Toyota is the maker of the world's first mass-produced hybrid car, the Prius, which went on sale more than a decade ago. Chrysler is also developing an electric version of the Fiat 500 to begin selling in the U.S. in 2012 for city driving.

While recharging stations for electric-car batteries present an infrastructure challenge, locations for refueling natural gas vehicles are also limited. There are 1,300 stations in the U.S. for the 110,000 vehicles using natural gas, the International Association for Natural Gas Vehicles said. That compares with 160,000 gasoline stations, the Petroleum Marketers Association of America said.

The lack of methane fueling stations in the U.S. has limited these vehicles primarily to government and corporate fleets that can return to a central location to refill.

"That is where the industry is primarily putting its emphasis right now," said Richard Kolodziej, president of Natural Gas Vehicles for America. Natural gas is about $1 less on average than a gallon of gasoline, he said.

Targeting Trucks
Marchionne, who plans to raise his Chrysler stake to 35 percent by the end of 2011 from 20 percent, last year separated the Ram and Dodge brands to create a standalone truck unit. His five-year plan for Chrysler includes bringing large- and small- commercial vans to the U.S. in 2012 under the Ram brand based on Fiat's trucks platforms.

"That gives them the freedom to introduce Iveco products into the Chrysler lineup," said Phil Gott, an IHS Automotive analyst in Lexington, Massachusetts. "The target customer would be the heavy duty fleets, they could cut their fuel costs in about half," he said of natural gas engines.

The U.S. currently ranks 14th in the world in sales of natural gas vehicles, while Italy is sixth, according to the International Association for Natural Gas Vehicles. Pakistan ranks No. 1 with 2.3 million vehicles and 3,068 fueling stations. Marchionne hopes to boost the U.S. figure.

"Fiat's technological leadership in compressed natural gas in Europe is a key asset for the U.S. natural gas-vehicle market," the CEO said this week.

Eoin Treacy's view I have always been a fan of Ockham's razor especially when applied to economics. The proposition can be interpreted as "always seek the simplest explanation or solution to a problem" In other words there is no need for complication when a simpler alternative presents itself.

Gasoline at $2.85 a gallon is expensive by US standards and much of the nation's oil requirement is imported from country's not particularly well disposed to the USA. Oil prices have been rangebound for more than a year and have recently established themselves above $80. Natural gas prices have deteriorated considerably over the same timeframe as massive new supply stemming from domestic US share gas is absorbed by the pricing structure. So how can this disparity be used to the USA's benefit?

At present, renewable energy is being touted as the answer to high oil prices and an excess of atmospheric carbon. However, wind and solar have still got a way to go before they are cost effective when compared to fossil fuels for power production. Electric cars and battery technology have developed impressively but still have a long way to go before they are competitive with combustion engines. I believe these solutions are simply not viable in the short term, if lowering the end price of energy to the consumer is the aim. For anyone who questions that this should be the aim of energy policy, let's not forget that higher energy prices act as a tax on economic growth which can be ill afforded..

Natural gas appears to offer a happy medium. It is a less polluting fossil fuel. Supply is ample and close at hand for US consumers. Pipeline networks are already in place. The technology for producing gas powered vehicles is reasonably well established and retrofitting of current vehicles is possible. The missing ingredient remains refuelling stations. With geopolitically secure supply increasing and competitive prices. It is only a matter of time before new uses are found for this essential commodity. Transport remains a leading candidate.

Fiat broke out of a yearlong range two months ago and consolidated below €14 for most of November. It is currently rallying from the lower side of this range and a sustained move below €11.50 would be required to question medium-term upside potential.