The Pros and Cons of Converting to LPG

LPG-Conversion -Hero

Since 14 August 2006 a Federal Government has had some kind of subsidy has been available to consumers who convert their cars from petrol to LPG. In view of the fact that in some cases this process costs less than $2500, the subsidy goes along way in covering the cost of the conversion, in the words of the government's own website on the matter: "There will be a significant benefit not only to the community, but to individual users in terms of reduced running costs. It is therefore reasonable that users contribute to the cost of conversion."

Response has been strong and in many areas of Australia there are long waiting lists. Nevertheless some companies are so keen to get business that they are offering to do the work for barely any more than the subsidy. The point is that to get the best deal from a reputable organisation, it pays to shop around.

LPG conversions do not interfere with the existing ability of the car to run on petrol. Indeed, it is recommended that the car runs on petrol from time to time to keep everything working properly. While there is usually some sacrifice of performance when the car is run on gas, this should not be the case with petrol.  

Crunching the numbers - is it worth it?

So what kind of savings are available and is it automatically the case that converting your vehicle for gas makes good economic sense? The typical price of converting a six-cylinder Holden or Falcon is $2500 to $3000. We will use the example of a VT Commodore. On petrol it will average about 12 litres per 100 kilometres. On gas the figure will rise to about 15. So let's assume you will be $1000 out of pocket on day one. Basing 91-RON unleased fuel at $1.50 per litre and LPG at 0.75c, and assuming an average annual mileage of 20,000 km, after one year you will have more than paid for the conversion. The VT would slurp 2400 litres of unleaded at a cost of $3600 compared with 3000 litres of gas at $2250. But if your annual mileage was just 5000 km per year, it would become a dubious exercise.

As a general rule, the bigger the engine and the thirstier the vehicle, the more sense conversion makes. Consider the opposite end of the spectrum. A Honda Jazz averages about 5.5 litres per 100 km on petrol. Given an annual mileage of 10,000, this equates to 550 litres or $825. On gas the car would probably drink at least 7 litres per 100 km or 700 litres in a year at $525. Upsetting the standard specification hardly makes sense in this example.

Nor does it make much sense investing money in a worn-out car. Better to buy something newer and more fuel-efficient and then consider your options. (If you buy a new vehicle that can run on LPG the government will give you a $1000 rebate.)

Now take the case of a 1992 Range Rover V8 which was averaging 18 litres per 100 km on an average mileage of 20,000 km. That's 3600 litres at $5400. Convert it to gas and consumption will rise to about 22 per 100. You would consume 4400 litres at a cost of $3300.

At present there is no excise on LP but this is set to change. Starting in 2011 at 2.5 cents per litre, this will rise by 2.5 cents each year until 2015 by which time it will be 12.5 cents per litre.

It does seem likely that as petrol prices rise, so, too, will the cost of LPG, but it is likely to remain at about half the cost of petrol. So the dearer petrol becomes, the more sense an LPG conversion will make.

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