Speaker 1: You want to be an American.
Speaker 2: It's got a film show on seven hundred WOLW twenty
Speaker 2: four hours before the Grand Show with the Holy Grail
Speaker 2: Banks Opening Day twenty twenty six on the Home of
Speaker 2: the Red seven hundred WW.
Speaker 1: It can't wait for it.
Speaker 3: Gonna cost you a little bit more to get downtown
Speaker 3: for the Fidling Market opening Day parade or the game itself,
Speaker 3: as gas today costs more than it has in nearly
Speaker 3: four years. Lois price for you is about three twenty
Speaker 3: six in Hamilton according to gas Buddy, but the average
Speaker 3: is now very close to four dollars a gallon, which
Speaker 3: is on par with the national average. So we have
Speaker 3: Iran shutting down the straight of her moves. That's the problem.
Speaker 3: We have an explosion yesterday at major refinery in Texas
Speaker 3: just outside of Houston, and the switch to summer blended
Speaker 3: fuel all happening at the same time. The question is
Speaker 3: will we and could we see five dollars a gallon
Speaker 3: gasoline on? That is Dan Eberhard Danzen Oil and Gassingery
Speaker 3: inside with Canary and everheard capital. He's actually Landman. Landman
Speaker 3: is on the show. Dan, Good morning, how.
Speaker 4: Are you good? Good morning? Good morning. I'm doing well.
Speaker 1: By the way.
Speaker 3: I'm sure presumably you've seen the show uh land Man,
Speaker 3: which is one of the best TV shows Tyler Sheridan.
Speaker 3: You just could continue to hit it in the park.
Speaker 3: But how accurate is a lot of stuff that happens
Speaker 3: in there.
Speaker 4: I think it's I mean drama dramatized, but I mean
Speaker 4: I would say it's accurate, but it's it's more like,
Speaker 4: you know, there's weeks and weeks of normalcy and then
Speaker 4: an episode not back to right right.
Speaker 3: Yeah, because I mean, I mean, if your life was
Speaker 3: actually like Tommy, your head would explode. I mean, there's
Speaker 3: no human it's just you can't have that much coming
Speaker 3: at you when one day it's impossible.
Speaker 4: Oh yeah, yeah, no, it's it's you know, look, the
Speaker 4: oil business is a business like any other, but just
Speaker 4: it it gets chaotic at time. This is this is
Speaker 4: one of them.
Speaker 1: Yeah, yeah, it's a great it's a great watch.
Speaker 4: Yeah.
Speaker 3: And and of course you know then there's the ex
Speaker 3: wife reality too, but that's that's probably true in life
Speaker 3: as well. So Dan, you know, I know that you've
Speaker 3: been doing this for a long time, have been covering
Speaker 3: energy markets for decades, so put it on a scale
Speaker 3: of one to ten. How serious is this hor Mooz
Speaker 3: crisis compared to others disruptions you've seen in your career.
Speaker 4: Oh, I mean this is probably a twelve. I mean
Speaker 4: this is I think this is a bigger deal. You know,
Speaker 4: I've been kind of going back to these seventy boil shocks,
Speaker 4: and for the world, I think it's a bigger deal.
Speaker 4: For the US, I think it's not as big of
Speaker 4: a deal because of cracking and we are more self
Speaker 4: sufficient than we were. But look, the news stories are
Speaker 4: mostly about the straight of hor Moods, which is extremely important.
Speaker 4: But something that I feel like at least slightly being
Speaker 4: lost here is so they're taking an infrastructure there. You know, look,
Speaker 4: Middle Eastern production is down about ten million barrels a day,
Speaker 4: and I think that some of this infrastructure is going
Speaker 4: to take years to rebuild.
Speaker 3: Years to rebuild, which means four dollars gallon gasoline is
Speaker 3: here to stay.
Speaker 4: Is after saying no, I think in the open for Moods,
Speaker 4: I think we'll see guys clean praise is fall a
Speaker 4: gallon here in the US within two weeks. But I
Speaker 4: think for Europe this is this is a bigger problem
Speaker 4: for European But it's a pretty big property entire.
