Chesapeake Energy Corporation (CHK), Clean Energy Fuels Corp (CLNE), Phillips 66 (PSX): America’s Latest Energy Revolution

In 2013, Phillips 66 (NYSE:PSX) estimates that a $0.10 rise in natural gas prices would decrease its worldwide refinery net income by $10 million. Even after accounting for midstream benefits from increased prices, its total net income would decrease by $8 million.

The company has been able to pump out a $19.45 per barrel realized margin on West Texas Intermediate oil in its most recent quarter and an overall return on investments, of 16.7%. These numbers mean that Phillips 66 (NYSE:PSX) does not have to start worrying about natural gas vehicles right away, but over the next decade these vehicles could put real margin pressure on the entire refining industry.

Conclusion
Increased demand for natural gas may be enough to make more of Chesapeake Energy Corporation (NYSE:CHK)’s wells profitable. Predicting the future is far from easy, but what is good for Clean Energy Fuels Corp (NASDAQ:CLNE) is good for Chesapeake Energy Corporation (NYSE:CHK). If natural gas prices stay low relative to diesel, buying these two companies will be a great growth play. Phillips 66 (NYSE:PSX) is stuck on the other side of this trend, and it is important for downstream investors to watch the adoption rates of natural gas engines.

The article America’s Latest Energy Revolution originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels. The Motley Fool has the following options: long January 2014 $30 calls on Chesapeake Energy.

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