The Omni Intelligencer

Sell your house faster for more. auction-style-property-sale
  Sunday, May 24, 2015  Home > Money > Finance > Investment > Put Rising Gas Prices to Work for You!
Follow us on Twitter
Every Dollar Helps
Donate using PayPal
Amount:

Put Rising Gas Prices to Work for You!

| More

As I look back on the first quarter of 2012, one of the most glaring events was the rise in gas prices here in the U.S. Wholesale gasoline began the year at $2.66/gallon on the NYMEX, and closed last Friday at $3.33, a gain of 67 cents ... a jaw-dropping 25 percent.

The reasons for the increased gas prices are varied. Generally speaking, though, they've risen because oil prices have risen. I know that might sound obvious. But I'm not talking about the oil prices we follow in the U.S., which is known as West Texas Intermediate (WTI).

Instead, I'm talking about what has replaced WTI as the global benchmark of oil: Brent crude.

Brent crude rose from $109/barrel (bbl) to over $125/bbl in the first quarter on reduced supply coming out of the Middle East and on concern regarding potential military conflict between Israel and Iran.

In addition to the general rise in oil prices, we have seen a widening of the difference, or spread, between WTI and Brent crude prices. That spread has increased from about $9 at the beginning of the year to over $19 as of Monday morning. And this has created a very unique opportunity for refining companies in the central U.S.

You see, those refiners have the ability to buy crude oil at the WTI price, then refine it and sell gasoline based on the Brent crude price ... which is over $120/bbl.

These market dynamics have occurred because of global unrest in the Middle East — not because oil company executives are greedy. So when the media, or anyone else, tries to vilify them, don't believe it. The truth is prices are just reacting to the market in which they exist.

Now the reason there is such a large spread between WTI crude and Brent crude is mainly because the WTI crude we produce here in the Baaken Shale and middle of the country is "trapped" since there are very few pipelines that can transport it to the Gulf of Mexico for export.

But That Will Be Changing ...

Companies dedicated to moving oil across the U.S.  then on to foreign ports are sure to prosper from the additional flow.
Companies dedicated to moving oil across the U.S. then on to foreign ports are sure to prosper from the additional flow.

The integral Seaway Pipeline, which carries crude oil from the Gulf of Mexico to Cushing, Oklahoma, is going to be reversed. It will then carry oil from Cushing, Oklahoma to the Gulf of Mexico to be exported. In addition, other pipeline companies have discussed switching the direction of their pipelines to help relive the glut of WTI crude oil sitting in the U.S.

One potential way you could profit from this trend is by purchasing shares in master limited partnerships (MLPs) that make money as crude oil is transferred through their pipelines. Additionally, oil tanker companies will benefit from this increased export as well.

Two ways to play that:

First, is the Alerian MLP ETF (AMLP), which owns shares in infrastructure-related MLPs.

And the second, to a lesser extent, is the Claymore/Delta Global Shipping ETF (SEA), which owns shares in a tanker companies.

As a savvy contrarian investor, you must constantly be searching for opportunities in unique events. Indeed, the very wide WTI/Brent spread is one of those events. And as that spread narrows, there will potentially be multiple opportunities to profit with MLPs and tanker companies, which could leave you smiling the next time you fill up.

Source: moneyandmarkets.com


Sell your house faster for more. auction-style-property-sale
| More
 

Current Headlines - Finance

  • US: Iraq's 'will to fight' at issue after IS takeover Ramadi 24 May 2015 | 6:18 pm

    FILE - In this May 1, 2015 file photo, Defense Secretary Ash Carter speaks during a news conference at the Pentagon in Washington. The Islamic State group’s takeover of Ramadi is evidence that Iraqi forces do not have the “will to fight,” Defense Secretary Ash Carter said in an interview on CNN’s “State of the Union” that aired Sunday, May 24, 2015. (AP Photo/Manuel Balce Ceneta, File)The U.S. defense secretary delivers a harsh assessment of Iraqi fighters.


  • After officer's acquittal, 2 more cases loom for Cleveland 24 May 2015 | 5:40 pm

    A protester is arrested after the acquittal of Michael Brelo, a patrolman charged in the shooting deaths of two unarmed suspects Saturday, May 23, 2015, in Cleveland. Brelo, who fired down through the windshield of a suspect's car at the end of a 137-shot barrage that left the two unarmed black occupants dead, was acquitted Saturday of criminal charges by a judge who said he could not determine the Cleveland officer alone fired the fatal shots. (AP Photo/Tony Dejak)CLEVELAND (AP) — Cleveland emerged unscathed and intact after a day of protests following the acquittal of a white patrolman who had been on trial in the shooting deaths of two unarmed black suspects killed in a 137-shot barrage of police gunfire.


