Yes, Jack Welch was right yesterday when he said on CNBC's Squawk Box that we are in inning one of the natural gas revolution. But this is a game that could easily be rained out simply because the groundswell to use the stuff may end with those who are peddling it.
We periodically hear about companies that are switching to natural-gas engines. But these tend to be companies that are in the industry themselves, or are inner-city operators who are afraid of governmental authorities and don't want to run afoul of airborne-particulate rules.
Some trucking companies are embracing it. Clean Energy Fuels (CLNE) put out a very good paper last week about early truck adoption. But, again, this is a first-inning matter. It's not shift that's at critical mass, which is what must happen for a change in this industry to matter. Selling millions of gallons doesn't cut it. It has to be billions of barrels.
Yes, what Jack Welch has wrong is that the nat gas revolution is totally stalled out right now. We've learned as much from Sam Thomas, the CEO of Chart Industries (GTLS) -- the ticker symbol denotes "gas to liquids" -- and Dave Demurs, the CEO of Westport Innovations (WPRT). Chart makes the equipment needed to turn nat gas into the compressed natural gas that can be used in surface vehicles. Westport ought to know; it makes the engines that run on it. Thomas is now predicting it might take 10 years before any meaningful shift occurs. Is this a 10-inning ballgame?
Now as I articulated Monday night, if Governor Romney wins the presidency, he will have to help make nat gas a primary surface fuel in order to make North American energy self-sufficient. Nat gas will have to replace diesel for trucks, because trucks use one-quarter of the oil imported into the U.S. Romney has said over and over again that he doesn't want the government picking winners in private enterprise, but that would directly clash with his self-sufficiency goal, and I don't know which one would win under him. But I do know he would never accomplish that latter, chief tenet without throwing his presidential weight behind this fuel.
But if President Obama wins, forget it. The market will not sustain it and trucks will stay with diesel. They just wouldn't have the incentive to switch, and they don't have the gas-station network built out. It's just too risky -- and it could be a huge mistake for trucks if there is no build-out.
Now, get this. If you think I am asking for too much to think the government could ever get involved to push this initiative along, just consider that we in the U.S. burn a huge amount of our corn crop, our basic food staple, in order to make an inferior form of gasoline that uses up a gigantic amount of water that no one really wants -- and the government subsidizes it.
That's totally nuts. It's ridiculous.
But ethanol got through because of the power of the farmers.
Unless the nat gas industry begins exhibiting farmer-like power, I can promise you the U.S. will be in inning one for the next four years if Obama wins -- and that this will probably hold true in the unlikely event that Romney wins. In Romney's case, again, this would simply be because he doesn't want the government to get behind any private enterprise.
So, we wait for inning two.
Don't hold your breath.