Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
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Speaker 1: next guest is making the case for enlightenment and also
Speaker 1: for reason, science, humanism and progress. You think that'd be
Speaker 1: an easy case to make, but we need Stephen Pinker,
Speaker 1: Harvard psychologist and professor, to tell us more and why
Speaker 1: it's been such a struggle for many people to grasp
Speaker 1: that enlightenment now is a good thing. Professor Pinker, thanks
Speaker 1: for being with us. Tell us why did you decide
Speaker 1: to write this book now? Two reasons. One of them
Speaker 1: is I kept coming here across data showing that the
Speaker 1: state of humanity has been improving in ways that that
Speaker 1: surprised me. I knew from the work that I did
Speaker 1: for a previous book, The Better Angels of Our Nature,
Speaker 1: that measures of violence had shown declines that the rate
Speaker 1: of death in war, violent crime, rape, spousal abuse, child abuse, capital,
Speaker 1: punishment all had declined over over the centuries and decades.
Speaker 1: But then I was pleasantly surprised to see that global
Speaker 1: poverty has fallen from about of humanity, that literacy has
Speaker 1: risen to for people under twenty five, that diseases are
Speaker 1: being decimated, that lesser time has increased, and a few
Speaker 1: people are aware of these developments. Were aware of everything
Speaker 1: that goes wrong, and we are not aware of the
Speaker 1: gradual things that get better and better. So I wanted
Speaker 1: to put all of these data between a pair of
Speaker 1: covers just to uh counter the uh gloomy view of
Speaker 1: the world that you get from the lines, and also
Speaker 1: of course try to explain it, because I don't believe
Speaker 1: there's any mystical force that just makes things better and
Speaker 1: better by magic. And I attributed to a few important
Speaker 1: ideas that came to the four during the second half
Speaker 1: of the eighteenth century, such as that we should use
Speaker 1: reason to analyze our situation as opposed to authority and
Speaker 1: dogma and superstition, that we should enhance science, and that
Speaker 1: we should value the lives of individual men, women and
Speaker 1: children as about the highest moral good. These ideas might
Speaker 1: sound obvious, but they're they're not bad obvious, and I
Speaker 1: think collectively they're responsible for the progress that we've enjoyed. Yeah,
Speaker 1: what's not responsible is us, uh, the media, because you
Speaker 1: blame us for if it bleeds, it leads and sort
Speaker 1: of adding to this gloom and doom view of the world.
Speaker 1: And I'm just wondering, I mean, is that enough to
Speaker 1: drag down the discourse and sort of the misinformation that
Speaker 1: we have experienced with uh, you know, potentially ambiguous sources
Speaker 1: of news and filtrating different economies. I mean, has that
Speaker 1: impeded the progress or is that a blip on the
Speaker 1: screen that's been over emphasized by us. Well, I certainly
Speaker 1: don't want to join into the in the within the
Speaker 1: chorus of blaming the mainstream media for for everything, because
Speaker 1: the mainstream media are short of a heck of a
Speaker 1: lot better than the alternatives. I do think there's a
Speaker 1: there is something of a bias. That is, it is
Speaker 1: of course essential to point out the problems that occur
Speaker 1: in the suffering and the injustices and the failures, but
Speaker 1: what's more important is to be accurate and to also
Speaker 1: show where where things have gotten better and without It's
Speaker 1: not a call to balance bad news with feel good stories,
Speaker 1: but a lot of good things have happened. They don't
Speaker 1: happen overnight, but still they're is important to have a
Speaker 1: balanced view of the world and to be aware of
Speaker 1: the solutions that actually have made people better off, not
Speaker 1: not just the catastrophes and disasters. Professor Pinker, I want
Speaker 1: to just draw your attention to something specific because we
Speaker 1: don't necessarily get a chance to focus on it too much,
Speaker 1: which is a nuclear power and fourth generation nuclear reactors,
Speaker 1: and what if you could just expand a little bit
Speaker 1: on what some of the things you described in your
Speaker 1: book about the potential for nuclear power. Yeah, that's uh,
Speaker 1: I have I'm very open about the uh severe problems
Speaker 1: facing the world that we have not yet solved, and
Speaker 1: climate change is one of them. But I joined in
Speaker 1: I think a growing number of science oriented environmentalists in
Speaker 1: saying that nuclear power is going to have to be
Speaker 1: part of the solution to mitigating m harmful climate change
Speaker 1: just because it's the most scalable and abundant source of
Speaker 1: um of zero carbon energy. UH. And there is among
Speaker 1: the the pro nuclear power environmentalists, there is a bit
Speaker 1: of a debate as to whether we should continue to
Speaker 1: perfect the second generation light water reactors that have despite
Speaker 1: the Chernobyl and three miles and have had a a
Speaker 1: remarkable safety record over the last sixty years, especially compared
Speaker 1: with alternatives like coal, or whether we should accelerate towards
Speaker 1: the so called fourth generation designs, which are a variety
Speaker 1: of different technologies, none of them in operation now, but
Speaker 1: they include possible designs where small reactors would be mass
Speaker 1: produced in shipyards and and and moved by rail or
Speaker 1: ship to locations and put it out of the way
Speaker 1: if there's a storm or a warning of an earthquake. UM,
Speaker 1: there are traveling wave reactors. There, there's a thorium reactors. Uh.
