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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Authoughts podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm Joe Wasenthal.

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Speaker 2: Joe, you know what's weird.

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Speaker 3: Tell me what's weird.

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Speaker 2: There's a lot that's weird. Actually, But we seem to

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Speaker 2: be living in this extremely high tech world where you

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Speaker 2: can get a chat bot to write you an essay

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Speaker 2: or create a video. Sure, you could buy a robot

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Speaker 2: dog to play with all that stuff, and yet we

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Speaker 2: still seem to be struggling somewhat to provide cheap and

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Speaker 2: affordable and abundant energy to power all these things. And

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Speaker 2: in fact, because all this new technology guzzles so much energy,

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Speaker 2: data centers you so much power, it feels like energy

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Speaker 2: is becoming even more strategically important in many ways.

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Speaker 3: It definitely feels like we're in an age of sort

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Speaker 3: of people remembering the deep constraints that energy, yeah imposes,

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Speaker 3: whether it's data center, all kinds of things. Energy is

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Speaker 3: not a solve problem by any stritch, although I would

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Speaker 3: say that in my limited sort of reading of the

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Speaker 3: history of energy, it's never a solved problem. I know,

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Speaker 3: at the moment we find we're in a period of

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Speaker 3: energy surplus, we quickly find something to do with that energy,

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Speaker 3: and once again we are in a period of constraint.

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Speaker 3: But it does feel like we're in some sort of

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Speaker 3: period of constraint right now.

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Speaker 2: When Caines was doing his whole abundance theory, did he

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Speaker 2: mention energy at all? What do you say, Well, I'm

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Speaker 2: just gonna assume that Kaines promised us all abundant energy

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Speaker 2: as well as everything else, and it's not here. So

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Speaker 2: we're all upset. Okay. So even though we've had all

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Speaker 2: these breakthroughs in alternative energy technologies, you know, things like

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Speaker 2: solar and wind, we're still using more coal, more oil

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Speaker 2: than ever. And in fact, there's sort of some old

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Speaker 2: school energy behaviors going on with China stockpiling massive amounts

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Speaker 2: of oil.

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Speaker 3: Yeah, as you said, coal is booming, China stockpiling oil.

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Speaker 3: Electricity prices in the US on the rise, maybe perhaps

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Speaker 3: due to some of this AI data centered demand. It

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Speaker 3: feels like I would say pre COVID at least. I

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Speaker 3: don't know if people got a little bit naive or

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Speaker 3: optimistic or goldilocks, but this view is it's only a

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Speaker 3: matter of time before energy is solved because we're gonna

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Speaker 3: have all this wind and solar is gonna be cheap,

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Speaker 3: it's gonna be clean. We see all these cost curves

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Speaker 3: coming down with like batteries and wind and so forth.

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Speaker 3: It's only a matter of time before we don't need

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Speaker 3: the dirty stuff. And right now it doesn't feel we're

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Speaker 3: anywhere close to that. And I'm sort of curious what happened.

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Speaker 2: Yeah, well, everyone talked about the energy transition, but so

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Speaker 2: far it's not really a transition. It's like a compliment

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Speaker 2: to existing sources. Anyway, we could keep talking, but why

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Speaker 2: not go to our guest, who is truly, truly the

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Speaker 2: perfect guest. We're gonna be speaking with someone I wanted

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Speaker 2: to speak with on the podcast for a very long time. Dan,

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Speaker 2: you're he is, of course, the author of the Pulitzer Prize,

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Speaker 2: winning the prize the Epic Quest for Oil, Money and Power.

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Speaker 2: He's also vice chairman of SMP Global, and he also

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Speaker 2: has a new book out called The New Map, Energy,

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Speaker 2: Climate and the Clash of Nations. So a lot to

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Speaker 2: talk about, Dan, Thank you so much for coming on

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Speaker 2: all thoughts, It's great to be on with you all.

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Speaker 2: So does it feel like energy and security is still

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Speaker 2: with us in many forms.

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Speaker 4: Yes, it goes through cycles. You know, you mentioned COVID.

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Speaker 4: I think during COVID demand went down, prices went down,

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Speaker 4: and people kind of forgot about energy, and there was

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Speaker 4: a sense in twenty twenty one, International Energy Agency did

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Speaker 4: this scenario about getting to basically a renewable world by

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Speaker 4: twenty fifty. But now we're in twenty twenty five, going

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Speaker 4: into twenty six, energy demand is going up wind and solar,

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Speaker 4: but also coal, oil, and natural gas. And this share

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Speaker 4: of hydrocarbons and energy has gone from about eighty one

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Speaker 4: percent to about eighty point five five percent roughly.

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Speaker 3: So it's going to take a while to get down

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Speaker 3: to zero in a while.

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Speaker 4: You know, though you mentioned energy transition. I think it's

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Speaker 4: time to do some rethinking about the energy transition.

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Speaker 3: Well good, That's what I was going to ask you about.

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Speaker 3: So when people talk about the energy transition, this fantasy

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Speaker 3: or you know, maybe fantasy is a little bit scenario

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Speaker 3: scenario scenario of Okay, we're going to get to net zero,

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Speaker 3: et cetera. Is this just a matter of the timeline

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Speaker 3: has been pushed back, or is there a fundamental flaw

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Speaker 3: with the premise.

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Speaker 4: I think certainly the timeline has been pushed back, the

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Speaker 4: notion by twenty fifty the closer we get to twenty fifty,

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Speaker 4: the farther way, it seems the goal of net zero

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Speaker 4: by twenty fifty zero. And what Tracy said before energy

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Speaker 4: transition has been energy addition.

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Speaker 3: And what happened.

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Speaker 4: What happened is I think the reality came back in

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Speaker 4: that we live in a world that rests on an

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Speaker 4: energy foundation, and that you just can't overnight take one

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Speaker 4: hundred and fifteen trillion dollar world economy and change it

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Speaker 4: from one thing to another.

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Speaker 2: Are there any scenarios you could see where I guess

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Speaker 2: new technologies like AI, the data centers that are getting

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Speaker 2: built encourage new players to come in and provide capital

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Speaker 2: for energy, so you know, Google building their own gas port.

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Speaker 4: Well, exactly what we have now is the tech world

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Speaker 4: meeting the energy world, and these two worlds have very

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Speaker 4: different cultures. Tech world, things go happen pretty fast energy.

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Speaker 4: You know, in your software engineer come out with new software.

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Speaker 4: In the energy world, an engineer takes seven years to

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Speaker 4: build something. And these cultures have come together, and I

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Speaker 4: think one of the reasons that we're seeing kind of

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Speaker 4: this called the easy or simple notions and transition pushed

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Speaker 4: out is what you've mentioned. It's going to take a

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Speaker 4: lot more electricity, and some of that will come from

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Speaker 4: windows solar. But what's come back into the picture is

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Speaker 4: natural gas is an electric generation. If you wanted to

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Speaker 4: go out and buy a gas turbine today, you could

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Speaker 4: get it delivered in twenty thirty. If we back go

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Speaker 4: back to twenty twenty two. I was talking to one

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Speaker 4: of the big companies in the field and the guy

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Speaker 4: said that year, all over the world, exactly one gas

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Speaker 4: turbine was sold and it wasn't one of ours. So

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Speaker 4: we said, our market share that year was zero. Now

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Speaker 4: they're all sold out.

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Speaker 3: Is there an increase in capacity? We talked about this

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Speaker 3: recently and this has come up, the shortage of gas turbans.

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Speaker 3: Is the scarcity being addressed or is there still this

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Speaker 3: phenomenon where no one really wants to do the initial

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Speaker 3: upfront investment in a say, factory that makes the gas

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Speaker 3: turbans because there's still uncertainty about say twenty thirty.

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Speaker 4: What I you know, when I talked to the companies,

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Speaker 4: those who are around in about two two and a

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Speaker 4: half decades ago, remember there was a huge rush turbance

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Speaker 4: and then it all collapsed.

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Speaker 3: And there were and that was coincidentally or incidentally that

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Speaker 3: boom was also at a time of massive tech investment

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Speaker 3: the late nineties. That was another period of the sort

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Speaker 3: of marriage of tech and energy at the time.

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Speaker 4: Absolutely, that's right, and so I think they are expanding capacity,

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Speaker 4: but they're not doing it helter skelter. Also, like so

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Speaker 4: many other companies, the shortage of the talent that you need.

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Speaker 4: I mean, these are not simple things to build.

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Speaker 2: One of the reasons we wanted to talk to you

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Speaker 2: is because you do such a fantastic job of connecting

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Speaker 2: the oil space with capital markets, and I've always maintained

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Speaker 2: that oil is very much a capital market story. Can

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Speaker 2: you talk about the difference between how capital is sourced

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Speaker 2: for something like oil or gas versus clean energy, and

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Speaker 2: whether attitudes towards the two have changed at all.

