GE Capital

Part I: The Trucking Industry: Solid Growth, but Large Cost Challenges Ahead

The trucking industry looks set to enjoy three or four years of reasonable growth, according to Bruce Allen, professor emeritus of business economics and public policy at Wharton, and Dan Clark, president and general manager of transportation finance at GE Capital. But not everything out on the road is smooth-running. Major challenges include rising fuel costs, a need to increase driver salaries substantially to steady the labor supply, a potentially large-scale transition from diesel fuel to natural gas, and increasing regulations. Part 1 of this two-part podcast series looks at growth prospects and major cost challenges.

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One Comment So Far

Allen Schaeffer

Natural gas is an option for commercial trucks that is getting a lot of attention these days like in this podcast because of lower fuel costs. Market shares and forecasts of 20-25 percent are often made by natural gas suppliers; government and independent forecasters typically cut those by one-half. But forecasts are forecasts. And, facts are facts.

With all due respect to Dan Clark and GE, he is quite in error in his comments about the purity and benefits of natural gas and not needing any after-treatment systems.

All the heavy-duty truck natural gas engines cited in this interview as well as others all require the use of a three way catalyst to reduce emissions of nitrogen oxides to meet the EPA standards…. Yes that is correct.
Please know the facts about just how clean natural gas is. The nitrogen oxide emissions advantage that natural gas has over diesel today in heavy trucks is quite small — in the range of 0.02 grams per brake-horsepower hour; two-hundreths of a gram. Both natural gas and diesel engines meet all the EPA and California Standard- which is what really matters here.

But his statement “…natural gas in and natural gas out…” was more prophetic actually, since the leaking of methane emissions at the many points along the well, transmission, distribution and storage infrastructure was not mentioned here – and of course is the major concern of environmental activists and federal and state regulators alike. Why? Because methane is a 120-times more potent climate change agent than carbon dioxide. Released even in small quantities can easily nullify any benefits of natural gas and in fact lead to more global warming than would occur otherwise.

Imagine tens of thousands of fracking sites around the US and the pressurized tanks on the trucks and all the plumbing and piping and valves and well…. you get the picture; leaks are real and are a real problem.

And Professor Bruce Allen- thank you for recognizing that diesel engines have gotten a lot cleaner in the last 10-15 years; you are correct. In fact today’s new generation of diesel truck engine is near zero emissions for particulates and nitrogen oxides.

However the comment that diesels have more particulate emissions than gasoline is curious and generally not true in an apples to apples comparison, since all new diesel engines have particulate filters that reduce PM emissions to near zero.

In fact many new passenger cars have gasoline direct injection engines that actually have higher emissions of particles than diesel engines in passenger cars. Yes gasoline higher than diesel in levels of particulate emissions.

If we were to continue this conversation we might inquire as to whether the natural gas industry and its vested supplier and financing interests believe that local, state and federal governments may choose to regulate one or more aspects of natural gas fracking. If the answer is yes, we would ask whether or not those regulations might increase the cost of natural gas acquisition. If the answer is yes, we would ask whether natural gas would be able to maintain such a fuel price advantage over diesel in the longer term, and what a realistic future price might be taking into consideration an undoubtedly robust regulatory structure. We would also ask whether exporting natural gas onto the global energy market might happen and whether or not that would impact the price of domestic natural gas.

Expanded natural gas use can be a boon to our energy supply and economy. Where it is best used — by industry, for electric power generation or to power vehicles will continue to be a point of debate.