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May 31, 2005

New biodiesel pump in Central Oregon

Bend gas station offers biodiesel at the pump
http://www.bendbulletin.com/news/story.cfm?story_no=16399
Published: May 27, 2005

By Ernestine Bousquet
The Bulletin

Up to four times a week, John Flannery drives his 12-person tour and shuttle bus into the Red Carpet Express fuel station on Greenwood Avenue in Bend, fills up with earth-friendly biodiesel and drives off with a clean conscience.

Since last September, Flannery, who owns Green Energy Transportation and Tour, has been able to buy B-20 biodiesel, or fuel that is 20 percent biodiesel and 80 percent diesel, from Red Carpet.

Red Carpet is the first and only public fuel station in Central Oregon to sell biodiesel at the pump. Since last month, it has also been offering B-99, which is 99 percent biodiesel.

Manufactured from vegetable oil, biodiesel can be used in pure form or blended with diesel to make a cleaner-burning fuel that reduces vehicle emissions, according to the National Biodiesel Board (NBB), a biodiesel trade association.

Much of the commercially sold biodiesel, including most of Red Carpet's, is domestically made from soy beans and shipped from the Midwest.

For the past few years, the only way for a Central Oregon driver to get biodiesel was to buy it through the Bend Biodiesel Cooperative as a member, or to use homemade biodiesel.

With a retail source now available, Red Carpet has jettisoned the alternative fuel into the public eye. That is why Flannery chooses to buy his biodiesel from Red Carpet, even though he is a member of the biodiesel co-op.

The co-op tapped into a growing niche, and Flannery wants to support that effort by being a member. But he believes stations like Red Carpet can open the door to mass-market appeal.

"People recognize ... Red Carpet, and it's easier for them to use it than the co-op. But the co-op got the groundswell," said Flannery, who also owns a bike taxi service called Bend Cycle Cab.

Selling a philosophy

Red Carpet owner Mike Fassett decided to sell biodiesel after he was able to free up a fuel dispenser. Building a new one would have cost too much.

Fassett ended up spending $27,000 to convert a fuel dispenser to hold biodiesel. He buys the fuel from SeQuential Biofuels, a marketing and distribution company with offices in Eugene and Portland, through petroleum wholesaler Bend Oil.

"I'm not real green, but everyone wants to help," said Fassett, who owns two other Red Carpet stations in town. "The key is getting the dependence away from the imported oil."

Business has been slow so far. Out of roughly 200 customers a day, Fassett estimated about 10 of them buy either grade of biodiesel. He sells about 120 to 150 gallons of biodiesel a day.

But Fassett caters to a core of regular biodiesel users, most of whom buy B-99 versus the B-20, he said.

"I think people that are into this are really into this," said Fassett, who uses both grades of biodiesel for his three personal vehicles. "It's a dedicated group of people."

The higher price may deter some drivers. Red Carpet's biodiesel generally sells for 20 to 40 cents more than regular diesel.

On Thursday, B-20 was $2.75 a gallon and B-99 sold for $2.81 a gallon. Regular diesel was selling for $2.49 a gallon, while regular unleaded was $2.39 a gallon.

A federal tax credit for petroleum distributors has been established to level the playing field for the now-taxed biodiesel. Credits are given for every percent of biodiesel in blended fuel that comes from vegetable or recycled oils, according to the NBB.

For instance, the credit that Fassett gets for B-99 knocks almost a dollar off the retail price for drivers.

The price of biodiesel can be affected by production or crop problems in the domestic soybean market. But Fassett said the price doesn't fluctuate as much as regular fuel made from imported oil. In the nine months he has sold biodiesel, he estimated that the price of B-20 had only changed four times.

Fassett said he is selling the biodiesel just above cost to build up demand. He typically ends up with a roughly 1 percent gross profit margin on biodiesel, before subtracting business costs or credit card sales fees. He tries to retain a 10 percent margin on gasoline before business costs.

"I think (biodiesel use) could build really fast if the price was more competitive," Fassett said. "I think several years down the road it will be."

Building a market

Wade Fagen, the president of the biodiesel co-op, believes there is plenty of room for Red Carpet on the biodiesel market.

"You might think of us as competitors, but I think that it's fantastic that they introduced biodiesel to the public in the commercial product," Fagen said. "It assures there is a good market, and the public does have a choice."

The co-op buys about 2,000 gallons of B-99 biodiesel a month for its 95 members. The members initially pay a $75 fee for infrastructure costs, then pay per gallon based on the cost to buy the biodiesel from the distributor. The last batch of B-99 sold for $2.80 a gallon, he said.

Like many drivers, Fagen's willingness to pay more for biodiesel stems as much from political reasons as it does from environmental concerns.

"I thought of it as a self-imposed tax that I'm happy to pay to get us out of the Middle East," said Fagen, who uses biodiesel for his business, Fagen Tree and Chips.

"Trucks smell better, and it puts farmers to work."

The city of Bend has also dabbled with biodiesel.

Glenn Crawford, the shop supervisor for the city's public works department, said the department bought B-20 biodiesel from Red Carpet from November to April. The department used it to fuel dump-truck sweepers and one Dial-A-Ride van as part of a pilot project.

The department ended up buying about 2,500 gallons of biodiesel during that time. The equipment worked well with biodiesel, and the public works department is deciding whether to use it permanently, he said.

A growing industry

The amount of biodiesel sold in the U.S. jumped from 500,000 gallons in 1999 to an estimated 25 million gallons in 2003, according to the NBB.

Last year, the U.S. used approximately 36 million gallons of biodiesel, according to the U.S. Energy Information Administration.

By comparison, Americans consumed roughly 140 billion gallons of gasoline in 2004, the energy administration statistics show.

Biodiesel has become one of the fastest-growing alternative fuels, according to Jenna Higgins, the communications director for the biodiesel board.

Right now, the biggest biodiesel users are fleet-users, such as a school district, businesses, the government and the military, she said. Biodiesel is also being used more in farming, for home heating and in the marine industry. The trucking industry is another huge potential market, she said.

About 400 public pumps have sprouted up throughout the nation, catering to the small but growing number of diesel-fueled passenger vehicles. Some are card-lock stations, which are secured fueling networks, but most are retail sites.

According to Tyson Keever, a managing partner of SeQuential Biofuels, demand for biodiesel is booming. The company supplies the biodiesel to Red Carpet through Bend Oil and also sells to the Bend co-op.

The company's sales are growing about 20 percent a month, he said. The company is also planning to build a processing facility in Oregon to make biodiesel regionally.

After starting in 2002, SeQuential now sells biodiesel to 10 retail outlets throughout Oregon. It also sells it at bulk and card-lock locations. The company distributes about 20,000 gallons of biodiesel in Oregon every two to three weeks. Most of it is bought from Midwest producers.

"People choose biodiesel because it's domestically produced, it's renewable and improves the performance of your vehicle," Keever said. "The more available it is, the more it will be consumed, and the cheaper it is."

Ernestine Bousquet can be reached at 541-504-2336 or atebousquet@bendbulletin.com.

Posted by Martin at May 31, 2005 1:03 PM

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