Speaker 1: These are separate from fusion, which is a whole different
Speaker 1: family of technologies. But there is I think tremendous progress
Speaker 1: on the scale of several decades for UM even safer,
Speaker 1: even cheaper abundance sources of energy. You know, Stephen, when
Speaker 1: when people talk about enlightenment, they think of the golden
Speaker 1: ages of science where there was rapid understanding and aspect
Speaker 1: for previous analyzes and theorems, And how do you square
Speaker 1: that with a growing movement to reject evolution? And you know,
Speaker 1: kind of push back or fund universities less um, you know,
Speaker 1: sort of anti intellectual bents that can be seen on
Speaker 1: a number of different levels. Yeah, a lot. We're living
Speaker 1: in paradoxical times because on the one hand, science is
Speaker 1: being applied to more and more areas of policy and
Speaker 1: human life. We've got evidence based policy and evidence based
Speaker 1: medicine and uh cleo metrics and moneyball. Even in sports,
Speaker 1: we've got data driven crime. My husband loves saber metrics
Speaker 1: by the way, to carry on, Yeah, and the But
Speaker 1: at the at the same time, we have what seemed
Speaker 1: to be outbursts of the irrationality, such as anti vaccine
Speaker 1: campaigns and uh demonization of genetically modified organisms and denial
Speaker 1: of human made climate change. The the I think the
Speaker 1: main answer is that when issues get politicized, when they
Speaker 1: become identity badges for a political coalition, almost a tribe,
Speaker 1: that's when all of the mechanisms of human psychology that
Speaker 1: we're becoming aware of that deny evidence or that actually
Speaker 1: use our rational faculties to construct the strongest case for
Speaker 1: what we already believed in the first place, dismissing counter arguments,
Speaker 1: dismissing counter evidence, that's when it goes into full tilt,
Speaker 1: and we use our intelligence instead of getting at the truth.
Speaker 1: We use our intelligence kind of like high powered lawyers
Speaker 1: to win the case at all costs. And so we
Speaker 1: don't yet really know how to de politicize issues so
Speaker 1: that we can apply our collective rationality to coming up
Speaker 1: with the best answer as opposed to just glorifying our
Speaker 1: side of the political divide. Have you read or sort
Speaker 1: of listened to any of the criticism of your new book,
Speaker 1: because it's interesting that it's being criticized by both those
Speaker 1: who are supposedly in favor of scientific inquiry, inquiry and reason,
Speaker 1: but also those uh that offer a more dystopian view
Speaker 1: of the future. Oh yeah, I mean it would be
Speaker 1: it would contradict my own principles if I only read
Speaker 1: the positive reviews and didn't read the negative reviews. UM
Speaker 1: so so so yes. And there is opposition, and I
Speaker 1: expected opposition UM from from a number of sectors, from
Speaker 1: a kind of mainstream UH literary cultural academic um UH
Speaker 1: cadre of of critics and analysts who are deeply committed
Speaker 1: to the idea that that Western civilization is in decline,
Speaker 1: that all our institutions are evil and corrupt, and that
Speaker 1: it's been in decline. I mean you actually take them
Speaker 1: seriously for for hundred and fifty years. You wonder why
Speaker 1: it hasn't top of yet. Uh. And there's an attitude
Speaker 1: of uh, a constant dudgeon and and the feeling of
Speaker 1: taking umbrage at every institution of modern society. And so
Speaker 1: for someone to like me to come along and say, well,
Speaker 1: for all its laws, you know, we are living longer,
Speaker 1: and racial prejudice is going down, and that the rights
Speaker 1: of women have increased, and poverty is going down globally,
Speaker 1: and there are fewer wars and crime is down. It's
Speaker 1: almost like vindicating the establishment that they're committed to uh
Speaker 1: to to demonizing. So I expected that. I expected push
Speaker 1: back from the religious right, because I argue, for a
Speaker 1: morality that is thoroughly secular, depends only on human well being,
Speaker 1: doesn't depend on scripture or Messiah's or divine commandments. UH.
