Future availability of LPG

[p38arover]

I was thinking today about the future availability of LPG at service stations.

Now that the govt. rebate for LPG installations has ended and the rising cost of LPG with the rising excise on LPG (yes, I know it stops when it reaches 12.5c/litre), I foresee a fall in the number of vehicles being converted. I've noticed an increasing number of hybrid taxis so that must impact on the sales of LPG-equipped taxis.

I guess Bee-Utey could say whether he's noticed a fall in LPG installation sales. The impact on LPG installers might be significant.

When will service stations make the decision to start pulling LPG pumps out and replacing them with pumps for other fuels? As they already have the tanks and other infrastructure in place for LPG, I suppose they could just reduce the number of pumps to, say, one.

Some might get rid of them completely if the sales of LPG fall markedly.

Would I consider an LPG conversion now? No - and that's not just because I no longer do the km to get a return on my investment. The payback period might just be too long for many people, unlike my solar system which has paid for itself in under 4 years.

[Mick_Marsh]

The reason why LPG was so cheap (all those years ago), was because it was a by product that had a very small market. As the demand increases, the price will increase.

This is a better question: "As diesel costs less to produce than ULP, why is it more expensive at the pumps?"
Also, I can hardly wait until the motor manufacturers produce ethanol only cars. It will be a boom time for the Queensland cane fields. They might not have enough cane available to produce their rum.

[p38arover]

This is a better question: "As diesel costs less to produce than ULP, why is it more expensive at the pumps?"

I can't help on that one.

LPG had no excise for many years. A few years back it was introduced, commencing at 2.5c/litre, increasing by 2.5 cents per year until the set max of 12.5% was reached. I'm not sure if we've now reached the 12.5 cents/litre point.

Edit: it went to 10 cents on 1st July and will go to 12.5 cents next year.

See http://www.raa.com.au/motoring-and-road-safety/fuel-information/lpg-excise

[101RRS]

This is a better question: "As diesel costs less to produce than ULP, why is it more expensive at the pumps?"


Because the sale price is not necessarily related to production price. It is related to the basic economic principle of supply and demand that determines price - and in the case of diesel the market is not just Australia but the global market - hence we have to be a price taker as the price is determined by Global supply and demand.

If the sale price was actually based on production costs, a top level Porshe would only cost as much as your favoured Dunnydore.

As far as LPG goes, for the major cities even with the full amount of excise the cost will always be around 50c or more a litre cheaper than petrol and diesel (unless govts get greedy) so there will always be a market.

Outside the cities it is a different deal. Out west recently, the cost of LPG was $1.22 and petrol was $1.60 - in the 101 that means the cost per km is about even because of the increased consumption on gas. So if you lived out there, why would you convert to gas.

Garry

[p38arover]

Even with the rebate, I thought the same about the value of a conversion to our country brethren.

[sheerluck]

........This is a better question: "As diesel costs less to produce than ULP, why is it more expensive at the pumps?".......

And another good question, why, when the price of petrol at the pumps goes up and down like a whore's drawers, does the price of diesel not fluctuate to the same degree?

[bee utey]

There are a number of notable usage drivers.

1. The new vehicles sold today (and of course over the last 5 years) are either tiny or diesel powered. The cars that I frequently converted in 2008 are now worn out and the replacement vehicles aren't being converted. New Commodore, Falcon and Camry sales are waay down. How many petrol V8 Land Rovers are left to convert? Even D3's are lots more difficult than the ol pushrod engines that stopped in 2003.

2. Excise and local price rises, the price rises until the demand is blunted and the price then drops until demand picks up again. I've seen so many cycles since I started LPG work in 1985 that I get the overall picture by now.

3. Supply. As local oil/gas production drops, there is less LPG available to push to price down. The clear leaders in local production were Victoria with Bass Strait reserves and SA with the Cooper Basin. They are dying and the fracking supplies are different in composition.

4. Shipping cost: One future driver of price will be the upgrade of the Panama Canal allowing Yankee oil products to be more competitive in Asia. Cheaper shipping will drive down local prices in the short term. Article here: (http://www.platts.com/latest-news/oil/singapore/panama-canal-expansion-to-put-more-us-lpg-into-27490803)
Asian car manufacturers may even produce factory LPG cars to capitalize on the price drop, seeing as Oz car manufacture is dead.

