"There are three kinds of lies: lies, damned lies, and statistics."
-- Popularized by Mark Twain

Recent reports have called Clean Energy Fuels' (CLNE 4.26%) decision to invest heavily in liquefied natural gas (LNG) into question, painting a picture of statistics that makes it sound like the company is doomed. While the authors of these reports are both anonymous and hold short positions in the company, they have largely contributed to sending shares down a painful 25% in 2014. 

These reports were targeted at the investor community, and not the shipping, trucking, public transit, and waste removal companies that are largely Clean Energy's customers, so a direct response wasn't really necessary. However, CEO Andrew Littlefair held a conference call on February 10 to give investors an "update of natural gas for the trucking industry." In short, Littlefair put the company's own data out there to dispute the statistics used by detractors.

Who has it right? Only time will answer that question, but here's a look at what Littlefair has to say. 

My numbers are better than your numbers
Statistics can be (and usually are) used to support both sides of any argument, and both sides of this argument have a number of valid points, or so it seems on the surface. However, when two sets of statistics clash, one must decide whose data to trust. In the case of exactly how many of the so-far delivered class-8 NG-powered trucks are featuring LNG, Clean Energy's detractors put the number at below 20%. Littlefair pegs the number at closer to 40%.

Additionally, he pointed out that Cummins' and Westport Innovations' joint CWI ISX12 G 400hp engine -- key to trucking -- didn't start production until August of 2013. Considering that it can take up to four months for these engines to make it from the factory to the end user, we are essentially still in the first few months of trucks actually hitting the road. Here are a couple of key statistics from the call:

  • Of the 1,442 trucks delivered (of 2,500 total ordered) with ISX12G in 2013, 42% were LNG. 
  • Clean Energy's data from customers, OEMs, and dealers indicates 3,500 deliveries already scheduled for 2014, with 57% of these configured for LNG.
  • According to Littlefair, they have submitted 1,100 trucks for financing with General Electric (GE 1.25%) subsidiary GE Capital, 50% of which are configured for LNG.
  • Clean Energy is still projecting "10,000, perhaps a bit more" heavy-duty LNG or CNG truck orders for 2014, according to Littlefair, or about 5% of total class-8 truck sales. 

There's more to the cost than just the price of fuel
The key sticking point that detractors of LNG have used is that it's more expensive than CNG, and that for most truckers and shippers this additional cost just didn't add up, even with the limitations in range, etc. However, Littlefair pointed out that there's a lot more to factor in than just the price at the pump. 

On the call, Littlefair gave one simple, and common, example: Due to the additional weight -- easily another 2,000 pounds for the CNG tanks -- trucks hauling heavy loads could potentially need to make 100 extra trips every single year just to move the same amount of cargo. That's essentially 100 free loads. The labor and lost time alone would add about 40 cents per gallon to the "at the pump" cost of CNG, not even considering the lost business for those 100 "free" trips.

Most importantly, and Littlefair stressed this on the call, it's about making sure that the right fuel is used for the specific application, and whether it's LNG or CNG doesn't matter to Clean Energy Fuels. 

Partnerships still important
GE Capital and GE Oil and Gas are both key partners for the company going forward. Clean Energy has more than 1,100 trucks in the application process with GE Capital for financing, and a large percentage of these are smaller and mid-sized fleet owners and trucking companies. With GE set to IPO 20% of the consumer finance division of GE Capital this year, the company could use part of the proceeds to expand financing within the transportation sector, a boon for both the trucking industry and Clean Energy. 

Clean Energy has acquired 54 of GE's "CNG in a Box" systems from Chesapeake Energy. The plan is to use this product to support the ready-mix cement truck market, and if this deployment goes well, GE and Clean Energy could find further ways to partner, on top of the planned deployment of LNG plants over the next several years. 

The Mansfield Oil partnership sometimes gets overlooked as well. Mansfield is the largest private oil services company in the U.S. and serves several billion gallons of fuel "behind the gate." Clean Energy will be supplying natural gas to these customers as they add CNG and LNG to their fleets. 

Final thoughts: Consider the source
Clean Energy's management has given us a lot of new information, and much of it counters the argument that LNG will have a minor role to play in heavy-duty transportation. Additionally, the company is heavily investing in both forms of natural gas, and its core business is still CNG. It's worth considering that those who have argued that LNG is a losing bet have published anonymously, and have financial incentive to push the share price lower. 

If you are a shareholder (as I am, though it makes up only 2% of my portfolio) or are considering buying shares, take a hard look at the sources: Are you willing to trust anonymous authors with a clear motivation for a price drop, or transparent and accountable sources like a co-founder with more than $5 million invested in the stock? That's up to you.