The U.S. Energy Information Agency estimates there are 2,203 trillion cubic feet of technically recoverable natural gas in the United States. To put that number into perspective, last year we used about 24 trillion cubic feet. That means we have enough natural gas to last about 92 years. However, it's more than likely there is even more gas out there waiting to be discovered or unlocked by technological advances. Bottom line, we have plenty of gas. Not only that, but there are two big reasons why we really should be using more of it.
Natural is cheap
The following slide is pretty remarkable. In the upper right hand corner it details two charts that clearly demonstrate how cheap natural gas is relative to rival fuels.
First, note how the barrel of oil equivalent of natural gas is about a quarter of the price of oil. Further, notice how cheap it is to fuel a power generation fleet with natural gas. The low capital costs of building a natural gas power plant really give it a competitive advantage over coal.
Coal producers are certainly taking notice. Many are shifting to exporting coal volumes overseas, while CONSOL Energy (NYSE: CNX ) is jumping into the natural gas revolution with both feet. The company is basically abandoning its efforts to grow coal volumes. Once it completes its latest mine expansion next year the company expects to only invest to maintain its coal production with all of its growth capital being spent to increase its natural gas volumes. Clearly, CONSOL sees natural gas fueling its future.
Replacing coal isn't the only spot where natural gas has the potential to make a big impact. The economics of fueling our nation's garbage trucks or buses is very compelling. Clean Energy Fuels (NASDAQ: CLNE ) , one of the leaders in building out our nation's natural gas refueling infrastructure, has a great chart that shows just how cheap natural gas is against diesel or gasoline:
Given those compelling numbers it is no wonder why 30% of all new transit vehicles and 60% of new refuse trucks are built to be fueled by natural gas.
Then there is the very compelling environmental benefit of switching.
Natural Gas is clean
Not only is natural gas cheap, but it is so much cleaner than other fuels. Back to the first chart, the second diagram on the right shows how much lower natural gas emissions are when compared against rival fuels. There is no question that it is the cleanest fossil fuel.
The reason for this is simple, because natural gas is simple. It is composed primarily of methane, which is the simplest hydrocarbon. At its core it contains more hydrogen and less carbon. When it burns it produces mostly carbon dioxide and water, which incidentally are the same substances humans emit when we exhale.
How to play our natural gas future
Investors aiming to profit from this potential can look to Clean Energy, which is building and operating the refueling stations. Another company that will really benefit from this future is Chart Industries (NASDAQ: GTLS ) which manufactures all the equipment needed for a natural gas refueling station as well as well as the tanks required to move and store liquefied natural gas. It's a company I own, but one with a future compelling enough that I'd like to purchase a second helping in the near future. If only its shares were as cheap as natural gas these days.
The bottom line is that natural gas is abundant, cheap, and clean. We really need to use more of it in the U.S., with transportation and power generation being two key areas where it has the potential to be really transformative. That's the recipe for a compelling future and why natural gas-related stocks are so compelling for investors.
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