1 00:00:00,080 --> 00:00:02,960 Speaker 1: Hello everyone, and welcome to the latest episode from the 2 00:00:03,000 --> 00:00:06,360 Speaker 1: midweek edition of the coin Bureau podcast. Every week, I 3 00:00:06,400 --> 00:00:08,920 Speaker 1: pick out two of my favorite videos from coin Bureau's 4 00:00:08,960 --> 00:00:12,440 Speaker 1: YouTube channel to present to you in podcast form. The 5 00:00:12,480 --> 00:00:15,319 Speaker 1: audio you're about to hear is from those videos I've 6 00:00:15,400 --> 00:00:17,759 Speaker 1: chosen this week. Many of you have been in touch 7 00:00:17,840 --> 00:00:20,040 Speaker 1: to ask whether it's possible to listen to our videos 8 00:00:20,040 --> 00:00:23,240 Speaker 1: in podcast format, and so your wish is my command. 9 00:00:23,600 --> 00:00:26,320 Speaker 1: This week, I've selected our videos looking at the tensions 10 00:00:26,360 --> 00:00:30,520 Speaker 1: between China and Taiwan and the oil price crisis that 11 00:00:30,680 --> 00:00:35,320 Speaker 1: likewise threatens global security. When Russia launched its invasion of 12 00:00:35,440 --> 00:00:38,960 Speaker 1: Ukraine back in February, many feared that China could follow 13 00:00:39,000 --> 00:00:41,919 Speaker 1: suit and use the situation as an opportunity to make 14 00:00:41,960 --> 00:00:45,800 Speaker 1: a similar move against its neighbor, Taiwan. China has long 15 00:00:45,920 --> 00:00:49,120 Speaker 1: coveted the island, which it regards as sovereign territory, and 16 00:00:49,280 --> 00:00:53,360 Speaker 1: has ratcheted up its belligerent rhetoric in recent months. Meanwhile, 17 00:00:53,479 --> 00:00:56,760 Speaker 1: the US has pledged to defend Taiwan if it is attacked, 18 00:00:57,040 --> 00:01:00,760 Speaker 1: leading to fears that Chinese aggression could precipitate a wider 19 00:01:00,800 --> 00:01:05,240 Speaker 1: conflict between the world's two superpowers. The matter is further 20 00:01:05,280 --> 00:01:09,160 Speaker 1: complicated by the fact that Taiwan manufactures the vast majority 21 00:01:09,200 --> 00:01:12,360 Speaker 1: of the world semiconductors, meaning an attack on the island 22 00:01:12,400 --> 00:01:16,440 Speaker 1: would paralyze global trade. If the China Taiwan issue isn't 23 00:01:16,440 --> 00:01:19,920 Speaker 1: on your radar yet, well it should be. In the 24 00:01:19,959 --> 00:01:22,920 Speaker 1: first part of today's episode, we look at the likelihood 25 00:01:22,920 --> 00:01:25,480 Speaker 1: of China making a move against its neighbor and what 26 00:01:25,840 --> 00:01:28,520 Speaker 1: such an action could mean for the world. There are 27 00:01:28,560 --> 00:01:31,600 Speaker 1: a number of reasons why China could be seriously weighing 28 00:01:31,680 --> 00:01:34,560 Speaker 1: up such a step, and even though it would likely 29 00:01:34,600 --> 00:01:40,000 Speaker 1: cause global chaos or worse, it unfortunately cannot be discounted. 30 00:01:40,319 --> 00:01:44,360 Speaker 1: Taiwan troubles aside, the global macro economic picture continues to 31 00:01:44,400 --> 00:01:47,120 Speaker 1: get more and more worrying. In the second part of 32 00:01:47,120 --> 00:01:50,200 Speaker 1: this episode, will also look at the issue surrounding oil prices, 33 00:01:50,240 --> 00:01:53,880 Speaker 1: which have a huge effect on all economies. The Organization 34 00:01:54,000 --> 00:01:58,120 Speaker 1: of the Petroleum Exporting Countries or OPEC, recently announced a 35 00:01:58,240 --> 00:02:01,640 Speaker 1: two million