By Ben Geman - 06/21/12 04:05 PM EDT
“Liquefied natural gas for heavy-duty trucking cracks the classic chicken-and-egg cycle that plagues new transportation technologies and fuels,” said Tiffany Groode, director of the IHS Automotive Long-Term Planning and Scenarios Service, in a statement. “The route is known, the mileage is high and economics is the primary decision factor.”
Billionaire energy magnate T. Boone Pickens and lawmakers including Senate Majority Leader Harry Reid (D-Nev.) have championed legislation that would provide various incentives for nudging the trucking industry toward natural gas, calling it a way to enhance energy security by curbing oil reliance.
But the bipartisan legislation has not advanced amid resistance from conservative groups that are influential in GOP circles.
The ongoing U.S. natural-gas drilling boom has created a supply glut that helped push prices to 10-year lows earlier this year, although prices have been moving upward of late.
Here’s a summary from IHS CERA:
The nature of the heavy duty trucking fleet makes it possible for operators to take advantage of retail LNG prices that were as low as $1.70 equivalent to a gallon of diesel (DGE) in April of 2012 compared to diesel, which is expected to average $3.91 per gallon over the next five years. The price differential makes the higher incremental costs of LNG heavy duties vehicles—which range from $40,000-$75,000 more than diesel-fueled trucks—economical ...
The IHS CERA report finds that LNG heavy duty trucks would recoup the initial costs of the investment in three years without government incentives.
The report nonetheless notes that a series of hurdles stand in the way of using natural gas for heavy trucking.
“These include a lack of LNG retail, uncertainty over future government support and the need for new training and logistics. Hardware maintenance, availability of replacement parts and the long-term durability of the cryogenic fuel tanks are also factors that need to be addressed,” a summary of the report states.