WEBVTT - Daniel Yergin Sees a 'Different World' Emerging After the Hormuz Crisis 0:00:00.080 --> 0:00:02.240 Hey there, au thu Oughts listeners. Joe and I are 0:00:02.440 --> 0:00:04.920 very excited to announce that we will be holding our 0:00:05.000 --> 0:00:07.880 first ever live show in London. That's right. 0:00:07.920 --> 0:00:11.400 We've done shows around the country around the US affair 0:00:11.400 --> 0:00:14.560 amount always a lot of fun. Me guests record live 0:00:14.600 --> 0:00:18.000 episodes on stage, fans of the podcast get to meet 0:00:18.079 --> 0:00:20.120 other fans of the podcast, and so forth. But this 0:00:20.160 --> 0:00:22.200 is our first time doing one of these outside the 0:00:22.280 --> 0:00:22.920 US in London. 0:00:22.920 --> 0:00:24.880 As you said, so if you want to come here 0:00:25.040 --> 0:00:28.400 some live recordings of authoughts episodes, if you want to 0:00:28.400 --> 0:00:30.000 hang out with me and Joe, if you want to 0:00:30.000 --> 0:00:32.680 hang out with other au Thoughts listeners, then you should 0:00:32.680 --> 0:00:35.760 definitely head over to bloomberg dot com forward slash aud Thoughts, 0:00:35.760 --> 0:00:38.599 where you can find all the info there and purchase tickets. 0:00:38.760 --> 0:00:40.920 It's going to be on the evening of May seventh 0:00:40.960 --> 0:00:44.080 at Wilton's Music Hall. Doors open at six and the 0:00:44.120 --> 0:00:45.400 recordings start at seven. 0:00:45.560 --> 0:00:48.040 Yep, there's still a few tickets available, so go look 0:00:48.040 --> 0:00:50.200 on the website, go look through our twitters. The ticket 0:00:50.200 --> 0:00:52.560 link is also in the show notes to this episode, 0:00:52.640 --> 0:00:55.200 so go buy a ticket before they sell out. 0:00:55.360 --> 0:00:56.200 Hope to see you there. 0:00:58.800 --> 0:01:12.680 Bloomberg Audio Studios, Podcasts, Radio News. 0:01:14.600 --> 0:01:17.440 Hello and welcome to another episode of the Odd Lots podcast. 0:01:17.520 --> 0:01:20.440 I'm Tracy Alloway and I'm Joe. Why isn't thal Joe 0:01:21.319 --> 0:01:24.440 in the Odd Lots tradition of Spring of twenty twenty six. 0:01:24.480 --> 0:01:26.200 I'm going to start this podcast by saying that we 0:01:26.240 --> 0:01:29.760 are recording on April seventeenth at one pm. 0:01:29.600 --> 0:01:32.440 One on one pm. Yes, And of course the reason 0:01:32.480 --> 0:01:35.080 we have to specified dates is because this is yet 0:01:35.080 --> 0:01:39.920 another episode about commodities, oil, do war on Iran and 0:01:39.920 --> 0:01:42.759 so forth. And we've already had multiple mixed headlines today. 0:01:42.800 --> 0:01:46.480 But by and large, even with the mixed headlines, and again, 0:01:46.560 --> 0:01:49.160 who knows what's going to happen, but you know, the 0:01:49.160 --> 0:01:51.880 market is moving past the acute phase of the war. 0:01:51.760 --> 0:01:55.040 Pretty clearly, possibly possibly right. 0:01:54.880 --> 0:01:56.560 Now, the market is moving past it now. 0:01:56.600 --> 0:02:00.840 The market, the market is certainly interpreting this as moving past. Yes, absolutely, 0:02:00.880 --> 0:02:03.720 But again things are very fluid. They can always change 0:02:03.760 --> 0:02:05.800 on a dime, which they have been. I'm convinced that 0:02:05.840 --> 0:02:08.720 one day in early twenty twenty six will be able 0:02:08.720 --> 0:02:11.520 to record one of these energy related episodes without saying 0:02:11.600 --> 0:02:15.280 exactly what time and date it is. But not yet. However, 0:02:15.440 --> 0:02:17.960 I think that no matter what happens with the status 0:02:18.000 --> 0:02:22.040 of the ceasefire, it seems very clear that what we've 0:02:22.120 --> 0:02:24.639 just experienced has been I'm not even sure if you 0:02:24.639 --> 0:02:27.280 could say a wake up call, but certainly an acute 0:02:27.600 --> 0:02:31.360 phenomenon that is being interpreted very differently by different players 0:02:31.360 --> 0:02:31.880 in the world. 