Fuel Price Effect on Transit

[Busjack]

I'm not sure if I can make heads or tails from Hilkevitch's column on this.

The main question is whether the TAs really are saving money on diesel. In 2009, CTA apparently hedged wrong, in that all the financial reports indicated that throughout the year it was paying the budgeted $3.60/gallon, even though oil prices had cratered and the going price for diesel (adjusted for CTA being tax exempt) was about $2.20.

On the other hand, I don't know whether to buy what Pace is saying, because biodiesel posted on the pump has not gone down as much as gasoline, although GasBuddy now says that it has gone down about 80 cents in the last week, so maybe (there are prices in the north suburbs ranging from $2.79 to $3.99, including tax, of course).

[BusHunter]

I'm not sure if I can make heads or tails from Hilkevitch's column on this.

The main question is whether the TAs really are saving money on diesel. In 2009, CTA apparently hedged wrong, in that all the financial reports indicated that throughout the year it was paying the budgeted $3.60/gallon, even though oil prices had cratered and the going price for diesel (adjusted for CTA being tax exempt) was about $2.20.

On the other hand, I don't know whether to buy what Pace is saying, because biodiesel posted on the pump has not gone down as much as gasoline, although GasBuddy now says that it has gone down about 80 cents in the last week, so maybe (there are prices in the north suburbs ranging from $2.79 to $3.99, including tax, of course).

Unfortunately it's only for a subscriber, but maybe I can check out what he's saying in the hard copy newspaper version if that's in today's paper.

Unfortunately CTA buys it's gas at a negotiated pre set rate so if it goes up they are not burned, but if it goes down they are burned. Best thing they could do is negotiate a new rate when the contract is up. Gas prices I've seen in Bensenville are as cheap as $1.86/Gallon. But Dupage County always has the cheapest gas around here. The BP at Fullerton/Ashland is $2.75/Gallon. Big difference. The reason for the gas price fall I've heard is because the Saudi's have put their oil on sale and the Iranians and Iraqis heard about it and lowered their price. So they all are having a price war. But I believe diesel hasn't fell as much as unleaded. I've heard the prices are going to stay down this time. All these hybrid and CNG buses and fuel efficient cars, some which run on very little gas or none at all like Tesla is probably putting a dent in demand. They probably have too much gas and can't sell it so it goes on sale. The scales might balance back though when people start buying the big trucks again like Exhibition if that still exists but there probably is a market now for a bigger vehicle.

[Busjack]

..The reason for the gas price fall I've heard is because the Saudi's have put their oil on sale and the Iranians and Iraqis heard about it and lowered their price. So they all are having a price war. But I believe diesel hasn't fell as much as unleaded. ...

The issue seems to be that fracking increased the supply and the Saudis decided to keep pumping, causing a price war (also to knock out competition from shale oil). The big loser is Putin.

..All these hybrid and CNG buses and fuel efficient cars, some which run on very little gas or none at all like Tesla is probably putting a dent in supply. They probably have too much gas and can't sell it so it goes on sale. The scales might balance back though when people start buying the big trucks again like Exhibition if that still exists but there probably is a market now for a bigger vehicle.

You meant demand. But that brings up the issue that if a diesel Volkswagen was basically a break even proposition when gasoline was $3.29/gallon and diesel was $3.99/gallon, it became a real questionable proposition when gasoline was $2.89 a gallon and diesel was still $3.99/gallon. There were articles on why diesel fuel hadn't dropped, but it apparently just did.

The hybrids and electric cars were essentially credited or blamed for gas tax revenue going down, and hence the inability to pass long term transportation bills, but rumors now are that since gasoline is now down, probably as good a time as ever to raise the federal gasoline tax. Still don't know how they intend to tax usage of hybrid and electric vehicles.

[BusHunter]

I bet the new Gov. will raise the gas tax in the state by the sounds of the states deficit and he probably could get away with it without too many raised eyebrows. Gas will probably go back up though if we start buying the bigger vehicles because they need more gas, but I believe there's a hybrid Tahoe, so if the other companies follow suit maybe not.

I was reading about CNG and Pace. It took one TA out west 1.2 million dollars to install a CNG gas facility plus they claim it takes more training to train someone to use the facility probably because of the risk of explosiveness. There was an article I was reading that stated the upfront costs of CNG versus diesel actually make the entire service life of a bus virtually the same in cost of operation. CTA wants no part in CNG as they explained in the article, but they probably don't want a repeat of the gas explosion they had I believe in the 60's involving a few propanes. I don't know if CNG is safer than propane or not.

I believe I also read that MTA was trying out an all electric BYD bus that is 60 foot (artic) so the transit industry is moving in that direction as NF is developing a similar bus, but I don't think it's in the trial stage yet.

[Busjack]

I bet the new Gov. will raise the gas tax in the state by the sounds of the states deficit and he probably could get away with it without too many raised eyebrows. Gas will probably go back up though if we start buying the bigger vehicles because they need more gas, but I believe there's a hybrid Tahoe, so if the other companies follow suit maybe not.

I was reading about CNG and Pace. It took one TA out west 1.2 million dollars to install a CNG gas facility plus they claim it takes more training to train someone to use the facility probably because of the risk of explosiveness. There was an article I was reading that stated the upfront costs of CNG versus diesel actually make the entire service life of a bus virtually the same in cost of operation. CTA wants no part in CNG as they explained in the article, but they probably don't want a repeat of the gas explosion they had I believe in the 60's involving a few propanes. I don't know if CNG is safer than propane or not.

