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. Purpose
2. Background Information on Natural Gas
1. Reserve
2. Production
3. Consumption
1
2
2
3
3
4
II. Natural Gas and Natural Gas Vehicles
6
1. Technological Overview
2. Economic Overview
3. Social Overview
6
10
12
III. Cost-Benefit Analysis
1. Cost-Benefit Analysis Framework
2. General Assumptions
3. Economic Savings Analysis: Price
Difference in the Transportation Sector
4. Infrastructural Cost Analysis
5. Externality Analysis
1.Quantifiable Externalities
2.Unquantifiable Externalities
6. Efficiency Analysis
7. Cumulative Net Profit Calculation of Main
Function, αf(x) + e
8. Sensitivity Analysis
IV. Conclusion
1. Conclusion
2. Further Discussion and Limitations
Works Cited
Appendix
15
15
15
16
18
22
22
39
40
42
43
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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 s
uch 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 Novem
ber 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.
1
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 Figure 1. Typical Composition of Natural Gas
4
“Natural Gas in the Transportation Sector,” NaturalGas.org, FERC Natural Gas Market Analysis,
http://naturalgas.org/overview/background.asp.
2
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
Russia
22%
24%
Iran
Qatar
Saudi Arabia
United States
2%
3%
Turkmenistan
United Arab Emirates
3%
16%
4%
Nigeria
Venezuela
4%
4%
Algeria
4%
14%
Other (84 countries)
Figure 2. Percentage Distribution of Natural Gas World Reserve
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.
3
100%
7%
19%
80%
60%
Mexico
40%
74%
Canada
U.S
20%
0%
North
America
Figure 3. North America Production Distribution, 2010
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). 6.4% 1.6%
4.9%
Oil
Natural gas
33.1%
30.3%
Coal
Nuclear energy
23.7%
Hydro electricity
Renew- ables
Figure 4. World Primary Energy Consumption by Fuel Type, 2011
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.
4
3000.0
2500.0
Renewables
Hydro electricity
2000.0
Nuclear energy
1500.0
Coal
Natural gas
1000.0
Oil
500.0
0.0
China
U.S.
Russia
India
Japan
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. Natural Gas Consumption Trend in the Transportation Sector,
in million cubic feet
35000
30000
25000
20000
15000
10000
5000
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Figure 6. Natural Gas Consumption Trend, Transportation Sector
8
9
International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0201e.
International Energy Statistics, U.S. Energy Information Administration, http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0605.
5
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.
6
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/.
7
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 U
nion. . http://www.igu.org/html/wgc2009/papers/docs/wgcFinal00193.pdf .
8
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.
"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.
15
9
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 fuelstorage 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,"
10
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).
"U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012-2030)." Wood Mackenzie . ( 2011). http://www.api.org/newsroom/uploa
d/api-us_supply_economic_forecast.pdf.
23
"Shale Gas and New Petrochemicals Investment: Benefits for the Economy, Jobs, and US Manufacturing."Economics & Statistics American Ch
emistry 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/tabl
ebrowser/.
25
"Measuring the Impact of Coalbed Methane Wells on Property Values." BBC Research & Consulting. (2001 ). http://www.savecoloradofromfra
cking.org/harm/Resources/Property Values - Coal Bed Methane in SW CO.pdf.
22
11
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 26
Cobb, Kurt. "How Fracking Threatens the Health of the Mortgage Industry." OilPrice.Com. (2012 ). http://oilprice.com/Energy/Natural-Gas/Ho
w-Fracking-Threatens-the-Health-of-the-Mortgage-Industry.html.
12
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. 13
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/tri
al_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. 14
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 15
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. 35
30
Liquefied Petroleum Gases
25
E85 8/
20
Motor Gasoline 2/
15
Jet Fuel 9/
10
5
0
Distillate Fuel Oil 10/
Residual Fuel Oil
Figure 8. EIA Projection of Transportation Sector Energy Consumption by Fuel Types
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 16
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. 35
30
25
Liquefied Petroleum
Gases
E85 8/
20
15
Motor Gasoline 2/
10
Jet Fuel 9/
5
Distillate Fuel Oil 10/
0
Figure 9. Constant Rate Projection of Transportation Sector Energy Consumption by Fuel Types
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
Projection of Constant Annual Amount Change
35
Liquefied
Petroleum Gases
30
Motor Gasoline
2/
25
20
Distillate Fuel
Oil 10/
15
Residual Fuel
Oil
10
Pipeline Fuel
Natural Gas
5
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
0
Compressed /
Liquefied Natural
Gas
Figure 10. Change by Constant Amount – Projection of Transportation Sector Energy Consumption by Fuel Types
17
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
−[𝑃
𝐶
(𝐶
+𝑃
+𝐶
𝐶
+𝑃
+𝐶
+𝐶
𝐶
+𝑃
+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.
18
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 gasolinepowered 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,"
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.
36
19
Highway, total (registered vehicles)
Total Vehicle Growth Rate
Total Natural Gas Vehicles Growth Rate
% Gasoline Vehicles
% Natural Gas Vehicles
# Total Gasoline Vehicles
# Total Natural Gas Vehicles
Conversion Cost
255,556,134
1.05%
3.73%
85.74%
9.96%
219,124,051
25,443,169
$2,629,488,617,433
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
# of Gasoline Vehicles (2012)
Gasoline Fueling Stations (2012)
NG Fueling Stations (2012)
NG Stations to be Built (2012 E)
219,124,051
149,374
1,100
21,306
39
Reid, Keith. "2010 MarketFacts Industry Survey." National Petroleum News, August 16, 2010.
Cookson, Colter. "Stations To Enable Natural Gas Powered Trucks To Go From Coast to Coast." The American Oil & Gas Reporter,
November 2012.
40
20
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.
NG Refueling Station Type
CNG, small
CNG, medium
CNG, large
LNG, large
CNG/LNG, large
Average
Estimated Cost
$400,000
$600,000
$1,700,000
$1,700,000
$2,000,000
$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
NG Stations to be Built (2012 E)
Cost
$
NGVs (2035 E)
NG Stations Required (2035 E)
21,306
27,271,739,573.27
310,980,787
211,991
NG Stations to be Built (2010-35)
Cost (2012-35)
$
189,585
242,668,778,697.46
Total Cost
Cost per Year
$
$
269,940,518,270.73
11,247,521,594.61
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.
21
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 22
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 23
would yield the total environmental savings. The following table shows the notations used for the formulas for such calculation:
Notations
Units
EX
Gram/mile
Definitions
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
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).
24
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 =
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑁𝐺𝑉 𝑑𝑟𝑖𝑣𝑒𝑟
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑁𝐺𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
∗𝐸 ∗𝑃
For Petroleum-based Vehicles: 𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑃𝑉 𝑑𝑟𝑖𝑣𝑒𝑟
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑃𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
∗𝐸 ∗𝑃
For Scenario 2
For Natural Gas Vehicles: 𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑁𝐺𝑉 𝑑𝑟𝑖𝑣𝑒𝑟
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑁𝐺𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
∗𝐸 ∗𝑃
For Petroleum-based Vehicles: 𝑀𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡 =
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 𝑓𝑜𝑟 𝑦𝑒𝑎𝑟 𝑡 = 13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑃𝑉 𝑑𝑟𝑖𝑣𝑒𝑟
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑃𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
∗𝐸 ∗𝑃
25
∆𝐸𝐶 = 13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑃𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑃𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
−
∗𝐸 ∗𝑃
+
∗𝐸 ∗𝑃
+
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑁𝐺𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
13,350 𝑚𝑖𝑙𝑒𝑠
∗ 𝑉 ∗ 𝑁𝐺𝑉
𝑑𝑟𝑖𝑣𝑒𝑟
∗𝐸 ∗𝑃
∗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/.
26

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.
27
$800,000,000.00
$600,000,000.00
Scenario 2 Total
Cost of
Emission
Scenario 1 Total
Cost of
Emission
$400,000,000.00
$0.00
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
$200,000,000.00
Figure 11. Emission Costs of Scenario 1 and Scenario 2 for Carbon Dioxide
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.
28
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.
$50,000,000,000.00
$45,000,000,000.00
$40,000,000,000.00
$35,000,000,000.00
Scenario 1 Total
Cost of Emission
$30,000,000,000.00
$25,000,000,000.00
Scenario 2 Total
Cost of Emission
$20,000,000,000.00
$15,000,000,000.00
$10,000,000,000.00
$5,000,000,000.00
$0.00
Figure 12. Emission Costs of Scenario 1 and Scenario 2 for Methane
29
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. 30
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. $50,000,000,000.00
$45,000,000,000.00
$40,000,000,000.00
$35,000,000,000.00
$30,000,000,000.00
Scenario 1 Total
Cost of
Emission
Scenario 2 Total
Cost of
Emission
$25,000,000,000.00
$20,000,000,000.00
$15,000,000,000.00
$10,000,000,000.00
$5,000,000,000.00
$0.00
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Figure 13. Emission Costs of Scenario 1 and Scenario 2 for Nitrous Oxide
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
Total Change in CH4 Emission Costs
$1,420,077,900.50 ($216,000,235,707.51)
Total Change in N2O Emission Costs
$414,347,287,550.26 Aggregate Total Savings
$199,767,129,743.24
31
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
32
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 nonrenewable waste fluids called “flowback”. These highly toxic fluids are currently considered as nonrenewable 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 = ∑ 2035 𝑓(𝑥)
2012
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.