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Speaker 4: Well, I mean it was quite different with clean energy,

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Speaker 4: and a lot of it, you know, had tax credits

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Speaker 4: and ability to you know, to sell tax credits and

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Speaker 4: things like that, and a lot of the oil and

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Speaker 4: gas development may be funded by financial institutions, but a

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Speaker 4: lot of it is funded by the companies themselves.

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Speaker 3: What is it like we see these lines on charts

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Speaker 3: that show the collapsing price of solar production, or the

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Speaker 3: collapsing price of wind production, or the improvements in battery technology.

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Speaker 3: All true, all true, and yet there is still so

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Speaker 3: much public money that goes into these areas, and so

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Speaker 3: many tax credits and subsidies, etc. To kind of accelerate

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Speaker 3: them along. Why is it that you have these lines

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Speaker 3: going down and yet they don't undercut traditional sources in

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Speaker 3: the way that maybe the tech mindset.

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Speaker 2: We yes so well.

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Speaker 4: First, remember the renewables, wind and solar. Really we're not

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Speaker 4: competing with oil until you started to have electric cars

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Speaker 4: coming onto the scene. But you know, it's interesting. I

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Speaker 4: was talking to a company that's developing a big battery

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Speaker 4: project in Europe I probably shouldn't say which country, and

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Speaker 4: they're very excited about it. It's really big. They said, Oh,

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Speaker 4: by the way, they couldn't do it on their own.

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Speaker 4: They had to go to the government and get incentive

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Speaker 4: subsidies or a partnership with it. So the costs are

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Speaker 4: still up there, and I think we're seeing a testing

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Speaker 4: now for wind and solar. Everybody's rushing right now to

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Speaker 4: get steel into the ground so they can get the

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Speaker 4: tax credits which will expire in not very long time,

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Speaker 4: so the testing will be how competitive will they be?

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Speaker 4: And I think we'll still see wind and solar, particularly

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Speaker 4: solar put in, but it won't be enough. And what

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Speaker 4: they concern right now is about the reliability of the

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Speaker 4: electric power system. And you see prognostications about this area

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Speaker 4: that stretches from Illinois, you know, as far as New Jersey,

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Speaker 4: that by the end of this decade, which is not

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Speaker 4: so far away now, we'll be looking at very tight

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Speaker 4: markets with really great pressure on it. And I'll tell

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Speaker 4: you the kind of regulators. The people looking at it

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Speaker 4: but are starting to get pretty alarmed. And that's why

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Speaker 4: you see a lot of a lot of discussion and

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Speaker 4: focus on can we get permitting reform so you can

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Speaker 4: actually get something built?

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Speaker 3: Can you just what is the source of alarm? Is

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Speaker 3: it about the generation of electrons or is it about

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Speaker 3: the transmission and with the grid capacity to balance and

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Speaker 3: take in all these things.

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Speaker 4: Well, it's both, and certainly the transmission is a very

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Speaker 4: key part of it. But what we have been doing

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Speaker 4: has been retiring coal plants. We thought, you know, we

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Speaker 4: re mar going to have any more gas and electric generation,

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Speaker 4: but that's coming back. And now you see kind of

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Speaker 4: slow down and closing these coal plants. And also we

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Speaker 4: see an election coming up in New Jersey where electricity

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Speaker 4: prices are an issue, and suddenly this whole issue. I

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Speaker 4: was looking at our numbers, and electricity prices have been

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Speaker 4: going up at twice the rate of inflation in the

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Speaker 4: United States.

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Speaker 2: Why can't clean energy seem to exist without subsidies? Given

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Speaker 2: that electricity prices are going up, and we all agree

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Speaker 2: that energy is strategically important, why can't it, you know,

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Speaker 2: fund itself.

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Speaker 4: Well, it has to, you know, ultimately, it has to

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Speaker 4: be that. But you know, obviously there's a lot of

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Speaker 4: debate about what happened in this big beautiful bill where

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Speaker 4: they you know, basically are cutting back and then eliminating

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Speaker 4: the subsidies. And at least this administration says, well, wait,

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Speaker 4: these were put in thirty two years ago for infant

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Speaker 4: in industries, and now the prices come down, why are

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Speaker 4: we were doing it? So I think these industries are

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Speaker 4: going to have to stand on their own right now.

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Speaker 2: Would they be economical in their current form?

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Speaker 4: I think, you know, it depends on the circumstances and

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Speaker 4: where they're built and whether they have access to transmission,

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Speaker 4: because of course you can have solar, but then you

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Speaker 4: need you need to connect it to the grid, and

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Speaker 4: grid connection becomes a very important issue.

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Speaker 2: That's the expensive thing. That's why with my solar panels

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Speaker 2: on my farm, I mooch off of the entire Connecticut

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Speaker 2: system grid.

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Speaker 4: How is your solar panels working?

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Speaker 2: They're fantastic. Our energy bills are like maybe twenty dollars

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Speaker 2: a month. Sometimes we get paid so you.

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Speaker 4: Put it back in the system. You didn't get any

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Speaker 4: tax creditors.

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Speaker 2: Well, the house had it when we bought it. Oh,

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Speaker 2: but I'm just very happy with the low electricity bill

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Speaker 2: and not having to shoulder the costs of the grid.

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Speaker 4: Yeah, and somebody else will take care of it, that's right,

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Speaker 4: somebody else's problem.

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Speaker 3: I want to talk a little bit more about the

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Speaker 3: return of natural gas or LNG. What do you think

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Speaker 3: the prospects are for the US as an LNG export powerhouse?

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Speaker 3: Can you continue to grow well at the pace that

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Speaker 3: it's been growing, especially given some of the bottlenecks and constraints.

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Speaker 4: Yeah, well, obviously you need pipes to get gas to

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Speaker 4: the Gulf coast or to tide water in order to

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Speaker 4: ship the gas, and that ability to build pipes is

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Speaker 4: really difficult, or has been difficult. It's going to get

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Speaker 4: easier now unless you're in Texas where you could build

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Speaker 4: them anyway. But it's an amazing story. A decade ago,

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Speaker 4: the US was not exporting any LNG in fact, and

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Speaker 4: now it's the world's largest exporter of LNG. And our

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Speaker 4: own numbers say that the next half decade or so,

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Speaker 4: global capacity will increase by over fifty percent. Half of

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Speaker 4: that increase will be in the United States, you know,

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Speaker 4: and people don't think about it this way, but we're

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Speaker 4: not for USLNG. Putin might well have succeeded using the

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Speaker 4: energy weapon cutting off gas to Europe and shouted the

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Speaker 4: coalition supporting Ukraine. And what prevented him from doing that

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Speaker 4: was USLNG, which he hadn't counted on. In the book

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Speaker 4: you mentioned the new Map. I have this story about

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Speaker 4: where I had this interaction with Putin in twenty thirteen,

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Speaker 4: and it was at the Saint Petersburg International Economic Forum,

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Speaker 4: which was his version of Davos, was before he enexed Crimea,

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Speaker 4: and he was up there on the platform with Chancellor Merkel,

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Speaker 4: and you could see the ice between them, and they

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Speaker 4: said to me, oh, you get to ask the first question.

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Speaker 4: So I thought I was just asking the question. Yeah, exactly,

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Speaker 4: no pressure, the normal question about you know, what are

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Speaker 4: you going to do? Your budget is over dependent on

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Speaker 4: oil and gas. By accident, I mentioned shale and he

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Speaker 4: started shouting at me in front of all these people

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Speaker 4: and said, shale is barbaric, it's terrible, poisoned people. He

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Speaker 4: went on and on like that, and I can tell

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Speaker 4: you it was very unpleasant being shouted at by Vladimir

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Speaker 4: Putin in front of three thousand people.

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Speaker 3: But it's a good story.

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Speaker 4: Yeah, but it's a good story, you know exactly it

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Speaker 4: did at the time and think it's a good story.

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Speaker 4: At the time, I wanted to get out of there,

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Speaker 4: But afterwards I thought he was actually precient. He saw

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Speaker 4: that shale gas in the form of then LNG would

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Speaker 4: augment us influence in the world, which it certainly has,

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Speaker 4: and it would compete with his jewels crown jewel gas problem,

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Speaker 4: which has also happened because now Russian gas is being

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Speaker 4: pushed out of Europe. So I think, you know, people

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Speaker 4: don't connect speaking of connecting the dots that the shale

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Speaker 4: gas revolution there tied into the ability to support Ukraine

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Speaker 4: in this war that's now gone on almost as long

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Speaker 4: as World War One.

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Speaker 3: It sounds like you're saying, Aubrey McClinton was a great

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Speaker 3: hero for the West and democracy and all of this stuff.

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Speaker 4: Well, i'd say a great entrepreneurial. Yes.

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Speaker 2: When it comes to old school energy sources, whether it's

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Speaker 2: oil or your term old school, is there any low

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Speaker 2: hanging fruit left in terms of making the technologies more efficient?

