Biodiesel Pays Off for Travel Center, Wholesaler

“Biodiesel has opened a lot of doors for us.” That’s what the vice president of Sapp Bros., Inc. says of the renewable fuel’s effect on his company’s travel center and fuel wholesale businesses.

The Economic Advantage of Biodiesel

Sapp Bros., Inc. has experienced the benefits of biodiesel with two different businesses.

One is Sapp Bros. Travel Centers, which operates 17 travel centers stretching from Salt Lake City to Pennsylvania, many of them along Interstate 80. The other is a fuel wholesale business, Sapp Bros. Petroleum, which sells petroleum diesel, biodiesel, biodiesel blends, and other fuels and lubricants.

“Economically, biodiesel is a good thing to do,” says Kevin Cassidy, Vice President of both the petroleum and travel center businesses. “It’s also a sustainable fuel. It’s made us more competitive.”

Biodiesel economics spur interest

The company’s travel center in Peru, Illinois, offers a case study in these benefits. Located 100 miles west of Chicago on I-80, Sapp Bros. Peru is a full-service travel center that sees 750,000 customers a year.

It was one of the first travel centers in the state to offer biodiesel blends when it introduced the alternative fuel in 2005, according to Cassidy.

“The state of Illinois established a sales tax exemption on blends of B11 and higher that still stands, and it made sense to do it,” he says. “The B100 was priced attractively, below what our petroleum diesel cost. And we were able to offer a B11 blend at 8 cents per gallon below our No. 2 ultra-low sulfur diesel (ULSD). It went over very well with our customers.”

The infrastructure changes needed to introduce biodiesel were relatively simple. Sapp Bros. Peru converted a 12,000-gallon underground storage tank to hold straight biodiesel, or B100. Then as now, biodiesel is piped over to a loading station where petroleum fuel trucks come in, and Sapp Bros. uses splash blending by loading the B100 into the top of a truck’s tank. The truck then unloads the blended fuel into tanks that feed the diesel islands.

“To get started with biodiesel, our infrastructure upgrades were minimal,” Cassidy says. “It was around an eight-month payback on the cost.”

Utilizing B20

Cassidy is able to easily adjust the blend level and frequently goes up to a B20 blend.

“The blending economics make B20 a smart choice for us,” Cassidy says. “And I’ve had drivers say it’s cleaned up their fuel systems, cleaned their fuel injectors, and they actually get better mileage with biodiesel blends versus a regular No. 2 ULSD because of the clean injectors.”

The Peru travel center and the wholesale business run out of the location use B11 throughout the winter, and on milder winter days will move up to B20. Cassidy says by using a good cold weather additive, they’ve had no issues in storage tanks, at dispensers or with customers.

No matter the weather, he advises other travel centers to do their homework on producers and to purchase quality fuel.

“REG produces a quality product, they stand behind it, and they have the supply to meet our demand,” Cassidy says.

Biodiesel has made Sapp Bros. more competitive both against other travel centers and as a fuel distributor.

“Because we took the step and handled biodiesel, it opened up a lot of doors for us as a wholesaler,” Cassidy says. “And at our travel centers, having a diverse lineup of fuels attracts a bigger customer base. Besides filling up with fuel, they’re inside your stores. They’re shopping, maybe getting something to eat. There are benefits to bringing in new faces.”

The Bottom Line

Economics

Sapp Bros. pays less for biodiesel.
They can price biodiesel blends lower at the pump than ULSD, making them more competitive.
Helps drive in-store sales.

Infrastructure

Quick ROI on blending system.
Easy to switch blend level.

Watch: Sapp Bros. Explains Biodiesel Benefits

Biodiesel has made Sapp Bros. more competitive in the crowded travel center market. See the results.  

Growing the Biodiesel Business with Proven Results

To introduce biodiesel to their customers, Ag-Land FS, Inc., put the benefits front and center.

Success in the field proves biodiesel’s value.

When Ag-Land FS, Inc., began marketing biodiesel blended fuel in 2002, they knew they needed to provide data and prove to farmer members that biodiesel was a viable alternative.

“We did not want to come into the marketplace until we actually took biodiesel into the field and put it on trial,” says Kevin Lockart, energy consultant with Ag-Land FS. “So we did some testing with the Greater Peoria Mass Transit District that proved biodiesel blended fuel was a viable option for our commercial and agricultural customers.”

Once that test proved successful, the transition was easy and customers were excited about the potential of biodiesel.

Economic benefits help convince customers. 

In addition to supporting local farmers and reducing greenhouse gas emissions, biodiesel gave Ag-Land FS customers a significant economic edge. In Illinois, the sales tax on transportation fuel can be up to 25 cents higher per gallon than taxes in neighboring states. But when a retailer offers biodiesel blends of B11 or higher, the biodiesel blended fuel is not subject to the additional sales tax.

“We began offering a B2 biodiesel blended fuel in 2002 and rapidly moved to offer a B11 blend to take advantage of the Illinois tax abatement,” says Lockart. “I must admit it wasn’t an easy transition, and it took a lot of work, but looking back it was worth the effort. I estimate 95 percent of farmers in our trade territory utilize a B11 or higher biodiesel blended fuel today.”

Passing savings to customers helps increase market share. 

By passing the tax savings on to their customers, Ag-Land FS was able to increase their market share beyond the agricultural industry. The Greater Peoria Mass Transit system has been using biodiesel blended fuel for the past 10 years, as well as several other over-the-road trucking fleets in the Peoria area, ranging from five to 500 trucks. Many of these Ag-Land FS customers have experienced increases in mileage using biodiesel blends — up to 6.5 percent with on-road trucks — particularly those that do a lot of stopping and going.

"We are lessening dependence on foreign oil. The greenhouse gas emission reduction is probably what drives Ag-Land FS, Inc., more than anything. It's one of those rare things where it's the right thing to do."
Kevin Lockart, Energy Management Specialist, Ag-Land FS, Inc.
 
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