Clean Energy Fuels Is Overrated

Clean Energy Fuels (Nasdaq: CLNE  ) , a provider of natural gas fueling stations, is widely viewed as the main beneficiary of an emerging natural gas vehicle market in the U.S.

But what happens to Clean Energy Fuels if the utility companies or, heaven forbid, Big Oil want a piece of the action? Well, we might find out.

Piedmont Natural Gas (NYSE: PNY  ) plans to build a network of natural gas fueling stations across the Carolinas and Tennessee. The natural gas utility company is taking a page from Clean Energy's playbook and targeting business fleets as the primary customers for the fueling stations.

Other natural gas utility companies are entering the market as well.

Atlanta Gas Light, a subsidiary of AGL Resources (NYSE: AGL  ) , is seeking state funds to construct a network of 10 to 15 natural gas filling stations in the Atlanta metro area. The move is prompted, in part, by the success of Clean Energy Fuels' CNG stations in the area.

And that's just the utility companies. The biggest competitive threat to Clean Energy Fuels may come from the major integrated oil companies.

Chevron (NYSE: CVX  ) offers CNG alongside gasoline and diesel at fueling stations in Pakistan. Royal Dutch Shell (NYSE: RDS-B  ) plans to do the same in Canada. If natural gas transportation catches on in the States, Big Oil could simply domesticate its foreign fueling station strategy.

Clean Energy Fuels offers an unattractive risk/reward profile because of the competitive environment. The other natural gas transportation stocks look to be a better way to invest in this trend.

Fool contributor Adam J. Crawford does not own shares in any company mentioned in this article. Motley Fool newsletter services have recommended buying shares of Chevron and Piedmont Natural Gas. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On September 15, 2011, at 3:47 PM, Doridori wrote:

    CLNE might be the little guy now but it is sure awakening the giants. This stock might be attractive as a good takeover candidate when one of the sleeping giants try to catch up in the NG market.

    I'm a buyer, especially at this level. Natural gas

    is the future, believe it.

  • Report this Comment On September 16, 2011, at 12:57 PM, encendere wrote:

    We knew this would occur. Still long CLNE.

  • Report this Comment On September 16, 2011, at 2:56 PM, Safcraker wrote:

    The early bird gets the worm. There was a lot of rationality, logic and forethought put into this statement before it was made by it's originator. It was true then and it is true now. Wise up.

  • Report this Comment On September 16, 2011, at 3:22 PM, Safcraker wrote:

    For what it is worth, I would personally like to see "Fools" doing more to encourage their readers to write their representatives promoting a Natural Gas Bill. This is so important for this country to use our own natural resoures and keep the tremendous amount of money spent on it, at home. To many benefits to mention here, many are obvious. It seems this should be a no-brainer but there are actually a lot of people that would vote against America becoming less dependent on foreign oil and the people that do should voted out of office. A lot of figures are thrown around but approximately half a trillion dollars a year is spent on foreign oil, what are the reasons not to vote for it ? If it is fracking and if they can prove it, there must technology to overcome this problem, my understanding is that they are a long ways under the water table.

    Which brings up another point, and not because of fracking, but desalination technologies are needed for many reasons but think of all the benefits there would be for cheap desalination with the upcoming future food shortages around the world. Theres alot of land out there that could grow a lot of food with cheap water. Imagine death valley covered in watermelon, lol.....or something similar.

  • Report this Comment On September 16, 2011, at 5:27 PM, FoolofaMan wrote:

    Your article about Clean Energy Fuels, on the surface, appears to be accurate. However, it does not take into account that over the past several years Clean has been buying up and investing in the companies that make the parts and equipment for Natural Gas stations. So their competitors will be sharing a piece of the pie every time they build a station. T. Boone truly believes that Natural Gas is a big part of the future and because he truly believes this he has been preparing for a competitive market. He has a lifetime of experience in the Oil game, I would not sell him short.

  • Report this Comment On September 19, 2011, at 2:33 PM, mnatural wrote:

    QUOTE:

    Other natural gas utility companies are entering the market as well.... Atlanta Gas Light, a subsidiary of AGL Resources (NYS: AGL) , is seeking state funds to construct a network of 10 to 15 natural gas filling stations in the Atlanta metro area. The move is prompted, in part, by the success of Clean Energy Fuels' CNG stations in the area.

    UNQUOTE:

    You are way off, Adam J. Crawford: To understand what AGL is seeking to do with free public funds (when their own cost of capital is <0.5% nominal = negative in real dollars) you need to look at the opposing public comment on file with the Georgia PSC.

    Get it by going to GA's PSC web site > Manual Docket Retrieval > Docket 32499 > zip file 138023 dated 9/13/2011 > RWW Letter to GA PSC Commissioners - 110822

    You ought to read it.

    Regards,

    RWW

    P.S. CLNE has only 1 station "in the area." What makes you label it "success[ful]"? Does CLNE have earnings? Ever had any?

  • Report this Comment On September 19, 2011, at 8:52 PM, winmnguy wrote:

    Well, sure, competition is coming, but the companies Mr. Crawford mentions just have plans. Clne has I don't rememer how many fuleing stations up and running and recently got substantial backing from Chesapeak, so they already have backing from a significant energy company with huge natural gas resources. I'm stayin with them.

    Winmnguy

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