In another indicator of the fallout from lower global oil prices, gasoline and diesel transportation fuel is cheaper in some parts of Oklahoma than compressed natural gas (CNG), according to sources at Tulsa-based Heartland CNG.
Depending on the service station, gasoline can be bought for $1.48-1.55/gal, compared with equivalent CNG prices in recent days of $1.49-1.65, an official with Heartland told NGI. Long-term, Heartland is not worried, however, and the official echoed a white paper released by NGVAmerica that concluded that natural gas as a transportation fuel should maintain its edge (see Daily GPI, Jan. 22).
"Only about 25% of the cost of CNG is due the commodity," the Heartland executive said. "In comparison, the commodity is more like 75% of the price of gasoline and diesel." CNG's price will vary a little over time, but gasoline looks more like a "saw blade," according to the Heartland source.
"Right now it is pretty apparent that OPEC is doing everything it can to kill our production capability and put our small producers out of business by just dumping oil onto the market, but I don't think they will be able to hold that position," the source said.
In Oklahoma, where Gov.Mary Fallin has been a national leader in pushing more use of CNG, there are already a lot of fleets that are running on natural gas. The state has been a leader in getting fleets to switch to CNG or liquefied natural gas. There are more than 100 natural gas fueling stations in the state.
"The price decline is a short term thing, but I don't know if anyone knows for sure how short term that will turn out to be," Heartland's executive said.
Heartland CNG recently announced it was converting an added 43 trucks in the state Department of Wildlife Conservation to run on CNG, and its General Manager, Justin Steckman, had to buy the company once a major buyer dropped its offer, citing the large drop in oil prices (see Daily GPI, Jan. 26).