Reuters has a highly interesting oil and gasoline story. If you are one of the “peak oil” types
, you may not want to hear it. As a matter of fact, it could shake your belief system so much that you scream “BIASSSSSSSS.” As a service to all our readers, we give you a chance to stop before it gets ugly.

So much money is made to convert crude oil in to motor fuels, that power and industry can’t afford it, making power and industry switch to other fuels, mostly gas. Motor fuels however is a low growth industry. What’s more, it could also easily switch to natural gas. The effect is an oil glut.

• BP predicts a worldwide oil demand growth of just 0.8 percent a year up to 2030 – slower than for any other energy type and only half the projected total energy demand growth rate over the same period.
• Transport is slow growing as cars are getting more efficient. BP’s Outlook 2030 study shows the fuel economy of new cars in the United States and China falling well below 5 liters per 100 kilometer by 2030 from between 7 and 8 now.
• In OECD countries, transport fuel demand is set to actually fall as weak economies, a shift to smaller cars, and a move onto public transport in congested urban areas take a further toll.
• Worldwide, gas, biofuels and other alternatives are expected to steal almost a third of what growth there might be.

Gas is already approaching a similar overall market share to oil in the world’s energy mix. Liquefied natural gas (LNG) already is a viable transport fuel, and oil executives are starting to see a point at which familiarity and availability could tip the balance away from diesel and gasoline.  Big oil players are already heavily invested in LNG.

LNG is expected to replace diesel in trucks and buses, ships, even airplanes first, before it makes a difference in private cars some decades away.

LNG-powered ships are already a reality. The first commercial gas-powered civil aircraft flight left Doha for London on Jan. 9 this year, fueled by jet fuel made from gas.

Gasoline prices are falling in Japan, not only due to lower crude oil prices, “but also because the widespread popularity of fuel-efficient vehicles has lowered demand for gasoline,” The Nikkei [sub].

The Tokyo paper predicts …

“a shakeout in the gas station industry, as next-generation green cars, including electric and fuel-cell vehicles, become more popular. Next-generation cars will account for 56% of all automobiles in Japan in fiscal 2030. Gasoline consumption that year is expected to be about 60% lower than the fiscal 2010 level.”

A gallon of that ultra low-priced gasoline retails for $6.64 a gallon, due to a strong yen and high taxes.

Since 1998 Honda has been quietly producing one of the cleanest vehicles in America. In 2001 the EPA called its engine “the cleanest burning internal combustion engine in the world.” No, it’s not a hybrid, it’s Honda’s Civic Natural Gas (formerly known as the Civic GX). Until now, the Civic Natural Gas has only been available for retail sale in a handful of states like California and New York. For 2012, Honda expanded sales to 37 states and lent us one for a week.

As Honda dropped off the CNG Civic one bright Tuesday morning, I realized I had absolutely no idea what I had gotten myself into. Like most of the motoring public, I didn’t know much about CNG and it was only when the compact sedan arrived that I asked: “where do I fill this thing up?” Once I found a CNG station, I realized I had no idea how to fill it up either. If you’re dying to know, check out our video below.

Click here to view the embedded video.

Exterior

The all-new 9th generation exterior is instantly recognizable as a Civic. While there are virtually no carryover parts from 2011, the changes are subtle enough to be a refresh. Unlike the Civic Hybrid, which gains a few blue-tinted trim bits and some LED brake lights to set it apart from the rabble, the only way to identify the Civic Natural Gas is by the legally required blue diamond CNG logo on the trunk lid. (The sticker is supposed to help emergency responders know that high-pressure gas lurks within.) Limited production means limited options, and you can get your Civic Natural gas in any color you want so long as its light grey, dark grey, periwinkle or white.

Interior

The Civic Natural Gas started out  in 1998 as a cleaner alternative for the meter maids parking enforcement specialists in Los Angeles. Since then, the majority of gaseous sales have gone to fleet customers looking for lower operating costs, a green image and a vehicle that uses the same fueling infrastructure as their vans and buses. Honda’s focus on fleet customers (and their needs) is obvious by the lack of options found on Honda’s retail-focused models. The interior is only available in one color scheme, with cloth seats and only one option: Honda’s touchscreen nav system. You won’t find leather seats, automatic climate control, heated seats, or an up-level speaker package at any price.

