“Two hundred gallons from LA, the engines thumpin’ like a disco” Diesel, the band
In this month’s reflection section, we discussed the idea the US should ban exports of diesel. This is not the most exciting topic, but it definitely highlights the concept of a simple idea with unintended consequences. It seems like you can solve the high price of diesel by keeping more diesel in the US and detach from the higher prices in the rest of the world. There are several problems with this. Some of the refineries that produce diesel for export are on the coast and do not have an easy way to ship the diesel inland for domestic consumption. A big issue is how will the rest of the world handle the export ban? Will they retaliate? Canada ships oil to the US and US ships some diesel to Canada. This might be a big issue, why ship oil if they won’t ship us the diesel they made with the oil? It seems easy until you dig deeper. That may be why we have only heard it as an idea and not as a plan. This is just one example of knee jerk solutions to any problem.
We have stressed in other commentaries how we believe in creating portfolios and not just a collection of stocks. Our portfolios primarily are concentrated on dividend paying stocks such as banks and pipelines. We like the history of dividend increases that help grow returns over time. We include stocks with other attributes. For instance, gold stocks provide some diversification from the interest sensitive sectors. We understand the market will fluctuate and a diversified portfolio is the best defence to changing markets.
