After more than a decade of lobbying, LNG is finally getting on the fast-track to becoming America’s next great fuel source…
The legendary Texas oil and gas magnate, now a champion for cleaner energy, was encouraged by President Obama’s recent State Of The Union address.
In his speech, Obama called upon Congress to create a new Energy Security Trust to support cost-effective energy technologies while scaling back the $4 billion in taxpayer subsidies that are given the oil industry.
Within his $2 billion Trust proposal, he wants to see more energy efficient vehicles on the road, and has included natural gas as part of that strategy.
“I’ve lived through a lot of energy crises in my life. We shouldn’t wait for a crisis to act. We should act now. I’m encouraged by the President’s focus on natural gas and transportation. But remember, a plan without action isn’t a plan, it’s a speech. I look forward to seeing how the President and Congress follow through.” — T. Boone Pickens
Since 1997, Pickens has been touting natural gas as the best fuel source for America’s transportation future, with compressed natural gas (CNG) and liquefied natural gas (LNG) at the helm.
Natural gas, which is readily abundant domestically, has many advantages to other fossil fuels, but mainly, it is cleaner burning and reduces our dependence on foreign oil.
Compared to gasoline and diesel, vehicles running on natural gas emit up to 30% less pollution.
Obama has unequivocally referred to natural gas as the “bridge fuel” that will shift America’s thirst away from pollutive hydrocarbons and towards renewable energy sources.
In his speech, he acknowledged what Pickens has long believed and has pledged to turn his words into action.
“Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas,” says Obama.
For natural gas ambassadors like Pickens, it’s been a slow-go trying to wean Americans off a fuel source that they’ve been addicted to for nearly two centuries.
According to the US Department of Energy, there were 118,000 CNG and 3,400 LNG powered vehicles on the road in 2011.
Those figures are out of an estimated 244.1 million vehicles registered in the US that same year — a mere 0.05%.
There are more than 121,400 gas stations located throughout the US, while there are only around 1,260 natural gas refueling stations.
Without a doubt, there is a steep climb ahead to try and narrow this gap.
But what with all the talk of the shale gas boom, LNG exporting, and now subsidies to build more fueling stations…the true possibilities for natural gas is only just starting to be realized.
And the energy firm that Mr. Pickens founded in 1997 has all the potential to deliver. But it comes with a warning sign.
Clean Energy Fuels Corp. (NASDAQ: CLNE) is the largest provider of natural gas fuel for transportation in North America with approximately 500 refueling stations located across Canada and the US.
However, a quick review of its financials would turn most investors away in a New York minute — it’s reported net losses every year since its inception.
And with its tiny network of fueling stations servicing a similarly small consortium of natural gas vehicles, profit margins are razor thin.
Refueling stations are at the core of its business. But the company also manufactures CNG and LNG equipment and technologies and is developing renewable natural gas production facilities.
Where CLNE is seemingly positioned to capitalize most on are in trucking fleets.
Large companies including Frito Lay, Procter & Gamble, UPS, and Lowe’s, are rolling out new NGVs to add to their delivery fleets over the course of the next few years.
These corporations have signed agreements to enable their trucks to fuel up at Clean Energy stations, and the success in utilizing these vehicles will likely mean a larger deployment over time.
If all of them switched over even just a quarter of their fleet to natural gas, they can become extremely lucrative contracts for CLNE.
However, being bullish on a growing trend doesn’t guarantee that CLNE will turn a profit anytime soon.
They’ve amassed a fair amount of debt with their aggressive construction plans for more stations across the country.
The company owes creditors nearly $600 million as of September 2013 — way up from just $42 million in 2010. Interest payments alone in 2014 are expected to be around $38 million.
So despite Obama’s encouraging words to convince Americans to make the switch to natural gas, the financial burden that CLNE has already taken on could potentially be the Company’s demise.
Investors still optimistic about Clean Energy Fuels really need to dig deeper into its business outlook before convincing themselves to jump in.
Rather than trying to catch a knife that’s teetering on the ledge, I’ve found another natural gas refueller with a better chance of benefiting from POTUS’s energy plan.
Not only are they in the business of building and operating natural gas fueling stations like CLNE, they also own a network of over 6,200 miles of natural gas pipeline, various utility stations, wind power projects, and even biomethane production.
But most importantly…they are profitable.
I’ll be revealing the name of this game-changing company in next month’s issue of the Top Stock Millionaire report. If you’d like to get in line for this and other moneymaking picks, I strongly urge you to click here.
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