33

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

N2011 = N2010 + 16,000 = 538,627
o

19,000 is the EPA estimate of the number of newly built fracking wells in year 2011
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.
Marcellus Drilling News , "Record-Breaking 19K New Wells to be Fracked in 2012." Last modified 2010. http://marcellusdrilling.com/2012/0
1/record-breaking-19k-new-wells-to-be-fracked-in-2012/.
49
34
Average amount of industiral water loss per a
fracking well due to NGV (USD)
$60,000,000,000.00
$50,000,000,000.00
$40,000,000,000.00
$30,000,000,000.00
$20,000,000,000.00
$10,000,000,000.00
$-
Figure 14. Industrial Water Price in Thousand USD
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 35
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
(b) 𝑃
∗𝑊
∗𝑁 ∗𝐶∗𝑉
=
(c) 𝑁 = 𝑁
(1 + 𝑔)
(d) 𝑔 = (
+
(e) V = )
(f) 𝑓(𝑥) = ∑
2035
𝑓(𝑥)
2012
Variables

𝑃

𝑁
= 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑙𝑙𝑠 𝑖𝑛 𝑆𝑢𝑠𝑞𝑢𝑒ℎ𝑎𝑛𝑛𝑎, 𝑃𝐴, 𝑖𝑛 2012

𝑃
= 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 𝑆𝑢𝑠𝑞𝑢𝑒ℎ𝑎𝑛𝑛𝑎, 𝑃𝐴, 𝑖𝑛 2012

𝑊

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
= 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑎𝑓𝑓𝑒𝑐𝑡𝑒𝑑 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑎𝑖𝑙𝑦 𝑤𝑎𝑡𝑒𝑟 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑓𝑜𝑟 𝑈. 𝑆. 𝑎𝑑𝑢𝑙𝑡
= 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑢𝑠𝑒𝑑 𝑖𝑛 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑁𝐺𝑉𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑔𝑖𝑣𝑒𝑛 𝑦𝑒𝑎𝑟 𝑥
36

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

N2011 = N2010 + 16,000 = 538,627
o

19,000 is the EPA estimate of the number of newly built fracking wells in year 2011
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.
37
Amount of drinking water loss per annum
due to NGV (USD)
$3,500,000,000.00
$3,000,000,000.00
$2,500,000,000.00
$2,000,000,000.00
$1,500,000,000.00
$1,000,000,000.00
$500,000,000.00
$-
Figure 15. Drinking Water Price in Thousand 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.
38
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 modifie
d 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.
39
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 40
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. 41
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 42
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
$ 1,003,718,048,660
$
Median
892,442,732,458
$
Low
781,167,416,256
$
Mean
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.)
43
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 44
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. 45
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49
APPENDIX
Cost-Benefit Analysis
Feasibility of Natural Gas Vehicle Implementation in the U.S.
December 10th, 2012
Team 4
Seohyun Stephanie Chang
Yechan Cho
Seung Ho Andy Han
Hye Sung Kim
Hae Yun Park
Eugene Pyun
Jisun Yu
Economic Savings Analysis
Price Difference Analysis
Variables
x
Year
Price of Liquefied Petroleum Gases
Price of Motor Gasoline
Price of Diesel Fuel (distillate fuel oil)
Price of Residual Fuel Oil
Price of Natural Gas
2012
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
28.32 $
27.38
27.34
14.96
12.04
30.84 $
27.17
25.15
16.27
12.23
31.47 $
28.47
26.69
17.50
12.29
31.93 $
29.26
27.56
18.32
12.40
31.53 $
29.57
27.92
18.60
12.35
31.75 $
29.98
28.31
18.98
12.33
31.85 $
30.23
28.62
19.14
12.36
32.01 $
30.47
28.76
19.35
12.43
32.21 $
30.77
28.98
19.58
12.50
32.46 $
31.01
29.25
19.74
12.71
32.79 $
31.17
29.47
20.15
12.95
33.00 $
31.47
29.71
20.37
13.10
33.19 $
31.73
29.94
20.49
13.18
33.38 $
32.10
30.42
20.62
13.29
33.53 $
32.34
30.67
20.56
13.38
33.71 $
32.26
30.57
20.48
13.47
33.86 $
32.45
30.78
20.65
13.52
34.11 $
32.75
31.07
20.70
13.59
34.37 $
33.03
31.38
20.76
13.68
34.59 $
33.51
32.01
20.80
13.78
34.79 $
34.00
32.56
20.83
13.90
35.10 $
33.34
32.00
20.62
13.99
35.46 $
33.29
31.94
20.81
14.26
35.74
33.61
32.40
20.95
14.51
0.05
16.50
5.96
0.85
0.75
0.04
16.39
6.18
0.88
0.72
0.04
16.27
6.40
0.91
0.74
0.04
16.13
6.55
0.91
0.74
0.04
15.99
6.67
0.91
0.75
0.04
15.84
6.73
0.91
0.75
0.04
15.60
6.74
0.91
0.74
0.04
15.48
6.77
0.92
0.76
0.04
15.31
6.80
0.92
0.76
0.04
15.11
6.84
0.92
0.76
0.04
15.02
6.93
0.92
0.77
0.04
14.96
6.97
0.92
0.77
0.04
14.93
7.00
0.92
0.78
0.04
14.90
7.03
0.93
0.78
0.05
14.85
7.08
0.93
0.80
0.05
14.82
7.11
0.93
0.80
0.05
14.71
7.14
0.93
0.81
0.05
14.72
7.16
0.93
0.81
0.05
14.69
7.20
0.93
0.82
0.05
14.50
7.23
0.93
0.82
0.05
14.23
7.26
0.93
0.83
0.05
14.42
7.32
0.94
0.83
0.05
14.50
7.38
0.94
0.84
0.05
14.53
7.44
0.94
0.85
Current Trend (In quadrillion Btu)
Consumption of Liquefied Petroleum Gases
Consumption of Motor Gasoline
Consumption of Diesel Fuel (distillate fuel oil)
Consumption of Residual Fuel Oil
Consumption of Natural Gas
New Trend After Implementation (In quadrillion Btu)
Consumption of Liquefied Petroleum Gases
Consumption of Motor Gasoline
Consumption of Diesel Fuel (distillate fuel oil)
Consumption of Residual Fuel Oil
Consumption of Natural Gas
0.05
16.5
5.96
0.85
0.75
0.04782618
15.78263941
5.700880658
0.81304506
1.752608696
0.04565236
15.06527881
5.441761316
0.776090121
2.755217391
0.04347854
14.34791822
5.182641974
0.739135181
3.757826087
0.04130472
13.63055762
4.923522633
0.702180241
4.760434783
0.0391309
12.91319703
4.664403291
0.665225302
5.763043478
0.03695708
12.19583644
4.405283949
0.628270362
6.765652174
0.03478326
11.47847584
4.146164607
0.591315422
7.76826087
0.03260944
10.76111525
3.887045265
0.554360482
8.770869565
0.03043562
10.04375465
3.627925923
0.517405543
9.773478261
0.0282618
9.326394059
3.368806581
0.480450603
10.77608696
0.02608798
8.609033465
3.109687239
0.443495663
11.77869565
0.02391416
7.891672871
2.850567898
0.406540724
12.78130435
0.02174034
7.174312277
2.591448556
0.369585784
13.78391304
0.01956652
6.456951683
2.332329214
0.332630844
14.78652174
0.0173927
5.739591088
2.073209872
0.295675905
15.78913043
0.01521888
5.022230494
1.81409053
0.258720965
16.79173913
0.01304506
4.3048699
1.554971188
0.221766025
17.79434783
0.01087124
3.587509306
1.295851846
0.184811085
18.79695652
0.00869742
2.870148712
1.036732504
0.147856146
19.79956522
0.0065236
2.152788118
0.777613163
0.110901206
20.80217391
0.00434978
1.435427524
0.518493821
0.073946266
21.80478261
0.00217596
0.71806693
0.259374479
0.036991327
22.8073913
2.14041E-06
0.000706336
0.000255137
3.6387E-05
23.81
Dollar Values of Current Consumption
Consumption of Liquefied Petroleum Gases
Consumption of Motor Gasoline
Consumption of Diesel Fuel (distillate fuel oil)
Consumption of Residual Fuel Oil
