Investment opportunities in the energy markets always bounce between questions of available supply and prospects for demand.
These days many commentators in the U.S. are viewing excess domestic shale gas and tight oil as a factor in restraining energy prices. Meanwhile, their colleagues in Western Europe forecast continuing economic malaise, translating into a similar result.
Both put forward the position that there is a surplus of oil and gas in a weak global economy, thereby reducing concerns over either supply or price.
I have questioned those premises before here in Money Morning. And I agree that there's no crisis situation emerging any time soon. The prices may not remain as low as some believe, but supply isn't going to be an issue in North America or in the European Union.
But the same can't be said about other parts of the world. And it's this wave of unrest that may have repercussions across the entire energy sector.
Russia: The Greatest Threat to the Energy Markets
As Yogi Berra aptly put it, It's deja vu all over again.
The Soviet gulag state is coming back and this time it could wreak havoc on the world's energy markets.
I began my energy career in Russia. Back then it was part of a sprawling Soviet Union. For the past 23 years there have been 15 independent countries in its place.
But these days it sure feels like the Beatles song from the late 1960s, "Back in the USSR."
You see, many governments aren't able to work out how to plot the global energy sector because it becomes too wrapped up in local political machinations.
And the bigger the energy producer, the bigger the impact is on the global picture.
Three Hidden Water Costs That Promise to Boost Energy Prices
This may sound funny, but water availability is becoming an issue in energy generation. And it may start to impact prices.
The issue here is not the environmental impact of water usage. That is quite a different debate.
What I'm talking about today is the water supply/demand issue.
Because water is plentiful in those areas of the U.S. where shale gas and tight oil drilling is most concentrated, the price of the water itself is very low.
But there are three other costs involved with the usage of water, and those are beginning to cause some serious concerns.
Here's what I mean...
Energy Investors Will Love These New MLPs
The "midstream" segment in oil and gas markets is undergoing some very interesting changes these days.
Remember, these are the companies that connect "upstream" (field production of oil and gas) and "downstream" (refining, processing, wholesale, and retail distribution) functions.
Throughput - moving and storing volume - is the major component of midstream activities, as well as the primary source of revenue. And lots of it.
This market is still the domain of master limited partnerships (MLPs) and other partnership arrangements and used to be primarily populated by pipeline companies.
But the sector is diversifying in an exciting way.
MLP "clones" are starting to emerge, controlling more expanded activities and new product-specific focuses that never existed before.
That means brand-new investing opportunities for you.
The Next Big Change in the Energy Markets
Thoughts are again turning to the next big change in the energy landscape.
As it unfolds, I have been working on how to exploit this trend and will be rolling out my recommendations when I appear at the MoneyShow in Las Vegas next Tuesday and Wednesday.
Of course, before I sketch my new approach to the Caesar's Palace audience, I'll outline it here first. You can expect more on this in coming Money Morning editions.
Today, I want to extend on Saturday's discussion and set the stage for the revisions I will be begin sketching out in my next article.
This is once again about hedging.
How to Play by the Rules and Beat the Tax Man with MLPs
Paying taxes is about a pleasurable as a root canal. It's hard not to think about all that money going bye bye.
But it's inevitable and there's nothing we can really do about it, I guess.
However, tax day does bring to mind something quite a bit more positive: Like how to make money in the energy sector.
Actually, that's not as much of a stretch as you might think. That's because the bridges are already in place between how taxes are paid and energy returns.
Right about now, some of you are probably thinking I will start talking about energy sources like renewables that survive on government tax concessions.
Or perhaps you might think this is going to be a discussion of tax write offs for certain field projects that utilize public land.
And unless you are prone to the more fanciful, your thoughts should not be wandering toward squirreling money away on a small island somewhere.
Because there has been a much more practical approach that's been generating success for a while now.
This is how you play by the rules and still beat the taxman in Washington.
This Shifting Balance Will Have a Huge Impact on Energy Investors
This will have a huge impact on how you invest in the sector.
As the new balance emerges, we will see a realignment of global energy prices, and both the sourcing and use of energy will open up significant opportunities worldwide.
We are already beginning to see the revisions working themselves out among the world's most developed nations.
Yet this time around, the changes will have the most positive effect on those regions usually left out of the picture. These regions have the lowest economic diversification, relying largely on sporadic, inefficient, and ecologically damaging energy sources.
Because of high pricing considerations - prompted by collapsing power generation, rusting refineries, and deteriorating delivery infrastructures - people in developing countries are usually cut off from market expansion taking place elsewhere.
In spite of such problems, these countries will provide major demand increases going forward, resulting in significant changes to the international market landscape.
And a damaging cycle that's been churning for half a century will begin to break down...
Why I Cancelled Everything in Germany and Took the Next Flight to Dubai
Something big unfolded on my trip to Frankfurt last week.
It began with meetings in Germany over natural gas prices, but morphed into an interesting sidebar on the impact government subsidies have on energy prices.
As I noted last week, a recent International Monetary Fund (IMF) staff report concluded that public-sector support largely created more harm than good.
Investing in Clean Energy Stocks Just Got More Risky
Despite its promising future, clean energy stocks have proved to be an investing minefield.
Even China-based clean energy stocks are no longer a safe haven. Yesterday (Monday) Suntech Power Holdings Co. Ltd. (NYSE ADR: STP) defaulted on its debt.
Heavy losses caused by plummeting prices for solar panels - which fell 73% from 2010 to 2012 - left Suntech unable to make the payment on a $541 million bond that was due Friday.
The news caused Suntech stock, already down 80% over the past year, to slip another 10%.
While numerous U.S. renewable energy companies have faltered, most notably the 2011 bankruptcy of solar panel maker Solyndra, Suntech is the first Chinese clean energy company that could go under.
What's new is a reluctance on the part of the Chinese government to keep pouring subsidies into money-losing companies.
Why Oil Refiners Are Among the Best Energy Stocks to Buy Now
Shale oil production continues its upward path, increasing overall U.S. oil production and making specific groups of energy stocks among the best to buy right now.
In fact, the U.S. Energy Information Agency (EIA) reported last month that domestic oil production surpassed the 7 million barrel a day level, the highest point in nearly 20 years. Production this year, the EIA says, will rise by another 14%.
This is obviously good news for the companies producing that oil, and it gets even better. Many industries outside the energy sector, including chemicals and railroads, have benefited from the shale boom.
But there is one subsector in the energy industry that has reaped the rewards of plentiful oil from the Bakken and other areas more than any other, and that's the refining industry.