From energy menu, America should order – ‘all of the above’

From an OpEd article published in the Raleigh News and Observer on October 27, 2016:


When gas prices rise, we routinely hear about the added costs rippling through the economy, hitting consumers and companies alike with the equivalent of a “gas tax.” By that logic, shouldn’t lower gas prices mean more expendable income and higher profits, creating a generally improved economic climate and bullish markets?

Yet throughout the year we’ve seen just the opposite, with counter-intuitive headlines like, “Oil Prices Slump, Markets Follow.” Now, as those same oil prices have begun to rise, the Dow Jones Industrial Average has flirted with record-setting territory.

Is this the new normal?

Probably not. Some analysts believe that when oil prices recover, the markets will eventually decouple themselves from their attachment to “black gold.” Yet the market fluctuations do illustrate the destructive power oil price instability has on the American economy.

And the issue of volatile oil prices is unlikely to subside anytime soon.

In the utilities industry, no one energy source makes up more than a third of the electricity generated. Last year, about a third of our electricity came from coal, another third from natural gas, 20 percent from nuclear and another 13 percent or so from hydro and other renewable sources. For consumers, that means fluctuations in the costs of one fuel can be more easily offset by the diversity of sources employed by utilities.

On the other hand, the transportation sector illustrates how a lack of diversity in fuels spikes what Americans pay for their daily commute. Gasoline and diesel produced from petroleum dominate, making up a whopping 86 percent of the market; the rest comes from renewables, Compressed Natural Gas, electric vehicles, etc.

The petroleum industry doesn’t want the public, or policy makers, to focus on diversifying the market. Instead, they promise domestic drillers will simply unearth almost unlimited supplies of oil under our own soil. And, they say, awash in new oil, America’s petroleum industry will drive down the cost of gasoline.

But recent history tells us this can’t possibly be true. The past 20 months have clearly demonstrated that only OPEC has the means to shift the price of oil – higher or lower, depending on its motives.

In the fall of 2014, OPEC, led by Saudi Arabia, made the decision to flood the market with oil. Domestic drillers tried to keep up, but the price of oil – traded on international markets – dropped precipitously, causing the U.S. petroleum industry to lose hundreds of millions of dollars and shed thousands upon thousands of jobs.

The fact is that within our borders we only control less than 1 percent of the world’s proven oil reserves. The Middle East controls almost half. To make matters worse, it can cost 10 times as much to reach those U.S. reserves as compared to countries in the Middle East.

What America needs is an “all of the above” strategy when it comes to its transportation fuels. Yes to biofuels. Yes to electric vehicles. Yes to new technologies that have the promise of providing diversity to our portfolio of fuels.

Yet the powerful oil and gas lobby vehemently opposes any attempt to boost alternatives and voluntarily lessen its monopoly of the market. Ironically, they argue free-market principles should carry the day. The transportation fuels market should be unfettered, they exclaim.

There are two obvious issues with this position: First, there’s nothing “free” about their position in the transportation fuels market. According to Congress’ Joint Committee on Taxation, the U.S. oil and gas industry alone enjoys more than $4 billion in subsidies. Globally, it’s even worse.

The second issue is the suggestion that the transportation fuels market is unfettered. OPEC operates as an international cartel, making decisions as a group of nations to set production targets that influence the price of oil on global markets. Frankly, as a leader of a U.S. trade organization, if I suggested our group operate in a similar manner, I could go to jail.

The markets may sometimes react illogically to the conditions they’re presented, but policy makers don’t have to do the same. We need to change the headlines. I’d take one that reads, “Consumers and Economy Helped by Fuel Diversity.”

Zack Hamm is President of Triangle Biofuels, based in Wilson.

Read more here:

NC Biodiesel Highway Tax Drops to .34

Effective July 1st, 2016, the NC motor fuels tax rate will drop to .34 per gallon from .35.   The current .34/gallon tax rate will remain valid until December 31, 2016.


Saudi Arabia has declared an end to its oil war with the US

“Two years after quietly declaring war on upstart US shale, Saudi Arabia says the need for the fighting is over. In remarks to journalists while on a US visit, Saudi Arabian energy minister Khalid Al-Falih said that the worldwide oil glut has vanished, signaling an end to Saudi Arabia’s strategy of flooding the global market with oil to try to put American drillers out of business.”

The implication was that Saudi Arabia owned the victory. But a three-week-long resurgence of US oil drilling after 21 months of decline suggests that Saudi and the US fought to a draw.

