Energy 101: We Ask The Dumb Questions So You Don't Have To

00;00;00;00 - 00;00;37;12
Unknown
Welcome to energy 101. Today we have the esteemed Marc Meyer, who is a familiar face if you're in the Callide bubble. He runs the show Big Digital Energy, our topical show where him and his colleagues sit down and talk topical news. Keep everyone up to date. Honestly, a true news source. I'm super impressed by it. And, you know, there's this there's a certain amount of people that you follow online and no matter how irrational or one sided the take is, you know, Marc is one of those people that every take he has is just you can't disagree with it.

00;00;37;13 - 00;01;11;23
Unknown
You know, sometimes it's leaning one way, sometimes it's neutral. Moderate. I don't know. But you're just I hear you and I'm just like, yeah, I guess so. I take it as fact. Well, you're too kind and probably not 100% accurate because we all do have opinions, right? And we're a product of our background and environment. But I try to stay grounded in being as objective, and led by the data and the information that, you know, oftentimes can be prone to errors or deliberate misinformation.

00;01;11;26 - 00;01;49;15
Unknown
A term from the not too distant past in the political rhetoric. But, you know, I think, I think having a three plus decade front row seat to the industry and also being, like everybody else, a consumer of energy, including oil and gas throughout my lifetime, there's always something interesting to talk about and never more interesting than when the industry has recaptured the attention of, I think, a large segment of the population and certainly, the political class.

00;01;49;18 - 00;02;19;27
Unknown
It's now front and center with what's going on in the Middle East. Yep. And great criteria for what will be an episode on geopolitics, how the world works and so on. So good to have, backed data driven takes in the next, hour. We'll do our best. Speaking of, you know, I edit the show for y'all, and, you know, if you if you ever want a little Easter egg or I don't know how to describe it, but Mark will bring up something.

00;02;19;27 - 00;02;38;20
Unknown
And there might be, like, a stat or numbers involved. And, you know, from there I may pop in the headline of said article or whatever, just to get a little contacts or maybe even show like a literal, data point. Chuck says a lot of things in a similar vein, and you may notice nothing really pops up.

00;02;38;20 - 00;03;03;24
Unknown
No be wrong. And that's because Chuck just the entertainer Chuck vibes. He has vibing stats sometimes, including yesterday's episode. His booty gate, insider text he got from someone zero results. I was like that. And if you remember, that's the first question that I asked. Okay. What what were the results of that? Well, yeah, very strong production.

00;03;03;24 - 00;03;21;28
Unknown
Okay. What does that mean. Yeah. And then he gave a very confident, vague answer that I was unable to prove. And, you know, maybe he's right. Maybe we have to wait. Maybe he's a little too insider. And you got to wait a few more weeks for that info to come out. But, let's get into the topics today.

00;03;22;05 - 00;03;47;17
Unknown
Geopolitics, energy. It's all connected, right? And, energy is one of these things that are one of the biggest things in our lives. And people like us pay attention to it every day. But it takes moments in history for people to, you know, spike in interest and then go back down and not care whether it's the war in Ukraine or the current closure of the Strait of Hormuz.

00;03;47;20 - 00;04;08;17
Unknown
And we are in, I guess, the the ending of that. But everything is now on social media, from your grandma to kids talking about energy. And then in a few weeks, they'll all be gone and everyone will forget about it. But people like us are every day thinking about it and acknowledging it. And you know, what are your thoughts on all that?

00;04;08;22 - 00;04;41;02
Unknown
Yeah, I think people are prone to, notice when there's a disruption and things. Think about what happened during Uri back in 21. Did you really think about your power shutting off for meaningful periods of time? In normal circumstances, that was an extraordinary thing. And then everybody cared and everybody wanted to know more or I think in the in the.

00;04;41;05 - 00;05;17;01
Unknown
Maybe not the majority, but there is a significant number of people who convey authority to media and social media commenters on what's going on without a lot of investigation of, okay, does this does this square with the reality of how the energy system works, or there's an expectation that everything is easy? But these these disruptions cause moments where focus, attention and priority.

00;05;17;01 - 00;05;44;08
Unknown
It now matters a lot. And so hopefully that's followed by just a curiosity to dig in and learn more. I think there's for the entirety of my career, there's been a high degree of prevailing energy ignorance. That doesn't mean people are stupid. They're just not. They've just not been informed or they've not been curious enough to dig in to to really understand how the industry works.

00;05;44;08 - 00;06;23;01
Unknown
And if we're going to focus it in the current context, we're talking primarily about oil and gas and the disruption that we're seeing now as a result of hostilities with Iran and broader disruption in the Middle East is unprecedented from a physical standpoint. So there are looming physical shortage crises in certain parts of the world. We talked about one yesterday, so why should the situation at Heathrow Airport, for example, which I hope I'm I'm quoting Paul Sankey, London's airport accurately.

00;06;23;01 - 00;07;00;09
Unknown
I think he said I may have to correct it next week. London is now the busiest airport in the world. Well, they're running critically short of jet fuel, which is pretty important to keep in planes in the air and jet for a lot of physical reasons. Is more difficult to store than gasoline or diesel. And then when you get restrictions on the wedge of jet supply that comes into the UK, into Heathrow, because some of that, some meaningful portion of those imports can't get through the Strait of Hormuz that matters.

00;07;00;09 - 00;07;37;24
Unknown
And when physical shortages manifest, it causes price reactions that then effectively ration demand because you'll shut down an operation because the price for this, the scarcely available product jet fuel in this case is untenable. That's that's just one example that's really current. It's coming. It's going to get worse in the near term before it gets better. I get three big things out of that that are inconveniences to everyday people where but definitely point them to caring about this stuff.

00;07;37;26 - 00;08;06;02
Unknown
You know, whether it's inconvenience at the airport, inconvenience at the pump or their lights turning off. And Gary is such an extreme example. Like we went through a few freezes since then and, you know, a lot of the power of the people's power going out was fraction of that. And even in other countries, even, first of all, countries, they deal with outages more often, you know, a few hours in and out, whatever that we take for granted here in the US.

00;08;06;05 - 00;08;32;02
Unknown
But what about those small things? You know, let's let's step back and unpack all this, you know, from, you know, you're going to be saying a barrel a day, you know, ten, 20, a million, a trillion, whatever. Let's maybe, let's do that whole land man spiel where, you know, everything's made out of crude oil and let's let's scale it in a, in a way to, like, really understand as we continue to scavenge, not everything, but virtually everything.

00;08;32;02 - 00;09;08;05
Unknown
Right? So a barrel of crude oil and there really is no to typical barrel of crude, but let's, I guess, suspend reality and talk about the typical barrel of crude oil. Over 6000 products are derived ultimately from a barrel of crude. You think about the primary things that come out of a refinery through its various process units. You've got gasoline, you've got diesel, you've got jet fuel, you have something called rosin, which you're as you're moving down the barrel, you're getting heavier.

00;09;08;12 - 00;09;55;27
Unknown
So ultimately you're cooking the bottom of the barrel and producing things like asphalt that you see on the roads is retarded. Short for residual. Yes. Residual fuel. And a lot of that is used and marine transportation. Right. So those, those engines, the those engines burn or the generators burn residual fuel. And in the winter in the northeast, for example, where you have constrictions on natural gas, because we don't have sufficient pipeline capacity into the northeast, despite having a prolific gas field defined as the Marcellus, about 300 miles from Boston, you got to make a decision when the call on natural gas is.

00;09;55;29 - 00;10;42;05
Unknown
I got to heat grandma's home. I got to take it away from the gas fired power generator. So I got to have something else to replace that generation fuel heating oil. A lot of times, yes. So if you've looked at what has happened in New England, I think 2018 was the the big the big cold snap. They had one again this last winter where out of all the generation sources in the New England power stack at the peak, at the coldest and the highest demand, oil was generating almost 40% of electricity in that in that grid, which is pretty stunning when you think about the fact that, okay, here's much more efficient and certainly

00;10;42;05 - 00;11;20;25
Unknown
cleaner burning fuel and natural gas sitting 300 miles to the south of Boston and in fact, Boston is. Unique in, kind of the LNG complex in the US, which is mostly export, meaning we pipe pipeline gas to the Gulf Coast, we refrigerate it, put it on ships and export it. Well, the terminal Everett in in Massachusetts is actually bringing gas in from places like Trinidad to then be used by consumers in Massachusetts, for example.

