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Look for Opportunities in Midstream O&G Storage and Transportation

I was interviewed by Investor Business Daily on Friday. The topic of the conversation was causation of the recent run up in crude oil prices. I provided several reasons which have all concurrently contributed to the spike in prices. All of these reasons can and have lead to unbridled speculation and hoarding in the commodity:

1. Concerns over mounting tensions associated with the nuclear weapons threat coming out of Iran;

2. Trapped crude oil which is unable to make itself from Canada or Oklahoma to the coastal refineries in the US; 

3. Lack of a comprehensive, cogent and practical energy policy from the administration in Washington;

4. A failure of the CFTC to prevent and curb excessive speculation; and,

5. The media. Apparently, according to the local and national news, gas prices at the pump are going to $5. That prognostication is based on speculation and not fact or rigorous research. 

Of all those reasons above, the one that provides the greatest long term opportunity is #2, which as it turns out is also a byproduct of #3. We cannot get the raw product to the refineries fast enough or efficiently. Thus we need to focus on both oil and gas storage and transportation. We also have to get over the NIMBY (not in my back yard) issue and build more refineries. I am not going to point you to a specific company but will tell you to look at midstream companies which specialize in storage and transportation. I would emphasize earnings strength over payout ratios in this part of the master limited partnership (MLP) sector. 

By the way, on Wednesday I will be appearing on Bloomberg TV with Pimm Fox. You can tune in on your local cable station, on the Bloomberg Professional Service or on the internet

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time. 

Chat with Scott all day Wall Street All-Stars. in “The Finance Professor’s Classroom”


 



Posted By Scott Rothbort at March 4, 2012

Scott Rothbort

About Me :

SCOTT ROTHBORT

THE FINANCE PROFESSOR

 

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational website TheFinanceProfessor.com and a frequent contributor the TheStreet.com where he also writes a weekly article as The Finance Professor

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com.

 


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