All That's Trucking

Senate Gets Version of NAT GAS Act; Bipartisan Backers Tout Jobs, Energy Security Benefits

November 15, 2011

A U.S. Senate bill granting generous tax credits for using natural gas as a motor fuel will create jobs, make the United States more self-sufficient in energy and has broad bipartisan support, say Democrat and Republican senators who introduced it yesterday.

Natural gas-fueled engines are now available for trucks, but cost has limited market penetration. If the NAT GAS Act becomes law and the credits begin to flow, CNG and LNG powered vehicles should become more popular. Photo by Jim Park.

Similar to a House bill introduced earlier this year, the Senate's New Alternative Transportation to Give Americans Solutions (NAT GAS) Act of 2011 would also extend tax credits for building fueling stations. Its backers say it would be paid for by a temporary user fee on natural gas vehicle fuel, though the fee amount is not immediately known.

Prices for natural gas have tumbled following increased production and discovery of vast deposits in the U.S., so presumably could bear up to a funding fee and remain a financially attractive alternative to gasoline and diesel fuel.

A funding fee could partly silence previous criticism of the House bill by conservatives who said the country can't afford billions of dollars in subsidies for the natural gas industry. If passed by Congress and signed by President Obama, the NAT GAS Act would feed the fortunes of any company involved in natural gas, said investment advisor Nathan Slaughter of Street Authority.

The NAT GAS Act is sponsored by Senators Robert Menendez (D-N.J.), Richard Burr (R-N.C.), Saxby Chambliss (R-Ga.) and Majority Leader Harry Reid (D-Nev.). The bipartisan backing was lauded by investor T. Boone Pickens, who has called for widespread use of natural gas by commercial heavy trucks.

"Nothing in America has such a thoroughly transformative economic potential as domestic natural gas," Pickens said in a statement. "Simply by increasing the use of domestic natural gas in vehicles, we can get on our own resources, immediately create 400,000 good jobs, redirect billions of dollars of foreign oil money back into the hands of American businesses, and cut our dependence on OPEC by half."

"Currently there are nearly 14 million natural gas vehicles in the world, but only about 117,000 in the United States," said a statement by Senator Burr's office, citing a Department of Energy report. "The NAT GAS Act of 2011 will jumpstart the industry and in 10 years add over 700,000 NGVs to our roads.

"In addition, it is estimated that the bill will displace over 20 billion gallons of fuel and create over 1 million direct and indirect jobs," the statement said.

Tax credits listed in the Senate bill would run through 2016 and, like the House bill, would be worth up to $7,500 for the purchase of a natural gas-fueled car and up to $64,000 for a heavy truck. Producers of such vehicles would also get a tax credit. The current excise tax credit of 50 cents per gallon for producers of natural gas motor fuel would be extended through '16.

Credits for building natural gas fueling stations would rise from the current 30% to 50% of a station's cost, or up to $100,000, under the House bill. The Senate bill also encourages investment in fueling stations, but the exact amount was not known last night.

Unremarked in comments yesterday is the fact that natural gas burns much more cleanly than diesel fuel, so makes cleansing exhaust an easier matter. Only a few natural gas-fueled engines are now available for cars and trucks, but more would be engineered and brought to market if the NAT GAS Act becomes law and the credits begin to flow.