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Cost-Benefit Analysis:
Feasibility of Natural Gas Vehicle
Implementation Team 4:
Seohyun Stephanie Chang Yechan Cho
Seung Ho Andy Han Hye Sung Kim Hae Yun Park Eugene Pyun
Jisun Yu
Abstract
Global concerns regarding energy sources, especially the accessibility of petroleum,
have been constantly increasing. Various attempts are being made world-wide in order to
alleviate the possible catastrophe if our major sources of energy were to be depleted in the near
future. Of the different sectors that consume energy sources, it has been observed that a
substantial amount of petroleum based vehicles in transportation sector are slowly being
substituted with natural gas vehicles. With such trend taking place, this paper seeks to analyze
the feasibility of implementing natural gas vehicles as an alternative transportation method by
providing a fundamental framework for cost and benefit analysis. The viability is analyzed
mainly in three standpoints –economic, technological and social –over the time span of 24 years.
The net results indicate that such implementation has the potential to be beneficial despite
certain limitations.
Table of Contents
I. Introduction 1
1. Purpose 2 2. Background Information on Natural Gas 2
1. Reserve 3 2. Production 3 3. Consumption 4
II. Natural Gas and Natural Gas Vehicles 6
1. Technological Overview 6 2. Economic Overview 10 3. Social Overview 12
III. Cost-Benefit Analysis 15
1. Cost-Benefit Analysis Framework 15 2. General Assumptions 15 3. Economic Savings Analysis: Price
Difference in the Transportation Sector 16
4. Infrastructural Cost Analysis 18 5. Externality Analysis 22
1.Quantifiable Externalities 22 2.Unquantifiable Externalities 39
6. Efficiency Analysis 40 7. Cumulative Net Profit Calculation of Main
Function, αf(x) + e 42
8. Sensitivity Analysis 43
IV. Conclusion 44 1. Conclusion 44 2. Further Discussion and Limitations 44
Works Cited 45
Appendix
1
I. Introduction
Petroleum is one of the major energy sources that facilitate how society functions. Petroleum is
not only the basis of most transport systems but also a crucial resource for drug and chemical industries
and agriculture industries. As the concern for petroleum demand and supply is increasing rapidly, so is the
desire to find the potential substitute. In fact, petroleum on which the modern civilization depends is
running out faster than previous predictions.
There are more than 800 petroleum fields in the world;; however, most of the largest fields have
already peaked and the current rate of decline in petroleum-based energy source production is almost
twice the speed of that for 2007.1 Oil production has already peaked in most of the non-OPEC countries,
and the decline in oil production in most existing fields is 6.7% a year. At this rate, there will no longer be
affordable oil, for there will be only a few countries –mostly in the Middle East –that can produce oil in
the future. 2
Numerous suggestions were made in order to prevent such problems inflicted by the decreasing
availability of petroleum. Some even suggested extracting oil from coal;; nevertheless, such methods are
carbon-intensive and, therefore, will worsen the climatic problem. As a result, searching for renewable
and efficient energy accelerated, and, subsequently, an argument for using natural gas as a substitute
arose, especially within the transportation sector.
In fact, natural gas has been used as an alternative fuel for the transportation sector in the United
States since the 1930s. Natural Gas Vehicle Coalition reported that there are more than 150,000 natural
gas vehicles (NGV) on the roads and that the transportation sector accounts for 3 percent of the natural
gas consumption in the United States.3 Therefore, the increasing trend towards the use of natural gas as
an alternative fuel gave rise to accelerated natural gas demand within the United States’ transportation
sector.
This paper addresses the effects and implications to which such development of and increased
interests in natural gas as an alternative transportation fuel lead.
1 Peak oil is a phrase referring to the situation when worldwide oil supplies reach its peak (maximum) point. The theory suggests that following such peak, oil supplies will decrease and never rise again. Geophysicists predicts that the peak is either already occurring or will have occurred by 2015 while the demand for oil continues to increase rapidly. Gordon, Jake. "Peak Oil: a brief introduction." Last modified 2004. Accessed November 30, 2012. http://peakoil.org.uk/. 2 André Angelatoni, “Peak Oil Primer,” Post Peak Living, May. 2010, http://www.postpeakliving.com/peak-oil-primer. 3 “Natural Gas in the Transportation Sector,” NaturalGas.org, FERC Natural Gas Market Analysis, http://www.naturalgas.org/overview/uses_transportation.asp.
2
Figure 1. Typical Composition of Natural Gas
1. Purpose The purpose of this research paper is to offer a skeletal framework for further studies in the
feasibility of converting the currently petroleum-based vehicles into NGVs. The paper first introduces the
general background information on natural gas, as well as the advantages and disadvantages of natural gas
and natural gas vehicles. Then, it conducts a cost-benefit analysis with sensitivity and externalities taken
into consideration. From the analyses, the feasibility of converting petroleum-based vehicles into NGVs
is determined. Finally, the results of the analysis, implications, and limitations are discussed.
2. Background Information on Natural Gas Natural gas is a colorless, odorless, and a nontoxic clean-burning fossil fuel;; it is known to be one
of the cleanest and most useful energy sources. It is a combustible mixture of hydrocarbon gases and,
when burned, gives off significant amount of energy with few emissions of potentially harmful pollutants.
Although natural gas is primarily composed of methane, it also includes ethane, propane, butane and
pentane (Figure 1). Natural gas is formed through the compression of organic matter, such as the remains
of organisms, under the earth at high pressure for a significant amount of time;; more natural gas is
produced compared to oil in environments under higher temperature and pressure. Therefore, natural
gas—pure methane—can be found in deeper deposits. 4
4 “Natural Gas in the Transportation Sector,” NaturalGas.org, FERC Natural Gas Market Analysis, http://naturalgas.org/overview/background.asp.
3
2.1. Reserve
Currently the world’s natural gas reserve amounts to approximately 186 trillion cubic meters.
The countries with the largest natural gas reserves are Russia and Iran, which holds approximately 24%
and 16% of the world’s reserve, respectively. The United States’ natural gas reserve is the fifth largest,
holding approximately 7.7 trillion cubic meters—that is 4% of the world’s reserve (Figure 2). Compared
to United States’ 2.3 billion cubic meters reserve of petroleum, the amount of natural gas found within the
country implies that there is abundant source of natural gas. Such resource abundance in the United
States makes natural gas one of the most attractive energy sources for transportation.5
2.2. Production
Despite the natural gas reserve abundance, natural gas as a usable source of energy must be
produced through appropriate industrial processes, such as hydraulic fracturing, which is explained later
in this paper. The annual world production of natural gas is about 3.1 trillion cubic meters. North America
produces about 819 billion cubic meters, which composes about 26% of the world’s production. United
States produces 604.1 billion cubic meters of natural gas annually, a fact that indicates United States as a
major producer of natural gas (Figure 3).6
5 International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=3&aid=6. 6 International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=26&aid=1.
24%
16%
14% 4% 4%
4% 4%
3%
3% 2%
22%
Russia
Iran
Qatar
Saudi Arabia
United States
Turkmenistan
United Arab Emirates
Nigeria
Venezuela
Algeria
Other (84 countries)
Figure 2. Percentage Distribution of Natural Gas World Reserve
4
33.1%
23.7%
30.3%
4.9% 6.4% 1.6%
Oil
Natural gas
Coal
Nuclear energy
Hydro electricity
Renew- ables
Figure 4. World Primary Energy Consumption by Fuel Type, 2011
2.3. Consumption Along with its increasing production, natural gas is being widely consumed. In fact, natural gas
is the third-most consumed fuel, at 23.7% of global energy consumption (Figure 4).
Similarly to the production of natural gas, United States has the greatest share of natural gas
consumption, consuming 626 million tonnes oil equivalent in 2011. In fact, the consumption of natural
gas consisted about 27.6% of the total energy consumption. Compared to other countries, United States
relies significantly on natural gas as source of energy. In fact, United States is the second largest user of
natural gas in terms of proportion, following 55.7% of Russia’s annual natural gas consumption (Figure
5).7 Such data indicate United States’ significant dependency on natural gas as a source of energy.
7 International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=26&aid=2.
74%
19% 7%
0%
20%
40%
60%
80%
100%
NorthAmerica
Mexico
Canada
U.S
Figure 3. North America Production Distribution, 2010
5
0
5000
10000
15000
20000
25000
30000
35000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Natural Gas Consumption Trend in the Transportation Sector, in million cubic feet
Figure 6. Natural Gas Consumption Trend, Transportation Sector
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
China U.S. Russia India Japan
Renewables
Hydro electricity
Nuclear energy
Coal
Natural gas
Oil
Figure 5. Primary Energy Consumption by Fuel in Top 5 Energy-Consuming Countries
Nevertheless, the United States’ consumption of natural gas in transportation sector is
substantially minimal compared to its significant total consumption of natural gas in other sectors, such as
industrial or residential sectors. For example, natural gas consists only 2.7% of total energy consumption
of the country’s transportation sector. On the other hand, 85% of the total energy consumption in the
transportation sector of the United States is petroleum based energy sources.8
However, the consumption of natural gas in the transportation sector has gradually increased
continuously since 1990 in the United States (Figure 6).9 Taking such trend into consideration, this paper
addresses and examines the potential of natural gas vehicles in the transportation sector.
8 International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0201e. 9 International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0605.
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II. Natural Gas and Natural Gas Vehicles Prior to going into an in-depth analysis on NGV implementation, it is important to understand the
technological, economic, and social advantages and disadvantages of natural gas and, furthermore, natural
gas vehicles.
1. Technological Overview This section addresses the technological aspects that developed the operation of NGVs. More
specifically, this section briefly introduces the technologies used to extract and produce natural gas, the
different forms of natural gas mainly used in NGVs, and the technology used to operate NGVs.
1.1. Extraction and Production Technology
Ever since the technique of hydraulic fracturing was introduced, extraction and production of
natural gas have become inseparable processes. Once the preparation for extraction is completed through
horizontal or vertical drilling, natural gas is extracted deep earth. Although there are different methods
through which natural gas is extracted, hydraulic fracturing, or fracking, has been noted to be the most
widely used method. In fact, technological advances in hydraulic fracturing led to recent dramatic
increases in natural gas production from shales in various regions.
Hydraulic fracturing is a well stimulation process used to maximize the extraction of underground
resources, including oil, natural gas, geothermal energy, and water (Figure 7). The natural gas industry
uses this method to enhance subsurface fracture systems to allow oil or natural gas to move more freely
from the rock pores to production wells that bring the oil or gas to the surface, using the viscosity
mechanisms in the concentration of fracking fluids.10
10 United States Environmental Protection Agency, "Hydraulic Fracturing Background Information." http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydrowhat.cfm.
7
Figure 7. Hydarulic Fracturing
The process of hydraulic fracturing begins with building the necessary site infrastructure
including well construction. Production wells may be drilled in the vertical direction only or paired with
horizontal or directional sections. Vertical well sections may be drilled hundreds to thousands of feet
below the land surface and lateral sections may extend 1000 to 6000 feet away from the well.
Fluids, commonly made up of water and chemical additives, are pumped into a geologic
formation at high pressure during hydraulic fracturing. When the pressure exceeds the rock strength, the
fluids open or enlarge fractures that can extend several hundred feet away from the well. After the
fractures are created, a propping agent is pumped into the fractures to keep them from closing when the
pumping pressure is released. After fracturing is completed, the internal pressure of the geologic
formation cause the injected fracturing fluids to rise to the surface where it may be stored in tanks or pits
prior to disposal or recycling. Recovered fracturing fluids are referred to as flow-back. Disposal options
for flow back include discharge into surface water or underground injection.11
The aforementioned technological advancement is only one of the technologies that are being
developed and put into practice in the exploration and production of natural gas and oil. New forms of
technology and applications are being developed continuously and, thus, serve to improve the economics
11 United States Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing." http://www.epa.gov/hydraulicfracture/.
8
of producing natural gas, allow for the production of deposits formerly considered too unconventional or
uneconomic to develop, and ensure that the supply of natural gas keeps up with steadily increasing
demand. Sufficient domestic natural gas resources exist to help fuel the U.S. for a significant period of
time, and technology plays a significant role in providing low-cost, environmentally sound methods of
extracting these resources.
1.2. Forms of Natural Gas
Although there are various forms of natural gas, this paper focuses on liquefied natural gas and
compressed natural gas, which are the two main forms used in the transportation sector.
1.2.a. Liquefied Natural Gas
Liquefied Natural Gas (LNG) is formed by cooling natural gas to about -260°F at normal
pressure. LNG is deemed to be useful, particularly for the transportation of natural gas, since it takes up
about one six hundredth the volume of gaseous natural gas. While LNG is reasonably costly to produce,
advances in technology have reduced the costs associated with the liquefaction and regasification of
LNG.
LNG is also a relatively safer form of natural gas as it, when vaporized to gaseous form, only
burns in concentrations of between 5 and 15 percent mixed with air. In addition, LNG, or any vapor
associated with LNG, does not explode in an unconfined environment. Thus, in the unlikely event of an
LNG spill, the natural gas has little chance of igniting an explosion.12
1.2.b. Compressed Natural Gas
Compressed Natural Gas (CNG) is a colorless and odorless gaseous fuel that is consisted of a
mixture of hydrocarbons. CNG is produced by compressing natural gas to a pressure of 200 to 250 bars.
CNG is lighter than air and is referred to as green fuel because of its relatively environmental-friendly
traits;; it reduces harmful emissions and is non-corrosive.
Moreover, CNG is known to be less flammable than other fuels, such as gasoline or diesel, as it
requires higher compression energy and ignition temperature of about 540 degrees Centigrade. As a
result, accidental ignition or combustion involving natural gas is less likely to occur than those involving
gasoline or diesel fuel.13
12 Foss, Michelle M. "An overview on liquefied natural gas (LNG), its properties, the LNG industry, and safety considerations." Bureau of Economic Geology. (2007). 13 Eftekhari , Hassan. "Producing Compressed Natural Gas For Natural Gas Vehicles By Alternative And Traditional Ways." International Gas Union. . http://www.igu.org/html/wgc2009/papers/docs/wgcFinal00193.pdf .
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1.2.c. LNG vs. CNG
There are different advantages and disadvantages associated with LNG and CNG, respectively,
when both forms are being used as alternative fuels for vehicles.
Vehicles that use LNG requires less space as LNG has greater fuel density and LNG systems can
store as much as 2.5 times the fuel as CNG. However, disadvantages of LNG include the complexity of
pressure and temperature management, higher life cycle fuel cost, and high maintenance costs.14
On the other hand, there are more advantages associated with CNG. First, the technology
associated with CNG and its systems are more mature than those of LNG. For example, the fuel tanks
and pressure management are simpler. Moreover, CNG can be held in tanks for a longer time than LNG
without any fuel loss.15
Therefore, despite certain disadvantages of CNG, such as the cost of compression and larger
storage tanks, more vehicles use CNG as an alternative fuel to gasoline and other petroleum-based fuels.
1.3. Natural Gas Vehicles
It has been globally observed that the number of natural gas vehicles is increasing. Natural gas
vehicles utilize the same basic principles as gasoline-powered vehicles. Although there are some
differences between natural gas and gasoline in terms of flammability and ignition temperatures, NGVs
themselves operate on the same basic concepts as gasoline-powered vehicles. Still, some adjustments are
necessary to make an NGV work efficiently. These changes are mainly in the fuel storage tank, the engine
and the chassis.
1.3.a. Fuel Storage
Natural gas takes up less space. At a fueling station, gas is compressed to more than 3,000 pounds
per square inch before being pumped into high-pressure cylinders attached to the vehicle. The storage
tanks of early NGVs used to be larger and took up much of the cargo space; however, newer and more
lightweight cylinders have been developed. The cylinders are made of robust materials designed to endure
impact, puncture and, in the case of fire, their pressure relief devices provide a controlled venting of the
gas rather than letting the pressure build up in the tank.16
1.3.b. Engine Modifications
When the engine in an NGV is started, natural gas flows from the storage cylinders into a fuel
line. The natural gas enters a regulator that is located near the engine, to reduce the pressure. Then the gas
14"Natural Gas Fuels: CNG and LNG." Agility Fuel Systems . . http://www.agilityfuelsystems.com/why-natural-gas/lng-vs-cng.html. 15 "Natural Gas Fuels: CNG and LNG." Agility Fuel Systems . . http://www.agilityfuelsystems.com/why-natural-gas/lng-vs-cng.html. 16 NGVAMERICA, "Technology." http://www.ngvc.org/tech_data/index.html.
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feeds through a gaseous fuel-injection system, which introduces the fuel into the cylinders. Sensors and
computers adjust the fuel-air blend so that when a spark plug ignites the gas, it burns efficiently.17
1.3.c. Chassis Modification
Some adjustments in the suspension of a NGV may be required to create space for the fuel-
storage containers. In the rear of the vehicle, a semi-trailing arm suspension sometimes replaces the
lateral-link suspension that comes standard in many gasoline-powered cars. This creates more open space
in the rear undercarriage, yet still provides a smooth, comfortable ride. NGVs also remove the spare tire
and jack, which allows for a flat floor plan.18
1.4.d. Advantages and Disadvantages of Natural Gas Vehicles Natural gas vehicles are attractive in many aspects. Their greenhouse gas emissions are far less and not as harmful to the environment as the emissions from gasoline vehicles. Besides, there are vast amounts of natural gas deposits available in the United States. The maintenance cost of natural gas vehicles is also very low and natural gas vehicle owners receive tax incentives for the environmental savings natural gas vehicles incur. Finally, natural gas itself costs far less than gasoline.19 On the other hand, it is still more expensive to both purchase a new natural gas vehicle and convert to a natural gas vehicle than to just buy a gasoline vehicle. Natural gas vehicles are also not as speedy as their gasoline counterparts and there are currently only about 1,100 available natural gas stations in the States. Lastly, natural gas vehicles show less performance when it comes to the amount of gas used in relation to the mileage of the car.20
2. Economic Overview This section addresses economic advantages and disadvantages of natural gas and natural gas
vehicles from multiple dimensions, such as lower price of natural gas, creation of jobs through the
development of natural gas industry, and impact of natural gas on real estate prices.
