Natural gas has Utah driving cheaper

  • 01/09/2008

  • International Herald Tribune (Bangkok)

SALT LAKE CITY: The best deal on fuel in the United States right now might be here in Utah, where people are waiting in lines to pay the equivalent of 87 cents a gallon. Demand is so strong at rush hour that fuel runs low, and some days people can pump only half a tank. It is not gasoline they are buying for their cars, but natural gas. By an odd confluence of public policy and private initiative, Utah has become the first state in the country to experience broad consumer interest in the idea of running cars on natural gas. Residents of the state are hunting the Internet and traveling the country to pick up used natural gas cars at auctions. They are spending thousands of dollars to transform their trucks and sport utility vehicles to run on compressed gas. Some fueling stations that sell it to the public are so busy that they frequently run low on pressure, forcing drivers to return before dawn when demand is down. It all began when unleaded gasoline rose above $3.25 a gallon last year, and it has spiraled into a frenzy in the last few months. Ron Brown, a Honda salesman here for the Civic GX, the only car powered by natural gas made by a major automaker in the country, has sold one out of every four of the 800 cars Honda has made so far this year, and he has a pile of 330 deposit slips in his office, each designating a customer waiting months for a new car. "It's nuts," Brown said. "People are buying these cars from me and turning around and selling them as if they were flipping real estate." Advocates for these cars see Brown's brisk sales as a sign that natural gas could become the transport fuel of the future, replacing much of the oil the nation imports. While that remains a distant dream, big increases recently in the country's production of natural gas do raise the possibility of making wider use of the fuel. To a degree, it is already starting to happen in Utah, where the cost savings have gotten the public's attention. Natural gas is especially cheap here, so that people spend about 87 cents for a quantity of gas sufficient to propel a car approximately the same distance as a gallon of gasoline that costs $3.95. The buzz about natural gas cars has been spreading in news reports and by word of mouth, and so many people in Utah are now trying to get their hands on used natural gas vehicles that they are drying up the national supply. Used-car lots are stocking up and beginning to look like county government parking lots with multiple lines of identical white Civic GXs once used in out-of-state fleets. Governor Jon Huntsman Jr. got into the act last year, spending $12,000 out of his own pocket to convert his state-issued sport utility vehicle to run on natural gas. "We can create a model that others can look to," Huntsman said in an interview. "Every state in America can make this a reality." In fact, some unique factors apply in Utah. Natural gas prices at the pump here are controlled and are the cheapest in the country, while the price of conventional gasoline is one of the highest. Questar Gas, the public utility, has compressed-gas pumps around the state open to the public, a fueling infrastructure that few states can match. Special factors or not, the sudden popularity of natural gas vehicles here demonstrates their potential, according to advocates like T. Boone Pickens, the Texas oil billionaire who is financing a national campaign promoting wind power and natural gas to replace imported oil. "Utah shows that the technology is here and the fuel works, and the fuel is better than foreign oil," Pickens said. Natural gas cars produce at least 20 percent less greenhouse gas per mile than regular cars, according to a California study. No official figures are available on how many natural gas vehicles Utah has, in part because so many people go to garages that install conversion kits that are not certified by the Environmental Protection Agency and are therefore illegal. (Huntsman has expressed concern, and some in the installation business have requested that the EPA close down the unauthorized operations; the agency says it does not comment on possible investigations.) But Questar estimates the number at 6,000 and growing by several hundred a month. That is small compared with the 2.7 million vehicles registered in the state, but natural gas executives and state government officials say it makes Utah the fastest-growing market in the country for such cars. Cars fueled by compressed natural gas have been available intermittently in the United States for decades and have found wide use in fleets, but they have never attracted much consumer interest. The situation is markedly different abroad. Of the eight million natural gas vehicles operating worldwide, only about 116,000 were in the United States, mostly as fleet vans, buses and cars, according to a 2006 Department of Energy estimate. Congress mandated the use of fleets capable of using alternative fuel cars for governments and some energy companies in the early 1990s, but public interest petered out as gasoline prices plummeted. Over the years, all the major car companies except Honda dropped their production in the United States. The cars have two major disadvantages: a shortage of fueling stations and a limited range. (Some natural gas cars go half as far on a full tank as a gasoline-powered car.) Utah is one of the few states where a driver can travel across the state without being out of range of a station. The situation presents a paradox: Carmakers do not want to make natural gas cars when so few filling stations are set up for them, and few stations want to install expensive equipment to compress gas with so few cars on the road. In a few states like California, New York and Arizona, hundreds of stations supply compressed gas, but most are either closed to the public or charge only slightly less than regular gasoline prices. Retail prices of natural gas in some states are triple the price in Utah. The only state that comes close to Utah's low prices is Oklahoma, and a surge of natural gas car buying is going on there, too. The natural gas industry and some politicians are pushing to open up the market across the country to natural gas vehicles. Even in states without fueling stations, a few drivers have switched by spending several thousand dollars to install a home gas compressor. A proposal on the ballot in California this autumn would allow the state to sell $5 billion in bonds to finance rebates of $2,000 and more to buyers of natural gas vehicles. Legislation has been introduced in Congress to offer more tax credits to producers and consumers and to mandate the installation of gas pumps in certain service stations, with the goal of making natural gas cars 10 percent of the nation's vehicle fleet over the next decade. "If the incentives are right and the fuel and cars are available, natural gas can work," said Gordon Larsen, supervisor for natural gas vehicle operations at Questar Gas. But he noted that any drop in gasoline prices douses enthusiasm among drivers considering the switch.