0:02:32.240 --> 0:02:35.720 I would say three things that, regardless of how this 0:02:35.840 --> 0:02:39.519 ultimately resolves itself, are on my mind right now, and 0:02:39.560 --> 0:02:42.280 they all relate to past episodes. So of course, we 0:02:42.360 --> 0:02:44.800 did that episode with Bob Brackett. We talked about, Okay, 0:02:44.800 --> 0:02:47.720 this is perhaps going to be a change in global 0:02:47.720 --> 0:02:51.200 and ad gas flows, maybe to the benefit of American 0:02:51.240 --> 0:02:54.519 producers of LNG, depending on how much that can be expanded. 0:02:54.880 --> 0:02:57.720 We did that episode with Alex Turnbull who said in 0:02:57.800 --> 0:03:00.560 East Asia there's going to be an appetite for really 0:03:00.680 --> 0:03:04.440 starting more nuclear plans. And also we've seen this surge 0:03:04.720 --> 0:03:08.960 in ev buying there, so already a change in East Asia. 0:03:09.000 --> 0:03:11.440 And then I'm thinking back to our and this was 0:03:11.480 --> 0:03:14.480 before the war, but our most recent conversation with Jeff Curry, 0:03:14.720 --> 0:03:17.560 who's talked about this sort of the story of global 0:03:17.560 --> 0:03:20.160 commodity hoarding and this being like a sort of real 0:03:20.200 --> 0:03:23.760 post twenty twenty story in generally and so wondering whether 0:03:24.040 --> 0:03:28.640 this will accelerate structural shifts towards more resource nationalism, et cetera. 0:03:28.840 --> 0:03:32.160 Resource guarding. Yeah, I mean, whatever you can say about 0:03:32.200 --> 0:03:34.520 the current environment, one thing seems very certain, which is 0:03:34.560 --> 0:03:37.080 if you compare where we are now to say, I 0:03:37.080 --> 0:03:39.880 don't know, twenty eighteen or twenty nineteen before the pandemic 0:03:40.240 --> 0:03:42.400 just feels so different totally. If you think about that 0:03:42.600 --> 0:03:46.040 energy environment, it was all about you know, cheap us shale. 0:03:46.680 --> 0:03:50.880 It was about lots of money flowing into green energy 0:03:50.960 --> 0:03:55.440 and VSG and aiding the energy transition. Russian gas was 0:03:55.480 --> 0:03:58.640 going to power Europe for pretty much forever. And now 0:03:58.760 --> 0:04:01.840 we are just in a very different worlds. So the 0:04:02.000 --> 0:04:07.080 long term trajectory of the energy layout, let's put it 0:04:07.120 --> 0:04:09.600 that way, seems to happen altered, like no matter what 0:04:09.760 --> 0:04:12.400 happens immediately with Iran. And who do we call when 0:04:12.400 --> 0:04:15.200 we want to talk about longer term structural changes in 0:04:15.240 --> 0:04:18.400 global energy market? Only one name, only one name. So 0:04:18.480 --> 0:04:20.160 I'm very happy to say that we do, in fact 0:04:20.279 --> 0:04:24.320 have the perfect guest again, he's coming back on the podcast. 0:04:24.640 --> 0:04:27.120 Daniel Jurgen. He is, of course vice chairman of S 0:04:27.160 --> 0:04:29.800 and P Global. He's the author of the prize the 0:04:29.800 --> 0:04:33.520 Epic Quest for Oil, Money and Power, basically the book 0:04:33.880 --> 0:04:36.560 on oil history, as well as the new book, The 0:04:36.600 --> 0:04:40.320 New Map, Energy Climate and the Clash of Nations. So Dan, 0:04:40.440 --> 0:04:42.440 thank you very much for coming back on the podcast. 0:04:42.560 --> 0:04:43.400 Really appreciate it. 0:04:43.640 --> 0:04:46.359 Well, thank you, And as you said, it could not 0:04:46.400 --> 0:04:49.920 be more timely, but things do change very quickly. 