Dividends and US oil drilling revenue falls short leaving a gap in funds for hurricane protection projects

In the southern US, everyone knows about hurricane season, as the climate changes the hurricane season has seen more powerful storms. The government thought it had a good idea, using the ever increasing funds from offshore drilling to pay for projects to protect the states. According to an article by Nichola Groom of Reuters the idea was to have a 37.5% share of federal oil and gas royalties, but oil prices go up and down as commodity prices tend to do. Previously the arrangement was 27% of royalties within 5 miles of shore. The decline of the oil price has meant less royalties to the states to pay for the projects.

In 2013, the states of Alabama, Mississippi, Louisiana and Texas were told they would receive $375 million annually to 2055. Plans and projects were started, the federal government delivered $188 million

Linking to dividend paying stocks, projections linked to commodity prices will have a range, ideally the companies you invest in are protected from commodity prices but as an investor, you need to ensure profits are reasonably protected if prices fall. If not be diversified and be willing to buy as commodity prices rise.

There are more questions than answers, till the next time – to raising questions.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s