00;11;20;27 - 00;12;17;26
Unknown
And I think, as everybody is maybe aware or should know, the US is the largest producer of natural gas and the largest LNG exporter as well. We reached recently, I think, 109 BCF a day, which is a tremendous number, and it continues to grow and we continue to grow our LNG export volumes. But what what's important and all that is that the, the dependencies for not only primary energy and power that both at a personal residential level, but also to an industrial level in terms of the dependency on the hydrocarbon crude oil and natural gas and all the derivative products through, you know, petrochemical processes, making plastics, for example, the, the high degree

00;12;17;26 - 00;13;02;11
Unknown
of dependency and the embed of petroleum, our ours is ours is in the world's is a petroleum based system. And so when there is a physical disruption and you start to notice things like gasoline going from, you know, closer to $2 a gallon here in the Houston area to I don't know where the spike was, I've been spending a lot of time out in the desert southwest, and it's it's kind of a mini California in terms of being a, an island with not a lot of of, of product transport capability in the form of pipelines, you know, north of $5 recently a gallon in Arizona, whereas California's even higher.

00;13;02;13 - 00;13;34;24
Unknown
And so you don't you don't notice until, you know, some change or some pain point in your in your daily life as a consumer. And we've talked about it, look. It's a little tone deaf to make the argument that, you know, gasoline prices 20 years ago in 2006, if you adjusted those for inflation, would be higher. Ex you know, recent spikes due to the war would be higher than normalized prices that we're seeing today.

00;13;34;27 - 00;14;07;10
Unknown
Right. And regardless of whether that over generational time spans has become less and less impactful on your disposable income, it's something you see every day. It's something you experience at least weekly. If you're a heavy driver, you're filling up your tank. Now you notice that relative to 3 or 4 months ago, depending on the vehicle and the tank size, it's costing you 20 to $30 more per fill up because of what has happened in terms of product pricing, namely gasoline.

00;14;07;12 - 00;14;31;29
Unknown
A big takeaway from all of that is the, the irony of just how the infrastructure works here. Like, for example, what you're saying in Massachusetts, in Trinidad, I've heard this. It's a paradox, throughout the whole world. Australia is another example of how they have the supply of gas or oil, any kind of hydrocarbon. And they don't they don't feed it to themselves.

00;14;31;29 - 00;14;59;06
Unknown
They take it from somewhere else because they leave it in the ground. That too. So we made mention of the fact and we're talking about, you know, as a as a related looming kind of physical shortage crisis. Australia is unique in terms of its Australia uses generally just overall about a million barrels a day. By comparison, the US is 20 plus million barrels a day.

00;14;59;09 - 00;15;25;07
Unknown
Total oil consumption of that million barrels a day. Australia's refining capacity, its domestic refining capacity. And remember, Australia is an island, so to get anything there from anywhere else is a long boat ride. Even if you're in Southeast Asia. Just go look at the globe. And I'm always taken aback at the distances. So there are long travel distances and so on that million barrels a day.

00;15;25;09 - 00;16;03;19
Unknown
Australia's domestic refining capacity is diminished to 200,000 barrels a day, and it's probably going lower. And this this is a result of kind of a long, you know, path that a lot of Western countries set forth on. You know, really starting 2015 with the Paris Agreement and transitioning their energy systems away from hydrocarbons and fossil fuels. And so the consequences of that are you've not you've not had that perfect, perfectly synchronized substitution.

00;16;03;21 - 00;16;30;13
Unknown
And there are a lot of things where, you know, alternatives and renewables can't do the core industrial work that hydrocarbons and fossil fuels more broadly can do. And there are a lot of kind of technical and physical and scientific reasons for that. And one more thing, before we move on, we're naming all these commodities and, the products that we make out of them a big thing.

00;16;30;13 - 00;16;56;21
Unknown
I feel like, no one really talks about, and I certainly haven't on this podcast, is what crew has to do with the pharmaceutical industry and how I mean, obviously that's a that's a big that's a big component, right? Yeah. It's you know, I don't know what the precise proportion is, but it's they the vast majority of pharmaceuticals today have some hydrocarbon derivative component.

00;16;56;24 - 00;17;25;10
Unknown
So it's pretty important stuff. Yeah. For a pretty important part of a critically important consumer product. You know, if not outright health and well-being. Segment or sub segment of the economy or in the markets. Yeah. It's crazy. So in that, in the words of land, man, every damn thing right. Maybe a little more strongly, used adjective there, but yeah, I'll I'll take that one.

00;17;25;12 - 00;17;45;01
Unknown
I'm just trying to avoid copyright. Yeah. So let's transition into something you said earlier about, you know, people being smarter about this stuff or ignorant. Right. So I actually have a comment, based off a clip that's probably from BD, if I'm being honest. One of our clips, the person said, in oil and gas, they forget the public is smarter than they think.

00;17;45;01 - 00;18;09;02
Unknown
They just haven't been told. And, you know, there's this whole notion I would love to talk about with, you know, people just need to be more curious. Like, like I said, they're only paying attention when these world events are happening. But energy is everything. It's huge and it's inherently interesting. And, you know, people should be more curious. And I don't know if what's going on there.

00;18;09;02 - 00;18;37;28
Unknown
Like, do we blame the schools not teaching us, or is there not enough representation? Is it too negative? You know, like what is going on? I you know, like I think because it has been at least for, you know, a broad swath of American society, you've more or less been able to take it for granted. It's just kind of there in the background and it's reliable.

00;18;37;28 - 00;19;17;08
Unknown
It's available, it's affordable. And then when it starts to become not one of those things is when it directly impacts you, either at a professional level or more. I think more fundamentally, at a personal level. And a lot of that is along the lines of affordability. Now we get into, you know, true, true crisis events like Uri. Then there are personal well being from, you know, in the extreme of life and death standpoint and your you become acutely aware of the critical importance of energy and power.

00;19;17;14 - 00;19;40;06
Unknown
And so that being a motivation or a catalyst to wanting to know more and to learn more, I think is, you know, hopefully some of that we don't need to go through these extremely painful periods, hopefully that people are just getting wanting to get more curious and doing their own work and research and understanding how this business works.

00;19;40;09 - 00;20;33;11
Unknown
But there's a whole overlay and the loudest voices in traditional media and social media and certainly in government, which all come at every issue from a deeply biased and tilted angle of of whatever the political narrative in affiliation is. And that's unfortunately had some pretty far reaching consequences. If you look, for example, at what's happened in Western Europe since since Paris, and we can get into the whole IEA thing and flip flopping messages and not doing some things to, make make energy security better, resilience of the energy systems better, the reliability better.

00;20;33;13 - 00;21;09;00
Unknown
Subordinating everything to really a political objective of things like net zero and climate when, you know. One of my favorite Substack, publishers has said, you know, in the in the battle between, platitudes and physics, physics ultimately wins. And that's never more true, an energy and one. One thing I want to reinforce, and I've said this for a long time, is, you know, I, I've, I've been very explicit in saying don't don't conflate ignorance with stupidity.

00;21;09;02 - 00;21;39;00
Unknown
Ignorance means that you just haven't learned about it doesn't mean you don't have the capacity to learn about it. And we're biased. We think, you know, we we're passionate about this industry. We get excited about it. We realize how just ever present it is in everything that we do in daily life and importantly, how complex, hazardous, what you know, what the risks are involved in this industry.

00;21;39;02 - 00;22;10;25
Unknown
Yet it's, you know, it's politically popular to beat on the industry when we have things like these, these volatile price periods where you see the price of gasoline go up by a buck or two a gallon seemingly overnight. And then there's, I think all kinds of misguided insight or misinformation, whether intentional or not. And I would think in the case of most most of the political class, it is intentional.

00;22;10;27 - 00;22;48;19
Unknown
One case in point is, you know, the, Secretary of Energy, Chris Wright, was out in an interview last week, and basically it was was conveying the notion that these elevated gasoline prices may persist into 2027. What part of 2027 I don't know, I don't know the precise kind of micro context of that, that discussion that was followed immediately by, an official statement, whether it was true social or some, some white House social media account, basically saying, I totally disagree.

00;22;48;21 - 00;23;24;21
Unknown
And then the Treasury secretary was out, in recent comments saying, well, we we think gasoline prices are going to very quickly return to pre-war kind of normal levels, if not lower. Well, if you look at all the dynamics, particularly on the physical side of what's going on and how much hasn't been produced, the logistical system of getting crude and products where they need to go, and the damage that's been done to producing and processing facilities.

00;23;24;24 - 00;23;48;17
Unknown
And perhaps I've seen some, some comment on that, you know, Iran having to shut in. Actually it's it failed production. Is there going to be damage to the to the producing reservoirs? We don't know that. But it's not it's not a flip of the switch. You know, all the backed up ship traffic is through the strait and at its destination, assessing the damage.

