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Page added on May 29, 2011

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Prices at pump build demand for natural gas cars

Consumption

With the future of gasoline prices uncertain, cars and trucks that run on compressed natural gas — fuel that’s about half the cost of gasoline — are getting another look.

Los Angeles commercial real estate broker Ted Simpson recently snapped up a Honda that runs on CNG, which in the U.S. has been better known for powering public transit buses and delivery trucks.

“I did not want to be hostage to what I believe will be rapidly escalating oil and gasoline prices,” said Simpson, who drives hundreds of miles a week, covering a territory that ranges from San Diego in the south to Santa Barbara in the north. He’s been able to fill up his vehicle for the equivalent of about $2.25 a gallon.

CNG costs about $2.10 to $2.70 at Southern California filling stations.

For the moment, Honda is the only major automaker selling natural gas passenger cars in the U.S. Honda, which makes the CNG-powered Civic GX in Indiana, has sold a record number so far this year. Although the volume was small — 643 — it was almost triple the number sold during the same period a year earlier, and the company expects to run out of the cars this summer as it gets ready to sell a larger, redesigned version this fall.

The current version gets the equivalent of 24 miles per gallon in city driving and 36 mpg on the highway. The next-generation vehicle is expected to have better fuel economy.

Honda wants to double annual production to at least 2,000 and maybe more, depending on parts availability from earthquake-stricken Japan. The cars list for $25,490 and are sold at 139 dealers in 33 states. Honda plans to certify more dealers to service and sell the cars this year, pushing it into more regions where there are natural gas filling stations, Honda spokesman Eric Rosenberg said.

Simpson said there are enough freeway-close natural gas filling stations to make driving the vehicles in Southern California practical.

“The interest in this car has grown significantly,” Rosenberg said, which is why the automaker plans to pack it with more options, such as a navigation system and rear stereo speakers and aluminum wheels.

Many consumers also install home filling stations in their garages, connecting a natural gas pump to their existing gas piping. That slices the cost of the fuel to the equivalent of about $1.43 a gallon. But the pump is expensive — about $6,000 for the device and installation, minus a $1,000 federal tax credit for the purchase of a natural gas vehicle home refueling system.

Ford Motor Co. Chief Executive Alan Mulally said natural gas technology hasn’t caught on domestically because automakers find it too difficult to make a cost-competitive passenger car with the type of trunk space and interior that consumers expect.

Times Leader



2 Comments on "Prices at pump build demand for natural gas cars"

  1. DC on Mon, 30th May 2011 4:05 pm 

    Leaveing aside the question of can hundreds of millions of vehicles be made to run on CNG so we can keep our suburbs and wall-marts, there is another issue. The article mentions how ‘cheap’ NG is. That may be true atm, but if NG were ever to become serious competition, it would not stay that way for long.

    You see, its happened before to another ‘alternative fuel’, propane. In Canada Propane in the 90s became quite popular as a vehicle fuel, in urban areas, taxi and various fleets converted many vehicles to run on it. In more rural areas, many private vehicles were converted to run on it as well. And for a time, it was good, auto-propane was very in-expensive compared to gas, even allowing for its lower energy density. However, after a few years, the price of auto-propane began to gradually creep upwards, well, actually rather quickly. No reason or rationale for the increases was ever offered. But as its price rose, many conversions were removed and the vehicles went back to gas, as propane was no longer price-competitive with gas. People, of course were aware that propane was less polluting that gas, but with the oil companies essentially equalizeing the price with gas, it really wasnt a deciding factor any longer.

    You can still find people operateing with this fuel, but in far fewer numbers. What had happened is, the oil companies did not want auto-propane to offer a cost advantage to drivers. They wanted to sell gas to drivers-not propane, or even cng. They premitted the situation to persist while auto- propane was a marginal market, but as it began to gain in popularirty, it was more or less shut down. As far as oil cos are concerned, propane is for barbercueing, not for vehicles, at least not in any signifigant way.

    So, what to conclude form this? If CNG were to gain anything remotely like a noticable market share, it would stop being ‘cheap’ very…very quickly. A series of gradual price increases would quickly nullify any price benefit, and pretty soon people would realize not only were they paying more or less what they used to for ‘gas-o-line’, but also had to amortize the cost of conversions as well.

    BTW diesel fuel got the same treatment more or less at about the same time. Coupled with auto-makers refuseing to make small-efficent diesels for the consumers, the oil-companies made sure diesel, just like propane was nearly as expensive as gas, once all other factors are considered. Like propane diesel fuel used to be quite reasonabely priced compared to gas.

    Prices as of today

    Reg Gas 1.339/Litre
    Auto Propane .799/litre.

    Now the general rule we used to use was you would get about 25% less MPG than its gas ~. Range would also be somewhat less. For CNG the effect is even more pronouced. CNG has even lower density that propane, meaning again, less range and larger tank volume. None of the issues are imsurmountable in and of themselves, except for one.

    Gas companies, be they american or canadian, have no wish to sell cng or propane at anyting like low prices. If it exsists on the margins, then they dont really care. When it stops being a marginal fuel, they will imediately rig the price to ensure it stays at the margins. They would rather sell the worst tar-sand oil to consumers at a premium any day over diesel cng or anything else for that matter.

    NG may well run things like farm equipment, government vehicles like polic ambulance, city services etc, to a greater extent than they do now, but I dont think anyone should expect to see a billion CNG powered cars running people around to wall-mart or idling at drive thros for there star-bucks fixes like we do now. The current glut of NG would vanish overnight if even, say 5 or 10% of vehciles were converted, along with its low price.

  2. Dusko on Tue, 31st May 2011 1:10 am 

    Come on people! Why don’t we just give up on the car already. Lets re-engage our small towns and make them great and surround them with organic farms and beautiful rural settings!

    And then we can connect them via rail and get over our obsession with the car. I am sick and tired of cars and big box stores. Gas will not save us. Fracking will not work in the long run and we will run out of gas.

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