Drivetrain

Under the hood beats the biggest change: a re-worked 1.8L engine. This is one of the few engines in the world built specifically for CNG. Unlike conversion kits that blow gas into the air intake, the Civic uses a CNG  multi-port injection system. To compensate for the lower energy density of CNG, the compression ratio is increased from 10.6 to 12.7. Despite this, power drops from 140HP to 110HP while torque goes from 128lb-ft to 106lb-ft. Honda toyed with a CVT in the past, but for 2012, the 5-speed automatic from the regular Civic makes a cameo. I’m probably the only car guy to wish the CVT from the hybrid was under the hood as it would have improved the fuel economy

According to the EPA, this engine produces 70-90% lower smog forming emissions, 20-30% lower CO2 and virtually no evaporative emissions when compared to a regular Civic. It’s smog numbers and CO2 numbers are lower than VW’s most efficient clean diesel and it delivers considerably lower NOx and particulate emissions when compared to clean diesels. A side benefit of CNG engines is improved spark plug and oil life as there are fewer impurities to foul either one.

Cargo

Sound too good to be true? There are a few problems. First off, natural gas must be stored in a pressure cylinder. By their design, these cylinders are large, need to be placed somewhere safe, and can’t be shaped like your typical gas tank. This means the cylinder is in the trunk and cargo space gets cut in half from 12.5 cubic feet to 6.1. As you can see below, it is still possible to fit two carry-on sized roller bags and some small hand luggage in the trunk, but larger items like large strollers might not fit.

About CNG

According to the EPA, CNG is a plentiful and as a result, 87% of the natural gas consumed in the United States in 2011 was produced domestically. The rest came from Canada and Mexico. If you are simply seeking to reduce this country’s dependence on foreign energy without changing your lifestyle, CNG is one of your better options. While there are about 120,000 CNG powered vehicles in the United States, most of them are buses. You want something other than a cargo or people hauler, the Civic is the only factory built CNG vehicle around.

Since virtually all natural gas consumed in America comes from underground deposits created by ancient decaying matter, it’s not a renewable resource in its current form. Unlike gasoline, diesel and liquid propane, natural gas isn’t sold by the gallon. Instead, it is served up by the Gasoline Gallon Equivalent or GGE. At 3,600psi this equates to 0.51 cubic feet of gas. In California we averaged $2.19 per GGE while gasoline was around $4.27 a gallon.

Finding CNG can be tricky as there are only 1,000 stations in the US, and half of them are closed to the public. Approximately 250 public stations are available in California with New York and Utah coming in second and third at 101 and 84 respectively. Operating your CNG Civic in a state like Texas could be tricky, with both long driving distances and only 36 stations to fill up at. Most stations are located near airports and industrial areas, so if your commute takes you near these locations it’s an easy sell. While there are home refueling stations available, Honda does not recommend them as they may not sufficiently dry the gas and allow moisture to build up in the tank. The home unit costs $4,900 without installation and is only good for 3,000 GGE of CNG. Although not recommended, it is much cheaper to fill up at home, with an estimated cost per GGE of $1.43 in California. While the CNG station nearest to my home is 20 miles away, there are several on the way to my office and one only 0.2 miles from my office, making commuter-car use a real option for me.

Infotainment

Honda’s Civic Natural Gas carries a mid-range feature set despite its price tag. This means that although a nav system is available (the only option on the CNG), upgraded speakers are not. The sound quality is mediocre with dull highs and muddy lows. Remember, this is a fleet-oriented vehicle. The only real reason to get the factory nav system is that it is preloaded with a CNG station database which can be handy if you don’t have a smartphone. If you have a smartphone, stick with the base radio and get a CNG finder app.

Drive

Out on the road the Civic Natural Gas drives just like a regular Civic, with less power. From a standstill, 60 arrives in 10.9 seconds, about 2 seconds slower than a regular Civic, but only 3/4 of a second behind the hybrid. When it comes to road holding, the CNG performs essentially the same as a regular Civic LX sedan, since Honda chose not to use low rolling resistance rubber on the CNG like they did on the hybrid.