Panama Canal expansion to put more US LPG into Asian markets: Bernstein


Singapore (Platts)--7Oct2013/232 am EDT/632 GMT


The biggest beneficiary when the expanded Panama Canal opens for business in 18 months' time will be arbitrage flow of LPG from the US to Asia, according to a Bernstein Research report released late Friday.

The canal's expansion, when completed by 2015, will allow the passage of larger vessels, including very large gas carriers or VLGCs and LNG vessels, for the first time.

Sailing time for vessels from the East Coast of the US to the Asia-Pacific will be reduced to 25 days through the Panama Canal, versus 41 days currently going around Cape Horn and 43 days on the eastern route through the Suez Canal.....

[DeeJay]

My 5.7 litre Chev powered Landie on LPG costs almost exactly as much per klm as my Defender TD5.
My company car is a dedicated gas falcon & it goes like stink.
I like LPG, one thing often overlooked with the stuff is its safety in an accident. The tanks are very durable.
As far as availability goes, it will find its own level. I remember my taxi driving early days when there were 3 X 24 hour servo's in Melbourne. I doubt smaller town country Servo's would spend the money to remove tanks & bowsers, easier to keep them, they are low maintenance, and just sell at a higher price.

[Toxic_Avenger]

And another good question, why, when the price of petrol at the pumps goes up and down like a whore's drawers, does the price of diesel not fluctuate to the same degree?

LPG is propane based, which is derived from oil reserves througyh 'cracking' the crude into useful components.
As most of the world's oil is produced out of the arab nations, oil price (and subsequent LPG price) fluctuates in line with the Saudi Aramco Oil index. This is what the Saudi Aramco contract price is for buyers of their product (a index which goes up and down with the season (summer / winter) and their production schedules.
Big gas suppliers in Australia have limited ability to store gas product, so are pretty much at the mercy of buying it irrespective of price, and passing costs onto the consumers. One initiative is the 'Cavern' under port Botany, which is managed by Elgas. It's a man made cavern under the water table which uses water pressure to maintain LPG in its liquid state. Pretty cool, I'd love to see it one day.

As for the Saudi aramco index, there is a link here (http://gasenergyaustralia.asn.au/reports-and-submissions/saudi-aramco-lpg-prices-per-metric-tonne-mt/) and here. (https://www.raa.com.au/documents/fuel-monthly-saudi-aramco-contract-price-for-lpg-v3)
So the saudi contract price is what the big suppliers are paying for the product, then they add distribution costs, their profit margin, then the retailer (caltex, BP etc) will add a cut as well.

There are ongoing projects to use LNG (natural gas) from coal seams within the country to provide stable supply of these products (much to the dislike of the greener ones amongst us). These should further help to alleviate reliance on external price influences.



Also, I can hardly wait until the motor manufacturers produce ethanol only cars. It will be a boom time for the Queensland cane fields. They might not have enough cane available to produce their rum.

E85 (85% ethanol) is in use in a lot of major cities, and it's use is gaining a lot of support. Issues are:
1)You burn twice as much ethanol than you would petrol (octane) to get the same power output.
2) Not all vehicles are compatible with the ethanol- can damage fuel systems, or fuel injectors just can't maintain the fuel flow.

[Mick_Marsh]

E85 (85% ethanol) is in use in a lot of major cities, and it's use is gaining a lot of support. Issues are:
1)You burn twice as much ethanol than you would petrol (octane) to get the same power output.
2) Not all vehicles are compatible with the ethanol- can damage fuel systems, or fuel injectors just can't maintain the fuel flow.
Yep, we know what is happening today. Blended fuels in cars that are not designed to use them is not going to work well.
However, should a car manufacturer produce an ethanol only car (much like the LPG only ones), and the fuel stations have ethanol only bowsers, it's got to be a good thing.

[Toxic_Avenger]

Yep, we know what is happening today. Blended fuels in cars that are not designed to use them is not going to work well.
However, should a car manufacturer produce an ethanol only car (much like the LPG only ones), and the fuel stations have ethanol only bowsers, it's got to be a good thing.
It's a chicken or the egg situation.
Can't build a car without the refueling infrastructure.
Can't build a refueling run from ethanol manufacture site to refueling stations without the demand for it.

