The nat gas revolution begins

Thanks to this pair of coinciding events, it's happening in trucks -- finally -- right now.

By Jim Cramer Aug 14, 2013 9:02AM

thestreet logoWhen we look at the tipping point as to what caused U.S. trucking companies to switch from diesel to liquefied natural gas en masse, it will be an odd one. Indeed, it will be when the oil bottleneck in Cushing, Oklahoma, was eliminated and West Texas Intermediate rose to the world crude price, instead of the world crude price coming down. That, combined with the mass production of the 12-liter Cummins (CMI) truck engine, will have made LNG too cheap not to switch to it.

That's what Sam Thomas, the CEO of Chart Industries (GTLS) -- which is at the heart of the natural gas revolution -- told me when we chatted Tuesday night (TheStreet). Those two events simply made the whole deal too economic to not do. That price differential eliminated any hope, in the minds of the big shippers, that diesel would come down enough to render it reasonable to stick to it vs. a fuel half its price. Truckers, after all, would now be relying on Cummins to produce the engine that burns it. Reliability and inexpensive fuel made a value proposition come true, and without any government monkeying around the subsidies needed.


Workers reading clipboard by tanker © Monty Rakusen, Cultura, Getty ImagesHow fast will it happen? It only took seven years for diesel to go from being a pretty unknown fuel to being the only fuel for trucks. Sam says it will pretty much be the same for nat gas when the infrastructure's built out. The big change here, by the way, is that all of the major gas station owners are talking about having LNG tanks, according to Sam. Chart, moreover, has a huge backorder of on-the-go filling stations for those who want to turn their fleets from diesel to natural-gas-burning vehicles. Sam says that, if we measure the adoption by looking at the percentage of new nat gas trucks being ordered, we will be able to grasp the enormity of the change.

How about cars? That's much tougher, Sam points out, because the car companies are always getting new mandates from the government: more gasoline mileage, more ethanol, more electric. They don't want to offer any more different kinds of vehicles if they can avoid it.

 

But trucks? It's happening right now.

 

At last.

 

cramer

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and had no positions in stocks mentioned.  

 

 

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82Comments
Aug 14, 2013 10:03AM
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LNG will be popular until the banks and hedge funds gin up the price. Then of course, they will hold seminars and buy TV ads "advising" the rest of us to take long positions so they can sell and start the process all over again.

 

Then the producers will raise and lower output according to pre-determined price targets set by the big banks. 

 

The whole process would more closely mirror actual supply/demand if commodity prices were set between producer and user only, the way the Dutch set it up 400 years ago. Blame Congress for accepting bribes (sorry, campaign contributions) to eliminate the wall between banking activities.

Aug 14, 2013 9:47AM
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No offense, Cramer, but I'll believe this "revolution" is upon us when I hear it coming from T. Boone Pickens, not you.
Aug 14, 2013 11:24AM
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Isn't Ford coming out with a natural gas F150 pick up truck?

 

 

Aug 14, 2013 9:39AM
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Unitl the EPA cracks down on it next
Aug 14, 2013 12:23PM
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LNG will stay cheap until they start exporting it in mass quantities.  Currently, they are trying to build export terminals along all of the coastlines (Atlantic, Pacific and Gulf Coast.)  The only ones standing in the way are the environmentalists.  Even if you do not normally support the environmentalists, this may be one issue where it would be in most people's interest to get behind them.  Help keep LNG cheap: oppose the building of export terminals!  Once they build the terminals, the price of LNG will rise to whatever the international market will bear.  The only people who will benefit are the people directly involved with LNG production and transport.  The rest of us will lose, as we will pay higher prices for gas to heat our homes, generate our electricity and fuel our vehicles.
Aug 14, 2013 10:02AM
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cramer likes his natural gas!  he must be trying to sell....

 

i can see or understand however how a construction job site might like using LARGE natural gas tanks to top off the tanks of all their equipment. 

 

we know the regular gas station infrastructure can't support this for cars and trucks.  but a construction site can.  along with continued EPA regulations on diesel fuel, switching to natural gas can help that industry.  they also gain bragging rights for inner city construction jobs. 

 

i heard - never confirmed - that natural gas engines last far longer than gas or diesel engines.  if that is true, then these industrial vehicles and last far longer than before earning more return for their purchase price. 

 

 

Aug 14, 2013 2:50PM
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  Remember when Boone was pushing for a massive wind farm belt in the mid west where they have consistent night winds. Just needed gov. to get out of the way Sounded like a good idea. . Well now Obama wants to increase wind energy by 10 fold. I have to wonder if this will happen. Wind farms are killing nearly 1.5 million birds and bats per year now. Ten fold that and you have a big insect problem exploding insecticide needs on our food crops increased illness and health care cost etc. At some point the greenies will jump ship and move against wind farms. Still lots of issues to consider in the green world,. ideas are not always as good as they first appear.
Aug 14, 2013 10:23AM
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NTU....I don't need him to go-away, I like jousting with his Fat Azz.....Keeps me alive and en-garde.
Aug 14, 2013 1:45PM
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Hard to stop laughing right now.. Apple could go to 700... but we all have read the Apple is Dead articles and they have NOTHING ready for roll-out. Does anybody else see today's Red Banner and Top Header news about Apple as a Billionaire Ploy to get losers like YOU to buy Apple so they can sell their positions higher? I mean REALLY... give Icahn a ZERO for effort here!

