Does the Oil Glut Spell DOOM, GLOOM or BOOM for Alternative Fuels?
by Jim Lane (Biofuels Digest) How does $60 oil impact payback for natgas or hybrid electric vehicles, and cellulosic biofuels? The going assumption is that low oil prices are bad for alternative fuels — but it’s not always the case. Consider the competition. Quite a bit of ink has been spilled regarding hybrid electrics and natgas vehicles — as alternatives to petroleum-based cars, and biofuels.
Higher costs are no reason, in and of themselves, to avoid alternative vehicles. All alternative vehicles are a good idea, and good for the planet. But, we see that $60 oil is going to offer some challenges in terms of selling consumers on the economics.
Over to cellulosic fuels
Now, let’s look carefully at cellulosic biofuels, specifically at cellulosic biofuels waiver credits, available under the Renewable Fuel Standard in the United States.
Conclusions from the data
1. Expect tougher selling conditions for natgas and hybrid electric vehicles.
2. There could be boom times for cellulosic biofuels in 2016, and reasonable economics in 2015.
3. Maintaining RFS2 is going to be crucial — otherwise, cellulosic biofuels will be priced out of the market just as US shale oil is getting priced out of the market right now as OPEC drives down the oil price. Leaving the world more dependent than ever on OPEC oil.
4. Cellulosic feedstock may well be at a premium in 2015 and 2016 — depending on how RIN values for advanced biofuels and corn ethanol evolve.
5. As fuel prices decline, fuel consumption is likely to rise, slightly — improving the overall market size for biofuels blends. Both on the biodiesel and ethanol side. READ MORE and MORE (Wall Street Journal) and MORE (OilPrice.com)