Quite possibly BNSF, Warren Buffett's railroad, will take the biggest step yet to switch from oil to gas for transportation. Russell Gold of the Wall Street Journal reports that BNSF is working to begin switching all of its 6,900 locomotives from expensive, dirty diesel to cheap, cleaner natural gas, starting next year.
BNSF is reportedly the second biggest user of diesel in the USA, ranking only behind the Navy. The railroad industry uses 6% of all diesel.
Gold makes clear that the primary reason for the switch is the price difference between natural gas and diesel. Gold states that diesel costs about $4 per gallon, while industrial gas is available for 42 cents for an equivalent amount, without including cooling costs to convert gas to LNG.
Interestingly, a second factor pushing BNSF to look at using natural gas is looming EPA rules in 2015 that will require expensive retrofits of locomotives if they are to continue burning gas. Here is yet another example of how stronger EPA rules benefit natural gas,.
It remains stunning that the natural gas industry has done virtually nothing to support the various Obama EPA's regulations that can substantially impact positively or negatively the demand for natural gas. One consequence of that neglect has been rules that benefit natural gas but less than they could have.