Natural gas is the answer, maybe.

May 11, 2012

Natural gas is the  answer, maybe.

Jet fuel and diesel fuel are usually derived from crude oil. With crude oil at all time highs the result is much higher prices at the pump. The biggest users of diesel fuel are truckers. Those semis we all see roaring down the roads and rely on for everyday products, groceries and consumer goods burn diesel.

A technology exists for converting natural gas to diesel and jet fuel. The “gas-to-liquids” plants have been built most recently in the Middle Eastern country of Qatar. These plants cost billions to build and require reliable access to relatively cheap supplies of natural gas feedstock over the long-term. Some of the major energy companies are now seriously considering building such plants in North America.

North America, especially Canada and the United States, have abundant and under-utilized reserves of natural gas with more coming on stream rapidly.

This technology might be able to assure us of a reliable supply of diesel and jet fuel but the prices may still be relatively high, at least over the short-term until the cost of constructing the plants is  paid out.

The big kicker for most consumers – this technology will not convert natural gas to gasoline. Consumers would still benefit but primarily by lowering the trucking industry’s costs.

We’ll just have to watch and see if someone takes the plunge and gets into this business.

Further reading:
“Turning natural gas into diesel fuel” by Steve Hargreaves @CNN Money May 9, 2012 (http://money.cnn.com)

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