New hope for natural-gas autos: Colorado is among 22 states aligning to promote natural-gas vehicles-and the infrastructure such a movement would require.

• Author: Peterson, Eric
• Position: COVER STORY

NATURAL GAS IS DOMESTIC AND CHEAP AND CLEAN, SO THE STORY GOES. SO WHY ARE WE STILL GUZZLING GASOLINE IN OUR CARS INSTEAD OF SIPPING NATURAL GAS?

There are no easy answers, but Colorado Gov. John Hickenlooper has reached across party and state lines in search of one.

To push for the adoption of natural gas as a transportation fuel, Hickenlooper, a Democrat, signed a November 2011 memorandum of understanding (MOU) with Oklahoma Gov. Mary Fallin, Wyoming Gov. Matt Mead, and Pennsylvania Gov. Tom Corbett-all Republicans. The MOU has a stated goal "to attract automobile manufacturers in the U.S. to develop a functional and affordable original equipment manufacturer (OEM) fleet natural gas vehicle (NGV) that will also meet public demand."

The states committed to buy NGVs for their state fleets to buoy local natural gas producers and give the broader market a boost. Hickenlooper traveled to Detroit last July to discuss the issue with the auto industry's leaders, and the conversation continued when manufacturer representatives visited Colorado in August.

"This bipartisan effort demonstrates the ability of government to work together to secure energy independence for the U.S.," says Tracee Bentley, the Hickenlooper administration's director of policy and legislation. "Vehicle procurements on this scale provide economic development, promote jobs and utilize a lower-cost, cleaner burning fuel. The MOU is moving the transportation industry in a good direction."

EARLY REWARDS OF THE MOU

Since the MOU's genesis, 18 additional states have signed on, bringing the grand total to 22 states stretching from Maine to Utah. In 2013, the strategy is starting to bear fruit.

Oklahoma's bid prices for NGVs and bifuel vehicles that can run on either natural gas gasoline dropped by about 10 percent to 20 percent in 2013. The Sooner State's price tag on the Honda Civic GX, the only OEM-made light-duty NGV on the U.S. market. fell from about $31.000 to $25,000. The bi fuel Dodge Ram 2500 Crew Cab from $36,000 to just under S30,000.

In Colorado, the early results oil he MOU have been less pronounced, but the state bids for the bifuel Ford F-250s were clown more than 15 percent, while the bid for the Civic GX remained the same at $25,557.

But incremental cost dropped by 11111Ch higher percentages, making NGVs an easier sell for high-mileage fleet operations. Also important for fleets, the breadth of options has widened: Colorado can choose from two light-duty NGVs and 15 blind trucks and vans in 2013, up from only five in 2012.

Thanks to historically low natural gas prices, the payback for fleet vehicles could be a, little as two or three years. Estimates hold that Colorado would save $20,000 in fuel over live years with the compressed natural gas (CNG) Dodge Ram, but it costs about $10,000 more than a gasoline Ram.

"Natural gas is attractive because it's cheap." says Alex Schroeder. senior manager fur transportation fuels at the Colorado Energy Office. "Fleets and businesses are doing this for economic reasons." The volatile economics of petroleum-based fuel "is lifting all boats" in the uncharted alternative-fuel waters.

California and Utah are ahead of the curve, but "Colorado is catching up," Schroeder says. But if. 22 states start aggressively buying NGVs for their fleets, he adds, Now you're talking numbers the manufacturers can respond to. It starts with the fleets. The big step now is implementation."

Broader consumer adoption will take longer, Schroeder says. "That's not something that's going to happen overnight. We've been using petroleum for 100 years." A five-year development cycle is the norm for the auto industry. and...