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The Oil Price Roller Coaster is on the Upswing

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It has been nine months since oil hit its high of $147 per barrel and the price of gasoline at the pump in the United States topped $4 per gallon for regular. In California, gasoline topped out at an average of $4.43 per gallon. Since then, the worldwide recession dampened worldwide demand and oil fell to about $39 per barrel in February of this year.

But, guess what? OPEC has been fairly successful in cutting supplies and the world's economies are showing the earliest signs of recovery and oil prices are creeping back up.

In March the average barrel of oil cost about $48 per barrel. In April that oil cost about $50. Today, it's back above $55. OPEC wants to push the price up to about $75 per barrel by the end of the year and they will probably be successful.

The rise in oil (and, therefore gasoline and diesel) prices is not the biggest issue confronting facing the United States on its energy supply. In April 2009, we imported 375 million barrels of petroleum at a cost of about $18.6 billion. But that represented 68 percent of the oil we used during the month.

Rather than decreasing our dependence on foreign oil, the percentage of oil we use which comes from non-US sources is continuing to rise.

Seventy percent of the oil we import is used as a transportation fuel. And about thirty percent of imported oil is used to fuel heavy trucks - 18-wheelers.

Neither wind, solar, nuclear, hydro, nor thermal - not even ethanol - will work as a substitute for imported diesel to move the goods that have to be transported from coast to coast and from border to border on 18-wheelers.

The only domestic fuel which will work as a substitute for foreign oil in all classes of vehicles is natural gas.

We have a virtually unlimited supply of natural gas in the United States. The new technologies now being employed to recover natural gas from the enormous shale deposits under Appalachia, Arkansas, Louisiana and Texas have led independent researchers to conclude our reserves will last for more than 100 years. That includes using natural gas for electrical generation, as feedstock for the chemical industry, in compressed (CNG) or liquified (LNG) form as a transportation fuel, and for all other current and planned uses.

Using natural gas to replace diesel-fuelled heavy trucks solves a number of issues when we talk about reducing our dependence on foreign oil. The first issue is the size of the current fleet. We have over 250 million cars and light trucks on America's streets and highways. That is an enormous installed base so making dent in gasoline usage is a daunting task. To move just five percent of cars and trucks to natural gas would require the upfitting of about 12.5 million vehicles. That is not likely to happen.

However, the national fleet of heavy trucks comes in at about 6.5 million. A five percent move from diesel to natural gas means replacing only about 325,000 trucks - a number we can get our arms around. And because 18-wheelers are such vociferous consumers of diesel, we can make real progress in decreasing our need for foreign oil by aiming at that goal.

In addition, most 18-wheelers tend to run the same routes back and forth. Truckers stop at the same places to eat, rest and refuel so the infrastructure issue of natural gas fueling stations will be easily handled in the normal course of commerce. You don't need a natural gas refueling pump on every street corner as you would for passenger cars and light trucks.

There is now a bill in Congress, H.R. 1835, which is known as the NAT GAS Act. This bill - which has generated more than 35 co-sponsors from both sides of the aisle - will provide incentives to move heavy trucks from diesel to natural gas.

It is crucial to avoid the "chicken-and-egg" issue: buyers can't find natural gas vehicles (NGVs) to purchase, and manufacturers won't build them until they are sure there is a market for them.

When AT&T announced it was upgrading 8,000 trucks in its domestic fleet to run on natural gas, it found that while Ford Motor Company could (and will) build the chassis, they had to find other domestic vendors to do the upfitting to natural gas.

H.R. 1835 will close that gap between builders and buyers. In 2007 the federal government purchased almost 65,000 gasoline, diesel and E85 vehicles. In that same year the federal government purchased only 129 NGVs. Not 129 thousand, but one hundred twenty nine. This bill requires the government to purchase 50 percent of its vehicles purchased over the next five years to run on natural gas.

This will provide a kick start to the NGV production capabilities of our struggling car and truck manufacturers and will have the additional effect of lowering the prices of NGVs as manufacturing ramps up.

H.R. 1835 provides a number of tax incentives which can be utilized by public and private fleet managers. Municipal and school bus fleets; refuse and recycling trucks, taxis, municipal vehicles, express delivery trucks can all be replaced with CNG vehicles.

This is the right time and H.R. 1835 is the right vehicle to show the world that the United States is serious about reducing our reliance on foreign oil.

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