Ryder Sees Natural Gas Fleet Adoption Threatening Diesel Demand

Ryder System Inc., the largest commercial fleet leasing company in the U.S., sees the growth of natural gas use in transportation expanding enough to affect domestic demand for diesel fuel.

Ryder is working with about 50 companies, including Sherwin-Williams Co. and Staples Inc., that are beginning to test natural gas in their trucks, Scott Perry, vice president of supply management for Miami-based Ryder, said in an interview at Bloomberg’s Houston office today. That’s up from 12 two years ago, he said.

The degree to which companies are embracing natural gas as a transportation fuel means its use will keep growing and supplant some diesel demand, Perry said. He said development of fueling stations, truck engines and lower-cost manufacturing capabilities is also rising.

“We absolutely see that,” said Perry, who was in Houston for a symposium and an event at Rice University. ’’There are so many positive variables there’’ including abundant supply, environmental benefits and cost, he said.

Growing use of natural gas vehicles may cut global gasoline and diesel demand by 1.5 million to 4.5 million barrels a day, Martijn Rats, an analyst at Morgan Stanley in London, said in an April 16 note to clients.

Perry said builders of medium- and heavy-duty engines have told Ryder that they anticipate that 30 percent of their manufacturing capacity will move to natural gas engines in the next three to five years.

One remaining barrier to widespread adoption is the development of natural gas storage tanks for use aboard actual trucks, he said. Natural gas use in vehicles is growing most quickly in states such as California and Texas where fueling stations are being built quickly, Perry said.

Before it's here, it's on the Bloomberg Terminal.