It Pays to Check the Oil

      About 20 years ago, I bought my wife a new riding lawn mower. It was one of the best available at that time with a 21 horsepower engine and automatic transaxle. She loved that mower and used it often, keeping our yard the pride of the neighborhood. I always nagged her to check the oil in the engine each time she used it but she seldom did. One day, shortly after starting to mow, it made a loud noise and died. When I inspected it I found the engine was out of oil and the connecting rod was protruding from the crankcase. Oil is a must for any internal combustion engine, ignore this and disaster will ensue. Our economy also is reliant on oil and it's byproducts like gasoline, jet fuel and diesel fuel. Many people in rural areas heat their homes with heating oil. The recent ransomware attack on the Colonial Pipeline which supplies gasoline to the east coast of the US was a reminder of just how reliant we are on oil and its distillates. I recently counted 22 different gas engines that I own for transportation, recreation, lawn  maintenance, emergency electricity, and gardening. With the advent of electric vehicles, the oil industry has been under pressure for the last 10 years but I believe that there will not be a wholesale conversion to electric power during my lifetime. The internal combustion engine is just too ingrained in our lives to vanish quickly. Since the oil industry is so volatile, I do not have a "buy and forget" mentality about it. Over the past 30 years I have been in and out of names like Schlumberger, Halliburton, Chevron, Royal Dutch Shell,  Marathon Petroleum, Phillips 66, and Valero. Each of these companies have a niche in the industry and should be considered on their individual merits. I like the last 3 listed because they are the refiners of oil and supply us with the finished products that we need in our everyday lives. The barriers to entry into the refinery business are very high for obvious reasons which creates a moat, giving these companies a near monopoly. It also helps that they pay generous dividends while you wait for price appreciation. Schlumberger provides technology to drillers to streamline their operations and make wells more productive. New technology always takes longer to roll-out than expected so I think gas engines will be with us for the foreseeable future. It still pays to check the oil.