The big oil price collapse that prompted a bear market in energy stocks and Master Limited Partnerships (MLPs) started 5 years ago this summer.

There were two crucial changes – discussed at length in these pages in late 2014 – that prompted the collapse. First, the US shale revolution kicked into high gear as improvements in technology and efficiency helped propel US oil production to all-time record highs. Just consider: the US is now the world’s largest producer of crude oil, a fact that would have been considered inconceivable a decade ago.

Second, OPEC recognized this shift and was unwilling to continue to accommodate shale’s rising shale production through a never-ending string of production cutbacks and lowered quotas.

These two key changes, not fully appreciated by most market participants, were behind our 2014 sell calls in crude oil and many popular energy stocks.

Today, 5 years post-collapse, we believe the market is once again failing to appreciate 2 crucial changes now underway.

Not so long ago, a tanker on fire in the Persian Gulf would have spiked the price of crude oil. But despite the potentially destabilizing standoff between the US and Iran, West Texas Intermediate crude oil still sells for about $10 a barrel less than a month ago.

That’s in large part due to concerns about global economic growth. But generally flat oil prices are also the most compelling evidence yet of the immense changes in global energy politics wrought by the rise of US shale oil and gas. And don’t forget this is happening as Venezuelan output is imploding, Iran is embargoed and unrest is again threatening Libya.

For the past five years, it’s become an all too familiar refrain for energy investors: Oil and gas prices drop, but sector stocks fall harder. Then when prices rebound, the shares lag the recovery.

The pattern has also largely held this year, despite the fact that the S&P Energy Index has consistently shown up among the top performing S&P 500 sectors. No matter how positive underlying conditions have become, many investors still favor the commodities to energy stocks.

On the other hand, it’s much harder to ignore the good news that’s increasingly flowing from American energy companies. First quarter 2019 results once again showcased the recovery up and down the energy value chain. And as highlighted in the previous issue, the macro outlook strongly suggests this will continue.