The Price of Propane Autogas

Over the past 100 years, propane autogas has proven to be a cost-effective alternative fuel to lower operating costs through less expensive fuel and extended maintenance intervals.

Determining the Price of Propane

Propane prices are subject to a number of influences — some common to all petroleum products, and others unique to propane. Propane has a wide range of uses and is easily transported from market to market. Propane is commonly used to fuel a variety of applications including barbecue grills; heating homes; school buses, trucks, and vans; off-road vehicles such as forklifts and lawn mowers, and producing petrochemicals. In rural areas, propane is one of the most commonly used energy sources.

The price of propane in all these markets is influenced by many factors, including the prices of competing fuels; the distance propane has to travel to reach a customer; political and environmental climates; and the volumes used by a customer.

Because propane’s production process is a byproduct of the petroleum and natural gas refining process, its costs follow the ups and downs of the market price trends of gasoline and diesel. However, over a 15-year average, propane prices have remained about 30 to 40 percent less expensive on a per gallon price basis than gasoline.

Costs of Conversion

The incremental costs to convert a vehicle to operate on propane autogas depend on many factors, such as the type of vehicle, the number of vehicles, the fuel system technology (dedicated vs. bi-fuel / vapor vs. liquid injection), and whether the vehicle is converted new from the factory or is using an aftermarket system.

Vehicles fueled by propane autogas usually experience lower maintenance costs due to the clean-burning nature of the fuel. Many propane autogas users find the engine life extended and oil changes less frequent.

Infrastructure Costs

There are thousands of propane autogas refueling stations across the country. However, some companies choose to use install their own refueling facility. National, regional, and even local propane distributors offer skid-mounted propane fuel pumps, which can be installed for little or no up front cost. These units are compact in size, taking up only about as much space as a parking space, and are equipped with the same array of safety features on any conventional fueling pump. Currently, the federal government offers tax credits for installing a propane autogas-refueling site at any location for 30 percent of the installation costs up to $30,000.

In addition to the tax credit for installing new propane autogas fueling structures, fleet operators are eligible for a 50-cent-per-gallon federal tax credit or rebate for each gallon of propane autogas the operator sells at the facility. The federal government and many states offer programs to encourage the use of alternative fuels. For more information about incentives, click here.

Source: U.S. Energy Information Administration

 

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