The energy market is rapidly changing. Dr. Kent Moors explains how to hedge your oil and gas stocks with this simple "insurance policy." Read more...
- How to Play by the Rules and Beat the Tax Man with MLPs
- This Shifting Balance Will Have a Huge Impact on Energy Investors
- Why I Cancelled Everything in Germany and Took the Next Flight to Dubai
- Investing in Clean Energy Stocks Just Got More Risky
- What's Keeping Oil Prices Down – for Now, at Least
- Watch What Carl Icahn Does to These Energy Stocks
- Why Oil Refiners Are Among the Best Energy Stocks to Buy Now
- The Next (Energy) Revolution Starts Here
- Three Reasons Why the Energy "Experts" are Wrong
- The Next Big Boom in Energy Isn't What You Think
- The Morning After: An Energy Shakeout, Then a Move Higher
- Energy Prices 2013: Renewable Power Could Cause Your Electric Bill to Plummet
- A Cyclical Shift in Energy Prices Creates Opportunity for San Juan Basin Royalty Trust (NYSE: SJT)
- Hidden Inflation: Why Prices Are Rising Faster Than You Think
- Electricity Prices Are Moving Higher Across the Globe
Paying taxes is about a pleasurable as a root canal. But as Dr. Kent Moors explains, you can ease the pain by investing in Master Limited Partnerships, or MLPs. Here's how.
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. Here's what's causing the shift.
Something big unfolded on my trip to Frankfurt last week.
It began with meetings in Germany over natural gas prices. They morphed into a discussion on how government subsidies affect energy prices. Our conversation turned to a recent IMF report that criticized taxes on energy - specifically pre-tax concessions - those provided by governments to producers in oil exporting countries.
That led four of us to drop everything in Germany and fly to Dubai, so we could hash out the matter firsthand with some of the folks responsible for those tax benefits.
What we learned there could change everything in the global energy markets and have huge consequences for energy investors around the world.
Remember, you heard it here first…
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.
Speaking on CNBC, Moors said the oil market is now "slightly oversold."
Moors said increased demand and less refinery capacity being used could increase the oil crack spread in the United States, leading to higher energy prices even if oil prices fall.
Asked why energy prices are so high, Moors said there are six or seven major factors.
"The bottom line," he said, "is we have to stop looking at Western Europe and North America when we talk about oil demand because oil demand is being driven essentially worldwide by completely different regions."
Among them, Moors said, is West Africa, where oil demand is spiking.
Watch the accompanying video to hear Moors talk more about global oil prices and how they will affect you.
Energy stocks have been largely left behind in the recent stock market rally - except for those with interest from activist investors like Carl Icahn.
You see, concerns about global demand as well as political pressure to focus on alternative energy have weighed on energy stocks. So have the low price and oversupply conditions in the natural gas markets.
Many of these energy stocks trade at what seem to be very low prices compared with the assets owned by the corporations and their future prospects.
This has attracted the attention of many activist investors looking to force the share price to unlock the real value of the underlying corporation.
One of the best-known activist investors, Carl Icahn, has accumulated several positions in leading energy companies in the past year because of low prices and under-valuations.
Take, for example, what Icahn's done with CVR Energy Inc. (NYSE: CVI).
Icahn owns 83% of CVR, a refiner that has seen its stock price soar recently as refining margins have improved. The company also has a fertilizer business that is a major beneficiary of lower natural gas prices.
The stock has better than doubled in the past year so it would be foolish for investors to chase the shares now.
But CVR does serve as an example of the sizable returns Icahn is looking to achieve in his foray into additional energy investments, like the following two stocks he's been accumulating.
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.
There are few times in life when you stand on at the beginning of a truly revolutionary change. This is one of those moments. Here's what's driving it.
Last week, we got another batch of oversimplificated "reasons" to explain a significant decline in energy stocks. Excuses ranged from declining demand to shale oil and gas gluts to a general market Armageddon. Now here's the truth.
But recent trends in the wind and solar age tell us that this conclusion just isn't so.