barrels per day cut in oil production, a 36 00:02:01,720 --> 00:02:05,360 Speaker 1: move calculated to keep prices high. This at a time 37 00:02:05,400 --> 00:02:09,079 Speaker 1: when rising inflation and continued supply chain issues to name 38 00:02:09,120 --> 00:02:12,880 Speaker 1: but two, are already dragging on the global economy. It's 39 00:02:12,919 --> 00:02:15,720 Speaker 1: a worrying development, but made more so by the fact 40 00:02:15,840 --> 00:02:19,639 Speaker 1: that the United States has been draining its Strategic Petroleum 41 00:02:19,680 --> 00:02:23,160 Speaker 1: Reserve or SPR in order to try and tame inflation 42 00:02:23,320 --> 00:02:26,640 Speaker 1: and keep pump prices low, all with an eye on 43 00:02:26,680 --> 00:02:30,079 Speaker 1: the mid term elections in just a few weeks time. Meanwhile, 44 00:02:30,240 --> 00:02:34,079 Speaker 1: guess which country has been adding to its strategic reserves 45 00:02:34,080 --> 00:02:37,320 Speaker 1: of oil. Have a listen, and all will be revealed. 46 00:02:37,720 --> 00:02:39,880 Speaker 1: I hope you enjoyed listening to these two pieces, and 47 00:02:39,919 --> 00:02:42,520 Speaker 1: I'll be back talking crypto with Mike very soon, So 48 00:02:42,639 --> 00:02:45,280 Speaker 1: be sure to stay tuned, and if you want even 49 00:02:45,320 --> 00:02:47,880 Speaker 1: more content from coin Bureau, be sure to subscribe to 50 00:02:47,880 --> 00:02:51,240 Speaker 1: our YouTube channel and visit us on social media too. 51 00:03:11,520 --> 00:03:15,079 Speaker 1: In less than twenty four hours, the twentieth National Congress 52 00:03:15,160 --> 00:03:19,200 Speaker 1: of the Chinese Communist Party will begin. This one week 53 00:03:19,240 --> 00:03:23,639 Speaker 1: event only happens every five years, and the twentieth edition 54 00:03:23,760 --> 00:03:27,680 Speaker 1: is said to be extra special. That's because Chinese President 55 00:03:27,760 --> 00:03:31,600 Speaker 1: Zi Jingping is expected to be re elected and designated 56 00:03:31,720 --> 00:03:35,800 Speaker 1: as the People's Leader. Now. This title was originally given 57 00:03:35,840 --> 00:03:39,160 Speaker 1: to Mao Zadong, who founded the People's Republic of China. 58 00:03:40,000 --> 00:03:43,400 Speaker 1: This has led to speculation that China could finally do 59 00:03:43,480 --> 00:03:48,600 Speaker 1: the unthinkable and invade Taiwan. So in today's video, I'll 60 00:03:48,640 --> 00:03:51,720 Speaker 1: tell you why this seems more likely than ever and 61 00:03:51,920 --> 00:03:55,840 Speaker 1: the domino effect it could have around the world. Now, 62 00:03:55,880 --> 00:03:58,480 Speaker 1: I want to start by saying that most of what's 63 00:03:58,480 --> 00:04:02,840 Speaker 1: in this video is based on circumstantial evidence. Even though 64 00:04:02,920 --> 00:04:06,560 Speaker 1: this evidence is compelling when it's put together, it doesn't 65 00:04:06,640 --> 00:04:12,160 Speaker 1: mean necessarily that China will invade Taiwan anytime soon. That's 66 00:04:12,200 --> 00:04:15,840 Speaker 1: simply because the CCP has proven over time that it 67 00:04:15,920 --> 00:04:19,680 Speaker 1: plays the long game. If the CCP knows that it 68 00:04:19,720 --> 00:04:23,599 Speaker 1: can take Taiwan without starting a kinetic war, then that's 69 00:04:23,640 --> 00:04:26,640 Speaker 1: the route the CCP will take, regardless of how much 70 00:04:26,680 --> 00:04:30,080 Speaker 1: time it takes. Note that I'm also not an expert 71 00:04:30,120 --> 00:04:33,760 Speaker 1: in geopolitics. I just listened to lots of podcasts and 72 00:04:33,839 --> 00:04:37,320 Speaker 1: read lots of news from a whole slew of sources. Now, 73 00:04:37,320 --> 00:04:40,640 Speaker 1: funnily enough, the first bit of circumstantial evidence that China 74 00:04:40,760 --> 00:04:45,039 Speaker 1: could soon invade Taiwan actually relates to the CCP strategy 75 00:04:45,160 --> 00:04:48,240 Speaker 1: of playing the long game. You see, the CCP can 76 00:04:48,279 --> 00:04:51,400 Speaker 1: play the long game because it's the only political party 77 00:04:51,440 --> 00:04:55,240 Speaker 1: in China. That means it can implement policies that take 78 00:04:55,360 --> 00:04:59,840 Speaker 1: decades to complete without having to worry about interference. There's 79 00:04:59,880 --> 00:05:02,880 Speaker 1: no other political party that can be elected which will 80 00:05:02,920 --> 00:05:06,159 Speaker 1: pause the policy or remove its funding or whatever else. 81 00:05:07,040 --> 00:05:11,520 Speaker 1: This is in stark contrast to basically every democracy in existence. 82 00:05:12,240 --> 00:05:15,560 Speaker 1: What the CCP and political parties in Western countries have 83 00:05:15,720 --> 00:05:19,200 Speaker 1: in common, however, is that their highest ranking officials are 84 00:05:19,320 --> 00:05:22,640 Speaker 1: generally getting on a bit, including their leaders. In the 85 00:05:22,680 --> 00:05:27,080 Speaker 1: CCPs case, Z is sixty nine years old. That means 86 00:05:27,279 --> 00:05:29,800 Speaker 1: that he doesn't have the luxury of playing the long 87 00:05:29,839 --> 00:05:32,919 Speaker 1: game on a personal level. As much as Z is 88 00:05:32,920 --> 00:05:36,039 Speaker 1: committed to the future of the CCP, his actions have 89 00:05:36,240 --> 00:05:40,120 Speaker 1: arguably proven that he's more concerned with cementing himself as 90 00:05:40,160 --> 00:05:43,919 Speaker 1: the most powerful leader that China has ever seen. To 91 00:05:44,040 --> 00:05:47,279 Speaker 1: my mind, taking back Taiwan would be the best way 92 00:05:47,320 --> 00:05:49,839 Speaker 1: to do that, and I reckon Z is hyper aware 93 00:05:49,880 --> 00:05:53,640 Speaker 1: of this as well. That's because being elevated to the 94 00:05:53,680 --> 00:05:56,880 Speaker 1: same level as Chairman Mao within the CCP is almost 95 00:05:56,880 --> 00:06:00,680 Speaker 1: certainly not enough. After all, it's a title there was 96 00:06:00,760 --> 00:06:05,560 Speaker 1: also given to Mao's successor, Huago Feng. It doesn't really 97 00:06:05,680 --> 00:06:08,479 Speaker 1: make the title that special, then, because it's far from 98 00:06:08,480 --> 00:06:11,920 Speaker 1: being one of a kind and therefore could make Z forgettable. 99 00:06:12,560 --> 00:06:16,039 Speaker 1: Being labeled as the man who reunified China. However, now 100 00:06:16,120 --> 00:06:19,680 Speaker 1: that's a title that would make Z immortal within the CCP. 101 00:06:20,560 --> 00:06:24,080 Speaker 1: More importantly, it's a title that nobody else would ever 102 00:06:24,120 --> 00:06:26,680 Speaker 1: be able to hold, at least not unless China and 103 00:06:26,680 --> 00:06:31,000 Speaker 1: Taiwan are split up and then reunited again sometime far 104 00:06:31,040 --> 00:06:34,520 Speaker 1: in the future. Now this ties into the second bit 105 00:06:34,520 --> 00:06:37,359 Speaker 1: of circumstantial evidence, and that's the fact that over the 106 00:06:37,440 --> 00:06:41,120 Speaker 