Political junkies all over America are salivating today…
The U.S. House of Representatives will hold a vote on the Keystone XL Pipeline, and after a long winter break for Congress, it looks like legislation will come early on in the new session.
Now, I don’t really care much for politics or what the corporate buyers tell their puppets in Washington to vote on next. But when the vote concerns energy, I pay attention.
So with the first vote of the year to be on the controversial Keystone XL, it makes sense that I should talk about it in today’s column, since it could have an impact on the market.
Here’s the thing: The Keystone XL Pipeline has been hijacked by politicians, PACs, and the media and turned into something it is not.
Both sides of the aisle are more or less wasting their time… and you will be too if you were planning on buying TransCanada (NYSE: TRP) or shares of any other company involved in its construction.
Ready the Veto Pen
I have no doubt in my mind that the Keystone pipeline bill will pass the House today. It should be no problem, with energy-friendly Republicans outnumbering Democrats 247 to 188.
Heck, it’s even going to pass the Senate once it reaches the upper chamber, what with Republicans now firmly in control there, too.
The real challenge will be a presidential veto.
On Tuesday, White House Press Secretary Josh Earnest had this to say: “I can confirm for you that if this bill passes this Congress, the president wouldn’t sign it either.”
Clearly, President Obama will not approve the legislation that the House is voting on today, but that doesn’t mean it will never pass.
One way is for Congress to override the veto with a two-thirds majority vote. This is easier said than done because while the House could easily override a veto, it is unlikely Republicans will be able to convince enough Democrats in the Senate to approve the bill.
Another way to get the pipeline approved would be for the Senate, once the House passes it today, to introduce amendments that are agreeable to the president — perhaps environmental legislation, rules against Canadian export of oil from the pipeline, or a requirement saying that all construction and materials must be supplied by American companies.
Either way, it doesn’t matter; the pipeline is irrelevant.
Why it Doesn’t Matter
After six long years of foot dragging and over-hyping of the 800,000 barrel-per-day extension to an already existing pipeline system, the Keystone XL has lost its luster.
No matter if the pipeline passes now; Canadian producers looking to transport tar sands crude to refineries and ports for export have found alternatives aplenty.
Two of those — the Energy East Pipeline and the Northern Gateway Pipeline — travel through Canada, one to the west and the other to the east.
The Energy East will have a capacity of about 1.1 million barrels per day, while the Northern Gateway will carry about 525,000 barrels per day.
Add to that the Flanagan South Pipeline’s 600,000 barrel-per-day throughput, and you can see that the combined 2.3 million barrels per day between these three alone makes Keystone unimportant.
If you weren’t aware, Keystone XL will only transport 800,000 barrels a day maximum.
Beyond that, if you are an investor, buying the pipeline operator or manufacturers makes little sense.
Because investors have had six years to learn of the Keystone XL and make investments accordingly, any worthwhile gains have already evaporated. Sure, if it passes, you could make a quick buck, but it’s not worth the hassle.
However, that doesn’t mean you have to sit out entirely…
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Rising Tides Lift All Boats
While it’s tough to predict any potential impacts the pipeline’s passage could have on investing, I don’t think it’s a stretch to say that the midstream sector will see a bump.
And even if it doesn’t, North American midstream is on a tear, and the much-publicized vote in Congress today on a pipeline, of all things, confirms this.
So much for a boring sector…
What I’m getting at here is that if you want to make money on pipelines (or any other midstream investment), the key is to avoid investing in what’s popular.
There are other more profitable ways to invest your money in the logistics of North American oil and gas. There are service companies, oil tankers, storage tankers, and refiners, among others.
So why just limit yourself to an investment that’s already been pillaged for gains? Instead, I suggest you look away from what’s popular and toward what’s valuable.
In my last letter to you, I mentioned a portfolio I’ve been working on that’s designed to help investors go long on oil and buy cheaply during this time of low prices.
Today I wanted to make good on that promise and show you the portfolio. But I’m going to do you one better…
I’m going to show you three stocks that pay out double-digit dividends and are poised to see triple-digit gains as oil prices hit bottom and start to creep back up.
Enjoy the recommendations. And remember, stay away from the Keystone XL Pipeline.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
