WEBVTT - Markets, Big Oil, Intel, and Jeep 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.200 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.000 you listen to podcasts, and at Bloomberg dot com slash 0:00:20.040 --> 0:00:24.720 podcast Economists, I mean, I don't know. We're told we 0:00:24.840 --> 0:00:27.800 have to talk to them, so we So we've frightened 0:00:27.800 --> 0:00:29.600 this guy, Stewart paula in there. He's a new guy. 0:00:30.120 --> 0:00:32.639 I didn't hire him, but he's at Bloomberg Economics. He's 0:00:32.640 --> 0:00:36.040 an economist here and we love talking to him. He's 0:00:36.040 --> 0:00:37.360 not a new new guy. 0:00:37.479 --> 0:00:39.240 He has a lot of experience on the street. 0:00:39.280 --> 0:00:40.280 Oh he's been around forever. 0:00:40.360 --> 0:00:42.600 Yeah, he's a research fellow at the fd I S. 0:00:43.159 --> 0:00:45.519 But who gets a PhD in economics? I mean, talk 0:00:45.520 --> 0:00:45.839 about it? 0:00:45.880 --> 0:00:46.480 Work for teal? 0:00:46.720 --> 0:00:49.760 I know that's pretty cool. Hey, Stuart, you're in our studio, man, 0:00:49.800 --> 0:00:52.960 you get like a double star on a Friday in studio. 0:00:53.159 --> 0:00:55.880 That is, he's always an effort man. You guys, have 0:00:56.080 --> 0:00:59.640 you and your team have a great story out or 0:00:59.800 --> 0:01:03.400 no doubt consumers lived beyond their means through third quarter. 0:01:03.400 --> 0:01:05.839 And then that's Matt Miller, I mean, as he's looking 0:01:05.840 --> 0:01:09.920 at his Dodge Challenger parked in the garage and coveting 0:01:10.000 --> 0:01:13.160 that what are the numbers behind that are just have 0:01:13.240 --> 0:01:15.080 we exhausted all our savings and that we're just kind 0:01:15.080 --> 0:01:17.200 of borrowing And that's how the big spending number comes 0:01:17.240 --> 0:01:17.720 out today. 0:01:17.959 --> 0:01:20.440 Well, so the savings picture is a little bit complicated, 0:01:20.440 --> 0:01:23.040 but the headline numbers make it pretty clear that consumers 0:01:23.080 --> 0:01:25.080 were living beyond their means and it was mostly due 0:01:25.120 --> 0:01:28.000 to discretionary services spending in the third quarter and that 0:01:28.000 --> 0:01:31.560 continued through September. And so when we're looking really in 0:01:31.800 --> 0:01:34.400 real space, which is what matters most, we see real 0:01:34.440 --> 0:01:39.000 disposable income declining for four straight months and gangbusters spending 0:01:39.000 --> 0:01:42.479 throughout the quarter, including on discretionary items. So the real 0:01:42.560 --> 0:01:46.200 question ends up being what's the FED going to do next? Fortunately, 0:01:46.440 --> 0:01:48.600 within the report, there's one little bit of a silver 0:01:48.680 --> 0:01:51.520 lining on the inflation side, and it's that in flight 0:01:51.640 --> 0:01:54.120 there was actually deflation for some of the most important 0:01:54.200 --> 0:01:56.320 durable goods, some of the things that are going to 0:01:56.360 --> 0:01:58.520 be most front of mind for those of us who 0:01:58.520 --> 0:02:00.920 lived through June of twenty one, for example, and we're 0:02:00.960 --> 0:02:04.040 really focused on auto prices. Autoprice is declining in the 0:02:04.080 --> 0:02:08.400 PCE report, furniture price is declining. The catch all other 0:02:08.520 --> 0:02:12.840 durables prices declining. And so we see monetary policy getting 0:02:12.880 --> 0:02:15.160 some traction and they're just going to need to continue 0:02:15.240 --> 0:02:17.880 leaning against the consumers who have been spending down that 0:02:18.000 --> 0:02:18.960 saving spot pile. 0:02:19.040 --> 0:02:23.480 Now can they continue leaning against consumers? Can Can monetary 0:02:23.520 --> 0:02:30.120 policy get more aggressive even without them doing anything. That's 0:02:30.200 --> 0:02:33.079 kind of the narrative that the Fed has been giving us, right, 0:02:33.160 --> 0:02:36.519 this passive tightening thing that Bostik talks about. 