Savings

You should know that essentially all the tax credits for CNG vehicles have evaporated. This means your CNG Civic is a whopping $6,710 more than a comparably equipped Civic LX and even $2,105 more than a Civic Hybrid. Based on current fuel costs in northern California, it would take 5.5 years for the CNG to break even with the Hybrid and 7.5 with the Civic LX. The Civic Natural Gas has a trump card to play in California: Solo carpool usage. If you live on the left coast as I do, and “enjoy” a “healthy” commute, the CNG may just be the best investment you could make in your family. On my daily commute, being able to drive in the carpool lane saved me 25-35 minutes of commute time per day. That adds up to 125 hours less commuting a year, or 5.2 days less time in a car on my commute. The scarcity of CNG filling stations will continue to ensure Civic Natural Gas sales remain low. However, for those that live near CNG infrastructure, the Civic Natural gas makes an interesting proposition. While it will take nearly a decade to justify the cost of buying one, in states like California where you can use the HOV lane, it presents quite a different reason to buy one. It also makes a compelling case against EVs, as America is the land of coal and gas power plants, the CO2 emissions from the CNG Civic are similar or lower than the Leaf depending on the state you live in.

Honda provided the vehicle, insurance and one tank of gas for this review

Specifications as tested

0-30: 4.2 Seconds

0-60: 10.9 Seconds

Average fuel economy: 35.2MPG over 820 Miles

The Economist has put together the above chart showing global gas prices as of February 2012, as well as how fast they’ve risen in the past 12 months. Even with gas approaching $4 overall, we’re not doing too badly compared to the rest of the world.

While the French still have to cope with $10/gallon gasoline, their prices have increased the least, while Italians have seen fuel costs go up 18 percent. Italy ranks behind Norway and the Netherlands for the priciest fuel, while the US is still sitting at about $3.53 a gallon on average. Australia, land of the V8 super sedan, pays $5.82 a gallon. No wonder the Mazda3 has overthrown the Holden Commodore as Australia’s best selling car.

Edmunds’ always dead-on Autoobserver brings us the shocking news that Americans don’t drive enough. That, or they use the wrong cars. Whatever it may be, Americans are about to lose the carefully cultivated title “world’s biggest gasoline oinkers.” Gasoline consumption hit rock bottom in July!

Says Edmunds:

“U.S. demand for gasoline last month was at its lowest for July in a decade as the slower-than-expected economic recovery appeared to cause many people to either cut back on driving or buy more fuel-efficient cars. U.S. refinery gasoline production in July dropped 2.3 percent from a year earlier, marking the first year-over-year drop for 2011, the American Petroleum Institute (API) said in a report released late last week.”

There are multiple reasons for people taking a pass on gas. Let’s investigate.

“Gasoline demand relative to previous summers appeared to be hindered by a stubbornly high unemployment rate,” says Edmunds. Aha! We aren’t prudent, we’re po!

“Consumers aren’t spending, and jobless claims have increased, so it isn’t surprising gasoline demand was down and overall demand slipped a bit,” John Felmy, Chief Economist at the petroleum-pushing institute moaned.

Horrible: Not only do Americans buy less gasoline, they also save on overalls!  What’s next? A resurgence of streaking?

Americans indeed develop nasty habits: They buy miserly cars, and – OMG! – they drive less. Over to you, Edmunds:

“Americans appear to have increased purchases of four-cylinder cars, even as deliveries for many small-engined models from Japanese automakers such as Toyota and Honda were hindered by the tsunami and earthquake that struck Japan in March. General Motors’ Chevrolet Cruze compact sedan accounted for 10 percent of the automaker’s unit sales through July, while Ford Focus unit sales increased 7.3 percent and the relaunched Fiesta sales were way up.”

