The Natural Gas Revolution Need Not Be Subsidized

Michael Giberson

Boone Pickens, among others, has been hot to have Congress devote taxpayers money to rolling out natural gas vehicles and refueling stations as a way of encouraging long-distance trucking companies and other folk to convert their fleets from diesel fuel to natural gas. A report produced by energy consulting group IHS CERA concludes that at current natural gas prices the conversion makes economic sense for many trucking fleets already, so subsidies are not necessary to jump start the market. The report also concludes installation of LNG refueling stations would be profitable for a sufficient number of retailers. See the discussion at The Hill’s E2 Wire blog; the Oil & Gas Journal also reports. The IHS CERA press release is here.

In related news, just last week Shell announced an agreement with TravelCenters of America to provide natural gas fueling options at about 100 TA stations along the interstate highway system. Elsewhere Shell has indicated a plan to offer long term contracts to trucking firms switching to natural gas that would guarantee savings relative to diesel fuel prices. Other transportation-focused natural gas companies, including Pickens’s own Clean Energy Fuels Corp., also have been partnering up and making expansion plans.

Overall I’d say that businesses are adapting to changing value opportunities at a reasonable pace. Sure, maybe businesses are moving a little slower than the dreamers in DC able to spend other people’s money want (and slower than lobbyists seeking other people’s money want, too), but also moving at a pace which is more likely to be sensible.