason to doubt that the biodiesel industry will receive its $1 per gallon excise tax credit and that NORA will be reauthorized in the very near future. State associations are actively pursuing and integrating biodiesel blended with ULSD as the new liquid fuel of the future. NORA and the NBB are actively working not only on the new fuel blends of today, but also on the blends for the future.

In this issue of Oil & Energy magazine, the focus has been targeted on new technologies, conservation strategies and improving energy efficiencies. By promoting the new fuels of the future, the Oilheat industry can provide a platform for the heating oil marketer to impress upon their customers a bright and innovative future for Oilheat. It has been said that it is always darker before the dawn. One can choose to look at what is not happening today in these two respective industries or one can look to the future of a shared vision of what a brilliant collaborative effort between Oilheat and biodiesel signifies. Our new technology and bright future will reside in what has always marked change on this planet throughout history, the “human element.”

Please feel free to contact me for comment on this article or any insight that I may be able to provide in better understanding the use of biodiesel or Bioheat by e-mail at mike@earthenergyalliance.com or call me at (203)-221-3044. For additional information regarding biodiesel, please feel free to see the National Biodiesel Board at www.biodiesel.org or for additional information regarding Bioheat, see www.bioheatonline.com.

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