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although economies of scale in production have helped cut
the differential to $47,000 today from $85,000 to $95,000
per truck in 2007, according to Peter Grace, senior vice
president for Clean Energy Fuels Corp., a Newport Beach,
Calif.-based company that builds and manages infrastructure for CNG and liquefied natural gas (LNG) fueling.
Private fleets, dedicated contract carriers, and for-hire
carriers that have committed to large-scale investments
plan to see them through, confident that an eventual return
to higher oil prices will bear out the wisdom of their strategy. By contrast, firms on the fence two or three years ago
are either still straddling or have pulled back. “They are
taking a wait-and-see approach,” said Patti M. Murdock,
a former transport executive at Cincinnati-based Procter
and Gamble Co. and head of Clean Logistics Consulting,
which advises companies on alternative energy solutions
for transportation and logistics services.
Bill Renz, general manager of U.S. Gain, an Appleton,
Wis.-based provider of CNG fueling and infrastructure
services, said the drop in oil prices has put many fleet conversion plans on hold. But those already running on CNG
continue to grow their fleets, Renz added. “In general,
we’ve seen a shift from smaller fleets moving to CNG to
much larger corporations making the move, so our overall
growth hasn’t slowed down,” Renz said in an e-mail.
Those who are pressing forward are couching their
investment in terms of environmental, rather than economic, benefits. Belgian brewing giant Anheuser-Busch
InBev said in August it was replacing its St. Louis tractor
fleet of 97 diesel-powered rigs with CNG-powered rigs.
Last year, the company switched out its entire Houston-based fleet of 66 diesel tractors for CNG. (Approximately
30 percent of Anheuser over-the-road tractors now run on
natural gas.) In its statement announcing the changes in St.
Louis, Anheuser emphasized the value of reducing green-house-gas emissions. There was no mention of cost savings.
Shippers that aggressively pushed their carrier partners
to convert to natural gas when oil prices were higher have
since backed off. Spending on the refueling infrastructure
has slowed so far this year, though a huge project backlog
from 2014 ensured that work would continue in earnest
well into 2015. As a result, the one component long seen
as the biggest impediment to the growth of the CNG
heavy-duty truck market is in better shape now than it has
ever been, Murdock said.
Sales of big CNG rigs during 2015 have been roughly
on par with 2014 levels, but that’s considered a victory of
sorts considering how the sharp decline in oil prices could
have deflated CNG’s value proposition. Cummins Inc., one
of the manufacturers of the 12-liter CNG engines used by
heavy-duty fleets, will sell 3,000 to 3,500 engine units this
year, about the same as last year, according to William
Zobel, vice president, market development and strategy, for
Trillium CNG, a Salt Lake City-based fueling-services and
filling-station–design company. “The market is still maintaining momentum” despite unfavorable macro trends,
Zobel said in a phone interview.
Those involved in the CNG space remain optimistic,
believing natural gas’s historical price stability (it has traded
in a tight range for more than a decade, except for late 2005
after hurricanes Katrina and Rita shut down Gulf Coast
supply lines, and mid-2008, when all energy prices spiked),
its environmental benefits, and its abundant domestic production will remain appealing factors. Private fleets and
dedicated carriers remain committed to CNG, they contend. “The feedback we’re getting is that they’re all in,” said
Grace of Clean Energy.
Then there is the price of oil itself: Most in the CNG field
are biding their time, confident that oil and fuel prices will
eventually rise, and, if there is a supply shock due to unrest
anywhere in the oil-producing world, that the increase will
be violent. Over the last eight years, which include the sharp
fall in the past 16 months, diesel prices have averaged $3.44
a gallon, according to Grace.
Still, the best guess is that, barring unexpected events,
oil prices will stay around current levels—or perhaps go
lower—for the next year or two. That has led DelBovo of
Saddle Creek Transportation to engage in unconventional
thinking. “I’m probably the only person in America hoping
for oil prices to rise,” he mused.
