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.
Patrick Keaney isn’t someone you’d expect to find toiling under the hood of a car. Tall and rangy, with the square jaw of a B-movie actor, he’s a part-time Green Party operative by tradeâ€”he ran the Massachusetts campaign for Ralph Nader in 2000â€”and a full-time environmentalist by inclination. Both of those interests happened to align when, in March 2004, he bought an ’84 Volkswagen Rabbit from an old lady in Mission Hill, then jerry-rigged it to run on used cooking oil. Though Keaney was just looking to wean himself off petroleum, his tinkering would come to reverberate through one of Boston’s oldest underground economies in ways he could never have expected.
The conversion process, employed by green-minded folks since the 1980s, was surprisingly simple. Keaney simply secured a 12-gallon tank of vegetable oil in the car’s trunk and ran hoses to and from the diesel engine. When he started the car, it ran briefly on diesel until hot antifreeze coming through one hose melted the thick grease and allowed it to flow freely through the other one. Then he flicked a switch on his dash that turned off the diesel and started feeding grease into the engine, where it delivered roughly the same miles-per-gallon performance. VoilÃ â€”a homemade hybrid.
Keaney was a zealous convert. He and a friend soon started a company they called Green Grease Monkey, retrofitting other cars behind his Jamaica Plain apartment building. To herald the new enterprise, Keaney printed bumper stickers that read, “Powered by Foreign Oil,” with the word “Foreign” scratched out and “Vegetable” scribbled over it.
Keaney told the new grease-car drivers that he’d help them get the fuel they’d need. To make good on the deal, he convinced restaurant owners to give him the thick, yellow glop sitting in their back alleys. Since it’s illegal to pour spent grease down the drain, nearly every eatery in Boston that deep-fries foodâ€”there are about 2,500 of themâ€”dumps the waste into 55-gallon drums. Even a small mom-and-pop can run through 25 gallons a week. For years, these restaurants paid collection companies about $50 for each drum they trucked away. Now, as Keaney’s need for fuel grew, it threatened to upset that long-standing arrangement. Restaurant groups that had been paying as much as $19,000 a year for pickup could erase their bill with one handshake.
After striking his first major deal with a Boston restaurant group in late 2005, Keaney started pumping grease from barrels outside the Blarney Stone in Dorchester and West on Centre in West Roxbury. That caught the eye of newspaper reporters hungry for stories with green angles, who dutifully noted that Keaney was carting the grease away for free. As the calls came in from other restaurant owners, he also signed up the Glynn Hospitality Group, which owns the Black Rose, the Purple Shamrock, and a half-dozen other bars and restaurants. Between just those two big suppliers, Keaney could count on as many as 1,000 gallons of grease a month.
If Keaney had known more about the history of grease in Boston, if he had known who controlled the market for it and how hard they had fought to get it, he might have thought twice about edging onto their turf. He might have seen the grease war coming. But he didn’t. And so he was somewhat surprised when a representative of Aâ€‰&â€‰K Wasteâ€”the company that had been making good money off Keaney’s two new clientsâ€”called him and his partner in for a meeting. We have something we’d like to talk to you about, the man on the phone said.
On a cold morning in January 2006, Keaney slid into the passenger seat of a grease-powered Mercedes driven by his business partner, Dave Staunton. They headed to Roxbury, where Staunton pulled into Newmarket Square, a sprawling industrial park just off Route 93, where rows of refrigerated warehouses surround a parking lot no one has gotten around to paving. Staunton parked, and he and Keaney walked into a building marked Mutual Beef.
They were met by Anthony Martucci, a tall man with a crown of white hair and a build thick as a prize steer’s. Martucci wore a white meat-cutter’s jacket with “Big Guy” embroidered above the pocketâ€”a moniker describing not just his size, but also his position of authority within the family’s businesses. In 1905, his grandfather started A. Martucci & Sons, which used a horse and buggy to collect the fat and meat trimmings from homes and area slaughterhouses. Eighty years later, the family took over Mutual Beef, which makes hamburger patties for restaurants, and then added a second byproducts collector, Aâ€‰&â€‰K Waste, in 1995. Today, Martucci’s black Hummer can often be found parked in front of the Roxbury warehouse door. Its vanity plate reads: “Bones.”
