|Dow||-9.44 to 16,560.54|
|S&P 500||-3.17 to 1,933.75|
|Nasdaq||-11.85 to 4,389.48|
|10-YR Yield||+0.022 to 2.442%|
|Gold||+$0.50 to $1,311|
|Crude Oil||-$0.82 to $97.26|
Pittsburgh International Airport isn’t seeing the traffic it once did. Instead of 600 daily arrivals and departures, it’s down to around 300. Many of its 75 gates sit idle. And as the New York Times notes, the olden days where double-decker 747s jetted off to London or Frankfurt from PIT’s runways are long gone.
But in this fascinating story, the Times says PIT may have found its salvation.
Energy! Specifically, natural gas that’s trapped in the Marcellus Shale producing region thousands of feet beneath the airport’s runways!
Like other energy companies are doing throughout the Marcellus, Consol Energy (CNX, Weiss Ratings: B) is drilling a new set of pads and wells to capture the gas and related liquids under PIT. It will “frack” the shale to extract the gas, then feed it into a series of pipelines to bring it to market.
Consol estimates there’s enough gas under the airport to power all of Pennsylvania for a year and a half. Local officials expect related royalty payments will total several hundred million dollars over the next couple of decades. That should help the indebted airport offset the loss of revenue from reduced retail sales, slumping gate demand, and other traditional sources.
|The Pittsburgh International Airport has a future, thanks a lot to the American energy renaissance.|
Yet the story of Pittsburgh International’s salvation is just one of the thousands of hopeful stories tied to the American domestic energy renaissance. The business of drilling, transporting, storing, and refining oil, gasoline, natural gas, and gas liquids — right here in our backyard — is creating jobs, wealth and promise for the future on a scale few would’ve imagined just a few short years ago.
Legitimate questions about the environmental impact of this boom can and should be raised. And the debate about whether oil and gas, rather than alternative energy sources like wind and solar, are the best ways to meet America’s energy needs will continue for a long time to come. But all in all, I think the PIT story is yet another hopeful sign for this country — and for energy investors!
|“The PIT story is yet another hopeful sign for this country — and for energy investors.”|
So what do you think? Is Consol Energy’s interest in drilling under the Pittsburgh tarmac a good thing? What does it say about the American energy industry? Have you had wells drilled near your property, and if so, what did you think about the experience? Sound off right here.
|OUR READERS SPEAK|
Master limited partnerships (MLPs) are handing investors a fantastic mix of high yield, strong growth and handsome capital gains. That’s one reason why I’ve been beating the drum for MLPs for a while.
Mark’s column yesterday on the $44 billion series of transactions that Kinder Morgan Inc. (KMI, Weiss Ratings: B) launched in the sector delved into them even more. That, in turn, spurred some interesting discussion at the website.
Reader Joan said: “I have held KMI in IRAs and several other MLPs in a taxable account for some time. They have provided a nice income stream, and some, including my Buckeye Partners (BPL, Weiss Ratings: C+),Magellan Midstream Partners (MMP, Weiss Ratings: A), and Golar LNG Partners (GMLP, Weiss Ratings: A-) have provided some nice capital gains, despite some recent pullbacks.
“I let my accountant grapple with the tax reporting, but he seems to cope okay. For some it may be easier to use some of the ETFs. One risk is of course a change in the tax code but I don’t see it happening any time soon.”
Reader James added: “I didn’t have Kinder Morgan, but I have five other MLPs in my portfolio including El Paso Pipeline Partners (EPB, Weiss Ratings: C+). They all have done well, and have yields of 4.33 percent to 12.29 percent. That is a pretty good income stream.”
Finally, Reader Dennis B. said: “I have invested in MLPs for more than 20 years … I currently own five MLPs, all in the oil industry. I have made unbelievable profits over the years, and intend to continue making judicious investments in them. Not all MLPs are worthwhile, but a bit of research will reveal those that have investment merit.”
Thanks all around for the feedback! All of the companies you mentioned are solid names in the MLP sector, and they have certainly delivered nice profits. So I’d encourage other investors to look into them, and appreciate your suggestions.
Or for my favorite MLPs, you can check out the Safe Money Report model portfolio. If you’re already a subscriber, you know that one of the names in there briefly touched an all-time high after the Kinder news came out.
Finally, on the subject of gas prices, Reader Rene weighed in by saying: “Just travelled Colorado, Idaho, Wyoming, Nevada and California and the lowest price we experienced was in Colorado, $3.459, highest $3.789 in Nevada. Wondering what states contribute to such a low national average?”
Glad you asked, Rene. The Energy Information Administration provides a treasure trove of data on retail gas prices, as well as virtually every other energy-related topic. You can find data on gasoline prices here. If you search by state, you’ll see that Texas ($3.362) and Minnesota ($3.425) were recently showing the cheapest retail gas prices.
Any other thoughts on gasoline? MLPs? Share ’em here.
|OTHER DEVELOPMENTS OF THE DAY|
One of the most closely watched job market reports at the Federal Reserve these days is the “JOLTS” report. It tracks the total amount of job openings in the U.S., the rate at which Americans are leaving their jobs because they believe there are better opportunities elsewhere, and more.
And boy, were the June figures strong! The U.S. economy had 4.671 million job openings in June. Not only was that much higher than 4.577 million in May … and the forecast for a reading of 4.6 million … but it was also the best reading going all the way back to February 2001!
Do you see why I keep saying the Fed is ridiculously “off-sides” with policy?
Of course, a bigger driver of interest rates right now is geopolitics — specifically, the Ukrainian situation. Russia is currently sending 280 trucks that supposedly carry “humanitarian aid” toward the Ukraine border. Whether they actually have food, medicine, drinking water, and other supplies — or more troublesome cargo like weapons — remains to be seen.
The risk is that Russia uses the convoy as a pretext to launch a full-scale invasion of eastern Ukraine, especially now that its proxy fighters have been experiencing a series of defeats.
Meanwhile, in Iraq, Prime Minister Nouri al-Maliki is reluctant to let go of power despite a push to install Haider al-Abadi as the head of a new government. The U.S. and other outside parties clearly want a political change, and will only send more aid Iraq’s way if it occurs. We’ll see how it shakes out, but the last thing the markets need is more geopolitical turmoil!
Finally, I was shocked like many of you undoubtedly were by the loss of comedian and actor Robin Williams. I’ve enjoyed his work over the years, and the sad circumstances of his death simply underscore the fact that you never really know what people are struggling with from the outside. May he rest in peace.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
P.S. Wealthy investors are surprisingly picky about the companies they invest in — demanding the very best in order to preserve their capital and make it grow. Simply put: They have patience. Would you like to know what else separates them from average investors? Then click here for Bill Hall’s FREE report.