When UPS decides whether to run its vehicles on oil, natural gas, electricity, or something else entirely, it enjoys a variety of options that can reduce the company's overall risk. If oil prices stay low, gasoline may continue to be the best option. But if it heads higher, alternative energies may look more appealing. Clean Energy Fuel Corp. may not always be the best deal for United Parcel Service -- but it's there if and when UPS wants it.
The bottom line
This week's announcement isn't a fundamental game changer for United Parcel Service shareholders (like myself). Between this new Texas deal and the pre-existing California one, Clean Energy Fuels Corp. will fuel up just 540 of UPS' approximately 106,000 vehicle global ground fleet. And in 2014, the company still only displaced 5.4% of its traditional gas and diesel purchases with alternative fuels like propane, ethanol, renewable diesel, and electricity.
But as volatile energy (and stock) markets have shown us in recent years, the power of diversification should never be discounted. Investors should applaud small deals like this one as signs that UPS is continuing to seek out interesting and progressive ways to ensure steady earnings in the years to come.
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The article United Parcel Service to Clean Energy Fuels: Let's Make a Deal originally appeared on Fool.com.
Justin Loiseau owns shares of United Parcel Service and hedges his fuel costs with a bicycle. The Motley Fool recommends Clean Energy Fuels and United Parcel Service. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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