As entrepreneurs, we have a lot on our plates at any given time. Staying focused can be tough with a constant stream of employees, clients, emails and phone calls demanding our attention, not to mention the impact COVID-19 has had on us and what its continued effect moving forward might be. To say the least, times have certainly changed for us all.
Amid the noise and crisis management, understanding our limitations and working around them can improve our focus and increase our productivity. Our brains are finely attuned to distraction, so today’s digital environment, which brings all the noise into our homes and businesses every day, will likely not abate. Our ability to remain focused will be challenged from this day forward.
When markets closed on April 20 of this year, crude oil on the futures market sold for $37.63 per barrel. Sellers were literally paying buyers to take their oil. This chaos in the
oil market was largely due to the COVID-19 pandemic, which has caused plummeting oil demand.
This pandemic takes no prisoners; it has driven a stake in the ground and has dictated we adjust far and wide in our personal and business lives. While all this continues to unfold, our industry continues to lean in on realizing its goal to attain Net Zero carbon dioxide (CO2) emissions by 2050. This goal was set at the Northeast Industry Summit held during the September 2019 Heating & Energizing America Trade Show at the Rhode Island Convention Center, organized by the New England Fuel Institute (NEFI) and association partners.
You cannot say life is normal; it is not. Critical issues prevail right now and demand everyone’s attention. Watching from the sidelines is no longer an option for any of us. If you are a fuel dealer, wholesaler, equipment manufacturer or any other company deriving profits from the supply chain, your commitment to industry-wide collaboration is no longer elective, but mandatory.
It is possible to compete with one another, while working together, to keep our industry strong and viable for the future. Social distancing will certainly challenge our collaboration methods, but I believe those who exude passion to succeed will be driven to give it their best shot, and your best shot is all the industry is asking of you.
Moving forward, consider sharing ideas and leaning on one another. Remember, no person is an island. Knowledge increases in value when it is shared, not hoarded. There is power in sharing and co-creating, and that garners trust. Sharing may be counterintuitive to your experience and level of comfort, but at the very least, sharing your vision with your employees and customers is of paramount importance as our industry continues its transition from fossil fuel to low carbon liquid fuels.
Best kept secret no more
You would be amazed at how many existing fuel dealers I have encountered selling biodiesel blended ultra-low sulfur heating oil, aka Bioheat ®, that have not yet informed their customers about it. Why is that? The answer is simple—they are ambivalent about the industry’s commitment to move towards B20, never mind Net Zero by 2050, continuing to covertly blend while keeping the industry’s best-kept secret to themselves.
Some maintain the reason doubt hangs overhead like a raincloud is because the blended fuel is still not widely available. Although blended fuel is often quietly spoken about, many times the commentary remains negative. Change is only going to accelerate from this point forward; 2023 is a few years away and policy leaders are showing no signs of retreating from their desire to move your customers to electric heat pumps or anything other than a liquid fuel.
Natural gas and propane are not safe havens because neither can alter their carbon score favorably. This leaves market development opportunities for, yes, low carbon liquid fuel, which will for the next decade be B20—80% ultra-low sulfur heating oil, 20% biodiesel. By accurately anticipating the future, you can see more than enough reason to make this market disruption your biggest competitive and personal advantage. Now is the time to circle the wagons, align with your industry leaders and get working on establishing the baseline for this transition from carbon to fuels that will stand the test of time.
For those who continue to doubt the industry’s desire to transition to a better, cleaner and more marketable fuel, you should be aware that any perceived technical challenges associated with blends up to B20 have been successfully addressed. The National Oilheat Research Alliance (NORA) and other industry groups have exhaustively studied and written about their efforts and have declared that there are no technical impediments that prohibit broad-based deployment of B20 today. None!
If you’re in doubt, contact NORA (noraweb.org) and ask for copies of these studies, which address its wide-ranging studies of pumps, yellow metals contamination, tank sedimentation, cad cell performance, microbial contamination and pour point performance, all of which indicate no increase in operational issues other than those already being endured with conventional ultra-low sulfur fuel use.
While NEFI continues to build industry-wide consensus to align the goals of the Providence Resolution, the upstream has been carefully evaluating supply strategies that can make B20 a reality. Moving an industry, which is still not adequately prepared logistically to deliver B20 efficiently and ratably by 2023, takes careful planning by biodiesel producers, fuel wholesalers, marine, rail logistic experts and hedging strategists. At the present time, many of these groups have been entertaining the question: How will 700 million gallons of biodiesel be moved throughout New England and the Mid-Atlantic States from both domestic and foreign production sources? The preliminary discussions have clearly revealed the challenges. Interested parties are now working to address and overcome potential supply roadblocks. The good news is, nothing was viewed impossible, but planning was a prerequisite for our collective success.
Just in time
For the past decade, the regional supply chain has managed supply in a just-in-time methodology, bringing in product to satisfy the Massachusetts’ Alternative Energy Portfolio Standard (APS) program, as well as pure arbitrage strategists seeking to reduce tank product costs. This works for intermittent opportunities but not as a system-wide pull.
To blend 20% system-wide, the rules of the road changed when we made the Net Zero by 2050 commitment last September in Providence. When it comes to supply, storage, blending and distribution preparation, I would compare this planning with a baseball pre- game meeting—when the managers stand at home plate and speak with the umpires to go over the rules and regulations for the day. It’s a work-in-progress, but it is progressing rapidly.
With the industry’s technical analyses successfully completed for 20% and higher blends now under review to meet Stage II commitments under the Providence Resolution, supply discussions are in full swing. As mentioned earlier, sharing knowledge helps to reduce the potential anxiety of a customer worried that their fuel is changing. They worry not only about the performance, but also the price. Will my price be higher?
The simple answer is: It’s evolving to meet rapidly changing governmental policy directives nationally and in the neighborhoods where you live. A fuel dealer adopting B20 today is a fuel dealer preparing for the future. Adopting B20 sends a strong message that you are looking out for your customers and helping them maintain the same equipment, with no additional capital outlay. Meanwhile, policy leaders are anxiously trying to get those same homeowners to spend $20K+ to retrofit a 1700 sq ft home. Really, is that necessary?
We have Step No. 1 of three in our pockets. We need you to step in and deliver both the product and message to your customers: We are here to stay. Why? Because our product is the intelligent choice today and for the long-term to provide families with clean, efficient and environmentally-acceptable home comfort.
For more information, marketing tools, guidance or just to share an observation please contact Paul Nazzaro, 978-880-5338 or: [email protected]. ICM