1 00:00:00,800 --> 00:00:03,920 Speaker 1: Hi, I'm Sarah Holder, host of The Big Take podcast. 2 00:00:04,280 --> 00:00:06,880 Speaker 1: We wanted to share a special episode of our sister show, 3 00:00:06,920 --> 00:00:10,520 Speaker 1: odd Lots. Today. They're discussing a big Bloomberg story on 4 00:00:10,680 --> 00:00:14,280 Speaker 1: energy markets that's fascinating and we think you'll love the episode. 5 00:00:14,720 --> 00:00:17,079 Speaker 1: Thanks for listening, and subscribe to odd Lots if you 6 00:00:17,079 --> 00:00:27,480 Speaker 1: don't already. 7 00:00:28,640 --> 00:00:32,640 Speaker 2: Hello, and welcome to another episode of the Oddlocks podcast. 8 00:00:32,720 --> 00:00:34,120 Speaker 3: I'm Joe Wisenthal and. 9 00:00:34,080 --> 00:00:35,080 Speaker 4: I'm Tracy Alloway. 10 00:00:35,400 --> 00:00:38,040 Speaker 2: Tracy, remember a couple of years ago, you know, when 11 00:00:38,120 --> 00:00:41,240 Speaker 2: like oil prices started booming, and there was this big 12 00:00:41,320 --> 00:00:45,080 Speaker 2: story that like production wasn't coming back. All these oil 13 00:00:45,120 --> 00:00:48,880 Speaker 2: companies had found discipline, They're all focusing on profits, et cetera, 14 00:00:49,040 --> 00:00:52,400 Speaker 2: not just volume, and that the expectation would be that 15 00:00:52,720 --> 00:00:55,040 Speaker 2: production would be depressed for a long time. 16 00:00:55,160 --> 00:00:57,920 Speaker 4: Wait, I don't think it wasn't that production was ever 17 00:00:58,080 --> 00:01:01,720 Speaker 4: coming back. It was that production and would slow substantially. 18 00:01:01,880 --> 00:01:05,720 Speaker 4: And the idea was that this is one part of 19 00:01:05,840 --> 00:01:08,919 Speaker 4: the oil boom story of the sort of mid twenty tens. 20 00:01:08,959 --> 00:01:11,840 Speaker 4: That always fascinated me was it was actually a capital 21 00:01:11,880 --> 00:01:14,880 Speaker 4: market story. So it was all these investors who just 22 00:01:15,120 --> 00:01:19,360 Speaker 4: poured money into shale oil basically and thought they were 23 00:01:19,400 --> 00:01:23,759 Speaker 4: going to make millions and millions. Shale completely over expanded. 24 00:01:24,040 --> 00:01:26,800 Speaker 4: It became very very difficult for them to actually pump 25 00:01:26,920 --> 00:01:30,040 Speaker 4: at a profit, and so they all started collapsing. They 26 00:01:30,080 --> 00:01:33,200 Speaker 4: all started pulling back. All the investors got burned, and 27 00:01:33,240 --> 00:01:35,479 Speaker 4: they were like, we're never going to touch this industry 28 00:01:35,520 --> 00:01:37,600 Speaker 4: with a ten foot pole ever again. 29 00:01:38,080 --> 00:01:38,759 Speaker 3: And then lo and. 30 00:01:38,720 --> 00:01:43,520 Speaker 4: Behold in sort of the early twenty twenties, shale starts 31 00:01:43,560 --> 00:01:47,640 Speaker 4: to become profitable again. It starts to expand. It says 32 00:01:47,680 --> 00:01:51,480 Speaker 4: it's expanding at a more disciplined pace than previously. But 33 00:01:51,680 --> 00:01:54,200 Speaker 4: I have questions about that. But yeah, it's all changed, 34 00:01:54,240 --> 00:01:55,160 Speaker 4: it's all turned around. 35 00:01:55,520 --> 00:01:57,680 Speaker 2: Yeah, I'm glad. You know, you brought up that capital 36 00:01:57,720 --> 00:02:00,720 Speaker 2: market aspect that did seem to be in this idea 37 00:02:00,800 --> 00:02:03,919 Speaker 2: of depressed production, seemed to be all part and parcel 38 00:02:03,960 --> 00:02:08,040 Speaker 2: of that that suddenly financial conditions were tightening, that the 39 00:02:08,080 --> 00:02:11,880 Speaker 2: market was placing this premium in this new nonserp world 40 00:02:12,040 --> 00:02:15,520 Speaker 2: of you know, cash flow today, et cetera. And so like, 41 00:02:15,560 --> 00:02:19,440 Speaker 2: I'm stillly confused, like what exactly happened with that story. 42 00:02:19,560 --> 00:02:22,680 Speaker 2: You know, there's lots of things. As production has come back, 43 00:02:23,360 --> 00:02:27,359 Speaker 2: it seems like investors are still into the space. Prices 44 00:02:27,400 --> 00:02:31,000 Speaker 2: have come down, then there's all kinds of obviously geopolitical 45 00:02:31,080 --> 00:02:33,400 Speaker 2: stuff going on. It seems like it's a time to 46 00:02:33,480 --> 00:02:35,440 Speaker 2: sort of take stock of what's going on in. 47 00:02:35,360 --> 00:02:36,120 Speaker 3: The energy world. 48 00:02:36,360 --> 00:02:40,680 Speaker 4: Yeah, well, US oil production in particular, right, I mean, 49 00:02:40,720 --> 00:02:43,799 Speaker 4: I think that's an all time high. I actually, if 50 00:02:43,800 --> 00:02:47,040 Speaker 4: you look at domestic production in the US, I think 51 00:02:47,080 --> 00:02:51,160 Speaker 4: it's something like thirteen million barrels of crude per day 52 00:02:51,320 --> 00:02:55,720 Speaker 4: and twenty million including you know, energy and things like that. 53 00:02:55,840 --> 00:02:59,760 Speaker 4: So an all time high. And it means that you 54 00:03:00,200 --> 00:03:04,480 Speaker 4: oil basically accounts for one of every eight barrels of 55 00:03:04,560 --> 00:03:07,480 Speaker 4: global output. So pretty big stuff there. 56 00:03:07,680 --> 00:03:10,760 Speaker 2: Yeah, pretty extraordinary. So what happened to all the narratives? 57 00:03:10,880 --> 00:03:14,800 Speaker 2: Is production coming back? Why have prices falling? I'm very 58 00:03:14,800 --> 00:03:17,679 Speaker 2: pleased to bring in the person we always love to 59 00:03:17,720 --> 00:03:19,799 Speaker 2: turn to when it comes to oil and energy. We're 60 00:03:19,800 --> 00:03:22,720 Speaker 2: going to be speaking to our colleague, Javier Blast, Bloomberg 61 00:03:22,800 --> 00:03:26,400 Speaker 2: opinion columnists on oil and energy. How thank you so 62 00:03:26,480 --> 00:03:28,000 Speaker 2: much for coming back on outlaws. 63 00:03:28,360 --> 00:03:29,560 Speaker 3: Thank you for having me again? 64 00:03:29,840 --> 00:03:31,760 Speaker 2: Have you what is the deal with that? So like 65 00:03:31,800 --> 00:03:35,360 Speaker 2: we're back at records again in the US production we add. 66 00:03:35,720 --> 00:03:38,880 Speaker 5: Two record levels, and it's just an incredible number. 67 00:03:39,080 --> 00:03:40,200 Speaker 3: As Stracey said. 68 00:03:40,400 --> 00:03:43,280 Speaker 5: If you look just at what we say is crude oil, 69 00:03:43,280 --> 00:03:45,760 Speaker 5: it's more than thirteen million dollars a day. But if 70 00:03:45,840 --> 00:03:48,920 Speaker 5: you add on top of that number other things that 71 00:03:48,960 --> 00:03:53,240 Speaker 5: they go into the oil liquids streams, so like condensates 72 00:03:53,400 --> 00:03:56,720 Speaker 5: and NGLs or natural gas liquids, a bit of ethanol, 73 00:03:56,880 --> 00:04:00,840 Speaker 5: et cetera, et cetera, we are well above million borrows 74 00:04:00,880 --> 00:04:03,360 Speaker 5: a day of oil production on that compares to one 75 00:04:03,480 --> 00:04:08,560 Speaker 5: hundred million worldwide. So you put everything together, the US 76 00:04:08,640 --> 00:04:12,680 Speaker 5: is producing one in five barrels of oil consumed. That 77 00:04:12,800 --> 00:04:16,320 Speaker 5: is just an incredibly high number, and it doesn't seem 78 00:04:16,360 --> 00:04:19,240 Speaker 5: to be about to stop. Probably it's gonna slow down 79 00:04:19,279 --> 00:04:21,679 Speaker 5: a bit in twenty twenty four, but it's going to 80 00:04:21,720 --> 00:04:22,600 Speaker 5: continue to go up. 81 00:04:23,200 --> 00:04:26,920 Speaker 4: Okay, where is all that new oil actually coming from? 82 00:04:26,960 --> 00:04:29,960 Speaker 4: Because it's been a while since I've brought up the 83 00:04:30,080 --> 00:04:33,440 Speaker 4: rig count chart, But if you look at the rigcount chart, 84 00:04:33,920 --> 00:04:35,599 Speaker 4: I mean, this is such a fun one because you 85 00:04:35,640 --> 00:04:39,920 Speaker 4: can see the big humps of the early twenty tens 86 00:04:39,920 --> 00:04:43,600 Speaker 4: and then the big slide into twenty fifteen, and now 87 00:04:43,680 --> 00:04:47,400 Speaker 4: it seems kind of flat. So there's been some increase 88 00:04:47,720 --> 00:04:50,520 Speaker 4: between twenty twenty and twenty twenty two. The number of 89 00:04:50,520 --> 00:04:53,520 Speaker 4: new rigs being drilled has gone up, But it's not 90 00:04:53,640 --> 00:04:56,880 Speaker 4: like it's not like we're seeing a boom in new 91 00:04:57,120 --> 00:05:01,120 Speaker 4: gas rigs and new explorations. So where is all this 92 00:05:01,200 --> 00:05:02,240 Speaker 4: oil coming from. 93 00:05:02,560 --> 00:05:05,000 Speaker 5: Well, it's coming from the very same places that it 94 00:05:05,080 --> 00:05:08,360 Speaker 5: was coming about ten years ago, but it's coming in 95 00:05:08,400 --> 00:05:09,240 Speaker 5: some way, and. 96 00:05:09,120 --> 00:05:11,159 Speaker 3: For lack of a better war better. 