Do You Think Avgas Is Cheap?

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At least once a year, I try to take the temperature of the emerging aircraft diesel engine market. What’s selling? Who’s buying it? How are they doing with it? A recent sweep through this topic revealed that in new airplanes, not much is selling at all, diesel or otherwise. (See the most recent GAMA production and shipment figures.)

With that established, shouldn’t the diesel conversions be doing a brisk business, especially since Continental recently raised the TBR on its CD line of engines to 2100 hours? Yes, but that’s not what’s happening. Conversions remain a lukewarm, low-volume market, despite demonstrated data that they deliver about 15 percent lower operating costs against avgas engines.

When I asked people involved with the conversions why this is so, the answer I heard consistently was that avgas is cheap. It is? At the moment, the average national price of avgas in the U.S. is $4.68, more than twice the average cost of autogas. Have you noticed? Do you care?

Irrespective of why diesels aren’t gaining more ground, I’m not so sure owners and pilots care that much about gas prices, with the exception of flight schools that use a lot of it. You can answer that for yourself in this week’s poll, but the overarching question is, do you consider avgas cheap? My answer is hell no, I don’t consider it cheap. But I do consider autogas to be cheap and, in fact, it is. In inflation-adjusted current dollars, the price of regular autogas costs about what it did in 1972 and is cheaper than at any time during the 1950s or earlier. The lowest adjusted rate occurred in 1998, at $1.48.

With gas so cheap, are you driving more? Personally, I’m not, because I’m not sensitive to autogas prices. Nationally, we are driving more, by about 2 percent, according to the Federal Highway Administration, confirming what you’d expect from standard supply and demand theory.

What about flying? With avgas so “cheap,” are you flying more? Do you care? I can find good data for avgas prices going back to the early 1980s, when it cost about $1.20. Adjusted for 2016 dollars, that’s about $2.60. The current U.S. national average is $4.68, according to airnav.com. So as with everything else in aviation, avgas prices have far outstripped inflation. Sometimes it makes me feel so special I could just weep.

But then I realized something. For much of the last decade, avgas has been in the high $5 range and $6 wasn’t unusual. Now it’s below that and has been for a while. Perhaps a certain psychological sense of “cheap” took time to seep in. If that’s so, wouldn’t we see increasing flight activity? Yes, maybe. But such that data is available to tell this story, it’s mixed. At AirVenture in July, the number of fly-in show planes, homebuilts, vintage and warbird airplanes all increased substantially over the previous year, despite worse weather. Whether a fluke or not, the numbers were as much as 11 percent higher. Fuel prices may or may not have been a factor. That these numbers didn’t decline serves as a victory of sorts, whatever the reason.

I’d like to correlate this with increasing fuel sales, but the data is murky at best. According to the Energy Information Administration, avgas sales plummeted sharply (after an equally sharp rise) in 2013, leveled off in 2014 and showed only slight decline in 2015. But a decline doesn’t support higher activity, unless piston airplanes have suddenly become more efficient, which we know they haven’t, Cirrus lean-of-peak notwithstanding. It’s possible that fuel sales have ticked up for 2016, but I’m not holding my breath that the data will confirm this. The data itself is iffy. There appears to be consolidation or retraction going on in the avgas refining business and for reasons related to proprietary considerations, avgas data is being withheld.

One anecdotal story: When I was interviewing sources for this, one owner told me he had flown his Cessna to AirVenture and back with a side trip out west. When I observed that the gas bill must have been substantial, he said something interesting. “You know, I really don’t want to know what the gas cost. I’m at a point in my life where I just wanted to make the trip, so I did.”

Because I’m an inveterate, dues-paying POW of the general aviation industry, I’m just self-delusional enough to weave that observation into a trend: pent-up demand! But seriously, if one guy feels that, others might too and it could account for increased flight activity. If the EIA gets it data collection together, we’ll know more.

Ample crude oil and refined product in the autogas markets appear to be tamping down prices and that’s likely to remain the trend for a while. Avgas has its own pricing psychology, but it’s sometimes linked—with an add-on margin—to the price of premium autogas. Its price is not strongly linked to the cost of production and thus crude oil prices.