2.1. Economic Advantages
Although the issues of fracking, in terms of negative social effects of Hydraulic fracking in the
United States, are controversial, natural gas possesses high potential to drive the United States’ economy.
If the natural gas industry can become active through high usage of natural gas vehicles in the United
17 Karner, Don, and James Francfort. "LOW-PERCENTAGE HYDROGEN/CNG BLEND FORD F-150 OPERATING SUMMARY." Idaho National Engineering and Environmental Laboratory. (2003). 18 Harris, Williams. How Natural-gas Vehicles Work, http://auto.howstuffworks.com/fuel-efficiency/alternative-fuels/ngv3.htm. 19 Kolodziej, Rich. NGVAMERICA, "Natural Gas Vehicles: Pros and Cons." Last modified 2012. http://www.actresearch.net/seminar/12seppr/06_Kolodziej.pdf. 20 TIAX, "US and Canadian Natural Gas Vehicles Market Analysis: Compressed Natural Gas Infrastructure,"
11
States, it will bring various unforeseen economic benefits. For example, new industries, created by
increasing demand of NGV can result in national wealth and increased jobs. Perryman Group found that
natural gas contributes $8.2 billion in the United States’ annual economic activity (8.1% of total output in
the local economy that directly affects the region) and 83,823 jobs (8.9% of total job). 21 Moreover, Wood
Mackenzie estimated that an additional 1.1 million jobs could be produced by 2020 in the U.S. under
assistance of policies that encourage the development of new gas resources, which can be motivated by
high demand of natural gas from NGV sector. 22 According to HIS Global Insight, growth of natural gas
industry affects US economy in that it will cause an increase in U.S. economic output by more than $132
billion plus 4.4 billion a year in additional local, state and federal taxes. 23
The main advantage of using natural gas vehicle as a major source of transportation in the United
States is the affordable operation cost of the vehicles. Affordable and stable prices of natural gas make the
abundant natural resource a main source of energy that the entire nation can depend on. According to the
U.S Department of Energy’s price projection analysis of natural gas, the price of natural gas in 2025 will
not be far different from 2004 in constant dollars. 24 Such stability of natural gas’s price change has
already been shown historically. For example, in the United States, the average price of natural gas at the
wellhead prices decreased by 35% from 2006 to 2010, as an effect of an almost 400% increase in shale
gas production during this time frame.
2.2. Economic Disadvantages
From an economic perspective, one of major concerns and issues of implementing natural gas as
a major source of energy is the potential externalities that natural gas can present to our society. As
demand of natural gas will substantially increase, the country will have to prepare enough corresponding
supply by fracking more gas reserves. While environmental externalities will be explained in later section
of social and environmental problems, the most evident economic externalities of natural gas is damage
imposed by natural gas fracking to related real estates.25 For example, according to the case of Colorado,
real estate properties that are affected by fracking of natural gas are valued 22% less than similar
properties that are unaffected by fracking. In addition, some homeowners of Colorado who signed leases
for drilling natural gas near their property had to encounter depreciation of their property values by 85%.
These damages in property values are incurred due to potential buyers’ fear of exposure to hazardous
21 "Economic/Socioeconomic Issues." Penn State Extension. http://extension.psu.edu/naturalgas/issues/economic (accessed December 1, 2012). 22 "U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012-2030)." Wood Mackenzie . ( 2011). http://www.api.org/newsroom/upload/api-us_supply_economic_forecast.pdf. 23"Shale Gas and New Petrochemicals Investment: Benefits for the Economy, Jobs, and US Manufacturing."Economics & Statistics American Chemistry Council. (2011). http://www.americanchemistry.com/ACC-Shale-Report. 24 “Energy Prices by Sector and Source, United States, Reference Case.” US Energy Information Administration. http://www.eia.gov/oiaf/aeo/tablebrowser/. 25"Measuring the Impact of Coalbed Methane Wells on Property Values." BBC Research & Consulting. (2001 ). http://www.savecoloradofromfracking.org/harm/Resources/Property Values - Coal Bed Methane in SW CO.pdf.
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materials from gas refineries, and expectation of possible air and noise pollutions.26
Such significant negative economic impact of fracking does not end at plummeting people’s
property values. The substantial decrease of real estate property values results in additional problems and
concerns to our society as it can cause mortgage disaster and home insurance challenges.
In most cases, money borrowers are unaware of the fact that their mortgages can be foreclosed if
they sign fracking leases near their homes without notifying the mortgage banks. Unfortunately, such
information is not well known to numerous mortgage borrowers and nation-wide mortgage foreclosures
have happened in the US. The difficulty of obtaining mortgage is not the only problem that homeowners
with houses near fracking grounds encounter. Such avoidance of homeowners near fracking zones also
occurs in home insurance industry as well.
3. Social Overview Furthermore, there are social advantages and disadvantages associated with replacing the current
sources of energy for vehicles with natural gas.
3.1. Social Advantages
There are various social advantages associated with operating vehicles with natural gas. The most
observable pertains to the environmental advantage of natural gas. As previously examined, the vehicular
pollution will be reduced, as natural gas will substitute most of the current pollutants. Cleaner air to
breathe and a healthier atmosphere are the utmost benefits of natural gas to the society. The main
emissions from the combustion of natural gas are carbon dioxide and water vapor in which is already
what humans breathe. Compared to oil, natural gas releases lower levels of carbon dioxide, sulfur,
nitrogen oxides and ash. By emitting fewer harmful chemicals into the air, natural gas can help alleviate
different environmental problems. First of all, combustion of natural gas releases fewer greenhouse gas
emissions. Increase in greenhouse gas emission will increase temperature in the globe, thus expediting
global warming;; thus, the usage of natural gas will be beneficial to environment. Secondly, since natural
gas combustion produces lower level of nitrogen oxides and particulate matter, it will contribute
significantly less to smog formation and acid rain, preventing damages to crops, wild life, and humans’
respiratory systems.
Most importantly, natural gas can be used in the transportation sector –one of the greatest
contributors to air pollution in the United States. When applied in the transportation sector, the
environmental benefits of natural gas mentioned above can be maximized and reduce the overall air
26Cobb, Kurt. "How Fracking Threatens the Health of the Mortgage Industry." OilPrice.Com. (2012 ). http://oilprice.com/Energy/Natural-Gas/How-Fracking-Threatens-the-Health-of-the-Mortgage-Industry.html.
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pollutions in the United States.
3.2. Social Disadvantages
Despite the mentioned and implicated benefits, the social costs incurred by natural gas
replacement are substantial.
First, methane levels are found to be very high in the wells. Duke University’s study found the
level of methane gas surrounding the fracking sites to be 17 times higher on average, compared to the
counterpart found near normal, safe-to-drink wells. In May 2011, a study examining methane
concentration in 60 water wells in Pennsylvania and New York was conducted. Results indicated
significantly high levels of methane within one kilometer of hydraulic fracturing site, leading to
arguments that identified hydraulic fracturing as the main cause of explosions in various sites, such as
Pittsburg and Dimock.27 Such argument is not unfounded, since methane is known to be highly
inflammable.
What further concerned the residents was the potential impact of highly concentrated methane in
the atmosphere and in drinking water on human health. According to the Wisconsin Department of Health
Studies, however, the level of methane in drinking water is not as serious a problem as that in the
atmosphere. Methane evaporates quite quickly, and thus the level of methane in the drinking water is
usually not as significant.28 Thus, residents would be directly exposed to the methane when they inhale
the gas. Acute health consequences may follow. Such effects include frostbite when there is direct skin
contact with methane. Increase in methane level in the atmosphere also leads to decrease in oxygen in the
atmosphere, since methane leads to asphyxiation. When the percentage of methane in the atmosphere
increases to 14% of the breathable air, then the amount of oxygen in the air decreases to below 18%,
which can result in suffocation. The symptoms of such condition are headache, dizziness, nausea, loss of
coordination and judgment, and increased breathing rate. Ultimately, such health consequences can lead
to permanent health damages to the central nervous system, brain and other organs.29
Other chemicals apart from methane are also suspected to be in the fracking water. According to
the residents in the drilling areas, the way in which the drillers unleash the gas could potentially lead to
the leakage of such chemicals. During the process in which the fracking water is pulled, fractures are also
propagated upward so that gas chemicals escape. 30 What makes this issue more serious is that the
chemicals have not been fully disclosed. However, previous tests have detected benzene, which has been
27 Wickens, Jim . "Special report US natural gas drilling boom linked to pollution and social strife." The Ecologist. (2010 ). http://www.theecologist.org/trial_investigations/687515/us_natural_gas_drilling_boom_linked_to_pollution_and_social_strife.html. 28 "Methane ." Wisconsin Department of Health Resources. http://www.dhs.wisconsin.gov/eh/chemfs/fs/Methane.htm. 29 "Right to Know Hazardous Substance Fact Sheet: Methane." http://nj.gov/health/eoh/rtkweb/documents/fs/1202.pdf. 30 “Implications of Greater Reliance on Natural Gas for Electricity Generation”. Aspen Environmental Group. June 2010.
14
noted to cause genetic issues, and radium, which could be a potential cause of explosion and blowouts. 31
Fracturing companies also insert chemicals, such as biocide, into the water to enhance performance;; such
chemicals may have health-related side effects when consumed. Besides, fracturing water picks up
naturally occurring chemicals as well.32
Such social issues represent externalities that are not necessarily reflected in the relatively cheap
price of natural gas. The social costs that natural gas inflicts on the society are substantial and should not
be ignored. However, it is important to note that such social issues are difficult to approach in the first
place not because the problems themselves are hard to resolve but because the issues have not surfaced
entirely.
31 Wickens, Jim. "Special report US natural gas drilling boom linked to pollution and social strife." The Ecologist. http://www.theecologist.org/trial_investigations/687515/us_natural_gas_drilling_boom_linked_to_pollution_and_social_strife.html. 32 Kerr, Richard A. “Natural Gas from Shale Bursts onto the Scene”. Science Magazine, Vol 328. June 25, 2010.
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III. ANALYSIS 1. Cost-Benefit Analysis Framework This paper examines the feasibility of replacing petroleum-based vehicles with natural gas
vehicles through a cost-benefit analysis. Prior to conducting an analysis, various assumptions had to be
made in order to resolve ambiguity and establish coherence of multiple aspects of the research. The areas
of this study include the analyses on the following topics: price difference, infrastructural changes, and
various externalities. Specific assumptions for each analysis are included in respective analysis sections of
the paper. The following assumptions are applicable to all research areas.
The main framework of this research was constructed as: αf(x) + e, where
f(x) = total benefit – total cost (quantifiable)
α= efficiency
e= net quantifiable externalities =(positive externalities – negative externalities)
Analysis under f(x)
Net profit from price competency of natural gas
Infrastructural cost of converting to natural gas vehicle
Analysis under α
Survey analysis to calculate efficiency of natural gas vehicle
Analysis under e
Net emission benefit from converting to natural gas vehicle
Total water loss from extracting additional natural gas to support increasing demand
of natural gas
Detailed descriptions of each variable are mentioned on each following corresponding section’s
analysis.
2. General Assumptions 1. The replacement of petroleum-based vehicles by natural gas vehicles occurs from 2012 to
2035.
2. By 2035, natural gas vehicles will consume 49.6% of total natural gas consumption in the
United States.
3. The analysis focuses on producing a skeletal framework model to analyze the most popularly
discussed cost and benefit of natural gas vehicles.
4. Natural gas is the main energy source of vehicles in the future – energy usage in other
16
0
5
10
15
20
25
30
35 Liquefied Petroleum Gases
E85 8/
Motor Gasoline 2/
Jet Fuel 9/
Distillate Fuel Oil 10/
Residual Fuel Oil
Figure 8. EIA Projection of Transportation Sector Energy Consumption by Fuel Types
alternative energy sources, including but not limited to electric, hydrogen cell, and solar
energy, are kept constant at the current rate.
5. The dollar unit used in the analysis is scaled to 2010-dollar value.
6. The inflation rate is set at 2%.
7. The per annum amount of petroleum-based vehicles replaced by natural gas vehicles is held
constant.
8. Any usage of natural gas in sectors other than vehicle-specific transportation is projected
according to the current EIA estimates.
9. The current EIA estimate is the most accurate projection of natural gas development, given the
contemporary data.
3. Economic Savings Analysis: Price Difference in the Transportation Sector In this section, the effect of implementing natural gas as the main source of fuel on total
transportation operating cost will be examined.
Figure 8 depicts the U.S. Energy Information Administration’s projection of transportation
sector’s energy consumption by fuel types. EIA projected that the consumption of petroleum-based
transportation energy sources—LPG, Motor Gasoline, Jet Fuel, and Distillate Fuel Oil—would increase at
a growth rate of approximately 1.10%, and that the consumption of natural gas would increase at a growth
rate of 5.70% from 2010 to 2035.
The projected consumption amounts determined by the EIA were used to calculate the net profit of
transportation operation costs. In determining the net profit, it was assumed that all consumption of
17
petroleum-based fuels would be replaced by natural gas consumption.
To calculate the net profit of using NGV instead of petroleum based vehicles, the compounded
annual growth rate of natural gas consumption was initially calculated. However, such measure, as
shown in Figure 9, yielded dramatic results and, as a result, was rule out, as the consumption of
petroleum-based fuels decreased exponentially.
Therefore, a different approach was conducted. The transformation of fuel consumption from
2010 to 2035 was implemented through a constant amount change by fuel types. Figure 10 depicts the
annual consumption change (in quadrillion btu) of petroleum-based fuels and natural gas.
Annual Change in Consumption (in quadrillion btu)
Petroleum-Based Fuel -1.016
Natural Gas 1.003
0
5
10
15
20
25
30
35
Liquefied PetroleumGases E85 8/
Motor Gasoline 2/
Jet Fuel 9/
Distillate Fuel Oil 10/
Figure 9. Constant Rate Projection of Transportation Sector Energy Consumption by Fuel Types
0
5
10
15
20
25
30
35
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Projection of Constant Annual Amount Change
LiquefiedPetroleum Gases
Motor Gasoline2/
Distillate FuelOil 10/
Residual FuelOil
Pipeline FuelNatural Gas
Compressed /Liquefied NaturalGas
Figure 10. Change by Constant Amount – Projection of Transportation Sector Energy Consumption by Fuel Types
18
To calculate the net profit of implementing natural gas as the main fuel used in the transportation
sector, the prices (dollar per million btu) of different fuel types from 2010 to 2013, projected by EIA,
were used.33. As it was assumed that price trends of natural gas and petroleum based energy sources will
continue to be the same as our current status quo, the EIA’s price projection was used to predict total
energy consumption prices by the United States’ transportation sector until 2035.
The general equation used to determine the net profit is:
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑜𝑓 𝑦𝑒𝑎𝑟 𝑡 = 𝑁𝑃 =
[𝑃 𝐶 + 𝑃 𝐶 + 𝑃 𝐶 + 𝑃 𝐶 + 𝑃 𝐶 ]
−[𝑃 (𝐶 + 𝐶 + 𝐶 + 𝐶 + 𝐶 )
P = price of fuel X in year t
C = consumption of fuel X in year t
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑜𝑓 𝑃𝑟𝑖𝑐𝑒 𝐷𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 =
𝑁𝑃 = $4,828,023,378,307.80
Through this calculation, the total cumulative net profit from 2012 to 2035 was calculated to be:
$4,828,023,378,307.80
4. Infrastructural Cost Analysis Costs that can be incurred due to necessary infrastructure changes can be categorized into two parts:
natural gas vehicle conversion cost and natural gas refueling stations construction cost. 34
4.1. Assumptions
1. The number of total vehicles in the United States increases linearly in the future.
2. The ratio of natural gas vehicles also linearly increases and a complete conversion from
gasoline-powered vehicles to natural gas vehicles will be achieved by 2035.
33 Although the prices of fuel types should change in accordance with their supply and demand, our assumption is that increase in demand for natural gas corresponds to increase in supply of natural gas through more excessive fracking. In this analysis, the effect of implementing natural gas on the prices of other fuel types were disregarded under the assumption that the demand for petroleum-based fuels would remain relatively consistent (relatively consistent to the projection by EIA) in foreign countries, which would not cause dramatic changes to the prices. 34 The cost of building new natural gas vehicles is disregarded because it is hard to accurately estimate the potential technological advances, which soon will narrow the gap of prices between gasoline-powered vehicles and natural gas vehicles.
19
3. Cost will be linearly distributed from 2012 to 2035, since conversion and station construction
should happen gradually and consistently.
4. Minimum percentage of refueling stations required to meet the demand of increasing number
of natural gas vehicles is 10~20%.35
4.2. Direct Costs
4.2.a. Natural Gas Vehicle Conversion Cost
We are given the historical data of the number of vehicles in the United States from 1960 to
2010.36 We used an average growth rate of the recent 10 years (2001-2010) to project the future number
of vehicles: 1.05%. Refer to the appendix for the complete data.
In addition, we have the ratio of natural gas vehicles and gasoline based vehicles to the total
vehicles in 2012: 9.96% and 85.74%, respectively.37 The ratio of natural gas vehicles will linearly rise up
to 95.70% and there will be no gasoline-powered vehicles by 2035, in accordance with the assumptions.
