Growth Opportunity

The 85-year-old fuel supplier, Taylor Oil Co. Inc., ventured into the biodiesel field just over two years ago, and has been looking to expand its presence in the renewable fuels marketplace ever since.
By Jeff Adler | April 01, 2005
udolf Diesel developed the concept for the peanut oil-based diesel engine and obtained the German patent in 1892. Over a century later, the movement Diesel helped launch, is playing an increasingly important role in America's drive toward greater environmental responsibility and energy independence.

As biodiesel production and use grows nationwide, producers, distributors and retailers in the Northeast have positioned themselves on the leading edge of the industry. Many retailers in the region operate with the understanding that biodiesel contributes to America's national security by lessening the nation's dependence on finite, foreign sources of oil in a volatile world economy. Many are also aware of the environmental benefits of biodiesel use-drastic reductions in carbon dioxide and carbon monoxide emissions as well as sulfur output.
Put all that aside, however, and retailers must fairly be expected to ask: "Is biodiesel good for business?" A growing number of them believe it is, and with state and federal tax incentives now a reality, renewable fuels possibilities are starting to seem more like probabilities.

Taylor Oil Co. Inc., a retailer and provider of on-site fueling services to construction crews, contractors, trucking fleets and marinas along the
East Coast, has taken it a step further, turning possibilities into realities. The company ventured into the biodiesel field a couple of years ago and is looking to expand its share of the market. John Cusack, head of biodiesel operations at the company's Williamstown, N.J., office, and Bob Phillips, the company's general manager, described both successes and challenges they encountered in launching the company's biodiesel venture. The challenges, they said, could be tallied up on a very short list: Finding bonded, reliable suppliers of ASTM specification biodiesel was the first bump in the road, and they overcame it quickly.

Their successes with biodiesel, it turns out, aren't so easily encapsulated into a simple statement.

Taylor Oil Co. was founded approximately 85 years ago. In the 1960's, CEO George Taylor became among the first to develop an on-site delivery process for fuels and lubricants to construction sites. Continuing to see the potential for alternative paths, Taylor Oil Co. ventured into kerosene and ethanol, and today provides kerosene for a major Northeast telecommunications company's backup power generators. From New England to Baltimore, Taylor Oil Co. began to supply more and more construction sites, trucking companies and government projects with a variety of fuels.

With other successful ventures under its belt, Taylor Oil Co. leaped into biodiesel. Cusack and Phillips both indicated that the company's biodiesel venture has steadily improved since its inception. Taylor Oil Co. is now listed as a supplier on the National Biodiesel Board's Web site ( and offers its customers biodiesel blends ranging from B5 to B100. Last fiscal year alone, Taylor Oil sold an estimated 20,000 gallons of biodiesel. Due to the passage of the American JOBS Creation Act of 2004, which gives tax relief to biodiesel blenders, companies like Taylor Oil Co. are able to turn greater profits on biodiesel, especially oilseed-based fuel. Cusack and Phillips expect their biodiesel venture to prosper in 2005 due to the combination of normal commercial growth, expanded marketing and the tax incentive, which they said allows Taylor Oil Co. to compete on a slightly more even playing field with petroleum-based diesel.

"As increases in the cost of petroleum production continue, alternative fuels will become more feasible for commercial customers, and demand will grow," Taylor Oil Co. President Rick Workman said when asked about the company's expansion into biofuels. "We want to be positioned to take advantage of that niche market."

When discussing the federal legislation, which President Bush signed into law in October, Cusack expressed anticipation at being able to achieve price parity with the petroleum diesel market. Having to sell a new product at a higher price is not an easy task, he said. States have also begun to recognize the benefits of providing incentives for biodiesel, but from the other side of the marketplace. Pennsylvania demonstrated this on Nov. 30, when Gov. Edward Rendell signed the Alternative Fuels Incentive Act, giving incremental grants to schools, municipalities, non-profits and corporations that use alternative fuels such as biodiesel in their fleets. This incentive potentially opens the door for many vehicle fleets-schools, shipping companies, public transport and construction-simply by providing the consumer with a bottom line reason to be environmentally sound.

Anna Gomez of the Pennsylvania Department of Environmental Protection said, "This is great change. We are hoping biofuels will start to be used as transportation fuels. [Biofuels] not only help the environment but also the economy of the state and make us less dependent on foreign oil."

So who is looking to benefit from these tax incentives? Cusack described Taylor Oil Co.'s retail biodiesel customer base as a broad demographic. Individuals interested in a "green" lifestyle make up a significant percentage of the company's customers. Because biodiesel can be used to power generators, automobiles and even sailboats, the opportunity to have an environmentally sound fuel appears to be gradually becoming more desirable to consumers throughout the region.

On March 16, Taylor Oil Co. proudly announced that new biodiesel pumps would be installed at the company's Williamstown, N.J., and Philadelphia locations, extending the company's reach with biodiesel even more. It is these customers that Taylor Oil Co. will soon be primarily targeting with Web site and link promotions on the Internet, according to Workman.

While retail sales are expected to grow, Taylor Oil Co. will continue to build sales to one of its largest customers: the U.S. government. On a regular basis, companies can place bids for government fuel contracts via the Internet at the defense energy site for federal fuel supply needs. The nation is broken up regionally, and companies bid for contracts in areas where they can guarantee supply.
Taylor Oil Co. has been supplying the government with fuel for decades. The company began providing the military with deliveries of biodiesel as large as 4,000 gallons in 2003. The government's interest in non-petroleum based fuel has provided Taylor Oil Co.'s biodiesel venture with the financial strength to grow. Federal government and federally regulated agencies in the Northeast, including the U.S. Postal Service, represent huge financial opportunities, now that these agencies have begun to come under pressure to find and use alternative fuels. From individuals to governments, providing a practical alternative that few others offer is the type of niche marketing on which Workman believes Taylor Oil Co. must focus.

After 113 years, the vegetable-oil based diesel engine has developed from a German professor's idealized invention to a recognized realistic alternative throughout Europe and North America. Today, through increased pressure from biofuels advocates and tax incentives coupled with increased petroleum prices, the viability of alternative fuels has been strengthened. While there is no such thing as business without risk, for niche companies like Taylor Oil Co., there has never been a more practical time to grow its business with biodiesel. n

Jeff Adler is a freelance writer living in Pennsylvania. He can be reached at [email protected]
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