Investors in the oil and gas industry have shifted their focus to energy infrastructure and utilities with high incomes. So, it’s vital to understand the difference between utilities vs midstream before investing in the oil and gas industry. Both industries have attractive income and diversification benefits that make them more appealing to investors.
While utilities and midstream share a lot of similarities, there are some differences. One factor that distinguishes the two is their performance relative to the energy prices and broader market. This guide explores the critical considerations of allocating to utilities and midstream energy.
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Now, let’s look at how utilities and midstream are similar and what differentiates them.
How They Are Similar
Despite many things differentiating utilities and midstream energy infrastructure, these two sectors share a similar role in investors’ portfolios within a real asset or income allocation. They both offer more generous earnings than the broader market. Also, both sectors have low correlations with other asset classes, allowing diversification.
How They Are Different
People see utilities and midstream as adjacent industries since oil and gas companies within both sectors have assets tied to energy demand. However, some factors distinguish the two industries, including their relationship with broader energy markets.
For example, utilities and midstream depend on energy demand, but the latter has more exposure to energy exploration and production trends. As a result, there has been a more robust correlation between midstream and oil prices. That’s why utilities perform more aggressively in volatile commodity price markets.
Liquefied Natural Gas In These Industries
While utilities and midstream share a lot of similarities, there are some differences. One factor that distinguishes the two is their performance relative to the energy prices and broader market. This guide explores the critical considerations of allocating to utilities and midstream energy.
Sapphire in Oil and Natural Gas
Utilities vs. midstream energy infrastructure occupy the same income-focused position as investors. However, many notable features differentiate the two industries. Notably, utilities have outperformed so far due to their volatility in the energy markets. One of the companies that have played a vital role in both sectors is Sapphire Gas Solutions.
Contact us to learn the contributions of Sapphire Gas Solutions in energy markets.