Refer to the appendix for the complete data.
Natural gas conversion costs typically range from $12,000~$18,000 and we decided to use
$12,000 for a conservative calculation.38
The followings are the variables used to calculate the cost:
T: Year
NT: Number of total vehicles in year T
RT: Ratio of gasoline-powered vehicles in year T
There is only one thing we need to consider when calculating the conversion cost: conversion
cost for the currently available gasoline-powered vehicles. Since the ratio and actual number of gasoline-
powered vehicles will linearly decrease, the projection indicates that we won’t be making any more
gasoline-powered vehicles from the year 2013; currently available gasoline-powered vehicles will just be
steadily converted into natural gas vehicles and only natural gas vehicles will be increasingly built.
35 TIAX, "US and Canadian Natural Gas Vehicles Market Analysis: Compressed Natural Gas Infrastructure," 36 Research and Innovative Technology Administration (RITA), "Number of U.S. Aircraft, Vehicles, Vessels, and Other Conveyances." http://www.bts.gov/publications/national_transportation_statistics/html/table_01_11.html. 37 Stacey C. Davis, Susan W. Diegel, and RobertG. Boundy, "TRANSPORTATION ENERGY DATA BOOK: EDITION 30," Oak Ridge National Laboratory, http://info.ornl.gov/sites/publications/files/Pub31202.pdf. 38 NGVAMERICA, "Fact sheet: Converting lightduty vehicles to natural gas." Last modified 2011. http://www.ngvc.org/pdfs/FAQs_Converting_to_NGVs.pdf.
20
# of Gasoline Vehicles (2012) 219,124,051Gasoline Fueling Stations (2012) 149,374 NG Fueling Stations (2012) 1,100 NG Stations to be Built (2012 E) 21,306
Total Cost = N2012 x R2012 x $12,000
= $2,629,488,617,433.71
Yearly Cost = Total Cost / 24
= $109,562,025,726.36
4.2.b. Natural Gas Refueling Stations Construction Cost
There were 159,006 fueling stations in the United States in 2010,39 which means that there were
1467 gasoline-powered vehicles per one fueling station. In the same logic, in year 2012, since there are
219,124,051 gasoline-powered vehicles, it was projected that there would be 149,373 gas stations. In
accordance with the assumptions, the optimal ratio of the natural gas stations to the gasoline stations is
15%. Hence, there should be 24,354 natural gas stations in 2012, but in fact there are merely 1,100
stations now.40
39 Reid, Keith. "2010 MarketFacts Industry Survey." National Petroleum News, August 16, 2010. 40 Cookson, Colter. "Stations To Enable Natural Gas Powered Trucks To Go From Coast to Coast." The American Oil & Gas Reporter, November 2012.
Highway, total (registered vehicles) 255,556,134
Total Vehicle Growth Rate 1.05%
Total Natural Gas Vehicles Growth Rate 3.73%% Gasoline Vehicles 85.74%% Natural Gas Vehicles 9.96%
# Total Gasoline Vehicles 219,124,051 # Total Natural Gas Vehicles 25,443,169
Conversion Cost $2,629,488,617,433
21
NG Refueling Station Type Estimated CostCNG, small $400,000CNG, medium $600,000CNG, large $1,700,000LNG, large $1,700,000CNG/LNG, large $2,000,000Average $1,280,000
According to a report from the Department of Energy,41 the average cost of constructing a new
natural gas refueling station is $1,280,000.
The followings are the variables used to calculate the cost:
T: Year
NT: Number of total vehicles in year T
RT: Ratio of gasoline-powered vehicles in year T
There are two parts considered when calculating the construction cost: construction cost for (1)
the currently supposed-to-be-available stations (22,406 -1,100) and (2) the required natural gas stations in
the future.42
For part (1):
Cost1 = (N2012 x R2012 / 1467 x 0.15 – 1,100) x $1,280,000
= $27,271,739,573.27
For part (2): 41 Whyatt, GA. "Issues Affecting Adoption of Natural Gas Fuel in Light and Heavy-Duty Vehicles." Pacific Northwest National Laboratory. (2010). 42 The number of required natural gas stations to be built was calculated by dividing the number of total natural gas vehicles in the year 2035 and dividing this number by 1467 (which is the number of gasoline-powered vehicles per a station) and subtracted the number of currently (2012) supposed-to-be-available natural gas stations: N2035 x (0.957 - R2035) / 1467 – 22,406 = 189,585.
NG Stations to be Built (2012 E) 21,306 Cost 27,271,739,573.27$
NGVs (2035 E) 310,980,787NG Stations Required (2035 E) 211,991
NG Stations to be Built (2010-35) 189,585 Cost (2012-35) 242,668,778,697.46$
Total Cost 269,940,518,270.73$ Cost per Year 11,247,521,594.61$
22
Cost2 = (N2035 x (0.957 - R2035) / 1467 – 22,406) x $1,280,000 = $242,668,778,697.46
Total Cost = Cost1 + Cost2 = $269,940,518,270.73
Yearly Cost = Total Cost / 24 = $11,247,521,594.61
4.2.c. Total Direct Costs
According to the above analysis, the total direct cost of infrastructural change due to the increase
in use of natural gas vehicles is $2,629,488,617,433.71 + $269,940,518,270.73 = $2,899,429,135,703.44.
4.3. Indirect Costs
There are additional possible factors that do not directly discount the value of using natural gas
vehicles instead of gasoline-powered vehicles, but may have partial negative impacts. However, due to
the lack of data and current immaturity of natural gas vehicle industry, the costs they may incur cannot be
entirely quantified. The following is the list of the factors.
Cost of destructing (or recycling) the gasoline refueling stations
Cost of destructing (or recycling) the petroleum refineries
Cost of destructing (or recycling) the gasoline pipelines
Cost of constructing new natural gas refineries
Cost of constructing new natural gas pipelines
5. Externality Analysis On top of the direct costs and benefits discussed above there are other indirect costs associated
with pursuing NGV conversion. As previously defined, direct costs and benefits are the ones that rise
from an action or an event that a private individual would voluntarily take or cause as a process of NGV
conversion. On the other hand, indirect costs are the ones that rise from an action or an event that is
initiated by the government and any governmental organizations. In this section, the paper attempts to
quantify the major indirect costs that rise as the U.S. pursues the desired NGV conversion.
5.1. Quantifiable Externalities
5.1.a. Environmental Benefit of Natural Gas Vehicles
23
Vehicles emit harmful greenhouse gases into the atmosphere. Of such greenhouse gases, the
three most significant are carbon dioxide, methane and nitrous oxide. Allegedly, natural gas vehicles emit
less of these greenhouse gases compared to other fuel sources, and is thus claimed to be more
environmentally favorable. According to NGV America, converting one refuse truck from diesel to
natural gas is equivalent of taking as many as 325 cars off the road in terms of pollution reduction.
However, while natural gas vehicles emit less carbon dioxide and nitrous oxide, they emit more methane.
This section of the paper investigates whether this setback is outweighed by the benefits of gas emission
reduction;; using the data available, the change in costs of each greenhouse gas emissions was quantified
and thus compared. The next section elaborates on how such calculations and comparisons were
conducted. This way, we aimed to derive the close-to-exact benefit or loss that the natural gas vehicles
could bring to the environment. But it must be acknowledged that some environmental benefits of natural
gas vehicles cannot be measured. Such benefits could not be incorporated into our equation but are
understood to have significant presence. Natural gas engines not only are less noisy, leading to less noise
pollution, but also are relatively safer.
5.1.a.i. Measuring the Reduction in Greenhouse Gases: General Methodology
This analysis attempts to measure the environmental benefit derived from converting petroleum
gas vehicles to natural gas vehicles. The reduction of greenhouse gas emission from this conversion was
quantified and changed into dollar terms. To do so, two scenarios were defined. In Scenario 1, the year
2012’s percentage of natural gas vehicles with respect to the total number of vehicles was maintained
until 2035. In Scenario 2, the replacement of petroleum vehicles by natural gas vehicles was
implemented. Thus, in this second scenario, the percentage of natural gas vehicles with respect to the total
number of vehicles was assumed to increase linearly and the percentage of petroleum vehicles to decline
linearly. With this assumption, the projection of how the natural gas vehicle percentage would increase
until 2035 was made. The exact percentage numbers for this projection are included in the appendix.
Several other assumptions were made. Prices of emission may change based on unpredictable
factors such as the economic situation at the time or on the investor preferences. Thus, the cost of
emission per mile of 2012 was assumed to be applied until year 2035. Another assumption made was the
constant number of miles driven by each driver. The average number of miles was acquired and this
number was used from 2012 until 2035. Lastly, the ratio of vehicle to driver in the United States, which
was 1.3 vehicles to one driver, was predicted to stay the same from 2012 to 2035.
The cost of greenhouse gas emission was computed for each scenario. The cost from scenario 1
subtracted by the cost from scenario 2 would provide the total amount of environmental benefit derived
from the replacement strategy. The sum of all the environmental cost savings for each greenhouse gas
24
would yield the total environmental savings.
The following table shows the notations used for the formulas for such calculation:
Other information that should be used for such calculation is:
The average proportion of vehicles to driver in the United States was 1.3 vehicles per each
driver.
The average amount of miles driven each year by each driver was 13,350 miles.43
Since only the numbers of natural gas vehicles and petroleum-based vehicles are being changed
in scenario 2, the change in amount of gas emitted from these two types of vehicles was calculated.
Moreover, all the results were converted into dollar amounts to demonstrate the significance of the
change.
43 U.S. Energy Information Administration. "Annual Energy Outlook 2012 with Projection to 2035." (2012).
Notations Units Definitions
EX Gram/mile Emission of greenhouse gas X per mile, where 𝑋 =
𝐶𝑂 , 𝐶𝐻 , 𝑎𝑛𝑑 𝑁 𝑂
𝐍𝐆𝐕𝐭𝐒𝟏
Percentage Percent of Natural Gas Vehicles with respect to the total
number of vehicles in year t in scenario 1
𝐏𝐕𝐭𝐒𝟏
Percentage Percent of Petroleum-based Vehicles with respect to the total
number of vehicles in year t in scenario 1
𝐍𝐆𝐕𝐭𝐒𝟐
Percentage Percent of Natural Gas Vehicles with respect to the total
number of vehicles in year t in scenario 2
𝐏𝐕𝐭𝐒𝟐
Percentage Percent of Petroleum-based Vehicles with respect to the total
number of vehicles in year t in scenario 2
𝐕𝐭
Number Total number of vehicles in year t
𝐏𝐗
$/gram Price of greenhouse gas X per gram emitted, where 𝑋 =
𝐶𝑂 , 𝐶𝐻 , 𝑎𝑛𝑑 𝑁 𝑂
∆𝐄𝐂𝐗𝐭 $ Difference in Emission Cost for Greenhouse Gas X in year t
(Emission cost of scenario 1 – Emission cost of scenario 2),
where 𝑋 = 𝐶𝑂 , 𝐶𝐻 , 𝑎𝑛𝑑 𝑁 𝑂
25
The formulas for calculating the environmental costs reduced from decrease in carbon dioxide
emission are as follows:
For Scenario 1
For Natural Gas Vehicles:
𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑁𝐺𝑉
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑁𝐺𝑉 ∗ 𝐸 ∗ 𝑃
For Petroleum-based Vehicles:
𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑃𝑉
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑃𝑉 ∗ 𝐸 ∗ 𝑃
For Scenario 2
For Natural Gas Vehicles:
𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑁𝐺𝑉
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑁𝐺𝑉 ∗ 𝐸 ∗ 𝑃
For Petroleum-based Vehicles:
𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑃𝑉
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑃𝑉 ∗ 𝐸 ∗ 𝑃
26
∆𝐸𝐶 =
13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑃𝑉 ∗ 𝐸 ∗ 𝑃 +
13,350 𝑚𝑖𝑙𝑒𝑠𝑑𝑟𝑖𝑣𝑒𝑟
∗ 𝑉 ∗ 𝑁𝐺𝑉 ∗ 𝐸 ∗ 𝑃
−13,350 𝑚𝑖𝑙𝑒𝑠
𝑑𝑟𝑖𝑣𝑒𝑟∗ 𝑉 ∗ 𝑃𝑉 ∗ 𝐸 ∗ 𝑃 +
13,350 𝑚𝑖𝑙𝑒𝑠𝑑𝑟𝑖𝑣𝑒𝑟
∗ 𝑉 ∗ 𝑁𝐺𝑉 ∗ 𝐸 ∗ 𝑃
Where X refers to one of the three greenhouse gases, respectively. 𝑋 = 𝐶𝑂 ,𝐶𝐻 , 𝑎𝑛𝑑 𝑁 𝑂.
To calculate the total environmental savings, the following equation was used:
𝐸𝐶 = ∆𝐸𝐶 + ∆𝐸𝐶 + ∆𝐸𝐶
If this end amount turned out to be positive, then switching to natural gas vehicles would be
environmentally beneficial.
5.1.a.ii. Emission Analysis: Carbon Dioxide
Carbon dioxide, a primary cause of the greenhouse gas effect, is emitted during the process of
fossil fuel combustions. According to studies from EPA, 31% of total U.S. Carbon dioxide emissions
result from transportation sector. The amount of heat retained by the Earth’s atmosphere changes
dramatically, and this will eventually cause global warming. 44 Although carbon dioxide is naturally
present in the air, for each 1 degree Celsius increase in temperature due to carbon dioxide retaining heat,
there are more than 20,000 human deaths a year worldwide. 45 Undoubtedly, excess carbon dioxide
emission is detrimental to our health and environment. If replacing petroleum vehicles with natural gas
vehicles could reduce carbon dioxide emission, the environment would benefit significantly from such
implementation.
From the EPA, the following values were found to be plugged into the formulas:
ECO2, PV = 4.23 grams/mile
44 United States Environmental Protection Agency, "Greenhouse Gas Emissions (Carbon Dioxide Emissions)." http://www.epa.gov/climatechange/ghgemissions/gases/co2.html. 45, Laura. Treevolution, "Carbon dioxide emissions are bad for human health, study finds." Last modified 2008. http://treevolution.co.za/2008/01/carbon-dioxide-emissions-are-bad-for-human-health-study-finds/.
27
ECO2, NGV= 3.384 grams/mile
PCO2 = $30/ton
The price of carbon dioxide was adjusted for the inflation rate of =2% for the subsequent years.
This was computed by dividing the current price by (1+)t-2012 for each year, where t is the year number.
Scenario 1
When the carbon dioxide emission values for the two types of vehicles and the projected increase
in %NGV and %PV for Scenario 1 are substituted into the formula developed in Section 6.3.1, it was
found that the carbon dioxide emitted increased from 1.05682e13 grams in 2012 to 1.34381e13 grams in
2035. Plugging in the price into the formula, the calculations showed that the emission cost of carbon
dioxide would increase from $349,483,706.15 in 2012 to $700,754,981.45 in 2035.
Scenario 2
With similar computations, it was found that the carbon dioxide emission would be 1.04027e13 in
2012 and this emission would increase to 1.08069e13 grams by 2035, which is significantly less than in
scenario 1. The formulas from the Section 6.3.1 were used;; the cost of carbon dioxide emission would
increase from $344,009,440.37 in 2012 to $563,548,333.82 in 2035 under this scenario.
The emission costs of scenario 2 were subtracted from those of scenario 1 in each year to measure
the difference. This cost reduction increased from $5,474,265.78 in 2012 to merely $137,206,647.63 in
2035. When the reduced costs were summed from 2012 to 2035, we arrived at the total amount we would
be saving in scenario 2 as compared to scenario 1: $1,420,077,900.50.
28
5.1.a.iii. Emission Analysis: Methane
Methane (CH4) is another prevailing greenhouse gas. It is mostly emitted by natural gas system
leakage and from the livestock. Methane is the primary component of natural gas and it is highly emitted
into the atmosphere during the production, transportation and the general usage of natural gas. Methane is
harmful because it is more efficient in ensnaring radiation than CO2. In a 100-year period, methane will
have a greater impact on climate change compared to carbon dioxide, and thus, methane emission should
also be avoided if possible.46 Having realized that methane is another major component of greenhouse gas
which is damaging to earth, we considered how beneficial replacing petroleum vehicles to natural gas
vehicles would be by using similar method we implemented for the case of Carbon dioxide.
From the EPA, the values to be plugged into the formulas were found:
ECH4, PV = 3.5148 grams/mile
ECH4, NGV = 14.0592 grams/mile
PCH4 = $205/ton
Similarly, for the following years’ price of methane, the current price of methane was adjusted for
the inflation rate of =2%. The 2012 methane price was divided the current price by (1+)t-2012 for each
year, where t is the year number.
46 United States Environmental Protection Agency, "Greenhouse Gas Emissions (Methane Emissions)." http://www.epa.gov/climatechange/ghgemissions/gases/ch4.html.
$0.00
$200,000,000.00
$400,000,000.00
$600,000,000.00
$800,000,000.00
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Scenario 2 TotalCost ofEmission
Scenario 1 TotalCost ofEmission
Figure 11. Emission Costs of Scenario 1 and Scenario 2 for Carbon Dioxide
29
Scenario 1
Plugging in the methane emission values for the two types of vehicles and the projected increase
in %NGV and %PV for Scenario 1 into the formula developed in Section 6.3.1, it was found that the
methane emitted increased from 9.51929e12 grams in 2012 to 1.21043e13 grams in 2035. Also plugging in
the price into the formula, the calculations showed that the cost of methane emission would increase from
$2,151,109,598.77 in 2012 to $11,609,416,370.54 in 2035.
