The most viable alternative to oil is natural gas.

It is far more abundant in terms of reserves relative to current demand, especially since technological breakthroughs in the US have made it possible to harvest gas from shale and similar previously largely-ignored resources. Huge reserves are also conveniently located in politically-favourable environments, such as America and Australia.

However, production of "tight gas" and shale gas formerly not viable to exploit has transformed the supply situation, halving US prices for natural gas, which have plummeted relative to oil, with which it competes in some uses. In the US, the Energy Information Administration says its most likely forecast is for the annual average price of gas at the wellhead to remain below $5 per unit for the next decade. This means gas is likely to remain an attractively-priced alternative to oil for years to come. Perhaps. But low gas prices are also discouraging exploration.

Vehicles driven directly by compressed gas have been around a long time. But they haven't made much of an impact.

Eoin Treacy's view I first came across a gas fuelled car a few years ago in Beijing. The retro fitted apparatus necessitated that the fuel tank be in the trunk and took quite a bit of space which made fitting my daughter's pushchair in a bit of a challenge. However, the driver had no complaints about the system and was planning to have a more discreet gas fuel tank in his next car.

Gas fuelled cars are far from mainstream primarily because of the absence of a system of refuelling stations and public perceptions that they are dangerous. However, with US natural gas prices so low and supply so remarkably abundant it would appear to be only a matter of time before economics trump conservativism and demand for such vehicles increases.

In Comment of the December 2nd I posted an article which raised the possibility that Fiat in conjunction with Chrysler would attempt to introduce a fleet of trucks to the US market that run on natural gas. Fiat has de-merged Fiat Industrial from its main listing and the share now trades independently on the Italian and other exchanges. If Fiat is going to produce natural gas powered vehicles, then I suspect this share is more likely to offer leverage to such a play than the main listing.

Additionally, it offers exposure to increased demand for agriculture machinery as a result of the surge in food prices. John Deere and Caterpillar have both rallied impressively over the last year and while overextended relative to their 200-day MAs, breaks of the progressions of rising reaction lows would be required to indicate mean reversion is underway. Komatsu is a relative outperformer in the Japanese market and remains in a consistent medium-term uptrend. It is currently testing the upper side of the two-month range and a clear downward dynamic would be required to question scope for a successful upward break.