The shale energy revolution in the US has already driven some big changes in the global economy.
The use of fracking' technology has freed up huge quantities of oil and gas in the US. But while oil is a global market, natural gas is not. That's left natural gas far cheaper in the States than anywhere else.
As a result, companies in energy-intensive industries have been moving their businesses back there a process called reshoring'.
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But reshoring' isn't the only big shift. The massive gap between the price of oil and the price of natural gas is pushing companies to find uses for gas that once seemed too much hassle to be worthwhile.
That means shale is already well on the way to revolutionising another sector the transport industry
Natural gas is fuelling more and more vehicles
Despite a recent drop-off, the price of crude oil remains high by historical standards. Meanwhile, the price of natural gas in the US is at rock-bottom. So there's every incentive to substitute natural gas for oil where at all possible.
Now natural gas is even making inroads into one of the biggest markets of all: transport.
Compressed natural gas (CNG) and liquefied natural gas (LNG) vehicles are gradually growing in popularity with industrial users in the US.
Already, more than half of all new waste collection trucks run on natural gas. And as Mike Ramsay reports in the Wall Street Journal, "operators of some of the largest US truck fleets, including [home improvement retailer] Lowe's, Procter & Gamble, and [logistics group] United Parcel Service are accelerating a shift to natural-gas fuelled trucks."
According to the WSJ, heavy duty trucks make up just 1% of the US vehicle fleet, but consume a fifth of the fuel. At the moment, filling up on natural gas costs around $1.50 a gallon less than diesel.
So you can see why it makes sense to switch over to natural gas, for as long as the huge gap between prices lasts. Brendan Marasco of the Motley Fool reckons that UPS could save around $17m a year by replacing its diesel trucks with an LNG-based fleet. Overall, around 5% of all heavy duty trucks sold next year will run on natural gas, up from around 1% in 2013.
But there's more to it than just the pump price. Natural gas is also environmentally cleaner than diesel or petrol. That matters to the bottom line, because in the longer run, governments are only going to tax or regulate dirty' fuels more. A final advantage is that natural gas inflicts less wear and tear on engines. That means lower maintenance costs.
It's not just trucks it's trains too. As John Kemp notes on Reuters, Canadian National Railways is already running an LNG-powered train in the oil sands region of Alberta. And Warren Buffett's Burlington Northern-Santa Fe railroad is trialling LNG trains.
It's not easy to find a place to fill up
One problem standing in the way of wider adoption of natural gas vehicles is the question of refuelling. As the WSJ points out, companies usually use their own garages to refuel, rather than relying on a network of fuelling stations.
But Clean Energy Fuels, founded by well-known oil explorer T Boone Pickens, is building a chain of natural gas fuelling stations across the US it already has more than 400.
And there are even efforts to make natural gas vehicles more feasible for domestic use. For example, as the New York Times reports, Eaton Corporation is developing a natural gas home refuelling station aimed at ordinary drivers. The goal is to have it ready before the end of 2015. "If Eaton can offer it at a reasonable price, it could be a game changer."
In short, there's a lot of interest in this sector. Similarly to the way that the shale revolution took everyone by surprise, there's a good chance that natural gas vehicles could be adopted more quickly than expected, too. It's worth remembering, as Eoin Treacy of Fullermoney points out, that big oil' is in many cases firmly behind this shift for example, "both Exxon Mobil and Royal Dutch Shell produce more natural gas than oil".
Of course, the more uses there are for natural gas, the more the gap between natural gas and crude oil prices will close, particularly as the export market for US natural gas gradually opens up.
But as Kemp notes, it won't be long before natural gas is so firmly entrenched in the market that the cost differential becomes less important to its progress. "If the present gap between natural gas and crude oil prices remains for another two to three years, it should be enough for natural gas to establish a major beach-head in the transport market".
How you can profit
We'll have more on this topic in a future issue of MoneyWeek magazine. But if you're interested in making a small punt on the sector, one risky company to investigate further is Clean Energy Fuels (Nasdaq: CLNE).
Clean Energy's share price hasn't moved much since we last tipped it a year ago, and it's definitely a risky play it's not expected to turn a profit before 2016. But if natural gas becomes a big part of the transport sector in the US, then it should be well-placed to benefit.
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