The gasoline pump is the first place Americans feel the Iran war, and this summer it has not let up. The Bureau of Labor Statistics reported in May that gasoline prices are up more than 20% over the year, airfare the same, and the result is a travel market in retreat. Just 56% of Americans now plan to drive more than two hours this summer, compared to 69% last year, according to a GasBuddy survey Reuters cited. A NerdWallet report found nearly half of Americans would rather stay home than book budget trips.
That is the headline. I don't care about the headline. I care about what the companies collecting fees on that energy actually earned, and whether their cash flows are insulated from the consumer squeeze everyone is panicking about.
Now let's talk about the Canadian midstream layer.
Here is what the market is missing: the pipeline companies that move Canadian oil to market earn their revenue through fee-based toll contracts. They charge a rate per barrel, not a percentage of the barrel's price. When oil is at $92 or $120, their revenue per barrel does not change. The consumer pain is upstream and downstream of their operation. Their cash flows sit in the middle, insulated.
Canada is producing oil at record levels - 5.19 million barrels per day in the first half of 2025, up from 5.13 million barrels per day the prior year, according to Canada's energy regulator. More barrels flowing means more volume for the pipelines, and more tolls collected. The business is a toll road for crude, and traffic has never been heavier.
Let me start with Enbridge. It runs the largest oil and gas pipeline network in North America. Enbridge reported CAD 5.8 billion in quarterly EBITDA - earnings before interest, taxes, depreciation, and amortization, a rough proxy for cash earnings - and guided for full-year 2026 adjusted EBITDA between $20.2 billion and $20.8 billion. Management declared a 3% dividend increase for 2026, its 31st consecutive annual raise, working out to $3.88 per share on an annualized basis. The stock trades at roughly 14.4 times EV/EBITDA (enterprise value divided by EBITDA, a multiple that values the whole company relative to its cash earnings), with a dividend yield near 5%.
TC Energy, Canada's other major pipeline operator, shows a similar profile. It guided for $11.6 billion to $11.8 billion in 2026 EBITDA and raised its quarterly dividend to $0.8775 per share. Its EV/EBITDA sits around 15.35x. That is not cheap by historical discount standards, but it is the price of a fee-based cash flow engine in a commodity world.
Both of these companies earn the vast majority of their revenue through long-term fee contracts. That means their cash flows are fee-based to the point of predictability. The higher the fee-based share - both sit well above 85% - the less commodity volatility actually matters to the bottom line. Oil could dip to $60 and these tolls keep collecting. Oil could spike to $130 and the same thing happens. The volume grows, the fees stay fixed, and the cash flow just accumulates.
From a valuation perspective, here is the contrarian crack. Dollar-based investors buying these Canadian stocks get a currency discount on top of the fee-based model. The Canadian dollar is trading at roughly 0.72 U.S. dollars - that is, one CAD buys about 72 cents USD. That weakness is structural, driven by the U.S. tariff wall that has depressed the loonie and by oil price volatility that hits the currency harder than it hits pipeline cash flows. But the pipeline revenue is in CAD, the costs are in CAD, and the currency risk falls on the investor, not the business. A dollar investor buying at 0.72 is getting a roughly 28% discount on the share price that vanishes if the loonie reverts toward parity.
Macquarie forecasts the CAD/USD to move toward 1.31 (about 0.76 USD per CAD) by end of 2026. That is not a guarantee, but even a partial recovery adds to total return for U.S. buyers. It is a free option that the market has priced as a permanent impairment.
While it's true that these multiples are not screamingly cheap - 14 to 15 times EV/EBITDA is not a distressed bid - the predictability deserves recognition. These are not cyclical producers riding oil price swings. They are regulated-adjacent toll operators with contracted volume and inflation-protected rates. The dividend coverage is comfortable. Enbridge's 5% yield is backed by cash flows that have held steady through commodity turbulence. TC Energy's distributable cash flow has covered its dividend with room. Neither company needs oil to stay at $96 to keep paying.
Even if the Iran situation escalates further and oil climbs to $100-plus, the thesis does not break. Higher oil prices might reduce physical demand marginally, but Canadian production is at record levels and the pipelines are capacity-constrained, not demand-constrained. The barrels are going somewhere, and they are paying the toll.
The counterargument is worth stating: if oil collapses, Canadian producers cut capex and production falls, eventually starving pipeline volumes. That is real. But these pipeline contracts are long-term take-or-pay agreements, which means shippers pay the fee whether they fill the pipe or not. The survival test is on the producer, not the pipeline. The toll road does not go bankrupt because fewer cars drive on it - the drivers pay the penalty.
All things considered, the consumer pain story is the wrong story to bet against. The companies collecting the fees on that energy are not exposed to consumer demand. Their cash flows are contracted, covered, and growing. The Canadian dollar discount adds a layer of margin of safety for U.S. buyers. I see Enbridge as the more compelling entry - the larger network, the longer dividend growth history, and the 5% yield make it the cleaner fee-based play. I reaffirm my Buy rating on Enbridge for dollar-based investors willing to accept the currency overlay as a temporary discount rather than a permanent cost.