Alternative Fuels: Assessing Their Viability

Gasoline has been a U.S. automotive fuel mainstay for more than 100 years, while diesel has been the primary fuel for heavy equipment for more than 60 years. The U.S. fuel distribution infrastructure has been built out to support the country’s demands for these fuels that, for the most part, are conveniently available.

Alternative fuel approaches (electric cars) were introduced in the U.S. as early as 1897, though they quickly fell out of favor. But the United States’ continued reliance on volatile crude oil sources, oversupply of low-cost natural gas, and its focus on becoming “energy-independent” make reconsidering alternative fuels important again — this time, for their economic, business and regulatory feasibility. We need to reduce our reliance on domestic and foreign oil and protect our environment by reducing vehicle emissions, which are harmful to our environment and controlled heavily by the U.S. Environmental Protection Agency.

The U.S. transportation industry has a unique opportunity to convert from diesel fuel to cleaner, less-expensive natural gas. Some of the alternative fuels we analyze in this piece will become more viable as the infrastructure around alternative fuel supply matures. Until then, let’s look at each fuel’s characteristics and evaluate them from operational and economic perspectives to explore the alternatives intelligently.

Alternative Fuels Currently Used in Transportation

Biodiesel, which is widely used alone or mixed with crude-based diesel produced from liquid organic oils, can be used in diesel trucks without any engine or fuel line modifications.

Organic alcohol (ethanol) is commonly mixed with gasoline, creating a variety of “ethanol blends.” Unfortunately, although gasoline engines and fuel lines can be modified to accommodate ethanol blends, diesel engines cannot.

Although kerosene and diesel are similar — and often used interchangeably — the damage kerosene can cause to diesel engines over time has not been studied extensively.

Lighter-than-air propane, currently used in more than 270,000 vehicles in the U.S., is a clean-burning alternative to diesel fuel, but cannot be used without converting a truck’s fuel system. Propane is stored at a higher pressure point than butane and contains a lower boiling point, allowing it to stand up better to inclement weather and harsh elements. It is used extensively in forklifts.

Like propane, butane is used for heating and other fuel applications and derived from oil or natural gas, but it burns more cleanly than propane, provides more energy and is heavier than air (accumulating in low-lying or enclosed areas subjecting humans to asphyxia).

Renewable, domestically produced hydrogen can be combined chemically with oxygen to create electricity and water. But this element is extremely flammable! Remember the Hindenburg!

Research is under way into using natural gas to power diesel trucks. Natural gas already powers natural gas vehicles, which have limited range and must be refueled frequently due to the volume of gas required.

For its part, compressed natural gas facilitates natural gas transportation. Liquefied natural gas, comprised predominantly of cooled methane compressed into a super-cooled liquid fuel for ease of storage or transport, takes up about 1/600th the volume of natural gas in its gaseous state. It is odorless, colorless, nontoxic and noncorrosive. Hazards include flammability, freezing and asphyxia. Once transported to markets, LNG is re-gasified and distributed as CNG or natural gas. Its relatively high production cost and storage requirements (expensive cryogenic tanks) have prevented its widespread use in commercial applications.

The Btu: A Handy Tool for Comparing Alternative Fuel’s Energy Potential

Typical energy measurements include:

  • Petroleum: Gallons or barrels (1 barrel equals 42 gallons).
  • Gases: Cubic feet (cf).
  • Electricity: Kilowatt hours (KwH).

But effective energy viability and value comparisons demand conversion to a single unit of measurement. The British thermal unit is the most commonly used unit for comparing fuel energy density in the United States. This traditional heat energy unit is equal to the amount of energy needed to heat 1 pound (0.454 kilogram) of water (about 0.1198 U.S. gallons) from 39 degrees to 40 degrees Fahrenheit (3.8 to 4.4 degrees Celsius).

The Btu content of fuels varies slightly from country to country and source to source due to the fuel’s inherent composition. The Btu content of each of the following fuels reflects the average energy content for these fuels consumed in the U.S.:

  • 1 barrel (42 gallons) of crude oil equals 5.8 million Btu.
  • 1 barrel of residual fuel oil equals 6.287 million Btu.
  • 1 gallon of gasoline equals 124,238 Btu.
  • 1 gallon of diesel fuel equals 138,690 Btu.
  • 1 gallon of home heating oil equals 138,690 Btu.
  • 1 cubic foot of natural gas equals 1,023 Btu.
  • 1 gallon of propane equals 91,333 Btu.
  • 1 kilowatt-hour of electricity equals 3,412 Btu.

British thermal units convert directly to horsepower (1 horsepower equals 2,545 Btu), so one gallon of gasoline provides 48.8 horsepower (124,238 divided by 2,545) and one gallon of diesel provides 54.5 horsepower (138,690 divided by 2,545). For all practical purposes, gasoline, diesel, natural gas, CNG, or LNG vehicles will differ only in the form and method of their fuel storage and engine combustion processes. This is where the differences begin.

Building a Natural Gas Fleet: Economic, Regulatory and Operational Considerations

  • Natural gas vehicles are $30,000 to $40,000 more expensive than diesel-powered vehicles, affecting cash flow, interest expense and depreciation expenses.
  • The diesel gallon equivalent for natural gas is about 60 percent of the diesel price. The 40 percent savings in fuel can often offset the increased price of the equipment within a short period (based on your annual mileage).
  • Dedicated refueling stations at a terminal cost approximately $100,000 each and in many cases would be subject to local ordinances and restrictions, property taxes and insurance.
  • Refueling with CNG and LNG is more time consuming than refueling with gasoline or diesel, and would involve training drivers and staff employees in specific safety procedures.
  • Stocking additional parts could be necessary due to limited part supply options for alternative fuel engine, exhaust and fuel-related systems.
  • Mechanics would have to be trained to service the new natural gas systems, potentially requiring specialized testing and safety equipment.
  • Commercial road service might not be able to rectify en route engine malfunctions or out-of-fuel situations with their current equipment, increasing breakdown and recovery time delays and expenses.
  • Various state and federal incentives could be available for the purchase, conversion and use of alternative fuel vehicles.
  • Carriers or shippers that currently pay diesel fuel taxes might need additional processes to properly record and pay the appropriate excise taxes.
  • At least one major oil company has committed to provide LNG at a large chain of truck stops, but the ideal situation would be locating a refueling station at each terminal to supply the local pickup and delivery operations and serve as a refueling station for line haul operations.
  • LNG must be super-insulated, stored and transported at temperatures lower than minus-160 degrees Celsius in a pressurized, double-tank system, similar in principle to a thermos flask, and use a vapor venting system. The storage pressure is about eight times atmospheric pressure and is not regarded as very high. Because of insulation requirements, however, tanks are large and the fuel is only suited to large, heavy-diesel vehicles such as trucks and buses. Stored LNG eventually dissipates (vents) as its temperature increases.
  • CNG has a lower energy density and is stored at very high pressures — about 200 times atmospheric pressure. Energy density is 25 percent compared to diesel, or 42 percent compared to LNG, creating big disadvantages:
  1. Storage and vehicle tanks must be robust and heavy because of the high-pressure requirement.
  2. On-vehicle space required for tanks is more than double that required for LNG tanks (or the range is much less than half) because of the lower energy density.
  3. Additional tanks would increase vehicle weight and reduce payload.
  • Fueling a diesel engine, which produces a set horsepower, with natural gas will reduce engine horsepower (this difference can be eliminated by moving to a larger engine if needed).
  • LNG and CNG availability is limited mainly to local gas companies and other limited-access commercial locations in the U.S.
  • Meeting or exceeding current published EPA alternative fuels standards for alternative fuels will likely suffice for the foreseeable future.

In summary, alternative fuels provide opportunities for reducing the transportation industry’s reliance on foreign oil and operating expenses. This opportunity, however, must be tailored to each transportation provider’s needs and requirements. Continuous monitoring of the alternative fuel mix will be necessary to ensure that alternative fuel provides continued economic benefits and the anticipated returns on equipment, investment and infrastructure assets.

Dan Acker is senior vice president of research and economic development at SMC³. His 35-plus years of experience in the motor carrier industry includes all aspects of daily operations and administration, from line haul to financial statements, with heavy emphasis in the cost, financial and statistical areas. In his current role, he oversees SMC³’s economic updating of its SMC³ CzarLite benchmark rate products, the SMC³ Carrier Cost Index and other industry studies. Contact him at

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