Kasich Urges Four-State Natural-Gas Fleet That May Expand Honda, GM Market

​Ohio Governor John Kasich wants his fellow Republican governors in Indiana, Michigan and Pennsylvania to join him in an unprecedented initiative to replace their state fleets with vehicles that run on compressed natural gas.

Kasich said he has spoken with Pennsylvania Governor Tom Corbett and is contacting Mitch Daniels of Indiana and Michigan’s Rick Snyder to generate the demand needed to persuade automakers to produce more of the vehicles.

The four states have almost 41,000 vehicles in their fleets, and there are 112,000 natural-gas vehicles on U.S. roads, according to NGVAmerica, a Washington-based trade association. With Ohio and Pennsylvania trying to tap the natural-gas deposits, Republican governors who sometimes scrap over jobs would be embracing an environmental cause that makes good economic sense, Kasich said.

“Sometimes we do compete with one another, but there is no reason that we all can’t work together to lead America,” Kasich, 59, said last week at two-day conference he convened in Columbus to create an energy policy. “Without scale, it’s not going to happen.”

The conference included panels that discussed the drilling method known as hydraulic fracturing, or fracking, which uses water, sand and chemicals to release natural gas. Kasich has said he’s committed to fracking while ensuring it is “done in an environmentally sound way.”

Creating a Market

Corbett thinks Kasich’s idea could be part of an overall plan to boost natural-gas production in Pennsylvania, said Eric Shirk, a spokesman for the governor.

“It’s something we’ll be looking into,” Shirk said by telephone from Harrisburg.

Snyder is “always open to discussion with other governors,” Sara Wurfel, a spokeswoman, said by telephone from Lansing. It’s likely that Daniels would listen to Kasich’s idea, Jane Jankowski, a spokeswoman, said in an e-mail.

No states have combined fleet purchases as Kasich proposes, said Richard Kolodziej, president of NGVAmerica. States including California are buying natural-gas vehicles, and public and private fleets use the alternative fuel for buses, street sweepers and other large vehicles, he said. Almost 960 of New York City’s 5,200 buses run on compressed natural gas, the Metropolitan Transportation Authority said in an e-mail.

Big, Symbolically

A four-state deal “would be huge, not just for the impact of the purchase, but for the symbolic nature,” Kolodziej said in a telephone interview.

Ohio has a fleet of 12,073 vehicles and buys an average of 1,100 a year, Molly O’Reilly, a spokeswoman for the Administrative Services Department, said by telephone. Indiana has 10,050 vehicles, Pennsylvania has 11,838 and Michigan has 7,101 after going to an all-leased fleet two years ago, said Kurt Weiss, spokesman for the Department of Technology, Management and Budget.

Honda Motor Co. is the only automaker selling cars that run on compressed natural gas to U.S. retail customers, Jessica Fini, a spokeswoman, said by telephone from Torrance, California. General Motors Co. (GM) began offering them to U.S. fleet buyers last year, and Chrysler Group LLC, the U.S. automaker controlled by Fiat SpA (F), has said it plans to start by 2017.

Buckeye Built

Honda makes its natural-gas Civic GX in Greensburg, Indiana, with engines built in Anna, Ohio, Fini said. The automaker, which began selling the vehicles in 1998, has been producing about 1,000 a year with plans to double that with the 2012 model, Fini said. The 2011 model costs $25,490, compared with $18,555 for a comparable conventional-gas Civic, she said.

Purchases from states, cities and other governments compose about 60 percent of Honda’s Civic GX fleet business, Fini said.

Natural gas -- along with alternatives such as electricity and propane -- is a good option for fleet vehicles, said Sam Spofforth, executive director of Clean Fuels Ohio, a Columbus- based nonprofit group.

“I don’t think we’ll know exactly what the right mix is until we just start rolling up our sleeves and working with them on it,” Spofforth said in a telephone interview.

The major drawback to natural-gas vehicles is the range, because refueling is limited, said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Michigan. It makes sense for fleet vehicles that return to base daily, Cole said.

“This is very doable,” Cole said. “It just depends on the economics.”

Local governments and private companies might join the states, Cole said. Kasich also raised that possibility.

“Maybe some of those new cars will be built in Ohio, maybe some of them will be built in Pennsylvania,” Kasich said. “If we move America forward and begin to wean ourselves off that foreign dependence, it doesn’t matter where they’re built, does it?”

This article was first published by Bloomberg.

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