Shares of Chesapeake Energy have rebounded sharply
since the news in mid-May that CEO
Aubrey McClendon had been mixing business with personal investments.
But even with a more than 50% jump from the lows of
three months ago, the stock may still have some more room to run. Why? Just look
at the pump the next time you refill your car. The price
of gasoline has suddenly crept higher. And with prices getting close to $4 a
gallon, conversations about gas alternatives are again making the rounds.
This should help Chesapeake (CHK,
Fortune
500), which has a growing presence in compressed natural gas, a type
of fuel that is expected to be used more by consumers. Chesapeake formed a
relationship with General Electric (GE,
Fortune
500) in March to work on more natural gas solutions in the
transportation industry.
The Department of Energy is increasingly giving larger amounts of funding to organizations in major cities that support lowering emissions—something compress natural gas can deliver.
And since this type of gas costs roughly half the
price for regular gas at the pump -- prospects for this fuel source seem bright.
Currently, Honda (HMC)
is the only major automaker that manufactures light-duty vehicles running on
compressed natural gas in the US. But it may soon have more competition.
Mick Cornett, mayor of Oklahoma City, has publicly endorsed the use of compress natural gas lately. So Chesapeake, which is based in Oklahoma City, may be in the enviable position of having home-team advantage in the state as new planning and permitting go into effect.
Gaining local contracts and proving compressed natural gas is a real business will only validate it as a fuel source that this country clearly needs to offset dependence on foreign oil while also reducing emissions. This may be why 22 states are joining forces to solicit American carmakers to build compressed natural gas-powered vehicles for state fleets.
Cleveland Crains
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