Buying Pipelines Should Be Easier Than This

It is a paradox of the energy business today that U.S. oil and gas production are at record levels but the business of piping the stuff around is in the pits.

More than a few of the industry’s wounds were self-inflicted. Like their exploration and production clients, hubris led many of them into riskier, tenuously linked businesses financed with too much debt. Insiders, aided by large stakes and sometimes breathtakingly skewed incentives, reaped much of the reward while distributing pain more widely. Assets were often enclosed in master limited partnerships, offering tax benefits and high payouts predicated on the idea these businesses were essentially immune from the commodity cycle (it will shock you to learn this notion was rather oversold). Tax reform and a jarring reappraisal of pipeline-tariff setting by federal regulators delivered hammer blows in 2018.