97 00:05:11,400 --> 00:05:13,920 Speaker 5: So it's coming from Texas, it's coming from New Mexico, 98 00:05:13,960 --> 00:05:17,880 Speaker 5: and it's coming a bit from North Dakota, Oklahoma, et cetera, 99 00:05:17,960 --> 00:05:20,520 Speaker 5: et cetera. It's coming from the shale regions of the 100 00:05:20,600 --> 00:05:23,880 Speaker 5: United States. But if we were to say where in 101 00:05:24,000 --> 00:05:26,680 Speaker 5: just one single or two or in this case three 102 00:05:26,720 --> 00:05:30,080 Speaker 5: single wars is Texas and New Mexico. That's where the 103 00:05:30,440 --> 00:05:33,719 Speaker 5: new oil is coming. And you're right, Tracy, the recount 104 00:05:33,839 --> 00:05:37,400 Speaker 5: is not significantly up. Actually, you look at from a 105 00:05:37,440 --> 00:05:40,960 Speaker 5: long perspective, it's lower than it was during the previous 106 00:05:40,960 --> 00:05:42,240 Speaker 5: booms of shale. 107 00:05:42,560 --> 00:05:44,760 Speaker 3: But it's just that the oil. 108 00:05:44,560 --> 00:05:47,840 Speaker 5: Companies in Texas and New Mexico have got very good 109 00:05:47,920 --> 00:05:51,560 Speaker 5: at distracting more oil from those rigs, from those wells 110 00:05:51,560 --> 00:05:55,880 Speaker 5: that they are drilling, and they're also doing much longer well. See, 111 00:05:55,920 --> 00:06:00,480 Speaker 5: if you think about how an oil shale were looks 112 00:06:00,600 --> 00:06:04,039 Speaker 5: like it first goes down vertically and then it just 113 00:06:04,080 --> 00:06:07,640 Speaker 5: turns around ninety degrees and he goes horizontal for a while. 114 00:06:08,080 --> 00:06:12,880 Speaker 5: At the beginning, those horizontal wells were relatively short, perhaps 115 00:06:13,040 --> 00:06:16,040 Speaker 5: you know, a quarter of a mile, half a mile 116 00:06:16,080 --> 00:06:19,440 Speaker 5: at most. Now they're going as much as three miles horizontally, 117 00:06:19,440 --> 00:06:21,560 Speaker 5: and that they can get a lot more oil that 118 00:06:21,640 --> 00:06:23,440 Speaker 5: they were able to do a few years back. 119 00:06:23,880 --> 00:06:24,800 Speaker 3: So it's important. 120 00:06:24,800 --> 00:06:26,760 Speaker 2: We're going to talk a lot about the capital markets 121 00:06:26,760 --> 00:06:31,960 Speaker 2: an investor aspect, but it's important just like ongoing technological 122 00:06:32,400 --> 00:06:35,040 Speaker 2: improvements as well. What else is happening on this sort 123 00:06:35,080 --> 00:06:35,599 Speaker 2: of Oh. 124 00:06:35,560 --> 00:06:38,520 Speaker 4: Oh, can I read? Sorry, I never get a chance 125 00:06:38,560 --> 00:06:41,200 Speaker 4: to do this. Can I read one of my all 126 00:06:41,279 --> 00:06:44,800 Speaker 4: time favorite leads from a story that is all about 127 00:06:44,800 --> 00:06:46,279 Speaker 4: technological improvements? 128 00:06:46,600 --> 00:06:47,160 Speaker 3: Oil? Joy? 129 00:06:47,440 --> 00:06:50,200 Speaker 4: Okay, okay, Javier, Joe, you guys are ready, I'm gonna 130 00:06:50,200 --> 00:06:50,479 Speaker 4: read it. 131 00:06:50,520 --> 00:06:50,760 Speaker 1: Okay. 132 00:06:51,680 --> 00:06:55,720 Speaker 4: This is a story from twenty sixteen. Last spring, stat 133 00:06:55,760 --> 00:06:58,880 Speaker 4: Oil announced it had used the same oil well design 134 00:06:58,960 --> 00:07:02,360 Speaker 4: and components to drill three reservoirs for the price of one. 135 00:07:02,839 --> 00:07:06,520 Speaker 4: While the specs for Norwegian sy drilling might provoke reactions 136 00:07:06,560 --> 00:07:11,320 Speaker 4: akin to the oil field's name, the snore, such standardized 137 00:07:11,320 --> 00:07:14,040 Speaker 4: pipes and casings could hold the key to a pervasive 138 00:07:14,080 --> 00:07:17,400 Speaker 4: mystery about today's energy market. Why is everyone still drilling 139 00:07:17,400 --> 00:07:20,840 Speaker 4: when prices are in the basement? Snore? Get it? Oh 140 00:07:20,880 --> 00:07:22,920 Speaker 4: that's good, Maybe you have to read it. 141 00:07:23,000 --> 00:07:23,920 Speaker 2: So that really held up? 142 00:07:23,920 --> 00:07:24,200 Speaker 3: Well? 143 00:07:24,440 --> 00:07:26,440 Speaker 2: So what changed twenty sixteen? 144 00:07:26,480 --> 00:07:26,760 Speaker 3: Have you? 145 00:07:27,840 --> 00:07:28,160 Speaker 2: Well? 146 00:07:28,920 --> 00:07:33,600 Speaker 5: Technologically? Why we can driad longer, particularly the laterals. We 147 00:07:33,680 --> 00:07:38,480 Speaker 5: can pump fracking fluids at the higher pressure, and companies 148 00:07:38,520 --> 00:07:41,520 Speaker 5: are also very good at doing these super quick. Previously 149 00:07:42,040 --> 00:07:44,680 Speaker 5: a well could have taken thirty days. Now it takes ten. 150 00:07:45,160 --> 00:07:48,200 Speaker 5: They just companies and their crews have got very good 151 00:07:48,240 --> 00:07:51,120 Speaker 5: at doing it, and that means that they can do 152 00:07:51,160 --> 00:07:53,920 Speaker 5: it cheaply. And that's the funny part of the whole 153 00:07:54,160 --> 00:07:57,280 Speaker 5: boom of twenty twenty three and twenty twenty four, at 154 00:07:57,320 --> 00:08:00,560 Speaker 5: difference of the previous ones, companies are made making money 155 00:08:00,720 --> 00:08:03,600 Speaker 5: and investors are making money, so everyone is loving it. 156 00:08:03,680 --> 00:08:05,720 Speaker 5: This is the first time, and this is what really 157 00:08:06,040 --> 00:08:08,960 Speaker 5: terrorized or PEG. This is the first time that shale 158 00:08:09,120 --> 00:08:12,840 Speaker 5: oil is growing and making money at the same time, 159 00:08:13,000 --> 00:08:14,960 Speaker 5: and that's a big problem in you are Saudi Arabia. 160 00:08:15,280 --> 00:08:18,840 Speaker 4: I definitely want to get to the possible response from OPEK, 161 00:08:18,960 --> 00:08:21,160 Speaker 4: but just in terms of technology, I mean one of 162 00:08:21,160 --> 00:08:23,800 Speaker 4: the things and the reason I brought up that story, 163 00:08:23,920 --> 00:08:27,040 Speaker 4: it was the idea of standardization. So before you used 164 00:08:27,040 --> 00:08:30,800 Speaker 4: to have all these bespoke custom fittings for oil rigs 165 00:08:30,880 --> 00:08:33,840 Speaker 4: or platforms or whatever. But then I think there was 166 00:08:33,880 --> 00:08:38,360 Speaker 4: actually like an industry wide effort or attempt to start 167 00:08:38,400 --> 00:08:40,760 Speaker 4: standardizing some of these things so you didn't have to 168 00:08:40,920 --> 00:08:44,400 Speaker 4: order a bespoke component for every single oil project that 169 00:08:44,440 --> 00:08:48,120 Speaker 4: you were doing, and that seems to have helped make 170 00:08:48,200 --> 00:08:52,199 Speaker 4: things go faster to Havier's point, and also brought down costs. 171 00:08:52,600 --> 00:08:54,640 Speaker 4: How much of a big deal is that in the industry. 172 00:08:54,840 --> 00:08:56,960 Speaker 5: It is a big deal. I mean it has happened 173 00:08:57,000 --> 00:08:59,160 Speaker 5: everywhere in the oil industry. Let me give you my 174 00:08:59,280 --> 00:09:02,800 Speaker 5: fabord Anne though, of a standardization in the oil industry. 175 00:09:03,320 --> 00:09:06,400 Speaker 5: So you are working on a norsea oil platform. This 176 00:09:06,520 --> 00:09:10,400 Speaker 5: is offshore outside Norway and and the United Kingdom. You 177 00:09:10,440 --> 00:09:12,480 Speaker 5: need to paint a lot of the stuff yello kind 178 00:09:12,480 --> 00:09:16,080 Speaker 5: of you know, yellow Dungeier, very busybll et cetera, et cetera, 179 00:09:16,240 --> 00:09:18,200 Speaker 5: very stormy areas of the world. 180 00:09:18,520 --> 00:09:19,880 Speaker 3: The Norsea folk. 181 00:09:20,480 --> 00:09:22,320 Speaker 5: You get the kind of it's not the kind of 182 00:09:22,320 --> 00:09:24,640 Speaker 5: place that you really want to spend an evening in 183 00:09:24,760 --> 00:09:28,880 Speaker 5: winter there. So every company have their own shade of yello. 184 00:09:29,400 --> 00:09:33,760 Speaker 5: They were nineteen different kinds of yello to paint things 185 00:09:33,800 --> 00:09:36,640 Speaker 5: in the Norseea. Each company have their own shade with 186 00:09:36,640 --> 00:09:40,440 Speaker 5: their own specification, and it was just ridiculous. So at 187 00:09:40,440 --> 00:09:43,600 Speaker 5: one point a few engineers in the industry got together 188 00:09:43,640 --> 00:09:45,320 Speaker 5: and said, well, this is a bit ridiculous. I mean, 189 00:09:45,320 --> 00:09:48,280 Speaker 5: can we not just doing like a Yello Norsea And 190 00:09:48,360 --> 00:09:51,160 Speaker 5: so they got together and everyone decided this is the 191 00:09:51,200 --> 00:09:53,760 Speaker 5: shade of jello that we're gonna use. And now everyone 192 00:09:53,880 --> 00:09:56,160 Speaker 5: is painting everything that they need to paint in yello 193 00:09:56,240 --> 00:09:59,520 Speaker 5: with the same shade that at a much bigger scale 194 00:09:59,559 --> 00:10:02,720 Speaker 5: has happened across the oil industry. Everything has got a 195 00:10:02,800 --> 00:10:05,959 Speaker 5: standard and companies within themselves. 196 00:10:05,360 --> 00:10:07,760 Speaker 3: They like it to do everything best spoke. 