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Natural Gas Cars Are On The Road; Potholes Remain

The 76 station at the corner of Los Angeles' Olympic and La Cienega boulevards doesn't look much different from the myriad gas stations that dot the metropolis.

But next to the banks of traditional gas pumps is one dispensing a cheaper, cleaner-burning fuel to the occasional delivery van or Honda Civic equipped to use it.

The station is one of dozens in Southern California selling compressed natural gas. The region has one of the nation's densest concentrations of CNG fueling infrastructure.

That network is a key piece of the puzzle needed if motorists are ever going to convert en masse to the fuel, which currently goes for about $1.50 a gallon less than the equivalent amount of gasoline, thanks to decades' worth of new U.S. supply.

Dawn Of New Age? Advocates have heralded the dawn of a transportation age, with the domestic fuel powering trips to the mall, soccer practice or work, displacing more expensive and dirty imported oil. The Obama administration's tightened fuel economy standards include incentives for automakers to offer natural gas vehicles.

And more than a dozen states have banded together to pledge to buy light-duty cars and trucks for their own fleets, and are waiting to see which manufacturers step up.

"It may not be at every corner, but there are enough stations around that if you've got a 220-mile range, you're going to be able to get to a station and fuel," said Richard Kolodziej, president of Natural Gas Vehicles for America, who's driven a natural-gas-powered car since the early 1990s.

But the consumer market is a tough nut to crack.

Of roughly 120,000 natural gas vehicles on U.S. roads, only a fraction is in consumers' hands. Car research firm Edmunds.com says drivers of hybrids, electrics, CNG and other alternative-style vehicles often don't repeat the purchase, in part because there are few move-up choices.

There are about 160,000 traditional gasoline and diesel fueling stations in the U.S., but just more than 1,000 across the country where customers can top off with compressed natural gas.

Waiting On Demand "There are no obstacles, just the need to have enough demand to warrant the capital investment in a particular station," said Bruce Russell, communications director for station builder and operator Clean Energy Fuels (CLNE). The firm was founded by oil-executive-turned-natural-gas advocate T. Boone Pickens.

Many early CNG adopters, such as Kolodziej, have home filling stations feeding off the houses' natural gas line, rather than relying on sparse public infrastructure.

In addition to being cheaper, the fuel produces up to 30% less greenhouse gases "well-to-wheel," according to various studies. Kolodziej says blending with methane recovered from landfills, sewage plants and other natural sources reduce those emissions even more.

But most CNG proponents have focused first on converting low-hanging fruit — small fleets such as utility trucks, meter reader vehicles and taxis. About 40% of trash trucks sold in the U.S. last year were natural-gas-powered, according to NGVAmerica.

Those vehicles often cover long miles each day but return to a centralized home base at night, making refueling easy, and delivering a quick payback on upfront costs.

Coast-To-Coast Big-Rig Stops Now the push is to create infrastructure for long-haul truckers. Clean Energy Fuels is now building hundreds of stations nationwide at Flying J and other truck stops, dispensing liquefied natural gas — the cryogenically cooled version that heavy trucks need to give them enough range. Shell (RDS-A) this year announced a deal with truck-stop chain Travel Centers of America for another 100.

Some of those truck stops could be configured to dispense both LNG and the car-friendlier CNG if demand warrants, experts say. More importantly, those plans would create coast-to-coast corridors for LNG trucks. Manufacturers are responding with new engines that can replace the workhorse diesels, including a joint effort by Cummins (CMI) and Westport Innovations (WPRT).

Just The Civic For Now But no automaker has announced plans for a new CNG model in the U.S. Only Honda Motor (HMC) currently offers a straight-from-the-factory CNG car for Americans, though many OEMs do offer models elsewhere.

Honda rolled out the natural-gas-version Civic in the U.S. in 1998 for fleet customers. In 2005 it made a push to consumers more broadly. The car is now available at 197 dealers in 36 states, says Angie Nucci, a Honda environment and safety spokeswoman.

The company doesn't disclose sales numbers for that model, but Nucci said 80% are in California, where there's that relatively dense refueling network. Sales in Utah and Oklahoma, states that have promoted the infrastructure, follow.

Some reviewers have called the CNG version light on power compared with the gas model, with a harsher ride, due to the stiffer rear suspension needed for the heavier tank.

That tank — made out of aluminum and sturdy composites — is larger too, eating up some cargo space.

And even with the cheaper fuel, the payback is typically longer on a light-use family car.

Honda's CNG offering sells for a $5,600 premium to the base gas-model Civic. Honda says a family could recoup that in three years.

Other early CNG adopters spend $8,000 to $10,000 to convert their gasoline cars, installing the pressurized tanks, and upgrading hoses and nozzles. SUVs such as GM's (GM) Chevy Suburban or Tahoe are popular starting points, because of their size and ability to accommodate the larger tanks.

The government says a typical family puts about 12,000 miles a year on a car. At 25 miles per gallon, that family wagon burns 480 gallons of gas per year, costing about $1,920, at about $4 a gallon. Natural gas, at an equivalent price of about $2.50 per gallon, would save that family only $720 a year.

Gasoline prices could rise, shortening payback windows. But so too could natural gas prices, which are at a historically wide gap from the price of crude.

Waiting On Supply The higher prices on CNG vehicles should fall if manufacturers ramp up production, though some premium is likely to remain because of the more expensive tank, pressure regulators and other components. Purpose-built CNGs could better incorporate the larger tanks, alleviating the storage crunch.

But auto manufacturers seem to be waiting for a wider fueling network. Natural gas firms want vehicles on the road before they build them. And consumers seem to want their neighbors to go first, demonstrating the technology before they themselves take the leap.

Kolodziej says price isn't a main driver for earliest adopters. Many have one or two vehicles already.

He says his own CNG Civic accommodates 99% of his driving needs. And on the rare occasions when he needs to drive beyond sparse fueling infrastructure

"I take my wife's car," he said.