00;23;48;19 - 00;24;19;27
Unknown
You know, good example is, you know, there was some bombing of an of the Qatari, LNG facilities. And so that effectively damaged their 20% of world LNG and about 17%, cited by the Qataris was extensively damaged to the tune of needing somewhere between 2 to 3, maybe even as much as five years of restoration and repair.

00;24;19;29 - 00;25;12;13
Unknown
So there is a there is some physical damage to the producing and processing capability. The first order one, the biggest one is the bottleneck of all the crude and products. That's just that's just, you know, at gridlock behind the blockades and the closure of the Strait and having to scramble to, you know, in the case of California, for example, California is pretty heavily, import dependent just because their state level production has very precipitously decline because of their, you know, their, their policy, path that they followed over the last 2 or 3 decades, has been dis incentivizing not only production in the state, but also refining and, their biggest the biggest

00;25;12;13 - 00;25;43;17
Unknown
slice of California imported crude oil is from Iraq. Well, all of that crude oil is backed up by the blockades and they can't get it. So now there's this arcane, piece of there's this arcane law from the 20 is called the Jones Act. You'll hear something about that. That was, originally there was a 60 day Jones Act waiver I saw just before we started that Trump has authorized another, I think, 90 day extension.

00;25;43;17 - 00;26;16;05
Unknown
What does that mean? Well, the Jones Act was a protectionist piece of legislation that said that any vessel transporting between US ports, whether they're inland or seaborne, had to be U.S built, US crude and US flagged. And so if you know anything about what's happened to the kind of the atrophy of the shipbuilding industry in this country over the last 50 years, it's pretty stunning.

00;26;16;07 - 00;26;48;03
Unknown
China produces about 350 ships to our one. So a lot of our, you know, a lot of our, a lot of our capacity is now built elsewhere. So the waiver allows foreign flagged, foreign constructed tankers in this case to, for example, fill up in the Gulf Coast, go through the canal and deliver to California, which under the Jones Act wouldn't be allowable.

00;26;48;06 - 00;27;18;15
Unknown
So if you want to have a, a really expansive episode of the Jones Act, you need to have Chuck on. That's. I think you're here. He did one. Yeah. So we are not a fan of the Jones act. It it diminishes us, outdated. It diminishes our collaboration with other countries who can help in certain moments. The I mean, when I was on the Valdez spill, for example, which was a crisis situation, and we're going through cleanup and so we're trying to skim oil off the water.

00;27;18;17 - 00;27;48;29
Unknown
There were very the most effective technology for the skimming was a French made skimmer, self-propelled skimmer called a, magma pole. I just remember the name. I think I recall we had to get some kind of Jones Act exception because we were actually in pulls off the coastlines up there in Prince William Sound. We're skimming the oil off the water, but we were transporting it and depositing it somewhere else within the US.

00;27;49;01 - 00;28;16;11
Unknown
And so that technically was covered by the Jones Act. Well, these vessels were not, you know, they were not they did not conform to the specifications dictated by the Jones Act. So there's there's kind of a weird little tangent, some loopholes. The first time I ever heard about the Jones Act. Wow. But yeah. So it's it's, This is a real awareness and teaching moment.

00;28;16;14 - 00;28;46;10
Unknown
You and I both know that this industry is endlessly fascinating. And if you know, if people are kind of intrinsically motivated to solve challenging problems, it's harder to find an industry in an area of scientific study, technical study that is more challenging and thus more rewarding for solving those problems for people that have that, that kind of career and professional motivation.

00;28;46;12 - 00;29;18;21
Unknown
Yeah. Let me get your take on that. Because here collide, we have two types of people. We have people from the industry which we like to call domain expertise. And then we have super smart tech, nerdy people who are here down to clown, ready to solve challenges. And there's this, there's this wonderful trade of advanced advancements in tech and everything we've accomplished where oil and gas invented something to drill, you know, tens of thousands of feet into super hot rock.

00;29;18;23 - 00;29;49;26
Unknown
And we gave that to other industries, whether it's something as easy to understand as geothermal or something completely unrelated to energy. And there's always the reverse of that, right from the tech being adopted in oil and gas that started from something unrelated. And, you know, you you just visited Arizona State, with our gang, and you kind of got to see firsthand this, the younger generation being, intrigued by this and this is kind of the positive side of everything we've just covered in the last 20 minutes.

00;29;49;26 - 00;30;12;16
Unknown
Like, they're there, there's these archaic laws and these people and these governments and these contradictions. But at the on the other side of that, there's still a lot of hope, a lot of people who are super curious and ready to solve these issues every day. Well, I'll make one slight modification. I was not there, but I heard a pretty significant download yesterday and saw some of the work product.

00;30;12;18 - 00;30;54;15
Unknown
And so you basically have a group of. College kids at Arizona State who are fundamentally not convert even conversant in the energy industry and with very little framing and foundational setting, immediately took up the challenge in this hackathon to, you know, present a problem solution. I saw one it was basically, natural gas fired data center problem.

00;30;54;18 - 00;31;29;03
Unknown
Okay. And it really was a, a nifty way to to solve the problem of optimizing with respect, with respect to power costs. So there were periods in the span of 24 hours, or in this case, the time slice was 72 hours, which, because of the demand and pricing profile on the grid power, you should be running that data center off the grid.

00;31;29;05 - 00;31;51;20
Unknown
Whereas when the grid was stressed or at maximum capacity, highest demand, highest pricing, that's when you ought to flip on your on site natural gas generation and with really no foundation or context and understanding or with any kind of depth, having just been presented with this problem.

00;31;51;23 - 00;32;19;00
Unknown
It implies to me, just because of sophistication, of what I was looking at as the final presented project solution. And again, this was in a very compressed period, defined as a 24 hour hackathon, that there was a lot of what based on my kind of two plus decades of being in the research business, meaning equity research. But the kind of research analysts are all the same there.

00;32;19;03 - 00;33;13;02
Unknown
There's, There's a discipline, there's a motivation, there's a curiosity that is that comes from within. And so what I believe is that these teams, these energy uninitiated folks in a very turbocharged way, locked in and bootstrapped their way to a useful level of understanding of the context of energy that they were talking about in these projects and then were able to to bring kind of their professional grade skills as, become the best among the technology players I engineers, or I'm not sure what the precise mix of, of capabilities were, and I know I engineer has a broad a broad definition today or can fit a lot of things.

00;33;13;05 - 00;33;43;08
Unknown
It was pretty impressive to see. But it it said, based upon what they were given as a problem statement and some framing basics, they had to go learn a lot more on their own to be able to come up with this final solution in a very short period of time, and getting really creative around doing that and looking for, I think I heard described where, you know, they'd kind of run out of tokens and they were kind of.

00;33;43;10 - 00;34;34;05
Unknown
Fill in the gaps by finding some kind of free model solutions. And so the under a very budget, budget constrained situation in a world where compute cost a lot right there, making it happen and being resourceful and finding a way, which is the same kind of resourcefulness that they applied to. I got to learn a lot about this unfamiliar territory to as energy as quickly as I can, and then again, connecting that with a a pretty incredible, incredible solution to to the problem challenge that that's very encouraging is so it goes all the way back to, you know, there's plenty of intelligence among society and the general public and the populace and more importantly, the

00;34;34;05 - 00;35;00;25
Unknown
electorate to know a lot more and be a lot more thoughtful and curious about the way the energy system works and the way the US energy industry works. So did they solve it that day? They did they solve the energy problem? We don't even have a national energy policy, even though we we've had several administrations purport to have one.

00;35;00;27 - 00;35;22;06
Unknown
It's been a, a long running deficiency and, and, in the energy landscape and that's, you know, that's getting aggravated by the political yo yoing that we're seeing over the past several election cycles. Not to get too political here, but I do think it, it, it has a meaningful influence on the progress we make or don't make.

00;35;22;09 - 00;35;46;16
Unknown
No, that's let's stay political because on that question, I, I have, I have what I think will be my first actual dumb question. I remember when Trump was getting elected back in 2016, I'm very much against it. But my first one of my positive spins on it was, well, he's a businessman. He'll run the country like a business.

00;35;46;16 - 00;36;16;26
Unknown
Right? And years have passed. And that I thought, is deteriorated into something else. But Chris Wright kind of brought that feeling back where he became our energy secretary. And he comes from Liberty, which is the company behind building some of the most advanced rigs behind all the operations around the world. Fracture simulation. Right. That's their core. Okay. So and they're a big market player, I think a couple of years ago I read and this may have changed.

