Norman Turiano is the principal at Turiano Strategic Consulting, specializing in retail fueling, the customer experience and the future of transportation fuels. He is a member of the Fuels Institute Board of Directors.
LAS VEGAS – In moderating one of the first slotted educational sessions at 2:00 pm on Sunday, I had some concern that many people would still be dealing with flights and hotel check-in lines. So I was pleasantly surprised that “Preparing Your Infrastructure for Future Fuels” had few empty seats.
Speaking to attendees prior to the session, it became apparent that many have concerns about the future of their current business model, which relies on continuing to provide the United States with 82% of its transportation fuel, consisting of mainly gasoline-blended liquid fuel. Changes to this model can require substantial capital investment in new infrastructure, and the attendees were highly interested in the insights Jay Ricker, chairman of Anderson, Indiana-based Ricker’s, and Stillwater, Oklahoma-based OnCue Marketing CNG Business Development Manager Scott Minton, could offer them.
As the opening slides showed, attendees’ concerns are well-founded: Government data show trends indicating that its desire to shift away from petroleum fuels is succeeding. Alternative fuel vehicles (AFVs) in use have tripled the past decade, from less than 50 models to now nearly 200 by multiple manufacturers. These vehicles now replace over a billion gallons of gasoline a year.
Minton explained how OnCue focuses on maintaining and preparing for a growing number of vehicles utilizing CNG. He referenced that nearly a quarter of the 6 billion gallons of petroleum-based transportation fuel displaced though 2013 was through CNG usage. He spoke about the price stability CNG offers, sharing that a web camera facing his price signs, which post the prices of E10, diesel and CNG, gave a time-lapse view of the volatility of liquid fuels in comparison to CNG, which did not change during the 18 months of price changes. Predictable margins of CNG are beneficial to retailers who rely on unpredictable periods of declining costs to meet their cash flow needs. While he admitted that the appeal of CNG had declined in tandem with the price of gasoline, supply and demand in addition to government intervention would cause gasoline prices to again increase.
Ricker focused on the cost of converting equipment to increased ethanol blends such as E15 and E85, and what he saw as barriers to the introduction of these fuels, namely high conversion costs, a lack of cost advantage, and what he feels is a lack of consumer acceptance. He highlighted how his company has installed level-3 charging at a handful of sites, driven by a partnership with Nissan who bears the cost of the charger and provides the electricity free to its car-buyers. Ricker stated that while he has given up a valuable parking space for the charger, he rarely sees it in use, but has benefited from the publicity generated from embracing “green technology.”
In closing the session, I reiterated that all of us in the room continue to try to divine what the future holds in terms of alternative fuel development. The most prudent course of action is to stay informed of developments in the area through NACS educational sessions and the Fuels Institute, founded by NACS in 2013, that regularly publishes studies at fuelsinstitute.org.