Dividends and Merkel reassures Ukraine amid concerns about Russian pipeline

In every commodity there is different methods to transport the commodity from the place where the commodity is found to the markets which can use the commodity. There will and always be conflicts with different governments on which method to move the commodity.

If you think about the country of Russia, it is one of the biggest producers of oil and natural gas in the world, which essentially means you could classify the country as a Petrocurrency – as the price of oil and natural gas so does the economy. The least expensive way to move natural gas is through a pipeline. The use of pipelines the world over has a long history and it is reasonably safe. However pipelines must go through multiple country lines from the producer to the consumer.

In the country of Russia, the government of Russia once turned off the taps of the pipeline to another country for geopolitical purposes. Since then every country which deals with Russia knows this, but they have lots of supply of oil and gas and it is good for countries to de dependent of more than one source of supply. The other big supplies of oil and gas comes from the Middle East including Saudi Arabia.

In an article by Andreas Rinke and Pavel Polityuk of Reuters, the head of Germany, Chancellor Angela Merkel prior to leaving office made a trip to Russia and the Ukraine. The country of Ukraine was once part of the USSR and in 2014, Russia took over a piece of the Ukraine called the Crimea. Russia wants to build a pipeline through the Crimea into Germany called Nord Stream 2. They have a pipeline going through the Ukraine but want a second one so they are not dependent on being good neighbors to the Ukraine. Chancellor Merkel was in the Ukraine to say even when the pipeline is built, Germany will be a valued partner with Ukraine.

Linking to dividend paying stocks, in many cases a relatively simple commercial transaction has implications of local and even global politics. The company just wishes to deliver a commodity to consumers and that is what they are focused on, however politics can be intertwined with the commercial transaction. Companies with a long track record have dealt with the issue before and came out ahead, as a shareholder that is what you want to hear. Remember politicians change and sometimes the issue changes, companies even though they report their results quarterly do have the limited luxury of time on their side if profits can be seen at the end of the deal.

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

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