5th Gear: LP Gas can save you a bundle!
This is the transcript of a TV programme which was broadcast on Channel 5 in the UK on 27th May 2002.

From an economic perspective, autogas is the most cost-effective alternative to conventional automotive fuels taking account of pre-tax fuel costs as well as the cost of establishing the distribution infrastructure and converting vehicles. Today, autogas simply makes economic sense, especially for fleet vehicles such as delivery vans, taxis, and buses all of wich are highly amenable to autogas conversion.

Payback Period for Cost Savings

The financial motivation for an end user to switch to autogas largely depends on the cost of converting the vehicle (or the cost of a dedicated OEM vehicle compared to a gasoline or diesel vehicle) and the relative cost of the fuel. Since converting a vehicle to run on autogas involves upfront capital expenditure and some minor inconvenience, the owner needs to be compensated later through lower running costs, of which fuel is generally the most important. The time it takes for the savings in running costs to offset the capital cost - the payback period - depends on the usage of the vehicle, i.e. the average distance travelled monthly or annually. In practice, the payback period generally has to be less than two to three years to encourage commercial vehicle owners to switch; private individuals often demand a much shorter payback.

Case Study - Converting a gasoline LDV in France

Using 1998 data, the cost of conversion is estimated at €2060 for a gasoline-powered vehicle, while the higher purchase cost of a diesel vehicle compared to a gasoline vehicle is assumed to be €760. Because excise duties on autogas are significantly lower than on gasoline, autogas breaks even with gasoline after about 60 000 km. This would equate to around two years for a commercial van that travels 30 000 km a year. The payback period would be just over one year for a taxi using gasoline with a typical annual usage of over 50 000 km. Duties on diesel are only slightly higher than for autogas and much lower than for gasoline. Consequently, the break-even point of autogas against diesel is considerably higher than for gasoline.

Vehicle Conversion Costs

Vehicle-conversion costs vary considerably from one country to another, depending on the sophistication and quality of the equipment installed. Costs may fall as OEMs become more involved in the development, equipment installation and marketing of dedicated autogas vehicles. Conversion costs for older cars with less sophisticated engines tend to be much lower.

Infrastructure Costs

The costs incurred in establishing or expanding an autogas distribution network essentially relate to investments in service-station storage and dispensing facilities. The plants and equipment that already exist to handle the importation, production, storage and bulk distribution of LP Gas for traditional uses are exactly the same as for autogas, although some additional investment may be needed to cope with higher throughput. Since autogas generally makes use of the existing service-station infrastructure for distribution of conventional fuels, additional costs for autogas dispensing are low relative to some other alternative fuels. For example, the cost of installing a standard tank, pump and metering equipment for autogas alongside existing gasoline and diesel facilities is typically around one-third that of installing dispensing facilities for CNG with the same capacity and performance. This is because of the added cost of dedicated supply pipelines, high-pressure compression, storage cylinders and special dispensers for CNG. In addition, the continued fuelling rate for CNG is much lower than for autogas.

source: GAIN