Monday Night Links

• Arbitrageurs implicitly assume that the world is full of people who are rational, but imperfectly so, and that the big money is in keeping the expressions of their views that take place through financial markets roughly in line with one another—taken too seriously, it's a form of nihilistic optimism that every important problem will be figured out by somebody else, but that they won't perfect the last few details of their approach before moving on to the next thing. Startups often assume that the world is missing a critically important big idea, and that only they can bring it to fruition. It's a form of realist pessimism holding that nobody else will pick whatever the low-hanging fruit happens to be. At the same time, believing that there are secrets left in the world and low-hanging fruit left to pick is a form of optimism in itself. [The Diff]
• I really hate to be "that guy" (i.e., the jerk that goes around correcting people on spelling and grammar and word usage and such) and I do apologize but... Please note that "Episcopalian" is not an adjective, it is a noun. It always only refers to a person who is a member of that denomination. The adjective is "Episcopal." Some examples: "John and Mary are both lifelong Episcopalians, so their wedding took place in the Episcopal church on the town green." "The Episcopal prayer book is called 'The Book of Common Prayer.' Many Episcopalians turn to it for solace in times of sorrow." "I went to an Episcopal school, where Episcopal chapel services were held on a weekly basis. Most, but certainly not all, of the students there were Episcopalians." [Salt Water New England]
• The film has become a cult classic for its crisp dialogue, lucid fatalism, and fine detail. It bubbles back up in moments of market stress, and the past few weeks have provided a steady supply of oxygen. It hit TikTok during the 2023 collapse of Silicon Valley Bank, boosted by an explainer on the All In Pod. Close to a million people have watched it in unlicensed 30-second installments. There is, of course, an Irons meme generator. And it is invariably how a certain breed of Wall Streeter — just young enough not to have had their careers tarnished by 2008, but to feel like they had missed out on a great war — answers when asked what their favorite movie is. (Nos. 2 and 3 are Michael Clayton, which stars George Clooney as a corporate fixer, and, for reasons passing understanding, Master and Commander, Russell Crowe’s Napoleon-era high seas drama.) [Semafor]
• Fundamental to our approach to energy markets at RBN is a view that natural gas, crude oil and NGLs have become much more interdependent than in the days before shale. What happens in gas impacts NGLs, which influences crude oil, which loops back to the natural gas market. There was a time when you could live out your career in the gas business, or the NGL business, or the crude business and get by with knowing very little about the other hydrocarbon markets. Those days are gone forever. For example, today’s gas prices make no sense unless you understand the economics associated with NGLs and associated gas production. Production of condensates from crude wells directly compete with natural gasoline, the highest margin NGL for gas processors. Natural gasoline prices are being boosted by its use as a diluent for Canadian bitumen crude oil. Low prices for ethane result in rejection of ethane molecules back into the natural gas tailgate stream of gas processing plants. These examples and many more typify today’s highly integrated liquids and gas hydrocarbons markets. [RBN Energy]
• The strong physical trading liquidity at Cushing attracted paper traders, allowing market participants to hedge their physical business and bet on the market via the WTI Light Sweet Crude Oil futures contract (contract symbol: CL) on the New York Mercantile Exchange (NYMEX). This contract, which launched more than 40 years ago, became important in the domestic market and internationally. In 2008, NYMEX was acquired by the Chicago Mercantile Exchange (CME), which currently manages the CL contract. CL remains the world’s most liquid crude oil contract. While this contract was initially supplied with WTI directly from West Texas, it did not exclude crude oil that originated elsewhere but met the contract standards. [NYMEX Leads the Way on WTI Futures Contracts, But There's Room for More]
• As in our report on midstream M&A in 2022-23, many of the midstream deals announced in 2024 and early 2025 involved the acquisition of companies with extensive holdings in the Permian, which is by far the U.S.’s top crude oil production area and also a major supplier of natural gas and NGLs. Rising Permian production over the past few years spurred a massive buildout of midstream infrastructure — including gathering systems (for crude, associated gas and produced water), gas processing plants, takeaway pipelines (for crude, natural gas and NGLs), storage facilities, fractionators, and export terminals. While a significant portion of that midstream development was undertaken by large publicly held companies or master limited partnerships (MLPs), many other vital projects were developed by privately held midstream companies backed by private equity. In the post-COVID era, with many publicly held companies looking to gain further scale and scope — and many private-equity-backed midstream companies looking to cash in on their well-timed, well-planned developments — it could be argued that conditions for large-scale midstream M&A have never been better. [Combination of the Two - A New Drill Down Report on Consolidation in the Midstream Sector]
• In a Drill Down Report in late 2023, we described the NGL networks owned and operated by the four large midstream companies (Enterprise Products Partners, Energy Transfer, Targa Resources and Phillips 66) that currently provide wellhead-to-water services — everything from gas processing plants in the Permian and other plays to long-haul NGL pipelines to the Gulf Coast to fractionation plants (almost all of them in Mont Belvieu) and export terminals for purity NGL products. As we said then, “That start-to-finish management of the NGL stream provides a number of important benefits — chief among them, the ability to operate with extraordinary efficiency, collect fees from shippers each step of the way, and feed pipelines, fractionators, storage and export terminals along the network’s value chain.” [At Last - New NGL Pipes, Fracs and LPG Export Terminal Give MPLX, ONEOK What They've Wanted]
• Give me the money that's been spent in wars and I will clear up every acre of land in the world that ought to be cleared, drain every marsh, subdue every desert, fertilize every mountain and hill, and convert the whole earth into a continuous series of fruitful fields, verdant meadows, beautiful villas, hamlets, towns, cities, standing along smooth and comfortable highways and canals, or in the midst of luxuriant and fruitful orchards, vineyards, and gardens, full of fruits and flowers, redolent with all that pleases the eye and regales the senses of man. [CBS]