Pennsylvania car dealer John Jakobsen watched a Ford Crown Victoria go unsold at the auction for several weeks in a row before curiosity got the best of him.

The bifuel car could run on gasoline or natural gas. He guessed there were no bidders because natural gas costs more on the East Coast than gasoline, so the bifuel setup just meant more hardware under the hood to take care of. But Jakobsen smelled a bargain and, with a really low bid, found himself with a bifuel car on his lot.

His head began to spin when the car sold within hours after he listed it on eBay. It was a real find for a taxi company across the continent in San Francisco, where natural gas for vehicles currently sells for the equivalent of $2.04 per gallon — a real bargain compared to gasoline.

Jakobsen did a little research and found natural gas prices were even better in Utah. A lot better — 73.6 cents a gallon. "Seventy-three cents a gallon does have a draw to it," he said. He was already thinking, "How do I zero in on that?"

Now Jakobsen snaps up every CNG (natural gas) car he can find and advertises them on Web sites that have high visibility in Utah and California.

Tax incentives and fuel prices have made Utah the nation's sweet spot for vehicles powered by natural gas.

"We have the cheapest gas in the nation," said Gordon Larsen, Questar Gas' supervisor of natural gas vehicles. "The demand here is really, really high," he said. "Fleets have been running on it for some time, but the general public is really taking it up right now."

With natural gas costing the equivalent of 73.6 cents per gallon, a car that gets 25 miles per gallon can go 100 miles for $2.94, compared to $10.80 with gasoline at $2.70 a gallon. Questar's vehicle fueling stations have seen a 60 percent increase in use over the past two years, Larsen said.

North Ogden resident Marty Phipps caught the CNG bug because of the expense of his daily commute to Salt Lake City. There are now four CNG cars in his household. "As a family, we know where all the natural gas stations are in Utah, Idaho, Wyoming and Nevada," he said. "I want people to know that there are ways to save money on gas and help keep our air clean for a very reasonable price, not to mention the great tax advantages."

This is the place — for fuel

Questar passes along a 50-cent-per-gallon tax incentive that has driven prices in Utah to record lows. The natural gas utility has also created an infrastructure of fueling stations throughout the state that is second only to California's.

CNG cars can even be refueled at home using a device that connects to a house's natural gas lines. That gives motorists even more independence from the filling station, though Questar's pass-through subsidy makes fuel cheaper at one of its stations.

Environmental, tax benefits

Emissions from CNG vehicles are dramatically lower than gasoline or diesel vehicles. "Gasoline pollutes when they refine it, when they put it in the truck, when the truck puts it in the gas station's tank, when it's pumped into the car and when it's burned in the engine," Larsen said. "When you look at the full cycle of pollution, the difference is huge."

Federal environmental policy is the foundation for a number of alternative-fuel tax credits.

Consumers who buy a new vehicle that runs only on natural gas qualify for a $4,000 tax credit. Utah will kick in another $3,000 in tax credits through its own program. The "gotcha" there is that the only vehicle that qualifies is the Honda Civic GX, and in Utah, only Ken Garff Honda downtown sells them, further limiting the supply of qualifying vehicles. The CNG Civic sells for about $25,000. Minus the tax credits, the price is about $130 more than the Civic's gas-engine counterpart.

Tax credits are tied to the vehicle, not the owner, so potential buyers in Utah should check with the Division of Air Quality, which issues tax-credit certificates for CNG vehicles, before buying to see if a particular vehicle is still eligible for the credit.

Ford and Chevrolet were in the CNG market for some time, making factory conversions to fleet-oriented vehicles: vans, pickup trucks and only two passenger cars — the Chevy Cavalier and Ford Contour. Consumers didn't show enough interest, and both manufacturers were out of the CNG business by 2005.

A supply of used bifuel vehicles, which run on either gasoline or natural gas, is available if buyers are willing to do their finding online or shop at government-surplus auctions. Additional tax incentives are available for vehicles put back into commercial use. The Utah Tax Commission says the biggest surge in CNG-vehicle popularity is in the consumer market.

State bureaucrats have had mixed experiences with state-level tax incentives. "In Arizona, nothing was happening with their program so they kept sweetening the pot. Then they went too far and they got hammered," said Utah Air Quality engineer Ran Macdonald. Arizona offered a 50-percent credit on the price of the entire vehicle, which prompted the clever to pay for conversions on Hummers and motor homes and then get half of the entire purchase back from the state.

"Our pilot money is really quite small. It wouldn't take much to overrun us," Macdonald said. Utah's tax credit will pay up to half of what it costs to convert a vehicle, up to $2,500, or half of what a factory CNG vehicle's incremental cost over a gasoline vehicle costs, up to $3,000.

Converted vehicles

Gas-engine cars also can be converted to run on natural gas. The process is highly regulated by the EPA and can cost $10,000 or more per vehicle.

Rick Oliver is president of SNO-Motion Solutions, which is currently the only business in Utah performing EPA-regulated conversions. He mostly converts commercial vehicles and says that market remains strong. He is moving his business from adapted space downtown to much larger facilities in West Valley City soon, anticipating his business will continue to grow.

"Business is up 300 percent in the last couple of months," said Oliver, who also expects to be doing more vehicle repairs as the surge of CNG vehicles continues in Utah.

"I think it's going to be a very steady climb. Natural gas is a steppingstone for the eventual use of hydrogen, and hydrogen will need a fuel-delivery infrastructure just like the one we have for natural gas."

A deal for dealership

Interest in CNG vehicles caught the attention of Phoenix banker Veerachart Murphy, who now runs CNG Motors, a used-car dealership that sells nothing but propane and CNG vehicles. He brings cars to his Phoenix dealership from as far away as Florida and sells about half of them, sight unseen, to Internet buyers. The home page of CNGMotors.com lists shipping prices to Utah and California.

Three-quarters of his business comes from people who research the advantages of owning a CNG car online and then buy from him, also online. Murphy said the other quarter of his business comes from referrals. "Ninety-five percent of my business comes from outside Arizona. Most are from California and Utah," he said.

Not for the Big Gulp crowd

16 comments on this story

The financial advantages have boosted the interest in CNG cars. But finding, buying, fueling and maintaining a CNG car is unique enough that the surge is taking place only among the more adventurous motorists who are willing to take on significant changes to the mainstream culture of car ownership. And rumor has it that claiming the tax credit is a good way to attract a tax audit.

Next to California, Utah has the best infrastructure of fueling stations in the nation, but there are still only 23 in the state. Some of those are located at traditional filling stations, while others are unstaffed self-service-only pumps without gas-station amenities like restrooms, snacks and soft drinks.


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