Thursday, March 1, 2012

Natural Gas -- the real obstacles to its adoption as a vehicle fuel

I wrote this article in September of 2009. It is as appropriate today as it was then and to date there has been very little progress and no reduction in the onerous and unnecessary regulations.


In the very early years of the 20th century the “Horseless Carriage” came into being. As this new technology evolved everything from steam to electricity was used to power these vehicles. As the demand for convenient, fast long range transportation developed, gasoline became the fuel of choice for the following two reasons -- the power coefficient and the availability. Gasoline is a very powerful explosive when ignited in a confined space and is also easy to transport in a container. This makes it very suitable for use as a transportation fuel. As a result, the entire transportation industry, from trains to planes to automobiles adopted oil derivatives as their preferred fuel.

During the period from the early 20th century through the beginning of the 1970’s, automobile use in the US increased from Henry Ford creating the Model T through Herbert Hoovers campaign promise of “A car in every garage and a Chicken in every pot” to the late sixties hot rods and drag races. The automobile became an iconic expression of American Freedom. Supplies of gasoline were abundant and cheap. There was little incentive for technological improvement except to make the car go faster or look better.

As the seventies unfolded, we experienced the first signs that the golden days of readily available oil had reached their zenith. Coming of age at the end of this era, I too was a fan of the hotrod, but remember well the day during my senior year in High School when I had to pay the exorbitant sum of $7.00 to fill the tank in my 1969 American Motors AMX.

Around the same time, we experienced our first gas shortages and lines at gas stations. Our President, Richard Nixon, rather than push a national referendum to seek alternative fuels, decided to place wage and price controls on the purchase of gasoline products. As any economics student knew, and as history has shown, this had an opposite effect than the one desired. Gasoline became scarce and industry was negatively impacted to the point that a recession was felt across the entire country.

People were also becoming concerned about the harmful pollutants being emitted from the tailpipes of our cars. Government stepped in and legislated emissions requirements on the auto manufacturers. Gas efficiency, never really great, plummeted and emissions testing became a requirement in order to license your automobile.

When Jimmy Carter became our president, his administration reviewed the situation with the oil supply, determined that America was using more oil than domestic production could supply and that America was importing an incredible 20% of our domestic demand. His response -- create a bureaucracy -- The Department of Energy, to develop ways to decrease our dependence on the importation of foreign oil. The result of this was more shortages, rapidly increasing prices and a bureaucracy which today has a budget of 16.5 BILLION DOLLARS per year while we as a nation have increased our imports of foreign oil to approximately 50% of demand.

During this period of turmoil in the marketplace, the government has responded with additional legislation on fuel efficiency and emissions standards. Regulations have been layered one on top of the other until the goal of lower emissions and fuel efficiency have become contravening interests.

Advance to the spring of 2008, oil traded at the stratospheric price of $55.00 per barrel on the world market. By June, it had jumped to $86.00 per barrel, yet demand continued to rise while supplies coming out of the Oil Producing and Exporting Countries (OPEC) declined due to the war in Iraq. World demand exceeded supply by approximately 2 million barrels per day. Prices on the open market continued to rise until they reached their peak at $147.00 per barrel. OPEC increased supply by about a million barrels a day at the urging of then candidate Obama, American consumers cut back on our use of gasoline by a few million barrels per day and the price of a barrel of oil dropped to a low of $36.00 as supply began to exceed demand. Yet we as a country were still importing more than 65% of our domestic demand. As OPEC members cut supply to equalize the supply/demand curve, oil increased in price to its current price of approximately $70.00 per barrel. As time passes, demand will increase and supply channels in America will remain constricted so prices will continue to trend upward.

There are numerous alternatives on the horizon, electric cars will continue to become more popular, but will not become viable until significant advances in battery technology are achieved. Diesel is growing in favor, but doesn’t come close to reducing our dependence on foreign oil. Hydrogen fuel cells remain quite a few years from perfection and distribution poses a major problem. The most reasonable alternative in the world today is Compressed Natural Gas (CNG). Natural gas is often described as the cleanest fossil fuel, producing less carbon dioxide per BTU delivered than either coal or oil, and far fewer pollutants than other fossil fuels.