This video may be of interest- not sure how long until an idea like this is fully mainstream though?
https://www.youtube.com/watch?v=g0HuxJmuot8

[Mick_Marsh]

It's a chicken or the egg situation.
Can't build a car without the refueling infrastructure.
Can't build a refueling run from ethanol manufacture site to refueling stations without the demand for it.
It's amazing how cars were ever invented!
California managed to do it with hydrogen and fuel cell powered cars.

[Slunnie]

This is a better question: "As diesel costs less to produce than ULP, why is it more expensive at the pumps?"
Thats interesting. It was always cheaper than petrol up until 2001 I think it was when the 1st Gulf war happened. Diesel price went up and the rationale at the time was that was because Australian Oil was too light for Diesel and it was an import. Interestingly, since the Gulf war it never dropped in price in relation to petrol.

[JDNSW]

As a matter of fact, the cost of producing diesel has now almost certainly risen to be equal to or higher than petrol, as the specifications for the fuel have become tighter, especially the sulphur limit.

The real cost of producing a particular fuel will depend on what hardware the refinery has, and how long it has been in operation, and the composition of the oil being processed. Any change in the composition of the oil feedstock from that assumed when the refinery was designed will result in inefficiency and hence higher costs.

John

[Toxic_Avenger]

It's amazing how cars were ever invented!
California managed to do it with hydrogen and fuel cell powered cars.

Interesting about California. They are s till actively extracting oil from downtown LA. Saw an interesting short video about this, click here. Hidden oil rigs in buildings along Hollywood boulevard!

One concern for 100% ethanol as a fuel could be its boiling point- about 78 degrees. In comparison octane BP is 125ish. So there would be losses and evaporated product at even normal summer temperatures. Modern fuel is stabilized to prevent fuel turning bad (summer blends vs winter blends etc).
Ethanol as a fuel burns relatively clear, so may even be concerns regarding fire safety? Race/drag cars running methanol (1 less carbon atom than ethanol) have been known to ignite, and no one knows that the driver is burning to death inside due to the clear flame.

[olbod]

Race/drag cars running methanol (1 less carbon atom than ethanol) have been known to ignite, and no one knows that the driver is burning to death inside due to the clear flame.

In 1957 my short circuit 500cc BSA was running on pure methanol ( Shell A ). At a meeting at the Vineyards it caught fire on the second lap which I was unaware of. Didn't know, couldn't see it but by crikey it wasn't long before I felt it. My leathers caught fire on the inside of my right thigh. I bailed out and beat myself out with dirt and dust from the side of the track.
Bike was stuffed so I moved onto a 500 AJS.

[ozscott]

I had a BP Card until 1 private station on my usual route to work at Indooroopilly sold out for units (lpg provider), then 2 other private BP stations on Mogill Rd pulled pulled out their LPG gear...so swapped to Shell where at least I have several stations around me with LPG.

I get 15 to 18 litres per 100k on injected Lpg so its well worth having at 79c per litre in my area or even 90c per l as it was in the northern winter increase. My truck is a HC V8 with some cam so premium is the go on petrol. Given I am getting very similar consumption of LPG to petrol it could G o up quite a lot and im still saving...system paid off ages ago. On highway trips having close to 1000k on the combined fuel load is sweet.

When you consider that Rover v8 motors suffer no valve seat regression and run beautifully on LPG and oil stays clean the case to run it is a no brainer.

Cheers

Cheers

[PhilipA]

When you consider that Rover v8 motors suffer no valve seat regression and
run beautifully on LPG and oil stays clean the case to run it is a no
brainer.

Except for the loss of load area and/or range in the country.

After a lot of consideration I decided not to go gas as a major use for the RRC was remote touring. OK for a suburban or bitumin car.

Even less of a reason now due to no subsidy and cost increases. Diesel ticks the boxes for remote travel.

Regards Philip A

[ozscott]

Load area loss is certainly true albeit not a lot if well set up. I manage with a family of 5. Range is improved over just petrol. True though that diesel is best if doing only country work. I just couldn't live with a td5 in town having driven a few. A tdv6 is a different proposition.

