The cost of natural gas is less than the cost of diesel fuel and gasoline. The savings when using LNG is approximately $1.30 per diesel gallon equivalent (DGE). The savings when using CNG is about $1.15 per gasoline gallon equivalent (GGE).
The actual savings vary widely around the country and also vary greatly depending on the price of oil, and, therefore, the price of gasoline and diesel fuel. The above savings reflect oil at $95 / barrel. The tax on LNG is about 50% more per BTU which affects cost.
These approximations, and the others used in Part 1, can allow for making general conclusions.
The premium paid for a LNG heavy truck is about $70,000, while it is about $6,000 for a light vehicle, excluding pick-up trucks. (See Table 2 of Part 1).
Heavy-duty trucks average around 6 miles per gallon of diesel fuel. A truck driving 65,000 miles/year will use approximately 11,000 gallons of diesel fuel. Switching to LNG results in a savings of around $14,000 per year (when DGE savings are $1.30) – or 5 years to recover the added $70,000 investment.
Recovering the added $6,000 investment for a CNG light vehicle would take approximately 9 years if the GGE savings are $1.15.
While initial cost is an important factor in purchasing a CNG vehicle, assuming the availability of fueling stations, a few other factors may negatively affect the purchasing decision, especially by individuals.
- The storage of compressed natural gas uses half the trunk space in a typical CNG passenger vehicle.
- The range of the CNG vehicle is considerably less than for a gasoline powered vehicle, approximately 225 miles compared with 600 miles for new light vehicles obtaining 30 mpg.
- There is also confusion about CNG fueling stations rated 3,000 psi and 3,600 psi, along with the temperature at the station. While the fueling process is simple, the amount of energy in a GGE increases with pressure and lower temperatures. This adds some complexity to the determination of savings and range.
These factors may discourage individuals from purchasing a CNG passenger vehicle.
Detailed studies of fleet vehicles, including heavy-duty and medium-duty-trucks, and transit buses, show paybacks of around three years for sufficiently large fleets (approximately 50 or more units) when making investments in both vehicles and fueling stations. School buses travel shorter distances during the year, which results in longer payback periods. Typically, fleet trucks and vehicles return to fixed locations at the end of the day where fueling of natural gas is available.
Fleets, such as municipal garbage trucks, municipal busses and delivery trucks, should continue to grow at a rapid pace. Market penetration currently remains fairly low at 25 to 40%, though data is hard to come by.
Long haul heavy-duty trucks remain caught in the chicken and egg scenario, though Clean Energy Fuels (CLNE) has announced the development of “America’s Natural Gas Highway”. CLNE, according to its web site, plans to build 150 fueling stations by the end of 2013. The web site lists 68 specific locations, and an additional 32 for which it is making plans.
Other organizations, such as Royal Dutch Shell, are making commitments to add CNG or LNG fueling stations at other truck stops.
It’s very likely that the number of long haul heavy trucks will continue to increase at a modest rate over the next few years, until fueling stations for LNG are actually in place.
- Owners of heavy-duty trucks can recover their incremental cost in 5 years, which is a slow payback, but still within the realm of being a good business decision. When miles driven exceed 65,000 miles, the cost can be recovered more rapidly. If volume production lowers the price premium, it could shorten payback time.
- Owners of heavy-duty long distance trucks are reluctant to invest in LNG trucks, without an LNG fueling infrastructure along major transportation routes. Perhaps CLNE can boot-strap the growth of LNG heavy duty trucks with its “America’s Natural Gas Highway”.
- The payback for light vehicles is too great for individuals to buy CNG vehicles based strictly on cost.
- Many owners of fleets with 50 or more vehicles can recover their added investment in approximately 3 years – 2 years for fleets of 100 or more vehicles.
With a 7% growth rate, the same as the past ten years, natural gas consumption for transportation would increase to approximately 65,000 million cu. ft. This would not have a negative effect on natural gas supplies or pricing. Consumption for natural gas vehicles in ten years would represent less than 0.3% of 2011 consumption of 24,285,300 million cu. ft. … In addition, the potential for increased supplies of shale gas is enormous.
Even a doubling of the growth rate wouldn’t affect the availability or price of natural gas, assuming fracking isn’t discouraged by the EPA.
There is always the possibility that Congress will provide subsidies for speeding the development of fueling stations and the purchase of natural gas vehicles, though this is doubtful, given America’s huge debt.
It’s very likely that the use of natural gas for long haul trucks and fleets will continue to grow at the current 7% rate … the economics favor increased usage of low-cost natural gas. Whether natural gas usage for transportation will increase at a rate faster than 7% is the real question.
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