US trucking firms are very interested in using more natural gas as a highway fuel, the American Trucking Associations’ chief economist said.
“There’s a lot of interest not just for local use, but for long-haul operations because it’s so much cheaper than diesel fuel,” Bob Costello said during the US Chamber of Commerce Foundation’s Quarterly Economic Roundtable.
“It’s a significantly higher equipment cost—at least $25,000 more than a standard diesel truck, and more for specialized refueling and maintenance equipment,” he said.
Natural gas also is a long-term possibility in an industry that has pressing short-term needs, Costello said.
“We need to invest at least $40 billion in new trucks,” he warned. “Otherwise, we won’t be able to haul all the goods once the economy recovers.”
Financing has improved, although some ATA members sell two used trucks for each new one they buy, Costello said.
“Equipment costs have surged, primarily from two new federal environmental regulations which have pushed the average cost of a new large truck from $95,000 to $125,000,” he said.
Unconventional oil and gas exploration and development has become a bright spot in US trucking demand, Costello said.
“Manufacturers can’t get enough tank trucks to North Dakota and Pennsylvania to haul away produced water and flowback,” he said.
American Petroleum Institute Chief Economist John C. Felmy confirmed that North Dakota’s economy is very strong because of the Bakken formation development. But the growth also has created some unexpected problems, he added.
“Some mortgage applications require having worked at a job for a certain period, which isn’t always possible for workers arriving in North Dakota to satisfy,” Felmy said. “One banker there told me it’s a significant problem.”
North Dakota nevertheless stands in stark contrast to many other states that face continued economic challenges, he said.
“We have an opportunity to generate millions of jobs and billions of dollars in investments and taxes,” Felmy said. “Our national leaders need to make the right decisions, such as approving the Keystone XL pipeline, which would result in thousands of immediate new jobs.”
US Chamber of Commerce Chief Economist Martin Regalia, who moderate the discussion, agreed that energy is a US economic bright spot that could contribute more to the still sluggish economy.
Federal policymakers should concentrate less on raising taxes and more on establishing spending cut priorities, he said. “Otherwise, these monthly budget crises are going to go on,” he warned.
Contact Nick Snow at firstname.lastname@example.org