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Speaker 2: I remember, maybe like almost ten years ago now, there

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Speaker 2: was a big standardization push and all these you know,

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Speaker 2: drills that used to have custom parts started to standardize

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Speaker 2: them and that actually brought down prices quite a bit

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Speaker 2: or helped ease some of the pressure at a time

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Speaker 2: when oil prices were quite low. Is there anything like

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Speaker 2: that on the horizon.

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Speaker 4: Well, I think you're right. I mean shale. The development

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Speaker 4: of shale revolution is to kind of continue your memory,

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Speaker 4: it really became a manufacturing process. It's a very repetitive

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Speaker 4: manufacturing process. And you know, no one back then when

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Speaker 4: days of you mentioned Ay mcclennan was one of the

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Speaker 4: pioneers could have possibly envisioned the US being the world's

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Speaker 4: largest oil producer, the largest natural gas producer. I think

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Speaker 4: right now you know about maybe ten percent of the

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Speaker 4: oil has recovered from shale. So one thing companies are

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Speaker 4: working on, can we increase that output? Can we increase

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Speaker 4: it be more efficient? But there is the sense now

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Speaker 4: which you wasn't even had a year ago, that maybe

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Speaker 4: shale has peaked out, peaked out at a very high number,

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Speaker 4: but peaked doubt And people I start to see are

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Speaker 4: starting to talk about what's known as exploration, going out

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Speaker 4: and finding new oil sources in parts of the world

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Speaker 4: where nobody really looked for them.

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Speaker 2: Does it make you nervous to use the word peak

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Speaker 2: in an oil conversation.

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Speaker 4: Now that you mentioned it at times? What should I say? Plateau?

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Speaker 4: How's plateau?

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Speaker 2: Ok?

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Speaker 4: Yeah? Peak oil. I remember when when people were talking

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Speaker 4: about peak oil back in you know, decade and a

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Speaker 4: half ago, and that the world was going to run

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Speaker 4: out of oil. I remember I said, I better go

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Speaker 4: back and look in the prize and went back and said, oh,

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Speaker 4: the world's actually run out of oil five times, and

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Speaker 4: every time it's where you pointed before. It's new technologies

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Speaker 4: and new geographies, that changed the game.

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Speaker 3: Tell us a little bit more about some of those

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Speaker 3: times were, so, I guess probably the seventies, when else

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Speaker 3: have there been well, right at the air of peak

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Speaker 3: oil running out.

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Speaker 4: World War One turned out to be a war that

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Speaker 4: really sort of elevated oil because it started with people

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Speaker 4: on horses and cavalry, it ended up with banks and

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Speaker 4: airplanes and trucks and all of that. And there was

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Speaker 4: this great fear after World War One that the US

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Speaker 4: had what was it, nine years worth supply left, and

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Speaker 4: so what happened as American companies started to go out

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Speaker 4: and it went out to the Middle East and of

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Speaker 4: course found lots of oil. So that was a period.

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Speaker 4: Then after World War Two there was that concern because

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Speaker 4: oil had been so important there had been an oil

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Speaker 4: war within the larger war, and then of course the seventies.

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Speaker 4: But it even happened in the nineteenth century that you know,

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Speaker 4: people start ringing the bell saying, you know, it's all over,

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Speaker 4: and technology keeps expanding the frontier.

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Speaker 2: So, speaking of oil supplies and stockpiles, one of the

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Speaker 2: big stories in energy markets has been China buying enormous

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Speaker 2: amounts of oil and stockpiling them for reasons that we

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Speaker 2: don't know for certain how important has that dynamic been

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Speaker 2: to you know, a fairly resilient oil price. Crewd has

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Speaker 2: come down a little bit, but it's still, you know,

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Speaker 2: around sixty dollars a barrel, I think, and why are

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Speaker 2: they doing it?

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Speaker 4: In your rod, that is always the question of why

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Speaker 4: they're Chinese stockpiling. I've we've been working on minerals too,

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Speaker 4: and looking at the stockpile minerals too. It's what they do.

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Speaker 4: Is it because they think there may be a conflict?

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Speaker 4: Is there a problem? Are they worried about the South

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Speaker 4: China Sea which I write about in the new map?

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Speaker 4: And they know that during World War Two the US

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Speaker 4: cut off the oil line to Japan, and so they

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Speaker 4: want to be sure they have supplies. Or is it

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Speaker 4: just because it's cheap and they're expecting it to go up.

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Speaker 4: We don't know. I'll be there in a couple months

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Speaker 4: and I'll ask them again. I'm not sure I'll get

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Speaker 4: an answer. But they're doing it. But the role of

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Speaker 4: China's changed because for two decades the growth in oil

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Speaker 4: demand worldwide, half of it was in China. And now

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Speaker 4: the view, I won't use the word peak I'll use

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Speaker 4: the word plateau. That demand in China is plateauing at

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Speaker 4: a high level. But they're importing seventy five percent of

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Speaker 4: their oil and they don't want to continue to do that.

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Speaker 4: That's why they've been pushing one of the reasons they've

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Speaker 4: been pushing electric cars. The other reason is because I

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Speaker 4: see it as a way to an export market, so

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Speaker 4: you don't have the growth engine of China. And so

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Speaker 4: you know, there's a fair amount of debate today at

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Speaker 4: what rate at oil de Man will grow, but is

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Speaker 4: it how how much will grow? Will be a million

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Speaker 4: barrels a day, a million and a half barrels a day,

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Speaker 4: And that is a subject within oil circles of a

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Speaker 4: great deal of vigorous debate.

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Speaker 3: We obviously don't know what chision ping strategic plans are,

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Speaker 3: potential military plans in the future. But for all of

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Speaker 3: the EVY adoption in China, which has of course been

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Speaker 3: huge military conflict, whatever the source, will still be an

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Speaker 3: incredibly oil intensive process.

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Speaker 4: Yes, I think exactly. I mean, that's right. All you're

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Speaker 4: not going to have battleships, you know, you know, solar

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Speaker 4: power times yeah, yeah, yeah, I mean you do mention,

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Speaker 4: I mean what is we know some things that are

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Speaker 4: ensoes Youping's mind, because he said it, and he does

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Speaker 4: talk about the dominating the new indust supply chains, which

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Speaker 4: means evs, which means solar panels, which means when and

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Speaker 4: of increasingly critical importance batteries, which is another issue that's

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Speaker 4: going to actually is percolating up about here. We have

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Speaker 4: regulations against batteries that come from foreign entities of concern

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Speaker 4: and you say, what's a foreign entity of concern? And

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Speaker 4: it tends to be mean parentheses China in the energy discussion, could.

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Speaker 2: You ever envision a time where where earths are more

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Speaker 2: important strategically than oil?

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Speaker 4: No, but I can tell you that they're really important,

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Speaker 4: and I would say in the last six months there

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Speaker 4: has been, if you are here in Washington, a crisis

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Speaker 4: mentality about them, because I think that was a shock

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Speaker 4: when Trump was rolling out all of his tariffs and

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Speaker 4: the country that they were going to be most aimed at,

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Speaker 4: which was China. Suddenly China said, well, you know, to

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Speaker 4: complay this game. And then that is, of course, in

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Speaker 4: recent days is once again come up the Chinese, whether

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Speaker 4: for strategic reasons, but again new supply chains. You know,

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Speaker 4: they produce process ninety percent of the rarers and they

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Speaker 4: know it. And when you hear an automobile maker saying,

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Speaker 4: you know, we have a week and a half supply,

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Speaker 4: you realize how urgent it is, and so you know

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Speaker 4: it's really come up and trying to grapple with it.

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Speaker 4: It's not something you can solve overnight, because it takes

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Speaker 4: a long time to open a mind, put up a

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Speaker 4: processing a thing. And the Chinese are putting not only

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Speaker 4: controls on rareers, they put controls on the machinery and

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Speaker 4: equipment for processing rarers, and they put controls on the

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Speaker 4: people who have to know how that they may not

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Speaker 4: be able to have passports anymore.

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Speaker 3: Let's talk about US energy policy. It seems a little

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Speaker 3: unfocused to me.

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Speaker 4: Or we might say variable, okay.

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Speaker 3: Go on, Like how would you characterize it? Or like

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Speaker 3: when you say, let's say it's variable, how would you

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Speaker 3: characterize what's going on? I think there was a US

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Speaker 3: energy security or energy policy.

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Speaker 4: And under Biden, of course, it was all about basically renewables,

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Speaker 4: climate change, the goal that have no gas, natural gas

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Speaker 4: or coal and electric generation. By twenty thirty five, half

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Speaker 4: the new cars in America were to be electric by

439
00:22:17,480 --> 00:22:21,159
Speaker 4: twenty thirty. That was then, this is now. It's just

440
00:22:21,200 --> 00:22:23,760
Speaker 4: pretty much in the opposite direction.