1: last year or so, almost every single major Western economy 107 00:06:41,360 --> 00:06:44,760 Speaker 1: has announced that it will begin creating its own microchip 108 00:06:44,880 --> 00:06:50,720 Speaker 1: manufacturing facilities. For context, the Taiwan Semiconductor Manufacturing Company t 109 00:06:50,960 --> 00:06:56,080 Speaker 1: SMC manufactures most of the world's microchips and manufactures almost 110 00:06:56,120 --> 00:07:00,560 Speaker 1: all the specialized chips that are used in, say, military equipment. 111 00:07:01,000 --> 00:07:04,520 Speaker 1: This is basically why Taiwan is so important to the 112 00:07:04,600 --> 00:07:08,320 Speaker 1: United States and its allies. It's the reason why the 113 00:07:08,400 --> 00:07:11,880 Speaker 1: sudden moves by these countries to establish their own microchip 114 00:07:11,960 --> 00:07:18,040 Speaker 1: manufacturing facilities aren't so significant for starters. Creating domestic microchip 115 00:07:18,080 --> 00:07:21,680 Speaker 1: facilities means that Western countries will be less reliant on 116 00:07:21,800 --> 00:07:25,720 Speaker 1: Taiwanese chips. This, in turn will increase the likelihood that 117 00:07:25,760 --> 00:07:30,400 Speaker 1: Western countries will intervene if China invades Taiwan. If Western 118 00:07:30,480 --> 00:07:33,520 Speaker 1: countries don't need Taiwan's chips, then they won't have a 119 00:07:33,560 --> 00:07:38,320 Speaker 1: reason to intervene militarily. This fact would increase the likelihood 120 00:07:38,360 --> 00:07:41,720 Speaker 1: that China will invade Taiwan since there's no fear of 121 00:07:41,760 --> 00:07:46,000 Speaker 1: a kinetic war. Again, this doesn't necessarily mean China will 122 00:07:46,120 --> 00:07:50,080 Speaker 1: invade Taiwan anytime soon. That's because it's still going to 123 00:07:50,120 --> 00:07:53,760 Speaker 1: be years before all these new microchip facilities are built. 124 00:07:54,520 --> 00:07:57,800 Speaker 1: Even so, it looks like they will all be complete 125 00:07:57,920 --> 00:08:01,120 Speaker 1: within the decade, and at that point China will have 126 00:08:01,280 --> 00:08:04,880 Speaker 1: a clearer path to take Taiwan. Now, I talked about 127 00:08:04,920 --> 00:08:07,880 Speaker 1: the Taiwanese semiconductor industry in much more detail in a 128 00:08:07,920 --> 00:08:10,640 Speaker 1: previous video which will be in the description for you 129 00:08:10,880 --> 00:08:15,920 Speaker 1: and pro tip. If TSMC stock starts to completely collapse, 130 00:08:16,200 --> 00:08:19,760 Speaker 1: then chances are shit is about to hit the fan. Now, 131 00:08:19,800 --> 00:08:22,520 Speaker 1: this relates to the third bit of circumstantial evidence, and 132 00:08:22,560 --> 00:08:26,080 Speaker 1: that's that Taiwan is not part of the North Atlantic 133 00:08:26,080 --> 00:08:30,840 Speaker 1: Treaty Organization or NATO. This means that Western countries are 134 00:08:30,960 --> 00:08:36,240 Speaker 1: under no obligation to defend the country if China attacks. Obviously, 135 00:08:36,360 --> 00:08:39,720 Speaker 1: this doesn't mean that Western countries couldn't help in other ways. 136 00:08:40,640 --> 00:08:43,800 Speaker 1: Ukraine isn't part of NATO either, yet it's received about 137 00:08:43,800 --> 00:08:47,200 Speaker 1: as much support as NATO can give without putting actual 138 00:08:47,240 --> 00:08:50,600 Speaker 1: boots on the ground. The thing is that it's not 139 00:08:50,760 --> 00:08:54,560 Speaker 1: clear just