Would you pay $2.14 for a gallon of gas?
I know I would. According to AAA, the nationwide average for a
gallon of gasoline is $3.80... Diesel is even more expensive at
Yet despite high fuel costs across the country, a select group of
drivers are paying only $2.14 a gallon... more than $1.50 below the
What's the catch?
To be honest, there isn't one. These drivers aren't getting some
"special deal," and this isn't some publicity stunt that's only
available to a select few. They're simply filling up their tanks
with a different kind of transportation fuel.
Let me explain...
During the past decade, new technologies like horizontal drilling
and hydraulic fracturing have unlocked waves of natural gas
reserves that were previously thought inaccessible. As a result,
gas prices have plummeted to below $3 per thousand cubic feet
(Mcf)... well below the 10-year high of $10.79 hit in 2008.
With natural gas prices hovering near record lows, companies across
the board are looking for ways to take advantage of the new cheap
energy source... and who better to benefit than the transportation
All over the nation, companies with heavy transportation costs are
introducing vehicles that run off natural gas into their regular
operations. Just last year, UPS added 48 trucks that run off
natural gas to its shipping fleet, which brings the total number of
vehicles in its fleet running on natural gas to 1,100.
Right now, the compressed natural gas (CNG) equivalent to a gallon
of gasoline costs on average $2.14. With over 110,000 natural-gas
vehicles already diving on U.S. roads -- and CNG prices roughly
$1.50 per gallon cheaper than gasoline -- the number of CNG
vehicles on the road is going nowhere but up.
But while there's ample incentive for truck owners to switch from
diesel to CNG, there's still one big obstacle: lack of
After all, you wouldn't want to be on a lonely stretch of highway
somewhere on the outskirts of Omaha running on 'E' without a CNG
station in sight.
Clean Energy Fuels (NYSE:
is in the middle of a bold initiative to install 150 natural
gas-based fueling stations along the nation's most heavily traveled
Clean Energy Fuels operates an interesting business. It's one of
the few companies focusing on putting natural gas fueling stations
along America's busiest corridors.
Judging by the pace at which the company continues to land new
customers, the plan appears to be working.
Since Clean Energy unveiled its plan earlier this year to add
fueling stations to existing Pilot-Flying J truck stops in more
than 30 states, the company has picked up no less than a dozen new
accounts representing hundreds of trucks.
Here are a few of the recent wins:
-- Lancaster, the largest wholesale produce dealer in the
Mid-Atlantic, has begun the transition to CNG-powered refrigerated
trucks to make deliveries in the Washington D.C. area.
-- This transportation and fulfillment firm, which delivers freight
across the country, has signed a 10-year agreement with Clean
Energy to build dedicated fueling stations to support the firm's
growing fleet of gas-powered trucks.
-- Premier delivers consumer products and other goods to department
stores and retail chains in big cities. The company has agreed to
use Clean Energy as its sole fuel supplier, with each of its trucks
expected to use 15,000 gallons of CNG per year.
And this is just a small sample.
More and more of the nation's largest freight delivery firms are
willing to at least test-drive CNG powered trucks. Some are making
the full transition and converting their entire fleets.
And with fueling stations along the nation's busiest routes -- such
as Los Angeles to Las Vegas, Dallas to Houston, and Chicago to
Atlanta -- Clean Energy is well-positioned to maintain its dominant
lead in the fuelmarket .
The company already fills up 25,000 vehicles at 300 locations each
week -- and I fully expect that number to continue growing.
Risks to consider:
Of course, with investing, nothing is 100% certain. If the
price of natural gas rallies, it could be a deterrent for companies
considering making the switch from traditional burning gasoline
vehicles to those that run off CNGs.
Action to Take -->
But seeing as America now has much natural gas as Saudi Arabia has
oil, I think the trend of "cheap" natural gas is here to stay. And
with the price of CNGs $1.50 less than equivalent gallon of
gasoline... this looks like a huge opportunity for investors in
Clean Energy Fuels.
-- Nathan Slaughter
P.S. -- There is an energy crisis looming in the United States.
In case you haven't heard, in six months a major event will take
place that could cause 10% of America's electric energy supply to
dry up. As the country scrambles to react, one company could shoot
up by hundreds of percent. For more information on how to profit
from the coming crisis, click here.
Nathan Slaughter does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.
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