By the mid-1990s
not only in California but in the rest
achieving success in the high fuel-
of the United States.1 6 5
use market is to target fleets.
it was evident
Emphasis will be on developing
that natural gas
By the mid-1990s it was evident that nat-
products and technologies that sat-
and propane
ural gas and propane vehicles were winning
isfy customer needs. . . . This strategy
the alternative-fuel battle but losing the
does not encourage additional gov-
vehicles were win-
motor fuel war. While Ford, General
ernment mandates, or broad rate-
ning the alterna-
Motors, Chrysler, Honda, Toyota, and
based financing by the gas industry
Volvo offered select natural gas models as
for NGV refueling infrastructure. . . .
tive-fuel battle
either dedicated or dual-fuel vehicles, sales
NGVs must . . . meet the needs of its
but losing the
stakeholders and the marketplace.1 6 7
to the general public were rare, and com-
motor fuel war.
mercial fleet sales were difficult. While
some fleets were converting in the worst air
A number of developments were behind
quality markets such as Los Angeles and
the retreat to a niche market. Some nonat-
New York City, fleet conversions were more
tainment areas such as Houston tried and
the result of mandates or special incentives
abandoned gas-powered vehicles in their
than of market calculation. Several thou-
light-duty and heavy-duty fleets. Enron
sand dollars in up-front costs for dedicated
Corp., the "world's first natural gas major,"
or converted vehicles, a lack of refueling
abandoned its transportation program in
infrastructure and maintenance facilities,
1995 after two years of effort. The competi-
limited driving range, extra onboard stor-
tion from reformulated gasoline in recon-
age requirements, extra weight lowering car
figured engines was also rapidly raising the
performance, and falling gasoline and
bar. A headline on page 1 of the February
diesel prices were barriers to entry. A study
19, 1996, issue of Natural Gas Week told this
by Battelle Memorial Institute determined
part of the story: "NGVs Pushed to the
that the overall cost of using compressed
Back Seat as RFG Takes Over Favored
natural gas in FedEx's Los Angeles fleet was
Role."
slightly greater than that of propane and
Dedicated natural gas vehicles have
substantially more than that of using refor-
lower air emissions than do vehicles run on
mulated gasoline.1 6 6
reformulated gasoline, but they also have a
number of economic disadvantages that
The one advantage of natural gas and
typically restrict their market niche to fleet
propane--their substantially lower cost per
vehicles in select urban areas. There is little
gallon equivalent--was due more to gaso-
reason for ordinary motorists to pay a
line and diesel taxes than to the gases'
$1,000$1,500 premium for a dedicated
inherent energy and technology character-
methane vehicle (a premium that would be
istics. Had enough market share been
closer to $3,500$5,000 without subsidies)
gained, chances are that motor fuel taxa-
that has less range and less trunk space and
tion would have been extended to natural
does not have a national refueling net-
gas and propane to reduce if not eliminate
work.1 6 8 There is even less reason to convert
this benefit.
In a strategy shift in 1995, the Natural Gas
vehicles from gasoline or diesel to natural
Vehicle Coalition, the Gas Research Institute,
gas or propane because vehicles run on
and the American Gas Association deempha-
those fuels have higher costs and poorer
sized both the passenger market and govern-
operating characteristics than do dedicated
ment mandates:
vehicles. A more robust market exists for
heavy-duty dedicated vehicles that can be
The high fuel-use vehicle market
centrally refueled and maintained where
offers the greatest potential. . . . The
heavy concentrations of diesel particulate
most economical approach to
emissions are displaced.
27