Biofuel Branding: Conserv Fuel

How many gas station owners can say that presidential hopeful Barack Obama has given a speech amidst their pumps? OK, so that was a leading question — I know of one: Kristopher Moller. The founder of alternative fueling station Conserv Fuel received the senator from Illinois at his flagship station in Brentwood, Calif., last month. (Check out the shaky video clip)

A visit from Obama sure makes for good press, but Moller’s own story does, too. More than just trying to hawk biofuels, Moller is looking to reinvent the refueling experience – think what Starbucks did for cafes or Whole Foods is doing for supermarkets. “People don’t particularly like going to the gas station, but what if they did? There’s a level of loyalty in my customers that is unheard of in the gas station industry,” says Moller.

Right now Moller sells B99 biodiesel (99% biodiesel) and is in the process of adding E85 ethanol (85% ethanol,15% gasoline) – his station will be one of only a handful of public stations across the state of California that are close to selling E85. (Only one right now according to some info). Of course Moller also sells standard diesel and gasoline fuels – he has to in order to cover his costs, because the volume of alternative fuel sales is still low. “The business model is partly based on getting those guilty Prius drivers to want to buy gas from an alternative fueling station,” explains Moller.

Building alternative fueling stations for consumers isn’t a new idea in the U.S – Of hundreds of thousands of public US gas stations, about a thousand now offer E85 and slightly more that offer biodiesel. But the trend is gaining traction as the transportation industry and consumers look harder at biofuels as a way to reduce oil dependency and cut carbon emissions in response to global climate change. According to research from the green tech consultancy, Clean Edge, the global market for biofuels (ethanol and biodiesel) will grow from $20.5 billion in 2006 to $80.9 billion by 2016. At the same time ethanol is also controversial when it comes to using food like corn.

Moller says that while plenty of venture investment is funding production of next-generation fuels, too little money has gone into distribution plays, such as Conserv Fuel. So far it’s not too crowded of a space and Conserv Fuel has few competitors: SeQuential Biofuels is a company in the North West; the best-known is Willie Nelson’s BioWillie biodiesel brand; and big names like Walmart have also shown interest in adding biofuels to stations.

One reason may be that distribution is an expensive part of the alternative fuel food chain: It can cost from $1.5 million to $2 million to build an eco-friendly alternative fueling station from the ground up. Still, Moller hopes to open up additional Conserv Fuel stations soon, and is considering funding alternatives to do so. “Someone will need to create the household brand name for this,” He says.

It will be no small task, but Moller has the background to do it. His family founded a chain of independent gas stations called USA Petroleum 50 years ago. Moller convinced his father to add biodiesel at five of the family stations last year, and volume and margins of fuel sales increased at each.

You might think Moller could just roll-out biodiesel across all USA Petroleum stations. But there was a slight hitch. His father sold the company for $273 million to Texas gas station owner and refiner Tesoro in May. Doh! But Moller got to keep the Brentwood outlet in the deal, and that was incentive enough to rebrand and go out on his own as ConservFuel.

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