Precision Sales and Service, Inc.

Birmingham, Alabama

 Buddy Gamel 205.591.2266

Toll Free 877.403.7827

 

 

 

 

 

 

Propane Use for Fleet Vehicles

Propane: The #1 Alternative Motor Fuel in the World

 

Propane, also known as LPG (liquefied petroleum gas), is the leading alternative fuel in the country. It is also the nation's third most common vehicular fuel today, after gasoline and diesel. There are over 270,000 on-road vehicles in the United States and more than 10 million worldwide that operate on propane (Source: US Department of Energy, World LP Gas Association). A large number of these are used in fleets that include light-to heavy-duty trucks, buses, taxicabs, police cars, and rental and delivery vehicles.

No. of Propane Vehicle in Use in the US 1993-2002

 

Source: Alternative Fuels Data Center, US Energy Information Administration

Economics


Propane offers fleet operators distinct economic advantages over conventional fuels (gasoline and diesel). The Battelle Memorial Institute found that propane is the most economical alternative fuel for fleets (on a per mile basis) when operating, ownership, and infrastructure costs are all taken into consideration. Operating costs associated with propane fleets typically range from 40-50 percent less than those of gasoline fleets (Source: National Propane Gas Association).

>From an economic perspective, propane is 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. Of all available alternative fuels, propane offers the best mix of vehicle driving range, durability and performance.

Infrastructure Costs


The capital structure needed for production, storage, and bulk distribution of propane for traditional uses already exists. Some additional investments may be required for automotive uses to accommodate the higher throughput. The majority of incremental infrastructure costs however, relates primarily to the expansion of the distribution network.

Existing service station infrastructure used for conventional fuels can be modified to dispense propane. The additional costs of adapting a station for propane use is low compared to the requirements for other alternative fuels. For example, the cost of installing the necessary equipment for dispensing propane (tank, pump and metering equipment) is about one-third of that for dispensing CNG (dedicated supply lines, high-pressure compression, storage cylinders, and special dispensers) (Source: World LP-Gas Association).

Capital Costs 

The majority of propane vehicles on the road today are converted vehicles. The offerings from OEMs (original equipment manufacturers), although increasing, are still relatively few. Fleet vehicles can be conveniently converted to propane use. Conversion costs vary, depending upon the type of original vehicle and equipment installed. According to the Alternate Fuels Data Center, factory conversions of light-duty trucks typically cost about $6,000 over the conventional vehicle base price. Conversion costs generally range from $3,000 to $6,000. Other fees may be applied, such as the cost of EPA testing and documentation. On the other hand, there may be tax deductions or other incentives available to offset the up-front capital cost. Some dealers lease the conversion equipment, which virtually eliminates upfront costs. Regardless of initial capital costs the typical ROI (return on investment is less than 18 month).

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 (see below)

Operating Costs


The upfront costs of propane fleet vehicles can be offset by lower operating and maintenance costs over the lifespan of the vehicles. The time it takes for these savings to offset the capital costs (payback period) depends on vehicle usage patterns but is normally based on the average distance traveled monthly or annually. Fleet vehicles typically travel long distances and have very high fuel consumption, so the payback period on propane fleet vehicles can be very reasonable (12 months or less).

Fuel Costs


Fuel is the principal operating cost for fleets. On average, a gasoline gallon equivalent (gge) of propane is generally less than that of gasoline (Source: US Department of Energy) and federal excise taxes on propane (13.6 cents/gal) are lower than for gasoline (8.4 cents/gal) and diesel fuel (24.4 cents/gal).

Propane can deliver up to 90 percent of gasoline's miles per gallon with significantly less environmental pollutants. Its fuel efficiency relative to gasoline surpasses those of all other alternative fuels - 70 percent for ethanol, 54 percent for methanol, and 21 percent for compressed natural gas (see chart below).

 

This comparison uses identical vehicles optimized for their specific fuel. The baseline is a gasoline-fueled vehicle with enough fuel to travel 100 miles. Distance shown is based on the relative energy content (British Thermal Units - BTUs) of each fuel gallon.

If all vehicles were fitted with equal volume tanks, propane gas would require the least fill-ups on a trip, followed by ethanol, methanol and CNG.

