The Push for Natural Gas Fleets

Brian Hicks

Written By Brian Hicks

Posted November 28, 2012

As natural gas prices continue to remain at attractive levels within the U.S., everyone from oil companies to public utilities and the government has been working to ramp up demand for vehicles utilizing natural gas.

Nationwide infrastructure is starting to emerge to support and sustain the transition to a country of natural gas-fueled vehicles.

The gas costs between $1.50-$2 less than conventional gasoline and diesel, and major companies like AT&T (NYSE: T) and UPS (NYSE: UPS) are already converting company fleets to natural gas.

From Delaware Online:

“Now that you can save a dollar or two dollars a gallon, there’s huge interest in the market, especially in those fleets that use a lot of fuel,” said Richard Kolodziej, president of the trade group Natural Gas Vehicles for America.

EQT Corp. (NYSE: EQT), a drilling company, set up its own natural gas filling station just outside Pittsburgh back in 2011; today it does about 1,000 fill-ups a month, and half of that is non-EQT clientele.

Right now, a mixture of good forces means natural gas is seen in a very favorable light. Primarily, the shale revolution has caused an abundance of gas production, which has helped suppress its price to levels that make it a highly attractive alternative to conventional fuel.

Unfortunately, that newness also means natural gas distribution lacks the comprehensive infrastructure that conventional fuels enjoy, so it will probably not be a dominant fuel for vehicles anytime soon.

Just a tenth of 1 percent of all the natural gas consumed domestically was actually used as vehicle fuel, says the Department of Energy.

However, the big companies are pushing it aggressively. Chesapeake Energy (NYSE: CHK) has invested $150 million in Clean Energy Fuels Corp. (NASDAQ: CLNE), a company that is developing a network of LNG refueling stations for long-haul truckers across the country.

General Electric (NYSE: GE) has been pushing its “CNG In A Box” fueling system for retailers, and Chesapeake, GE, and Whirlpool (NYSE: WHR) are working on a $500 at-home fueling appliance.

States are getting involved too. More than 20 state governments have determined to add natural gas vehicles to their fleets, and the Pennsylvania Department of Environmental protection has offered $20 million in incentives to stimulate the market for medium and heavy-duty natural gas vehicles.

On the other hand, conventional engines continue to improve efficiencies, as Delaware Online reports, and the initial high cost of investing in natural gas vehicles remains an off-putting prospect for most consumers.

In fact, the Honda Civic Natural Gas is still the only passenger car available to domestic consumers.

So for now, champions of natural gas vehicles remain focused on heavy vehicles, fleets, and the like—before taking the fight to the general public.

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