how far NATO would go to defend Taiwan, 140 00:08:54,800 --> 00:08:57,559 Speaker 1: especially once many of its members have set up their 141 00:08:57,600 --> 00:09:01,800 Speaker 1: own microchip manufacturing facilities. Note that the United States and 142 00:09:01,880 --> 00:09:07,120 Speaker 1: others art technically neutral towards Taiwan's affairs. That said, US 143 00:09:07,200 --> 00:09:10,400 Speaker 1: President Joe Biden has mentioned on many occasions that the 144 00:09:10,520 --> 00:09:14,520 Speaker 1: US would respond with military force, but it looks like 145 00:09:14,640 --> 00:09:17,640 Speaker 1: these statements have been walked back by the White House 146 00:09:17,880 --> 00:09:22,640 Speaker 1: every time. That's probably because they know that war with 147 00:09:22,760 --> 00:09:27,120 Speaker 1: China over Taiwan wouldn't be worth it. Now, this pertains 148 00:09:27,160 --> 00:09:29,920 Speaker 1: to the fourth bit of circumstantial evidence, and that is 149 00:09:29,920 --> 00:09:34,000 Speaker 1: the ongoing war in Ukraine. There's no question that China 150 00:09:34,120 --> 00:09:38,200 Speaker 1: has been watching the West's sanctions against Russia very closely. 151 00:09:38,800 --> 00:09:42,160 Speaker 1: In fact, there's lots of evidence to suggest that China 152 00:09:42,240 --> 00:09:46,080 Speaker 1: has been funding Russia's war in Ukraine. I mean, how 153 00:09:46,160 --> 00:09:51,760 Speaker 1: else could Russia's economy survive these unprecedented sanctions. This begs 154 00:09:51,760 --> 00:09:56,120 Speaker 1: the question of whether China provided these funding guarantees prior 155 00:09:56,360 --> 00:10:00,800 Speaker 1: to Russia's invasion of Ukraine. The answer must be yes, 156 00:10:00,840 --> 00:10:04,720 Speaker 1: because there's no way Russia would have invaded without China's 157 00:10:04,760 --> 00:10:08,600 Speaker 1: economic support. Call me crazy, but I think Putin is 158 00:10:08,840 --> 00:10:12,960 Speaker 1: sane enough to have made that calculation. Now this begs 159 00:10:13,000 --> 00:10:16,000 Speaker 1: a second question, and that's what China would stand to 160 00:10:16,080 --> 00:10:20,599 Speaker 1: gain by supporting Russia financially. Clearly, whatever China stands to 161 00:10:20,640 --> 00:10:24,400 Speaker 1: gain must be significant, since it's supporting Russia economically would 162 00:10:24,440 --> 00:10:28,679 Speaker 1: result in serious scrutiny from Western countries. In fact, that's 163 00:10:28,720 --> 00:10:32,520 Speaker 1: exactly what's been happening. As a wise man once said, 164 00:10:32,600 --> 00:10:35,479 Speaker 1: if you want to know why something is happening, examine 165 00:10:35,640 --> 00:10:39,160 Speaker 1: who benefits. In this case, there seemed to be four 166 00:10:39,320 --> 00:10:42,080 Speaker 1: big benefits for China, and all of them assist with 167 00:10:42,160 --> 00:10:46,400 Speaker 1: the CCPs vision and end game. The first benefit is 168 00:10:46,520 --> 00:10:50,720 Speaker 1: unrestricted access to Ukraine. Believe it or not, but China 169 00:10:50,800 --> 00:10:54,120 Speaker 1: actually has a strategic interest in Ukraine due to its 170 00:10:54,160 --> 00:10:57,080 Speaker 1: Belt and Road initiative. For those who don't know, the 171 00:10:57,120 --> 00:11:00,640 Speaker 1: Belt and Road initiative is China's global infrastruct your project. 