Natural Gas Fueled Cars: Game Changer or Day Dreamer? (UNG)
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Governors from Colorado and Oklahoma appealed to Detroit auto companies this week asking for more cars and trucks with engines that run on compressed natural gas. According to reports out of Bloomberg, 11 states have already committed to buy thousands of natural gas vehicles for their fleets. The idea is to fuel Detroit built cars with natural gas from states rich in the commodity, which some are referring to as the patriotic fuel source.
"What we want to do is be a partner to Detroit and make it so it works for them as a business proposition," said Colorado Governor John Hickenlooper during his visit to Michigan.
Thanks to advances in technology, the U.S. is now the world's largest producer of natural gas. The supply is so great, natural gas prices collapsed to 10-year lows this year.
Power companies have been quick to make the swap from coal to natural gas following the price declines, but the automotive industry is nowhere near making natural gas a viable alternative to petroleum products. Currently, there are only about 500 public CNG filling stations in the U.S. That is less than 0.03 percent of the total 159k fueling stations in America.
In November, when the 11 states first announced plans to purchase natural gas vehicles, the goal was for each state to buy 5,000 CNG vehicles each year. The federal government also has plans to use more natural gas fueled vehicles.
Insiders say that for now it is unclear whether these efforts will create real demand for natural gas fueled vehicles or if these efforts will eventually fizzle out. One thing is for sure, if the natural gas fueled vehicles 'story' make it off the drawing board and onto the assembly line in a meaningful way, it truly would be a game changer for energy in this country.
United States Natural Gas ETF (NYSE: UNG) which owns natural gas futures, is lower by 26.4 percent year-to-date. Natural gas futures trade at $2.80 per million BTU.
"What we want to do is be a partner to Detroit and make it so it works for them as a business proposition," said Colorado Governor John Hickenlooper during his visit to Michigan.
Thanks to advances in technology, the U.S. is now the world's largest producer of natural gas. The supply is so great, natural gas prices collapsed to 10-year lows this year.
Power companies have been quick to make the swap from coal to natural gas following the price declines, but the automotive industry is nowhere near making natural gas a viable alternative to petroleum products. Currently, there are only about 500 public CNG filling stations in the U.S. That is less than 0.03 percent of the total 159k fueling stations in America.
In November, when the 11 states first announced plans to purchase natural gas vehicles, the goal was for each state to buy 5,000 CNG vehicles each year. The federal government also has plans to use more natural gas fueled vehicles.
Insiders say that for now it is unclear whether these efforts will create real demand for natural gas fueled vehicles or if these efforts will eventually fizzle out. One thing is for sure, if the natural gas fueled vehicles 'story' make it off the drawing board and onto the assembly line in a meaningful way, it truly would be a game changer for energy in this country.
United States Natural Gas ETF (NYSE: UNG) which owns natural gas futures, is lower by 26.4 percent year-to-date. Natural gas futures trade at $2.80 per million BTU.
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