Natural Gas Vehicles Makes Inroads into U.S. Trucking Industry
When Walmart starts using a technology, it’s a sure sign of an emerging trend. Walmart has deployed eight Liquid Natural Gas (LNG) Class 8 trucks in Southern California to test the feasibility of converting to LNG company-wide. If the past is an accurate predictor, as Walmart goes, so goes the world.
The infrastructure doesn’t currently exist to support a rapid conversion to LNG or CNG (Compressed Natural Gas.) Limited availability of fueling stations has slowed the development of natural gas as a viable alternative to diesel fuel. This is changing, however, as entrepreneurs rush to develop the five natural gas highways called for by President Obama in his speech on January 26, 2012 at a Las Vegas United Parcel Service facility.
With significantly lower costs for LNG over diesel, the higher initial expense of a natural gas-powered rig rapidly starts to make economic sense. Natural Gas currently costs about $1.70, while diesel is predicted to average nearly $4 per gallon over the next five years. With their high fuel use, trucking companies can expect to recoup their investment in three years, according to a recent study by IHS Cambridge Energy Research Associates. If the government develops incentive programs for LNG, the break-even point would be even sooner.
Although an LNG-equipped truck can cost $40,000 to $75,000 more than a conventional one, as unit sales increase prices will come down. Trucking companies with large fleets, such as Walmart or UPS, are most likely to lead the way. Their size allows greater flexibility in gradually adding new technology, and they have the experience and logistical structure already in place to manage the transition.
Development of a reliable chain of refueling facilities is critical to the success of LNG, and a reliable supply of customers is equally critical to the availability of service stations. The trucking industry, with its fixed routes and high fuel usage, is ideally suited to stimulate the growth of natural gas fueling stations. Clean Energy, a natural gas fuel company, is a key player in developing the natural gas highway called for in Obama’s speech.
The company plans to open 70 LNG and CNG stations by the end of 2012, with 150 total stations in service by the end of 2013. Clean Energy is initially building in high traffic regions like the San Diego to Las Vegas corridor, with expansion cross country along heavily used interstate routes such as I-70. With more fueling locations available, fuel costs should decrease for both the freight industry and green vehicle owners.
Although economics is the primary consideration for truckers converting to LNG, there are national security, environmental and public relations advantages as well. By increasing the use of plentiful natural gas for fuel, the nation’s reliance on foreign oil will be reduced. Natural gas is also estimated to contribute up to 15 percent less greenhouse gases than diesel. Going green is also a major marketing advantage for an industry frequently labeled as bad for the environment.