I have been thinking more about the economics and feasibility of using compressed natural gas as the fuel for transportation, as opposed to the liquid gasoline currently used for most automobiles in the US. In terms of energy content about 4800 cubic feet (cf) of natural gas at a pressure of one atmosphere and room temperature is equivalent to a barrel of gasoline (42 gallons). (The AGA says that in 2007 there were 130,000 vehicles in the US fueled by CNG, and these vehicles used 31 Bcf of CNG, the equivalent of 250 million gallons of gasoline; that gives a conversion of 5.2 mcf to one barrel of gasoline.) For convenience I just assume a barrel of gasoline is equivalent to 5 mcf of natural gas. Currently a gallon of gasoline costs about $3.50 so a barrel costs $147. (The oil feedstock costs about $110 per barrel; so, obviously while there is a lot of profit in oil, there is not much profit in gasoline.) Natural gas costs about $8 per mcf, so the equivalent to the energy of a barrel of gasoline costs $8*5 = $40. All other things being equal then, it appears that using natural gas offers a significant cost advantage. There are some other factors to consider. The price of gasoline includes a road tax that is not in the price of natural gas. And the price of gasoline includes the cost of transportation to the delivery point while the natural gas price does not. Actually the price of natural gas does include some transportation cost, but does not include the cost of compressing the gas to the pressure in the vehicle CNG tank, which is in the range of 3000 to 3500 psi. The pressure of the gas in the pipeline that transports the gas to the point of transfer to the automobile could be in a range of 200 to 1000 psi. A compressor would be required at the delivery point to the automobile. I don't know precisely how much this would cost, but an idea could be obtained from the cost of compressing gas for movement through the pipeline system, which appears to be around $0.50/mcf. Compressing the gas to 3500 psi could cost two or three times that amount, which would increase the cost of the CNG equivalent of a barrel of oil to $47.50, still much less than the cost of a barrel of gasoline. Then, a road tax would no doubt be added, maybe another $10. But $57.50 is still much less than the $147 the barrel of gasoline costs.

There would be a lot of capital expenditure required to make CNG attractive to motorists. There would have to be a sufficient number of fueling stations. Pipelines to deliver the CNG to these fueling stations would be required, storage tanks would be necessary at the fueling points, as well as compressors and fuel transfer equipment. The fuel tanks in the automobiles would be more expensive than gasoline tanks, and the connectors at the fueling port would be more expensive. T. Boone Pickens talks about people having CNG re-charge facilities at their home. People already have natural gas lines to their home, but they do not have the rather expensive compressor required to increase the low line pressure to 3500 psi. The compressor cost would depend on how fast it could re-charge the CNG tank. And, of course, it requires some energy to power the compressor. (I have not researched it, but I have read that natural gas is cleaner burning than gasoline, so engine life may be longer with lower maintenance cost, possibly providing another incentive for auto owners to switch to CNG fuel.)

Now consider the cost of producing natural gas as compared to oil. Based on what I read and hear on TV, the cost of lifting oil in the US is about $7 per barrel. (In Saudi Arabia it may be only $1.00 per barrel.) But, because of the demand for oil, it sells for a much higher price. Given the demand for oil, the marginal cost of producing oil from new sources is probably more meaningful. I have heard it is about $20 or $25 per barrel for oil sands, maybe $30 to $35 per barrel for oil from the Bakken Shale, and maybe $50 per barrel from oil shale in Colorado and Wyoming. Natural gas sources currently costs about $2.50/mcf in the Barnett Shale in Tarrant County, in the Haynesville Shale, the Fayetteville Shale, and similar tight gas sources around the United States. There is an enormous amount on natural gas that has already been developed in Alaska that probably cost much less, but, no matter since it has already been found. A $40 billion pipeline is about to be developed to bring the Alaskan natural gas through Canada to the American mid-west(assuming that 100 Tcf are transported over 30 years, with maintenance and operating costs of 5% per year, then the cost of bringing the gas south is $1/mcf). Thus it appears that there is a lot of natural gas available at a lift cost at the equivalent of $12.50 per barrel of oil. This is a lot less than the cost of oil from non-traditional sources such as shale oil.

It appears that there is plenty of natural gas available to make it attractive as an alternative to gasoline. The US currently uses about 21 trillion cubic feet (Tcf) of natural gas per year, with about 18 Tcf coming from conventional sources (with a reserve of perhaps 180 Tcf). New sources have large supplies (Alaska, 100 Tcf, Barnett Shale, 60 Tcf, Fayetteville shale, 30 Tcf, Haynesville Shale, 245 Tcf, and Marcellus Shale, 500 Tcf.) If all US transportation fuel were switched from oil to CNG (an unlikely scenario) then US yearly natural gas consumption would go up from 21Tcf to 37 Tcf. The known supply would last 30 years at a consumption of 37 Tcf per year. If we could shift natural gas electricity production to nuclear or coal fired plants (or wind turbines), that would free up more natural gas for use in transportation. It appears that CNG is a viable alternative transportation fuel.