Scenario 2
Similar computations were performed and it was found that the methane emission would be
1.15825e13 grams in 2012 and this emission would increase to 4.48985e13 grams in 2035. When the price
of methane was plugged into the formula of Section 6.3.1, the cost of methane emission would increase
from $2,617,350,097.85 in 2012 to $43,062,835,141.88 in 2035.
To calculate the change in costs due to the replacement strategy, the costs of scenario 2 were
subtracted from those of scenario 1 in each year. Since natural gas vehicles emit more methane than
petroleum vehicles, there was an increase in the emission cost for methane when replacement was
implemented. This increase in cost went from $466,240,499.08 in 2012 to $31,453,418,771.34 in 2035.
When all of these cost differences were summed up, the increased incurred costs came out to be
$216,000,235,707.51.
$0.00
$5,000,000,000.00
$10,000,000,000.00
$15,000,000,000.00
$20,000,000,000.00
$25,000,000,000.00
$30,000,000,000.00
$35,000,000,000.00
$40,000,000,000.00
$45,000,000,000.00
$50,000,000,000.00
Scenario 1 TotalCost of Emission
Scenario 2 TotalCost of Emission
Figure 12. Emission Costs of Scenario 1 and Scenario 2 for Methane
30
5.1.a.iv. Emission Analysis: Nitrous Oxide
A transparent gas with a slightly sweet odor, nitrous oxide has the atmospheric lifetime of about
120 years and a strong heat trapping effect. This heat trapping effect is known to be approximately 310
times stronger than that of carbon dioxide per molecule (EPA). Because of the damage nitrous oxide
poses on the environment, the cost of the gas is approximated to be $5,900 per ton, which is significantly
larger than the prices of the other two greenhouse gases analyzed above. According to the EPA, the
concentration of nitrous oxide in our atmosphere has been increasing by 0.25% every year for the past
decade. Clearly, nitrous oxide is a threat to our environment. If replacing gasoline vehicles with natural
gas vehicles could reduce the amount of nitrous oxide in our atmosphere, then this environmental benefit
would be quite important.
From EPA, it was found that:
EN2O, PV = 1.4422 grams/mile
EN2O, NGV = 0.1875 grams/mile
PN2O = $5,900/ton
For the following years’ price of methane, the current price of nitrous oxide was adjusted for the
inflation rate of =2%. The 2012 nitrous oxide price was divided the current price by (1+)t-2012 for each
year, where t is the year number.
From these data alone, we could predict that replacing the petroleum-based vehicles with natural
gas ones would significantly reduce the nitrous oxide emission.
Scenario 1
Plugging in the nitrous oxide emission values for the two types of vehicles and the projected
increase in %NGV and %PV for Scenario 1 into the formula developed in Section 6.3.1, it was found that
the nitrous oxide emitted increased from 3.29428e12 grams in 2012 to 4.50104e12 grams in 2035.
Substituting the price into the formula, the calculations showed that the cost of nitrous oxide would
increase from $23,029,302,018.27 in 2012 to $46,176,396,279.94 in 2035.
Scenario 2
Similar computations were performed and it was found that the nitrous oxide emission would
only be 5.98743e11 grams by 2035, which is significantly less than in scenario 1. The formulas from the
Section 6.3.1 were used;; the cost of nitrous oxide emission would decrease from $22,545,555,801.25 in
2012 to $6,142,534,574.91 in 2035 under this scenario.
31
These emission costs were compared between the two scenarios;; the costs of scenario 2 were
subtracted from those of scenario 1 in each year to understand the difference. This cost reduction
increased from $1,597,269,542.77 in 2012 to merely $40,033,861,705.03 in 2035. When the reduced
costs were summed from 2012 to 2035, we arrived at the total amount we would be saving in scenario 2
as compared to scenario 1: $414,347,287,550.26.
5.1.a.v. Combined Environmental Savings Analysis
The table below summarizes our findings from analyzing the changes in emission of each
greenhouse gases:
Summary of Environmental Savings Analysis
Total Change in CO2 Emission Costs $1,420,077,900.50 Total Change in CH4 Emission Costs ($216,000,235,707.51)
Total Change in N2O Emission Costs $414,347,287,550.26
Aggregate Total Savings $199,767,129,743.24
$0.00
$5,000,000,000.00
$10,000,000,000.00
$15,000,000,000.00
$20,000,000,000.00
$25,000,000,000.00
$30,000,000,000.00
$35,000,000,000.00
$40,000,000,000.00
$45,000,000,000.00
$50,000,000,000.00
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Scenario 1 TotalCost ofEmissionScenario 2 TotalCost ofEmission
Figure 13. Emission Costs of Scenario 1 and Scenario 2 for Nitrous Oxide
32
When we replace the gasoline vehicles with natural gas vehicles by 2035, emission costs are
reduced by roughly 198 billion dollars. Although emission costs of methane are increased, the reductions
in carbon dioxide and nitrous oxide emission costs far outweigh the increase, resulting in quite a
significant aggregate saving.
5.1.a.vi. Other Environmental Benefits
As mentioned in the introduction, natural gas vehicles bring other environmental benefits that
cannot be measured. These benefits are important and should not be dismissed. Since we could not
incorporate them into our computation, we will mention them here. If these factors could be quantified
and were thus included in our calculation, the savings from greenhouse gas emission reduction could
potentially be greater than our end result.
Natural gas vehicles produce less noise pollution compared to other vehicles. This is mainly due
to the way the engine is run: gasoline engines are inherently noisier than natural gas engines. The noise
reduction may not seem significant on the surface, but when individual accounts are studied, the benefits
cannot be ignored. Noise pollution has a lot of negative side effects on the society: it damages not only
our health and wellbeing but also the condition of structures like buildings, roads, tunnels and bridges.
Noise pollution is known to be a source of annoyance, sleep disturbance, hypertension and ischemic heart
disease and even reduced cognitive functioning. By reducing noise pollution level, natural gas vehicles
could also reduce these side effects and thus have a greater positive impact on the environment and the
society.
Another aspect that cannot be neglected is the relatively safer nature of natural gas. Natural gas is
non-corrosive and non-toxic. Also, natural gas is lighter than air, so it doesn’t pool like other liquid fuel
but will rise. Hence, the chance of a fire in the event of a leak is quite slim;; after all, natural gas is as
flammable as diesel, but ignites only under concentrations of 5% to 15%. The safety of natural gas
vehicles has a proven track record. Over 8,000 natural gas fleet vehicles traveling almost 180 million
miles were studied, and there were only seven fire incidents and only one of them was directly caused by
failure of the natural gas system.
5.1.b. Water Loss Analysis
5.1.b.i. Industrial Water Loss
The first major externality associated with pursuing the desired NGV conversion is the industrial
water loss that occurs each time a well is fractured.47 Large amount of water is used to create fracking
47 WHYY, "Some fresh water disappears down a hole in ‘fracking'." Last modified 2010. http://whyy.org/cms/news/health-science/2010/09/29/so
33
fluids, which are required to carry proppants to the desired depth. Per each fracking well, various amount
of industrial water is used during the well’s useful lives, depending on the size of each project. As
previously explained, fracking fluids that have fulfilled their responsibility become highly toxic and non-
renewable waste fluids called “flowback”. These highly toxic fluids are currently considered as non-
renewable and they are also non-reusable in any other industrial process. It is an externality, since there
are loopholes in regulations that allow the fracking companies to avoid responsibilities in purifying the
wastewater and no private individual is likely to voluntarily make effort to compensate for the water loss.
Functions and variables:
For each year of projection, the following equation is employed to calculate the dollar amount of
industrial water loss due to initial drilling of a fracking site:
Functions:
(a) 𝑓(𝑥) = 𝑊 ∗ 𝑁 ∗ 𝐶 ∗ 𝑉
(b) 𝑊 = 𝑃 ∗ 𝐹
(c) 𝑁 = 𝑁 (1 + 𝑔)
(d) 𝑔 = ( + )
(e) V =
(f) 𝑆𝑢𝑚 = ∑20352012 𝑓
(𝑥)
Variables:
𝑊 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑤𝑎𝑡𝑒𝑟 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑎𝑛 𝑖𝑛𝑡𝑖𝑎𝑙 𝑑𝑟𝑖𝑙𝑙𝑖𝑛𝑔 (𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡)
𝑥 = 𝑃𝑟𝑜𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑦𝑒𝑎𝑟 𝑁 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. 𝑝𝑒𝑟 𝑒𝑎𝑐ℎ 𝑝𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝑦𝑒𝑎𝑟 𝑥 𝐶 = 𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑖𝑛𝑑𝑢𝑠𝑡𝑟𝑖𝑎𝑙 𝑤𝑎𝑡𝑒𝑟 𝑝𝑒𝑟 𝑈𝑆 𝑔𝑎𝑙𝑙𝑜𝑛 𝑃 = % 𝑜𝑓 𝑤𝑎𝑡𝑒𝑟 𝑐𝑜𝑚𝑝𝑜𝑠𝑖𝑡𝑖𝑜𝑛 𝑖𝑛 𝑓𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑓𝑙𝑢𝑖𝑑 𝑝𝑒𝑟 𝑙𝑖𝑡𝑒𝑟. 𝐹 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑓𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑓𝑙𝑢𝑖𝑑𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑎𝑛 𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑑𝑟𝑖𝑙𝑙𝑖𝑛𝑔 𝑔 = 𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑔𝑟𝑜𝑤𝑡ℎ 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. (𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡) 𝑁 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑥 𝑉 = % 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑁𝐺𝑉𝑠 𝑜𝑢𝑡 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑁𝐺 = 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑁𝐺𝑉𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑔𝑖𝑣𝑒𝑛 𝑦𝑒𝑎𝑟 𝑥
me-fresh-water-disappears-down-a-hole-in-‘fracking’/46978.
34
𝑁𝐺 = 𝑡𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. 48
Assumptions
W stays constant, assuming that there is no external factor, such as technological
development, that will alter the amount of water required in initial drilling. The value of W
used in the calculations is a 2012 estimate.
N does not grow in any proportion to the NGV conversion rate but grows according to its
average historical growth rate g because: o Each well has different useful lives and amount of natural gas storage. o Currently producing wells will still be producing natural gas in the future until their
storage is depleted but;; o It was difficult to assume the quantifiable relationship between the number of wells and
the number of NGVs, since the percentage of natural gas produced from each fracking
well that is used in NGVs varies across the wells.
P = 98.25%, as between 98 – 95.5% of fracking fluids are composed of water.
F = 3.1 million US gallons, as each fracking well may use between 1.2 – 5 million US gallons
of fluid during its useful life, depending on the size of the project.
N2012 = N2011 + 19,000 = 557,627
o 19,000 is the EPA estimate of the number of newly built fracking wells in year 2011
N2011 = N2010 + 16,000 = 538,627
o 16,000 is the EPA estimate of the number of newly built fracking wells in year 2011
N2010 = 522,62749
Calculations
Per annum calculations are attached separately in the appendix, as the number of projected years
was 25 and it was inefficient to show each calculation here. However, the dollar amount of industrial
water loss due to fracking per each year is shown in the following graph. Then, the accumulated total
dollar amount of industrial water loss due to fracking is calculated:
48 NaturalGas.Org, "Uses of Natural Gas." Last modified 2011. http://www.naturalgas.org/overview/uses.asp. 49 Marcellus Drilling News , "Record-Breaking 19K New Wells to be Fracked in 2012." Last modified 2010. http://marcellusdrilling.com/2012/01/record-breaking-19k-new-wells-to-be-fracked-in-2012/.
35
Discussion
The calculations showed that, in order to reach the desired proportion of NGVs by 2035, the U.S.
is expected to incur approximately $ 663,246,531,709 .00 of industrial water loss as a negative externality
or external cost. Even disregarding other sources of bias or limitations, there was one major limitation to
the above analysis. The limitation lied in the fact that the analysis did not take “produced water” into
account. “Produced water” is the water that naturally gets permeated to the surface. The problem was
that this “produced water” also contains highly toxic chemicals and they carry those chemicals up to the
surface. Thus, the amount of “produced water” should also be taken into consideration in addition to the
amount of “flowback” wastewater to calculate the dollar amount of industrial. However, as no research
dedicated to estimating the amount of “produced water” was found and as it was impossible to get an
estimate of “produced water”, since the amount of “produced water”, the number of fracking process, and
the useful life varied across the wells.
5.1.b.ii. Drinking Water Loss
The second major externality associated with pursuing the desired NGV conversion is the
drinking water loss that occurs throughout the useful life of a well. As the “flowback” and “produced
water” seep through and contaminate the ground, the source of drinking water near fracking sites gets
contaminated. Explosion also contributes to the drinking water contamination as it spreads the toxic frack
fluids around the explosion site. As studied in the attached case study, residents near fracking sites
suffered from the drinking water contamination. Thus, the following analysis attempted to quantify the
Figure 14. Industrial Water Price in Thousand USD
$-
$10,000,000,000.00
$20,000,000,000.00
$30,000,000,000.00
$40,000,000,000.00
$50,000,000,000.00
$60,000,000,000.00
Average amount of industiral water loss per a fracking well due to NGV (USD)
36
amount of drinking water that is lost due to post-fracking contamination. Drinking water loss due to
fracking is a serious externality caused by natural gas production that has been in the center of regulatory
disputes and further scientific studies. It is an externality, since there are loopholes in regulations, such as
the Safe Water Act, that allow the fracking companies to not be held responsible for contaminating
drinking water and a private individual is unlikely to voluntarily take initiatives to compensate for the
drinking water loss.
Functions and variables:
For each year of projection, the following equations were employed to calculate the dollar
amount of industrial water loss due to initial drilling of a fracking site:
Functions:
(a) 𝑓(𝑥) = 𝑃 ∗ 𝑊 ∗ 𝑁 ∗ 𝐶 ∗ 𝑉
(b) 𝑃 =
(c) 𝑁 = 𝑁 (1 + 𝑔)
(d) 𝑔 = ( + )
(e) V =
(f) 𝑓(𝑥) = ∑20352012 𝑓
(𝑥)
Variables
𝑃 = 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑎𝑓𝑓𝑒𝑐𝑡𝑒𝑑 𝑁 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑆𝑢𝑠𝑞𝑢𝑒ℎ𝑎𝑛𝑛𝑎, 𝑃𝐴, 𝑖𝑛 2012 𝑃 = 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝑆𝑢𝑠𝑞𝑢𝑒ℎ𝑎𝑛𝑛𝑎, 𝑃𝐴, 𝑖𝑛 2012 𝑊 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑎𝑖𝑙𝑦 𝑤𝑎𝑡𝑒𝑟 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑓𝑜𝑟 𝑈. 𝑆. 𝑎𝑑𝑢𝑙𝑡 𝑥 = 𝑃𝑟𝑜𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑦𝑒𝑎𝑟 𝑁 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. 𝑝𝑒𝑟 𝑒𝑎𝑐ℎ 𝑝𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝑦𝑒𝑎𝑟 𝑥 𝐶 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑎 𝑏𝑜𝑡𝑡𝑙𝑒 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘𝑖𝑛𝑔 𝑤𝑎𝑡𝑒𝑟 𝑃 = % 𝑜𝑓 𝑤𝑎𝑡𝑒𝑟 𝑐𝑜𝑚𝑝𝑜𝑠𝑖𝑡𝑖𝑜𝑛 𝑖𝑛 𝑓𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑓𝑙𝑢𝑖𝑑 𝑝𝑒𝑟 𝑙𝑖𝑡𝑒𝑟. 𝐹 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑓𝑟𝑎𝑐𝑘𝑖𝑛𝑔 𝑓𝑙𝑢𝑖𝑑𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑎𝑛 𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑑𝑟𝑖𝑙𝑙𝑖𝑛𝑔 𝑔 = 𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑔𝑟𝑜𝑤𝑡ℎ 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. (𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡) 𝑁 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆. 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑥 𝑉 = % 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑁𝐺𝑉𝑠 𝑜𝑢𝑡 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑁𝐺 = 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑁𝐺𝑉𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑔𝑖𝑣𝑒𝑛 𝑦𝑒𝑎𝑟 𝑥
37
𝑁𝐺 = 𝑡𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑡ℎ𝑒 𝑈. 𝑆.
Assumptions
Susquehanna, PA, is fully saturated in terms of the number of fracking wells. Thus, PAff
would be a conservative estimate of the population affected by fracking.50
PAff is held constant to preserve conservative estimates.
N does not grow in any proportion to the NGV conversion rate but grows according to its
average historical growth rate g because: o Each well has different useful lives and amount of natural gas storage. o Currently producing wells will still be producing natural gas in the future until their
storage is depleted o It was difficult to assume the quantifiable relationship between the number of wells and
the number of NGVs, since the percentage of natural gas produced from each fracking
well that is used in NGVs varies across the wells.
N2012 = N2011 + 19,000 = 557,627
o 19,000 is the EPA estimate of the number of newly built fracking wells in year 2011
N2011 = N2010 + 16,000 = 538,627
o 16,000 is the EPA estimate of the number of newly built fracking wells in year 2011
N2010 = 522,627
Calculations
Per annum calculations are attached separately as an appendix, as the number of projected years
was 25 and it was inefficient to show each calculation here. However, the dollar amount of drinking
water loss due to fracking per each year is shown in the following graph. Then, the accumulated total
dollar amount of industrial water loss due to fracking is calculated:
50 We Are Power Shift. Org, "Explosion, Flaring, and More Fracking for Susquehanna County." Last modified 2012. http://www.wearepowershift.org/blogs/explosion-flaring-and-more-fracking-susquehanna-county.
