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Currently, natural gas is selling at its lowest price in 10 years, making it about 42% less than the cost of diesel fuel on a per-gallon basis. More importantly, the Department of Energy's Energy Information Administration forecasts that this price differential will last for decades into the future. While natural gas-fueled passenger vehicles have yet to catch on, more and more managers of commercial truck fleets are beginning to replace their diesel trucks with trucks that burn compressed natural gas (CNG) or liquefied natural gas (LNG).

Recently, President Obama used a visit to a Daimler plant in North Carolina that makes trucks that run on natural gas as a platform to promote his energy agenda, and in the process continued to push the green-vehicle envelope. The natural gas theme continued as Obama pushed for a new tax incentive for commercial trucks that would provide a credit for 50% of the incremental cost of a dedicated alternative-fuel truck, including trucks powered by natural gas or electricity, for a five-year period.

The commercial trucking industry itself is also seeing a lot of change in terms of business models. The primary driver of this change is fuel costs. These are usually charged over-and-above freight charges as a "fuel surcharge." Shippers (those who pay for the shipping) surveyed list surcharges as their number one gripe when it comes to transportation costs. Most believe that fuel surcharges are profit-making schemes, whereas similar surveys of carriers (those doing the shipping) show surcharges are often a pass-through cost rather than a profit. Carriers fear going back to a straight-charge model, while shippers are pushing hard to get to one. This rift means there is a lot of potential for change in the industry. This change is already happening.

Paccar (NASDAQ:PCAR), which is the top producer of heavy duty long-haul vehicles in the U.S., making both Kenworth and Peterbilt brands, is offering a natural gas version of several of its vehicle models. Navistar (NYSE:NAV), another leading producer, has vowed to offer every one of its heavy-duty models in natural gas variants with several already at market.

Cummins' (NYSE:CMI) flagship natural gas truck engine is the spark-ignited, 8.9 liter USL G, which is a based on a similar diesel engine and optimized for natural gas use. It can burn CNG, LNG, or biomethane. It is manufactured through a 50:50 joint venture between Cummins and Westport Innovations (NASDAQ:WPRT), which develops fuel injection technology for natural gas engines. Cummins-Westport announced in February they expect to sell the larger, 12-liter ISX12 G engine beginning in early 2013.

There are currently only about 1,000 fueling stations operating in the U.S. that offer CNG. Moreover, many of those are for not open to the public and are often for government-owned vehicles or corporate fleets. Natural gas as a truck fuel got a big boost this February, when truck maker Navistar announced it will partner with Clean Energy Fuels (NASDAQ:CLNE) to offer customers a comprehensive engine/truck/fuel package. Clean Energy Fuels is a company set up by financier and natural gas advocate T. Boone Pickens to build a network of natural gas vehicle fueling stations. Customers can lease natural gas fueled trucks from Navistar (using a Cummins engine) as well as contract for fuel through Clean Energy's 257 fueling stations. Clean Energy hopes to build a network of 150 LNG truck fueling stations along major truck routes that will allow LNG trucks to travel coast to coast.

In addition to producing oil and gas, Apache (NYSE:APA) has been a leading advocate of NGVs by converting its own U.S. vehicle fleet to CNG, and hopes to have about 800 on the road by the end of 2015. Apache has built and operates seven CNG fueling stations, and has nine more in various stages of planning and construction. Of the new stations, five will be open to the public.

So should you dig for gold or sell the shovels? Another company that stands to benefit from increased use of natural gas as a truck fuel is Quantum Fuel System Technologies (NASDAQ:QTWW), which makes high-pressure CNG storage tanks for light and heavy duty fleet vehicles. Quantum Fuel System Technologies is a small-cap, $26.9 million, that trades below $1.00. It just announced on April 23 that it has received a new purchase order from a leading natural gas vehicle system integrator for supplying its industry-leading, ultra-lightweight high capacity carbon composite compressed natural gas (CNG) storage tanks for long-haul trucks. The stock price has been lowered due to Quantum Fuel System Technologies' investment in other alternative energies, such as wind and solar products.

The bottom line: Cummins and Paccar have a bullish equity summary score and a First Call Consensus rating of buy. Clean Energy Fuels, Westport Innovations and Navistar have a bearish outlook among equity summary score analysts. Quantum Fuel System Technologies is underfollowed by analysts at this time.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Big Trucks Lead Use Of Natural Gas As A Transportation Fuel