0:02:36.760 --> 0:02:39.760 Right, So the passive tightening would be that you see 0:02:39.800 --> 0:02:43.839 economic activities slowing in the background while nominal policy rates 0:02:43.880 --> 0:02:46.560 stay steady, all while the FED is continuing to soak 0:02:46.600 --> 0:02:48.520 up liquidity by running down its balance sheet. 0:02:48.800 --> 0:02:49.679 That is possible. 0:02:49.760 --> 0:02:52.000 I suppose it's not. It's not doing nothing if they 0:02:52.040 --> 0:02:54.200 continue QT essentially. 0:02:54.200 --> 0:02:57.119 Yeah, I mean they still call QT passive. It really 0:02:57.120 --> 0:02:59.200 depends on how much there is an active sales to 0:02:59.280 --> 0:03:02.600 max out. There apps of ninety five billion dollars a month, 0:03:03.520 --> 0:03:05.040 but they consider it to be one of the more 0:03:05.080 --> 0:03:09.880 passive elements. Of their monetary policy, and as they continue 0:03:09.880 --> 0:03:12.960 to soak up liquidity, as banks continue to see the 0:03:12.960 --> 0:03:15.800 effects of higher rates resulting in deposits leaving and the 0:03:15.800 --> 0:03:18.800 cost of credit becoming higher for consumers, it is the 0:03:18.840 --> 0:03:20.600 sort of thing that ends up resulting in slow and 0:03:20.600 --> 0:03:21.560 spending going forward. 0:03:22.680 --> 0:03:26.160 Now, consumers living beyond their means? Isn't that what Americans 0:03:26.200 --> 0:03:28.360 do in general? What's exactly? 0:03:28.480 --> 0:03:28.680 I mean? 0:03:28.760 --> 0:03:30.320 Have we just gotten back to normal? 0:03:30.360 --> 0:03:34.240 Because when I put you know, Torsten Slocks list of 0:03:34.320 --> 0:03:36.920 worries up to any of the bulls and I say, 0:03:37.520 --> 0:03:42.720 you know, savings have been completely drawn down. Everything's going 0:03:42.720 --> 0:03:46.440 on a credit card these days. Delinquencies are picking up. Yeah, 0:03:46.440 --> 0:03:48.720 the bulls always say, so what, That's how it was 0:03:48.720 --> 0:03:49.800 in twenty nineteen. 0:03:50.080 --> 0:03:51.480 This is how we do well. 0:03:51.520 --> 0:03:53.800 So here's what's not the same as in twenty nineteen. 0:03:54.000 --> 0:03:57.320 Savings rates are extraordinarily low, and we've been with the 0:03:57.400 --> 0:04:01.520 higher interest rates. Yeah wow, yeah, three point four percent 0:04:01.560 --> 0:04:04.520 in September. Three point four percent savings as a percentage 0:04:04.520 --> 0:04:05.520 of disposable. 0:04:05.040 --> 0:04:07.480 Person of your daughter, Paul, I am too every time. 0:04:07.520 --> 0:04:10.640 And that's while disposable personal income growth is negative, right, 0:04:10.680 --> 0:04:12.880 So think about what that means in saving space. I 0:04:12.960 --> 0:04:15.480 know that people like to, especially the bulls, like to 0:04:15.480 --> 0:04:18.160 look at this idea of cumulative excess savings, but that 0:04:18.560 --> 0:04:21.919 as a source of additional spending power going forward. But 0:04:22.040 --> 0:04:25.840 that is not dry powder that's sitting in banks. That 0:04:25.880 --> 0:04:29.360 cumulative access savings, as it's calculated, is really just foregone 0:04:29.400 --> 0:04:32.920 spending in previous months, and that money could have been 0:04:32.920 --> 0:04:37.440 put into bitcoin or into whatever at sixty thousand dollars 0:04:37.960 --> 0:04:41.080 and it's gone, right, And we know that it's gone 0:04:41.080 --> 0:04:43.200 if we look at bank balances for the average person 0:04:43.240 --> 0:04:45.599 in the bottom fifty percent of the income distribution and 0:04:45.640 --> 0:04:48.719 adjusted for inflation, there is no excess cash balances for 0:04:48.760 --> 0:04:49.360 those folks. 