Is natural gas a lost cause?

Despite being a cleaner fuel than oil or coal, it has few supporters in Washington, making it a risky investment.

By Jim Cramer Sep 23, 2010 8:59AM

jim cramerBy Jim Cramer, TheStreet


The Senate is at it again. Harry Reid is trying to get the Clean Energy Fuels Subsidy Act passed, this time in a new, stand-alone bill filed Wednesday. Oops, excuse me for being so obvious, but this bill is about giving money back to people who buy truck engines that burn natural gas -- engines made typically with technology from Westport Innovations (WPRT) with its partner Cummins (CMI), an name.


Clean Energy Fuels (CLNE) is the nifty little company that owns a huge chain of natural-gas filling stations, a decent business that would go into hyperdrive if this bill passes.


But "if" is the big operative word here. Clean Energy and natural-gas backers have tried strenuously to get these tax breaks through, but the subsidies have been trapped within larger unpopular and controversial energy bills. The hope is that this stand-alone bill will be able to slip through without the baggage of environmental regulation.


Here's the problem. As much as I think that natural gas is the fuel of the future for power plants and autos and buses and trucks, I could not be more wrong to date. The utilities have managed to avoid the fuel and stick with dirty coal because the president and the Environmental Protection Agency have done nothing to favor natural gas.


Congress isn't focused on this issue of truck subsidies, even though getting trucks to switch from gasoline to natural gas would make the air cleaner and go a much longer way than most people realize toward cutting our oil dependence. The 18-wheelers covered by this bill use up to 25% of our gasoline. I know, it's staggering.

But there is no groundswell. If anything, the fuel has taken more heat than just about every other alternative, as a national coalition has risen up to try to slow or stop natural-gas drilling because of water contamination worries.


Or to put it simply: This fuel's got fewer backers than offshore drilling. Now, that is saying something.


There was another, more rational time when I would have advised buying Clean Energy Fuels if you think this bill will pass. I now say I don't think it will pass, so you are on your own. I have been fooled too many times by Washington -- not by Clean Fuels, which is a great company that will make it without the subsidies but won't be able to blow out the numbers -- and I won't let it happen again. One look at the price of natural gas tells you the true betting line.


Believe me, if this bill were about to go into law, natural gas would be at $5, not $4.


I don't think that move is in the cards.


At the time of publication, Cramer was long Cummins.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


Click here to learn how to follow Cramer's trades for his Charitable Trust.


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