LAS VEGAS, Nev. — States interested in squeezing every last efficiency out of their budgets are increasingly turning to vehicles that run on alternative fuels or use less gas, initiatives officials say could end up saving millions of dollars over the long run — while helping to spur an emerging industry.
Vehicles make up a significant percentage of a state’s budget. States, counties and municipalities owned more than 3.7 million vehicles in 2011, according to Government Fleet, an industry analysis group, and many of those vehicles must be replaced every six to 10 years. Before they are replaced, they need gas to run, and at more than $3 a gallon, those expenses add up.
But as they replace aging vehicles, states are starting to look beyond petroleum, to natural gas, hybrids, electric cars, flex-fuel and biofuel vehicles.
“One of the things we’re trying to do to be more proactive is to find efficiencies in our own fleet,” said Utah Gov. Gary Herbert (R).
Herbert’s state is spending $14 million to transition to more fuel-efficient vehicles. As of Dec. 12, Utah had purchased 97 vehicles that run on natural gas, 578 hybrids, 13 electric vehicles, 39 that run on biofuel and 1,449 flex-fuel vehicles, said Cody Stewart, Herbert’s energy advisor.
Wyoming is another state either replacing its fleet with natural gas vehicles where it can, or converting gas-powered vehicles to natural gas tanks. So far, a tiny fraction of the 22,000 vehicles Wyoming owns run on alternative fuels — just 37 — but that number will increase as older vehicles are replaced. One of those 37 vehicles is the car that Gov. Matt Mead (R) drives.
“Granted, that’s symbolic, but it’s important symbolism in a state that’s number three or number two, depending on the year, in natural gas production,” Mead said.
Converting a gas vehicle to a natural gas vehicle isn’t cheap. “I’d have to be governor for, like, 50 years, which nobody wants, including me, for that to pay off,” Mead joked.
But the economics can work. A gallon of regular unleaded in Salt Lake City will run about $2.95, Stewart said. A gallon of natural gas will cost just $1.52 — only a few cents over half the price.
Few automakers build vehicles that run on natural gas yet, but they might find a lucrative market if they do: In 2011, 14 states signed a memorandum of understanding sent to Ford, General Motors and other manufacturers demonstrating their commitment to replacing petroleum-powered vehicles with automobiles that run on natural gas. The following year, states sent a request for proposal to the automakers asking for bids to provide cargo vans and trucks.
Some states are helping the market along by providing tax breaks to consumers who buy alternative fuel cars. In Colorado, Gov. John Hickenlooper (D) signed legislation that provides a $6,000 state tax break to go along with a $7,500 federal tax break for alternative fuel vehicles. Providing incentives to consumers, several governors gathered for the annual winter meeting of the Western Governors Association said, will give incentives to automakers, and bring down costs over the long term.
That’s why the 14 states — since expended to others — banded together: To create a market for alternative fuel vehicles.
“What we want to do is to stimulate competition so we have price-competitive vehicles,” Hickenlooper said. Hickenlooper has ordered a survey of fleet managers across Colorado, to gauge the feasibility of buying new alternative fuel vehicles; the results of the survey will be released in February.
One significant problem that is hindering the growth of natural gas vehicles, even in states interested in replacing their fleets, is the fact that there aren’t many places to refuel them. In Wyoming, only governments in jurisdictions that actually have natural gas fueling stations are required to purchase those vehicles; at the moment, there are just six towns with fueling stations in the entire state.
Hickenlooper said his goal was to build 30 fueling stations over the next four years. The state is using money earmarked for cleaning up air pollution to “fill in the gaps,” Hickenlooper said. And Colorado is working to put in recharging stations for electric vehicles, too: Electric vehicle owners will be charged an extra $20 when they register their cars to expand plug-in stations across the state.
That, said several governors, leads to a chicken-and-egg problem: “Nobody wants to use natural gas vehicles unless you have filling stations, and nobody wants to have filling stations unless you have natural gas vehicles,” Wyoming’s Mead said.