Predictable Profits
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- Published on Wednesday, 09 May 2012 08:00
- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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The Keystone pipeline is about to make headlines once again. This time, though, the news will be good.
The great thing about politicians is they are predictable... and profitable.
When I was in Argentina early this year, I was asked to share my admittedly brash views on the role the government plays in the economy.
Argentina is the heartland of a government gone wild. The country's nut job of a president thinks she can steal an oil company and immediately put an end to Argentina's woes.
But just as any rational human would predict... all she did was ignite a firestorm of hate.
Fortunately, American politics have not yet reached this level of indecency. And that's what I told my audience in Buenos Aires. I pointed to the Keystone Pipeline as the prime example of the idea that our politicians are equal parts predictable and profitable.
"The pipeline will get built," I said. "But it will be built around Obama's timeline."
Plain and simple, the Keystone is a political football. Just about every legicritter in Washington is in favor of the project. But that doesn't mean they will vote for it. No, that would take the "charm" out of politics.
Remember, Obama has flip-flopped on the pipeline several times. And the only reason he gave it a thumbs-down in January was because Republicans trapped him -- they tossed the project into the fiery debt-ceiling debate.
But now, the pipeline is back... and the timing is better than ever.
On Monday, I got word from a source that tells me the Keystone is once again a popular topic on Capitol Hill. In fact, the House and Senate sat down yesterday to hash out their latest highway spending bill.
The Right-leaning House has a bill that would automatically approve the Keystone pipeline. And the chances are good it will get approval from the Senate... so long as it is tacked onto the Senate's "bipartisan" transportation bill.
It's complicated, I know. But it is political genius.
It gives both parties the kind of smoke and mirrors they love to hide behind. Plus, it does something much more important. It gives Obama the power to smash one of the GOPs leading talking points... and it will happen just as the Oval Office debates move into high gear.
For you, the everyday investor... it is fantastic news.
The Keystone opens two extraordinary profit opportunities.
First, it will double down on America's cheap fuel revolution -- affecting everything from transportation to manufacturing and even the value of the dollar.
But more importantly, it reignites one of the hottest oil deposits on the planet. By giving Canada's tar sands access to a global market, the firms working in the region will see a boom that rivals what we're witnessing in the Marcellus and Bakken regions.
And if you've followed the action in those two spots... you know the kind of profit potential we're looking at.
One Canadian oil expert recently went as far to say his nation's oil sands could be the world's leading crude source within the next 10 years. In fact, some 1.7 trillion barrels are at stake.
The handful of companies working to tap that resource are likely to find the Keystone is their industry savior. The pipeline will send oil to the south... and will deliver a windfall to the north.
Right or wrong, the fate of these companies -- big and small -- is in the hands of America's finest politicians.
And I'm all right with that -- we've got these tricksters dialed in. An American elected official is as predictable as the sunrise.
The Keystone will be built. And smart investors will make big money.
Editor's Note: I would not make such bold promises without at least putting you in touch with an insider who can get you in on the action. My good friend and long-time colleague Sara Nunnally has been digging into the sector for nearly 14 months. And now... she's released her full report on the technology that makes it all possible.
Chart of the Day: Natural Gas Prices Bottom Out
By Adam English, Associate Editor, Inside Investing Daily
Natural gas consumption and production has finally found some balance in the U.S. economy.
The stark reality of supply and demand wreaked havoc on natural gas producers over the past year as natural gas from crude oil rigs caused a massive supply glut.
On the other hand, low prices are a boon for our heating bills and energy-hungry businesses.
As more and more industrial users make the switch to gas, consumption has surged and the age-old supply-and-demand equation is finally kicking in...
Utilities are leading the charge for demand. Power companies used 34% more gas in February than a year earlier according to the U.S. Energy Information Administration.
Even Atlanta-based Southern Co. -- one of the largest U.S. coal-plant operators -- is on pace to consume more gas than coal in 2012 for the first time in its history. Southern ran its gas turbines at a near-record 70% of capacity during the first quarter, doubling the plant's typical use.
We are now into the critical "injection" period, when most new gas supplies are forced into storage instead of into the market. If industrial demand continues to rise, the supply-demand equation will stay in balance.
If not, though, storage facilities may reach capacity by October -- even earlier in Canada. If it happens, and we have no place to put new gas, the equation will collapse, taking gas prices with it.
The next few months are pivotal. It is make-or-break time for the gas industry.
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