A Game-Changer for Natural Gas Stocks?

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General Electric and Chesapeake Energy have teamed up to offer "CNG in a Box," an all-in-one package that gas stations and convenience stores could purchase to add a pump for compressed natural gas. While we don't know how much the pump will cost, GE and Chesapeake claim that stations can operate them at higher margins than regular gas pumps, which could make them compelling. 

When looking at natural gas as a transport fuel, its future is by far the strongest in fleet vehicles, which are already diving head-first into vehicles that run on cheap natural gas. If adapted widely by gas stations and convenience stores, the "CNG in a Box" device could help convince customers to purchase natural gas powered vehicles. Still, as analyst Brendan Byrnes explains in the video below, there remain a lot of variables to sort out, making it unlikely that natural gas vehicles go mainstream within the next decade. 

The main competitor for the "CNG in a Box" device is Clean Energy Fuels, which is attempting to build out the infrastructure for "America's Natural Gas Highway." It's the first mover in this space, and is poised to make a big impact on this essential industry by providing cheap natural gas to trucks and fleets. To find out everything you need to know about Clean Energy Fuels, and whether the stock is a buy or not, check out our new premium report. Just click here to get started.

Brendan Byrnes has no positions in the stocks mentioned above. The Motley Fool owns shares of Clean Energy Fuels, General Electric Company, Waste Management, and Westport Innovations and has the following options: long JAN 2013 $16.00 calls on Chesapeake Energy, long JAN 2013 $25.00 calls on Chesapeake Energy, short JAN 2014 $17.00 puts on Chesapeake Energy, long JAN 2014 $20.00 calls on Chesapeake Energy, and long JAN 2014 $30.00 calls on Chesapeake Energy. Motley Fool newsletter services recommend Clean Energy Fuels, Waste Management, and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (4)

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  • Report this Comment On October 12, 2012, at 1:09 AM, mountain8 wrote:

    It would have to be a very large push. For me to buy a natural gas car, I would have to have a station near me. I'm only in a city of about 189,000. I'm guessing they would have to install at least 100 free pumps at 100 stations (and the stations would have to be willing to pay for and store the gas until the market establishes) to make me put out the money to purchase that kind of car. And I travel so I would have to know there were 100 stations/pumps in every city I go to. I'm not sure they will be willing to put up with that kind of investment to break into a market that just isn't there yet. HUGE start up cost. It seems the only large groups willing to convert is the freight transport industry, Construction equipment, and some bus lines. Once totally established and profitable, it will then 'catch on' in passenger vehicles. That makes CLNE and WPRT about the only current bet to make.

  • Report this Comment On March 22, 2013, at 12:13 PM, cngaz wrote:

    Most compressor manufacturers have had models in a "box" for years, this is just a better marketing plan than in the past. More players are jumping in as natural gas gets more popular. CNG is moving in all over, but the best initial bet is the large fleets then it will spread. Just as everyone thought once that cel phones and computers would always be too expensive for regular use!

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