Speaker 1: And I expected uh um pushback on specific issues. So
Speaker 1: there's a lot of the traditional green movement is dead
Speaker 1: set against nuclear power, for example. On the other side,
Speaker 1: a lot of the American right is dead set against
Speaker 1: the that there's even a threat of climate change. Because
Speaker 1: of mission of UM greenhouse gases. Yeah, so anyway, but
Speaker 1: a lot of opposition and I anticipated all of it. Well,
Speaker 1: we appreciate you joining us and filling us in on
Speaker 1: all of that and expressing your ideas, which are an important, uh,
Speaker 1: an important thing to note given the negative headlines that
Speaker 1: do cross every day that we bring to everybody every day.
Speaker 1: Stephen Pinker, professor of psychology at Harvard University, joining us
Speaker 1: from Boston, Massachusetts, here to talk about what the trade
Speaker 1: policy may mean into weigh in and what we just heard.
Speaker 1: Paresh Upata, director of Currency Strategy at A Mundi Pioneer.
Speaker 1: He joins us here in our eleven three oh studios,
Speaker 1: Thank you so much for being here. What was your
Speaker 1: impression of what we just heard from Peter Navarrow Well,
Speaker 1: I thought what I thought was most interesting comment was
Speaker 1: the need for protectionism in UM certain sectors like he
Speaker 1: mentioned steel and aluminum, and he in fact highlighted aluminum,
Speaker 1: and there's little doubt that aluminum production the US has
Speaker 1: declined sharply. Capacit utilization aluminium is down to thirty seven.
Speaker 1: But I think what we need to see is not
Speaker 1: just arroiffs. I mean to protect the industries one thing,
Speaker 1: but we need investments, and he describes six smelter plants
Speaker 1: that have been shut down. The problem is is that
Speaker 1: we're not seeing new investment in the aluminum industry. So
Speaker 1: if tariffs are implemented, but these aluminum UM firms start
Speaker 1: to UH invest and build new factories, then that's positive
Speaker 1: for growth. But it's unclear if we're going to see that.
Speaker 1: But when't they invest more? If they thought that it
Speaker 1: was going to be more lucrative UM, they would, But
Speaker 1: there's a number of items that's afflicting that industry. One
Speaker 1: is the electricity costs are very high, which makes it
Speaker 1: very difficult for um Alcoa and other lumin producers to
Speaker 1: be cost effective. So as long as their support so
Speaker 1: instead of terroriffs, I would argue that if you can
Speaker 1: give subsidies to reduce the cost of electricity, that is
Speaker 1: probably a more beneficial impact in the aluminum industry than
Speaker 1: than terroriffs, which could ignite a trade war. I'd like
Speaker 1: to know your thoughts about what's going on with the
Speaker 1: US dollar and whether we can see you continued US
Speaker 1: dollar weakness or whether rising US interest rates in the
Speaker 1: United States UH will compel investors to be bullish the dollar.
Speaker 1: It's probably what surprises people the most. You know, we
Speaker 1: have such strong US growth fundamentals, you have a federal
Speaker 1: reserve that is sounding ever bit more hawkish, but yet
Speaker 1: the dollar has has weakened. It reminds me of a
Speaker 1: period in the mid two thousands where we had the
Speaker 1: same thing where the FED was hiking interest rates, but
Speaker 1: the dollar declined seven percent despite FED interest rates going
Speaker 1: up another hundred twenty five basis points. I see a
Speaker 1: similar pattern happening now, and the main difference is that
Speaker 1: global growth remains pretty strong, and I think that that
Speaker 1: factor is likely to keep the dollar under pressure because
Speaker 1: we have a lot of FED rate hikes priced in.
