The Hidden Risks of Energy MLPs

Comments (4)

  1. vince says:

    I feel in my gut you’re going to see the energy complex take a hard nose dive with the upcoming ability of the U.S. to export oil and other energy products worldwide. I base this on the fact that oil is starting to get competitive selling around the globe and middle eastern countries will still have to sell twice as much to make the money for their economies to operate. Its a case of more sellers than buyers. I also feel the biggest pressure will be on Brent Sea crude oil and the gap between Brent and WTI will probably invert as Europe will buy cheaper fuel and the demand for Brent will dwindle. I still don’t understand why we haven’t converted to natural gas and placed priority on building out infrastructure to support it. Logically it feels like political BS that’s doing it. I can see oil going to $25 dollars a barrel within 4 months and staying there as every economy around the globe starts dumping more and more product on the market for cash. No matter what anyone says, Cushing doesn’t have and hasn’t had any more room for oil in a long time and the space goes at auction. So the space in an oil tank has created a futures market, wtf. All these current prices are being held up by bets to the upside in the futures oil markets and margin calls are going to be a reality in the near future. Gravity and pressure are real forces in the energy markets and for my gut, which I have learned to listen to on my 50 some odd years on this planet says that gravity is taking over right now and drawn downs of a couple 2-3 barrels more or less doesn’t mean anything but a couple cents movement for a very small amount of time in the physical market. Long term my money is short oil, diesel, heating oil, and gasoline, but not on the gases, such as natural gas and propane. Everyone using propane and natural gas doesn’t have the infrastructure to be used throughout the U.S. North Dakota and Penn still burn it off during drilling, which means they have no storage and if someone where able to take they would – these companies are just burning money.


    Martin Hutchinson Reply:

    That’s a persuasive argument. The only argument against it is that much U.S. production, from fracking, has a very short lifespan, so output will start to drop quite rapidly in 2016. That’s a dynamic we haven’t seen in previous cycles and may push prices back up.


  2. Mark says:

    How about other high dividend stocks like (SDIV), (SFL) or (TWO). Are these subject to the mark to market thing? Will they all have trouble maintaining their dividends too?


  3. Will Koenig says:

    The problem with natural gas is all of the subsidies aimed at the sun and the wind distract attention in the wrong direction. Only when we clear the air of the do-gooders that fill their pockets by preaching hot air will natural gas then be able to take its rightful place.


Add Comment