Postcards: California Has Worn Me Quite Thin (Let's Go Downstream)

We wrap up our analysis of the energy supply chain with the Downstream, all while quoting Jimmy Buffett.

Dear Fellow Expat:

All right.

The Producer Price Index (PPI) was hotter than expected. Inflation isn’t going away, no matter how much they lie about it.

But oil prices are still ticking higher, and natural gas has hit levels we haven’t seen in a long time (to the downside).

We have one last place to focus on in the energy sector.

The downstream.

We love selling credit spreads on upstream producers like Occidental Petroleum (OXY).

And we like to invest in midstream companies like Plains Holdings (PAGP) and Enterprise Product Partners (EPD).

But the downstream?

Well… that’s a different animal.

There are four ways to approach it depending on your risk tolerance.

Let’s go…

All About the Downstream

The downstream sector of the energy industry encompasses the final phase of oil and gas production. Let’s focus on the oil side for the moment.

This portion of the sector centers on the refining, processing, and marketing of petroleum products.

After crude oil is extracted and transported from its s…