Subsidies not needed for natural gas coversion

Bloomberg Editorial:

Few areas of American governance have been as incoherent in recent decades as energy policy, which is saying something. But lately, we keep seeing reasons for optimism.

Almost miraculously, the U.S. is both reducing its greenhouse-gas emissions and becoming increasingly energy independent. As Bloomberg News recently reported, the share of U.S. energy demand met by domestic sources increased to 81 percent through the first 10 months of 2011 -- the highest level in 20 years -- and emissions are expected to decline 12 percent by 2020.

A major factor in both trends is increased use of natural gas, a cleaner-burning fossil fuel now being extracted in abundance across the country. Hydraulic fracturing, a new production technology also known as fracking, has helped push prices for the fuel to a decade low, and has created plenty of jobs in the process.

Inevitably, a large lobbying effort has attached itself to this booming business, advancing buoyant visions of an America free of Middle East oil, cleansed of carbon pollution and humming with new natural-gas-powered vehicles -- if only Congress would provide a few billion in tax credits to get the industry on its feet.

Natural gas has many advantages -- which is exactly why the industry doesn’t need more government help.

Proponents of federal aid argue that the costs of switching to natural gas on a large scale are prohibitive for trucking companies and consumers. But as Bloomberg News has reported, trucking companies are already buying more long-haul natural-gas trucks simply because the fuel is so cheap. Annual savings over diesel can add up to $20,000 for a single truck -- so a company can recoup the extra cost of the new technology in about two years.

On the consumer side, Chrysler Group LLC and General Motors Co. recently announced that they plan to build pickups that use compressed natural gas, joining Honda Motor Co., which sells a version of the Civic that runs on the fuel.

To meet increased demand, companies are building infrastructure on their own: Clean Energy Fuels Corp., which provides natural gas fuel for transportation, plans to build 70 liquefied natural-gas stations by the end of the year. General Electric Co. and Chesapeake Energy Corp. have formed an alliance to help make compressed natural gas available at more filling stations. Honda plans to install fueling stations at some of its dealerships. Fleets of taxis, trucks and buses across the country are using the fuel in growing numbers.

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Texas has a program for school buses to run on natural gas.  With the price so low for natural gas it makes sense for some heavy duty drivers to make the switch without distorting the market with subsidies.  People who have natural gas in their homes can also buy kits that allow them to fuel their vehicles that run on natural gas.