With oil prices running well over $120 per barrel pushing diesel past $4 a gallon, sales of natural gas-powered commercial trucks are rising quickly – helped along in some cases by federal and state government incentives.

For example, Tom Vatter, vp-sales and marketing for vocational truck maker Autocar LLC, told FleetOwner that his company’s sales of natural gas-powered refuse trucks should increase to 500 units this year, sharply up from 300 in 2007.

“Natural gas is the big topic in the refuse market right now – everyone is talking about it,” said Vatter. “While there’s always been a market for it, especially in California, what’s really driving interest in it now is the price of diesel and how fast it’s going up.”

One advantage Vatter noted is that refuse fleets can lock natural gas prices on five to seven year contracts, something most of them can’t do with diesel fuel.

Tax breaks and state grants are also boosting natural gas sales of highway tractors. Sterling Truck Corp. is the latest OEM to roll out a natural gas-fueled tractor model. The Sterling Set-Back 113, designed for port operations as well as utilities and municipalities, is powered by the Cummins Westport ISL G engine,. The OEM pointed out that using natural gas could save an estimated $6,000 in annual fuel and operating costs per tractor.

“Natural gas technology has come a long way,” noted Richard Shearing, Sterling’s manager of product strategy. “Buses have been using it for years, but these next-generation powertrains have more power because less air is needed for combustion. Plus, the technology simply burns cleaner.”

Kenworth Truck Co. expanded its presence in the growing market for natural gas-powered trucks earlier this year, signing an agreement to build liquefied natural gas (LNG) vehicles with Westport Innovations Inc. in Vancouver, B.C., from its Renton, WA plant starting in 2009.

“Our agreement with Kenworth creates a dramatic increase in LNG truck delivery capacity and further strengthens our ability to efficiently meet the significant growth in market demand for environmentally clean LNG trucks from the ports and other fleet customers,” said Michael Gallagher, president & COO of Westport Innovations.

The deal also coincided with a Ports of Los Angeles and Long Beach announcement to approve a new $1.6 billion Clean Truck Superfund, which would assist replacing many of the 16,800 Class 8 trucks serving the ports with grants to defray the higher sticker price for LNG-powered vehicles.

It’s these kinds of savings that will drive increased sales of natural gas-powered commercial trucks this year, said Richard Kolodziej, president of advocacy group NGVAmerica – including federal tax credits that range from $2,500 to $32,000 for the purchase or conversion of natural gas vehicles

“In the past, there were substantial societal benefits of using more natural gas as a vehicle fuel – such as reducing dependence on foreign oil, reducing greenhouse gases and reducing urban pollution,” he said. “Now, as the price gap between petroleum and natural gas widens, we're seeing a major economic advantage, too. As a result, 2008 will be a milestone year in the growth of natural gas vehicles in the U.S.”

View more Fleet Owner news relating to idle reduction, fuel conservation, fuel economy and diesel fuel prices.