A glut of cheap, abundant natural gas is about to turn the U.S. transportation industry upside down - and it will make two companies at the epicenter of this revolution among the best stocks to buy.
Exploration and drilling for oil in America's newfound shale fields has unleashed a game-changing byproduct - enormous pools of natural gas that could meet the nation's energy needs for the next century.
In fact, the discoveries are so colossal they're set to rattle energy markets around the planet.
"North America has set off a supply shock that is sending ripples throughout the world," the International Energy Agency (IEA) said in its 2013 medium-term report.
But the first place to feel the effects will be right here at home.
You see, the supply surge will spur a massive switch away from smog-belching diesel engines to clean-burning, natural gas-powered vehicles.
Here's why...
Natural Gas Prices Tilt the Energy Market
Excessive drilling and exploration in shale fields drove natural gas prices to lows of around $2 per million British thermal units (mbtu) in 2012.
In fact, natural gas prices were so low that it became more economical for producers to simply burn or "flare" it at the wellhead as an unwanted byproduct.
But that's all changing now.
Prices have recovered to roughly $4 mbtu, as producers have begun to cut back.
But even at those levels, natural gas runs about $1.50 less per gallon than gasoline or diesel, so converting vehicles to natural gas remains attractive.
"Cheap and abundant natural gas has already facilitated the transition of the U.S. economy towards broader use of [natural gas for transport fuels]," the IEA report stated. "Natural gas will increase its share of road transport fuels to 2.5% in 2018 from 1.4% in 2010."
That may not sound like much, but the implications are enormous...
There are currently about eight million heavy and medium-weight trucks burning three million barrels of oil a day, according to The New York Times.
That's nearly 15% of total national daily consumption and 75% of the oil imported from members of the Organization of the Petroleum Exporting Countries (OPEC).
Depending on local market conditions, switching to natural gas from diesel would save the nation's trucking industry $1.65 billion annually in fuel costs alone.
What's more, using natural gas not only reduces operating costs for vehicles, it also reduces greenhouse gas emissions--up to 30% in light-duty vehicles and 23% in medium to heavy-duty vehicles.
And Washington is firmly behind the natural gas revolution.
The U.S. government currently offers a tax incentive of 50 cents per gallon for using natural gas.
Even better, a bill currently under consideration in Congress, HR 1380, dubbed the New Alternative Transportation to Give Americans Solutions Act (NATGAS) would offer tax credits ranging from $7,500 to $64,000, depending on the size of the truck, for the purchase of new vehicles that run on natural gas.
No wonder the trucking industry is excited.
"We are truly at the cusp of a potential revolutionary change in the trucking industry," said Michael Card, chairman of the American Trucking Association.
Two Natural Gas Stocks to Buy Now
Right now, hundreds of compressed natural gas (CNG) and liquid natural gas (LNG) filling stations are being built across the U.S. to help support the growing number of natural-gas-powered vehicles.
If enough natural gas filling stations get built, sales of heavy-duty natural gas vehicles could increase to 275,000 in 2035, fully 34% of new vehicle sales, from 860 in 2010, the EIA said last year.
And two natural gas stocks to buy now are paving the way.
Clean Energy Fuels Corp. (Nasdaq: CLNE) just completed what it calls "America's Natural Gas Highway" -- 70 new LNG truck fuel stations to support long-haul movement along major interstate corridors throughout the U.S.
Headed by legendary energy tycoon T. Boone Pickens, CLNE is also the largest provider of CNG in North America. This natural gas stock to buy currently fuels over 25,000 vehicles daily at 273 locations in the U.S. and Canada.
With a recent injection of $150 million from an investment group headed by Pickens, CLNE plans to build 70 to 80 additional LNG fuel stations adjacent to long-haul trucking routes in North America.
Many of these stations are located at existing Pilot-Flying J truck stops. Pilot is the nation's largest truck-stop operator with more than 550 retail properties in 47 states.
For a picks-and-shovels natural gas stock to buy, take a look at Westport Innovations (Nasdaq: WPRT).
WPRT owns hundreds of patents with the most innovative technology and designs for the conversion of diesel engines to natural gas. It designs natural gas-burning engines as well as systems and components for both the manufacturing and direct-to-consumer sectors.
A collaboration with Cummins Inc. (NYSE: CMI), Cummins-Westport, just released theISX12 G, a heavy duty natural gas engine.
The new engine is expected to grab the attention of retail heavyweights like Wal-Mart Stores Inc. (NYSE: WMT) and Nike Inc. (NYSE: NKE) that have been pressing trucking companies for transportation of their goods by natural gas vehicles.
To learn about several more promising stocks to buy, please read Two of the Best Energy "Pick and Shovel" Plays to Buy Now
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Betting on the Coming Boom in Natural Gas Prices - Yahoo Finance:
U.S. Oil Production to Shock Global Energy Markets: IEA Report - The Wall Street Journal:
Natural Gas Blazes a Path to Higher Prices - Transport Topics:
Trends' Panel Cites Nat Gas Transitional Concerns - The New York Times
Trucking Industry Is Set to Expand Its Use of Natural Gas
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