Consumption of Natural Gas
Sum
Cumulative Total
$
$
1,416,000,000 $
451,770,000,000
162,946,400,000
12,716,000,000
9,030,000,000
637,878,400,000
17,041,516,400,000
1,233,600,000 $
445,316,300,000
155,427,000,000
14,317,600,000
8,805,600,000
625,100,100,000
1,258,800,000 $
463,206,900,000
170,816,000,000
15,925,000,000
9,094,600,000
660,301,300,000
1,277,200,000 $
471,963,800,000
180,518,000,000
16,671,200,000
9,176,000,000
679,606,200,000
1,261,200,000 $
472,824,300,000
186,226,400,000
16,926,000,000
9,262,500,000
686,500,400,000
1,270,000,000 $
474,883,200,000
190,526,300,000
17,271,800,000
9,247,500,000
693,198,800,000
1,274,000,000 $
471,588,000,000
192,898,800,000
17,417,400,000
9,146,400,000
692,324,600,000
1,280,400,000 $
471,675,600,000
194,705,200,000
17,802,000,000
9,446,800,000
694,910,000,000
1,288,400,000 $
471,088,700,000
197,064,000,000
18,013,600,000
9,500,000,000
696,954,700,000
1,298,400,000 $
468,561,100,000
200,070,000,000
18,160,800,000
9,659,600,000
697,749,900,000
1,311,600,000 $
468,173,400,000
204,227,100,000
18,538,000,000
9,971,500,000
702,221,600,000
1,320,000,000 $
470,791,200,000
207,078,700,000
18,740,400,000
10,087,000,000
708,017,300,000
1,327,600,000 $
473,728,900,000
209,580,000,000
18,850,800,000
10,280,400,000
713,767,700,000
1,335,200,000 $
478,290,000,000
213,852,600,000
19,176,600,000
10,366,200,000
723,020,600,000
1,676,500,000 $
480,249,000,000
217,143,600,000
19,120,800,000
10,704,000,000
728,893,900,000
1,685,500,000 $
478,093,200,000
217,352,700,000
19,046,400,000
10,776,000,000
726,953,800,000
1,693,000,000 $
477,339,500,000
219,769,200,000
19,204,500,000
10,951,200,000
728,957,400,000
1,705,500,000 $
482,080,000,000
222,461,200,000
19,251,000,000
11,007,900,000
736,505,600,000
1,718,500,000 $
485,210,700,000
225,936,000,000
19,306,800,000
11,217,600,000
743,389,600,000
1,729,500,000 $
485,895,000,000
231,432,300,000
19,344,000,000
11,299,600,000
749,700,400,000
1,739,500,000 $
483,820,000,000
236,385,600,000
19,371,900,000
11,537,000,000
752,854,000,000
1,755,000,000 $
480,762,800,000
234,240,000,000
19,382,800,000
11,611,700,000
747,752,300,000
1,773,000,000 $
482,705,000,000
235,717,200,000
19,561,400,000
11,978,400,000
751,735,000,000
1,787,000,000
488,353,300,000
241,056,000,000
19,693,000,000
12,333,500,000
763,222,800,000
1,416,000,000 $
451,770,000,000
162,946,400,000
12,716,000,000
9,030,000,000
637,878,400,000
12,213,493,021,692
1,474,959,392 $
428,814,312,658
143,377,148,552
13,228,243,131
21,434,404,348
608,329,068,081
1,436,679,770 $
428,908,487,772
145,240,609,531
13,581,577,111
33,861,621,739
623,028,975,923
1,388,269,784 $
419,820,087,050
142,833,612,814
13,540,956,514
46,597,043,478
624,179,969,640
1,302,337,824 $
403,055,588,929
137,464,751,900
13,060,552,487
58,791,369,565
613,674,600,705
1,242,406,078 $
387,137,646,944
132,049,257,158
12,625,976,223
71,058,326,087
604,113,612,490
1,177,083,001 $
368,680,135,441
126,079,226,614
12,025,094,725
83,623,460,870
591,585,000,652
1,113,412,157 $
349,749,158,884
119,243,694,095
11,441,953,418
96,559,482,609
578,107,701,162
1,050,350,067 $
331,119,516,155
112,646,571,781
10,854,378,246
109,635,869,565
565,306,685,814
987,940,230 $
311,456,831,792
106,116,833,253
10,213,585,414
124,220,908,696
552,996,099,384
926,704,428 $
290,703,702,818
99,278,729,951
9,681,079,651
139,550,326,087
540,140,542,935
860,903,346 $
270,926,283,139
92,388,807,883
9,034,006,662
154,300,913,043
527,510,914,075
793,710,978 $
250,402,780,189
85,346,002,853
8,330,019,427
168,457,591,304
513,330,104,751
725,692,557 $
230,295,424,081
78,831,865,064
7,620,858,865
183,188,204,348
500,662,044,914
656,065,424 $
208,817,817,414
71,532,536,988
6,838,890,158
197,843,660,870
485,688,970,853
586,307,926 $
185,159,208,513
63,378,025,785
6,055,442,525
212,679,586,957
467,858,571,707
515,311,286 $
162,971,379,541
55,837,706,516
5,342,587,924
227,024,313,043
451,691,298,311
444,967,007 $
140,984,489,233
48,312,954,818
4,590,556,721
241,825,186,957
436,158,154,735
373,644,530 $
118,495,432,382
40,663,830,938
3,836,678,134
257,142,365,217
420,511,951,201
300,843,770 $
96,178,683,340
33,185,807,468
3,075,407,832
272,838,008,696
405,578,751,105
226,956,056 $
73,194,796,010
25,319,084,574
2,310,072,123
289,150,217,391
390,201,126,154
152,677,291 $
47,857,153,644
16,591,802,263
1,524,772,013
305,048,908,696
371,175,313,907
77,159,556 $
23,904,448,090
8,284,420,855
769,789,508
325,233,400,000
358,269,218,009
76,498
23,739,940
8,266,438
762,307
345,483,100,000
345,515,945,184
Dollar Values of Consumption Trend with Implementation
Consumption of Liquefied Petroleum Gases
Consumption of Motor Gasoline
Consumption of Diesel Fuel (distillate fuel oil)
Consumption of Residual Fuel Oil
Consumption of Natural Gas
Sum
Cumulative Total
$
Net Profit
$
$
4,828,023,378,308
Technological Savings Analysis
Infrastructure Cost Analysis
Variables
T Year
N T Highway, total (registered vehicles)
Light duty vehicle, short wheel base
Motorcycle
Light duty vehicle, long wheel base
Truck, single-unit 2-axle 6-tire or more
Truck, combination
Bus
2012
255,556,134
194,218,011
2013
258,239,473
196,257,300
2014
260,950,988
198,318,001
2015
263,690,973
200,400,340
2016
266,459,728
202,504,544
2017
269,257,556
204,630,842
2018
272,084,760
206,779,466
2019
274,941,650
208,950,650
2020
277,828,537
211,144,632
2021
280,745,737
213,361,650
2022
283,693,567
215,601,948
2023
286,672,349
217,865,768
2024
289,682,409
220,153,359
2025
292,724,074
222,464,969
2026
295,797,677
224,800,851
8,390,656
2,606,757
863,911
8,478,758
2,634,128
872,982
8,567,785
2,661,786
882,149
8,657,747
2,689,735
891,411
8,748,653
2,717,977
900,771
8,840,514
2,746,516
910,229
8,933,339
2,775,354
919,786
9,027,139
2,804,495
929,444
9,121,924
2,833,942
939,203
9,217,704
2,863,699
949,065
9,314,490
2,893,768
959,030
9,412,292
2,924,152
969,100
9,511,122
2,954,856
979,276
9,610,988
2,985,882
989,558
9,711,904
3,017,234
999,948
2027
298,903,553
227,161,260
9,813,879
3,048,915
1,010,448
2028
302,042,040
229,546,453
9,916,924
3,080,928
1,021,057
2029
305,213,482
231,956,691
2030
308,418,223
234,392,236
2031
311,656,614
236,853,355
2032
314,929,009
239,340,315
2033
318,235,764
241,853,388
2034
321,577,239
244,392,849
2035
324,953,800
246,958,974
10,021,052
3,113,278
1,031,779
10,126,273
3,145,967
1,042,612
10,232,599
3,179,000
1,053,560
10,340,041
3,212,379
1,064,622
10,448,612
3,246,109
1,075,801
10,558,322
3,280,194
1,087,096
10,669,185
3,314,636
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%
85.74%
9.96%
82.02%
13.68%
78.29%
17.41%
74.56%
21.14%
