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Nat Gas Prices Drive the Transport Politics

NEW YORK ( TheStreet) -- President Obama chose an interesting way to voice his latest support for a U.S. transportation future less reliant on oil in referring on Wednesday to an "all-of-the-above" approach to American energy. It was interesting because as far as Congress is concerned there is only one correct response when it comes to Obama's transport ideas: none of the above.

Natural gas transportation is a good indicator of the divide between Obama's plan and Capitol Hill reality, and legislation related to natural gas transportation may continue to be a victim of difficult legislative timing and Capitol Hill divisiveness.
As gasoline prices rise, so does President Obama's enthusiasm for an 'all-of-the-above' approach to the transport future.

Meanwhile, natural gas transport-linked stocks continue to find support, even if legislative priorities of the president falter or get pushed off to a second term, which there is good reason to suspect could become reality. This dilemma applies most directly to natural gas transportation infrastructure company Clean Energy Fuels (CLNE - Get Report) and natural gas engine maker Westport Innovations (WPRT - Get Report).

Right now, it's Clean Energy that continues to push a 52-week high level , up 60% so far in 2012.

Investors have been here and done this before with these stocks. While it's always a good time to take some profits, Westport continues to defy any sustained bearishness. Even coming slightly off a 52-week high while Clean Energy tests its highest level, Westport shares are up 141% in the past year: it's done so well, in fact, that it was recently able to use a 52-week as a good time to issue more equity.

What keeps these stocks going, and what gets the president talking about natural gas transportation more and more, comes down to three key factors, and they are more credible as reasons to be bullish on natural gas transportation than the most supportive words from politicians: oil prices and the related price at the pump, the historic slide in the natural gas price, and the failure of electric cars to take off.

President Obama's administration had focused more on the electric vehicle story than the natural gas story as it evolved an energy and transportation strategy, but its migration to a full-throated support of natural gas transportation has increased as the electric car story has stumbled, and more recently as a president running for re-election has had to deal with high gasoline prices.

The election cycle also includes rhetoric about where the Obama administration has spent its stimulus dollars as gas prices rise, and the "Solyndra Effect" has spilled over into the electric car market. The Department of Energy recently decided to deny loan funding -- from the same program that bankrolled bankrupt solar power company Solyndra -- to electric car makers Fisker and Bright Automotive.

It's important to remember that the electric car story has been about passenger vehicles, while the natural gas transportation story is about truck sales, and in particular fleet purchases by heavy-duty truck buyers like UPS (UPS) and Fedex (FDX). However, positioning the energy and transport future as one encompassing both natural gas and electric vehicles is clearly important to the president. Ultimately, technology is a game of scale, and while the payback period for a pickup truck driver adopting natural gas is many more years than a heavy-duty truck where economics works today, that gap closes over time as technology is adopted and the price of new engines comes down.
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