Elgas LPG Gas Blog

We are Wasting Our Autogas Infrastructure?

It’s easy to imagine a situation with cars but no fuel. 

But how could it possibly come to pass that one country would have a well-established LPG infrastructure but no new cars to use it?

A Perplexing Problem

autogas dispenserWhile many countries are currently working to build up their autogas infrastructure, a lack of LPG cars is not a problem. 

In a perplexing reversal, Australia has world class autogas infrastructure but no one is selling LPG cars to take advantage of it?

In fact, there are a number of reasons why this makes absolutely no sense at all:

1. Vehicle supply void

2. Ample autogas infrastructure

3. Self-sufficient in LPG

4. DOM capable facilities available

5. Established and stable national autogas standards

6. Trained support personnel and training facilities

7. Favourable tax treatment

8. Attractive price differential

9. Missed marketing opportunity

Vehicle Supply Void

LPG carsBased on the status quo, within about 2 years there will be no new OEM LPG cars available to purchase in Australia. 

The current limited offer will vanish when Ford and Holden cease all manufacturing in Australia. 

Currently, there are also no DOM (Delayed Original Manufacturing) cars available.

Even now the current Ford and Holden LPG models are limited to full size vehicles, like the Falcon and Commodore.  These are both excellent cars. 

However, consumers are no longer buying full size cars the way they once did. 

There are no new OEM or DOM LPG 4-cylinder cars available in Australia.

Ample Autogas Infrastructure

autogas infrastructureAustralia has one of the most established autogas supply networks of any country. 

With a population of only 23.5 million and over 3,000 autogas outlets, it would have to be one of the best supplied countries in the world, on a per capita basis. 

Self-Sufficient in LPG

Australia is a net exporter of LPG. 

Most of the LPG is sourced from substantial in-ground gas reserves, being separated from the produced natural gas stream after extraction.

Upstream infrastructure is also well established. 

In addition to the gas pipelines, there are import and export facilities and an extensive bulk storage network.

DOM Capable Facilities Available

Australia already has small scale DOM (Delayed Original Manufacturing) capable facilities available. 

The DOM option would be one way to fast-track entry into the Australian market, using DOM on a transitional or permanent basis.

This knowledge and capability would further reduce the time to market.

Established and Stable National Autogas Standards

There are no issues with having to deal with moving targets when it comes to standards and testing. 

The autogas market in Australia is mature and the standards are stable.

Australian Standard AS/NZS 1425 covers specifications, installation and maintenance. 

Emission testing is also applicable, with testing in accordance with either the ADR 79/00 Type I test or the IM240 exhaust emissions test.

Trained Support Personnel and Training Facilities

Autogas technicians must be trained and licensed to work on a LPG vehicles in Australia. 

TAFE (technical and further education) government run technical schools provide the required training.

Thanks to an extensive aftermarket network, there is an ample supply of qualified and licensed technicians to support a large LPG vehicle population.  

Do-It-Yourself (DIY) conversions are illegal in Australia.

Favourable Tax Treatment

Autogas receives favourable tax treatment in Australia. 

The current excise tax rate for autogas, as of 4/2/2019 is A$0.136. 

In contrast, the excise tax on gasoline and diesel is A$0.392, which is more than 3X the current autogas tax. 

So, the taxation on autogas is still less than one third that of gasoline or diesel.

Attractive Price Differential

attractive pricePetrol (gasoline) pricing in Australia follows an unusual price cycle

Over time this range varies with international benchmark prices.

Diesel prices do not follow the petrol cycle. 

They are relatively stable, albeit at an average price close to the high price or petrol for the same comparable period. 

Diesel would also vary with international benchmark pricing.

Autogas prices are also not part of the petrol price cycle. 

Over time, LPG pricing roughly follows the Saudi Contract Price benchmark. 

So, on average the price of LPG is currently about 60% that of either petrol or diesel.

Missed Marketing Opportunity

How can it be that a major marketing niche goes unfilled?  

Automobile manufacturers and importers are clearly missing a marketing opportunity. 

It is said the nature abhors a void. 

It is time for LPG car manufacturers to do the natural thing and supply this unsupplied market. 

Australian consumers and the manufacturers would both benefit from this initiative.

 

 

 

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The information in this article is derived from various sources and is believed to be correct at the time of publication. However, the information may not be error free and may not be applicable in all circumstances.