It's a fact that ADM makes money turning corn into ethanol. The taxes on gasoline help. Look at their balance sheet.
Yes there may be lots more petroleum underground but consumption increases every year. So we will run out the question is when. The year 2050 has been suggested as probable. No more liquid petroleum based pharmaceuticals, fibers, paints, etc. As available supplies fall prices will go up. This is already beginning.
Presumably the pipeline companies will benefit. But I expect a sell off in KMP soon due to inside information.
<<<The year 2050 has been suggested as probable. No more liquid petroleum based pharmaceuticals, fibers, paints, etc. As available supplies fall prices will go up. This is already beginning.
Presumably the pipeline companies will benefit. But I expect a sell off in KMP soon due to inside information. >>>
Sorry, my friend, but we will not someday drive up to the gas pump only to see a sign that says "Sorry, the world just ran out of oil". We are just slowly running out of cheap oil.
What you will see over the next century is the beauty of economics and innovation at work (if they are allowed to). We will see scarcity of supply leading to higher prices leading to lessening demand from either 1) changes in the way we live or 2) substitution of other fuels. The price will continue to go up until there is a substitute that can meet the demand at whatever the price happens to be at that point in time. Hopefully its cost is the equivalent of $50 per barrel of oil and not $100. This will be a very slow process that will not happen overnight and will have no effect on KMP's bottom line in the near to medium term, and probably little in the long term. It doesn't matter if the stuff is made from petroleum, corn, oil shale, coal, cow poop or whale blubber, if it's a motor fuel it can be pumped through a KMP pipeline for a fee.
Two other comments:
1) as far as ADM, they used to get significant federal subsidy (a.k.a. pork) to make corn likker for fuel. I don't know if they still do, but hopefully someone can add something to help here. I've got nothing against ethanol, it helps reduce emmissions and dependence on foreign oil, but producing ethanol has a relatively low net energy yield, and has other negative consequences such as increasing the demand to return very marginal cropland back into production.
2) The Canadians have 2 trillion (that's 12 zeros after the two) barrels of tar sands in place that are being exploited at a very low production rate relative to the total volume in place. All they are waiting for to increase production (now at around 300,000 barrels a day, I believe) is the right price for their product.
Go ahead, make my day, sell off that KMP. The dividend yield is in danger of breaking 6% anyway.
It is a fact that world consumption of liquid fuels is increasing while the total available supply is decreasing due to consumption. As more is discovered in more difficult locations prices will continue to go up but eventually IT WILL BE ALL GONE.
I cannot reveal the source or nature of my info but when KMP falls out of bed I will say I told you so.