Cheap Gas Prices and EV Adoption Beat Natural Gas Vehicles

Have natural gas vehicles failed completely as an alternative to gasoline and diesel-powered vehicles?

Analysis from Bloomberg seems to come to that conclusion, citing cheap pump prices and growth in electric vehicles behind it.

Going back to 2008 with spiking gasoline and diesel prices, T. Boone Pickens — a giant in the oil and gas industry and co-founder of Clean Energy Fuels Corp. — is cited for making a convincing case for natural gas as a vehicle fuel. Natural gas was much cheaper than petroleum and was a plentiful domestic fuel. Clean Energy Fuels got into the fueling infrastructure side enough to reach market valuation, at one time, of about $1.8 billion.

Two market developments won out, with new drilling tactics like hydraulic fracturing (fracking) pumping a lot of oil and gas out of U.S. reserves, leading the way to gasoline prices dropping. The second trend was seeing plug-in electrified vehicles take off, starting with the Nissan Leaf and Chevy Volt. Lately, that’s been enhanced by 455,000 reservations being placed on the Tesla Model 3.

The analysis piece cites the 455,000 forecast representing 20 times the number of natural-gas vehicles on U.S. roads during 2015. Clean Energy Fuels seeing its share price drop 90 percent from a 2012 peak is also cited.

Andrew Littlefair, CEO at Clean Energy Fuels, conceded that NGVs aren’t heading for widespread adoption. A lot more fueling infrastructure needs to fall in place for that to happen.

“I’m not sure America is set up” for it to happen, Littlefair said.

Two failed business ventures are cited in ways NGVs haven’t made the mainstream. Chesapeake Energy Corp., a major U.S. gas producers, eliminated its business until working on NGVs in 2013. Another was seeing Honda Motor Co. take its compressed natural gas-powered Honda Civic off its production line in 2015.

NGVs won’t be going away anytime soon in the U.S. and other global markets, if you take a closer look at where it stands. Major fleets like Ryder System Inc., AT&T, and UPS, continue to purchase more NGVs and install refueling stations to keep the trucks and vans on roads.

Littlefair said Clean Energy Fuels continues to see growth in CNG and liquefied natural gas fueling stations. Dallas Area Rapid Transit, which has 660 vehicles in its fleet powered by natural gas, has extended its operation and maintenance contract with Clean Energy Fuels. A few cities have also joined up with the company.

Companies and government fleets appreciate the stable fuel pries, along with significant reductions in tailpipe and greenhouse gas emissions, as reasons for making the investment in converting trucks over to natural gas.

They’re also enticed with investments being made by Clean Energy Fuels and several other companies in a new alternative fuel, renewable natural gas. Energy is being extracted from landfills and other sustainable, renewable sources to supply existing CNG and LNG fueling stations with the clean fuel.

There are about 1,828 natural-gas fueling stations in the U.S., according to Bloomberg. It pales in comparison to gasoline stations, but the national network has spread out to cover major metro markets and highways across the country.

SEE ALSO:  Refreshed Volkswagen Polo Available With Natural Gas Engine

The biggest challenge for end users is the cost of having a natural gas fueling station. It’s averaging about $1.8 million to build a CNG fueling stations, according to the National Renewable Energy Laboratory.

That’s where EV charging stations has natural gas beat, even with the more expensive fast-charger units.

Fleet operators and other end users need to see more value coming from NGV fueling stations.

“The infrastructure would be costly” for widespread use, said Lee Klaskow, a senior analyst for transportation and logistics at Bloomberg Intelligence. “You would have to have some huge cost savings.”

Bloomberg


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