Natural Gas Moves Cars

Natural Gas Moves Cars

July 17, 2009

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

Telecommunications giant AT&T says that it will renovate its gasoline-powered fleet of vehicles so that they can use alternative fuels such as natural gas. Over the next five years, it will convert 8,000 of those cars. It then hopes to have 15,000 clean-burning vehicles on the road by 2019.

It is part of a trend that began in the mid-1990s when the federal government enacted mandates to require government fleets as well as those provided by large utilities to make the leap to cleaner burning fuels. Natural gas is eager to get noticed and its primary market is large fleets. Such vehicles drive substantial distances and are therefore able to recoup their higher initial costs through reduced fuel charges. They also have access to centrally located fueling and repair stations.

According to the Natural Gas Vehicle Association, such cars would reduce global warming emissions of carbon dioxide, methane and nitrous oxide by 20 to 25 percent when compared to those most prevalent today. Altogether, about 120,000 natural gas-fueled vehicles are now in operation in this country while roughly 7 million exist globally, the association adds. Natural gas is a third of the cost of gasoline at the pump.

"AT&T's decision to upgrade 8,000 of its fleet vehicles to run on natural gas is a demonstration of real American corporate leadership that will be good for their bottom line, the environment and the country," says T. Boone Pickens, who is advancing the cause. "AT&T recognizes that our reliance on foreign oil is one of the greatest threats to our national security -- hopefully others will follow their lead."

Indeed, the telecom carrier's involvement means generally positive things for an industry that has long fought to get into the transportation sector. Already, about 22 percent of all new bus orders are for those that can use natural gas. The industry's goal is to get 50 million of its cars and buses out there by 2020.

As for AT&T, it says that it will spend $350 million converting the original 8,000 vehicles. It will then spend another $215 million phasing out 7,000 additional cars and replacing them with those that are more fuel efficient. It's an investment that the company says will pay off in the form of lower transportation costs.

Pickens' grand plan is that natural gas would be diverted away from electric generation and used instead for transportation. Right now, only a small fraction of natural gas is deployed for such purposes. With unconventional shale sources emerging in addition to newer conventional natural gas finds, he says that shortages would not be a problem. Meantime, electric generators would limit their natural gas use and instead, rely increasingly on wind and solar power.

The Roadblocks

It's a proposition supported by the Potential Gas Committee, which is a non-profit academic organization that has released some reports regarding the availability of natural gas in North America. With new discoveries, it says that the U.S. has a 100-year supply of natural gas that is growing with new technology.

"Natural gas is clean, abundant and ready now to power our homes and automobiles today and for future generations," says Rod Lowman, president of America's Natural Gas Alliance. And because 98 percent of natural gas consumed in the United States is produced in North America, the increased use would lead to economic growth.

But a number of roadblocks have stood in the way. For starters, the infrastructure to support those natural gas-fired vehicles is not pervasive. Only about 1,500 filling stations exist across the country, which make driving overly long distances impractical. Beyond that, the tanks hold less fuel while they are said to be so big that trunk space must be reduced as a result.

Consumers, meanwhile, don't have a lot of choices. Honda is the only major manufacturer producing such cars and its $25,000 Civic GX is only sold in California and New York. Toyota and Mercedes are said to be considering natural gas vehicles while Chrysler has long nixed its version, saying that they don't make sense. Honda counters that view, maintaining that natural gas-powered cars will be a precursor to those that run on pure hydrogen -- the ultimate step in the transition to alternatively fueled vehicles.

High gas prices along with new clean air standards will eventually have a profound effect on the country's driving habits. Natural gas vehicles, however, will be just one solution. Hybrids that run on both gasoline and electricity are here now. Plug-in hybrids are coming. Biofuels are now used to help power cars and more promising technologies are in the offing. Hydrogen fuel cells for cars, meanwhile, may one day be a reality.

For their part, utilities are using a variety of measures like deploying sedans, vans and pick-ups "capable" of running on natural gas, propane, methanol or E85, a mix of 15 percent gasoline and 85 percent ethanol. If vehicle manufacturers spot an opening, they will deliver. Government, too, must be there to facilitate the growth not just through tax-favored legislation but also to help build the fueling and serving infrastructure.

"All-purpose battery electric vehicles will not be practical, let alone cost-effective, for a long, long time and the same applies to plug-in hybrids," says Dave Bruderly, Wise Gas, Inc.'s chief executive. "Natural gas vehicle technology is inexpensive, available and easily adapted to existing internal combustion engines. Yet this solution is ignored by policy makers and advocates for more sustainable energy solutions."

Natural gas is trying to make headway in what will become a lucrative market for alternatively fueled vehicles. While it must overcome some critical obstacles that include the perception that there are cleaner and more practical choices, the fuel has some powerful advocates and AT&T's move represents a major victory for the industry.