Speaker 3: If we actually de escalate, Dan, you're breaking up a
Speaker 3: lot right now. Let me I'll reset for a second here.
Speaker 3: Maybe you can get the higher ground, get a better sell.
Speaker 3: We saw Brent crude hit one hundred dollars a barrel
Speaker 3: early this month of the first time in four years.
Speaker 1: Uh one twenty six is peak.
Speaker 3: The closure has been called the largest energy supply to
Speaker 3: our disruptions, you said since the nineteen seventies.
Speaker 1: I don't think that's overhyped at all.
Speaker 3: But if we get to one fifty a barrel, we're
Speaker 3: talking five dollars gasoline. What's the reality this summer here
Speaker 3: in Cincinnati, in the tri state for that to happen.
Speaker 4: Oh, I think I think we're you know, four dollars
Speaker 4: a gallon. I think we hit a demand destruction at
Speaker 4: five dollars a gallon. I think we're looking at people
Speaker 4: trying to, you know, use eight to ten percent less gasoline,
Speaker 4: which is a lot of trips not happening.
Speaker 1: Yeah, I think the CEO of United said that.
Speaker 3: You CEO of United just said that our gas prices
Speaker 3: are probably going to go up twenty percent your ticket
Speaker 3: costs go up twenty percent basically, and they're going to
Speaker 3: spend eleven billion dollars on fuel this year. So if
Speaker 3: you have a trip planned, you better book it right
Speaker 3: now because you're if you wait till the last minute,
Speaker 3: the cost is going to go through the roof.
Speaker 4: Yeah. No, I think that we're going to be seeing
Speaker 4: that all all over the economy. And like I said,
Speaker 4: you know, every everything is the fact that you know,
Speaker 4: the price of rubber, the price of your Amazon delivery,
Speaker 4: the price of your uger, the price of your plane ticket.
Speaker 4: Oil factors into everything, So it's something we should all
Speaker 4: watch out for, and I think it if this doesn't
Speaker 4: end soon, we're going to see consumers tighten their bell
Speaker 4: a little.
Speaker 3: Yeah, Dan, you mentioned that, you know, the hormones closure
Speaker 3: doesn't really affect the US as much because we produce
Speaker 3: so much of our own oil, but experts kind of
Speaker 3: push back on that and saying that it's because it's
Speaker 3: it's a global oil market. Everything goes into the same kettle,
Speaker 3: so to speak, no matter where it comes from from
Speaker 3: the Earth, it all goes in the same supply. So
Speaker 3: if something goes wrong anywhere, prices go up everywhere. And
Speaker 3: you mentioned also fracking and of course alternate fuel sources
Speaker 3: and the premium basin. When we're drilling baby drill, we
Speaker 3: have venezuela as well. How much is that I'll set this.
Speaker 4: Well, I you know, I do venezuela thing will help
Speaker 4: us in the long term. I don't think it's a
Speaker 4: fix for this because they need infrastructure to something. Yeah,
Speaker 4: that takes time and money, but I do think Look,
Speaker 4: you know, I pushed back a little bit on what
Speaker 4: you just said, because there's two prices for world oil
Speaker 4: is thought of in WTI and bread, right, there are
Speaker 4: two different prices, and the US market is mostly self contained.
Speaker 4: We import about eight percent of our oil, A lot
Speaker 4: of that actually comes from Canada. The US is largely
Speaker 4: self contained. Otherwise this will be worse right now for US?
Speaker 3: Yeah, yeah, I mean I guess if we're self contained,
Speaker 3: so it would be worse. It hits us less, but
Speaker 3: that that gives our economy a distinctive advantage then too.
Speaker 3: If we have a reliable supply of oil, and granted
Speaker 3: our prices will go up just because it's going to
Speaker 3: but maybe not as the rest of the world.
Speaker 1: That gives us a pretty strategic advantage then.
