Gas-Price Spike Boosts Alternative-Fuel Convert
By ERICA R. DAVIS
Charles Anderson transforms cars and trucks with diesel engines to run on ordinary vegetable oil, the kind that comes out the back of a restaurant kitchen. With gas prices skyrocketing, Mr. Anderson says, his firm expects to double sales from last year, to $2 million.
There's only one glitch: Using straight vegetable oil (SVO) to power a car or truck is illegal. Because SVO hasn't been registered with the Environmental Protection Agency as a motor vehicle diesel fuel, its use violates EPA regulations, says EPA press officer Dave Ryan.
Mr. Anderson admits the legality issue has him worried about the viability of his five-year-old business, Golden Fuel Systems. At the same time, he's ready to fight the system. "It's a battle that could be won because it makes so much sense," he said.
Golden Fuel sells a parallel heated auxiliary fuel system, which includes a hose, filter and an extra fuel tank that allows a vehicle to run on either standard diesel or vegetable oil. A dashboard switch allows drivers to flip between the fuel tanks.
Mr. Anderson founded Golden Fuel in September 2001 after hearing that diesel cars and trucks, which ordinarily run on petroleum diesel, could be powered from ordinary vegetable oil.
"I'm inherently cheap," he said. Mr. Anderson saves 95% of his normal auto fuel bill by using vegetable oil. He says vegetable oil gets the same mileage per gallon as ordinary petroleum diesel and burns cleaner than petroleum. In October 2004, a State of Ohio Vehicle Inspection Report concluded an engine in a 1995 Chevrolet running on straight vegetable oil (SVO) produced about 53% less pollution than regular diesel fuel.
After he converted his own truck, news spread. "A guy called me up and said he'd pay for consulting. He sent me a $50 check. I thought, `this has to be a business opportunity,'" Mr. Anderson said.
While some vegetable-oil fuel users are motivated by a desire to preserve the environment, others are looking to save money. "I can almost trace spikes in business to huge gas increases," Mr. Anderson said.
Mr. Anderson says about 98% of his customers rely on local restaurants for their fuel, pumping the used vegetable oil from the restaurant's storage tank directly into their vehicle. "Instead of a gas station, they go to a restaurant to fuel up," he said. The grease oil is filtered to remove the stray chunks of fried foods.
Most restaurants typically pay to have their grease hauled away, so they're happy to offer the used oil for free, Mr. Anderson said. "You can create a really good relationship. Eat there a few times and it makes a difference."
Mr. Anderson funded his business using personal credit cards, spending $30,000 to $40,000 on mechanics tools and special filters. He designed the system himself, converting cars and trucks from a 1,000-square-foot shop on his rural farm in south central Missouri, employing only himself for the first two years.
"In the beginning I'd get excited if I had a phone call a day. Now we can get 200 to 300 calls a day," he said. Amid increasing demand and a lack of expansion space, he leased in May a new 6,000-square-foot facility, which includes a warehouse and a small office, in Springfield, Mo. He now has six employees.
Not everyone believes vegetable oil should be used as fuel. National Biodiesel Board Director of Communications Jenna Higgins-Rose said that ordinary vegetable oil is not safe for use as fuel because it contains glycerin, which can clog diesel-engine parts. A close cousin to vegetable oil, biodiesel is legal to use and slightly more expensive than petroleum diesel. Biodiesel, like Golden Fuel's pure vegetable oil, can be made from any kind of vegetable oil, including rapeseed or coconut, put through a chemical process called transesterification, which is meant to solve the problem. One branded version of biodiesel is Willie Nelson Biodiesel, or BioWillie, which is blended with regular diesel fuel at a 20% ratio of biodiesel to petro-diesel.
Mr. Anderson said the National Biodiesel Board's claims are false. "Biodiesel's mantra is it can gum things up. We just haven't seen that," he said. He believes the organization provides false information because vegetable oil and biodiesel are competitors. "If our technology catches on, biodiesel is sunk. They are as scared as can be." Still, there isn't a large-scale study certifying SVO's safety in diesel engines.
SVO has other drawbacks. Vegetable oil requires the installation of an auxiliary fuel system, while biodiesel doesn't require modifications. Also, biodiesel is EPA approved.
The EPA's Mr. Ryan said Golden Fuel may be subject to enforcement action, but declined to comment on whether action had been taken. Maximum penalties are $32,500 per violation if committed by a manufacturer or dealer or $2,750 per violation if committed by any other person.
"No manufacturers in recent memory have submitted a car for [emission standards] certification that runs on vegetable oil. If they did submit one, we would evaluate it to ensure it meets our standards," Mr. Ryan said.
To be considered for certification, Mr. Anderson would need to submit the proper forms to the EPA. But Mr. Anderson won't do it because he believes the law doesn't apply to him. The EPA law prohibits the conversion of a motor vehicle to operate on vegetable oil. Mr. Anderson doesn't convert engines; instead, he adds a fuel tank. "In my mind I don't have to submit for approval," he said.
The EPA's Mr. Ryan doesn't agree, saying Mr. Anderson's vehicles do need to be certified.
Still, Mr. Anderson says he hasn't heard from the EPA and neither have his customers.
Golden Fuel isn't the only company in the vegetable-oil market. Others include Seattle-based Frybrid LLC; Florence, Mass.-based Greasecar Vegetable Fuel Systems and Salmon Arm, British Columbia-based PlantDrive, a division of Neoteric Biofuels Inc.
Ms. Davis is a reporter with Dow Jones Venture Wire.
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