0:04:50.720 --> 0:04:53.720 I got to ask about first about you Mish one 0:04:53.800 --> 0:05:00.000 year out their survey just coming across the ticker, participants 0:05:00.000 --> 0:05:03.480 expecting inflation of four point two percent. It's more than 0:05:03.680 --> 0:05:05.520 we thought they were going to say, and more than 0:05:05.520 --> 0:05:06.960 double what the Fed wants it to be. 0:05:07.279 --> 0:05:07.960 Is that a concern? 0:05:08.560 --> 0:05:11.919 So year ahead inflation expectations don't matter as much as 0:05:12.000 --> 0:05:13.839 longer term inflation expectation. 0:05:13.440 --> 0:05:14.800 So we should be looking at the five year or 0:05:14.839 --> 0:05:16.480 what so we should be looking at five year It 0:05:16.480 --> 0:05:18.480 seems like I don't even what can do tomorrow much 0:05:18.520 --> 0:05:19.880 less a year much less five. 0:05:19.800 --> 0:05:23.000 Yeah, because because year ahead is so responsive to gasoline prices. 0:05:23.240 --> 0:05:24.040 That's really why. 0:05:24.160 --> 0:05:25.560 It's like a pretty simple correlation. 0:05:26.000 --> 0:05:26.560 So it makes sense. 0:05:26.720 --> 0:05:28.400 Yeah, that tracts, so we do. 0:05:28.760 --> 0:05:32.360 We do want to look at the five. 0:05:32.200 --> 0:05:34.560 Year, five to ten year. We're looking at three percent 0:05:35.000 --> 0:05:35.560 on the survey. 0:05:35.600 --> 0:05:37.920 It just crossed, that's right, So that's for the median. 0:05:38.200 --> 0:05:40.120 The thing that most people are going to overlook that 0:05:40.160 --> 0:05:41.839 I don't want you guys to overlook, is that the 0:05:41.880 --> 0:05:45.800 average inflation expectations five year out jumped pretty dramatically up 0:05:45.800 --> 0:05:48.599 to four point seven percent from I think three point 0:05:48.640 --> 0:05:50.680 two percent the prior month. Yep, right, So like that 0:05:50.839 --> 0:05:52.720 is something notable that the FED is going to keep 0:05:52.720 --> 0:05:55.440 an eye on. We still think that the FED is 0:05:55.440 --> 0:05:57.919 going to remain on pause through the October thirty one 0:05:58.040 --> 0:05:58.919 November one meeting. 0:05:59.839 --> 0:06:00.520 There is still. 0:06:00.360 --> 0:06:02.240 Another opportunity to hike at the end of the year. 0:06:03.200 --> 0:06:06.479 But when you see durable's prices coming off as we 0:06:06.520 --> 0:06:10.040 did in the most recent report, we see consumer sentiment 0:06:10.120 --> 0:06:14.560 moderating a little bit month over month, and we see 0:06:14.720 --> 0:06:19.120 real disposable income declining for four straight months, and households 0:06:19.160 --> 0:06:21.159 clearly getting a little bit stretched than the FED can 0:06:21.279 --> 0:06:22.440 be a bit patient. 0:06:22.560 --> 0:06:26.560 I just got one last question for an economist, which 0:06:26.600 --> 0:06:29.720 you are, and you have experience working with government economists 0:06:29.720 --> 0:06:31.720 as well. Comments are always on the one hand, on 0:06:31.760 --> 0:06:33.400 the other hand, right, and when you look at the 0:06:33.440 --> 0:06:36.279 surge in yields that we've seen in these markets, on 0:06:36.320 --> 0:06:38.960 the one hand, you could say, well, that's because of 0:06:39.480 --> 0:06:41.000 strong growth in. 0:06:41.000 --> 0:06:42.080 The US economy. 0:06:42.120 --> 0:06:43.640 On the other hand, you could say it's because of 0:06:43.680 --> 0:06:47.160 massive deficits that we have. Janet Yellen yesterday said the 0:06:47.200 --> 0:06:49.360 surge in longer term bond yields in recent months is 0:06:49.360 --> 0:06:52.120 a reflection of strong growth in the US economy, not 0:06:52.360 --> 0:06:55.719 the jump in government borrowing driven by a widening fiscal deficit. 0:06:56.000 --> 0:06:58.119 She would say that right talking her book. 0:06:58.480 --> 0:07:00.479 Yeah, I mean, is she just talking the book her book? 0:07:00.520 --> 0:07:01.520 Totally? Yeah, totally. 