Ho-Hum, B20 Diesel Now Available Not Any Cheaper

A new B20 diesel blend is now on sale in four San Francisco, CA gas stations. Excuse our non excitement, but the blend retails for the same price as non-blended diesel fuel. Why isn’t it cheaper?

Off-shore oil production is booming and the U.S. is now a net exporter of fuel. Plus, alternative fuel production is exploding. Yet, gas prices remain high. What’s the deal?

Everybody now knows the story we have been given as to why we should use biofuels. Proponents point to a list of things including: It is better for the environment, it breaks our dependence on fossil fuels (and foreign fuels) and it is the key for long-term energy dependence. Unfortunately, every time it seems one of these new biofuels hits the market, it doesn’t really seem to solve any of these.

Algae-Derived Fuels

There are many obstacles to fuels like B20. Autoweek.com says it is an “algae-derived” biodiesel blend which typically means it is very expensive to scale and mass produce. And auto manufactures don’t universally accept it as a good alternative. Why? It has too much of the algae-derived fuel (20 percent) in it. With only 80 percent of the product being diesel fuel, manufactures have concerns about long-term damage to components and critics call foul on how much more fuel-efficient the product could be with that much algae.

There is also concern on how much energy is takes to create B20. The company, Peoria, Ill.-based Solazyme says the algae is grown in a “lab-like environment, feeding on sugar in large, stainless-steel vats.” This is an extremely energy-dependent process.

This fuel could then have the net impact of costing more energy to create than the energy savings it provides. This is very similar to the argument electric car critics makes, the extra energy used to build the car doesn’t equal the net gain.

Alternative Fuels are Great!

Another interesting news piece is that the U.S. became a net exporter of oil in the first half of 2012. That’s right. For the first time since 1949, the U.S. has more fuel than it can use and is exporting it. And yet, U.S. gas prices are the same price they were a year ago according to AAA. Gas prices, we have all been told, are directly related to the price of crude oil on the national and international markets, according to most economists and the site GasPricesExplained.com.

You would think then that the basic economics of supply and demand would dictate that gas prices should drop. Especially when you think about the Cash for Clunkers program last year that removed a significant amount of gas guzzlers from the demand, rising auto sales of smaller, more fuel efficient cars dropping demand and a poor economy where people are spending less on fuel. And the fact that when you add alternative fuels to fuel blends it reduces the amount of “expensive crude oil.” Except that global demand from growing economies is driving the crude oil price up. Oil companies are now profiting mightily from policies that encourage domestic drilling.

Let’s understand this. We used to be told that OPEC and foreign oil is driving up the price. Now, we are being told that even though the U.S. exports fuel, foreign demand is keeping the prices up. It looks like we are now the “middle men” in the game of gas prices. And that now government investment of alternative fuels is the answer EXCEPT when these fuels come to the market, they don’t offer better prices.

Alright, here’s the deal. Alternative fuels can be a great solution to our dependence on fossil fuels by reducing the amount of oil we need to create fuel. And using less crude oil SHOULD mean lower gas prices. However, that hasn’t been the case. When are consumers going to get a product that is good the environment AND good the checkbook? The response has been in a few years once these alternative fuel companies get up to full production.  Yawn. We have been listening to that for too long. How about you?

Related Posts:

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• Compressed Natural Gas – The Future of Full-size Truck Engines?
• Study: Federal Incentives Vital for Alt-Fuel Cars Future