The shares of natural gas engine maker Westport Innovations have, as you may have noticed, gotten clobbered along with everything else in the last month or two.  Because the company is not profitable, and is a somewhat speculative play on an alternative energy niche, it has fallen even more than most — speculation is a dirty word these days, as is “unprofitable.”

But what does it all really mean for Westport in the long term?  Well, there is one other hiccup:  California is broke.

Obviously that’s an exaggeration — California remains one of the largest economies in the world, and they’re far from broke.  They are, however, dependent on short term money market funding and on bond issuance to meet their commitments, and not long ago the Governator came, hat in hand, to the Treasury to ask for a backstop.  Add to that the fact that their economy got extra drunk on the housing boom, and we’ve got a worried State.

Why does that matter?  Well, the primary positive catalyst that Westport should be able to look forward to is a wave of significant orders for their heavy duty LNG engines for the trucks that service California container ports.  Particularly, they’re ramping up capacity, along with Kenworth, to sell to the expected heavy demand from the San Pedro Bay Clean Trucks program.

That program, which I focused on in my original writeup of Westport, basically includes grants and loans for truckers to urge them to upgrade to natural gas engines such as that offered by Kenworth and Westport (and other alternative fuels and clean diesel).  There are a few trucks that have been delivered so far, but the hope is that there are thousands more orders to come — the ports want to replace 16,000 trucks, fewer than 100 have been delivered so far.

So … the big question is, where are the orders?  When will they come in?  How many will come?  And is the money still there for those trucks?

The potential upside for the company (it’s been cut in half in the last month or so) is dependent on the answers to those questions, and as long as there are questions there will probably be few folks who are excited about the shares.

But a larger problem is that the ports are planning to pay for this program through fees on the containers that move ...