0:04:50.240 --> 0:04:53.640 Yes, okay, the caveat is right up front. But I 0:04:53.640 --> 0:04:56.960 guess if we go back to early March, I would 0:04:56.960 --> 0:04:58.600 just love to get a sense of what you were 0:04:58.680 --> 0:05:01.200 thinking as you saw some of these headlines about the 0:05:01.240 --> 0:05:04.760 Straight of Horror Moves being closed, Because for anyone who's 0:05:04.800 --> 0:05:07.000 read the book, I mean the closure of the Strait 0:05:07.000 --> 0:05:10.920 of Horror Moves is basically kind of the nightmare scenario 0:05:11.040 --> 0:05:13.360 which has been looming in a lot of energy analyst 0:05:13.400 --> 0:05:16.160 minds for a very long time, and here you were 0:05:16.960 --> 0:05:20.080 seeing it actually happen. What was going through your head. 0:05:20.360 --> 0:05:23.440 Well, it was that, in fact, the nightmare scenario that 0:05:23.560 --> 0:05:27.120 had been not only for energy but for strategic planners 0:05:27.160 --> 0:05:29.640 for decades had happened. I think it's one of those 0:05:29.680 --> 0:05:32.200 things that people looked at as a scenario but thought 0:05:32.240 --> 0:05:35.480 it would never happen. But then it happened, and it 0:05:35.520 --> 0:05:37.960 does change the world and it changes the way people 0:05:37.960 --> 0:05:41.320 think about energy. We've had supply chain shocks, but this 0:05:41.480 --> 0:05:44.200 was the mother of all supply chain shocks in terms 0:05:44.200 --> 0:05:45.880 of the closure of the strait of horror moves. 0:05:46.240 --> 0:05:50.120 Look if the ceasefire is durable and the strait opens 0:05:50.200 --> 0:05:52.040 up in a short period of time, and look, Okay, 0:05:52.440 --> 0:05:56.440 it made sense that oil prices surged, but didn't go 0:05:56.520 --> 0:05:59.280 to say, two hundred dollars plus, because you know, we'll 0:05:59.320 --> 0:06:02.039 be able to say in retrospect it turned out to 0:06:02.080 --> 0:06:06.880 be a short war. We had buffer stocks, et cetera. Nonetheless, 0:06:06.960 --> 0:06:09.440 I think, like in the middle of March, there was 0:06:09.480 --> 0:06:13.240 this feeling that something is weird because you hear the 0:06:13.279 --> 0:06:17.760 mother of all supply shocks, and what's like and the 0:06:17.920 --> 0:06:22.080 aunt of all what's like the aunt of like what's like? 0:06:22.560 --> 0:06:24.760 Oh, you mean I thought you meant the actual No, no. 0:06:25.120 --> 0:06:27.440 The mother of all supply shocks, and then the aunt 0:06:27.520 --> 0:06:28.960 of all like pricey. 0:06:28.680 --> 0:06:31.920 I'm trying to say, like second cousin removed, the second removed. 0:06:32.000 --> 0:06:33.679 I mean, it was like, remember we had two different 0:06:33.720 --> 0:06:36.080 prices going at the same time. We had the Brent, 0:06:36.360 --> 0:06:39.520 the futures price, which was always saying, well, this is 0:06:39.560 --> 0:06:41.720 going to end and prices are going to come down, 0:06:42.000 --> 0:06:44.360 and then there was a dated Brent the near term. 0:06:44.440 --> 0:06:47.599 We said, we are having a major dislocation and prices 0:06:47.600 --> 0:06:50.000 are really going up, and we've never seen that dislocation 0:06:50.440 --> 0:06:53.040 on that scale before. It was like two different visions 0:06:53.040 --> 0:06:54.280 of the world almost. 0:06:53.920 --> 0:06:56.960 So, actually, why don't you I've read like ten explainers 0:06:57.000 --> 0:07:00.640 on some of these gaps between the front month price 0:07:01.120 --> 0:07:04.599 and the data brand or the quote, physical price, etc. 0:07:05.040 --> 0:07:08.120 But how were you at the time thinking about this gap. 0:07:08.240 --> 0:07:10.720 Was it as simple as the market simply does not 0:07:10.880 --> 0:07:12.880 believe that the straight will stake to well. 0:07:13.040 --> 0:07:15.600 I did think that there was a difference between how 0:07:15.640 --> 0:07:19.160 the financial markets, which were processing things like statements by 0:07:19.160 --> 0:07:22.720 the president's statements from Iran and so forth, looking at 0:07:22.720 --> 0:07:27.160 the future, and the way the physical market, the industry market, 0:07:27.400 --> 0:07:29.960 and at SERA week, I remember one of the CEOs 0:07:29.960 --> 0:07:32.600 said in one of the dialogues that risk is being 0:07:32.680 --> 0:07:35.480 underpriced in the market because I think from the industry 0:07:35.480 --> 0:07:38.360 point of view, they saw there are major dislocations and 0:07:38.440 --> 0:07:42.760 those dislocations are playing out unevenly across the world. Asia 0:07:42.880 --> 0:07:46.480 hit the hardest, Europe feeling it, and then the US 0:07:46.520 --> 0:07:49.120 mainly seeing it in terms of rising prices at the 0:07:49.120 --> 0:07:52.680 gasoline pub but no problem getting supplies. But in Asia, 0:07:52.760 --> 0:07:54.360 a big problem getting supplies. 