A play on the natural gas fairy

Westport is a terrific spec trade, but it's a bit fanciful to think the natural gas shift will happen on its own.

By Jim Cramer Aug 16, 2012 10:24AM

I'm torn about Westport Energy (WPRT). There's no doubt that it is a terrific speculative trade, as long as natural gas remains low. Judging by the glut, that's going to be a multiyear forecast. Even if natural gas goes $2 higher, it will still have the edge on diesel.


Plus, I think CEO David Demers has done a remarkable job getting the company to establish a joint venture with the right guys: VolvoCaterpillar (CAT) and, of course, Cummins (CMI). His deals with General Motors (GM) and Ford (F) are remarkable as well.


But I think it's a bit fanciful to think the market will shift to natural gas engines on its own. The U.S. doesn't have enough filling stations. Not enough incentives are offered, given the high upfront costs. Plus, natural gas doesn't have the support that the government gives electric and ethanol, support so monstrous and demonstrable that everyone in every part of the food chain has to be on board for it.


Instead, we have the gradual conversion of a couple of truck stops and the building of as many stations as one small capitalized companyClean Energy (CLNE), can do.


This shift has to be a national purpose. It has to be a national goal to become a reality. It's just unrealistic right now for anything wholesale to come of this. We aren't seeing anywhere near the level of change in infrastructure or the short-term incentives to switch.


And we know neither presidential candidate endorses any subsidies for the fuel -- even ones that should pay for themselves, as the Natural Gas Act that Boone Pickens fathered would have done.


Regardless, it is true that Westport could still make it big. Further, despite mild protestations from Demers that things are happening fast here and that it will work sooner than I think, it is China that seems to have the all-out government support for cleaning the skies and kicking the OPEC habit. And you wonder why they are such a threat to us. They aren't going to let their country be hostage to OPEC -- and us?


I don't think either candidate even thinks it is possible that we could break OPEC's hold on things. I know that, because it isn't possible without natural gas as our surface fuel.


So understand this: As much as I was behind Westport all the way, I now recognize that it has to be bought on one of these pullbacks that affect all speculative plays. It can't just be bought on the hope that the natural gas fairy will one day buy several hundred thousand truck engines using Westport technology.



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 has no positions in stocks mentioned.



More from TheStreet.com

Aug 16, 2012 12:58PM

How Appropriate

Cramer doing a blog on Gas.

Who else is more full of the stuff than the Guru of Loosers himself !!!

Aug 16, 2012 4:14PM
Well there, Mr. Kramer, there is a reason why natural gas is not attractive as a fuel, for vehicles anyway. It, like ethanol, has a much lower energy density that good ol' gasoline. Certainly the internal combustion engine with which we are so familiar can be converted to run on either natural gas or ethanol, but because of the lower energy density, it takes a lot more of it to get the same horsepower per cubic inch of engine displacement. That means your fuel mileage is cut by about one third compared to gasoline. In fact, if you take alternative energies...ALL of them working TOGETHER at peak efficiency...the sum total of them do not equal gasoline by itself. I've always wondered why the Chesapeake Energy hydraulic fracking company parking lots are chocked full of big GASOLINE powered vehicles. If NG is such a wonderful replacement fuel, why is there not ONE of those lumbering Chesapeake clunks running on NG?? Riddle me THAT Bat Man!
Aug 16, 2012 12:22PM
I think the conversion could very possibly happen.  But it will be without or in spite of government intervention.  How can Cramer, the poster child for "the greed motive", propose that government get involved in this?  Are they good at picking winners and losers?  No.  Did they have a hand in solving the difficulties with accessing these vast supplies of natural gas? No. 
Aug 16, 2012 3:51PM
Hey Jim Cramer!! Wake up! Go to Freeport, Texas, and get directions to Quintana. Look at the LNG re-gassification plant built on the bank of the Intracoastal Waterway. They process liquified natural gas from OPEC countries! Try to stop spreading ignorance, please. Check to see if there are any facts in your articles, before releasing them. Of course, your editor, (if any), shares the blame for not checking, too. You can even check this out on-line; after you do, how about amending your story.
Remember when Cramer used to pump Sears? hmmmmmmmmmmm
Aug 16, 2012 2:35PM
Aug 16, 2012 12:50PM
Does Crammer really know what he is talking about? He is very wishy washy. Plus, now they have included one of his flunkies on CNBC. She is incharge of this portfolio. Did CNBC give in. He is not that great any monkey can stand in front of a screen and rant plus look at a screen is people put up for him. What a loss. Crammer has lost his appeal. Just using CNBC to get rid of his junk stock.
Aug 16, 2012 12:47PM

Is cramer looking more bloated or is that just me?

Aug 16, 2012 2:46PM

If we really want to convert to NG the first move the government has to make is dropping direct subsidies for electric and ethanol as well as any others for any form of commercially viable sources. That would allow the market to move according to real (as opposed to manipulated) demand.


Hey Cramer, how about using your mouth for something constructive and calling for the Feds to get out of the markets altogether?

Aug 16, 2012 2:43PM

listen to motley fool guys


they have half a brain

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