A free-market energy blog
Random header image... Refresh for more!

Category — Natural Gas Vehicles

Natural Gas Vehicles 2014: Caution, not Government Subsidies

“It was somewhat disconcerting to hear about the economic challenges from NGV fleet operators. In an interview [one] said: ‘Right now, we’re doing it solely for sustainability. We’re not saving any money. I’m glad to hear we’re not the only one to struggle with fuel mileage’.”

Several weeks ago, the Natural Gas Vehicle USA Conference was held in Houston, Texas. The promise of the industry was discussed in light of the economic challenge facing the fuel’s acceptance for transportation.

There are a handful of vehicles in Houston powered by compressed natural gas. Their owners, many of whom are affiliated with the natural gas or energy industries, talked about the benefits of their cars. 

However, they are often forced to acknowledge the challenges that come with owning a natural gas vehicle (NGV), which includes the loss of significant storage space in the vehicle due to the need for a large fuel tank. Another challenge is finding a fueling station unless you are fortunate enough to work at a location with refueling capabilities, or you have access to a pump in your own garage. [Read more →]

July 8, 2014   1 Comment

Joint Letter in Opposition to Special Tax Treatment for Natural Gas Vehicles (time for free-market, fuel-neutral energy policy)

“The federal tax code is already overly complex and needs to be simplified. It would be far better to remove all subsidies, set-asides, and special treatment for all forms of energy than create new complexities through the NAT GAS Act.”

This letter to Congress was sent by American Energy Alliance, Americans for Prosperity, Club for Growth, Council for Citizens Against Government Waste, Freedom Action, The National Center for Public Policy Research, and Sixty Plus Association. It is reproduced here for its educational value in the general debate over special government favor to politically correct energies.

Dear Senator:

We are writing [in regard to] amendment 1782—the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act.

Members of this coalition have previously written to Congress to oppose both this NAT GAS Act in January of this year and the previous version in May of last year. We are writing again because we oppose tax increases, subsidies, and special treatment for politically-preferred energy sources and this NAT GAS Act includes all three.

Say No to New Financing Subsidies, Special Tax Treatment, and Increased Taxes. The NAT GAS Act creates vast new subsidies for natural gas vehicles. The NAT GAS Act includes a scheme to provide large tax credits for natural gas vehicles, the production of those vehicles, and natural gas fueling infrastructure. These tax credits are “paid for” by higher taxes on natural gas fuel. This is both a subsidy and it is special treatment. [Read more →]

March 14, 2012   1 Comment

Natural Gas Prices Spur Truckmaker Interest (Market, not political, development)

The Wall Street Journal‘s Marketplace headline of March 5th said much: “Natural Gas to Power Pickups.” The piece did not mention the Nat Gas Act or other special government favors, just an effort by U.S. automakers to get natural-gas-fueled trucks into the mix given the large BTU disparity between gas and gasoline/diesel prices.

Reporter Jeff Bennett described a “growing wave” of interest in natural gas trucks:

On Tuesday, Chrysler Group LLC plans to disclose it will build the first production-line pickup truck powered by natural gas. The auto maker is promising to build at least 2,000 heavy-duty Ram bi-fuel trucks that run on a combination of compressed natural gas and gasoline starting in June.

General Motors Co. on Monday plans to disclose it will offer bi-fuel Chevrolet Silverado and GMC Sierra 2500 pickups in the fourth quarter. The trucks will be built by GM and sent to a supplier that will retrofit them to use compressed natural-gas tanks.

Back in 2009, natural gas trade groups, as well as Apache Corporation, pushed automakers to offer factory-built CNG-powered pickups, Bennett explained, but fuel prices are the real catalyst. Still, gas refueling remains a problem with only 400 public compressed gas stations in the country. [Read more →]

March 8, 2012   8 Comments

“No New Energy Subsidies: Oppose NAT GAS Act!” (free market voices rise up against tax-code politicking)

Call it the iron law of political economy: Government goes to those who show up.

The good news is that limited-government groups are showing up. And they are not pro-industry (such as the natural gas industry) but pro-consumers, pro-taxpayers, and pro-marketplace. The bad news is that too many business leaders–and think T. Boone Pickens in this instance–are using their resources to politicize industry.

Elements of the gas industry want to use special government favor to increase demand and thus prices of their product. A quick summary of the New Alternative Transportation to Give Americans Solutions Act was given by the Leftie group DeSmogBlog:

As stated in an earlier article, “The bill is 24-pages long and rewards [natural gas vehicles] with tax [subsidies] to help ‘drive’ consumption. The bigger the vehicle, the more tax credits given.” The bill’s main purpose is to build up a massive fueling and vehicle infrastructure for the natural gas industry, which currently does not exist in the United States.

