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Rick D

Rick D
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  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred [View article]

    Safety actually should be a factor in an investment in any aspect of the oil and gas business, which inherently involves working with dangerous substances. Investing in a sloppy accident-prone operator is likely to prove injurious to your wealth. Just ask anyone who owned BP stock in 2010.

    In this case the relative safety of LNG compared to other energy sources is a plus for those who wish to invest in this portion of the energy industry. However, the public's lack of understanding of LNG's relative safety is a serious impediment to the growth of LNG.
    Nov 9, 2015. 01:22 AM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred [View article]
    I think you've missed my point.

    I'm not saying it is impossible to have a serious incident with LNG. It is possible.

    I'm not suggesting taking shortcuts on safety. Far from it.

    I'm saying that LNG shipping is a lot less likely to produce a serious incident than, say, crude oil, refined products, or LPG transport.

    I don't want a missile to hit an LNG tanker either. But given the choice I'd certainly prefer that to a missile hitting, say, a gasoline tanker.

    I don't want people to think that we should be afraid of LNG shipping. You're a lot more likely to get a fireball from a car, truck, train, or airplane accident than from an LNG shipping accident. Yet we aren't afraid to use those methods of transport.

    I once saw a video of an LPG explosion. The description on it incorrectly stated it was an LNG explosion. Under the circumstances of the video LNG would not have exploded and probably would not have even caught on fire. The public unfortunately does not understand the difference and irrationally fears LNG.

    The public generally thinks all hydrocarbons have similar characteristics and risks. Of course this isn't true. I've seen people foolishly think that gasoline was a good substitute for charcoal lighter fluid. (I hope you know why that's not true.)

    The risk of a fireball from an LNG accident or terrorist incident is a LOT lower than it is with other fuels. The public needs to understand that. The benefits of LNG far outweigh the risks. I don't think the general public really understands that. I've seen a lot of unjustified public opposition to LNG terminals.

    Please take a look at those two videos if you haven't already done so.
    Nov 5, 2015. 03:10 PM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred [View article]

    I think you misunderstood me. I'm not suggesting sloppiness in the handling of LNG. Under certain conditions it CAN be dangerous. (I even gave a specific example where it could be explosive.) It's just a lot less dangerous than you are making it out to be.

    In particular I take exception to your statement:

    "Once [LNG] breaks containment it becomes a gas again. It's the same as a gas leak in your home. A spark or flame WILL ignite it into a fireball."

    This statement is demonstrably false. A gas leak in your home is at room temperature. In the right mixture with air you are correct that this will ignite. However, LNG that has just broken containment is not at room temperature. It is too cold to burn and will not ignite even when exposed to spark or flame. Even when you do get it to burn it generally doesn't create a fireball. It burns more like a candle flame.

    Here is the video I was referring to. The demonstration of a lighted cigarette being placed in a beaker of LNG is at the 4:16 mark:

    And here is another one. Part of this video is even more impressive. A charcoal fire is extinguished by pouring LNG on it:

    As for Fischer-Tropsch, pyrolysis, and coal gasification, these are chemical reactions that occur only under very special conditions. They mostly require elevated temperatures. Boiling LNG at minus 260 Fahrenheit definitely isn't at an elevated temperature! I can't imagine any of them happening from an LNG shipping accident.
    Nov 4, 2015. 09:29 PM | Likes Like |Link to Comment
  • An Unsinkable 12.5% Yield From Dynagas LNG Partners Preferred [View article]

    Boiling LNG vapor is too cold to burn. I have seen a video of someone putting a lighted cigarette into a beaker of boiling LNG. The cigarette was extinguished. No fire resulted.

    In order to be combustible, methane must be above a certain temperature. (I'm not sure of the exact value; I think it is around -40 Fahrenheit.) Boiling LNG is at approximately -260 Fahrenheit. When LNG is regasified, it must also be warmed to a combustible temperature or else pipelines won't take it.