441
00:22:24,520 --> 00:22:28,240
Speaker 3: Can the US, you know, I think Trump would like

442
00:22:29,600 --> 00:22:33,119
Speaker 3: powerful dominant US energy industry.

443
00:22:33,560 --> 00:22:34,480
Speaker 4: He uses that word.

444
00:22:34,680 --> 00:22:37,400
Speaker 3: Yeah, is that realistic? Can you get there? I mean,

445
00:22:37,440 --> 00:22:40,679
Speaker 3: there's wanting to expand drilling, but with the price of oil,

446
00:22:40,840 --> 00:22:43,120
Speaker 3: actually it's a below fifty blow six and now it's

447
00:22:43,359 --> 00:22:47,920
Speaker 3: fifteen seventy five today. For like, can these things hang together?

448
00:22:48,040 --> 00:22:51,439
Speaker 3: Can we have prices at these levels and booming domestic

449
00:22:51,520 --> 00:22:52,359
Speaker 3: oil coustrut No.

450
00:22:52,440 --> 00:22:55,040
Speaker 4: I think that's one reason we get into not the peaking,

451
00:22:55,160 --> 00:22:58,560
Speaker 4: but the plateauing for that reason. And you know, you

452
00:22:58,600 --> 00:23:01,959
Speaker 4: look at the survey from the Dallas Federal Reserve that

453
00:23:02,080 --> 00:23:06,639
Speaker 4: came out, and you know, below sixty, people don't you know,

454
00:23:06,680 --> 00:23:10,720
Speaker 4: they just pull back and they husband capital. And you know,

455
00:23:11,040 --> 00:23:14,200
Speaker 4: it certainly seemed that it was possible that we would

456
00:23:14,200 --> 00:23:17,119
Speaker 4: see oil prices below sixty in the latter part of

457
00:23:17,160 --> 00:23:19,119
Speaker 4: the year. And it's come. Maybe it's come earlier than

458
00:23:19,160 --> 00:23:23,080
Speaker 4: people might have expected, and very much affected by the

459
00:23:23,119 --> 00:23:25,639
Speaker 4: trade war between the US and China, among other things.

460
00:23:26,040 --> 00:23:30,600
Speaker 4: But the US is the dominant player right now and

461
00:23:31,960 --> 00:23:34,959
Speaker 4: energy you know, the new trade deal the Europe supposed

462
00:23:34,960 --> 00:23:36,560
Speaker 4: to have with the US, They're supposed to buy more

463
00:23:36,640 --> 00:23:39,920
Speaker 4: natural gas from US and so forth, and they set

464
00:23:39,960 --> 00:23:43,560
Speaker 4: up something called the National Energy Dominance Council, which is

465
00:23:44,160 --> 00:23:46,760
Speaker 4: you know, kind of the view of the US in

466
00:23:46,800 --> 00:23:50,879
Speaker 4: this position. But it is tough to both want to

467
00:23:50,880 --> 00:23:54,080
Speaker 4: have a very vibrant domestic industry and have low prices

468
00:23:54,119 --> 00:23:54,879
Speaker 4: at the same time.

469
00:23:55,680 --> 00:23:57,560
Speaker 2: I know you just mentioned that Europe is still going

470
00:23:57,600 --> 00:24:01,119
Speaker 2: to be getting US oil, But do you foresee a

471
00:24:01,160 --> 00:24:05,440
Speaker 2: more I guess autaric energy future for the world, because

472
00:24:05,440 --> 00:24:08,600
Speaker 2: it does feel like, at least with manufacturing goods and

473
00:24:08,640 --> 00:24:13,080
Speaker 2: some strategically important goods, people are stockpiling and people are

474
00:24:13,119 --> 00:24:16,560
Speaker 2: focused on building out their own capacity. Is that going

475
00:24:16,560 --> 00:24:19,320
Speaker 2: to be the case in energy or will it be

476
00:24:19,440 --> 00:24:24,040
Speaker 2: that energy is just so geographically specific and expertise oriented

477
00:24:24,160 --> 00:24:25,399
Speaker 2: that not everyone will well do.

478
00:24:25,440 --> 00:24:28,679
Speaker 4: We've already seen a partitioning of the global oil market

479
00:24:29,119 --> 00:24:32,040
Speaker 4: in terms of Russian oil not going to its natural

480
00:24:32,080 --> 00:24:36,240
Speaker 4: market Europe, but going to China, which was a market before,

481
00:24:36,280 --> 00:24:39,200
Speaker 4: in India, which was not a market before. We see

482
00:24:39,200 --> 00:24:42,639
Speaker 4: that in natural gas. So I think call it economic

483
00:24:43,040 --> 00:24:48,280
Speaker 4: nationalism or economic sovereignty. I think that the you, and

484
00:24:48,320 --> 00:24:51,520
Speaker 4: in a sense, that's what all the teriff policies are about.

485
00:24:51,880 --> 00:24:55,119
Speaker 4: I think Europe is in a very difficult position because

486
00:24:56,160 --> 00:24:59,680
Speaker 4: they would like to continue to pursue zero as it's called,

487
00:25:00,040 --> 00:25:03,080
Speaker 4: since by twenty fifty, but now they have this other problem,

488
00:25:03,200 --> 00:25:06,480
Speaker 4: which is called being competitive, or rather not being competitive

489
00:25:06,520 --> 00:25:08,879
Speaker 4: and losing industry. And on the other hand, they're now

490
00:25:08,880 --> 00:25:11,359
Speaker 4: supposed to spend not one and a half percent, but

491
00:25:11,440 --> 00:25:15,119
Speaker 4: five percent of GDP on defense. So I think Europe

492
00:25:15,200 --> 00:25:17,200
Speaker 4: is in a very tough position.

493
00:25:18,119 --> 00:25:20,359
Speaker 2: And I know you speak to a lot of experts

494
00:25:20,400 --> 00:25:23,760
Speaker 2: in the energy industry, but what's your sense of the

495
00:25:23,800 --> 00:25:26,879
Speaker 2: mood on the ground among I guess oil and gas

496
00:25:26,920 --> 00:25:30,520
Speaker 2: workers specifically, because on the one hand, Trump has been

497
00:25:30,560 --> 00:25:32,800
Speaker 2: a friend of oil and gas and has said that

498
00:25:32,880 --> 00:25:36,000
Speaker 2: he wants oil and gas to be dominant. But on

499
00:25:36,040 --> 00:25:39,040
Speaker 2: the other hand, a lot of the policies that he's

500
00:25:39,040 --> 00:25:41,440
Speaker 2: actually put in place, you see people in like the

501
00:25:41,560 --> 00:25:45,320
Speaker 2: Dallas Fed survey complaining about them, and the mood seems

502
00:25:45,359 --> 00:25:45,960
Speaker 2: to be kind of bad.

503
00:25:46,200 --> 00:25:49,040
Speaker 4: Well, I think it's both. I mean, I remember CEO

504
00:25:49,080 --> 00:25:51,600
Speaker 4: of one Oil Companies saying that he was actually too

505
00:25:51,680 --> 00:25:54,119
Speaker 4: surprise was invited to I don't know if he's joking

506
00:25:54,200 --> 00:25:56,080
Speaker 4: or not to the Biden White House, but he said

507
00:25:56,080 --> 00:25:59,119
Speaker 4: he had to go in through the basement door. And now,

508
00:25:59,200 --> 00:26:02,919
Speaker 4: of course they're very you know, accepted, and you know,

509
00:26:03,040 --> 00:26:05,320
Speaker 4: in part of the dialogue, you know, I think it's

510
00:26:05,320 --> 00:26:08,800
Speaker 4: a mixed message. They're glad to see a reduction in

511
00:26:09,040 --> 00:26:11,760
Speaker 4: all these new regulations that have been imposed and kind

512
00:26:11,760 --> 00:26:15,000
Speaker 4: of just the general hostility to an important US industry.

513
00:26:15,480 --> 00:26:18,480
Speaker 4: But on the other hand, they at low prices. You've seen,

514
00:26:18,800 --> 00:26:21,679
Speaker 4: you know, layoffs in the industry, you see people putting

515
00:26:21,680 --> 00:26:24,600
Speaker 4: down drilling rigs, you know, at this prices, I think

516
00:26:24,880 --> 00:26:27,840
Speaker 4: if they persist, we'll see more of a negative impact.

517
00:26:44,000 --> 00:26:48,200
Speaker 2: So the US is producing massive amounts of oil and gas.

518
00:26:48,400 --> 00:26:51,200
Speaker 2: How does this sort of change the geography or the

519
00:26:51,760 --> 00:26:52,560
Speaker 2: energy industry.

