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The Most Misunderstood Investment in the U.S. (and It’s Not Bitcoin)

Written by Keith Kohl
Posted February 10, 2021

All it took was one swift stroke of a pen, and President Biden ended a 13-year war against the Keystone XL pipeline.

At the very least, he delayed any hope for the project by another four years.

Remember, Trump reversed a previous veto from the Obama administration. This game of one-upping the previous administration’s stance on the Keystone XL pipeline has been going on since 2008 when the project was first proposed.

All I can say is be careful what you wish for.

Whether you love or hate oil and gas pipelines, they remain a sorely misunderstood investment in the United States today.

And that, dear reader, breeds an interesting opportunity for individual investors like us.

Let me explain...

The Most Misunderstood Investment in the U.S.

Once completed, the Keystone XL would have transported approximately 830,000 barrels of oil from Alberta to refineries along the Gulf Coast of Mexico.

If you’re asking yourself why it's so important that crude comes from the bituminous sands of Alberta, you have to realize that these refineries are special — they’re specifically geared to handle heavy grades of crude oil.

These refiners crave the heavy, sour crude oil we import from two particular places: Venezuela and Canada.

Now, we both know how Venezuela’s oil industry has been an absolute dumpster fire ever since Hugo Chávez seized assets from oil companies operating in the country back in May 2007.

With a snap of his fingers, PDVSA took control of 30 barges, 13 drilling rigs, 399 boats, and 39 terminals that were owned by roughly 60 oil companies.

And it’s been an utter disaster for Venezuela since then.

Couple the collapse of Venezuela’s oil output with the crippling sanctions placed on the country by the U.S., and those refiners along the Gulf of Mexico could only turn to Canada to satiate that hunger for poor-quality crude.

As you can see below, we’ve dramatically cut our imports of crude oil from Venezuela over the last 15 years:

image1ven

Naturally, the oil sands stepped up in a major way.

Take a peek for yourself:

image2can

Today, we import well over 4 million barrels of crude oil and petroleum products every day from our friendly neighbors to the north.

To put a little perspective on how crucial Canadian oil is to the United States, keep in mind that this is nearly seven times more crude than we buy from all of OPEC!

So you can understand why it’s important we have a safe and effective means to transport this oil.

Believe me, I’ve read the same headlines that you have regarding pipelines.

Depending on which political team you play for, it’s safe to say that you either abhor the notion of using pipelines to transport crude or you see pipelines as a saintly option with absolutely no drawbacks.

Spoiler alert: Both of those takes are inaccurate.

Let me be clear — NOTHING is perfect when it comes to transporting crude oil, pipelines included.

And even though 99.9% of the crude oil that starts at one end of the pipeline will make it safely to its destination, it’s illogical to think that pipelines don’t have their own flaws.

However, you also have to realize the alternatives will make President Biden regret revoking the Keystone XL’s permit.

Just break down the numbers yourself…

Let’s take the 830,000 barrels per day that the Keystone XL would’ve transported to our refineries.

There are only two other ways to move that crude. You can either load it up onto tanker cars and ship it via railway or you can haul it out with trucks.

Given that the weight limit for trucks is set at 80,000 pounds, each truck can haul roughly 8,000 gallons of crude, or about 190 barrels.

That means it would take 4,368 trucks to ship what the Keystone XL could in a day.

Of course, this is also assuming that President Biden’s attack on U.S. pipelines stops after revoking the Keystone XL permit.

If he decides to go after the rest of America’s pipelines, we’re talking about a network of over 2.6 million miles of oil and natural gas pipelines that crisscross our country.

Even if he only goes after new pipeline projects, that could lead to an even greater catastrophe. Not only would it come during a time when natural gas plays a critical role in our energy mix but also when our energy infrastructure is in desperate need of an upgrade.

By now, you can probably see the opportunity in midstream players that control our current pipeline infrastructure.

That’s one place investors can start their search for the hidden investment gems under President Biden’s administration.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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