00;36;16;26 - 00;36;50;05
Unknown
I think they in North America. So mostly U.S. and in Canada, we don't have much going on south of the border for a lot of reasons. I know Liberty was involved. I believe in 20% of all completions in North America, right where we are, you know, the biggest producer. So and I met Chris years ago, when we used to have CEOs come in for or kind of a lunch fireside at TPG.

00;36;50;08 - 00;37;19;25
Unknown
My first, you know, real interaction or direct in person, kind of listening to how he thinks and, you know, I think he's probably the most intelligent cabinet secretary, certainly the most intelligent energy secretary we've ever had. Yeah. And and he does know how this business operates. Exactly. So getting just wrapping up that thought, you know, a couple of years later, you know, I feel like he's still been a good pick and stuff like that.

00;37;19;27 - 00;37;49;08
Unknown
But maybe if we, if we put it in a scenario like you're talking to 2016, Jacob, who knows nothing about energy, has not met Colin, the founder co founder of this company. And it's just very liberal minded, you know, what can you tell him to, not worry about or worry about the next ten years he's about to witness with a Donald Trump in office and people behind him, who are at least you see nicely like Chris.

00;37;49;08 - 00;38;50;21
Unknown
Right? What? You know, what's going to go right, what's going to go wrong and what's, a reverse scenario that should have happened if everything went perfectly? Yeah. I think, I think a lot of it was the prevailing political narrative. And I'll, I'll keep it as close to the energy question and as I can. And I do believe that there was such an overwhelming onslaught of coming out of Paris and, the conference on the party of the cop climate, annual gatherings that were creating what more impressionable young people and soon to be or just becoming voters and part of the electorate, that this whole revolutionary speed transition was both a function of

00;38;50;21 - 00;39;18;14
Unknown
of averting an existential existential crisis and practically doable. And so we cast the industry, the traditional industry in negative kind of a negative light I've not seen before. You know, we've we've gone through periods where Congress is hauling oil and gas, executives in front of Congress from gas prices spike, and they have these show hearings and, you know, they get their pound of flesh.

00;39;18;16 - 00;40;04;16
Unknown
We had windfall profits, tax threat brought back up. And we've talked a lot about that. But I think. I would tell the 2016 Jacob to do your own work. There's plenty of information and learning about how the world's physical system, energy systems work and it it, you know, it starts to diverge from realistically doable. You know, we're Kamala was on the campaign trail in 2020 or, you know, 2020.

00;40;04;18 - 00;40;46;26
Unknown
Talking about we're going to eliminate fracking. Well, what if we had done that? What what are the consequences of that? And just just to appreciate the nonsensical nature of that from a fundamental kind of standard of living quality of life, industrial security and capacity standpoint? How nonsensical that is. Because a lot of, you know, the younger generation were influenced by rhetoric that was so detached from kind of the physical reality of the way the world works.

00;40;46;28 - 00;41;10;23
Unknown
You know, at that time, you may have believed or generically, someone who was who was oriented that way would believe that we're going to be at 80% less oil demand and consumption and emissions as a result are going to come down in 5 to 10 years. It's just are just not practically doable. Yeah, it was a pipe dream.

00;41;10;23 - 00;41;36;23
Unknown
And I think it goes all the way back to, you know, the activists who are, you know, posting from their phones, which are very hydrocarbon dependent too, you know, the travel that they're doing to go to whatever protest or disruptions are, I think, fundamentally hypocritical because they're using jet fuel to get there. They're using marine transportation fuels to get there.

00;41;36;26 - 00;42;32;10
Unknown
They're, you know, in high tech performance gear and in weather, weather resistant clothing and all those things. So start taking those comforts away that are absolutely not possible without hydrocarbons. And so vilifying hydrocarbons the way kind of the wave of of the political narrative coming that got accelerated at Paris and ran through, I would say, 2022 when net zero was driving the bus, I would say, be aware of the of the actual kind of energy system damage that it can do, which has a direct impact on you as, as a young adult as you're progressing to that that stage of life is that does that make sense?

00;42;32;13 - 00;42;56;08
Unknown
Yeah. I don't know if I would listen back then, though. I've often said that in listening to, members of Congress on both sides of the aisle opine on, particularly energy matters and the well and gas industry in particular, or just even more broadly, things in the industrial kind of scientific technical realm that just are inherently that way.

00;42;56;08 - 00;43;27;27
Unknown
Nuclear power and net zero and all these things. I think it ought to be a the criterion that in order to be able to run for office in Congress, that you have to provide proof that you passed your high school level physics course and you can't be above 80 years old. Well, I that goes without saying. But in all seriousness, there are not enough in in a in a vast array of issues, policy related.

00;43;27;29 - 00;43;49;23
Unknown
There are not enough there's not enough kind of equivalent level, decision authority and power at the table when decisions are made that have the technical and scientific grounding that is necessary. You just can't you can't ignore those things. You know,

00;43;49;25 - 00;44;20;08
Unknown
You believe that we're going to we're going to carpet the landscape with wind turbines and solar panels and get rid of everything in the extreme. You know, fossil fossil fuel consumption goes to zero. Well, a lot of manufacturing and refining processes that are in that supply chain that absolutely require the the things that only hydrocarbons and fossil fuels can do.

00;44;20;10 - 00;44;57;04
Unknown
Right, that yeah, we can displace some segment of gasoline consumption with electric vehicles. But what do you need to build both the batteries and the vehicle itself? All of those things, it's all interconnected. I, I've said in the distant past, you know, I wish we could depoliticize the whole discussion, make it not about climate, but let's all focus on an area that I think we can all agree on, which is nobody likes pollution, and there's no such thing in my mind is clean versus dirty energy.

00;44;57;07 - 00;45;22;14
Unknown
It's all trade offs. Everything is a trade off. There are obviously positive attributes on the side of the ledger. All the things we've talked about with the vast array of products that are derived from the hydrocarbon that we enjoy and make our lives better every day. But there's also the consequences. There's emissions. There's, you know, there's waste disposal, there's all those things.

00;45;22;17 - 00;45;48;23
Unknown
But then with renewables, particularly solar panels and wind turbine blades, you've got you've got landfill issues, you've got, national security issues where now your energy supply chain unlike and oil and gas, where we have become a net exporter of products. So we have a lot of energy dominance and security. Not for kind of closed, closed environment, energy independence.

00;45;48;23 - 00;46;03;04
Unknown
That's that's misleading. But now the supply chain for things like wind and solar and batteries are so heavily dependent upon namely China. So you've traded off.

00;46;03;06 - 00;46;28;10
Unknown
The notion the perception of clean for by ceding a large portion of your critical energy security supply chain to inherently an adversary. And our biggest one. Yeah. And it it all it all ties into, one of my last points I wanted to bring up about, you know, net zero. You brought up Paris. You know, it all.

00;46;28;10 - 00;46;54;28
Unknown
It all rings a bell for your your three favorite letters. You know, there's all these organizations around the world, that, you know, I guess their purpose is to collect these stats and share them and help research and help build what's best for the future and stuff like that. You know, whether it's and I hear all these acronyms all the time, IEA, OPEC in your favor, like I mentioned, IEA, you know what, I hear these acronyms all the time.

00;46;55;05 - 00;47;15;03
Unknown
I hear I hear lots of acronyms being in this building. But, what what are these organizations? What what are why are they such a big deal? You know, I see them as, like, the UN for energy or like, just these big, like, collaborative, national, worldwide organizations. What are some of these big ones? What are they doing and which ones are not?

00;47;15;03 - 00;48;09;04
Unknown
Well, doing OPEC is very different from the IEA in the EIA. OPEC is an actual producer nation cartel. Right. And they attempt to manage the market and pricing through impose quotas on their member countries. Saudi being the dominant player among the OPEC member countries OPEC pre shale was a lot more in focus in terms of how global markets were, what the supply demand balance was, and, and related to that pricing, although they've had significant influence in the last five, ten years, too, through moments in time where OPEC has surprised the market with and in periods of falling prices, like in 2014, Thanksgiving of 2014, they came out and put a bunch of barrels back

00;48;09;04 - 00;48;41;28
Unknown
on the market and prices collapsed and the same thing happened in 2020, exacerbated by the Covid, demand contraction. And so we actually saw futures prices go negative to the tune of $37 a barrel. Never seen that before. But let's focus on the IEA. These are. These are really IEA and EIA. I is a adjunct of the Department of Energy as US only.

00;48;42;02 - 00;49;10;21
Unknown
It's us online. But they they comment and analyze on things globally as well. But they're doing things like the weekly Petroleum status report. They have nice graphs. The 914 report, you know, they have the most robust and dense data set on and a lot of a lot of private, players rely on the IEA data. And so it's the official petroleum status report.