Subcompacts aren’t taking over America – yet. According to Edmunds,  they “accounted for 4.7 percent of U.S. vehicle purchases during the first seven months of the year.” But there is a nasty little trend:

“Sub compact sales are up from 3.6 percent a year earlier, while the propensity to buy entry level SUVs and luxury cars as well as large trucks are down this year, according to statistics compiled by Edmunds.com. So while consumers may be responding to economic signals that are mixed at best, car-buying habits may be tilting as well.”

That’s not all. Americans are giving up their hard-earned freedom of driving anywhere, anytime, anyfar. Edmunds.com Chief Economist Lacey Plache paints a grim picture:

“We have been in an economic soft patch this summer. There is quite likely decreased demand for driving vacations and other non-essential driving due to higher gas prices since late February and due to still weak economic conditions.”

We can’t have that, Best & Brightest. Stop what you are doing. Cease reading immediately (even TTAC – it’s for a good cause.)  Hop in your car, warm up that engine before starting, drive like Jack, and for Pete’s sake – fill ‘er up on your way home!

Take the scenic route.

General Motors CEO Dan Akerson set off something of a firestorm a few weeks ago, when he said, in response to a question about forthcoming CAFE increases:

You know what I’d rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas.

Predictably, populists and economic alarmists of all stripes took great umbrage at Akerson’s candor, questioning his leadership of GM as well as his perspective on the shaky US economy. But Akerson is not alone in his support of some form of gas-tax increase. Bob Lutz and  Tom Friedman (an odd couple right there, if ever there was one) agree with him. Edmunds CEO Jeremy Anwyl defended Akerson and even suggested a $2/gallon tax earlier this year. Bill Ford and  AutoNation’s Mike Jackson are of the same mind as now-retired Republican Senator George Voinovich on the issue. And yet, inside the Beltway, the subject tends to draw a chuckle and a roll of the eyes. Everyone wants it, but nobody wants it.

Since the term “oil addiction” has been used to death, let’s look to an (arguably) less demeaning metaphor: vegetables. Your mother probably didn’t force you to take an honest personal inventory when she made you eat some dreaded brussel sprout or another (which is why the addiction metaphor seems better), but she would have had you not been slave to infantile instinct. So now, with our fully developed faculties, let’s consider what happens if you don’t eat your vegetables.

In the most basic sense, not increasing the gas tax is bad for America’s physical body. Our roads, which circulate the lifeblood of commerce (OK, enough with the metaphor), are literally crumbling. Again, a phrase we may have become desensitized to, but literally true. Car and Driver has a good look at the problem of America’s infrastructure woes and their link to the gas tax, the Highway Trust Fund.

The HTF is a rare beast in the political world. Usually, federal tax money goes into the general fund, where legislators first pass an authorization bill, giving guidelines about how the money can be spent, then a separate appropriations bill actually putting the money into things like buying fighter jets or paying the National Institutes of Health’s electric bill. The HTF’s authorization guarantees that all federal gas-tax revenue will only be put there. Whenever a new transportation spending bill is passed, called a reauthorization, there are slight tweaks to the HTF and how it is spent, but in general it is considered sacrosanct.

Once in the HTF, interstate money is divided according to complex formulas that take into account things such as lane-miles of road, the number of  licensed drivers, ­priority programs for things like bridge replacements, and equity provisions to ensure that every state gets a minimum (currently guaranteed at 92 percent) of their contribution back. State transportation departments, which plan, build, and maintain the interstates, decide what they want to do and then pay for it; the federal share for interstate projects is 90 percent, 80 percent if no high-occupancy lanes are built.

Now, the HTF is running out of money….To match the rate of inflation and have the same value that the 18.4-cent tax did in 1993, the gas tax  would have to be increased to 28 cents per gallon.

Safe public roads are a government outlay that all but the most extreme “Atlas Shrugged”-thumpers can get behind, especially in the wake of a rush-hour bridge collapse like the 2007 Minneapolis I-35 bridge collapse. And yet the tax that pays for our interstates hasn’t even kept up with inflation. Increasing the price of gas may hurt Americans’ mobility in the short term, but not having an interstate system is the more dire long-term alternative.

