Our company, XYZ Oil Developers Inc., has developed a new type of alternative fuel. This alternative fuel will be marketed with the average consumer in mind, especially those who drive large vehicles. XYZ's Alterfuel will join the ranks of other alternative fuels, such as propane or LPG, natural gas, hydrogen, methanol, ethanol and biodiesel.

Alterfuel is produced at our main research refiney located in Zenia, California and at our secondary facility in Cottage Grove, Oregon. Alterfuel consists of a mixture of water and a hydrocarbon feedstock, usually a fossil fuel. At our refinary in California, advancements in technology has allowed us to use photobiological techniques to produce Alterfuel. However, at our Oregon facility, the more economical method of steam reforming is used to produce the product.


Since February this year, XYZ has been testing the reception of Alterfuel in the states of California and Oregon. The vast majority of Alterfuel produced is transported only a short distance before use. Short-distance distribution is by pipeline, similar to the method used for natural gas. At present, long-distance distribution is made via large tanks delivered by trucks or railway. Consumers can purchase Alterfuel at specific fuel stations under a cooperative agrement with XYZ. There are 100 stations offering Alterfuel in California and 55 stations selling our product in Oregon. Vehicles must be fitted with a special high pressure tank, offered at the fueling stations for $1500 plus labor.

Reception of Alterfuel has been very encouraging, especially within the marketing segment of car owners who drive sports utility vehicles. Even though Alterfuel costs slightly more than gasoline at an average of $2.67 per gallon, Alterfuel has low emissions of nitrous oxide (NOx), the polluant that is emitted by gasoline. Independent tests by the Environmental Protection Agency has recorded NOx emissions at 7 percent. Our product is also more fuel efficient than gasoline, increasing the average sports utility vehicle's highway mpg from 15 to 23. We believe the low emissons and the fuel efficiency is a definate value creating examples for Alterfuel. We also believe this will make Alterfuel superior and position our product in the forefront of the alternate fuel market.


Technological trends are the backbone of XYZ's continuing improvement of Alterfuel. We are studying more efficient techniques of making Alterfuel, such as electrolysis, photochemical processes and solar hybridation. As technology drives competition, so will the efficiency of alternative fuels.

Curtural trends are a driving force of the alternative fuel developement. Our marketing research indicated that Baby Boomers are the big spenders of today. They drive minivans and SUVs. Thirty-five percent of our cliental are Baby Boomers However, Gen Xers seem to be more receptive to alternative fuels with their willingness to try new products.

As we are reaping a prosperous economy, the positive socio-cultural trends have helped Alterfuel. The reception of Alterfuel is favorable. More people are willing to exchange the extra charges for Alterfuel and the high pressure tank for fuel efficency and less pollution.

Political and legal trends affecting Alterfuel not only come in the form of the EPA and Federal Energy Regulatory Commission (FERC), but also the stringent requirements of California's Clean Car Campaign. The campaign's Clean Car Standards promote: 1) increased fuel efficiency, 2) reduced auto emissions, and 3) reduced impacts from the manufacture and ultimate disposal of the vehicle. The EPA has proposed a somewhat less stringent program set to begin in 2004. XYZ has been commended for helping the state of California begin to meet the Federal vehicle emissions standards by as early as 2001. Additionally, Oregon Office of Energy has commended XYZ in the catagory of Transportation Efficiency even though Oregon's nitrous oxide emissions have been declining. The commendation was for helping the state reach it's goal of reducing the state's reliance on oil and reducing the pollution, congestion, and other costs associated with vehicle travel.


There are competitors in the alternative fuel market: natural gas, ethonol, even the electric car. However, besides electric car, none of them boast a 7% emission rating. Our superiority even outruns the electric car, as we do not have the constraints of cloudy days or rechargable batteries. Our target market, people who drive SUVs, would definitely spend their money on the pollution producing gasoline of old. That is if they did not have a choice. Now they do have a choice.

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