Obama to Propose Tax Credits for Buying Natural Gas Trucks

This story appears in the Jan. 30 print edition of Transport Topics.

Standing amid a fleet of trucks powered by liquefied natural gas, President Obama last week said he would propose tax credits for carriers who buy trucks powered by the fuel.

“We’ve got to take advantage of this incredible natural resource,” Obama said Jan. 26 during a visit to a LNG fueling depot for UPS trucks in Las Vegas. “And think about what could happen if we do. Think about an America where more cars and trucks are running on domestic natural gas than on foreign oil.”

The president’s visit to the UPS facility occurred two days after his Jan. 24 State of the Union speech, in which he pledged to develop the nation’s supply of natural gas, which he said could power trucks and factories that are cleaner and cheaper.

“We have a supply of natural gas that can last America nearly 100 years,” Obama said in his report to Congress.

Obama did not say in Las Vegas how large the tax credits would be, but news reports said they could be as high as 50% of the differential between the price of diesel and natural gas-powered trucks.

Obama also said he favored incentives to help build fueling infrastructure along interstate corridors.

“We know how to make these trucks, but if they don’t have a place to pull in and fill up, they got problems,” he said.

Obama’s championing of the fuel source parallels burgeoning expansion of LNG use in the trucking industry, as diesel remains around $4 a gallon and a network of natural-gas fueling stations is taking shape along key highway truck routes.

Earlier this month, Clean Energy Fuels Corp. announced it would open 70 new LNG fueling stations this year to accommodate the growing number of trucks using the fuel.

Its Las Vegas fueling station allows UPS to run 59 trucks in LNG?from Ontario, Calif., to Salt Lake City, said UPS spokesman Norman Black.

“We started with Ontario to Las Vegas, and then last year, we bought [more LNG?trucks],” Black said.

Clean Energy plans to have 150 fueling stations by 2013 in a nine-state, interstate network that it is calling “America’s Natural Gas Highway.”

As diesel costs escalate to meet increasing global demand, natural gas has become more attractive to trucking. The price differential can be as high as $1.50 a gallon, and natural-gas producers say the greenhouse gas emissions are lower than those from diesel.

Makers of engines and Class 8 vehicles — including Cummins-Westport, Kenworth Truck Co., Peterbilt Motors Co., Navistar Inc. and Freightliner — are developing LNG equipment.

This month, Ryder System Inc., announced it had lease agreements for 87 heavy-duty natural gas trucks from customers.

FedEx operates LNG trucks, as well as trucks using compressed natural gas, in Europe, the Asia-Pacific region and Latin America. Walmart said it is testing natural-gas trucks on Southern California runs.

Obama’s proposal for offering tax credits to buyers of LNG trucks would have to be approved by Congress.

Bills already have been introduced in Congress by lawmakers that would provide tax credits of up to $64,000 per truck to carriers that buy vehicles powered by natural gas. Manufacturers and those who build fueling stations also would be eligible for tax credits (11-14, p. 4).

The bills, introduced last year, are sponsored in the Senate by Majority Leader Harry Reid (D-Nev.) and in the House by Rep. John Sullivan (R-Okla.).

After the president’s Las Vegas announcement, Sullivan issued a prepared statement, saying: “Thank you, Mr. President, for finally realizing that using the cleaner, cheaper, more abundant and American-made natural gas under our feet is a good idea.”

American Trucking Associations has said it supports the legislation.

Obama told Congress in his State of the Union address: “Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure.”

The president, however, made only scant reference to the nation’s transportation system, saying he would issue an executive order clearing away the red tape that he said slows down road projects.

“But you need to fund these projects,” he told the lawmakers. “Take the money we’re no longer spending at war, use half of it to pay down our debt and use the rest to do some nation-building right here at home.”

In a statement the following day, ATA President Bill Graves took issue with the president’s approach to improving highways, saying Obama and Congress must focus on finding the funds to support the transportation system.

“What the country needs is money — money from real sources, not promises of private investment or redirected savings,” Graves said. “While promises of speeding the construction pro-cess will help in the short term, in the long term, it still boils down to funding.”

On another transportation front, the day following his speech, Obama di-rected the departments of State and Homeland Security to develop plans that will strengthen the global supply chain’s defenses against natural disasters and at-tacks from criminals or terrorists.