Unknown is how the downward tend in fuel prices, however modest it has proven to be, will sustain itself when the replacement for 100LL surfaces two years from now. I was once confident that a market-competitive replacement would just naturally emerge because there’s money to be made in selling 250 million gallons of fuel a year. But with possible erosion underway in the avgas refinery business, I’m less confident of that now. It doesn’t help that the FAA’s cumbersome PAFI process is utterly opaque to progress. That may be the break diesel needs to become more attractive because one thing is certain: The world is swimming in Jet A.

Comments (29)

I think that one reason that diesel aircraft have not caught on is that Jet A is not available at the real GA airports. Who wants to go to the Cl C or Cl D airport to get 25 gal of Jet A for their C172 Diesel? If you have a pick up truck with a bed mounted diesel tank, you could use D2 (if allowed) now that all D2 is ULS (Ultra Low Sulfur), if allowed by the STC. Then you would have to fill the truck tank, drive to the airport and fill the plane. Sounds like a lot of work vs. pulling up to the self-serv pump and loading up.

Another reason is the perception that diesel engines are not as reliable and durable as 100LL engines. The mechanics at many smaller shops have not been trained on these engines and as such are reluctant to maintain them.

For an individual owner, unless you fly a lot, the cost of the diesel install is overwhelming. Many owners are older and can't justify a 30 year ROI. the practicality is that if fuel prices go up, you don't fly as much to stay within budget with your gas burner. However, if you have the BIG monthly payments for the Diesel conversion, you still have to make the same BIG payment.

I do like diesel power, and have had my share of diesels. Too bad that the aviation units don't have the same reputation for reliability of a Cat or Cummins. Then too, if that were so, they would weigh more than the plane. Since the market is small, the gestation period will be long and arduous. Oh yes there is that nasty vibration thing.

Posted by: Leo LeBoeuf | August 14, 2016 3:55 PM    Report this comment

We've travelled this road before ...

Comparing two "all the bells and whistles" aircraft:

DA42 -- ( $800,000)

BE58 -- ($ ditto)

.... yeah, I'm dense ... it's Baron all the way.

Posted by: Phil DeRosier | August 14, 2016 5:38 PM    Report this comment

Doing an overhaul every 2000 hours is expensive. Changing out an engine, prop, and fuel system is not economical and will never repay the cost. This is especially true with the aging pilot/owner population that does not have another 30-40 years to reach a theoretical break-even point. Just throw on some jugs and fly for another 15 years is what many owners are satisfied in doing.

Posted by: Mark Fraser | August 14, 2016 8:06 PM    Report this comment

Is avgas cheap? No! Is it affordable? Perhaps. That probably depends on where you live and what you fly. In my case other things have had a bigger influence in how much I fly. One thing that surprises me is how much the price varies, not just around the country, but across a metropolitan area. My home airport is currently at $4.00 a gallon, but the price within 30 miles of home goes from $3.50 to $6.00. In the spring we saw it as low as $3.30 here. My biggest concern is what will happen to the price when the unleaded fuel - whatever it may be - comes along in 2018. When in the history of the FAA have they ever brought out anything new that was cheaper than its forerunner?

As for converting to jet, the world may be "swimming" in jet A, but the domestic market for conversions is pretty bleak. The current fuel situation is a temporary thing that may last a couple years. You will have to live with an engine for a couple decades. Other than flight schools, the economics for switching just do not exist. Also, the lack of trained diesel engine mechanics means very limited options for maintenance and repair, which translates into higher operating costs. What happens when you get stranded at a far away airport and no one knows how to fix your diesel?

Posted by: John McNamee | August 15, 2016 12:14 AM    Report this comment

Diesel Engine = 1.) Right from the get go, the conversion is expensive.
2.) Once converted you will climb slower.
3.) Once converted you will cruise slower.
4.) Once converted you will have less useful load. Less trip planning latitude.
5.) Maintenance facilities are limited.
6.) It will take the average person 15 to 20 years to realize cost savings if any from
diesel.
7.) Many people will just not have their planes long enough to come close to realizing
any economic benefits.

