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Cost remains a question for CNG vehicles

Oklahoma tcredits can help defray the cost of converting to compressed natural gas as a vehicle fuel, but they're not available to everyone.
BY JAY F. MARKS Published: April 24, 2011

There's a lot to like about compressed natural gas.

It's cheaper than gasoline or diesel fuel.

It burns cleaner than those other fuels too.

Advocates also point out that it is an American product with abundant supply.

Those factors make CNG an increasingly popular alternative vehicle fuel, but it's not for everybody — yet.

It costs an additional $8,000 to buy the only available dedicated CNG vehicle or $10,000 or more to convert a vehicle to run on CNG.

Oklahoma tax credits can reduce the cost for some, but not everyone. There currently are no federal tax credits for CNG vehicles.

Edmond CPA David Phillips said Oklahoma's tax credits are only available to people who pay Oklahoma income tax; it is not a rebate.

“There's a whole lot of people ... that don't pay any income tax,” he said.

Still the Oklahoma Tax Commission expected to grant about $15.6 million in CNG-related tax credits in fiscal year 2009-2010. That figure includes credits for other alternative fuels and fueling equipment.

Phillips said people thinking about switching to CNG should look at their 1040 tax form to see how much income tax they paid.

“If that number is zero, you're not going to get a tax credit on CNG,” he said. “You have to remember that.”

Popular fleet alternative

Chesapeake Energy Corp. is an outspoken advocate of CNG as a vehicle fuel.

The Oklahoma City-based company, which bills itself as “America's Champion of Natural Gas,” recently finished converting its 800-vehicle Oklahoma fleet to run on CNG.

James Roller, Chesapeake's market development coordinator, acknowledged converting a vehicle to run on CNG is an expensive process, one he likened to building a house.

The cost varies according to a buyer's needs. He said some drivers will be OK with the 9-gallon tank used in some conversions, while others will want a vehicle that can hold more fuel for longer trips.

“So much of this is based on the size of the tanks,” Roller said.

Okarche's OEM Systems, which performed CNG conversions for Chesapeake and others, uses composite tanks that make up a large part of the cost for the conversion kits it uses, general manager John Luber said.

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State tax credits

Tax credits can help reduce the cost of converting to compressed natural gas as a vehicle fuel.

Oklahoma offers a credit good for 50 percent of the incremental cost of a CNG vehicle over a gasoline-fueled equivalent. It also applies to conversion costs and installation of fueling infrastructure.

There currently is no federal tax incentive for CNG use, although a five-year credit was included in legislation recently introduced by U.S. Reps. John Sullivan, Dan Boren and others.

The proposed tax credit would cover 80 percent of the incremental cost for dedicated CNG vehicles or 50 percent of the conversion cost for bi-fuel or dual-fuel vehicles.

Types of CNG vehicles

There are three types of vehicles that run on compressed natural gas:

Dedicated: Runs only on CNG as built by the manufacturer or converted.

Bi-fuel: Runs on gasoline or CNG after conversion.

Dual-fuel: Runs on a mixture of diesel and CNG after conversion.

Writer tests natural gas car

Business Writer Jay F. Marks is in the middle of a two-week compressed natural gas test, driving a bi-fuel Chevrolet Tahoe borrowed from Carter Chevrolet and OEM Systems in Okarche. Watch for updates in The Oklahoman or on the OKC Central blog on NewsOK. You can also follow him on Twitter: @OKenergybeat.


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