Compressed Natural Gas vs. Traditional Fuels

Compressed Natural Gas

Compressed Natural Gas (CNG) saves up to 50% over conventional fuels, and CNG vehicles are available for all types of applications, including business fleets and vehicles for personal use.

CNG is sold at retail stations in Gasoline Gallon Equivalents (GGE) and CNG usage at private stations is also converted to GGE by owners of these stations for fuel cost comparison and tax purposes.

One GGE = 1.25 therms of natural gas (approximately)

Example: If a fleet operator is paying $0.60 per therm to supply natural gas to his CNG fueling equipment then the delivered commodity cost is $0.60 x 1.25 = $0.75/GGE. 

Of course, he would have to add the cost of amortizing his fueling equipment, maintenance, electricity, etc. so his final cost would likely be something more in the range of $1.50 – 2.00/GGE before taxes. 

The commodity cost of natural gas is only about 20% of the total cost of CNG at the pump, so any increases in the commodity price would not have as large an increase at the pump. Since all the other costs components of CNG are relatively constant, this insulates fleets from the effects of any spikes in the price of the underlying commodity. Whereas, since the commodity is about 70% for gasoline/diesel, a sudden spike in oil prices would translate to a correspondingly larger increase at the pump.

The fuel economy of a gasoline vehicle converted to run on CNG is about the same, so you can compare fuel costs on an “apples to apples” basis once you calculate the cost of CNG using the 1.25 therms per GGE conversion above. If you get 25 mpg with gasoline, you would average 25 miles per GGE with natural gas but it would likely cost much less to fill up.