 Source: Michigan Propane Gas Association 

 

Maintenance Costs


Lower maintenance costs are one of the prime reasons underlying propane's popularity for use in delivery trucks, taxis, and buses. Propane's high octane rating (104-112 compared with 87-92 for gasoline) and low carbon and oil contamination characteristics have resulted in documented engine life of up to three times that of gasoline or diesel engines (Source: National Propane Gas Association). Many fleets have also reported extended intervals between required maintenance. Spark plugs from unleaded gasoline engines typically have to be replaced after 30,000 miles, but those in a propane vehicle can last 80,000-100,000 miles. 

 

Is this a Good Choice for your Vehicles


 Propane is an excellent fuel choice for fleet vehicles, which have characteristics that make them ideal candidates for propane operation. Typical characteristics include: 

  • High fuel usage
  • Significant emissions
  • Urban locations
  • Centrally fueled
  • Fixed and/or limited routes
  • Susceptibility to government mandates
  • Special vehicle orders
  • High public visibility

Fleet operators do not have to sacrifice performance for environmental friendliness. The power, acceleration, payload, and cruise speed of propane-fueled vehicles are comparable to those obtained with equivalent internal-combustion engines. In addition to its superiority in environmental benefits, propane is safe, readily available, and makes good economic sense.

Environmentally Preferred


At the top of the federal government's environmental agenda is the need to reduce air pollution caused by engine emissions. The use of clean-burning fuels is critical to achieving this goal. Propane is on the Environmental Protection Agency's (EPA) list of federally approved clean-burning fuels. Furthermore, propane is contained in a sealed, pressure-tight system at all times, and there are no evaporative emissions. This eliminates a significant source of secondary pollution.

Propane is clean burning. Tests conducted by the EPA show that propane engines produce 60 percent less ozone-forming emissions than reformulated gasoline. Recent tailpipe emissions tests performed on Orange County (California) Transit Authority's propane buses showed they emitted 87 percent less total hydrocarbons, 50 percent less nitrogen oxides, and 40 percent less particulate matter than gasoline-fueled buses.

Safe


Propane is nontoxic and nonpoisonous, and has a very small flammability range (the lowest among all the alternative fuels). Propane vehicle tanks are tested to four times the normal operating pressures, and the tanks are 20 times as puncture resistant as gasoline tanks. (Source - Puget Sound Clean Cities Coalition).

Readily Available


More than 90% of all propane used in the US is produced domestically meaning the revenue from this source of energy would stay in the USA. There are over 10,000 public propane refueling stations and an established network of licensed propane conversion centers throughout the country, and the numbers are growing.

Incentives


 Financing is a central issue in the acquisition of propane fleet vehicles. There is a wide variety of incentives offered at the federal, state and local levels to encourage the expanded use of propane vehicles.

Federal Incentives

 

Clean Fuel Vehicle Federal Tax Deduction


The EPA Act established an incentive program for the purchase of Alternate Fuel Vehicles and conversion of conventional gasoline vehicles to alternative fuels. Through the federal Clean Fuel Vehicle Federal Tax Deduction Program, companies and private individuals can offset a portion of the incremental costs associated with the conversion of vehicles or the purchase of an AFV:

  • Tax deduction is available for the purchase of a new original equipment manufacturer (OEM) qualified clean-fuel vehicle, or for the conversion of a vehicle to a clean-burning fuel. Dual-fuel vehicles qualify, but only the incremental cost associated with the clean fuel will be taken into account.
  • The deduction cannot be amortized and must be taken in the year the vehicle is acquired or the conversion performed. The amount of the tax deduction is based on the gross vehicle weight (gvw) and type of vehicle.
  • A tax deduction of up to $100,000 per location is available for qualified clean-fuel refueling property used in a trade or business.
Clean Fuel Vehicle Federal Tax Deductions 

Clean Fuel Vehicle

Criteria

2002
Maximum Deduction

2003
Maximum Deduction

2004
Maximum Deduction

Truck or van

gvw of 10,000-26,000 lbs.

$3,750

$2,500

$1,250

Truck or van

gvw more than 26,000 lbs.

$37,500

$25,000

$12,500

Buses

seating capacity of 20+ adults

$37,500

$25,000

$12,500

All other vehicles

off-road vehicles excluded

$1,500

$1,000

$500

 

The real dollar value of these deductions will depend upon the depreciation method used and the individual or company's income tax rate. More information on the tax deductions can be obtained by calling the Internal Revenue Service at (800) 829-3676 for a free copy of Publication 535, "Business Expenses," or by contacting Alternative Fuels Tax Provisions at (202) 622-3110 (ph) or (202) 622-4779 (fax).