Another downside to undertaxed gasoline, which explains the broad industry support for a gas tax hike, is that America’s cheap gas makes life hell for automotive product planners. Though this might actually be good for TTAC, as it would keep us well-stocked with stories of inventory issues and mis-timed products, we’re not that selfish. Recent history teaches us that the rate of increase or decrease in the price of gas, rather than the price itself, drives the market to the extremes of high and low fuel efficiency (as evidenced by he fact that last month’s hybrid sales fell despite gas prices hitting their 2008 price levels). Industry planners would rather see the price of gasoline taxed to a state to create sustainably steady price increases, eliminating some of the speculative swings in pricing, than to plan for lower efficiency and higher profits only to be caught flat-footed by a price shock. Also, bringing US gas prices into line with the rest of the world will help US market-dependent manufacturers develop truly global products. Finally, a gas tax increase would eliminate the need for the complex, loophole-ridden CAFE regime, which industry lobbyists say “only about six people in the US actually understand.” Lutz explains:

You either continue with inexpensive motor fuels and have to find other ways to incentivize the customer to buy hybrids and electric vehicles, such as the government credits. Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base. Every time gas prices go back down, everybody starts buying big stuff again. Gas prices go up a buck, the big stuff is unsellable and everyone wants small cars. Go figure. It’s like the collective memory is about three weeks long. We can’t run a business that way.

And then there’s the issue of “externalities,” or the unborn costs of cheap gasoline. One commonly-cited “hidden cost” of cheap gasoline is the US’s huge overseas military presence. Though the link between America’s military adventures and our low price of gas isn’t always obvious, our intervention in Libya shows how expensive interventions are often undertaken out of fear of a gas price shock. Since the cost of military action isn’t built into the price of gas, this amounts to a hidden cost. Furthermore, the military’s intensive use of gasoline has a multiplying effect on those costs, forcing Pentagon planners to seek ever-greater efficiency simply to maintain existing overseas deployments.

Another there are plenty of other externalities to cheap gasoline. As Akerson points out, CAFE puts the burden of efficiency on auto manufacturers, potentially costing manufacturing jobs, at a time when the oil industry has been immensely profitable. Furthermore, as the video above shows, pollution is another hidden cost of cheap gas. Like military interventions, the cost of health problems caused by pollution is largely born by taxpayers… another “hidden cost” that some estimates place at over a trillion dollars per year.

But the final externality is one that should stop the populist resistance to a gas tax in its tracks: if we don’t pay for our gas with more money, we will do so with our privacy. Going back to  the Highway Trust Fund, we find that the only alternative to an increase in the tax itself is the “Vehicle Miles Traveled” tax, a scheme that would require the government to track every single vehicle in the United States and tax it based on the miles traveled. Though in many ways a more fair system than a gas tax alone (as it apportions costs based on use of the infrastructure, without filtering it through the efficiency level of each individual car, the VMT tax scheme is an Orwellian nightmare waiting to happen. Though privacy is not at the height of its popularity at the moment, those who oppose any increase in the gas tax would do well to consider the implications of this alternative (Who does the data belong to? Will law enforcement get access? Will others be able to track you by piggy-backing onto the system?). Especially since no other alternative is even being seriously considered.

Ultimately, the tragic truth is that there may be no way to prevent this final “alternative” to the gas tax for the simple reason that, as efficiency improves towards zero gasoline use vehicles, gas tax revenue will eventually fall away to nothing. But that horizon could be pushed out twenty years if we recognize that not even indexing the gas tax to inflation is unsustainable and if we create a long term “glidepath” of predictably-increasing gas taxes. In this scenario, our highways could be maintained, some of the externalities of gasoline use could be mitigated, and the auto industry would have the predictability to plan products that use the remaining gasoline as efficiently as possible. Moreover, the US would not be taking on any special burden in the global picture, but would simply be joining the rest of the world in paying a more realistic price for our gasoline.