0:07:54.720 --> 0:07:56.640 So I'm glad you mentioned Siera Week, and this is 0:07:56.680 --> 0:07:58.760 also one of the reasons we wanted to talk to you. 0:07:59.240 --> 0:08:01.840 So Sarah Week, which is the sort of annual energy 0:08:01.920 --> 0:08:06.320 industry gathering in Houston right every year, that took place 0:08:06.680 --> 0:08:09.960 in sort of mid to late March, smack dab in 0:08:10.000 --> 0:08:12.880 the middle of all of these very changing headlines which 0:08:12.920 --> 0:08:15.880 we've been discussing. What was the mood like over there 0:08:15.920 --> 0:08:19.200 when you were talking to you know, actual participants in 0:08:19.240 --> 0:08:20.080 the market. 0:08:20.360 --> 0:08:22.800 I think in terms of actual participants in the market, 0:08:22.880 --> 0:08:26.240 particularly you know, the CEOs of the companies. On the 0:08:26.280 --> 0:08:29.720 interviews that I did on stage platform, they were all 0:08:30.000 --> 0:08:33.280 feeling that there was a real dislocation, a real scramble. 0:08:33.320 --> 0:08:36.240 They had worried about getting their employees to safety, worried 0:08:36.240 --> 0:08:39.280 about the safety their colleagues, their facilities, and then just 0:08:39.360 --> 0:08:42.839 how these markets are going to be supplied and what 0:08:42.840 --> 0:08:45.240 would be the demand destruction what would happen to price. 0:08:45.600 --> 0:08:48.760 So they were very concerned with the logistics of, you know, 0:08:48.840 --> 0:08:51.360 of having lost the biggest supply of oil that had 0:08:51.400 --> 0:08:53.880 ever happened in history. And by the way, it was 0:08:53.920 --> 0:08:58.280 not oil but also natural gas, which people have focused 0:08:58.280 --> 0:09:01.280 on because I think there was less awareness of how 0:09:01.320 --> 0:09:04.320 significant it was in terms of LNG. And then I 0:09:04.320 --> 0:09:07.280 think the eye opener that maybe all these scenarios that 0:09:07.280 --> 0:09:09.520 people had been doing for the years about the closure 0:09:09.559 --> 0:09:12.560 of the Strait of Horror moves people not thought about fertilizer, 0:09:12.559 --> 0:09:15.240 They're not thought about petrochemicals, they've not thought about sulfur, 0:09:15.360 --> 0:09:19.400 they'd not thought about helium, which the semiconductor industry in 0:09:19.440 --> 0:09:22.920 Taiwan desperately needs. And so actually one of the other 0:09:22.960 --> 0:09:25.320 things that came out of this was the recognition of 0:09:25.360 --> 0:09:28.280 how the Gulf countries Saudi Arabia had become much more 0:09:28.280 --> 0:09:31.160 integrated into the world economy. And by the way, there 0:09:31.160 --> 0:09:35.160 were also exporters of one other extremely valuable commodity called 0:09:35.240 --> 0:09:37.960 money with the size of their reserves. 0:09:38.320 --> 0:09:40.160 Well, I'm glad you just listed a bunch of all 0:09:40.160 --> 0:09:42.880 thoughts episodes basically, so I feel like we've ticked each 0:09:42.960 --> 0:09:47.080 of those boxes in separate episodes, including Golf Capital. So 0:09:47.240 --> 0:09:50.120 that's good. But just going back to Joe's question, do 0:09:50.160 --> 0:09:53.680 you have a framework in your mind to explain why 0:09:54.240 --> 0:09:58.400 the physical market and the actual CEOs of energy companies 0:09:58.440 --> 0:10:01.040 are freaking out versus what's going on with the futures 0:10:01.040 --> 0:10:02.079 price or was going on with. 0:10:02.040 --> 0:10:04.360 Well, yeah, well I think it is because the futures 0:10:04.360 --> 0:10:08.599 price is responding to so many forces there, and the 0:10:08.760 --> 0:10:11.040 people investing in futures, a lot of them, they don't 0:10:11.080 --> 0:10:14.080 have to worry about supplying a customer. They don't have 0:10:14.120 --> 0:10:16.200 to worry about