  • Amazon changes tax practices in Europe as investigations continue: WSJ 24 May 2015 | 4:23 pm

    A box from Amazon.com is pictured on the porch of a house in GoldenAmazon.com Inc has started booking revenue from retail sales in individual European countries, instead of channeling all sales through low-tax Luxembourg, the Wall Street Journal reported Sunday. The change was made effective May 1, a company spokesman told the Journal. Amazon said it had started preparing to diversify its retail sales structure two years ago, the Journal reported.


  • Deadly weather soaks south central U.S., forces evacuations 24 May 2015 | 2:27 pm

    Trooper Marcus Gonzales walks on the Highway 12 bridge over the Blanco River which was blocked by large trees after flooding in Wimberly, TexasBy Jim Forsyth SAN ANTONIO, Texas (Reuters) - Flash flooding and severe storms in Texas forced evacuations, submerged roads and left thousands without power on Sunday, after an Oklahoma firefighter was swept into a storm drain during an overnight rescue effort and died. The National Weather Service reported river flooding across southern Oklahoma and central Texas, where six to nine inches of rain fell overnight. The severe weather was moving into Arkansas, Kurt Van Speybroeck, a NWS meteorologist based in Fort Worth, Texas, said.


  • John Nash, wife, 'A Beautiful Mind' inspiration, die in NJ 24 May 2015 | 12:30 pm

    John Nash, wife, 'A Beautiful Mind' inspiration, die in NJJohn Forbes Nash Jr., a mathematical genius whose struggle with schizophrenia was chronicled in the 2001 movie "A Beautiful Mind," has died along with his wife in a car crash on the New Jersey Turnpike. He was 86.


  • Cleveland police say 71 people arrested overnight in protests 24 May 2015 | 12:00 pm

    A protestor lies on the ground on a downtown intersection as Cleveland police officers block them from a RTA bus following the not guilty verdict for Cleveland police officer Brelo on manslaughter charges in ClevelandBy Aaron Josefczyk CLEVELAND (Reuters) - Some 71 people were arrested in Cleveland overnight during protests that flared after a police officer was found not guilty in the shooting deaths of an unarmed black man and a woman following a high-speed car chase in 2012, police said on Sunday. Protests were mostly peaceful after the judge's verdict was announced on Saturday, Police Chief Calvin Williams said. Over the past year, the deaths of unarmed black men during confrontations with police in Ferguson, Missouri, New York City, Baltimore and elsewhere have spawned protests and occasional violent outbursts around the United States.


  • MIDEAST STOCKS-Saudi slips after oil price drop, bomb attack; Egypt up 24 May 2015 | 4:06 am

    (Updates with Saudi Arabia, Egypt open) DUBAI, May 24 (Reuters) - Saudi Arabia's stock market fell in early trade on Sunday after oil prices fell and Islamic State militants carried out their first attack in the kingdom, while Egypt's bourse extended gains after rising above key technical resistance. Brent oil fell $1.17, or 1.8 percent, to $65.37 a barrel on Friday, declining 2.1 percent on the week as a rallying dollar and profit-taking ahead of a long U.S. holiday weekend cut short a two-day rally. Petrochemicals giant Saudi Basic Industries, whose profits are sensitive to oil prices, dropped 2.7 percent and was the main drag on Saudi Arabia's index which lost 0.7 percent.

  • Wall Street Weekahead - Yellen tone suggests choppiness for markets ahead 22 May 2015 | 11:23 pm

    Specialist traders work at a terminal screen on the floor of the New York Stock ExchangeBy Ryan Vlastelica NEW YORK (Reuters) - U.S. stock investors have been enjoying an extended period of low volatility and steady gains, but with the Federal Reserve on track to raise interest rates this year and major indexes near records, the market could get a bit choppier in coming weeks. Fed Chair Janet Yellen on Friday said she expected the U.S. central bank to raise rates in 2015, though the process was expected to be gradual, with the timing of the first hike dependent on the strength of economic data. Some weak reports have pushed back the expected lift-off, but Yellen's words suggest the Fed is still headed to rate increases later this year.


  • US stocks fall slightly on lower oil, mixed earnings news 22 May 2015 | 4:43 pm

    FILE - In this Aug. 8. 2011, file photo, a Wall Street sign hangs near the New York Stock Exchange. Stocks slipped in early trading Friday, May 22, 2015, as energy companies fell along with the price of oil. (AP Photo/Jin Lee, File)NEW YORK (AP) — The stock market capped a quiet week of trading on a down note.


  • Wall Street ends lower after Yellen comments fail to inspire 22 May 2015 | 3:34 pm

    Traders work shortly after the opening bell on the floor of the New York Stock ExchangeU.S. stocks ended weaker on Friday after Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates this year, in line with Wall Street's expectations. In a speech, Yellen said a rate hike would be warranted this year if the economy keeps improving as expected. Investors have enjoyed an extended period of low volatility and steady gains, but with the Fed on track to raise rates this year and major indexes near records, the market could get a bit choppier in coming weeks.


The fastest and best way to sell real estate.
auction-style-property-sale