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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (58137)	10/7/2016 5:43:11 PM
From: Graham Osborn	Read Replies (1) of 78702

My knowledge of the current energy distribution infrastructure is not extensive, but if you are right the trend would be consistent with the oil boom in the 1800s. Initially oil was transported by mule and barrel, later by railcar and barrel, still later by tank cars, and finally by pipelines. Transporting the oil became less and less profitable as time went on. Similarly, refining was a very profitable business in the beginning due to the limited number of distribution routes (rivers, railroads) and the relative absence of competition. This situation vanished after 5-10 years and most of the refineries were losing money whether oil went up or down. Rockefeller capitalized on this by forming a distribution cabal with the railroads and effectively forcing all the other Cleveland refineries (and others later) into bankruptcy and then "acquiring" them at around book value then scrapping them. If the cycle holds true here, many of the refineries (like many of the producers) will ultimately be wiped out or consolidated. Warren's railroad business will be permanently hurt too.

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