    Methane is flammable only in concentrations of 5 - 15% in air. In open air, by the time the methane vapor from LNG has warmed up enough for combustion it has dissipated to the point of having a concentration less than 5% and is not flammable.

    LNG can pose an explosion hazard, but generally this occurs only in a confined space. Some major explosions have happened where, for instance, LNG has gone into a storm sewer. In a confined space like this it is possible for the methane to warm up to combustion temperature while also being in the 5 - 15% concentration range.

    The bottom line is that LNG is not nearly as dangerous as people often think. LPG, which is often confused with LNG, is much more hazardous due to its vapor being heavier than air. LPG vapor will hug the ground, spreading out until it finds an ignition source, at which time a major explosion occurs. LNG vapor is lighter than air and does not have this issue.
    Nov 4, 2015. 12:21 PM | 2 Likes Like |Link to Comment
  • The Type Of Dividend Stocks You Should Put In A Roth IRA [View article]

    Shell's Scrip Dividend Programme is available through many but not all brokers. I know Vanguard does, and to sign up all you have to do is elect to reinvest dividends. I believe (but don't quote me on this) that most of the retail discount brokerages (Fidelity, E*Trade, etc.) participate; the only one I am aware of that does not is Scottrade.

    Call your broker and ask them if they participate and how to sign up. And do make sure to talk to someone who is knowledgeable about the subject!
    Oct 28, 2015. 03:22 PM | Likes Like |Link to Comment
  • Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery [View article]
    smurf's response is correct only for some holders who take dividends in cash or who reinvest using a broker who does not participate in Shell's corporate DRIP (the Scrip Dividend Programme).

    If you reinvest dividends via Shell's SDP you should own A shares. Dutch tax will NOT be withheld on dividends reinvested via the SDP. As smurf states, if you reinvest B share dividends via the SDP you will receive A shares. You probably don't want a small holding of A shares along with a larger holding of B shares.

    In a taxable account, A shares are preferable for many holders who take dividends in cash if they can recover all or almost all of their foreign tax withholding via the Foreign Tax Credit.

    Please see the two resources in my comment above for complete, correct guidance as to which share class to purchase.
    Oct 17, 2015. 12:21 PM | 1 Like Like |Link to Comment
  • Why We Believe Shell's Stock Is Worth $62 [View article]

    "Why do you think Oil prices will recover?"

    Good question. Here are three answers:

    1. Oil prices went down because the Saudis wanted to drive them down to maintain market share. They have done this in the past, most notably in the mid-1980s. When they did, the price recovered within about 2 years. The Saudis don't want to keep the price low forever, as it hurts their economy. They just want to keep it low long enough to kill off much of the competing supply and rekindle demand.

    2. Demand in Asia is increasing over time. Much ado has been made about a Chinese slowdown. I can't see this being anything but temporary. Bicycles are being traded for motorcycles and motorcycles for cars. This trend may slow down for awhile, but longer term it will keep going.

    3. The cure for low prices is low prices. Low prices reduce supply (with a bit of a time lag, due to projects already underway and hedges that take awhile to roll off) and increase demand. Remember when gasoline was $4 a gallon? Hummers and large SUVs disappeared from the road, while Priuses became popular. Now you see the large SUVs returning. On average a new car is driven for about 23 years before going to the junkyard. The new SUV purchased today will be guzzling gasoline for a long time to come.
    Oct 17, 2015. 12:03 PM | 3 Likes Like |Link to Comment
  • Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery [View article]

    "Please could someone print a definitive explanation of the Tax situation in RDS shares, so that every time we get an article about the company we can just refer to the article?"

    This was done long ago by Dividends Boom. Unfortunately there's no way to "pin" an article in Seeking Alpha so that it can be seen by anyone looking up a stock no matter how long it's been since it was posted.

    As that article and its comments were rather lengthy, I created the Instablog post mentioned in my response to mybi, above.

    "At least half of the comments will refer to whether A or B shares are better, and completely ignore the fundamentals."

