When Biodiesel is Cheaper Than Petro-Diesel: Lyle Estill on the Tipping Point
We apologize in advance if folks are getting tired of reading about Piedmont Biofuels, but these folks just keep on pushing the sustainable biofuels agenda in such a way that it's hard not to take note. Admittedly last week's post on their biofuels jigsaw was not, perhaps, ground breaking news, but it did look like a neat gift for the grease fanatic in the family. However, on visiting co-founder Lyle Estill's energy blog yesterday, we found a fascinating discussion which should be of interest to all biofuel co-ops everywhere — namely, what happens when petroleum-based diesel gets more expensive than biodiesel. As Lyle explains, it looks like the cost of petroleum diesel is approaching $3.50 a gallon which is the same price that Piedmont Biofuels have been selling biodiesel for through their community trail. Some folks are concerned that an increase in demand may endanger the fuel supply for those who have pioneered the biodiesel 'scene' in North Carolina:
Traditionally our Coop members have been driven by different levers, none of which has been price. We are populated by clean air connoisseurs, peaceniks who like the fact that there is "No War Required" to get biodiesel, fans of Made in America, societal collapse aficionados, and a host of others who all have their reasons to run around on B100, or high percentage blends.
We do have fans of cheap fuel-those are the folks who brew their own. But when the price on the street exceeds the price on the Trail, I believe we will be awash with "cheap fuel lovers" who will sign up based exclusively out of an abiding love for their wallets.
However, Lyle goes on to argue that he is not particularly concerned. It seems that the largest, and most profitable, proportion of Piedmont Biofuels' sales have been to industrial oil companies that blend it with traditional fuels. As sales volume grows through their community trail of filling stations, Lyle believes they can more than meet the demands of a growing membership for B100 fuel while maintaining their price point:
We believe in the Trail. We've invested heavily in the Trail. One of the main reasons it fails to make money is that it does not represent significant volume. A tank and dispenser costs the same for a location that pumps 2,000 gallons a month, or 20,000 gallons a month.
All of which is to say that it is not quite as simple as Supply and Demand. I actually think it would be spectacular to see every drop we churn out go directly into the fuel tanks of Coop members. And I think there is a very real possibility that we could do that, without increasing price.
There is no doubt that there are some very interesting tipping points approaching as cleaner technologies become increasingly competitive with fossil fuels. Lyle concludes by harking back to Hurricane Katrina, and the temporary spike in oil prices that lead to a very big sales month for their biodiesel. "Unlike Katrina," says Lyle, "I don't believe this price of petroleum is headed back down "