Cheers

[Davehoos]

My falcon wagon very good. It could have been much better had they been serious. long term maintanence on the sedan version will pay for it self with a ULP fuel tank and engine repairs running into lots of dollars.


Brother working on an LNG plant for Newcastle. I believe it was planned for export but that's not whats on the web. The plant wont be running till the end of the decade properly. Just have to wait and see if the American road freight becomes the planned 70% LNG.


do they need subsidies to use LPG. LPG is less than half that of ULP.

[PhilipA]

It is my maybe imperfect understanding that the tank size required for LNG precludes it from general automotive use, especially since the tank must be heavily built and capable of withstanding the -161 Liqification point.

Here is an article in Forbes which gives more information , and really IMHO indicates that we won't see LNG cars in my lifetime.

The venting while idle problem is a biggie and the reason that they say it's for use in long haul trucks.
Should Natural Gas-Powered Cars Run On CNG, LNG ... Or Gasoline? - Forbes (http://www.forbes.com/sites/christopherhelman/2013/06/05/should-natural-gas-powered-cars-run-on-cng-lng-or-gasoline/)

Regards Philip A

[scarry]

I have to buy a new work van,all the existing vans are dual fuel,petrol/LPG.
They have been great,no issues at all,many have done close to 300K.
They use Landi Renzo injection system,which is also very economical.
The same system that is used in the maxi cabs.

Speaking to a few people,they are not confident LPG will be around for the long term,with out some form of incentive from the Govt.

The taxi industry was the biggest user and they are using hybrids,Prius,etc,although the few maxi cabs still use LPG.

We do a lot of work for a guy who owns around 10 service stations,and he is saying not only are sales falling,but margin is also lower than fuel.He is happy not to have it at his garages.

So that means i will have to go to diesel,cost of a diesel van is about the same as a petrol van with the LPG factory fitted.

We generally keep the vans for 6 to 7 yrs.

But actual running costs favour the LPG.

Any thoughts?

[Eevo]

i thought "they" were looking to phase out LPG, due to number of engine fires (compared to petrol)

[Mick_Marsh]

I think LPG will be here for a while yet. There are a few Prius' on gas around.
There are quite a few gas only vehicles around too.
I heard today the sales of 91RON ULP in NSW is down too because it has ethanol in it.

[Eevo]

I heard today the sales of 91RON ULP in NSW is down too because it has ethanol in it.

so many people dont like ethanol yet why do fuel companies insist in putting it in, and not telling us.

[bee utey]

"They" have been predicting the demise of the LPG industry since the beginning of time, I started in it in 1985 and have personally seen plenty of ups and downs. While the recent past hasn't been particularly profitable in this business, a good war or major hurricane in an oil producing area can still flip the switch and make the LPG industry take off.

Two potential LPG drivers (in opposite directions) are

1. the opening of the revamped Panama Canal, due sometime this year, allowing the Yanks to export LPG cheaply into the East Asia region, ie round here.

2. The rise in battery electric vehicles, helped by the Tesla Corporation mass producing lithium batteries, probably not for 5-10 years yet.

[p38arover]

so many people dont like ethanol yet why do fuel companies insist in putting it in, and not telling us.

Ethanol is mandated by law in NSW for a certain minimum volume of petrol sold. I believe that there is insufficient ethanol available even for NSW that other States don't get as much E10.


Legislation
To ensure motorists in NSW have choice at the petrol pump, 6% of the total volume of petrol sold in the State must be ethanol.

Fuel suppliers and retailers are required to abide by the Biofuels Act 2007 as well as the Biofuels Regulation 2007.

[Eevo]

Ethanol is mandated by law in NSW for a certain minimum volume of petrol sold. I believe that there is insufficient ethanol available even for NSW that other States don't get as much E10.

oh wow, im glad that law doesnt exist in SA.

[Mick_Marsh]

so many people dont like ethanol yet why do fuel companies insist in putting it in, and not telling us.
From what I understand, in Vic., ULP has no ethanol but PULP does. The opposite of NSW.
I'm still trying to confirm this.

[scarry]

"They" have been predicting the demise of the LPG industry since the beginning of time, I started in it in 1985 and have personally seen plenty of ups and downs. While the recent past hasn't been particularly profitable in this business, a good war or major hurricane in an oil producing area can still flip the switch and make the LPG industry take off.

