Although February contains only 28 days, for some reason my workload and travel schedule always seems to expand during the shortest month of the year. I just returned to my hometown of Alexandria, Va., after attending the World MoneyShow Orlando and the weeklong Money Answers Investment Cruise in the Caribbean. I enjoyed the warm weather and the opportunity to speak to dozens of subscribers in person.

If you weren’t able to join me at the MoneyShow or on the cruise, you’re not out of luck: I’ll be at the KCI Wealth Society Investing Summit in Las Vegas on April 1 to 2 at the beautiful Mandarin Oriental hotel.

I’ll discuss my favorite plays on surging energy prices, and you can look forward to presentations from my colleagues Roger Conrad, Yiannis Mostrous, Ben Shepherd, David Dittman and Jim Fink. We’ll also hear from guest speakers from some of our favorite companies, including Linn Energy LLC (NSDQ: LINE), Vermilion Energy (TSX: VET, OTC: VEMTF), Atlantic Power Corp (TSX: ATP, NYSE: AP) and Everbank Financial. Find out more about the conference agenda and reserve your place at this exclusive event.

I always enjoy the Q-and-A sessions that follow my presentations at investment conferences. Hearing investors’ questions and concerns helps me to identify issues that are foremost in subscribers’ minds. Here’s a review of some of the most common questions I received at the MoneyShow and on the cruise, along with my responses.

Kinder Morgan Inc (NYSE: KMI) had its initial public offering (IPO) recently. Some analysts claim the IPO is a negative for Kinder Morgan Energy Partners LP (NYSE: KMP). Do you agree with this take?

Kinder Morgan Inc’s IPO will not have a negative impact on Kinder Morgan Energy Partners, the master limited partnership (MLP). Structured as a corporation, Kinder Morgan Inc serves as Kinder Morgan Energy Partners’ general partner (GP) and holds a roughly 11 percent stake in the MLP.

Every MLP is a combination of two companies, a limited partner (LP) and a general partner. When you purchase an MLP, you’re typically buying a stake in the LP, which entitles you to a share of the MLP’s cash flow.

The GP is best thought of as part manager and part parent. The GP manages the MLP’s assets and makes major business decisions–for example, the acquisition of certain assets or the construction of new pipeline projects. The exact relationship between GP and LP is governed by the partnership agreement–the basic document drawn up when an MLP is formed–which also establishes the fees that the LP pays to the GP in exchange for its services.

Typically, these fees take the form of quarterly incentive distribution rights (IDR) that are based on the size of the quarterly distribution made to LP unitholders. IDRs are tiered such that the GP receives a larger percentage of cash flows when the LP increases its distribution, a structure that should incentivize the GP to make decisions that support growth. That Kinder Morgan Energy Partners’ GP is now a public company won’t impact the structure of the IDRs KMP pays to its GP. In fact, Kinder Morgan Inc was a public company for years until it was taken private back in 2007.

The only possible risk is that investors will sell down their holdings of Kinder Morgan Energy Partners to make room in their portfolio for Kinder Morgan Inc–a concern that was magnified by what turned out to be the biggest energy-related IPO in 10 years.

But this risk is overstated; the two securities will appeal to different groups of shareholders. Set up as a corporation, Kinder Morgan Inc is subject to corporate taxes. Accordingly, KMI will pay normal, qualified dividends reported on a 1099 rather than MLP distributions reported on a K-1; this makes Kinder Morgan Inc a good choice for investors seeking to add exposure to the Kinder Morgan family of companies in their tax-advantaged IRA or 401(k) accounts.

Although Kinder Morgan Inc intends to pay out the majority of its cash flows as dividends, management estimates that its initial dividend will be just $0.29 per quarter, equivalent to a yield of about 3.7 percent. In contrast, KMP paid out $1.13 per unit in late January, equivalent to an annualized yield of nearly 6.3 percent–considerably higher than that of Kinder Morgan Inc. Units of the MLP should continue to appeal to income-oriented investors.

Like most GPs, Kinder Morgan Inc will likely grow its dividend at a faster rate than its LP. As the LP boosts its distributions, the IDRs that the GP receives will increase at a faster pace; shares of Kinder Morgan Inc will likely appeal to growth-oriented investors

Finally, there is no precedent to suggest that Kinder Morgan Inc’s IPO will be a negative for the MLP. Take, for example, Targa Resources Partners LP (NYSE: NGLS), an MLP that owns natural gas processing and fractionation facilities. On Dec. 7, 2010, the limited partner’s GP, Targa Resources Investments (NYSE: TRGP), went public. The shares closed at $24.70 on its first day of trading. Since this IPO, units of Targa Resources Partners are up 9.8 percent, while shares of its general partner have rallied 30 percent.

Investors in Kinder Morgan Energy Partners shouldn’t fret about its GP becoming a publicly traded company.

Do you expect crude to stay between $80 and $90 per barrel this year? Why hasn’t the price of crude oil rallied more in response to the unrest in the Middle East?

Crude oil prices should stay above $100 per barrel this year will likely spike to $120 at some point.

I opened several of my presentations at the World MoneyShow Orlando by noting that oil prices have surpassed the psychologically important mark of $100 per barrel. This claim invariably confused some audience members; West Texas Intermediate (WTI) crude oil, a key US oil price benchmark, traded in the mid-$80s per barrel. Propelled by unrest in Libya, WTI crude oil has rallied into the mid-$90s per barrel. Many news outlets only quote the price of WTI, so that tends to be the price that many US-based investors follow.