    I agree that this is very frustrating. But lacking the ability to "pin" an article means that the A vs. B question will quite understandably be asked by a newcomer to Shell in almost every article. Everyone, when this occurs, please refer the questioner to the two resources in my response to mybi rather than trying to answer the question in your own words.
    Oct 16, 2015. 11:01 AM | 1 Like Like |Link to Comment
  • Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery [View article]

    It sounds like you are reinvesting dividends on your B shares via Shell's Scrip Dividend Programme. The SDP only issues A shares. If you don't reinvest dividends on A shares via the SDP you will have withholding on those.

    If you want to reinvest dividends and your broker participates in the SDP, as yours apparently does, you should own only A shares. Please see either of the two resources in my response to mybi above.

    There is no foreign withholding on the sale of Shell ADRs. Unlike with most ADRs, there is no ADR fee assessed to the holder of Shell shares.
    Oct 16, 2015. 09:12 AM | 1 Like Like |Link to Comment
  • Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery [View article]

    This is a common question. The answer is "it depends".

    For all the details please see Dividends Boom's article and its comment stream here (note: very long):

    For basic guidance, not so lengthy and adequate for most investors, please see my Instablog post here:
    Oct 16, 2015. 07:19 AM | 1 Like Like |Link to Comment
  • Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery [View article]

    If your brokerage participates in Shell's Scrip Dividend Programme you will not pay any foreign taxes and you will not lose any of the compounding effect.
    Oct 16, 2015. 07:15 AM | 1 Like Like |Link to Comment
  • Buy Royal Dutch Shell For 6.8% Dividend Yield While Waiting For An Oil Price Recovery [View article]

    I never had that problem with Vanguard. I just elected to reinvest dividends online and they took care of the rest, from then on.
    Oct 16, 2015. 07:13 AM | Likes Like |Link to Comment
  • Oil Majors: Dividend Investing Amid The Downturn [View article]

    Remember that for upstream operations, oil is an output, but for downstream operations like refining, oil is an input. Upstream benefits from high oil prices while downstream is hurt by high oil prices (because of increases in input costs that they can't fully pass on to their customers). Low oil prices have the opposite effect.

    The point I was trying to make is that although integrated oil companies have refining exposure, they will still suffer in an oil price downturn (though not as much as a pure upstream company would). Adding a refiner to an integrated oil portfolio could be done to offset this, since refiners benefit from low oil prices, effectively making the energy portion less susceptible to swings in energy prices. Adding a non-energy stock won't have this effect.

    I can't think of a compelling reason to add a standalone refiner to a portfolio that doesn't have either upstream companies or integrated companies in it, unless you simply want to make a bet on lower oil prices.
    Oct 4, 2015. 06:37 PM | 1 Like Like |Link to Comment
  • Royal Dutch Shell - Strong Dividend Play [View article]

    Many brokers automatically sign up Shell shareholders for the Scrip Dividend Programme if the shareholder elects to reinvest dividends. In this case the only way to opt out is to elect to take the Shell dividends in cash.

    I would suggest calling your broker to straighten this out.
    Oct 4, 2015. 06:23 PM | Likes Like |Link to Comment
  • Oil Majors: Dividend Investing Amid The Downturn [View article]

    As Mark mentioned above, you already have a significant interest in refining in your CVX and XOM. There is one reason why you might want to add a standalone refiner or two to your portfolio, though, and that is that the upstream portion of the integrated supermajors loses more from low oil prices than the downstream portion gains from them. If you want a portfolio that is relatively oil-price-neutral, you'd want to add refiners to the mix.

    Having said that, I have no pure refining positions in my portfolio. I think that oil prices won't go down much from here and that the supermajors will weather this storm and do fine in the long run. I expect oil prices will be higher over the next few years and that will likely hurt standalone refiners.

    If oil prices were high right now and likely to fall I'd say you'd have good reason to add standalone refiners to your portfolio. But I personally don't see a compelling case to add them in the current environment.
    Oct 4, 2015. 04:49 PM | Likes Like |Link to Comment