197 00:10:08,160 --> 00:10:11,319 Speaker 5: They really in some ways gold plated a lot of projecs, 198 00:10:11,360 --> 00:10:14,360 Speaker 5: so each well was a bit different to the other one. 199 00:10:14,640 --> 00:10:18,480 Speaker 5: Now companies are designing one single design and when they 200 00:10:18,480 --> 00:10:20,000 Speaker 5: have really thought Okay. 201 00:10:19,720 --> 00:10:20,199 Speaker 3: This is it. 202 00:10:20,280 --> 00:10:23,760 Speaker 5: This really works very well now copy and paste for 203 00:10:23,880 --> 00:10:26,679 Speaker 5: the next twenty five to fifty one hundred wells, and 204 00:10:26,720 --> 00:10:28,479 Speaker 5: that has cut costs significantly. 205 00:10:29,440 --> 00:10:31,880 Speaker 2: I love the fact that, like, just something as simple 206 00:10:31,880 --> 00:10:33,480 Speaker 2: as the color painting of. 207 00:10:33,760 --> 00:10:37,240 Speaker 4: I'm imagining a room full of oil executives looking at 208 00:10:37,240 --> 00:10:39,920 Speaker 4: different swatches of yellow and being like, no, that one's 209 00:10:39,960 --> 00:10:43,320 Speaker 4: too orange. Can we get something a little bit more buttermilk? 210 00:10:43,480 --> 00:10:47,240 Speaker 5: Maybe I would love to be the competition lawyers who 211 00:10:47,280 --> 00:10:49,560 Speaker 5: has to stop it on the meeting to make sure 212 00:10:49,600 --> 00:10:52,880 Speaker 5: that no one is saying anything inappropriate that the Department 213 00:10:52,920 --> 00:10:55,960 Speaker 5: of Justice could get us, like there was a conspiracy 214 00:10:56,000 --> 00:10:58,640 Speaker 5: for the yellow color look. 215 00:10:58,600 --> 00:11:00,760 Speaker 2: At the different pan turner shape, but gotta do so 216 00:11:00,840 --> 00:11:02,440 Speaker 2: in a legal way. All right, Let's talk about the 217 00:11:02,440 --> 00:11:05,640 Speaker 2: capital markets aspect, because you know, it did seem like 218 00:11:06,320 --> 00:11:08,560 Speaker 2: the way people thought about it was that the industry 219 00:11:08,600 --> 00:11:10,760 Speaker 2: face had to face a choice. Would it be pursuing 220 00:11:10,840 --> 00:11:14,520 Speaker 2: volume or would it be pursuing profitability? And as you've 221 00:11:14,600 --> 00:11:17,000 Speaker 2: just said, like there seems to be this very weird 222 00:11:17,040 --> 00:11:21,640 Speaker 2: situation in which volume is ramping and productivity is sustained. 223 00:11:21,840 --> 00:11:22,920 Speaker 2: How is that happening? 224 00:11:22,960 --> 00:11:25,640 Speaker 5: And how sustainable is that well to the question of 225 00:11:25,720 --> 00:11:28,959 Speaker 5: how long how sustainable. I'm gonna be honest either know, 226 00:11:29,160 --> 00:11:31,640 Speaker 5: I thought that production on growth will have a slow 227 00:11:31,720 --> 00:11:34,679 Speaker 5: down in twenty twenty three, and it never happened. It 228 00:11:34,720 --> 00:11:39,480 Speaker 5: did the opposite. They accelerated. You look to every oil executive, 229 00:11:39,600 --> 00:11:43,120 Speaker 5: if you look at the forecasters of the industry, everyone 230 00:11:43,200 --> 00:11:45,760 Speaker 5: is saying it's gonna sloan in twenty twenty four. But 231 00:11:45,800 --> 00:11:47,800 Speaker 5: also they said the same for twenty twenty three and 232 00:11:47,800 --> 00:11:51,880 Speaker 5: they were wrong. So we'll see what happens really. But yes, 233 00:11:51,960 --> 00:11:56,000 Speaker 5: I mean, the industry went into this new era thinking 234 00:11:56,000 --> 00:11:59,559 Speaker 5: about profitability, so everyone cut kapex, everyone tried to get 235 00:11:59,600 --> 00:12:03,440 Speaker 5: more fee, and everyone thought that production growth was going 236 00:12:03,520 --> 00:12:07,200 Speaker 5: to slow down because the focus was profitability. The fact 237 00:12:07,200 --> 00:12:10,440 Speaker 5: that they were able to grow quite strongly came a 238 00:12:10,480 --> 00:12:13,600 Speaker 5: bit of a surprise to the industry and then everyone 239 00:12:14,160 --> 00:12:17,440 Speaker 5: kind of, you know, celebrated it. But here there is 240 00:12:17,440 --> 00:12:21,120 Speaker 5: a very important question. If opeck have not cut production 241 00:12:21,720 --> 00:12:24,199 Speaker 5: to make room for all these new shale oil from 242 00:12:24,200 --> 00:12:27,400 Speaker 5: the United States, prices will have come down, and then 243 00:12:27,440 --> 00:12:30,160 Speaker 5: the industry will have faced the same kind of dilemma 244 00:12:30,200 --> 00:12:33,080 Speaker 5: of the past. You are producing too much, then the 245 00:12:33,080 --> 00:12:36,400 Speaker 5: prices come down, your profitability comes down, and then you 246 00:12:36,480 --> 00:12:38,360 Speaker 5: have a problem. So a lot of these that we 247 00:12:38,400 --> 00:12:43,920 Speaker 5: are putting based on efficiency, It's true. But if not 248 00:12:44,000 --> 00:12:47,400 Speaker 5: for OPEC cuting production and keeping prices about seventy dollars 249 00:12:47,400 --> 00:12:49,800 Speaker 5: a power, then shale companies will be in trouble. 250 00:13:06,480 --> 00:13:09,640 Speaker 4: One thing I'm really curious about is who is actually 251 00:13:09,760 --> 00:13:14,800 Speaker 4: funding production now versus say, in the early twenty tens. 252 00:13:15,000 --> 00:13:16,559 Speaker 2: And just to air on to that a little bit, 253 00:13:16,640 --> 00:13:20,520 Speaker 2: is there any difference between private and publicly traded domestic 254 00:13:20,600 --> 00:13:21,360 Speaker 2: US players? 255 00:13:21,440 --> 00:13:24,600 Speaker 5: Okay, so let's go from pars on Tracy's question, who 256 00:13:24,640 --> 00:13:28,320 Speaker 5: is founding this well? Back ten years ago, five years ago, 257 00:13:28,480 --> 00:13:31,160 Speaker 5: it was Waller Street. It was a mix of equity 258 00:13:31,200 --> 00:13:34,320 Speaker 5: and credit markets which were founding or all of these 259 00:13:34,679 --> 00:13:38,480 Speaker 5: growth through different instruments. I mean sometimes it was just 260 00:13:38,600 --> 00:13:43,240 Speaker 5: issuing of fresh equity. Sometimes it was bond high till bonds. 261 00:13:43,640 --> 00:13:46,800 Speaker 5: Researchs lending where a bank is lending to an oil 262 00:13:46,840 --> 00:13:49,559 Speaker 5: company based on the research underground, more or less like 263 00:13:49,600 --> 00:13:52,560 Speaker 5: a mortgage rather than a house. You mortgage the oil 264 00:13:52,600 --> 00:13:54,920 Speaker 5: research that they are underground, and a lot of that 265 00:13:55,040 --> 00:13:57,559 Speaker 5: is still there, but a lot of the money now 266 00:13:57,960 --> 00:14:02,200 Speaker 5: needed for the espansion and to financing all these new 267 00:14:02,240 --> 00:14:06,040 Speaker 5: growth is coming from cash flow generation, is the internal 268 00:14:06,120 --> 00:14:09,800 Speaker 5: cash flow of these companies. They generate enough cash to 269 00:14:09,960 --> 00:14:13,480 Speaker 5: pay for all the new drilling that they're doing, to 270 00:14:13,600 --> 00:14:16,040 Speaker 5: pay for all the capital investment that they need to 271 00:14:16,080 --> 00:14:19,680 Speaker 5: do alongside new pipelines, et cetera, et cetera, and to 272 00:14:19,840 --> 00:14:23,680 Speaker 5: pay the shareholders. These companies now for the very first time, 273 00:14:23,960 --> 00:14:29,040 Speaker 5: are paying dividends and that sounds like well companies publicly 274 00:14:29,040 --> 00:14:32,280 Speaker 5: listed companies would be paying dividends, that that's like normal. Well, 275 00:14:32,320 --> 00:14:34,480 Speaker 5: that was not the case a few years back. But 276 00:14:34,560 --> 00:14:37,080 Speaker 5: now they generate enough cash to do all of the 277 00:14:37,160 --> 00:14:41,040 Speaker 5: boat And in terms of the is there a difference, Yes, 278 00:14:41,280 --> 00:14:44,400 Speaker 5: publicly listed companies have been a bit more caustios. They 279 00:14:44,400 --> 00:14:48,040 Speaker 5: have been trying to they have the shareholders, they have 280 00:14:48,120 --> 00:14:50,400 Speaker 5: wall strips on top of them, and they have to 281 00:14:50,560 --> 00:14:53,440 Speaker 5: really try to focus as much as possible on paying 282 00:14:53,480 --> 00:14:57,720 Speaker 5: dividends and buying back shares. Probably on they don't have 283 00:14:57,760 --> 00:15:01,320 Speaker 5: that pressure, that super strong pressure, so they have done 284 00:15:01,360 --> 00:15:04,080 Speaker 5: a bit more of growing, and there is a suspicion 285 00:15:04,120 --> 00:15:06,000 Speaker 5: in the industry that a lot of that growth was 286 00:15:06,040 --> 00:15:08,840 Speaker 5: to try to maximize the amount of production that you 287 00:15:08,880 --> 00:15:12,200 Speaker 5: are doing. So you can sell yourself to a big player, 288 00:15:12,320 --> 00:15:16,080 Speaker 5: say Exomobile or Chevron, and perhaps that's not as sustainable 289 00:15:16,120 --> 00:15:16,800 Speaker 5: as he looks like. 290 00:15:17,680 --> 00:15:21,920 Speaker 2: Talk more about Opek, because you mentioned that USHL has 291 00:15:21,960 --> 00:15:23,680 Speaker 2: benefited from OPEC cutting production. 