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Report Finds More Natural Gas Vehicles Would Not Raise Natural Gas Prices

May 2, 2013

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A new study from the American Clean Skies Foundation (ACSF) finds that a transition to natural gas-fueled heavy- and light-duty vehicles over the next decade will have a minimal impact on natural gas prices.

The report, “Driving on Natural Gas: Fuel Price and Demand Scenarios for Natural Gas Vehicles to 2025,” used three scenarios to calculate potential natural gas demand and price impacts attributable to natural gas vehicles (NGVs).

“We found that the estimated level of natural gas demand from NGVs, even under the most optimistic scenario, accounted for only about 2 percent of the overall market by 2025,” said Gregory Staple, ACSF’s CEO and co-author of the report. “And the incremental rise in fuel prices for this high growth scenario was only approximately 25 cents per MMBtu, or 5 percent.”

“That’s largely because we expect the growth in natural gas vehicles over the next decade to provide adequate time for supply and infrastructure developments to keep pace with demand, and thus to moderate any incremental natural gas price impact,” Staple added.

ACSF’s optimistic growth scenario included high adoption rates of both light- and heavy-duty NGVs. In this scenario, the transportation sector’s natural gas demand grew from 57 billion cubic feet (Bcf) in 2013 to 711 Bcf in 2025, which equates to roughly 2.3 percent of total demand that year. The scenario estimated roughly 2.4 million NGVs on the road by 2025, of which 480,000 are heavy duty trucks. The effect on 2025 natural gas prices across the scenarios ranged from an additional 3 cents to 27 cents per MMBtu.

The report highlights the opportunity to diversify America’s transportation sector away from petroleum-based fuels. In the report’s highest NGV growth scenario, more than 180 million barrels of petroleum fuels are displaced by natural gas in 2025 and almost 1 billion barrels of oil consumption avoided cumulatively from 2013-2025.

Report co-author Patrick Bean said, “Our analysis should give businesses, consumers, regulators and political leaders confidence that a plausible transition to NGVs can achieve energy security objectives while having minimal impact on natural gas prices and competition for the fuel.”

The report also found that retail prices for compressed natural gas (CNG) and liquefied natural gas (LNG) will remain attractive compared to diesel and gasoline even if natural gas prices increase significantly. Currently, about 20 percent of the retail CNG price is attributable to the raw natural gas cost. Even if natural gas prices double from $4/MMBtu to $8/MMBtu, the commodity component of retail CNG prices will be about 40 percent, and CNG will cost about $2.20 per gallon of gasoline equivalent.

ACSF retained Navigant Consulting, Inc. to partner in the scenario development and to conduct some of the analysis. The report includes data tables with assumptions and results.

Copies of the report can be downloaded at www.cleanskies.org/natural-gas-pricing.

Established in 2007, the American Clean Skies Foundation seeks to advance America’s energy independence and a cleaner, low-carbon environment through expanded use of natural gas, renewables, and efficiency. The Foundation is a not-for-profit organization.

Comments

  1. 1. GREG FOREMAN [ May 02, 2013 @ 07:51AM ]

    What a revelation—increased demand for a product, any product, may result in higher prices. Really! What an outstanding revelation, perhaps this group will be nominated for and maybe even receive the Nobel Price in economics—NOT! Natural gas has a role in fueling the transportation industry, but not in the gaseous form as historically advocated, but in a liquid form, called GTL, GAS TO LIQUID. GTL fuel is currently being produced around the world by oil companies such as SHELL OIL and SASOIL. Refineries are in the process of being constructed to produce GTL in the United States, two in Louisiana alone. Daily production of GTL is pegged in excess of a million gallons daily. Shell and Sasoil currently have two refineries producing GTL, Shell in QATAR and Sasoil in South Africa, so this is not “Buck Rogers” stuff. Advocates for and purchasers of natural gas equipment should consider the fact that such vehicles will ultimately be a waste of money and resources and will be antiquated within the next four to five years.

  2. 2. localnet [ May 02, 2013 @ 08:01AM ]

    We produce liquid gasoline up here in North Dakota, and you can run it in your truck. We ship it to Canada, they use it to loosen up the tar sand oil to send through their pipelines.

    But I still like the idea of CNG, as our natural gas supply is ungodly.

  3. 3. GREG FOREMAN [ May 02, 2013 @ 03:00PM ]

    Natural gas has but ¼ the power of diesel. In other words, a diesel rig averaging 6 miles to a gallon of diesel will average less than 2 miles of equivalent NCG. Stated an alternative way, the diesel rig I drove could go approximately 900-1000 miles on diesel(the truck had two 100 gallon tanks). The load range using NCG would be less than 300 miles. That amounts to a whole lot of inefficiency for a whole lot of money. When one takes into consideration the considerable cost associated with creating the necessary infrastructure required for natural gas distribution, the added expense incurred for truck modification along with the lack of productive capacity, someone, somewhere, somehow, sometime will have an “epiphany” to the fact that this natural gas proposal tantamounts to a “pick in a poke”. This approach will end up costing the transportation system at every level precious dollars that would be more productive if expended in the name of driver safety such as additional rest areas, interstate highway improvements and markings. This project will ultimately go the way of old time electrical systems installed at truck stops or the IDLE AIR company that when bankrupt after losing $500 million government dollars. Thank U Al Gore...

 

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