As billionaire T. Boone Pickens and politicians on Capitol Hill debate whether to offer tax credits to help facilitate a transition to natural-gas-fueled trucking fleets, U.S. automakers Chrysler and General Motors (NYSE: GM, Stock Forum) are rolling out their own plans for natural-gas-powered vehicles (NGVs).
Chrysler's model – a heavy-duty Ram truck that runs on a combination of compressed natural gas and gasoline – is expected to begin production in June, while General Motors' "bi-fuel" Chevrolet Silverados and GMC Sierra 2500s, which are retrofitted with compressed natural gas tanks, are forecast to hit production lines in the fourth quarter of this year.
Up until these announcements, the U.S. had only one dedicated natural-gas-powered vehicle – the Honda Civic GX.
However, one chink remains in the chain for a possible transition to commercially viable NGVs in the U.S.: How will people who purchase NGVs fill up their tanks?
Gifford Briggs, vice president of the Louisiana Oil and Gas Association, claimed that – since, unlike gasoline, natural gas equipment cannot be stored underground – the real estate necessary for building infrastructure to support NGVs will take years to finance and build:
For natural gas stations, storage tanks, dryers, compressors and other equipment need to be stored above ground, which takes a lot more real estate to put a station in. For a highway truck stop it wont [sic] be a problem, but for every gas station on the highway or in the middle of a city, that creates a problem.
NGV for America – a natural-gas-industry trade association – claims that there are roughly 1,000 NGV fueling stations in the U.S., but only half are open to the public. Many of the other 500 NGV fueling stations are used exclusively by public transit systems, which accounted for 62% of all vehicular natural gas uses in 2010.
Hope is on the horizon, as Chesapeake Energy (NYSE: CHK, Stock Forum) – the world's second-largest producer of natural gas – and General Electric (NYSE: GE, Stock Forum) recently announced plans to fund numerous liquefied-natural-gas fueling stations along major U.S. corridors.
According to the plan, GE will provide more than 250 modular and standardized natural gas (CNG) compression stations. This "CNG in a box" will provide core infrastructure to enable expanded access to CNG fueling stations and other designated installations.
The two conglomerates claim that a vehicle using CNG can reduce annual fuel costs up to 40%, representing a total annual savings of $1,500 per vehicle. Additionally, for each vehicle using CNG in a box instead of gasoline, a fleet operator can reduce CO2 emissions from fuel combustion annually by roughly 24% (or 2.2 metric tons) per vehicle.
At the moment, the U.S. has 112,000 natural-gas vehicles on the road, while there are over 13 million NGVs operating worldwide. According to Gas and Vehicle Report, the U.S. currently ranks 14th worldwide for NGV use, well behind top-ranked Pakistan, which currently has 2.9 million NGVs on the road.
Whether you are a proponent of global warming or not, a transition to a domestically harvested, cost-effective, and clean-burning alternative such as natural gas has benefits that stretch far beyond environmental impact. And, since the International Energy Agency forecasts that the global over-supply of natural gas could continue until 2030, U.S. automakers and conglomerates are simply responding to market forces.
It might not be an overnight energy revolution, but as long as unconventional production maintains the current supply glut (and thus low prices), the market will continue to be nudged in this direction.