Natural gas costs less to produce than gasoline and diesel

fuel. However, it must be

delivered to the market area and

compressed or liquefied before being

put into the vehicle fuel tank, steps

that add significant cost. Whether 

the natural gas at the vehicle fuel

tank retains a price advantage over

gasoline or diesel fuel depends on

many factors. A few of the most

important are:

• Distance from the wellhead to the 

market area

• The gas volumes over which the 

costs of compression or liquefaction are spread

• The numbers of vehicles being 

fueled at a given refueling site.

Vehicles using natural gas also cost

more than comparable gasoline and

diesel vehicles because the fuel 

tanks are inherently more expensive,

whether the gas is compressed

(CNG) or liquefied (LNG). At this

time, it is not clear whether CNG 

or LNG will ultimately be the better

option; hopes for LNG are high

because it has a higher energy density than CNG and because significant further cost reduction in the

vehicle tanks is possible.

Despite the higher vehicle cost, the

lower fuel cost in some locations 

and for some uses is already creating

opportunities for LNG use. As technology has improved over the past

several years, LNG has become

increasingly attractive as an economic alternative fuel for heavyduty trucks. 

With the current economics for LNG

so close to favorable, the impact of

highway fuel taxes has become a

critical factor. This factor has been

studied to some extent for methanol,

CNG, and propane, and was reported

in the 1994 study entitled Impact of

Highway Fuel Taxes on Alternative

Fuel Vehicle Economics (CRS 

Report 94-247, by David E. Gushee,

Congressional Research Service,

Washington, DC, March 16, 1994,

from which this article was taken).

The study found that the economics

of methanol, natural gas, and propane

were so close to attractive that

changes in tax policy could have 

significant impacts on their ability to

penetrate the motor fuel market, but

LNG was not treated at great length.

In a 1995 setback for LNG, the U.S.

Treasury Department ruled that LNG

is a "special motor fuel," and

imposed a federal highway tax of

18.3 cents per LNG gallon, instead of

the rate of about 6 cents per diesel

equivalent gallon imposed on CNG

used as highway fuel. Because LNG

has a significantly lower energy density than the diesel fuel with which 

it would compete (about 75,000 Btu

per liquid gallon—compared to some

130,000 Btu per diesel gallon), this

tax rate equates to about 31 cents per

diesel equivalent gallon—compared

to the tax on diesel of 24.3 cents per

gallon. Thus, the ruling has transformed LNG from a fuel with an 

18 cent per gallon federal highway

tax rate advantage to a fuel with a 

7 cent per gallon federal highway tax

disadvantage.

Because this change basically wipes

out the price advantage necessary for

Volume 5, Number 4

The Impact of Federal Highway Taxes

on LNG-Powered Trucks

INSIDE THIS ISSUE

LNG Fuel and Vehicle

Economics 

An Innovative Emissions

Testing Facility 

Local Company Fuels Up

with Latest Technology: 

The Chambers-USA Waste

Project 
LNG to be competitive with diesel

fuel, it eliminates most potential

opportunities for LNG to become 

an economically attractive alternative

to diesel fuel. Efforts are under way

to seek legislative relief by "normalizing" the federal LNG tax, either 

by making it equal to the federal tax

on CNG, or by making it equal, on a

Btu equivalent basis, to its petroleum

counterpart. 

State taxes on highway fuels also 

figure into the equation. Most states

have historically taxed motor fuels

by the liquid gallon, a position that

would further increase the tax on

LNG at the pump relative to gasoline

and diesel fuel. Increasingly, however,

states are taking specific actions to

favor one or more alternative motor

fuels, in some cases taxing by energy

equivalence and in other cases taxing

at rates lower than those for gasoline

and diesel fuel. The state taxes levied

in each state can be found on the U.S.

Department of Energy's World Wide

Web site at http://www.afdc.doe.gov

Potential Markets

Considerable progress in LNG

fuel and vehicle economics over the

past several years has resulted in the

identification of two on-road truck

markets where LNG has potential to

be an economically competitive fuel:

(1) fixed-route intercity trucks 

(trucks that travel between or among

specific cities on a regular basis on

fixed routes), and (2) centrally fueled

heavy-duty (Class 8, over 33,000

pounds gross vehicle weight) urban

trucks in uses such as trash hauling.