Posted by: Thomas Cooke | August 15, 2016 4:09 AM    Report this comment

I might be off base with this, but from my amateur research, the high cost of AvGas is partially due to transportation costs. Auto fuel goes into a pipeline, but AvGas must be trucked. Consider the cost of trucking a tanker of fuel from Texas to New Jersey, and add it to the base refinery price. Correct me if I am wrong here.

Posted by: Walt Hankinson | August 15, 2016 5:54 AM    Report this comment

Avgas is also shipped by rail and barge, which are cheaper than trucks, but not as cheap as pipelines. Leaded avgas requires segregated storage and transport, which further raises costs and all but eliminates investment in new infrastructure.

Probably the large margin refiners tack on to the avgas which they can't and don't add to autogas accounts for much of the price difference.

Posted by: Paul Bertorelli | August 15, 2016 6:24 AM    Report this comment

I'll believe in that universal, fungible replacement for 100LL when I see it. Lord knows what it will cost per gallon, but it's unlikely to be even close to the price of Jet-A. My next plane will burn kerosene. I may or may not recover my up-front costs, but at least I - or my heirs - will be able to sell the vehicle.

Posted by: Tom Yarsley | August 15, 2016 6:54 AM    Report this comment

Anything that is labeled for aviation use is going to be expensive due to the liability involved. Just wait until Apple gets sued for an alleged IPad failure that some lawyer thinks caused a fatal accident. Apple will then disavow any use of their IPads for aviation and that will be the end of that cheap source of IPads. Add those liability costs to Avgas along with all the other special handling needed and the relatively small quantities and there you have some of the reasons for the higher cost of avgas. I share the concerns about the cost of any unleaded avgas that is created with Mr McNamee.

Posted by: matthew wagner | August 15, 2016 7:04 AM    Report this comment

"You know, I really don't want to know what the gas cost. I'm at a point in my life where I just wanted to make the trip, so I did."

I'm 99 percent there. I still shop fuel stops but convenience is the driving factor. Although I must admit fuel for my Liberty XL2 isn't a bank breaker.

Posted by: Robert Mahoney | August 15, 2016 8:36 AM    Report this comment

The big problem with avgas is there is only one refinery in the UK that makes a key ingredient. When they stop, what then? We humans have trouble seeing big changes so we are likely to be caught off guard. Efficiency will always be important and technology breeds efficiency. A modern airplane with Rotax 912 can make a 500 mile trip for about $40 using mogas vs $275 for a 1970 vintage airplane using a gas. Of course then there is the cost of the new airplane...

Posted by: DANA NICKERSON | August 15, 2016 8:36 AM    Report this comment

Now that Eci's cylinder issue has been AD'd, there are apparently 6000+ IO 520/550's engines that will need cylinder replacement. For some, that may be an incentive to consider diesel. Of course, that means a larger version is needed. The thread here is to look at the GA population's age. I may be wrong, but once us baby boomers hang up the goggles, the market will shrink again. If I were a manufacturer of anything GA aviation, I'd be looking for a buyer. Next time you're at an aviation event, have a look at the attendee's. My bet is the boomers dominate. So, if gas goes up in price or becomes scarce, diesel or not, the end is not that far off.

Posted by: MICHAEL BROOKER | August 15, 2016 8:49 AM    Report this comment

I would say the avgas price is one-sided elastic (or is that in-elastic?; my ECON 101 memory is fading). Low prices don't necessarily make one use more (that's more limited by the available time and weather), but high prices will for darn sure make you consider some belt tightening and foregoing those long trips.

I remember the avgas price wars of the late 1980s it was running $1.75 typically in the southern US and in the early 1970s it was below 1 dollar; I have an old ticket here somewhere for 80/87 if I can find it. Before the 1973 embargo, nobody seemed to worry that much about the fuel price (at least in recreational GA); it was kind of like worrying about the price of bait to go fishing. You were thinking more about the fish!

Posted by: A Richie | August 15, 2016 8:57 AM    Report this comment

I think your Airnav average price is suspect. They may know the advertised price for avgas, but do they know how many gallons were sold--at what price? When I was based at KLGB Millionair avgas was frequently above $7.00 a gallon, but I never paid that for it. Having one of their tie-downs provided a considerable discount. Fueling with more that 100 gallons (C 340A) provided another discount.

