Note To Congress: America’s Energy Solution Is Right Here

Friday, February 26, 2010: Issue #1205

A round of applause for the U.S. Congress.

In just one month, the bumbling bureaucrats have managed an impressive feat: From a 61% rating last month, voter unhappiness has now hit a record-high 71%, according to Rasmussen Reports.

That probably isn’t surprising to the majority of Americans. Most view Congress as inept, driven by the belief that politicians’ main goal is just to get re-elected. To wit: The Center for Responsive Politics says the 2010 battle for Congressional seats will cost $3.7 billion. Not exactly what our forefathers had in mind.

If only our politicians could actually accomplish something meaningful.

The 19-state Western Governors’ Association (WGA) shares that frustration. It penned a letter to Congress on February 11, in which it urges politicians to pass significant energy legislation.

And it has one energy resource in mind…

Natural Gas: America’s Domestic Energy Solution?

Here’s the last paragraph of WGA’s letter to Congress:

“The use of natural gas as a transportation fuel is a domestic solution to a variety of critical issues. Ninety-eight percent of the natural gas we consume is produced right here in North America. Additionally, natural gas is a cleaner, more affordable fuel for Americans. Natural gas produces approximately 25% fewer greenhouse gas emissions and significantly fewer criteria air pollutants, and fueling natural gas-powered vehicles (NGVs) costs a third less than traditional gasoline. Incentivizing the further build-out of NGV technologies will stop billions of dollars in overseas oil payments, create thousands of jobs, reduce harmful greenhouse gas and criteria air pollutant emissions, and improve the overall health of the United States’ economy.”

Job creation, reducing our dependence on foreign oil, improving America’s balance sheet. What’s not to like?

In a capitalist society and the race for profits… plenty.

America Shoots… And Hits Itself In the Foot

Forget global warming, or greenhouse emissions. America is fighting another battle. Against itself.

While natural gas seems like a slam-dunk idea, the coal industry views it as a huge threat. And with “big coal” profits hinging on whatever legislation is passed, Congressional members from the big coal-producing states are looking after their best interests.

So what should be no-brainer legislation has turned into a messy pot-pourri of environment, business, science – and of course, politics.

Aubrey McClendon, CEO of major natural gas producer Chesapeake Energy Corporation (CHK: 26.68 0.00 0.00%) states: “Never in my life have I been confronted with something so obviously easy and good to do and have such Congressional apathy.”

However, just replacing coal with natural gas isn’t necessarily the answer either.

David Hawkins, a climate change expert at the Natural Resources Defense Council says: “A coal plant with carbon capture and storage is a cleaner plant than an uncontrolled natural gas plant.”

True. But carbon capture is still in the experimental stages, and its long-term viability is still in question.

So where to from here?

All parties should be able to agree on this: Cars burning American-produced natural gas are better than burning foreign oil. And switching to natural gas gives scientists time to test the commercial viability of carbon capture.

Especially since we’ve got so much of the darn stuff…

America Has the World’s Biggest Natural Gas Reserves – And This Firm Is Leading the Way

It would be a real shame to cave in to the coal and oil lobbies and under-use the greatest natural gas resource on the planet, right here in America. We’ve got 100 years worth of supplies.

Designing cars that run on natural gas costs no more than designing them to run on gasoline. And consumers would notice a difference in their bank accounts, too, since fueling up with natural gas costs about a third of the price for gasoline.

The good news is that Congress will eventually reach a compromise (probably later this year) with both coal and natural gas interests and pass some form of legislation.

When it comes to the natural gas industry, there are several major publicly traded companies. One is the afore-mentioned Chesapeake Energy, but another firm with a big role is Clean Energy Fuels Corporation (CLNE: 18.45 0.00 0.00%).

Right now, it’s primarily focused on its fleet of 300-plus customers, which operate around 15,000 natural gas vehicles in the service sector. That includes public transportation such as airport transit, seaports and taxis. Clean Energy also supplies fuel for the trucking and trash haulage industries.

But when natural gas legislation is passed, the firm’s reach will likely multiply. It’s already a natural gas supplier and operates around 200 fuel stations. It’s a virtual lock to be at the forefront of the fuel station build-out on a wider scale.

Mammoth energy sector players like Exxon Mobil Corporation (XOM: 65.40 0.00 0.00%) and Chevron Corporation (CVN: 0.00 N/A N/A) are also likely to participate – firms that have the money to upgrade their existing fuel stations to accommodate natural gas vehicles, too.

The key to progress, though, will be Congress. If politicians can actually pass meaningful natural gas legislation, it will bode well for firms like Clean Energy.

Good investing,

Dave Fessler

P.S. Given the constant quest for re-election in Congress, it’s no wonder that the legislative process is slow. However, there are two bills currently circulating the chambers:

• H.R. 1835: Introduced last April by the House, it proposes generous tax incentives to both manufacturers and buyers of natural gas vehicles. These credits last up to 10 years. The bill also provides huge tax credits to companies that install natural gas fuel stations – up to $100,000 per station.
• S.1408: This Senate bill is similar to that of HR 1835, but is a little friendlier to natural gas – at least as a transitional fuel to alternative energy.

To keep up with all the latest developments in the energy and infrastructure sectors, check out my “Hot Stacked” column in The Oxford Club’s Communiqué. Each month, I report on the most important trends and companies best-placed to profit from crucial projects. Find out more about how to become an Oxford Club member.