The Natural Gas Revolution Is Here

 | Mar 05, 2012 | 11:14 AM EST  | Comments
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gm

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fsys

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wprt

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nav

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xom

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clne

General Motors (GM) gets it. They get the moment. The company recognizes that natural gas is the way of the future because we have way too much of it and because diesel is super expensive and will get more expensive, given the price of Brent and the lack of refining capacity.

Not only that, but GM has figured out that it doesn't matter how much the government subsidizes all electric cars, they are going to be losers -- and not just because of the technology problems of the Volt. Put simply, we have not developed a way to be able to make electric cars pay for themselves because they can't go far and they can't be serviced effectively and because there is no way to dispose of the battery without developing the equivalent of superfund sites to do so.

Meanwhile, hybrid natural gas trucks have a one-year payback even if they extort higher prices for the machines (meaning more than $6000) and more importantly, businesses recognize that we have no control over our energy sources under President Obama and many small  business owners believe that the administration favors higher oil prices as an umbrella for alternative energy. Plus the Sierra Club, which is extremely powerful in this country and a very underrated force -- not unlike the NRA used to be -- has turned on natural gas. So the administration is not going to make the obvious choices when it comes to Post Office or military trucks to go with natural gas. Without those big markets, natural gas will stay low for some time,

With the ratio of 16-1 diesel to natural gas in terms of cost, with the possible savings of more than $2 between the two and with the avoidance of what could be gas lines in an Iran-Israel war, the Chevy truck could be a necessity for business. The electric car is a total nonstarter for these same people. GM's truck, by the way, is an upfit brought to you by Fuel Systems (FSYS), if you want to play that angle. I wouldn't. The company's not good enough to be able to translate the contract into big numbers

Ford has an F-250 truck with an engine from Westport Innovations (WPRT). Navistar (NAV) is committing one third of its output to natural gas trucks. The Europeans can turn these engines out on a dime.

The revolution is here. How fast can it evolve? It only took diesel seven years to go from minor fuel for trucks to being the only real fuel for trucks.

I think that natural gas will have a similar trajectory, with or without President Obama's backing.

The weak link is Exxon (XOM). It is a huge owner of natural gas and its own intransigence and dismissal of the issue dovetails perfectly with the lack of support of natural gas at the federal level for fear that the environmentalists will be upset. Exxon and the Democrats in cahoots with each other on surface fuel aversion to natural gas. Just ridiculous if you ask me, because natural gas is cleaner and don't believe that hogwash about how methane is worse than coal, as coal kills thousands each year in this country, which is what matters. Natural gas is cheaper. And natural gas is divorced from OPEC. I think that if you don't embrace it in government you will be overtaken by events. It's where we are going and right now, because of big oil's stupid aversion to it, the game will be won by Clean Energy (CLNE), which should do a massive secondary like Westport did, to have a warchest to build out CNG and LNG gas stations everywhere.

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