Sir Richard Branson recently announced that he would commit US$3 billion to the biofuels movement in a venture called Virgin Fuels. While he’s unlikely to switch his planes to plant-based fuel any time soon, it’s a clear indication that big business is interested in alternative fuels. Furthermore, in an Australian first, NRMA Motoring & Services held its Alternative Fuel summit on October 4. As a result of the Summit, NRMA has formed the Jamison Group to look at our alternative fuel options, contributing $250,000 towards this goal (see below).

Such encouragement is great news for the environment and perhaps the future of fuel in Australia, but what does it mean for the average driver right now? What are the realistic alternative fuel choices for motorists whose budgets are already tight? And if we pump our tanks full of greenhouse-friendly juice, will our cars still love us in the morning?

Prices on the up

The main determinant of fuel prices is the cost of crude oil, which is a commodity that is traded internationally in US dollars, so the strength of the Aussie dollar against the greenback is obviously a factor in rising fuel prices. Excise and GST also make up around 40% of the final cost per litre. There is also a cost in refining the crude oil, and a profit margin added on to that.

These costs create the terminal gate price, which is the wholesale price petrol stations buy it at. Of course, petrol stations must then add their own profit margin.

Worldwide demand also affects the cost of fuel, and oil is not only in demand to fuel road vehicles, ships, boats and planes, but also for the manufacture of everything from bicycle helmets to fertilisers, computers, cosmetics, paints, even chewing gum. The increased need for oil in the US over winter to heat homes, offices and so on, will also affect the price of fuel in Australia.

International incidents that affect the flow of crude oil into the market, such as instability in the Middle East or hurricanes in important oil-producing regions, can also affect the cost of petrol, and these have been claimed to be the cause of recent price rises.

Are we running out?

Nobody knows for sure when Australia will run out of crude oil. But there are educated guesses.

Dr Clinton Foster, Geoscience Australia’s Chief of Petroleum and Marine Division, says Australia’s current production rate is about 470,000 barrels of crude oil and condensate per day. Consumption rate per day, however, is in the vicinity of 750,000 barrels. As at the start of 2005, at the current rate of production and known reserves, we had about 9.8 years of crude oil supply plus condensate left.

“The Australian Government is encouraging exploration of Australia’s on- and offshore petroleum resources,” Foster says. “On August 14, the Prime Minister announced an injection of $134 million into Geoscience Australia to acquire new data and supply geoscience information to encourage exploration in frontier regions that, up until now, have been under-explored. This work is hoped to lead to the discovery of new reserves which would add to our national energy security.”

David Lamb, the CSIRO’s Low-Emission Transport Leader, says the Australian Bureau of Agriculture and Resource Economics (ABARE) predicts Australia’s oil consumption will increase over the next 30 years while our oil production will fall from almost 80% self-sufficiency today to around 45% by 2029.

He further notes that the ABARE forecast of Australian oil production is very optimistic compared with Geoscience Australia forecasts.

“Oil prices have been rising steadily over the past three years. With oil usage rising faster than the rate of discovery, we can expect the price of oil to increase until we reduce the demand,” he says.

So, facts currently indicate that we have passed peak supply and that we will become more reliant on imported oil, which means the price of fuel in Australia will continue to be dependent on international prices.

However, a recent NRMA Motoring & Services’ survey of more than 330 Members found that almost 90% believe Australia can no longer rely on overseas markets for fuel because of its volatility and should develop local sources of fuel.

“Governments, car manufacturers, the oil industry, NRMA and all other stakeholders have a responsibility to make the most of this community enthusiasm and set about developing an alternative fuel industry in Australia,” says NRMA Motoring & Services’ President, Alan Evans.

The NRMA survey also found that cost savings and environmental causes were among the main reasons for the public’s change of heart about alternative fuels.

“Almost 80% of motorists said they would convert their car to an alternative fuel because it’s cheaper,” says Alan. “More than 70% would convert for environmental reasons, and over 60% pointed to incentives from the Federal Government as their motivation.”

What are the alternatives in Australia?

Fuel alternatives in Australia are presently pretty thin on the ground. According to NRMA’s survey, 87% believe car manufacturers are not producing enough vehicles that use alternative fuels, and 89% believe the Federal Government has not provided them with enough information about alternative fuels to make an informed decision about their use.

