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Friday, November 18, 2011
Pretty soon, every heavy-duty truck in the world will run on natural gas.
That may seem like a bold prediction. After all, most industry experts believe the only way this could happen is if Congress approves the Natural Gas Act.
The Natural Gas Act has been floating through Congress for years. It basically provides incentives (taxpayer dollars) for trucking companies to upgrade their fleets from diesel engines to natural gas.
For those who believe in this bill, I have bad news for you: It will probably never pass through Congress.
Sure, politicians on both sides of the aisle say they support the bill. But most Americans are sick of government handouts. Also, the U.S. has to repay more than $56 trillion in debt. The last thing on a politician's agenda is to vote through another taxpayer-funded program heading into an election year.
Trucking companies have been waiting on the sidelines to upgrade their fleets for more than 12 months – in hopes the government will pay them for making the switch. It makes sense... Why buy a natural gas engine when the government may buy it for you down the road?
The thing is, trucking companies are no longer waiting for the Natural Gas Act. They're switching their fleets to natural gas right now.
You see, the price to manufacture a natural gas engine has come down considerably over the past 12 months. Also, natural gas is dirt-cheap and getting cheaper. Based on the economics, it's now cheaper for trucking fleets to run on natural gas than diesel fuel.
Heckmann, a water supplier to the natural gas industry, provided clear proof of this trend during its third-quarter conference call two weeks ago. Management said:
Heckmann is saving $7 million in annual fuel costs by running its fleet on natural gas instead of diesel. It's doing this with no incentives from the government.
It's no wonder large companies like Waste Management, UPS, and trucking firm Ryder are adding natural gas engine trucks to their fleets. In southern California, Wal-Mart – the largest retailer in North America – has several trucks now running on natural gas.
Two of my favorite plays on this are Clean Energy Fuels (CLNE) and Westport Innovations (WPRT).
Chesapeake Energy, one of the largest natural gas producers in the world, just invested $150 million in Clean Energy Fuels. That's the largest operator of natural gas fueling stations.
Oil giant Shell just signed an agreement with Westport Innovations, which makes natural gas engines, to give future clients a better understanding of how natural gas – as a transportation fuel – works. The U.S. Post Office is also talking to Westport about switching over its fleet to natural gas to save money.
Westport Innovations has a near-monopoly on the natural gas-engine market. It has partnerships with the largest global engine manufactures including Cummins (U.S.), Weichai (China), and Volvo (Europe). Together, these companies manufacture more than 50% of the world's engines for heavy-duty trucks.
All of this is taking place right now.
Some of you may be familiar with Westport. I've written about the stock several times in Growth Stock Wire. My paid subscribers are up over 100% on the stock in eight months. Based on the recent trend of new orders, I think Westport is going much higher...
Trucking fleets have just begun making the switch from diesel engines to natural gas to save money. The infrastructure is being built right now. Plus, some of the largest companies in the world are putting their cash behind this technology.
The natural gas engine boom is still in its infancy. I suggest buying Westport Innovations and Clean Energy Fuels on any weakness.
"If each truck switched to natural gas engines, the total market potential would be $240 billion," Frank wrote in July. "Westport's market cap is a mere $1.2 billion. The upside potential is enormous." Shares of Westport are up 17% in just four months. Get the full story here: Another Huge Win for Natural Gas.
Congratulations: If you took Frank's advice and followed an investing legend's bet on energy in September, you're already looking at 17% profits.
The U.S. dollar is holding steady... up more than 6% over the past three months, thanks to the euro crisis.
Tech stocks are still leading the market... Apple, IBM, Google, and Cisco are all up 10%-plus over the past six months.
Silver prices fall 9% in 24 hours... just one week after the "death cross."
No sign of an end to the volatile market... fear index "VIX" jumps 20% in less than a week.