Friday, May 30, 2008

Motor Trade Association, May 2005

Gas: The Economic Alternative?

As petrol prices skyrocket around the country, many Australians are beginning to hunt around for fuel alternatives for their motor vehicles. As a relatively inexpensive automotive fuel, LPG Autogas is currently leading the way as an accessible and more economic fuel option to petrol.

LPG is also much more environmentally friendly. According to LPG Australia, there would be between 10 and 15 percent less greenhouse gases than petrol-powered equivalents from Autogas-powered vehicles. LPG also has 20 per cent less ozone-forming potential (a measure of the tendency to generate photochemical smog) and one fifth of the air toxic emissions.

According to the Australian Institute of Petroleum, there are approximately 250,000 vehicles in Australia currently running on LPG, with more than 3,500 service stations selling it. Estimates are that exhaust and evaporative greenhouse emissions are approximately 15 per cent lower from LPG than from petrol vehicles, and it does not need lead or other additives to boost its octane rating. When converted to a gas, LPG expands up to 270 times. This means that the liquid form is a very efficient method of carrying large amounts of gas, and hence more economical than petrol.

In Sydney and Melbourne recently LPG was selling at an average of 40 cents per litre compared to the average price of unleaded petrol at $1.07 per litre. According to LPG Australia, at that price a Holden Commodore driver traveling 20,000 kilometres a year on Autogas would save $1,145 – the equivalent of $22 per week.

Possibly inevitably, oil companies are finally beginning to recognise the advantages of fuel alternatives that are economically as well as environmentally friendly for consumers. Shell have just announced that it would progressively phase out the supply of lead replacement petrol (LRP) throughout their Australian service stations by mid 2005 due to a sharp decline in demand. BP is also in the process of phasing out LRP, estimated to be completed in the second half of 2005.

In line with the phase-out of LRP and for those people who have been caught out, a new product called Nulon Lead Substitute is available which allows drivers to safely use either standard unleaded or premium leaded petrol in their leaded-fuel engine.

Following the phase-out, the Government has promised that LPG will remain excise-free until 2011, when a $1,000 rebate will be paid to motorists who purchase a new Autogas-powered vehicle. After this date an escalating excise will apply. The high establishment costs to convert motor vehicles to LPG have also been eased by the Government offering a $500 subsidy for private vehicles. To date, there are an average of 1,500 subsidy claims per year.

"Autogas has always been much better value than petrol. However the current upward trends in petrol prices should prompt motorists to again consider the potential savings to be had by running their car on Autogas," said LPG Australia's industry development manager, Phil Westlake.

Pat Browne from Pebco is used to being inundated by enquiries for gas conversions every time there is a price hike in petrol.

“There has been a huge increase in the last couple of weeks,” says Pat. “We are getting 50-60 per cent more telephone calls right now than we were two months ago, which is estimated at about 6-10 calls per day. At the moment, we’re getting through two full gas conversions per week, which is all that we can handle right now with the other work we have”.

Despite the Government’s subsidy for private users, there still remains no subsidy for commercial or fleet vehicles, acting as a disincentive for businesses to convert their cars to more eco-friendly gas. Pat sees this refusal as completely unacceptable.

“I think it’s criminal that the small business sector cannot get a subsidy for its vehicles. I find it absolutely disgusting that one person is eligible for a discount and the next can’t”.