Fanatics Protest From a Steel Cell
You might think that using a crane to place steel boxes so as to block all the entrances to a global energy corporation might attract some attention before completed. Nonetheless, Greenpeace successfully demonstrated a gap in business continuity planning, just hours before BP’s annual general meeting. Even at 3am, BP’s global headquarters should have had some security staff on site. They might be expected to notice the unplanned delivery of five steel boxes so as to block access to the building. Perhaps they were taking a nap. It must have led to a lively exchange between the head of security and senior executives.
People sealing themselves inside a chamber with several days of food and water should perhaps be allowed to languish for somewhat longer. One imagines that, had this imaginative protest occurred in Houston not London, the authorities’ response would have been different.
The steel boxes and the fuel for the cranes were enabled by the type of petroleum products BP produces, but this well-worn criticism of environmental activists (do protesters ever cycle to their protests?) is not our point. The energy industry is under attack by a small but vocal group who deny science to try and impose their own quirky vision of 18th century living standards on the rest of us.
Enbridge (ENB) told us last week they would not attempt a new, “greenfield” crude oil pipeline in Canada given the unpredictable approval process. New York recently denied Williams Companies (WMB) permission to build a natural gas pipeline connecting the Marcellus Shale in Pennsylvania with consumers in New York City. Boston relies on Russian imports of liquefied natural gas in winter, because new pipelines to bring domestic natural gas have been successfully opposed.
80% of the energy that supports modern life comes from fossil fuels and it’s never been cheaper. Living standards and longevity in developing countries are improving due to greater energy use. In spite of this undoubted success, the energy sector has lost the PR battle. Providing the world with what it clearly wants draws the smug opprobrium of those whose fixation on solar and wind power includes opposition to nuclear energy. Bill Gates, who writes thoughtfully on big subjects, has questioned the focus on R&D for renewables instead of more on cleaner use of fossil fuels: “Should you really be funding the intermittent stuff with all the money and putting no money in the stuff that works all the time?”
The tobacco industry has no claim to improving well-being, but does share with the energy sector a constant need to apologize for its existence. 25 years ago, big tobacco was being sued by U.S. states and individuals for the terrible health outcomes caused by its products. In 1998 they entered into a Master Settlement Agreement with almost all U.S. states, agreeing to pay billions of dollars over many years.
We are no fans of tobacco companies and the morality of energy companies is wholly different. But it’s worth noting that much-reviled tobacco stocks have provided strong returns since, as shown in the chart. The Wall Street Journal has included Altria (MO) in its “30 best-performing stocks of the past 30 years”. It’s just behind Apple (AAPL). MO also made the top 25 S&P500 stocks of the past 50 years.
Midstream energy infrastructure offers predictable cashflows that are growing, and will always be out of favor with those who like to inhabit steel boxes. It’s a recipe for attractive future returns.
We are invested in ENB and WMB.
SL Advisors is the sub-advisor to the Catalyst MLP & Infrastructure Fund. To learn more about the Fund, please click here.
SL Advisors is also the advisor to an ETF (USAIETF.com).
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.
Leave a ReplyWant to join the discussion?
Feel free to contribute!