520
00:26:52,760 --> 00:26:56,080
Speaker 4: Well, it really has changed it dramatically. It was really

521
00:26:56,080 --> 00:27:00,320
Speaker 4: brought home in twenty nineteen when the Iranians attacked the

522
00:27:00,320 --> 00:27:02,960
Speaker 4: most important infrastructure in the entire world oil industry in

523
00:27:02,960 --> 00:27:05,200
Speaker 4: Saudi Arabia, and the price went up for a day

524
00:27:05,240 --> 00:27:07,080
Speaker 4: or two and then went down. And I think that's

525
00:27:07,080 --> 00:27:10,520
Speaker 4: because of the existence of shale and just as it

526
00:27:10,600 --> 00:27:12,359
Speaker 4: kept growing and growing and it gave a sense of

527
00:27:12,400 --> 00:27:14,560
Speaker 4: security that wasn't there before.

528
00:27:14,840 --> 00:27:16,919
Speaker 2: I totally forgot about that, but I think I was

529
00:27:16,920 --> 00:27:20,080
Speaker 2: actually in the Middle East when that happened. Does Opek

530
00:27:20,160 --> 00:27:21,320
Speaker 2: matter anymore? U?

531
00:27:21,600 --> 00:27:25,200
Speaker 4: Yes, Well, it's really OPEK plus that matters right now.

532
00:27:25,680 --> 00:27:28,920
Speaker 4: And they took a lot of oil off the market,

533
00:27:29,200 --> 00:27:32,920
Speaker 4: basically giving room market share to the US. They're now

534
00:27:33,000 --> 00:27:36,280
Speaker 4: begun the process of taking back their market share, and

535
00:27:36,359 --> 00:27:38,479
Speaker 4: that's partly what's reflected in price.

536
00:27:38,920 --> 00:27:41,320
Speaker 3: One of the things that is a constant theme on

537
00:27:41,400 --> 00:27:44,040
Speaker 3: the podcast, and it comes up in numerous industries, whether

538
00:27:44,040 --> 00:27:47,880
Speaker 3: we're talking about housing or lumber or anything else, is that,

539
00:27:48,160 --> 00:27:51,080
Speaker 3: you know, periods of surplus or periods of slack, you

540
00:27:51,200 --> 00:27:52,800
Speaker 3: end up paying for it at the end. You end

541
00:27:52,840 --> 00:27:54,639
Speaker 3: up maybe paying for it five ten years down the

542
00:27:54,680 --> 00:27:57,119
Speaker 3: road because you get this declined in production. The talent

543
00:27:57,240 --> 00:27:59,959
Speaker 3: leaves the industry, the labor moves the industry, the parts run,

544
00:28:00,240 --> 00:28:02,320
Speaker 3: and you can't just take them out of the warehouse,

545
00:28:02,359 --> 00:28:05,320
Speaker 3: et cetera and start drilling or whatever. Again, when you

546
00:28:05,400 --> 00:28:08,040
Speaker 3: look at the declining price of oil today, are we

547
00:28:08,080 --> 00:28:08,840
Speaker 3: going to pay for this?

548
00:28:09,040 --> 00:28:11,840
Speaker 4: I so yeah, I think it's interesting because you know,

549
00:28:11,880 --> 00:28:14,960
Speaker 4: I had to write this new epilogue for the new edition,

550
00:28:15,440 --> 00:28:18,040
Speaker 4: thirtieth edition of the Prize, and I was thinking about

551
00:28:18,040 --> 00:28:20,000
Speaker 4: what are the lessons And one of the lessons to

552
00:28:20,080 --> 00:28:22,520
Speaker 4: me is, among the hundreds of characters in the book,

553
00:28:22,560 --> 00:28:24,760
Speaker 4: there are only two who really matter. One is supply

554
00:28:24,840 --> 00:28:27,800
Speaker 4: and one is demand, and they're always fluctuating between the

555
00:28:27,840 --> 00:28:30,399
Speaker 4: two of them. And I could see that today. Let

556
00:28:30,480 --> 00:28:33,399
Speaker 4: me give you an exact because there's a natural decline

557
00:28:33,400 --> 00:28:35,560
Speaker 4: that goes on in oil, which is people now saying

558
00:28:35,800 --> 00:28:38,400
Speaker 4: and gas maybe it's five percent a year. So in

559
00:28:38,440 --> 00:28:41,120
Speaker 4: twenty twenty one you had the International Energy Agency come

560
00:28:41,120 --> 00:28:43,440
Speaker 4: out with a scenario for net zero by twenty fifty

561
00:28:43,920 --> 00:28:46,800
Speaker 4: in terms of emissions, and all these steps to get

562
00:28:46,800 --> 00:28:49,160
Speaker 4: there made it look rather easy. Because the demand was

563
00:28:49,200 --> 00:28:51,640
Speaker 4: down and price was down. They just came out with

564
00:28:51,680 --> 00:28:54,680
Speaker 4: a new study saying the world needs five hundred and

565
00:28:54,760 --> 00:28:58,560
Speaker 4: forty billion dollars of investment every year between now and

566
00:28:58,600 --> 00:29:00,960
Speaker 4: twenty fifty just to kind of stay where we are

567
00:29:00,960 --> 00:29:04,120
Speaker 4: with oil. So it is that cycle that people forget.

568
00:29:04,160 --> 00:29:07,000
Speaker 4: There's a whole decline there, and I think if you

569
00:29:07,040 --> 00:29:09,480
Speaker 4: have a period of slack, you pay for it down

570
00:29:09,480 --> 00:29:12,040
Speaker 4: the road in terms of the tight market, because investment

571
00:29:12,120 --> 00:29:14,240
Speaker 4: leaves and I think you made a really important point.

572
00:29:14,400 --> 00:29:16,560
Speaker 4: People leave too, They say, I don't want to be

573
00:29:16,600 --> 00:29:17,280
Speaker 4: in this industry.

574
00:29:17,760 --> 00:29:20,520
Speaker 3: Did some episodes a couple of years ago, like actually,

575
00:29:20,520 --> 00:29:22,800
Speaker 3: when oil is much higher about one of the constraints

576
00:29:22,840 --> 00:29:25,360
Speaker 3: that's been well, a bunch of like the petroleum schools,

577
00:29:25,400 --> 00:29:27,960
Speaker 3: they didn't have the same pipeline of engineering talent because

578
00:29:27,960 --> 00:29:30,680
Speaker 3: in twenty nineteen or whatever those years were, who was

579
00:29:30,720 --> 00:29:33,400
Speaker 3: going into majoring in petroleum engineering?

580
00:29:33,600 --> 00:29:36,880
Speaker 4: Right here exactly Now it's actually looks like it's a

581
00:29:36,880 --> 00:29:39,640
Speaker 4: more attractive industry, but it's.

582
00:29:39,200 --> 00:29:41,840
Speaker 2: A competition from geothermal as well. If you want to

583
00:29:41,840 --> 00:29:44,160
Speaker 2: go drilling some rocks somewhere, you don't have options.

584
00:29:44,160 --> 00:29:47,280
Speaker 4: Well, actually we didn't talk about geothermal, but in fact

585
00:29:47,880 --> 00:29:51,120
Speaker 4: there is now the notion can you apply shale technology

586
00:29:51,120 --> 00:29:51,960
Speaker 4: and drilling to geos?

587
00:29:52,000 --> 00:29:53,120
Speaker 3: Are you optimistic about that?

588
00:29:54,200 --> 00:29:57,040
Speaker 4: I don't go through optimist or pessimism. I'd just say,

589
00:29:57,360 --> 00:29:59,600
Speaker 4: but it's promising. Let's see how it plays out.

590
00:30:00,040 --> 00:30:02,520
Speaker 3: I want to talk more about Europe. You mentioned the

591
00:30:02,560 --> 00:30:05,040
Speaker 3: industrial economies getting clobbord. I mean German. Let's just talk

592
00:30:05,040 --> 00:30:09,360
Speaker 3: about just Germany. Maybe they were able to substitute LNG

593
00:30:09,560 --> 00:30:12,080
Speaker 3: imported from the US from some of its Russian sources,

594
00:30:12,080 --> 00:30:15,720
Speaker 3: but the price is up and industrial production in Germany

595
00:30:15,920 --> 00:30:19,320
Speaker 3: has been terrible. Do you think at some point European

596
00:30:19,400 --> 00:30:22,840
Speaker 3: leaders will sort of cry on goal or cave on

597
00:30:22,880 --> 00:30:26,520
Speaker 3: the net zero ambition because it feels like the politics

598
00:30:26,520 --> 00:30:27,960
Speaker 3: of that have been running on fumes first.

599
00:30:27,960 --> 00:30:31,520
Speaker 4: Well, you know, it's interesting because of course they're it's

600
00:30:31,560 --> 00:30:33,720
Speaker 4: so entrenched that it's hard for them. I mean, you

601
00:30:33,720 --> 00:30:35,840
Speaker 4: could say, okay, we're for net zero, but maybe not

602
00:30:35,920 --> 00:30:39,640
Speaker 4: by twenty fifty. But Europe continues to you know, it's

603
00:30:39,640 --> 00:30:44,320
Speaker 4: not just energy costs, it's this incredible weight and burden

604
00:30:44,520 --> 00:30:48,280
Speaker 4: of regulations that are designed without any connection to the markets.

