I'd been ruminating for several days about a Wall Street Journal editorial taking issue with the proposed Nat Gas Act, when this week the financial-0news icon trumpeted the information that Chrysler and  General Motors (NYSE: GM) are about to offer pickup trucks powered by natural gas. The announcement came at a time when motorists are feeling progressively pump-pinched as gasoline prices move to -- and in some cases above -- the $4.00-per-gallon inflection point where they noticeably affect the economy.

Chrysler, which is controlled by Italy's Fiat, will manufacture production-line pickups that run on natural gas, along with bi-fuel trucks that will be powered by a combination of compressed natural gas and gasoline. In GM's case, it will manufacture bi-fuel trucks beginning in the last quarter of this year. Once the company has produced the trucks, they will be sent to an outside source for retrofitting to facilitate natural gas usage. The planned vehicles will join the compressed natural gas units that Ford (NYSE: F) has manufactured -- with their tanks added externally -- for a couple of years.

We had almost forgotten how to spell "bipartisan."
Given the substantial increases in gas reserves that our nation's producers have added through technological advancements that have led to output from unconventional plays, the automakers' news has to be considered a sensible advancement. That still leaves the Journal's consternation over the Nat Gas Act, a measure with the bipartisan support of 180 House "parents," including six dozen Republicans, along with a trio of senators, including Majority Leader Harry Reid, Democrat Robert Menendez of New Jersey, and North Carolina Republican Richard Burr.

However, the paper clearly has saved its sharpest approbation for Dallas oilman and energy seer T. Boone Pickens, hence the piece's "Boone-Doggle" headline. Pickens is an avowedly strong advocate of the act's potential to push the expansion of natural gas as a transportation fuel. Possibly, along with the proposed act's design -- which would , as they phrase it, "dun taxpayers" -- the Journal's editors are likely put off by Pickens' nearly 30% ownership in Clean Energy Fuels (Nasdaq: CLNE), a manufacturer of natural gas equipment for refueling cars and trucks.

You're beautiful and you're mine
But it'd be strange if Boone -- I can call him that; I've met him -- were to oppose the heightened expansion of natural gas as a transportation fuel. As the onetime Oklahoma geologist has said for years, "Natural gas is cheap, clean, [and] abundant, and it's ours." So let's take a gander at the key provisions in the act to see whether we can locate realistic rubs. Perhaps then we'll be compelled to add some of our own rarely tentative observations:

Under the act, truck owners, from 18-wheelers to light delivery models would receive tax credits running all the way from $7,500 to $65,000 for the conversion of each vehicle to natural gas-burning capability. Further, there's a provision for a $0.50 per gallon credit for natural gas purchases during the next four years, and service stations would become beneficiaries of $100,000 tax credits for adding natural gas dispensing capabilities. According to the Journal, an average tax credit of $15,000 for each of the eight million trucks in the current U.S. fleet would set taxpayers back by more than $100 billion, not the $5 billion in the course of five years that advocates allege.

My recommendation is that both the bill's sponsors and the Journal editors rethink their numbers. Beginning with the top end of the truck owners' rebate, $65,000 appears to be, well, highway robbery. With gas currently costing as little as half of oil per gallon, and admittedly taking only a stab at a seemingly logical amount, high-end tax credits of, say, $25,000 would appear to meaningfully initiate the payback, which would then be enhanced by every gallon of natural gas burned, in the process lowering the editors' $15,000 average multiplier.

Oldsters need not apply
And then, we're presumably not drunken sailors -- itself a horrific notion, given my Marine Corps stint -- so let's not get carried away by tossing rebates at all trucks. The clear objective here is to begin to build a natural gas-as-a-fuel movement that, once it's taken root, will logically expand on its own. So perhaps credits should be awarded only for the top third of newest trucks, logically calculated by beginning with models from a relatively recent year -- thereby eliminating the editors' absurd notion of covering the entire 8 million-vehicle national fleet. After all, why provide taxpayer largesse for, say, a 10-year-old 18-wheeler that is bearing down on its final years of plying the highways?   

As the editors further note, ethanol was sold as a way to achieve energy "security," but after three decades and layouts in excess of $40 billion, it still requires government support. And despite the two-decade federal bolstering of such renewable fuels as solar, wind, and other non-hydro renewable fuels, to which tens of billions have been appropriated, they collectively still account for just 3.6% of U.S. electricity.

That's unfortunately been the track record for those programs, but as I noted to Fools just last week, natural gas is a proven transportation fuel in many far less technologically advanced countries than our own. 

Yet another position
Writing in The Washington Times the day following the appearance of "Boone-Doggle," longtime conservative writer and American Spectator founder R. Emmett Tyrell Jr. took a stab at the Journal editors for their omission of a powerful inducement for passage of the Nat Gas Act:

The way to justify the Nat Gas Act is via national security. ... America is vulnerable to terrorists, Middle Eastern instability, and unfriendly powers around the world. We have a kind of miracle that has been developed over the past few years, natural gas. By passing the Nat gas Act now we can end these threats against us. We can become an energy exporter.

My Foolish friends will recognize from my past writings that I'm in complete agreement with Terrell and, by extension, Boone Pickens. I don't judge it to be hyperbole to warn that we can consider ourselves fortunate if we're able to dodge involvement in another geopolitical conflict during the next year. An all-hands-on-deck effort to implement the Nat Gas Act would at least nudge us toward seeing our own protection -- military and financial.

The power of arbitrage
Finally, there is one key consideration that neither the typically spot-on Journal editors nor Terrell has touched upon: Our nation's natural gas prices have recently been trading in the nearly moribund vicinity of $2.50 per million British thermal units. That's resulted in a cutback in gas production at Chesapeake Energy (NYSE: CHK), and more recently other companies. Conversely, our Japanese brethren must cough up about $16 for their imported liquefied natural gas.

But as my Foolish colleague Amitabha Chakraborty has told you, Cheniere Energy (AMEX: LNG) could have the U.S. participating in the liquefaction game with shipments from Louisiana's Sabine Pass by 2015. I thereby smell a price arbitrage effect entering the global natural gas pricing picture. That could alter even Boone's best laid gas-as-a-transportation-fuel plans dramatically. Stay tuned, Fools, most likely by adding Cheniere to your version of My Watchlist.