70.83%
24.87%
67.10%
28.60%
63.38%
32.32%
59.65%
36.05%
55.92%
39.78%
52.19%
43.51%
48.46%
47.24%
44.74%
50.96%
41.01%
54.69%
37.28%
58.42%
33.55%
62.15%
29.82%
65.88%
26.10%
69.60%
22.37%
73.33%
18.64%
77.06%
14.91%
80.79%
11.18%
84.52%
7.46%
88.24%
3.73%
91.97%
0.00%
95.70%
R T % Gasoline Vehicles
% Natural Gas Vehicles
219,124,051
25,443,169
# Total Gasoline Vehicles
# Total Natural Gas Vehicles
Average Conversion Cost per unit Vehicle
$
12,000
Total Conversion Cost
Total Station Construction Cost
$
2,629,488,617,433
269,940,518,271
Total Infrastructure Cost
$
2,899,429,135,703
211,797,686
35,337,490
204,293,309
45436786
196,607,990
55,744,272
188,738,755
66,263,205
180,682,590
76996891
172,436,437
87,948,678
163,997,195
99,121,964
155,361,718
110520192
146,526,815
122,146,855
137,489,250
134,005,493
128,245,742
146099696
118,792,962
158,433,103
109,127,535
171,009,404
99,246,037
183832340
89,144,996
196,905,704
78,820,891
210,233,342
68,270,152
223819150
57,489,157
237,667,083
46,474,234
251,781,146
35,221,660
266165401
23,727,659
280,823,967
11,988,399
295,761,018
0
310,980,787
NG Refueling Station Type
Estimated Cost
CNG, small
CNG, medium
CNG, large
LNG, large
CNG/LNG, large
Average
$400,000
$600,000
$1,700,000
$1,700,000
$2,000,000
$1,280,000
Gasoline Vehicles (2010)
Gasoline Stations (2010)
Vehicles per Stations
233,254,261
159,006
1467
Gasoline Vehicles (2012)
Gasoline Stations (2012)
NG Fueling Stations (2012)
219,124,051
149,374
1,100
NG Stations to be Built (2012 E)
Cost
$
NGVs (2035 E)
NG Stations Required (2035 E)
21,306
27,271,739,573.27
310,980,787
211,991
NG Stations to be Built (2010-35)
Cost (2012-35)
$
189,585
242,668,778,697.46
Total Cost
Cost per Year
$
$
269,940,518,270.73
11,247,521,594.61
Externality Analysis
Emission Analysis
Given Information
Variables
PVt(S1)
NGVt(S2)
PVt (S2)
NGVt (S2)
𝐕𝐭
Year
% Gasoline Vehicles
% Natural Gas Vehicles
Total Natural Gas Vehicles Growth Rate
% Gasoline Vehicles
% Natural Gas Vehicles
Light duty vehicle, short wheel base
Motorcycle
Light duty vehicle, long wheel base
Truck, single-unit 2-axle 6-tire or morec,d
Truck, combinationc,d
Bus
Highway, total (registered vehicles)
2012
2013
85.74%
9.96%
3.73%
85.74%
9.96%
2014
85.74%
9.96%
3.73%
82.02%
13.68%
2015
85.74%
9.96%
3.73%
78.29%
17.41%
2016
85.74%
9.96%
3.73%
74.56%
21.14%
2017
85.74%
9.96%
3.73%
70.83%
24.87%
2018
85.74%
9.96%
3.73%
67.10%
28.60%
2019
85.74%
9.96%
3.73%
63.38%
32.32%
2020
85.74%
9.96%
3.73%
59.65%
36.05%
2021
85.74%
9.96%
3.73%
55.92%
39.78%
2022
85.74%
9.96%
3.73%
52.19%
43.51%
2023
85.74%
9.96%
3.73%
48.46%
47.24%
2024
85.74%
9.96%
3.73%
44.74%
50.96%
2025
85.74%
9.96%
3.73%
41.01%
54.69%
2026
85.74%
9.96%
3.73%
37.28%
58.42%
2027
85.74%
9.96%
3.73%
33.55%
62.15%
2028
85.74%
9.96%
3.73%
29.82%
65.88%
2029
85.74%
9.96%
3.73%
26.10%
69.60%
2030
85.74%
9.96%
3.73%
22.37%
73.33%
2031
85.74%
9.96%
3.73%
18.64%
77.06%
2032
85.74%
9.96%
3.73%
14.91%
80.79%
2033
85.74%
9.96%
3.73%
11.18%
84.52%
2034
85.74%
9.96%
3.73%
7.46%
88.24%
2035
85.74%
9.96%
3.73%
3.73%
91.97%
85.74%
9.96%
3.73%
0.00%
95.70%
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
8,390,656
2,606,757
863,911
8,478,758
2,634,128
872,982
8,567,785
2,661,786
882,149
8,657,747
2,689,735
891,411
8,748,653
2,717,977
900,771
8,840,514
2,746,516
910,229
8,933,339
2,775,354
919,786
9,027,139
2,804,495
929,444
9,121,924
2,833,942
939,203
9,217,704
2,863,699
949,065
9,314,490
2,893,768
959,030
9,412,292
2,924,152
969,100
9,511,122
2,954,856
979,276
9,610,988
2,985,882
989,558
9,711,904
3,017,234
999,948
9,813,879
3,048,915
1,010,448
9,916,924
3,080,928
1,021,057
10,021,052
3,113,278
1,031,779
10,126,273
3,145,967
1,042,612
10,232,599
3,179,000
1,053,560
10,340,041
3,212,379
1,064,622
10,448,612
3,246,109
1,075,801
10,558,322
3,280,194
1,087,096
10,669,185
3,314,636
1,098,511
255,556,134
1.05%
258,239,473
1.05%
260,950,988
1.05%
263,690,973
1.05%
266,459,728
1.05%
269,257,556
1.05%
272,084,760
1.05%
274,941,650
1.05%
277,828,537
1.05%
280,745,737
1.05%
283,693,567
1.05%
286,672,349
1.05%
289,682,409
1.05%
292,724,074
1.05%
295,797,677
1.05%
298,903,553
1.05%
302,042,040
1.05%
305,213,482
1.05%
308,418,223
1.05%
311,656,614
1.05%
314,929,009
1.05%
318,235,764
1.05%
321,577,239
1.05%
324,953,800
1.05%
Year
Vt x NGVt(S1) * 1 driver/1.3 vehicle
Vt x PVt(S1) * 1 driver/1.3 vehicle
Vt x NGVt (S2)
Vt x PVt (S2)
Vt x NGVt (S2) x 1 driver/1.3 vehicle
Vt x PVt (S2) x 1 driver/1.3 vehicle
Scenario 1 (No Replacement)
# of Natural Gas Vehicle Drivers
# of Gasoline Vehicle Drivers
Scenario 2 (Replacement by 2035)
# of Natural Gas Vehicles
# of Gasoline Vehicles
# of NGV Drivers
# of Gasoline Vehicle Drivers
Number of Miles Drive per Driver
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
4914541.04
183214089.84
4966143.717
185137837.8
5018288.23
187081785.08
5070980.253
189046143.8
5124225.55
191031128.34
5178029.914
193036955.2
5232399.23
195063843.21
5287339.42
197112013.6
5342856.48
199181689.71
5398956.477
201273097.5
5455645.52
203386464.98
5512929.798
205522022.9
5570815.56
207680004.10
5629309.124
209860644.1
5688416.87
212064180.90
5748145.247
214290854.8
5808500.77
216540908.78
5869490.03
218814588.3
5931119.68
221112141.50
5993396.432
223433819
6056327.09
225779874.08
6119918.529
228150562.8
6184177.67
230546143.67
6249111.539
232966878.2
25443168.69
219124051.5
19571668.22
168556962.7
13,350
35337489.53
211797686.4
27182684.25
162921297.3
13,350
45436785.99
204293309.3
34951373.84
157148699.5
13,350
55744271.72
196607989.6
42880209.02
151236915.1
13,350
66263205.25
188738754.8
50971696.35
145183657.5
13,350
76996890.58
180682590.1
59228377.37
138986607.7
13,350
87948677.77
172436437.4
67652829.06
132643413.4
13,350
99121963.6
163997195.3
76247664.3
126151688.7
13,350
110520192.1
155361718
85015532.37
119509013.8
13,350
122146855.2
146526814.9
93959119.36
112712934.6
13,350
134005493.3
137489250.3
103081148.7
105760961.8
13,350
146099696.2
128245742.3
112384381.7
98650570.97
13,350
158433103.2
118792962.3
121871617.9
91379201.8
13,350
171009404.3
109127535
131545695.6
83944257.66
13,350
183832340.4
99246036.66
141409492.6
76343105.13
13,350
196905704.5
89144995.6
151465926.5
68573073.54
13,350
210233341.6
78820890.8
161717955.1
60631454.46
13,350
223819150.3
68270151.56
172168577.2
52515501.2
13,350
237667082.7
57489156.79
182820832.9
44222428.3
13,350
251781145.7
46474234.35
193677804.4
35749411.04
13,350
266165401.2
35221660.36
204742616.3
27093584.89
13,350
280823967.2
23727658.53
216018436.3
18252045.02
13,350
295761018.3
11988399.47
227508475.6
9221845.747
13,350
