The Shorts Are Wrong About This Nat Gas Leader

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and consumer-goods editor/analyst Austin Smith discuss topics around the investing world.

In today's edition, Brendan takes a look at a natural gas-focused company with a high percentage of short interest. Clean Energy Fuels, a company that specializes in natural gas stations and infrastructure, has about 25% of its float sold short. It's not particularly surprising, considering Clean Energy Fuels isn't currently making money and has been spending heavily on capital expenditures. Still, Brendan disagrees with the shorts on this one. He thinks Clean Energy, though still a highly speculative bet, has advantages as the first mover in the natural gas infrastructure space, and should benefit from tie-ins with truck stops that fleets are familiar with. Brendan thinks that while natural gas likely won't stay as cheap as it is now, it will remain cheaper than gas and diesel for the foreseeable future, and thus remain a compelling fuel for fleets and trucking companies.

Investors are rightly very excited about natural gas and the companies that stand to profit from it. Our analysts have identified a company that uses an interesting approach to play the natural gas boom and will prosper for years to come. Read more about an energy stock set to soar in our special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

Austin Smith and Brendan Byrnes have no positions in the stocks mentioned above. The Motley Fool owns shares of Westport Innovations and Chesapeake Energy. Motley Fool newsletter services recommend Clean Energy Fuels, Chesapeake Energy, Cummins, and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


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  • Report this Comment On May 30, 2012, at 4:29 AM, kmacattack wrote:

    I'm long in Clean Energy and also in Chesapeake energy, which is one of 3 Nat gas producers involved in a joint venture financing package which is funding Clean Energy's build out of the natural gas superhighway, at a total cost of $450 million. The fueling stations are being installed at a rapid pace at Flying J / Pilot truck stops across the country and Clean Energy has an exclusive contract with Flying J. The nations trucking fleet is already beginning to convert from diesel to natural gas, but the big holdup has been the lack of CNG and LNG away from the major cities where Clean Energy has a strong presence in fleet fuel sales. Waste management just ordered 90 new trucks and all are natural gas powered.

    In the annual report just released by Chesapeake, I was pleasantly SHOCKED to learn that Chesapeake is not only helping speed the process of conversion by partnering with Clean Energy fuels, but Chesapeake is on the verge of introducing two new GAME CHANGING technologies which should rapidly accelerate conversion of the nations trucking fleet to natural gas power. First, Chesapeake is about to introduce a conversion "Kit" specifically for big rigs, which will allow the existing truck engine to run on either Compressed Natural Gas (CNG), or Liquid Natural Gas (LNG) or diesel fuel. Ideally, the trucks will operate on a blend of 70 percent natural gas to 30 percent diesel. This will be an immediate game changer for a couple of reasons. First, at current natural gas prices (about 1/6 to no more than 1/2 that of diesel depending on location) the conversions will pay for themselves in as short as 4 months to no more than 1 year, and that is excluding the tax benefits available for conversion. Second, I expect several large trucking fleets to add these Kits to their entire fleets almost immediately after they are available for sale, because the savings for a company such as Wal Mart will amount to hundreds of millions, and even possibly billions of dollars per year. The great thing is that the conversion can happen immediately without waiting for completion of each leg of the natural gas highway to be built. Another Chesapeake innovation which will "dovetail" with Clean energy's business is the joint venture between Chesapeake and Whirlpool corporation which will build a home CNG compressor which will sell for $1500, a dramatic drop from the current price of $5,000 to $6,000. I spoke last Friday with a marketing rep with ONEOK (Oklahoma natural gas) and he told me that a co worker has a home compressor furnished with his company CNG car. His cost of filling up is $0.56 per gallon at home, less than 1/6 the price of diesel or gasoline for a much cleaner burning fuel which is 100 percent American made. Even though this compressor will be competition to Clean Energy fuels, when a CNG car owner goes about 200 miles, they will need to stop and refill, and there will be a Clean Energy CNG outlet there to fill their needs, and even though in this area, CNG sells mostly for $0.98 per gallon to $1.11 you have to consider that filling at a Clean Energy station didn't require you to spend $1500 for a home compressor. According to major Clean Energy stockholder T. Boone Pickens, the conversion to natural gas has been blocked for 3 years by the infamous Koch brothers in the senate, with help from Sen Mitch McConnell who received nearly $550,000 from the Kochs, Big Oil, and the coal lobby, and all these powerful lobby groups will spend any amount of money to block any competition to the price fixed monopoly which they have enjoyed forever. The Kochs have made tens of billions of dollars by blocking the energy bill, because by doing so, they suppressed demand for natural gas which drove prices to 20 year lows. The Kochs are making billions in additional profits due to the low price of natural gas which is used in their fertilizer and chemical plants. By killing competition to big oil, the Kochs enabled big oil to increase gasoline and diesel prices since they knew they would have no competition if the bill which would spend a small amount of money to make our country energy independent. The Kochs lined their own pockets, and cost Americans about $5 trillion per year, 3 trillion alone comes out of American's pockets and goes straight to OPEC bank accounts. At least $2 Trillion more was due to price gouging by big oil. Can you imagine the effect that $5 trillion per year given back to American consumers would have had on our economy? We would have been paying less than $2.00 per gallon for gasoline and diesel by now if the energy bill had not been filibustered by McConnell and the Koch brothers.

  • Report this Comment On May 30, 2012, at 12:32 PM, knightly101 wrote:

    Are you worried about Westport who seems to be the leader in this area?

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