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When will a diesel be available for my aircraft? |
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News, facts, and comments on the coming revolution for piston-engine aircraft.News of May 14, 2006You must read Jim Cavanagh in Aviation Consumer, May 06: Why 100LL wont dieJim explains in very convincing terms that Avgas will survive a very long time simply because there is a market for it, and it is a profitable business. And it will remain so for decades: It is for the same reason that you can still buy Zippo lighter fluid even though everyone uses a throw-away gas lighter. You pay $50 a gallon but on a very small amount! He fights the notion that there would be a need for alternative engines and fuels because of an unfounded fear that Avgas would disappear in the US. He describes in detail the processing actors from refinery to airport who have a role in producing, shipping, distributing and selling Avgas. He explains very well why Mogas is not the answer: it often causes camshaft corrosion, carburetor gumming (for older planes), and engines suffer of the inconsistency of available Autogas, changing from supplier to supplier and with the season. So what you save on fuel, you pay and then some at TBO. Jim shows a very interesting graph of wholesale fuel prices since 1986: From 1986 to 2006, Avgas went from $0.9/Gallon to around 1.80 while JetA went from 0.45 to 1.85 and Auto Fuel from 0.85 to 1.90. These figures show therefore that Avgas is the fuel the price of which has increased the least, while JetA price increased the most. This is not surprising. The lower the initial price, the higher is the incidence of higher oil prices. They also tell you that retail margins on Avgas are incredibly high… As for Avgas market, it is mostly in the US of course, and Jim correctly explains why aero diesel is taking off first overseas, where Avgas prices are truly forbidding, or where Avgas disappears. He comments on diesel saying that it will not impact significantly on the US fuel market for at least another 5 years, and this is again right: Even if you had 2,000 diesel aircraft flying in the US in 5 years (and you won’t: ask for our world market forecast) its impact on Avgas market would be negligible with over 230,000 airworthy piston aircraft in the US. However, Avgas is also disappearing in US regions where the demand is too low in absolute volume and the shipment cost are getting too high: American Northwest, Hawaii, Caribbean islands, US Pacific islands… and of course the rest of the world. So that diesel will, as Jim says, grow much faster overseas than in the US. Then the US will catch up. We see this happening in the 2010-2020 decade. Meanwhile if you are one of the smart Americans who buy a diesel now, expect its resale value to hold very well. posted at 11:32 AM |
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