The staying power of oil and gas pipelines

Demand for fossil fuels will not grow indefinitely, but it will probably be more resilient than most may expect.

Most would probably agree that pipelines have long useful lives. If you live in the Deep South or on the East Coast, there is a good chance your gasoline comes from the massive Colonial Pipeline system, which was built 60 years ago. Often, investors ask us about the remaining useful life for pipelines and whether these assets will become stranded as renewable energy and electric vehicles gain traction. Today’s note addresses that question.

Replacing Energy Sources Takes Time

Without digressing into a full energy transition discussion, replacing energy sources takes time. Coal is the most vilified fossil fuel, yet global coal demand is expected to have reached a new all-time high in 2023. The world has needed more and more energy as the global population has grown and economies have developed. Due to the global growth in energy demand, renewables have generally added to the energy mix, instead of displacing fossil fuels to this point (read more).

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Source: ETF Trends

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