00;49;10;21 - 00;49;40;19
Unknown
So you see inventory reports for crude refined products. The Strategic Petroleum Reserve weekly and markets move on. What happens week to week with with those inventory changes and levels. The IEA is a is is similar in nature in that its foundation is data and analysis on all things energy. The IEA was created by, you know, a group of now G30.

00;49;40;19 - 00;50;16;18
Unknown
It's there's not strictly just all the G30 and the IEA, but Western countries who were very severely impacted by the Arab oil embargo of 1973. And the result shocked. And so it it brought to kind of front of mind both politically and from health. You know, societies and governments were concerned when you actually have a physical disruption. We're seeing something even unprecedented today relative to what happened in in the early mid 70s.

00;50;16;20 - 00;50;47;16
Unknown
So the IEA was put together and funded by its member, countries to provide the best, data and information on global energy matters and also the best analysis and objective policy guidance to their member countries, governments. And that has been the foundation of the IEA in its 50 plus years of existence. That came into being in 1974.

00;50;47;18 - 00;51;34;10
Unknown
What has happened in the last 10 or 15 years is that the leadership and from an editorial perspective, they have taken extreme license with moving from objectivity and data grounded analysis to a preference for advocacy that aligned with Paris in the path to net zero, in my opinion, is and that one unchecked until very recently. So in in May of 2021, the infamous report that was published by the IEA, it was called net zero by 2050.

00;51;34;13 - 00;52;16;22
Unknown
And it basically said that we can stop all future exploration and development for oil and gas, because in our these these were not. These were not you know, they have a bit of an out. These are scenarios. But they were driven by kind of the emissions forcing paths dictated by Paris net zero. The IPCC, which is the International Panel on Climate Change that reports out every think 5 to 7 years on kind of where we are as, as a globe and then present several scenarios.

00;52;16;22 - 00;53;03;25
Unknown
But back to the net zero by 2050 report that motivated, I think, a kind of a watershed response from OPEC in particular. That's, in fact, I think they called it La La Land. And so what we've seen is, you know, the IEA digging in its heels from 2020 to 2024. So a five year period where they they had the political cover to continue on this, this advocacy path, which was not helping governments, countries and just the average citizen understand the reality of what was going on.

00;53;03;25 - 00;53;57;18
Unknown
And you look at what has happened in in the immediate aftermath and the kind of one two punch, Russia, Ukraine and the, the winter energy crisis that Europe went through. Then and how they've decommissioned things like even nuclear power plants. You know, the UK has been on a, on a very similar path to what Germany has been on, and there has been a real deindustrialization trend over the past decade in the UK and and Germany in particular, because, you know, those were industrial powerhouses, not only of Europe, for the world that now have become uncompetitive because energy input and power cost have so dramatically increased, because you've taken out things like dispatchable power

00;53;57;18 - 00;54;20;24
Unknown
or coal fired power generation or natural gas fired generation and replaced it with intermittency, which, as you know, you can argue all day long that on a what what likes to get, people like to cite about renewables is levelized cost of energy. Well, that's not the total cost in terms of backup. And all the transmission capital that you need to spend.

00;54;20;26 - 00;54;48;24
Unknown
And so what we know here in the US or in the West is retail consumers of power. We know we know our power bills have gone up substantially in the last 5 to 10 years. And it's more extreme in some places like California and Germany and the UK, less so in places like Texas. But the IEA was off on this path of advocacy that started to diminish, I think, unfairly so.

00;54;48;24 - 00;55;14;20
Unknown
Its credibility as really the platinum standard of the best energy data and analysis in the world. And there was a lot of reliance on that. I had a long career in the equity markets where, you know, we were looking at the data in the commentary presented in the monthly oil market report for supply demand signals and breaking it down into key producing countries.

00;55;14;22 - 00;55;41;29
Unknown
What's going on with demand in these subsegments and all these things. And so sticking with that kind of core mission, which I think the objective truth of what the data tells you in your analysis serves policymakers much better than, okay. We've already decided on what the answer is. We're going to go down this net zero path that's, you know, been kind of ill formed, and there's a lot of detachment from what's physically possible and feasible.

00;55;42;01 - 00;56;10;09
Unknown
Yet we're going to go ahead and take those destructive steps and cut significant parts of our energy system, like, the UK and Germany have done. And now we're, we're we were talking about it earlier Europe today you're the EU. Plus the UK is about a, 37 a joule annual consumer of energy. Do you know how much that's that's everything.

00;56;10;12 - 00;56;36;16
Unknown
Do you know how much they produce themselves versus import? Let's say a 30th of that close. They produce five. So there's about a 32 exit your gap so that that has become an import dependent on all forms of, of energy and power.

00;56;36;19 - 00;57;16;26
Unknown
And how that can, can ultimately cost more is beyond me. We're paying you know, right now. Houston ship channel, delivered natural gas is $2.67 and a MMBtu to that pre-war equivalent. And Europe and the UK and Japan, for example, was multiples of that. Call it 9 to 11. Japan in the UK are going to see, equivalent natural gas prices north of $20 in MMBtu sometime this month if they're not already seeing it.

00;57;16;28 - 00;57;23;09
Unknown
So, you know, this this,

00;57;23;12 - 00;57;48;27
Unknown
It even it even infected, this misguided path even, in fact, did meaningful players like BP, which is used to be one of the considered one of the large super majors, they're now they're now in terms of market capitalization, smaller and ConocoPhillips, which still gives me pause today because that's that just doesn't seem natural in the long history that I have covering the sector from a stock perspective.

00;57;48;27 - 00;58;21;25
Unknown
But anyway, BP back in 20. Bernard Looney back in 2021, I believe they committed to a big pivot to alternatives. We're going to we're going to contract. We're going to diminish our oil production deliberately over a five year period by 40%. Well, that's the core of the business. That's the core economic engine of the business. And so subsequent to that, there's been a lot of upheaval.

00;58;21;25 - 00;58;49;01
Unknown
He left under scandal. They had another successor replace and shell and BP, which were more beholden to larger stakeholder groups in Europe, meaning you better get on these net zero kind of plans. These portfolio transitions, where as the US companies, you know, don't have those types of of hurdles and obstacles. Yeah, there's there's activism and all that.

00;58;49;03 - 00;59;15;28
Unknown
But BP you know, has since pivoted hard back to saying we're about producing oil and gas. This is this is what we do. Well, this is our future. Yeah. There's a lot of damage that has been done to the enterprise in, you know, the least of which is the underperformance of the stock. Five plus billion and in write downs related to kind of ill advised renewables investments that were done.

00;59;15;28 - 00;59;44;16
Unknown
It way to higher speed than, you know, kind of thoughtful investment decision and portfolio allocation would have, would have suggested. So it wasn't just the rhetoric, it was the cover that the rhetoric in the narrative provided that caused a lot of actual damage in terms of dismantling and reducing reliable capacity in some key areas, particularly in the West.

00;59;44;18 - 01;00;12;25
Unknown
And so the IEA was, I think, culpable in that because they're so-called, policy analysis that was heavily tilted toward net zero advocacy caused and gave governments cover and politicians cover to go ahead and do these things. And ultimately, it's the, you know, the trillions of dollars that were readily and willingly allocated at at the expense of taxpayers.

01;00;12;27 - 01;00;38;07
Unknown
I just don't understand how, like, what's going to happen in 2050 when like they're like, not even close to their promise. And like, all these countries signed on promising something and it's not they're not a single country is going to have that promise capped. And what's going to happen? There's no responsibilities. There's no actions, there's no they're going to say sorry and move on and come up with the new year.

01;00;38;07 - 01;01;12;07
Unknown
Like, I don't understand the responsibility of the scope of this entire Paris Agreement. Like, why do they think that was right? And it sounds like they base it off of nothing. The data, they skewed the data. It's politically expedient in the models. You know, for example, we this is maybe too tedious, but it's worth mentioning. The EPA, just issued a rescission order for the 2009 endangerment finding, which classified CO2 as a pollutant under the Clean Air Act.

01;01;12;07 - 01;01;46;10
Unknown
That's a big deal, because between 2000 and 9 and this year, we spent the auto industry in particular, we spent over $1 trillion as an economy and as a society to comply with this classification of CO2 as a pollute. And there's there's a legal basis for that rescission, which says, you know, climate is a global issue. The clean air, involves pollution, local and regional issues within the US.

