Sample k1 form4/10/2023 While most MLPs are pipelines and are not directly dependent on the price of the commodity they are transporting through their veins, they aren’t quite the “toll-road model” that many people got suckered into believing all the way up until the end of 2014. Master Limited Partnership are Minimally Insulated Toll Roads The EIA and others forecasted a rare drop in oil demand across the globe in 2020. Planes aren’t flying as much, people aren’t driving as much, and cruise ships have become floating quarantine zones. Population growth has blunted the effects of both of those headwinds.īut now due to the virus, commerce and tourism have all come to a grinding halt around the world. Master Limited Partnerships were feeling the blunt of a double whammy of supply and demand shocks at the same time.Įven before the COVID-19 crisis, electric cars were becoming popular and fuel mileage standards were being raised every few years. This is bad for an MLP because their business is fee based on how much they transport. There is great pressure to cut production if it is not profitable to remove it from the ground. For an exploration and production (E&P) company, which a midstream MLP provides transport services to, it is hard to make a profit with super low commodity prices. This had never happened before in the history of oil markets.
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