On the other hand, motorists have backed the development of an alternative fuel industry, with 85% supporting the Federal Government’s incentives to take up Liquefied Petroleum Gas (LPG) and ethanol.

LPG can be up to 50% cheaper than petrol and it reduces some emissions, the most important being 10–20% less CO2. This, along with some reductions in toxic tailpipe emissions, makes it a better choice environmentally than petrol and diesel. 

Private motorists have been offered a $2000 subsidy from the Federal Government to have their cars converted to LPG. Many have responded to the offer, the result being even longer waiting lists at conversion stations. The cost of the conversion can be up to $4000. Tim Pomroy, NRMA’s Acting Manager of Motoring Information Services, says you need to work out whether it’s a practical choice before making the switch.

“You have to [consider it in relation] to the mileage that you do,” says Tim. “There’s also the problem that a large car has the boot space to fit the gas tank, but where do you put the tank in a small car? The cost of installation will mean that if you do an average 15,000–20,000km per annum, it’s going to take you a couple of years to get your capital costs back.”

Besides LPG, hydrogen is not yet available, natural gas has very limited availability, and biofuels, such as biodiesel and ethanol, are not available in enough petrol stations at present to be a realistic choice for private motorists, although NRMA supports their roll-out as soon as possible.

“The problem in Australia is that the renewable fuels industry has only been able to access a small part of the market, via independent service stations. The introduction of these fuels into the mainstream petrol and diesel market is controlled by the major oil companies,” says Bob Gordon, Executive Director, Renewable Fuels Australia.

“In December 2005, the Prime Minister called in the CEOs of the major oil companies and told them they’d have to decide whether they were going to introduce renewable fuels voluntarily or by mandate. They said they’d introduce renewable fuels via an action plan process, and we’ve been struggling with that ever since.

“The main issue is that Australia ... has not accepted that we’re in a serious crisis zone. We’re rich in fossil energy resources, but not in liquid transport fuels. Geoscience Australia is predicting we could exhaust our domestic oil reserves in seven or eight years. The transition to renewable fuels can be rough or smooth, it depends on   how soon we start to make changes.”

If you want to use a biofuel blend, check it’s suitable for your engine.

“There’s a list of vehicles on manufacturers’ websites that are recommended not to use ethanol,” says Jack Haley, NRMA Vehicle Policy Expert. “Also, make sure any biodiesel you use complies with the national fuel standards. There have been reports of waxing in winter – where the fuel turns waxy and glues up the fuel system.”

The only other viable alternative for Aussies at the moment is diesel. Though, at the moment, we have limited choice. This is slowly changing as diesels such as Fiat’s Punto and Audi’s A6 are imported into the country, and others such as the Holden Astra Diesel and the Mazda 6 Diesel become available.

An efficient diesel engine in a small car can achieve incredibly low fuel consumption, competitive with the Toyota Prius hybrid, the class leader, and in a larger vehicle the engine’s low-revving and efficient running can result in 50% less fuel usage than a petrol engine. This must be weighed against the fact that a diesel version will cost more than its petrol version, and that diesel now costs more per litre.

Diesel fuel is still a derivative of crude oil, but a diesel engine can give the option of running biodiesel blends once they become widely available (as long as the manufacturer agrees). After all, when Rudolf Diesel first demonstrated his newly-invented engine in 1900 at the Paris World’s Fair, it ran on peanut oil.

What can YOU do NOW?

The most obvious action to take in the battle against high fuel prices is, of course, to downsize to a smaller car.

“While there may be the odd case where vehicles [with large engines] get better fuel consumption on highways, they’d be the exception,” says Jack.

Tim agrees, saying he always recommends vehicles with smaller engines for the simple fact that average fuel consumption of say a 1.6-litre Hyundai Getz is 6.2L/100km, whereas a family-sized, six-cylinder car is closer to 11L/100km. However, because of family demands or towing needs, a smaller vehicle may not be an option.

For city drivers who do a lot of driving, or if you need a larger car, Jack recommends a diesel-powered car, or one with a dedicated or dual fuel/LPG engine. If you spend a lot of time on motorways, he says modern diesel engines are the most efficient choice.