01;01;46;10 - 01;02;34;06
Unknown
And so the, the mismatch of the scope, between global and conveniently characterizing or including CO2 and on the basis of climate change was not legally defensible. But there's also a scientific basis for it, which was a secondary rationale, which said based on the IPCC and modeling that was prevalent at the time, starting in about mid second term of the Bush administration, last Bush administration that the models were predicting warming and emissions, that as you move forward, the the the, the, the, the outcomes didn't match what the modeling was predicting.

01;02;34;06 - 01;03;02;16
Unknown
So it was flawed. It was a flawed basis scientifically, that the impacts were going to be as extreme as the models predicted. The models were, were flawed themselves. And so, one of my favorite ones is, You know, actual emissions reduction. The U.S. has done a very good job over the last 20 years, namely because we've substituted natural gas for a lot of coal.

01;03;02;16 - 01;03;33;09
Unknown
We've we've reduced over a 20 year period. We reduced, greenhouse gas emissions, mostly CO2 by 20%. And that's been accompanied by a pretty significant rise in GDP. And emissions per capita have gone down. We've seen population grow in the last 20 years. I forget what the kind of 2006 was. We're at, what, 330 million people. But we've had a meaningful number of people added to the population in the United States.

01;03;33;11 - 01;04;14;04
Unknown
And so that is actual absolute emissions that have been reduced. Whereas taking the UK, the North Hampshire or the North Yorkshire coal fired facility, which is the largest coal fired electrical generation plant in the UK, converted from burning coal to burning wood pellets, which, wood pellets actually have higher actual CO2 emissions than coal does. But because those pellets were sourced from ostensibly renewable resources defined as trees that you can replant the accounting, the emissions accounting made those emissions accounted for as zero.

01;04;14;07 - 01;04;49;25
Unknown
Never mind the fact that a particularly in an old growth mature tree, the carbon sink capacity was not recaptured by replanting something to replace that old tree until 50 to 100 years down the road. But today we're counting those emissions that are higher inherently because wood pellets emit more CO2 than coal. We're accounting for those wood pellets emissions is zero one on an absolute basis, you've actually raised contemporary emissions, and then you're paying someone to plant that.

01;04;49;25 - 01;05;36;00
Unknown
You're using crude resources to do all the logistics, and you're using water, which is another scarce, commodity. So and, and until, you know, emissions are a global thing, they don't respect the climate is not respect, kind of sovereign political and governmental borders, nation, national borders, the the what's mostly been silent in the whole discussion is looking at the sheer scale, the rising level of greenhouse gas emissions from coal fired generation coming from principally China and secondarily India.

01;05;36;02 - 01;06;03;21
Unknown
But none of the neither of those have been kind of on the firing line in all this discussion. So your question about, you know, I think given somewhat of, an enthusiastic return to investing in traditional oil and gas sector that we've seen in the performance of the stocks and all those things, I think, you know, by and large, those companies aren't going to be held accountable come 2050.

01;06;03;21 - 01;06;32;21
Unknown
It's not it's not going to matter because we've been through this reality check of what it means to go without. Right, which is been no more evidenced by in certain parts of the world than what we're going through right now. That's how I think all the time. Like there's there's these countries like India, China, Nigeria, just these super dense hundreds of millions, billions that are just completely offsetting everything in the news and in newsletters.

01;06;32;21 - 01;06;59;07
Unknown
I read China's opening up coal fired plants like how like everything's existing and doesn't make any sense from promising net zero by 2050. These countries that are just doing the opposite effect. And then a little bit on the positive, for example, a state like Vermont, which you could say basically runs on 100% renewables, very highly, you know, they not just solar and wind, they have hydro and all these other things.

01;06;59;07 - 01;07;21;26
Unknown
And where do they get their hydro? Yeah. Except Canada. Yeah. Okay. And it's like, so in 2050, maybe a country or two will do what Vermont is doing on their scale. I mean, if Vermont is, I don't I think like a million people, and some of these European countries don't have that many. But yeah, it just it none of it adds up.

01;07;21;26 - 01;07;50;03
Unknown
And if it does, another country or a densely populated country or a third world country is completely offsetting it. And I, I feel no positivity or I don't see any light. Yeah. You should feel a tremendous amount of positivity. Let's trying to decide which is going to do things from an industrial and energy security standpoint that are best for China, I think.

01;07;50;11 - 01;08;20;08
Unknown
I think China has been more than happy to let us give us more rope to hang ourselves with on. Let's let's get the West captive to our renewable supply chain, because we manufacture most of the components for renewable energy machines anyway, so we'll get more dependent on things like as fundamental as rare earths to finished solar panels and, wind turbine blades.

01;08;20;11 - 01;08;54;03
Unknown
The other subset that is critically important, that has been largely ignored, ignored in this whole since Paris conversation and cop and net zero is the singular. It's the it's taking on almost a kind of a religious evangelical type of of of or, is the global South. So there are 2 billion people in the world that consume, on an annual basis, less electricity than your single refrigerator consumes.

01;08;54;05 - 01;09;34;13
Unknown
And so there are hundreds of millions of people who suffer, mostly women who suffer the acute respiratory life shortening consequences of cooking with things like dung and wood and poorly ventilated homes. And so those things are kind of front and center. And we built our, you know, our standard of living in the West and particularly in the US through the miracle of the hydrocarbon.

01;09;34;15 - 01;10;11;18
Unknown
It was absolutely critical and core to to what we've witnessed in every aspect of advancement in standard of living in the West and for us to now say and hold that global South to account for kind of bypassing what is really the only current scalable, affordable, reliable and sufficient adequacy to get to the next level. I mean, we need to solve for the human flourishing problem first.

01;10;11;18 - 01;10;46;04
Unknown
So there's a whole moral imperative to do that that hopefully continues to subordinate kind of the singular, religion of climate in favor of energy security and well-being. And, and continuing to move people out of both energy poverty and poverty in general. And what's central to that is what the hydrocarbon brings to the table, because it's proven we've we had a we had our time, we got we got all the benefits of that.

01;10;46;06 - 01;11;13;02
Unknown
So for us to now take on, you know, kind of the, the moral high ground and, and point at the global South. It's saying, you know, you guys have got got to quit burning coal. I can tell you India is going to continue to burn coal. In fact, they're increasing their their coal production capacity because economically and from a security and reliability standpoint, it's the thing that works.

01;11;13;02 - 01;11;49;18
Unknown
And it's the thing that's available. And what, what politicians know, what leaders of nations know is introducing. Less reliability, putting inflationary pressure on energy prices leads ultimately to, political unrest, populist uprisings and ultimately can get get you out of a job as a, as the president of a country. So I think every country, from a sovereign standpoint is is self-interested in its well-being.

01;11;49;18 - 01;12;09;00
Unknown
First. Yeah. I don't think that's more evident than anywhere in the global South. And they have a right to be that way. Good. Still not feeling positive. And to reflect on that, I did quickly pull up the slide. I saw, presented by BHL. I'll turn my laptop and show you and I'll pull it up on screen.

01;12;09;02 - 01;12;32;17
Unknown
They are presenting, a just in a panel at TCU last week at the symposium and brought up your, you know, cooking in home talking point. And there are some statistics here. If you want to read it off I'll show it. And he ate it. There are 2 billion people worldwide who cook with wood, dung or charcoal. That's one out of four on earth and four out of five.

01;12;32;17 - 01;13;01;11
Unknown
So 80% of people in Africa and indoor air pollution, which this is a measurable number. Indoor air pollution kills over 3 million people per year, more than malaria, TB, TB and Aids combined. Yeah, there's a few more, diseases. So cut off there. So in in kind of the, the. The rhetoric and the, you know, just the.

01;13;01;13 - 01;13;39;22
Unknown
The emotional outburst throughout this climate advocacy and protest period. You know, millions are going to die. That's that's a precisely quantifiable number. And caused a determination that lives are significantly shortened due to respiratory illnesses caused by, you know, think about it. You're living in in Africa and less than ideal circumstances. And the only source that you have to cut because your village isn't electrified, you don't have distributable natural gas.

01;13;39;22 - 01;14;12;00
Unknown
You certainly don't have, electric cooking equipment. And so you're burning whatever you can, which has a very detrimental emissions profile, particularly in a, in a, in an enclosed space and over a prolonged period of time, you know, that means people die in their 40s, not in their 80s. And that's, that's very real. So I would put a plug in for, reading the, Compendium of Liberty Energies Bettering Human Lives report that comes out every year.

01;14;12;03 - 01;14;38;25
Unknown
I think it's really the only useful sustainability report that's out there, because it does focus primarily, or it's grounded in the human human flourishing. And well-being, principle for, you know, all things energy. Well said. Well, let's wrap it up with, you know, why are you the way you are? Besides your decades of actual boots on the ground experience, how are you keeping up these days?

