Calif. offers subsidies for natural-gas burning vehicles


For more than a month, Californians have watched gas prices jump up well above $4 a gallon. But what was far less noticed was the wholesale price of gasoline which has been falling for about the past three weeks.

"So we've seen some huge declines in the wholesale market in California," says Prof. Severin Borenstein, Ph.D. with the Berkeley Energy Institute, who believes wholesale prices have fallen 50 cents a gallon and retail prices should follow. "If things stay where they are, we could very well see another 20 or 30 cents come off of our gas prices over the next month or so."

Borenstein says the price per gallon could drop below $4 a gallon. The price for natural gas-powered garbage trucks in Livermore has already dropped below $2.50 a gallon.

Don Arata sells garbage trucks powered by natural gas, which right now is about $2 a gallon cheaper than diesel. We asked him how the market for natural gas-powered trucks was doing.

"Oh, it's huge," he says. "In the last two years, Arata Equipment has sold about 200 natural gas-powered to one diesel. It's running very rampant."

Arata just got $884,000 in a grant from the California Energy Commission to lower the price of the trucks that he sells by about $26,000 apiece.

"So if somebody buys a new vehicle that is natural gas-powered, the $26,000 is applied and when we invoice it out we deduct it right off the price of the invoice," Arata explains.

The $8.5 million that the California Energy Commission is handing out will go to reduce the cost of 357 new natural gas-powered trucks and cars and another 110 powered by propane. Borenstein says there is hope that promoting the sale of those vehicles will in turn promote the creation of fueling stations.

But as for greenhouse gases…

"Natural gas is a fuel that creates greenhouse gasses slightly less than gasoline, but not a huge amount less," says Borenstein. "It's just got a big price advantage right now."

Borenstein says there's a glut of natural gas on the market and natural gas will remain cheaper than diesel for the foreseeable future. There's also the added advantage of not having to buy it from the Middle East. A number of Bay area car dealers have also received grants from the Energy Commission. For a list of those, click here.

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