Plantoil/diesel conversion basics
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danalinscott

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I convert truck fleets and my clients are very fiscally conservative. They want to know "the bottom line" on every aspect of conversion. Luckily so am I and so I understand that the biggest disservice I can provide is to not provide very conservative numbers. I also understand that "fudging" the cost/benefit ratio to these folks will not serve ME in any way either.

HERE'S WHY 
My largest clients only pay me AFTER they have paid off the cost of conversion.  I ONLY make a profit if THEY have a net savings on operating costs LONG TERM. If my Return On Investment (ROI) calculations are off I end up losing money TOO.

HOWEVER ...VO conversion kit vendors have a slightly different incentive when it comes to estimating how long it will take for a prospective customer to experience a "net gain" after converting a diesel using THEIR conversion kit.  Since they make ALL of their profit from the sale of a kit they have a strong incentive to "fudge this estimate. After all once the kit is "out the door" and a customers payment is "in the bank" their maximum profit is realized. Even though ost kit vendors are basically honest people this provides a LOT of incentive to NOT provide a conservative/accurrate estimate of ROI and likely long term cost savings.

When calculating how much YOU might save if you switch to WVO fuel there is more to consider than simply what the kit costs and how much your avoided fuel costs are. But this is all most kit vendors will provide prospective customers with when trying to convince them that they should buy a conversion kit.  And many lead prospective customers to believe that VO fuel is free. I reccomend not trusting ay vendor who fudges this fact very much...as they are most likely not being any more truthful on other ... more critical... information. 

Calculating fuel savings is a fairly simple equation.
Simply take the cost of a gallon of fuel (Let's call that "$G") and divide it by the average number of miles per gallon the vehicle you are converting gets. (MPG)
This is the cost per mile ($PM) you pay now to drive down the road on petrodiesel. (see example #1 below)
(You can also plug in these figure to the calculator HERE to get $PM)

Once you have determined what $PM (Cost per mile on diesel) you multiply THAT by the average number of miles you drive the vehicle you are planning to convert each year. Let's call that "MPY". This will give you the average cost per year of filling your tank with petroleum based fuel each year (at diesels CURRENT cost). Let's call that "$PY". (see example #2 below) (You can get both $PM and $PY by plugging in your figures HERE)

Finally take the cost of the conversion components and installation (Let's call that "KIT") and divide that by $PY.
(see example #3 below) This will provide you with the Return On Investment (ROI) as a percentage of a year.
If you are curious exactly how many DAYS this is  just divide 365 by the ROI. (see example #4 below)

This is as far as any kit vendor will take you in determining how economically wise it is to purchase their conversion kit. Why..mainly because this is the point at which it LOOKS like the best investment and if you use this figure you may choose to buy a kit from them...and if you calculate the actual likely cost you may decide NOT to.

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Example #1: My Dodge gets an average of 17MPG and the current cost of diesel is $3.60 per gallon.
 So:
 $G = $3.60
MPG = 17.2
The equation is:
$G/MPG=$PM
so plugging in the values:
$3.60/17.2=$.2093

Some might want to round this number UP to 21 cents per mile. I do. In this case $PM = .21

---------------------

Example #2: I drive an average of 8,654 miles per year in my Dodge and $PM was calculated to be .21

$PM = .21
MPY=8,654
The equation is:
$PM x MPY = $PY 
so plugging in the values:
.21 x 8,654 = $1,817.34

Let's round that down to $1,817.00 since 34 cents per year really IS a negligible amount.

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Example #3 :
My conversion cost (which is admittedly very low)  was roughly $1,123.00. And $PY was calculated to be $1,827.
KIT =$1,123
$PY = 1,817
The equation is:
KIT/$PY = ROI so:
1,123/1,817= .618

ROI=.618% of a year.
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Example # 4
ROI x 365 = days till simple ROI payoff.
In this example:
.618 x 365 = 225.588 days to pay off the conversion with fuel savings.

OK..so You have figured out how long it will take to pay for your new conversion kit and installation considering nothing other than fuel cost savings using either a calculator provided by a conversion kit vendor or the equations provided HERE.  But that is not the ONLY cost you need to factor into your decision making...economically speaking. Below is a list of cost considerations than someone just trying to sell you kit may not mention.

1. Decreased engine life.
Most vendors dismiss this when trying to sell you a kit. But the fact is that no one knows exactly how much substituting WVO for petrodiesel will decrease your engines lifespan...it is just a safe bet that it will to some extent. Every formal study ever conducted on VO fuel has concluded that engine life is decreased somewhat when VO is used as fuel in a diesel engine. To be safe....even using the most advanced VO conversion technology available currently...I suggest taking the best estimate of remaining engine life you can get...and dividing it by 2.  This should provide as conservative estimate of how many total miles you can expect to use VO fuel for.

