A comparative cost analysis of biodiesel, compressed natural gas, methanol, and diesel for transit bus systems

A comparison of operating costs for buses used in a transit system are investigated considering four alternative fuels: biodiesel, compressed natural gas, methanol, and diesel. Rustʹs `nested fixed pointʹ maximum likelihood estimation algorithm is used in this comparison. The algorithm considers both tangible costs such as fuel, maintenance, and infrastructure, and intangible costs associated with different levels of bus engine operating reliability under alternative fuels. Using data on actual monthly mileage and time of engine rebuilds under the four alternative fuels, the Rust algorithm is employed assuming that an optimal maintenance strategy is adopted for each alternative fuel type. Results indicate that although biodiesel and biodiesel blends have higher total costs than diesel fuel, they have the potential of competing with CNG and methanol as fuels for urban transit buses.