Last week, Kinder Morgan (NYSE:KMI) CEO Steven Kean attended a conference hosted by the Energy Information Agency, where he talked about why the world still needs natural gas even as renewable energy is getting its feet off the ground.
In this clip from the Industry Focus: Energy podcast, Sean O'Reilly and Taylor Muckerman look how Kean's comments stack up to stats. Also, they look at how appealing of a buy KMI currently is for investors.
A transcript follows the video.
This podcast was recorded on Jul. 14, 2016.
Sean O'Reilly: After selling this half of the pipeline, Steven Kean then attended a conference hosted by the EIA, the Energy Information Agency, where he said ... this is interesting. He's obviously talking his own book, which he should do. He talked about the ability of renewable energy sources to fulfill our energy needs is overblown, and we will need natural gas. He noted that environmentalists used to love natural gas, but have since said that it's no good because it, too, contributes to greenhouse gas emissions. I actually looked into this point. Do you know about the carbon emissions that happen from natural gas?
Taylor Muckerman: Yeah.
O'Reilly: Oh, you do?
Muckerman: Oh, no, I know that it happens, especially during the production process, as well, with flaring and whatnot.
O'Reilly: Right. So, I actually went to the EIA's website. They publish this sort of thing. Pounds of CO2 emitted per million British thermal units, BTUs of energy, for various fuels. Anthracite coal is 228.6 million. Diesel fuel is 161. Gasoline is 157. At about half of coal is natural gas at 117. That's not ... I mean, it's better. It's the best one on the list, but, it's not infinitely better, bottom line.
Muckerman: Yeah. It's still a fossil fuel. But, especially in America, you look at other countries, like Canada, for instance. 60% of their power comes from hydropower.
O'Reilly: It's that high?
Muckerman: That allows them to export the majority of the fossil fuels that they actually extract out of the ground, mainly to the United States. We're a big purchaser of natural gas, not only from Canada but from other countries as well. Europe, still very reliant on natural gas. It's going to be necessary for these big economies--
O'Reilly: So, you agree with them?
Muckerman: I don't know how long it's going to be like this major need for base load power. In Portugal, where I was for my wedding, wind power is everywhere, solar power is gaining steam. They actually had four consecutive days in May this year that 100% of the electricity used in the country was produced by renewable energy.
O'Reilly: Wow! Yeah.
Muckerman: So, you see countries like that, Germany, very high up on the wind scale, Denmark, I think almost 50% of their power comes from wind. There are countries out there that are way ahead of the game in terms of renewable energy sources. But you're still talking about less than 50% in most cases from renewable sources. It's the lesser of evils is what I'm trying to say, in terms of coal or oil or natural gas for all electricity generation. And it's plentiful.
O'Reilly: I know you're a huge bull on natural gas pipelines for reasons that you mentioned--
Muckerman: Maybe not the construction of more, but the use of existing, yeah.
O'Reilly: What do you think of shares of KMI these days?
Muckerman: They've come back since their lows, along with the industry. And they were punished a little bit more than most because of the dividend cut, and all the news around that. But, The Motley Fool right now, in general, is feeling pretty good about it.
O'Reilly: A lot of people in this building do like it.
Muckerman: It was a Stock Advisor Best Buy Now from Tom's side of the scorecard the 1st of July, and then a week later, David named it as a Best Buy Now on his side of the scorecard in Stock Advisor. So, it's a company that seems to have taken some steps. Maybe people's tone changes a little bit if they decide to hike the dividend a little bit too early, because then they could be right back where they were a few months ago, retracing their steps. It's an interesting story to follow, and it's one that The Motley Fool does believe in.