 

The Clean Fuels Grant Program 


The Clean Fuels Grant Program was designed to accelerate the deployment of advanced bus technologies by supporting the use of low-emission vehicles in transit fleets. The program assists transit agencies in the following areas:

  • Purchase of low-emission buses and related equipment
  • Construction of alternative fuel stations
  • Modification of garage facilities to accommodate clean fuel vehicles
  • Assistance in the utilization of bio-diesel fuel

For additional information, go to the Federal Transit Administration (FTA) web sites:
http://www.fta.dot.gov/library/policy/prgms/bbr.html
http://www.fta.dot.gov/library/policy/prgms/cffgp.html 

Or contact:

U.S. Department of Transportation (DOT)
Federal Transit Administration (FTA)
400 7th Street, SW, Washington, DC 20590
Phone: (202) 366-4000

 


Or contact:

U.S. Department of Transportation (DOT)
Federal Transit Administration (FTA)
400 7th Street, SW, Washington, DC 20590
Phone: (202) 366-4000

 

State and Alternative Fuel Provider Fleets Program


The Energy Policy Act established the State and Alternative Fuel Provider Program that requires state and alternative fuel provider fleets to purchase AFVs as a portion of their annual light-duty vehicle acquisitions. Fleets earn credits for each vehicle purchased and credits earned in excess of their requirements can be banked or traded with other fleets. More information on this program can be found  at: http://www.eere.energy.gov/afdc/incentives_laws.htmlby or by  calling the National Alternative Fuels Hotline at (800) 423-1DOE or (800) 423-1363 or e-mail at hotline@afdc.nrel.gov.

Department of Energy State Energy Program


Under the DOE's State Energy Program, individual states implement comprehensive State Energy Plans that promote energy conservation, renewable energy technologies, and reduction of dependence on imported oil. Under these plans, grants and/or financial assistance are available to accelerate the use of alternative transportation fuels for government vehicles, fleet vehicles, taxis, mass transit, and privately-owned vehicles. For more information click on your state at: http://www.eere.energy.gov/afdc/incentives_laws.html

Department of Energy Clean Cities Program 

The DOE's Clean Cities Program coordinates voluntary efforts between local governments and industries to accelerate the use of alternative fuels and to expand the AFV refueling infrastructure. For more information, please see the Clean Cities Web site at http://www.ccities.doe.gov.

 

Refueling


 Refueling of a propane vehicle involves filling the vehicle's on-board storage cylinder from a dispenser connected to a storage tank. Just as propane is stored in the engine fuel tank as a liquid, it is stored and handled as a liquid at the fuel dispenser. Propane is pumped from the dispenser storage tank into the vehicle tank. This method takes the same amount of time needed to refuel a gasoline or diesel vehicle (about 10-12 gallons per minute.

 

Propane fleet vehicles generally must return to their home base for refueling. However, public refueling stations exist in all states. The cost of building propane fueling stations is similar to, or lower than, comparable-sized gasoline dispensing systems. Propane refueling facilities are designed in compliance with nationally recognized standards and local building and fire codes, and must follow stringent safety regulations (see Industry Safety Standards).

Number of Propane Refueling Sites

Source: Alternative Fuels Data Center

The U.S. Department of Energy maintains the most complete alternative fuels refueling site database in the country. Propane refueling stations throughout the country can be located using this website: http://www.eere.energy.gov/afdc/fuels/propane_locations.html

 

Special Information on CNG (Compressed Natural Gas)

 

Because many people have recently been exposed (through the news media) much about this application we wish to update Fleet Managers considering Propane as to the present status of CNG. CNG will perhaps join propane as an alternate fuel for vehicles within the next 5-10 years. Unfortunately CNG isn’t immediately applicable because there is little or no infrastructure available (re-fueling stations which are very expensive and require significant maintenance) and it is extremely expensive to covert existing vehicles. Instead of converting vehicles to utilize CNG we feel manufacturers will have to make these vehicles new at the factory. Then as demand for CNG vehicles increases it will be followed by the construction of new re-fueling stations.