Some flight schools negotiate bulk purchases for a yearly cost, Und so weiter.

Flying around Arizona, it is easy to find prices lower than $4.00/gallon. And frequent customers usually get a discount. Some places have prices >$#.50/gallon, attracting planes like my wife's hummingbird feeder.

Posted by: Edd Weninger | August 15, 2016 9:38 AM    Report this comment

Is it possible that more transportation airplanes are going turbine? Think of all those 421's, Navajos, even Barons...they have always been the largest users of 100LL. As used turbine aircraft get older and cheaper, perhaps more of the users of these aircraft are finding bargains in older turboprops...? I fall in that category: Baron, 414, now an old beat-up Conquest. Flying >200 hours a year, it's cheaper than the 414 when considering maintenance...

Posted by: JOHN EWALD | August 15, 2016 10:13 AM    Report this comment

Dana Nickerson makes an excellent point. Today, there is only one supplier for the tetraethyl lead used in avgas, and that is in the UK. Ethyl Corporation, the inventor of TEL, got out of the business eons ago, and there has not been a U.S. supplier for many years. If the Brits decide to get out of the business, there goes all avgas! The push to unleaded aviation fuel should be driven by that fact and not by a directive from the EPA.

In spite of my previous statements over developing 100 UL, I am cautiously optomisitic that more manufacturers will get involved with an unleaded fuel, since it no longer must be completely isolated from other refined products. I have been to several refineries where 100LL is made and they all hate the stuff - mostly because of its storage and handling issues. They all said that they would support an unleaded fuel. My main concern is that the FAA is subject to political pressures that often override the scientific and technical aspects of the project. I just hope we don't wind up with some end product like the idiotic idea to put alcohol in motor gasoline.

Posted by: John McNamee | August 15, 2016 11:13 AM    Report this comment

It is simply not true that Innospec is the only manufacturer of TEL. China makes its own avgas and, indeed, recently opened at least one new refinery to do that. Homegrown TEL, too.

www.tinyurl.com/aa4vpp2

Whether it could be imported to the U.S. is an open question, but Inospec export to the U.S. The larger concern is the big picture economics of whether U.S. refineries still want to fool with lead in making 100LL. They could decide it's just not worth it and that, in fact, may be going on beneath the surface. But if they do, TEL would probably remain available from somewhere.

Posted by: Paul Bertorelli | August 15, 2016 12:21 PM    Report this comment

We've all heard that diesels do not save enough money to make them worthwhile except in applications where utilization is high. I'd like to throw another question out for discussion: Automotive diesel.

Diesel engine manufacturers have largely incorporated either diesel parts taken from the auto industry to assemble their own diesels, or taken automotive diesels right off the assembly line and used them in aero applications (with additional modifications and quality control--think Mercedes/Austro).

The diesel engine providers have specified that their engines run on Jet-A--usually for quality control purposes. That's desirable. What would happen to the economics of diesel engines if they were able to utilize #1 diesel for aeronautical use? It would be interesting to see how the economics would work out at retail diesel prices.

Auto fuel has worked out well for those who can use it--but unlike using the varying qualities of auto fuel, diesel engines will run on just about any distillate--it should be less susceptible to being "off-spec" than gasoline.

Paul--you have the numbers--what would happen to the viability if aviation diesels could use auto diesel?

Posted by: jim hanson | August 15, 2016 2:27 PM    Report this comment

On the current "Do you consider avgas to be cheap?" QOTW, as I write this 50% have voted flat "No" with only 17% indicating that "Frankly, I just pay for it" and don't think about the cost.

Rising above the strictly literal interpretation of the offered selections, I really think most private pilots actually fall more into the "I just pay for it" sphere. Having elected to play (and enjoy) the aviation game, we pretty much accept that you pay whatever the cost is.

Not to say fuel cost isn't a factor, but for me the overall cost of the fuel has never been a critical component of the decision to go or not. And certainly I select my stops on long cross country trips with an eye to getting the best deals, but convenience is always more heavily weighted than agonizing over finding some mathematically perfect lowest cost route.