Intercity trucks average about 60,000

miles, or 10,000 diesel gallons, per

year. Some centrally fueled urban

trucks operate on two or three shifts

per day and consume up to 4 diesel

gallons per hour, some of it consumed

in operations other than driving, such

as refuse compacting. About 20,000

of the intercity fixed route and 15,000

of the centrally fueled urban vocational vehicles consume sufficient

diesel fuel to constitute a conservative target LNG market, which is

illustrated in Table 1. Their combined

usage would exceed one billion 

gallons of LNG per year.

A market penetration of this magnitude would be an important contribution to the goal of Title V of the

Energy Policy Act of 1992 (EPAct),

which promotes the displacement of

petroleum-based motor fuels with 

nonpetroleum-derived alternatives,

preferably domestically produced.

These two markets have the one

characteristic essential to LNG's

potential: very high fuel consumption.

High fuel consumption is necessary 

if a potential fuel cost advantage is 

to make up for the added cost of the

alternative fuel vehicle.

LNG Fuel and Vehicle Economics

Table 1. Potential LNG Vehicle Markets

Intercity Trucks Centrally Fueled

Urban Trucks

Estimated Number of Trucks 

with Sufficient Fuel Use 20,000 15,000

Required Annual Fuel 

Consumption (diesel per capita) 25,000 gallons 15,000 gallons

Estimated Diesel Fuel Use/Year 500,000,000 gallons 225,000,000 gallons

Estimated LNG Fuel Use/Year 867,000,000 gallons 390,000,000 gallons

2 Alternative Fuels In Trucking—Volume 5, Number 4
An Innovative Emissions Testing Facility

Total LNG Cost in the

Vehicle Fuel Tank

The "average" cost of LNG delivered to the vehicle fuel tank is about

71 cents per diesel equivalent gallon,

before taxes of any kind. The elements

of this price are tabulated in Table 2,

although 71 cents is not the "average"

of the best and worst case prices.

West Virginia University, working

with the U.S. Department of Energy's

Office of Transportation Technologies,

designed, constructed, and is operating

two Transportable Vehicle Emissions

Testing Laboratories. The labs are

used to monitor engine performance

and to test the emissions from heavyduty vehicles operating on conventional and alternative fuels. Because

the laboratories can be moved easily

from site to site, vehicles can be tested

where they are housed, minimizing

their downtime.

Simple but Thorough

Testing

The transportable laboratory can

• Perform transient and steady-state 

chassis dynamometer emissions 

tests on vehicles in the field, at or 

near their home base or maintenance shop

• Simulate a range of driving cycles 

to provide performance data for 

medium- and heavy-duty vehicles

• Provide emissions data for carbon 

monoxide, carbon dioxide, oxides 

of nitrogen, methane, methanol, 

formaldehyde, particulate matter, 

and other emissions constituents

• Simulate road load, wind drag, and 

vehicle inertia

• Incorporate effects of gear shifting 

by providing the driver with visual 

prompts via a computer monitor in 

the cab

• Provide a complete computer database and a hard-copy log of timevarying speed, torque, and emissions.

The chassis dynamometer incorporates:

• Fast-response, computer-controlled 

eddy current power absorbers

• Direct mechanical coupling 

between drive axle and the 

dynamometer power train using 

wheel hub adapters. This coupling 

method eliminates problems associated with tire slippage and overheating, which are common for 

systems with tire to roller coupling

• Flywheels that can be adjusted to 

simulate inertia of a vehicle in 

Table 2. Delivered Cost of LNG to Vehicle

Cost Element Cost/DEG* Cost/mcf

Natural Gas at Wellhead $1.75 $0.25

Transportation to City Gate $0–$1.25 $0–$0.15

Liquefaction

Capital Recovery $0.02–$0.14

Operating Cost $0.10

Delivery to Refueling Site (range) $0–$0.02

Retail Markup (range) $0.05–$0.14

Total

Best Case $0.42

Worst Case $0.80

Pretax Cost of Diesel Fuel (range) $0.65–$0.85

Source: EA Science, Engineering, and Technology, 1996, Impact of Federal Highway Tax on

Potential for LNG in Heavy Duty Trucks, prepared for the U.S. Department of Energy Office 

of Transportation Technologies.

