Last summer's substantial increases in the cost of gasoline and more recent uncertainty over how high prices may return has vaulted energy issues to the center stage of national policy. National security issues regarding U.S. reliance on foreign oil and environmental concerns about burning fossil fuels are causing many to push for alternative sources of fuel to power our cars and trucks.

T. Boone Pickens, a well-known Texas oilman, has captured the attention of many Americans by broadcasting national television ads suggesting that our economy and national security are threatened by reliance on imported oil. His solution is to use wind energy and other alternative energy sources to fuel our power plants and employ compressed natural gas to power our automobiles. But is compressed natural gas (CNG) a viable alternative source of fuel to power our nation's vehicles?

What is Compressed Natural Gas

CNG is colorless, odorless and non-corrosive. In vehicles, it is most commonly used in its gaseous form where it is compressed to pressures above 3,100 pounds per square inch. Natural gas is extracted from condensate wells (which contain natural gas in gaseous or liquid states), oil wells and coal bed methane wells. 

Advantages of CNG Vehicles

CNG has several advantages as a motor vehicle fuel. One major advantage is that North America currently produces almost all of the natural gas used in the United States. According to the Energy Information Administration, U.S. consumption of natural gas was 23,055 billion cubic feet in 2007. The United States produced 19,278 bcf of natural gas during the same year, and imported 3,777 bcf from Canada and 54 bcf from Mexico. Natural gas imports from countries outside of North America totaled 776 bcf. It is possible that in the future we may need to import more natural gas from countries outside North America due to projected increases in the use of natural gas as a fuel for power plants. The Energy Information Administration predicts that by 2025 more than 15 percent of our natural gas supplies will be imported from non-North American sources. These projections may prove incorrect as development of new technology, such as horizontal drilling, has already resulted in the ability to economically extract natural gas from extensive coal bed methane reserves from U.S. land-based and deep-water sources.

The U.S. Environmental Protection Agency rates the Honda CNG Civic (the only CNG-powered vehicle currently for sale in this country; General Motors and Ford stopped producing CNG vehicles due to limited customer interest and instead are focusing on gasoline-electric hybrids and hydrogen fuel cell vehicles) as the least polluting passenger vehicle, cleaner even than hybrid vehicles such as the Toyota Prius. The CNG Civic produces approximately 80 percent less smog-producing tail pipe emissions than comparable gasoline-powered vehicles. Although CNG vehicles generally produce less greenhouse gas emissions than comparable gasoline powered vehicles, they typically produce more greenhouse gas emissions than hybrids.

Fuel costs are also lower for CNG powered vehicles than similar gasoline models. The costs comparison depends upon such variables as the cost of natural gas in a particular region and the price of gasoline at that given time. Although the cost of CNG varies by region of the country and the price of gasoline is continually changing, a general rule of thumb is that the cost of fuel for operating a CNG vehicle is approximately 40 percent less per mile than a comparable gasoline powered vehicle. Of course, if more U.S. vehicles run on natural gas, the increased demand without a corresponding increase in supply will cause natural gas prices to increase. However, according to the Natural Gas Vehicle Association, a 100-fold increase in natural gas vehicles over the next 10 years (5 percent of U.S. vehicle fleet) would only result in a 4 percent increase in U.S. natural gas consumption.

The CNG Civic is rated by the EPA at 24 mpg city and 36 mpg highway compared to 25 mpg city and 36 mpg highway for the gasoline model. Fleet vehicle operators report that engine life is greatly extended by using CNG vehicles due to its non-corrosive properties, which can lead to considerable cost savings in high mileage applications. 

There also exists an option of fueling a CNG vehicle at home, provided your home has a natural gas line. The FuelMaker Corp. produces a device called Phill, about the size of a pay telephone, that can be mounted outside or in a garage. Phill uses about the same amount of electricity as a small appliance and requires about eight hours to provide enough fuel to drive approximately 100 miles. The cost is about $3,900, and the device is eligible for a $1,000 tax credit. The price of natural gas varies, but $1.25 a gallon cost to fuel a vehicle with Phill is a reasonable average. Assuming a $260 tax break for purchasing Phill and gasoline averaging $3.50 a gallon, it would require approximately 48,000 miles of driving using Phill as the fuel source to recoup the cost. 

Additionally, CNG vehicles do not require significant reengineering from their gasoline counterparts in order to run on CNG. Virtually any gasoline powered vehicle can be adapted for CNG use. Gasoline-electric hybrid vehicles require dual power trains, which necessitates complex engineering and increased cost to the consumer. Hydrogen fuel cell vehicles are even more complex and have yet to be perfected for consumer use. 

