Scenes from the Grease Wars

How sky-high energy prices and green chic turned Hub restaurants’ used fryer oil into a prize worth fighting dirty for.

 

The two years since that meeting have proven Keaney right. Across the country, record-breaking oil prices are turning commodities markets upside down. The price of corn has more than doubled, driven largely by demand for the ethanol fuel now made from it. The price of rendered grease has seen an even bigger spike, thanks to a variety of new applications for the stuff.

Biodiesel, a cleaner-burning version of diesel fuel that’s made from processed grease (and goes straight into a car’s fuel tank), has become popular both here and abroad. The raw grease used in hybrid setups like Keaney’s has also become increasingly sought after. Already, Legal Sea Foods powers a delivery truck on canola oil that just a few days earlier had fried its fish. Nationwide, an estimated 250,000 people now run vehicles on grease, including California Governor Arnold Schwarzenegger (who has said the exhaust from his Hummer smells like French fries). To meet local demand, more than a half-dozen companies touting eco-friendly aims have sprung up here since Green Grease Monkey did its first retrofit. With names like Green Mountain Biofuels and SmartFuel, they’re each tapping our irrepressible fascination with all things green to carve out their own slice of the market.

There’s just one problem: With all the new competition, there suddenly isn’t enough grease to go around. In 1998, the U.S. Department of Energy pegged the total pool of restaurant grease in Boston at just over 10 million pounds, or about 1.4 million gallons. The department estimated that the business of picking it up was already fully controlled by three groups: the Martucci family (with 30 percent), American By-Products in Lynn (20 percent), and Baker Commodities in North Billerica (50 percent). A decade later, with the city still home to roughly the same number of restaurants, the supply hasn’t grown. The only thing that has changed is the number of people who want it. “It’s very simple economics,” says Bill Dieterichs, an analyst with the Jacobsen Publishing Company, which tracks the grease market. “We’ve created new demand factors in a market where the supply is basically static.”

When demand outpaces supply, prices go through the roof (see: $140 barrels of Middle East oil) and competition gets ugly (see: the Middle East). With a barrel of grease now worth around $100 and rising, old and new players alike are proving willing to fight for it. “It’s an old market that is being radically altered very quickly,” says the co-owner of one new company. “This is the epitome of the Wild West in the very sleepy Northeast.” These days, as those with even the greenest intentions are discovering, you can’t get into the grease business in Boston without getting your hands dirty.

“We were sucked,” Tony Barlage says. “I’d bet my ass on it.”

It’s late on a rainy day in June, and we’re standing behind All Asia Café in Central Square, peering into an empty green barrel that should have contained about 50 gallons of grease. A skinny 27-year-old wearing a dirty Sox cap, Barlage is the operations manager for grease collection startup SmartFuel. He checks a second barrel of his. It’s also empty. So is an unmarked black barrel off to the side. Though he can’t say for sure, Barlage suspects the owner of that third barrel came along and pilfered all of the grease. Later I learn the barrel belongs to All Asia’s previous collection service, the Martuccis’ A & K Waste; it denies any wrongdoing.

SmartFuel has had All Asia as a client since moving into the Cambridge market in April, a period during which the restaurant went through an estimated 70 gallons of vegetable oil. This was SmartFuel’s fourth attempt at a pickup. It had yet to collect a single gallon.

Theft wasn’t something the company founders planned for when they opened their 6,000-square-foot facility in Seabrook, New Hampshire, this winter. Drawing on their $100,000 in seed money, they bought a flatbed truck and several hundred 55-gallon barrels from Roche Bros. The plan is to eventually use the grease to produce biodiesel—hence their tag line, “Saving the Planet One Gallon at a Time”—but first they need a steady supply of it.

A couple of weeks after SmartFuel launched, Baker Commodities, one of the old companies charging restaurants for pickup, sent a letter to its customers. “Due to increased market prices we have great news for you,” it read. “Effective February 1, 2008, we will provide FREE FRYOLATOR GREASE SERVICE!!!” In response, SmartFuel began paying restaurants 10 cents a gallon for grease. Baker quickly followed suit. So SmartFuel paid even more—that is, when it had the chance. During one pickup run in June, company cofounder Hunt Stehli says, 11 out of 40 SmartFuel barrels had been sucked dry—a loss of about $900. “It’s completely out of control. Our business will not survive if people steal our product,” he says.