310980786.6
1.2176E-07
239215989.7
9.36618E-08
13,350
CO2 Analysis
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
Eco2,ngv x Vt x NGVt(S1) x 1driver/1.3 vehicle
Eco2,pv x Vt x PVt(S1) x 1driver/1.3 vehicle
Scenario 1
Emission from NGV (g)
Emission from Gasoline Vehicles (g)
Total Emission (g)
2.22021E+11
1.03462E+13
1.05682E+13
2.24352E+11
1.04548E+13
1.06792E+13
2.26708E+11
1.05646E+13
1.07913E+13
2.29089E+11
1.06755E+13
1.09046E+13
2.31494E+11
1.07876E+13
1.10191E+13
2.33925E+11
1.09009E+13
1.11348E+13
2.36381E+11
1.10154E+13
1.12517E+13
2.38863E+11
1.1131E+13
1.13699E+13
2.41371E+11
1.12479E+13
1.14893E+13
2.43905E+11
1.1366E+13
1.16099E+13
2.46466E+11
1.14853E+13
1.17318E+13
2.49054E+11
1.16059E+13
1.1855E+13
2.51669E+11
1.17278E+13
1.19795E+13
2.54312E+11
1.18509E+13
1.21052E+13
2.56982E+11
1.19754E+13
1.22324E+13
2.59681E+11
1.21011E+13
1.23608E+13
2.62407E+11
1.22282E+13
1.24906E+13
2.65162E+11
1.23566E+13
1.26217E+13
2.67947E+11
1.24863E+13
1.27543E+13
2.7076E+11
1.26174E+13
1.28882E+13
2.73603E+11
1.27499E+13
1.30235E+13
2.76476E+11
1.28838E+13
1.31603E+13
2.79379E+11
1.30191E+13
1.32984E+13
2.82312E+11
1.31558E+13
1.34381E+13
Eco2,ngv x Vt x NGVt(S2) x 1driver/1.3 vehicle
Eco2,pv x Vt x PVt(S2) x 1driver/1.3 vehicle
Scenario 2
Emission from NGV (g)
Emission from Gasoline Vehicles (g)
Total Emission (g)
8.84178E+11
9.5185E+12
1.04027E+13
1.22802E+12
9.20025E+12
1.04283E+13
1.57898E+12
8.87427E+12
1.04532E+13
1.93717E+12
8.54042E+12
1.04776E+13
2.30272E+12
8.19859E+12
1.05013E+13
2.67572E+12
7.84864E+12
1.05244E+13
3.05631E+12
7.49044E+12
1.05468E+13
3.44459E+12
7.12385E+12
1.05684E+13
3.8407E+12
6.74873E+12
1.05894E+13
4.24473E+12
6.36496E+12
1.06097E+13
4.65684E+12
5.97237E+12
1.06292E+13
5.07712E+12
5.57085E+12
1.0648E+13
5.50572E+12
5.16023E+12
1.0666E+13
5.94276E+12
4.74037E+12
1.06831E+13
6.38837E+12
4.31113E+12
1.06995E+13
6.84269E+12
3.87236E+12
1.0715E+13
7.30584E+12
3.42389E+12
1.07297E+13
7.77796E+12
2.96558E+12
1.07435E+13
8.25919E+12
2.49726E+12
1.07564E+13
8.74967E+12
2.01879E+12
1.07685E+13
9.24953E+12
1.52999E+12
1.07795E+13
9.75894E+12
1.0307E+12
1.07896E+13
1.0278E+13
5.20762E+11
1.07988E+13
1.08069E+13
0.005289126
1.08069E+13
4.23
3.384
4.23
3.384
1
$30.60
1.10231E-06
$351,752,780.04
$360,216,350.77
$8,463,570.73
4.23
3.384
2
$31.21
1.10231E-06
$359,647,278.92
$371,278,594.90
$11,631,315.98
4.23
3.384
3
$31.84
1.10231E-06
$367,694,918.43
$382,680,560.55
$14,985,642.12
4.23
3.384
4
$32.47
1.10231E-06
$375,897,659.14
$394,432,680.56
$18,535,021.43
4.23
3.384
5
$33.12
1.10231E-06
$384,257,437.59
$406,545,708.18
$22,288,270.59
4.23
3.384
6
$33.78
1.10231E-06
$392,776,163.02
$419,030,726.88
$26,254,563.86
4.23
3.384
7
$34.46
1.10231E-06
$401,455,713.80
$431,899,160.51
$30,443,446.71
4.23
3.384
8
$35.15
1.10231E-06
$410,297,933.77
$445,162,783.72
$34,864,849.95
4.23
3.384
9
$35.85
1.10231E-06
$419,304,628.37
$458,833,732.81
$39,529,104.44
4.23
3.384
10
$36.57
1.10231E-06
$428,477,560.48
$472,924,516.75
$44,446,956.26
4.23
3.384
11
$37.30
1.10231E-06
$437,818,446.18
$487,448,028.66
$49,629,582.48
4.23
3.384
12
$38.05
1.10231E-06
$447,328,950.12
$502,417,557.62
$55,088,607.49
4.23
3.384
13
$38.81
1.10231E-06
$457,010,680.85
$517,846,800.81
$60,836,119.96
4.23
3.384
14
$39.58
1.10231E-06
$466,865,185.71
$533,749,876.06
$66,884,690.35
4.23
3.384
15
$40.38
1.10231E-06
$476,893,945.62
$550,141,334.76
$73,247,389.14
4.23
3.384
16
$41.18
1.10231E-06
$487,098,369.48
$567,036,175.15
$79,937,805.67
4.23
3.384
17
$42.01
1.10231E-06
$497,479,788.43
$584,449,856.09
$86,970,067.66
4.23
3.384
18
$42.85
1.10231E-06
$508,039,449.65
$602,398,311.17
$94,358,861.51
4.23
3.384
19
$43.70
1.10231E-06
$518,778,510.04
$620,897,963.30
$102,119,453.26
4.23
3.384
20
$44.58
1.10231E-06
$529,698,029.44
$639,965,739.76
$110,267,710.32
4.23
3.384
21
$45.47
1.10231E-06
$540,798,963.57
$659,619,087.62
$118,820,124.05
4.23
3.384
22
$46.38
1.10231E-06
$552,082,156.70
$679,875,989.80
$127,793,833.11
4.23
3.384
23
$47.31
1.10231E-06
$563,548,333.82
$700,754,981.45
$137,206,647.63
Eco2, pv
Eco2, ngv
Pco2,t
∆ECco2(t)
Σ∆ECco2
CO2 Emission (g/mile)
Gasoline
Natural Gas
Cost of CO2 ($/ton)
Ton/gram
Scenario 2 Total Cost of Emission
Scenario 1 Total Cost of Emission
Reduction in Cost
Total Reduction in Cost of CO2 Emission
$30.00
1.10231E-06
$344,009,440.37
$349,483,706.15
$5,474,265.78
$1,420,077,900.50
Methane Analysis
Year
Ech4, pv
Ech4, ngv
CH4 Emission (g/mile)
Petroleum
Natural Gas
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
3.5148
14.0592
Emission from NGV (g)
Emission from Gasoline Vehicles (g)
Total Emission (g)
3.67341E+12
7.90913E+12
1.15825E+13
5.10193E+12
7.64469E+12
1.27466E+13
6.56003E+12
7.37382E+12
1.39339E+13
8.0482E+12
7.09643E+12
1.51446E+13
9.56689E+12
6.81239E+12
1.63793E+13
1.11166E+13
6.52161E+12
1.76382E+13
1.26978E+13
6.22397E+12
1.89218E+13
1.43109E+13
5.91936E+12
2.02303E+13
1.59566E+13
5.60767E+12
2.15643E+13
1.76352E+13
5.28878E+12
2.2924E+13
1.93473E+13
4.96258E+12
2.43099E+13
2.10935E+13
4.62894E+12
2.57224E+13
2.28741E+13
4.28775E+12
2.71619E+13
2.46899E+13
3.93888E+12
2.86287E+13
2.65412E+13
3.58222E+12
3.01234E+13
2.84287E+13
3.21763E+12
3.16463E+13
3.03529E+13
2.84498E+12
3.31979E+13
3.23144E+13
2.46416E+12
3.47785E+13
3.43137E+13
2.07503E+12
3.63887E+13
3.63514E+13
1.67745E+12
3.80289E+13
3.84282E+13
1.2713E+12
3.96995E+13
4.05446E+13
8.56433E+11
4.1401E+13
4.27011E+13
4.32713E+11
4.31339E+13
4.48985E+13
0.004394851
4.48985E+13
Scenario 1
Emission from NGV (g)
Emission from Gasoline Vehicles (g)
Total Emission (g)
9.22412E+11
8.59688E+12
9.51929E+12
9.32097E+11
8.68715E+12
9.61924E+12
1
$209
1.10231E-06
$2,217,170,174.55
$2,938,008,291.76
$720,838,117.21
9.41884E+11
8.77836E+12
9.72024E+12
2
$213
1.10231E-06
$2,285,259,470.61
$3,275,892,878.33
$990,633,407.72
9.51774E+11
8.87053E+12
9.82231E+12
3
$218
1.10231E-06
$2,355,439,788.95
$3,631,759,488.55
$1,276,319,699.59
9.61768E+11
8.96367E+12
9.92544E+12
4
$222
1.10231E-06
$2,427,775,344.87
$4,006,393,917.95
$1,578,618,573.08
9.71866E+11
9.05779E+12
1.00297E+13
5
$226
1.10231E-06
$2,502,332,325.71
$4,400,613,266.75
$1,898,280,941.04
9.82071E+11
9.1529E+12
1.0135E+13
6
$240
1.10231E-06
$2,683,377,781.07
$5,009,803,913.13
$2,326,426,132.05
9.92382E+11
9.249E+12
1.02414E+13
7
$245
1.10231E-06
$2,765,784,312.73
$5,463,388,826.12
$2,697,604,513.39
1.0028E+12
9.34612E+12
1.03489E+13
8
$260
1.10231E-06
$2,965,890,699.55
$6,180,088,527.44
$3,214,197,827.89
1.01333E+12
9.44425E+12
1.04576E+13
9
$265
1.10231E-06
$3,056,973,202.93
$6,701,169,630.43
$3,644,196,427.50
1.02397E+12
