Steven C. Agee, Ph.D.Shouro Dasgupta, B.S.B.

Alexis Caron, B.S.B.

Introduction: Natural Gas Vehicles

• Dedicated natural gas vehicles are designed to run on natural gas only, while dual-fuel or bi-fuel vehicles can also run on gasoline or diesel.

• Dual-fuel vehicles allow users to take advantage of the wide-spread availability of gasoline or diesel but also uses a cleaner, more economical alternative when natural gas is available.

• Natural gas used as a transportation fuel is called compressed natural gas because the gas is compressed to a pressure of about 3,600 pounds per square inch (psi) and stored in a fuel cylinder aboard the vehicle. CNG flows into the engine's combustion chamber and is ignited to create power to drive the vehicle.

• It is estimated that there are 9.6 million natural gas operated vehicles in the world (December 2009)

Advantages and Disadvantages of Natural Gas Vehicles

Advantages Disadvantage•Nearly 87% of U.S. natural gas used is domestically produced, while in 2008 53% of the petroleum/crude oil consumed in US was imported

•60-90% less smog-producing pollutants*

•30-40% less greenhouse gas emissions

•Less expensive than gasoline

• Using CNG is also considered to be better for engines, as cylinder wear and oil contamination is reduced. Also, spark plugs stay cleaner for longer.

•Limited vehicle availability

•Filling stations are less readily available than gasoline and diesel

•Fewer miles on a tank of fuel

•Less trunk space for dual-fuel autos.

* Depending on the type of vehicle

Worldwide Natural Gas Vehicle Statistics

Rank Country Natural Gas Vehicles Refueling Stations

1 Pakistan 2,000,000 2,941

2 Argentina 1,745,677 1,801

3 Brazil 1,588,331 1,688

4 Iran 1,000,000 500

5 India 650,000 463

6 Italy 580,000 700

7 China 400,000 1,000

8 Colombia 280,340 401

9 Bangladesh 190,381 502

10 Thailand 127,735 303

11 Ukraine 120,000 224

12 USA 110,000 224

Source: International Association of Natural Gas Vehicles, 2009

Table 1: Number of Natural Gas Vehicles by Country

The Technology

Typical CNG Components in a Natural Gas Vehicle

The Technology (cont.)4th Generation CNG System

Conversion Costs (Gasoline to Natural Gas) • A specially designed Conversion Kit is required consisting of

cylinders to be fixed in the trunk of the car with associated

equipment to allow the natural gas to flow into the engine and all

cars can be converted irrespective of make or model.

Country Conversion Cost (50 liter

tank)

Conversion Cost (90 liter

tank)

Bangladesh $750 - $800 $850 - $ 900

Pakistan $ 200 - $230 $ 245 - $285

Argentina $ 200 - $400* $420 - $515*

Brazil $100- $175 $ 200 - $400

Iran $50* $80*

India $700 - $800 $950 - $1,000

Thailand $1170 - $1400 -

Malaysia $875 - $1100 -

USA $1450-$3000

*Government subsidized

Table 2: Conversion Cost Comparison by Country

Fuel Price Comparison

  Average Price in

Gasoline Gallon

Equivalents ($)

Average Price in

Diesel Gallon

Equivalents ($)

Average price in

Dollars per Million

Btu ($)

Gasoline 2.65 2.96 22.99

Diesel 2.57 2.87 22.26

CNG 1.85 2.07 16.07

Ethanol (E85) 3.36 3.75 29.13

Propane 4.13 4.61 35.81

Biodiesel (B20) 2.70 3.02 23.44

Biodiesel (B99-B100) 3.54 3.95 30.67

•CNG is about 80 cents less than gasoline on an energy-equivalent basis, while E85 is about 28 cents less per gallon than gasoline.

Source: US Department of Energy (January 2010)

Table 3: Fuel Price Comparison

Emission Standards

Light-Duty Vehicle Emissions: CNG vs. Gasoline

• Reduces carbon monoxide emissions 90%-97%

• Reduces carbon dioxide emissions 25%

• Reduces nitrogen oxide emissions 35%-60%

• Potentially reduces non-methane hydrocarbon emissions

50%-75%

• Emits fewer toxic and carcinogenic pollutants

• Emits little or no particulate matter

• Eliminates evaporative emissions

Source: U.S. Environmental Protection Agency

Savings from CNG Vehicles

• As a vehicle fuel it is about 30-50% cheaper than gasoline. This is due

to a combination of:

– The cost of natural gas on an energy equivalent basis relative to

petroleum fuels and

– fuel taxes, the current pre-tax price of Russian H-gas (the

assumed marginal source for NG used in Europe) delivered in the

form of CNG is, per lower heating value energy unit, only 63 % of

the current price of petrol.

