ECONOMIC EVALUATION OF COMPRESSED NATURAL GAS FLEET CONVERSION AND OPERATION

Increased public concern about energy efficiency and air quality has led to a number of state and federal initiatives that examine the use of alternative fuels for motor vehicles. Texas instituted an alternative fuels program for public fleet operations beginning in FY 1991-1992. A life-cycle benefit/cost model for evaluating the economic implications of fleet conversion and operation on compressed natural gas (CNG) is presented. The principal benefit in a CNG-fleet operation is the fuel cost savings resulting from the price difference between gasoline/diesel and natural gas. The costs are classified according to capital infrastructure costs, capital vehicle costs, and operating costs. The benefits and costs are driven by fleet-specific demand parameters, including number and type of vehicles, annual mileage, fuel consumption, and fueling procedures. Sample fleets similar to those of the Texas Department of Transportation are analyzed to identify critical benefit/cost elements in the model. The sample analysis confirms that fuel prices, fueling infrastructure, and vehicle conversion costs are the key factors in the life-cycle economic evaluation.