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Pickens Plan Stirs Debate, and Qualms
Kate Galbraith | 05 Aug 2008 | 02:29 PM ET
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California automobile dealers report long waiting lists for a Honda Civic that runs on natural gas. In Utah, where natural gas is especially cheap, drivers are scouring the Internet for vehicles that burn it. In Washington, members of Congress are eagerly filing bills favoring natural gas cars.

In other countries, interest has been rising for years in running passenger cars on the cleanest of fossil fuels, natural gas. Now, in an era of $4 gasoline, some Americans seem to be waking up to the possibility if it might save them money.

The attention is partly, but not exclusively, because of the efforts of Boone Pickens, the billionaire Texas oilman and onetime corporate raider (Pickens discusses his plan in the video below). “You have only one fuel that will reduce the oil imports, and you have it in abundance,” Mr. Pickens said in a recent interview aboard his Gulfstream jet as it streaked from Washington to Dallas — not propelled, alas, by natural gas.

Mr. Pickens earned Democrats’ ire for backing the “swift boat” attacks that helped defeat John Kerry, their presidential nominee, in 2004. At 80, Mr. Pickens has decided to play a markedly different role in this election, committing $58 million to a marketing campaign that he hopes will force the presidential candidates into a discussion of his ideas.

Fearing that reliance on foreign oil poses national security and economic risks, Mr. Pickens argues that natural gas produced in North America is a “patriotic” fuel that should be used for trucks and automobiles.

Perhaps not coincidentally, Mr. Pickens’s plan aligns with his own business interests. He is the founder and chairman of an energy-focused investment fund, BP Capital, as well as the majority shareholder in Clean Energy Fuels, a company that supplies fuel for natural gas vehicles.

Mr. Pickens’s plan also includes a bid to foster wind power, which he believes could free up some of the natural gas now used for electricity generation. He is one of the country’s biggest investors in wind generation.

With advertisements about them running on television and in print, his ideas are generating broad discussion. But the notion of a mass migration to natural gas vehicles — now less than 1 percent of the country’s highway fleet — is not universally welcomed. Some analysts say he is underestimating the costs as well as the problems.

Large industrial users of natural gas, like chemical companies and utilities, have been struggling with gas prices that have sometimes spiked to extraordinary levels in recent years, and they would not welcome a new source of demand.

“We don’t believe natural gas makes a good transportation fuel,” said Rich Wells, vice president of energy at Dow Chemical [DOW  Loading...      ()   ].

In addition to Mr. Pickens’s push, two bills recently introduced in Congress seek to jump-start production of natural gas vehicles through tax credits and other incentives.

Natural gas is cleaner than gasoline, and at the pump it can cut the cost of transportation fuel by nearly half. However, it can cost thousands extra to buy or convert a vehicle for natural gas. Mr. Pickens claims gas could displace 38 percent of the oil the nation imports, but that would require the sale of tens of millions of vehicles.

“There’s a role for natural gas,” said David Friedman, research director for clean vehicles at the Union of Concerned Scientists, an advocacy group. “It’s just that Pickens’s scale is way off the charts.”

The immediate problem is a lack of fuel pumps. Without them, drivers will not buy natural gas cars. Without the cars, service stations will not go to the trouble of installing pumps. The few people buying these cars often use home refueling kits that cost thousands.

Another problem is limited vehicle range. The Honda Civic GX, the only such passenger car on the market in the United States, goes only 250 miles on a tank, half the range of many cars. With few fueling stations, drivers on long trips would risk being stranded. Honda is selling the GX only in New York and California, mainly to commuters and for fleets.

Amid limited public interest, Ford [F  Loading...      ()   ] stopped selling natural gas vehicles in the United States in 2004, and General Motors stopped production last year. Higher gasoline prices, however, could alter the calculations, and the car companies are monitoring public interest.

“Times have changed since we exited the business and, given the current price of oil, the economics may be different,” said Kyle Johnson, a spokesman for General Motors [GM  Loading...      ()   ], in an e-mail message.

This year’s gasoline price spike, to an average of $4.11 a gallon in mid-July, prompted some consumers to look at alternatives. Some are clamoring for the Civic GX, which is eligible for tax credits and allows single drivers to use high-occupancy vehicle lanes in some areas.

“I think we have 8 cars coming and 55 people on the list,” said Kathie Paulsen, a spokeswoman for Colonial Honda, a dealer near Los Angeles.


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