SmartFuel isn’t the only company reporting thievery. Last year, a new Jamaica Plain collector called Bio-Diesel Boston signed up South Boston’s Doughboy Donuts. They say they haven’t been able to get a single gallon, either. Several other New England firms, including AltEnergy Oasis, GreaseGuys, and Green Mountain Biofuels, all say that grease left out for them has gone missing.

Usually, it’s just the grease that’s taken. But lately the barrels themselves are getting stolen as well. And once again, the new companies point the finger at the old ones. “Martucci’s been playing games with me,” says the pickup driver for Bio-Diesel Boston. “If they go in and take my account, they’ll take my barrels.” He says 20 barrels have gone missing in this way. One of Stehli’s employees claims a Somerville pizza shop owner told her that a Baker Commodities driver took two SmartFuel barrels, saying he’d get in touch with the company. Stehli hasn’t heard from them. All told, he’s lost more than 30 barrels this year.

The Martuccis, Baker, and American By-Products deny stealing grease or barrels. “Our drivers are instructed to only pick up our material,” says Baker general manager Joe Huelsman. He says that when Baker signs up a client—or wins one back—it will remove the old barrels only if the restaurant owner has already tried to cancel the competitor’s service. Similarly, American’s general manager, Phil Bruno, says his drivers have removed grease from competitors’ barrels solely by request of the restaurant owner. “Until it gets into the truck, it belongs to the restaurant,” he says. All three companies say they’ve been hit by thieves themselves.

When they aren’t dealing with outright theft, the new collectors say their businesses are being harassed in other ways. Bio-Diesel Boston co-owner Patrick Maloney believes a competitor deliberately tipped over one of his full barrels. The mess prompted the owner of the restaurant to cancel Maloney’s service. Mark Howards, whose AltEnergy Oasis picks up grease from more than a dozen Legal Sea Foods locations, once found his barrels had been crushed by a truck. SmartFuel found a hole punched into the side of one of its barrels. Another firm complains of finding batch-spoiling chunks of lard dumped in theirs.

The most serious charge the upstart companies level is that the entrenched players have for years operated as a cartel. “That whole group, Baker, Martucci, all these guys in the rendering business, it’s like—I don’t want to use the word ‘mafia’—but it’s like a little group,” says Maloney. “They don’t like the competition.” For years most restaurants paid around $1 a gallon for grease disposal, regardless of who picked it up—an arrangement the new companies claim smelled of price fixing. “They cooperate rather than compete with each other. It makes it very difficult for others to get in,” says Howards. “That’s a cartel, isn’t it?”

It’s not the first time people have complained there’s something rotten about Boston’s rendering industry. In 1917, the Federal Trade Commission opened hearings here to investigate monopolistic behavior on the part of five national meat and rendering companies. It ultimately ruled that those players conspired to divide up territory among themselves, artificially inflated prices, and encouraged government inspectors to harass their rivals. The five meat trusts were forced to sell off dozens of seemingly independent stockyards and rendering outfits they had secretly controlled in Greater Boston for years.

Short of the same kind of sweeping investigation, there’s no way of determining whether modern companies have fallen into old, conspiratorial habits. Baker denies there’s any pact, and says it’s been competing with American and Martucci ever since entering the Boston market in 1979, the year it bought a North Billerica rendering plant (one that, incidentally, was founded in 1898 as a front for one of the bygone meatpacking trusts). There is, nonetheless, a measure of cooperation among the three. Even as Baker vies with the Martuccis and American at the collection level, it also buys grease from them. Regardless of what company a restaurant chooses to work with, a significant portion of Boston’s grease ends up at Baker’s North Billerica rendering plant.

According to that 1998 Department of Energy study, half of Boston’s grease went to Baker, while Martucci and American split the rest. What that survey didn’t show—and what many of the companies’ competitors and restaurant clients still don’t know today—is that the Martuccis’ share is larger than it looks. In 1976, the family partnered with two other rendering firms to launch American By-Products. Today, one-third of that seemingly independent company is still controlled by the Martuccis—a fact that neither business is quick to advertise.

Anthony Martucci says his family isn’t hiding anything, adding that he cofounded American to create an alliance that would help him weather fierce competition in the ’70s. “That’s how you survive,” he says. The plan worked. Bruno, American’s general manager, acknowledges he and the Martuccis have generally avoided competing for each other’s customers. “Until all these biodiesel guys came along, we didn’t really have to,” he says.

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