Questar Expanding Natural Gas as a Transport Fuel

(MoneyWatch)  T. Boone Pickens' famous idea of using compressed natural gas as a vehicle fuel is slowly gaining currency in parts of the western United States. Local news stations near Salt Lake City, Utah are reporting that the nearby interstates are getting more CNG filling stations, led by Questar Gas, which is tapping into government subsidies to build the stations.

Utah was one of the few places in the United States that consumers could own natural gas vehicles before Pickens began pushing his plan to use gas as a transportation fuel. The first pioneering owners of CNG cars found they could stop at commercial fueling stations and get a substantial discount on CNG compared to the cost of gas. The market expanded more quickly once gas prices hit highs last year.

But even with gas prices down, anecdotal evidence suggests demand is continuing. There may be a psychological component to the trend: In Utah, as well as nearby lightly-populated states like Montana and Idaho, buying a CNG vehicle appears to now be a rather normal idea. Not so with the rest of the country.

However, other states could also become more welcoming to CNG cars. The largest and best-positioned of those may be Texas.

Today, Texas is looking at a potential glut of gas from the Barnett Shale and some other formations. The growing gas industry in the state may find that it's well-served by lobbying the local governments to create a new market for their product. Indeed, Aubrey McClendon, the CEO of Chesapeake Energy, is already doing so, except that he's gone straight to the Feds to ask for assistance. "We want to reposition natural gas as the best-known alternative fuel in the United States ... Not as an alternative to fossil fuels," he told the Dallas Morning News.

With gas prices hovering below $2.50 per gallon, most consumers will feel little inclination to buy a new CNG car, especially during the recession. But with prices for hybrid and electric cars set to remain high for the forseeable future, and hydrogen vehicles nowhere in sight, the fuel may yet make a place for itself.