After another news release, Clean Energy Fuels (NASDAQ:CLNE ) again appears setup for a big run yet the stock continues to languish around $12. The largest provider of natural gas fuel for transportation in North America offers catalysts that could push the stock on a huge run in 2014. Most investors are still concerned that the ‘hype’ won’t ever be met with reality.

Clean Energy falls into a group of stocks set to benefit from the abundant supplies of natural gas that have led to a glut of the cheap fuel. Other stocks including Cheniere Energy (NYSEMKT:LNG ) and Westport Innovations (NASDAQ:WPRT ) are building products that benefit from this cheap energy source. Oddly these stocks continue to diverge though all are still in the process of proving out their respective business plans. In fact, none of the three stocks is even expected to be profitable next year making the divergence perplexing. Considering the huge gains in Cheniere, Clean Energy could be set up for a strong 2014 once it hits full stride.

70% Increase In Vehicle Orders

The headline from the recent news release by Clean Energy was very catchy. The company has seen customers’ order 70% more natural gas vehicles in the first nine months of 2013 compared to 2012. The number sounds impressive as usual, but investors will keep coming back to the Q313 gallons delivered only increasing 17% over last year. Why does the massive discrepancy exist?

Part of the issue is that the statement about 70% growth in vehicles ordered probably catches people off guard. Clean Energy isn’t forecasting 70% growth, but rather 70% growth in the amount of vehicles added to the fueling network compared to last year. The total growth in the amount of gallons delivered for Q4 and beyond isn’t as easy to decipher.

Back in June, an investor presentation listed 26,000 natural gas vehicles were fueled daily by Clean Energy. Based on 4,000 refuse trucks ordered industry wide last year, one can possibly guesstimate (as much a guess as an estimate) 6,000 orders in total for customers of Clean Energy. The 70% growth in orders would lead to roughly 10,000 vehicle orders by customers this year. Using the 10,000 ordered vehicles with a customer base of 26,000 vehicles would lead to 38% growth. Even if the number is wrong, the analysis is more to prove that the headlines number is far from indicative of the actual fuel usage that equals revenue growth.

Again the discrepancies between these order totals and the actual growth in fuel sold is vast. Either the company is set up for strong growth in 2014 as the orders turn into fuel usage or old vehicles are being replaced to counteract some of the growth in new vehicles.

2014 Catalysts

From the production of the Cummins Westport 12L engines quadrupling next year to 10,000 engines from a forecast of 2,400 engines this year to the opening of more Americas Natural Gas Highway stations, the stock has several catalysts for 2014.

Due to the nature of the markets and availability of engines, the market has developed so far focused primarily on the return to base businesses of airport vehicles, refuse trucks, and transit buses. Each of those three markets only average fuel usage of around 2 billion gallons per year for a total somewhat less than 6 billion gallons a year. The heavy duty truck market uses an astonishing 25 billion gallons of fuel per year. The amount is nearly 5x the other three markets combined.

In total though, the company is only on a pace to reach 210 million gallons sold in 2013. The amount barely reaches 10% of the refuse truck segment alone. The substantial heavy duty market potential is so beyond the other three segments that it is estimated that 143 million gallons will be used in 2014 and it will surge to over 2 billion gallons by 2017. Even by 2017, the market is only forecast to reach 35% of the new trucks utilizing natural gas engines.

Fuel Costs

One major concern for investors is also the biggest benefit. The low costs of natural gas aren’t guaranteed to last forever. As the below slides highlight though, the cost differential between natural gas and oil used for fuel products of diesel and gasoline are the largest in decades. The possibility of the prices converging is probably the biggest threat to the Clean Energy investment thesis.

Interestingly though, the economics of natural gas is very impressive at almost any price level assuming oil remains this high. As the below slide indicates, even if natural gas prices surge from $4.09/MMbtu to $7.09/MMbtu, the commodity price impact to the fuel hardly budges. In that scenario, Clean Energy estimates that the commodity price only gains from $0.57 to $0.98 per gallon.

The real issue and biggest concern would be a corresponding slump in the price of oil that makes the low cost benefits of CNG and LNG disappear. Suddenly, heavy-duty truck firms would delay any decisions to invest in the fuel. The below chart shows that historically oil and natural gas have traded in tandem:

Only recently has the prices diverged due to abundant natural gas being tapped domestically. As the natural gas market opens up to exports starting in 2015, the price could surge to global levels that are significantly higher. Still, the real issues would be oil plunging down to the $60 to $80 level due to the now larger supply of domestic oil from similar shales and hydraulic fracturing that created the natural gas boom. What if the price of diesel and gasoline dropped to $2.50 per gallon?

Stock Divergence

The longs on Cheniere will quickly suggest that the stock has surged due to the 20 year contracts to export natural gas that it has signed, but Clean Energy has long-term deals. Westport is a slightly different situation where the company needs to focus the development plan in order to create a path to profits. Right now it has unlimited potential, but the development plans don’t appear to ever end.

The below chart shows the divergence in stocks that now separates Cheniere and Westport by nearly 400 percentage points over the last two years?

Conclusion

The news on Clean Energy can be deceiving, but the company is set up to finally benefit from the shift to natural gas as a transportation fuel. Assuming oil prices remain high, the stock has the potential to replicate the Cheniere run in 2014 .

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CLNE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.