Patrick Keaney had unwittingly stumbled into a corner of this country’s $3.1 billion trade in processed fatâ€”an industry that has always preferred to stay in the background. As meat eaters, we’re happy to see supermarket cases of chicken breasts, pork chops, and filet mignon, but we’d rather forget that, on average, 2 pounds of every chicken, 100 pounds of every pig, and 600 pounds of every cow aren’t even edible. It falls to rendering companies to collect those partsâ€”54 billion pounds of them last year nationwideâ€”and boil them down into fats that end up in a wide range of fertilizers, livestock feeds, and cosmetics. (“It’s not a glamorous industry,” says Thomas Cook, the head of the National Renderers Association.) But in the urban Northeast, where it’s been 25 years since most of the old slaughterhouses closed, just about the only thing left for the local renderers to collect and boil down is the fat left out behind restaurants. And now some guys calling themselves the Green Grease Monkeys were trying to take that away, too.
Martucci led Keaney and Staunton to a low-ceilinged office above Mutual Beef’s processing floor. An American flag hung on the wall, alongside stills from GoodFellas, The Sopranos, and The Godfather. Keaney noticed that someone had pasted pictures of Martucci family members over the actors’ faces. Several of those same relatives were already gathered in the office when he and Staunton sat down. The Martuccis didn’t mince words. Their problem, they explained, was that Green Grease Monkey’s offer of free pickup was threatening to put them out of business. How should the family deal with the newcomers, Anthony Martucci asked. He let the question hang in the air. (“We didn’t say, â€˜We’re going to break your legs,’ or anything like that,” Martucci told me later.)
As Keaney and Staunton saw it, the family’s frustration betrayed a foggy understanding of the emerging uses for grease. Keaney explained that his own tiny operation wasn’t the real threat. The real threat would come from a wave of well-funded green entrepreneurs who were beginning to see opportunity where others had seen only garbage. “Look, man,” Keaney told them, “this isn’t the last you’re going to hear of this. This is no longer the waste disposal businessâ€”this is the energy recycling business.”
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 CafÃ© 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’ Aâ€‰&â€‰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 biodieselâ€”hence their tag line, “Saving the Planet One Gallon at a Time”â€”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 moreâ€”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 dryâ€”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 clientâ€”or wins one backâ€”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 likeâ€”I don’t want to use the word â€˜mafia’â€”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 upâ€”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 fiveÂ 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 showâ€”and what many of the companies’ competitors and restaurant clients still don’t know todayâ€”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 Martuccisâ€”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.
Last year, the country’s 275 rendering plants processed enough fat to fill two lanes of tractor-trailers stretching from here to California. Without them, our landfills would be overflowing. So would our waterways: Before there was a glue factory on Spectacle Island, after all, dead horses were simply tossed into Boston Harbor. The renderers, by extension, have had a claim on being eco-friendly for years: “We’ve been green since before green was ever heard of,” says Bruno. Yet they have botched the job of highlighting that. When the National Renderers Association published an official history in 1978, it couldn’t come up with a better title than The Invisible Industry. By the time the group got around to publishing an edition it called The Original Recyclers in 1996, the scrap metal association had beaten it to the punch, trademarking that name four years earlier.
Stodgy though they may be, the established companies say that in addition to the necessary permits and licenses, they also have a certain wherewithal the planet-hugging startups lack. Anthony Martucci says that while his company can recycle all of the meat and fat that sometimes gets deposited into barrels, the green companies are generally only capable of reusing the grease. “We’re a full recycling company,” he says, claiming that some competitors are taking the other waste and “either throwing it in the garbage or dumping it down the drain.” And since rendering companies treat grease as a hazardous material, they spend a lot of money taking care of any accidents. When American had a spill in Boston earlier this year, cleaning up the mess properly cost $12,000. “A lot of these fly-by-night companies, I don’t know if they can write the check,” Bruno says.
Where the new companies do have a clear advantage, though, is in their skill at leveraging the rhetoric of the environmental movement. And “leveraging” is indeed the wordâ€”because while none of the companies are exactly lying about what they do with the grease, they’re also not always as community-spirited as they’d have customers believe.
Bio-Diesel Boston, for instance, does indeed brew biodiesel, making it in a $10,000 contraption in a shed in Jamaica Plain. But then it pours the biodiesel into bulldozers and other heavy machinery that helps the company’s owners make their real money in landscaping and construction. So while the restaurants are getting their grease recycled for free, they’re also subsidizing the fuel costs of other businesses.