The truth is both types of energy will be required to work in tandem in order to achieve our energy goals in the future.
And - as these developments accelerate - it is in this "new" energy balance that individual investors will find the next big boom.
These days, with oil-rich countries like Saudi Arabia and the United Arab Emirates unveiling huge renewable energy projects, even some analysts are drawing the wrong conclusions.
But I have to stress, renewable development is not a signal these countries are running out of crude oil anytime soon.
Quite the contrary, countries like Saudi Arabia realize that one side of this energy equation will require the help of the other.
The same holds true in North America, where the surplus of unconventional natural gas has led some to the erroneous conclusion that wind and solar - still requiring significant government subsidies - have been dealt a fatal blow.
Wrong again. This is not a winner-take-all battle. There will be no silver bullet that delivers the next "new age of energy"
Rather, it will be in the integration of all the available energy sources that will lead to the next big development. And that is going to require sourcing from genuinely distinct and dissimilar energy categories-including wind and solar.
In fact, three recent events provide clear indications that this "energy integration boom" is already well underway.
In fact, aside from the Dems picking up a few seats in the Senate, the composition remains the same - one party controlling the White House and the Senate; the other with a majority in the House.
For all the criticism of Congress kicking the can down the street, that's just what the nation as a whole did on Tuesday night.
There will be no possibility of expecting a recovery in an environment of uncertainty about rising taxes and meat cleaver program cuts.
I'm calling this the financial precipice these days because I am tired of saying "fiscal cliff." But it is one of two things that have pushed the energy markets down, along with markets across the board.
A poster child for the ongoing debate over government support for renewable energy, the wind subsidy will expire at the end of 2012. Amidst the fog and din of a political war, Congress is not going to renew it.
The wind subsidy amounts to a tax credit of some $22 per megawatt hour. Critics note that the wholesale price of electricity in many parts of the U.S. costs $44. That means the credit accounts for 50% of the grid cost.
On the solar energy side, the primary federal subsidy provides a tax credit of 30% for the cost of installed equipment. That will drop to 10% at the end of 2016. Already, a separate cash grant for up to 30% for solar energy equipment expired at the end of 2011.
Of course, both approaches have generated a considerable amount of criticism from mainly conservative opponents.
These critics claim that the only reason wind and solar are even in the game is because of these subsidies. Without them, they argue these sources of energy are not cost effective otherwise.
Then, there are others who prioritize environmentally friendly energy sources. But the penchant against government involvement and the assumption that federal subsidies are always an inefficient usage of taxpayer funds are at the core of the argument.
So, who is correct?
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Currently the company is yielding about 6.3% on an annualized basis. This yield is generated from the overriding royalties the trust owns on current natural gas production.
Additionally, the company is poised to profit from a seasonal shift in energy prices.
You see, San Juan Trust has the rights to 75% of the revenue generated by an oil-and-gas property owned by Burlington Resources Oil & Gas Company LP, a subsidiary of ConocoPhillips (NYSE: COP). It also has royalty interests in 119,000 net producing acres located in northwestern New Mexico's San Juan Basin.
The cash flow from these properties is returned to investors once the trust's costs and capital budgets are deducted.
This makes the company compelling to me as I review its mix of assets and yield, as well as the seasonality of natural gas at this point in the year. I love to buy yield that can appreciate in price and quantity, with a bull market in the out-of-favor underlying asset.
In simple terms, if natural gas goes up in value, so should the dividend rate paid per share of the trust. So investors will enjoy a double gain if the stock rises: One in share price, another in cash flow. This offers you a great way to play natural gas without using margin or futures.
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By excluding food and energy prices, as volatile as they may be, the CPI fails to convey the pain that rising prices are inflicting on American households. Indeed, some economists have claimed that the true rate of inflation is closer to 8% or 9%.
To get a true picture of the current inflation situation - and to understand its impact and potential dangers (as well as several investment opportunities) - Money Morning Executive Editor William Patalon III sat down with Chief Investment Strategist Keith Fitz-Gerald for a question-and-answer session on the topic.
For three inflation-fighting investments, please read on....