Speaker 4: Oh no, I think this is relative to Europe. This
Speaker 4: is good for us. And one of the things not
Speaker 4: being covered is the oil price really affects the price
Speaker 4: of fertilizer, which is actually a very big deal in
Speaker 4: the African economy, and they're going to be hit very
Speaker 4: negatively by by all of this.
Speaker 3: He's Dan Eberhart, oil gas industry insider on the show
Speaker 3: this morning, and the reality of five dollars a gallon
Speaker 3: gasoline we could see it the summer is what a
Speaker 3: lot of experts are saying right now.
Speaker 1: And who knows.
Speaker 3: I mean, again, our supply is much better than the
Speaker 3: rest of the world ward and again we love Drill
Speaker 3: Baby Drill because of that too. Is they keep cutting
Speaker 3: the straight of her moose off every few years, and
Speaker 3: this is what winds up happening. And it's not just
Speaker 3: a physical ball play, but I think it's interesting too.
Speaker 3: The inside baseball thing here is insurance withdraw you know,
Speaker 3: there are risk premiums have gone up four or five times,
Speaker 3: meaning the outcome for cargo flow is largely the same
Speaker 3: as a physical blockage. Can you lay that out for
Speaker 3: our listeners who and maybe myself, we don't really understand
Speaker 3: the insurance angle here.
Speaker 4: Sure, Typically the insurance is is maybe three or four
Speaker 4: percent of a shipment, and these oil tinkers, uh, you know,
Speaker 4: I'll to one hundred million, one hundred and fifty million
Speaker 4: barrels of oil. So these are these are giant investments
Speaker 4: for people that are very expensive to ensure. That insurance
Speaker 4: through the straight and four moves is now, on my understanding,
Speaker 4: costing fifteen to sixteen percent of cargo instead of three
Speaker 4: to four percent. And the insurance companies don't really they're
Speaker 4: they're trying to price the people so that they don't
Speaker 4: take the voyage, not so they take the voyage and
Speaker 4: take the money.
Speaker 3: Yeah, obviously the risk goes up, the cost of insurance
Speaker 3: is going to go up as well. And that's just
Speaker 3: one of those unseen add fees that that that we
Speaker 3: all pay for when we.
Speaker 1: Go to the pump.
Speaker 4: Yeah. No, look this this it reverb rates through the
Speaker 4: cost of everything and it's driving everything up.
Speaker 2: You know.
Speaker 4: Another point I'll make is, you know, in the US,
Speaker 4: we spend three or four percent of our UH consumer
Speaker 4: spending is on energy, and a lot of third world
Speaker 4: country it's something like nine to eleven percent. So though
Speaker 4: you'll see for those folks, it's gonna it's gonna hit
Speaker 4: even even worse.
Speaker 3: Yeah, Dan, I do a lot of my good thinking,
Speaker 3: if you can call it that, on the toilet. I
Speaker 3: I know about you, but we had a kind of
Speaker 3: a I said, you know, we have the Panama Canal
Speaker 3: and I'm looking in my head, in my mind, and
Speaker 3: I'm picturing the strain of Horror Moves, which is like
Speaker 3: a peninsula just kind of juts out there. And the
Speaker 3: problem is there's a choke point, and Iran can easily
Speaker 3: shut it down by attacking any ships that go through there.
Speaker 3: So it's very pretty narrow, about thirty miles wide if
Speaker 3: we're going to circumvent that. Now, the terrain from Google
Speaker 3: Earth looks pretty intimidating. There's those mountains and everything else,
Speaker 3: and it's certainly not the same situation as we did
Speaker 3: in Panama.
Speaker 1: But I'm trying to think of an alternative.
Speaker 3: It's like, is there a way that those Gulf States
Speaker 3: can can do a pipeline or something that prevents us
Speaker 3: from happening in the future that seems like be the
Speaker 3: best bad is that a problem that's unsolvable?
Speaker 4: I mean, in the long term, you could have a pipeline,
Speaker 4: but the problem is that you know, pipeline is going
Speaker 4: to take within years to build. Yeah, it's not something
Speaker 4: that can be done in ninety days at all.
