One way or the other, the world will eventually be forced on to cleaner fuels for its vehicles, so says Bruce Pile, who runs the Marketocracy fund, and so hopes T. Boone Pickens, one of the world’s extraordinary investors who is banking on America’s trucking fleet shifting to natural gas sooner rather than later.
Is it realistic? Pile’s theory says yes, and so may Pickens’ money.
According to Pile, in the
Pile notes that while there is some interest in natural gas today, people still have plenty of concerns, including safety and logistics.
But in the state of California, whose policies often serve as harbingers for the rest of the nation, busses in the city of Los Angeles are already running on natural gas, which burns cleaner than oil.
So the question is: Is T. Boone Pickens a natural gas hopeful, or a prophet? Are his investment choices ideological or strictly financial?
Pickens, according to Pile, is a proponent of natural gas, in part because he holds to the theory of climate change, but moreover because Pickens wants to see U.S. trucking fleets weaned off foreign oil. As far back as 1991, Pickens chaired the Natural Gas Coalition, and prior to that, he had a 1993 presidential appointment to the Natural Gas Task Force.
Also in 1993, his company Mesa Petroleum, created Mesa Environmental, which would subsequently become Pickens Fuel Corp, began operating natural gas stations. In 2001, Pickens sold a 75 percent stake in the company to BC Gas, and then repurchased that stake in 2006—renaming it Clean Energy Fuels. By then the company had purchased even more stations, and had made a substantial profit in natural gas. In 2007, the company went public as CLNE, and now owns approximately one-third of the country’s natural gas fueling stations.
CLNE is one of the few successful companies in the market, and so Pickens’ stake in natural gas has so far paid off. One might call him a realist who had the foresight to see natural gas for what it was—a stepping stone to a cleaner tomorrow.
Tomorrow, as always, is extremely relative. While Pickens may have the patience for this tomorrow, others will not. At the end of the day, Pickens’ stepping stone is likely covered in the moss of foresight—but it’s a very large stone.
Pile cites data from the
The public interest isn’t quite there yet, but this isn’t really what Pickens is banking on. His focus seems to be on the commercial trucking fleets.
A Class 8 commercial semi-truck can burn around 100,000 gallons of diesel fuel per year, placing them high up on the hit list for environmental advocates and government regulators. But this diesel guzzling is also a problem for fleet operators themselves. It’s expensive. And while natural gas commercial trucks are around twice the price of their predecessors, the savings in the end makes sense for fleet operators.
While Pickens may be anxious to see U.S. trucking fleets make the switch to natural gas, it is worth noting that Class 8 natural gas truck sales in the US and Canada saw a
But the dip in sales may not suggest something fundamentally wrong with the natural gas truck market. As ACT’s Steve Tam notes, other market factors may have been involved. Heavy trucking companies are competing for the same freight, and as it happened, operators moved to increase their fleet sizes just as freight growth began to slow, thus leading to an overall slump in truck sales.
Meanwhile, the National Park Service, the cities of Ogden, Utah; Long Island, New York; and Norman, Oklahoma; along with Leon County, Florida, are among the
Natural gas commercial fleets are likely to move forward precisely because the government wants them to, and fleet operators are increasingly on board. In fact, a
Ultimately, legislation of this nature this will help to ease the tax burden for fleet operators who want to get in on the natural gas trucks.
This will please T. Boone Pickens to no end. After all, for him, converting the US commercial fleet to natural gas is not just about an investment he hopes to make a few bucks on: it’s about geopolitics. It’s about trumping OPEC.
Transportation, Pickens has famously noted, accounts for more than two-thirds of all the oil we use—and as such, a huge chunk of our dependence on foreign oil is oil from the Middle East, and as such, has become a national security issue. “As long as we keep buying oil from the Middle East, our enemies can continue to fund terrorism,”
So Pickens is very serious about lobbying to make the shift to natural gas for America’s heavy-duty trucks because it “will introduce the first real competition into our fuel supply. It will improve our balance of trade, it will improve our environment, and it will remove the last marked card from OPEC’s poker hand over our national security.”
Lincoln Brown for Oilprice.com
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