The United States went to war to get its hands on Iraq's oil, or so the charge goes. But ironically, our military now runs many of its jeeps on fuel that mixes diesel with a U.S.-made soybean extract. Biodiesel, or B20, requires no modification to engines. Though it produces traces of nitrous oxide -- and a French fry aroma -- it burns cleaner than other fuels. Sold primarily by a Chelsea, Mass., company, World Energy Alternatives, B20 begs the question: Are we ready for an alternative to oil?
"The days when we could literally keep our heads in the sand are over," says Gene Gebolys, WEA's founder and CEO. Since 1998, he notes, the U.S. market for B20 has grown from zero gallons to 15 million. Of course, that's only a tiny drop in the pan -- Americans consume 136 billion gallons of gas each year. Gebolys projects U.S. consumption of B20 will surpass 700 million gallons in 10 years, especially if a planned tax credit is introduced.
While that's still a relatively small niche, there's money in it, and WEA is poised to "write the rules for the industry," Gebolys says. Gulf Oil is an investor. And WEA's costs are low because it contracts out manufacturing -- a model borrowed from Sam Adams beer. (You can make biodiesel in your tub. Directions: Crush soybeans into meal and oil and then chemically separate the glycerin through the process of transesterification.)
OIL FOIL: Gebolys copied the business model of Sam Adams beer.
B20 costs 20 cents more a gallon than standard diesel, but customers seem committed to it. For example, the Medford, N.J., school district -- WEA's oldest account -- first bought B20 to comply with clean-air mandates. Now the district's B20 buyer Joe Biluck backs the fuel because he wants the U.S. to wean itself from foreign oil. "Iraq is one of the biggest exporters of oil to the U.S.," he says. "We need to take a stronger stance."