Speaker 3: Right, Well, that would be far more for future proofing,
Speaker 3: right at some point the Gulf States, who are pretty
Speaker 3: much united against Iran right now, is the rest of
Speaker 3: the Middle East. It seems that that'd be a good thing.
Speaker 3: That was like, hey, listen, if we just start doing
Speaker 3: pipelines now and it's going to take thirty years to build, sure,
Speaker 3: but who knows what that nation's going to look like
Speaker 3: in thirty years. It could be worse than we have
Speaker 3: right now. It seems like that'd be a good hedge
Speaker 3: against bet.
Speaker 4: Yeah, that's the scary thought that it could be worse.
Speaker 4: I think it would be a good head But I
Speaker 4: think if somebody's got to be thinking five to ten
Speaker 4: years in the future, not about the next ninety day
Speaker 4: for that to happen, and it has happened, I forgot.
Speaker 3: We're living in the in the day and age of
Speaker 3: investing groups of course, and sharks and everything else, and yeah,
Speaker 3: we don't even think about the next quarter. We're thinking
Speaker 3: about the next day right now. Let alone thirty years
Speaker 3: from now. There's no long term planning in any business.
Speaker 3: I forgot, I forgot what year I live in here
Speaker 3: for a second, there, Dan, So the it's about twenty
Speaker 3: million dollars, twenty million barrels a day.
Speaker 1: I believe it's the number.
Speaker 3: It's about twenty percent of global petroleum consumption that goes
Speaker 3: through the Strait. And I mentioned there a few pipeline
Speaker 3: alternatives there can bypass it. So are there any of
Speaker 3: the workarounds here? I mentioned, you know, taking a kind
Speaker 3: of dig baby dig lay pipe.
Speaker 4: In the long term, US producers can produce more, in
Speaker 4: Saudi Arabia can produce more, but again that's something that
Speaker 4: takes time. The way that I look at the problem
Speaker 4: is it's like a twenty percent of supply problem, and
Speaker 4: the buttons of the US government has are like one
Speaker 4: percent button. So I mean, we can do, you know,
Speaker 4: release the strategic particularly and reserve we countentially the thing
Speaker 4: that I've been advocating for to spend the national gas
Speaker 4: tax for ninety days or six months. There's different levers
Speaker 4: the US government has that it can pull, but I
Speaker 4: think those are are just frankly not big enough to
Speaker 4: solve the problems in the world.
Speaker 3: Yeah, Dan, I know you're you're a pro Trump guy,
Speaker 3: yourself a Republican, and I read something you said. You
Speaker 3: warned that steel chairs to make the industry less competitive
Speaker 3: against opek. How does steel relate to what we're talking about.
Speaker 4: Here, Well, you know, it goes into the drilling process.
Speaker 4: The wellheads that we sell, cantry and the drilling you know,
Speaker 4: drilling rigs and all this stuff are all you know,
Speaker 4: you have metal components. So because the mettal goes up,
Speaker 4: makes the.
Speaker 3: Yeah that makes sense. Yeah, yeah, okay, I get I
Speaker 3: get the connection there. Yeah, because you've got to pay
Speaker 3: if your your you know, it's not like the uh,
Speaker 3: the equipment you use to drill and add infrastructure is
Speaker 3: going to last forever. You've got to replace it. And
Speaker 3: so steel goes in. Once the pipes in the ground,
Speaker 3: it stays there. It's not like you pull it back
Speaker 3: out like a drill bit. I get that fifteen million
Speaker 3: barrels a day though, or twenty million, it's not easy
Speaker 3: to offset everywhere. That's pretty much the total production of
Speaker 3: the United States, and we're the biggest producer in the world.
Speaker 3: That that's the squeeze right there. We're cranking out right
Speaker 3: now as much as we can. You run an oil
Speaker 3: field services company, land Man, when you hear there's no
Speaker 3: easy fix, is that.
Speaker 1: This is that practical. There's got to be there's got
Speaker 1: to be something.
