LPG Economics

There are multiple alternative fuels becoming available and propane seems to offer a viable mix of vehicle driving range, durability and performance. Propane offers drivers a distinct economic advantage over fossil fuels (gasoline and diesel). A study conducted by the Battelle Memorial Institute found LPG (Propane) to be a more economical alternative fuel (especially for fleets) on a per mile basis. Operating, ownership, and other related expenses associated with propane fleets typically range from 5-30 percent less than those of gasoline fleets (Source: National Propane Gas Association).

From an environmental perspective, propane appears to be the most cost effective alternative to conventional transportation fuels when capital costs (vehicle and infrastructure) and operation and maintenance costs are all taken into consideration, but that is not the only advantage of using propane fuel. LPG produces a much lower environmental impact across the full range of controlled and uncontrolled greenhouse gases, not only over its conventional fuel rivals, but also when compared to so-called CO2 neutral fuels. Pollution from fossil fuel use creates major impacts on community health, especially in urban areas and locations near busy roadways. The resultant health care and costs related to lost productivity are very high, especially where there are larger numbers of diesel vehicles in use.

Infrastructure Costs

Propane is not a renewable fuel, as it is linked to petroleum reserves and already in great demand. Propane's infrastructure is already established, and can continue to help carry the load until other alternatives are more developed. While automobile manufacturers do not advertise that they can build propane powered vehicles, they can do it but, the choices are currently quite limited. It is rumored that some new cars can be special ordered that run on propane but, you should expect to be able to order a fleet versus a single car. Should propane vehicles become more requested, the big three may answer with available models.

Propane Conversion

Considering that the basic infrastructure for production, storage, and bulk distribution of propane already exists, converting fossil fuel gas stations to propane could be the best economical choice. Many gas stations already sell propane and the setup for doing so is not complex. The existing network would require funding for expansion as well as investments to accommodate the higher throughput. According to the World LP-Gas Association, the existing gas station infrastructure used for petroleum fuels can (easily) be modified to dispense propane. Expenses for converting a gasoline station to propane are lower than the requirements for converting to other alternative fuels. A CNG conversion for example, would cost approximately three times that of installing the necessary equipment for dispensing propane. Converting a (fossil fuel) gas station to propane only requires a tank, pump and metering equipment while converting to CNG requires dedicated supply lines, high-pressure compression, storage cylinders, and special dispensers.

Converting to Propane

A majority of propane vehicles on the road today have been converted from using fossil fuel. While very few, offerings from OEMs (original equipment manufacturers), are increasing. Fleet vehicles are most commonly converted to propane use due to the long term benefits. Conversion costs will vary depending upon the original vehicle and equipment required. According to the Alternate Fuels Data Center, factory built Propane burning light-duty trucks typically cost about $2,500 more than the conventional vehicle base price, and converting a gasoline burning light-duty truck to propane costs somewhere between $1,500 and $3,000. Other fees may be applied when purchasing a new propane burning vehicle, such as the cost of EPA testing and related documentation. Conversely, there may be tax deductions or other incentives available to offset the additional FFV cost. In some cases, dealers lease the conversion equipment, which virtually eliminates upfront costs but could cost more in the long run. A significant advantage to fleet owners is the fact that part of the conversion costs may be deducted from federal taxable income. State and local tax incentives are also available, and details can be obtained from local propane dealers, conversion companies, and/or government tax agencies.