Then there’s the hybrid option, such as the Toyota Prius, the Lexus RX400h and the Honda Civic. At costs of $37,000, $94,000 and $32,000 respectively for the base models, you’re unlikely to ever recover the purchase cost of the hybrid through fuel savings. But if it’s within your budget, you’ll be doing something to solve the fuel problem. For running costs of a range of vehicles visit NRMA's Operating Costs.

Fuel options

LPG Liquefied Petroleum Gas (LPG) is a mix of propane and butane – hydrocarbon gases that turn to liquid when compressed. It comes from oil wells and oil refineries.

SOLAR POWER Solar cells convert sunlight into electricity, which can be used to power an electric motor or to produce fuels such as hydrogen.

DIESEL Rather than being ignited in an engine by the spark from a spark plug, diesel fuel, obtained through the partial distillation of crude oil, is designed to combust in the heat of highly compressed air in the chamber of an internal combustion engine.

ETHANOL An alcohol produced by the fermentation of plant juice with high levels of sugar, or from crops with high levels of carbohydrates such as wheat. NRMA supports the availability of a 10% blend with petrol for vehicles that are recommended by the manufacturer to use it.

BIODIESEL A diesel fuel manufactured by enhancing the chemical composition of oils such as vegetable, canola and coconut oil, as well as cooking oils and animal fats.

FUEL CELL Fuel cells convert hydrogen and oxygen into electricity and heat. The electricity can be used to power an electric motor, and the only emissions are heat and water.

HYDROGEN Considered the ultimate clean fuel as it burns pollution-free, producing only heat and water vapour. While we currently lack the infrastructure to fuel cars with hydrogen, it’s seen as the fuel of the future.

HYBRID Hybrid cars generally have a petrol engine as well as an electric motor powered by a battery pack that recharges during normal driving. The electric motor kicks in at various stages to save petrol.

How to SAVE FUEL

Buy a smaller car and rent a larger one when necessary. Prolonged warming up of post-1990 cars is unnecessary, but avoid high revving a cold engine. Don’t fill your tank beyond the first full click of the pump. Never rev the engine before switching it off. Use cruise control on the open highway. Turn aircon off and open windows in urban areas and at slower speeds. Without making the engine labour, move into high gear as soon as possible. Travel below the speed limit on multi-lane roads, but keep left. Check tyre pressures and have the car serviced regularly. Avoid unsealed, rough or gravel roads if you can, where fuel consumption rises by up to 30%. Remove heavy items from the car if they are not being used, such as golf clubs, tool kits, roof bars and bullbars, to decrease weight and drag. Accelerate and brake smoothly, and read the traffic a long way ahead so you don’t have to change speed often. Plan trips to avoid peak hour whenever possible, and combine several trips into one if you can. Visit NRMA's Petrol Watch to find the cheapest petrol in your area.

