Oil's Biggest Weakness


By Keith Kohl, Energy & Capital, Monday, September 16

Few times have I come across an investment that you can call a “no-brainer.”

You know the ones I mean.

They’re the positions in your portfolio that are as close to a win-win situation as you can get in the market.

These investments not only thrive during the best of times, but they’ll also perform and make you a tidy profit during the worst.

Today, with investors and pundits alike fretting about recession fears, a no-brainer is harder to find than you might think.

Don’t get me wrong; they’re out there.

In fact, there are a number of them staring us in the eye as you read this.

There’s no denying that the Achilles’ heel of the U.S. energy sector is its infrastructure.

It has been for a long, long time.

And it may just be the biggest investment opportunity out there right now.

The Achilles’ Heel of the U.S. Energy Sector

Everything has a weakness.

Producing a lot of oil ISN’T ours.

Last week, the EIA reported that U.S. crude oil production for the prior week averaged 12.4 million barrels per day.

That’s 1.4 million barrels per day more than it was a year ago.

To put a little more perspective on that, consider that U.S. oil output in 2008 averaged just 5 million barrels per day.

So our production growth from last year alone would’ve accounted for more than one-quarter of our total output back then!

In August, just five oil-producing regions in the United States accounted for nearly 70% of U.S. oil production — extracting crude at a rate of more than 8.4 million barrels per day!

The Permian Basin alone makes up more than half of that production, too.

Now, don’t get me wrong; there are plenty of things to be concerned about when it comes to our tight oil production.

Fortunately for you and I, one of the biggest issues is something most investors take for granted.

And it’s something you should be taking full advantage of right now, while you still can.

Have you guessed it yet?

It’s not the steep decline rates or the fact that E&P companies need to drill at a furious pace to continue these growth trends.

No, the problem lately has been GETTING that flood of oil to market.

The Easiest Investment I’ve Ever Made

If you haven’t caught on yet, the problem right now revolves around the 2.6 million miles of oil and natural gas pipelines crisscrossing the Lower 48.

What’s the problem, you wonder?

Well, it turns out that our pipeline infrastructure is horribly outdated.

Just think...

Over half of our pipelines were built in the 1950s and 1960s.

In fact, roughly 10% of the pipelines that transport our crude oil and natural gas today were laid down over 70 years ago!

I’m certainly not the first person to recognize this potential crisis, mind you. The American Society of Civil Engineers has been wildly waving this red flag for years and even gave our energy infrastructure a D+ grade in its latest infrastructure report card.

Love it or hate it, you can’t deny the fact that U.S. petroleum consumption is at near-record levels.

More importantly, finding the right infrastructure play not only means decades of dividend payments, but they are among the strongest positions to own during a recession.

Need proof?

Consider that while everyone lost their shirts during the crash of 2008, Enbridge — one of the biggest pipeline players in North America — shed less than 20% of its value.

Yet it was also one of the quickest to recover.

And throughout it all, Enbridge actually boosted its dividend, which has grown over the last 20 years at a CAGR of 11.96%.

Like I said, it’s one of the few win-win investments you can make today.

Have you heard of these Superpower Checks? $1,818 each [sponsor]

This is news to most Americans… but Congress unanimously approved a program that’s sparked a $270 billion spending spree across America. Part of this spending is required to be paid out to everyday Americans, in the form of these American Superpower Checks.

You could collect up to 24 per year — each worth $1,818 or more.

Go here for full details and to sign up.



 
 

Oil's Biggest Weakness | www.RediNews.com | Copyright © 2013 - 2024, All Rights Reserved

Nothing in RediNews.com is intended to be investment advice, nor does it represent the opinion of, counsel from, or recommendations by BNK Invest Inc. or any of its affiliates, subsidiaries or partners. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All viewers agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. By visiting, using or viewing this site, you agree to the following Full Disclaimer & Terms of Use and Privacy Policy. Video widget and market videos powered by Market News Video.