"Energy market seems like water torture. If it has to do with hydrocarbons it is going down, and going down hard. Once here, I guess there is nothing to do but tough it out, but I surely wish I had never delivered myself to this trap."
I have been surprised at the correlation of the midstream MLP index to the price of oil recently. I saw a graph the other day and in the past the two were not correlated but during the oil panic they have been in lockstep. This is different than how this sector has behaved historically. My conspiracy theory is that its because we have ETFs for the sector now and the robots are running wild with it.
Anyway, I have been going through the ETF that I own (AMLP) and listening to the quarterly conference calls of the companies that make up the index. This has been very helpful to get an understanding of what the actual companies are seeing. What they are seeing is lower margins but higher volume. All in all they are not suffering, they are still making profits and investing for growth. I see no indications of dividend reductions. There probably will be a halt to dividend growth because the of mergers. There are a lot of acquisitions going on within the sector.
This isn't like 2008 where there was demand destruction in the US. The demand is up in the US, and I'm only targeting the midstream MLP sector which is for the most part a domestic business. There is transportation to sea ports for export, but most of the transportation is for internal use.
I'm looking at this as a buying opportunity. It may go on for several years. If so good!
Now I'm going to come to my tinfoil hat comment...
From what I can gather, this oil panic is a supply problem, not a demand problem. The supply issue appears to have been originated by OPEC, in particular Saudi Arabia. I have done some reading up on SA and from what I understand they just had a new monarch take over. Well the authority to set the SA oil policy was given to the new kings favorite son... not only that he is also, in US terms, the head of the dept of defense and the head of state... This favorite son is 29 years old and his education background is in Islamic law. He doesn't have a western education like many SA princes. Anyway, he has gotten SA engaged directly in two wars (Yemen and Egypt), he has also cost OPEC roughly $500 billion the last year through over supply of oil... Just FYI, its estimated that SA really needs oil up around $100 to cover all the hand outs they pay for to discourage their people from rioting.
Long story short I think this oil panic has been caused by a 29 year old religious studies major in SA (who by the way has gotten them into two wars already). He is the favorite son of the new king. From what I understand he is the favorite because he looks handsome and has lots of confidence in himself...
This is from what I have gathered reading articles on the web (from "legitimate" non-conspiracy websites I might add)...