01;14;38;26 - 01;15;10;15
Unknown
As you seem to be somewhat retired, floating around the continental US with your family, you know, what are the what numbers you look at every day? The websites, the articles you read, you know, you talking about staying bias, you know, are you hopping up from CNN to Fox News and so on? No, I, I'll start with why I'm why am I the way I think I think I've always had research DNA and whether I did it professionally or just curious about things around me and wanted to learn more.

01;15;10;15 - 01;15;48;11
Unknown
And so I dedicated, you know, the majority of my life to this industry. And I'm just as curious and interested in learning about it, as I was when I got started. In fact, I'm first generation in my family to be in the oil and gas business. Which is a bit ironic since we have a long kind of lineage and, and South Texas, area and but I'm the first one, and it all started with small independent out of Corpus Christi, drilled few wells and my grandfather's ranch.

01;15;48;11 - 01;16;10;27
Unknown
So I got to experience that as a, you know, kind of a younger high school student was my first real awareness, and that set me on that path. But things I look at now are not all that different than, you know, when I was a practicing research analyst and needed to be at least aware of what the indicators were in the market.

01;16;10;29 - 01;16;33;12
Unknown
And if I see big moves. So the first things I look at are, you know, front month, WTI and Brant prices, which are all readily available, I no longer am able to feed my Bloomberg Pro subscription. I had to give that up that I've said that's the most ingenious addiction, particularly to, a financial professional or somebody in the oil and gas business.

01;16;33;12 - 01;16;56;20
Unknown
Bloomberg does way more than just so well, the gas industry. I look at that. I look at the major indices, whether they're ETFs or indexes for, you know, upstream, midstream oilfield services. So WTI is like the price of oil basically. Yeah. It's the futures contract for front month delivery or near month. And what's Brant same.

01;16;56;20 - 01;17;23;00
Unknown
It's it's you know, the UK North Sea. Brant. Pricing contract. And so you pay attention to this stuff. So when gas prices or airplane tickets are different in a month, you're not surprised. No. And but normally people are they're like, oh what's happening. And you and other people are whether you're private or a person online are like, yeah, it's going to happen.

01;17;23;00 - 01;17;56;11
Unknown
And here it comes. And don't freak out. I think what I continue to get, frustrated in some cases irritated by is the immediate kind of backlash about the industry price gouging and, you know, windfall profits and things like that. And we've talked about this on BD. So if you look at if you look at the last 15 years, so from 2010 to now or through 2025, if you look at net income margins.

01;17;56;11 - 01;18;27;08
Unknown
So how much after tax, net income did you make as a percentage of total revenue, those for the two biggest U.S. players and oil and gas, which are Chevron and Exxon, those average somewhere between 7% on the low end for Chevron, 9% on the high end for tax on this is through meaningful periods of elevated crude oil prices, defined as 2010 to 2014, where we spent most of that five years, somewhere between 95 and $100.

01;18;27;10 - 01;19;07;01
Unknown
Okay, so that's a single digit ultimate net profit margin when you compare the same results over the same time period, or the same metric over the same time period for Google, meta. Microsoft, Apple. Over that same time period, the low was 23% and it's north and the high is north of 35%. And so profitability and and the resilience of that profitability, there's a big disconnect there.

01;19;07;04 - 01;19;34;16
Unknown
And nobody talks about the fact that although Chuck has talked about it because he had to upgrade his iPhone pretty recently, you know, now having to pay $2,000 for the next generation iPhone. And I know that's not as frequent a thing as people experience in terms of going and filling up their car with gasoline. But let's look at this kind of reality of who actually sets prices in a market.

01;19;34;21 - 01;20;08;19
Unknown
Because if you look at the smartphone market and this may be somewhat dated data, but it speaks to market concentration, Apple and Samsung in the US control well north of 50% of the smartphone market. So they have discretion in the market power to set pricing. That's way more than that. Yeah. And so when you consider that Exxon is a few percentage points of global petroleum production, they have no pricing power.

01;20;08;21 - 01;20;41;16
Unknown
And I'll take it even one step further. So what everybody sees is their retail gasoline outlet, whether it's convenience or fuel station, whatever. There are 150,000 retail fuel outlets in the US. 60% of those are made are, are operators that have a single or two stores. So it's a very fragmented market and it's extremely priced, transparent and, and, and, competitive.

01;20;41;18 - 01;21;08;04
Unknown
But no one sets no one sets pricing per se. The market sets the prices. And everybody's a fundamentally a price taker instead of a price setter. And when you consider that kind of the neighborhood of of of net profit on a gasoline, a gallon of gasoline sold to retail outlets somewhere between 2 and $0.04, that's that's a pretty razor thin margin.

01;21;08;04 - 01;21;39;28
Unknown
So the, you know, this price gouging as it gets gets irritating because you're fundamentally talking about an industry with a highly fragmented, numerous or a large population of participants who have no pricing power. Whereas when you do the comparative, it's completely opposite. Ignorance is bliss, Mark. Well, with that being said, with the the sauces and the things you'd like to watch, I always find it interesting how you reference Rogan a lot.

01;21;40;00 - 01;21;59;22
Unknown
Joe Rogan, infamously has on wacky, kooky guests. I mean, he has he has people on all the time where I know you're not clocking every episode or are you? I don't know, but it's funny hearing you reference, Joe Rogan. But, like, what are the kind of people who the guests that he has. Like, what? What piqued your interest?

01;21;59;23 - 01;22;28;09
Unknown
Well, I think I told Chuck last night or texted him since he had a road trip today. I said, if you haven't, if you haven't yet listened to the episode that he recently recorded with John Fogerty, who hopefully most people know as an iconic and legendary artist from, you know, beginning in the 60s with Creedence and just, you know, just learning about that person, that historical figure.

01;22;28;09 - 01;22;53;01
Unknown
He's 80, almost 81 now and still touring, but listening to things like, you know, he was he did unwillingly serve in the military during the Vietnam era because he was drafted and Fortunate Son, which is Creedence and probably Fogerty's most famous song. It's an anthem, you know, it's almost a standard. You hear, you could hear the helicopter blades.

01;22;53;01 - 01;23;17;19
Unknown
Yeah. And listening to kind of the story that he told. What led to that song, his life experience, you know, that's that's more of what I enjoy when I see a guest like that on kind of the Rogan catalog of episodes. And I usually, you know, if I have longer drive times, that's where I, I know that's where I spend my time.

01;23;17;22 - 01;23;52;10
Unknown
If I'm not listening to music and I'm more, you know, I'm more interested in kind of fascinating people than I am about, you know, the, the repetitive, you know, conspiracy theories and, and kind of re plowing all the, you know, the, the Covid ground and the anti-vax stuff. What's going on with, you know, all the kind of deep state conspiracies just just gets tiresome.

01;23;52;10 - 01;24;30;03
Unknown
And if you spend any time watching either side of the spectrum, Fox News or CNN, MSNBC, it is the same recycled guest experts every show and every show in the sequence starting, you know, early into prime time, has the same run of show. They're talking about the same things now. Both aren't talking about the same things because both sides aren't talking about the same thing, is because some subjects are politically advantageous to one side and disadvantageous to the other.

01;24;30;03 - 01;24;57;20
Unknown
So lo and behold, those don't get much coverage on the opposite side. It just it just gotten really tiresome. I really enjoyed politics when I was younger. I remember starting in the, in the 80s when I was in college with, you know, the rise of the Reagan administration, the whole Reagan revolution, and what was going on internationally between the United States and Soviet Union.

01;24;57;20 - 01;25;07;15
Unknown
That whole period was fascinating. And one of the things that I brought up with someone the other day is, you know.

01;25;07;17 - 01;25;46;02
Unknown
The speaker of the House at that time, tip O'Neill, Massachusetts liberal, and Ronald Reagan, the standard bearer of the the conservative movement, who used to be a Democrat, by the way, or who was originally a Democrat, they were. There were beyond civil to each other. They had a warm and respectful personal relationship. And maybe that's going on now, but the theater is just so grossly distorted where it is nothing but discourse and gotcha back and forth.

01;25;46;02 - 01;26;11;26
Unknown
It lacks any kind of civility, objectivity and a in most cases, just a distraction from focusing on what, for example, Congress ought to be doing, what the administration ought to be doing in terms of taking action instead of just talking about it, looking for the nearest camera, or blasting out 20 tweets a day if you're, you know, Ted Cruz or, Bernie Sanders, it's all Peggy Noonan.

01;26;11;27 - 01;26;44;23
Unknown
You know who she is? No, she was, you still, as a writer, political writer. And, you know, I think she's been accused of a lot of things as we've we've moved the definitions of Democrats and Republicans. But Peggy wrote a, piece back in 2004 called The Conceit of Government. And, I would recommend that everyone go read that.

