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Kinder Morgan, Inc. Message Board

  • brryry47 brryry47 May 31, 2013 1:57 PM Flag

    WHY IS KMI TANKING?

    Any ideas?

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    • Maybe because T-bond yields have been on a sharp rise in recent weeks this could be the trend to come and interest rates follow suite. A rising rate would affect KM's cost of capital and therefore its growth rate. It's no reason to panic and sell, but something to understand.

    • There appears to be some sector rotation out of dividend plays. Also, on the news front, Kinder just announced they are canceling the proposed Freedom pipeline due to lack of interest by refiners. It appears Valero and Tesoro prefer rail to pipeline for their California operations.

      • 1 Reply to gdx100
      • A few quotes from a 5/23 WSJ article "Trains Leave Kinder Morgan Pipeline in Lurch"

        "Their (Valero, Tesoro & Phillips 66) lack of interest in the pipeline underscores how these other modes of oil transport, once seen as stopgaps until new pipelines could be built to deliver the growing amount of crude produced in Alberta, Texas and North Dakota, are becoming a permanent fixture of the North American energy landscape.

        Over 200,000 rail carloads of oil were shipped in the U.S. last year, more than three times the amount in 2011, according to the Association of American Railroads. Each rail car can hold more than 700 barrels of light, sweet crude, the AAR said.

        Relying on train shipments allows refiners to access crude from different regions at different prices, a flexibility not always found in long-term pipeline contracts, the refiners say.

        Rail cars won't completely replace pipeline projects but could force Kinder Morgan and other pipeline companies to rethink their routes or pricing options, said Raymond James analyst Darren Horowitz. Refiners may be willing to pay higher transportation fees if rail ultimately allows them access to a greater variety of crude types and prices, Mr. Horowitz added."

 
KMI
37.30+0.13(+0.35%)Jul 30 4:03 PMEDT

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