Speaker 1: But I think that the key theme driving the dollar
Speaker 1: for the next year or two is monetary policy convergence,
Speaker 1: where the ECB will tighten policy and the BOJ world
Speaker 1: time policy. But right now, the markets haven't priced in
Speaker 1: a lot of that. So would that be good for
Speaker 1: emerging markets? Um? Well, I think that the global backdrop
Speaker 1: for emerging markets is actually still pretty constructive. Export growth
Speaker 1: is pretty strong, and global financial conditions still remain very accommodative.
Speaker 1: Those are great conditions for emerging markets. The big wild
Speaker 1: card is what what Peter Navarre just talked about and
Speaker 1: what we've been discussing about the prospects of trade wars.
Speaker 1: That remains the real big wild card for global growth,
Speaker 1: and that would be particularly negative for emerging markets because
Speaker 1: trade wars will definitely affect um export depend economies and
Speaker 1: other economies. You know, I'm just struggling to sort of
Speaker 1: extrapolate out here. So if the FED gets more hawkish
Speaker 1: and raises rates more frequently, the dollar continues it's depreciating path,
Speaker 1: meaning that foreign investors are less willing to invest in
Speaker 1: this nation. Isn't this a sort of dangerous recipe allowing
Speaker 1: borrowing costs in the US to rise somewhat more than
Speaker 1: perhaps the economy can handle. Well, I think that's certainly
Speaker 1: a risk and another source of tightening for the overall economy. Um.
Speaker 1: And that's that's the other factor that I didn't describe
Speaker 1: behind dollar weaknesses, the re emergence of twin deficits. Not
Speaker 1: only is the current account deficit rising, but in particular
Speaker 1: the budget deficit, which will rise from three point four
Speaker 1: percent of GDP last year to some estimates i've seen
Speaker 1: nearly six percent. And the issue wance the treasury issues
Speaker 1: were likely to see with fed selling of treasuries and
Speaker 1: new issue in could lead to a crowding out of investors,
Speaker 1: and that will drive up treasury yields and borrowing costs
Speaker 1: for the US at just this at just the wrong time,
Speaker 1: exactly at a time, um, when when we've entered a
Speaker 1: mature phase of the U S economic cycle. Um, But
Speaker 1: we're receiving the stimulus at the time that we probably
Speaker 1: shouldn't be seeing it. You know, I'm wondering whether I'm
Speaker 1: over reading one particular market action today. I'm looking at
Speaker 1: five year forward break events. Basically, this is a measure
Speaker 1: of future traders expectations of inflation over the next five years.
Speaker 1: It's risen to the highest since twenty thirteen. If you
Speaker 1: look at longer term measures of inflation, they've actually been declining.
Speaker 1: This seems to me a set up for stag inflation.
Speaker 1: Do you think that we are heading more toward that
Speaker 1: potential reality? I would say that unlikely to see that
Speaker 1: at this point in time, only because the FETE has
Speaker 1: definitely communicated that the objective of form of of of
Speaker 1: Monterrey policy is gradual rate hikes and as long as
Speaker 1: we see twenty five basis points you know, per quarter.
Speaker 1: I think that that reduces the risk of stagflation um,
Speaker 1: but certainly it's it's worth monitoring, especially with the prospects
Speaker 1: of trade wars and does that start to hurt um
Speaker 1: growth and UM and inflation is really the big wild card.
Speaker 1: It looks like all the trends inflation and wages seem
Speaker 1: to be on this mild upward trend. But if we
Speaker 1: were to see real surprise to the upside, then that
Speaker 1: might force the FED to tighten more aggressively. Then the
Speaker 1: risk of stagflation truly increase. I want to thank you
Speaker 1: for spending time with us and coming into our eleven
Speaker 1: three oh studios. Pereschial Patia is the director of Currency
Speaker 1: Strategy at a Mundi Pioneer. Are we getting closer to
Speaker 1: nuclear or well, many say yes and here to talk
Speaker 1: about that and frankly the companies uh that corporate role
Speaker 1: in this sort of escalation of nuclear tensions is Beatrice Finn,
Speaker 1: executive director of the International Campaign to Abolish Nuclear Weapons
Speaker 1: based in Geneva, Switzerland. She joins us here in our
Speaker 1: eleven three year studios. She also has one a Noble
Speaker 1: Peace prize and she keeps it on her manta face.
