Honda Civic GX
With gasoline prices at record highs, Honda is betting its Civic GX model, pictured here, which runs on natural gas and is more expensive than a standard Civic, will catch on with U.S. drivers.
By Roland Jones Business news editor
updated 9/23/2005 3:56:17 PM ET 2005-09-23T19:56:17

It may seem strange to power a car with the same fuel you’d use to heat your home or cook an evening meal, but with the soaring price of gasoline cutting into most Americans’ pocketbooks, at least one car company hopes natural gas vehicles will soon be as ubiquitous as those running on regular unleaded.

Earlier this year, the state of California agreed to subsidize a home refueling device, called Phill, which drivers of Honda’s Civic GX — a more expensive version of the standard Civic that runs on natural gas — use to fill up their fuel tanks at home. The Japanese car maker hopes the home fueling system will help their natural gas cars to catch the attention of cost-conscious U.S. car drivers.

But natural gas cars have their critics who say a workable infrastructure is not in place to completely service the fuel needs of the average car driver, and that the range of the cars that run the fuel is not large enough.

They also point out that natural gas prices are now nearly twice the level of a year ago. They have risen sharply to record levels over the last year as part of a global energy crush, and they are expected to go even higher thanks to the impact of Hurricanes Rita and Katrina.

“The biggest problem here is range,” said Scott Miller, CEO of automotive research firm Synovate Motoresearch.

“Given the size of the tank in these cars you get enough compressed fuel to provide about 250 miles of travel, and that could make these cars very difficult for customers to go for,” he said. “This could be offset by a more robust network of fueling stations, but with gasoline companies all doing well thanks to high gas prices, which of them will invest in natural gas and wait for this technology to achieve wider adoption?”

To date, natural gas-powered vehicles have mostly populated the corporate fleets of companies who have aimed to cut their fuel bills using gas-powered service trucks and corporate cars. And in cities and towns, school buses and taxis have also used the fuel.

Honda hopes to sell up to 500 natural gas cars this year in the Golden State and then run the program out nationwide in 2006.

The thinking, according to Gunnar Lindstrom, senior manager of Honda alternative fuel vehicles sales, is that with fuel-cell technology still some 20 years away from widespread adoption, and hybrids still not on the nation’s roads in meaningful numbers, natural-gas powered cars are a technology that can reach a wide number of consumers right now.

“It’s a clean fuel, and the majority of the natural gas we use is American, although we are looking to import it too,” he said. “The dilemma we have is there are not enough fueling stations for it, but it’s half the cost of gasoline and it’s something we aim to promote.”

Richard Kolodziej, president of the Natural Gas Vehicle Coalition, a lobbying group and trade association, acknowledges that the adoption of the technology for cars running on natural gas remains low, but he says companies like Honda aim build on the successes of natural gas powered vehicles in commercial use and, at a time of soaring gasoline and costs, promote the use of a fuel that has historically been cheaper than gas.

“You go after the bigger clients first,” said Kolodziej, noting that at present natural gas fueling stations are few and far between and mostly located near industrial areas.

“It’s like building a shopping mall,” Kolodziej said. “You might have 600 stores, but you only really care about one big anchor store; you can fill in with smaller stores later. The same is true for natural gas. You get a big client to use the system and buy the gas — a company like UPS with lots of vehicles — and then you can build from that.”

Honda started leasing its home-based natural gas refueling appliance, called Phill, to consumers in April. The appliance, which costs about $70 a month and is about half that price with the California subsidy, is about the size of a telephone box and can be mounted to an interior or exterior wall and is attached to a homeowner’s natural gas line and fuels up overnight.

Scott Miller of Synovate notes that, while the system affords gasoline powered cars some flexibility and freedom, it’s still likely to act as a tether for many potential users.

“This is a great solution for someone who only drives in city, and the average driver probably never goes more than 150 miles a day and remains within a single metro area, but while logically seems like that means these cars will see a ton of sales, in our studies we have found some customer insecurity in having vehicle on a driveway that can’t be taken outside certain area,” he said.

“I don’t want to throw cold water on what I think is a novel and interesting strategy for expanding alternative fuel vehicles,” Miller continued. “The question is can natural gas be the right alternative fuel? Before you get mass acceptance you need consumers feeling manufacturers will stand by it in force and you need the retail fueling industry also standing behind it in force, or you will only get passionate environmentalists taking part, and that’s only a small percentage of marketplace.”

Kolodziej points to some incentives that may soon draw consumers to natural gas powered cars. In 2006, an energy bill recently signed by President Bush gives tax breaks to owners of dedicated natural gas vehicles and home-fuelling appliances. Natural gas sellers will also receive incentives for selling the cleaner fuel to consumers, he added. Kolodziej also notes that higher EPA emission standards due to come into effect for gasoline and diesel vehicles is likely to make natural gas an attractive option for consumers and businesses.

“We have tried to get these incentives through Congress for a number of years,” he said.

But Miller counters that more incentives are needed to boost natural gas as a fuel. The government needs to also subsidize car dealerships, the training of service technicians and the overall development of the vehicles. “Purchasing and fueling are only the first barrier,” he said.

Still, in the commercial world natural-gas powered cars and trucks are still seeing successes. In 1992, for example, a small Rhode Island pest control company scored an unlikely first in the drive to adopt alternative fuels for vehicles.

Providence-based New England Pest Control retrofitted two Toyota trucks in its fleet of corporate vehicles to run on compressed natural gas for a four-year test period, becoming the first private company in New England to run some of its vehicles on a fuel that is cleaner and cheaper than traditional vehicle fuels like gasoline and diesel.

The result was positive — the vehicles ran just as well on natural gas as on gasoline. Fuel and maintenance costs fell, and oil only needed a change after 8,000 miles instead of 4,000. Exhausts, valves and pistons lasted longer, and the vehicles were still on the road after 200,000 miles. The company followed up its test period by converting another 20 trucks to run on natural gas and by 1998 it had 22 gas-powered trucks in its fleet.

“We were very pleased,” said Dave Pontes, general manager of New England Pest Control. “The trucks ran as well as a regular gasoline-powered vehicle, we had less costly repairs and the refueling station was just a few blocks away,” he said. “And we were able to show we were doing our part to help environment.”

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