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Lipow Oil Associates President Andy Lipow on how investors can profit from expected growth in oil transportation.
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The US oil boom doing more than increasing the chances will become energy independent it's also bringing about.
Booming investment in the transportation industry new report says an estimated 45 billion dollars you heard me correctly.
45 billion bucks will be spent on -- or at least expanded pipelines.
Rail cars rail terminals and that's just next year how to get it on this right it's a windfall.
But is it realistic.
For insight we're gonna turn to Andy -- out president.
Well let's than any you know I would have assumed it was all shipped by pipeline -- what's this business of Elkhart seems horribly nineteenth century to -- to -- -- that way.
Well it's really new development in the oil patch but when you look at -- -- growth the production especially in North Dakota we simply don't have pipelines.
To move that oil to the east and West Coast where we have a significant amount -- refining capacity.
So I guess what you're saying is investing and -- -- -- the -- companies that ship oil or.
The companies that actually make steel for the tracks what what led to -- money.
We actually have both of them in fact on the the -- -- front we've of course got Burlington northern on by Berkshire Hathaway.
But other winners in this are going to be the Union Pacific the Kansas City Southern.
And up in Canada we've got both the Canadian Pacific and the Canadian national who are looking to double their rail shipments of crude oil next year.
Is this an efficient way to -- well there's got to be a cheaper.
Way to do this and I would imagine an investor who can get in on that would make even more money.
Well there's no doubt that it's much more expensive to move oil by a tank of a car rather than pipeline but.
The fact of the matter is we're not going to build any pipelines from the what the -- through the Rockies over to California.
Nor we got to build pipelines across Pennsylvania New Jersey.
To the few refineries on the East Coast so these guys are going to be sitting with -- supplies for quite some time.
OK so we've talked about the rail companies who else other smaller companies that I might be able to start researching to.
Invest in that are going to be part of his 45 billion dollar bonanza just next year.
Well we look -- the pipeline company says a number of big winners they're starting with Enbridge pipelines because they have a pipeline network from Canada all the way to the Gulf Coast which they're gonna expand.
In Texas we've got Sunoco logistics who's got a number of projects as does a Magellan.
And they're all gonna benefit by more crude oil by pipelines.
Okay what about that this surge in natural gas same players in that -- third -- do I have other opportunities in which to invest.
Well on the natural gas side we actually see companies who want to convert their natural gas pipelines into crude oil service.
Among them we've -- -- Morgan who wants to move oil from the Permian Basin out to Los Angeles.
We've got ETP Energy Transfer Partners wants a reversal line from Chicago to the Gulf Coast as well as TransCanada up in Canada.
Wants to move oil from the Alberta oilsands all the way over to cut back.
All right -- -- let's wrap up -- -- I'm down by a challenge on something out this all sounds like music to an investor's ears.
Yesterday we had a guest on who said this prediction.
Oil independence -- United States is way overblown the CIA and the IEA got it wrong.
As an investor.
Do I need to listen to the guest we had yesterday or should I ignore that and continue to proceed as if -- oil bonanza continues.
Well I think you should proceed -- the oil bonanza continues because worldwide oil prices are going up due to higher demand.
And that those high prices go up it.
And it gives good access to production and I mean the production industry will grow and the transportation of crude oil -- grow whether it.
All right well -- -- how we appreciate your being here you mentioned every train company except the -- to speak and the Santa Fe but I'm sure they were still in business -- get in on that action.
Well thanks very much -- -- well.