*DEG = Diesel equivalent gallon (on Btu basis), defined as the quantity of natural gas that

contains the same energy as a gallon of conventional diesel fuel

Alternative Fuels In Trucking—Volume 5, Number 4 3
4 Alternative Fuels In Trucking—Volume 5, Number 4

A local Washington company will

soon begin operating a first-of-itskind liquid natural gas fueling station

that could eventually set the standard

for the way many of the country's

heavy-duty trucks are fueled.

The storage tank was to be placed

into the ground in January, but the

burial was postponed because of

frozen water in the ditch meant to

hold the tank.

In the spring of 1997, the fueling 

station will be operational, providing

LNG fuel for a fleet that will grow 

to seven trucks built especially for

the project. The trucks will be used

on Martin's regular hauling schedule, 

Local Company Fuels Up with Latest Technology:

The Chambers-USA Waste Project

by Michael Bradwell

250-pound increments over the 

range from 20,000 to 60,000 pounds

• On-line continuous torque and 

speed measurement

• A full exhaust dilution tunnel and a 

secondary dilution tunnel for particulate sampling

• The same emissions analysis instrumentation and calibration gases 

required for measuring emissions in

accordance with the Federal Test 

Procedure (FTP) for certification of

heavy-duty engines.

The laboratory facility arrives on the

test site pulled on two trailers: a box

trailer containing equipment for

emissions measurement, data acquisition, and control; and a flatbed that

carries the power absorber unit. Once

on the site, the flatbed is lowered to

the ground with hydraulic jacks.

The test vehicle is driven onto the

flatbed and positioned so that the

drive axle of the vehicle is over the

center section of the test bed and is

perpendicular to the test bed's length.

The wheels of the vehicle are positioned on free-standing rollers. The

outer wheels of the dual wheel set on

each side of the vehicle are removed

and special hub adapters are mounted

to the drive axle. These adapters 

connect the drive axle to the drive

shaft of the dynamometer units 

located on each side of the vehicle.

Each dynamometer unit consists of 

a power absorber and flywheel. The

flywheels connected to the drive

shafts consist of a series of selectable

discs to allow simulation of the inertia load of the vehicle. 

During the test cycle, torque cells

and speed transducers in the power

absorber drivetrain measure the 

actual vehicle load and speed. The

vehicle can be driven through a wide

range of possible test cycles to simulate both dynamic and steady-state

vehicle driving conditions. A computer system contains a program

description of the driving cycles 

and sends a signal to a video display

screen mounted next to the driver's

compartment. The display screen

shows the driver's desired and actual

vehicle speed during the preselected

pattern of transient speed and load

conditions.

The full exhaust from the tailpipe of

the test vehicle is ducted to the dilution tunnel on top of the second 

trailer. The exhaust is mixed with air

and the quantity of diluted exhaust is

precisely measured. The air flow in

the dilution tunnel is maintained

using a blower, and the amount of 

air flow is measured using critical

orifices. Sampling probes send diluted

exhaust to a number of different gas

analysis instruments.

Calibrations of dynamometer components and emissions measurement

equipment are made before and after

each test. Test results are accurate,

repeatable, and traceable, and emissions measurement equipment and

procedures correspond to FTP

requirements. All data are sent to 

the National Renewable Energy

Laboratory's Alternative Fuels Data

Center for analysis. These data can

be accessed on the World Wide Web

at http://www.afdc.doe.gov
Alternative Fuels In Trucking—Volume 5, Number 4 5 

and will be quieter and have fewer

emissions than the standard diesel

trucks.

If the pilot project is successful, it

could represent the future for

Martin's hauling operations. Ben

Woods, Martin's Washington district

manager, said the Washington office

employs 87 drivers and 43 helpers

who operate 88 refuse trucks on

routes in Washington, Allegheny,

Greene, Beaver, and Fayette counties.

Woods said Chambers became interested in the LNG project because of

the fuel's economics and its ability to

reduce noise and harmful emissions.

Jack Bonn, Vice President for

Product Development for CVI, the

Columbus, Ohio, firm that designed

and is building the fueling station,

said the design greatly reduces the

complexity of LNG fueling, lowering

both initial and operating costs while

enhancing safety and environmental

advantages.

