Oilman discusses biodiesel issues, distribution at CBC event
Third-generation oilman Brian Potter spoke at the 2014 Collective Biodiesel Conference in Pittsboro, N.C., about how Potter Oil & Tire Co. Inc., a 60-plus-year-old North Carolina-based fuel wholesaler and biodiesel distributor servicing the Mid-Atlantic region, selects its biodiesel suppliers, and his company’s views on the biodiesel industry.
Potter said his company got its start in biodiesel back in 2002, offering B2, B5 and eventually B20 to North Carolina through state contracts. He said the distribution business has two sides, retail and commercial. Potter said for the most part the retail side doesn’t want to deal with RINs and they want product that’s already blended. The commercial distribution side, of which Potter Oil is a part, is a “penny business,” said Potter, where gross profit margins are less than 1 percent, requiring commercial distributors to be “lean and mean.”
On selecting a biodiesel supplier, from which Potter said his company purchases fuel from up to 10 plants, BQ-9000 certification topped his list. He said not only should a Certificate of Analysis be present with every shipment of biodiesel, but it should also have a recent date. “If the date on the C of A is six months old, then something’s not right,” he said. For cold soak, Potter said his company likes to see 100 seconds year-round.
Selling biodiesel isn’t just about fuel transactions, Potter said. “It’s not about selling a load of biodiesel,” he said, “but it’s about trying to build a relationship. Sometimes we lose money on biodiesel just to keep the customer.”
Plants that Potter Oil buys biodiesel from must have adequate finished product storage, he said, in order to be able to quickly move in and out, and plant location is important. A biodiesel plant’s ability to transition between high and low cloud point feedstock and fuel with the season is also critical to his company’s desire to do business with them.
Pricing structure must be competitive with diesel fuel, Potter noted, adding that it’s vital for Potter Oil to be able to buy product at a locked-in price for three months forward. This allows him to forward sell the RINs, too.
Potter listed specific issues he has encountered with large and small biodiesel plants. Delays in shipping, railcar demurrage, having payment due prior to delivery, and product quality are just a few of the sticking points Potter Oil has had to overcome in dealing with large-volume plants. For small-volume biodiesel plants, Potter said the issues that can affect his business include the volatile productivity, wherein the plant is producing and not producing at inconvenient or inconsistent intervals. Waiting on feedstock is another problem he has seen with small plants. Finally, he said small plants often don’t actually produce the product until it’s sold. “We can’t operate like that,” Potter said. “We have to roll, roll, roll.”
While Potter Oil sells all kinds of biodiesel blends, a majority of what it sells is B20. The company’s biodiesel sales are split 50/50 between state/municipality contracts and the private sector. Potter Oil splash blends all its biodiesel.
Potter’s opinion on the future of the biodiesel industry is that “the big guys” are going to be moving more toward renewable diesel production, and “local production, long-term, is where this industry will stay.”