The commercial truck-fleet market in the U.S. may be about to undergo unprecedented change.
Due to the dramatic drop in natural gas prices over the last few years, fleet operators now have access to an alternative fuel that can slash operating costs. A number of major manufacturers are laying the ground work to be ready if the market really takes off. And if it does grow like they expect, the surge could be dramatic.
Fleet operators rack up a lot of miles every year and the savings from switching to compressed natural gas (CNG) or liquid propane (LPG) are simply too big to ignore.
Several OEMs such as Freightliner and Thomas Built Bus have jumped into the market. International now offers the Transtar Class 8 semi that runs on CNG.
A cost calculator on its website shows a fleet can save well over $150,000 in fuel costs over the life of the truck. For fleets that run their per-mile operating costs to the penny, this is a financial windfall.
While there are not yet enough CNG or LPG fueling stations to accommodate large numbers of everyday motorists and their passenger cars, there are plenty to service fleets, especially those that return to the same yard every night.
Some fuel suppliers will even provide a fueling station for free, sort of like getting a phone for free, but paying for minutes of time.
In 1980, the U.S. had about 600,000 vehicles that ran on CNG or LPG. Today there is less than half that number. As gasoline and diesel prices fell in the 1980’s the payback largely disappeared.
But with natural gas prices so low and likely to remain lower than conventional fuels for decades to come, proponents believe the potential market could be 1 million commercial vehicles.
Ford, General Motors and Chrysler now offer trucks that can run on these fuels.
Ford is the most bullish, offering 10 different models. It charges $325 to add harder valve and valve seats so a truck engine can accommodate CNG or LPG, but a customer must spend an additional $10,000 or so to add the tanks and fuel system. Even so, for many fleets the payback is about two years.
Ford says its sales of these vehicles, while still small, shot up 350% since 2009.
Natural gas and propane in gaseous form hold less energy than gasoline or diesel, but by using liquid natural gas (LNG) or liquid propane, trucks can pack much more fuel into a tank. Also, new fuel-delivery systems inject the fuel into the engine in liquid form, not gaseous, providing similar power and driveability to gasoline or diesel.
Depending on the duty cycle, these trucks emit 20% to 30% fewer greenhouse gasses, so there is a significant environmental benefit.
The federal government offers subsidies to encourage fleets to use these fuels. There is a 50-cent tax credit for every gallon used, plus up to $30,000 towards the cost of a fueling station. Even so, fleets still get the substantial savings cited above even without these credits, so there’s little danger the market would collapse if the federal government dropped them.
Now the question is, which will it be, CNG or LPG? LPG offers lower initial costs. It is stored at a relatively low 250-300 psi, (17-21 bar), making the conversion cost per truck several thousand dollars less. And LPG fueling stations are significantly cheaper to install, about $50,000 compared with $400,000 for CNG, which is stored at 3,600 psi (248 bar).
But big oil companies such as Exxon Mobil and Shell have made major plays in CNG, and it enjoys backing from big names such as billionaire investor T. Boone Pickens. LPG, by comparison, largely is supported by smaller energy companies without the marquee names.
Outside the U.S. there’s no comparison, LPG, commonly called autogas, is far more popular. It is the third most common fuel in the world, after gasoline and diesel. There are roughly 17 million vehicles running on LPG worldwide, mainly in Poland, Russia, South Korea, and Turkey.
The U.S. lags behind the rest of the world in using natural gas for vehicles. But since the fracking revolution largely is an American innovation, it’s likely to catch up quickly. The savings are simply too compelling.
John McElroy is editorial director of Blue Sky Productions and producer of “Autoline” for WTVS-Channel 56, Detroit, and “Autoline Daily,” the online video newscast.