Executive Briefings

Positive Payoffs Result from Natural Gas Conversions

For building products manufacturer Owens Corning Corp., whose annual transportation fuel bill hits about $100m, $1.1m in savings over the last year or so may seem like a drop in the bucket. Unless, that is, the bucket is filled with found money.

Owens Corning gained these savings by doing nothing more than going about its business. One of its truckers, Chicago-based Dillon Transport Inc., converted from diesel fuel to lower-cost, cleaner-burning liquefied natural gas on two lanes that it operates for the Toledo, Ohio-based company. The routes from Owens Corning's suppliers to its factories in Texas and Ohio have stayed the same, as have the rates. Owens Corning's savings come from lower energy surcharges imposed by Dillon.

Phil Crofts, Dillon's marketing director, reckons its natural gas surcharges are, on average, 30 percent below those on traditional diesel fuel. Unlike with diesel, there is no industry-wide template for determining natural gas surcharges. However, natural gas prices are today about 90 cents to $1 a gallon cheaper than diesel prices. In addition, natural gas price fluctuations are less extreme. The combination of low prices and low volatility has become a boon to truckers, which can pass on some of that bounty to their shippers.

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Owens Corning gained these savings by doing nothing more than going about its business. One of its truckers, Chicago-based Dillon Transport Inc., converted from diesel fuel to lower-cost, cleaner-burning liquefied natural gas on two lanes that it operates for the Toledo, Ohio-based company. The routes from Owens Corning's suppliers to its factories in Texas and Ohio have stayed the same, as have the rates. Owens Corning's savings come from lower energy surcharges imposed by Dillon.

Phil Crofts, Dillon's marketing director, reckons its natural gas surcharges are, on average, 30 percent below those on traditional diesel fuel. Unlike with diesel, there is no industry-wide template for determining natural gas surcharges. However, natural gas prices are today about 90 cents to $1 a gallon cheaper than diesel prices. In addition, natural gas price fluctuations are less extreme. The combination of low prices and low volatility has become a boon to truckers, which can pass on some of that bounty to their shippers.

Read Full Article