Fracturing or fracking for short has made big moves and is reducing the cost of NG, Natural Gas, in the continental US and indeed the western hemisphere. There are several big energy users that can benefit from the lower cost---one such is the heavy trucking industry. Examples of some large US truck fleets are LOWE’S Co., PROCTOR & GAMBLE Co., UNITED PARCEL SERVICE Inc. and others. These companies are accelerating a shift to NG, natural gas, replacing diesel and gasoline. Cost is the main driver. Also there are side benefits that some of the companies also rate highly---particularly the reduction of cost of routine maintenance.
Home-improvement retailer LOWE’S wants its delivery company to shift all of its several hundred trucks over to NG by 2017. P&G already has 7% of its trucks on NG and hopes to reach 20% in another 2 years. UPS says it plans to buy 1000 NG powered trucks by the end of 2014. FedEx corp. plans to shift 30% of its long trucks to NG over the next decade.
The nation’s supply of low cost NG is helping spur this shift. So are new NG engines that can power heavy-duty trucks that weigh up to 80,000 pounds. The first, a 12-liter CUMMINS Westport NG engine went on sale this past July. Next year, Volvo AB, the Swedish heavy truck maker, will introduce NG engines for its trucks. Long distance trucking companies are testing compressed natural gas powered trucks as they are awaiting more powerful engines and a nation-wide fueling and repair infrastructure. High initial cost of vehicle, scant number of NG vehicles suppliers and fuel availability are impediments. The take up is just starting: about 5% of all heavy duty trucks sold next year will run on NG—that is up from around 1% this past year. Barriers to wider use are coming down, driven by the relatively low cost of compressed NG or CNG, which sells for about $1.50 per gallon less than its equivalent in diesel which averaged $3.87 per gallon just this past week.
USEFUL ASIDE---All being hydrocarbons, diesel, gasoline, and NG produce the same heat energy when compared on equal fuel weight basis.
A shift to NG for trucking has implications for US consumption of oil, domestic energy industry and air quality. Natural Gas, NG produces less carbon dioxide, carbon monoxide and sulfur-based pollution than diesel or gasoline per mile driven. The average heavy truck consumes about 40 times the fuel from a heavy sedan. Such trucks are about 1% of the vehicle count but consume 20% of the fuel. Diesel trucks of this size get from 5 to 7 mpg and average 100,000 miles driven per year per truck.
INFRASTRUCTURE—Clean Energy Fuels Corp, the largest NG fueling station company, is working on both the infrastructure and vehicle cost problems. The Irving, Texas-based company founded by oil man, T.Boone Pickens has more than 400 fueling stations and is building a network across the US. Recently the company offered a deal through GENERAL ELECTRIC Corp. leasing arm allowing trucking companies to lease a new vehicle for the same price as a diesel, if they agree to a fuel contract. This scheme has been successfully used several times in past US industrial history.
A Mr. Arthurs, president of CUMMINS WESTPORT, thinks the price of truck will come down quickly. He believes that industry will quickly provide the additional capacity needed.
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