If this fewer miles than needed to repay the cost of conversion via fuel cost savings you MAY want to reconsider converting it at all.

2. WVO fuel is not FREE.
There is a cost associated with gathering it and processing it to fuel quality. These can be broken down into the following:
a) WVO collection containers.
These may be as simple as some 55 gallon drums with tops. But most add a chain and lock (to prevent theft of the entire drum) and a locking lid (to prevent theft of the wvo).  Each WVO source will need at least one drum.
Approximate cost per drum w/locks/chain/lid $40-$70 each. And you may need more than one or two.

Note:If you are really cheap and don't expect to use much WVO each year you may be able to talk your sources into pouring the wvo back into the cubees it came in originally or lidded buckets.  This will be much cheaper..but involve more labor and is not really practical for most who use over 100 gallons of fuel per week.

b) A wvo collection device.
In warm/mild climates this may just be a WVO vacuum (sucker) costing from $30 (if you use salvaged materials) to $250 (if you do not). In colder climates you may need a small trailer and hydraulic swing crane so you can load full drums of solid wvo and  transport them to a warm shop/garage to liquefy during winter months. This will cost from $300 to $500 depending on the size of trailer you need.

c) A wvo processing unit.
No matter how you collect wvo you need to remove the particulate and water borne contaminants before it can safely be used as fuel. The cost of a simple DIY processing unit is around $140. More expensive ones capable of processing up to 500 gallons per week are available for from $300 to $700...and up.

d)Fuel and energy costs.
Collecting and processing wvo into safe to use fuel takes energy...and you can figure this will run from 3 to 15 cents per gallon depending on the distance you must travel to collect WVO ..and the cost of energy used for processing.

e)Due to increasing demand for WVO as feedstock (mainly biodiesel plants) you may have to PAY for it.  This can run from $.10 to as much as $.50 per gallon. If this is the case simply deduct this cost per gallon from the "SG" amount in the above calculation to get a more accurate basic ROI number.

There are more hidden costs associated with using wvo fuel including...

3. Taxes.
Most states frown on not paying taxes on ANY fuel used on the road.  A few allow exemptions..but not many. The federal govt (IRS) has not shown much interest yet in collecting taxes..but it will eventually...and have the power to tax it retroactively. To be safe figure in your states fuel tax...and the federal tax on fuel to your costs per gallon. Link to a US map of diesel fuel tax. Again this amount should be deducted from the "SG" amount in the above calculation to get a more accurate basic ROI number. If you decide to not pay fuel tax on the wvo you use youmay never get caught. But if you do you will be required to pay the amount you owe PLUS a fine. Your choice but it is not accurrate to include the tax not paid for fuel in ROI calculations.


4. Increased maintenance costs.
This is actually a small cost but it should be noted anyway. Generally speaking it is best to change crankcase oil more often when using VO fuel. The more worn an engine the more frequently it will need to have its lube oil and filter changed. And it is also wise to change your VO fuel filter every other time you change your oil filter. On newer engines this is not much of an additional cost. But on older worn engines it may be. And consider the cost of replacement VO filter elements when choosing a kit. Some cost $6 and some cost $30. Generally speaking The cost of extra oil changes and filters will will cost $.01 to $.02 per mile so this amount should be deducted from the "SG" amount in the above calculation to get a more accurate basic ROI number.

5. Cost of bringing your engine up to good operating condition.
Converting an engine that has poorly working or worn our injectors is an unwise decision. A single "bad injector" can create a cascade of more serious problems that will doom your VO fuelled diesel to a significantly shorter working life. If you don't plan to (at a minimum) have your injectors tested and (if neccesary) rebuilt or replaced any ROI calculation will be a wild guess and most likely unreasonably optimistic. Contact your local diesel repair shop about what this costs and add this to the cost of the conversion kit in the ROI calculation.

6. Finally one should consider the value of one own time.
You can figure that for each gallon of WVO you collect and process you will be spending from 1-4 minutes of you time.  And depending on the kit and your own mechanical skill level you can expect to spend from 20 to 100 hours installing your conversion kit and making collection and processing equipment.
If you want to ignore the value of your own time you can otherwise calculate a value for it and ad this to the cost of of the conversion kit in the ROI calculation.




 

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Dana danalinscott@yahoo.com
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