9.54342E+12
1.05674E+13
10
$293
1.10231E-06
$3,410,584,456.26
$7,845,930,567.76
$4,435,346,111.49
1.03472E+12
9.64362E+12
1.06783E+13
11
$299
1.10231E-06
$3,515,323,504.92
$8,467,842,061.37
$4,952,518,556.46
1.04559E+12
9.74488E+12
1.07905E+13
12
$330
1.10231E-06
$3,921,953,811.40
$9,872,378,617.35
$5,950,424,805.95
1.05657E+12
9.8472E+12
1.09038E+13
13
$336
1.10231E-06
$4,042,397,012.95
$10,613,642,389.82
$6,571,245,376.87
1.06766E+12
9.9506E+12
1.10183E+13
14
$386
1.10231E-06
$4,692,199,668.60
$12,828,255,652.10
$8,136,055,983.50
1.07887E+12
1.00551E+13
1.1134E+13
15
$394
1.10231E-06
$4,836,297,120.42
$13,746,331,024.60
$8,910,033,904.18
1.0902E+12
1.01607E+13
1.12509E+13
16
$453
1.10231E-06
$5,613,716,731.18
$16,564,380,903.54
$10,950,664,172.36
1.10165E+12
1.02673E+13
1.1369E+13
17
$462
1.10231E-06
$5,786,113,971.99
$17,700,126,322.70
$11,914,012,350.71
1.11321E+12
1.03752E+13
1.14884E+13
18
$552
1.10231E-06
$6,987,548,698.13
$22,132,654,248.49
$15,145,105,550.36
1.1249E+12
1.04841E+13
1.1609E+13
19
$563
1.10231E-06
$7,202,136,318.65
$23,592,858,647.55
$16,390,722,328.91
1.13671E+12
1.05942E+13
1.17309E+13
20
$673
1.10231E-06
$8,697,595,398.34
$29,434,280,985.28
$20,736,685,586.94
1.14865E+12
1.07054E+13
1.18541E+13
21
$686
1.10231E-06
$8,964,698,553.03
$31,309,730,899.85
$22,345,032,346.82
1.16071E+12
1.08178E+13
1.19785E+13
22
$853
1.10231E-06
$11,263,513,859.90
$40,559,127,582.96
$29,295,613,723.06
1.1729E+12
1.09314E+13
1.21043E+13
23
$870
1.10231E-06
$11,609,416,370.54
$43,062,835,141.88
$31,453,418,771.34
Scenario 2
Ech4,ngv x Vt x NGVt(S2) x 1driver/1.3 vehicle
Ech4,pv x Vt x PVt(S2) x 1driver/1.3 vehicle
Ech4,ngv x Vt x NGVt(S1) x 1driver/1.3 vehicle
Ech4,pv x Vt x PVt(S1) x 1driver/1.3 vehicle
Pch4,t
∆ECch4(t)
Σ∆ECch4
Cost of CH4 ($/ton)
Ton/gram
Scenario 1 Total Cost of Emission
Scenario 2 Total Cost of Emission
Increase in Cost of Methane Emission
Total Increase in Cost of Methane Emission
$205
1.10231E-06
$2,151,109,598.77
$2,617,350,097.85
$466,240,499.08
$216,000,235,707.51
Nitrous Oxide Analysis
Year
En2o, pv
En2o, ngv
En2o,ngv x Vt x NGVt(S2) x 1driver/1.3 vehicle
En2o,pv x Vt x PVt(S2) x 1driver/1.3 vehicle
N2O Emission (g/mile)
Petroleum
Natural Gas
Scenario 2
Emission from NGV (g)
Emission from Gasoline Vehicles (g)
Total Emission (g)
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
1.4422
0.187486
48986674079
3.24529E+12
3.29428E+12
68036576074
3.13678E+12
3.20482E+12
87481125231
3.02564E+12
3.11312E+12
1.07327E+11
2.91182E+12
3.01915E+12
1.27579E+11
2.79527E+12
2.92285E+12
1.48245E+11
2.67596E+12
2.82421E+12
1.69331E+11
2.55383E+12
2.72316E+12
1.90843E+11
2.42885E+12
2.61969E+12
2.12789E+11
2.30095E+12
2.51374E+12
2.35174E+11
2.1701E+12
2.40528E+12
2.58006E+11
2.03625E+12
2.29426E+12
2.81291E+11
1.89936E+12
2.18065E+12
3.05037E+11
1.75936E+12
2.06439E+12
3.29251E+11
1.61621E+12
1.94546E+12
3.53939E+11
1.46986E+12
1.8238E+12
3.7911E+11
1.32026E+12
1.69937E+12
4.0477E+11
1.16736E+12
1.57213E+12
4.30927E+11
1.0111E+12
1.44203E+12
4.57589E+11
8.51431E+11
1.30902E+12
4.84764E+11
6.88297E+11
1.17306E+12
5.12458E+11
5.21643E+11
1.0341E+12
5.40681E+11
3.51413E+11
8.92094E+11
5.6944E+11
1.77552E+11
7.46991E+11
5.98743E+11
0.001803304
5.98743E+11
12300792004
3.52749E+12
3.53979E+12
12429950320
3.56453E+12
3.57696E+12
1
$6,020
1.10231E-06
$23,736,531,883.25
$21,267,049,347.60
$2,469,482,535.65
12560464799
3.60195E+12
3.61452E+12
2
$6,140
1.10231E-06
$24,465,480,777.39
$21,071,720,318.30
$3,393,760,459.09
12692349679
3.63978E+12
3.65247E+12
3
$6,263
1.10231E-06
$25,216,815,692.06
$20,844,337,138.57
$4,372,478,553.49
12825619351
3.67799E+12
3.69082E+12
4
$6,389
1.10231E-06
$25,991,224,101.97
$20,583,115,258.13
$5,408,108,843.84
12960288354
3.71661E+12
3.72957E+12
5
$6,516
1.10231E-06
$26,789,414,594.14
$20,286,190,749.96
$6,503,223,844.17
13096371382
3.75564E+12
3.76873E+12
6
$6,647
1.10231E-06
$27,612,117,516.32
$19,951,617,118.12
$7,660,500,398.20
13233883281
3.79507E+12
3.8083E+12
7
$6,780
1.10231E-06
$28,460,085,645.25
$19,577,361,984.14
$8,882,723,661.11
13372839056
3.83492E+12
3.84829E+12
8
$6,915
1.10231E-06
$29,334,094,875.41
$19,161,303,647.92
$10,172,791,227.49
13513253866
3.87519E+12
3.8887E+12
9
$7,053
1.10231E-06
$30,234,944,929.04
$18,701,227,518.34
$11,533,717,410.70
13655143031
3.91587E+12
3.92953E+12
10
$7,195
1.10231E-06
$31,163,460,087.81
$18,194,822,408.85
$12,968,637,678.96
13798522033
3.95699E+12
3.97079E+12
11
$7,338
1.10231E-06
$32,120,489,947.11
$17,639,676,693.18
$14,480,813,253.92
13943406515
3.99854E+12
4.01248E+12
12
$7,485
1.10231E-06
$33,106,910,193.38
$17,033,274,316.05
$16,073,635,877.33
14089812283
4.04052E+12
4.05461E+12
13
$7,635
1.10231E-06
$34,123,623,405.42
$16,372,990,653.50
$17,750,632,751.92
14237755312
4.08295E+12
4.09719E+12
14
$7,788
1.10231E-06
$35,171,559,880.20
$15,656,088,217.56
$19,515,471,662.64
14387251743
4.12582E+12
4.14021E+12
15
$7,943
1.10231E-06
$36,251,678,484.12
$14,879,712,199.38
$21,371,966,284.74
14538317886
4.16914E+12
4.18368E+12
16
$8,102
1.10231E-06
$37,364,967,530.37
$14,040,885,845.18
$23,324,081,685.19
14690970224
4.21292E+12
4.22761E+12
17
$8,264
1.10231E-06
$38,512,445,683.23
$13,136,505,658.72
$25,375,940,024.51
14845225411
4.25715E+12
4.272E+12
18
$8,430
1.10231E-06
$39,695,162,890.16
$12,163,336,424.20
$27,531,826,465.96
15001100278
4.30185E+12
4.31686E+12
19
$8,598
1.10231E-06
$40,914,201,342.52
$11,118,006,042.95
$29,796,195,299.56
15158611831
4.34702E+12
4.36218E+12
20
$8,770
1.10231E-06
$42,170,676,465.74
$9,997,000,177.24
$32,173,676,288.51
15317777255
4.39267E+12
4.40798E+12
21
$8,945
1.10231E-06
$43,465,737,940.01
$8,796,656,694.17
$34,669,081,245.84
15478613916
4.43879E+12
4.45427E+12
22
$9,124
1.10231E-06
$44,800,570,752.14
$7,513,159,902.51
$37,287,410,849.64
15641139362
4.4854E+12
4.50104E+12
23
$9,307
1.10231E-06
$46,176,396,279.94
$6,142,534,574.91
$40,033,861,705.03
Scenario 1
En2o,ngv x Vt x NGVt(S1) x 1driver/1.3 vehicle
En2o,pv x Vt x PVt(S1) x 1driver/1.3 vehicle
Pn2o,t
∆ECn2o(t)
Σ∆ECn2o
Emission from NGV (g)
Emission from Gasoline Vehicles (g)
Total Emission (g)
Cost of N2O ($/ton)
Ton/gram
Scenario 1 Total Cost of Emission
Scenario 2 Total Cost of Emission
Reduction in Cost of Emission
Total Reduction in Cost of Nitrous Oxide Emission
Total Reduction in Cost of Emission from Replacement
$5,902
1.10231E-06
$23,029,302,018.27
$21,432,032,475.50
$1,597,269,542.77
$414,347,287,550.26
$199,767,129,743.24
Industrial Water Loss
Variables
x
year
W
Average total amount of water used in a fracking well (U.S. gallons)
Nx
Fracking sites in the U.S.