 

Meanwhile... Macy's is dragging the market lower. It isn't every sane person on Earth liquidating ahead of the CRASH, is it? We need a replacement for Big Media.

Aug 14, 2013 2:50PM
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This billionaire war over Apple is not funny at all.  This is how you destroy the credentials as well as the fundamentals of an issue.  These cats are making Apple appear to be a cheap disrespected issue. .  Most all these cats are saying is barbs and get backs with the bottom line they either want to make money or keep some else from doing same.  Just all the smearing and negativity will result in a cause and effect. I would probably most side with Ellison in that I don't believe Apple will have any where near the success they had with Jobs.  Cook is merely an employee until he proves otherwise.  I know many of you have had a good run with Apple.  But MSFT, CISCO, QUALCOMM were all up and comers who have peaked at growth and leveled off.   Also the perma bulls might think about reading what the term "greater fools theory"  is and how people can become complacent and end up getting seriously harmed. This is developing to perhaps get a bit ugly.   But who knows for sure.  We have had a very substantial run coupled with many doubts as to the sustainability of profits.  My own opinion is many profits have been the result of cost cutting wihout any investment in future product development.  Not a sound future in my terms. .JMHO
Aug 14, 2013 12:17PM
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Cramer, you are 100% wrong on this issue.  Diesel will never be replaced by natural gas because of safety.  Try putting a match to a tank of diesel and then natural and let me know how that works out?  The answer is efficient combustion rather than energy source.
Aug 14, 2013 1:51PM
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this hack has been pushing nat gas for 8 years............BEWARE
Aug 14, 2013 11:12AM
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This has already been tried and everybody seems to have forgot.  They tried using LP gas in the 70's when the price of gasoline went up to $2.00 a gallon (drool), due to the arabs. 

 

What they found was that with the few vehicles that were equipped it cost $1,500 to change over, (then), and that the risk of explosions due to leaks was far more deadly.  Also during a crash gasoline can catch fire, however, in most cases just leaks on the ground.  OTOH, if there is a leak of LP in the tank, unlikely, or in the gas lines, very likely, LP is far more dangerous than gasoline.

 

Course I do remember just a few years back all the wonderful ethanol that's going to be made from corn.  Course now they figured out ethanol corn field to tank is dirtier than gasoline oil well to tank.  Not to mention the price of corn has gone up considerably. 

 

Yeah go out there and buy up all that LP stock, you can put it with your ethanol companies.  

Aug 14, 2013 10:48AM
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Cheaper,, burns cleaner,,, therefore a lot less engine maintenance,, gee whiz,, big oil is involved, but they aint pushed it for years because it would cut into thier profits,, thank T Boone  if it ever comes to the front,
Aug 14, 2013 10:09AM
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NatGas.........Is an interim technology, that will probably have it's day in the Sun...

LP or propane was installed and put into several usages years back, vehicles, BBQ cooking etc.

Some of the Utility companies I think may have converted trucks to one or the other...?

They even had signage touting usage of NG or LPNG.

The Government's Fleets were another experiment...In a limited capacity.

 

I can certainly see Electric (battery) or Hybrids in smaller vehicles, as a force to reckon with.

But heavier hauling, needs power; And batteries wouldn't seem to have that and any lasting capability for the long haul..

Although Trains (locomotives) function as such, they are based on much different concept of combinations...Big powerful electric motors, powered by big powerful diesel engines.

 

As soon as NG was/is applied as a source for energy and travel...I'm sure we would see pricing that would be comparable to other forms of fuel or power.

Aug 14, 2013 10:32AM
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Yeah DLH....I wasn't  even going to relate to the Power or Electric producers (Power plants)..

 

That use of NG, much of that change occurred I think back in the 70s-80s due to oil embargos and/or EPA regulations to get away from Coal....The "clean air initiatives."

 

Not really sure, but think...??

Some of those plants have the ability to burn both or more than one kind of fuel.

Aug 14, 2013 1:21PM
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Geez !  Looks like the Hindenburg Omen  is BACK !
Aug 14, 2013 12:08PM
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Thanks to (someone-Haggas)...For expanding on the rest of the story, as I remember it also.

It never caught hold before, because of the bugs that he mentioned...

And then big oil got some sense; Tensions eased.

 

And Americans went right back to sucking on the oil teat, as always.

Aug 14, 2013 1:43PM
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Hey cramer - remember how you said you could manipulate stock prices buy feeding info to a "pisani" ....

Well guess what ---EVERY CEO who comes on your show is  going to say they are great ....you are just the small end of the megaphone !!
Aug 14, 2013 1:47PM
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They've been selling on any rally attempted and to make things worse they called once again to accelerate the sell off at 1330 hrs so we are down about 125 and counting. Scumbags have total control on and off the floor now so there is very little we can do...Like we said earlier, remain cautious and on the sidelines, these crooks are not done yet, better believe that...More after the close.
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