0:07:01.920 --> 0:07:05.800 I mean, any economists would acknowledge it. Because if we 0:07:05.839 --> 0:07:07.440 take it back to econ one oh one, we're thinking 0:07:07.440 --> 0:07:10.800 about incentives and constraints. Right, what's the Treasury Secretary's incentive here? 0:07:10.840 --> 0:07:12.880 It's to downplay the effect of running deficits that are 0:07:12.880 --> 0:07:15.520 pretty massive and being on a unsustainable fiscal trajectory for 0:07:15.560 --> 0:07:18.120 the next thirty years at least right over the entire 0:07:18.160 --> 0:07:20.320 forecast window. You look at what the Fed thinks that 0:07:20.360 --> 0:07:22.000 it is going to be more so a matter of 0:07:22.200 --> 0:07:24.640 unsustainable fiscal fiscal policy. 0:07:25.080 --> 0:07:26.280 That's what is good. 0:07:26.360 --> 0:07:29.040 Yeah, he's good. You can get a time, dude, Stuart 0:07:29.040 --> 0:07:32.320 Paul used US economists before Bloomberg Economics kind of breaking 0:07:32.360 --> 0:07:33.240 it down for us. 0:07:33.280 --> 0:07:38.120 Here you're listening to the teenth Ken's Live program Bloomberg 0:07:38.160 --> 0:07:41.520 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:07:41.600 --> 0:07:44.760 the iHeartRadio app, and the Bloomberg Business App, or listen 0:07:44.840 --> 0:07:47.040 on demand wherever you get your podcasts. 0:07:48.800 --> 0:07:50.000 Take a look at Xon Mobile. 0:07:50.000 --> 0:07:53.280 The stock is down about one two point two percent 0:07:53.360 --> 0:07:55.280 on earnings now at miss earning estments in the third 0:07:55.360 --> 0:07:58.760 quarter did boost its dividend and a huge, huge increase 0:07:59.080 --> 0:08:01.240 in cash flow. We want to get more details here 0:08:01.240 --> 0:08:04.400 with Darren Woods, exce On Mobile chairman and CEO. Darren, 0:08:04.400 --> 0:08:06.920 we really appreciate you joining us on this very busy 0:08:06.960 --> 0:08:09.960 earnings day. I just want to start a little nerdy 0:08:10.440 --> 0:08:12.600 and that's what the chemical side of the business, that's 0:08:12.720 --> 0:08:15.160 really what led to some of the weakness and earnings. 0:08:15.560 --> 0:08:19.120 Chemicals is a really wonderful indicator as to the global economy. 0:08:19.440 --> 0:08:22.280 What should be our takeaway from that weakness for you guys. 0:08:22.960 --> 0:08:24.880 Well, I think there's two things to look at our 0:08:24.960 --> 0:08:28.560 chemical business. One obviously is demand and the link to GDP, 0:08:29.080 --> 0:08:31.440 but the other is the supply. And we typically see 0:08:31.440 --> 0:08:35.559 that commodity cycles in chemical are driven by generally growing demand, 0:08:35.640 --> 0:08:39.480 but then peaks of supply coming on, and that's certainly 0:08:39.480 --> 0:08:42.040 been the case that post a pandemic, a lot of 0:08:42.080 --> 0:08:45.440 supplies come on. We haven't seen excessive growth in GDP, 0:08:45.600 --> 0:08:48.120 and so you're seeing that pressure manifest itself in very 0:08:48.120 --> 0:08:51.800 low margins, But that's a supply issue. Demand hasn't been 0:08:51.800 --> 0:08:53.960 as strong as in the past, but we're still continuing 0:08:54.000 --> 0:08:56.360 to see rising demand, just at a much lower rate 0:08:56.960 --> 0:09:00.200 than historical. My expectation as gb begins to pick up 0:09:00.240 --> 0:09:02.520 and China continues to kind of come out of its 0:09:02.960 --> 0:09:08.120 post lockdown issues, that we'll see growth and chemicals pick up, 0:09:08.280 --> 0:09:09.640 but we're still going to have to work through the 0:09:09.720 --> 0:09:10.640 supply overhang. 0:09:11.120 --> 0:09:13.240 Okay, So that's more of a supply issue than a 0:09:13.280 --> 0:09:13.880 demand issue. 