Will CNG Vehicles Beat Out Electric Cars?
Is natural gas the answer to rising prices at the pump? One energy company’s chief executive is betting on it — by giving its employees vehicles that run on the cheaper fuel.
“We’re certainly going to take a leap in that we’re giving away some cars to some employees so they can determine how it works,” Southwestern Energy President and CEO Steve Mueller said Monday in an exclusive “Fast Money” interview. “It is a viable solution.”
The Houston-based company has converted 150 pickup trucks for its workers to use on a trial basis, a process Mueller said was relatively easy.
Earlier, General Motors announced it would offer dual-fuel trucks that run on either gasoline or compressed natural gas.
Mueller said that other auto companies already had or were planning CNG vehicles, with hundreds of engine models abroad that could be converted.
“It’s just a matter of bringing the technology into our country and starting that build-up, just like they had with electric cars,” he said.
Last month, oil billionaire T. Boone Pickens said substantial cost savings and energy independence for the United States could be achieved by switching trucks to CNG-powered engines, such as Navistar and Clean Energy Fuels planned to do.
Mueller echoed some of those sentiments.
“When you think about natural gas, it’s good for the economy,” he said. “It’s good for the country to have it at a good price.”
Drakon Capital’s Guy Adami thought there was potential — at a cheaper valuation than Southwestern, whose shares traded at about 18 times forward earnings and paid no dividend.
Marathon Oil, he said, has a valuation of 8 times earnings and paid a 2 percent dividend yield.
“I love the story, but if you want to play in the space I’d rather own MRO than SWN,” he said.
Brian Kelly of Shelter Harbor Capital liked Navistar.
“They’re already converting trucks. They already have orders to convert trucks into natural gas-burning engines. That’s the way to go,” he said. “Also, Clean Energy. That’s another way to play it.”
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Trader disclosure: On March 5, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Finerman is long (AAPL); Finerman is long (BAC); Finerman is long (JPM); Finerman is long (HPQ); Finerman is short (SPY); Finerman is short (IWM); Finerman is short (MDY); Kelly is long (QQQ) calls; Kelly is long (USG); Kelly is long (SPY); Kelly is long (SPY) Puts; Kelly is long (EWE); Kelly is long Mexican Peso; Kelly is long German Bunds; Kelly is short (EWY); Kelly is short Australian Dollar; Kelly is short New Zealand Dollar; Adami is long Citigroup; Adami is long (GS); Adami is long (INTC); Adami is long (AGU); Adami is long (MSFT); Adami is long (NUE); Adami is long (BTU); Nations is long (BAC); Nations is long (SPY)
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