CNG deserves same incentives as electric cars
BY MIKE JONES Associate Editor
Sunday, August 12, 2012
8/12/12 at 3:13 AM
I don't often agree with Gov. Mary Fallin, but she's on the right track in her pursuit to establish fairness in federal rules concerning alternative fuels vehicles.
Oklahoma, of course, has an abundance of natural gas and any kind of help for that industry would be a boon to the state, as well as the country. The governor is promoting the state and that is what she was expected to do. So, good for her.
According to an article in last week's Tulsa World, Fallin and Colorado Gov. John Hickenlooper are asking the Obama administration to adopt standards for alternative energy vehicles that would be "technology neutral."
A gap
Fallin and Hickenlooper, as well as many others, believe that there is a gap that favors electric vehicles. As 22 states, including Oklahoma, move to convert state fleets to compressed natural gas, they find an unfair advantage toward electric vehicles.
CNG burns cleaner and is, at least for now, cheaper than gasoline. Experts believe that CNG causes less wear on a vehicle's engine, meaning another cost savings for repair and maintenance.
Use of CNG in fleets has long been a cause of T. Boone Pickens. His Pickens Plan was instrumental in the NAT GAS Act being introduced into Congress and supported by Sens. Jim Inhofe and Tom Coburn. First District Rep. John Sullivan has long been its champion in the House.
Unfortunately, the NAT GAS Act - officially the New Alternative Transportation to Give Americans Solutions Act - has found little traction in Congress.
Back in Oklahoma, Fallin is looking to convert the state's fleet to CNG and her argument for equality is easily illustrated by the federal government's incentives for domestic vehicles.
Mike Ming, Oklahoma energy secretary, told the Tulsa World that, "Basically, you get more tax credits for producing those types of vehicles (electric), and natural gas won't get those credits."
Money back
The Internal Revenue Service allows a tax credit of $2,500 to $7,500 for an electric vehicle purchased after Dec. 31, 2009. The amount of the credit depends on the battery capacity.
The IRS also provides a tax credit for plug-in electric drive conversion kits. That credit is equal to 10 percent of the cost of converting a vehicle placed in service after Feb. 17, 2009. It does not apply to conversions made after Dec. 31, 2011.
Here, at least as I see it, is the catch when it comes to buying an electric vehicle. For instance, a Chevy Volt (one of the more popular completely electric cars available) sells (at Tulsa prices) from $39,445 to $44,445.
On the higher end is the Tesla. Its roadster sells for around $100,000.
So, buy any one of those cars and you could get as much as a $7,500 tax credit.
The catch: How many folks can afford to buy a $40,000 car, especially in this economy? That's up there in Lexus range. Most people, at least in Oklahoma, pay a lot less than that for a new car.
Bad break
Nothing against the 1 percenters, but do they really need the $7,500 tax credit? The 50 percenters certainly do. Until electric cars can reach the masses, the prices and tax breaks are not going to gain much speed in the marketplace.
That is where Fallin's, and Pickens', idea makes a lot of sense. Switching fleets from gasoline to an alternative fuel, CNG, would get the wheels turning. As GM, Ford, Chrysler and smaller, more exclusive firms begin to have a bigger market, the more likely they are to start mass manufacturing alternative fuel cars. That brings the price of the vehicle down.
Cars fueled by CNG and electricity are not the only alternatives. The Department of Energy recognizes as eligible for a tax credit fuels such as liquefied natural gas (LNG), liquefied petroleum gas (LPG,) hydrogen and any liquid at least 85 percent methanol by volume.
According to Natural Gas Vehicles for America, Congress failed to extend some valuable tax incentives for CNG conversion and purchases, but it did enact a new bonus depreciation provision that allows companies to expense 100 percent of the cost of new capital equipment. The provision extends to transportation equipment used to transport persons or goods.
That provision ought to have helped businesses that acquired natural gas vehicles in 2011. For 2012, the bonus depreciation is worth 50 percent of the cost of property placed in service, according to NGV America.
Right track
The United States is on the right track. Whether CNG, electricity or LNG are the long-term answers for our energy future is unclear now. All, however, are readily available right here in the United States. The next president and Congress need to finally get serious about a national energy policy. We have the capacity to greatly diminish our dependence on foreign oil. We ought to have started long ago.
A study due out in 2013 by the Bipartisan Policy Center is aiming to set a course toward energy policy. BPC was founded by four former senators who were known for being able to work on both sides of the aisle: Republicans Howard Baker and Bob Dole and Democrats Tom Daschle and George J. Mitchell. The six-member board of governors includes former Oklahoma Gov. Brad Henry.
Whatever path our much-needed energy policy takes, it will require a truly bipartisan effort, no matter who is in the White House, and the American people should demand it.
In the meantime, the efforts of Gov. Fallin and those like her are much appreciated and deserve a fair hearing.
CNG, as well as other fuel alternatives, deserve to be treated fairly. If that is done, the best alternative is likely to come out on top. And, on a level playing field, CNG has a good chance to do just that.
Original Print Headline: Shocking
Mike Jones, 918-581-8332
mike.jones@tulsaworld.com
