Diesel prices are up, and natural-gas prices are down. Will truckers ditch diesel for natural gas?
Rising diesel costs last year forced Waste Management Inc. to charge customers an extra $169 million, just to keep its garbage trucks fueled. This year, the nation’s biggest trash hauler has a new defensive strategy: it is buying trucks that will run on cheaper natural gas.
In fact, the company says 80% of the trucks it purchases during the next five years will be fueled by natural gas. Though the vehicles cost about $30,000 more than conventional diesel models, each will save $27,000-a-year or more in fuel, says Eric Woods, head of fleet logistics for Waste Management. By 2017, the company expects to burn more natural gas than diesel.
“The economics favoring natural gas are overwhelming,” says Scott Perry, a vice president at Ryder Systems Inc., one of the nation’s largest truck-leasing companies and a transporter for the grocery, automotive, electronics and retail industries.
The shale gas revolution, which cut the price of natural gas by about 45% over the past year, already has triggered a shift by the utility industry to natural gas from coal. Vast amounts of natural gas in shale rock formations have been unlocked by improved drilling techniques, making the fuel cheap and plentiful across the U.S.
Although the U.S. has loads of natural gas, adoption of natural gas vehicles has been spotty. Less than 0.1% of vehicles on American roads burn the fuel today and the percentage sagged slightly from 2005 to 2010, when federal policies encouraging their use waned. The number began edging up last year, lifted by market forces.
Meanwhile, in the Asia-Pacific region, natural gas vehicle sales have grown at an average annual clip of 42% during the past decade, according to NGV Global, a trade group formed in 1986 to promote gas-friendly policies. Pakistan led the list in 2010 with 2.7 million natural gas vehicles, though many are tiny tuk-tuks, out of a total of 13 million natural gas vehicles worldwide. The U.S. came in 14th with 112,000 natural gas vehicles.
The potential market is enormous. The 3.2 million big rigs on U.S. roads today burn some 25 billion gallons of diesel annually. Almost 7 million single-unit trucks, such as UPS or FedEx Corp. trucks, consume another 10 billion gallons of diesel.
Converting even a modest number of these trucks, which often get 5 to 8 miles a gallon, to natural gas could save significant amounts of money. Tailpipe emissions also would drop, since natural gas burns cleaner than diesel or gasoline.
If large numbers of fleet operators decided to embrace natural gas, it could rev up truck manufacturing, which slowed dramatically during the recession. North American heavy duty truck sales peaked in 2006 with 360,000 units, just ahead of tighter emission standards, and plunged to 110,000 units in 2009.
Noel Perry, principal at Transport Fundamentals Inc., a trucking research company in Lebanon, Penn., says one disadvantage of natural gas is that it isn’t as dense as diesel. CNG is only 25% as dense and LNG is 60% as dense. That means trucks need more tanks or bigger tanks to go as far, or they must refuel more often. That’s not a big deal for city buses or delivery trucks that go back to home base each night, where they can refuel. But it’s a problem for trucks that drive unpredictable routes or venture out into the hinterland.
As a meta note, I find it interesting how the vital information — the list of trade-offs between diesel and natural gas — comes at the end of the article.