The NAT GAS bill was written by and for natural gas insiders, chief among them energy magnate T. Boone Pickens, Chesapeake Energy CEO Aubrey McClendon, and Clean Energy Fuels CEO Andrew Littlefair — referred to in an earlier post as the “self-enriching trifecta.” The bill currently possesses 183 bipartisan co-sponsors and until finally getting a hearing Friday, had sat in the Congressional coffers since early April. [Read more →]

November 22, 2011   14 Comments

Natural Gas a Natural Winner? Let the (Transportation) Market Decide!

Four-dollar per gallon gasoline provides more margin for oil producers than four dollars per million British thermal units (MMBtu) provides for natural gas producers. Historically speaking, oil prices are high and natural gas prices low.

In the face of low prices, the natural gas industry can practice self-help in a free market–or resort to political shenanigans. Self-help means producing less (hard to do in a technology boom!) or selling more. Whether converting fuel oil customers to natural gas in the home heating market or building gas-to-liquids plants to convert natural gas into petroleum products, including gasoline, natural gas companies and their trade groups can work to be their own best friend.

But segments of the natural gas industry, led by master rent-seeker T. Boone Pickens, has turned to the political means to bolster demand and thus price. After all, if wind, solar, and biomass can get special government favor (a favorable regulation or special tax-code provision), why not natural gas?  And enigmatic T. Boone‘s large ownership interest in natural gas refueling stations would just happen (sshhhh!) to win big from his political activism.

Specifically, Pickens is fronting and bankrolling legislation to provide a generous government subsidy for converting transportation vehicles from petroleum (gasoline or diesel) to natural gas. Too bad if there is not a national refueling infrastructure . . . too bad if the natural gas tanks are heavier and take up more space than a gasoline tank . . . and too bad if the extra engine expense doesn’t work despite natural gas’s lower relative cost per BTU.

What is the Subsidy?

A Wall Street Journal article, “Natural-Gas Trucks Face Long Haul,” went over the sour economics of natural-gas-driven 18-wheelers.

As veteran energy writer Jeffrey Ball explains, the extra cost for a dedicated natural gas vehicle differs from a low of around $10,000 (+5 percent) for a trash truck to a high of $100,000 (+105 percent) for a long-haul cab truck. United Parcel ordered 48 natural gas cabs–but only by applying $4 million of Obama stimulus money. So taxpayers paid about $83,300 (83 percent) of the premium. [Read more →]

May 24, 2011   6 Comments

Robert Bryce on Natural Gas Vehicles

[This excerpt from Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future is used with permission of the author. Copies of Power Hungry can be purchased here.]

Making fun of T. Boone Pickens is easy. But give him his due: he’s right about using more natural gas in the transportation sector. That concept makes economic sense for many fleet operators.

But – and it’s a big but – Pickens has grossly exaggerated the ability of the U.S. to make a quick transition to natural gas fueled vehicles. On the Pickens Plan website (PickensPlan.com), the billionaire claims that using more wind power and “increasing the use of our natural gas resources can replace more than one-third of our foreign oil imports in 10 years.”

That’s an easy claim to make. But Pickens can’t do it. And he can’t do it even if he were somehow able to manage a 100-fold increase in the number of natural gas-fueled vehicles in the U.S. and do so in just ten years. Building a large fleet of natural gas vehicles – and more importantly, the refueling infrastructure to support them – will take decades, not years. [Read more →]

June 26, 2010   4 Comments

Pickens Plan II: Retreat as Prelude to Failure? (worth reading Sunday)

Several MasterResource posts on the problems of the original Pickens Plan, and the retreat to Pickens Plan II, are worth revisiting as T. Boone continues his multi-million-dollar quest for a government-engineered energy makeover.

Pickens, like Al Gore, does not want to debate his plan–he just wants to implement it with edicts. But fundamental problems remain with Pickens I and the scaled-back Pickens II. Here is a one-two-three punch by critics: [Read more →]

March 29, 2009   No Comments

Pickens Plan II’s Natural Gas Trucks: Mel Brooks Meets Energy Policy

Mel Brooks, in his classic comedy The Producers, schemed to make money by over-subscribing shares in a sure-to-fail play. Unfortunately for his character, the play became a smash hit, and all the investors wanted their payouts. Since he had sold well over 100% of the interest in the play, he was in a bit of a pickle.

And so it is with natural gas. Clean, easy to use, abundant—natural gas is everyone’s choice for our energy transition away from oil and coal for power generation, industry, homes, and now transportation. Enter oilman-turned-wind-promoter T. Boone Pickens, with a proposal to move U.S. heavy trucks strongly toward natural gas fuel (as compressed natural gas, or CNG). And to enable the offset, the electricity that is currently generated by such gas (about a 21% market share of power generation, according to the Energy Information Administration’s Annuel Energy Outlook 2009, Table 8) would be supplied by new wind farms, built mostly in the Plains States.[1]

The argument is based on simple physical resource reallocation. [Read more →]

March 9, 2009   11 Comments