“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.”
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
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.
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.
Petroleum Wholesale Gains a Competitive Edge with Biodiesel
Published on: Feb 08, 2019
By adding diversity to its fuel offerings, the company benefits from tax incentives, price advantages
and better supply management.
In 2013, John Cook, president
and CEO of Petroleum Wholesale, which includes Sunmart convenience stores, brought diversity to the company’s fuel offerings when it started offering biodiesel.
“Basically, all of our competitors started bringing it in. So it didn’t take us long to realize we needed to get into it to stay competitive,” Cook says.
Today, 95 percent of Petroleum Wholesale’s locations offer biodiesel. Stores start at a B10 blend, move up to B15 a couple of months later, and then B20 a couple months after that. And the company has heard no complaints from customers.
“There’s no downside to biodiesel, and a lot of advantages to it,” Cook says. The benefits include state incentives such as an exemption from the diesel fuel tax, price advantages over traditional diesel, the easing of some supply
issues, biodiesel being a renewable fuel and its clean-burning properties.
Choosing a supplier to keep up with the company's growing demand.
A concern before Petroleum Wholesale began offering biodiesel was availability because of the limited number of production facilities in the biodiesel industry.
Petroleum Wholesale partnered with Renewable Energy Group, Inc. (REG), which has biorefineries and terminals throughout the U.S. Cook believes it’s best to do business with the largest suppliers, and REG being one of the biggest producers of
biomass-based diesel in North America means it can offer a stable supply and competitive pricing. Cook says REG provides high-quality biodiesel and getting fuel from REG has never been a problem.
Cook’s satisfaction with REG is about more than the biodiesel the company supplies, however. He says REG employees consistently go above and beyond in helping Petroleum Wholesale improve its business. One example, he says, is the numerous times
his company has been under contract for a certain number of gallons of biodiesel for a month, and toward the end of the month, they ask for more.
“REG has accommodated us in every instance,” Cook says.
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