Falih noted that a record volume of oil remains in storage in the US and around the world (paywall), built up during the glut, but once much of that is sold off, the kingdom can resume its traditional role managing supply and demand.

“We are out of it,” Falih told the Houston Chronicle. “The oversupply has disappeared. We just have to carry the overhang of inventory for a while until the system works it out.”


Saudi Arabia has declared an end to its oil war with the US

InProcess Biodiesel after reacting and settling.

Production Increases, Upgrades Coming

2014 and 2015 were tough years for biodiesel.  The lack of an established tax credit and delayed policy implementation for the EPA RFS program created uncertainty in the biodiesel  market, and many smaller plants suffered for it.   Even for 2016 the tax credit took over a month and a half to be established where plants could send in the forms to claim credits.   That old saying about the 9 most terrifying words:  “I’m from the government and I’m here to help”, sure seems to fit.

In-Process Biodiesel After Reacting and Settling.

But things are picking up, and demand for biodiesel is increasing for the second quarter of this year.   We have several upgrades underway to improve our production efficiency and throughput.  We will be making some improvements to our boiler, adding another resin column, installing additional heat exchangers to scavenge heat and improve process temperatures, and improving our wash process to reduce the bottleneck we have there.  We should have these improvements completed in the next few weeks, expecting an almost instant realization of efficiency savings and improved production capacity (assuming Murphy doesn’t step in and rear his ugly head).

On the longer term, we are revisiting our original master site plan for consideration of a major expansion at the facility.  We have been looking at two different production paths for this upgrade, using the enzymatic biodiesel production process, or supercritical.  They both have their advantages and disadvantages, and both will be expensive to convert the plant to.  We are still in the evaluation stages but intend to move forward with one of them in the future, hopefully realizing an increase in our nameplate capacity while also reducing our cost per gallon production costs.

The fuel industry is on its heels right now, and while most are probably thinking of getting out of the business, it feels more like it’s time to double down while things are cheap.   It wouldn’t take much for the oil industry to spike above $50/barrel again, or even $100.  A war in the middle east, Iran and Russia, or our own US production going bankrupt because of the recent oil glut.  There is no quick fix for oil, we don’t have any readily available replacement for it so it’s going to be with us for a while, always in demand; and biodiesel will be right there beside it.



Biodiesel Tax Credit Passed!

The Biodiesel Tax Credit passed and was signed into law on December 18th. 

The bill was for retroactive production of 2015, and forward production of 2016 will be eligible for a $1.00 per gallon subsidy for each gallon of biodiesel produced and sold.  The credit was originally designed to be a producer’s credit for 2016, but was modified to remain as a blender’s credit.   This initially spelled a problem, but at the same time the oil export ban was lifted, meaning that a significant portion of exported diesel fuel may now contain biodiesel.  That could mean an expanding market for US biodiesel.

Coupled with the recent EPA RFS mandates volumes being finalized for previous and upcoming years, this should mean a good year in 2016 for the biodiesel industry.    If the politics further sway towards Republicans in the 2016 election, it would ironically point to better times for the renewable fuel industry.

The biodiesel industry has suffered not from lowering oil prices or increased feedstock  prices.  Well… okay, it has, but not nearly as much as it has suffered at the hands of an indecisive Legislative body that will not consistently pass a biodiesel tax credit subsidy, AND from an ever more indecisive Executive branch that will not implement and enforce RFS policy that has already been established.   Both of these issues are resolved for 2016 finally, so perhaps we can get on with the process of making biodiesel now (and making money).


EPA RFS Volumes Finalized

Today, the EPA released final RFS volumes for the periods 2014 – 2017.   A welcomed relief, these volumes are higher than earlier proposed volumes for biodiesel and should be good for spurring on biodiesel demand.  The D4 Biomass-based Diesel volumes are as follows:

2014 – 1.63 billion gallons
2015 – 1.73 billion gallons
2016 – 1.90 billion gallons
2017 – 2.00 billion gallons

Also included are the D5 Advanced Biofuel volumes which also increased:

2014 – 2.67 billion gallons
2015 – 2.88 billion gallons
2016 – 3.61 billion gallons

EPA Website Information:



Obama Administration – Biodiesel Friend or Foe?

Reuters: Pelosi to Obama: boost U.S. biofuels program ahead of Paris talks

NEW YORK | By Chris Prentice

U.S. House Democratic Leader Nancy Pelosi and three other lawmakers are pressing President Barack Obama not to back-peddle on the country’s biofuels program just days ahead of global climate change talks in Paris.

