If you have a neighbor who drives a hybrid car, you’ve likely been made (involuntarily) aware of its fantastic fuel-saving, environment-saving, mankind-saving capabilities. Hybrid vehicles, after all, contributed to drastic reduction in petroleum usage: a study from 2007 found that hybrid vehicles reduced the national fuel consumption level by a total of about 56 million gallons of gasoline.
The same study then reminds the smuggest of environmentalists that this figure accounts for just one fifth of the total amount of gasoline that the United States consumes every day.
The world runs on oil. This is an inconvenient truth far greater than any narrative established by Al Gore as he takes his private jet from speaking opportunity to speaking opportunity. Each day, the United States consumes the equivalent of ten oil tankers full of crude, while tacking on plenty of natural gas on top of it.
The American fracking revolution helped to not only push down the cost of gasoline from an astronomic average of $4 per gallon in 2011 to half that figure today.
What’s more, the American sweet crude hitting the market put a number of our international rivals into the red: Venezuela, Russia, Saudi Arabia, and Iran are just some of the peaceful, democracy-loving nations who rely on petroleum exports for 80% or more of their GDP. The more American oil goes onto the market, the fewer contributions Iran can make to Hamas’ bank account, and the fewer sovereign European countries Russia can invade.
Of course, to liberals, this spells bad news and not good because of the great specter of global warming — even though that the same scientists who decry global warming also admit that we’re overdue for a new ice age.
With this spate of positivity in a crucial section of our economy, there’s more good news on the horizon. President Trump has used executive orders to open the Keystone XL Pipeline, a huge energy project mothballed by the Obama Administration in favor of neutering our energy independence to appease the world at the Paris climate conference.
Keystone XL connects oil fields in Canada with refineries in Texas, allowing valuable supplies of oil to reach the complex facilities needed to distribute oil and gas products. He’s also used executive orders to begin work on the Dakota Access Pipeline, a smaller but no less pivotal lifeline that connects oil from the Bakken formation to the town of Patoka, Illinois, where a population of 600 belies a critical transportation juncture.
These pipelines, costing eight billion and four billion dollars respectively, will have a huge benefit throughout both the United States and Canada (Keystone is enthusiastically supported by Canadian Prime Minister Justin Trudeau) by improving the supply chain and distribution of valuable petroleum.
Currently, distribution from Canada requires hugely inefficient rail systems, making it hard for our neighbors to the north to get their product into American engines. As Trump had previously invested in the Dakota Access Pipeline prior to his presidential campaign, it’s clear that he not only values energy surety, but that he also believes in the economic value of these pipelines.
You should too: estimates suggest that for every dollar drop in the price of gasoline, the average American pockets about $1000 from savings on transportation and heating.
Keystone and the Dakota Access Pipeline can affect your bottom line away from the gas pump. Without a doubt the biggest winner on the market will be the TransCanada Corporation, which trades on the NYSE, with a consensus analyst price target of over $50.
Quanta Services, a Houston-based refiner, will also capitalize from this fresh inflow of Canadian crude. From the Dakota pipeline, Energy Transfer Partners took a huge hit from Obama’s decision to block the Dakota Access Pipeline, costing the company an estimated $400 million dollars. Their resurgence with the approval and ultimate completion of the Dakota pipeline makes them a fantastic value buy for investors.
Remember that these companies’ shares may fall initially, as earnings per share tend to rise when companies slash project budgets and sit on their capital. In the longer term, however, they appear to be well-poised to gain from Trump’s executive orders to turn on the taps. Their investors will be happy too — especially if they have neighbors who won’t shut up about their Toyota Prius.
Regards,
Ethan Warrick
Editor
Wealth Authority
