Bill focuses on compressed natural gas

By TIM TALLEY Associated Press
Published: 3/22/2009 12:38 PM
Last Modified: 3/22/2009 12:38 PM

OKLAHOMA CITY — Republican leaders of the Oklahoma House are pushing an ambitious program to use taxpayer dollars to encourage motorists to fuel their cars and trucks with compressed natural gas, a plentiful fuel that is more economical and produces less emissions than traditional motor fuels.
The idea has received bipartisan support in the House, which has overwhelmingly approved several energy-related measures and sent them to the Senate for consideration. But some lawmakers question whether state government should be meddling in the CNG business and believe the investment may actually discourage private operators.

"When state government gets into the private sector, especially competing with the private sector, I get a little bit nervous about that," said House Democratic Leader Danny Morgan of Prague.

The alternative fuel plan was developed by House Speaker Chris Benge and would appear to be a roll reversal for the Tulsa Republican who is best known for promoting tax cuts and less government spending. But Benge defended the program as a way to wean the state and nation from dependence on foreign oil and position the state as a leader in alternative fuels.

"I think this is a commonsense approach," Benge said. The plan would rely on tax dollars that have already been set aside and would use tax policy to achieve a public policy goal, he said.

"In certain instances, those are appropriate," the House speaker said. "Our background and our heritage has been built on energy. We've been a leader in petroleum. Why not consider the next generation

of energy?"
The bill would authorize the Department of Central Services to build alternative fuel stations for state agencies and the vehicle fleets of schools and county and city governments.

The fueling stations would also have public access to CNG in underserved areas unless a private provider locates within five miles of the facility.

The State Fleet Management Fund would be amended to allow money to be used to build alternative fuel stations or buy alternative fuel vehicles for state agencies or to lease to cities and counties.

The maximum amount of a loan for a fueling station will increase to $300,000. The cap on an existing 50 percent tax credit on the cost of converting vehicles to CNG will remain at $10,000, the average cost of a conversion.

At least nine other states offer some form of tax credit for building alternative fuel stations or vehicle conversions including Utah, which provides an income tax credit for 50 percent of the incremental cost of a clean-fuel vehicle, up to $3,000, and a 50 percent income tax credit for the cost of converting a vehicle, up to $2,500.

Oklahoma currently has 28 alternative fuel stations, more than Utah and all but two other states — California and New York. A total of 27 of Oklahoma's alternative fuel stations are owned by Oklahoma Natural Gas Co., which estimates there are between 1,200 and 1,500 CNG-powered vehicles in the state.

Benge said he has been concerned about the nation's dependence on foreign oil for many years and that last year's spike in the price of gasoline to almost $4 a gallon prompted him to investigate alternative fuels.

Gasoline is currently selling for about $1.80 a gallon while a one gallon equivalent of CNG sells for about $1.03, according to Brad Ballard, manager of business development for ONG.

Benge said the program could will encourage more people to switch to CNG vehicles.

"I believe the free market ought to drive what we do. But I think there are times that government can come in and give it a kick start," Benge said. "We need to provide that spark. It would be good for Oklahoma."

Morgan, who voted for Benge's bill, agreed that promoting CNG would be good for the state, which is the third largest producer of natural gas in the U.S.

"I think CNG is a tremendous opportunity, particularly for the mid-continent section of the country," Morgan said. "For the public sector, I think we can do some pretty good things."

But state government should concentrate more on providing incentives to private companies to promote use of the fuel, Morgan said. If CNG users rely on government-run fueling facilities, he said, "there's not much left for the private sector. So, they're not going to be as motivated."

But Benge said creating public fueling facilities will encourage more people to convert to CNG vehicles and provide the incentive for private companies to build alternative fuel stations.

"Once you have that infrastructure in place, it's going to spur companies and individuals to start purchasing these vehicles themselves," Benge said.

"We really hope that the private sector takes this and runs with it."

Ballard said ONG supports Benge's program.

"I think what the speaker is doing is trying to further the market," Ballard said. "They're doing a great job in trying to promote this industry."

Telecommunications giant AT&T announced an alternative fuel vehicle program last week and is still determining the state-by-state specifics, said Bryan Gonterman, president of AT&T Oklahoma.

"However, I believe Speaker Benge's legislation sends the right signal that Oklahoma wants to encourage efforts by companies and individuals to be more energy efficient and reduce the dependence on imported oil," Gonterman said.

"We're a state that's a leader in natural gas production, so it makes sense that Oklahoma, and the companies that do business here, take the lead in this area," he said.

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