292 00:15:23,960 --> 00:15:25,000 Speaker 3: You know, I remember, I. 293 00:15:24,920 --> 00:15:27,920 Speaker 2: Guess it was twenty fifty fifteen. I think when OPEK 294 00:15:27,920 --> 00:15:30,800 Speaker 2: did that huge increase in production to try to kneecap 295 00:15:30,920 --> 00:15:34,240 Speaker 2: US Shew, why are they sort of I guess in 296 00:15:34,240 --> 00:15:39,400 Speaker 2: alignment these days, where OPEC's impulse to maintain production is 297 00:15:39,400 --> 00:15:42,800 Speaker 2: good for OPEC, but also I guess clearly as you say, 298 00:15:43,040 --> 00:15:44,560 Speaker 2: benefiting US production. 299 00:15:44,880 --> 00:15:47,520 Speaker 5: Well, Opek is trying to keep oil prices as close 300 00:15:47,600 --> 00:15:50,000 Speaker 5: as he can to one hundred dollars. It's not as 301 00:15:50,040 --> 00:15:53,680 Speaker 5: successful as they will hope. Prices have been between seventy 302 00:15:53,760 --> 00:15:56,280 Speaker 5: and eighty despite a lot of geopolitical tension that you will, 303 00:15:56,320 --> 00:15:59,560 Speaker 5: in mind, will have pushed prices even higher. I think 304 00:15:59,560 --> 00:16:02,400 Speaker 5: that they The key question here is that OPEK is 305 00:16:02,480 --> 00:16:05,080 Speaker 5: convinced that this is a bit of a blip, that 306 00:16:05,240 --> 00:16:08,960 Speaker 5: at some point the growth in US production slows down, 307 00:16:09,320 --> 00:16:12,480 Speaker 5: the demand remains there, the annual demand growth remains there, 308 00:16:12,720 --> 00:16:15,280 Speaker 5: and then they have room to expand their production to 309 00:16:15,360 --> 00:16:17,720 Speaker 5: bring some of the production that they have taken off 310 00:16:17,760 --> 00:16:18,240 Speaker 5: the market. 311 00:16:18,320 --> 00:16:20,320 Speaker 3: Now they will able to bring it back. 312 00:16:20,720 --> 00:16:23,240 Speaker 5: And I was, to be honest, the same kind of 313 00:16:23,280 --> 00:16:27,240 Speaker 5: bet that Opek made in twenty eleven, twenty twelve. 314 00:16:27,560 --> 00:16:28,640 Speaker 3: You know, this is a blip. 315 00:16:29,120 --> 00:16:32,000 Speaker 5: Usl growth is going to slow down at some point, 316 00:16:32,520 --> 00:16:36,040 Speaker 5: and after a few years, by twenty fifteen, twenty sixteen, 317 00:16:36,280 --> 00:16:39,080 Speaker 5: they knnot discovered actually, no, this is not working at 318 00:16:39,280 --> 00:16:42,440 Speaker 5: seventy five eighty one hundred dollars oil. These guys can 319 00:16:42,480 --> 00:16:45,240 Speaker 5: grow and they can grow forever. We need to change 320 00:16:45,280 --> 00:16:48,600 Speaker 5: the strategy. And that's when Opek decided to float the market, 321 00:16:49,000 --> 00:16:52,240 Speaker 5: kill prices. The price of West Texas and a brand 322 00:16:52,320 --> 00:16:56,800 Speaker 5: crew the two global benchmark collapsed to thirty dollars a barrel, 323 00:16:56,880 --> 00:16:59,600 Speaker 5: and that's what really brought down shale growth for a 324 00:16:59,600 --> 00:17:02,840 Speaker 5: few years. The jury is out whether they are making 325 00:17:02,880 --> 00:17:05,520 Speaker 5: the same mistake or not, and I think that we 326 00:17:05,560 --> 00:17:07,440 Speaker 5: are going to see it by the middle of this year, 327 00:17:07,880 --> 00:17:10,480 Speaker 5: at most Q three of this year, we are gonna 328 00:17:10,480 --> 00:17:13,800 Speaker 5: see whether US shale really is slowing down or not, 329 00:17:14,160 --> 00:17:18,400 Speaker 5: and whether demand is either sustaining the growth or we're 330 00:17:18,440 --> 00:17:20,760 Speaker 5: beginning to see a slowdown in demand. Because you know, 331 00:17:21,160 --> 00:17:24,800 Speaker 5: electric vehicles and more energy efficiency, et cetera, et cetera. 332 00:17:24,920 --> 00:17:27,000 Speaker 5: So this is this is a very important year for 333 00:17:27,080 --> 00:17:31,159 Speaker 5: OPEK because if it doesn't really go as planned, OPEK 334 00:17:31,280 --> 00:17:33,320 Speaker 5: really needs to change the strategy completely. 335 00:17:34,160 --> 00:17:37,080 Speaker 4: What can it do in that scenario, Well. 336 00:17:36,800 --> 00:17:38,400 Speaker 3: They can only do two things. 337 00:17:38,720 --> 00:17:42,399 Speaker 5: One is to accept that, you know, the one current 338 00:17:42,440 --> 00:17:45,160 Speaker 5: prices of seventy five dollars plus they need to cut 339 00:17:45,200 --> 00:17:49,240 Speaker 5: even more production, giving shale more share of the market. 340 00:17:49,880 --> 00:17:53,680 Speaker 5: Or they accept that they need to bring prices down 341 00:17:53,800 --> 00:17:57,919 Speaker 5: because shale can grow at seventy five dollars and perhaps 342 00:17:58,000 --> 00:18:01,199 Speaker 5: cannot grow at say fifty or four. And then OPEK 343 00:18:01,280 --> 00:18:03,520 Speaker 5: and that's Saudi Arabia puts a lot more production into 344 00:18:03,560 --> 00:18:06,679 Speaker 5: the market and triggers a crash. But that means lower 345 00:18:06,720 --> 00:18:07,560 Speaker 5: prices for OPEK. 346 00:18:07,720 --> 00:18:09,840 Speaker 4: Yeah, and it didn't really work the last time because 347 00:18:09,880 --> 00:18:12,760 Speaker 4: it just incentivized everyone to cut costs and streamline and 348 00:18:12,760 --> 00:18:13,640 Speaker 4: become more efficient. 349 00:18:13,800 --> 00:18:17,680 Speaker 5: Indeed, you're absolutely right, and on both options means lower revenue, 350 00:18:18,000 --> 00:18:20,439 Speaker 5: either because you are producing less or because you are 351 00:18:20,480 --> 00:18:24,240 Speaker 5: accepting lower oil prices. But if the strategy of OPEC 352 00:18:24,320 --> 00:18:26,960 Speaker 5: doesn't work, and I am not really one hundred percent 353 00:18:27,000 --> 00:18:29,879 Speaker 5: sure that OPEK really has much of a strategy of 354 00:18:30,080 --> 00:18:32,640 Speaker 5: the next six months. I think that they are holding 355 00:18:32,680 --> 00:18:34,520 Speaker 5: the line for the next six months and then they 356 00:18:34,560 --> 00:18:35,400 Speaker 5: will see. 357 00:18:35,200 --> 00:18:35,880 Speaker 3: What they do. 358 00:18:36,280 --> 00:18:39,320 Speaker 5: But if they are wrong, it means a period of 359 00:18:39,359 --> 00:18:42,800 Speaker 5: low revenues for OPEC countries and that will be very painful. 360 00:18:43,200 --> 00:18:47,639 Speaker 5: Just in mind lower revenues when you have experienced a 361 00:18:47,720 --> 00:18:52,119 Speaker 5: significant increase in inflation. That means that the purchasing power 362 00:18:52,119 --> 00:18:54,679 Speaker 5: of your barrel goes even lower. That's very painful for 363 00:18:54,680 --> 00:18:55,480 Speaker 5: Saudi Arabia. 364 00:18:55,680 --> 00:18:59,160 Speaker 4: This is a slightly off topic question, but shale producers 365 00:18:59,160 --> 00:19:02,399 Speaker 4: in the US cannot join OPEK right because we do 366 00:19:02,520 --> 00:19:05,040 Speaker 4: not like price fixing cartels. 367 00:19:05,240 --> 00:19:07,679 Speaker 3: I think that the Department of Justice may have one. 368 00:19:07,600 --> 00:19:10,480 Speaker 4: Or two yea and might have something to say. 369 00:19:10,040 --> 00:19:14,760 Speaker 5: Yeah, you know, like no, I mean, it's not a 370 00:19:14,800 --> 00:19:17,359 Speaker 5: completely you know, it's not a crazy question. 371 00:19:17,480 --> 00:19:20,399 Speaker 4: Tracy Texas, I know it's come up every once in 372 00:19:20,440 --> 00:19:20,680 Speaker 4: a while. 373 00:19:21,119 --> 00:19:25,159 Speaker 5: The State of Texas sent observice to OPEK meetings in 374 00:19:25,200 --> 00:19:28,920 Speaker 5: the eighties. They never joined, but actually they send observice 375 00:19:28,960 --> 00:19:31,480 Speaker 5: and the State of Alaska so send observers to the 376 00:19:31,480 --> 00:19:33,600 Speaker 5: OPENK meetings. I mean they will be you know, an 377 00:19:33,600 --> 00:19:38,240 Speaker 5: American gentleman sit down during the open meeting as an observer. 378 00:19:38,400 --> 00:19:39,720 Speaker 3: I think at some. 379 00:19:39,680 --> 00:19:42,760 Speaker 5: Point cool heads and some legal advice decided that I 380 00:19:42,840 --> 00:19:44,120 Speaker 5: was not very cool. 381 00:19:44,680 --> 00:19:47,600 Speaker 2: It's funny the things that like one remembers from like 382 00:19:47,640 --> 00:19:51,639 Speaker 2: the sort of fever swamp days of spring twenty twenty 383 00:19:51,800 --> 00:19:54,240 Speaker 2: during the peak of the pandemic. But I just remember 384 00:19:54,240 --> 00:19:56,840 Speaker 2: there was like some like railroad commissioner in Texas, and 385 00:19:56,920 --> 00:19:59,880 Speaker 2: of course the Railroad commission in Texas is the oil regulator. 