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The Shocking Truth About the Keystone XL Pipeline

At Capitol Hill Daily, we’ve just unearthed some shocking details about Phase III of the Keystone XL Pipeline extension.

But before we unveil the disturbing news (and a rare opportunity for our readers), here is a quick refresher…

The Keystone Pipeline is a 2,000 mile plus pipeline delivering oil from the Canadian tar sands to the American Midwest.

The Keystone XL Pipeline is a four-part extension to the original pipeline that will transport the oil to refineries in other locations, particularly the Gulf Coast.

To say the project is highly controversial would be putting it mildly. The Keystone project has become a lightning rod for both political and environmental criticism.

But despite the resentment associated with the Keystone XL, Obama is absolutely certain to approve the permits for Phase III of the extension.

And Here’s Where it Gets Scary…

When Obama gives Phase III the green light, both Canadian and domestic oil will get channeled directly into the hands of our chief oppressors.

Yes, you heard that right.

We’re talking 510,000 barrels each day that were supposed to advance our quest for energy independence…instead pouring straight into Saudi tanks.

You see, Saudi Aramco, the highest-valued company in the world, is strategically positioned at the hub of America’s largest petrol vendor: the Motiva Oil Refinery in Port Arthur, Texas.

And the worst part is that the U.S. government is fully aware. In fact, they’re the ones allowing it.

It’s a hush-hush arrangement between Washington and the world’s leading force in daily oil production and oil reserves – Saudi Arabia.

And Saudi Aramco solidified its stake in Motiva by completing a $10-billion expansion of the Motiva refinery…a drop in the bucket considering the $10 trillion it has in the bank.

Now, because of this backroom deal, its dominance in the energy market will stay intact… and so will our dependency.

And while this situation certainly begs a few questions… at this point, the reasons why don’t matter.

All you need to worry yourself with is how you can spin this political power play in your favor.

A Rare Opportunity Hidden in Phase III

Because Saudi Arabia is pillaging an oil supply intended as an energy trust fund for the United States, Phase III will not provide decreased prices for gasoline or heating oil whatsoever.

Besides an uptick in construction jobs, the average American will not benefit from Keystone XL at all.

The major beneficiaries will be the refineries.

You see, the United States is divided into five Petroleum Administration for Defense Districts (PADDs).

padd graphic

As it stands, the Keystone Pipeline has PADD 2 overloaded with excess oil.

Phase III expansions will flow Canadian glut crude down to PADD 3, where there’s a much larger capacity for refining.

US refining capacity

As a result, PADD 3 is the largest untapped market for Canadian crude oil.

And that’s at the heart of the Keystone XL mission – to get Albertan oil down to America’s preeminent network of refineries.

The important thing for investors to know, however, is that this upsurge in business will allow refineries to offer Master Limited Partnerships (MLPs).

And investors can make a ton of money from these.

The MLP Advantage

So what’s so attractive about MLP’s?

Three things:

  • Their stable business model
  • Their high quarterly yields
  • Their knack for raising distributions every year

In fact, MLPs are renowned for their predictable cash flow in both good and bad times.

They’re also great for:

Taxes – MLPs are exempt from the capital gains tax on profits made by the partnership. That’s especially useful thanks to the higher taxes brought on by the Fiscal Cliff deal.

Income StreamMLPs disperse 90% of their cash flow as quarterly distributions (like dividends). As an MLP grows, increases business and acquires other businesses, the quarterly payouts increase in value as well.

A typical distribution yield tends to fall in the 6% to 7% range, which is very attractive. And it’s not uncommon to find many paying out double-digit yields – just make sure the revenue is strong enough to cover the payout.

There’s Always a Way For Investors to Benefit…

Obama’s approval of this political and environmental catastrophe is inevitable. But we don’t have to sit idly when there’s an opportunity to line our own pockets.

Remember, no matter what’s going on behind the scenes in D.C., there’s always a way for investors to benefit. You just need the right information.

And that’s what Capitol Hill Daily is here for.

In Pursuit of the Truth,


Martin Biancuzzo

Senior Correspondent, Capitol Hill Daily


Marty Biancuzzo

, Technology Analyst

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