by Jason Simpkins
With energy prices tanking, master limited partnerships (MLPs) – companies in the oil and gas transport business – have slumped hard.
But that decline has been well overdone.
Remember, MLPs get paid on volume – the amount of oil and gas they pump through their pipelines. So it doesn’t matter what oil is trading at, so long as it’s being pumped, transported, and stored.
Now, I understand that declining production follows declining prices. But the oil and gas glut is still so big, that a decline in production really doesn’t matter. There’s more than enough oil to move. And in fact, demand is being accelerated by lower prices.