Few of us give much thought to Syria. The country has no oil, mostly exports asylum seekers to Europe and is now run by religious extremists following a decade of civil war. If you live in America, Syria doesn’t matter. 

This simplistic view was challenged last week in a presentation at the Naples Council on World Affairs, which regularly invites experts on geopolitics to give presentations.  

Andrew J. Tabler is the Martin J. Gross Senior Fellow in the Linda and Tony Rubin Program on Arab Politics at The Washington Institute, where he focuses on Syria, the Levant, and U.S. Middle East Policy. 

Tabler argued that Syria is important because Middle East oil supplies will inevitably have to travel through an as yet unbuilt pipeline to reach the Mediterranean. The cost asymmetry in attacking/defending shipping in the Persian Gulf means that it will never be truly safe.  

The US Navy has been very effective in blockading Iran while ensuring safe passage for other ships through the Strait of Hormuz. But this is unsustainably expensive. The missile to shoot down a drone can cost 10-50X as much as its intended target, in addition to which we’re maintaining two carrier groups in the region.  

It doesn’t take much to ensure the Strait is “commercially” closed – if insurers won’t provide coverage, ships generally won’t move. It’s this growing realization that will eventually support construction of alternative supply routes out of the Persian Gulf that are harder for Iran to target.  

Iraq would clearly benefit from a pipeline from Basra to Baniyas, on Syria’s Mediterranean coast. Kuwait could connect to it. Perhaps even Saudi Arabia. Nothing would be proposed through Israel, and Lebanon is too unstable. Turkey is a possibility but it’s a longer route.  

Iraq is already moving crude through Syria via a “road pipeline” — fleets of trucks. This is expensive.  

Therefore, Andrew Tabler thinks Syria will be the obvious choice for a new pipeline. He also expects the US to be asked to provide financial support. Perhaps logistical help as well – we have a lot of pipeline expertise in this country.  

Areas of southern Iraq and Syria are only loosely under government control, with groups aligned with ISIS still active. Note the missile strikes on Saudi Arabia from southern Iraq a few weeks ago.  

Pipeline construction across this region won’t be easy, but Tabler argues it’s why we’re going to care more about Syria in the years ahead.  

What about natural gas? Qatar has seen its LNG exports plummet as it keeps extending its force majeure. The owners of LNG tankers are less willing to expose them to Iranian attacks than oil shippers. But physics makes a Syrian gas pipeline unlikely. Any gas that reached the Mediterranean would need to be liquefied at a new LNG export terminal, the same process that Ras Laffen in Qatar is designed for.  

Gas is harder to move than oil. No LNG export terminal will get built in Syria. Qatar has no good options. They’re planning to add 85% more liquefaction capacity in Ras Laffen within five years – and yet they’re signing up for shipments of US LNG, presumably to assure future buyers that deliveries won’t be interrupted again.  

Almost doubling capacity under such circumstances could never attract private capital. Qatar as a sovereign entity can commit funds without consideration of a stock price. For now, they show every intention of pressing on.  

The prospects for US LNG exporters look good.  

While political analysts are busy writing op-eds, it’s worth remembering the chart above, which shows how relatively unimportant the party in power is to the prospects for midstream energy. Trump 1.0 led to excessive spending and poor returns. The caution that followed under Biden was well rewarded by the market. Trump 2.0 has been better, and not just since we attacked Iran.  

Voters have moved on from climate change. Because of the inexorable rise in living standards and energy consumption across emerging countries, it’s their policies that will determine the path of global emissions. The Progressive philosophy to impede the reach of natural gas across regions such as New England has demonstrated that liberal thinking comes with high energy prices. This viewpoint has been marginalized by the focus on affordability, which is where the energy debate sits today. 

The fundamental outlook hardly changed for midstream last week. Natural gas production and exports of LNG, LPG and oil will continue to grow. Regardless of how the Iran war plays out, it has highlighted the reliability of the US as a supplier. Earnings continue to reinforce the message of stable growth. The sector remains attractively priced for the long term investor.  

We have two funds that seek to profit from this environment:

Energy Mutual Fund

Energy ETF

Important Disclosures

The information provided is for informational purposes only and investors should determine for themselves whether a particular service, security or product is suitable for their investment needs. The information contained herein is not complete, may not be current, is subject to change, and is subject to, and qualified in its entirety by, the more complete disclosures, risk factors and other terms that are contained in the disclosure, prospectus, and offering. Certain information herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy,  completeness or timeliness of this information. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments.  Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in an index and do not reflect the deduction of the advisor’s fees or other trading expenses. There can be no assurance that current investments will be profitable. Actual realized returns will depend on, among other factors, the value of assets and market conditions at the time of disposition, any related transaction costs, and the timing of the purchase. Indexes and benchmarks may not directly correlate or only partially relate to portfolios managed by SL Advisors as they have different underlying investments and may use different strategies or have different objectives than portfolios managed by SL Advisors (e.g. The Alerian index is a group MLP securities in the oil and gas industries. Portfolios may not include the same investments that are included in the Alerian Index. The S & P Index does not directly relate to investment strategies managed by SL Advisers.)

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involves a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of SL Advisors LLC or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made. r

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with SL Advisors LLC with respect to any linked site or its sponsor, unless expressly stated by SL Advisors LLC. Any such information, products or sites have not necessarily been reviewed by SL Advisors LLC and are provided or maintained by third parties over whom SL Advisors LLC exercise no control. SL Advisors LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

Past performance of the American Energy Independence Index is not indicative of future returns.