C
Average price of industrial water per U.S. gallon
$
2012
3,045,750.00
522,627.00
0.45
2013
3,073,131.29
524,181.47
$
0.45
2014
3,100,758.74
525,740.56
$
0.45
2015
3,128,634.56
527,304.28
$
0.45
2016
3,156,760.99
528,872.66
$
0.45
0.0020
0.02
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
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
V
% of NG used in operating NGVs out of total NG consumption
Inflation rate
f(x)
Average amount of industiral water loss per a fracking well due to NGV (USD)
$
Sum
$ 663,246,531,709
$
2017
3,185,140.27
530,445.70
0.45
$
2018
3,213,774.68
532,023.42
0.45
$
2019
3,242,666.52
533,605.84
0.45
$
2020
3,271,818.09
535,192.96
0.45
$
2021
3,301,231.73
536,784.80
0.45
$
2022
3,330,909.81
538,381.38
0.45
$
2023
3,360,854.68
539,982.70
0.45
$
2024
3,391,068.77
541,588.79
0.45
$
2025
3,421,554.48
543,199.65
0.45
$
2026
3,452,314.25
544,815.31
0.45
$
2027
3,483,350.56
546,435.77
0.45
$
2028
3,514,665.88
548,061.05
0.45
$
2029
3,546,262.72
549,691.17
0.45
$
2030
3,578,143.63
551,326.13
0.45
$
2031
3,610,311.14
552,965.96
0.45
$
2032
3,642,767.83
554,610.66
0.45
$
2033
3,675,516.32
556,260.26
0.45
$
2034
3,708,559.21
557,914.76
0.45
$
2035
3,741,899.16
559,574.18
0.45
Variables
x
NGNGVx
Year
Amount of NG consumed for NGVs in year x , in U.S.
NGTotal
Amount of NG consumed in year , in U.S.
NGNGVx – NGNGVx-1 Amount of increase in NG for NGVs in year x , in U.S.
2012
0.05
23.61
1.003
2013
0.12
22.85
1.003
2014
0.18
23.40
1.003
2015
0.25
23.89
1.003
2016
0.32
23.86
1.003
2017
0.38
23.82
1.003
2018
0.45
23.87
1.003
2019
0.52
23.94
1.003
2020
0.58
23.85
1.003
2021
0.65
23.85
1.003
2022
0.72
23.81
1.003
2023
0.79
23.80
1.003
2024
0.85
23.85
1.003
2025
0.92
23.89
1.003
2026
0.99
23.97
1.003
2027
1.05
24.11
1.003
2028
1.12
24.24
1.003
2029
1.19
24.35
1.003
2030
1.25
24.45
1.003
2031
1.32
24.53
1.003
2032
1.39
24.68
1.003
2033
1.45
24.77
1.003
2034
1.52
24.87
1.003
2035
1.59
24.94
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 Water
Avg. cost for 50 U.S. gallons
Avg. cost for 100 U.S. gallons
Avg. cost for 150 U.S. gallons
Phoenix6
Fresno1
Memphis2, 8
Chicago4
Baltimore4
New York2
San Antonio7
Salt Lake City2
Los Angeles7
Seattle2
Santa Fe2
Charlotte10
Dallas1
Las Vegas2
Tucson2
Denver5
Austin1
Jacksonville1
Houston3
Fort Worth1
Columbus1
San Jose2
Philadelphia1, 8
San Francisco1
Boston1
Atlanta7
San Diego9
Milwaukee1
Detroit1, 8
Indianapolis1
$
11.02
15.99
16.02
16.08
19.25
20.88
12.21
14.48
27.18
42.15
43.28
14.16
16.16
17.18
17.46
18.24
19.18
19.54
21.97
22.20
23.95
24.51
27.34
30.63
31.84
33.83
44.05
16.11
16.22
25.24
$
34.29
21.95
26.50
24.12
39.50
41.76
19.64
22.89
58.49
72.78
121.42
35.68
37.81
32.93
33.04
33.01
47.17
30.04
39.49
43.48
43.06
40.93
49.03
58.47
65.47
72.95
70.95
26.83
28.36
41.26
$
59.84
27.91
36.98
36.18
79.00
62.64
32.94
32.67
99.07
117.33
224.26
78.24
65.30
52.72
72.64
58.33
94.30
40.55
71.17
67.24
62.18
59.09
68.82
86.31
99.72
112.07
99.52
37.55
40.55
56.79
Avg. price of ind. water per 50, 100, 150 U.S. gallons
Avg. price of ind. water per U.S. gallon
$
22.61
0.45
$
43.78
0.44
$
71.06
0.47
Average
$
0.45
Drinking Water Loss
Variables
x
Year
P Aff
Population affected by a fracking site
2012
W Avg
Fracking sites in the U.S.
Average price of bottled water
Inflation rate
Average number of bottled water consumption per day
V
% of NG used in operating NGVs out of total NG consumption
f(x)
Amount of drinking water loss per annum due to NGV (USD)
$
Sum
$
Nx
C
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
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
522,627.00
0.42
0.02
2.73
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
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
0.02
2.73
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
60,942,395 $
32,665,720,252
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
Results - Cost Benefit Analysis
Main Function
α*f(x) + e
Efficiency
α
0.72
Benefit
$
4,828,023,378,307.77
Sensitivity
0%
Cost
$
(2,899,429,135,703.44)
Sensitivity
0%
$
199,767,129,743.24
(32,665,720,251.83)
(663,246,531,708.70)
Sensitivity
Sensitivity
Sensitivity
0%
0%
0%
$
892,442,732,457.84
Externalities
Env. savings
Drinking water loss
Ind. Water loss
Total Net Profit
Sensitivity Analysis
The 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 Tech. Costs
II.
########
-2.0%
-2.0% $
864,670,975,364 $
-1.5%
882,051,859,526
-1.0%
899,432,743,688
-0.5%
916,813,627,850
0%
934,194,512,012
0.5%
951,575,396,174
1.0%
968,956,280,336
1.5%
986,337,164,498
2.0%
1,003,718,048,660
-1.5%
854,233,030,476 $
871,613,914,638
888,994,798,800
906,375,682,962
923,756,567,123
941,137,451,285
958,518,335,447
975,899,219,609
993,280,103,771
-1.0%
843,795,085,587 $
861,175,969,749
878,556,853,911
895,937,738,073
913,318,622,235
930,699,506,397
948,080,390,559
965,461,274,721
982,842,158,883
% Change in Economics Savings
-0.5%
0%
833,357,140,699 $
822,919,195,810 $
850,738,024,861
840,300,079,972
868,118,909,023
857,680,964,134
885,499,793,184
875,061,848,296
902,880,677,346
892,442,732,458
920,261,561,508
909,823,616,620
937,642,445,670
927,204,500,782
955,023,329,832
944,585,384,944
972,404,213,994
961,966,269,105
0.5%
812,481,250,922 $
829,862,135,084
847,243,019,245
864,623,903,407
882,004,787,569
899,385,671,731
916,766,555,893
934,147,440,055
951,528,324,217
1.0%
802,043,306,033 $
819,424,190,195
836,805,074,357
854,185,958,519
871,566,842,681
888,947,726,843
906,328,611,005
923,709,495,166
941,090,379,328
1.5%
791,605,361,145 $
808,986,245,307
826,367,129,468
843,748,013,630
861,128,897,792
878,509,781,954
895,890,666,116
913,271,550,278
930,652,434,440
2.0%
781,167,416,256
798,548,300,418
815,929,184,580
833,310,068,742
850,690,952,904
868,071,837,066
885,452,721,228
902,833,605,389
920,214,489,551
-1.0%
827,880,647,032 $
845,261,531,194
862,642,415,356
880,023,299,518
897,404,183,680
914,785,067,842
932,165,952,004
949,546,836,166
966,927,720,328
% Change in Economics Savings
-0.5%
0%
825,399,921,421 $
822,919,195,810 $
842,780,805,583
840,300,079,972
860,161,689,745
857,680,964,134
877,542,573,907
875,061,848,296
894,923,458,069
892,442,732,458
912,304,342,231
909,823,616,620
929,685,226,393
927,204,500,782
947,066,110,555
944,585,384,944
964,446,994,717
961,966,269,105
0.5%
820,438,470,199 $
837,819,354,361
855,200,238,523
872,581,122,685
889,962,006,847
907,342,891,009
924,723,775,171
942,104,659,332
959,485,543,494
1.0%
817,957,744,588 $
835,338,628,750
852,719,512,912
870,100,397,074
887,481,281,236
904,862,165,398
922,243,049,559
939,623,933,721
957,004,817,883
1.5%
815,477,018,977 $
832,857,903,139
850,238,787,301
867,619,671,463
885,000,555,625
902,381,439,786
919,762,323,948
937,143,208,110
954,524,092,272
2.0%
812,996,293,366
830,377,177,528
847,758,061,690
865,138,945,852
882,519,830,013
899,900,714,175
917,281,598,337
934,662,482,499
952,043,366,661
Sensitivity on % Change in Economic Savings and in Externalities
% Change in Externalities
########
-2.0% $
-1.5%
-1.0%
-0.5%
0%
0.5%
1.0%
1.5%
2.0%
-2.0%
832,842,098,255 $
850,222,982,416
867,603,866,578
884,984,750,740
902,365,634,902
919,746,519,064
937,127,403,226
954,508,287,388
971,889,171,550
-1.5%
830,361,372,643 $
847,742,256,805
865,123,140,967
882,504,025,129
899,884,909,291
917,265,793,453
934,646,677,615
952,027,561,777
969,408,445,939
III.
