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How Converting From Oil to Natural Gas Could Backfire

Huge discoveries of natural gas reserves sent the price of the clean-burning fuel to their lowest levels in more than a decade last year. But as more homeowners and businesses convert to natural gas, there's a danger that many are ignoring.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, examines the way that counting on cheap natural gas could backfire. Dan notes that based on current prices, converting from oil-based home heating to natural gas allows you to recoup your big initial investment within just a few years. Indeed, commercial trucking businesses are looking at engine conversions, with Westport Innovations (NASDAQ: WPRT  ) helping to develop natural-gas engines and Clean Energy Fuels (NASDAQ: CLNE  ) and General Electric (NYSE: GE  ) partnering on a network of natural-gas fueling stations around the country. But Dan also goes through some of the reasons why natural gas prices could rise in the future that could make conversion less profitable, including simple increased demand as well as projects to export natural gas. Dan concludes that it's smart to consider plenty of contingencies in making a final choice with a furnace conversion or other natural-gas-based energy solution.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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4/16/2014 3:59 PM
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