Report Finds Growth of Natural Gas Vehicles (NGVs) Would Not Cause Spike in Natural Gas Prices

  Report Finds Growth of Natural Gas Vehicles (NGVs) Would Not Cause Spike in
  Natural Gas Prices

Business Wire

WASHINGTON -- April 11, 2013

A new study from the American Clean Skies Foundation (ACSF) finds that a
transition to natural gas-fueled heavy duty and light duty vehicles over the
next decade will have a minimal impact on natural gas prices.

The report, “Driving on Natural Gas: Fuel Price and Demand Scenarios for
Natural Gas Vehicles to 2025,” used three scenarios to calculate potential
natural gas demand and price impacts attributable to natural gas vehicles
(NGVs).

“We found that the estimated level of natural gas demand from NGVs, even under
the most optimistic scenario, accounted for only about 2 percent of the
overall market by 2025,” said Gregory C. Staple, ACSF’s CEO and co-author of
the report. “And the incremental rise in fuel prices for this high growth
scenario was only approximately 25 cents per MMBtu, or 5 percent.”

“That’s largely because we expect the growth in natural gas vehicles over the
next decade to provide adequate time for supply and infrastructure
developments to keep pace with demand, and thus to moderate any incremental
natural gas price impact,” Staple added.

ACSF’s optimistic growth scenario included high adoption rates of both light
duty and heavy duty NGVs. In this scenario, the transportation sector’s
natural gas demand grew from 57 billion cubic feet (Bcf) in 2013 to 711 Bcf in
2025, which equates to roughly 2.3 percent of total demand that year. The
scenario estimated roughly 2.4 million NGVs on the road by 2025, of which
480,000 are heavy duty trucks. The effect on 2025 natural gas prices across
the scenarios ranged from an additional 3 cents to 27 cents per MMBtu.

The report highlights the opportunity to diversify America’s transportation
sector away from petroleum-based fuels. Currently, 93 percent of the country’s
transportation fuel is petroleum based, leaving the economy susceptible to oil
price shocks. In the report’s highest NGV growth scenario, more than 180
million barrels of petroleum fuels are displaced by natural gas in 2025 and
almost 1 billion barrels of oil consumption avoided cumulatively from
2013-2025.

Report co-author Patrick Bean said, “Our analysis should give businesses,
consumers, regulators and political leaders confidence that a plausible
transition to NGVs can achieve energy security objectives while having minimal
impact on natural gas prices and competition for the fuel.”

The report also found that retail prices for compressed natural gas (CNG) and
liquefied natural gas (LNG) will remain attractive compared to diesel and
gasoline even if natural gas prices increase significantly. Currently, about
20 percent of the retail CNG price is attributable to the raw natural gas
cost. Even if natural gas prices double from $4/MMBtu to $8/MMBtu, the
commodity component of retail CNG prices will be about 40 percent, and CNG
will cost about $2.20 per gallon of gasoline equivalent.

ACSF retained Navigant Consulting, Inc. to partner in the scenario development
and to conduct some of the analysis. The report includes data tables with
assumptions and results.

Copies of the report can be downloaded here:
http://www.cleanskies.org/natural-gas-pricing

Established in 2007, the American Clean Skies Foundation seeks to advance
America’s energy independence and a cleaner, low-carbon environment through
expanded use of natural gas, renewables and efficiency. The Foundation is a
not-for-profit organization.

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Contact:

American Clean Skies Foundation
Jack Deutsch, 202-682-6294
Communications Director
jdeutsch@cleanskies.org