On raising the state gas tax, there has been rumblings about that, and also broadening the retailers' occupational tax (sales tax) to include services.

A similar issue is raised at the end of this Daily Herald column whether there will be a 5-year transportation capital plan at the end of this 5 year plan. The pattern the last two times (Ryan and Quinn) was to raise miscellaneous fees (like on license plates) and inaugurate stuff like video poker to cover 30 year bonds for a 5 year capital plan to buy stuff like Optimas and NABIs, instead of having a consistent funding plan for capital projects. Maybe a gas tax would provide that.

On the CNG front, the Pace budget indicated that $12 million in Pace bonds were for retrofitting the South garage for CNG, including such things as the fueling facility and removing open flames in the furnace. The approximately $45 million to buy the buses is out of Build Illinois funds (although an equivalent number of diesel buses would have cost $37.5 million). I suppose one can crunch the numbers based on that.

CNG is the same natural gas as in your stove and furnace, so it appears that the explosion risk is worse than propane.

[strictures]

CNG is the same natural gas as in your stove and furnace, so it appears that the explosion risk is worse than propane.

Almost all of People's Gas trucks are CNG & I have yet to hear of one exploding.

[BusHunter]

Busjack stated:

"On the CNG front, the Pace budget indicated that $12 million in Pace bonds were for retrofitting the South garage for CNG, including such things as the fueling facility and removing open flames in the furnace. The approximately $45 million to buy the buses is out of Build Illinois funds (although an equivalent number of diesel buses would have cost $37.5 million). I suppose one can crunch the numbers based on that.

CNG is the same natural gas as in your stove and furnace, so it appears that the explosion risk is worse than propane."

BusHunter responded:

The CNG savings seems to come from operations as they are a little cheaper, it's when you add the upfront costs that raises the overall cost. Funny I haven't heard of a CNG bus exploding in a side impact crash but it probably is protected in some way as that's a liability on the manufacturer of the product. I don't know if there's a portable way to fill the tanks with a truck if say the bus runs out of gas which does happen here and there. I guess it's then a tow versus an onsite repair. I don't know if I would gamble on always having one way to fill up an entire fleet of buses. If something happened to that fuel island then you have buses that cannot go into service. At least CTA could take the day off with it's 3 #5900's when they were running if there was a fuel issue.

[BusHunter]

Alright I read the article by reading the paper. Basically the gist of the article is that the transit agencies may lose ridership due to low gas prices which might happen but they mentioned Metra and if they did raise the prices how that would affect them. They have the most to lose as many of there clientele have cars. As stated in the article "30 percent of Pace riders don't own a car" and the same is true for most who live in the congested areas of the city such as Wicker Park or Little Village as parking is more a headache than riding an "L" or bus. I didn't quite understand they stated that "the Pace 2015 budget had budgeted $3.61 a gallon for gas yet they pay $1.64 a gallon today. I don't know how they managed to swing that already but it looks to save them money in the budget for something else.

[Busjack]

Almost all of People's Gas trucks are CNG & I have yet to hear of one exploding.

Advanced Disposal has all of its trucks on CNG, too, and there hasn't been a report of an explosion.

... Funny I haven't heard of a CNG bus exploding in a side impact crash but it probably is protected in some way as that's a liability on the manufacturer of the product. I don't know if there's a portable way to fill the tanks with a truck if say the bus runs out of gas which does happen here and there. I guess it's then a tow versus an onsite repair. I don't know if I would gamble on always having one way to fill up an entire fleet of buses. If something happened to that fuel island then you have buses that cannot go into service. At least CTA could take the day off with it's 3 #5900's when they were running if there was a fuel issue.

The tanks are on the roof, so it would take a leak there to cause a problem (see, for instance, the picture of 15500).

My "more explosive" point was based on that CNG was already gas under pressure, while indications are that propane has to be heated first to explode. Krambles's book has an excerpt about how the propane tanks in the Old Look buses were heavy plate steel and a propane fire would burn as a blow torch, rather than spread like a gasoline fire, and that one bus was cut in half by a train but didn't burn, but said there were other accidents at the garages later. Usually natural gas doesn't explode in a house, either, but occasionally it happens.

On the fueling issue, apparently you can fuel then wherever there is a compressor. For instance, in the early 1990s, New York state had an experimental procurement for 5 for each of the upstate transit authorities. Rochester had theirs refueled at the gas company (RG&E) facility in the suburbs (about 7 miles from the garage), but apparently did not like them and sold them to Syracuse.

In Pace's case, the South garage is fairly close to the Harvey TC, so I'm sure the drivers can read the gauges and pull in if they are low.

You also have to consider that southern California TAs have used CNG buses for about 20 years, without problems.

... I didn't quite understand they stated that "the Pace 2015 budget had budgeted $3.61 a gallon for gas yet they pay $1.64 a gallon today. I don't know how they managed to swing that already but it looks to save them money in the budget for something else.

I had questioned that too, but then noted that diesel fuel went down about 80 cents a gallon at gas stations in the past week. In Pace's case, it depends on how their contract was structured, i.e. at a fixed price, or requirements at so much compared to an index. Apparently Pace didn't get on the wrong end of hedges or fixed priced contracts like CTA did in 2009. There was a report that when the RTA asked Pace about hedging, Pace replied that it was not a good idea.