Billionaire oil tycoon T. Boone Pickens rocked the automotive and energy industries this week with a bold plan to drastically reduce America's dependence on imported oil. His plan, in case you missed it, is to build massive wind farms to produce electricity, and to stop making electricity from natural gas. Then he wants to divert that natural gas to be used in cars and trucks.
Doing so, Pickens argues, would allow the U.S. to reduce its use of imported oil by 30 percent. Natural gas proponents point out that it burns far cleaner than gasoline, that we have abundant domestic reserves, and that depending on where you live, it sells at the equivalent of $1.50 for a gallon of gasoline.
Mr. Pickens may know a lot about the oil and gas industry. But getting people to buy cars that can run on natural gas may not be as easy as he thinks.
Car companies have always known about the advantages of compressed natural gas (CNG). They fruitlessly tried for decades to persuade people to buy CNG cars and trucks because that would allow them to immediately meet the toughest emission standards on the books. These things can meet Tier 2 Bin 2!
Until a few years ago General Motors, Ford, Chrysler, Honda, Toyota and Volvo all offered cars, trucks or vans that could run on natural gas. But today, in the U.S., Honda is the only one left that sells a CNG car. Even at that, Honda only offers one model, the Civic GX. And it will only sell them to individuals in California and New York (though fleet customers might be able to buy them in other states if they ask pretty please).
Honda boasts that its Civic GX is selling very well and that it's sold out for 2008. But to put that in perspective, it will barely sell 1,000 GX's this year.
The reason that CNG cars never caught on was twofold. First, the high cost of converting a car to run on natural gas. Second, the relative difficulty in finding where to fill the tank. I say relative difficulty because even though all major cities have natural gas outlets, it's not like they're on every other street corner. And back when gas was cheap, most people couldn't be bothered to go out of their way to find a CNG station.
Maybe that will change with gasoline at $4 a gallon, but clearly, the conversion cost is the biggest road block. A Civic GX costs $6,800 more than a comparable model with a gasoline engine.
Why so expensive? Much of the cost is in the tank, which in Honda's case is a carbon-fiber wound cylinder tucked in the trunk. It also uses special fuel injectors that are manufactured by Honda. And it uses forged pistons, because engineers boosted the compression ratio to 12.5:1, up from 10:1 on the gasoline version.
Of course, the cost can be offset by federal and state incentives. The feds offer a tax credit of $4,000, but be careful. Even Honda advises buyers that they better check with a tax accountant to make sure they qualify for the credit. The California Air Resources Board used to offer a $3,000 rebate for people who bought CNG vehicles. But that money has run out.
Honda will sell you a home refilling station, called Phil, which taps into the natural gas line in your home so you can fill the tank there. But with this method it takes 16 hours to fill an empty tank! And Phil will set you back another $5,500 including installation.
I love the fact that Mr. Pickens is coming out with a bold new plan to help this country slash its dependence on imported oil. And I truly hope that he can pull it off. I'm with him all the way. But people should be aware that when it comes to CNG cars, there's a hefty price tag that's part of the deal.