386 00:20:00,040 --> 00:20:00,919 Speaker 3: There was some oil. 387 00:20:01,040 --> 00:20:03,960 Speaker 2: There was some railroad commissioner who was like trying to 388 00:20:04,040 --> 00:20:07,480 Speaker 2: like do diplomacy with Opek in the middle of I 389 00:20:07,520 --> 00:20:09,640 Speaker 2: can't remember his name, but he was like some guy 390 00:20:09,680 --> 00:20:11,080 Speaker 2: on Twitter. Do you guys remember that. 391 00:20:11,760 --> 00:20:14,919 Speaker 5: Yes, there was someone I cannot remember one hundred percent, 392 00:20:15,040 --> 00:20:15,960 Speaker 5: but I will come back. 393 00:20:17,040 --> 00:20:21,000 Speaker 2: Yeah, there was some random guy. 394 00:20:21,160 --> 00:20:22,119 Speaker 3: Let's not forget that. 395 00:20:22,160 --> 00:20:25,240 Speaker 5: When Opek and an Opek plash with this this alliance 396 00:20:25,240 --> 00:20:28,640 Speaker 5: between Opek and and other oil producers, including Russia, they 397 00:20:28,640 --> 00:20:32,359 Speaker 5: were negotiating how to respond to the pandemic and just 398 00:20:32,400 --> 00:20:35,399 Speaker 5: basically trying to agree how to split a ten million 399 00:20:35,440 --> 00:20:37,800 Speaker 5: bowles that they got. Ten percent of global oil production 400 00:20:38,240 --> 00:20:41,120 Speaker 5: was taken out of the market by Opek and his allies. 401 00:20:41,640 --> 00:20:44,720 Speaker 5: A lot of the negotiations Donald Trump that that point, 402 00:20:44,840 --> 00:20:48,639 Speaker 5: President Donald Trump was heavily involved. I mean, the whole 403 00:20:48,960 --> 00:20:52,680 Speaker 5: final deal was effectively cook on a three way phone 404 00:20:52,680 --> 00:20:56,760 Speaker 5: conversation between President Donald Trump, President Bloody Meat Putting, which 405 00:20:56,880 --> 00:20:59,160 Speaker 5: was still, you know, negotiating these things with the White 406 00:20:59,200 --> 00:21:02,560 Speaker 5: House face to face effectively on and King Salmon of 407 00:21:02,600 --> 00:21:05,840 Speaker 5: Saudi Arabia. So the US in some ways it was 408 00:21:05,880 --> 00:21:08,600 Speaker 5: not part of the cartel or anything like that, but 409 00:21:08,680 --> 00:21:13,200 Speaker 5: it was participating in the conversations, and Trump got actually 410 00:21:13,240 --> 00:21:16,320 Speaker 5: acquired a sweet deal because he got the Saudist and 411 00:21:16,359 --> 00:21:18,960 Speaker 5: the Russians to agree to cut production while the US 412 00:21:19,040 --> 00:21:20,560 Speaker 5: industry got absolutely nothing. 413 00:21:21,280 --> 00:21:24,040 Speaker 2: I think his name. He even wrote a Bloomberg opinion 414 00:21:24,119 --> 00:21:27,679 Speaker 2: column in March March twentieth, twenty twenty. Ryan Sitton was 415 00:21:27,720 --> 00:21:30,960 Speaker 2: his name. The railroad commissioner who called on OPEK to 416 00:21:31,080 --> 00:21:34,560 Speaker 2: coordinate with the US in constraining supply. I want to 417 00:21:34,560 --> 00:21:37,680 Speaker 2: pivot for a second and talk about the Red Sea, 418 00:21:37,800 --> 00:21:40,120 Speaker 2: and we talked about it a couple of weeks ago 419 00:21:40,200 --> 00:21:43,800 Speaker 2: at the context of container freight. What is the rising 420 00:21:44,200 --> 00:21:48,959 Speaker 2: tensions there? We recently saw the US strike at UTI assets. 421 00:21:49,359 --> 00:21:53,159 Speaker 2: What does the rising tension there mean from an oil perspective. 422 00:21:53,359 --> 00:21:56,720 Speaker 3: Well, it's more or less a binary situation. 423 00:21:57,080 --> 00:22:00,399 Speaker 5: As long as the straight up Hormos, which is big 424 00:22:00,480 --> 00:22:04,480 Speaker 5: outlet from the Persian Golf for countries like Kubey or 425 00:22:04,520 --> 00:22:07,879 Speaker 5: Saudi Arabia into the open markets. As long as that 426 00:22:08,000 --> 00:22:11,439 Speaker 5: remains open, what's happening on the Red Sea is of 427 00:22:11,560 --> 00:22:15,720 Speaker 5: less importance. Yes, it's gonna mean an increasing cost because 428 00:22:15,760 --> 00:22:18,920 Speaker 5: a lot of the oil tankers and also the leg carriers, 429 00:22:18,920 --> 00:22:22,320 Speaker 5: this is liquefied natural gas carriers, they're gonna have to 430 00:22:22,400 --> 00:22:26,199 Speaker 5: divert about the Red Sea and go around Africa that 431 00:22:26,359 --> 00:22:29,280 Speaker 5: ads from the Persian Golf into Europe. 432 00:22:29,320 --> 00:22:31,360 Speaker 3: That had probably a good. 433 00:22:31,200 --> 00:22:35,359 Speaker 5: Ten to fifteen days extra, so you know, it's not 434 00:22:35,440 --> 00:22:38,280 Speaker 5: as small and it could really increase the cost of shipping, 435 00:22:38,640 --> 00:22:40,280 Speaker 5: but it's not the end of the world. And that's 436 00:22:40,320 --> 00:22:43,400 Speaker 5: what the oil market is taking it quite relaxed. I mean, 437 00:22:43,440 --> 00:22:46,639 Speaker 5: prices has barely increased over the last few days. 438 00:22:47,040 --> 00:22:48,960 Speaker 3: But then you could think. 439 00:22:48,760 --> 00:22:51,959 Speaker 5: Well, okay, so that is basically on a scale of 440 00:22:52,000 --> 00:22:55,159 Speaker 5: one to ten, probably that's a two, maybe a three. 441 00:22:55,480 --> 00:22:58,440 Speaker 5: What is the other scenario? Where the other scenario is 442 00:22:58,480 --> 00:23:01,639 Speaker 5: the you know open five with Iran, not with his 443 00:23:01,800 --> 00:23:05,600 Speaker 5: proxies the hoodies in Germen, but actually with Iran and 444 00:23:05,720 --> 00:23:09,479 Speaker 5: the straight of hormones from somehow gets in trouble. Shipping 445 00:23:09,560 --> 00:23:12,320 Speaker 5: is more difficult through it probably is not completely close, 446 00:23:12,440 --> 00:23:15,040 Speaker 5: but things get really bad, and that on a scale 447 00:23:15,040 --> 00:23:17,520 Speaker 5: of one to ten, that's probably twenty five. And that's 448 00:23:17,520 --> 00:23:19,199 Speaker 5: the problem. That's what I say. It's a bit of 449 00:23:19,240 --> 00:23:23,000 Speaker 5: a binary situation at the moment. Are we well so 450 00:23:23,000 --> 00:23:24,480 Speaker 5: so far not so bad? 451 00:23:24,720 --> 00:23:27,919 Speaker 4: Could it mean that more LNG gets exported from the 452 00:23:28,040 --> 00:23:31,320 Speaker 4: US to Europe. That seems to be the obvious solution, right. 453 00:23:31,320 --> 00:23:33,800 Speaker 5: Yeah, the obvious solution is that all the Atlantic LENG 454 00:23:33,960 --> 00:23:36,159 Speaker 5: goes into euro So that's the US, but also in 455 00:23:36,240 --> 00:23:39,360 Speaker 5: Nigeria trily that that's gonna go as much as possible 456 00:23:39,359 --> 00:23:39,960 Speaker 5: to Europe. 457 00:23:40,240 --> 00:23:45,160 Speaker 3: And then all the non Atlantic basin LENG goes to Asia. 458 00:23:45,280 --> 00:23:48,159 Speaker 5: So Gutar will try to radiorect as much of the 459 00:23:48,359 --> 00:23:51,640 Speaker 5: leg that they can into intu Asia. I could provide 460 00:23:51,720 --> 00:23:55,600 Speaker 5: some training opportunities for LNG exporters in the United States, 461 00:23:55,720 --> 00:23:59,000 Speaker 5: and let's not forget that means also more Russian LENG 462 00:23:59,240 --> 00:24:02,080 Speaker 5: is gonna remain in Europe rather than going into Asia. 463 00:24:02,200 --> 00:24:05,080 Speaker 5: Because Europe continues buying LG from Rascia. I mean, we 464 00:24:05,200 --> 00:24:26,840 Speaker 5: stopped buying Rascia and gas through pipeline bat lngs real quickly. 465 00:24:27,000 --> 00:24:29,280 Speaker 2: Just going back to the OPEC conversation, I just remembered 466 00:24:29,359 --> 00:24:31,280 Speaker 2: one of the other things that we talked about a lot, 467 00:24:31,320 --> 00:24:34,360 Speaker 2: I think in like twenty twenty two was just that, 468 00:24:34,480 --> 00:24:36,640 Speaker 2: you know, setting aside what was going on with US 469 00:24:36,680 --> 00:24:40,280 Speaker 2: show production, that there were various structural impediments to OPEC 470 00:24:40,320 --> 00:24:43,600 Speaker 2: supply or non OPEC supply or OPEC plus supply, that 471 00:24:44,000 --> 00:24:47,320 Speaker 2: a number of countries had let their own infrastructure slowly 472 00:24:47,359 --> 00:24:50,240 Speaker 2: get into disarray with the low prices of twenty tens, 473 00:24:50,280 --> 00:24:53,520 Speaker 2: that that was constraining the ability to expand. What is 474 00:24:53,560 --> 00:24:58,440 Speaker 2: happening with sort of non US OPEK related capacity, what is. 475 00:24:58,400 --> 00:24:59,119 Speaker 3: True in part? 476 00:24:59,200 --> 00:25:02,080 Speaker 5: I mean you look at so particularly the African producers 477 00:25:02,119 --> 00:25:04,960 Speaker 5: of OPEK, the likes of Nigeria, well, they have been 478 00:25:05,000 --> 00:25:07,359 Speaker 5: in travel and they have been struggling to meet their 479 00:25:07,359 --> 00:25:11,080 Speaker 5: own production targets. Recently, Angola left OPEK because it was 480 00:25:11,119 --> 00:25:14,160 Speaker 5: not happy with the fact that OPEK was pointing to Angola, 481 00:25:14,200 --> 00:25:16,359 Speaker 5: you cannot produce as much as we even allowed you 482 00:25:16,400 --> 00:25:18,840 Speaker 5: to produce, so we are going to bring your production 483 00:25:19,000 --> 00:25:21,520 Speaker 5: level officially to what you are able to do. Well, 484 00:25:21,560 --> 00:25:24,840 Speaker 5: don Goola didn't take that very well and then decided that, well, 485 00:25:24,720 --> 00:25:26,960 Speaker 5: we don't want to be part of this club anymore. 