605
00:30:48,760 --> 00:30:52,680
Speaker 4: I was talking to one company on Sunday and they

606
00:30:52,720 --> 00:30:56,200
Speaker 4: said they just closed one facillit plant in Europe. They

607
00:30:56,240 --> 00:30:58,640
Speaker 4: had another one that was eighty percent built that they've

608
00:30:58,680 --> 00:31:01,280
Speaker 4: decided not to go ahead with. Talking to another company

609
00:31:01,400 --> 00:31:05,240
Speaker 4: that's also closing. I mean, they impose these policies with

610
00:31:05,560 --> 00:31:09,840
Speaker 4: no connection to the marketplace or to technology, saying seventy

611
00:31:09,880 --> 00:31:13,160
Speaker 4: percent of jet fuel has to be so called sustainable

612
00:31:13,200 --> 00:31:17,160
Speaker 4: aviation fuel. Well it's less than one percent now, and

613
00:31:17,240 --> 00:31:19,480
Speaker 4: so it's just if you say it, it's going to happen.

614
00:31:19,760 --> 00:31:22,480
Speaker 4: So I think maybe in Germany we're starting to see

615
00:31:22,640 --> 00:31:26,040
Speaker 4: some of that easing up, But I think that those

616
00:31:26,080 --> 00:31:29,000
Speaker 4: economic realities are weighing down with them and if they

617
00:31:29,000 --> 00:31:32,040
Speaker 4: don't step back, and as I say, it's not just

618
00:31:32,360 --> 00:31:36,920
Speaker 4: climate policies, but it's this whole regulatory straight jacket that

619
00:31:37,160 --> 00:31:40,000
Speaker 4: helps people go invest. In the United States, I.

620
00:31:39,960 --> 00:31:44,120
Speaker 2: Do feel like even before Russia invaded Ukraine, there was

621
00:31:44,160 --> 00:31:48,200
Speaker 2: a sense that I guess ESG in general was kind

622
00:31:48,200 --> 00:31:51,520
Speaker 2: of failing. You know, inflation started to.

623
00:31:51,480 --> 00:31:53,080
Speaker 3: Pick up, er bureau phenomenon.

624
00:31:53,200 --> 00:31:56,480
Speaker 2: Yeah, well, inflation started to pick up, and suddenly there

625
00:31:56,600 --> 00:31:59,960
Speaker 2: was what I thought was an inevitable backlash against East

626
00:32:00,360 --> 00:32:04,200
Speaker 2: and targets net zero and things like that. Do you

627
00:32:04,280 --> 00:32:08,200
Speaker 2: think that ever comes back or how would you characterize

628
00:32:08,280 --> 00:32:11,800
Speaker 2: I guess the helpfulness of ESG when it comes to

629
00:32:11,840 --> 00:32:14,400
Speaker 2: building out clean energy, well.

630
00:32:14,120 --> 00:32:18,040
Speaker 4: I think it was clearly that all is a package together.

631
00:32:18,720 --> 00:32:22,560
Speaker 4: I think now really the clean energy argument, the argument

632
00:32:22,600 --> 00:32:25,240
Speaker 4: for solar now is less about that, and it's about

633
00:32:25,240 --> 00:32:26,760
Speaker 4: that you can do it quickly and lay it down

634
00:32:26,840 --> 00:32:30,280
Speaker 4: quickly and get those electrons into the grid. So it's

635
00:32:30,280 --> 00:32:34,640
Speaker 4: more about the economics are working economics rather than virtue

636
00:32:35,160 --> 00:32:39,640
Speaker 4: and ESG clearly is faded away. I can't see it

637
00:32:39,680 --> 00:32:42,040
Speaker 4: coming back with the full force that it did because

638
00:32:42,920 --> 00:32:46,120
Speaker 4: it has a built in backlash, which we're seeing now.

639
00:32:46,520 --> 00:32:48,560
Speaker 4: So I think it means that these things have to

640
00:32:48,560 --> 00:32:50,640
Speaker 4: be more market driven.

641
00:32:51,280 --> 00:32:54,400
Speaker 3: Does the boom and energy exports from the US raised

642
00:32:54,440 --> 00:32:56,000
Speaker 3: prices for American households?

643
00:32:56,160 --> 00:33:00,520
Speaker 4: That is, of course a very critical question was raised

644
00:33:00,560 --> 00:33:03,440
Speaker 4: at the end of the Biden administration. We did a

645
00:33:03,480 --> 00:33:06,120
Speaker 4: study on that, you know, we being S ANDP and

646
00:33:06,160 --> 00:33:10,040
Speaker 4: the Commodity Insight team there and concluded that we have

647
00:33:10,120 --> 00:33:12,760
Speaker 4: a lot of natural gas so that it's not a

648
00:33:12,800 --> 00:33:15,719
Speaker 4: threat in terms of prices. Natural gas is not as

649
00:33:15,760 --> 00:33:16,640
Speaker 4: constrained as oil.

650
00:33:17,040 --> 00:33:20,040
Speaker 2: What about nuclear? We've gone this entire conversation without talking

651
00:33:20,040 --> 00:33:22,720
Speaker 2: about nuclear, but nuclear, you know, could solve all these

652
00:33:22,720 --> 00:33:23,239
Speaker 2: problems well.

653
00:33:23,280 --> 00:33:25,479
Speaker 4: And it's also interesting because that circles back to one

654
00:33:25,520 --> 00:33:29,120
Speaker 4: of the points we talked about before, because you say, well,

655
00:33:29,160 --> 00:33:33,240
Speaker 4: what's brought nuclear back? Partly it's you know, just time,

656
00:33:33,440 --> 00:33:36,720
Speaker 4: Partly its need, but I think it's also the entry

657
00:33:36,840 --> 00:33:40,880
Speaker 4: of the tech companies from being just consumers, you know,

658
00:33:40,960 --> 00:33:45,640
Speaker 4: for software, to really worrying about data centers. And you

659
00:33:45,720 --> 00:33:48,120
Speaker 4: look at it last time I looked, there's been six

660
00:33:48,160 --> 00:33:52,240
Speaker 4: billion dollars of venture capital infusion. Nobody ever used to

661
00:33:52,320 --> 00:33:54,240
Speaker 4: do venture capital in fusion. That was what the government

662
00:33:54,280 --> 00:33:56,960
Speaker 4: did because it was fifty years away. And we had

663
00:33:57,440 --> 00:33:59,960
Speaker 4: an event at our SERRAH conference in Houston this year

664
00:34:00,040 --> 00:34:03,400
Speaker 4: where we had Commonwealth Fusion, which came out of MIT.

665
00:34:03,960 --> 00:34:06,440
Speaker 4: The head of the largest, the main utility in Virginia

666
00:34:06,520 --> 00:34:08,879
Speaker 4: and the governor of Virginia saying, you know, we think

667
00:34:08,920 --> 00:34:11,440
Speaker 4: we're going to have fusion here by twenty thirty two.

668
00:34:11,760 --> 00:34:15,560
Speaker 4: So nuclear is definitely back. Small modular reactors are a

669
00:34:15,560 --> 00:34:18,480
Speaker 4: hot topic. I think the first ones will be deployed

670
00:34:19,000 --> 00:34:20,439
Speaker 4: around twenty thirty.

671
00:34:20,440 --> 00:34:21,960
Speaker 3: So you think they're actually going to happen because this

672
00:34:21,960 --> 00:34:25,120
Speaker 3: seems like another technology that's always five or ten years old.

673
00:34:25,120 --> 00:34:26,759
Speaker 4: Well, I think it's going to happen, But I think

674
00:34:26,760 --> 00:34:29,400
Speaker 4: the test will be then can you bring down the

675
00:34:29,440 --> 00:34:32,720
Speaker 4: cost and is it a more flexible way to add nuclear?

676
00:34:33,160 --> 00:34:35,520
Speaker 4: But it is. I think that it's really the tech

677
00:34:35,560 --> 00:34:38,640
Speaker 4: companies who I mean there you had Amazon investing in

678
00:34:38,680 --> 00:34:41,680
Speaker 4: one of the SMR companies with the notion that they

679
00:34:41,680 --> 00:34:46,319
Speaker 4: will then buy successive reactors with the idea that each

680
00:34:46,360 --> 00:34:48,919
Speaker 4: one the cost will come down. Now that will still

681
00:34:48,960 --> 00:34:50,920
Speaker 4: be tested. It still has to go through a regulatory

682
00:34:50,960 --> 00:34:54,239
Speaker 4: process at the Nuclear Regulatory Commission and all of that,

683
00:34:54,680 --> 00:34:59,680
Speaker 4: but there's certainly you have the sort of entrepreneurial Silicon

684
00:34:59,760 --> 00:35:04,360
Speaker 4: Valley spirit now imbued into nuclear, which of course is

685
00:35:04,400 --> 00:35:07,560
Speaker 4: not an overnight thing, but it is back on the agenda,

686
00:35:07,560 --> 00:35:09,640
Speaker 4: and I think history will go back and say, in

687
00:35:09,719 --> 00:35:13,920
Speaker 4: Germany Chancellor Mercles one of her two biggest mistakes was

688
00:35:13,960 --> 00:35:17,320
Speaker 4: shutting down the nuclear basically in a weekend. Well was

689
00:35:17,360 --> 00:35:18,759
Speaker 4: the other and that was and that was twenty five

690
00:35:18,760 --> 00:35:24,759
Speaker 4: percent of her electricityke The other mistake was saying, you know, immigration,

691
00:35:24,920 --> 00:35:25,640
Speaker 4: the door is open.

