Is natural gas the fuel of the future? This article was in the Arizona Republic today:
Natural-gas autos appear to catch on
By Russ Wiles
The Arizona Republic
Aug. 31, 1999
Arizona officials have been busy this year
trying to jump-start enthusiasm for
alternative fuels, and motorists finally
seem ready for a test drive.
Legislation that cleared both houses of
the legislature and was signed by Gov.
Jane Hull in May offers some unusually
generous tax incentives to individuals and
businesses willing to power their vehicles
with natural gas, electricity and various
other low-pollution fuels.
"Arizona has the most aggressive
program in the country," said Nathan
Learner, president of AZ Star Alternative
Fuels, a Phoenix company that converts
gasoline-powered vehicles to run on
natural gas too. "The state has gone out
of its way to offset people's objections."
Actually, Arizona lawmakers have been
dangling carrots in front of consumers
and businesses on the alternative-energy
front for several years, but this spring's
enhancements were especially sweet. The
centerpiece of the program is a tax credit
for new and used cars and trucks that
have been equipped to run on electricity,
solar energy, hydrogen, natural gas or
propane.
In many cases, motorists don't have to
give up their gasoline engines to reap the
benefits. For example, the state requires
motorists to buy only 100 gallons of
natural gas a year, and cars can be
converted to switch automatically
between the two fuels.
On new natural-gas cars and trucks, the
credit is worth up to $5,000 or 30
percent of the vehicle's cost - whichever
is greater. Used cars offer a break of up
to $2,500 or 15 percent of value. This
benefit applies equally to vehicles that
have been bought or leased.
Credits represent dollar-for-dollar
reductions in a person's tax bill and thus
are more valuable than deductions, or
reductions in taxable income.
Alternative-fuel credits not fully used in
the year of purchase, lease or conversion
can be carried forward five more years.
The Arizona tax breaks should not be
confused with more restrictive federal tax
benefits. The nation's tax code allows a
credit up to $4,000 for certain electric
vehicles only, reports researcher CCH
Inc. in Riverwoods, Ill.
Also, it's important to note that credits
are reductions of taxes owed, if any.
"This means you won't get a refund check from the state," said Ed
Hempelman, a senior accounts representative for Southwest Gas in Phoenix.
So, it's wise to evaluate the size of any potential tax breaks against your
Arizona tax liability. Arizona residents had an average tax bill of $939 in
1997, the most recent year for which the state Department of Revenue has
released information. That suggests roughly half of all Arizonans could not
make full use of a $5,000 new-car credit even if it was spread over six
years.
A second substantial tax saving involves a complete waiver of state and local
sales taxes on the purchase of a new vehicle powered by an alternative fuel.
In addition, license taxes are much lower, and motorists who drive one can
enjoy unrestricted use of freeway carpool lanes.
"One of biggest sellers of the program is that people receive alternative-fuel
license plates, which allow them access to the high-occupancy vehicle lanes,"
said Amanda Ormond, energy director for the state Department of
Commerce.
And there are various other tax credits and grants for people or businesses
willing to add refueling equipment, either for private or public use.
The biggest incentive here is a credit of up to $400,000 for service-station
operators who modify their outlets to handle alternative fuels.
"The intent is to get local gasoline stations to add fueling infrastructure,"
Hempelman said. "The more places that offer fueling and the more vehicles
you have, the more you get the ball rolling."
For details on incentives for fuel-delivery systems, call the state's energy
office at (602) 280-1402.
Although the tax breaks and other benefits apply to five alternative fuels,
natural gas seems to enjoy the edge in Arizona, at least for now.
It's fairly quick and relatively inexpensive to convert a gasoline-powered car
to run on compressed natural gas as well. And virtually any conventional
vehicle can be modified.
AZ Star, for example, charges about $6,500 to convert a vehicle to run both
on gasoline and natural gas, and the process takes about three days, Learner
said. One key caveat: Motorists who want to save the sales tax on a new
car must take possession of the vehicle after it has been modified, although
the conversion work need not be done by the factory or dealer.
Hoping to capitalize on the legislature's tax largess, Southwest Gas is sending
out a fact card on the tax savings to 700,000 gas-using customers in
Arizona.
"We're getting 20 to 25 calls a day from that mailer," said Frank Breeden,
fleet service adviser at Pioneer Ford in Phoenix, one of eight Arizona
dealerships listed on the card as selling natural-gas autos. "Nobody has
purchased one of these vehicles yet from us, but there's a lot of interest."
Because natural-gas vehicles must carry a fairly large fuel tank, pickup
trucks are the best conversion candidates, Breeden said.
But Jerry Polick, an alternate-fuels manager for Honda Cars of Mesa, said
his dealership has sold more than two-dozen Civic LXs over the past year.
Tanks also can be placed in trunks and sometimes can be attached to a
vehicle's undercarriage. Depending on a vehicle's size, natural-gas tanks hold
roughly 4 to 10 gallons, which makes a gasoline complement important for
lengthy trips. Mileage is a bit worse for natural gas compared to gasoline.
Yet natural gas enjoys the edge in wear and tear, Polick said. Because the
fuel emits fewer pollutants, you don't need to change the oil as frequently,
and engines can be expected to last longer.
Although natural gas has momentum, electricity ultimately could be more
attractive. Since electric cars emit no pollutants, Arizona will grant their
owners a more generous tax credit - up to 50 percent of a vehicle's value or
$10,000, whichever is greater.
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