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New Technology (And Profit Opportunity) Cleared For Takeoff

The energy sector is in the midst  of incredible upheaval right now.

As the  global resource chase continues at an exponential rate,  new discoveries and technologies offer big opportunities for investment.

The kind of shift we’re talking about is so big,  it seems like it may take forever. But in truth, it’s happening very quickly.

Here’s a perfect example…

Within a year, Qatari Airways will open a new airport, equipped to pump jet fuel made from natural gas into its fleet of jets.

But this is just one of many industries that will switch to natural gas-based fuel to take advantage of its newfound abundance and low price. Over the next 20 years, 80% of all new electricity generation capacity is expected to come from natural gas plants. And there are already more than 500,000 compressed natural gas vehicles on the road today.

So it makes sense that the airline industry would be an early adopter of the fuel, too.

After all, persistently high and unpredictable fuel costs have been the biggest culprit in the airline industry’s cycle of bankruptcies. For instance, U.S. airlines this summer used an average of 918 million gallons of jet fuel per month – a total  cost of $2.6 billion. Add in international use, and the numbers jump to 1.4 billion gallons at $4 billion.

That’s where natural gas comes in…

It  costs about 25% as much as crude on an equal energy basis. And in addition to being cheaper, the fuel contains more energy per pound, meaning a lighter payload on flight. And since it produces less sulfur dioxide than traditional fuels, it’s also easier on engines.

Qatar itself has only a modest supply of oil, but it has a huge amount of natural gas. However, the country has no real way to export the fuel, which is notoriously difficult to transport. That makes the country an ideal candidate for spearheading this transition.

Of course, that doesn’t mean it’s the first…

Two years ago, when natural gas prices were much higher than they are today, United Airlines tested natural gas flights. And Rolls Royce and General Electric (NYSE: GE) – two of the top jet engine makers – have already approved the new fuels in their engines, as well.

Will natural gas come to dominate the airline industry? It’s hard to say at this point. There’s still plenty of infrastructure that needs to be built to make that happen. So in the immediate-term, this experiment will be confined to small niche markets like Qatar.

But the point is this: The dynamics of energy prices are so great that the airline industry, which has made fuel through essentially the same process since the Wright Brothers flew at Kitty Hawk, is now implementing big changes on a commercial scale.

That’s just one of the reasons we’ve decided to launch Oil & Energy Daily. Stories like this are simply too big to ignore.

Indeed, with the amount of capital being deployed across the oil and energy sector, we’re seeing wealth created at a pace not seen since the Gilded Age.

So keep checking in to see how it all unfolds – and learn which investments will benefit the most.

Ahead of the tape,

Matthew Weinschenk

 

 

Matthew Weinschenk