The best oil opportunities may not be found in oil at all, but in the distribution, allocation, and organization of it. It is an argument made at the next big article on energy investing. Curious visitors can find this here. The argument boils down to one big truth- oil can be a moneymaker, but oil transportation may be where the big gold rests.
Oil is valid, but direct oil production investing may not be the way to go anymore. How can investors work this system of oil production and distribution for their own benefit? How should investors approach oil differently in 2017?
Investing in the MLPs
MLPs take oil and run with it- sometimes literally. An MLP is a Master Limited Partnership. These are organizational bodies that connect the producers with the transporters. They can also be considered a categorical way to look at the separation that exists in the energy and oil industries. Master Limited Partnership bridges these gaps. These are companies, under a “banner,” that work the midstream transportation from oil production to the consumer end.
The Price Immunity
Oil hasn’t been consistent the last two years due to a lot of complicated political and legal matters which have created some tumultuous waters. This goes beyond the goal of this article here, but it essentially boils down to this- oil is not a fixed price and it can waver due to external matters entirely.
Oil transportation, on the other hand, is more consistent. It is unaffected by the direct trade price of oil, which consequently can affect the direct trade price of oil-producing companies. Oil transportation is the same in the cost-benefit analysis whether an oil barrel is $1 or $100. It is still a ton of oil.
Oil transportation entities, specifically MLPs, are partly immune to the price of oil. Oil investors may find staggering opportunities in the boundless exterior of oil. These companies work in the industry, but they are a bit more immune to the rising and falling prices. They offer a safer and more sensible alternative to investors hypnotized by oil, but not enough to think a little outside-the-box.