Coronavirus picks part 4: MPLX

In my post on Signet, I talked about how I don't think Signet is really a brick-and-mortar retailer the same way other companies are brick-and-mortar retailers, so I don't think they are rightfully being dragged down in the secular trend that is dragging down retailers.

The other company whose stock I bought on April 8 was MPLX. (I already owned some of their stock, but I significantly increased my position.)

I have more or less the same opinion about MPLX as I did for Signet, just less to say. I don't think MPLX is really an oil and natural gas company. MPLX is operates and builds oil and natural gas pipelines, and it also has operations related to refining, shipping (in ships), and storing oil and natural gas. All of the price volatility in these sectors related to the natural gas boom, fracking, price wars, and sudden swings in demand increase the demand for MPLX and its business.

Negative oil prices are the worst thing imaginable for someone who produces oil. But they're amazing for someone who operates oil pipelines, shipping, and storage. The world isn't going to stop using fossil fuels anytime soon. Billions of people still live in countries that have not industrialized yet, and as long as that is the case, people will still want to buy the cheapest fuel they possibly can.

Moreover, technology is approaching a point where fuel will determine an equilibrium price for all precious metals. It will eventually be economically feasible to mine the asteroids. That's still decades away, but so is electrifying away terrestrial demand for fossil fuel.

Additionally, there's always plastics.

The way I see it demand for fossil fuel will exist for the foreseeable future, and changing technology and political attitudes will make it volatile and create regional disparities in prices for the foreseeable future. As long as these things are happening, MPLX seems like it's in a really good business.

MPLX does have significant revenues associated with operating natural gas gathering facilities, but I don't believe that any of this revenue is from actually owning the natural gas that it is gathering.

Moreover, MPLX appears to me to have a strong track record of taking advantage of the opportunities it sees, and it has been steadily growing its revenues and its dividend over the past several years.

I think it has a bright future, and I don't think it's particularly exposed to the current conditions.

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