No matter who wins, natural gas will probably lose
The industry looks set to remain stuck in its first inning for some time to come.
Yes, Jack Welch was right Monday when he said on CNBC's "Squawk Box" that we are in inning one of the natural gas revolution. But this is a game that could easily be rained out simply because the groundswell to use the stuff may end with the forces that are peddling it.
We periodically hear about companies that are switching to natural gas engines. But they tend to be companies that are in the industry themselves or are inner-city operators who are afraid of governmental authorities and don't want to run afoul of rules on airborne particulates.
Some trucking companies are embracing it. Clean Energy Fuels (CLNE) put out a very good paper last week about early truck adoption. But, again, this is a first-inning matter. It's not a shift that's at critical mass, which is what must happen for a change in this industry to matter. Selling millions of gallons doesn't cut it. It has to be billions of barrels.
Yes, what Jack Welch has wrong is that the nat gas revolution is totally stalled out right now. We've learned as much from Sam Thomas, the CEO of Chart Industries (GTLS) -- the ticker symbol denotes "gas to liquids" -- and Dave Demurs, the CEO of Westport Innovations (WPRT). Chart makes the equipment needed to turn nat gas into the compressed gas that can be used in surface vehicles. Westport ought to know, as it makes the engines that run on it. Thomas is now predicting it might take 10 years before any meaningful shift occurs. Is this a 10-inning ballgame?Monday night, if Mitt Romney wins the presidency, he will have to help make nat gas a primary surface fuel in order to make North American energy self-sufficient. Nat gas will have to replace diesel for trucks, because trucks use one-quarter of the oil imported into the U.S. Romney has said over and over that he doesn't want the government picking winners in private enterprise, but that would directly clash with his self-sufficiency goal, and I don't know which one would win under him. But I do know he would never accomplish that latter, chief tenet without throwing his presidential weight behind this fuel.
But if President Barack Obama wins, forget it. The market will not sustain it and trucks will stay with diesel. They just wouldn't have the incentive to switch, and they don't have the gas station network built out. It's just too risky, and it could be a huge mistake for trucks if there is no build-out.
Now, get this. If you think I am asking for too much to think the government could ever get involved to push this initiative along, just consider that we in the U.S. burn a huge amount of our corn crop, our basic food staple, in order to make an inferior form of gasoline that uses up a gigantic amount of water that no one really wants -- and the government subsidizes it.
That's totally nuts. It's ridiculous.
But ethanol got through because of the power of the farmers.
Unless the nat gas industry begins exhibiting farmer-like power, I can promise you the U.S. will be in inning one for the next four years if Obama wins -- and this will probably hold true in the unlikely event that Romney wins. In Romney's case, again, this would simply be because he doesn't want the government to get behind any private enterprise.
So we wait for inning two.
Don't hold your breath.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and had no positions in stocks mentioned.
More from TheStreet.com
now who ever wins natural gas will lose?? (not what he said a few months ago?)
My Cadillac has a natural gas kit so it will burn either regular gas or compressed natural gas at the push of a button. Compressed natural gas is found at most city airports. We happen to live near one so we fuel up with natural gas for running around the city for the week. It is clean burning, does not require a stinky refinery, and keeps the air and engine clean! Don't have to change engine oil as often. It is a major advantage and CNG is plentiful in the U.S.
Mitt Romney is the candidate that will organize and develop more CNG filling stations especially at truck stops. I am voting Mitt Romney and Republican straight ticket because independence from foreign oil is part of the Republican way to increase jobs and develop our economy to its full potential rather than propping it up with quantitative easing.
Get ready for tomorrow's Market Crash ! Smart Money has left the House ! TAKE YOUR MONEY AND RUN !
I think Cramer may have good reasons for his view. Because of gross ingnorance about two
subjects: man made global warming from carbon dioxide and the amount of carbon dioxide that
is given off by natural gas when it is burned.
The current global warming effort is consensus science which is not real science. About six months ago I tried to get estimates of the amount of carbon dioxide that is given off when natural
gas is burned; what I found was 25%, 50% and 75% of the amount that would be given off by
burning gasoline. Also I heard Bill Gates say (on either the TV or internet as part of the summary from a group of CEOs) that he is supporting research on a new, safe nuclear electric generator because commercial nuclear power has caused less fatalities than any other comparable source.
So I think there may be good reasons to say "slow down" to the natural gas horses.
William B. Smith
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.