Threat of Oil Price Spike Has Passed, According to The Boston Company Asset Management
BNY Mellon Investment Manager Sees Opportunities as New Energy Sources Come On Line
NEW YORK and LONDON, Feb. 28, 2013, The days of worrying about the threat of a devastating oil price hike are over, according to a white paper from The Boston Company Asset Management (TBC), LLC, the Boston-based equity specialist for BNY Mellon.
For decades, pundits have been trying to predict the point at which a sustained climb in oil prices would spark a near-collapse of the global economy. However, TBC’s February 2013 paper, End of an Era: The Death of Peak Oil, contends structural shifts in the energy industry have insulated the global economy from dramatic spikes in oil prices, while simultaneously creating an array of investment opportunities.
After years of indifference, U.S. consumers have radically reduced their consumption of petroleum and related products, moderating demand in the world’s largest market, according to the report. Concurrently, heightened investments and technological breakthroughs, such as fracking, have spurred an explosion in resources, creating balanced supply and demand, the report said.
Areas of investment opportunity highlighted in the report include exploration companies, energy service companies, pipeline and transportation companies, companies that benefit from the low cost of gas and associated liquids, and companies that sell products to firms that directly are involved in natural gas and oil production.
The changing environment for energy has created potential traps for investors, warns Robin Wehbe, who heads the energy research team at TBC and is a co-author of the report. “Exploration companies have become victims of their own success as natural gas discoveries have led to a glut of new supply and depressed prices,” he said. “However, investors who can identify exploration companies operating in the most profitable and prospective shale plays can find opportunities.”
Energy services companies drill wells and perform other services for the exploration companies. The report notes that services companies operating technologically advanced horizontal operating drilling rigs are integral to recovering the new sources of oil and gas from shale.
Increasing shale and oil production also is likely to create demand for more pipelines, separation and storage facilities to move crude oil and gas from the wells to refineries and other users. With the relatively strong predictability of future revenues, pipeline companies can then pay higher dividends to shareholders, the report said.
Utilities are expected to benefit from lower fuel costs, and lower natural gas prices are expected to benefit U.S.-based chemical companies, according to the report. These benefits also are expected to extend to refineries and manufacturers, the report said.
The Boston Company Asset Management, LLC, a BNY Mellon Investment Management boutique, provides investment management services for corporate, public, mutual funds and union sponsored and jointly trusteed retirement plans, endowments and foundations.
BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, with $1.4 trillion in assets under management. It encompasses BNY Mellon’s affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 36 countries and more than 100 markets. As of December 31, 2012, BNY Mellon had $26.7 trillion in assets under custody and administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.
All information source BNY Mellon as of December 31, 2012. This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street , London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority. A BNY Mellon Company.
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I think Warren Buffett is completely on trgaet with his thoughts on giving to others creates good feelings/happiness. I personally feel so good when I give something to someone, whether it is time, service of some sort, or monetary. I wish I could do more, but I am swamped in college debt. My goal for when my debt is paid, is to give my time and money to charities. I especially would like to donate time/service to orphanages in other countries. That is at the top of my bucket list!