General Electric and Chesapeake Energy have formed an alliance to promote the use of natural gas as a fuel for cars and trucks, in a bid to capitalise on the US shale gas boom.

The two companies will work together on developing gas infrastructure for transport, including new units for compressing natural gas for use at filling stations.

The collaboration has an initial target of installing just 250 of those units, which would be a large increase from the 500 natural gas filling stations now open, but small in the context of about 159,000 retail fuel outlets in the US.

However, Mike Hosford, GE’s general manager for unconventional fuels, said he believed the alliance could have “a huge upside”.

Chesapeake, which is the second-largest gas producer in the US, and GE, which has been investing in technology for gas production and transport, share an interest in increasing demand.

The boom in production of shale gas, unlocked by the use of improved production techniques, has created a glut in the market and sent US gas prices tumbling to a 10-year low, putting pressure on Chesapeake’s finances.

GE, meanwhile, has identified energy infrastructure as one of its most important growth markets.

Natural gas is most widely used for transport in emerging economies including Pakistan, Iran, Brazil and Argentina. In the US, it accounts for less than 1 per cent of road fuel demand.

However, the huge gap that has opened up between gas and oil prices in North America is encouraging companies to explore ways of switching cars and trucks away from petrol and diesel and on to gas.

For an equivalent energy content, crude oil is roughly seven times the price of natural gas in the US.

Mr Hosford said: “We’ve got these huge reserves of gas in the US, and this is one way to move towards energy independence, by getting away from oil a bit and on to gas, which is also a cleaner-burning fuel.”

He added that for the market to develop, more manufacturers needed to start producing gas-fuelled vehicles.

This week General Motors and Chrysler both announced plans to sell pickup trucks that will run on compressed natural gas.

GE and Chesapeake say that at today’s prices, a vehicle driving 25,700 miles a year would save $1,500 a year from using CNG rather than petrol. However, natural gas vehicles are typically significantly more expensive than petrol-engined counterparts and have shorter range.

Demand may be strongest for vehicles such as taxis, buses and refuse and delivery trucks.

A tax credit for natural gas vehicles expired at the end of 2010. President Barack Obama has proposed a new tax break for natural gas trucks that would cover half the difference in price compared to a conventional vehicle.

Legislation that has won bipartisan support in Congress, including a bill known as the “Nat Gas Act”, includes tax credits for natural gas vehicles and infrastructure.

However, the call for further subsidies for natural gas vehicles is controversial. The Industrial Energy Consumers of America, a group representing manufacturers that are large gas buyers, said: “The market is working and intervention by Congress is not needed ... The Nat Gas Act picks winners and losers that jeopardise competitiveness and manufacturing jobs.”