38
Figure 15. Drinking Water Price in Thousand USD
$-
$500,000,000.00
$1,000,000,000.00
$1,500,000,000.00
$2,000,000,000.00
$2,500,000,000.00
$3,000,000,000.00
$3,500,000,000.00
Amount of drinking water loss per annum due to NGV (USD)
Discussion
The calculations show that, in order to reach the desired proportion of NGVs by 2035, the U.S. is
expected to incur approximately $ 32,665,720,252.00 of drinking water loss as a negative externality or
external cost. Although there was a specific reason for choosing Susquehanna to be our basis of
calculating the expected average population affected by fracking, there still lie limitations and biases in
our conservative estimate of the population affected by fracking. For example, the population of
Susquehanna may be growing, decreasing, or identical, compared to the previous years. Then, applying
the U.S. population growth rate to project future populations of Susquehanna may yield a less accurate
value.
Even disregarding other sources of bias or limitations, there is one major limitation to the above
analysis. The limitation lies in the fact that the analysis did not take “produced water” into account.
“Produced water” is the water that naturally gets permeated to the surface. The problem is that this
“produced water” also contains highly toxic chemicals and they carry those chemicals up to the surface.
Thus, the amount of “produced water” should also be taken into consideration in addition to the amount
of “flowback” wastewater to calculate the dollar amount of industrial. However, as no research dedicated
to estimating the amount of “produced water” was found and as it was impossible to get an estimate of
“produced water”, since the amount of “produced water”, the number of fracking process, and the useful
life vary across the wells.51
51 Save Colorado From Fracking, "TOXIC WASTE." Last modified 2011. http://www.savecoloradofromfracking.org/harm/toxicwaste.html.
39
Population growth rate applied to each year may be an overestimate depending on whether the
population is growing, decreasing, or identical to the previous year.
5.2. Unquantifiable externality
Besides externalities mentioned above that were numerically calculated and converted into
monetary costs, during the research, substantial externalities were found as unquantifiable. One major
unquantifiable externality is explosion resulted from fracking process. This section deliberately examines
explosion’s unquantifiable externality features.
5.2.a. Social consequences of fracking explosion
Fracking explosion leaves three main traces to the society. These consequences of explosion
bring harms to the people and society near fracking site by increasing the methane level, spilling of
fracking fluid and increase in ozone level. It is an externality, because such social damages to the society
are not monetarily compensated by those causing the harm.
Consequence of fracking explosion is that Methane level exceeds the 7mg/l, which is seven
times the human health hazard limit.52 Increase in Methane level causes asphyxiation and carbon
monoxide poisoning. Asphyxiation displaces oxygen and oxygen level below 16% can be dangerous to all
living organisms. Furthermore, Carbon monoxide poisoning causes brain damage and increase the chance
of cancer. Monetarily quantifying such health hazard issues resulting from increased methane level is
ambiguous.
Fracking explosion causes spilling of thousands of gallons of fracking fluids over containment
walls. These fracking fluids result in serious water contamination damaging fresh water reserves of local
population. For example, in Colorado, chemical spills were linked with more than 40 cases of water
contamination in 2008. Fracking fluids were transported by ground water and melted into a tributary of
the Colorado River. As explosion sizes vary depending on numerous factors and levels of water damage
are dependent on wide range of conditions, water contamination resulted from solely explosion is
unquantifiable.
Ozone level near drilling sites goes up due to toxic precursors to smog, for instance, volatile
organic and nitrogen oxides are released during the process that brings natural gas from ground to market.
It causes the protection of ozone layer to be weaker, which allows more UV rays to enter through ozone
layer. More entering of the UV rays could not be quantified in dollar amount.53
52 Shearer, Christine. Truthout, "About That Dimock Fracking Study: Result Summaries Show Methane and Hazardous Chemicals ." Last modified 2012. http://truth-out.org/news/item/8021-about-that-dimock-fracking-study-results-did-show-methane-and-hazardous-chemicals. 53 Fox, Josh. Gasland, "Hydraulic Fracturing FAQs ." http://www.gaslandthemovie.com/whats-fracking.
40
Although we were able to find how much of a methane level has increased and how much of
fracking fluid has spilled after the fracking explosion, these traces could not be numerically calculated
into the cost form, because we could not find how methane, fracking fluid or ozone level directly affect
the people and societies near the site. For instance, increase in methane level would somehow hurt
citizens living in the county, but none of the research suggest what exactly happens, or what physical or
mental problems arises from increase in methane level, which prevent us from calculating numerical cost.
Consequences that arise from fracking exploration is one clear example of how complex externalities
require complex analyses that make them unquantifiable.
6. Efficiency Analysis Thus far, the benefits and costs of natural gas vehicle implementation were analyzed and
quantified. The cost-and-benefit function was set up to study whether or not investing in natural gas
vehicles would be feasible and favorable in social, economic and technological aspects. However, there
are other inefficiencies that may hinder such implementation of natural gas vehicles and these
inefficiencies must be taken into account. To do so, efficiency coefficient represented as “” was added in
front of the cost-and-benefit function. This would be lower than one. Depending on the degree of the
inefficiencies, then, the potential profit derived from natural gas vehicles could decrease;; with a bigger ,
then this decrease would also be bigger and with a smaller , the decrease would be smaller.
The aforementioned inefficiencies may arise from a number of factors. First of all, consumers
may not be as willing to purchase natural gas vehicles for various reasons. The rather intimidating
appearance of the natural gas vehicles may not be appealing for the consumers. Furthermore, the idea of
having gas pump the vehicles itself may be intimidating for the drivers. Another factor may be the lower
driving performance of natural gas vehicles compared to vehicles of other fuels. The consumers also have
to buy these new vehicles, which are relatively more expensive. Consumers’ tendency to refrain from
natural gas vehicles may also be attributed to the negative media coverage. Secondly, the government
may be hesitant in implementing such change. Although natural gas vehicles may be environmentally and
economically beneficial, other indirect costs that will be incurred are not negligible.
To estimate this alpha, a survey was conducted. Although inefficiency from the governmental
perspective could not be measured, inefficiency arising from consumers’ perspective could be roughly
estimated by studying a focus group. Basic and factual information about natural gas vehicles were
provided to each member in the focus group;; then, the members were asked to make a choice. Would they
or would they not be for natural gas vehicles? They were also asked to provide the reason to support their
choices. The survey that was distributed to this focus group is attached in the Appendix.
The survey resulted in the conclusion that would be around 0.72. Of the hundred people
41
surveyed, seventy-two replied that they would drive natural gas vehicles and twenty-eight replied that
they would not. Since is 0.72, the effective net profit would be 0.72 times the previously computed
profit from the cost-benefit analysis. However, this alpha value is not fully comprehensive. This is
because only takes into account the inefficiency from the consumers’ perspective and not that from the
government’s. As explained above, the government may not be as willing to implement natural gas as the
main fuel source for transportation. New fuel stations must be built and these stations are extremely
expensive. Such additional cost and effort may motivate government to not support such implementation.
Also, other industries will be damaged;; other energy industries will suffer from loss as natural gas starts
dominating the market and the tourism industry will suffer as well because intense drilling activities will
damage the potential tourist areas. From the government’s point of view, such indirect damages are
unfavorable. Companies that could be harmed would also lobby against implementing natural gas
vehicles, which would also hinder action from the government’s side. With the governmental inefficiency
taken into account, our alpha may be lower. Also, only a hundred people were sampled in this study. If
more people were surveyed, the study may yield a different result.
With a more complete study of the inefficiency, a more accurate inefficiency coefficient could be
derived and thus a more accurate estimation of the net profit from the implementation of natural gas
vehicles could be computed.
42
7. Cumulative Net Profit Calculation of Main Function, 𝜶𝒇(𝒙) + 𝒆
Calculations for f(x):
Benefits
Total Net Profit of Price Difference $4,828,023,378,307.80
Cost
Total Infrastructural Cost $2,899,429,135,703.44.
Benefit - Cost
$1,928,594,242,604.36
Calculations for e:
Benefit
Total Environmental Savings $199,767,129,743.24
Cost
Total Externality Cost – Drinking Water $ 32,665,720,252.00
Total Externality Cost – Industrial Water $ 663,246,531,709 .00
Benefit - Cost
($496,145,122,217.76) Cost-Benefit Analysis Total Result:
αf(x) + e
0.72($1,928,594,242,604.36)+ ($496,145,122,217.76)
$ 892,442,732,457.38
43
8. Sensitivity Analysis
The purpose of this analysis is not only to observe how our result changes according to respective
changes in the variables but also to examine variables, to which the analysis’ results are the most sensitive
and the least sensitive.
Results from the Sensitivity Analyses
High Median Low Mean $ 1,003,718,048,660 $ 892,442,732,458 $ 781,167,416,256 $ 892,442,732,458
The results demonstrate that the output value of the conducted Cost-Benefit Analysis is the most
sensitive to the changes in Economic Savings and in Infrastructural Costs, for both the maximum and the
minimum values were obtained from the sensitivity analysis on percent change in Economic Savings and
in Infrastructural Costs.
(The calculations on the sensitivity analysis are attached separately in the appendix section of this
paper.)
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IV. CONCLUSION
1. Conclusion From the cost and benefit analysis, this paper has developed the skeleton analytic framework to
estimate profitability of implementing natural gas vehicle as the main means of transportation in the
United States. The model, produced by this paper, focuses on quantifiable costs and benefits of natural
gas vehicles including positive and negative externalities. In order to maximize accuracy and practicality
of the calculation, both efficiency and sensitivity analysis were made. The results yielded a positive net
profit in terms of the quantifiable factor, hinting at a possibility of such implementation in the future.
The key finding of this paper was the fact that economic benefit of the low price of natural gas
seems to be offset by infrastructural replacement cost. However, the monetized environmental benefit
from implementing natural gas vehicle is incomparable by any other implementation costs, driving the net
profit of implementation high.
Nevertheless, the research of this paper was conducted under substantial assumptions and
limitations. Moreover, unquantifiable externalities were out of the scope of this project, which might
have changed the outcome of the net profit calculation in this paper. In addition, with limited time and
capability, efficiency analysis survey were only based on population of 100 university members, which
can be improved with greater number of diverse survey sample sizes. In order to increase accuracy of the
cost and benefit analysis, further study on the unquantifiable externalities and a more detailed sensitivity
analysis may be beneficial.
The significance of this research paper is its construction of analytic formula to assist future study
on natural gas vehicle implementation and discovery of optimistic perspective on the future of our society
when natural gas vehicle becomes a major means of transportation.
2. Further Discussion and Limitations As calculations and analysis of costs and benefits of implementing natural gas vehicles as the
main means of transportation were made, the research had to overcome multiple limitations during the
process. Major limitations of the analysis are focused on calculating indirect cost/benefits of replacing
petroleum-based energy vehicle with natural gas vehicle. The followings are the limitations of this
analysis, which could not be accurately calculated and omitted for the simplicity of the research.
Employment: It was nearly impossible to recognize exact size of increase in employment rate due
to increasing usage of natural gas vehicle and how NGVs will damage employment rates of other industry
sectors such as conventional petroleum fuel based automobile industry
Gas Stations: In current petroleum based vehicle transportation system, there is a high
45
competition between different companies and individual gas stations, driving up the number of gas
stations in our society. For this research paper’s purpose, the minimum number of natural gas stations to
support increasing usages of natural gas vehicles was calculated. It is up to the companies to increase
number of gas vehicles. Nevertheless, the calculation method this paper is based on proportion of gas
stations in current number of vehicles.
Refineries/Gas Well: Each refinery and gas well of natural gas possess different capacity to
extract and process natural gas. Such capacity cap can be significant enough to distort the total number of
refineries and gas well required. Moreover, technological advances in the future can also decrease the
number of refineries/gas wells required to support increasing number of NGVs. The paper calculated the
number of refineries/gas well required based on average natural gas extraction/production amount from
current refineries and gas wells of the United States.
Relationships with other alternative energy sources: Development of natural gas vehicle sectors
may represent less social emphasis on other alternative energy source based vehicle systems, including