692
00:35:26,960 --> 00:35:30,000
Speaker 2: This might be a dumb question, but you know, if it's.

693
00:35:29,800 --> 00:35:31,719
Speaker 4: Not such any dumb there's not such a thing. I

694
00:35:31,800 --> 00:35:32,680
Speaker 4: better watch out now.

695
00:35:32,760 --> 00:35:36,040
Speaker 2: Okay, But if Amazon or someone invests in a small

696
00:35:36,120 --> 00:35:40,399
Speaker 2: nuclear reactor or some other type of energy plant, how

697
00:35:40,440 --> 00:35:44,200
Speaker 2: are those agreements actually structured in terms of the off take?

698
00:35:44,239 --> 00:35:48,120
Speaker 2: Because I assume they get priority, and then does whatever

699
00:35:48,280 --> 00:35:50,280
Speaker 2: is left over get sent into the grid?

700
00:35:50,400 --> 00:35:53,200
Speaker 4: Well, I guess it depends if it is a reactor

701
00:35:53,200 --> 00:35:56,279
Speaker 4: that's owned by a utility, or is it possible that

702
00:35:56,320 --> 00:35:59,879
Speaker 4: these would be like merchant nuclear reactors. You have seen

703
00:36:00,600 --> 00:36:03,399
Speaker 4: examples already where some of the I guess we used

704
00:36:03,400 --> 00:36:06,040
Speaker 4: to call them big tech. Now we call them hyperscalers.

705
00:36:06,880 --> 00:36:09,480
Speaker 3: When did that happen? We just all started using that term.

706
00:36:10,680 --> 00:36:13,680
Speaker 4: Yeah, exactly. I think it's about a year. Yeah, I

707
00:36:13,719 --> 00:36:15,200
Speaker 4: mean for the first time you had to think, what's

708
00:36:15,200 --> 00:36:18,360
Speaker 4: a hyperscale? Is like an elephant, But it's scaling. But

709
00:36:19,400 --> 00:36:21,719
Speaker 4: where they've signed where they will take the entire off

710
00:36:21,760 --> 00:36:25,520
Speaker 4: take of nuclear power plant. So they are very these

711
00:36:25,560 --> 00:36:30,640
Speaker 4: companies are very concerned about power because it's so electricity intensive.

712
00:36:31,040 --> 00:36:33,400
Speaker 4: The other day there was a story saying that the

713
00:36:33,440 --> 00:36:39,760
Speaker 4: two data centers that that Elon muskis building in Memphis

714
00:36:39,800 --> 00:36:42,680
Speaker 4: will use more electricity than all the households. So this

715
00:36:42,719 --> 00:36:44,719
Speaker 4: is a big issue for regulators of what are you

716
00:36:44,880 --> 00:36:47,399
Speaker 4: going back to the question you raised before about who

717
00:36:47,480 --> 00:36:50,040
Speaker 4: pays for this? How do these costs get disaggregated?

718
00:36:50,680 --> 00:36:54,120
Speaker 3: Right now, you mentioned electricity costs having gone up faster

719
00:36:54,200 --> 00:36:57,920
Speaker 3: than inflation. Right now, can we draw a line between

720
00:36:58,080 --> 00:37:02,640
Speaker 3: these prices and the data enter boom or is this

721
00:37:03,080 --> 00:37:05,319
Speaker 3: two things that happened to be happening. Well, I've seen

722
00:37:05,840 --> 00:37:08,480
Speaker 3: different views on how directly data centers are right now.

723
00:37:09,040 --> 00:37:11,719
Speaker 4: I think it's it's part of it, but it's just

724
00:37:11,760 --> 00:37:16,280
Speaker 4: the general increase of demand, including you know, evs, although

725
00:37:16,320 --> 00:37:18,799
Speaker 4: not on the scale that had been envisioned, So all

726
00:37:18,800 --> 00:37:22,520
Speaker 4: those things and just having I mean, we had gone

727
00:37:22,800 --> 00:37:26,239
Speaker 4: for twenty five years with flat demand in electricity the

728
00:37:26,280 --> 00:37:29,400
Speaker 4: United States then and now it's just recently that it

729
00:37:29,480 --> 00:37:31,640
Speaker 4: started to grow again. And so you have a whole

730
00:37:31,680 --> 00:37:35,239
Speaker 4: generation of utilities who've grown up in flat demand and

731
00:37:35,280 --> 00:37:37,200
Speaker 4: now figuring out how do you get things built, how

732
00:37:37,200 --> 00:37:39,960
Speaker 4: do you get into the regulatory process, and even when

733
00:37:40,000 --> 00:37:42,239
Speaker 4: you get it approved and you end up in court

734
00:37:42,239 --> 00:37:43,560
Speaker 4: because somebody challenges it.

735
00:37:44,320 --> 00:37:46,280
Speaker 2: Are we ever going to solve the energy problem?

736
00:37:46,719 --> 00:37:48,759
Speaker 4: No? I think it will just I mean, it will

737
00:37:48,760 --> 00:37:52,239
Speaker 4: always be there as long as industrial society will be

738
00:37:52,280 --> 00:37:56,320
Speaker 4: one form or another. Maybe fusion, the dream.

739
00:37:56,080 --> 00:37:59,320
Speaker 2: Of ah fusion. Yes, I used to play some city

740
00:37:59,400 --> 00:38:02,000
Speaker 2: and that was all was the ultimate goal. You work

741
00:38:02,040 --> 00:38:04,480
Speaker 2: out from the gas plant to nuclear and then to.

742
00:38:04,640 --> 00:38:08,319
Speaker 4: Confusion solves everything. But it's also striking to me what

743
00:38:08,440 --> 00:38:12,640
Speaker 4: I've noticed, you know, having studied the energy for you know,

744
00:38:12,719 --> 00:38:16,480
Speaker 4: some time that you get a consensus about energy and

745
00:38:16,520 --> 00:38:19,279
Speaker 4: it lasts about three years and then something new comes

746
00:38:19,320 --> 00:38:20,799
Speaker 4: along and just changes the view.

747
00:38:21,360 --> 00:38:24,759
Speaker 3: Are past periods we actually talked, we talked a little

748
00:38:24,760 --> 00:38:27,400
Speaker 3: bit about the late nineties when there's the gas boom.

749
00:38:27,480 --> 00:38:30,920
Speaker 3: Then are there any other past periods that people should

750
00:38:31,080 --> 00:38:34,560
Speaker 3: study right now that might help them form the current environment.

751
00:38:34,880 --> 00:38:38,720
Speaker 4: Well, I think that what we have to remember, which

752
00:38:38,840 --> 00:38:44,440
Speaker 4: to me is absolutely critical, is energy security, and that

753
00:38:45,120 --> 00:38:48,080
Speaker 4: it gets forgotten. And for me, I have this story

754
00:38:48,120 --> 00:38:51,880
Speaker 4: and the prize about Winston Churchill converting the Royal Navy

755
00:38:51,920 --> 00:38:54,680
Speaker 4: from coal to oil before the First World War, which

756
00:38:54,719 --> 00:38:57,719
Speaker 4: to me is that is what made oil a strategic commodity,

757
00:38:57,800 --> 00:38:59,080
Speaker 4: that transition.

758
00:38:59,280 --> 00:38:59,880
Speaker 3: Why do you do that?

759
00:39:00,239 --> 00:39:03,800
Speaker 4: He did it because he gained speed, flexibility, you didn't

760
00:39:03,800 --> 00:39:06,760
Speaker 4: need to have all these guys shoving coal on board,

761
00:39:07,000 --> 00:39:09,080
Speaker 4: and you gained thirty percent extra cargo space.

762
00:39:09,520 --> 00:39:12,480
Speaker 2: That's the very start of the book, right, that's opening exactly.

763
00:39:12,560 --> 00:39:16,200
Speaker 4: And I've always thought that phrase. He said safety in oil,

764
00:39:16,239 --> 00:39:18,120
Speaker 4: but we could say an energy lies in variety and

765
00:39:18,239 --> 00:39:21,600
Speaker 4: rite alone that you don't want to be overdependent on anything.