486 00:25:27,400 --> 00:25:30,440 Speaker 5: Then we have two other countries that they have been 487 00:25:30,520 --> 00:25:33,760 Speaker 5: producing far less than in the past but due to sanctions, 488 00:25:33,760 --> 00:25:36,720 Speaker 5: as Venezuela and Iran. The sanctions are still there, but 489 00:25:37,080 --> 00:25:40,440 Speaker 5: the US is enforcing them while the US is not 490 00:25:40,560 --> 00:25:44,280 Speaker 5: really enforcing them anymore. It's particularly in the case of Iran, 491 00:25:44,560 --> 00:25:47,480 Speaker 5: has started a blind eye because you know, the priorities 492 00:25:47,520 --> 00:25:50,680 Speaker 5: get oil prices under control. So Iranian and Venezuelan production 493 00:25:50,840 --> 00:25:55,480 Speaker 5: has increased significantly last year, to the point in twenty 494 00:25:55,560 --> 00:25:59,720 Speaker 5: twenty three the biggest source of extra oil into the 495 00:25:59,760 --> 00:26:03,240 Speaker 5: market was the ushail industry. The US was the kind 496 00:26:03,240 --> 00:26:05,760 Speaker 5: of the big number into the oil market put in 497 00:26:05,800 --> 00:26:09,879 Speaker 5: extra oil. The second source of extra oil in twenty 498 00:26:09,920 --> 00:26:13,560 Speaker 5: twenty three compared to twenty twenty two was Iranian oil production. 499 00:26:13,680 --> 00:26:16,480 Speaker 5: And that's just incredible to me that Iran added so 500 00:26:16,600 --> 00:26:18,719 Speaker 5: much oil into the market to the tune of how 501 00:26:18,960 --> 00:26:21,719 Speaker 5: half a million borrowers to day. So the story of 502 00:26:21,720 --> 00:26:24,879 Speaker 5: Opek struggling is not as true as it was three four, 503 00:26:25,040 --> 00:26:28,400 Speaker 5: five years ago. And then you have the UE which 504 00:26:28,400 --> 00:26:30,639 Speaker 5: is adding a lot of production and not happy that 505 00:26:30,680 --> 00:26:33,480 Speaker 5: it cannot produce more. And we are beginning to see 506 00:26:33,520 --> 00:26:37,320 Speaker 5: also the Southeast starting to try to increase the production capacity. 507 00:26:37,600 --> 00:26:40,040 Speaker 5: Some of that will come on a stream next year 508 00:26:40,119 --> 00:26:42,320 Speaker 5: and then in twenty twenty six and twenty twenty seven. 509 00:26:42,800 --> 00:26:46,440 Speaker 5: So the story within OPEK is starting to change from 510 00:26:46,520 --> 00:26:50,080 Speaker 5: one of struggling to keep production to one where it 511 00:26:50,160 --> 00:26:52,879 Speaker 5: and Venezuela are adding a lot of burrowers. But also 512 00:26:52,920 --> 00:26:56,920 Speaker 5: we have this new production capacity expansion plants of the 513 00:26:57,040 --> 00:27:00,639 Speaker 5: UIE and Saudi Arabia really about to hear the market 514 00:27:00,960 --> 00:27:04,080 Speaker 5: potentially because we don't know if they will translate that 515 00:27:04,200 --> 00:27:07,280 Speaker 5: capacity into actual products or not. That's a political that's 516 00:27:07,280 --> 00:27:08,280 Speaker 5: a political decision. 517 00:27:08,520 --> 00:27:11,040 Speaker 4: Yeah, Saudi Arabia needs to pump more in order to 518 00:27:11,359 --> 00:27:15,240 Speaker 4: afford Rinaldo's contract, I guess. But you know, hearing you 519 00:27:15,320 --> 00:27:18,200 Speaker 4: weigh all this out, Havevier, it sounds almost as if 520 00:27:18,200 --> 00:27:24,240 Speaker 4: we're watching like a slow motion reconfiguration of the world's 521 00:27:24,359 --> 00:27:28,439 Speaker 4: energy sources or energy trade, one where the US is 522 00:27:28,480 --> 00:27:32,160 Speaker 4: far more prominent, Iran is more prominent than it used 523 00:27:32,160 --> 00:27:34,480 Speaker 4: to be. Is that a fair way of putting it, Like, 524 00:27:34,640 --> 00:27:37,679 Speaker 4: is this a reordering of the system in some respects? 525 00:27:37,920 --> 00:27:40,200 Speaker 5: I think that you're putting it absolutely right. I mean, 526 00:27:40,520 --> 00:27:42,800 Speaker 5: the fact that the US is exporting so much oil, 527 00:27:42,840 --> 00:27:45,959 Speaker 5: and when you count crude and refined products many weeks, 528 00:27:46,359 --> 00:27:48,879 Speaker 5: the US on a growth basis is sporting more than 529 00:27:48,880 --> 00:27:51,640 Speaker 5: ten million borrows a day. Obviously, at the same time 530 00:27:51,680 --> 00:27:53,720 Speaker 5: it's important in a bit so on a net basis 531 00:27:53,760 --> 00:27:55,120 Speaker 5: about two million borrowers a day. 532 00:27:55,160 --> 00:27:57,040 Speaker 3: But the fact that the US has. 533 00:27:57,200 --> 00:28:00,240 Speaker 5: Oil to sport on a net basis that you know, 534 00:28:00,280 --> 00:28:02,520 Speaker 5: more than he consumes and it can esport it. It's 535 00:28:02,720 --> 00:28:05,760 Speaker 5: just mind blowing, and particularly for you know, I have 536 00:28:05,880 --> 00:28:08,760 Speaker 5: been writing about this industry for twenty five years. If 537 00:28:08,880 --> 00:28:12,280 Speaker 5: even ten years ago you have told me that the 538 00:28:12,400 --> 00:28:14,440 Speaker 5: US was going to be exporting the amount of crude 539 00:28:14,880 --> 00:28:18,159 Speaker 5: that is doing today, I would have said absolutely not. 540 00:28:18,359 --> 00:28:21,199 Speaker 3: And you know, no way, I mean, no way, this 541 00:28:21,320 --> 00:28:21,840 Speaker 3: is happening. 542 00:28:21,880 --> 00:28:24,800 Speaker 5: And you know the fact that Iran and Sancians is 543 00:28:24,840 --> 00:28:28,320 Speaker 5: back producing quite a little oil is also quite surprising. 544 00:28:28,640 --> 00:28:32,000 Speaker 5: And the fact that Saudi Arabia has accepted again to 545 00:28:32,119 --> 00:28:36,399 Speaker 5: cut unilaterally his production without the help of other production countries, 546 00:28:36,480 --> 00:28:40,440 Speaker 5: something that if promise, will never do again. That is 547 00:28:40,480 --> 00:28:41,520 Speaker 5: also very surprising. 548 00:28:41,720 --> 00:28:45,280 Speaker 4: Yeah, where does the Biden administration set in all of this? 549 00:28:45,600 --> 00:28:47,240 Speaker 4: And we've sort of touched on it in a few 550 00:28:47,240 --> 00:28:50,080 Speaker 4: episodes at this point, but Biden came on on a 551 00:28:50,240 --> 00:28:56,719 Speaker 4: very oil unfriendly campaign, basically talking about transitioning to green energy, 552 00:28:57,360 --> 00:29:00,280 Speaker 4: and yet here we are a few years later and 553 00:29:00,520 --> 00:29:04,880 Speaker 4: US domestic production is that a record around is pumping again, 554 00:29:04,920 --> 00:29:07,520 Speaker 4: which is a whole other political situation. But you talk 555 00:29:07,600 --> 00:29:11,280 Speaker 4: to people in the industry, how are they feeling about 556 00:29:11,320 --> 00:29:13,520 Speaker 4: the Biden administration at the moment. 557 00:29:14,040 --> 00:29:16,880 Speaker 5: Well, I think that the Biden administrations say it has 558 00:29:16,920 --> 00:29:20,840 Speaker 5: a narrative in public just very climate change green transition, 559 00:29:21,720 --> 00:29:24,960 Speaker 5: and in practice what you see has been they have 560 00:29:25,080 --> 00:29:30,600 Speaker 5: not really done much to limit the US industry ability 561 00:29:30,640 --> 00:29:33,520 Speaker 5: to expand. Yes, people in the oil industry will say, 562 00:29:33,560 --> 00:29:35,760 Speaker 5: oh my god, you know, we have all these problems 563 00:29:35,800 --> 00:29:38,760 Speaker 5: with the White House and you know they are really 564 00:29:39,240 --> 00:29:42,480 Speaker 5: anti oil and anti fossil fuels and so on. But 565 00:29:43,120 --> 00:29:46,680 Speaker 5: you really sit down with them and told privately and relaxed, 566 00:29:47,160 --> 00:29:49,560 Speaker 5: they will admit, Look, they leave us alone, we can 567 00:29:49,640 --> 00:29:52,080 Speaker 5: produce as much as we can. Their focus is on 568 00:29:52,160 --> 00:29:55,360 Speaker 5: keeping energy prices down and we are all happy. Can 569 00:29:55,400 --> 00:29:56,640 Speaker 5: we get more things from them? 570 00:29:56,760 --> 00:29:57,040 Speaker 3: Yeah? 571 00:29:57,040 --> 00:29:59,840 Speaker 5: Probably without Republican administration, we will get it more. But 572 00:30:00,040 --> 00:30:02,760 Speaker 5: to be honest, we're getting more than enough. And actually 573 00:30:02,840 --> 00:30:05,520 Speaker 5: we do not really produce too much oil the same 574 00:30:05,560 --> 00:30:08,920 Speaker 5: prices crashing. So yeah, I mean, I think that everyone 575 00:30:08,960 --> 00:30:12,000 Speaker 5: in the industry privately at least it's pretty happy with 576 00:30:12,000 --> 00:30:14,840 Speaker 5: the Biden administration. In public, of course, the lobbies and 577 00:30:14,920 --> 00:30:17,000 Speaker 5: so on, they have to say, oh my gosh, President 578 00:30:17,080 --> 00:30:20,320 Speaker 5: Biden is threatening an energy crisis in America. 579 00:30:20,360 --> 00:30:22,160 Speaker 3: That's just completely utter nonsense. 580 00:30:23,360 --> 00:30:27,200 Speaker 2: Let's pivot real quickly. You have a new big piece out, 581 00:30:27,320 --> 00:30:30,920 Speaker 2: I know, not all related, but about the changes happening 582 00:30:31,160 --> 00:30:35,320 Speaker 2: in European energy market. What's the story about. 