Nat-Gas Advocates to Switch Their Focus to Attracting Over-the-Road Fleet Users

This story appears in the Nov. 25 print edition of Transport Topics.

ATLANTA — Natural gas-vehicle stakeholders said that after making strides in fueling the “return-to-base” trucking market, they are now moving to zero in on the over-the-road heavy-duty segment of the market.

Officials meeting here last week at the North American Natural Gas Vehicle Conference & Expo said that in order to market to the heavy-duty truck sector, they need to concentrate more on touting the fuel’s low cost.

That’s ultimately what it will take to convince heavy-duty, longhaul carriers that they need to retool their fleets to natural gas, according to Richard Kolodziej, president of NGVAmerica.

“With a growing number of companies buying NGVs, a growing number of companies offering NGVs and a growing number of companies providing components for NGVs, we’re seeing technology improvements, economies of scale and competition,” Kolodziej said. “This, in turn is bringing down our first-cost premium, making our bottom line even stronger.”

But both Mark Hazelwood, president of Pilot Flying J, and Bill Graves, president of American Trucking Associations, said while natural-gas economics may be a “no-brainer” decision for city delivery and return-to-base carriers, it requires more complex analysis for over-the-road trucking.

For starters, natural-gas Class 8 trucks can cost as much as $80,000 more than their diesel counterparts, said Hazelwood, a conference keynote speaker.

He said if natural gas is going to be successful for over-the-road trucking, comparisons of fuel economy, residual vehicle value, the cost of maintenance, engine life expectancy, fuel weight and freight density factors have to be considered.

“At the end of the day, everybody has to understand the cost structure of operations of natural-gas vehicles, and it has to work for both the shipper and the carrier,” Hazelwood added.

“What we’re talking about is a paradigm shift, and paradigm shifts are hard — real hard.”

Graves said while a trend of shorter average hauls will help the fuel become more attractive to heavy-duty fleets, “The No. 1 thing we’re focused on right now is the issue of cost competitiveness with diesel.”

There are many people who think it’s a very easy analysis to do, he said. In fact, it’s a complex process to pinpoint the savings created by natural gas because fuel surcharges can, in many cases, narrow the gap between the costs of diesel and natural gas.

While the price of diesel has been volatile in recent years, natural-gas prices have risen only slightly.

Liquefied natural gas has been selling on average $1.20 to $1.50 below the average cost of a per-gallon diesel equivalent. Likewise, compressed natural gas has sold recently as much as $1.50 cheaper than the per-gallon equivalent cost of gasoline.

Hank Linginfelter, executive vice president for AGL Resources, an Atlanta-based energy service firm, said the differential is “dramatic.”

Kathryn Clay, executive director of the Drive Natural Gas Initiative, a collaborative effort by gas producers and distributors, said it could take 20 years or more for the industry to transition in a major way.

“We have to recognize that we’re in the early days of the transition,” Clay told Transport Topics. “But the price advantage of natural gas for longhaul freight is so compelling that an industry that literally competes on a penny per mile basis is something it cannot afford to ignore.”