ACT Expo 2018


Natural Gas Vehicles: Still a Good Bet

January 19, 2015 in CNG, LNG, NGVs by Rich Piellisch  |  No Comments

Oil Price Volatility Is All the More Reason to Go with Gas,
NGVAmerica Says, Making a ‘Compelling Case’ for the Fuel

The price of oil is at a level almost no one anticipated a mere six months ago, causing operators to question whether the up-front costs of natural gas are worth the investment. But the situation is, really, all the more reason to go with gas, says NGVAmerica, which has released a new white paper on the subject.

Matt Godlewski

Matt Godlewski

Natural gas is a domestic fuel, still largely free from world market influence, the association says. Hence natural gas prices in North America are stable and predictable.

“Our analysis reveals a compelling case for the continued transition to natural gas-powered vehicles, especially among commercial and government fleets who are seeking long-term stability and low prices in their transportation costs,” NGVAmerica president Matt Godlewski told association members on Friday.

Pro-NGV Argument Strengthened

“We strongly believe that the recent volatility in oil only strengthens the strong long-term economic arguments associated with NGVs,” Godlewski said.

In Oil Price Volatility and the Continuing Case for Natural Gas as a Transportation Fuel, NGVAmerica looks at some of the key questions around the price and stability of all transportation fuels. The document “provides a historical and forward-looking perspective on oil prices, as well as those for gasoline, diesel and natural gas fuels.”


The association tackled the following questions:

  • What is causing the decline in oil and petroleum prices?
  • Why have oil prices declined and where is the price of oil headed over the next 12 months and in the long-term?
  • Will diesel prices fall further, and are factors other than crude oil prices influencing its price?
  • What is the long-term outlook for the price of all transportation fuels?
  • Why do the strong economic advantages of natural gas remain solid over the long-term? And
  • What are the public policy issues that could benefit natural gas as a transportation fuel?

Still Far Lower than Diesel

“Boom and bust in the oil industry is nothing new,” NGVAmerica notes. But the association, taking into account such factors as the price of oil versus natural gas on a BTU basis, projected fuel-price differentials, and U.S. refinery capacity (limited, which points to a continued dependence on imports for refined petroleum products), draws the following conclusions:

  • The price at the pump for gasoline dependent depends far more on the price of crude oil than CNG depends on the price of natural gas. graphic courtesy NGVAmerica

    NGVAmerica points out that the price at the pump for gasoline depends far more on the price of crude oil than the price of CNG depends on the price of natural gas. American Gas Association 2014 Playbook graphic

    History shows that the recent decline in world crude oil prices and related gasoline and diesel prices are likely to be short-lived. Oil prices will increase as the world economy rebounds.

  • Diesel fuel is influenced by a variety of other factors that will likely keep upward pressure on prices over the long run.
  • On a Btu basis, natural gas still has a 3:1 price advantage over oil. At the pump, average CNG prices are currently $0.75 to $1 lower than diesel.
  • The long-term stability and low prices for natural gas relative to oil are likely to remain for many years – perhaps even decades – based on well-documented economic models.
  • The long-term nature of fleet asset management suggests that it is prudent to continue to invest in transportation fuel portfolio diversification by transitioning more vehicles to natural gas. Fleets that have already made the investment in vehicles and infrastructure will continue to benefit from the stability of natural gas prices and their continuing economic advantage.
  • State and federal policymakers are likely to continue to promote fuel diversity and policies that encourage use of natural gas as a transportation fuel on the road to energy security.

-------------------------------
Contact information is only available to premium subscribers. Click here to purchase a subscription.

Source: NGVAmerica with Fleets & Fuels follow-up

Posted in CNG, LNG, NGVs and tagged .

Leave a Reply

Your email address will not be published. Required fields are marked *


  • Archives