Recovery, refueling infrastructure construction, engine manufacturer modifications and technician service training for natural gas are increasing rapidly. Most of this growth has been without government “help.” Let me give you some reasons why I think natural gas will soon become THE viable alternate commercial fuel.
No one wants to admit this, but the U.S. is becoming a second-rate nation because we can’t remain competitive with developing nations. Our government dumps a fortune in supporting solar energy research, yet the Chinese dominate production because of their labor costs.
We dump another fortune in supporting electric vehicles, but only the Tesla seems to be able to survive at a purchase price of $100K. We (you and I) lose money on every Chevy Volt sold. By the way, how is an electric vehicle supposed to be “zero emissions”? Doesn’t that power have to be generated by power plants; most of which are coal-fired? And, we still need a battery “breakthrough.”
The one thing that appears to solve many of our alternate energy problems is the newfound wealth of natural gas due to the perfection of “fracking.”
We now have a proven technology that no one else in the world has. This old physicist still believes that facts will win out in the end, not emotions! Natural gas is going to “make it” with or without federal government tax incentives! We have such an abundance of natural gas that prices should remain fairly low for years.
In contrast, gasoline and diesel fuel will only get more expensive with time, since the cheaply extracted crude oil is mostly depleted. I’m also encouraged to see that U.S. imports of Middle Eastern crude are way down. Most of our imported crude now comes from Canada, and as soon as the Keystone XL pipeline gets built, the cost of petroleum products based on Canadian crude will be significantly reduced. Rail transportation of crude oil is about twice as expensive as pipeline transportation, and trucking costs significantly more than rail.
We still have a few environmental activists whose emotional hatred of oil companies makes them continue to fight the inevitable. Their latest plea against the XL pipeline is that pipelines increase “global warming.”
What a ridiculous argument! Pipelines produce less global warming than any other form of petroleum transportation. Let’s get the Keystone XL pipeline approved as quickly as possible so construction can begin. It will still take years to make the pipeline operational, and diesel fuel costs will continue to rise throughout that time.
Until the economy completely rebounds, more and more upward pressure will be put on diesel fuel prices. Gasoline costs more to produce than diesel, but gasoline demand is significantly lower than in the past due to:
1. More fuel-efficient passenger cars;
2. Ethanol replacing 10% of gasoline demand;
3. Fewer commercial and personal miles being driven annually.
Refiners reduce the selling price of gasoline in order to “unload” it. Selling prices of other petroleum products, such as lube oil and diesel fuel, have been increased in order for refiners to remain profitable.
Natural gas is the only fuel source whose cost is currently not being affected by factors other than the cost of investment and production. In fact, the selling price is currently so low that many drillers are scaling back production as much as possible (investors won’t allow them to completely halt production).
I don’t see how the average fleet operator can go wrong converting pick-up and delivery vehicles to CNG and longer-haul units to LNG. Sure, it would be nice to have a government tax break, but aren’t tax breaks one of the reasons our country is currently so far in debt?