Speaker 1: I'm sure. Thank you so much, Beatrice for being here
Speaker 1: with us. You recently put out a report outlining, uh,
Speaker 1: the corporate role in nuclear arms. Can you sort of
Speaker 1: lay out what you found there? Well, we see a
Speaker 1: very worrying international trend where the nuclear arms states are
Speaker 1: modernizing their arsenals and frankly threatening to use nuclear weapons.
Speaker 1: And when Trump says that he wants more usable nuclear weapons,
Speaker 1: there are companies behind that that produced them. Um and
Speaker 1: companies like Honeywell, Boweing Airbus for example, that are making
Speaker 1: these weapons. And of course there's also a huge number
Speaker 1: of financial institutions that are providing them with the money
Speaker 1: to do so. So we've been tracking this and seeing
Speaker 1: that last year there was an additional eighty one billion
Speaker 1: dollars made available for new weapons production. Just real quickly
Speaker 1: does the government pay, like for example, with the US
Speaker 1: government pay Boeing or Honeywell to develop something in advance?
Speaker 1: And are they doing so right now? Yeah, it's huge
Speaker 1: defense contracts that involve these kind of modernization programs of
Speaker 1: nuclear arsenals that are being put out to these companies.
Speaker 1: So people are making profit out of these indiscriminate in
Speaker 1: the inhumane weapons of mass destruction that could end us all.
Speaker 1: Really um back in the this is obviously before, way
Speaker 1: before you were born. But the President Eisenhower, in his
Speaker 1: farewell speech to the nation, spoke about the potential danger
Speaker 1: of the influence in government of the military industrial complex. Uh.
Speaker 1: Eisenhower was also seemingly an advocate that no private industry
Speaker 1: should profit from the manufacture of armaments. Do you believe
Speaker 1: that we use a flawed lens to look at the
Speaker 1: effects of the armaments industry? And I'm what I mean
Speaker 1: by that, particularly a nuclear power nuclear in weapons, not
Speaker 1: nuclear powers, that's a completely different thing, is that they
Speaker 1: provide a level of safety which may sound rhetorically coherent
Speaker 1: but in reality doesn't necessarily work that way. I wonder
Speaker 1: what your thoughts are about that exactly. I mean, these
Speaker 1: weapons put us at the brink of war all the time.
Speaker 1: We've seen throughout the Cold War, but also after the
Speaker 1: Cold War, how close we've been to nuclear war and
Speaker 1: nuclear use, and the consequence of that would be devastating,
Speaker 1: with hundreds of thousands, maybe million, of casualties, long term
Speaker 1: impact both on human health, on the environ but also
Speaker 1: of course the business sector. Right. But I guess I
Speaker 1: guess I was going with this is that, um, yes,
Speaker 1: they sound rhetorically horrible and they are nuclear weapons, but
Speaker 1: that they provide a kind of context that then allows
Speaker 1: for the escalation of what you might describe as conventional warfare,
Speaker 1: whether that is using chemical weapons in Syria or whether
Speaker 1: that is using terrorists bombs to you know, blow up
Speaker 1: in the cin civilians. In other words, it gives you
Speaker 1: that kind of cover that says, well, we can't use
Speaker 1: nuclear weapons, so we're going to use these other things.
Speaker 1: But they kill people nonetheless, absolutely, And I think the
Speaker 1: entire weapons industry is a problem, but these weapons are
Speaker 1: really at another level in a way, with the possibility
Speaker 1: to in just a few seconds wipe out an entire city. Well,
Speaker 1: some people would argue that, you know, nuclear weapons have
Speaker 1: actually prevented another world war since their advent, and basically
Speaker 1: that the threat of using them has actually created peace. Uh.
