Energy Prices Drive Alternative Fuel Choices

July 28, 2008
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For US Airconditioning Distributors, the initial incentive to switch to natural gas trucks was so its drivers could utilize the car pool lanes on the Southern California freeways. When the company discovered how much lower the cost of natural gas was versus diesel, the company decided to invest in larger delivery trucks that utilized CNG.


It costs a lot to run a fleet of trucks today, but it’s an expenditure that is necessary for numerous types of businesses that have to make deliveries. For heating and air conditioning distributors, making deliveries is just part of their everyday routine, and there’s no doubt that the rising cost of fuel is having a major impact on their bottom lines.

The high cost of fuel is causing some companies to consider switching their fleets to alternative fuels, including biodiesel and compressed natural gas (CNG). These alternatives usually cost less and produce fewer emissions than regular gas or diesel fuel, and state or local entities sometimes offer attractive rebates for making the switch.

The rebates offered by Southern California’s South Coast Air Quality Management District (AQMD) were one of the many reasons why US Airconditioning Distributors, a distributorship located throughout five Western states, recently started switching its delivery fleet over to utilize CNG. Another major impetus for switching fuels is that some trucks utilizing CNG can use the carpool lanes throughout the Los Angeles metropolitan area, so deliveries are faster and less fuel is wasted idling in Southern California traffic.



HAPPINESS IN THE CARPOOL LANE

The lure of being able to use the carpool lanes was, indeed, attractive to Jack Scarsi, vice president of operations, US Airconditioning Distributors, City of Industry, Calif. “The initial incentive to switch to natural gas trucks was that our drivers could utilize the carpool lanes on the Southern California freeways. Using the carpool lanes meant that we could deliver product to our customers faster and provide better service. It was not until the rise in fuel costs did we decide to make the switch on our larger delivery trucks.”

In 2006, the company started purchasing CNG pickup trucks to take advantage of the carpool lanes for its rapid delivery service. When they discovered how much lower the cost of natural gas was versus diesel, the company decided to invest in larger delivery trucks that utilized CNG. The cost of these new trucks was mitigated by AQMD’s Carl Moyer program, which was designed to help truck owners and operators replace pre-1990 heavy-duty diesel trucks with model year 2007 or newer diesel-fueled or natural gas-fueled trucks.

The program can fund up to 80 percent of the cost of a newer replacement truck, and so far, US Airconditioning Distributors has purchased 17 new Chevy CC6500 flatbed stake trucks outfitted with natural gas tanks. These trucks, which are part of the company’s 200-truck fleet, handle 90 percent of all its deliveries in the City of Industry area.

To ensure there would be no problem finding places to fill up its trucks, US Airconditioning Distributors installed a CNG station in its City of Industry location. The station has 20 filling bays that “slow fill” the trucks - the rate of filling depends on how many trucks are filling at the same time. The tanks hold up to 55 gallons of fuel, have a range of about 500 miles, and are filled continually throughout the off hours to maximize their range.

Besides the carpool lane benefit, another advantage to using CNG is that it is a cleaner burning fuel, which means there is less wear and tear on the engines, so an engine’s life expectancy is virtually doubled. The trucks are inspected quarterly by the manufacturer and installer of the tanks, but other than that, regular maintenance is very much the same as that for diesel trucks. Scarsi noted that oil changes are needed less frequently on the CNG trucks and when the changes occur, the oil looks just like it did the day it was put in the truck.

Of course, one of the main reasons to switch to CNG is its lower cost compared to gas or diesel. “Since we installed our own filling station, our costs have dropped from $4.15 per gallon to approximately $0.93 per gallon based on March 2008 numbers. During 2007, our natural gas prices averaged about $0.65 per gallon. Currently we’re saving over $20,000 per month in fuel costs here at City of Industry,” said Scarsi.



RETROFIT OR REPLACE THE REST

The Carl Moyer grants offered through AQMD only cover certain retrofits, which is why it made more sense to purchase new trucks with natural gas tanks rather than retrofitting existing trucks. However, given the disparity in the price for fuel getting greater as time goes on, retrofitting might become an option in the near future.

“I expect our entire fleet to be running on natural gas here at City of Industry in about one year,” said Scarsi. “At other locations where many of our other trucks are located, natural gas trucks are not feasible at this time because of a lack of grants available from the local governments and a limited infrastructure of natural gas filling stations. As these barriers become less frequent, we will move forward in converting the remainder of our fleet to natural gas. The change out will take place over time when our diesel trucks normally retire after an average life span of seven years and 250,000 miles.”

The switch to CNG has gone very smoothly at US Airconditioning Distributors. Employees have all been trained on how to fill the trucks, and Scarsi noted they’re excited to be part of the new technology and fully understand what the fuel cost savings means to the competitive advantage of the company and its overall profitability.

“We are very happy with our natural gas trucks,” said Scarsi. “They have performed better than expected and have been a maintenance dream. The original idea about saving time on the road has now evolved into a huge cost savings for our company, thanks to the significant rise in the cost of diesel fuel. We expect to use these trucks for many years and will continue to replace older trucks with cleaner, environmentally friendly, and less costly natural gas versions.”

Publication date: 07/28/2008

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