Speaker 4: We can I mean we can us production kIPS potentially
Speaker 4: go up, you know, five million barrels a day, but
Speaker 4: again that would take a higher cost than you're seeing
Speaker 4: now and time. There's no easy there's there's no fix
Speaker 4: other than opening the straight. There's no fix. And I
Speaker 4: think what we're going to find out is a lot
Speaker 4: of the infrastructure and the lease has been damaged and
Speaker 4: will take a while to come back online.
Speaker 3: Trump is going to release or talking about releasing, or
Speaker 3: has released. I guess one hundred and seventy two million
Speaker 3: barrels from the strategic poet patrols, you know, Biden at
Speaker 3: every president, I think feels like it is they've done that,
Speaker 3: and it doesn't move the needle at all because it's
Speaker 3: it's literally a spit in the ocean. I was told
Speaker 3: I was reading something from a gas buddy before you
Speaker 3: came on this morning, and there an analyst said there's
Speaker 3: a warning a double headwind.
Speaker 1: I believe it is what they call it.
Speaker 3: You've got the supply shock with a RAN and the
Speaker 3: I mentioned the open normal seasonal transition to the more
Speaker 3: expensive summer blend glass line required by the clean air RAG.
Speaker 3: So what does that mean in real dollars for people
Speaker 3: listening this morning?
Speaker 4: And I think there's a lot of upward pressure on
Speaker 4: the gas price. And I was back to then into
Speaker 4: your summer plans and your your family.
Speaker 3: Yeah, there's no claw on that money back. And you
Speaker 3: know we're twenty percent from the CEO of United Airlines,
Speaker 3: so book now, I guess the is the mantra Here.
Speaker 3: Goldman says that this rate stays closed for more than
Speaker 3: two months, oil could stay above one hundred and ten
Speaker 3: bucks a barrel through the end of twenty twenty seven.
Speaker 3: And they've already pushed their uh first Federick cut call
Speaker 3: back to September because the oil are we is this
Speaker 3: gonna factor in the stagflation in your opinion?
Speaker 4: I think I think potentially. So look, look here here's
Speaker 4: the thing. If they if they say in an hour
Speaker 4: they're going to open the straight offour moves I think
Speaker 4: to get I think it will take six months to
Speaker 4: get the closed back to.
Speaker 1: The law six months.
Speaker 4: The market, Yes, the market. The market spoof The owners
Speaker 4: of the vessels are spoofed, the people on the vessels
Speaker 4: are spoofed. I mean, look, if they said they were
Speaker 4: opening in an hour, which you wanted to, would you
Speaker 4: win on the first ship going through this?
Speaker 1: Yeah, because somebody doesn't get the memo.
Speaker 4: Right, Yeah. So I mean if it's if it's your
Speaker 4: life and these things move incredibly slowly and what they're doing,
Speaker 4: the need to be so fast boats like the cigarette
Speaker 4: boats and basically comic casey drones to plow into the side.
Speaker 4: So I really do against the comic cosy figurette. Yeah.
Speaker 3: And you know, you can have the United States Navy
Speaker 3: the best fighting force in the world, those small craft
Speaker 3: are gonna be very difficult to stop no matter how
Speaker 3: many drones or anything else you have activated.
Speaker 1: You know, could be subs, could be anything.
Speaker 3: They're gonna be really really hard to get because of
Speaker 3: the size and just how slow these targets move. He
Speaker 3: again on the show this morning is Dan Everhart. He's
Speaker 3: an oil gas industry insider, Canary and ever Heard Capital
Speaker 3: and actual landman. Dan, all the best, thanks for jumping
Speaker 3: on the show this morning and and depressing us here
Speaker 3: the day before opening day.
Speaker 4: Thanks, thanks uh thanks for thanks for having me.
Speaker 3: I appreciate you, buddy. Thanks again. I know you're a
Speaker 3: busy man. Not the news you wanted to hear, but
Speaker 3: that's the reality. So planning, planning, planning, Do not wait
Speaker 3: till the last minute to book your travel for the summer.
Speaker 3: The gas prices are gonna go up before they go down.
Speaker 3: Scott's Loan Show with news on the way in just
Speaker 3: minutes on seven hundred WLW