A YOUNG INDUSTRY RIDING ITS FIRST STORM

Posted by cngsource on February 11th, 2015

A year ago when our fleet displayed a slogan stating that we were only paying .99 per gallon for fuel, drivers chased our vehicles wanting to know how and where they could buy fuel at such low prices. This interest spoke to more than just a promising future. It revealed that the CNG industry was about to explode now, with demand being ignited by the profitable savings achieved from substituting diesel with CNG.

A year later, gasoline is cheaper than gas. Several industries are cashing-in as most of the U.S. enjoys the ride—quite literally. Unlike so many who argued (rather publicly, unfortunately) that the oil price situation was a conspiracy against the U.S., I beg to differ. If I am wrong, then the conspiracy failed. However, a quick look at the dollar’s strength as well as the positive effects on so many industries including automobile, transport, travel and consumer goods, will tell you that the country has been far from hurt by the low oil prices. There’s no conspiracy here.

Yes, pressure and anxiety are increasing within the oil and gas industries as well as within the alternative energy sector, but this uncertainty is primarily due to other factors. Many things have happened and, most importantly, many things WILL happen. The U.S. went from being one of the largest energy consumers to one of the largest producers. U.S. oil production has increased exponentially in the past 5 years. Sooner or later, an adjustment to the worldwide market was going to happen, including here in the United States. Painful layoffs, production cost optimization, technology improvements and, sure enough, many small players going outof-business will contribute to a stronger, leaner and more agile oil industry. Another part of the equation is to be found in the Middle East and it concerns the obvious need for the OPEC to adjust, because the culmination of generous ROI given to foreign investors, monthly checks to citizens, flashy cities to pay for, and boisterous neighbors will demand that the OPEC adjusts or dies.

Meanwhile interest in the CNG industry has grinded to a slow crawl because the sense of urgency for replacing diesel with CNG has cooled down. I believe this is a grave mistake. Oil at a barrel is not here to stay. Fuel prices will creep up again. The early adopters for CNG are holding onto their plans and considering it a strategic move, which means the results will be measured over time. Good for them, because “strategy” and “short-term” rarely fit together in the same sentence. Panic and lack of long-term vision is what is really about to hurt the CNG industry.

My personal forecast is that many CNG industry players will have to do as the oil industry is already doing: lessen costs, improve technology, trim fat and sharpen their competitive edge. Many of the small CNG companies that have mushroomed in the past 3 years will simply go out of business or join forces merging or buying. I would also expect a lesson in humility to reach some of the larger players because they did not try hard enough to lower the entry barrier for potential adopters. Some manufacturers overpriced their equipment, taking advantage of a young market with few competitors and inflated by excited early adopters not looking too closely at the price tags.

Despite my belief that government should not interfere with business, it seems like this would be the right time for a little push in the form of establishing at the federal and state level a set of rules intended at favoring that the public fleets run on home produced fuel, perhaps real tax reliefs to those companies adopting natural gas as a fuel and perhaps some incentives to the municipalities favoring and promoting natural gas within their towns.

The truth is, the world remains highly contaminated and with an increasing thirst for energy. Fueling with CNG gives the ability to accurately plan and forecast the fuel cost, this is a huge competitive advantage providing predictability to fleet operators, and unlike the oil barrel at , CNG is here to stay. It is time to step up the effort and remain focused.

A seasoned executive with 25 years of experience in strategy, business development and marketing, Karim Bousfiha works in Houston, TX for CNG Source, a veteran company that develops and manufactures game-changing equipment and solutions for CNG station builders and commercial fleets. CNG Source manufactures CNG dispensers, priority panels, valve panels, control panels, among many other parts including the packaging of CNG Compressors. Mr. Bousfiha holds degrees in marketing and sales management, and earned two masters degrees from the highly distinguished Instituto de Empresa. Before joining CNG Source, Mr Bousfiha worked for Global Transynergy, Neoris, Cemex and many other companies across the globe. Karim speaks four languages and splits his time between his family, work and sailing

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Mark Reynolds. is the author of cngsource.com Visit the site for more information about CNG station for fleets, CNG compressors, CNG dispensers, CNG gas stations, CNG fueling stations, CNG fueling systems, etc.