For decades we've been looking for alternatives to gasoline fuel and our dependence on imported oil. Slowly but surely, I believe, this revolution is taking some major strides forward, magnified by the rise in oil prices. Quietly, the U.S. has become one of the world's leaders in natural gas production, and prices have fallen so low that it's impossible to ignore as a potential vehicle fuel.
I would love to say that we could flip the switch and change from gasoline-powered vehicles to natural gas. The problem is that the natural gas infrastructure is decades -- at least -- behind when it comes to fuel. Gasoline fuel stations are established on almost every street in every city and on every highway across the country, and automakers have a century of experience building and servicing vehicles powered by gas. But we aren't starting completely from scratch: At least we have natural gas pipelines crisscrossing the country, so the transition may not take as long as one might think.
To make the transition to a natural gas fleet of vehicles, there needs to be major investment in infrastructure and vehicle technology. And that's where I'm beginning to see some major movement.
Clean Energy Fuels (Nasdaq: CLNE ) has a head start in building the infrastructure necessary to make a transition to natural gas. The company has 257 CNG and LNG fueling stations across the country, including more than 100 LNG truck-fueling stations that the company has dubbed "America's Natural Gas Highway." And the company is getting some competition from a big name in energy.
General Electric (NYSE: GE ) announced this week that it is teaming up with Chesapeake Energy (NYSE: CHK ) to accelerate the adoption of natural gas vehicles. GE will supply more than 250 "CNG in a Box" units to build fueling stations around the country. These are, essentially, self-contained gas stations that include a point-of-sale interface that accepts credit cards.
But what would the infrastructure mean without vehicles to fuel up? That's where Westport Innovations (Nasdaq: WPRT ) come in. The company provides the technology and equipment needed to transition vehicles to natural gas. It has partnerships with the likes of Ford (NYSE: F ) on its F-250 and F-350 trucks as well as Cummins and many other engine makers.
Manufacturers like Ford, General Motors, and Chrysler are also getting in the game, albeit at a slow pace. Ford unleashed the Transit Connect, a taxi that can use a variety of fuel sources and is already operational in Los Angeles. GM is going to offer a bi-fuel model of the 2013 Chevy Silverado and GMC Sierra.
How the transition works
The initial transition to natural gas has focused on fleets like buses, airport vehicles, and other short-distance vehicles. Slowly, the revolution is moving to semi-trucks traveling nationally as the infrastructure builds out.
This business-oriented transition will likely continue through 2012, because routes are easier to define and fueling stations can be built based on where fleets need them. But as natural gas fueling stations become more prevalent, the barrier to entry for passenger vehicles will go down. In certain big cities like Los Angeles, there are enough stations to make a passenger vehicle viable and that will should begin influencing customer purchases because of the potential fuel-cost savings.
This way of developing the natural gas fuel industry may take longer than some would like, but what it also does is set a solid, financially sound footing for the industry. Unlike electric vehicles, which were in the media's eye and had yet to overcome challenges like rage anxiety, this will probably be a healthier way for natural gas to transition to wider-spread fuel use. It isn't a national focus yet, which allows the kinks to be worked out while the industry is still small.
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