Speaker 1: And a lot of people would say that if a
Speaker 1: country does fall behind with respect to modernizing their their
Speaker 1: stashes of nuclear weapons, that they could make it more
Speaker 1: likely that there could be some kind of conflict. I mean,
Speaker 1: what do you say to that? Argument, well, we're the
Speaker 1: threat of using new weapons is carried out all the time.
Speaker 1: We have big submarines and airplanes going around with these
Speaker 1: weapons and sort of hartrigal alert, and it also means
Speaker 1: that there could be a risk of an accident misunderstanding.
Speaker 1: The terrence will not always hold up. One day, we
Speaker 1: will see new weapons being used. We have seen many examples,
Speaker 1: for example, where it hasn't prevented war conflict. We are
Speaker 1: have been that brink of war with North Korea right now.
Speaker 1: When you talk with companies, when you talk to Boeing
Speaker 1: or honeywell, what do they say and what do you
Speaker 1: say to them? These companies and also the financial institutions
Speaker 1: and invested and they don't like to admit that they
Speaker 1: are involved in this and trying to sort of d vate.
Speaker 1: So I think it's really important for the public and
Speaker 1: for consumers to know what they are producing. And I
Speaker 1: think that the report that we produced is to also
Speaker 1: increase transparency and let consumers know where their money goes
Speaker 1: and where they're punching funds are being used for. So
Speaker 1: I think it's um it's for us, it's really important
Speaker 1: to have this dialogue with the companies. Also and to
Speaker 1: sort of try to find out what they are producing
Speaker 1: and and expose that in a way to make the
Speaker 1: consumers be able to choose. Do you think that the
Speaker 1: efforts on the part of US presidents, at least in
Speaker 1: the past to reduce the nuclear stockpile, which really every
Speaker 1: president has done, have been matched by the efforts, let's say,
Speaker 1: on the part of the Russian government. I mean, we've
Speaker 1: seen tensions go up and down. We've seen some huge progress.
Speaker 1: We saw that in the eighties, for example, we saw
Speaker 1: a huge Paris in the sixties after the Cuban missile crisis.
Speaker 1: Right now we see a very negative trend. So I
Speaker 1: think that there's US a lot of concern right now
Speaker 1: that we're going in the wrong direction in the nuclear
Speaker 1: arm states. We saw put in last week with an
Speaker 1: aggressive statement showing off new types of missiles. Of course,
Speaker 1: the US, the Trump new Nuclear Posture Review um shows
Speaker 1: uh an attempt to lower the bar for using nuclear
Speaker 1: weapons and developed more usable nuclear weapons. And we see
Speaker 1: all the new Crown states right now in a very
Speaker 1: negative trend. But we also see a lot of countries
Speaker 1: going in the other direction. We negotiate a treaty prohibiting
Speaker 1: nuclear weapons last year and seeing a lot of leadership
Speaker 1: from around the world and countries rejecting this weapon. Beatrice Finn,
Speaker 1: thank you so much for joining us. Really a pleasure,
Speaker 1: although you know I'm gonna be worrying about armageddon for
Speaker 1: the rest of the day. But other than that, it
Speaker 1: was a pleasure. Beatrice Finn, executive director of the International
Speaker 1: Campaign to Abolish Nuclear Weapons based in Geneva. She is
Speaker 1: a Nobel Peace Prize winner. Or thanks you for coming
Speaker 1: in oil. A lot going on here. I was struck
Speaker 1: by the I e A. The projection that US shale
Speaker 1: will account for about half of all new demand within
Speaker 1: the next ten years. Vincent Piazza, senior equity energy analysts
Speaker 1: in global sector leader for Bloomberg Intelligence, joins us. Now,
Speaker 1: how does the increasing US production and frankly exports to
Speaker 1: the rest of the world affect oil prices in your estimation? So,
Speaker 1: I think what we have talked about from time to
Speaker 1: time when over the last several years is the resilience
Speaker 1: of US oil production. And if you take a look
Speaker 1: at where we bottomed in production of the last couple
Speaker 1: of years, somewhere around eight point five eight point six
Speaker 1: million barrels we've driven this higher from the recovery will
Speaker 1: likely come in somewhere around ten point seven almost eleven
Speaker 1: million barrel UH per day in eighteen UH and that
Speaker 1: will likely shift higher to about eleven million barrels in
Speaker 1: twenty nine. So you're seeing this strong resilient growth in
Speaker 1: the US output, especially from unconventional resources from the Permian
Speaker 1: and to a lesser extent from the baking and also
Speaker 1: UH from the Eagle forward. In general, the liquids dominant plays.