Disadvantages of CNG Vehicles

There are several drawbacks to CNG powered vehicles, including the lack of fueling infrastructure. There are about 1,500 natural gas fueling stations nationwide, approximately half of which are available to the public. This lack of fueling stations has lead to a decline in the popularity of CNG powered vehicles. The limited number of fueling stations combined with the fact that CNG vehicles currently possess less range than comparable gasoline powered vehicles renders the use of these vehicles impractical for driving long distances.

Fuel tanks in CNG vehicles also are heavier and larger than conventional gasoline tanks. This is particularly a problem in smaller vehicles. The fuel tank in the CNG Civic, for example, reduces trunk space to such an extent that there is only enough room for two small suitcases. 

As noted previously, gasoline powered vehicles can be converted to CNG. Conversion costs are high, however, averaging from $8,000 to $12,000. A conversion from gasoline to CNG requires EPA certification that can be both expensive and time consuming. Conversions also have the disadvantage of using the existing engine in contrast to factory produced CNG vehicles that are designed to exploit the higher octane of CNG, thereby resulting in greater engine efficiency.

Conversion of gasoline powered vehicles to CNG would substantially increase the quantity of natural gas consumed in the United States at a time when natural gas is being increasingly used for the generation of electricity. The use of more wind power to generate electricity will likely require more natural gas due to the fact that wind power is unreliable and must be backed up by conventional electric generation facilities. Natural gas combined cycle power plants are the most common backup for wind turbines.

Increased demand for natural gas also would increase utility bills for many home owners because natural gas is the preferred fuel for heating American homes. Increased natural gas costs would reduce the savings of motorists switching from gasoline to CNG powered vehicles. The increase in cost of natural gas due to increased demand from shifting from gasoline to CNG vehicles is difficult to estimate; the key variable affecting price is how successful we are in producing and supplying U.S. markets with additional natural gas in the future.

Conclusions

While it's possible to convert a significant amount of the nation's vehicles from gasoline to CNG in the near future (10 to 15 years), it's not likely to happen. As discussed previously, there are several advantages to using CNG to power the nation's automobiles and trucks. The most compelling argument for CNG vehicles is that abundant natural gas reserves in North America (assuming those reserves are allowed to be developed), could substantially reduce or eliminate our dependence on foreign oil for the transportation sector. This is a significant advantage to CNG as no other suggested alternative comes as close to achieving the goal of U.S. energy independence - with the possible exception of hydrogen fuel cells that still have considerable technical and financial hurdles to overcome before they can be used practically in a commercial application.

CNG vehicles are cheaper to operate compared to gasoline vehicles, and auto manufacturers can utilize existing technology rather than spending the considerable capital necessary for the development of battery technology and hydrogen fuel cells, which would likely offset the packaging limitations and reduced range of CNG vehicles.

So why have auto manufacturers shown so little interest in developing and marketing CNG vehicles? They claim there is little consumer interest, citing poor sales. Consumer interest in CNG vehicles has been limited due to two reasons: historically low gasoline prices and lack of infrastructure to fuel CNG vehicles. Last summer's spike in prices and subsequent plummet has abated the price issue temporarily. However, the lack of infrastructure for fueling CNG vehicles is a major obstacle to increasing the number of CNG vehicles on U.S. highways. Without refueling infrastructure there is little demand from motorists for CNG vehicles, and without customer demand there is no economic incentive for automobile manufactures to produce CNG vehicles. This situation seems unlikely to change for the foreseeable future. Congress has shown some interest with Rep. Rahm Emanuel, D-Illinois, introducing the "New Alternative Transportation to Give Americans Solutions Act," which would require that by 2018, 10 percent of new vehicles sold in the country be natural gas vehicles. Sen. James Inhofe, R-Oklahoma, introduced the "Drive America on Natural Gas Act," which expands the definition of the Renewable Fuels Standard to allow the use of natural gas to meet renewable fuels mandates. It is questionable whether these bills will become law without considerable public pressure for CNG vehicles.

An increase in the use of natural gas vehicles in fleet applications would be more easily achieved than for individually owned vehicles. The lack of infrastructure for fueling natural gas vehicles is more easily solved for fleet vehicles such as city buses and taxi cabs that operate locally and return to a central location each day. It is also possible to convert over-the-road trucks to run on natural gas. Providing natural gas pumps at truck stops across the country is much more practical and less costly than attempting to install natural gas pumps at most of nation's 117,000 service stations.

It is unclear whether there will be any substantial increase in the use of natural gas to power more vehicles. Government mandates and incentives have generally not proven to be effective and often result in unintended consequences. A recent example is government incentives and mandates regarding corn ethanol that have proven costly and contributed to increases in the price of food as well as several other significantly negative consequences. Ultimately, complex market forces should determine what powers the vehicles Americans will drive in the future.