SoCalGas - Transit Cab - CNG Taxis
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Transit Cab - CNG Taxis

Helping create a clean environment is also good business

Transit Cab has a fleet of 20 roomy sedans serving the public in San Diego County 24 hours a day, seven days a week. Only two of the taxis run on gasoline. The other 18 taxis run on clean-burning, compressed natural gas (CNG).

“One of the reasons we chose CNG cabs was because we wanted to help create a clean environment. It’s also good business,” says Gabe Bakit, treasurer and co-owner of San Diego-based Transit Capital, which does business as Transit Cab.

Permits to operate taxicabs can be difficult to acquire because cities typically limit the number of available permits, also known as medallions. Bakit and fellow investors acquired Transit Capital – along with the CNG cabs and medallions – in October 2004.

Before that, the initial purchase of the CNG taxis had been partially funded through a pilot program by the San Diego Regional Air Pollution Control District to improve air quality. Natural gas vehicles contribute to clean-air goals by reducing emissions of smog-forming pollutants by up to 95% compared to gasoline- and diesel-powered vehicles, and reducing carcinogenic particulate emissions by 99%. To meet the requirements of the three-year pilot program, Transit Capital agreed to report annually on the efficiency and performance of the CNG cabs compared to gasoline-powered cabs through March 2007.

Cost-effective cabs, favorable responses

“CNG vehicles have a proven track record in our industry,” Bakit comments, “and we’re happy with them. We performed a cost comparison and concluded that the CNG cabs are more cost effective to operate than ones that run on gasoline. Our drivers love them because CNG costs less than regular gasoline. And our customers almost always comment that by using natural gas, we are contributing to a cleaner environment.”

He notes, too, that his Southern California Gas Company (SoCalGas®) Account Executive proved to be “very helpful when we set up the account for CNG. Anytime I need something from him, he gets back to me soon.”

SDG&E offers training

The SoCalGas Account Executive personally conducted the required safety training for Transit Cab drivers. He adds that “Transit Cab mechanics have actively participated in training on CNG vehicles offered by SDG&E. Some components of the fuel system are under pressure, so you have to know what you’re doing. But the basic things, like changing the oil and fluids, are the same.”

“We have had no major problems with the CNG cabs with the exception of two that had pump and transmission problems,” Bakit acknowledges, adding, “If they do break down, service can be hard to get. They are expensive to maintain mechanically. Also, drivers sometimes run out of fuel due to longer trips and this requires towing because refueling stations are not easy to find.”

Although he wishes there were more CNG refueling stations in San Diego, he’d still choose CNG vehicles again if he had to start over.

New tax credits starting in 2006

New tax credits made CNG vehicles even better for business in 2006. Starting in 2006, the federal Energy Policy Act of 2005 (H.R. 6, Sec. 1341) provides buyers of new, dedicated alternative fuel vehicles such as CNG vehicles with tax credits of 50% to 80% of the incremental cost. The credits range from $2,500 to $32,000, depending on the size of the vehicle, and will be available for purchases through Dec. 31, 2010. In addition, from Oct. 1, 2006, through Sept. 30, 2009, the federal Highway Bill (H.R. 3, Sec. 1113) provides a new excise tax credit of 50 cents per gasoline-gallon-equivalent (gge) for CNG fuel that will more than offset a higher excise tax, resulting in a net credit of approximately 32 cents per gge. The tax incentive goes to the CNG seller, or directly to fleets that have their own CNG stations.

As with any tax matters, businesses should have their own tax experts verify how the provisions of the two bills will affect their specific operations. In general, though, it’s good news for natural gas-fueled transportation.

1These case study materials are provided solely for information purposes, and are not a forecast or guaranty of any savings or results that will be obtained from using natural gas. A number of factors can influence actual results, including future gas prices, equipment used, actual usage and other operating conditions. Specifically, Southern California Gas Company does not endorse or provide any warranty of fitness for any particular purpose or use of any equipment selected by customer.

NGV Cabs

Many businesses and governmental agencies are discovering the advantages of adding natural gas vehicles (NGVs) to their fleets. Such vehicles have a positive impact on air quality, public health and transportation economics since natural gas burns more cleanly than other fossil fuels and typically costs less at the pump than gasoline and diesel.

Offering you this case study1 of real-world NGV experience is part of Southern California Gas Company’s commitment to providing exceptional customer service.

For more information about NGVs, please contact your Southern California Gas Company Account Executive in the Natural Gas Vehicle Group at 213-244-5681.

Southern California Gas Company
NGV Department, GT15E4
P.O. Box 3249
Los Angeles, CA