By on April 2, 2012

Even with gasoline prices reaching higher and higher, and natural gas prices at decade lows, consumers are doing as little as possible to adopt natural gas vehicles. As investment blog Seeking Alpha found out, the answer isn’t so complex.

The issue is of course, a classic chicken-and-egg problem. Looking at fleet customers as an example, a firm called PLS Logistics published a white paper on natural gas vehicles (specifically, LNG, or liquefied natural gas, commonly used in commercial applications like trucking). The biggest stumbling block by far was the lack of infrastructure available for fueling NGVs. Even in the face of substantial awareness about NGVs, as well as optimism that they will be adopted in the future in some capacity, literally no one is planning on purchasing NGVs in the next 12 months.

One interesting takeaway is that a quarter of respondents thought that there was zero price difference between diesel and natural gas. Natural gas is about $1.50 per diesel equivalent gallon (the unit used by PLS to measure an equivalent quantity of natural gas). Good news for NGVs comes in the form of a GE-backed project to build 250 filling stations for both CNG and LNG fuels - though as Seeking Alpha notes, demand for NGVs may be affected as much by low natural gas prices as high gasoline prices.

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19 Comments on “Low Natural Gas Prices Aren’t Spurring Demand For NGVs...”


  • avatar
    skor

    It’s not just lack of infrastructure. There are costs for converting the fleet, and then there are no guarantees that NG will stay low in price. We’re one Jon Corzine, brutal winter, or Sunburn anti-ship missile away from sky-high NG prices.

    • 0 avatar
      Toucan

      Compared to the brutal reality of the peak warranting the price surge of oil based fuel, relative low price of the nat gas can be taken for granted.

      It is, with its energy density and ability to be burnt using available automotive technology, just the future of fuel. And the technology can be rolled out at the push of the button by any car maker.

      Seeing how both peak oil and BRIC countries progress, the lower range of CNG cars will be the most comfortable of our problems.

  • avatar
    gslippy

    And for consumers, anyway, there aren’t many CNG vehicles to choose from. Add to that the vehicle price premium and lack of infrastructure, and you’ve got a technologically great solution that can’t be evangelized.

  • avatar
    Toad

    LNG/CNG are going to be adopted by fleets first; they know that their vehicles will be coming back to a fueling station. Natural gas fuels at truck stops for fueling over the road trucks will come next; only after that will natural gas come to passenger cars.

    The good news is that we have enough natural gas to supply ourselves for over 100 years, natural gas burns and runs relatively cleanly, and is cheap. Those that want to will have the option of fueling at home.

    Having choices is good. Natural gas as a vehicle fuel is a great option to have.

  • avatar
    MarkP

    The founder of FedEx was interviewed on NPR today. He is very strongly in favor of natural gas as a fuel for over-the-road trucks. He thinks a relatively small number (around 300 or so as I recall) of refueling stations located along major interstates could make NG-fueled OTR trucks a reality in a few years.

    • 0 avatar
      Toad

      That is coming next. The cost premium IIRC has dropped to about $25k for NG over the road truck. Combined with a lower cost fuel with much less price volatility and truck fleets will jump on this once the fueling stations are in place.

  • avatar
    nikita

    $1.50 difference per diesel gallon equivalent is far from zero. I dont understand that statement.

    • 0 avatar
      redrum

      “The difference effectively works out to about $1.50 per diesel equivalent gallon.”

      I don’t get this statement either. Are you saying natural gas is $1.50/gallon cheaper or more expensive than diesel?

    • 0 avatar
      Robert Schwartz

      Beyond that, the statement is wrong. A gallon of diesel has the energy equivalent of about 135,000 BTUs and costs about $4. Buying a million BTUs of diesel would cost about $30. Per million BTUs NG costs less than $3. The difference is $27.

      Of course, if this caught on the government would want to impose a gas tax of about $3.50 per million BTUs.

  • avatar
    Contrarian

    I’m all for NG powered vehicles. They are make economic sense, unlike almost all of the other green tech boondoggles that have been shoved down the taxpayers’ throats in the last few years.

    • 0 avatar
      early

      The sorry thing about the green-tech boondoggles is that the most successful green technology which is the hybrids of Honda and Toyota was not adopted by Chevy because Chevy wanted to be different and build a parallel hybrid and this crappy e-assist system. Both of which add complexity without decent efficiency gains. Hybrid technology could be added to ng cars to boost their efficiency with around town driving so that ranges would be on par with gasoline cars, of course with increased cost and complexity. The American companies have not developed that kind of technology. It’s very disappointing that Ford is trying to make an ev focus but not an honest 45-50mpg hybrid focus to take on the prius.