0:09:13.880 --> 0:09:14.480 That's good to know. 0:09:15.559 --> 0:09:17.560 To that point, if we just go to the broader 0:09:17.559 --> 0:09:19.920 oil story because in some ways, let's get through earnings, 0:09:19.960 --> 0:09:22.560 but really the story for you guys is the Pioneer 0:09:22.600 --> 0:09:25.319 deal and the takeover there. And some of the numbers 0:09:25.320 --> 0:09:27.920 that you guys were tossing out here are huge, like 0:09:28.040 --> 0:09:33.000 increasing approvable reserve to one billion in the Permian. Some 0:09:33.120 --> 0:09:35.600 analysts are worried that you can't get that far. What 0:09:35.640 --> 0:09:39.520 are you guys going to do that gets you there? 0:09:38.840 --> 0:09:41.719 We're going to do is what we're already demonstrated we're 0:09:41.720 --> 0:09:44.000 capable of doing. So if you go back in time, Alex, 0:09:44.440 --> 0:09:46.240 you know, we set out a strategy to make sure 0:09:46.240 --> 0:09:49.640 that we're applying the full weight and force and capabilities 0:09:49.679 --> 0:09:53.520 of our company into the unconventional space, and that's been 0:09:53.559 --> 0:09:57.760 a concerted effort to develop technologies to improve recovery. We've 0:09:57.760 --> 0:09:59.960 been implementing that in the acreage that we've got to 0:10:00.080 --> 0:10:02.280 day and both the Delaware and the Midland we're seeing 0:10:02.360 --> 0:10:05.240 very good results. We've demonstrated the ability of those technologies, 0:10:05.280 --> 0:10:07.679 the techniques and the development processes that we have in place, 0:10:07.920 --> 0:10:10.520 and what we're doing now is taking that proven capability 0:10:10.800 --> 0:10:14.280 and applying it to the best acreage in the Midland. 0:10:14.320 --> 0:10:17.800 And so Pioneer is basically in the fair way of 0:10:18.720 --> 0:10:21.040 acreage in the Midland, and so we've got this very 0:10:22.640 --> 0:10:24.920 good acregs that we're now going to apply these the 0:10:24.960 --> 0:10:27.760 capabilities that we have in Xon. So that's the combination. 0:10:27.960 --> 0:10:31.600 They are demonstrated capabilities that we have built into those 0:10:31.640 --> 0:10:36.760 synergy numbers. It doesn't comprehend the additional technology that we're 0:10:36.800 --> 0:10:38.880 working on today that's in the pipeline that frankly we 0:10:38.920 --> 0:10:41.600 think has promised. So our view is, while the numbers 0:10:41.600 --> 0:10:44.800 are big and it reflects the capabilities that we bring 0:10:45.080 --> 0:10:49.040 from Exonomobile and Merry up with the acreage and the 0:10:49.080 --> 0:10:52.760 capabilities that the Pioneer has, we've got additional upside coming 0:10:52.800 --> 0:10:53.400 down the pipe. 0:10:53.760 --> 0:10:55.920 Wow, Darren, good morning. It's guy. 0:10:57.760 --> 0:11:00.480 To your points and you're just talking about what's happening here, 0:11:00.480 --> 0:11:03.360 but I think it goes and speaks to beyond that 0:11:03.520 --> 0:11:05.640 and what else you're doing. You are proving to be 0:11:05.800 --> 0:11:09.560 very good at execution projects execution, You're demonstrating that you've 0:11:09.559 --> 0:11:10.760 got a new refinery coming on. 0:11:11.160 --> 0:11:12.560 You are proving to be very good at that. 0:11:13.160 --> 0:11:17.560 Others in the energy space are not, particularly within the 0:11:17.600 --> 0:11:20.600 renewable space, where it is proving to be very. 0:11:20.559 --> 0:11:21.679 Difficult to execute well. 0:11:21.760 --> 0:11:24.520 Right now, can you just talk to me about how 0:11:24.559 --> 0:11:27.960 big an advantage that execution story is and how you 0:11:28.000 --> 0:11:30.400 can leverage it, leverage that to do more. 0:11:31.520 --> 0:11:33.760 No, I think you've hit on a really important point, guy, 0:11:33.920 --> 0:11:36.280 and you're absolutely right. It is critical, particularly in a 0:11:36.280 --> 0:11:40.080 capital intensive industry like ours, to be very good at 0:11:40.120 --> 0:11:44.520 executing large, complicated projects. In twenty nineteen, we consolidated all 0:11:44.559 --> 0:11:48.600 of our resources on projects into one global organization. That 0:11:48.760 --> 0:11:51.600 organization