Oh yes, there are also millions of dollars in federal grants already available to develop such biofuels, with advances certain to improve the production sequence and reduce the costs. The current system used by D.C. BioFuels meets all Environmental Protection Agency (EPA) standards for new renewable fuels. The manufacture of B100 also results in cleaner air, greater price control in a volatile petroleum market, and real green jobs.
And there is yet another positive impact for end users...
A Less Expensive Diesel Option
As biodiesel technology improves and the production locations increase in number, competition will intensify with petroleum-based diesel and help to insulate the coming price increases.
You see, diesel is a "middle distillate" at the refinery. Others in that category are kerosene, jet fuel, and low-sulfur-content heating oil. "Light distillates" (gasoline, liquefied petroleum gases, and the feeder stock naphtha) are emphasized in the U.S. refining process over middle and heavy distillates (asphalt, lubricating, and heavy fuel oils). That causes diesel supply problems, higher prices and increasing imports of the fuel.
As a result, when gasoline prices rise (as they will soon), diesel will rise faster.
The industrial, power-generating, and especially transport usage of more expensive diesel will translate into a myriad of pass-through price increases to the end user or consumer. That puts an alternative like biodiesel into a very favorable market position.
Hardly surprising, therefore, that the NACF move is paralleled in approaches by other companies.
BIOX Corp. (TSE:BX.CA) already has a 60-million-gallon plant in Hamilton, Ontario, that uses a wide variety of feeder oils. And several of the major agricultural products producers are now increasing biodiesel production. These include Archer-Daniels Midland Co. (NYSE:ADM), ConAgra Foods Inc. (NYSE:CAG), and Bunge Ltd. (NYSE:BG).
Privately-held companies like Cargill and the Renewable Energy Group are establishing strong positions in biodiesel, too. And another private company, Piedmont Biofuels, has established a network of cooking oil collection centers in North Carolina and a rapidly developing distribution system.
The National Biodiesel Board (NBB) currently has more than 200 registered producers of BQ-9000 biodiesel (a voluntary accrediting standard for manufacture and distribution). Most of these are private and producing small volume. But biodiesel prospects are improving... and fast.
It won't be long before the best-positioned companies go public. They'll need to secure expansion capital in an exploding market.
At that point, there will be some incredibly attractive investing opportunities. And I'll let you know when they arrive.
Copyright (c) Dr. Kent Moors, Oil and Energy Investor