how do we get jet fuel to 0:10:16.559 --> 0:10:18.800 sure that the airplanes keep flying, And as you know 0:10:18.880 --> 0:10:22.440 in Asia, flights have been canceled. In India, you know, 0:10:22.520 --> 0:10:25.520 restaurants were closed because they use LPG for cooking and 0:10:25.559 --> 0:10:29.000 they didn't have enough cooking LKPG for that. So for 0:10:29.120 --> 0:10:31.800 Asia it is a real shortage situation. And I think 0:10:31.840 --> 0:10:34.120 that's what if you have a global perspective, that's what 0:10:34.200 --> 0:10:37.000 you were coping with in the United States. You know, 0:10:37.040 --> 0:10:40.400 one difference between this and previous energy crises, the famous 0:10:40.480 --> 0:10:42.719 energy crisis of the past that I've written about in 0:10:43.320 --> 0:10:45.720 the Prize and the New Map, and so forth is 0:10:45.760 --> 0:10:49.440 the position of the United States so dramatically changed, and 0:10:49.520 --> 0:10:51.920 that has been a huge buffer for consumers in this 0:10:52.000 --> 0:10:53.439 country and for the economy. 0:10:53.920 --> 0:10:57.480 Had it not been for the war, how much would 0:10:57.480 --> 0:11:01.760 a seero week in twenty twenty six have been dominated 0:11:02.080 --> 0:11:05.600 by conversations about powering AI data centers and so forth. 0:11:05.760 --> 0:11:08.400 How much would that have been the story had it 0:11:08.480 --> 0:11:10.240 not been for the war and around well. 0:11:10.040 --> 0:11:13.480 It was anyway. You know, we had the president of Google, 0:11:13.520 --> 0:11:16.239 the president of Microsoft there, we had people from Navidia, 0:11:16.280 --> 0:11:20.199 from other chip manufacturers. It was a real change. The 0:11:20.280 --> 0:11:23.319 focus was, you know, the tech industry meets the energy 0:11:23.360 --> 0:11:25.920 industry and how do we get along and kind of 0:11:25.960 --> 0:11:29.120 this panic about do we have enough electricity, particularly in 0:11:29.120 --> 0:11:31.720 the United States. And I would have said it then 0:11:31.800 --> 0:11:36.640 that energy security had shifted from oil and gas to electricity, 0:11:37.080 --> 0:11:39.760 but of course with this crisis it was back also 0:11:39.880 --> 0:11:42.080 was about oil and gas, but that was you know, 0:11:42.120 --> 0:11:46.319 the big discussion that ran through it, and about particularly 0:11:46.320 --> 0:11:49.360 the role of natural gas because on the one hand, 0:11:49.400 --> 0:11:52.640 the US has built up this big LNG industry, which 0:11:53.400 --> 0:11:56.680 plays a much bigger role in our economy than people recognize. 0:11:56.720 --> 0:11:59.679 I mean, our latest numbers are seventy five percent of 0:11:59.679 --> 0:12:03.319 the value of all semiconductor exports is represented by LNG, 0:12:04.040 --> 0:12:07.040 you know, twice the value of all Hollywood and television 0:12:07.040 --> 0:12:10.920 and entertainment exports. But now natural gas is coming back 0:12:10.960 --> 0:12:15.480 into It's already the significant, but more significant for electric generation. 0:12:16.160 --> 0:12:19.000 And what a change from the Biden administration which wanted 0:12:19.040 --> 0:12:22.760 to have hydrocarbons out of electric generation by twenty thirty five. 0:12:23.280 --> 0:12:26.120 So this question of what are the supply chains to 0:12:26.200 --> 0:12:30.160 assure electricity to support this AI boom, which is represents 0:12:30.280 --> 0:12:33.320 in the United States about half of GDP growth? 