"This station is the cutting edge of a

new technology for LNG infrastructure," Bonn said. "It will lead the

way to commercializing LNG as an

available, domestically produced and

inexpensive fuel for vehicles." Bonn

added that Martin's station is the first

to incorporate an underground storage tank in the design.

Stephen Petty, Manager of Columbia

Gas Distribution Companies, said the

station is the result of five years of

planning by a number of companies

and several government agencies.

In addition to participation by

Chambers and Columbia Gas, the

$3.8 million project has the support

of the U.S. Department of Energy

and its National Renewable Energy

Laboratory, the Commonwealth of

Pennsylvania's Department of

Environmental Protection, Pacific

Gas and Electric Company, Mack

Trucks, the Gas Research Institute,

and the American Trucking

Association's Foundation.

Petty said Pennsylvania's award of

$350,000 to the project was the

largest single grant given to any 

program in the commonwealth in

1996. This grant was particularly

beneficial because it provided major

funding for the infrastructure—the 

station itself.

Martin's fueling station will provide

data that will be used to determine

LNG fuel's marketability for Class 8

trucks (vehicles that weigh more than

33,000 pounds). There are about 1.8

million Class 8 trucks in use, and

nearly all are equipped with diesel

engines. These large, heavy-duty

trucks represent the most practical

market for LNG, because a great

number are used in situations where

the vehicles are returned to a home

site for refueling each day.

As a result of its work on the Martin

project, Mack Trucks now produces

an LNG heavy-duty truck on its

assembly lines. Although there is 

little difference in weight between

LNG and diesel fuel, LNG engines

are quieter and burn fuel with far

fewer emissions than diesels. The

other major advantage is that LNG

fuel is produced domestically, which

should ensure availability and reduce

dependence on foreign oil.

Steve Petty of Columbia Gas noted

that LNG fuel also has advantages

over compressed natural gas, which

is used in many smaller vehicles but

requires much larger on-board fuel

tanks that add extra weight to each

vehicle.

With LNG, Petty said, "You can get

more fuel on a (large) truck for a lot

less weight" than a truck equipped

for compressed natural gas. 

Note: This is an edited version of an

article that appeared in the

Washington, PA, Observer Reporter

on January 22, 1997. It describes

the arrival of a 13,000-gallon LNG

fuel storage tank on the site of the

William H. Martin Company, a local

refuse hauler in Washington. The

Martin Company, formerly part of

Chambers Development Company, is

now a subsidiary of USA Waste,

which purchased Chambers last year.

The LNG fueling station at the

Martin company site features underground storage, the first such configuration in the country. Actual burial

of the tank was to have occurred on

its delivery, but, as the article states,

weather precluded that from happening. The tank has since been buried,

and the station is expected to be completed in the near future. Individuals

who were present at the site to witness the arrival of the tank represented companies and organizations that

have been instrumental in developing

the project.
Volume 5, Number 4

René Texeira, Editor

Jim Miller, Graphic Designer

Alternative Fuels in Trucking is published quarterly

by the National Renewable Energy Laboratory

(NREL), a U.S. Department of Energy (DOE) 

national laboratory. The newsletter is written by 

the American Trucking Association Foundation’s

(ATAF’s) Trucking Research Institute.

The aim of Alternative Fuels in Trucking is to

inform fleet owners and operators, equipment suppliers, government officials, and other interested parties

about important developments in the use of alternative

fuels in heavy-duty trucks. Suggestions and comments

are welcome and may be directed to the National

Alternative Fuels Hotline at 800-423-1DOE. Views

expressed by guest authors are their own, and not

those of ATAF, DOE, or NREL.

NREL/BR-540-22663

June 1997

Printed with a renewable-source ink on paper

containing at least 50% wastepaper, including

20% postconsumer waste

UNITED S AT

FO SET

MA

ER

CI A

• DEPAR MT

FOTNE

NE ERGY •

U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Office of Transportation Technologies

How to Reach Us

• The AFDC World Wide Web 

address is 

http://www.afdc.doe.gov

• The Alternative Fuels in

Trucking newsletter is available

on the WWW at http://www.

afdc.doe.gov/1/trknews It is

available on-line 2 or 3 weeks

before the newsletter is mailed.

To speak to a human

being, call the

National Alternative

Fuels Hotline at 

800-423-1DOE.