As America attempts to harness the power of natural gas to its fullest—and to find a non-export-related use for plentiful supplies—there appears to be a shopping spree for natural gas vehicles under way.
From seminars to state commitments to purchase natural gas vehicles, the idea is suddenly a bipartisan phenomenon with more and more states jumping on the bandwagon.
Most notably, Colorado Governor John Hickenlooper has announced that his state, in coalition with 21 others, will purchase as many as 10,000 vehicles running on compressed natural gas (CNG) annually—providing that US automakers will actually build them.
According to Oklahoma governor Mary Fallin—who has been implemental in trying to convince automakers of the benefits of producing more CNG vehicles--more than 100 car dealers (Ford, Chrysler, General Motors and Honda) in 28 states have submitted bids for natural gas vehicles to the 22 states on the CNG coalition.
Virginia has also signed an executive director to advance the conversion of the state vehicle fleet to alternative fuels. To this end, the governor recently signed agreements with two private fuel companies.
The state of Pennsylvania is also gearing up to host a natural gas vehicle seminar on 16 October, the objective of which is to convince all about the practicality of converting commercial and government vehicle fleets to CNG.
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New York has been the odd man out, with Governor Andrew Cuomo resisting the push towards CNG vehicle—a move the Wall Street Journal opined would be a “giant loss for New York, which holds an estimated 20% of the reserves in the Marcellus Shale formation”.
The result, so far, of all of this lobbying and banding together on behalf of the CNG vehicle is that the big three automakers have reduced the cost of natural gas vehicles.
According to Fallin, automakers have cut by half the price difference between traditional and natural gas vehicles. Specifically, officials said that they would save $5,800 (16%) on three-quarter ton pickup trucks. Fallin estimated Oklahoma could save up to $20,000 in net fuel costs over the life of a vehicle by switching to natural gas over gasoline or diesel.
As for Colorado’s Hickenlooper, he says he expects sufficient demand for CNG vehicles within two years, not only because natural gas burns cleaner, but also because it is less expensive than gasoline and diesel. He also predicts that CNG vehicles will go beyond “fleets” within a couple of years to become widely available to private car buyers.’
So with all this new governor-created demand, will automakers respond with the necessary supply? And will we have the infrastructure to support CNG refuelling?
According to the Detroit News, the deal with the governors will help manufacturers reduce costs because the new vehicles would be built on the assembly line rather than converted afterwards, which is an expensive process. So there is now incentive where there was little before. For now, though, only Honda sells a fully CNG car, while Chrysler and General Motors offer only what they have dubbed “bi-fuel” vehicles, which can be run on CNG or regular gasoline.
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CNG fuelling stations, however, remain an obstacle. There are currently fewer than 1,000 CNG fueling stations across the US—not enough to pump up demand, and none in some of the states pushing so hard for conversion to the CNG vehicle. A good share of these CNG filling stations are not even open to private consumers, but reserved specifically for government and commercial CNG fleets. So before automakers start pumping out CNG vehicles, they’ll want to know that the proper fuelling infrastructure is in place—and more importantly, they’ll want assurances that private users will find them plentiful enough to make the CNG car a viable option and a clear bottom-line improver.
The governors can are keen to tout the environmental aspects of the cleaner-burning natural gas vehicles, but in the end, it’s about finding a use for overly abundant natural gas supplies. Of course, the natural gas industry would like most of all to see authorization of exports of natural gas, but this issue remains a politically charged one—especially ahead of presidential elections—and for the time being, CNG vehicles are the answer.
By. Charles Kennedy of Oilprice.com