583 00:30:35,600 --> 00:30:39,440 Speaker 3: Well, it's particularly about how we trade electricity. 584 00:30:39,600 --> 00:30:43,040 Speaker 5: And you think about a few years back, and by 585 00:30:43,080 --> 00:30:45,440 Speaker 5: that I mean five six years ago. A lot of 586 00:30:45,440 --> 00:30:48,960 Speaker 5: the electricity market in Europe was controlled by the typical 587 00:30:49,040 --> 00:30:51,920 Speaker 5: names that we all knew, the utilities that have been 588 00:30:52,000 --> 00:30:56,400 Speaker 5: privatized but used to be stay owned companies, big names 589 00:30:56,440 --> 00:31:00,200 Speaker 5: like you know, eedf Electricity of the France, r WUE, 590 00:31:00,400 --> 00:31:04,040 Speaker 5: et cetera, et cetera. And the market was quite sedated 591 00:31:04,160 --> 00:31:07,680 Speaker 5: prices were not really moving much. There was not much volatility. 592 00:31:08,120 --> 00:31:10,680 Speaker 5: There were very few of the independent trade that's really 593 00:31:10,720 --> 00:31:12,840 Speaker 5: making money trading electricity. 594 00:31:13,240 --> 00:31:14,680 Speaker 3: And a few years back. 595 00:31:14,520 --> 00:31:17,360 Speaker 5: In the middle of nowhere in Denmark, in a town 596 00:31:17,480 --> 00:31:22,000 Speaker 5: called Ark, who's the big, big university town in rural Denmark, 597 00:31:22,360 --> 00:31:25,280 Speaker 5: a group of companies kind of started to plot how 598 00:31:25,280 --> 00:31:27,480 Speaker 5: we can make out of money out of this market. 599 00:31:27,520 --> 00:31:31,800 Speaker 5: And they were really driven by two things that were 600 00:31:31,840 --> 00:31:34,320 Speaker 5: happening in Europe. Was the liberalization of the market. It 601 00:31:34,440 --> 00:31:38,480 Speaker 5: was a lot more of cross border electricity trading in Europe, 602 00:31:38,800 --> 00:31:41,000 Speaker 5: and there was also a lot more volatility in the 603 00:31:41,040 --> 00:31:44,360 Speaker 5: supply of electricity in Europe because win and solar you 604 00:31:44,400 --> 00:31:47,240 Speaker 5: cannot predate how much win and solar power you're gonna 605 00:31:47,240 --> 00:31:50,640 Speaker 5: get more than five days, perhaps ten days. But you know, 606 00:31:50,760 --> 00:31:53,480 Speaker 5: meteorologists have a limit of you know, how strongly the 607 00:31:53,520 --> 00:31:56,120 Speaker 5: win is gonna blow, or whether it's gonna be you know, 608 00:31:56,240 --> 00:31:58,520 Speaker 5: cloud covered in one area of the continent or not 609 00:31:58,600 --> 00:32:02,440 Speaker 5: for solar et cetera, et cetera. So that variability created 610 00:32:02,440 --> 00:32:06,040 Speaker 5: a lot of price polatility, particularly in the very short 611 00:32:06,360 --> 00:32:09,280 Speaker 5: of the short term market. I mean, electricity used to 612 00:32:09,320 --> 00:32:12,800 Speaker 5: be traded one year in advance, one month in advance, 613 00:32:13,080 --> 00:32:15,640 Speaker 5: and this company is kind of specialized in trading the 614 00:32:15,680 --> 00:32:18,479 Speaker 5: next thirty minutes of the electricity market. But it's going 615 00:32:18,560 --> 00:32:21,720 Speaker 5: to be you know, what is mid morning, what is 616 00:32:21,720 --> 00:32:24,040 Speaker 5: going to be the demand for electricity by lunchtime. 617 00:32:24,080 --> 00:32:25,440 Speaker 3: That's what they specialized. 618 00:32:25,720 --> 00:32:28,080 Speaker 5: But it was you know, the five or six top 619 00:32:28,120 --> 00:32:32,640 Speaker 5: of these companies were making perhaps one hundred million dollars combined, 620 00:32:32,920 --> 00:32:34,680 Speaker 5: so not a lot, and you know, they were in 621 00:32:34,720 --> 00:32:37,400 Speaker 5: the rather of the industry, but all that in twenty 622 00:32:37,440 --> 00:32:40,080 Speaker 5: twenty two they made five billion dollars. 623 00:32:40,480 --> 00:32:42,640 Speaker 3: Their return on equity on. 624 00:32:42,840 --> 00:32:46,280 Speaker 5: Many names of the industry went well above one hundred percent, 625 00:32:46,560 --> 00:32:49,440 Speaker 5: in some cases well about two hundred and fifty percent. 626 00:32:49,800 --> 00:32:52,320 Speaker 5: So let me put it this way. The companies that 627 00:32:52,400 --> 00:32:55,640 Speaker 5: were making a couple of million dollars were making ten 628 00:32:56,160 --> 00:32:58,960 Speaker 5: twenty five thirty million. The guys who were making twenty 629 00:32:58,960 --> 00:33:02,120 Speaker 5: five thirty million before were making a couple of one 630 00:33:02,160 --> 00:33:04,840 Speaker 5: hundred million dollars, and the guys who were making one 631 00:33:04,960 --> 00:33:07,640 Speaker 5: hundred all the way, they just. 632 00:33:07,560 --> 00:33:08,440 Speaker 3: Went to a billion. 633 00:33:09,080 --> 00:33:12,480 Speaker 5: It was just one of the biggest booms in commodity 634 00:33:12,480 --> 00:33:16,040 Speaker 5: trading profitability I have ever seen. And that the piece 635 00:33:16,120 --> 00:33:19,680 Speaker 5: is about these names, which outside the industry basically no 636 00:33:19,720 --> 00:33:20,720 Speaker 5: one really knows about. 637 00:33:21,000 --> 00:33:23,720 Speaker 4: Wait, how much of a parallel is there with the 638 00:33:23,760 --> 00:33:27,000 Speaker 4: sort of old school commodities traders like a Glencore or 639 00:33:27,040 --> 00:33:29,840 Speaker 4: a traffic Era. To the point where as we saw 640 00:33:30,040 --> 00:33:33,960 Speaker 4: after the pandemic, you had sort of systemic issues among 641 00:33:34,040 --> 00:33:37,400 Speaker 4: those commodities traders that became a headache or problem for 642 00:33:37,560 --> 00:33:40,880 Speaker 4: everyone in Europe at one point in time. Could something 643 00:33:40,920 --> 00:33:44,240 Speaker 4: like that happen with this new breed of electricity trader. 644 00:33:44,640 --> 00:33:47,360 Speaker 5: It's the results are different, but there are very significant 645 00:33:47,440 --> 00:33:50,560 Speaker 5: races with this new breed of electricity traders. A lot 646 00:33:50,600 --> 00:33:53,400 Speaker 5: of what they are doing is computer driven. Some of 647 00:33:53,440 --> 00:33:57,480 Speaker 5: the desks where this happening they are called automated electricity 648 00:33:57,520 --> 00:33:59,959 Speaker 5: trading desk. I mean everything is done by the computer. 649 00:34:00,400 --> 00:34:02,800 Speaker 5: I have been on their trading floors and in some 650 00:34:02,880 --> 00:34:06,200 Speaker 5: cases eighty percent of the volume is run by computers, 651 00:34:06,440 --> 00:34:09,480 Speaker 5: with the traders and the meteorologies just sitting in front 652 00:34:09,520 --> 00:34:12,040 Speaker 5: of the computers making sure that everything is fine, but 653 00:34:12,200 --> 00:34:15,640 Speaker 5: just the computers deciding where to buy and sell. To 654 00:34:15,680 --> 00:34:18,279 Speaker 5: the point that the kind of the umbrella of the 655 00:34:18,600 --> 00:34:22,040 Speaker 5: regulators in U that look at the electricity market reported 656 00:34:22,040 --> 00:34:25,640 Speaker 5: that in twenty twenty two they monitor four point four 657 00:34:25,760 --> 00:34:30,440 Speaker 5: billion transactions in the electricity market in Europe. That's one 658 00:34:30,520 --> 00:34:33,480 Speaker 5: hundred and forty transactions every second. 659 00:34:34,719 --> 00:34:38,439 Speaker 3: For the whole year. And how do you monitor that that. 660 00:34:38,800 --> 00:34:42,040 Speaker 5: I don't think that the regulators really have the capacity. 661 00:34:42,560 --> 00:34:45,880 Speaker 5: And then that a significant chunk of the market now 662 00:34:46,160 --> 00:34:52,640 Speaker 5: is traded by firms that they have relatively small capital bases, 663 00:34:53,080 --> 00:34:55,279 Speaker 5: that they are all trading from the same place in 664 00:34:55,280 --> 00:34:57,680 Speaker 5: the middle of nowhere in them market, using the same 665 00:34:57,760 --> 00:35:02,600 Speaker 5: banks and the same brokers. Well, it's when you know, 666 00:35:02,640 --> 00:35:06,239 Speaker 5: the worst systemic risks kind of come to mind. And 667 00:35:06,320 --> 00:35:08,719 Speaker 5: I'm not saying that there is a problem, but I 668 00:35:08,760 --> 00:35:13,359 Speaker 5: am concerned that regulators, some policy makers in Europe don't really. 669 00:35:13,120 --> 00:35:15,200 Speaker 3: Know much about them. And I was. 670 00:35:15,239 --> 00:35:17,720 Speaker 5: I was recently, as I was reporting for this column, 671 00:35:17,760 --> 00:35:19,960 Speaker 5: I was talking to one of the top people in 672 00:35:20,000 --> 00:35:22,799 Speaker 5: the European Commission that looks at, you know, these kind 673 00:35:22,800 --> 00:35:24,680 Speaker 5: of situations, and I said, well, what do you know 674 00:35:24,680 --> 00:35:27,600 Speaker 5: about XY said the names of these companies and this 675 00:35:27,719 --> 00:35:29,800 Speaker 5: person told me, honestly, havevier. 