General Motors (NYSE: GM) and Ford (NYSE: F) are making their signature trucks CNG-capable, and with good reason.
With lower natural gas prices, there is a growing market for CNG-powered civilian and commercial cars.
While the LNG demand for heavy duty vehicles is beginning to gain traction, the manufacturing sector hasn’t fueled higher demand. But compressed natural gas is different, since more civilians and local/state governments have asked these auto giants to retrofit their cars to handle CNG.
In 2013, Ford offered F-150 customers the choice of including a prep package for the 3.7 liter V-6 engine. It will cost the owner anywhere from $7,500 to $9,000 for the installation, but lower CNG prices will eventually prove to be worth the investment.
Since the price of CNG hovers around the $2 range, this could prove to be a cost-saving endeavor for civilians and cash-strapped local governments. And since the F-150 is Ford’s number one vehicle among individual customers and the private sector, it would only make sense to have this model capable of handling CNG.
General Motors is following the same path with its Chevrolet Silverado HD and the GMC Sierra HD. The 6.0 liter V-8 engine will handle CNG and gasoline, allowing the trucks to run up to 650 miles.
The four-tank model will allow drivers to go 300 miles, and the 3-tank version will go for 200 miles. If the CNG tank is empty, the car will automatically revert to gasoline consumption. This type of hybrid engine has already made headway in countries like India, where CNG stations are few and far between.
As in India, U.S. CNG stations are also a rare sight to see, but users have the additional option of installing CNG stations in their own homes.
Smith Dairy is one company that plans to convert 400 of its fleet trucks to CNG readiness, and the company has also constructed its very own CNG station. Efforts to construct more CNG infrastructure are beginning to catch up with demand.
In Pennsylvania, CNG station operators can take advantage of a two-tier grant program for vehicles over and under 14,000 pounds, Salem News reports. And Ohio is adding infrastructure-based loans to a grant program of its own.
Even though state legislatures are trying to bolster jobs and infrastructure growth in their own states, there is actually a mending of ideas in effort stimulate to manufacturing, along with taking advantage of prosperous natural gas production.
In East Ohio and most of Pennsylvania, the Marcellus shale has proven to be a lucrative natural gas venture, with such companies as Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) investing heavily in these states. Even former Chesapeake (NYSE: CHK) owner Aubrey McClendon is investing in the region with a new start-up company.
And with the Utica Shale also providing a buffer to Marcellus Shale production, the East Coast will be a perfect haven for CNG consumption and infrastructure.
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In addition to Ohio and Pennsylvania, nearly 20 other states are also offering incentives for CNG. Oklahoma, Texas, and Florida are some of these states, with the Sunshine State offering a $25,000 rebate starting in 2014.
But Pennsylvania is proving to be the fastest-growing natural gas producing state in the country, according to data from the Energy Information Administration. The state had the largest increase in marketed gas, and it has made it from seventh to third place among top ten natural gas producing states.
Pennsylvania will come in second in 2013, behind Texas in first and Louisiana in second. This explains why CNG infrastructure and demand has been skyrocketing within the Mid-West.
But the West Coast is another investment haven to watch out for, since the some states are ramping up efforts to reduce carbon emissions. California is turning to CNG vehicles to reduce emissions, cut costs, and to lead by example. You’re also seeing these efforts across the country, from Oklahoma to New York.
A recent report from the EIA highlighted that effective natural gas production could last beyond 2040, and this is excellent news for CNG supporters. It could also spawn more CNG-capable cars.
As long as CNG prices remain at the $2.00 level, you’re going to see much more demand for this fuel, along with more cars that will be fully ready to handle compressed gas the moment they are shipped from factories.
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