Rising oil prices spark interest in biofuels

John W. Schoen Senior producer • Profile • E-mail

In a small building in an industrial section of Staten Island, N.Y., in the shadow of New Jersey’s massive complex of oil refineries, Marty Baruso is working on the frontier of helping motorists cope with relentlessly rising fuel prices.

Baruso, an industrial chemist, originally got into the energy business setting up off-the-grid generators for businesses looking to beat New York city power prices of as much as 20 cents a kilowatt hour, among highest in the nation. To run those generators, he set up a few vats to brew biodiesel, a renewable fuel made from vegetable oil. Aside from being renewable, biodiesel has other things going for it: it produces no sulfur or soot when burned.

A year ago, his biodiesel plant was running at less than its 15,000-gallon-a-day capacity, largely due to distribution roadblocks. To sell his fuel to customers, he had to first find an oil dealer who would blend his product with conventional diesel.

But with the price of oil approaching $70 a barrel, Baruso’s fortunes have changed. He’s selling all the biodiesel he can make. He's about to close on a new facility in Brooklyn that will produce 8 million gallons of fuel a month. Now, the oil dealers are coming to him.

“We made our first sale this past two week to heating oil companies that are using it to blend with (oil-based heating oil),” he said. “We’re cheaper than petroleum.”

With oil refineries running at 95 percent capacity and pump prices soaring, businesses and consumers alike are scrambling for alternatives. Today, biofuels -- gasoline and diesel made from a variety of crops -- are the only non-petroleum energy source ready to pump into the empty tanks of the hundreds of millions of cars and light trucks on the road worldwide.

As old as fire
Biomass, a wide energy category that includes everything from wood to garbage to fuels brewed from plants, is often touted as an energy source of the future. But plant-based energy sources have been used for millennia -- ever since man first figured out how to start a fire to keep warm and cook dinner. In the U.S., wood was the primary energy source until after the Civil War, when coal became an '"alternative" fuel for heating and transportation.

When the first diesel engines came along at the end of the 19th century, they were originally designed to run on vegetable oil. But as petroleum (the alternative fuel at the time) began replacing increasingly scarce whale oil for lighting, oil soon proved to be too cheap, too convenient and too plentiful for other transportation fuels to compete with.

Now, the relentless rise in oil prices has sparked new demand for biofuels like ethanol and biodiesel. But it’s not clear how big a role biofuels will play in replacing petroleum oil over the long-term.

Proponents of biofuels argue that they are the best, readily-available, renewable substitute for gasoline and conventional diesel. By increasing demand for feedstocks like corn and soybeans, biofuel production also helps create new markets for American farmers. 

One of biofuel's strongest proponents is Amory Lovins, chief executive officer of Rocky Mountain Institute, a think tank that has assembled a detailed plan, Winning the Oil Endgame, to wean the U.S. from oil. Combined with increased efficiency — in everything from vehicles to power plants — Lovins' roadmap for energy independence includes a boost in ethanol production to cover 25 percent of fuel consumption, relying on wood and other waste cellulose to expand output of biofuels.

‘You would get the country completely off oil, revitalize the industrial and agricultural economies and save about $70 billion a year net.’ — Amory Lovins CEO, Rocky Mountain Institute

“You would get the country completely off oil, revitalize the industrial and agricultural economies and save about $70 billion a year net,” said Lovins.

But opponents argue that ethanol and biodiesel can now compete with gasoline and diesel at the pump only because they are heavily subsidized with tax dollars. Federal subsidies and tax breaks amount to as much as $1 a gallon for biodiesel and 51 cents a gallon for ethanol. Some states provide additional incentives.

And some skeptics argue that making biofuels like ethanol doesn’t save even oil.

“There are many in the energy community who believe that the amount in the oil that you use to produce a gallon of ethanol is about the same as you get out of it once you’ve made it,” said Ryan Wiser, a scientist at Lawrence Berkeley National Laboratory who specializes in the economics of renewable energy.

Questions of economics and energy efficiency aside, even biofuel's most enthusiastic proponents acknowledge that it would take decades to boost production enough to satisfy America's growing thirst for transportation fuel.

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