What's the Alternative?
As chicken-and-egg dilemma challenges growth, alternative fuels try to find a foothold.
Consumers love choices. Healthy or indulgent? Energy or relaxation?
But when it comes to fuels, consumers’ choice has been fixed for more than 100 years, dictated by the existing fueling infrastructure. Or is the existing fueling infrastructure dictated by the type of cars consumers choose to drive?
This is the chicken-and-egg dilemma of alternative fuels—how to introduce a fuel choice when supply and demand refuse to make that first big move.
The crippling dynamic looms over high-ethanol blends such as E85, for which less than 3,000 fueling sites exist to serve more than 600,000 flex-fuel vehicles (FFV) on the streets; and electric charging stations, for which a little more than 6,000 public outlets are available to more than 57,000 electric vehicles (EVs). Even compressed natural gas (CNG), which has the advantage of a large domestic supply and low prices, is still straining to gain momentum, with only about 600 public CNG fueling locations for more than 115,000 CNG-powered vehicles, according to the U.S. Department of Energy.
But is the hang-up all on the supply side? Consider that the total vehicle fleet of the United States is more than 250 million, according to the U.S. Department of Transportation. Alternative fuel vehicles (AFVs) make up only about 5% of this figure—after throwing in FFVs and hybrid EVs, which can run on regular gasoline. Granted, AFVs are often priced at a premium, but this is only part of the story.
In the case of all alternatives, establishing a foothold in the fueling infrastructure is a complex equation of education, technology, cost and meeting consumers’ fueling needs.
- According to an oft-cited survey by GM of FFV owners, less than 10% used E85, while 70% were not even aware they could use the fuel, which is often—but not always—priced at a significant discount to regular gasoline.
- Even with the development of DC fast-charging technology, which is capable of charging an EV battery to full capacity within 30 minutes, it is simply not fast enough to meet the in-and-out convenience occasion.
- While CNG is selling at a gasoline gallon equivalent (GGE) of $2.10 as of press time, compared to the national average of $3.59 per gallon of regular unleaded, retailers still face installation costs from the six figures to low millions.
Then there is the sometimes positively perceived, sometimes negatively received role of government in the form of programs such as Clean Cities that are designed to spur market development, subsidies to increase price competitiveness and tighten the ROI, and mandates to give everyone in the supply chain a shove.
But there’s another component to the equation that isn’t easily measurable: the retailers who see the competitive promise of alternative fuels and push through the supply/demand logjam out of good ol’ entrepreneurship.