By Beth Kelly
The global energy trade has been transformed in the last decade, thanks to the discovery of large reserves of “unconventional” gas resources worldwide. In recent years, natural gas harvesting and production has boomed within the continental United States. The country now stands as the world’s largest producer of the alternative fossil fuel, and, as a result, a serious interest in the use of natural gas as a vehicle fuel has taken hold among energy experts. Offering both substantial economic and environmental benefits, vehicles powered by natural gas (NGVs) are well-positioned and have the potential for eventual mass-market adoption.
Proponents of NGVs also point out the lower purchase cost of CNG when compared to the equivalent of a gallon of gasoline, and longer engine and oil life. Many states have initiated programs to help leverage the economic, security, and environmental benefits of natural gas. The Ohio NGV Partnership, just one example, works to promote both individual ownership of NGVs and the use of these vehicles in larger fleets. As natural gas prices continue to remain stable (or even decrease) the idea of liquefying or compressing this alternative fuel and using it to power everything from semi-trucks to automobiles only becomes more enticing.
Yet despite clear economic and environmental advantages, last year out of the 14.5 million new cars and trucks sold in the United States, just 20,381 ran on natural gas. So why do American consumers remain so hesitant to dive into the NGV market? One reason is that there are currently far fewer natural gas stations than gasoline stations in the country, and they are clustered in areas like California, Oklahoma, Utah and New York. But if the price differential between natural gas and diesel is sustained, the number of NGV fueling stations may continue to grow. While developers would have to foot a large bill early on in order to develop the infrastructure needed to make a network of fueling stations possible, it would offer a more sustainable business model for them in the long-term. At the U.S. Department of Energy’s Argonne National Laboratory, researchers have successfully developed a new software tool for analyzing the economic impacts of constructing new compressed natural gas (CNG) fueling stations. Called JOBS NG, the tool is available as a Website download.
The price of NGVs is also an obstacle in the road to their adoption. A report published by MIT in 2011 found that "high incremental costs of CNG vehicles lead to long payback times for the average driver, so significant penetration of CNG into the passenger fleet is unlikely in the short term." These vehicles remain much pricier than your average gasoline powered car, and with the additional inconveniences of sporadic fueling stations and smaller fuel tanks, consumers are skeptical.
Even if the most optimistic outlooks for the future for NGVs remain modest, in some cases sales of natural gas for motor vehicles are surging way ahead of state projections. According to the Texas Railroad Commission, tax revenues from sales of liquefied natural gas and compressed natural gas in the state exceeded $2.2 million through the end of July. The Texas Comptroller’s Office had only projected revenue of $992,000 for the 2014 fiscal year, which ended August 31.
Due to infrastructure costs and fuel storage requirements, however, it’s likely that NGVs will always find their greatest success in long-distance transport fleets and public transit. Yet it is expected that with continual research and better technology, NGVs in non-fleet settings will become more prevalent. Natural gas vehicles offer both the opportunity to reduce the destruction wrought by our most polluting sector, while also becoming independent of foreign oil influences.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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