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Energy Guru Thinks Natural Gas Will Replace Gasoline


When Edward Morse talks, the energy world listens. In February, the Citigroup commodities guru made waves in the energy community when he predicted the combined  US and Canadian oil supplies would outstrip demand in five years, in large part because of the American shale revolution.

He’s still bullish on shale’s transformative power; in fact, he’s taking it to the next step. On Tuesday, he predicted that oil’s long reign as the king of transport fuels could be coming to an end, as industries and consumers start figuring out how to use America’s natural gas glut to power cars and trains directly. The FT reports:

While coal, natural gas and renewable fuels regularly substitute for each other in power generation, oil has traditionally been immune from price competition because of the lack of widely adopted alternatives to kerosene, diesel and petrol in plane, train and car engines.

But Mr Morse expects the lower gas prices and plentiful supplies unleashed by the US shale revolution to lead to the adoption of compressed natural gas and liquefied natural gas vehicles.

The global benchmark for oil, the Brent crude price, has plummeted more than 15 percent since February. It’s now hovering at just above $100 per barrel, and if natural gas starts to eat away at oil’s dominance of the transport sector, oil prices are going to continue to fall.

That’s good for consumers, as Gal Luft and Anne Korin wrote for TAI a while back. Two energy sources competing with one another will bring down prices at the pump. Companies will probably be the first to scale up use of cars and trucks capable of running on compressed or liquid natural gas. Since corporate fleets generally fill-up at designated stations, they will be less affected by the current lack of infrastructure for CNG and LNG.

What’s good news for consumers is bad news for OPEC. Many regimes around the world rely on high oil prices to keep their budgets balanced and their people happy. A lower price of oil isn’t just devastating to OPEC member states’ economies; it will threaten the longevity of their political leaderships.

There’s still a lot that could go wrong here. The infrastructure to make this transition still needs to be built out, and more vehicles capable of running on natural gas will need to be sold as well. But whether it’s used to power American cars or compressed and sold on the global market, US shale gas is a threat to oil producers and the countries that rely on those producers—and that’s good news for America’s energy future.

[Compressed natural gas fill-up image courtesy of Wikimedia]

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  • gunsmithkat

    One problem with natural gas that nobody really talks about is the proclivity for LNG fueled vehicles to run into low vapor pressure situations( vehicle stops) when fuel levels drop below 40%. I produced a web interface for a municipal airport bus fleet so they could monitor fuel levels on all their vehicles to ensure vehicles didn’t get stranded on the road.

  • wigwag

    I’m no expert but I’ve read that the best way to utilize natural gas as a transportation fuel is to use it to produce methanol. The technology for methanol fueled cars already exists and cars can be retrofitted to use the fuel for a few hundred dollars at most. Methanol at current prices is about $1.15 per gallon but the mileage you get from it is only 50 percent of the mileage produced by gasoline. Still the price per mile is far less than the price per mile of gasoline fueled cars.

    As long as thirty years ago (long before the fracking revolution) auto makers were willing to manufacture methanol fueled cars but for political reasons, corn based ethanol was selected as the alternative fuel de jure. As it turns out, this was an enormous and costly mistake.

    It does raise the question though, have human beings domesticated corn, or has corn domesticated us?

  • Mark Michael

    How long ago was it that President Obama routinely stated in his speeches that the US had 1% of the world’s petroleum reserves and used 25% of the world’s daily oil consumption? He used it to justify putting stimulus dollars towards “green” energy projects such as Solyndra, A123 lithium-ion battery development, windmill tax credits, hybrid cars.

    At some point he stopped reciting that mantra, but I don’t perceive that the actual energy policies of his administration are much different today from back then. (Yes, shale natural gas is not oil, but fracking + horizontal drilling is also producing lots of high-quality petroleum. N.Dak. is now the 2nd or 3rd-largest oil producer: 600,000+ barrels/day.)

    Observation: statists have a very hard time openly and explicitly admitting they were wrong. It would be nice to hear Obama say, “I was wrong about that 1% reserves claim versus 25% usage claim I made 2 years ago. We’ve changed our policies as a result. It’s a positive development for America.”

  • ljgude

    I actually have years of experience running my car on LPG here in Australia where we have our infrastructure built out and LPG is available in something like 40-50% of filling stations. LPG is fixed at about 60% of the price of gasoline and it gets somewhat less than the mileage that gasoline achieves. The cost savings over a gasoline engine are significant – more so with a larger engine than a small one. Small engine cars are not worth converting at about $3000, but I did very well with a 2.2 liter Camry engine which ran at about the cost of the smallest class of cars. As an American who moved to Australia 35 years ago, I can’t help but notice certain key areas where Australia does a more efficient job than the US does. The big one is health care which Australia delivers for about half of what it costs (as a % of GDP) in the US and has slightly better health outcomes. Another is distance education which Australia has been doing since the 20s and which we now do routinely at all levels of education. (I’ve actually done research in Australian Distance Education practices.) What frustrates me is seeing debate in America in select areas like these where Australia has already demonstrated solid achievement on a routine basis. There is a certain kind of localism that keeps America focused inwardly and prevents it from looking further afield for solutions to its problems. Of course America does cutting edge innovation all the time, but I doubt that Dept. of Energy bureaucrats and oil company executives are going to places like Australia and researching the Australian experience with LPG infrastructure and price policies. It would have to be implemented differently in the US because of structural differences in the government and legal system, but the engineering, infrastructure and safety considerations are are what Donald Rumsfeld would classify as ‘Known Knowns’.

  • BobSykes

    Very unlikely for technical reasons. Most importantly is energy density relative to diesel/gasoline. Almost all modern cars will go 350 miles between fill-ups, and some will go farther. This sets the standard all alternative fuels must meet if they are to be widely adopted.

    LPG is propane, which liquifies at low pressure, but its energy density is only 50 to 60% of gasoline/diesel. This means that with a standard size fuel tank the vehicle’s range is only about 200 miles, or less. This is adequate for driving around a city but not for cross-country travel.

    Natural gas is largely methane, which is very difficult to liquify. Compressed natural gas (CNG) is typically transported at around 3,000 psi. At that pressure, it is still a gas and has an energy density of around 25% of gasoline/diesel. This gives a range of about 75 miles, which is about the same as the rightly despised electric cars. Also, there are safety issues with car fuel tanks pressurized to around 3,000 psi.

    Liquified natural gas is both pressurized and refrigerated. Pressure/temperature tradeoffs exist. Large transports normally are pressurized to around 4 psi and cooled to around -260 F. Under those conditions, the energy density of LNG is about 60 to 70% of gasoline and diesel. LNG will not be used in vehicles.

    Natural gas will likely never be used is large numbers of cars. Instead it will be converted to other fuels. Methanol is often suggested, but it (like ethanol) is highly corrosive and toxic. It can also be converted liquid fuels like gasoline, which is the most likely outcome.

    In short, for the next 100 years or so, people will be driving cars with piston engines burning gasoline or diesel. But the source of the fuel may well be methane. Especially if we can extract the enormous amount of methane clathrates on the ocean floor.

  • Saty Barole

    read that, The infrastructure to make this transition still needs to be
    built out, and more vehicles capable of running on natural gas will
    need to be sold as well. And US shale gas is a threat to oil producers
    and the countries that rely on those producers—and that’s good news for
    America’s energy future. But then after some time natural gas had been expensive to.


    gas and gasoline

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