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Natural Gas: The Logical Alternative

July 18, 2012

The term “logical” may not be strong enough – “only” is certainly more appropriate. The story however remains the same. We are finding more reserves of natural gas, drilling more, watching prices decline, and yet using only slightly more.

It is clear that the U.S. is between the proverbial rock and a hard place with respect to its dependency on fossil fuels. We are indeed a carbon based economy, and with low prices and abundant availability one would think the demand for natural gas would be sky-high.  So then why is the consumption of natural gas stick in the mud?

A look at the energy industry from source to demand sectors may shed some light on this anomaly.  The figure below shows the big picture: U.S. primary energy consumption by energy source from 1980 to 2010, with projection to 2035.[1] The consumption of each fuel changed accordingly:

• from 1980 to 2010: liquid biofuels (>1500%), nuclear (208%), coal (35%), renewables (28%), natural gas (22%), and oil and other liquids (5%), and

• projected from 2010 to 2035: liquid biofuels (260%), renewables (68%), nuclear (11%), natural gas (10%), coal (4%), and oil (-5%). Note: percent change based on quadrillion BTUs per pear.

A snap shot of the energy mix for any given year shows only a slight shift towards less carbon-intensive fuels.

• 1980; oil (42%), natural gas (26%), coal (21%), renewables (7%), nuclear (4%) and liquid biofuels (0%).

• 2010: oil (37%), natural gas (25%), coal (21%), nuclear (9%), renewables (7%), and liquid biofuels (1%).

• 2035: oil (32%), natural gas (25%), coal (20%), renewables (11%), nuclear (9%) and liquid biofuels (4%).

While the consumption of liquid biofuels was shown to grow by a factor of 587, biofuels are projected to remain a negligible part of U.S. energy inventory by 2035. Similarly, while the consumption of renewables is projected to double by 2035, total renewables are vastly overshadowed by fossil fuels in 2035.

These statistics necessitates clarifying what exactly constitutes renewables. In this analysis, renewable fuels are an aggregate of wood, municipal waste, biomass, and hydroelectricity in the end-use sectors; hydroelectricity, geothermal, municipal solid waste, biomass, solar, and wind for generation in the electric power sector; and ethanol for gasoline blending and biomass-based diesel in the transportation sector.

Today, it’s somewhat controversial whether hydropower should be classified as a renewable source of energy. There are many schools of thought adn qualification varies state-by-state. One argument against qualification is that most hydroelectric facilities were already built prior to adoption of renewable standards and policies by many states.[2]

Another argument states that damming interrupts the flow of rivers and can harm local ecosystems, and building large dams and reservoirs often involves displacing people and wildlife. However, unconventional hydropower using currents, waves, and tidal energy to produce electricity is less disruptive and qualifies as renewable.

U.S. Energy Consumption in 2011 by Energy Source is shown below.[3] As opposed to the previous figure, this chart breaks out the various energy sources that makeup renewable energy.

A closer look at the renewable energy component shows that solar, geothermal and wind are less than 2% of the total energy mix of the U.S. (see following chart). Whether surprising or not, these renewables are not substantially reducing our thirst for fossil fuels.

Reasons for the lack of renewable’s foothold include high cost to produce and use, location in remote areas, additional expense to build power lines , lack of reliability to deliver power, 24/7, as and when needed (for e.g.— nighttime and cloudy days reduce solar power and calm days reduce wind power.)

To understand how these energy sources are used, kindly refer to the following figure, which shows U.S.’s primary energy consumption by source and sector for 2010.[4]  The electric power generation sits between source and sector because it holds a dual role of being both an energy consumer and an energy generator and by definition it is not a primary source of energy.

On the demand side, electric power generation is the major consumer of fuels (39.6%), followed by transportation (27.5%), industrial (23.3%), residential (11.8%) and commercial (8.7%)

Electrical generation is primarily fueled by coal and natural gas and to a smaller degree by nuclear power. Transportation is fueled almost exclusively by petroleum. Industry is a mixed bag of petroleum, coal and electricity. Here renewables are ranked fourth and only slightly below electrical consumption. Residential and commercial are somewhat similar in that they run by electricity and natural gas. From this it’s difficult to see a sector other than electrical generation that can truly benefit from and increase the usage of renewable energy. That is unless there is some paradigm shift in the way the U.S. consumes fuels.

Taking a closer look at fossil fuels, the trend in consumption by the electrical power generation industry is shown in the following chart.[5]  For over 60 years, coal has been the predominant fuel used to generate power in the U.S.,  however, there has been an upward trend in natural gas consumption and a downward trend in coal usage. This is due to replacing coal-fired generation plants with natural gas-fired generation stations.

Increased consumption of natural gas for electrical generation is due to the combined effect of ever increasing natural gas production, declining natural gas prices and an increased use of efficient and low-cost combined cycle technology. Also, due to regulatory pressure to reduce greenhouse gas emissions and pollution from coal-fired power plants, electric utilities had no other choice but to adopt natural gas as a logical alternative.