766
00:39:21,760 --> 00:39:24,680
Speaker 4: You want variety, whether in terms of your suppliers, in

767
00:39:24,760 --> 00:39:25,720
Speaker 4: terms of your sources.

768
00:39:26,000 --> 00:39:28,480
Speaker 3: We're never going to bring whale oil back, you know.

769
00:39:29,120 --> 00:39:31,879
Speaker 4: I said there's not a single energy source that has

770
00:39:32,000 --> 00:39:35,920
Speaker 4: not increased, even wood has increased. The only one that

771
00:39:35,960 --> 00:39:37,880
Speaker 4: hasn't increased is whale oil.

772
00:39:39,160 --> 00:39:42,280
Speaker 2: All right, joke and dream, I guess Dan Jurgen, author

773
00:39:42,360 --> 00:39:45,560
Speaker 2: of the probably I'm pretty sure, the best book on

774
00:39:45,600 --> 00:39:48,080
Speaker 2: the oil market ever, thank you so much for coming

775
00:39:48,080 --> 00:39:48,600
Speaker 2: on all thoughts.

776
00:39:48,800 --> 00:39:49,080
Speaker 4: Thank you.

777
00:39:49,200 --> 00:40:03,680
Speaker 2: It's great, Joe, that was so much fun. I'm so

778
00:40:03,719 --> 00:40:05,200
Speaker 2: glad we finally got to take You can't.

779
00:40:05,080 --> 00:40:07,560
Speaker 3: Believe it took us that long to talk to Dan,

780
00:40:07,600 --> 00:40:08,240
Speaker 3: but that was great.

781
00:40:08,320 --> 00:40:13,000
Speaker 2: I know, well, fortuitous meeting in Washington, DC. I gotta

782
00:40:13,040 --> 00:40:18,520
Speaker 2: say his point about the sort of interconnection between energy

783
00:40:18,600 --> 00:40:22,839
Speaker 2: and technology, Definitely, it does seem to be a driving force, right,

784
00:40:22,920 --> 00:40:26,400
Speaker 2: And as soon as you get new advancements in weaponry

785
00:40:26,719 --> 00:40:31,839
Speaker 2: or transport or in this case software, you do tend

786
00:40:31,880 --> 00:40:35,320
Speaker 2: to get a sudden like rethinking of what your energy

787
00:40:35,360 --> 00:40:37,400
Speaker 2: needs actually are or some sort of transition.

788
00:40:37,880 --> 00:40:39,959
Speaker 3: And then on the flip side, like if you ever

789
00:40:40,040 --> 00:40:43,160
Speaker 3: are in an era of energy surplus, you're gonna find

790
00:40:43,200 --> 00:40:45,279
Speaker 3: something to do with it. Yeah, Like you never just

791
00:40:45,320 --> 00:40:47,640
Speaker 3: sit around it, like here's a bunch of cheap energy,

792
00:40:47,719 --> 00:40:49,160
Speaker 3: let's not do anything.

793
00:40:49,120 --> 00:40:52,560
Speaker 2: With Although China is stockpiling successfully, right.

794
00:40:52,600 --> 00:40:55,440
Speaker 3: Well, they are stockpiling. We don't know for what exactly,

795
00:40:55,480 --> 00:40:56,000
Speaker 3: but yes.

796
00:40:55,920 --> 00:40:57,120
Speaker 2: They haven't spent it yet.

797
00:40:57,200 --> 00:41:00,000
Speaker 3: They haven't spent it yet, although they're spending I guess

798
00:41:00,239 --> 00:41:04,000
Speaker 3: sense to acquire all the oil. It does feel to me,

799
00:41:04,480 --> 00:41:07,080
Speaker 3: And it's not like this is that new, but there

800
00:41:07,160 --> 00:41:10,719
Speaker 3: was a phase in probably the US and Europe in

801
00:41:10,760 --> 00:41:13,400
Speaker 3: the late twenty tens, and maybe it extended through twenty

802
00:41:13,440 --> 00:41:17,719
Speaker 3: twenty magical thinking with respect to energy being solved. We're

803
00:41:18,080 --> 00:41:20,000
Speaker 3: you know that there is just like this, like clear

804
00:41:20,120 --> 00:41:25,239
Speaker 3: path towards cheap, clean, abundant energy and some sort of

805
00:41:25,280 --> 00:41:28,839
Speaker 3: realities clearly smacked a lot of policymakers in the face.

806
00:41:28,880 --> 00:41:31,880
Speaker 3: And I guess the question is how locked into current

807
00:41:31,920 --> 00:41:35,239
Speaker 3: plans are they? What has to give? It does feel

808
00:41:35,280 --> 00:41:40,280
Speaker 3: like in Europe specifically, the constraints when it comes to industry, energy,

809
00:41:40,360 --> 00:41:42,759
Speaker 3: climate security are pretty real.

810
00:41:43,200 --> 00:41:45,160
Speaker 2: It seems to me like the big problem is the

811
00:41:45,200 --> 00:41:49,080
Speaker 2: cyclicality of the industry, Like you're constantly going through booms

812
00:41:49,120 --> 00:41:51,280
Speaker 2: and bus and as soon as you get a boom

813
00:41:51,400 --> 00:41:55,319
Speaker 2: in oil production, it inevitably leads to a collapse in

814
00:41:55,360 --> 00:41:58,560
Speaker 2: oil prices, and then you struggle to build out capacity

815
00:41:58,719 --> 00:42:01,560
Speaker 2: for years and years, and then there's not enough oil,

816
00:42:01,680 --> 00:42:03,680
Speaker 2: and then prices start to rise and everyone goes back

817
00:42:03,680 --> 00:42:06,960
Speaker 2: in again. If we could find some way to moderate that,

818
00:42:07,080 --> 00:42:09,279
Speaker 2: I don't know how you would do it, but that

819
00:42:09,400 --> 00:42:10,240
Speaker 2: might be a way forward.

820
00:42:10,400 --> 00:42:14,920
Speaker 3: I feel like an underrated element of the Chinese economic

821
00:42:15,200 --> 00:42:19,160
Speaker 3: story over the last however many decades has just been

822
00:42:19,200 --> 00:42:23,799
Speaker 3: this like sustained boom without major downturn, et cetera. And

823
00:42:23,840 --> 00:42:25,759
Speaker 3: so then you don't get these like big periods of

824
00:42:26,120 --> 00:42:29,080
Speaker 3: people leaving an industry or whatever that are really hard

825
00:42:29,120 --> 00:42:31,560
Speaker 3: to escape out of. It's like I sort of think

826
00:42:31,600 --> 00:42:34,280
Speaker 3: the cure for the boom bus cycle is just perpetual boom,

827
00:42:34,360 --> 00:42:37,960
Speaker 3: Like that's the answer. Just always be booming, always be booming, booming.

828
00:42:38,040 --> 00:42:40,960
Speaker 2: I like that, But I also have to say China

829
00:42:41,080 --> 00:42:43,800
Speaker 2: as a source of energy demand. You know, they're buying

830
00:42:43,840 --> 00:42:46,920
Speaker 2: for stockpiles right now, but they're using so many electric

831
00:42:47,000 --> 00:42:50,239
Speaker 2: vehicles that their gas consumption is actually going down. Gasoline

832
00:42:50,640 --> 00:42:52,680
Speaker 2: very impressive. All right, shall we leave it there.

833
00:42:52,760 --> 00:42:53,439
Speaker 3: Let's leave it there.

834
00:42:53,600 --> 00:42:55,960
Speaker 2: This has been another episode of the All Thoughts podcast.

835
00:42:56,040 --> 00:42:59,320
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.

836
00:42:58,960 --> 00:43:00,840
Speaker 3: And I'm Jill wasn't the Oh. You can follow me

837
00:43:00,880 --> 00:43:04,440
Speaker 3: at the Stalwart, follow our producers Kerman Rodriguez at Kerman

838
00:43:04,560 --> 00:43:08,080
Speaker 3: armand Dshel Bennett at Dashbot and Kilbrooks at Kilbrooks. From

839
00:43:08,080 --> 00:43:10,960
Speaker 3: more Oddlots content, go to Bloomberg dot com slash odd Lots.

840
00:43:11,000 --> 00:43:13,640
Speaker 3: We've a daily newsletter and all of our episodes, and

841
00:43:13,680 --> 00:43:15,640
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842
00:43:15,760 --> 00:43:19,720
Speaker 3: seven in our discord Discord dot gg slash odd Lots.

843
00:43:19,840 --> 00:43:22,440
Speaker 2: And if you enjoy odd Lots, if you like it

844
00:43:22,480 --> 00:43:25,800
Speaker 2: when we talk about the future landscape of the energy industry,

845
00:43:25,840 --> 00:43:28,440
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846
00:43:28,440 --> 00:43:32,040
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847
00:43:32,080 --> 00:43:35,280
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848
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849
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850
00:44:07,000 --> 00:44:07,040
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