So far, only Honda offers a CNG vehicle in the US.

It's Civic GX which has been the greenest car in the country practically since it was introduced in 1997. (A $25,000 price tag is trimmed by a $4,000 federal tax incentive.)

It may also be one of the cheapest cars to operate. With a home fueling unit, the Civic GX can be filled up at $1-1.50 per gallon equivalent, according to John German, American Honda’s environment and energy analysis manager.

Little wonder the stock of CNG-compatible cars is growing worldwide. Currently just one percent of the global vehicle stock, they make up 24 percent of vehicles in Argentina.

Natural Gas Prized by Power Sector

But this new demand from the transportation sector, overlaps—and possibly conflicts—with its growing popularity for electricity generation.

Roughly one-third of US gas consumption goes to generate power and that is projected to keep growing. (Gas produced one per cent of New England’s power in 1980; now it supplies more than 40 percent.)

That’s driving growing imports of liquidified natural gas (LNG), currently just three percent of total gas use (the rest is from North America) but soon expected to rise to 20 percent.

That’s why boosting domestic gas production is critical, argues McClendon, especially fast growing unconventional sources, which has soared 65 percent in the last decade.

Tapping these sources comes from new technologies, including improved horizontal drilling. (One example: gas is now being sucked from underneath Dallas-Fort Worth’s airport and “the drilling rigs.... are headed toward downtown," says the Department of Energy.)

John Felmy, chief economist of the American Petroleum Institute, says the Chesapeake study usefully highlights the importance of opening up more roughly 80 percent of US territory – both on and off-shore – that is closed to exploration.

But McClendon acknowledges current gang-buster unconventional gas production, should keep supply growing five percent a year for the next decade - even without opening up more public land.

Crowding Out Gas-Dependent Industry

McClendon says the US could convert 10 percent of our vehicle fleet to CNG within eight years, and only increase overall natural gas consumption by one percent.

Dow Chemicals’ Wells is not so sure about that, and he questions the even more fundamental assumption that gas will always be cheaper than oil.

He notes they were at rough parity between January 2003 and December 2005 and that gas prices were far more volatile than oil.

Increased demand will also ratchet up gas prices for both residential and business users, particularly harming industries dependent on gas for energy and feedstocks, such as chemicals and plastics, he says.

Rising prices are already taking a toll on US-based business. Foreign-sourced natural gas is far cheaper than US-produced gas - even LNG imports are two times cheaper $4-4.50 vs average US price of $10) - putting US industry at a significant disadvantage, noted Wells.

The spike in gas prices since 2001 has forced many US companies with “global market share ambitions” to relocate overseas, a trend he said would only accelerate with Pickens (and Chesapeake’s) plan, according to Wells.

“We want to invest in the US, but there must be an appropriate value proposition,” he said, noting Dow’s 2002 US sales outstripped those Germany (its second largest market), by more than six to one.

Today more than two-thirds of Dow’s total sales are generated outside the U.S.