Posted by: John Wilson | August 15, 2016 6:53 PM    Report this comment

Fuel prices never have factored into how much I fly because my spending philosophy is simple.

I spend most of my money on my women, red wine and my 2 airplanes, the rest I spend foolishly.

Posted by: DAVID GAGLIARDI | August 15, 2016 8:59 PM    Report this comment

Comparing diesel vs. avgas engines just based on fuel costs is only part of the story...

Aircraft diesels have many other advantages compared to their avgas counterparts, mostly because the diesels are computer-controlled FADEC engines, and/or they borrow from automotive technology:
- No issues with hot starts, just turn the key or push a button for instant starting
- Ditto for cold starts
- No need for pre-heat in the winter; start your diesel down to -30C without any engine damage (they're liquid cooled).
- Because diesels use unleaded JetA fuel, they also use multigrade synthetic oils: this means oil changes are every 100 hours instead of 50 hours.
- Make cabin heat/defrost the same way as your car: use hot coolant from the liquid-cooled engines via a heat exchanger. In a twin, this means there's no need for a dangerous gasoline-powered Janitrol heater in the nose.
- In the case of Austro/Mercedes diesels, when you're ready for an overhaul send your engine back to the factory with a check for $20K and Austro will dip into their supply of Mercedes diesel car engines and send you a brand new engine.

Posted by: DAVE PASSMORE | August 16, 2016 9:25 AM    Report this comment

Dave, unless I have been mis-informed by Austro, they send you an overhauled engine. No way $20,000 will pay for a new one. That would be $10,000 less than a new Lycoming and the economics don't reflect that. A TBR-replacement for the Continental engines is in the $35,000 to $42,000 range. Austro overhauls are $23,467, as of April exchange rates.

Posted by: Paul Bertorelli | August 16, 2016 9:33 AM    Report this comment

Paul:
The price for an Austro "overhaul" for $23,467 sounds about right, but they do send you back a brand new engine.

My understanding is that it's cheaper/easier/faster for them to send you a new Austro engine than to go through the labor-intensive process of actually overhauling your old Austro engine -- as you know they've got a room full of new Mercedes OM640 (relatively cheap car) engines that they can convert to Austros. When I visited the Austro factory in Wiener Neustadt I was told they want your old engine back only so they can see how much wear it experienced, and that Austro hasn't even written an overhaul manual yet (even though these engines have a TBO rather than a TBR).

And yes, a Continental diesel engine replacement at TBR does cost almost twice as much, about $40K. That's because Continental has to actually build their engines; they can't just modify a real Mercedes car engine like Austro can.

Posted by: DAVE PASSMORE | August 16, 2016 11:04 AM    Report this comment

The Continental engines and probably Austro too are approved for EN 590, which is winterized Euro spec road diesel. Don't know if there is a U.S. equivalent.

But even if there is, it won't help the economics much. Road diesel in the U.S. is about $2.30 now and if auto fuel is any guide, when it goes on an airport, add a buck to that. That puts it within 50 cents or a dollar of Jet A and if the engine is burning 5 GPH, we're talking about $2.50 to $5 an hour, if that. Again, if mogas is a guide, I doubt if such a small Delta would move the market much.

Last time I ran the numbers, a Continental CD was at $47 an hour, the Austro at $39 against a Lycoming O-360 at $55. In Europe, that works out to $55, $42 and $89 respectively. In Europe, running the diesel saves more than $70,000 over the Lycoming. This seems like a total no brainer. Yet...conversions are slow sellers in Europe, too. It's probably due to lack of capital and stick-in-the-mud conservatism.

Posted by: Paul Bertorelli | August 16, 2016 1:10 PM    Report this comment

That's very interesting Dave, regarding Austro giving you a new engine for the "overhaul/exchange". If the economics work, I don't blame them, as a true overhaul is a lot of laborious, exacting work to do it right; and then it's still a "used" engine (although you maybe could get some confidence knowing that you are past the infant mortality stage of the reliability curve, at least for the big parts like crank & case).

This is a great example of the benefits of mass production especially in a cross-over application. Just think if the GA industry was like this with a broad spectrum of engines, airframes, and components, we'd all be flying nice clean new airplanes! At least we can dream...

