Dear Fellow Investor,
On February 28th, 20% of the world’s oil supply vanished from the market overnight.
Prices surged past $100.
JPMorgan warned of $5/gallon gas at the pump.
Energy analysts scrambled to figure out how to replace millions of barrels a day of supply that had been flowing freely for decades.
It was the kind of event that makes most investors panic - a Middle East war, a closed Strait of Hormuz…
But here’s what I noticed while everyone was watching oil prices…
The Smart Money was watching something else entirely…
Why Pipelines Matter More Than Oil Wells
Let me explain something most investors don't think about.
When a foreign supply chain breaks — whether it's the Strait of Hormuz, OPEC cutting production, or sanctions on Russian crude — the immediate question isn't "how much oil is in the ground?"
America has plenty of oil.
We're the world's largest producer.
The question is: can we move it fast enough?
That's the real bottleneck.
It always has been.
In 2013, the shale revolution unlocked more oil than anyone expected.
But the price of crude collapsed 70% — not because demand was weak, but because there weren't enough pipelines to move the supply from the fields to the refineries.
44 million barrels got stuck in storage at Cushing, Oklahoma.
Warren Buffett saw the opportunity before anyone else.
He bought Burlington Northern Santa Fe railroad — his largest investment ever at the time — because railroads became the only way to move oil when the pipelines hit capacity.
That one investment turned into a 600% gain for Berkshire shareholders.
The lesson is simple:
During an energy crisis, the companies that transport energy become more valuable than the companies that produce it.
And right now, we're living through the biggest energy logistics crunch in modern history.
But Here's What Most People Are Getting Wrong
The Strait of Hormuz will reopen eventually.
Wars end.
Supply chains recover.
Even if Iran signed a peace deal tomorrow morning, the real demand driver isn't going anywhere.
Artificial intelligence.
AI data centers now consume the electricity equivalent of entire nations.
The International Energy Agency says their power demand will double by 2028.
A single advanced data center draws as much electricity as 80,000 homes.
And here's the part that surprised even me:
Nearly all of that electricity comes from natural gas.
Not solar.
Not wind.
Not nuclear — which takes a decade to permit and build.
Natural gas.
The fuel that flows through America's pipeline network every second of every day.
One major midstream company just reported that data centers are being built "right on top of" their existing pipeline infrastructure.
They've signed contracts to supply more than one billion cubic feet per day to power plants and data centers alone.
On their earnings call last week, management said something that stuck with me:
"AI needs terawatts, not just chips."
Think about that for a second.
Every dollar NVIDIA earns on a GPU only happens because a natural gas pipeline is feeding a power plant that's feeding a data center.
Cut the pipeline and the chip is a paperweight.
The Toll Booth That Pays You While You Wait
Here's what makes this different from buying an oil stock.
Oil drillers are at the mercy of commodity prices.
When crude drops, their margins collapse.
Pipeline operators don't have that problem.
They collect a fee on every barrel, every cubic foot, every gallon that passes through their system.
Whether oil is $60 or $120 a barrel, they get paid.
It's the toll booth on America's energy highway.
And right now, that toll booth is collecting more revenue than at any point in its history.
This company just reported record volumes across every segment — crude oil, natural gas, natural gas liquids, refined products, exports.
Revenue jumped 32% year over year.
They raised their full-year earnings forecast earlier this week.
Meanwhile, they're paying a dividend yield approaching 7%.
That's not a typo.
Nearly seven percent — paid quarterly — and they just increased it.
In a world where the 10-year Treasury pays you around 4%, this company is paying you almost double while growing its business at a pace I haven't seen in the midstream sector in over a decade.
What I've Been Working On
I've been spending a lot of time studying one energy company.
The same company that's building a 520-mile pipeline into the desert Southwest to feed Arizona's exploding data center corridor.
The same one expanding its Permian Basin network with billions of dollars in new infrastructure set to come online this year.
The same one that, by December, will have connected more American energy to more American demand than any other single operator in the country.
The market is still pricing it like a boring utility.
I think that's a mistake — and an opportunity.
Whether the Iran crisis drags on for months or resolves next week, the AI energy supercycle is just getting started.
And the company that controls where that energy flows may be sitting in the best position I've seen in 35 years of doing this.
“The Buck Stops Here,”
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Written by Dylan Jovine