Autogas positioned to power taxcab fleet market into future

October 6, 2011 By    

Jeff Kates carried an interest in alternative fuels for his taxicab fleet, but his knowledge of propane was minimal until a chance meeting with a marketer promoting the benefits of autogas changed his outlook and his business.

Now Yellow Cab of Columbus is serving as an alternative fuel model for taxi fleets in Ohio’s capital city by converting 25 vehicles to propane autogas and installing the refueling infrastructure to keep them running.

Kates, the company president, was attending a taxicab trade association event about two years ago when he met a representative of Blossman Gas, the independent propane marketer that spearheaded the Alliance AutoGas vehicle-conversion network of partners. That’s when Kates learned how propane could change his 128-vehicle fleet.

“It was a nice team effort to help us do something that we knew was the right thing to do and didn’t have all the practical knowledge to get this accomplished,” Kates says. “Now it’s got us feeling pretty proud about what we’ve done when it comes to getting 20 percent of our fleet a lot less dependent on foreign oil.”

Up Interstate 71 and 145 miles to the northeast, DeVo Bavishi, president of Ace Taxi Service Inc. in Cleveland, was learning about the same opportunity with propane for his 120-cab fleet. A meeting with Alliance AutoGas at an industry event also convinced Bavishi to move forward with the propane project. Ace Taxi is currently converting 23 taxis to propane, with the refueling infrastructure already in place on its company grounds.

“We had some negative thoughts with, ‘Hey, this is something we probably don’t want to touch or deal with the headaches that come with it,’” Bavishi says. “I probably would not have been open to reviewing it if [Alliance AutoGas] didn’t approach me. It’s experimental at this time. Federal grant money was available, and it seemed like a good, proven system that made sense. If things go well, we’ll look to get involved with more.”

With shale gas production likely to increase the nation’s propane supply and distribution channels in the coming years, the domestic propane motor fuel marketplace is one area that could benefit, says Mike Sloan, principal at ICF International. LP gas vehicle conversions and its refueling infrastructure cost significantly less compared to compressed natural gas. The nation’s taxicab companies could ride that wave of expected momentum and give propane marketers another area in which to sell their product.

“The taxicab market is obviously a great market opportunity for the propane industry and propane conversions because of the centralized refueling nature of the fleet itself,” says Brian Feehan, former vice president of engine fuels for the Propane Education & Research Council (PERC). “The number of miles put on these vehicles is amazing, so that accelerates the payback period of the actual conversion because of the fuel savings of running propane and the number of miles.”

A light-duty vehicle consumes about 2,000 gallons of propane per year, but that number can grow substantially with the high mileage of taxicabs, Feehan adds. Each taxi in the Columbus and Cleveland fleets travels about 40,000 to 60,000 miles per year, according to company officials.

In about nine months, Yellow Cab of Columbus vehicles have burned about 40,000 total gallons of propane, Kates estimates. Ace Taxi is still in the early stages of its conversion process.

“Anything worth doing has challenges,” says Rodney Johnson, branch manager for Alliance AutoGas of Ohio. “But I think [this market] will continue to grow, especially with the price of gasoline going up. Cab companies can take advantage of that and pass those advantages on to their drivers.”

Stuart Weidie, CEO of Blossman Gas, adds, “I’d like to think in the next three to five years 70 percent or more of taxi fleets in major metropolitan areas around the country will have autogas as one of their fueling options.

“The advantages we have on range, upfront costs and the ongoing maintenance in the vehicle make propane autogas a clear winner.”

Added incentives
To help convert their vehicles to propane, Yellow Cab of Columbus and Ace Taxi received grant funds from statewide non-profit organization Clean Fuels Ohio, which was awarded $11 million from the U.S. Department of Energy’s (DOE) Clean Cities program.

DOE distributed about $300 million in Recovery Act funds to 25 partners nationwide to increase the use of alternative fuel vehicles, including those running on propane, compressed natural gas, electricity and hybrid electricity. The program, which began in 2009 and runs through May 2014, will convert 2,850 vehicles to propane and install 358 propane-fueling stations.

“A lot of taxicab fleets have been running autogas for years, but the renaissance began in the last couple of years with the introduction of tax credits, and DOE and stimulus funding started to drive that marketplace,” Feehan says. “Once some of those cabs and police departments switched to autogas, their peers started to see the advantages of running autogas in their fleets. That success lends itself to continued success. It’s been around for a long time, but it received a boost in 2009, and now it’s taking off.”

Through the Ohio Advanced Transportation Partnership, Yellow Cab of Columbus received $145,000 for 25 Ford Crown Victorias (2006-08 model years), while Ace Taxi is utilizing $133,400 for 23 Crown Victorias (2008). And because they are part of the Alliance AutoGas network, the cab companies didn’t incur any upfront costs on their fueling infrastructure. Those costs are being met through a propane supply contract with Blossman Gas.

