Conversion of Shipping Fleets from Diesel to Compressed Natural Gas: A Real Options Analysis

Hui Xian, Gregory Colson, Berna Karali and Michael Wetzstein

No 170285, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: This study incorporates Real Options to determine the conditions under which it would be profitable for a regional shipping company to consider CNG (Compressed Natural Gas) as opposed to conventional diesel for the heavy-duty truck fleets. Such analysis can avoid the shipping industry adopting alternative energies, which are feasible under net present value (NPV) but infeasible in terms of market conditions. Ultimately, given fuel price patterns, our model could indicate an optimal selection of fuels, which provides some guidelines for a regional heavy-duty truck fleet company to make fuel selections and policy implications for government incentives about alternative fuels.

Keywords: Demand and Price Analysis; Resource/Energy Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 2
Date: 2014
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Related works:
Journal Article: Diesel or compressed natural gas? A real options evaluation of the U.S. natural gas boom on fuel choice for trucking fleets (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:170285

DOI: 10.22004/ag.econ.170285

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