HindeSight Investment #112 June 2024 - Newsletter - READ HERE
HINDESIGHT INVESTMENT EDUCATION NEWSLETTER
CONTENTS
OVERVIEW
INVESTMENT INSIGHTS
PORTFOLIO UPDATE
HINDESIGHT DIVIDEND UK PORTFOLIO
OVERVIEW
When Henry Harley built the first pumped oil pipeline at the Benninghoff Run oilfield in Pennslyvania in 1865, I’m sure he would not have been able to envisage the impact on the geopolitical future that his invention would create. While many would believe that oil is primarily shipped around the world in huge tankers, the transport volume of oil and gas by pipeline dwarfs the tanker supply many times over. In the case of liquid gas, over 90% is piped across continents to keep the world running and the proverbial ‘lights on’. While cost is the most obvious reason for pipelines over tankers, in times of conflict and changing global tensions, pipelines are crucial to help keep industry going. After the US entered WWII in December 1941, in the month of February 1942, Nazi submarines sunk 12 US oil tankers along the East Coast which quickly accelerated the South-North US overland oil pipeline development. The remaining tanker fleet was restricted to the trans-Atlantic route.
Of course, the transportation in fossil fuels is crucial from the countries of the world who have the mineral deposits in excess of their needs to sell and the countries who have needs greater than their mineral deposits to access. But, the wealth, power, politics and war that comes with these logistics has framed much of the last 150 years’ events.
While a railway, rather than a ‘pipeline’, much has been written that the progression of the Berlin-Baghdad, (Hamburg-Basra) railway in the early 20th century, that would see Germany have access to the Middle East oilfields without interference from the Royal Navy on the high seas, was a leading cause of imperial and colonial rivalry that saw the tragic outcome of WWI.
(N.B. Recommended holiday book read “The World is for Sale”-Javier Blas & Jack Farchy)
The original Suez crisis in 1956 that saw the demise of Antony Eden’s government as the US supported Egypt’s Nasser against British and French ‘continued colonialism’, but in 1967, with the Six-Day war against Israel, Egypt closed the Suez Canal for eight full years, leaving 14 merchant ships stranded for the duration. The stories of these stranded ships and their crews, (although regularly rotated) for almost a decade is one of the better stories of humanity and co-existence. But, it also saw the development of the Trans-Israel pipeline in 1968, from Eilat, on the Red Sea to Ashkelon on the Mediterranean coast in partnership with Iran (when they were on better terms prior to the 1979 revolution). It would take oil from the Iranian oilfields to the Mediterraean and beyond, without the need of the Suez Canal passage. In 2003, Israel and Russia had agreed to supply Asian markets with Russian oil, in effect reversing the pipeline from its original role with tankers coming from Novorossiysk to Ashkelon, piped across Israel to Eilat and then tankers to all points east.
Of course, the winds of change came again, firstly with the West’s sanctions of Russian oil and then more trouble in the Straits of Hormuth and Hamas….
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