solar, electricity, hydrogen, etc. There has not been any clear research on which energy source is the most
beneficial energy source for transportation system. As a result, gathering national focus on the NGV
sector instead of other alternative energy sources can be controversial.
46
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United States Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing." http://www.epa.gov/hydraulicfracture/.
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2035." (2012).
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susquehanna-county. Wickens, Jim. "Special report US natural gas drilling boom linked to pollution and social strife."
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APPENDIXCost-Benefit AnalysisFeasibility of Natural Gas Vehicle Implementation in the U.S.December 10th, 2012Team 4
Seohyun Stephanie ChangYechan ChoSeung Ho Andy HanHye Sung KimHae Yun ParkEugene PyunJisun Yu
Economic Savings Analysis
Price Difference AnalysisVariablesx Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Price of Liquefied Petroleum Gases $ 28.32 $ 30.84 $ 31.47 $ 31.93 $ 31.53 $ 31.75 $ 31.85 $ 32.01 $ 32.21 $ 32.46 $ 32.79 $ 33.00 $ 33.19 $ 33.38 $ 33.53 $ 33.71 $ 33.86 $ 34.11 $ 34.37 $ 34.59 $ 34.79 $ 35.10 $ 35.46 $ 35.74 Price of Motor Gasoline 27.38 27.17 28.47 29.26 29.57 29.98 30.23 30.47 30.77 31.01 31.17 31.47 31.73 32.10 32.34 32.26 32.45 32.75 33.03 33.51 34.00 33.34 33.29 33.61 Price of Diesel Fuel (distillate fuel oil) 27.34 25.15 26.69 27.56 27.92 28.31 28.62 28.76 28.98 29.25 29.47 29.71 29.94 30.42 30.67 30.57 30.78 31.07 31.38 32.01 32.56 32.00 31.94 32.40 Price of Residual Fuel Oil 14.96 16.27 17.50 18.32 18.60 18.98 19.14 19.35 19.58 19.74 20.15 20.37 20.49 20.62 20.56 20.48 20.65 20.70 20.76 20.80 20.83 20.62 20.81 20.95 Price of Natural Gas 12.04 12.23 12.29 12.40 12.35 12.33 12.36 12.43 12.50 12.71 12.95 13.10 13.18 13.29 13.38 13.47 13.52 13.59 13.68 13.78 13.90 13.99 14.26 14.51
Current Trend (In quadrillion Btu)Consumption of Liquefied Petroleum Gases 0.05 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 Consumption of Motor Gasoline 16.50 16.39 16.27 16.13 15.99 15.84 15.60 15.48 15.31 15.11 15.02 14.96 14.93 14.90 14.85 14.82 14.71 14.72 14.69 14.50 14.23 14.42 14.50 14.53 Consumption of Diesel Fuel (distillate fuel oil) 5.96 6.18 6.40 6.55 6.67 6.73 6.74 6.77 6.80 6.84 6.93 6.97 7.00 7.03 7.08 7.11 7.14 7.16 7.20 7.23 7.26 7.32 7.38 7.44 Consumption of Residual Fuel Oil 0.85 0.88 0.91 0.91 0.91 0.91 0.91 0.92 0.92 0.92 0.92 0.92 0.92 0.93 0.93 0.93 0.93 0.93 0.93 0.93 0.93 0.94 0.94 0.94 Consumption of Natural Gas 0.75 0.72 0.74 0.74 0.75 0.75 0.74 0.76 0.76 0.76 0.77 0.77 0.78 0.78 0.80 0.80 0.81 0.81 0.82 0.82 0.83 0.83 0.84 0.85
New Trend After Implementation (In quadrillion Btu)Consumption of Liquefied Petroleum Gases 0.05 0.04782618 0.04565236 0.04347854 0.04130472 0.0391309 0.03695708 0.03478326 0.03260944 0.03043562 0.0282618 0.02608798 0.02391416 0.02174034 0.01956652 0.0173927 0.01521888 0.01304506 0.01087124 0.00869742 0.0065236 0.00434978 0.00217596 2.14041E-06Consumption of Motor Gasoline 16.5 15.78263941 15.06527881 14.34791822 13.63055762 12.91319703 12.19583644 11.47847584 10.76111525 10.04375465 9.326394059 8.609033465 7.891672871 7.174312277 6.456951683 5.739591088 5.022230494 4.3048699 3.587509306 2.870148712 2.152788118 1.435427524 0.71806693 0.000706336Consumption of Diesel Fuel (distillate fuel oil) 5.96 5.700880658 5.441761316 5.182641974 4.923522633 4.664403291 4.405283949 4.146164607 3.887045265 3.627925923 3.368806581 3.109687239 2.850567898 2.591448556 2.332329214 2.073209872 1.81409053 1.554971188 1.295851846 1.036732504 0.777613163 0.518493821 0.259374479 0.000255137Consumption of Residual Fuel Oil 0.85 0.81304506 0.776090121 0.739135181 0.702180241 0.665225302 0.628270362 0.591315422 0.554360482 0.517405543 0.480450603 0.443495663 0.406540724 0.369585784 0.332630844 0.295675905 0.258720965 0.221766025 0.184811085 0.147856146 0.110901206 0.073946266 0.036991327 3.6387E-05Consumption of Natural Gas 0.75 1.752608696 2.755217391 3.757826087 4.760434783 5.763043478 6.765652174 7.76826087 8.770869565 9.773478261 10.77608696 11.77869565 12.78130435 13.78391304 14.78652174 15.78913043 16.79173913 17.79434783 18.79695652 19.79956522 20.80217391 21.80478261 22.8073913 23.81
Dollar Values of Current ConsumptionConsumption of Liquefied Petroleum Gases $ 1,416,000,000 $ 1,233,600,000 $ 1,258,800,000 $ 1,277,200,000 $ 1,261,200,000 $ 1,270,000,000 $ 1,274,000,000 $ 1,280,400,000 $ 1,288,400,000 $ 1,298,400,000 $ 1,311,600,000 $ 1,320,000,000 $ 1,327,600,000 $ 1,335,200,000 $ 1,676,500,000 $ 1,685,500,000 $ 1,693,000,000 $ 1,705,500,000 $ 1,718,500,000 $ 1,729,500,000 $ 1,739,500,000 $ 1,755,000,000 $ 1,773,000,000 $ 1,787,000,000 Consumption of Motor Gasoline 451,770,000,000 445,316,300,000 463,206,900,000 471,963,800,000 472,824,300,000 474,883,200,000 471,588,000,000 471,675,600,000 471,088,700,000 468,561,100,000 468,173,400,000 470,791,200,000 473,728,900,000 478,290,000,000 480,249,000,000 478,093,200,000 477,339,500,000 482,080,000,000 485,210,700,000 485,895,000,000 483,820,000,000 480,762,800,000 482,705,000,000 488,353,300,000 Consumption of Diesel Fuel (distillate fuel oil) 162,946,400,000 155,427,000,000 170,816,000,000 180,518,000,000 186,226,400,000 190,526,300,000 192,898,800,000 194,705,200,000 197,064,000,000 200,070,000,000 204,227,100,000 207,078,700,000 209,580,000,000 213,852,600,000 217,143,600,000 217,352,700,000 219,769,200,000 222,461,200,000 225,936,000,000 231,432,300,000 236,385,600,000 234,240,000,000 235,717,200,000 241,056,000,000 Consumption of Residual Fuel Oil 12,716,000,000 14,317,600,000 15,925,000,000 16,671,200,000 16,926,000,000 17,271,800,000 17,417,400,000 17,802,000,000 18,013,600,000 18,160,800,000 18,538,000,000 18,740,400,000 18,850,800,000 19,176,600,000 19,120,800,000 19,046,400,000 19,204,500,000 19,251,000,000 19,306,800,000 19,344,000,000 19,371,900,000 19,382,800,000 19,561,400,000 19,693,000,000 Consumption of Natural Gas 9,030,000,000 8,805,600,000 9,094,600,000 9,176,000,000 9,262,500,000 9,247,500,000 9,146,400,000 9,446,800,000 9,500,000,000 9,659,600,000 9,971,500,000 10,087,000,000 10,280,400,000 10,366,200,000 10,704,000,000 10,776,000,000 10,951,200,000 11,007,900,000 11,217,600,000 11,299,600,000 11,537,000,000 11,611,700,000 11,978,400,000 12,333,500,000 Sum 637,878,400,000 625,100,100,000 660,301,300,000 679,606,200,000 686,500,400,000 693,198,800,000 692,324,600,000 694,910,000,000 696,954,700,000 697,749,900,000 702,221,600,000 708,017,300,000 713,767,700,000 723,020,600,000 728,893,900,000 726,953,800,000 728,957,400,000 736,505,600,000 743,389,600,000 749,700,400,000 752,854,000,000 747,752,300,000 751,735,000,000 763,222,800,000 Cumulative Total $ 17,041,516,400,000
Dollar Values of Consumption Trend with ImplementationConsumption of Liquefied Petroleum Gases $ 1,416,000,000 $ 1,474,959,392 $ 1,436,679,770 $ 1,388,269,784 $ 1,302,337,824 $ 1,242,406,078 $ 1,177,083,001 $ 1,113,412,157 $ 1,050,350,067 $ 987,940,230 $ 926,704,428 $ 860,903,346 $ 793,710,978 $ 725,692,557 $ 656,065,424 $ 586,307,926 $ 515,311,286 $ 444,967,007 $ 373,644,530 $ 300,843,770 $ 226,956,056 $ 152,677,291 $ 77,159,556 $ 76,498 Consumption of Motor Gasoline 451,770,000,000 428,814,312,658 428,908,487,772 419,820,087,050 403,055,588,929 387,137,646,944 368,680,135,441 349,749,158,884 331,119,516,155 311,456,831,792 290,703,702,818 270,926,283,139 250,402,780,189 230,295,424,081 208,817,817,414 185,159,208,513 162,971,379,541 140,984,489,233 118,495,432,382 96,178,683,340 73,194,796,010 47,857,153,644 23,904,448,090 23,739,940 Consumption of Diesel Fuel (distillate fuel oil) 162,946,400,000 143,377,148,552 145,240,609,531 142,833,612,814 137,464,751,900 132,049,257,158 126,079,226,614 119,243,694,095 112,646,571,781 106,116,833,253 99,278,729,951 92,388,807,883 85,346,002,853 78,831,865,064 71,532,536,988 63,378,025,785 55,837,706,516 48,312,954,818 40,663,830,938 33,185,807,468 25,319,084,574 16,591,802,263 8,284,420,855 8,266,438 Consumption of Residual Fuel Oil 12,716,000,000 13,228,243,131 13,581,577,111 13,540,956,514 13,060,552,487 12,625,976,223 12,025,094,725 11,441,953,418 10,854,378,246 10,213,585,414 9,681,079,651 9,034,006,662 8,330,019,427 7,620,858,865 6,838,890,158 6,055,442,525 5,342,587,924 4,590,556,721 3,836,678,134 3,075,407,832 2,310,072,123 1,524,772,013 769,789,508 762,307 Consumption of Natural Gas 9,030,000,000 21,434,404,348 33,861,621,739 46,597,043,478 58,791,369,565 71,058,326,087 83,623,460,870 96,559,482,609 109,635,869,565 124,220,908,696 139,550,326,087 154,300,913,043 168,457,591,304 183,188,204,348 197,843,660,870 212,679,586,957 227,024,313,043 241,825,186,957 257,142,365,217 272,838,008,696 289,150,217,391 305,048,908,696 325,233,400,000 345,483,100,000 Sum 637,878,400,000 608,329,068,081 623,028,975,923 624,179,969,640 613,674,600,705 604,113,612,490 591,585,000,652 578,107,701,162 565,306,685,814 552,996,099,384 540,140,542,935 527,510,914,075 513,330,104,751 500,662,044,914 485,688,970,853 467,858,571,707 451,691,298,311 436,158,154,735 420,511,951,201 405,578,751,105 390,201,126,154 371,175,313,907 358,269,218,009 345,515,945,184 Cumulative Total $ 12,213,493,021,692 Net Profit 4,828,023,378,308$
Technological Savings Analysis
Infrastructure Cost AnalysisVariablesT Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035N T Highway, total (registered vehicles) 255,556,134 258,239,473 260,950,988 263,690,973 266,459,728 269,257,556 272,084,760 274,941,650 277,828,537 280,745,737 283,693,567 286,672,349 289,682,409 292,724,074 295,797,677 298,903,553 302,042,040 305,213,482 308,418,223 311,656,614 314,929,009 318,235,764 321,577,239 324,953,800
Light duty vehicle, short wheel base 194,218,011 196,257,300 198,318,001 200,400,340 202,504,544 204,630,842 206,779,466 208,950,650 211,144,632 213,361,650 215,601,948 217,865,768 220,153,359 222,464,969 224,800,851 227,161,260 229,546,453 231,956,691 234,392,236 236,853,355 239,340,315 241,853,388 244,392,849 246,958,974 MotorcycleLight duty vehicle, long wheel baseTruck, single-unit 2-axle 6-tire or more 8,390,656 8,478,758 8,567,785 8,657,747 8,748,653 8,840,514 8,933,339 9,027,139 9,121,924 9,217,704 9,314,490 9,412,292 9,511,122 9,610,988 9,711,904 9,813,879 9,916,924 10,021,052 10,126,273 10,232,599 10,340,041 10,448,612 10,558,322 10,669,185 Truck, combination 2,606,757 2,634,128 2,661,786 2,689,735 2,717,977 2,746,516 2,775,354 2,804,495 2,833,942 2,863,699 2,893,768 2,924,152 2,954,856 2,985,882 3,017,234 3,048,915 3,080,928 3,113,278 3,145,967 3,179,000 3,212,379 3,246,109 3,280,194 3,314,636 Bus 863,911 872,982 882,149 891,411 900,771 910,229 919,786 929,444 939,203 949,065 959,030 969,100 979,276 989,558 999,948 1,010,448 1,021,057 1,031,779 1,042,612 1,053,560 1,064,622 1,075,801 1,087,096 1,098,511
Total Vehicle Growth Rate 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05%
Total Natural Gas Vehicles Growth Rate 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73%
R T % Gasoline Vehicles 85.74% 82.02% 78.29% 74.56% 70.83% 67.10% 63.38% 59.65% 55.92% 52.19% 48.46% 44.74% 41.01% 37.28% 33.55% 29.82% 26.10% 22.37% 18.64% 14.91% 11.18% 7.46% 3.73% 0.00%% Natural Gas Vehicles 9.96% 13.68% 17.41% 21.14% 24.87% 28.60% 32.32% 36.05% 39.78% 43.51% 47.24% 50.96% 54.69% 58.42% 62.15% 65.88% 69.60% 73.33% 77.06% 80.79% 84.52% 88.24% 91.97% 95.70%
# Total Gasoline Vehicles 219,124,051 211,797,686 204,293,309 196,607,990 188,738,755 180,682,590 172,436,437 163,997,195 155,361,718 146,526,815 137,489,250 128,245,742 118,792,962 109,127,535 99,246,037 89,144,996 78,820,891 68,270,152 57,489,157 46,474,234 35,221,660 23,727,659 11,988,399 0 # Total Natural Gas Vehicles 25,443,169 35,337,490 45436786 55,744,272 66,263,205 76996891 87,948,678 99,121,964 110520192 122,146,855 134,005,493 146099696 158,433,103 171,009,404 183832340 196,905,704 210,233,342 223819150 237,667,083 251,781,146 266165401 280,823,967 295,761,018 310,980,787
Average Conversion Cost per unit Vehicle 12,000$
Total Conversion Cost 2,629,488,617,433$ Total Station Construction Cost 269,940,518,271
Total Infrastructure Cost 2,899,429,135,703$
NG Refueling Station Type Estimated CostCNG, small $400,000CNG, medium $600,000CNG, large $1,700,000LNG, large $1,700,000CNG/LNG, large $2,000,000Average $1,280,000
Gasoline Vehicles (2010) 233,254,261Gasoline Stations (2010) 159,006 Vehicles per Stations 1467
Gasoline Vehicles (2012) 219,124,051Gasoline Stations (2012) 149,374 NG Fueling Stations (2012) 1,100
NG Stations to be Built (2012 E) 21,306 Cost 27,271,739,573.27$
NGVs (2035 E) 310,980,787NG Stations Required (2035 E) 211,991
NG Stations to be Built (2010-35) 189,585 Cost (2012-35) 242,668,778,697.46$
Total Cost 269,940,518,270.73$ Cost per Year 11,247,521,594.61$
Externality Analysis
Emission AnalysisGiven Information
VariablesYear 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
PVt(S1) % Gasoline Vehicles 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74% 85.74%NGVt(S2) % Natural Gas Vehicles 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96% 9.96%
Total Natural Gas Vehicles Growth Rate 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73% 3.73%PVt (S2) % Gasoline Vehicles 85.74% 82.02% 78.29% 74.56% 70.83% 67.10% 63.38% 59.65% 55.92% 52.19% 48.46% 44.74% 41.01% 37.28% 33.55% 29.82% 26.10% 22.37% 18.64% 14.91% 11.18% 7.46% 3.73% 0.00%NGVt (S2) % Natural Gas Vehicles 9.96% 13.68% 17.41% 21.14% 24.87% 28.60% 32.32% 36.05% 39.78% 43.51% 47.24% 50.96% 54.69% 58.42% 62.15% 65.88% 69.60% 73.33% 77.06% 80.79% 84.52% 88.24% 91.97% 95.70%
Light duty vehicle, short wheel base 194,218,011 196,257,300 198,318,001 200,400,340 202,504,544 204,630,842 206,779,466 208,950,650 211,144,632 213,361,650 215,601,948 217,865,768 220,153,359 222,464,969 224,800,851 227,161,260 229,546,453 231,956,691 234,392,236 236,853,355 239,340,315 241,853,388 244,392,849 246,958,974 MotorcycleLight duty vehicle, long wheel baseTruck, single-unit 2-axle 6-tire or morec,d 8,390,656 8,478,758 8,567,785 8,657,747 8,748,653 8,840,514 8,933,339 9,027,139 9,121,924 9,217,704 9,314,490 9,412,292 9,511,122 9,610,988 9,711,904 9,813,879 9,916,924 10,021,052 10,126,273 10,232,599 10,340,041 10,448,612 10,558,322 10,669,185 Truck, combinationc,d 2,606,757 2,634,128 2,661,786 2,689,735 2,717,977 2,746,516 2,775,354 2,804,495 2,833,942 2,863,699 2,893,768 2,924,152 2,954,856 2,985,882 3,017,234 3,048,915 3,080,928 3,113,278 3,145,967 3,179,000 3,212,379 3,246,109 3,280,194 3,314,636 Bus 863,911 872,982 882,149 891,411 900,771 910,229 919,786 929,444 939,203 949,065 959,030 969,100 979,276 989,558 999,948 1,010,448 1,021,057 1,031,779 1,042,612 1,053,560 1,064,622 1,075,801 1,087,096 1,098,511
𝐕𝐭 Highway, total (registered vehicles) 255,556,134 258,239,473 260,950,988 263,690,973 266,459,728 269,257,556 272,084,760 274,941,650 277,828,537 280,745,737 283,693,567 286,672,349 289,682,409 292,724,074 295,797,677 298,903,553 302,042,040 305,213,482 308,418,223 311,656,614 314,929,009 318,235,764 321,577,239 324,953,8001.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05%
Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035Scenario 1 (No Replacement)
Vt x NGVt(S1) * 1 driver/1.3 vehicle # of Natural Gas Vehicle Drivers 4914541.04 4966143.717 5018288.23 5070980.253 5124225.55 5178029.914 5232399.23 5287339.42 5342856.48 5398956.477 5455645.52 5512929.798 5570815.56 5629309.124 5688416.87 5748145.247 5808500.77 5869490.03 5931119.68 5993396.432 6056327.09 6119918.529 6184177.67 6249111.539Vt x PVt(S1) * 1 driver/1.3 vehicle # of Gasoline Vehicle Drivers 183214089.84 185137837.8 187081785.08 189046143.8 191031128.34 193036955.2 195063843.21 197112013.6 199181689.71 201273097.5 203386464.98 205522022.9 207680004.10 209860644.1 212064180.90 214290854.8 216540908.78 218814588.3 221112141.50 223433819 225779874.08 228150562.8 230546143.67 232966878.2
Scenario 2 (Replacement by 2035) Vt x NGVt (S2) # of Natural Gas Vehicles 25443168.69 35337489.53 45436785.99 55744271.72 66263205.25 76996890.58 87948677.77 99121963.6 110520192.1 122146855.2 134005493.3 146099696.2 158433103.2 171009404.3 183832340.4 196905704.5 210233341.6 223819150.3 237667082.7 251781145.7 266165401.2 280823967.2 295761018.3 310980786.6Vt x PVt (S2) # of Gasoline Vehicles 219124051.5 211797686.4 204293309.3 196607989.6 188738754.8 180682590.1 172436437.4 163997195.3 155361718 146526814.9 137489250.3 128245742.3 118792962.3 109127535 99246036.66 89144995.6 78820890.8 68270151.56 57489156.79 46474234.35 35221660.36 23727658.53 11988399.47 1.2176E-07Vt x NGVt (S2) x 1 driver/1.3 vehicle # of NGV Drivers 19571668.22 27182684.25 34951373.84 42880209.02 50971696.35 59228377.37 67652829.06 76247664.3 85015532.37 93959119.36 103081148.7 112384381.7 121871617.9 131545695.6 141409492.6 151465926.5 161717955.1 172168577.2 182820832.9 193677804.4 204742616.3 216018436.3 227508475.6 239215989.7Vt x PVt (S2) x 1 driver/1.3 vehicle # of Gasoline Vehicle Drivers 168556962.7 162921297.3 157148699.5 151236915.1 145183657.5 138986607.7 132643413.4 126151688.7 119509013.8 112712934.6 105760961.8 98650570.97 91379201.8 83944257.66 76343105.13 68573073.54 60631454.46 52515501.2 44222428.3 35749411.04 27093584.89 18252045.02 9221845.747 9.36618E-08
Number of Miles Drive per Driver 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350 13,350
CO2 AnalysisYear 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Scenario 1Eco2,ngv x Vt x NGVt(S1) x 1driver/1.3 vehicle Emission from NGV (g) 2.22021E+11 2.24352E+11 2.26708E+11 2.29089E+11 2.31494E+11 2.33925E+11 2.36381E+11 2.38863E+11 2.41371E+11 2.43905E+11 2.46466E+11 2.49054E+11 2.51669E+11 2.54312E+11 2.56982E+11 2.59681E+11 2.62407E+11 2.65162E+11 2.67947E+11 2.7076E+11 2.73603E+11 2.76476E+11 2.79379E+11 2.82312E+11Eco2,pv x Vt x PVt(S1) x 1driver/1.3 vehicle Emission from Gasoline Vehicles (g) 1.03462E+13 1.04548E+13 1.05646E+13 1.06755E+13 1.07876E+13 1.09009E+13 1.10154E+13 1.1131E+13 1.12479E+13 1.1366E+13 1.14853E+13 1.16059E+13 1.17278E+13 1.18509E+13 1.19754E+13 1.21011E+13 1.22282E+13 1.23566E+13 1.24863E+13 1.26174E+13 1.27499E+13 1.28838E+13 1.30191E+13 1.31558E+13
Total Emission (g) 1.05682E+13 1.06792E+13 1.07913E+13 1.09046E+13 1.10191E+13 1.11348E+13 1.12517E+13 1.13699E+13 1.14893E+13 1.16099E+13 1.17318E+13 1.1855E+13 1.19795E+13 1.21052E+13 1.22324E+13 1.23608E+13 1.24906E+13 1.26217E+13 1.27543E+13 1.28882E+13 1.30235E+13 1.31603E+13 1.32984E+13 1.34381E+13
Scenario 2Eco2,ngv x Vt x NGVt(S2) x 1driver/1.3 vehicle Emission from NGV (g) 8.84178E+11 1.22802E+12 1.57898E+12 1.93717E+12 2.30272E+12 2.67572E+12 3.05631E+12 3.44459E+12 3.8407E+12 4.24473E+12 4.65684E+12 5.07712E+12 5.50572E+12 5.94276E+12 6.38837E+12 6.84269E+12 7.30584E+12 7.77796E+12 8.25919E+12 8.74967E+12 9.24953E+12 9.75894E+12 1.0278E+13 1.08069E+13Eco2,pv x Vt x PVt(S2) x 1driver/1.3 vehicle Emission from Gasoline Vehicles (g) 9.5185E+12 9.20025E+12 8.87427E+12 8.54042E+12 8.19859E+12 7.84864E+12 7.49044E+12 7.12385E+12 6.74873E+12 6.36496E+12 5.97237E+12 5.57085E+12 5.16023E+12 4.74037E+12 4.31113E+12 3.87236E+12 3.42389E+12 2.96558E+12 2.49726E+12 2.01879E+12 1.52999E+12 1.0307E+12 5.20762E+11 0.005289126
Total Emission (g) 1.04027E+13 1.04283E+13 1.04532E+13 1.04776E+13 1.05013E+13 1.05244E+13 1.05468E+13 1.05684E+13 1.05894E+13 1.06097E+13 1.06292E+13 1.0648E+13 1.0666E+13 1.06831E+13 1.06995E+13 1.0715E+13 1.07297E+13 1.07435E+13 1.07564E+13 1.07685E+13 1.07795E+13 1.07896E+13 1.07988E+13 1.08069E+13
CO2 Emission (g/mile) Eco2, pv Gasoline 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23 4.23Eco2, ngv Natural Gas 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384 3.384
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23Pco2,t Cost of CO2 ($/ton) $30.00 $30.60 $31.21 $31.84 $32.47 $33.12 $33.78 $34.46 $35.15 $35.85 $36.57 $37.30 $38.05 $38.81 $39.58 $40.38 $41.18 $42.01 $42.85 $43.70 $44.58 $45.47 $46.38 $47.31
Ton/gram 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06Scenario 2 Total Cost of Emission $344,009,440.37 $351,752,780.04 $359,647,278.92 $367,694,918.43 $375,897,659.14 $384,257,437.59 $392,776,163.02 $401,455,713.80 $410,297,933.77 $419,304,628.37 $428,477,560.48 $437,818,446.18 $447,328,950.12 $457,010,680.85 $466,865,185.71 $476,893,945.62 $487,098,369.48 $497,479,788.43 $508,039,449.65 $518,778,510.04 $529,698,029.44 $540,798,963.57 $552,082,156.70 $563,548,333.82Scenario 1 Total Cost of Emission $349,483,706.15 $360,216,350.77 $371,278,594.90 $382,680,560.55 $394,432,680.56 $406,545,708.18 $419,030,726.88 $431,899,160.51 $445,162,783.72 $458,833,732.81 $472,924,516.75 $487,448,028.66 $502,417,557.62 $517,846,800.81 $533,749,876.06 $550,141,334.76 $567,036,175.15 $584,449,856.09 $602,398,311.17 $620,897,963.30 $639,965,739.76 $659,619,087.62 $679,875,989.80 $700,754,981.45
∆ECco2(t) Reduction in Cost $5,474,265.78 $8,463,570.73 $11,631,315.98 $14,985,642.12 $18,535,021.43 $22,288,270.59 $26,254,563.86 $30,443,446.71 $34,864,849.95 $39,529,104.44 $44,446,956.26 $49,629,582.48 $55,088,607.49 $60,836,119.96 $66,884,690.35 $73,247,389.14 $79,937,805.67 $86,970,067.66 $94,358,861.51 $102,119,453.26 $110,267,710.32 $118,820,124.05 $127,793,833.11 $137,206,647.63Σ∆ECco2 Total Reduction in Cost of CO2 Emission $1,420,077,900.50
Methane AnalysisYear 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
CH4 Emission (g/mile) Ech4, pv Petroleum 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148 3.5148Ech4, ngv Natural Gas 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592 14.0592
Scenario 2Ech4,ngv x Vt x NGVt(S2) x 1driver/1.3 vehicle Emission from NGV (g) 3.67341E+12 5.10193E+12 6.56003E+12 8.0482E+12 9.56689E+12 1.11166E+13 1.26978E+13 1.43109E+13 1.59566E+13 1.76352E+13 1.93473E+13 2.10935E+13 2.28741E+13 2.46899E+13 2.65412E+13 2.84287E+13 3.03529E+13 3.23144E+13 3.43137E+13 3.63514E+13 3.84282E+13 4.05446E+13 4.27011E+13 4.48985E+13Ech4,pv x Vt x PVt(S2) x 1driver/1.3 vehicle Emission from Gasoline Vehicles (g) 7.90913E+12 7.64469E+12 7.37382E+12 7.09643E+12 6.81239E+12 6.52161E+12 6.22397E+12 5.91936E+12 5.60767E+12 5.28878E+12 4.96258E+12 4.62894E+12 4.28775E+12 3.93888E+12 3.58222E+12 3.21763E+12 2.84498E+12 2.46416E+12 2.07503E+12 1.67745E+12 1.2713E+12 8.56433E+11 4.32713E+11 0.004394851
Total Emission (g) 1.15825E+13 1.27466E+13 1.39339E+13 1.51446E+13 1.63793E+13 1.76382E+13 1.89218E+13 2.02303E+13 2.15643E+13 2.2924E+13 2.43099E+13 2.57224E+13 2.71619E+13 2.86287E+13 3.01234E+13 3.16463E+13 3.31979E+13 3.47785E+13 3.63887E+13 3.80289E+13 3.96995E+13 4.1401E+13 4.31339E+13 4.48985E+13
Scenario 1Ech4,ngv x Vt x NGVt(S1) x 1driver/1.3 vehicle Emission from NGV (g) 9.22412E+11 9.32097E+11 9.41884E+11 9.51774E+11 9.61768E+11 9.71866E+11 9.82071E+11 9.92382E+11 1.0028E+12 1.01333E+12 1.02397E+12 1.03472E+12 1.04559E+12 1.05657E+12 1.06766E+12 1.07887E+12 1.0902E+12 1.10165E+12 1.11321E+12 1.1249E+12 1.13671E+12 1.14865E+12 1.16071E+12 1.1729E+12Ech4,pv x Vt x PVt(S1) x 1driver/1.3 vehicle Emission from Gasoline Vehicles (g) 8.59688E+12 8.68715E+12 8.77836E+12 8.87053E+12 8.96367E+12 9.05779E+12 9.1529E+12 9.249E+12 9.34612E+12 9.44425E+12 9.54342E+12 9.64362E+12 9.74488E+12 9.8472E+12 9.9506E+12 1.00551E+13 1.01607E+13 1.02673E+13 1.03752E+13 1.04841E+13 1.05942E+13 1.07054E+13 1.08178E+13 1.09314E+13
Total Emission (g) 9.51929E+12 9.61924E+12 9.72024E+12 9.82231E+12 9.92544E+12 1.00297E+13 1.0135E+13 1.02414E+13 1.03489E+13 1.04576E+13 1.05674E+13 1.06783E+13 1.07905E+13 1.09038E+13 1.10183E+13 1.1134E+13 1.12509E+13 1.1369E+13 1.14884E+13 1.1609E+13 1.17309E+13 1.18541E+13 1.19785E+13 1.21043E+131 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Pch4,t Cost of CH4 ($/ton) $205 $209 $213 $218 $222 $226 $240 $245 $260 $265 $293 $299 $330 $336 $386 $394 $453 $462 $552 $563 $673 $686 $853 $870Ton/gram 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06Scenario 1 Total Cost of Emission $2,151,109,598.77 $2,217,170,174.55 $2,285,259,470.61 $2,355,439,788.95 $2,427,775,344.87 $2,502,332,325.71 $2,683,377,781.07 $2,765,784,312.73 $2,965,890,699.55 $3,056,973,202.93 $3,410,584,456.26 $3,515,323,504.92 $3,921,953,811.40 $4,042,397,012.95 $4,692,199,668.60 $4,836,297,120.42 $5,613,716,731.18 $5,786,113,971.99 $6,987,548,698.13 $7,202,136,318.65 $8,697,595,398.34 $8,964,698,553.03 $11,263,513,859.90 $11,609,416,370.54Scenario 2 Total Cost of Emission $2,617,350,097.85 $2,938,008,291.76 $3,275,892,878.33 $3,631,759,488.55 $4,006,393,917.95 $4,400,613,266.75 $5,009,803,913.13 $5,463,388,826.12 $6,180,088,527.44 $6,701,169,630.43 $7,845,930,567.76 $8,467,842,061.37 $9,872,378,617.35 $10,613,642,389.82 $12,828,255,652.10 $13,746,331,024.60 $16,564,380,903.54 $17,700,126,322.70 $22,132,654,248.49 $23,592,858,647.55 $29,434,280,985.28 $31,309,730,899.85 $40,559,127,582.96 $43,062,835,141.88
∆ECch4(t) Increase in Cost of Methane Emission $466,240,499.08 $720,838,117.21 $990,633,407.72 $1,276,319,699.59 $1,578,618,573.08 $1,898,280,941.04 $2,326,426,132.05 $2,697,604,513.39 $3,214,197,827.89 $3,644,196,427.50 $4,435,346,111.49 $4,952,518,556.46 $5,950,424,805.95 $6,571,245,376.87 $8,136,055,983.50 $8,910,033,904.18 $10,950,664,172.36 $11,914,012,350.71 $15,145,105,550.36 $16,390,722,328.91 $20,736,685,586.94 $22,345,032,346.82 $29,295,613,723.06 $31,453,418,771.34Σ∆ECch4 Total Increase in Cost of Methane Emission $216,000,235,707.51
Nitrous Oxide AnalysisYear 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035N2O Emission (g/mile)
En2o, pv Petroleum 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422 1.4422En2o, ngv Natural Gas 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486 0.187486
Scenario 2En2o,ngv x Vt x NGVt(S2) x 1driver/1.3 vehicle Emission from NGV (g) 48986674079 68036576074 87481125231 1.07327E+11 1.27579E+11 1.48245E+11 1.69331E+11 1.90843E+11 2.12789E+11 2.35174E+11 2.58006E+11 2.81291E+11 3.05037E+11 3.29251E+11 3.53939E+11 3.7911E+11 4.0477E+11 4.30927E+11 4.57589E+11 4.84764E+11 5.12458E+11 5.40681E+11 5.6944E+11 5.98743E+11En2o,pv x Vt x PVt(S2) x 1driver/1.3 vehicle Emission from Gasoline Vehicles (g) 3.24529E+12 3.13678E+12 3.02564E+12 2.91182E+12 2.79527E+12 2.67596E+12 2.55383E+12 2.42885E+12 2.30095E+12 2.1701E+12 2.03625E+12 1.89936E+12 1.75936E+12 1.61621E+12 1.46986E+12 1.32026E+12 1.16736E+12 1.0111E+12 8.51431E+11 6.88297E+11 5.21643E+11 3.51413E+11 1.77552E+11 0.001803304
Total Emission (g) 3.29428E+12 3.20482E+12 3.11312E+12 3.01915E+12 2.92285E+12 2.82421E+12 2.72316E+12 2.61969E+12 2.51374E+12 2.40528E+12 2.29426E+12 2.18065E+12 2.06439E+12 1.94546E+12 1.8238E+12 1.69937E+12 1.57213E+12 1.44203E+12 1.30902E+12 1.17306E+12 1.0341E+12 8.92094E+11 7.46991E+11 5.98743E+11
Scenario 1En2o,ngv x Vt x NGVt(S1) x 1driver/1.3 vehicle Emission from NGV (g) 12300792004 12429950320 12560464799 12692349679 12825619351 12960288354 13096371382 13233883281 13372839056 13513253866 13655143031 13798522033 13943406515 14089812283 14237755312 14387251743 14538317886 14690970224 14845225411 15001100278 15158611831 15317777255 15478613916 15641139362En2o,pv x Vt x PVt(S1) x 1driver/1.3 vehicle Emission from Gasoline Vehicles (g) 3.52749E+12 3.56453E+12 3.60195E+12 3.63978E+12 3.67799E+12 3.71661E+12 3.75564E+12 3.79507E+12 3.83492E+12 3.87519E+12 3.91587E+12 3.95699E+12 3.99854E+12 4.04052E+12 4.08295E+12 4.12582E+12 4.16914E+12 4.21292E+12 4.25715E+12 4.30185E+12 4.34702E+12 4.39267E+12 4.43879E+12 4.4854E+12
Total Emission (g) 3.53979E+12 3.57696E+12 3.61452E+12 3.65247E+12 3.69082E+12 3.72957E+12 3.76873E+12 3.8083E+12 3.84829E+12 3.8887E+12 3.92953E+12 3.97079E+12 4.01248E+12 4.05461E+12 4.09719E+12 4.14021E+12 4.18368E+12 4.22761E+12 4.272E+12 4.31686E+12 4.36218E+12 4.40798E+12 4.45427E+12 4.50104E+121 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Pn2o,t Cost of N2O ($/ton) $5,902 $6,020 $6,140 $6,263 $6,389 $6,516 $6,647 $6,780 $6,915 $7,053 $7,195 $7,338 $7,485 $7,635 $7,788 $7,943 $8,102 $8,264 $8,430 $8,598 $8,770 $8,945 $9,124 $9,307Ton/gram 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06 1.10231E-06Scenario 1 Total Cost of Emission $23,029,302,018.27 $23,736,531,883.25 $24,465,480,777.39 $25,216,815,692.06 $25,991,224,101.97 $26,789,414,594.14 $27,612,117,516.32 $28,460,085,645.25 $29,334,094,875.41 $30,234,944,929.04 $31,163,460,087.81 $32,120,489,947.11 $33,106,910,193.38 $34,123,623,405.42 $35,171,559,880.20 $36,251,678,484.12 $37,364,967,530.37 $38,512,445,683.23 $39,695,162,890.16 $40,914,201,342.52 $42,170,676,465.74 $43,465,737,940.01 $44,800,570,752.14 $46,176,396,279.94Scenario 2 Total Cost of Emission $21,432,032,475.50 $21,267,049,347.60 $21,071,720,318.30 $20,844,337,138.57 $20,583,115,258.13 $20,286,190,749.96 $19,951,617,118.12 $19,577,361,984.14 $19,161,303,647.92 $18,701,227,518.34 $18,194,822,408.85 $17,639,676,693.18 $17,033,274,316.05 $16,372,990,653.50 $15,656,088,217.56 $14,879,712,199.38 $14,040,885,845.18 $13,136,505,658.72 $12,163,336,424.20 $11,118,006,042.95 $9,997,000,177.24 $8,796,656,694.17 $7,513,159,902.51 $6,142,534,574.91
∆ECn2o(t) Reduction in Cost of Emission $1,597,269,542.77 $2,469,482,535.65 $3,393,760,459.09 $4,372,478,553.49 $5,408,108,843.84 $6,503,223,844.17 $7,660,500,398.20 $8,882,723,661.11 $10,172,791,227.49 $11,533,717,410.70 $12,968,637,678.96 $14,480,813,253.92 $16,073,635,877.33 $17,750,632,751.92 $19,515,471,662.64 $21,371,966,284.74 $23,324,081,685.19 $25,375,940,024.51 $27,531,826,465.96 $29,796,195,299.56 $32,173,676,288.51 $34,669,081,245.84 $37,287,410,849.64 $40,033,861,705.03Σ∆ECn2o Total Reduction in Cost of Nitrous Oxide Emission $414,347,287,550.26
Total Reduction in Cost of Emission from Replacement $199,767,129,743.24
Industrial Water LossVariablesx year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035W Average total amount of water used in a fracking well (U.S. gallons) 3,045,750.00 3,073,131.29 3,100,758.74 3,128,634.56 3,156,760.99 3,185,140.27 3,213,774.68 3,242,666.52 3,271,818.09 3,301,231.73 3,330,909.81 3,360,854.68 3,391,068.77 3,421,554.48 3,452,314.25 3,483,350.56 3,514,665.88 3,546,262.72 3,578,143.63 3,610,311.14 3,642,767.83 3,675,516.32 3,708,559.21 3,741,899.16 Nx Fracking sites in the U.S. 522,627.00 524,181.47 525,740.56 527,304.28 528,872.66 530,445.70 532,023.42 533,605.84 535,192.96 536,784.80 538,381.38 539,982.70 541,588.79 543,199.65 544,815.31 546,435.77 548,061.05 549,691.17 551,326.13 552,965.96 554,610.66 556,260.26 557,914.76 559,574.18 C Average price of industrial water per U.S. gallon 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$ 0.45$