172 00:11:01,080 --> 00:11:04,400 Speaker 1: When it's complete, it will run through most countries in Asia, 173 00:11:04,600 --> 00:11:09,880 Speaker 1: Europe and Africa, and this includes Ukraine. Now, the second 174 00:11:09,920 --> 00:11:12,760 Speaker 1: benefit is the ability to see how the West will 175 00:11:12,840 --> 00:11:17,320 Speaker 1: respond to the invasion of a significant yet non NATO ally. 176 00:11:17,400 --> 00:11:21,400 Speaker 1: To be clear, Ukraine and Taiwan are two different countries 177 00:11:21,440 --> 00:11:26,200 Speaker 1: in two different situations. Even so, the response is likely 178 00:11:26,240 --> 00:11:30,000 Speaker 1: to be similar, at least similar enough to allow for 179 00:11:30,120 --> 00:11:33,599 Speaker 1: a meaningful analysis. Now, the third game for China is 180 00:11:33,640 --> 00:11:36,120 Speaker 1: that many Western countries have sent most and in some 181 00:11:36,160 --> 00:11:41,000 Speaker 1: cases all, their significant military equipment to Ukraine. This leaves 182 00:11:41,040 --> 00:11:44,960 Speaker 1: such countries less equipped to assist with other significant conflicts 183 00:11:44,960 --> 00:11:49,320 Speaker 1: should they arise, be they in Taiwan or elsewhere. The 184 00:11:49,400 --> 00:11:52,440 Speaker 1: fourth gain is perhaps the most important, and that's that 185 00:11:52,480 --> 00:11:55,560 Speaker 1: the West sanctions against Russia are also doing a lot 186 00:11:55,600 --> 00:11:58,720 Speaker 1: of damage to them as well. The most acute effect 187 00:11:58,800 --> 00:12:03,040 Speaker 1: is inflation, which is leading to widespread discontent within these countries. 188 00:12:03,400 --> 00:12:05,960 Speaker 1: In the case of Europe, most of this inflation is 189 00:12:06,000 --> 00:12:09,840 Speaker 1: coming from energy and fuel shortages caused in large part 190 00:12:09,880 --> 00:12:14,000 Speaker 1: by the sanctions against Russia. If these energy and fuel 191 00:12:14,000 --> 00:12:17,600 Speaker 1: shortages are not addressed soon, you can bet that Europeans 192 00:12:17,640 --> 00:12:21,000 Speaker 1: will be overthrowing their governments for continuing to push their 193 00:12:21,040 --> 00:12:24,520 Speaker 1: green agendas. The practical effect of this is that these 194 00:12:24,559 --> 00:12:29,800 Speaker 1: countries will probably not respond if China invades Taiwan. The 195 00:12:29,920 --> 00:12:33,000 Speaker 1: scarier thing to consider is that these countries may not 196 00:12:33,160 --> 00:12:37,400 Speaker 1: even respond if Russia launches a counter offensive against Ukraine 197 00:12:37,720 --> 00:12:41,760 Speaker 1: in the dead of winter. Let's not go there. This 198 00:12:41,840 --> 00:12:45,000 Speaker 1: brings me to the fifth bit of circumstantial evidence, and 199 00:12:45,080 --> 00:12:49,559 Speaker 1: that's the United States. The US midterm elections will happen 200 00:12:49,600 --> 00:12:52,040 Speaker 1: in about a month's time, and it's believed that they're 201 00:12:52,040 --> 00:12:55,160 Speaker 1: going to be the most contentious set of elections to date. 202 00:12:55,520 --> 00:12:59,400 Speaker 1: Case and point, Bill Gates recently said that quote, We're 203 00:12:59,440 --> 00:13:02,440 Speaker 1: going to have a hung election and a civil war, 204 00:13:02,920 --> 00:13:07,000 Speaker 1: straight up. That's what he said. One side will disagree 205 00:13:07,040 --> 00:13:10,360 Speaker 1: with the outcome regardless, and people will take to the 206 00:13:10,360 --> 00:13:13,640 Speaker 1: streets and start fighting each other. And Bill isn't just 207 00:13:13,720 --> 00:13:17,240 