May 23 2012
In a recent report on the Indianapolis 500 and the feasibility of alternative fuels, Brent Schutte, Market Strategist for Harris Private Bank, writes about the promising future of natural gas vehicles to cut costs for American families and racing teams.
"Indy car drivers have embraced versions of alternative fuels and this season will mark the first year that cars will be burning E85 (ethanol) fuel," said Schutte. "The sights and sounds of race cars burning fuel to speed across the track in America's Heartland got us thinking about another American story, namely the increased natural gas and crude oil production that is occurring in many parts of the U.S."
Here are some facts from the report about gas usage for Indy car drivers and average residents of Indianapolis:
- The average Indy car gets a "whopping" 2-3 miles per gallon, which translates to approximately $600 - $900 in fuel to complete the 500 miles. The average Indianapolis resident will spend $55 on fuel driving 500 miles, up from about $20 in 1994.
- While the prize money for the winner of the Indy 500 has increased roughly 60 percent since 2002, the median income of an Indianapolis household has barely budged, rising from $64,100 in 2002 to $66,000 in 2011. Clearly, the increasing cost of fuel has "dented" household budgets.
- Currently, the gallon gasoline equivalent of driving 500 miles for an Indianapolis resident using natural gas would equate to roughly $15. That's $40 cheaper than driving with traditional gasoline or nearly $1,250 in annual savings for the average family.
"We believe that the recent trend toward alternative energy vehicles is more than just a passing fad and will continue until a new equilibrium exists between the price of natural gas and the price of oil," said Schutte. "Many companies already have or are in the process of converting some of their fleets to run on compressed natural gas, and the consumption of natural gas as vehicle fuel continues to rise."
For a copy of the complete report, visit www.harrisbank.com/indy500.
Harris Private Bank
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SOURCE BMO Financial Group