In a normal market, WTI serves as a reasonably accurate benchmark. But local conditions have made it temporarily unreliable. The delivery point for WTI–Cushing, Okla.–faces a glut of oil after the Keystone pipeline began transporting crude from Canada to the area and some unplanned refinery outages boosted the amount of oil in storage. That’s artificially depressed the price of WTI relative to most other grades of crude oil.

Rather than watching WTI, investors should monitor Brent crude oil, a key international benchmark that typically trades at a $1 to $2 per barrel discount to WTI because it’s a slightly inferior grade. Recently, Brent crude oil has commanded a premium of more than $10 per barrel to WTI.

And Brent crude oil isn’t the only variety that currently trades at an unusual premium to WTI. WTI is also priced at a discount to Light Louisiana Sweet (LLS) crude oil, another key US benchmark. Whereas LLS typically trades at a slight $1 to $2 premium to WTI, it’s traded at a near record $10 to $15 premium over the past few weeks.

The point is that when attempting to gauge the impacts of various fundamental and geopolitical events, it’s important to use a relevant measure of crude oil prices.

Oil prices have rallied in response to unrest in North Africa and the Middle East. As I explained in the Feb. 8, 2011, issue of The Energy Strategist Weekly, Egypt and Higher Oil Prices, Egypt isn’t an important producer or transit point for oil. The hype surrounding Egypt’s political stability and its implications for oil prices is primarily an invention of financial journalists looking for an exciting story.

Opposition protests in Libya have reached a fever pitch, and there’s a strong possibility that Muammar Qadaffi, who has led the nation for more than four decades, will be toppled from power. This is a more meaningful event for oil prices because Libya produces 1.6 million barrels of oil per day and exports the vast majority to Europe.

But even Libya isn’t a huge problem. The 1.5 million barrels per day of oil that the company produces is only a fraction of a global oil market is close to 89 million barrels per day.

And any shortfall in Libya can easily be accommodated by Saudi Arabia, a nation with considerable spare production capacity. To date, only 100,000 to 200,000 barrels per day of Libyan production is reportedly offline–a proverbial drop in the bucket as far as the international oil market is concerned. The only real concern would be if the unrest spread to Saudi Arabia, but that’s highly unlikely, as the ruling monarchy has a much firmer grip on power and the cash to keep its subjects content for now.  

Oil prices would likely be $5 to $7 per barrel lower without the political turmoil in the Middle East. But analysts often overstate the importance of the geopolitical risk premium to oil prices. The bigger story is that global demand for oil continues to grow, rapidly drawing down inventories. Absent recent political developments, supply and demand conditions would push oil to $120 per barrel this year.

 Moreover, the geopolitical risk premium never disappears from the oil market. The fact remains that much of the world’s oil supply comes from countries with less-than-stable political environments.

Won’t increased demand for natural gas push up prices in the US?

The problem isn’t demand but supply. US gas production continues at record levels despite weak prices. Storage in the US is glutted despite rebounding demand.

Normally, drilling activity would slow as prices dropped. But that hasn’t been the case, as gas producers continue to benefit from associated production of higher-value natural gas liquids such as propane and ethane. In addition, some leases require producers to drill regardless of profitability. It will take longer than normal for this oversupply to be sorted out, though we might see glimmers an improving market by the end of 2011.

One development to monitor is the potential for the North America-focused services firms to underperform into the back half of 2011. Drilling activity should moderate toward the middle of the year as companies complete required drilling. An emerging oversupply of pressure pumping capacity could weigh on services companies’ margins and profits.

What’s the potential for international shale gas and oil plays? I recently read about the Paris shale and the potential for massive growth.

Production from unconventional shale gas fields has revolutionized the US natural gas market. A decade ago, most analysts agreed that rising demand for gas and falling production would force the US to import ever-larger quantities of liquefied natural gas (LNG) from the Middle East and other regions.

Now, the nation has more gas than it knows what to do with. A glut of gas in storage and record production has turned the tables to the point that some are looking for ways to export US LNG to gas-hungry consumers in Asia and Europe.

North America doesn’t have a monopoly on shale, and several producers, including energy giants Chevron Corp (NYSE: CVX) and ExxonMobil Corp (NYSE: XOM), are evaluating plays in Europe and Asia right now.

But don’t expect international oil or gas shale to revolutionize global energy markets anytime soon. The US doesn’t have a lock on shale geology, but it is an ideal market for shale producers because the basic infrastructure to accommodate drilling and production from such fields already exists. In particular, the US has more land-based drilling rigs than any other country in the world, a huge domestic oil services industry with experience in the hydraulic fracturing techniques needed to produce shale, a massive pipeline network, and ample gas processing and storage capacity. Although the US still needs to build additional infrastructure to accommodate increased production, the country had a head start compared to other nations around the world.

Infrastructure is the key. It’s no coincidence that the first shale fields to be discovered and produced in North America are those closest to the heart of the energy industry, including the Barnett Shale in Texas and the Haynesville Shale of Louisiana. These states already had most of the infrastructure needed to get started producing shale.

It will take years for producers to prove out international shale plays and evaluate their productivity. Even in the US, the cost of producing individual shale plays varies widely. The quality of gas produced from different fields also varies; for example, the Haynesville Shale contains little oil or natural gas liquids, while portions of the Marcellus Shale are rich in liquids.

Once the most prospective international plays are identified, services companies will need to assemble fracturing crews and rigs. Finally, many of the nations currently being explored have much smaller domestic energy industries than the US, a major hurdle to exploiting their newfound energy wealth.

In short, don’t believe the hype about a massive new shale field that will turn France and Germany into energy exporters.