“Getting into new technology certainly has its challenges, but as far as finances these cab companies had it easy because they didn’t have to put up the money for their infrastructure and were able to pay the full conversion cost on the cabs,” says Cynthia Maves, director of grant administration for Clean Fuels Ohio.

However, one Cleveland taxicab company chose not to make the same commitment as its in-state neighbors. Yellow Cab of Cleveland was initially part of the Clean Fuels Ohio program, but it elected not to convert a portion of its 140-vehicle fleet to propane.

“I like to get at least three prices on everything. They said, ‘Here’s the price,’ but how do you know it’s a good price? Indirectly I’m paying for it,” says Brian McBride, owner of Yellow Cab of Cleveland, who at the time also had questions and concerns about the conversion system, how it would fit his fleet, the refueling infrastructure and the status of tax credits. “So we’re just going to take a longer-term focus.”

Selling points
Yellow Cab of Columbus and Ace Taxi were sold on the bi-fuel option of the EPA-certified Prins Vapor Sequential Injection LPG conversion system, provided by American Alternative Fuel of West Coxsackie, N.Y. The vehicles start on gasoline and automatically switch to propane, and the driver can then choose the fuel.

American Alternative Fuel converted the first two cabs for Yellow Cab of Columbus and trained its mechanics on the system. Xtreme Performance, a Cleveland-area conversion center, is handling the installations for Ace Taxi.

According to Alliance AutoGas, the conversion cost is dependent on the type of vehicle and the number of vehicles in the fleet. The system is currently available for more than 50 makes and models of vehicles. A gasoline-to-autogas conversion costs about $5,800, with potential for state, municipal and federal grants and tax incentives. Conversion costs are typically offset by fuel cost savings and reduced vehicle maintenance.

“The cabs not only run on propane, but if propane is unavailable they still run on gasoline,” Kates says. “I thought that was very important seeing that the drivers get trips out of town or are just working hard and don’t have time” to refuel at the company’s station.

Each cab company has a fueling station on site, equipped with two 1,000-gallon tanks, installed by Alliance AutoGas partner Superior Energy Systems Ltd. of the Cleveland area. Superior offers a temperature compensated propane motor fuel dispenser. Company President Donald Fernald says autogas in the propane industry is finally gaining momentum.

“We had a push for it, but there was no industry support. Now we’re seeing that industry support,” Fernald says. “Small independents and the majors are saying this is a real segment that we should be going after and taking a good piece of that fleet business.”

Kates also was drawn to the ease that cabs are refueled – similar to gasoline – and a fuel savings of about 25 percent less than gasoline. Autogas averages $1.30 less per gallon compared to gasoline, Johnson says. A tank of up to 24 gallons is stored in the vehicle’s trunk.

“With our business model, the drivers are paying for the gas. We don’t necessarily benefit from the savings, but if the drivers are happy we end up having better customer service all around,” Kates says.

Any uncertainty and negativity that was preconceived before the transition to propane has been overcome pretty quickly, and the drivers are pleased with the cabs’ power and performance, Kates says. “If we had another 40 propane vehicles, the drivers would be jumping in them,” he adds.

Ace Taxi has a similar business model as Yellow Cab of Columbus, with drivers as independent contractors. The company expects to see advantages in the clean-burning aspects of propane.

“We hope to gain the benefit of good publicity,” Bavishi says. “Cleaner-running vehicles add longevity, and we will be able to provide a cheaper solution for our drivers. Twenty five to 30 percent savings is great for them.”

Maves of Clean Fuels Ohio adds of the propane taxicabs, “The drivers enjoy driving them. It’s a cleaner vehicle, and it’s not hard to learn how to fill them. There is a lot more interest overall in alternative fuels. Some of that is because of the price of gasoline and diesel, but some of it too is driven by sustainability initiatives, whether at the city or company level.”

Helpful hints
Feehan advises propane marketers to become familiar with the EPA-certified conversion technology – the costs and installation and maintenance procedures; the refueling infrastructure packages that are available to potential fleet customers; and the cost comparisons between propane and other motor fuels for fleets.

PERC’s Marketer Technology Training Program is one resource to help propane marketers connect with fleet customers. One module focuses on on-road vehicles and fleets. Marketers can access www.propanecouncil.org/MTT for more information and a schedule.

While there are more than 80 EPA-certified conversion systems on the market today, Feehan says, there are few options in heavily regulated California. In August, PERC began its pursuit of a manufacturing partner to produce and sell an EPA- and CARB-certified aftermarket conversion system for a light-duty passenger car application.

“We want to be able to sell into the California market. It’s one of the largest fleet markets in the United States and clearly a robust market for alternative fuels,” Feehan says. “We feel there’s pent-up demand that’s being driven not only by fuel costs but by the regulatory regime in place in California.”

Other resources
www.allianceautogas.com
www.autogasforamerica.org
www.autogasusa.org

The Propane Education & Research Council contributed to the photos in this story.

Brian Richesson

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at brichesson@northcoastmedia.net or 216-706-3748.

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