Speaker 1: making this stuff up either. Poles show that most American 208 00:13:17,360 --> 00:13:21,000 Speaker 1: voters believe there is a high chance of a civil war. 209 00:13:21,600 --> 00:13:25,960 Speaker 1: This is true regardless of political affiliation. More than the 210 00:13:26,080 --> 00:13:29,000 Speaker 1: third of American voters also believe that it's time for 211 00:13:29,000 --> 00:13:32,160 Speaker 1: the country to be split up into blue states and 212 00:13:32,400 --> 00:13:37,160 Speaker 1: red states. That is some extreme polarization and all the 213 00:13:37,200 --> 00:13:41,600 Speaker 1: inflation that Americans are experiencing is probably making things worse. 214 00:13:42,120 --> 00:13:44,880 Speaker 1: When people don't have enough money to pay for rent 215 00:13:44,960 --> 00:13:48,920 Speaker 1: or food, riots tend to be the outcome, I reckon 216 00:13:49,040 --> 00:13:53,000 Speaker 1: the midterms could provide the perfect spark for these riots. 217 00:13:53,600 --> 00:13:56,480 Speaker 1: As with Europe, a domestic crisis of confidence in the 218 00:13:56,559 --> 00:13:59,400 Speaker 1: United States means it will be much less likely to 219 00:13:59,480 --> 00:14:04,120 Speaker 1: intervene if China invades Taiwan. Some would say that war 220 00:14:04,360 --> 00:14:06,800 Speaker 1: tends to be a great unifier, but I would say 221 00:14:06,840 --> 00:14:10,440 Speaker 1: that in today's information age, people know which wars are 222 00:14:10,480 --> 00:14:14,839 Speaker 1: worth fighting, it turns out most aren't. Now if I'm 223 00:14:14,920 --> 00:14:18,160 Speaker 1: wrong and the United States does somehow ralli at citizens 224 00:14:18,240 --> 00:14:20,760 Speaker 1: around going to war with China, then it could be 225 00:14:20,840 --> 00:14:24,920 Speaker 1: presented with a second issue, and that's the Strategic Petroleum 226 00:14:24,960 --> 00:14:28,760 Speaker 1: Reserve or SPR. If you watched our recent video about 227 00:14:28,760 --> 00:14:31,680 Speaker 1: the SPR, you'll know it's at its lowest level since 228 00:14:31,840 --> 00:14:36,120 Speaker 1: nineteen eighty four. That's because the current administration has been 229 00:14:36,200 --> 00:14:40,160 Speaker 1: dumping the SPR into the domestic economy to keep inflation 230 00:14:40,280 --> 00:14:44,520 Speaker 1: and petrol prices in the United States low. The SPR 231 00:14:44,720 --> 00:14:48,560 Speaker 1: has been draining fast, and OPEC's recent decision to cut 232 00:14:48,600 --> 00:14:52,040 Speaker 1: oil production by two million barrels a day will only 233 00:14:52,120 --> 00:14:55,880 Speaker 1: cause it to drain even faster. Given that the SPR 234 00:14:56,040 --> 00:14:59,440 Speaker 1: is intended for emergencies such as a war, the United 235 00:14:59,480 --> 00:15:02,320 Speaker 1: States might not have the energy resources it needs to 236 00:15:02,440 --> 00:15:06,520 Speaker 1: defend Taiwan if China invades. You can have the most 237 00:15:06,600 --> 00:15:09,280 Speaker 1: powerful military in the world, but if you have no 238 00:15:09,480 --> 00:15:12,320 Speaker 1: fuel for all your jets and ships, then you don't 239 00:15:12,400 --> 00:15:15,400 Speaker 1: really have a military at all. Now. To be honest, 240 00:15:15,480 --> 00:15:18,960 Speaker 1: I actually don't know how important the SPR is for 241 00:15:19,080 --> 00:15:22,800 Speaker 1: the U s military's operations. Based on my research, the 242 00:15:22,880 --> 00:15:26,200 Speaker 1: US military