Editor's choice
15 May 18

Soaring diesel prices: is CNG the next best thing?

Fuel prices have been rising across the European continent for months in a row, reaching levels the market has not seen for three years. From just $30 in early 2016, the price of a barrel of crude oil now equals more than $70.

At the pump, this translates in a petrol price increase of roughly 20 percent on major markets. In France, petrol went up 22% (source: France-inflation.com), which is as much as in the UK (source: RACfoundation.org), whereas Italian petrol prices rose 15% (source: Carburanti-italia.it) and those in Germany 18% (source: verbrauchsrechner.de).

Diesel loses its raison d'être

Looking at diesel, the increase is even higher. Today, the French pay a whopping 42% more per litre compared to the end of January 2016, the British 26%, and both the Italians and the Germans 27%. That means that in many cases, the price advantage diesel fuel had over petrol is shrinking or even annihilated. The fuel is clearly losing its economic raison d’être. Only for motorway addicts who drive large cars does the fuel bill add up.

What is at play here? It is very market dependent, but in some countries, taxation is changing, to the detriment of diesel. Another reason is that retailers are sacrificing part of their margin on petrol to stay competitive, while cashing in on diesel. Consumers usually drive petrol cars and tend to shop around, whereas the clear majority of company car and van drivers burn diesel and opt for convenience rather than price.

Finally, there is the law of supply and demand. Even though petrol and hybrid cars are increasingly popular, the current European fleet is still very diesel oriented. Add to that the rise in LCV and HGV sales and the booming e-commerce and it stands to reason that diesel demand is still high. At the same time, fuel companies might reduce the amount of diesel put to market in anticipation of the market switch to petrol.

CNG: more attractive than ever

Electric cars will probably become the norm, but as long as the product offer is limited, prices are high and charging infrastructure is scarce, they are not a viable alternative for the typical company car driver. There is an alternative that is worth considering more than ever, though: compressed natural gas.

It is relatively sustainable, because there is plenty of it, it is transported through pipelines rather than via road transport, and it can be created from organic waste. The price evolves independently from that of crude oil and has remained remarkably stable over the past 5 years.

As there is no foreseeable shortage and new reserves are being discovered every year, CNG prices are likely to remain stable. Moreover, the number of petrol stations distributing CNG is increasing steadily across Europe, even though great discrepancies between member states persist.

More tax incentives, more models

Also, countries like Germany and Belgium offer considerable tax incentives to promote CNG as a fuel. Spain, France and Slovakia also provide fiscal advantages. Natural gas creates less CO2, NOx and particulate matter than both diesel and petrol, making it the cleanest fuel for internal combustion engines.

Finally, virtually every petrol engine can be adapted to run on CNG. However, retrofitting your car with a CNG system is not recommended as you lose the manufacturer’s warranty and valuable boot space – the pressure tanks have to go somewhere.

Factory-fitted systems are by far the better choice. The gas tanks are integrated in the car’s underbody, so that you do not lose space. OEM CNG cars also feature bigger tanks, extending the combined range (CNG plus petrol) to over 1,000 km. The Skoda Octavia G-Tec, for instance, boasts a NEDC range of 1,330 km if you empty both the petrol and the CNG reservoirs.

The number of models that can be ordered with a factory-fitted CNG installation is still limited, but growing. Especially Audi (g-tron), Fiat (Natural Power), SEAT (TGI), Skoda (G-TEC) and VW (TGi) believe in the power of CNG. Volvo abandoned the natural gas project in favour of a drastic electrification strategy. Opel still offers the Astra and Zafira CNG, but it is unclear if they will fit in PSA's programme.

Picture copyright: Skoda, 2018 

Authored by: Dieter Quartier