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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