Tuesday, April 2, 2013

This "Made in America" Fuel Is Finally Going Mainstream

A crazy idea we had a few years ago is going mainstream… and is making my readers lots of money in the process.

In early 2011, we began publishing reports on how natural gas was poised to become a major transportation fuel right here in the U.S. I received dozens of e-mails from readers telling me that I'd lost my mind. They said it would never happen. These e-mails could be summed up as, "There's no way we'll move away from gasoline."

Today, this idea does not sound so crazy… It's gaining momentum as I write. And you can still put your money with the key players in this megatrend…
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America is moving closer and closer to a boom in natural-gas-fueled transportation

You see, right now, there's a $1.75 per gallon price differential between diesel fuel and natural gas. It's irresistible for companies that have large fleets of vehicles.

Take Waste Management, for example. It's America's largest waste recycler… It already owns 1,700 natural gas trucks. And the company recently said 80% of the new trucks it buys will run on natural gas. It's saving millions of dollars in fuel costs.

Wal-Mart, Coca-Cola, UPS, and dozens of other blue-chip companies with huge trucking fleets are also making the switch. Caterpillar, the largest construction company in the world, is producing mining vehicles that run on natural gas.

Ferry systems around the U.S. are switching to the clean fuel. In particular, Staten Island Ferry announced its vessels will begin running on natural gas. The City Transportation Department said each vessel could save up to $3 million a year.

Recently, Warren Buffett made headlines when he announced BNSF Railways will test using liquefied natural gas (LNG) to power some of its locomotives. BNSF is one of the largest transportation companies in the U.S. – and owned by Buffett's Berkshire Hathaway.

Berkshire said, "BNSF could cut its fuel costs by 88%." That's probably why GE and Caterpillar are designing new natural gas locomotives to market to the rail companies as you read this.

Nobody in the financial newsletter industry has spent more time than we have researching and writing about America's boom in natural-gas-fueled transportation. And I've shown you how it's going to make household names out of a few little-known energy stocks.

Westport Innovations (WPRT), for example, has a near-monopoly producing natural gas engines for trucks and cars. My Small Stock Specialistnewsletter readers booked 110%-plus profits on Westport last spring in just over a year. They've also made returns on Chart Industries (GTLS), which provides products and systems for natural gas storage and transmission. It's sitting near an all-time high.

And this megatrend is still developing…

According to the International Association for Natural Gas Vehicles, there are about 16 million natural-gas-fueled vehicles worldwide. That's just a hair above 1% of the 1.3 billion total vehicles in the world. In the U.S., only 0.05% of all vehicles run on natural gas.

In other words, the U.S. market for natural-gas-fueled vehicles would need to grow 20 times larger just to catch up to the world's average.

And our research shows 2013 could be a "breakout" year for natural gas use in the U.S.-vehicle market. That's because companies are doing everything in their power to cut costs these days. And using natural gas instead of gasoline or diesel to fuel their truck fleets and large machinery can generate 30%-60% cost-savings.

It's only a matter of time before we see a "tipping point," where consumers get comfortable enough to start using the clean fuel in their own vehicles.

Companies are already preparing for this tipping point to happen. The biggest drawback for cars running on the clean fuel, for example, is tank storage. Leading manufacturer 3M has teamed up with natural-gas giant Chesapeake Energy to address this problem.

They're developing natural-gas fueling tanks with a plastic lining that's wrapped in carbon-composite. These new tanks could provide 20% more fuel-storage capacity, while reducing the weight of a natural gas tank by 20%. In short, this new technology will make natural gas cars more affordable.

The conversion to natural-gas-fueled cars and other small trucks is the next phase of this massive rollout of American-made fuel.It will play out over years… and billions of dollars will flood the industry as it does.

I see strong profits ahead for the "nuts and bolts" companies that will develop the infrastructure that's required to support a booming natural-gas-fueled vehicle market. These businesses specialize in things like building natural-gas-fueling stations and LNG storage tanks.

Investing in these companies now, when this trend is just getting started, is the way to see massive gains in the years ahead.

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