Coal Age recently announced: “Recently published electric power data show that, for the first time since the Energy Information Administration (EIA) began collecting data, generation from natural gas-fired plants is virtually equal to generation from coal-fired plants, with each fuel providing 32% of total generation. In April 2012, preliminary data show net electric generation from natural gas was 95.9 million megawatt-hours (mw-hr), only slightly below generation from coal, at 96 million mw-hr. In April 2012, demand was low due to the mild spring weather. Also in April, natural gas prices as delivered to power plants were at a 10-year low. With warmer summer weather and increased electric demand for air conditioning, demand will increase, requiring increased output from both coal- and natural gas-fired generators.”[6]

It’s a well-proven fact that natural gas is clean, in fact the cleanest of all fossil fuels. Since natural gas is an organic compound, it does has a carbon footprint; however, its emissions level of CO2, CO, NOx, SO2, particulates and mercury are anywhere from 40% to 100% cleaner than coal and 28% cleaner than petroleum.[7]

 The point is that while coal will most likely continue its decline in fueling electrical generation facilities; natural gas needs another demand sector to increase demand and further replace dirty fossil fuels from our energy inventory. The sluggish U.S. economy has reduced expectations for new construction in the industrial, commercial and residential market, all potential users of natural gas.

This leaves the transportation industry as the only other viable sector that can make a significant impact on the energy mix by using an alternative fuel.

While there are reports of U.S. hybrid and electric vehicle sales jumping in March, the overall penetration of EV are far less than many in the industry would have you believe. A March 2012 report in the New York Times stated: “…the state of the electric car is dismal, the victim of hyped expectations, technological flops, high costs and a hostile political climate. General Motors has temporarily suspended production of the plug-in electric Chevy Volt because of low sales. Nissan’s all-electric Leaf is struggling in the market. A number of start-up electric vehicle and battery companies have folded. And the federal government has slowed its multibillion-dollar program of support for advanced technology vehicles in the face of market setbacks and heavy political criticism.”[8]

It must be noted that almost every conventional gasoline and diesel internal combustion engine can be converted to run on compressed natural gas (CNG). No innovations technological advancements are needed to power vehicles on CNG. Furthermore, natural gas is an abundant resource base that complements U.S. national energy security initiatives.

Not that incentives are a good thing, but to play on a level playing field with petroleum, either oil subsides should be reduced or incentives given to end users of CNG powered vehicles (see Oil Subsidies 101).[9]  All CNG incentives offered by the federal government have expired. There is rhetoric, and just that, on Capitol Hill to do something to stimulate usage of natural gas in the transportation sector.

Taking these factors into consideration, some forward thinking states such as Oklahoma offer a one-time income tax credit up to 50% of the incremental cost of purchasing a new CNG vehicle from an original equipment manufacturer or to cover the cost of converting a vehicle to operate on an alternative fuel such as natural gas.[10]

According to the Natural Gas Vehicles for America,

• “There are about 120,000 NGVs on U.S. roads today and more than 14.8 million worldwide.

• There are about 1,000 NGV fueling stations in the U.S., about half of which are open to the public.

• There are also “Home Refueling Appliances” available.

• In the U.S., about 30 different manufacturers produce 100 models of light-, medium-, and heavy-duty vehicles and engines.

• Natural gas currently costs from $1.50–$2.00 less per gasoline gallon equivalent (GGE).

• In the U.S. alone, NGVs offset the use of nearly 360 million gallons of gasoline in 2011.

• NGVs meet the strictest emission standards, including California’s AT-PZEV standard.

• NGVs are as safe as or safer than traditional gasoline or diesel vehicles.”[11]

There are a few disadvantages of using CNG, these include the limited number of models offered for sale or that can be retrofitted for CNG. A good part of this limitation is due to EPA regulations that make the CNG certification process rather lengthy and costly. Also, there are few certified conversion shops and CNG kits suppliers. CNG is less readily available than gasoline & diesel. Conversion is not cheap; passenger vehicles can be converted for $10,000 each, parts and labor.

In closing, like it or not, renewable energy has a long way to go to make an impact on U.S.’s energy inventory. Natural gas, being the least disruptive fossil fuel, could serve as a ‘bridge’ to a low-carbon future. Natural gas will buy time to further develop, cleaner fuels; hopefully there will be something at the end of the day, whether it takes 25 years or the end of the century. Then why are our lawmakers asleep to the needs of the country?


[1] U.S. Energy Information Administration, Today in Energy, January 24, 2012;

[2] Renewable or not? How states count hydropower, Midwest Energy News, January 13, 2012,

[3] U.S. Energy Information Administration, Renewable Energy Explained;

[4] U.S. Energy Information Administration, Annual Energy Review 2010, pg 361;            

[5] U.S. Energy Information Administration, Today in Energy, July 13, 2012:

[6] Coal Age, Coal and Natural Gas Reach Parity in April;

[7], Natural Gas and the Environment;

[8] The Electric Car, Unplugged, The New York Times, March 24, 2012;

[9] Oil Subsides 101, BarryOnEnergy, September 24, 2011;

[10] U.S. Department of Energy, Alternative Fuels Data Center;

[11] Natural Gas Vehicles for America, Facts About Natural Gas Vehicles;

One Comment leave one →
  1. July 18, 2012 11:23 AM

    While the amount of Carbon Dioxide is vast, its shown here that over the years we are significantly increasing in the amount of use of renewable and miscellaneous resources to counter balance it now. Hopefully by 2035, this nation will be greener then our Earth ever has been.

    -Sharone Tal

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