• 6 minutes Can the World Survive without Saudi Oil?
  • 10 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 15 minutes Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 1 min U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 3 hours Saudis Pull Hyperloop Funding As Branson Temporarily Cuts Ties With The Kingdom
  • 10 hours Judge Approves SEC Settlement With Tesla, Musk
  • 2 hours WTI @ $75.75, headed for $64 - 67
  • 4 hours How High Can Oil Prices Rise? (Part 2 of my previous thread)
  • 5 hours UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
  • 7 hours Iranian Sanctions - What Are The Facts?
  • 8 hours EU to Splash Billions on Battery Factories
  • 5 hours China Thirsty for Canadian Crude
  • 9 hours Porsche Says That it ‘Enters the Electric Era With The New Taycan’
  • 10 hours Gold price on a rise...
  • 11 hours Saudi Crown Prince to Trump: We've Replaced All Iran's Lost Oil
  • 5 hours Shell, partners approve huge $31 billion LNG Canada project. How long till Canadian Federal government Environmentalates it into the ground?
Alt Text

Hurricane Michael’s Impact On Gasoline Demand

Hurricane Michael had a significant…

Alt Text

The Next Pillar Of Oil Demand Growth

Pundits continue to discuss peak…

Editorial Dept

Editorial Dept

More Info

Trending Discussions

One Bright Spot In Utilities

If you consider a time span measured in years rather than days, weeks or months, it is hard to make a good case for investing in power utilities. Most are aware that over the next few years utility stocks are going to get hit with a double-whammy of epic proportions.

New EPA emissions regulations are going to force them to shutter many coal powered plants and move to cleaner energy sources. The U.S. Chamber of Commerce has estimated that this will cost utilities $28.1 Billion a year. No doubt some of those ongoing costs will be passed on to the consumer, but the initial cost of transition will be huge and not welcomed by an industry that is already highly leveraged.

That is not a good scenario from a fundamental profitability standpoint, but the price of the stock of electricity producers will also likely come under pressure for another reason. Much of the value of these companies to investors has traditionally been as income producing instruments. The industry as a whole has an average yield of around 3.5 percent, about 1.5 percentage points above that for the S&P 500. That, combined with the inelastic nature of electricity demand has made them a favored defensive play for income seekers.

The downside to a high yield is that it makes stock prices sensitive to moves in interest rates, and that could well prove a vulnerability over the coming years. The Fed may continue to delay the inevitable, but at some point most believe that interest rates will begin…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin

Trending Discussions





Oilprice - The No. 1 Source for Oil & Energy News