Drive Time
Diesel, LPG and hybrid power – they’re the alternative energy sources of the moment. But how do they feel on the road?
IT’S A GAS Liquefied Petroleum Gas (LPG) is very much an Aussie thing, a result of the bountiful amounts we have from our oil fields. It’s been a popular fuel alternative, mainly in urban Australia, for years and there is plenty of infrastructure across the country. Strangely, though, most of the cars available are after-market conversions, with only Ford currently offering a factory-dedicated system. Holden has said the VE Commodore will come with factory gas but when is another matter. On the road, the latest E-Gas Falcon (below) is almost indiscernible from a petrol version. On the throttle, there is some feeling of hesitation; the engine just doesn’t feel quite as powerful. With the lower calorific power of LPG, the Falcon 4.0-litre straight six just doesn’t make as many kilowatts. It’s also less enthusiastic about revving and feels pretty well exhausted at about 4500rpm, whereas the petrol engine would rev on beyond 5000rpm. There’s not much else that’s different from a standard Falcon, except of course the amount you will pay at the pump for each fill, anything up to one-third the cost of a litre of petrol, although you will use more litres to cover the same distance.	OIL RIGHT It seems that there’s a rash of new diesel cars on the Australian market, mostly from European makers but some Asian brands are also quickly moving into the market. The reason is simple. On January 1, 2006 Australia went to the latest European diesel fuel standard, and as a result many manufacturers were able to bring in their latest European engines. Diesels are all about lots of torque and have much better fuel efficiency than petrol cars. Volkswagen is a prime example, with a wide range of diesel cars, from its bottom end Polo to the top of the range Touareg 4WD, which has a V10 diesel! (Above, engine in Volkswagen Polo.) Driving a modern diesel is a revelation; the latest engine technology means they are quiet, don’t have smoky exhaust fumes, and with the massive amounts of torque available, and excellent six-speed manual or automatic transmissions, the performance and driving experience is amazing. Many diesels will go more than 1000km on a tank of fuel and that is a major attraction for many buyers.	ELECTRIC DREAMS The future of automotive transport undoubtedly lies with hybrid power and ultimately fuel cells, the former already being a reality, predominately with Toyota but Honda has also now had two generations of its Civic Hybrid on the market. Using a smaller capacity petrol engine than would normally be the case and coupling it with an electric motor (below) to boost available power means that fuel consumption drops to diesel levels. The driving experience can range from surprising to weird, but with Toyota, and its luxury brand Lexus, proliferating hybrids, the technology is being refined rapidly. The driving experience is generally surprising, and when using both petrol and electric power most hybrids produce performance that would normally be expected from a car with a much larger engine. Take the Lexus 450h for example, a larger luxury car that despite its smaller petrol engine feels like it has V8 power when both forms of power are united. At the same time it can return fuel consumption figures that you would expect from a four-cylinder car. The big question at the moment is cost. Taking the Honda Civic Hybrid as an example, it costs almost $12,000 more than its petrol equivalent; that’s a lot of money to recoup. Similar story with the Toyota/Lexus range, but if you want to do your bit for the environment then it is money well spent.

NRMA Alternative Fuel Summit

NRMA Motoring & Services has led the charge to address Australia’s petrol crisis with the recent Alternative Fuel Summit, which looked at ways of developing a long-term sustainable fuel industry in Australia.

The summit addressed ways to develop an alternative fuel industry and market the benefits of these fuels in Australia. As a result, the Jamison Group has been formed and will be responsible for establishing a road map to solve Australia’s fuel crisis in the same way the Wentworth Group was established to solve the nation’s water shortages.

“It is vital that we develop a national roadmap to the future rather than stumbling from one quick solution to another,” says David Lamb, the CSIRO’s Low-Emission Transport Leader.

NRMA Motoring & Services’ President Alan Evans says change cannot come soon enough, with almost 95% of motorists surveyed in a recent NRMA study saying that petrol prices had impacted negatively on their personal finances.

“Despite a recent drop in prices at the bowser, few people expect the problem of soaring prices to go away, with over 80% saying prices will stay high and 43% of those even expecting it to increase,” says Alan.

The group will comprise six to 10 eminent experts in the field from the scientific, business and political sectors, and NRMA will contribute $250,000 to its establishment. “[The] Alternative Fuel Summit has brought together some of the nation’s leading minds and decision makers in alternative fuels – but our job is not finished,” says Alan.

“The Jamison Group will look at all alternative fuel energy options and what proactive steps can be taken to fast-track their development. We want to look at what role governments can play to support the development of these industries and the new generation of vehicles that will run on these fuels.

“We will look to the car manufacturers and oil industry to play a leadership role to ensure Australia is building these vehicles and producing locally-developed fuels to run them.”

The Alternative Fuel Summit included international and domestic experts in alternative fuels, Federal Minister for Trade Warren Truss, Opposition Leader Kim Beazley, representatives from the oil industry, leading scientists and vehicle manufacturers.

“If there is one lesson to take from [the] summit, it’s that the options available to us for developing a local industry that will meet our transport energy needs are limitless,” says Alan. “We heard of a booming ethanol industry in Brazil where almost 80% of new cars sold are flex fuel models. We also heard about US incentives, which have led to biodiesel being America’s fastest growing alternative fuel.

“And in Sweden, government has supported the introduction of ethanol cars by offering motorists tax incentives and free parking, along with fuel industry support to roll out ethanol pumps at service stations. These are just some of the options available to our nation but we need to act now.”

To firmly establish the Jamison Group, NRMA will request support from the oil industry, finance and banking sector,
car manufacturers, the Federal Government, eminent scientists and alternative fuel experts.