The new 2015 bi-fuel Chevy Impala. Source: General Motors.

Americans have lived in a world dominated by gasoline-powered vehicles for nearly 100 years. There are robust biofuels programs in place that attempt to lower gasoline consumption, but the nation's overwhelming dependency on gasoline fuel creates some scary risks, some of which showed their ugly heads in the summer of 2008. Luckily, there is increased investment and attention being paid to the development of alternative vehicles that run on electricity or natural gas fuels. They may sit at a distinct disadvantage when it comes to infrastructure today -- gasoline had a multi-generational head start -- but several companies are breaking down walls to lower costs and increase availability. That's especially true for natural gas vehicles, or NGVs.

For instance, natural gas driller EQT Corporation (NYSE:EQT) is shuttling natural gas from major resource basins to nearby cities that can catalyze NGV usage to grow the market from the bottom up, Clean Energy Fuels (NASDAQ:CLNE) is tackling a nationwide distribution network focusing on commercial trucking fleets, and General Motors (NYSE:GM) now offers a mass-market NGV in its 2015 Chevy Impala. The more investors look at the situation, the more it appears to be beyond mere hype. These three companies aren't forcing the issue, either. There are three major factors supporting the expansion and use of natural gas fuels for vehicles: price, energy content, and environmental footprint.

Driving force No. 1: Price
On a gasoline gallon equivalent (meaning equivalent energy to 1 gallon of gasoline), the average national selling price of compressed natural gas, or CNG, is just over $2 per gallon. The only fuel cheaper is electricity, but CNG remains well below diesel, biodiesel, and ethanol. If you ever wished you could turn back the clock to a time when gasoline prices were that low, then grab your flux capacitor and hop into a natural gas vehicle.

Price -- powered by the abundance of natural gas -- is the key reason commercial trucking fleets are turning in gasoline and diesel engines in favor of those powered by CNG, which is the underlying factor supporting the distribution network expansion at Clean Energy Fuels. Plenty of work needs to be done before NGVs comprise a representable share of the nation's commercial or household transportation fleet. In the past, change has come easier for more densely populated areas, but newly announced incentives by the U.S. Environmental Protection Agency aimed at developing biogas resources at landfills and wastewater treatments facilities should drive expansion even further.

Source: Clean Energy Fuels.

It's estimated that one in five transit buses in service today runs on natural gas. In fact, all buses in Los Angeles County -- more than 2,000 total -- use natural gas supplied by Clean Energy Fuels. The fleet saves the city over 300,000 pounds of greenhouse gas emissions every day, saves over 600,000 GGEs every year, and has reduced particulate matter by 80% compared with diesel buses.  

Driving force No. 2: Energy content
While abundance keeps prices low, boasting high energy content doesn't hurt, either. Consider that premium gasoline has an octane rating of 91, while CNG can be as high as 130. In other words, if natural gas had an octane rating equivalent to regular gasoline, current market prices would "surge" to nearly $3 per gasoline equivalent gallon.  

The high energy content of natural gas fuels makes it possible for automakers such as General Motors not to compromise on driving range with NGVs despite the early stages of technological development. In fact, CNG offers slightly better fuel economy than gasoline for bi-fuel vehicles (cars and trucks capable of using both gasoline and natural gas fuels). Take the 2015 bi-fuel Chevy Impala as an example. The vehicle's gasoline tank offers 18.9 miles per gallon, but its natural gas tank offers 19.5 miles per gallon. General Motors is also using NGVs to not only match, but also boost, driving ranges. The 2015 bi-fuel Chevrolet Silverado offers a combined driving range of 650 miles -- more than double the range of the previous year's gasoline-only model -- while the Impala offers nearly 500 miles combined. Drivers have to make only minor sacrifices when it comes to cargo space.

Driving force No. 3: Environmental footprint
It gets better. Higher energy content means increased engine compression, which means higher efficiency (thanks to the chemical makeup of natural gas) and a greatly improved environmental footprint. According to EQT Corporation, natural gas fuels offer the following emissions reductions over petroleum-based fuels:

  • Particulate matter emissions by as much as 77%.
  • Nitrogen oxide emissions by as much as 94%.
  • Volatile organic compound emissions by as much as 55%.
  • Carbon monoxide emissions by as much as 90%.
  • Greenhouse gas emissions by as much as 29%.

Couple reduced tailpipe emissions with natural gas fuels produced from biogas, and NGVs look substantially greener than gasoline vehicles.

Foolish bottom line
Let's be honest: It will take many years for NGVs to make a splash in the market. However, concerted commercial efforts and investments are being made throughout the value chain, from natural gas drillers to suppliers to automakers. Investors will have to endure the short-term ups and downs associated with any emerging market, but they should be comforted in the long-term opportunities being solidified with big, bullish bets made today.