Dispensed Fuel Cost

Natural gas for vehicle use is typically 30% to 40% less expensive than liquid fuels. Like crude oil, natural gas is a commodity traded on the open market. Natural gas is processed to remove impurities, but it does not need to be refined the way that crude oil does to produce gasoline and diesel. Instead, natural gas is transported by pipeline to local markets.

Natural gas needs to be compressed (CNG) or liquefied (LNG) to be used as a vehicle fuel. There are two main elements of cost for dispensed fuel for vehicles – the cost to deliver the gas to market and the cost to dispense the gas as CNG or LNG.

Cost to Deliver Natural Gas to Market

The cost for delivering natural gas to market includes production, transmission by major pipeline, and local distribution by a regulated gas utility.

Cost of gas at wellhead

+ Transmission pipeline tolls

+ Local delivery charges

= Total Delivered Cost of Gas

Cost to Dispense Natural Gas as Vehicle Fuel

There are different elements of cost depending on whether the natural gas is dispensed as CNG or LNG. If a public station is available, there is no need for the fleet to factor in capital costs for the station. If there is no public or shared station option, capital costs need to be considered.

Actual costs vary significantly depending on the size and fueling capacity of the CNG or LNG station. For CNG, the typical elements of cost are as shown.

Delivered cost of gas (from above)

+ Capital cost for station

+ Power to operate compressors

+ Station maintenance costs

+ Retail taxes on fuel

= Total CNG Dispensed Cost

For LNG, typical elements of cost are as shown:

Delivered cost of gas (from above)

+ Liquefaction fee

+ Capital cost for station

+ Power to operate pumps

+ Station maintenance cost

+ Retail taxes on fuel

= Total LNG Dispensed Cost