An Analysis of Long-Run Economic Scenarios for LNG versus Diesel for Transportation Fuel
There is a tremendous level of interest and activity in the U.S. in the freight transportation sectors in alternative fuels to combat the high costs of diesel. Liquid Natural Gas [LNG] is being tried in long-haul markets by both On-Highway Trucking and Railroad Locomotives. Currently LNG can generate a favorable return on investment vis-à-vis diesel fuel. But that is driven by the historically high cost of oil and therefore diesel fuel. Oil and diesel have been quite high in real dollar terms in the past for 3-4 years and then dropped precipitously by two-thirds or more and remained there of r a decade or more.
This analysis and report deeply examines the historical nominal and real prices of oil. diesel and natural gas. And determines the breakeven point for diesel prices versus LNG prices.
If crude oil/diesel remains $100/bbl. [$3.90/gal Diesel] then break even at a 3-year simple payback can be achieved, even if no improvements / reductions in incremental initial investment and liquefaction and logistics occur. Below that enters into higher risk.