Is Driving a Natural Gas Powered Car a Good Deal?

US energy reserves in the form of natural gas are about 80% larger than its petroleum reserves. Future drilling will add modestly to either reserve with the likelihood that new natural gas reserves will be more significant.

T. Boone Pickens is proposing to use more natural gas as fuel for automobiles. His ads are gaining traction and many people are beginning to ask themselves if a Compressed Natural Gas or CNG powered car is in their future.

The answer depends on knowing three simple facts; is CNG really much less expensive than gasoline, is CNG readily available, and are commercial cars with bi-fuel capability available for sale? The answers are yes, no, yes.

Natural gas can be offered at a significantly lower price than gasoline. In a recent ad by a large gas company a price of $2.04 per GGE was offered for CNG while the comparable price for regular gasoline was shown at $3.46 per gallon. The energy content of compressed natural gas is quoted in "Gallon of Gas Equivalent" or GGE. This is a new measuring unit, which is based on the energy content of the dispensed gas. By basing the price of CNG on its energy content, one can compare energy prices of CNG and gasoline directly. This is by far the best approach for the customer who can compare prices for two equal amounts of energy, one for a gas, the other one for gasoline. Measuring the dispensed amount of CNG is more difficult than measuring an equivalent amount of gasoline. However, a precise measurement can be made. Installing a CNG measuring device is just more expensive than its gasoline counterpart.

At present, there are almost no fueling stations equipped to dispense CNG. The natural gas industry will have to make considerable investments before a sufficient number of fueling stations will be locally available. If you are the lucky one who lives close to such a new station, you should seriously consider buying a new car with bi-fuel capability. For local driving one uses CNG, for long distance traveling one continues to depend on gasoline. By having two fuel tanks on board, one for CNG, the other for gasoline, the driver can select the fuel he wants to use.

Existing cars can also be converted. Cars burning compressed natural gas will perform flawlessly without any performance handicap. However, the conversion of a gasoline powered car is expensive and the large, high pressure cylinders for storing CNG must be installed in the car's trunk when retrofitting.

A few car manufacturers are already offering vehicles equipped to use both fuels, CNG and gasoline. One can either use the one or the other fuel. An immediate changeover can be made by toggling a simple switch. In the US Honda is already offering its Civic GX model. Volkswagen, Opel, Mercedes, and Fiat are selling bi-fuel models in Europe. Other Europeans are making CNG powered models, too. American carmakers are sure to follow.

There are two remaining questions. How much natural gas reserves does the US possess and how reliable are early price signals? After all, imported natural gas is sold mostly by OPEC countries and the US is already importing small amounts of natural gas.

Available data puts US natural gas reserves at 230 tcf (trillion cubic feet). Present consumption is about 2 tcf annually. Consumption of natural gas will obviously sharply increase once CNG is used widely in automobiles and will also continue its annual rise as overall US energy consumption continues to grow. Annual natural gas consumption may soon grow close to 4 tcf. With this rate of consumption known natural gas reserves will last for more than fifty years.

When buying a bi-fuel car, we need to convince ourselves that CNG prices will stay stable and competitive in order to recover the higher purchase price of the bi-fuel equipped car. The natural gas industry has been using recent increases in the price of heating oil to significantly increase the price of natural gas. How can we make a realistic estimate about future price stability of CNG? Past history shows that the pipeline companies that sell natural gas to local distribution utilities were setting prices based on the same cut-throat practices used by OPEC.

Realistically, we do not have any effective protection from similar pricing policies in the future. We can therefore, expect that the advertised lower CNG energy prices will not last forever.

Only US Congress can step in and protect the consumer from exploitation. After all, gas companies are positioning themselves to ask US Congress to make CNG available as transportation fuel. We already know that the national oil industry is closely adhering to the OPEC lead when pricing domestically produced gasoline and diesel. US Congress must find the backbone and prohibit collusive price manipulation on the national level. The US administration must be especially careful with providing tax incentives or any other incentives for natural gas powered cars. Such incentives should only be considered if commensurate consumer protection provisions are part of the deal.