Citigroup Inc (C), Waste Management, Inc. (WM): What Shale Gas Means for Oil Prices

Page 1 of 2

The general direction of oil prices over the next several years is a polarizing topic. While many contend that it’s useless to attempt to predict oil prices, understanding the key drivers of oil prices can be a useful exercise for investors, or, at the very least, an interesting one.

One such driver, perhaps ironically, is the U.S. shale gas boom, which was spurred on by the same technologies that made the country’s oil boom possible. According to Ed Morse, head of commodities research at Citigroup Inc (NYSE:C), the shale gas revolution has massive implications for the price of oil.

Citigroup Inc (NYSE:C)

How shale gas could lead to lower oil prices
Morse predicts that shale gas will continue to gain market share against oil as a leading transport fuel. He argues that it “virtually guarantees” the end of oil’s dominance as a transport fuel, subjecting oil to growing price competition – an issue it has managed to avoid in the past due to the paucity of alternatives to kerosene, diesel, and gasoline for use in planes, locomotives, and cars.

Morse suggests that the attractiveness of natural gas as a transport fuel will lead to greater adoption of natural gas vehicles, which are gradually making inroads in some transport sectors, such as trucking. Waste Management, Inc. (NYSE:WM), for instance, already boasts a fleet of around 2,000 trucks that are powered by compressed natural gas, or CNG, and plans to add more, while United Parcel Service, Inc. (NYSE:UPS) recently said that it will purchase 285 more gas-powered trucks next year.

Meanwhile, however, the transition toward gas-powered passenger vehicles has proved excruciatingly slow. Still, the space may be primed for growth, as engine manufacturers like Westport Innovations Inc. (USA) (NASDAQ:WPRT) team up with automakers to develop better bi-fuel technologies. Earlier this year, Westport Innovations Inc. (USA) (NASDAQ:WPRT) announced that its WiNG Power CNG bi-fuel system will be available on Ford Motor Company (NYSE:F)‘s Ford F-450 and F-550 Super Duty Chassis Cab trucks.

While these firms are creating the technology required for gas-powered vehicles, companies like Clean Energy Fuels Corp (NASDAQ:CLNE) are hard at work developing the infrastructure required to refuel them. The California-based company is charging ahead with its natural gas highway project, which already boasts more than 300 natural gas refueling stations throughout the country.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!