By abandoning R&D and marketing, the gas industry may have sealed its own fate.
Richard Kolodziej is president of NGVAmerica, a national organization dedicated to developing a market for vehicles powered by natural gas or biomethane, based in Washington, D.C. Email him at rkolodziej@ngvamerica.org.
Once upon a time, there was a happy energy industry in the United States that served every market sector—residential, commercial, industrial, and power generation. This industry provided the country’s dominant fuel, and faced a promising future of endless profits.
Then three things happened: regulatory pressure; the emergence of competitive fuels; and what appeared to be an easy path forward to secure the industry’s fortunes—namely, continued demand from the power sector.
The fuel producers liked the last part, and focused most of their attention on satisfying the electricity generation market. Meanwhile, fuel distributors, no longer being supported by producers, decided one by one not to fight as hard as they previously had for the residential, commercial and industrial market. Eventually most of that market was lost, leaving the producers reliant on electricity generators.
This wasn’t a happy ending for the distributors, and, as it turned out, not a happy ending for the producers either. Because the electricity generators eventually found better, more economic alternatives, and that fuel’s share of the power generation market began to decline—leaving the industry scrambling.
This parable—more or less—describes the history of the coal industry in the U.S. But it could just as well describe what is happening to the natural gas industry today.