Investigating the strategic impacts of natural gas on transportation fuel diversity and vehicle flexibility

Abstract

The near-total dependence of the U.S. transportation system on oil has been attributed to exposing consumers to price volatility, increasing the trade imbalance, weakening U.S. foreign policy options, and raising climate change concerns. As a matter of policy to mitigate these issues, the U.S. has promoted fuel diversification and vehicle fuel flexibility in the transportation sector as complementary strategies. However, the search for a fuel that replicates the features of oil has proven elusive to policy makers. With the technological innovation of horizontal hydraulic fracturing that has enabled low cost shale gas production, natural gas has a unique opportunity in potentially breaking the stalemate. This thesis uses an exploratory approach to first identify the underlying factors that create challenges for scaling up alternative fuel and vehicle development. Second, it examines how consumers and policymakers, as two opposing sources of demand, influence and shape their development as well as directions for technological progress. Third, it develops a visual representation using natural gas as a case study to explore some of these issues and how they affect the potential pathways for using natural gas in light duty vehicle applications. This thesis concludes that while there are no clear pathways forward for natural gas in light duty vehicle applications, the transportation sector's sensitivity to changes in fuel feedstock composition enables a number of opportunities for development rather than suppresses it. This thesis also finds that rather than searching for a single fungible alternative fuel, there may be more opportunities for accommodating new energy sources. However, how the transportation system responds and can adapt to them still remains an area for more research.