Natural-Gas Vehicles Gain Senate Backing; Gas-Price Jump Seen
By Siobhan Hughes, Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- A plan to encourage more natural-gas vehicles in the U.S. got a new push on Wednesday, as the top Democrat in the Senate backed legislation to provide tax breaks and other incentives for the vehicles. But underscoring the trade-offs involved in turning the U.S. away from oil as a transportation fuel, one of the plan's biggest backers said that it would cause gas prices to double from current levels. That could be a problem for households that use gas to heat their homes or gas-fired power plants, though fueling vehicles would remain relatively inexpensive. "Will it bring the price up?" billionaire energy investor T. Boone Pickens said in a response to a question at a press conference on Capitol Hill. "It will probably." He estimated that prices would rise to about $7 per thousand cubic feet, compared with prices that would translate into about $3.46 per thousand cubic feet in recent trading. Pickens joined two senators at a press conference to promote the legislation, which is also backed by Senate Majority Leader Harry Reid, D-Nev. The plan would extend tax breaks for buying natural-gas vehicles, provide grants to develop light- and heavy-duty gas engines, and provide incentives to build refueling stations. Besides turning away from foreign oil, the goal is to turn to a fuel that produces fewer greenhouse-gas emissions. "Natural gas is not the ultimate solution at ending our dependence on foreign oil," said Sen. Bob Menendez, D-N.J., one of the sponsors. "But natural-gas vehicles must be part of the solution as well, because With new extraction techniques we now have 35% more accessible natural gas than we did two years ago." The plan has been promoted for at least a year by Pickens and a fellow gas man, Chesapeake Energy Corp. (CHK) Chief Executive Aubrey McClendon. The two got a boost last year, when Rahm Emanuel, who at the time was a lawmaker in the U.S. House of Representatives and now serves as chief of staff to U.S. President Barack Obama, introduced a natural-gas vehicle bill. Though the full measure never became law, it helped elevate the topic within the highest levels of the U.S. Congress. Behind the push is the discovery of vast new amounts of gas locked up in rock formations -- known as shale -- around the U.S. The gas fields in Texas, Louisiana and Pennsylvania led the nonprofit Potential Gas Committee to announce that the U.S. has 2,074 trillion cubic feet of natural gas still in the ground, or nearly a century's worth of production at current rates. That is up 35% from the previous estimate in 2007. For drilling in those regions to be truly economic, prices would need to rise. At $7, Pickens estimated that the cost of refueling a natural-gas vehicle would still be cheaper than using conventional gasoline, as a thousand cubic feet of gas contains the same amount of energy as eight gallons of gas, which would cost between $20 and $24 at current prices. Gas would also be cleaner: Cars that run on compressed natural gas generate 25% fewer carbon-dioxide emissions than cars that run on conventional gasoline, according to an earlier U.S. Environmental Protection Agency estimate. Separately, Pickens denied a report that he was scaling back a plan to build the world's biggest wind farm to five or six smaller farms. Speaking to reporters after the press conference, he said "I didn't cancel it." He said " it's going to be delayed about a year or two." -By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; Siobhan.Hughes@ dowjones.com | 
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