State Fleets to Purchase CNG Vehicles

Written By Brianna Panzica

Posted October 5, 2012

The nation may be split more than ever on the road to the election, but bipartisanship appeared on Thursday in one industry.

Last year, Oklahoma Governor Mary Fallin, a Republican, banded together with Democratic Governor John Hickenlooper of Colorado to propose a multi-state initiative to add natural gas vehicles to state fleets.

The initiative has gained support from governors from thirteen other states, and in April this year those governors sent requests to major automakers to express their interest in the vehicles.

The request was heard, and in July Fallin and Hickenlooper met with automakers in Detroit.

Since then, over 100 Ford (NYSE: F), Chrysler, General Motors (NYSE: GM), and Honda (NYSE: HMC) dealers from 28 states have been coming up with bids for vehicles to fit the states requirements.

They presented these bids on Thursday to twenty two states that have agreed to make a bid to purchase the vehicles.

From NewsOK:

“The initiative has been enormously successful,” Fallin said. “We asked auto manufacturers to develop products that were more affordable and functional. With the combined purchasing power of our 22 states, we successfully provided the incentive to do so.

“States will now have the incentive and ability to begin converting their fleets to CNG while saving millions of dollars in taxpayer money.”

The bids from the car dealers were aimed at reducing the price gap between standard vehicles and natural gas vehicles. And they were successful, slashing this gap by about half.

Officials said that some bids for three-quarter ton pickups created $5,800, or 16%, in savings.

And considering what sort of fuel savings the states will be looking at, these cuts simply add to the incentive.

In Oklahoma, Fallin has said, the fuel savings could be roughly $20,000 over a vehicle’s lifetime.

And if gas prices continue to go the way they’re headed now, savings could be even higher depending on the state. Today in California, gas prices rose as much as 20 cents overnight, averaging $4.60 in San Francisco, while certain stations charged upwards of $5 due to refinery outages.

Oklahoma’s state fleet consists of about 11,000 vehicles, and Fallin plans to start the shift with a purchase of 700 new vehicles each year. 40% of Oklahoma’s fleet already have 100,000 miles on them, so the purchases will be necessary.

Hickenlooper has lofty goals for the project. Across the 22 states involved, he anticipates total annual purchases to run around 10,000 vehicles.

Of course, refueling infrastructure will also be necessary, but that shouldn’t be a problem in Oklahoma. The state already has 63 public fueling stations – the most in the country. Colorado has 28 along major highways.

Currently, the only natural gas car for consumers on sale in the U.S. is Honda’s Civic GX. Other companies, like Chrysler and General Motors, have bi-fueled trucks that can use natural gas or gasoline.

From the Detroit News:

“The bi-fuel CNG Ram 2500 offers these customers the operating range and total cost of ownership necessary to operate their businesses efficiently and profitably. Production has begun, and vehicles will begin arriving at dealerships for fleet customers in August,” Chrysler said in July.

And Ford has CNG versions of three of its vehicles: the Transit Connect Taxi, the Ford E-Series vans, and the F-Series Super Duty trucks.

Exchanging gasoline for natural gas would reduce greenhouse gas emissions by up to 23% in heavy-duty vehicles.

That’s all for now,

Brianna Panzica

follow basic@brianna_panzica on Twitter

Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.

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