Natural gas bill won't go anywhere
Why? Two reasons: The president's blanket opposition to fossil fuels, and the coal and chemical money lobbying Congress.
It's not my wish is my command, but it was terrific Tuesday to see the introduction of the New Alternative Transportation to Give American Solutions, NATGAS Act, introduced in the Senate.
The aim is to give incentives to trucking businesses to switch to cleaner engines that use cheaper, more abundant natural gas but are more costly than regular engines to procure. If this bill passes, it would make little sense not to buy nat gas engines, because of the historic low price of natural gas compared with diesel. We have so much natural gas in this country that it is no longer an issue of availability. Diesel will almost always, from now on, be in short supply because of refinery issues and ridiculously strong Chinese demand.
But will the bill pass? The rallies in nat gas engine maker Westport (WPRT) and nat gas filling station company Clean Energy (CLNE), the two biggest beneficiaries, say yes. But frankly, I have seen it all before. In this environment I don't see much hope for this bill.
First, the Republicans have gone anti-subsidy crazy. They cringe if they even hear the word "subsidy," as I saw at last week's Republican debate.
Second, natural gas -- for all of its advantages, including abundance, cleaner skies and energy independence -- is a fossil fuel. So President Barack Obama is against it. Period. End of story. He's not trying to get us off gasoline. He's trying to get us on batteries. No matter that trucks, which use a huge amount of our imported oil, can't run on batteries.
The president wants to send an anti-fossil-fuel message. You don't take up this bill if you are the president, even if it creates jobs, makes the skies cleaner and gets us more energy-independent. It is too mixed a message in a White House where the medium is the message.
Anyway, the petrochemical industry will kill it by teaming up with the coal industry to lobby against it. Coal doesn't want natural gas to win anywhere, and the chemical industry wants low natural gas prices. Neither interest could care less about the benefits of this bill, and both interests have a lot of firepower to stop it.
How do you invest off of it?
Frankly, you bet on its failure. You bet that the big distributors of natural gas will team up with Cheniere (CQP), which doesn't have enough money to do it on its own, to get the natural gas where it is more needed and can earn more money -- which is overseas. The way I have been advising this is to buy Chart Industries (GTLS), which just hit a 52-week-high Tuesday.
You have to ask yourself, what is that stock doing to hit a 52-week high? Simple. People see what is happening. The president is not going to let natural gas be used as a bridge fuel, so all of these big international oil companies are going to build facilities to send it to Asia. You can't do it without GTLS.
So bet all you want that Boone Pickens and his team can get this critical act through. I am going to bet with the president, who tilts toward windmills, and the coal and chemical industries. Sadly, I believe overly green thinking in the White House plus dirty fuel money in Congress will stop this bill from passage. Which makes Chart Industries a great buy, even up here, and especially on a Europe-induced pullback.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
That's a good line--that the President is "tilting toward windmills". It neatly encases the silly idealism being promoted. Please, I'm all for more windmills to produce electricity, but until windmills and solar produce ALL our electricity (unlikely because of the on/off nature of the sources), electric cars and/or trucks just represent more use of the "residual" electricity being produced by coal. Because of this they are NOT green! How smart do you have to be to understand this?
The residual electricity could be produced by natural gas of course. But then using that electricity to move freight is FAR less efficient than directly burning the gas in an engine. Not to mention the extra pollution from millions of high-tech batteries.
Realistic analysis. Even though natural gas vehicles have been here at least 30 years I know of, they never have become popular. Too many diverse interests keep it a niche market. Oil is not expensive enough yet to breakthrough the politics. Our country has and will suffer because of this.
Wow.... now what's your response Cramer? Looks like Mr. Obama is not so "anti-fossil fuels" after all! I'm the last person to say anything good about Obama's decisions, but either way, I'm just glad to see we are finally making a step in the right direction as a country... It doesn't take a genius to see that nat gas is the only realistic alternative to the biggest transfer of wealth in human history. This issue couldn't' be more black and white.
Now, let's see if we can follow through with it.....
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