Speaker 1: During over seven hundred and fifty thousand people using Chezy's
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Speaker 1: Charsy's podcast continuing on with the election. If we just
Speaker 1: dig into the energy sectors, one that's coming up a
Speaker 1: bit like.
Speaker 2: Can you talk about about you.
Speaker 1: Know, what's happening there or what's going on and what
Speaker 1: impact that could have.
Speaker 2: Yeah, for sure.
Speaker 3: So there's a couple things going with energy and the
Speaker 3: kind of it's a bit of a mess, so you're
Speaker 3: right to kind of call it out. In particular, we've got,
Speaker 3: on one hand, both by the energy by the ways,
Speaker 3: it's really big, a morphous thing because it kind of
Speaker 3: includes lithium for batteries and coal for power stations and
Speaker 3: oil for general use largely transportation other things.
Speaker 2: It's going to go energy broader, So what is that.
Speaker 3: So on one hand, you've got the government promising their Future
Speaker 3: Made in Australia Fund which as part of that the
Speaker 3: invest in local solar panel manufacturing. Now that's energy, and
Speaker 3: the SENSUS Renewable Energy, So that that's kind of important.
Speaker 3: You've got the opposition who are promisely take money out
Speaker 3: of things like the Clean Energy Finance Corporation, which potentially
Speaker 3: reduced the investment in renewables. The opposition also saying they're
Speaker 3: going to have a policy to build at least seven
Speaker 3: nuclear power plants around the country for power generation. That's
Speaker 3: kind of going on. You've got the energy subsidies that
Speaker 3: are currently on power bills from the current government.
Speaker 2: They're probably to extend that for another six months.
Speaker 3: The opposition saying well they will do it with fuel instead,
Speaker 3: will reduce the fuel exercise. That means more oil and
Speaker 3: gas being sold in Australia. So there's lots of those
Speaker 3: pieces that are really moving all over the place. I
Speaker 3: didn't touch on lithium. I will touch on lithium very quickly.
Speaker 3: I think there's some lessons for lithium so on you.
Speaker 3: And this is not the end of the story, by
Speaker 3: the way, but I will I will talked to the
Speaker 3: story to date, and that was people went, hey, lithium
Speaker 3: equal EV's equals batteries.
Speaker 2: Batteries equals lithium. Therefore lithium is good if.
Speaker 3: EV sales grow, right, that's not actually wrong. That's entirely
Speaker 3: logical from a demand perspective. What lots of people miss,
Speaker 3: and I'll get back to why I'm talking about this
Speaker 3: with energy more broadly, but lithium in particular matters as
Speaker 3: well is what people didn't.
Speaker 2: The factor in was the supply response.
Speaker 3: So we had a boom and e boom in batteries,
Speaker 3: boom and home batteries as mentioned that before, and then
Speaker 3: an even bigger boom in supply.
Speaker 2: So we know.
Speaker 3: You know, there's no iron laws in economics, but one
Speaker 3: of the closest to an iron law is the law
Speaker 3: of supply and demand. If demand goes up, prices go
Speaker 3: up at the given level of supply. If demand goes
Speaker 3: up and supply goes up more, the curves shift and
Speaker 3: I won't go through the boring economics of it, and
Speaker 3: price actually can come down. So even though EV sales
Speaker 3: are boomed, batteries are boomed and again I'm all for it, right,
Speaker 3: but supplies grown by more, so the price is absolutely created.
Speaker 3: So people who said and again think about thematically, I'm
Speaker 3: by lithium because evs are going to be big.
Speaker 2: There's only half the story, and that's why it's.
Speaker 3: Really important back to energy more broadly, the other problem
Speaker 3: with half the story we've seen go back to unfortunately
Speaker 3: going to go back to tariffs for a second.
Speaker 2: The world is freaked out about the potential of a
Speaker 2: US and all global recession.
Speaker 3: We know when there's economic downturns, oil prices or volumes
Speaker 3: tend to fall because oil tends to power the global
Speaker 3: economy at leat until we fix that properly with renewables
Speaker 3: once and for all. But for now, at least oil
Speaker 3: powers the global economy. When there's fears of it downturned,
Speaker 3: guess what the oil price falls meaningfully. And so all
Speaker 3: we've actually seen as well as all this sort of
Speaker 3: stuff is in the energy space. Petrol prices, diesel prices
Speaker 3: are coming down because the oil price is coming down
Speaker 3: because the world's no longer sure we can use as
Speaker 3: much as we used to if things do get tougher.
Speaker 2: And so you ask at the energy sector.
Speaker 3: My broadest fiel and energy, honestly, mate, is trying to
Speaker 3: predict energy prices a really really, really really tough game
Speaker 3: because you've got to predict the supply and the demand.
Speaker 3: And again, if you don't believe me, go back three
Speaker 3: and a half weeks and say, who predicted the oil
Speaker 3: price would fall because Trump would unveil these massive so
Speaker 3: called reciprocal tariffs, you know, horribly disproportioned to anything else
Speaker 3: going on. And the oil price tanks, I mean maybe
Speaker 3: three people predicted it, and I'll say predicted and again
Speaker 3: the air quotes because they've probably predicted oil price falling
Speaker 3: in Outher twenty five times and it hasn't happened.
Speaker 2: But you had to kind of have a.
Speaker 3: View on that, have a view on the price of
Speaker 3: woodside patroleum for examples, that energy, or Santos or something else.
Speaker 2: Because no matter what they do themselves, great production.
Speaker 3: High no lost time, injuries, great scale, do all the
Speaker 3: things they can do correctly, but every morning you've got
Speaker 3: to look outside, you open open the blinds and go, oh,
Speaker 3: what's the price today, and kind of cringe as they
Speaker 3: check it.
Speaker 2: They have no control over that.
Speaker 3: And that's the biggest part by far, of any lithium, coal,
Speaker 3: oil gas.
Speaker 2: Pick your energy source.
Speaker 3: It's the global market price that termines your returns, far far,
Speaker 3: far more than then the company itself can do. And
Speaker 3: I'm yet to find anyone who can reliably predict the
Speaker 3: energy price to any reasonable degree to make it worth
Speaker 3: an investment. So there are local issues.
Speaker 2: There are local implications for the energy sective for sure.
Speaker 3: I just want people to kind of make sure they
Speaker 3: take the bigger picture, like the lithium supply and demand story.
Speaker 2: Government policy is one small bit of it, and it's
Speaker 2: not a tiny bit.
Speaker 3: Individual companies may get those government contracts for the future
Speaker 3: made in Australia.
Speaker 2: There's other things that could happen.
Speaker 3: Of course, nuclear power plants could be built and designed,
Speaker 3: and there's lots of possibles. The other thing, by the way,
Speaker 3: is if you're betting on government policy for an investment thesis,
Speaker 3: you're probably taking more risks than you know and probably
Speaker 3: more than you should.
Speaker 1: I think investing involves for risk, you might lose the
Speaker 1: money you start with. We recommend talking to a licensed
Speaker 1: financial advisor. We also recommend breeding product disclosure documents before
Speaker 1: deciding to invest.