0:12:33.640 --> 0:12:36.240 So what were people saying on that front? So, you know, 0:12:36.280 --> 0:12:38.600 we've had episodes of the show where we've talked about 0:12:38.600 --> 0:12:41.400 maybe over capacity when it comes to building out energy 0:12:41.440 --> 0:12:43.920 for data centers. There are still plenty of people out 0:12:43.920 --> 0:12:46.880 there who think that the energy demands are just going 0:12:46.920 --> 0:12:48.760 to be so enormous that we're always going to be 0:12:48.800 --> 0:12:51.800 playing catch up. There's a debate over who should bear 0:12:51.960 --> 0:12:56.920 responsibility for building out that new energy supply. So should 0:12:56.960 --> 0:13:00.560 it be the tech companies themselves or you know, someone else, 0:13:00.600 --> 0:13:03.679 given it's a strategic technology. What are you hearing on 0:13:03.720 --> 0:13:05.040 the ground, Well. 0:13:05.080 --> 0:13:07.040 I think the tech companies are going to be a 0:13:07.200 --> 0:13:09.560 much bigger player's electricity than they would have been in 0:13:09.640 --> 0:13:12.520 the past. I remember again the CEO of one of 0:13:12.520 --> 0:13:14.800 the president of one of those companies said in two 0:13:14.800 --> 0:13:17.320 thousand and eight, when they built their first data center, 0:13:17.920 --> 0:13:20.880 they didn't talk about electricity, they didn't worry about electricity. 0:13:21.120 --> 0:13:23.160 So it's been a huge learning and as one of 0:13:23.160 --> 0:13:25.280 them said, we've had to learn to talk to the 0:13:25.320 --> 0:13:28.520 power industry. You know, a software engineer, maybe I don't know, 0:13:28.559 --> 0:13:31.280 it's a month or two of work to do software. 0:13:31.720 --> 0:13:34.560 It's seven or eight or ten years from an energy 0:13:34.600 --> 0:13:37.400 company for an engineer to get a project done. And 0:13:37.559 --> 0:13:40.280 that's the gulf between the two of them, and the 0:13:40.360 --> 0:13:42.160 sense that there is a race, and it's you know, 0:13:42.240 --> 0:13:44.800 it's always said it's the US China race, but it's 0:13:44.840 --> 0:13:49.079 also a race, very definitely among companies to build capacity. Now, 0:13:49.120 --> 0:13:51.200 one question I think you were getting at is that 0:13:51.280 --> 0:13:54.360 the sense that there is the contrarian view that chips 0:13:54.400 --> 0:13:57.760 will become more efficient and maybe electricity demand will not 0:13:57.840 --> 0:13:59.839 be as great as it is. But at this point, 0:14:00.080 --> 0:14:02.760 every time you know, you talk to you know, a 0:14:02.840 --> 0:14:05.680 utility executive, they say, and we heard this at Sarah, 0:14:06.320 --> 0:14:08.120 you know, and they had years and years of no 0:14:08.240 --> 0:14:10.920 growth or very flat growth in demand. They'll say this 0:14:11.000 --> 0:14:12.760 year it's going to grow five percent, or it's going 0:14:12.840 --> 0:14:16.040 to grow eight percent. And there are only so many electricians, 0:14:16.040 --> 0:14:19.360 there are only so many transformers. So again, those supply 0:14:19.480 --> 0:14:22.440 chains are very important there too. 0:14:37.720 --> 0:14:42.200 How much do you expect to be truly internalized or 0:14:42.360 --> 0:14:47.600 vertically integrated within the tech industry when it comes to energy. 0:14:47.680 --> 0:14:49.880 We see headlines from here and there, like you know, 0:14:49.960 --> 0:14:53.960 like Google will make an investment in a small module 0:14:54.040 --> 0:14:56.640 or reactor startup, but I never I know how like 0:14:57.000 --> 0:15:00.000 serious that is. Or from time to time it's like, oh, 0:15:00.240 --> 0:15:02.920 Meta hired an energy trader and this is new and 0:15:02.960 --> 0:15:05.560 this is different, et cetera. Like what do you think 0:15:05.640 --> 0:15:10.000 that the big tech companies are ultimately going to internalize 0:15:10.160 --> 0:15:12.400 as we need to have this be as part of 0:15:12.400 --> 0:15:15.760 our core competency rather than we are going to work 0:15:15.800 --> 0:15:17.640 with some third party partner on. 0:15:17.800 --> 0:15:20.640 Yeah, we can see that they've hired people who come 0:15:20.680 --> 0:15:23.360 out of the energy industry, either from the oil and 0:15:23.400 --> 0:15:26.960 gas industry or in electric power industry. So they're building 0:15:27.080 --> 0:15:30.680 up the capacity to do that and their investments show it. 0:15:31.120 --> 0:15:33.720 You mentioned, you know, one company. But look at Amazon, 0:15:33.720 --> 0:15:37.640 They've invested in x Energy, which is a small modular 0:15:37.680 --> 0:15:41.240 reactor company. And I think the idea is that I 0:15:41.280 --> 0:15:43.760 hear from other of these tech companies too, will invest 0:15:43.840 --> 0:15:46.280 in them and help drive down the costs and see 0:15:46.280 --> 0:15:50.760 them as part of the way of meeting the electricity demand. 