CNG For Free-Would It Work?

CNG For Free-Would It Work?
It’s becoming increasing clear that help from the federal government in transitioning our transportation sector to consuming cleaner-burning, less expensive and abundant natural gas is going to be non-existent. Never once throughout his campaign did our President actually come out and speak the words “natural gas will power this nation’s transportation fleet.” His administration has repeated the importance of a national energy policy, and Obama led us to assume that natural gas has a major role to play. This smoke-and-mirrors approach was taken one step further with the appointment of Raum Emanuel as Chief of Staff. Natural gas supporters knew that Emanuel was one of the greatest proponents of natural gas as a transportation fuel, proven by past legislation that he authored.

During his campaign, the President talked about cleaner-burning fossil fuels and renewable energy technology. Now, more than 100 days into his term, mentions of fossil fuels in the speeches I have heard are non-existent. The entire focus now seems to be on the phrase “renewable energy.” Maybe he misled us or maybe we just wanted to believe it so badly that we read it into the gaps in his speeches. Personally I believe it was a bit of both, but that will be for voters to decide when Democrats come up for re-election.

Regardless of all this, one thing stands clear: President Obama and his administration are against anything that emits carbon. Lucky for trees they only breathe in the stuff. If they were caught emitting carbon, Democrats would find a way to put a tax on them. Seriously, though, when you go to The White House web page, notice what little mention any type of non-renewable energy like CNG receives. Combine that with Obama’s Carbon Tax and the $30 billion he plans to tax this nation’s drillers, it’s abundantly clear that not only will he not lend aid and support to CNG as a mass transportation fuel, he wants to put drillers out of business altogether with his ridiculous $30 billion tax increase on producers.

Increased CNG use without government support will be difficult but not impossible to accomplish. Instead of publishing commercials promoting the clean air and job-creating benefits of using the fuel found here at home, we need to act now as an industry of producers working in unison. I have heard that the loose ties of a “natural gas producers association” are being talked about by the major independents here. I believe that will be crucial to powering transportation with CNG. When that “association” is formed, the next quick step would be to get together and say, “Hey, let’s not give a dime to any candidate of any office, Democrat or Republican, who supports this $30 billion tax on America’s drillers!” It’s my belief that producers often contribute to both parties in an election as a means to creating some sort of hedge. Want to get their attention? Don’t give a dime to those who do not show outright and unwavering support for CNG and its producers in all forms.

As I have said in earlier blogs, we have to have refueling stations almost before we can have the cars. To accomplish this without the support of the federal government will require the above-described “association of producers.” Using J.D Rockefeller’s upstart of Standard Oil as an example, producers need to do the same and CREATE the market for their product, just as Rockefeller did in the late 1890s.

How do we do this? We give it away! OK, stop laughing and hear me out. Right now in the Mid-continent area (which encompasses Oklahoma) wellhead prices are cheap, sometimes 50% cheaper than wellhead prices elsewhere in the country! A thousand cubic feet of natural gas might fetch, what, $2 bucks?

I have a limited understanding of how natural gas is supplied to consumers here in Oklahoma, but I think it goes something like this. Producers drill for and recover the gas, a third-party pipeline delivers this to some sort of distribution point where someone like Oklahoma Natural Gas takes over with transportation to business and residential consumers. This is why the “association” concept is so important, as it would require the complete cooperation of all three—producers, pipeline owners, and distributors—to pull off what I’m suggesting. Namely, Oklahoma Natural Gas installs a meter at each CNG fueling station and agrees to transport all the usage that this meter reflects for free for a specified period, long enough to create demand for the CNG and CNG-powered cars. In turn, the pipeline owner does the same, not charging the producer for transportation costs associated with this meter. The producer provides for free the natural gas that this meter reflects was used.

This would be started as a pilot program somewhere like Oklahoma City where some fueling stations already exist. The “association” would need to fund the cost of installing others in the area. Then, while these plans are under way, Oklahoma’s major producers like Chesapeake and Devon pay a visit to a major auto dealer in the area. With Hyundai making a great CNG vehicle already, I would say that in Oklahoma City they should approach Bob Moore. Secure an agreement with the dealer to get his hands on 10,000 CNG cars, trucks and SUVs, with an agreement that not only will the “association” help subsidize the campaign to sell these vehicles, they will also provide a trained professional on site who will secure all the available state tax credits and rebates.

Here is the incentive and promotion: The buyers of the first 10,000 cars receive free fuel for 4 years with the purchase of the car. A “credit card” is issued to the user that is swiped at the pump and allows fueling. Buyers line up to purchase these vehicles as this is a one-time offer. Then, order another 10,000 with a promotion of just 2 years’ free fuel, and so on. Maybe producers could talk State and Federal officials into some sort of tax break, for a change, to help offset their costs.

Regardless, if this Oklahoma City pilot program were successful, it could be expanded and tailored to the Dallas/Fort Worth Metroplex, which has a population greater than the entire State of Oklahoma. If still successful it could be expanded around the country. This gives CNG a foothold and a great deal of media airtime as well as national attention. When the offers expire, CNG car owners will be required to purchase fuel, and everybody starts to profit.

OK, so that’s just a loosely roughed-out idea of how we get CNG cars on the road without President Obama’s blessing. There are many ways, and intelligent corporate minds should have no problem putting something together. It’s all got to start with some sort of “association” acting in unison.

One thing is certain, it’s not going to happen if we keep waiting on support from this Carbon-Cap/Tax Hike/Extreme Green President.