13 Governors ask auto leaders for CNG plan

Oklahoma Gov. Mary Fallin is one of 13 state Governors who are asking auto manufacturing chiefs to send them a plan provide the states “a cost-saving measure for states and a means to incentivize the manufacture of affordable and functional CNG (Compressed Natural Gas) vehicles.”

In April, the 13 Governors sent letters to the chiefs of General Motors, Ford Motor Co., Volkswagen Group of America, Volvo Car Corp., Chrysler Group, Mack Trucks and 14 other heads of major auto companies based or operating in the U.S. (Link here to the PDF of the letters sent from the Governors.)

Participating state Governors were from Oklahoma, Colorado, Wyoming, Pennsylvania, Utah, Maine, New Mexico, West Virginia, Kentucky, Texas, Ohio, Mississippi and Louisiana. Arkansas Gov. Mike Beebe chose not to participate in this initial effort.

Fallin and Colorado Gov. John Hickenlooper spearheaded the effort that seeks to “establish the demand and incentive for auto manufacturers in the United States” to design and build a “suitable CNG-powered passenger vehicle that can be used both by public fleets and private sector consumers.” Fallin and Hickenlooper were scheduled to be in Detroit today (July 16) to meet with auto industry leaders. Oklahoma Secretary of Energy Michael Ming and Oklahoma Secretary of Commerce Dave Lopez were set to be a part of the trip.

“The development of CNG vehicles continues to be hampered by a ‘chicken and egg’ scenario. Consumers won’t buy CNG vehicles while there is limited fueling infrastructure and high vehicle price points, and manufacturers won’t wade into the market if there is not sufficient consumer demand,” Fallin noted in a statement announcing the Detroit visit. “Purchasing vehicles for state automobile fleets will help encourage the development of fueling infrastructure and break through the barriers holding back the development of CNG vehicles. The end result will be an initiative that will pave the path toward the development of a product that has the ability to save money on transportation costs for both state government and families.”

Beebe spokesman Matt DeCample said Arkansas was approached to join, but state officials were in the midst of a review to determine “how best to approach” a significant change in how state vehicles are fueled.

DeCample also said the issue is the “classic chicken and egg” debate, in which state officials must decide what to do first: invest in CNG vehicles or CNG infrastructure?

As to eventually joining the multi-state plan, DeCample said Beebe “wouldn’t discount it entirely.”

Arkansas has made some progress toward pushing CNG use.

In January, the Arkansas Energy Office issued several grants, including $470,000 to help fund two compressed natural gas (CNG) fueling stations in Arkansas. Satterfield Oil Co. received $235,000 to add CNG to an existing station in Conway. The city of Little Rock received $235,000 to add CNG to an existing fueling station. There were already CNG fueling stations in Fort Smith, North Little Rock and Damascus.

The AEO has also extended the deadline for an individual CNG rebate program, with the new deadline set at Jan. 31 to apply for matching funds to convert a vehicle to CNG.

But Mike Callan, president of Fort Smith-based AOG and a vocal advocate for CNG use, believes Arkansas should do more.

“I believe the efforts of these governors will have an impact by creating a predictable market for CNG/LNG vehicles. Manufacturers will respond. Oklahoma is already light years ahead of most states in embracing CNG and establishing infrastructure,” Callan explained.

Callan provided several reasons why he believes broader CNG adoption use will eventually benefit state governments and the average consumer.
• Utilization of CNG and/or liquefied natural gas (LNG) will lower the states' operating costs (CNG currently about $1.34 per gasoline gallon equivalent) and will create a more diversified market for commodity which produces revenue to the state coffers.

• The U.S. consumes somewhere between 15 and 18 million barrels of oil per day, much of which is produced by countries or regimes which are dedicated to our destruction. Switching to reliance on a domestically produced fuel, fossil or otherwise, makes sense.

• If we simply reduce oil consumption by 1 million barrels per day by switching to natural gas, we push $26 billion of savings to American consumers annually.

“AOG is a very small company as utilities go. However, in the first six months of this year, AOG consumed 21,500 gasoline gallon equivalent (GGE) of CNG and sold an additional 29,000 GGE to vehicle fuel customers,” Callan said.

Continuing, Callan said: “I am obviously opining from a biased position, but I do believe Arkansas should join this effort. Success will benefit Arkansas for the same reasons stated above; an enhanced market for a revenue producing natural resource produced in the state and a savings in fuel costs for state owned as well as privately owned vehicles.”

Hickenlooper said the states have the market power to change the dynamic, and believes meeting with auto leaders will push that change.

“We believe there will is strong interest in natural gas vehicles and we want to leverage the collective purchasing power of state fleets to jumpstart that market. These meetings will help establish a mutually beneficial partnership between the 13 states on the agreement and the auto companies.”