U.S. producers are responding to lower oil prices by improving efficiencies and reducing costs. This should lead to more resilient production and a secular shift to lower marginal production costs in the U.S., and continued production growth over the next few years as oil prices recover to the $65-$75/bbl range. MLPs should benefi t from increased volumes on pipelines and the long-term need for infrastructure investment to support production.
The word “infrastructure” conjures up thoughts of roads, bridges and tunnels. Increasingly, however, investors are including solar panels and wind turbines, otherwise known as renewable energy assets, as a growing category of core infrastructure.
While the discussion of active management versus passive management in various asset classes may continue for some time, evidence suggests that active management wins out versus a passive approach when investing in listed real estate.
MLPs’ recent sell-off was triggered by the market’s “risk-off fears”, not due to declining oil prices.
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