Two potential LPG drivers (in opposite directions) are

1. the opening of the revamped Panama Canal, due sometime this year, allowing the Yanks to export LPG cheaply into the East Asia region, ie round here.

2. The rise in battery electric vehicles, helped by the Tesla Corporation mass producing lithium batteries, probably not for 5-10 years yet.


Sure that helped quite few years ago,when the majority of vehicles around were petrol 6 and 8 cylinder,think Holden,Ford,4WD's,utes,etc.

These vehicles were large enough to fit tanks to,relatively easy to modify,and it was economically viable.


There were Govt. incentives as well.

Today the vehicle market is totally different,many diesel utes and 4wd,most cars small four cylinder petrol or also diesel.
Fitting LPG to these vehicles would be impracticle, probably impossible,and extremely expensive,therefore not viable.

Sure there will always be enthusiasts around with older vehicles on LPG,but these may not be enough.

[Eevo]

From what I understand, in Vic., ULP has no ethanol but PULP does. The opposite of NSW.
I'm still trying to confirm this.

im glad i stick 98 in all my cars

[PhilipA]

To be clear
In NSW there are 4 types of fuel
ULP which is 91 octane and has no ethanol
E10 which is 94 octane and has 10% ethanol
Premium 95 which AFAIK has no ethanol
Premium 98 ditto.
Because of the mandated % Coles has no ULP in most Sydney Metro stations but available in the country.

Regards Philip A

[Bushie]

Another contributory factor 'may' be the reduction in production facilities.

eg HC extractions at Kurnell used to take feed (waste) from the refinery and extract LPG for automotive use (up to 6 tonnes per hour).
Now the refinery has ceased production, they will be closing up as there is no feedstock.

Martyn

[Mick_Marsh]

We are converting our refineries to terminals because, over the past few years, it has been cheaper to import our fuels than produce them here. We'll just import gas if local production doesn't keep up with demand.

[p38arover]

Because of the mandated % Coles has no ULP in most Sydney Metro stations but available in the country.

Fortunately, one of my local Woolies Caltex stations (there are two within a km of each other in my suburb) has ULP.

[Pedro_The_Swift]

BP in Tassie has ceased selling LPG due to "its" world wide change in handling procedures,, none of the Tassie sites can be changed viably,, :(

[Chucaro]

Yes, I know Pedro, now in Kingston only the Caltex have gas :(

[ramblingboy42]

There is an ethanol plant just across the road from me.

Run by the Rocky Point Sugar Mill , it's potential has never been realised as the govt and other bodies continuously fight their applications to manufacture for motor industry use.

All of their production goes to 'industrial' products. eg . metho.

Regulations prohibit any other persons from buying the ethanol for personal use.

If the plant was opened up to produce to the auto industry most of the local cane farmers would also benefit from increased production.

I'm not sure where the ethanol in our blended fuels is sourced from. Might search.

[PhilipA]

In NSW the ethanol all comes from Manildra's starch plant at Bomaderry.

The ethanol plant was originally commissioned to clean up biologically active effluent from the starch process, which the EPA didn't like.

The NSW state government then legislated a % of total petrol sales had to be ethanol, and restricted imports.

Dick Honan is a great businessman and negotiator!

Regards Philip A

[DeeJay]

We are converting our refineries to terminals because, over the past few years, it has been cheaper to import our fuels than produce them here. We'll just import gas if local production doesn't keep up with demand.


We have not produced sufficient LPG to meet local demand in this country for some years.


https://www.aulro.com/afvb/images/imported/2015/02/405.jpg

[350RRC]

FWIW I do freshwater fish surveys and just happened to be in Gippsland somewhere near Warragul late last year.

We'd come across a couple of the original underground Esso BHP dual pipeline creek crossings complete with signage. One pipe is oil from memory and the other is definitely LPG. Goes from somewhere near Longford to Melb and is connected to Coode Is., Mobil in Altona and Shell in Geelong, etc.

Coincidentally met a bloke staying at the same motel who works for Esso and is in charge of organising the replacement of both pipes, they're past use by date. They are 180km long.

Expect another 40 years boys.

cheers, DL