Currently, Natural Gas is selling for less than $2.60 per thousand cubic feet. For comparisons purposes, a gallon of gasoline produces 124,000 British Thermal Units of energy, while 1000 Cubic feet of Natural Gas produces 1,028,000 British thermal units of energy. Both cost approximately $2.60 at today’s prices. Yet, cleaner burning Natural Gas does not compete with gasoline as a transportation fuel because it has been much harder to package and meter in the automobile. The major difficulty in the use of natural gas is transportation and storage because of its low density. The easiest form of delivery is via pipeline and pipelines now cover more than 70% of America. Natural gas pipelines are economical, but many existing pipelines in North America are close to reaching their capacity. Natural Gas supplies are at their highest levels since the beginning of President Reagans second term. There is so much natural gas available in storage that producers are having a hard time finding places to store their supplies.

Contained within the borders of the United States are enough recoverable reserves of Natural Gas to supply all the energy needs of the US for hundreds of years to come. The conversion to CNG as a transportation fuel has the potential to reduce our dependence on foreign oil imports to virtually zero within the next ten years. CNG is the perfect fuel to bridge the paradigm shift from gasoline to the future renewable fuels.

In countries around the globe, primarily the developing countries of Pakistan, Argentina, Brazil, Iran and India use of CNG as a transportation fuel is becoming commonplace. CNG use as a transportation fuel in America is primarily limited to fleet vehicles.

Why has America been slow to convert to the use of CNG? Easy availability of gasoline is one answer. On many street corners, in every community, there is a filling station which open 24 hours per day seven days a week. Another reason is a lack of desire. As long as gasoline is cheap and readily accesible there has not been a desire to seek out alternatives.

As the cost of gasoline increases, why isn’t America rushing to convert their cars to run on Natural Gas? The answer is our government. Natural Gas as a transportation fuel is regulated by our government to the point that producing CNG vehicles is much too costly. Conversion of gasoline or diesel powered engines requires a Certificate of Conformity from EPA or an Executive Order from the California Air Resources Board (CARB). This requirement applies to each specific engine family. This means that each type of engine produced must undergo certification. To obtain a Certificate or EO, the manufacturer must submit substantial emissions performance data and related documentation to EPA and/or CARB for review. Additionally, manufacturers may be asked to submit a converted vehicle for rigorous testing to verify this data. The process of engineering, manufacturing, installing, pre-testing and then submitting a proposed retrofit system to an EPA- or CARB-approved laboratory for certification is a time-consuming and expensive process that costs $200,000 or more per engine model. It is economically unrealistic to expect the major automobile manufacturers to undergo this expense for every engine model they build and offer when the demand is so narrow currently.

Most vehicles driven in the United States today are within their useful life as defined by the EPA as roughly 10 years or 120,000 miles. EPA guidelines indicate that certification of the retrofit system IS required for these vehicles which makes the conversion option economically unfeasible. Converting privately owned vehicles does not meet this important criterion and will fail state or local emissions tests.

Vehicles which fall outside the EPA guideline, those older than 10 years or with more than 120,000 miles, encounter another obstacle. They are still required to pass emissions tests. When converted to CNG, emissions levels are so low that an error is indicated on the testing equipment resulting in a fail situation. Without passing the test, State motor vehicle department authorities will not allow the automobile to be licensed.

On July 21, 2009 the House passed HB 1622, with appropriations of 30 million per year for 5 years and sent it over to the Senate where it became the companion W.1350.IS. These actions are redundant, unnecessary, and more examples of the United States legislative bodies intruding into the private sector in ways that are not necessary.

There is no question that CNG produces fewer emissions than burning oil based fuel. This is undisputed fact. There is no argument that Natural Gas supplies come from within our country. The supply of Natural Gas is sufficient to power every vehicle in America without noticeably depleting reserves. There is no argument that increasing the use of Natural Gas will increase domestic jobs. The conversion technology exists, is easy to install and inexpensive enough to make the conversion cost effective. There is no argument that adding CNG pumping capacity to local filling stations is no harder than converting to ethanol (E85) metering pumps.

We don’t need to spend another 150 Million Dollars and 5 years to tell us something we already know. We need to use common sense and eliminate all restrictions and laws on the conversion of vehicles. We do not need protection us from ourselves. Get the government out of the way and let the private sector and market conditions determine what will work most effectively. If we do, within 10 years, we will virtually eliminate the import of foreign oil, all the while, cleaning our air.