01;26;44;25 - 01;27;17;07
Unknown
And she talks about the, it's really about the narcissism of all of our political leaders. And even more severely in the fact that there hasn't been a lot of accomplishment to justify that it's all about the grift, and it's all about the, feeding, you know, kind of feeding the hubris in the, the narcissistic tendencies of, I think everybody in that, in that power structure.

01;27;17;10 - 01;27;49;20
Unknown
So it's a good piece. It's it's a little bit dated, but, very cleverly written. It's one I always kind of refer to. Yeah. To check it out. It's super inspiring here. You, you know, consume this content and be so active politically and see through all the bullshit and pick and choose and just, you know, like just unfortunately this generation can't do it or in the same vein, they portray themselves as being unable to do it right.

01;27;49;20 - 01;28;12;29
Unknown
Like I'm surrounded by people who are like, Fuck Trump. But if they they befriended a new person and then months later, a like Trump or voted for them, you know, there's a chance they'll be like, oh, you know, whatever. Like we're cool, but like on paper or like on the internet, it'd be like, I would, I would, I would break that relationship the second I found out.

01;28;12;29 - 01;28;34;22
Unknown
And, you know, it's like, you know, it's just how it works. Or like if Biden and Trump are in the same room, like they're probably not just ready to fist fight, they're probably more collaborative and understanding and have a normal conversation as humans. But when they go on through social Twitter or whatever, it's a whole different story. And people just do not, they don't believe what they think.

01;28;34;22 - 01;29;01;28
Unknown
They think online is real life and someone your age and from a different generation. It's really inspiring to see that you say, you know, there are a few things I think people would say, a few of the things that they say in the extreme on social media would have the wherewithal and the courage to say to somebody face, and it may not, may not at all be real.

01;29;01;28 - 01;29;34;18
Unknown
It may just be theater. When you know, when the cameras are off and behind the closed doors, everybody's. But yeah, I truly believe that human beings. Well, that was a really good in-depth discussion. And it it leads us down to one important question. Are the Astros beating the Yankees tonight? Astros just came off of a, series win in Cleveland, which, after their early season struggles and getting swept in a couple of consecutive series, is.

01;29;34;21 - 01;29;55;29
Unknown
I don't know how to think about that. Yeah. And these last few years, I've gotten better about them playing on the road than I have been. And, there was one particularly disastrous year when they had terrible home record. And I think was that 22 or 20 3rd May have been one of the year's, may have been the year they last won the World Series of the year after.

01;29;56;01 - 01;30;23;15
Unknown
So tonight is Will Warren and Lance McCullers. So I say, yeah, they get a win tonight that they had their first day off in 13 days and 13 consecutive games. Right. And if you turn that had around, people would see the paradox that you are that is a round rock express, round rock express. And that's somewhat of a a knockoff of the old Texas Rangers.

01;30;23;15 - 01;30;47;07
Unknown
City connects abomination of a design for the city connects and the Astros. Yeah. Good lord. Well, here, let me give you some predictions you can make. So we could pull us up on a feature this year. So positive record for the Astros this year. I mean, above 500. Okay. God hope so.

01;30;47;09 - 01;31;14;23
Unknown
Yeah. Just depends on when they're missing arms return. Jeremy Payne is on the air. Jake Meyers is Hunter Brown, you know, when do we get, hater back? And there's some other arms that, you know, provided a lot of support last year. Like point 600, point 700 now, just barely above 500. Yeah, but but positively above 500.

01;31;14;23 - 01;31;36;17
Unknown
I mean, they won. What, 87 games last year to make the playoffs. Yeah. So I the offense is playing surprisingly well. Christian Walker is having a great year which he was a disaster last year. Not I don't say that pejoratively. It was just tough year for him. But hopefully that's a return to form. And he's he's hit really well.

01;31;36;17 - 01;31;56;19
Unknown
Thought on if we can keep him healthy. I can see that guy is amazing right now. He's leading all of baseball in almost every meaningful hitting category streak. Supernatural. He is a freak. Speaking of Jordan, are we going to lose him or who are we losing this year? Mid-season? A big name, at least. If any trail leaves again.

01;31;56;21 - 01;32;20;22
Unknown
No, he's got a no trade in his. You know, his trade value is diminished. That contract is more burdensome. You're not going to obviously trade off to you, but you're not going to trade Jordan. Yeah. You know, if they are sellers at the trade deadline, I think pretty much anyone else outside of those 3 or 4 are on the table.

01;32;20;24 - 01;32;35;18
Unknown
If you're looking at a reload or a rebuild and you've kind of thrown in the towel on the playoffs this year, then certainly a Christian Walker,

01;32;35;21 - 01;33;19;01
Unknown
Jeremy is a free agent after 27. Okay. There's a good chance we won't have a season in 27 because of the collective bargaining agreement. Right? Expiration and both sides digging in their heels. Yeah, I heard about that. Yes. And, you know, I think there are some. There's some bullpen pieces, that maybe you could trade, but you get you got to have some major league frontline caliber players to get the Prospect Hall back because they need to rebuild their prospect pipeline in the farm system, which was damaged by the two years that they lost first and second round draft picks and 21 and 22 or 20 or 20 and 21.

01;33;19;03 - 01;33;43;07
Unknown
Yeah, from that whole thing. Couple more prediction, that whole thing that everybody else was doing, by the way. Yeah. Who's leading the division this year? Yeah, the West are ours. Yeah. Oh, yeah. Like I forget how baseball works. We got, like, the Rangers suck, right? We have the A's. We had the think the regular leading the division, the A's and the Rangers are kind of neck and neck.

01;33;43;07 - 01;34;04;29
Unknown
Seattle and and, Houston are kind of in the in the basement right now. Yeah. And so I can't figure out Seattle because their pitching has only gotten better. Okay. They're just not playing. Well, they're not hitting, of course. You know, Kyle Raleigh's got gotten off to a tough start. I think he hit his first home. Home run against the Astros in the last series.

01;34;05;02 - 01;34;34;01
Unknown
But, their offense is, you know, who is playing better earlier than he usually does. You know, I think the division race is wide open. I mean, could Houston win it? Yeah. Win it with like a point 600. If I had to pick somebody right now, I'd probably say Texas wins it. Yeah, yeah. All right. And, last one, who's taken the whole the whole thing, the whole series, like the World Series.

01;34;34;01 - 01;35;03;03
Unknown
Yeah. Oh, I mean, absent some major losses in their depth, as you know, I think I think I think certainly the Dodgers are back. Where in Dynamo they're not even territory. They're not even leading the division right now San Diego is hit. Oh wow. And on the American League side there's just so much kind of an, let me let me revise that.

01;35;03;03 - 01;35;24;24
Unknown
And maybe this is a bit hopeful, but I'm going to call for a surprise and an upset. An end to the at least this year and end of the Dodgers run to the World Series. I think the Braves are going to be there. And on the American League side.

01;35;24;26 - 01;35;48;04
Unknown
I don't think anybody from the West This is probably the cleanest year for New York to make a return to, to the World Series. Yeah, certainly not the Mets. But to say that. All right. Yeah. Oh. So, so I'll say Yankees. Braves. Are you here? Heard it here first, and you'll hear it in about six months.

01;35;48;06 - 01;36;06;17
Unknown
As we, I bring this up to, get back at you for no reason in particular. I don't even make an old man joke. You know, when you brought up the, tape still running. You're bringing up, Reagan, like, back in the 80s. I was like, who is president in the 1880s? And then I came up with James Garfield.

01;36;06;17 - 01;36;22;03
Unknown
So in hindsight, James Garfield. Yeah. Was he is that about accurate? I don't know, I don't know. My president, Laura McKinley, was late 1890s because he was assassinated. McKinley same same birthdays. Me.

01;36;22;05 - 01;36;44;13
Unknown
What does it mean, hopefully that I'm not assassinated for for first president to be assassinated. Was it? He was 1800. Even like flat or 1900, Garfield or Arthur Garfield? Yeah, yeah, president law is a whole thing. We'll save it for another episode. I feel like Chuck's really into that stuff, He would be. Yeah. All right, well, let's save it for, the next episode, the deep dive.

01;36;44;13 - 01;37;05;22
Unknown
We got a lot more time. Maybe we'll do it around, 250th, which is coming up this July of the country. Yes. Oh, yeah. We're almost 250 years old. Look at this. Yeah, yeah, that's so weird to think about. All right. Thanks for doing this. Yeah, sure. It's fun as always.