(Nat gas vehicle, Obama energy speech story updated for analyst comment, trading)

NEW YORK ( TheStreet) -- Stocks in the natural gas vehicles space surged Wednesday with word that President Obama's plan to reduce U.S. reliance on foreign oil by one-third by 2025 will include support for natural gas vehicles.

The stock surge in the pure-play nat gas vehicle stocks, though, was getting ahead of the legislative reality, according to several Wall Street analysts. That's nothing new for these stocks, either, as anyone with an institutional history of the space dating back no further than 2010 should remember.

Natural gas engine maker Westport Innovations ( WPRT) rose by 14% in trading and reached a 52-week high level it had not been near since last July, the last time legislative hopes fueled these stocks higher. Westport shares traded at three times their average volume on Wednesday.

Natural gas transportation infrastructure play Clean Energy Fuels ( CLNE) rose by 9% and had already surpassed its average daily volume of trading within a half hour of the market open; by the afternoon, more than 8 million Clean Energy Fuels shares had been traded, versus average daily volume of 1.5 million shares.

Fuel Systems Solutions ( FSYS) rose by 10% on Wednesday.

President Obama, as part of a broader energy initiative to quell consumer anxiety about high gasoline prices at the pump and reliance on foreign oil, voiced his support for the use of natural gas in vehicles, expanding oil production, and boosting ethanol production.

The president pledged that the federal government will purchase only alternative-fuel vehicles, such as hybrid and electric cars, by 2015.

The natural gas lobby, led by T. Boone Pickens and Clean Energy Fuels CEO Andrew Littlefair, among others, failed in a major lobbying campaign in 2010 to see through its Natural Gas Act to legislative passage. The Natural Gas Act would increase the subsidies for the purchase of natural gas vehicles to a level where fleet purchasers like trucking companies would be able to buy natural gas-run trucks without paying more than for a conventional diesel truck.

The natural gas vehicle stock plays have been volatile investments and tend to swing on any change in the legislative landscape. During 2010, the stocks rose and fell several times based on the outlook for the Natural Gas Act. In 2011, the natural gas stocks have rebounded from a fizzle at the end of 2010 when the Nat Gas Act failed on hopes that the legislative outlook would brighten. The rate of adoption for natural gas vehicles in the U.S. is more reliant on a federal subsidy increase than any other single factor, analysts in the sector have long said.

Given the importance of the natural gas vehicle subsidy, it's understandable why stocks like Westport Innovations and Clean Energy Fuels rally on any sign of increased support from Washington D.C. These are not stocks that trade on current profits -- there aren't any -- and the quick path to profitability will rely on the U.S. adopting policy that spurs fleet purchases of natural gas trucks and vans. But that doesn't change the complex Capitol Hill equation.

Shawn Severson, who covers the natural gas vehicle sector for Think Equity, said that support from Obama doesn't change the legislative end game: They still need to get a specific bill for nat gas vehicles to get anything done quickly.

"Natgas has always had a lot of support but it keeps getting dragged down with bigger energy bills," Severson noted.

A second clean energy analyst who has watched the fortunes of these stocks rise and fall based on legislative gambles said it's still "so hard to tell" what will happen.

"Certainly the Middle East situation renews calls for energy security and nat gas support, but I won't be holding my breath on actual legislation passing," said the analyst.

The analyst noted that Clean Energy Fuel's Littlefair said during the company's recent earnings call that another version of the Nat Gas Act would be re-introduced in the Senate this spring.

"As of now, nothing has changed," he said.

Pavel Molchanov, analyst at Raymond James, who covers Clean Energy Fuels, concurred with the analyst skepticism, and thinks that as far as any legislation specifically in support of natural gas vehicles, the odds are still 50/50 in 2011. He added, "If it passes, it will not be because of this speech. The good news is that there is no real opposition to this -- it's purely a matter of getting on the (busy) legislative calendar. The bad news is that, unlike corn farmers and ethanol, there is no politically powerful lobby pushing in favor of NGVs."

Raymond James wrote in a research note on Wednesday, "the speech contains a combination of useful but small steps together with some typical PR elements. So, who benefits from all this? At this point, no one, because this purely in the realm of rhetoric."

"We will keep on being a victim to shifts in the oil market until we finally get serious about long-term energy policy," President Obama said on Wednesday.

President Obama acknowledged the legislative reality, saying, "I've got to be honest, we've run into the same political gridlock and inertia that has held us back for decades and that has to change. We cannot keep going from shock when gas prices go up to trance when they go back down. We can't rush to propose action when gas prices are high and then hit the snooze button when they are low again. The U.S. can't bet our long-term security on resources that will eventually run out and will get more expensive to extract from ground."

Notably, President Obama himself mentioned that failed plans to overhaul energy policy, specifically in relation to less reliance on foreign oil, date back to the administration of President Richard Nixon. Wall Street and the President were in agreement on this point, with Raymond James writing in its note on Wednesday, "First, let's point out that every president since Nixon (!) has offered targets along these lines, and none have EVER been fulfilled."

-- Written by Eric Rosenbaum from New York.

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