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US Natural Gas Usage Increasing: Will It Replace Diesel?

US Natural Gas Usage Increasing: Will It Replace Diesel?

Last year, the administrator of the U.S. Energy Information Administration (EIA) stated in a report that the EIA expects natural gas use will increase dramatically in the trucking and commercial transportation industry in the next 25 years. They also believe that natural gas prices will continue to be lower than the prices of crude oil through the year till 2040.

This seems to be in favor of natural gas. However, the EIA also stated that within the same interval, the price of natural gas will most likely be affected by the greater amounts the U.S. is exporting, a decrease in the amount of natural gas that is being importing and the overall global pricing, which is currently higher than in the U.S.

If U.S. natural gas prices start to reflect global prices though, there will certainly be no price incentive to switch from diesel. Those companies that have already converted to natural gas may be scrambling to find a solution for their new natural gas powered fleets in that case.

JOC.com, a shipping data analysis firm, reports that the capital cost of operating a truck with natural gas can be twice of that of the diesel run truck. While the fuel might be cheaper, the price of buying new natural gas powered trucks would prove to be an obstacle many companies could not overcome. They project that even with a grant of $54,000 per truck, those operated with natural gas will still cost 40% more. Some think that the cost of an entire new fleet would be counterproductive in saving money on fuel. Companies wouldn’t be able to afford the same number of trucks for their business and in turn, wouldn’t be able to haul as much freight as they normally would.

Though several companies are already investing in the future of natural gas, some skeptics think that those efforts are only being funded by government policy and environmental advocacy. Plenty of companies have switched over their entire fleets to natural gas already. There are also, already an estimated 10,000 natural gas powered trucks on the road.

The government, proponents of environmental issues and the media are excited to make the switch to natural gas. However, the price of natural gas and capital costs may keep most trucking companies from making the switch at least until they have a better long term picture of how natural gas prices will compare to crude oil. – See more at: http://truckernews.com/us-natural-gas-usage-increasing-will-it-replace-diesel-p668-90.htm#sthash.8r5CCB6o.dpuf

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