  • avatar
    ClutchCarGo

    “Even in the face of substantial awareness about NGVs, as well as optimism that they will be adopted in the future in some capacity, literally no one is planning on purchasing NGVs in the next 12 months.”

    Reminds me of the Onion piece about public tranportation:

    Report: 98 Percent Of U.S. Commuters Favor Public Transportation For Others

    WASHINGTON, DC–A study released Monday by the American Public Transportation Association reveals that 98 percent of Americans support the use of mass transit by others.

    “With traffic congestion, pollution, and oil shortages all getting worse, now is the time to shift to affordable, efficient public transportation,” APTA director Howard Collier said. “Fortunately, as this report shows, Americans have finally recognized the need for everyone else to do exactly that.”

  • avatar
    zekestone

    Well I looked into this myself. And the problems are as follows:
    1. There aren’t any CNG/LNG vehicles available that I actually want to drive. Sure I could probably find a Honda Civic GX… but all those are automatic. And the trucks on those, which are not that big to begin with, are made even smaller with the CNG tank. And forget about having fold down rear seats.
    2. Few refueling stations. There just aren’t many of them around. There used to be until a couple of years ago… but then Shell closed them down. The alternative is a home fueling system… which costs around $5000. And the tanks on those have to be replaced at a cost of $$$$ every 10 years too! Plus I think the system also needs to be inspected annually which costs $$$.
    3. You don’t save that much money when you factor in that the tanks will have to be replaced at the 10 year mark and the fact that CNG vehicles cost more to buy.
    4. Driving range… basically you get a driving range that isn’t all that great. And if it’s a pure CNG vehicle, once you run out, you’ll have to get it towed. At least with a Nissan Leaf, all you need is a 120V outlet and you can get going again eventually.
    5. This has been done before in the late 1990s to early 2000s. And all the people that did, got screwed over when NG pricest went through the roof in the mid 2000s. Now they’re saying that there’s a huge excess supply of natural gas… but that’s what was said in the mid 1990s. People just don’t want to get burned again.

    Natural gas is a great fuel for heat, cooking, a dryer or power generation.

    But using it in a car? Not so great in reality.

  • avatar
    Robert Schwartz

    NG is great stuff. It is cheap and burns clean. But, it is not ideal for moving vehicles, because it is bulky, or cryogenic. In either event is it is more difficult to handle and has greater safety risk than liquid hydrocarbons.

    Fortunately, the chemical transformation of NG into higher order alkanes that can be used as liquid fuels is fairly straight forward. The real problem is political as anybody who wanted open a plant to do that would face a fire storm of opposition from “environmentalists” and the EPA.

  • avatar
    lilpoindexter

    If they only built a stripped down, hatchback NGV vehicle with a manual tranny…

  • avatar
    S117

    My Grandfather was a professional mechanic by trade and mechanical genious by nature, When I was a young boy in the 1970′s he was teaching me a lesson in critical thinking and told me about a story about a device which he had learned about a long time before I was born that when bolted to the top of a regular gasoline engine would convert water to hydrogen and oxygen that the engine could use as a fuel. He asked me if this device was created why was petroleum products were in such short supply “which for those of you who dont rememeber,it was at the time” I had no idea, he told me that this device and the idea of how it worked as well as the patent for it were purchased and destroyed by several large corporations in co-ventute with each other to keep the price of petroleum products high and keep the money flowing to them and others. That is the real reason for all this nonsense today and one day America is going to wake up to this fact and the petroleum suppliers will be out of business in one day and we will all live cleaner healthier and better lives because of it.

    • 0 avatar
      Felix Hoenikker

      The myth of the hydrogen generator patent dies hard. Large corporations would not need to buy and destroy such a patent becasue this type of patent violates the most basic patent rule which simply stated says that you cannot get a patent on a perpetual motion device.
      All processes are less than 100% efficient. So to split water into H2 and O2, you would need more energy than you recover in the proudcts. If the H2 generator operated on electricity, you would need to burn more gasoline to power the generator to produce the H2 than just burning the gas in the engine.
      Solar powered H2 production would seem like a contradicition to this principal, but it isn’t because the fuel, sunlight, is free. However, the same laws apply in that you get less energy in the H2 produced by a solar cell than just using the electricity proudced by the cell.
      There is no free lunch in the first law of thermodyamics.


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