676 00:35:29,960 --> 00:35:30,720 Speaker 3: I know that they. 677 00:35:30,600 --> 00:35:33,799 Speaker 5: Exist and that's about it. I have never met. Then 678 00:35:33,840 --> 00:35:36,279 Speaker 5: I don't really know much about them. When I said, oh, 679 00:35:36,320 --> 00:35:38,319 Speaker 5: do you know that you know, this company made a 680 00:35:38,360 --> 00:35:40,400 Speaker 5: billion dollars, you know, in twenty twenty two, and the 681 00:35:40,440 --> 00:35:42,600 Speaker 5: person was utterly surprised. 682 00:35:42,200 --> 00:35:43,560 Speaker 3: About the level of profitability. 683 00:35:43,840 --> 00:35:46,880 Speaker 5: And the fact is kind of the I think that 684 00:35:46,920 --> 00:35:49,440 Speaker 5: a lot of European policy makers they don't know what 685 00:35:49,440 --> 00:35:50,080 Speaker 5: they don't. 686 00:35:49,880 --> 00:35:54,480 Speaker 2: Know high policymakers all around the world. That could be 687 00:35:54,480 --> 00:35:57,480 Speaker 2: said Javier Blast, thank you so much for coming back 688 00:35:57,520 --> 00:36:01,400 Speaker 2: on odd louds and I guess describing across many different 689 00:36:01,440 --> 00:36:05,360 Speaker 2: realms the massive changes that are happening in the energy boards. 690 00:36:05,200 --> 00:36:07,400 Speaker 3: It's great to have you back, my blessed Thank you. 691 00:36:07,680 --> 00:36:08,920 Speaker 4: Thanks, that was fun. 692 00:36:09,080 --> 00:36:09,600 Speaker 3: Yeah, thank you. 693 00:36:22,200 --> 00:36:25,600 Speaker 2: Just real quickly, Tracy, we should do more on electricity trading. 694 00:36:25,640 --> 00:36:27,360 Speaker 2: I've had some requests, and I have to say, like, 695 00:36:27,440 --> 00:36:31,080 Speaker 2: I still don't totally understand like the basics of electricity 696 00:36:31,080 --> 00:36:34,120 Speaker 2: trading in the sense that when I think about trading shops, 697 00:36:34,160 --> 00:36:38,080 Speaker 2: whether it's commodities or even just the traditional financial instruments, 698 00:36:38,080 --> 00:36:40,280 Speaker 2: you know, I think about like entities that are able 699 00:36:40,360 --> 00:36:44,040 Speaker 2: to wear house or absorb some sort of risk in 700 00:36:44,160 --> 00:36:47,080 Speaker 2: exchange for but you can't wear house electricity because it's. 701 00:36:47,080 --> 00:36:50,160 Speaker 4: I suddenly have this vision of like these electricity traders 702 00:36:50,160 --> 00:36:53,080 Speaker 4: on a trading for with tool belts filled with batteries 703 00:36:53,280 --> 00:36:55,680 Speaker 4: and they're like, I'm buying electricity and then someone comes 704 00:36:55,719 --> 00:36:57,840 Speaker 4: and like charge their battery and then they like hold 705 00:36:57,840 --> 00:36:59,799 Speaker 4: on to it and sell it two days later. It's 706 00:36:59,840 --> 00:37:00,439 Speaker 4: not how it works. 707 00:37:00,480 --> 00:37:01,120 Speaker 3: I don't think so. 708 00:37:01,239 --> 00:37:04,520 Speaker 2: But for real, like there's not much electricity storage or 709 00:37:04,560 --> 00:37:07,120 Speaker 2: it's pretty small, so like I want to do more. 710 00:37:07,640 --> 00:37:10,120 Speaker 4: It does seem Yeah, it does seem like it's a 711 00:37:10,320 --> 00:37:14,080 Speaker 4: unique commodity in the sense that, like the timeframe is 712 00:37:14,120 --> 00:37:16,400 Speaker 4: so short and you don't have a good line of 713 00:37:16,440 --> 00:37:20,360 Speaker 4: sight into electricity availability, you know, beyond a few days, 714 00:37:20,400 --> 00:37:22,160 Speaker 4: because you don't know what the wind's going to be 715 00:37:22,239 --> 00:37:25,160 Speaker 4: like or what how strong the sunlight's going to be 716 00:37:25,280 --> 00:37:27,359 Speaker 4: and things like that. So it is really interesting from 717 00:37:27,400 --> 00:37:28,040 Speaker 4: that perspective. 718 00:37:28,080 --> 00:37:30,280 Speaker 2: Yeah, we should do more just on like the basics 719 00:37:30,320 --> 00:37:32,960 Speaker 2: of what electricity traders do and where they they're sort 720 00:37:32,960 --> 00:37:36,320 Speaker 2: of how they harvest profits. But on the oil question, 721 00:37:36,480 --> 00:37:38,960 Speaker 2: I mean it's pretty wild that, at least for the 722 00:37:39,040 --> 00:37:41,200 Speaker 2: moment and who knows how long it lasts, the US 723 00:37:41,200 --> 00:37:45,000 Speaker 2: industry hasn't had to choose between volume and profitability. Yeah, 724 00:37:45,000 --> 00:37:46,080 Speaker 2: it was like why not both. 725 00:37:46,480 --> 00:37:50,160 Speaker 4: Yeah, and I think that story about technology. I mean, 726 00:37:50,239 --> 00:37:54,200 Speaker 4: shale was always a technology story and a capital market 727 00:37:54,280 --> 00:37:59,120 Speaker 4: story and investors getting excited about the new technology that 728 00:37:59,200 --> 00:38:02,120 Speaker 4: made all this possible. But it feels like people think 729 00:38:02,120 --> 00:38:05,160 Speaker 4: about technology and they think some like really cool new 730 00:38:05,200 --> 00:38:08,480 Speaker 4: way of drilling. And Okay, yes, the horizontal drills are 731 00:38:08,600 --> 00:38:13,560 Speaker 4: getting more horizontal and more powerful, but horizontal at horizontal AERT. 732 00:38:13,600 --> 00:38:14,000 Speaker 3: That's right. 733 00:38:14,280 --> 00:38:17,880 Speaker 4: But we can also talk about like just really small 734 00:38:18,040 --> 00:38:22,359 Speaker 4: incremental changes, like standardizing the types of bolts that you're 735 00:38:22,480 --> 00:38:25,960 Speaker 4: using in a rig, standardizing the color yellow on your 736 00:38:26,040 --> 00:38:28,479 Speaker 4: North Sea platforms. That was pretty fun. 737 00:38:28,560 --> 00:38:30,400 Speaker 2: I love that example. But no, it's like you just 738 00:38:30,480 --> 00:38:32,759 Speaker 2: don't know where you are in the tech cycle. And 739 00:38:32,800 --> 00:38:34,799 Speaker 2: the fact while you were talking, I looked up your 740 00:38:34,800 --> 00:38:38,280 Speaker 2: old article from twenty fifteen that you mentioned and seem 741 00:38:38,320 --> 00:38:41,520 Speaker 2: to have nailed it perfectly. We should do more on standardization. 742 00:38:41,680 --> 00:38:44,680 Speaker 2: Standardization bodies are really interesting organizations too. 743 00:38:44,800 --> 00:38:48,080 Speaker 4: Yeah, standardization is kind of like what drives the world 744 00:38:48,120 --> 00:38:51,839 Speaker 4: and also causes problems a lot. It's really interesting. Yes, 745 00:38:51,960 --> 00:38:54,600 Speaker 4: let's do a standardization series. I really want to speak 746 00:38:54,640 --> 00:38:57,239 Speaker 4: to the guys that make the c the barcodes, the 747 00:38:57,280 --> 00:38:58,400 Speaker 4: bar code Association. 748 00:38:59,040 --> 00:38:59,799 Speaker 3: What are they up to? 749 00:39:00,040 --> 00:39:01,800 Speaker 2: Love the idea of a standardization series? 750 00:39:01,880 --> 00:39:04,560 Speaker 4: Yeah, all right, okay, well this is one of those 751 00:39:04,600 --> 00:39:06,799 Speaker 4: episodes where we've kind of come away with five other 752 00:39:06,840 --> 00:39:08,600 Speaker 4: things to discuss. Shall we leave it there? 753 00:39:08,680 --> 00:39:09,760 Speaker 3: Let's leave it there. Okay. 754 00:39:10,080 --> 00:39:12,920 Speaker 4: This has been another episode of the Odd Thoughts podcast. 755 00:39:13,000 --> 00:39:15,840 Speaker 4: I'm Tracy Alloway. You can follow me at Tracy Alloway. 756 00:39:15,960 --> 00:39:18,720 Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart. 757 00:39:19,000 --> 00:39:22,800 Speaker 2: Follow Javier Bloss at Javier Bloss. Follow our producers Carmen 758 00:39:22,920 --> 00:39:26,120 Speaker 2: Rodriguez at Carmen Arman, dash Ol Bennett at Dashbot and 759 00:39:26,200 --> 00:39:29,000 Speaker 2: kel Brooks at kel Brooks. Thank you to our producer 760 00:39:29,000 --> 00:39:32,040 Speaker 2: Moses Onam. For more Odd Lags content, go to Bloomberg 761 00:39:32,040 --> 00:39:34,799 Speaker 2: dot com slash odd Lots, where we have a transcript 762 00:39:35,000 --> 00:39:39,200 Speaker 2: blog and a weekly newsletter and chat with fellow listeners 763 00:39:39,239 --> 00:39:42,000 Speaker 2: twenty four to seven in the Discord Discord dot gg 764 00:39:42,080 --> 00:39:44,200 Speaker 2: slash odd Lot. It's one of my favorite places to 765 00:39:44,239 --> 00:39:47,080 Speaker 2: hang out, an excellent place to learn about energy. There's 766 00:39:47,080 --> 00:39:48,640 Speaker 2: a whole channel on there where people are talking about 767 00:39:48,719 --> 00:39:49,400 Speaker 2: energy stories. 768 00:39:49,640 --> 00:39:52,480 Speaker 4: And if you enjoy All Thoughts, if you want us 769 00:39:52,520 --> 00:39:55,840 Speaker 4: to do our standardization series and figure out what the 770 00:39:55,880 --> 00:39:58,319 Speaker 4: Barcode Association is actually up to on a day to 771 00:39:58,360 --> 00:40:01,640 Speaker 4: day basis. Then please leave us a positive review on 772 00:40:01,680 --> 00:40:05,760 Speaker 4: your favorite podcast platform. And remember, Bloomberg subscribers can listen 773 00:40:05,760 --> 00:40:09,279 Speaker 4: to Odd Lots ad free by connecting their Bloomberg subscription 774 00:40:09,480 --> 00:40:11,840 Speaker 4: to Apple Podcasts. Thanks for listening.