PUBLIC SECURITIES GROUP | ENERGY INFRASTRUCTURE The Return of the Great American Road Trip Barren highways were the norm at the height of state lockdowns aimed at curtailing the spread of COVID-19, but there are signs that more vehicles are likely to hit the road this summer. The road trip—a form of leisure travel that was particularly popular in the 1960s—is back in vogue. Americans are gearing up for summer travel—just not by plane. They appear to be opting for trips via recreational vehicles (RVs) and cars, a return of the Great American Road Trip with implications for energy infrastructure equities. RVs : A REINVIGORATED CONTENDER FOR THE LEFT LANE Low prices at the pump, flexible work schedules and SEARCHES FOR 'RV RENTAL' HAVE SURGED a desire to avoid crowds have turned an inefficient 'RV Rental' Search Interest on Google Over the Last Five Years energy-consuming vehicle (averaging around 7-13 mpg 100 for a Class A motorhome) into a viable option.1 80 According to the June Ipsos survey conducted for the RV Industry Association, 46 million Americans 60 are planning to take an RV trip in the next 12 months.2 40 ELATIVE INTEREST Google Trends corroborates the data. After years of R summer/winter cyclicality, RV interest has broken out, 20 with searches for “RV Rental” surging in recent months. (See the chart to the right.) 0 Jul Jun Jun Jun Jun Jun 2015 2016 2017 2018 2019 2020 As of June 29, 2020. Data are through June 21, 2020. Numbers represent search interest relative to the highest point on the chart for the U.S. and time period. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means there were not enough data for this term. Source: Google Trends. AMERICANS PREFER SUMMER TRAVEL BY ROAD VS. AIR Interest in car travel is on the rise too, with data TSA CHECKPOINT NUMBERS REMAIN DEPRESSED suggesting Americans now prefer travel by road over air. Daily Number of Passengers Screened at TSA U.S. Checkpoints 2019 2020 A recent summer travel forecast from AAA projects 3 that of the 700 million trips Americans plan to take this 2.5 summer, 97% will be by car.3 AAA expects that travel by car this summer will be down only 3% from 2019, while ) 2 travel by air will drop 74%. 1.5 Another sign of this shift: Transportation Security (MILLIONS 1 Administration (TSA) checkpoint travel numbers in the 0.5 U.S. are down roughly 80% year over year.4 (See the chart NUMBER OF PASSENGERS SCREENED to the right.) The number of passengers screened saw only 0 March April May 2 4 6 8 10 12 14 16 18 20 22 25 a modest recovery in May and June, despite an economic June rebound during that period as states reopened. As of June 29, 2020. June bars represent each day of passengers screened. The bars show every other day from March 4 through June 2, and then every day in June through June 25. Sources: Statista.com, TSA. PETROLEUM DEMAND: WHERE THE RUBBER MEETS THE ROAD Motor gasoline consumption is key to crude oil demand. GASOLINE DEMAND IS REBOUNDING AT A PROMISING RATE In 2019, motor gasoline accounted for 45% of all refinery U.S. Gasoline Demand 2019 2020 output in the U.S.—compared with less than 10% for 12K Y jet fuel.5 (43.7%) (16.1%) With air travel floundering and public transit showing 9K few signs of revival, the return of drivers to the roadways may be the biggest single swing factor in the recovery 6K of demand for crude oil. 3K Gasoline demand continues to rebound at a promising (MONTHLY AVERAGE) rate. Yet despite a meaningful rebound from April lows THOUSANDS OF BARRELS PER DA 0 and a variety of indicators pointing to an increasingly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec mobile society, gasoline demand remained 16% below As of June 19, 2020. The bars represent average barrels per day for each month. Source: U.S. Energy Information Administration (“EIA”). year-ago levels in early June. (See the chart to the right.) THE IMPLICATIONS FOR ENERGY INFRASTRUCTURE SECURITIES Ultimately, a combination of rising demand and ongoing We are cognizant that a rebound is by no means set in supply management is needed to drive crude prices higher stone, but we have positioned our portfolios to benefit and provide incremental tailwinds for crude-focused from a possible bounce-back in petroleum demand midstream companies in North America. A continued while also being mindful that this scenario may not uptick in summer driving and an ongoing reopening occur. The current pandemic will chart its own course. of economies around the nation are necessary to drive We remain confident that the underlying resource that demand back to normalized levels and increase utilization our assets transport—hydrocarbons—will ultimately for energy infrastructure assets. In addition, continued retain its long-term value, yet the next several months adherence by OPEC and other nations to the agreed upon could produce more volatility as society grapples with production cuts could provide significant relief to elevated the near-term implications of the pandemic on mobility. petroleum storage levels across the globe. IMPORTANT DISCLOSURES FORWARD-LOOKING STATEMENTS Brookfield Public Securities Group LLC (“PSG” or “the Firm”). PSG is an SEC- Information herein contains, includes or is based upon forward-looking registered investment adviser and represents the Public Securities Group statements within the meaning of the federal securities laws, specifically of Brookfield Asset Management, Inc., providing global listed real assets Section 21E of the Securities Exchange Act of 1934, as amended, and strategies including real estate equities, infrastructure equities, multi- Canadian securities laws. 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Our actual results or outcomes may vary materially. to be from reliable sources; however, Brookfield does not warrant its Given these uncertainties, you should not place undue reliance on completeness or accuracy. This publication is not intended to and does these forward-looking statements. not constitute an offer or solicitation to sell or a solicitation of an offer to buy any security, product or service; nor shall any security, product ENDNOTES or service be offered or sold in any jurisdiction in which Brookfield is not 1 Camper Report “The Giant Guide to Motorhome Gas Mileage with licensed to conduct business and/or an offer, solicitation, purchase or sale 21 Examples.” Class A RVs can be identified by their large and boxy would be unavailable or unlawful. shapes and often sleep 6-8 people. Opinions expressed herein are current opinions of Brookfield Public 2 RVIA “46 Million Americans Plan to Go RVing”; Ipsos research. Securities Group LLC, including its subsidiaries and affiliates, and are 3 subject to change without notice. Brookfield Public Securities Group AAA Q3 projections are based on economic forecasting and research LLC, including its subsidiaries and affiliates, assumes no responsibility by IHS Markit, a London-based business information provider. to update such information or to notify clients of any changes. Any 4 Statista.com daily number of passengers screened at TSA checkpoints outlooks, forecasts or portfolio weightings presented herein are as in the United States from March 2019 to June 2020. of the date appearing on this material only and are also subject to 5 change without notice. U.S. Energy Information Administration (“EIA”). Past performance is not indicative of future performance and the value of investments and the income derived from those investments can fluctuate. Future returns are not guaranteed and a loss of principal may occur. 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