Sensitivity on % Change in Tech. Costs and in Externalities
% Change in Externalities
########
-2.0% $
-1.5%
-1.0%
-0.5%
0%
0.5%
1.0%
1.5%
2.0%
-2.0%
944,117,414,456 $
933,679,469,568
923,241,524,679
912,803,579,791
902,365,634,902
891,927,690,014
881,489,745,125
871,051,800,237
860,613,855,348
-1.5%
941,636,688,845 $
931,198,743,957
920,760,799,068
910,322,854,180
899,884,909,291
889,446,964,403
879,009,019,514
868,571,074,626
858,133,129,737
-1.0%
939,155,963,234 $
928,718,018,346
918,280,073,457
907,842,128,569
897,404,183,680
886,966,238,791
876,528,293,903
866,090,349,014
855,652,404,126
% Change in Tech. Costs
-0.5%
0%
936,675,237,623 $
934,194,512,012 $
926,237,292,735
923,756,567,123
915,799,347,846
913,318,622,235
905,361,402,957
902,880,677,346
894,923,458,069
892,442,732,458
884,485,513,180
882,004,787,569
874,047,568,292
871,566,842,681
863,609,623,403
861,128,897,792
853,171,678,515
850,690,952,904
0.5%
931,713,786,401 $
921,275,841,512
910,837,896,624
900,399,951,735
889,962,006,847
879,524,061,958
869,086,117,070
858,648,172,181
848,210,227,293
1.0%
929,233,060,790 $
918,795,115,901
908,357,171,013
897,919,226,124
887,481,281,236
877,043,336,347
866,605,391,459
856,167,446,570
845,729,501,682
1.5%
926,752,335,179 $
916,314,390,290
905,876,445,402
895,438,500,513
885,000,555,625
874,562,610,736
864,124,665,848
853,686,720,959
843,248,776,070
2.0%
924,271,609,568
913,833,664,679
903,395,719,791
892,957,774,902
882,519,830,013
872,081,885,125
861,643,940,236
851,205,995,348
840,768,050,459
-1.0%
809,728,552,630 $
826,935,627,950
844,142,703,271
861,349,778,591
878,556,853,911
895,763,929,231
912,971,004,552
930,178,079,872
947,385,155,192
% Change in Economic Savings
-0.5%
0%
816,323,874,220 $
822,919,195,810 $
833,617,853,961
840,300,079,972
850,911,833,702
857,680,964,134
868,205,813,443
875,061,848,296
885,499,793,184
892,442,732,458
902,793,772,926
909,823,616,620
920,087,752,667
927,204,500,782
937,381,732,408
944,585,384,944
954,675,712,149
961,966,269,105
0.5%
829,514,517,400 $
846,982,305,983
864,450,094,566
881,917,883,148
899,385,671,731
916,853,460,314
934,321,248,897
951,789,037,479
969,256,826,062
1.0%
836,109,838,990 $
853,664,531,994
871,219,224,998
888,773,918,001
906,328,611,005
923,883,304,008
941,437,997,012
958,992,690,015
976,547,383,019
1.5%
842,705,160,581 $
860,346,758,005
877,988,355,429
895,629,952,854
913,271,550,278
930,913,147,702
948,554,745,127
966,196,342,551
983,837,939,975
2.0%
849,300,482,171
867,028,984,016
884,757,485,861
902,485,987,706
920,214,489,551
937,942,991,396
955,671,493,242
973,399,995,087
991,128,496,932
IV. Sensitivity on % Change in Economic Savings and in α
% Change in α
########
-2.0% $
-1.5%
-1.0%
-0.5%
0%
0.5%
1.0%
1.5%
2.0%
-2.0%
796,537,909,450 $
813,571,175,928
830,604,442,407
847,637,708,886
864,670,975,364
881,704,241,843
898,737,508,322
915,770,774,800
932,804,041,279
-1.5%
803,133,231,040 $
820,253,401,939
837,373,572,839
854,493,743,738
871,613,914,638
888,734,085,537
905,854,256,437
922,974,427,336
940,094,598,236
V. Sensitivity on % Change in Tech. Costs and in α
% Change in α
########
-2.0% $
-1.5%
-1.0%
-0.5%
0%
0.5%
1.0%
1.5%
2.0%
-2.0%
905,587,719,327 $
895,358,533,337
885,129,347,346
874,900,161,355
864,670,975,364
854,441,789,374
844,212,603,383
833,983,417,392
823,754,231,401
-1.5%
912,739,417,499 $
902,458,041,783
892,176,666,068
881,895,290,353
871,613,914,638
861,332,538,923
851,051,163,207
840,769,787,492
830,488,411,777
-1.0%
919,891,115,670 $
909,557,550,230
899,223,984,790
888,890,419,351
878,556,853,911
868,223,288,471
857,889,723,032
847,556,157,592
837,222,592,152
% Change in Tech. Costs
-0.5%
0%
927,042,813,841 $
934,194,512,012 $
916,657,058,677
923,756,567,123
906,271,303,513
913,318,622,235
895,885,548,349
902,880,677,346
885,499,793,184
892,442,732,458
875,114,038,020
882,004,787,569
864,728,282,856
871,566,842,681
854,342,527,692
861,128,897,792
843,956,772,528
850,690,952,904
-1.5%
881,536,817,082 $
879,056,091,471
876,575,365,860
874,094,640,249
871,613,914,638
869,133,189,027
866,652,463,416
864,171,737,804
861,691,012,193
-1.0%
888,479,756,355 $
885,999,030,744
883,518,305,133
881,037,579,522
878,556,853,911
876,076,128,300
873,595,402,689
871,114,677,078
868,633,951,467
% Change in Externalities
-0.5%
0%
895,422,695,629 $
902,365,634,902 $
892,941,970,018
899,884,909,291
890,461,244,407
897,404,183,680
887,980,518,796
894,923,458,069
885,499,793,184
892,442,732,458
883,019,067,573
889,962,006,847
880,538,341,962
887,481,281,236
878,057,616,351
885,000,555,625
875,576,890,740
882,519,830,013
0.5%
941,346,210,183 $
930,856,075,570
920,365,940,957
909,875,806,344
899,385,671,731
888,895,537,118
878,405,402,505
867,915,267,892
857,425,133,279
1.0%
948,497,908,354 $
937,955,584,017
927,413,259,679
916,870,935,342
906,328,611,005
895,786,286,667
885,243,962,330
874,701,637,992
864,159,313,655
1.5%
955,649,606,525 $
945,055,092,464
934,460,578,402
923,866,064,340
913,271,550,278
902,677,036,216
892,082,522,154
881,488,008,092
870,893,494,031
2.0%
962,801,304,697
952,154,600,910
941,507,897,124
930,861,193,338
920,214,489,551
909,567,785,765
898,921,081,979
888,274,378,192
877,627,674,406
0.5%
909,308,574,176 $
906,827,848,564
904,347,122,953
901,866,397,342
899,385,671,731
896,904,946,120
894,424,220,509
891,943,494,898
889,462,769,287
1.0%
916,251,513,449 $
913,770,787,838
911,290,062,227
908,809,336,616
906,328,611,005
903,847,885,394
901,367,159,782
898,886,434,171
896,405,708,560
1.5%
923,194,452,722 $
920,713,727,111
918,233,001,500
915,752,275,889
913,271,550,278
910,790,824,667
908,310,099,056
905,829,373,445
903,348,647,834
2.0%
930,137,391,996
927,656,666,385
925,175,940,774
922,695,215,162
920,214,489,551
917,733,763,940
915,253,038,329
912,772,312,718
910,291,587,107
VI. Sensitivity on % Change in Externalities and in α
% Change in α
VII.
########
-2.0% $
-1.5%
-1.0%
-0.5%
0%
0.5%
1.0%
1.5%
2.0%
-2.0%
874,593,877,809 $
872,113,152,198
869,632,426,587
867,151,700,975
864,670,975,364
862,190,249,753
859,709,524,142
857,228,798,531
854,748,072,920
Further Analysis
Results from the Sensitivity Analyses
High
######## $
Median
892,442,732,458
$
Low
781,167,416,256
$
Mean
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?
Efficiency
n=100
Total
Yes
10
11
5
13
12
9
12
72
No
7
4
5
4
3
2
3
28
Yes
Main Reasons Saving From Lower Price
Environmental Savings
Safety
Abundance
Total
42
12
11
7
72
No
Main Reasons Shorter Driving Distance
Slower Speed
Intimidating Gas Tank Design
Environmental Concern
Total
16
5
4
3
28