has the sole focus of making sure that we 0:11:51.640 --> 0:11:56.600 are developing world class, industry leading projects and then executing 0:11:56.640 --> 0:11:59.360 them ahead of schedule and ahead of budget. And we're 0:11:59.360 --> 0:12:02.319 demonstrating that that applies itself to our low carbon solutions 0:12:02.360 --> 0:12:04.880 business today. And so if you look at the challenges 0:12:04.920 --> 0:12:07.960 of going from carbon capture or biofuels at scale or 0:12:08.040 --> 0:12:12.120 hydrogen at scale, marrying that with requirements of storing and 0:12:12.200 --> 0:12:16.240 sequestering CO two, we are in the sweet spot of 0:12:16.360 --> 0:12:18.880 pulling all those things together and doing it at scale, 0:12:18.880 --> 0:12:21.320 which is going to be required to address the challenges 0:12:21.600 --> 0:12:23.760 out there with respect to the size of the emissions 0:12:23.760 --> 0:12:25.960 that we have to reduce. There aren't any other players 0:12:26.000 --> 0:12:29.000 out there that have that same capability. 0:12:29.120 --> 0:12:30.880 And that gives you a huge advantage. Now you're just 0:12:30.960 --> 0:12:33.800 one the pioneer deal Alex was talking about that does 0:12:33.840 --> 0:12:36.880 that execution ability though, now give you the opportunity to 0:12:36.920 --> 0:12:39.600 look at what's happening in the renewables space where there 0:12:39.679 --> 0:12:43.560 is a tough time emerging and start to cherry pick 0:12:43.559 --> 0:12:46.479 assets there as well, and use your ability to execute 0:12:46.800 --> 0:12:48.160 to turn those assets around. 0:12:49.200 --> 0:12:50.840 I would tell you we're going to leverage not just 0:12:50.840 --> 0:12:54.079 our project capability, but our technology capability. And the way 0:12:54.120 --> 0:12:57.960 I've characterized it, we're a molecule company, not an electron company, 0:12:57.960 --> 0:13:00.640 and so we bring more value in the space required 0:13:00.679 --> 0:13:05.120 to manage and transform molecules hydrogen and carbon molecules that 0:13:05.160 --> 0:13:07.959 applies to CO two, and so what we're going to 0:13:08.080 --> 0:13:11.640 apply our capabilities too is the molecule side of the equation, 0:13:11.679 --> 0:13:16.240 which is carbon capturing, storage, hydrogen biofils, capturing the emissions 0:13:16.280 --> 0:13:21.440 associated with existing harder to carbonized industries that don't have 0:13:21.520 --> 0:13:24.440 any real practical alternatives, and applying that So we see 0:13:24.480 --> 0:13:27.959 huge opportunities there. In fact, our low carbon solutions businesses 0:13:28.400 --> 0:13:31.880 is turning those opportunities into high return projects today. 0:13:32.360 --> 0:13:33.600 But I know and I know that Dan Emin has 0:13:33.600 --> 0:13:35.240 talked about the fact that he won't do it unless 0:13:35.240 --> 0:13:38.400 he gets those high returns up for low carbon solutions. Darren, 0:13:38.520 --> 0:13:41.880 would that include buying a refiner, buying more refinering asset 0:13:42.040 --> 0:13:44.120 or refining assets, Like if you've got to move the stuff, 0:13:44.120 --> 0:13:45.880 if you've got to move the molecules and make different 0:13:45.880 --> 0:13:47.960 things out of it, you need different refining capacity. 0:13:49.160 --> 0:13:51.760 So you know, when we look at our refining circuit, 0:13:51.800 --> 0:13:55.280 we're looking for but I'd say is a diversified set 0:13:55.280 --> 0:13:58.000 of capabilities and advantages. So if you look at what 0:13:58.040 --> 0:14:00.320 we've been doing and refine, we've been concentrated dating our 0:14:00.320 --> 0:14:04.360 refinery footprint and focusing on the strategic refineries that are 0:14:04.400 --> 0:14:07.760 producing high value products in the lubricant space, the chemical space, 0:14:08.080 --> 0:14:11.520 the fuel space, the traditional fuel space, but also the 0:14:11.559 --> 0:14:14.560 opportunity to use our technology to then bring in biofuels 0:14:14.559 --> 0:14:18.320 in biofeeds to make lower emissions fuels. So we feel 0:14:18.360 --> 0:14:20.360 really good about the front print we have today. You 0:14:20.400 --> 0:14:22.320 can't just go out and buy that from a refinery. 