Thais Lead Drive to Natural-Gas Cars

Subsidies, Volatility of Oil Prices Spur Move Even as a Campaign Starts in U.S. to Get Americans to Switch
By PATRICK BARTA

Bangkok
An unusual alliance of energy tycoons and environmentalists is trying -- with limited success -- to persuade skeptical Americans to start running their cars on natural gas instead of gasoline.
But in many developing countries, the switch is already on, driven by the volatile price of gasoline, the accessibility of natural gas, hefty consumer subsidies and concern about the environment.
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Besides the small tanks, drivers complain of poor acceleration in CNG vehicles. There still aren't enough fueling stations set up to sell natural gas, so many users wait in line for 45 minutes or more to fill their tank.
In Thailand, drivers have converted or purchased more than 40,000 natural-gas-burning cars and trucks in the past six months. Local energy officials say they expect the number of natural-gas cars -- which in many cases are able to run on gasoline as well as natural gas -- to nearly triple by 2012 to 330,000.
Natural-gas-powered cars are among the hottest sellers in Bangkok, where long queues of drivers line up to buy the fuel every day. Kanika Kamdee, a 50-year-old psychology professor, paid 60,000 Thai baht ($1,795) last year to modify her Nissan sedan so that it could use natural gas.
The lower price for natural gas at the pump here has meant "big savings" in her monthly fuel bill, she says. She paid just 102 baht, or $3.05, to fill her tank one recent afternoon -- enough fuel to travel 93 miles.
And the switch isn't just happening in Thailand. Natural-gas cars are accelerating into the mainstream across the developing world. Pakistan, Brazil and Argentina each have more than 1.5 million of them on the streets, while India's fleet is approaching one million. China is also promoting the cars in some cities.
The cars appeal to environmentalists because natural gas is relatively clean burning. Some energy executives also hope that increased use of the vehicles will boost demand for natural gas.
In the U.S., one big booster, Texas oil man T. Boone Pickens, has blanketed the airwaves with ads calling for more natural-gas vehicles to help curb America's use of imported crude.
Lawmakers in Washington, D.C., and California have pitched plans calling for cash rebates and other incentives for people to purchase natural-gas vehicles. Honda Motor Co. now offers a natural-gas-fueled car in the U.S. market. But drivers in the U.S. -- the world's biggest oil consumer -- still haven't embraced the new fuel, and so far Honda is building only a couple of thousand natural-gas Civics a year.
Thailand's experience may offer some lessons on how to increase demand. Like the U.S., the Southeast Asian nation of 65 million people imports large amounts of crude oil -- about 800,000 barrels a day. But, also like the U.S., it has generous supplies of natural gas that could be tapped to power cars and trucks.
As oil prices climbed in 2004, the Thai government stepped up efforts to promote alternative fuels, including ethanol and compressed natural gas, or CNG.
Thai officials offered discounts to some drivers to convert their gasoline engines to CNG power and sent experts to Argentina and elsewhere to see what other countries were doing to promote natural gas.
Thailand also took a critical step that would be hard to duplicate in the U.S.: It pressed its state-controlled oil company, PTT PCL, to fix the price of CNG at roughly 25 cents, a kilogram. While it's difficult to make direct comparisons with conventional gasoline -- which in Thailand is measured in liters -- CNG's fixed price made it much cheaper than gasoline and diesel fuel.
The cost of the subsidy, now roughly $150 million a year, is absorbed by PTT. The company also had to build a network of fueling stations for the natural gas.
"We want to support the government policy and bring lower-cost products to our customers," says Chitrapongse Kwangsukstith, chief operating officer of PTT's upstream petroleum and gas division.
With so little domestic oil, "we need to substitute with alternative sources," he says.
In the beginning, even with the subsidy, the public response to CNG was lukewarm. But drivers grew more interested when oil prices surged earlier this year.
At Super Central Gas Co., a garage that specializes in converting engines to natural gas, mechanics modify the engine and then install one or more CNG storage tanks, usually in the vehicle's trunk. The process takes several days and costs car owners about $1,900. The sales staff says the garage is handling about 800 conversions a month, up from about 500 a month last year.
According to PTT officials, about 115,000 vehicles now run on CNG in Thailand, compared with only about 1,000 in 2003. About half of Bangkok's taxi fleet uses the fuel. Some consumers have expressed concern about the safety of the tanks, but PTT says it believes the risks are very low.
Not everybody is happy with the CNG-powered cars, though. Because of the size and capacity of their fuel tanks, they can't travel as far on CNG as they could on gasoline. And there still aren't enough fueling stations equipped to sell natural gas, so many users must wait in line for 45 minutes or more.
"Now I'm feeling sad" about converting, acknowledges Napunchita Thaima, a 35-year-old construction-equipment saleswoman who had her Honda sedan modified three months ago. Her car is slow to accelerate, she grumbles.
Other drivers are more enthusiastic -- as long as the new fuel is cheap. PTT says it plans to increase the retail price of CNG soon but intends to hold the price below that for gasoline. In the long run, analysts believe today's subsidies will help develop a larger market for CNG that could someday make supplying the fuel for vehicles a profitable business for PTT.
But PTT's Mr. Chitrapongse doubts the U.S. will convert to natural gas as quickly as Thailand has. For Americans, gasoline, even when its price soars, is a much smaller part of the budget than it is for Thais, whose incomes are lower. That means Americans may feel less urgency to put up with the hassles of CNG, he says.
But for companies whose businesses gobble up lots of fuel, eroding profits, CNG "is probably a good way to go," he says.
-- Wilawan Watcharasakwet contributed to this article.
Write to Patrick Barta at patrick.barta@wsj.com