One of the most talked-about trucking industry trends these days is the move towards replacing diesel with natural gas. According to some industry watchers, diesel will be all but unheard of within 10 years. On the other hand, others say that natural gas is a fad that will soon go away. Who is right, and why should you care? Let’s look at those questions and see if we can find the answers.
America: The New Energy Leader
With all the talk about high fuel prices and trouble in the Middle East, one story has been largely ignored in the news media. That’s the fact that the United States is on target to be the world’s single largest producer of energy – not in 20 years, but in less than one, according to a Wall Street Journal report. And one of the largest energy sources being developed in the US isn’t oil—it’s natural gas (NG).
Since 1982, the Russians have been the champs when it came to exporting natural gas—not any more. The United States is set to surpass them by the end of 2013. This means that prices for NG, which are already lower than those for gasoline and diesel, will fall even more.
Of course, this is good news for the biggest users of NG: homeowners who rely on it to heat their homes. But it’s also a big deal for owners and operators of commercial vehicles like city busses, earth-moving equipment, and truckers. A large percentage of the heavy equipment sold today runs on NG, and that will only increase in the years ahead.
“What About The Environmentalists?”
That’s what’s so great about NG; it burns much cleaner than liquid fuels, releasing one-third to one-half as many pollutants on average into the atmosphere. This has gained it supporters among both liberals and conservatives. A vehicle can travel at least as far on the equivalent of a gallon of NG as it can on the same amount of diesel, price-wise. Plus, right now NG costs about 35% less than diesel and is expected to drop even lower in 2014.
The Chicken and Egg Problem
Skeptics about NG point to the fact that the nation’s infrastructure can’t currently support it, and they’re right—pull into your average truck stop and tell them you want to fill up on natural gas. They’ll think you’ve made one too many trips over the Rockies.
However, NG’s supporters, like billionaire energy tycoon T. Boone Pickens, are already working on the problem. Pickens is footing the bill to have NG installed at 100 Flying J truck stops coast-to-coast by the end of 2014. Also, fleets are creating NG stations at their own terminals. So the supply problem won’t be around forever.
Just as the trucking industry converted from gasoline to diesel in the 1970s, so it will do so again with NG. The change will take a while; it took six years for the gasoline/diesel switch 40 years ago. But it will happen.
What the Move Towards Natural Gas Means for Truckers
Professional drivers should expect the following things to occur in the next 5-10 years:
- NG will become the standard fuel, with diesel slowly becoming harder to find.
- Trucks with diesel engines will need to be converted to run on NG. There are companies staying very busy doing these kinds of conversions right now.
- Out-of-pocket costs for an NG conversion are rapidly coming down. Right now it will set a driver back around $10,000 – not a drop in the bucket, but much better than the former $200,000 price tag.
- An alternative is to buy a new tractor built to run on NG. That can add as much as $50,000 to the price tag at present.
- The payback for this investment comes over time. For example, a rig that puts in 90,000 miles a year could save $20,000 in fuel costs over 12 months by running on NG. So, while a natural gas truck might take more out of the pocket at first, over time it will put more back in.
Bottom line: the answer to the question “Are diesel’s days numbered?” is a resounding “Yes!” The question isn’t a matter of “if,” but rather, “when.” Don’t expect things to change in the next 12-36 months. However, if you’re planning on staying in the industry for five years or more, chances are good that your rig will one day be powered by natural gas.
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