0:14:22.360 --> 0:14:26.440 It really comes from years of integrated approach to investing 0:14:26.480 --> 0:14:29.359 in making sure you've got a refinery that is producing 0:14:29.600 --> 0:14:33.320 a portfolio products that meets society needs, Darren. 0:14:33.360 --> 0:14:35.280 None of this happens at a vacuum. You must be 0:14:35.320 --> 0:14:37.480 watching very carefully what is happening in the Middle East. 0:14:37.480 --> 0:14:38.320 I assume you are. 0:14:39.440 --> 0:14:41.440 Is there to what extent do you think there is 0:14:41.480 --> 0:14:43.880 the possibility of a repeat of the nineteen seventies another 0:14:43.920 --> 0:14:46.600 oil shotcoming or do you think the supply base is 0:14:46.640 --> 0:14:49.600 now diversified enough to avoid that? And I'm also hearing 0:14:49.640 --> 0:14:54.720 conversations regarding the possibility of a supercycle re emerging. Do 0:14:54.760 --> 0:14:57.360 you see any eventuality that could lead to that at 0:14:57.360 --> 0:15:00.680 this point? How would you address these two issues? 0:15:00.920 --> 0:15:04.000 Well, I would start with the ladder And again, the 0:15:04.040 --> 0:15:07.359 industry is still recovering from the impact of the pandemic, 0:15:07.520 --> 0:15:10.680 and the lower levels of capital have been going in 0:15:10.720 --> 0:15:14.680 across the industry to offset the depletion that's been happening, 0:15:14.680 --> 0:15:17.680 and so supplies a fairly tight. So the big issue is, 0:15:17.680 --> 0:15:21.360 you know where's demand at. If you see real growth 0:15:21.520 --> 0:15:23.960 and growth in demand, then that's going to challenge the 0:15:24.000 --> 0:15:26.160 supply base that we have, which will put more pressure 0:15:26.160 --> 0:15:28.480 on prices and margins. So I think it's really a 0:15:28.520 --> 0:15:30.760 function of where does the global economies go in the 0:15:30.840 --> 0:15:33.200 years ahead, because for the next couple of years. It's 0:15:33.200 --> 0:15:35.600 going to it's going to take time to get additional 0:15:35.640 --> 0:15:37.080 capacity coming on. 0:15:37.440 --> 0:15:38.200 With respect to. 0:15:38.160 --> 0:15:40.760 The Middle East, yeah, no, go ahead. Finished. 0:15:40.960 --> 0:15:43.200 With respect to the Middle East, what I'd say it 0:15:43.280 --> 0:15:46.520 is still an important region in the world. And while 0:15:46.600 --> 0:15:51.200 to date the tragic events are not manifesting themselves in 0:15:51.240 --> 0:15:53.400 an impact, you know, that's something we're keeping a very 0:15:53.400 --> 0:15:54.200 close eye. 0:15:53.960 --> 0:15:55.000 On, Darren. 0:15:55.160 --> 0:15:58.920 Do you see the global economy entering a recession soft landing? 0:15:58.960 --> 0:16:00.000 Do you see any of that on the. 0:16:01.680 --> 0:16:04.000 I think if you step back and look the US, 0:16:04.040 --> 0:16:06.320 I think is in reasonably good shape. I think China 0:16:06.400 --> 0:16:09.680 continues a very slow emergence from some of the challenges 0:16:09.680 --> 0:16:12.200 had in the past. I think Europe is probably the 0:16:12.240 --> 0:16:14.680 most challenge reason as I look around the world, and 0:16:15.120 --> 0:16:18.360 obviously they've been disadvantaged with the lack of energy security 0:16:18.400 --> 0:16:20.120 and some of the challenges they've had with the loss 0:16:20.160 --> 0:16:23.680 of affordable and natural gas, and so I think that's 0:16:23.720 --> 0:16:26.480 going to continue to weigh on the European economies. 