Following the path of grease controlled by another biodiesel company is a trickier task. Green Mountain Biofuels touts its allegiance to the shop-local, save-the-planet ethos on containers that read, “For the community. For the environment. For the future.” It shares its mailing address, a post office box in North Conway, New Hampshire, with a company called MBP Bioenergy. Among its accomplishments, MBP helped Harvard start making biodiesel from its dining hall greaseâ€”just the kind of eco-friendly initiative that gets lots of play in the press. One article says Green Mountain is owned by a gentleman farmer named Al Landano, while another says its owner is Jim Proulx, the co-owner of a New Hampshire petroleum distributor. Neither mentions Paul Noonan, the man who actually incorporated the company here in Massachusetts. Noonan’s family owns J. P. Noonan, New England’s largest oil distributor.
The union between oil retailers and green entrepreneurs is not as incongruous as it might seem. Back in 2004, with an eye to expanding the use of bio-diesel, Congress passed legislation that gives oil companies a 50-cent tax credit for every gallon of biodiesel they make from grease (a credit raised to $1 this May). The perk has given oil companies a strong incentive to inch their way into the grease business.
Today, MBP Bioenergy gets the grease to make its biodiesel from the Green Mountain containers Proulx’s fellow oil man Paul Noonan set up outside places like Fenway Park. MBP then sells its biodiesel to oil companies, including the one owned by the Proulx family. When that biodiesel makes its way to the furnaces of area homes, it’s sold for roughly the same price as heating oil. That means the only ones obviously benefiting from the federal tax break are the oil companies, which get their grease from restaurants that think they’re sending it to an eco-friendly end. (Which, strictly speaking, they areâ€”just not one anywhere near the Green Mountains.)
Even grease devotees with the purest of intentions can sometimes be less than virtuous in practice. For a moment after Keaney starts up his makeshift hybridâ€”while the grease is melting so it can be injected into the engineâ€”the car runs on biodiesel, which he brews at home in his basement. He stores the concoction in a 55-gallon drum near the chemicals he uses in its manufacture: methanol, a highly explosive ingredient found in paint strippers; and sodium hydroxide, the caustic chemical known as lye. The process is so dangerous that two years ago, after an amateur lab in Colorado burned to the ground, the Centers for Disease Control issued a nationwide alert advising people to stop making biodiesel at home. Then there’s the fact that Keaney’s convertible Volkswagen (like all grease cars) is itself technically illegal, its vegetable oil fuel not recognized by the Environmental Protection Agency.
Last year, Green Grease Monkey moved its operations from Jamaica Plain to a quiet residential street in Brighton. On a sunny afternoon this spring, Keaney lopes around the driveway pushing rows of grease jugs into slightly more organized rows. He’s made one into a bird feeder that hangs above a blue bin that, I will discover, serves as the collection container for the composting toilet he set up in his basement. He still converts cars, but getting grease has become a real struggle. “I’ve had to hustle, scrounge, stealâ€”for lack of a better term,” he says. “The golden era is coming to an end.” Once happy to give fuel away, he recently began charging $1.75 a gallon.
Even the Martucci family has been changing to adapt to the shifting market. Over the past few months, they’ve finally begun describing themselves to clients as recyclers, something they never had to do in the past. “It’s like putting on your shoes. We don’t know how to explain it, because we’ve just been doing it for so long,” says Anthony Martucci’s son, Gus. As part of their new marketing effort, the family recently took out an ad in a trade magazine called Green Business Quarterly.
Up in New Hampshire, SmartFuel has passed its six-month birthday and has yet to turn a profit, despite its client roster of 300-plus restaurants. On July 1, in order to get his hands on more grease, Hunt Stehli began offering 35 cents for every gallon of it, nearly double what he had accounted for in his original business plan. He heard Baker jumped to 40 cents, but he refuses to go any higher. “They have extremely deep pockets, and I am pretty adamantly opposed to an endless bidding war,” he says.
Not long ago, Stehli got a phone call from Patrick Maloney of Bio-Diesel Boston, who has been working on a few plans of his own. Maloney wondered if the two could enter into some kind of agreement that would keep them from competing for each other’s customers. Maybe there’s a way to pull together, he said, to put an end to the bidding war.
Viewed one way, what Maloney’s proposing sounds something like a cartel, the kind of system he and others accuse the rendering companies of profiting from for years. Maloney wouldn’t use that word, though. If his plan comes to fruition, he thinks he’ll call the new arrangement a co-op.
Source URL: http://www.bostonmagazine.com/2008/07/scenes-from-the-grease-wars/