2 Reasons Companies Are Switching to CNG

How companies are cutting costs and using CNG to power their vehicles.

Jan 22, 2014 at 8:16AM

What innovation could possibly satisfy environmentalists and economists? Natural gas vehicles, powered by compressed natural gas (CNG) or liquefied natural gas (LNG) engines, may be able to do just that.

Waste Management (NYSE:WM) is part of the solution. With over 2,200 vehicles of its fleet powered by natural gas (mostly CNG), Waste Management is leading the switch from oil to natural gas.

On top of renovating its operations, Waste Management has added 50 natural gas stations to power up its vast fleet. By switching to vehicles powered by natural gas, Waste Management is able to save on fuel costs because gas is cheaper than oil.  

Benefits of CNG
Natural gas produces 30% less carbon dioxide than oil, so a move to CNG helps out both the environment and the economy.

Beyond the moral ramifications of lower levels of pollution, natural gas is cheaper than oil. For the equivalent of a diesel gallon, a gallon of natural gas was 65% cheaper than a gallon of gas back in October. This spread has been quickly expanding since January 2009, and has been continuously growing ever since. Cheaper fuel alternatives offer a great way to save face while cutting costs.

Halliburton (NYSE:HAL) decided to make a move into CNG last year, rolling out 100 natural gas-powered trucks across America. According to Halliburton, those trucks will reduce emissions by 90% and save $5,100 per truck annually. Over the course of ten years, Halliburton will be able to save over $5 million from this small investment. Just imagine what could happen with more widespread adoption of CNG... 

Start up your engines
One of the innovators in this market is Westport Innovations (NASDAQ:WPRT), which is situating itself for the future. By spending over $500 million, Westport Innovations has acquired over 300 patents related to CNG- and LNG-powered engines, which is over 100 more than the next competitor.

By being a market leader in an emerging industry, Westport Innovations has the potential to lead a multi-billion industrial shift. Westport Innovations partners up with the manufacturers to leverage their existing industrial capacity while Westport provides the intellectual property.

What is fueling the change
Back when the United States still imported LNG, natural gas prices were high and investment in the CNG engine space was small. Then the shale revolution swept in, depressing U.S. prices by so much that natural gas became significantly cheaper than oil (for the equivalent amount of energy). When industrial companies saw the potential to reduce fuel costs and be environmentally friendly they jumped on it, which fueled Westport's investment in the space.

As large companies switched thousands of vehicles to CNG/LNG, the market became cemented and economically viable. Halliburton is a good example of how demand has spread from garbage trucks to everyday trucks. This is a market positioned to keep growing.

Foolish conclusion
Natural gas can do more than just power our TV's and heat our homes; it can get us to work and make the air a little cleaner. We are on edge of a major shift in America toward cleaner, cheaper energy sources that can satisfy the demand of economists and environmentalists. Westport Innovations has one of the best patent portfolios in the industry, and investors could be on the cusp of something big.

Callum Turcan has no position in any stocks mentioned. The Motley Fool recommends Halliburton, Waste Management, and Westport Innovations. The Motley Fool owns shares of 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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