Greener fuels are taking a hit as a result of more affordable gas prices, which are at their lowest levels in five years.
Makers of biodiesel, fuel made from animal fats or vegetable oil, have been cutting costs to compete with diesel, which costs 20 percent less compared to the previous year.
“The producers have to be getting murdered,” said Steven Boyd, senior managing director at Sun Coast Resources Inc., a Houston-based distributor of petroleum and alternative fuels, according to Reuters. “And the consumer puts a smile on his face and drives down the road another mile.”
In Asheville, N.C., biodiesel producer Blue Ridge Biofuels has seen a 40 percent drop in sales since July. Although the price of the company’s product fell to just more than $3 per gallon compared to about $4.15 in September, it remains pricier than diesel, which costs less than $3 in the area.
Similarly, those who make corn-based ethanol are seeing smaller profits. The low cost of corn boosted US ethanol production to record levels in 2014 and manufacturers saw large margins.
Corn has bounced back approximately 25 percent since October, but the selling prices of ethanol are down due to a surge in supply of the fuel.
“We still see a positive margin, but not nearly what we saw last calendar year and last quarter,” said Jim Seurer, CEO of Glacial Lakes Energy LLC, an ethanol producer based in Watertown, South Dakota, according to the news agency.
The use of natural gas in heavy duty operations instead of diesel is also less appealing these days. In the trucking industry, for instance, although natural gas is cheaper, there is an additional cost of $50,000 for trucks that run on it.
“Right now there is no way we could buy a natural gas truck,” said Jeff Shefchik, president of Paper Transport Inc, a trucking company based in Green Bay, Wis., that operates 100 natural gas trucks and 350 diesel trucks, according to Reuters.
Top US truck brands say they expect demand for natural gas trucks to slow down.
Robert Carrick, natural gas sales manager for Freightliner, a top US truck brand, said the sale of trucks that run off natural gas will probably remain steady this year.
“We have seen customers that we thought would have pulled the trigger by now say ‘We’re just going to hold off a little bit and watch what fueling pricing does’,” he said, according to Reuters.
The natural gas sector has also suffered on Wall Street. The WilderHill Clean Energy index, which monitors green manufacturers such as solar panel makers and renewable power producers, has plummeted 36 percent following a three-year high in March last year.
Along with the decline in gas prices has come a 6 percent drop in electric vehicle sales. Shares for electric automaker Tesla fell 27 percent since marking a high year in September.
Sales for large SUVs and pickup trucks from carmakers Chrysler, General Motors and Ram, on the other hand, shot up by more than 30 percent in December.
(With reports from Reuters)
