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Natural-Gas Cars Can Drive Us Toward a Better Economy

Author: Peter R. Orszag
June 27, 2012


Armenia is not generally known as a world leader, but it holds at least one record: Seventy-five percent of its cars and trucks run on natural gas.

In the U.S., in contrast, the share is well under 0.1 percent -- even though natural-gas prices have plummeted here over the past few years. Given the problems associated with U.S. dependence on oil, more use of natural gas for transportation could carry big benefits.

One of the most important of these would be macroeconomic. Switching to natural-gas vehicles would reduce our vulnerability to oil-price shocks, as Christopher Knittel, a professor of energy economics at the Massachusetts Institute of Technology, argues in a new paper for the Hamilton Project. That benefit alone could amount to between $850 (for sedans) and $18,500 (for heavy-duty trucks) for each vehicle converted.

More natural-gas cars and trucks could also, if managed well, reduce greenhouse-gas emissions and other pollutants (more on that below). The bottom line is that the U.S. would be much better off with a wider choice of transportation fuels.

Converting to natural-gas vehicles requires several changes but, as Floyd Norris of the New York Times has recently pointed out, the most elemental involves filling stations. There are fewer than 2,000 natural-gas stations across the country -- a fraction of the 120,000 that offer gasoline. This makes people and companies reluctant to shift to the new vehicles. At the same time, the dearth of natural-gas vehicles on the road makes fuel companies reluctant to build the stations they need.

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