The Democratic Representatives – Pelosi from California, Steny Hoyer from Maryland, Collin Peterson from Minnesota, and David Loebsack from Iowa – asked the administration to rethink a proposal for the controversial Renewable Fuel Standard and to keep the program “robust” in a letter dated Nov. 18.

The push comes just over a week ahead of a Nov. 30 deadline for the U.S. Environmental Protection Agency to finalize mandates for renewable fuels use through 2016. That date coincides with the start of the Paris discussions.

The EPA in May proposed requirements for the amount of biofuels blended into the country’s transportation fuel stream that were below requirements set by Congress in 2007.

“We hope you will keep in mind the need to reduce carbon pollution, and not expand it in the transportation sector in the days leading up to the President’s historic efforts” in Paris, they said in a letter to Brian Deese, an assistant to the president and senior adviser.

EPA reduced the mandates around the principle of the “blend wall,” which oil groups say is the saturation point for ethanol use in the fuel stream without greater infrastructure change.

The plan drew ire from both biofuels groups and oil companies alike, and both groups have been ratcheting up their lobbying and advertising spending ahead of the EPA’s deadline to finalize the rule.

The lawmakers, who met with Deese on Oct. 29, also emphasized the importance of correcting errors in the mandates related to “more accurately reflect” gasoline demand projections and biofuels exports.

Politico: Biofuels Group Touts GHG Analysis

Just days before EPA is slated to release its latest Renewable Fuel Standard mandate, the Renewable Fuels Association is touting an analysis concluding that the program has saved over 354 million metric tons of carbon dioxide so far. It’s the latest salvo in the environmental war in which the RFS’s critics argue that corn ethanol, which makes up the bulk of RFS biofuel requirements, has little climate benefit over petroleum fuels. The report, from the consulting firm Life Cycle Associates, said the reductions were higher than expected despite the slow growth of cellulosic because corn ethanol technology improved and EPA underestimated baseline petroleum emissions.

Center for Regulatory Solutions begs to differ

The anti-RFS non-profit will release a report looking at the greenhouse gas impact of the RFS on Illinois today, the fifth in a series by the nonprofit. The report says corn ethanol production and consumption added 4.1 million tonnes of CO2 emissions in Illinois between 2005 to 2014.


Senate to Propose Biodiesel Tax Incentive

From the NBB:

We’re happy to report that the Senate Finance Committee today unveiled a bipartisan “tax extenders” package that includes the biodiesel tax incentive. The committee is slated to take up the package next week.

This marks welcome progress for one of NBB’s top priorities and is an important step toward winning reinstatement of the tax incentive. The proposal, released by committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., calls for a two-year reinstatement covering 2015 and 2016. The committee has scheduled a markup for the bill, which contains 52 tax incentives and is titled, “An Original Bill to Extend Certain Expired Tax Provisions”, on Tuesday, July 21.

The committee has been working on the bill in a bipartisan fashion on the bill for weeks, so we anticipate that it will have broad support in committee. However, we urge those of you with senators on the committee to contact them today and urge them to support the biodiesel incentive. Makes sure they know it is an important economic policy for their home state. To find a list of senators on the committee, click here on the committee’s website.

More information on the bill can be found here. A copy of the initial Chairman’s Mark of the bill can be found here. A revenue table for the tax extenders bill can be found here. A summary of the package can be found here.

As you know, this is the beginning of what has been a long process in past years. However, the Senate bill is a significant step forward, and it will serve as the first draft as House and Senate leaders continue negotiating how to proceed with expired tax incentives. It was critical that biodiesel was included in this proposal.

We will send another update next week after the committee markup. Meanwhile, if you have any questions, please don’t hesitate to contact our Washington office at 202-737-8801.



Enzymatic Biodiesel

We have been benchtop testing with enzymatic biodiesel, evaluating it’s performance with different feedstocks and mixture ratios to see what works best.  So far, I’m impressed with the results and it appears to be far easier to use than I originally understood.

We have begun investigating what the upfit costs would be to scale up for production, but the ROI looks promising.   Not only would we be able to use a wider range of feedstocks, but the pre-treatment time is cut dramatically, input chemicals are cut dramatically, and our production yields look like they might double.  All very promising.

I’ve been down this road before, skipping down what looks to be a yellow brick road and then have a bunch of flying monkeys swoop down and steal my favorite dog.   So, we proceed cautiously, but overall we are excited about the prospect of using a new technology that could potentially increase yields and profit.