Any one of these arguments could be quibbled with, but at the end of the day, opposition to any increase in the gas tax can only be justified on the fear of short-term consequences that pale in comparison to the longer-term alternatives. Like the auto bailout, sacrificing long-term principles based on short-term fears betrays a lack of faith in America’s ability to innovate its way out of challenges. What’s the principle at stake here? Market function, for one thing, which is fundamentally perverted by willfully hidden externalities. How about the historically unprecedented mobility offered by our interstate system, not to mention the ability to enjoy that mobility without government surveillance? Global equity in an increasingly multipolar world, and environmental justice are other fine principles, if you’re into that kind of thing. Oh, and did we mention America’s swamped fiscal situation that is the backdrop to all of this?

Sadly, the reason a gas tax increase hasn’t happened isn’t because people don’t understand these issues. This isn’t a problem that can be solved by op-eds like this one. Taking on this issue will require a fundamental shift in how the gas tax and gas prices more generally are seen inside the beltway, and based on President Obama’s recent decision to release strategic oil reserves, that leadership is as AWOL as ever. And with an election looming, we’re more likely to see a gas tax holiday (as we did during the last presidential election) than any proposal for an increase in gas taxes. So, what’s the solution? Instead of just verbally supporting a gas tax increase, corporate leaders like Akerson who claim the policy is in their best interests need to stop throwing up their hands at the political challenge and start putting their money where their mouth is. The ideas behind a gas tax increase are so strong, even a moderately well-funded political action committee would at least be able to embarrass a few of the craven politicians who oppose this common-sense policy. You have to start somewhere…

Rising prices at the pump make people do dumb things. Some buy a new car to save at all costs. Not only will they never recoup the cost of the new car, the tsunami in Japan turned fuel efficient Japanese cars into everything else than a bargain. Others do something particularly stupid: They drive their car until it runs out of gas.

The Automobile Club of Southern California reports that increasing gas prices make  motorists run out of fuel and become stranded. About 15,600 Auto Club members requested roadside service last month because they run out of gas. That’s up 12.9 percent from the same month in the previous year, the auto club told The Desert Sun.

The trend is attributed to people trying to stretch their existing fuel to the limit after prices crossed the psychologically important $4 mark and keep heading higher.

Wringing the last drop out of the tank does not save any money. In the contrary: Sediment at the bottom of a tank can clog the fuel pump pickup, the fuel filter or and the injectors.

“Letting your car regularly run on an almost-empty tank can cause even more wallet damage with expensive repairs,” said Steve Mazor, manager of the Auto Club’s Automotive Research Center. “Secondly, letting the vehicle’s level of fuel run down to empty may cause the electric fuel pump inside the tank to overheat.”  On top of it, that gas pump might just be on the list of parts your dealer is short of.

The Chevrolet Volt began life as a marketing concept: “what if,” GM’s finest minds asked themselves, “we could sell a car that could go 40 miles without burning any gasoline?” That goal was achievable (although how easily and regularly remains to be seen), but it came at a cost: if you check out GM’s just-released standard equipment sheet (click on “standard equipment”), you’ll find that the Volt’s gasoline range extender requires premium fuel. What’s strange about this is that the Volt’s 1.4 liter range extender is hardly an overstressed buzz-bomb, making only 80 hp at the crank and 74 hp at the generator. Why then does it need premium? Considering that the Volt would have struggled to pay off its premium over the Toyota Prius anyway, the decision to require premium fuel makes no sense at all.

Bumper stickers are a controversial subject, quite apart from the often-divisive sentiments they express. Most of us are either pro-bumper sticker or anti, and once we’ve decided which we are, there’s little chance of ever going back. Personally, I fall into the “anti” camp. You might think that someone who spends his time writing about the intersection of cars, culture and politics might embrace the bumper sticker medium, but I’ve never been a big fan. Perhaps the limitations of the format are what bothers me: not only does it require broadcasting deeply-held beliefs in ultra-condensed, often over-simplified messages, but it also requires a long-term commitment to the cause in question. Perhaps my political and personal views have changed too often to justify dedicating my mobile real estate to any particular opinion. In any case, this is the kind of bumper sticker I can absolutely get behind: timeless, true and a winking critique of the “flex fuel,” biodiesel and other pious stickers advertising alternative-energy-derived moral superiority. Deep down, perhaps we’re all pro-bumper sticker… some of us just haven’t found the right one yet.