Can Natural Gas Become the New Gasoline?

Friday, 8 Mar 2013 | 11:27 AM ET
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Natural gas is abundant, clean and far cheaper than diesel. That has the U.S. transportation and auto industries looking for ways to kick their dependence on dirtier fossil fuels.

After years of debating how to tap domestic energy sources, new innovations in the sector have created a boom in U.S. energy production. And natural gas is now being viewed as something of a panacea for much of what ails the world's largest economy — cheaper energy could make U.S. manufacturing globally competitive again.

Indeed, natural gas was the buzz of CERAWeek, an energy conference in Houston that explores hot topics in the energy sector.

Using the fuel in conventional transportation is one avenue that appears to hold vast potential.

This week, BNSF Railway, one of the largest consumers of U.S. diesel fuel and a subsidiary of Berkshire Hathaway, announced a natural gas pilot program for its fleet of locomotives. Observers and market participants say it could be the first step toward eroding the stranglehold oil and traditional gasoline has on cars, trucks and trains.

"Natural gas is a huge boom here in the economy," Lorenzo Simonelli, General Electric Transportation president and CEO told CNBC this week. GE is currently competing against manufacturing giant Caterpillar to develop natural gas locomotives.

The energy source is "a huge opportunity", Simonelli said.

Natural gas has been slow to catch on in the auto industry, but there are tentative signs that consumers may be warming to using the cheaper fuel as an alternative to regular gas.

Nat Gas the New Diesel?
The race is on for the world's largest rail makers to make natural gas-run train, with Lorenzo Simonelli, GE Transportation president & CEO. John Hofmeister, Citizens for Affordable Energy, weighs in.

This week, auto maker Ford said it sold a record 11,600 natural gas vehicles last year — a fourfold increase from just two years ago. In recent months, General Motors and Chrysler have added natural gas pickup trucks to their automobile lines.

Honda also sells a natural gas version of its popular Civic. Analysts, however, estimate their sales are far more modest than sales at Ford.

Natural gas has its share of critics, many of which are activists who bemoan the impact the process of natural gas extraction, known euphemistically as "fracking," has on the environment.

(Read more: US Gas Exports Will Shake Up Global Market)

Still, the sector also has some high-profile backers, many of whom see it as a way to revitalize the U.S. economy and build its energy independence. It's biggest boosters include alternative energy maven T. Boone Pickens and Dow Chemical CEO Andrew Liveris.

(Read more: How the US Shale Gas Boom Could Derail China)

The glut of natural energy in the United States is "a game changer, and I think it's the story of global economic recovery if handled right," Liveris told CNBC in January on the sidelines of the World Economic Forum.

(Read more: Dow Chemical CEO: Energy Growth a 'Game Changer )

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