0:15:51.160 --> 0:15:53.280 And I think, I know I wrote down, as you said, 0:15:53.320 --> 0:15:56.360 the themes that you had talked about on nuclear. I mean, 0:15:56.360 --> 0:15:59.160 this crisis is a boost to nuclear, but I think 0:15:59.440 --> 0:16:02.680 AI has been a big boost to nuclear in terms 0:16:02.720 --> 0:16:05.680 of the sense among tech companies that nuclear has to 0:16:05.720 --> 0:16:09.640 be part of the picture. And just this morning I 0:16:09.720 --> 0:16:12.800 was talking with the head of one of the largest 0:16:13.080 --> 0:16:17.560 government funds, and you know, they're invested a non US 0:16:17.680 --> 0:16:21.400 fund and they're invested in fusion. So you know, there's 0:16:21.480 --> 0:16:24.200 just a different attitude towards nuclear, and I think the 0:16:24.240 --> 0:16:27.080 needs of the tech companies is one of the things 0:16:27.120 --> 0:16:29.600 that's really driven that well. 0:16:29.640 --> 0:16:31.920 Actually, on this note, I wanted to ask you about 0:16:32.160 --> 0:16:35.400 renewables and you know, the green energy transition and all 0:16:35.440 --> 0:16:37.160 of that. It feels like in some parts of the 0:16:37.200 --> 0:16:41.280 world recent events in the golf have maybe hastened some 0:16:41.400 --> 0:16:44.080 of that transition. Although I can't even call it a 0:16:44.120 --> 0:16:47.680 transition because, as we discussed with Alex Turnbull, it's like, yes, 0:16:47.720 --> 0:16:50.800 people are buying a bunch more evs, but those evs 0:16:50.840 --> 0:16:53.000 are going to be powered by coal for you know, 0:16:53.120 --> 0:16:56.760 the foreseeable future, because there's an energy shortage. What exactly 0:16:56.800 --> 0:16:59.360 is going on with renewables now is are people still 0:16:59.400 --> 0:17:03.000 seeing that as a substitute for traditional energy or is 0:17:03.000 --> 0:17:06.840 this more of an addition to bolster I guess diversification. 0:17:07.480 --> 0:17:10.520 Well, first, we have to note that over ninety percent 0:17:10.560 --> 0:17:13.680 of the new electric capacity worldwide that was installed last 0:17:13.760 --> 0:17:19.520 year was wind and solar, so it is a growing business. Secondly, 0:17:19.600 --> 0:17:21.679 like I've heard of an example of a project in 0:17:21.840 --> 0:17:25.120 Vietnam that was going to be done with energy, they're 0:17:25.160 --> 0:17:29.000 buying solar panels. I think that wind and solar gain 0:17:29.800 --> 0:17:34.000 less about climate now and more about a part of diversification, 0:17:34.200 --> 0:17:37.680 part of energy security. So I think that dialogue that 0:17:37.760 --> 0:17:40.760 has changed maybe and certainly we'll hear it in Europe 0:17:40.760 --> 0:17:43.040 and well I hear it at least not from everybody, 0:17:43.040 --> 0:17:45.800 but from people in the United States as well. So 0:17:45.840 --> 0:17:48.119 it's a different way of looking at wind and solar 0:17:48.160 --> 0:17:52.400 as a way to be more independent more secure, more diversified. 0:17:52.880 --> 0:17:55.920 Doesn't answer the question of how you power an airplane, 0:17:56.440 --> 0:17:59.080 or the fact that only about six percent of the 0:17:59.119 --> 0:18:01.560 new cars being sold in the US today, even with 0:18:01.680 --> 0:18:03.320 this crisis, are evs. 0:18:03.680 --> 0:18:07.119 It's pretty crazy how little evs have taken off, you know, 0:18:07.280 --> 0:18:10.679 something just you know, like, you know, here's something I 0:18:10.720 --> 0:18:13.720 think about, Like in the US, we are, obviously our 0:18:13.840 --> 0:18:18.520 lands are blessed with commodities, including abundant oil and gas, 0:18:18.600 --> 0:18:21.440 especially since we've gotten really good at high tech and 0:18:21.760 --> 0:18:25.000 sideways drilling and all of these things like that. Could 0:18:25.000 --> 0:18:27.840 it be a curse in this sense that you know, 0:18:27.880 --> 0:18:30.359 the world is getting electrified one day, maybe not in 0:18:30.400 --> 0:18:33.480 our lifetimes, but one day there'll probably electric airplanes, right, 0:18:33.720 --> 0:18:37.240 batteries will eventually get good enough and airplanes will no 0:18:37.280 --> 0:18:40.560 longer need jet fuel, et cetera. Is part of the 0:18:40.640 --> 0:18:43.760 story that the US is going to stay on this 0:18:43.920 --> 0:18:47.800 path of the internal combustion engine and so forth, in 0:18:47.960 --> 0:18:51.760 part because we are just so blessed with fossil fuels. 0:18:52.080 --> 0:18:54.640 Well, I think that's part of it that I think 0:18:54.720 --> 0:18:57.919 I'm just reflecting on that. I think that's part of it. 0:18:57.920 --> 0:19:01.080 It's part of what consumers wanted. I think that the 0:19:01.119 --> 0:19:03.440 notion that there would be this big pickup and electric 0:19:03.560 --> 0:19:07.000 cars hasn't occurred here in Europe. I think it's about 0:19:07.040 --> 0:19:09.760 twenty percent. Then you go to China, and of course 0:19:09.800 --> 0:19:13.240 it's much higher because not only of the price point, 0:19:13.320 --> 0:19:16.600 but also government policies of all kinds. You know, you're 0:19:16.640 --> 0:19:18.280 not going to get a license for new car in 0:19:18.560 --> 0:19:22.159 Beijing unless it's an electric car. But here's some numbers 0:19:22.160 --> 0:19:24.080 that may not be clear. I mean, we were looking 0:19:24.160 --> 0:19:27.000 at this when we were doing our copper study, because 0:19:27.240 --> 0:19:30.000 electric cars use almost three times as much copper as 0:19:30.000 --> 0:19:32.960 a conventional car. And it turns out that in twenty 0:19:33.040 --> 0:19:36.360 twenty five, about twenty three million, twenty two twenty three 0:19:36.400 --> 0:19:40.600 million electric cars were sold worldwide compared to the entire 0:19:40.840 --> 0:19:44.560 US new car market of sixteen seventeen million new cars. 0:19:44.760 --> 0:19:47.600 So you see that it's happened worldwide. Now a big 0:19:47.640 --> 0:19:51.359 portion of them are in China. But China is also 0:19:51.760 --> 0:19:56.080 really you know, they have reoriented their exports much more 0:19:56.119 --> 0:19:59.359 to outside of the United States than even Europe, to 0:19:59.440 --> 0:20:01.719 the developing world, and they're going to really be pushing 0:20:01.720 --> 0:20:05.520 their electric cars. But of course you do need reliable 0:20:05.560 --> 0:20:09.760 electricity supplies. If you're going to have a penetration of 0:20:09.800 --> 0:20:10.720 electric cars. 0:20:10.920 --> 0:20:13.320 I just want to go back to the situation in 0:20:13.359 --> 0:20:16.520 the Strait of hormones directly for a few minutes. So 0:20:16.880 --> 0:20:20.040 you mentioned initially that this was something that people thought 0:20:20.040 --> 0:20:24.199 would never happen because the stakes were so high. If around, I. 0:20:24.160 --> 0:20:27.239 Thought they would do scenarios about it. But assume that 0:20:27.400 --> 0:20:28.520 all these things could happen. 0:20:28.600 --> 0:20:31.600 But not that right, So I mean, this is the 0:20:31.680 --> 0:20:35.960 surprising thing, Like it actually happened despite the stakes being 0:20:36.000 --> 0:20:39.080 so high, and you know, despite the world relying on 0:20:39.480 --> 0:20:41.960 the straight for twenty percent of its oil and gas. 0:20:42.720 --> 0:20:45.960 What's your take on, like why this particular moment, Like 0:20:46.000 --> 0:20:49.199 what are the conditions that allowed the closure of the 0:20:49.200 --> 0:20:50.280 strait of hormones. 0:20:50.560 --> 0:20:53.600 Well, I think it was the war. Here's a war 0:20:53.720 --> 0:20:57.480 in which the United States, the mightiest military was at 0:20:57.520 --> 0:20:59.840 war with the country. As somebody I heard somebody remark 0:20:59.880 --> 0:21:02.840