Fueling the Future: Crude Price Surge Ignites Renewable Energy Momentum
Showing no sign of fatigue, crude prices continued to climb last week, finishing 0.4% higher for the week at $83.19 – notching its seventh consecutive weekly gain. It’s not quite Joe Dimaggio, but that’s a pretty healthy streak. Global demand has been persistent and the pledge from OPEC+ to cut supply so far remains resolute. We’ll have to watch the pace of inventory declines closely, to see if there are any cracks in the cartel. If not, it’s inevitable that crude prices will continue to climb. Increasing energy prices certainly will bolster the rallying excitement behind biofuels.
Biochemical conversion of biomass to biofuels does offer a sustainable energy solution to address waning energy supply and mitigate climate change concerns. Methanol can be used as a feedstock to produce biodiesel and can be used as a feedstock to produce synthetic fuels, such as gasoline, diesel, and jet fuel. Carbon neutral advocates are also fans of bioethanol, which is a renewable energy source and is a feedstock for biofuels such as SAF and bio-chemicals. The processing of low-carbon, inedible oils (like chicken fat – no disrespect to Colonel Sanders) solves the controversial issue of using food for fuel. All of these processes support the pressing need to utilize fuels derived from renewable sources to reduce carbon emissions. The Tank Tiger has seen a real surge of demand for renewable storage. The 45Q tax credit has continued to seed investment in carbon capture and storage (CCS). The passage of the Inflation Reduction Act (IRA) further increased the potential value of the 45Q credit and introduced the 45Z tax credit. It looks like everyone is jumping into the clean fuels pool. The biomass-based diesel blending tax credit (BTC) has been extended to Dec. 31, 2024, introducing a clean fuel production credit payable to producers of ethanol, biodiesel, renewable diesel and sustainable aviation fuels (SAF). It’s no small wonder everyone wants storage for these fuels. Renewable diesel production increased 72% to 1.5B gallons in 2022, led by refiners converting teapot plants to renewables factories. Of course, this makes feedstock costs even more expensive, but renewable diesel production will inevitably continue to grow. So, the search for more feedstocks continues, and economic distribution systems to support supply chains are coveted. Extra crispy or original recipe? Terminal operators, start your engines. If you want to bet on the come, put your tanks in renewable fuels service. Take it from the Colonel. Build new tanks. The payoff is there. It’s a no brainer, and not a game of chicken. Let us know if you’re interested in seeing the data and bid prices for all of our storage inquiries. Chicken buck buck!