V % of NG used in operating NGVs out of total NG consumption 0.0020 0.0049 0.0075 0.0101 0.0128 0.0155 0.0181 0.0208 0.0235 0.0262 0.0290 0.0317 0.0343 0.0369 0.0395 0.0419 0.0443 0.0468 0.0492 0.0517 0.0540 0.0564 0.0588 0.0612 Inflation rate 0.02
f(x) Average amount of industiral water loss per a fracking well due to NGV (USD) 1,469,990,196$ 3,516,708,810$ 5,468,694,044$ 7,399,578,074$ 9,497,674,850$ 11,654,631,010$ 13,818,441,459$ 16,011,401,288$ 18,360,933,831$ 20,705,129,201$ 23,140,147,167$ 25,606,721,335$ 28,062,994,531$ 30,578,037,592$ 33,089,201,904$ 35,557,174,397$ 38,071,411,887$ 40,651,225,448$ 43,285,868,593$ 45,996,845,170$ 48,619,876,324$ 51,394,225,240$ 54,191,730,118$ 57,097,889,238$
Sum 663,246,531,709$
Variablesx Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035NGNGVx Amount of NG consumed for NGVs in year x , in U.S. 0.05 0.12 0.18 0.25 0.32 0.38 0.45 0.52 0.58 0.65 0.72 0.79 0.85 0.92 0.99 1.05 1.12 1.19 1.25 1.32 1.39 1.45 1.52 1.59 NGTotal Amount of NG consumed in year , in U.S. 23.61 22.85 23.40 23.89 23.86 23.82 23.87 23.94 23.85 23.85 23.81 23.80 23.85 23.89 23.97 24.11 24.24 24.35 24.45 24.53 24.68 24.77 24.87 24.94 NGNGVx – NGNGVx-1 Amount of increase in NG for NGVs in year x , in U.S. 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003 1.003
V 0.0020 0.0049 0.0075 0.0101 0.0128 0.0155 0.0181 0.0208 0.0235 0.0262 0.0290 0.0317 0.0343 0.0369 0.0395 0.0419 0.0443 0.0468 0.0492 0.0517 0.0540 0.0564 0.0588 0.0612
Price of Industrial WaterAvg. cost for 50 U.S. gallons Avg. cost for 100 U.S. gallons Avg. cost for 150 U.S. gallons
Phoenix6 11.02$ 34.29$ 59.84$ Fresno1 15.99 21.95 27.91 Memphis2, 8 16.02 26.50 36.98 Chicago4 16.08 24.12 36.18 Baltimore4 19.25 39.50 79.00 New York2 20.88 41.76 62.64 San Antonio7 12.21 19.64 32.94 Salt Lake City2 14.48 22.89 32.67 Los Angeles7 27.18 58.49 99.07 Seattle2 42.15 72.78 117.33 Santa Fe2 43.28 121.42 224.26 Charlotte10 14.16 35.68 78.24 Dallas1 16.16 37.81 65.30 Las Vegas2 17.18 32.93 52.72 Tucson2 17.46 33.04 72.64 Denver5 18.24 33.01 58.33 Austin1 19.18 47.17 94.30 Jacksonville1 19.54 30.04 40.55 Houston3 21.97 39.49 71.17 Fort Worth1 22.20 43.48 67.24 Columbus1 23.95 43.06 62.18 San Jose2 24.51 40.93 59.09 Philadelphia1, 8 27.34 49.03 68.82 San Francisco1 30.63 58.47 86.31 Boston1 31.84 65.47 99.72 Atlanta7 33.83 72.95 112.07 San Diego9 44.05 70.95 99.52 Milwaukee1 16.11 26.83 37.55 Detroit1, 8 16.22 28.36 40.55 Indianapolis1 25.24 41.26 56.79
Avg. price of ind. water per 50, 100, 150 U.S. gallons 22.61$ 43.78$ 71.06$ Avg. price of ind. water per U.S. gallon 0.45 0.44 0.47
Average 0.45$
Drinking Water LossVariablesx Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035P Aff Population affected by a fracking site 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34 50.34
N x Fracking sites in the U.S. 522,627.00 524,181.47 525,740.56 527,304.28 528,872.66 530,445.70 532,023.42 533,605.84 535,192.96 536,784.80 538,381.38 539,982.70 541,588.79 543,199.65 544,815.31 546,435.77 548,061.05 549,691.17 551,326.13 552,965.96 554,610.66 556,260.26 557,914.76 559,574.18 C Average price of bottled water 0.42$
Inflation rate 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 W Avg Average number of bottled water consumption per day 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73 2.73
V % of NG used in operating NGVs out of total NG consumption 0.0020 0.0049 0.0075 0.0101 0.0128 0.0155 0.0181 0.0208 0.0235 0.0262 0.0290 0.0317 0.0343 0.0369 0.0395 0.0419 0.0443 0.0468 0.0492 0.0517 0.0540 0.0564 0.0588 0.0612 f(x) Amount of drinking water loss per annum due to NGV (USD) 60,942,395$ 147,385,514$ 231,694,289$ 316,921,694$ 411,221,316$ 510,117,425$ 611,426,142$ 716,188,911$ 830,245,108$ 946,461,199$ 1,069,311,644$ 1,196,204,590$ 1,325,253,045$ 1,459,781,041$ 1,596,899,963$ 1,734,730,323$ 1,877,660,287$ 2,026,772,439$ 2,181,678,713$ 2,343,613,616$ 2,504,292,926$ 2,676,078,879$ 2,852,534,548$ 3,038,304,243$
Sum 32,665,720,252$
Results - Cost Benefit AnalysisMain Functionα*f(x) + e
Efficiencyα 0.72
Benefit 4,828,023,378,307.77$ Sensitivity 0%
Cost (2,899,429,135,703.44)$ Sensitivity 0%
Externalities Env. savings 199,767,129,743.24$ Sensitivity 0% Drinking water loss (32,665,720,251.83) Sensitivity 0% Ind. Water loss (663,246,531,708.70) Sensitivity 0%
Total Net Profit 892,442,732,457.84$
Sensitivity AnalysisThe following sensitivity analyses were chosen to demonstrate how our result changes as our variables change.The purpose of this analysis is not only to observe how our result changes according to respective changes in the variables but also to examine variables, to which our results are the most sensitive to and the least sensitive to.
I. Sensitivity on % Change in Economic Savings and in Technological Cost
% Change in Economics Savings######## -2.0% -1.5% -1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0%
-2.0% 864,670,975,364$ 854,233,030,476$ 843,795,085,587$ 833,357,140,699$ 822,919,195,810$ 812,481,250,922$ 802,043,306,033$ 791,605,361,145$ 781,167,416,256$ -1.5% 882,051,859,526 871,613,914,638 861,175,969,749 850,738,024,861 840,300,079,972 829,862,135,084 819,424,190,195 808,986,245,307 798,548,300,418 -1.0% 899,432,743,688 888,994,798,800 878,556,853,911 868,118,909,023 857,680,964,134 847,243,019,245 836,805,074,357 826,367,129,468 815,929,184,580 -0.5% 916,813,627,850 906,375,682,962 895,937,738,073 885,499,793,184 875,061,848,296 864,623,903,407 854,185,958,519 843,748,013,630 833,310,068,742
% Change in Tech. Costs 0% 934,194,512,012 923,756,567,123 913,318,622,235 902,880,677,346 892,442,732,458 882,004,787,569 871,566,842,681 861,128,897,792 850,690,952,904 0.5% 951,575,396,174 941,137,451,285 930,699,506,397 920,261,561,508 909,823,616,620 899,385,671,731 888,947,726,843 878,509,781,954 868,071,837,066 1.0% 968,956,280,336 958,518,335,447 948,080,390,559 937,642,445,670 927,204,500,782 916,766,555,893 906,328,611,005 895,890,666,116 885,452,721,228 1.5% 986,337,164,498 975,899,219,609 965,461,274,721 955,023,329,832 944,585,384,944 934,147,440,055 923,709,495,166 913,271,550,278 902,833,605,389 2.0% 1,003,718,048,660 993,280,103,771 982,842,158,883 972,404,213,994 961,966,269,105 951,528,324,217 941,090,379,328 930,652,434,440 920,214,489,551
II. Sensitivity on % Change in Economic Savings and in Externalities
% Change in Economics Savings######## -2.0% -1.5% -1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0%
-2.0% 832,842,098,255$ 830,361,372,643$ 827,880,647,032$ 825,399,921,421$ 822,919,195,810$ 820,438,470,199$ 817,957,744,588$ 815,477,018,977$ 812,996,293,366$ -1.5% 850,222,982,416 847,742,256,805 845,261,531,194 842,780,805,583 840,300,079,972 837,819,354,361 835,338,628,750 832,857,903,139 830,377,177,528 -1.0% 867,603,866,578 865,123,140,967 862,642,415,356 860,161,689,745 857,680,964,134 855,200,238,523 852,719,512,912 850,238,787,301 847,758,061,690 -0.5% 884,984,750,740 882,504,025,129 880,023,299,518 877,542,573,907 875,061,848,296 872,581,122,685 870,100,397,074 867,619,671,463 865,138,945,852
% Change in Externalities 0% 902,365,634,902 899,884,909,291 897,404,183,680 894,923,458,069 892,442,732,458 889,962,006,847 887,481,281,236 885,000,555,625 882,519,830,013 0.5% 919,746,519,064 917,265,793,453 914,785,067,842 912,304,342,231 909,823,616,620 907,342,891,009 904,862,165,398 902,381,439,786 899,900,714,175 1.0% 937,127,403,226 934,646,677,615 932,165,952,004 929,685,226,393 927,204,500,782 924,723,775,171 922,243,049,559 919,762,323,948 917,281,598,337 1.5% 954,508,287,388 952,027,561,777 949,546,836,166 947,066,110,555 944,585,384,944 942,104,659,332 939,623,933,721 937,143,208,110 934,662,482,499 2.0% 971,889,171,550 969,408,445,939 966,927,720,328 964,446,994,717 961,966,269,105 959,485,543,494 957,004,817,883 954,524,092,272 952,043,366,661
III. Sensitivity on % Change in Tech. Costs and in Externalities
% Change in Tech. Costs######## -2.0% -1.5% -1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0%
-2.0% 944,117,414,456$ 941,636,688,845$ 939,155,963,234$ 936,675,237,623$ 934,194,512,012$ 931,713,786,401$ 929,233,060,790$ 926,752,335,179$ 924,271,609,568$ -1.5% 933,679,469,568 931,198,743,957 928,718,018,346 926,237,292,735 923,756,567,123 921,275,841,512 918,795,115,901 916,314,390,290 913,833,664,679 -1.0% 923,241,524,679 920,760,799,068 918,280,073,457 915,799,347,846 913,318,622,235 910,837,896,624 908,357,171,013 905,876,445,402 903,395,719,791 -0.5% 912,803,579,791 910,322,854,180 907,842,128,569 905,361,402,957 902,880,677,346 900,399,951,735 897,919,226,124 895,438,500,513 892,957,774,902
% Change in Externalities 0% 902,365,634,902 899,884,909,291 897,404,183,680 894,923,458,069 892,442,732,458 889,962,006,847 887,481,281,236 885,000,555,625 882,519,830,013 0.5% 891,927,690,014 889,446,964,403 886,966,238,791 884,485,513,180 882,004,787,569 879,524,061,958 877,043,336,347 874,562,610,736 872,081,885,125 1.0% 881,489,745,125 879,009,019,514 876,528,293,903 874,047,568,292 871,566,842,681 869,086,117,070 866,605,391,459 864,124,665,848 861,643,940,236 1.5% 871,051,800,237 868,571,074,626 866,090,349,014 863,609,623,403 861,128,897,792 858,648,172,181 856,167,446,570 853,686,720,959 851,205,995,348 2.0% 860,613,855,348 858,133,129,737 855,652,404,126 853,171,678,515 850,690,952,904 848,210,227,293 845,729,501,682 843,248,776,070 840,768,050,459
IV. Sensitivity on % Change in Economic Savings and in α
% Change in Economic Savings######## -2.0% -1.5% -1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0%
-2.0% 796,537,909,450$ 803,133,231,040$ 809,728,552,630$ 816,323,874,220$ 822,919,195,810$ 829,514,517,400$ 836,109,838,990$ 842,705,160,581$ 849,300,482,171$ -1.5% 813,571,175,928 820,253,401,939 826,935,627,950 833,617,853,961 840,300,079,972 846,982,305,983 853,664,531,994 860,346,758,005 867,028,984,016 -1.0% 830,604,442,407 837,373,572,839 844,142,703,271 850,911,833,702 857,680,964,134 864,450,094,566 871,219,224,998 877,988,355,429 884,757,485,861 -0.5% 847,637,708,886 854,493,743,738 861,349,778,591 868,205,813,443 875,061,848,296 881,917,883,148 888,773,918,001 895,629,952,854 902,485,987,706
% Change in α 0% 864,670,975,364 871,613,914,638 878,556,853,911 885,499,793,184 892,442,732,458 899,385,671,731 906,328,611,005 913,271,550,278 920,214,489,551 0.5% 881,704,241,843 888,734,085,537 895,763,929,231 902,793,772,926 909,823,616,620 916,853,460,314 923,883,304,008 930,913,147,702 937,942,991,396 1.0% 898,737,508,322 905,854,256,437 912,971,004,552 920,087,752,667 927,204,500,782 934,321,248,897 941,437,997,012 948,554,745,127 955,671,493,242 1.5% 915,770,774,800 922,974,427,336 930,178,079,872 937,381,732,408 944,585,384,944 951,789,037,479 958,992,690,015 966,196,342,551 973,399,995,087 2.0% 932,804,041,279 940,094,598,236 947,385,155,192 954,675,712,149 961,966,269,105 969,256,826,062 976,547,383,019 983,837,939,975 991,128,496,932
V. Sensitivity on % Change in Tech. Costs and in α% Change in Tech. Costs
######## -2.0% -1.5% -1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0%-2.0% 905,587,719,327$ 912,739,417,499$ 919,891,115,670$ 927,042,813,841$ 934,194,512,012$ 941,346,210,183$ 948,497,908,354$ 955,649,606,525$ 962,801,304,697$ -1.5% 895,358,533,337 902,458,041,783 909,557,550,230 916,657,058,677 923,756,567,123 930,856,075,570 937,955,584,017 945,055,092,464 952,154,600,910 -1.0% 885,129,347,346 892,176,666,068 899,223,984,790 906,271,303,513 913,318,622,235 920,365,940,957 927,413,259,679 934,460,578,402 941,507,897,124 -0.5% 874,900,161,355 881,895,290,353 888,890,419,351 895,885,548,349 902,880,677,346 909,875,806,344 916,870,935,342 923,866,064,340 930,861,193,338
% Change in α 0% 864,670,975,364 871,613,914,638 878,556,853,911 885,499,793,184 892,442,732,458 899,385,671,731 906,328,611,005 913,271,550,278 920,214,489,551 0.5% 854,441,789,374 861,332,538,923 868,223,288,471 875,114,038,020 882,004,787,569 888,895,537,118 895,786,286,667 902,677,036,216 909,567,785,765 1.0% 844,212,603,383 851,051,163,207 857,889,723,032 864,728,282,856 871,566,842,681 878,405,402,505 885,243,962,330 892,082,522,154 898,921,081,979 1.5% 833,983,417,392 840,769,787,492 847,556,157,592 854,342,527,692 861,128,897,792 867,915,267,892 874,701,637,992 881,488,008,092 888,274,378,192 2.0% 823,754,231,401 830,488,411,777 837,222,592,152 843,956,772,528 850,690,952,904 857,425,133,279 864,159,313,655 870,893,494,031 877,627,674,406
VI. Sensitivity on % Change in Externalities and in α% Change in Externalities
######## -2.0% -1.5% -1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0%-2.0% 874,593,877,809$ 881,536,817,082$ 888,479,756,355$ 895,422,695,629$ 902,365,634,902$ 909,308,574,176$ 916,251,513,449$ 923,194,452,722$ 930,137,391,996$ -1.5% 872,113,152,198 879,056,091,471 885,999,030,744 892,941,970,018 899,884,909,291 906,827,848,564 913,770,787,838 920,713,727,111 927,656,666,385 -1.0% 869,632,426,587 876,575,365,860 883,518,305,133 890,461,244,407 897,404,183,680 904,347,122,953 911,290,062,227 918,233,001,500 925,175,940,774 -0.5% 867,151,700,975 874,094,640,249 881,037,579,522 887,980,518,796 894,923,458,069 901,866,397,342 908,809,336,616 915,752,275,889 922,695,215,162
% Change in α 0% 864,670,975,364 871,613,914,638 878,556,853,911 885,499,793,184 892,442,732,458 899,385,671,731 906,328,611,005 913,271,550,278 920,214,489,551 0.5% 862,190,249,753 869,133,189,027 876,076,128,300 883,019,067,573 889,962,006,847 896,904,946,120 903,847,885,394 910,790,824,667 917,733,763,940 1.0% 859,709,524,142 866,652,463,416 873,595,402,689 880,538,341,962 887,481,281,236 894,424,220,509 901,367,159,782 908,310,099,056 915,253,038,329 1.5% 857,228,798,531 864,171,737,804 871,114,677,078 878,057,616,351 885,000,555,625 891,943,494,898 898,886,434,171 905,829,373,445 912,772,312,718 2.0% 854,748,072,920 861,691,012,193 868,633,951,467 875,576,890,740 882,519,830,013 889,462,769,287 896,405,708,560 903,348,647,834 910,291,587,107
VII. Further Analysis
Results from the Sensitivity Analyses
High Median Low Mean######## 892,442,732,458$ 781,167,416,256$ 892,442,732,458$
The result shows that the output value of our Cost Benefit Analysis is the most sensitive to the changes in Economic Savings and in Technical Costs, for both the maximum and the minimum values were obtained from the sensitivity analysis on % change in Economic Savings and in Technical Costs.
Efficiency Analysis- Survey Result
Question: Would you use natural gas vehicle? Why and why not?Efficiencyn=100 Yes No
10 711 45 513 412 39 212 3
Total 72 28
YesMain Reasons Saving From Lower Price 42
Environmental Savings 12Safety 11Abundance 7
Total 72
NoMain Reasons Shorter Driving Distance 16
Slower Speed 5Intimidating Gas Tank Design 4Environmental Concern 3
Total 28
