Did anyone catch the piece in yesterday’s WSJ about the rise of natural-gas-powered vehicles in Thailand? The article noted that about 115,000 of these alternatively-fueled cars are on Thailand’s roads and that the price of compressed natural gas (CNG) at the pump is lower than gasoline, fueling the boom (pardon the pun).
But why is the price of NG lower than gasoline?
Thailand also took a critical step that would be hard to duplicate in the U.S.: It pressed its state-controlled oil company, PTT PCL, to fix the price of CNG at roughly 25 cents, a kilogram. While it’s difficult to make direct comparisons with conventional gasoline — which in Thailand is measured in liters — CNG’s fixed price made it much cheaper than gasoline and diesel fuel.
The cost of the subsidy, now roughly $150 million a year, is absorbed by PTT. The company also had to build a network of fueling stations for the natural gas.
And are there any drawbacks from the rise of CNG vehicles?
At Super Central Gas Co., a garage that specializes in converting engines to natural gas, mechanics modify the engine and then install one or more CNG storage tanks, usually in the vehicle’s trunk. The process takes several days and costs car owners about $1,900.
Not everybody is happy with the CNG-powered cars, though. Because of the size and capacity of their fuel tanks, they can’t travel as far on CNG as they could on gasoline. And there still aren’t enough fueling stations equipped to sell natural gas, so many users must wait in line for 45 minutes or more.
“Now I’m feeling sad” about converting, acknowledges Napunchita Thaima, a 35-year-old construction-equipment saleswoman who had her Honda sedan modified three months ago. Her car is slow to accelerate, she grumbles.
So, to recap: Thailand instituted price caps for a less efficient fuel that is not profitable on its own and whose widespread use the country’s infrastructure is ill-equipped to handle.