CNG Gasoline

Rate 1.91/kg $2.67/liter

Average 16.80 km/kg 12 km/liter

Running cost/km $ 0.114 $0.225

Save/100km $ 7.82 ($12.59/100 miles)

Nil

Table 4: Saving Chart between CNG and Gasoline (Asia)

Source: International Association of Natural Gas Vehicles, 2009

Savings (cont.)

Natural Gas RatePrice per kg  

Consumption/100 km  Cost per 100 km

0.79 € ($1.02 USD)7 kg (15.4 pounds)5.53 € ($7.17 USD)

Regular Gasoline RatePrice per liter 

Consumption/100 km Cost per 100 km

1.23 € ($1.59 USD) 10 liters (2.6 gallons) 12.30 € ($15.95 USD)

Savings 6.77 € /100 km ($14.13/100 miles) or 55 percent

Table 5: Saving Chart between CNG and Gasoline (Europe)

Source: International Association of Natural Gas Vehicles, 2009

Predicted Savings in USA

Source: US Department of Energy (April 2010)

• Based on the mileage information from a 2005 Honda Civic and gasoline and CNG prices data from

the Midwest region (CNG-$1.41* & Gasoline $2.73), it is projected that for a 100 miles trip a CNG

run vehicle will save;

• $3.71 in the city area and

• $2.14 in the highway

• Estimates do not include additional savings from lower maintenance costs from reduced wear and

tear of the engine, less frequent oil changes and tune-ups.

* Average price as of 3rd May 2010 in OKC

  Gasoline CNG

MPG (City) 32 30

MPG (Highway) 38 34

Requirement for 100 miles (City) 3.12 gallons 3.33 gallons

Requirement for 100 miles (Highway) 2.63 gallons 2.94 gallons

Cost per 100 miles (City) $8.12 $4.41

Cost per 100 miles (Highway) $6.84 $4.70

Savings from using CNG (City) $3.71

Savings from using CNG (Highway) $2.14

Table 6: Savings in USA

Savings from Maintenance and Performance

• Some fleet operators have reduced maintenance costs by as much as 40 percent by converting their vehicles to CNG.

• Intervals between tune-ups for natural gas vehicles are extended 30,000 to 50,000 miles.

• Intervals between oil changes for natural gas vehicles are dramatically extended--anywhere from 10,000 to 25,000 additional miles depending on how the vehicle is used.

• CNG has an octane rating of 130 and has a slight efficiency advantage over gasoline.

• Because CNG is already in a gaseous state, NGVs have superior starting and drivability, even under severe hot and cold weather conditions

Tax Rate ComparisonCountry Tax on Gasoline Tax on CNG

Germany 68.7 % + 19.0 % VAT 0.0%

India 52.0% 8.0%*

Pakistan 38.57% 0.0%

Italy 63.1% 0 – 5%**

Oklahoma 12.93% † 11.48%‡

* Currently only in the states of Maharashtra and Uttar Pradesh

** Depending on the size of the vehicle

† Federal tax of 18.4 cents/gallon plus state tax of 17 cents/gallon as a percentage of average gasoline price

in OKC of $2.737 (04/29/2010)

‡ Federal tax of 18.3 cents/gallon plus state tax of 16 cents as a percentage of average CNG prices in OKC of

$1.41 (05/03/2010). However, a state tax waiver permit for CNG can be purchased from Oklahoma Tax

Commission at a cost of $ 100 per year.

• In order to recover the $100, a person would have to purchase ($100/0.16) 625 gallons

of CNG.

• At an average tank size of 23 gallons, a person would have to fill up their car

approximately 27 times a year or drive approximately 17,500 miles a year.

• Otherwise it is better off to pay taxes during CNG purchase.

Incentives for Natural Gas Vehicles

• The state of Oklahoma offers the following incentives – a one-time income tax credit for 50% of the cost of

converting a vehicle to operate on an alternative fuel or– for 50% of the incremental cost of purchasing a new

Original Equipment Manufacturer AFV– The state also provides a tax credit for 10% of the total

vehicle cost, up to $1,500

Federal• Qualifying vehicles are also eligible for a federal income tax

credit of up to $4,000.

For Consumers: Oklahoma

• Oklahoma provides a tax credit for up to 75% of the cost of

installing alternative fueling infrastructure.

• Beginning January 1, 2010, a tax credit is also available for up to

50% of the cost of installing a residential CNG fueling system (not

to exceed $2,500).

Federal

• A 30% tax credit (not to exceed $30,000) is available for

equipment placed into service before January 1, 2009.

• For equipment placed into service after January 1, 2009, the credit

amount is up to 50% (not to exceed $50,000).

For Fuel Retailers : Oklahoma

Incentives for Natural Gas Vehicles

Contact Information

Steven C. Agee, Ph.D. Professor of Economics and DirectorEconomic Research & Policy InstituteMeinders School of BusinessOklahoma City University2501 N. BlackwelderOklahoma City, Oklahoma 73106 USAsagee@okcu.edu(405) 208-6111