Thursday, April 23, 2009

Oregon Startup makes Biobased News

Diesel Brewing hits the biz wire.

I've never heard of this start up before but I'm intrigued. In particular butanol has a real promise to be used in biodiesel production as well as a gasoline blend stock. As it relates to biodiesel the butanol can be used as the alcohol in the transesterfication process.

Primarily methanol is the alcohol used. When butanol is used supposedly the gel point of the biodiesel drops significantly below 0 degrees.

Their formal website is

I neither endorse or am familiar with anyone associated with Diesel Brewing. I just saw the news and thought it interesting.

Monday, April 13, 2009

VW Golf - World Car of the Year

The 2010 Golf is named "World Car of the Year" by a panel of journalist and auto industry folks.

The real good news in the story I saw at though.  Its coming to the US in diesel.  Now the only issue will be whether or not it can handle a blend of biodiesel higher than B20.  The latest clean diesel VW's have an oil dilution issue with higher blends of biodiesel.  It occurs where the particulate trap on the vehicles must maintain a temperature to burn out particulate.  With B99 biodiesel it doesn't fully burn all of the fuel in the particulate trap depositing this residual fuel into the oil pan of the vehicle.  This dilution should not cause issues with the actual wear on the engine if the fuel is ASTM spec (this according to a presentation I saw from a VW engineer discussing their engines).  The issue becomes engine lights go off requiring an oil change between 2,000 and 3,000 miles (as the oil pan fills up over capacity). 

I saw it first in a recent issue of Biodiesel Smarter magazine (a insiders type zine dedicated to sustainable biodiesel news).  By far the best biodiesel trade magazine you will ever find.  Dedicated to B100 and B99 market development.  

I'm curious to see how the industry deals with this.  My bet (and this is a bad thing) biodiesel enthusiasts will just disconnect their particulate trap.  This creating a conflict not just with OEM's and biodiesel users but also the EPA and local regulators.

Sunday, April 12, 2009

OPEC wants cheap oil.... Hmmmm?

Saw the analysis at MSNBC online from a month ago.  Not exactly timely but something jumped out at me that will alter my perception of what the future might hold.

OPEC tried on Sunday to nudge oil prices up by urging its members to stop overproducing, but the cartel decided not to cut current output levels which could have driven prices sharply higher.  Explaining the decision, OPEC Secretary-General Abdalla el-Badri spoke of his organization's concern over "ugly" global economic times that overrode the desire to achieve a quick fix by setting a lower overall output for the 12-nation producer's club.

First off, I'm thoroughly entertained that a roughly $50 a barrel and $2+ gasoline is considered "Cheap" by today's standards.  Two years ago it was not.  

I know.  Everyone got used to a $200 barrel of crude being a realistic price.  Regardless, I remember making biodiesel and ethanol pitches back when diesel was expensive at $0.75/a gallon and being told that no one would ever buy a biofuel unless it was cheaper.  And oil would never trade wholesale above $1 a gallon.  

I remember one time on-road diesel with taxes hit $1.28 and customers called to complain wanting to know "HOW" it was possible that prices could swing so high (it was caused by a sudden shutting down of the Olympic Pipeline into Portland by regulators because of safety issues).

My how we've changed our definitions and expectations.  Me included (I get really nostalgic at times for a high price of oil being $15 a barrel back when I started at StarOilco).  

Oh how life was easier in the oil business when I was empowered with an Economics degree and so much certainty.  But enough of the simple past - the future has much more potential and a greater opportunity with those with open minds and strong backs.  

Also add to this that OPEC likely has not forgotten that this is not "cheap" but a dream-boat of oil pricing and acceptability.  If the harshest international recession of the last 80 years leaves the bottom of the market at $50 barrel of crude they will be very happy with this new economic picture for oil.  

This is the real point of my post.  Calibrate your instruments.  $50 is the new floor for the foreseeable future.  If the price of a barrel of oil starts trading below this number there is a change in the economic numbers that set prices.  

If I was a practicing economist I would try to set up an experiment to determine volumes of ethanol, biodiesel, renewable diesel, syn diesel, and other fuel volumes as they effect over all pricing of petroleum.  It would be fun to try and create an easy factor of volumes of substitutes (even if they trade at a surplus cost) and their effect on petroleum prices.  

Given the US's energy position in the world not only as a consumer but market that sets prices you would likely be able to just use EPA and DOE numbers to run such an experiment.  I would treat the measurements much like the Federal Reserve tracks the money supply.  With an E1 for only petroleum refined products sold, E2 including immediate blendable substitutes including mandated blends, and an E3 and E4 for moving to wider industrial substitutes such as hog fuel, and experimental fuels manufactured outside of the main streams of commerce.

There has been very little talk about this (other than by the ethanol industry).  To me this is the future of the debate.  If only I could simultaneously work and be an academic.  Ahh, the dream.  Being able to actual focus on the bigger picture without the requirement of betting correctly with your own money.