Posted by: A Richie | August 16, 2016 2:29 PM    Report this comment

I can not see GM or Ford selling engines for use in airplanes. The 100,000 lawyers on staff would register 4.6 on the Richter Scale screaming NO!! US is too litigious. I sure would like to have an Astro conversion available at a reasonable price. It is not going to happen though. We are left with our Lycosaurus up front burning 100LL and whatever the FAA stuffs down our throats.

Posted by: Leo LeBoeuf | August 16, 2016 6:23 PM    Report this comment

I think Mr. Ewald is right; a lot of the high end piston market has gone to turboprops. it's really just the downward expansion of the trend since the 50s, and it's why GA piston engine technology remains largely frozen at a 1950s level. The source of the technology (military and civil development of large piston engines) dried up because everything went to turbines.

Personally, I plan to get around the price of 100LL by building my RV with an ethanol-tolerant fuel system and using electronic fuel injection. I'll have extra fuel capacity to tanker fuel on trips, so I'll minimize use of leaded fuel.

Posted by: Robert Gatlin-Martin | August 18, 2016 6:18 AM    Report this comment

The main downside to me for a diesel conversion is that you lose payload AND speed, and in something like a Piper Archer or Cessna 172, there isn't a huge amount of speed to start with. Piper's own factory Archer DX goes from being a 115-120kt plane to about a 100-110kt plane, and that's just a little too slow for me. In a new plane, the payload loss can be partially made up by having a smaller fuel capacity without sacrificing range, since the diesel fuel burn is typically a bit less. But until the speed is closer, it's just not worth it to me.

Posted by: Gary Baluha | August 18, 2016 11:22 AM    Report this comment

HOW WOULD YOU LIKE TO BE IN ONTARIO, CANADA. WE HAVE A PREMIER RUNNING ONTARIO WHO PUT A NEW AVIATION FUEL TAX ON A TAX OF 4 CENTS PER LITRE IN JANUARY. HER COMMENT WAS OWNERS OF PRIVATE AIRCRAFT ARE RICH AND CAN AFFORD TO PAY FOR POLLUTING THE EARTH. WE SHIP OUR RAW OIL TO LOUISIANA AT THESE LOW PRICES, HAVE IT PROCESSED AND SHIPPED BACK NORTH, BY TRUCK TO ONTARIO. OUR COST AT OUR AIRPORT IS NOW $1.93 PER LITRE. MULTIPLY THAT BY 3.8 TIMES IS $7.33 IN CANADIAN DOLLARS. YES MANY OF MY FRIENDS FLY WITH MOGAS. IT IS CURRENTLY $1.15 OR $4.37 PER US GALLON. CONSIDERING CURRENCY EXCHANGE ON A PAR WITH THE LITTLE AIRPORT I ATTEND IN THE WINTER IN FLORIDA. I CANT GET A CLEARANCE FOR MY E225-9 ENGINE SO I AM STUCK WITH 100LL. WE LIVE IN A PROVINCE THAT SAYS, "NIMBY" OR NOT IN MY BACK YARD. WHEN IT COMES TO CREATING A REFINERY IN OUR PROVINCE TO MAYBE STOP THE BLEEDING OF PUMP PRICES. IN QUEBEC THEY PROCESS AUTO FUELS. THEY NO LONGER PRODUCE 100LL. WE PAY ONE PRICE AND THE FUEL SHIPPED OFF TO THE UPPER EASTERN STATES GET ANOTHER LOWER PRICE FROM THE SAME REFINERY. GO FIGURE. MAYBE WE SHOULD HAVE DONALD TRUMP UP HERE TO NEGOTIATE A BETTER PRICING DEAL FOR US. UNFORTUNATELY OUR FEDERAL AND PROVINCIAL GOVERNMENTS DO NOT AGREE WITH PILOTS THAT AVIATION IS A NECESSARY METHOD OF TRANSPORTATION FOR THE PRIVATE PERSON TO OWN HIS OR HER OWN AIRCRAFT. THEY ARE DOING THEIR VERY BEST TO DISCOURAGE GENERAL AVIATION UP HERE.

Posted by: Jim Morrison | August 19, 2016 9:02 AM    Report this comment

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