Auto dealers submitted strong bids for natural gas vehicles following a request by 22 states.
The states are hoping to spur demand for natural gas vehicles. Three big U.S. manufacturers and Honda were represented by dealerships in 28 states. More than 100 bids were submitted. The bids drove down the cost premium of five classes of NGVs compared with their gasoline equivalents. Demand for the vehicles, at a time when a gasoline gallon equivalent of CNG is selling for about a third of that for gasoline, cut the premium for the five vehicle classes by between 4 and 16 percent.
Governors from 13 interested states including Oklahoma, Colorado, Wyoming, Pennsylvania, Utah, Maine, New Mexico, West Virginia, Kentucky, Texas, Ohio, Mississippi, and Louisiana sent a letter to carmakers in April.
“Abundant, affordable, clean‐burning natural gas presents a tremendous opportunity for America to realize an energy future using domestic resources to fuel our nation’s transportation needs. To that end, we are committed to explore the aggregation of our annual state fleet vehicle procurements to provide an incentive to manufacture affordable, functional natural gas vehicles,” the governors wrote in the letter. “ In coordination with this letter, we are releasing to all auto manufacturers in the U.S. a request for information (RFI) intended to assist our states in gathering the necessary information for developing a multi‐state solicitation.”
Oklahoma and Colorado led the bidding initiative. Oklahoma buys 500 to 750 fleet vehicles per year. Oklahoma, a leading natural gas producer, currently has 63 public CNG filling stations, the most per-capita of any U.S. state, helping to explain its ability to sell CNG at a price well below the national average of about $2 per GGE.
Since the solicitation, demand for the vehicles has reduced the price of a three-quarter ton Dodge Ram truck converted to run on CNG by about $6,000 from its 2011 price to just under $30,000. With CNG now at about $1.35 per GGE in Oklahoma – compared with $3.63 a gallon for gasoline – the reduced purchase price will allow the owner of the converted Dodge Ram driving 15,000 miles a year to pay off the premium in two and a half years, about half the previous time.
Other states are jumping on the CNG wagon. Virginia Governor Bob McDonnell announced contractual agreements with two private fuel companies, and signed a multi-state memorandum of understanding and an executive directive advancing the effort to convert Virginia’s state vehicle fleet to alternative fuels.
“Virginia has an opportunity to lead the nation by fully committing to making a substantial contribution to our nation’s energy independence from foreign oil. The Commonwealth of Virginia owns thousands of vehicles powered primarily by gasoline or diesel fuels blended from foreign oil,” Governor McDonnell said. “In addition to reducing our nation’s dependence on foreign sources of oil, a transition to natural gas and propane vehicles will also reduce emissions. Although these alternative fuel vehicles are available and operating on our roads today, available refueling infrastructure for these vehicles is limited. The agreements signed today will bring new refueling stations to Virginia at no-cost, and they will be available to state agencies, local governments, and private citizens and businesses. These alternative fuel vehicles can and should be used by the Commonwealth to reduce the Commonwealth’s dependence on foreign oil and expand markets for domestic fuels. Not only is this good for the government and the environment, but ultimately it will be good for consumers and the economy as well.”
It is possible that the increased presence of NGVs in state, city, and local government fleets will encourage the growth of refueling infrastructure, whose relative scarcity is a major obstacle to widespread public acceptance of CNG-powered vehicles.