Speaker 1: But Lisa, it's not just an oil or liquids driven story.
Speaker 1: It's also a natural gas story as well. Uh So
Speaker 1: across the hydro carbon chain UM natural gas from apple Chia,
Speaker 1: also natural gas from the Permian as well. So you're
Speaker 1: seeing a renaissance not just in the crude oil side,
Speaker 1: but also in UH natural gas from various plays, and
Speaker 1: that leads to growth in len G exports and also
Speaker 1: pipeline exports to other countries such as Mexico. Who sets
Speaker 1: the price. What's the price setting mechanism for oil? And
Speaker 1: is it different for oil? And it is from let's
Speaker 1: say natural gas and liqui five Naturally it's it's it's
Speaker 1: the standard demand versus supply really UM. And what we've
Speaker 1: seen here from the US perspective is this strong growth
Speaker 1: UH in crude oil output and that has placed sort
Speaker 1: of a limiting factor on the surge UH in crude
Speaker 1: oil prices. In general. What you're seeing here is capacity
Speaker 1: that that's being taken offline in other parts of the world,
Speaker 1: namely OPEC, not having as much of an impact relative
Speaker 1: to history UM as it is as it is today. Uh.
Speaker 1: I read a story yesterday on the Bloomberg that I
Speaker 1: thought was kind of interesting. Uh. It was members of
Speaker 1: OPEC senior officials saying that they were speaking to hedge
Speaker 1: funds down at the SARAH conference in Houston it's going
Speaker 1: on right now, and UH they were concerned they felt
Speaker 1: like hedge funds didn't understand their industry. Uh. Did you
Speaker 1: see that story? UM? I did not, but it wouldn't
Speaker 1: surprise me, right. I mean, given the volatility and the
Speaker 1: cyclicality of oil and gas UM, there are a lot
Speaker 1: of factors that go into the equation, and it is
Speaker 1: a conundrum for not just UH energy specific hedge funds,
Speaker 1: but generalists as well. So what do OPEC members want
Speaker 1: investors to be seeing that they're not right now, I
Speaker 1: think the history of OPEC has been um a sense
Speaker 1: that while there may be constraints put around UM output,
Speaker 1: that there always been some leakage on output. In other words,
Speaker 1: compliance has always been difficult. And what they want investors
Speaker 1: to appreciate that they seem pretty steadfast in their commitment
Speaker 1: to controlling the output from their side. What I think
Speaker 1: many have misunderstood and what we had b I have
Speaker 1: we've spoken about, is this resurgence in crude oil, this
Speaker 1: resilience in crude oil production, not only crude oil, but
Speaker 1: also natural gas production because of the shorter cycle nature
Speaker 1: of unconventional output. What about the input costs and how
Speaker 1: that relates to those refiners and those in the mid
Speaker 1: stream of production. Because we've heard a lot about how
Speaker 1: low input cost means that you've got a nice fat
Speaker 1: marchin for if you're running an oil refinery. Well, those
Speaker 1: differentials have now narrowed somewhat given the given the tighter
Speaker 1: balances in Cushing, it used to be wider difference in
Speaker 1: the spread between Brent and w T i UH. That
Speaker 1: has now consolidated, and now you're in a seasonal period
Speaker 1: where refiners are going through their traditional maintenance getting ready
Speaker 1: for the big driving season. Getting ready for the big
Speaker 1: driving season. Um, so you do hab refiners coming offline.
Speaker 1: In general, that differential now is somewhere around three dollars.
Speaker 1: It was almost twice that at one point last year.
Speaker 1: But given the output surge in crude oil, uh, that
Speaker 1: differential seems to be where will likely likely be in
Speaker 1: the near term. All right, I want to thanks very
Speaker 1: much for being here and as always appreciate the thoughts
Speaker 1: and experience of Vincent Piazza. He is our senior equity
Speaker 1: energy analyst and global sector leader for Bloomberg in intelligence.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
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