Thomko Petro Chemical Blog

Oil Heat Dealers Consider Offering Bioheat to the Customers

Until recently, most of the attention on this cleaner, renewable fuel has been focused on biodiesel as a transportation fuel. This is due to the fact that, as a nation, we consume more distillate fuel for transportation than any other use.

However, in the Northeast, this relationship is inverted. Maine, for example, uses three times more distillate for heating than for transportation. As a result, some fuel dealers have begun to recognize that there is a huge market that exists beyond biodiesel, and marketing "bioheat" blends can offer many advantages.

Using biodiesel as a heating fuel is not a new, untested idea. Extensive studies have been conducted in the lab, as well as in the field.

However, market research indicated that there exists a significant percentage of oilheat consumers who identify with the "red-white-and-blue" attributes of bioheat, namely that it is an American-made product, therefore it offsets foreign oil imports and supports American farmers.

This enables bioheat to be marketed to a much larger percentage of consumers than originally thought. In addition, a Federal Biodiesel Blender's Credit, which became available in January 2005, enables blended bioheat products to be sold at essentially the same retail price as conventional heating oil, often at higher margins.

Tests of bioheat showing positive results began in this country in 1993. Since then, extensive tests have been carried out by Brookhaven National Laboratory, the National Renewable Energy Lab and the National Biodiesel Board, among others.

These tests have all proven that using Biodiesel in a blend with No. 2 fuel results in lower emissions and fewer service calls, in addition to requiring no equipment modifications.

Here are a few of the positive aspects of being in the bioheat business:

- Bioheat burns cleaner and is lower in sulfur (B-100 has no sulfur), resulting in less soot, which means fewer service calls and a more efficient heating system.

- Bioheat offers a method for dealers to differentiate their product from the competition. Conventional heating oil is a commodity being sold in a saturated market. The only way to be different is to offer better service (everybody claims this), or a lower price (a slippery slope). Bioheat is a completely different product that competitors don't have.

- Bioheat is a way to demonstrate that your company is "part of the solution," something that, as a rule, is hard to claim in the oil business.

- Bioheat can offer higher margins than conventional heating oil. It's a premium product and many customers are willing to pay a higher price.

- Bioheat reduces the public perception that oil is dirty, sooty and smelly, and disarms suggestions that oil causes higher maintenance costs versus natural gas.

- Bioheat companies get lots of attention from the media, government officials and customers alike. It's a pleasure to have customers say, "Thank you so much for bringing me this product. I appreciate it that you are trying to make a difference." It's a switch to be on the good side of the environmentalists and an ego boost to receive positive media attention.