Natural Gas Trucks: Progress, But No Breakthrough

(Editor’s note: I recently attended a meeting on off-shore drilling potential off Virginia’s coast and the issue of natural gas fueled trucks came up and was briefly discussed. This article shows where we are in the nation on converting our truck fleet to natural gas.)

The fracking revolution has led to an abundance of U.S. natural gas, at relatively low prices. That development has stimulated the quest to shift trucks from diesel to either compressed natural gas (CNG) or liquefied natural gas (LNG). But it will take more than just low fuel prices to make such a transition happen.

An August 8th piece in The Hill by former Sen. Pete Domenici, Kathryn Clay, and Raymond Orbach called natural gas “The Silent Transportation Revolution.” It cited the increased use of CNG and LNG in bus and truck fleets, the growth of refueling stations along several major highways (I-10, I-40, I-95), and the development of more efficient fuel tanks as evidence that the revolution is under way. But that conclusion is premature.

The Wall Street Journal (Aug. 26th) carried a news article headlined “Natural Gas Trucks Stuck in First Gear.” It pointed in particular to the 33% price premium for a natural gas powered tractor compared with the equivalent diesel-fueled tractor. It noted recent sales projections that about 10,500 heavy-duty natural gas trucks will be sold this year, compared with forecasts of 16,000. And it also pointed out that, thanks to federal emission mandates, the newest diesel engines get close to 7 mpg compared with 6.5 mpg for their predecessors. That may sound like small change, but for a heavy truck that goes 100,000 miles a year, that difference means real cost savings.

A more detailed article, “Trucking’s Green Sprouts,” in The Journal of Commerce (July 21st) concluded that a transition away from diesel has not reached a tipping point “by a long shot”—because of high equipment acquisition and maintenance costs, the lack of a complete refueling infrastructure, and the need for further progress in engine and fuel tank design. It also quotes the CEO of trucking giant YRC as pointing out that the transition of trucks from gasoline to diesel took decades.

Natural gas has its largest foothold in local fleets, able to be refueled at a central station—buses, garbage trucks, etc. But nationwide, there are only about 1,500 refueling stations, of which only 716 are public. That includes the growing network along Interstates being developed by Clean Energy Fuels, most of which are CNG. Saddle Creek Logistics Services is a Florida-based pioneer in natural gas trucking, which earlier this year did four round trip test runs of a CNG-fueled tractor trailer between Lakeland, FL and San Diego. One of its findings was that some refueling stations are better than others, in terms of refueling time (one took three hours!).

Other major companies trying out natural gas trucks include Con-way Freight and UPS. Con-way has experimented with single-axle CNG tractors, finding their price to be almost double the cost of an equivalent diesel rig. They also experienced higher maintenance costs, higher cost of supplies, and the need to find and train qualified mechanics. Despite the fuel cost savings over diesel (at about 10-12¢/mile in pickup and delivery operations), that was not enough to offset the higher capital costs. UPS is using natural gas trucks in regions where refueling stations have been established, but is projected by year-end to have just 2% of its 100,000 fleet powered by natural gas.

One other point I learned while researching this story is that natural gas trucks do pay highway fuel

taxes. At the federal level, CNG is taxed at the same rate as gasoline, on a BTU-equivalent basis. LNG is taxed on a per-gallon basis, at the same rate as diesel. But LNG has considerably less energy content per gallon, and NGV America figures that LNG is taxed at 170% of the diesel rate, on an energy equivalent basis. Both of these taxes go into the Highway Trust Fund. State taxing policies, however, “vary all over the place.”

(This article ran in September’s issue of Surface Transportation Innovations.)

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