Did Ford Just Put Natural Gas Into Overdrive?

The potential for natural gas vehicles has long been simmering just below the surface. Commercial and industrial companies are quickly adopting the alternative fuel source, with Procter & Gamble (NYSE: PG  ) , for example, announcing last month that it would be converting 20% of its for-hire fleet to nat gas over the next two years. 

While Clean Energy Fuels (NASDAQ: CLNE  ) has been doing its part by building out a network of refueling stations that largely service the trucking market , the whole industry may have been pushed into overdrive by Ford (NYSE: F  ) announcing it would introduce a natural gas version of its highly popular F-150 pickup truck for 2014.

The F-150 is the industry's most popular vehicle (I've got one) and sales surged 24% in June, its best showing since 2006, as it sold more than 235,000 trucks. It marks nearly two straight years' worth of consecutive monthly increases in sales. Last year, it sold 645,000 F-series pickups, better than the combined 575,000 sales of General Motors' (NYSE: GM  ) Chevy Silverado and GMC Sierra trucks.

AT&T (NYSE: T  ) notes it's halfway to reaching its goal of having 15,000 alt-fuel vehicles on the road by 2018 and recently purchased 650 F-350 heavy-duty trucks, which it says helped it avoid purchasing 7.7 million gallons of gasoline over the past five years. Ford itself has sold some 15,000 CNG/LPG vehicles this year alone, up 25% from 2012.

So introducing a natural gas version of the light-duty truck has the potential to move the industry out of the breakdown lane, though I'm not sure we're ready to hit the passing lane just yet.

Ford will equip the F-150s with factory-installed valves, pistons, and rings capable of handling natural gas and gasoline as a $315 option, but purchasers will still be responsible for retrofitting through factory-approved installers new fuel tanks, lines, and injectors that will run another $7,500 to $9,500.

Yet Ford points out that compressed natural gas currently costs on average about $2.11 a gallon, with prices in some areas as low as $1 per gallon. In contrast, unleaded regular fuel is $3.66 per gallon. According to some admittedly old data from the Energy Information Administration, the average household purchases around 1,100 gallons of gas per year, so with a savings of around $1.50 per gallon, all things being equal, it will take around 10 years to pay off the conversion.

Moreover, the CNG tank is typically mounted in the bed of the truck, meaning its full use is diminished.

While the news is more than just a step in the right direction, it won't exactly put the pedal to the metal. While I'm convinced natural gas will be one of the main drivers for future economic expansion here at home, the industry is still stuck in traffic at the moment even though Ford is doing its best to clear the road ahead.


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2571363, ~/Articles/ArticleHandler.aspx, 8/22/2014 11:54:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement