Can The Summer Sun Counter Gas Costs?

I hope everyone had a wonderful three-day weekend filled with friends, family, and reflections on how great it is to be free. Now that summer is officially upon us, the American driving season would normally be set to go full speed.

Though some are saying, “Not so fast…” this year.

With gas prices at an all-time high, demand for fuel will likely slump. Data compiled by Bloomberg indicates that crude oil has hit its lowest demand floor since 2013.

Adding to that, NBC affiliate KPVI notes:

“Drivers in the U.S. spend the most time on the road between Memorial Day and Labor Day. And this year’s uptick coincides with record and still-climbing gasoline prices.

“Regular gasoline cost $4.60 per gallon nationally and $4.32 per gallon across Wyoming, according to AAA. Both now sit at the highest level ever documented…

“For most U.S. drivers, filling the gas tank has become increasingly costly at the same time that other necessities, like home heating and food, are also getting more expensive.”

This immense pain at the pump has plummeted demand for gasoline by 5%. But even as Americans scale back on their summer driving plans, fuel costs aren’t expected to ebb. In fact, many estimate that drivers will see increased prices throughout the season.

Certainly, oil futures are moving ever upward. The U.S. benchmark posted its highest finish in 11 weeks last Friday.

West Texas Intermediate (WTI) crude for July delivery rose $0.98 to $115.17 a barrel on the NYME. And Brent Crude (BZ) shot up $2.03 to $119.43 on ICE Futures Europe.

Considering how far they’d already climbed even at the beginning of May, it’s amazing that demand hasn’t decreased even more. Yet it looks like gas prices have to come up quite a bit more before truly deterring the will of the American driving force.

As we watch the pricing scales tip further against us, I guess we’ll just have to see how far we’re willing to go before putting the brakes on our travel budgets.

More Non-REIT News to Know About

The “methane migration industry” is looking better by the day thanks to new EPA policies scheduled for next year. Crude oil companies are now required to repair methane leaks and curb emissions throughout the production process.

The new rules will impact thousands of wells, storage facilities, and refineries.

This couldn’t come as better news to oil-field juggernauts like Schlumberger (SLB), Baker Hughes (BKR), and Honeywell International (HON). They pretty much possess all the equipment necessary to keep big oil in compliance.

Other industries and individuals naturally weren’t so happy about the impending situation. Domestic oil companies, for one, claimed that local economies could be put in peril based on these policies.

The Petroleum Association of America pushed back on the EPA in a strongly worded letter:

“While the citizens of these rural parts of the country are certainly concerned with the ‘climate and health impacts of pollution’… they are also concerned with their livelihood and putting food on the table.”

That reminder of economic realities did make the EPA waver a bit by making exceptions for smaller wells. But it still estimates that 280,000 sites will be affected by the coming requirements.

What this will do to already elevated prices at the pump, you can only imagine. At the risk of getting political, I have to say that clamping down on our domestic production seems downright irresponsible.

The World According to REITs

Since it is the start of American driving season – 5% decrease in gas consumption or not – let’s look at a real estate investment trust in the energy world. Yes, REITs are affected by our ever-changing energy and gas economy too.

But none so much as CorEnergy Infrastructure Trust (CORR). Which only makes sense considering its name.

A pioneer in its space, CORR is the first publicly listed REIT focused on energy infrastructure. This trust owns, operates, and leases assets in the oil, gas, power, and utility sectors.

With a debt-to-equity ratio of 1.58… a market cap of $40.99 million… and a powerful portfolio of high-quality assets essential to the American economy… it has the potential to provide an ever greater hedge against inflation these days.

Better yet, CORR has long been committed to environmental safety by working with the latest technology and governmental responders. So there’s a good chance the EPA and new eco-standards won’t affect it as severely.

In today’s environment, staying ahead of the curve is essential to oil companies and their investors. CorEnergy seems to understand this, to its credit.

Brad Thomas is the Editor of the Forbes Real Estate Investor.

Disclaimer: This article is intended to provide information to interested parties. ...

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