Whether you've made or lost a fortune on natural gas investments, this fuel's future is still an open book. One of the biggest question marks for natural gas investors is its use in transportation. With new technological advances, contracts, and ideas rolling in, here are three things you need to watch in 2014.
Infrastructure is an ugly word. When it comes to fast uptake, the less infrastructure needed, the better. That's why rooftop solar could soar, and why there are more mobile phones than land lines in Africa. For natural gas transportation to work, our nation needs a network of fueling stations spanning the continent.
Currently, there are 644 compressed natural gas (CNG) and 45 liquefied natural gas (LNG) non-private stations across the United States. Clean Energy Fuels (NASDAQ:CLNE) claims the title of the nation's largest provider of natural gas transportation. Since it was created 16 years ago, the company has designed, has built, and now owns and operates nearly 450 stations -- more than the combined infrastructure of all its competitors.
But commercial stations only tell a tiny bit of the tale. There are also 364 private CNG and 39 private LNG stations across the states. UPS (NYSE:UPS) has been using LNG since 2000 and currently has around 110 trucks in its fleet.
It's upping that number by a whopping 700 by the end of 2014 and is building four more private stations at the same time, having forged a multi-year agreement with Clean Energy Fuels for increased access to its commercial stations.
But infrastructure isn't the only reason natural gas has hit the road. Manufacturers Cummins (NYSE:CMI) and Westport Innovations (NASDAQ:WPRT) created a 50/50 joint venture in 2001 that has been behind much of the natural gas engine advancement over the past decade.
More than 35,000 of their engines are in service worldwide, and orders may spike next year as emission standards in the U.S., Europe, and China continue to demand more from less.
Diesel and gasoline engines currently cost around $3.45 per gallon to fill up, while CNG clocks in at a comparable $2.10. That's a major difference for companies like UPS, and a huge selling point for Cummins and Westport Innovations as they convince traditional fuel fleets to make the switch. In its annual report, UPS notes that LNG operating costs can be lower because of LNG's growing domestic supply, and isn't "burdened" with imported oil issues.
And outside the United States, countries like China are "low-hanging fruit" for natural gas transportation. With a goal of reducing carbon dioxide emissions per dollar of GDP by 40% to 45% by 2020, leaders in natural gas transport could see major gains abroad. And when companies like UPS have 96,000 vehicles operating across more than 200 countries, international uptake becomes even easier.