0:16:26.560 --> 0:16:27.040 And then I. 0:16:27.000 --> 0:16:30.400 Think feel relatively comfortable with what we're seeing in the 0:16:30.440 --> 0:16:32.800 other parts of the world, and we'll see we build 0:16:32.800 --> 0:16:37.120 the business to handle any economic situation. We certainly go 0:16:37.160 --> 0:16:39.040 through these cycles, and so we make sure that we're 0:16:39.120 --> 0:16:40.320 robust to the down cycle. 0:16:41.040 --> 0:16:41.720 Darren, you kind of. 0:16:41.720 --> 0:16:43.720 Let me perfectly there because I wanted to ask about 0:16:44.080 --> 0:16:47.200 LNG in particular. Guyana, you have a new partner there 0:16:47.280 --> 0:16:50.120 and at Chevron, you guys are not unlike working with 0:16:50.160 --> 0:16:52.360 each other. You guys do this all the time. Have 0:16:52.440 --> 0:16:55.440 you talked to Mike recently? What kind of development can 0:16:55.480 --> 0:16:58.120 you guys come together and really drive technology to get 0:16:58.160 --> 0:16:59.640 more stuff out of the ground there. 0:17:00.560 --> 0:17:02.440 Well, I think if you look at what we've been doing, Guyana, 0:17:02.480 --> 0:17:04.280 we've got a really good track record there. You know, 0:17:04.320 --> 0:17:07.520 we're the operator there, We run the projects, we're developing 0:17:07.560 --> 0:17:10.320 those projects. We've demonstrated over the last several years the 0:17:10.359 --> 0:17:15.359 ability to bring in these large, complicated projects at world 0:17:15.840 --> 0:17:19.359 class schedules, world class costs. We're beating our budgets, we're 0:17:19.400 --> 0:17:21.679 beating our schedules, and then once we get them online, 0:17:21.680 --> 0:17:24.160 we're running them at levels higher than what the investment 0:17:24.200 --> 0:17:28.320 basis was. So a very successful development process. We've got 0:17:28.359 --> 0:17:31.520 three votes, the third vote coming on here in November, 0:17:31.560 --> 0:17:33.840 and three more in the pipeline, so I think we've 0:17:33.840 --> 0:17:37.720 got a pretty good suite of technologies and capital projects 0:17:37.720 --> 0:17:41.080 that our organization is developing. We've worked with HESSE in 0:17:41.119 --> 0:17:43.520 the past. Of course, we work with Chevron all around 0:17:43.520 --> 0:17:47.480 the world. I see them their participation basically basically coming 0:17:47.560 --> 0:17:50.159 in and supporting the work that we've already demonstrated our 0:17:50.200 --> 0:17:51.320 ability to deliver on. 0:17:51.800 --> 0:17:53.720 Don This is an industry that feels like it's back 0:17:53.720 --> 0:17:56.720 on the front foots that you are optimistic that you 0:17:56.720 --> 0:17:58.160 can see deals getting done. 0:17:58.200 --> 0:17:59.360 The industry is doing deals. 0:17:59.359 --> 0:18:01.320 We see two manive ones over the last few days, 0:18:01.320 --> 0:18:05.960 yours obviously included within that age. Do you think that's true? 0:18:06.480 --> 0:18:08.760 Which then takes me to a kind of bigger picture story. 0:18:09.160 --> 0:18:11.680 This industry has been pushed back hard over the last 0:18:11.680 --> 0:18:13.760 ten years, let's call it by the ESG movement. 0:18:14.040 --> 0:18:17.160 Do you think that ESG movement is now over? 0:18:19.119 --> 0:18:19.560 I hope not. 0:18:19.680 --> 0:18:21.160 I don't think you know ESG. 0:18:21.280 --> 0:18:24.440 From our standpoint, this is not an either or proposition. 0:18:24.560 --> 0:18:26.960 This is an and equation where you've got to do both. 0:18:27.000 --> 0:18:29.960 You've got to develop the resources and the energy supplies 0:18:29.960 --> 0:18:32.480 that the world quickly needs to support economic growth and 0:18:32.720 --> 0:18:34.639 support people standards of living. And we've got to do 0:18:34.680 --> 0:18:37.280 things to reduce the emissions we're working on both of 0:18:37.280 --> 0:18:39.879 those things, and so I don't see those competing against 0:18:39.920 --> 0:18:43.199 one another. In fact, to my point before, we're working 0:18:43.280 --> 0:18:46.480