natural gas cars

Clean Energy Fuels (CLNE)  rose after President Obama announced that he will be opening a program which will research how to run cars on natural gas.  This announcement comes as we watch the rise in the price of gas hit the $4 mark.

Clean Energy Fuels makes their money by selling natural gas converters for cars and trucks.  Meaning, cars and trucks will be able to run on natural gas as an alternative fuel source.  Clean Energy Fuels has been performing very well so far this year; shares are up 45% year to date.

Similar companies to Clean Energy Fuels that could benefit just as much are Cummins (CMI) and Westport Innovations (WPRT).

With the exception of Cummins, these companies are not profitable at this time.  Mostly because they are selling price technologies to a fuel source that is hard to find (have you ever seen a natural gas station?).  That is why I have been a firm advocate for government support.  Without it, these companies, Westport and Clean Energy mostly, will not succeed.  I support the government giving tax breaks and incentives to buyers of cars with these natural gas converting technologies because that is the only way you will be able to get people to change.  There has to be unbelievable gas prices (kind of like right now) and a tax incentive that is backed by the government.

I thought we had a chance last year when the NAT GAS Act was in Congress but ultimately that never came to be.  It seems as though the government has waited until oil prices are way too high to finally say that we need an alternative fuel source.  Unfortunately, we do not know when or even if Obama will endorse these alternative fuel companies.

However, the good news is that some companies such as UPS have been working with Westport to convert part of their fleet of trucks to run on natural gas to save money.  A number of companies are starting to realize the cost of gas is killing their profit margins and have been looking for a way to cut costs without cutting their fleet and workers.  That is where CLNE and WPRT come in.  They have been signing contracts with big companies to have their natural gas technology power trucks.

I have been a huge supporter of natural gas.  It just makes sense because the United States is sitting under one of the largest natural gas field in the world.  So why don’t we create jobs and become energy independent in the process?  Not to mention the cost of natural gas at the pump is over half the price you are paying currently for oil.  I just think our wealth and well being as a country would astronomically rise if we use all this natural gas that is just sitting beneath us, waiting.