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Maybe Warren Buffett can get the idea of using natural gas for transport on track. BNSF, a freight railroad network owned by his Berkshire Hathaway conglomerate, is testing gas as a replacement for diesel fuel. It could give a lift to plodding efforts by oil tycoon T. Boone Pickens to convert trucks. The costs of change are daunting, but it's getting too hard for the industry to ignore the low price of U.S. gas.
Since hitting a peak in 2008, the price has fallen by about three-quarters. That has made it a more appealing choice for electricity generation. The market share of gas jumped to 30 per cent last year from 21 per cent in 2007, all at the expense of coal, according to the Energy Information Administration.
Oil remains the king of transport fuels, however. Natural gas only represents a tenth of a percentage point of the market, despite the plight of Mr. Pickens, who has been campaigning on the subject since 1997. The BNSF trial could provide a fresh spark.
The financial logic is compelling. Instead of paying $111 (U.S.) for a barrel of oil, the same amount of energy can be had from natural gas for about $22. The main reason trains, trucks and ships have hesitated is the cost of overhauling engines and refuelling infrastructure. BNSF boss Matthew Rose reckons it could cost the company up to $7-billion to convert its locomotives.
It makes sense to start with larger vehicles, like the ones used in rail and shipping. Fewer refuelling stops are needed. The two industries alone consume about 650,000 barrels of oil a day, according to the EIA. A full shift to natural gas could save as much as $20-billion a year at current prices. The bigger endeavour would be to transform America's truck fleet, which accounts for 13 per cent of the 18.6 million barrels of oil the nation consumes daily.
Remaking fuel stations up and down the country, not to mention engines, is a much bigger undertaking. Natural-gas trucks cost about $25,000 apiece, while refuelling sites can run to $1.5-million, according to Clean Energy, a company that supplies gas for transport. Even so, if drillers can prove the gas supply is sufficient to cope with rising transport demand and therefore not push up prices by much, the move to transport natural gas could gather steam.