Duxbury was a featured presenter at a Kokomo meeting, one of ten co-hosted by North Central Co-op, a CountryMark member cooperative. According to North Central Co-op sales and marketing manager Ron Pettet, the purpose of the meetings was to give tips and new information to NCC and CountryMark customers on how to “better manage your energy resources and be more profitable, whether you’re a farmer, school transportation official, or any one of our customers.”

According to Duxbury, two of the biggest drivers of crude oil prices were China’s double-digit economic growth, and currency and equity movements in the U.S. He said that the U.S. dollar had generally been weak, which bodes well for commodity prices, including oil. However, weakness in the Euro caused by European Union debt worries, occasionally made the dollar stronger in comparison and added to price volatility, which will be a factor in the foreseeable future.

To manage this volatility, Duxbury recommended that fuel buyers look at available price risk management tools, such as forward contracting.

“In my opinion, I think crude oil will trade in the $85 to $95 range during the first quarter of this year,” said Duxbury. “There doesn’t appear to be a big downside to this thing right now. As the volatility continues, my suggestion is to ‘buy the dips,’ even as small as $4 or $5, and don’t wait too long expecting it to go down further. If crude gets down to $85, I think we’re going to see a lot of contracting.”

Duxbury said there are a number of benefits to contracting one’s fuel needs.

“It’s not going to guarantee you’ll get the lowest price, but it will allow you to lock in a price based on your budget and turn a variable cost into a fixed cost,” said Duxbury. “This in turn allows you to predict your fuel costs for a seasonal period and tailor a program for your specific business needs.”

He indicated that contracts could be easily arranged through North Central by calling a local NCC office. Customers may choose the fuel amount, a contract period between 1 to 12 months in the future, and the delivery schedule. Minimum quantity is 1,000 gallons.

In an update on alternative fuels, CountryMark business development manager Mick Calvin told listeners that there were both encouraging signs and challenges for continued growth of biofuels. On the positive side were factors like: 2007’s Renewable Fuel Standard II, which mandates the displacement of 36 billion gallons of conventional fossil fuels with alternative fuels by 2022; the recent reinstatement of the $1 per gallon Biodiesel Federal Tax Incentive, which he said would make biodiesel-blended fuels very competitive with conventional diesel fuels; increasingly stringent emission standards, which alternative fuels can meet more effectively than conventional fuels; and advances in research and development to continue seeking new sources of alternative fuel from things like algae.

However Calvin stated that of the 36 billion gallons of alternative fuels mandated by RFS2, the amount of corn-based ethanol will max out in 2015 at 15 billion gallons, with the incremental amounts coming primarily from cellulosic ethanol. Current ethanol infrastructure is not nearly capable of supplying the additional amount of ethanol needed.

“Today we’re already at 12 billion barrels of production, yet the nation only has one facility capable of producing cellulosic ethanol,” said Calvin. “And while EPA approved the use of E15 in newer vehicles, gas station owners don’t want to take on the expense of adding new pumps and tanks, nor risk the liability of customers putting E15 into an unapproved vehicle.”

Calvin stated that despite the challenges, fuel refiners like CountryMark would be ramping up their commitment to blending bio-based fuels.

“Dramatically increased renewable fuel consumption is going to happen—that’s mandated,” said Calvin. “At CountryMark we’re committed to meeting the standard and the alternative fuel needs of our customers.”

In a later presentation Calvin stressed the importance of getting the right lubricants for specific engine applications. He stated that while most oils today contain a combination of base oil and additives, “there are some impostors in the marketplace” that can actually do harm to today’s engines.

To make his case, Calvin quoted from the label of a quart of an off-brand discount oil he’d recently purchased from a large, well-known retailer that stated on its label, “Contains no additives. Not suitable for use in gasoline-powered engines built after 1930. Use in more modern engines may cause unsatisfactory performance or equipment harm.”

To avoid such mishaps, Calvin explained how to use the “API Donut” on oil container labels, which explains the properties of the oil according to American Petroleum Institute standards, and encouraged listeners to become familiar with it.

Calvin also stressed the importance of protecting one’s investment by using high-quality oil filters, saying that the quality of the filter was just as important as the quality of the oil. He also encouraged customers to use the CountryMark Total Analysis program for their lubricants to check on the conditions of their oil and engines.

“We can tell you the contaminants in your oil, and if you’ve got too much wear if it’s coming from a ring or a rod bearing, if you’ve got too much fuel dilution, or even if you have an antifreeze leak. You can get a kit for less than $20 and it’s great insurance,” said Calvin.

In a fuel storage update, NCC energy consultant Ron Hill told attendees that the EPA would be requiring implementation of a Spill Prevention Control and Countermeasures (SPCC) plan by November 10, 2011. This would apply to above-ground storage tanks and its goal is to prevent spills from entering waterways.

Plans are required for any combination of stored oil-related items that exceeds 1,320 gallons, including oil, oil products, diesel fuel, gasoline, lubricating oil, hydraulic oil, adjuvant oil, crop oil, vegetable oil, or animal fat. Hill said that there were two types of certifications, self certification and certifications prepared by a professional engineer. He stated that most farms or businesses with less than 10,000 gallons storage could probably self-certify unless they had had a reportable spill within the last two years.

Hill said that plans were relatively easy to develop, and that North Central personnel would be happy to help customers with the process. He also said that information on creating plans could be found at http://www.epa.gov/emergencies/docs/oil/spcc/spccfarms.pdf.

“The EPA is not out looking for violations of on-farm fuel storage, but if you have a spill and don’t have a plan in place, you could face a significant fine,” said Hill. “The important thing is to have a plan.”

Later, NCC energy sales specialist Brad Swartzell discussed the benefits of using premium diesel fuels, including longer injector system life, decreased injector deposits, increased efficiencies, fewer emissions, improved startability, greater shelf life (years instead of months), and maintenance savings.

Swartzell quoted from a Cummins service bulletin which stated that while that company’s diesel engines were capable of running on a wide variety of fuels, premium fuels were recommended for customers wanting maximum performance, efficiency, reliability, and lower maintenance costs.

“We want to help you increase your profitability and efficiency,” said Swartzell. “Cheap fuel is expensive.”

CountryMark is a farmer-owned cooperative and is Indiana’s only American-owned oil exploration, production, refining and marketing company. In addition to its corporate offices in Indianapolis, it operates a refinery in Mount Vernon and terminal locations in Mount Vernon, Switz City, Jolietville, and Peru, Ind., as well as Henderson, Kentucky. Seventeen member cooperatives distribute CountryMark fuel in and around the state of Indiana. In addition to delivered fuels, these cooperatives operate more than 90 fuel stations in Indiana and surrounding states. CountryMark carries CountryMark Advantage Lubricants, and is recognized nationally as a leader in the distribution of biodiesel and ethanol.

For more information about CountryMark, go to www.countrymark.com.