Favorable blending economics, financial incentives, attracting new motorists and fuel diversity all add up for retailers offering biodiesel
By Jon Scharingson, executive director, sales and marketing, Renewable Energy Group Inc.
We all know that c-stores earn cents on the dollar for each gallon of fuel sold, despite what the general public believes. So anything that can provide an advantage at the pump is worth exploring.
I recommend you take a look at biodiesel blended fuel. For one, it will diversify your fuel lineup, which could attract additional motorists not only looking to fill up but also to shop inside your store. Also, some states offer financial incentives to retailers that sell biodiesel blended fuel, and there are times when biodiesel is less expensive than traditional diesel.
When there are favorable blending economics for biodiesel, those pennies start to add up. For example, there are instances in which diesel fuel containing 10% biodiesel, known as B10, carries a price advantage over traditional diesel.
Many c-stores and travel centers achieve even bigger gains by increasing their blend levels in the summer. One common approach is moving from B10 up to B20, which could further increase the margin a retailer receives when selling biodiesel blended fuel.
Biodiesel is an even bigger boon to retailers in states that offer financial incentives for selling biodiesel. Starting July 1 in Iowa, outlets selling B11 blends or higher receive a three-cents-per-gallon rollback on the state fuel tax. That’s on top of a previously existing 4.5-cent tax credit for selling B5 or higher. Illinois retailers that sell B11 blends or higher are exempt from the state’s 6.25% sales tax. Those are just two examples.
A diverse fuel lineup also helps make a c-store more competitive – one case study on Petroleum Wholesale shows how biodiesel is helping a 40 chain c-store grow its fuel business.
And as I’ve written in this space before, the number of diesel-fueled passenger vehicles on U.S. roads is increasing significant. You want these motorists at your pumps and inside your stores, where the real profits are.
Adding biodiesel blends is another selling point for you to help capture those motorists who care about the environment and their cars, and prefer biodiesel’s cleaner-burning properties and superior cetane number and lubricity compared with petroleum diesel.
Jon Scharingson oversees the sales and marketing efforts for Renewable Energy Group Inc., a biodiesel producer.