only uses around two hundred and fifty thousand 243 00:15:26,240 --> 00:15:29,800 Speaker 1: barrels of oil per day. This means that the United 244 00:15:29,840 --> 00:15:34,000 Speaker 1: States should theoretically have the capacity to supply its military 245 00:15:34,240 --> 00:15:37,680 Speaker 1: even without the SPR. One thing is for sure, though, 246 00:15:37,720 --> 00:15:40,320 Speaker 1: and that's that the SPR being at a multi year 247 00:15:40,400 --> 00:15:44,480 Speaker 1: low is literally a once in a lifetime opportunity. It's 248 00:15:44,600 --> 00:15:47,480 Speaker 1: unlikely that the United States will be in such a 249 00:15:47,560 --> 00:15:52,160 Speaker 1: vulnerable position energy wise. Ever, Again, you can bet this 250 00:15:52,280 --> 00:15:54,960 Speaker 1: is something that c c P is hyper aware of. 251 00:15:55,360 --> 00:15:58,640 Speaker 1: Oh and did you know that before and during the 252 00:15:58,760 --> 00:16:02,880 Speaker 1: Ukrainian invasion the Chinese have been filling up their strategic 253 00:16:02,920 --> 00:16:07,680 Speaker 1: reserves with a lot of Russian oil mm hmm. Speaking 254 00:16:07,800 --> 00:16:12,080 Speaker 1: of interesting energy issues. The sixth bit of circumstantial evidence 255 00:16:12,080 --> 00:16:16,480 Speaker 1: relates to China's pandemic policy, It's peculiar actions during the pandemic, 256 00:16:16,640 --> 00:16:20,920 Speaker 1: it's economic situation, and its demographics. A lot to break 257 00:16:20,920 --> 00:16:24,000 Speaker 1: down here, so bear with me. As many of you 258 00:16:24,040 --> 00:16:27,880 Speaker 1: will know, China has had a strict zero COVID policy 259 00:16:28,000 --> 00:16:31,280 Speaker 1: since the start of the pandemic. Now, there are many 260 00:16:31,360 --> 00:16:34,720 Speaker 1: theories as to why this is. One is that the 261 00:16:34,760 --> 00:16:38,200 Speaker 1: CCP wants to prove it can handle a pandemic better 262 00:16:38,320 --> 00:16:42,240 Speaker 1: than the West. This theory is questionable, given China could 263 00:16:42,320 --> 00:16:46,040 Speaker 1: very easily fudge the numbers. That's why the theory that 264 00:16:46,120 --> 00:16:49,320 Speaker 1: the CCP wants to cause inflation in the West by 265 00:16:49,400 --> 00:16:52,680 Speaker 1: locking down its supply chains has been the more popular 266 00:16:52,720 --> 00:16:56,120 Speaker 1: one over the last year. From what I've seen and heard, 267 00:16:56,480 --> 00:16:59,440 Speaker 1: it's been taken as a fact among macro analysts at 268 00:16:59,480 --> 00:17:03,120 Speaker 1: this point. Still, maybe the c c P really just 269 00:17:03,360 --> 00:17:06,119 Speaker 1: is that crazy. The thing about these theories is that 270 00:17:06,160 --> 00:17:09,600 Speaker 1: they're not mutually exclusive, and I reckon the sum truth 271 00:17:09,680 --> 00:17:14,320 Speaker 1: to both. It's also true that the CCP cannot continue 272 00:17:14,440 --> 00:17:18,399 Speaker 1: its zero COVID policy indefinitely. At some point it will 273 00:17:18,440 --> 00:17:21,639 Speaker 1: have to stop, and the speculation that this will happen 274 00:17:21,760 --> 00:17:26,960 Speaker 1: during or after the twentieth c CP Congress. Once this happens, 275 00:17:27,080 --> 00:17:31,160 Speaker 1: then all of China's manufacturing will come back online. This 276 00:17:31,240 --> 00:17:34,200 Speaker 1: will create a surge in oil demand at a time 277 00:17:34,240 --> 00:17:38,000 Speaker 1: when there are energy shortages around the world. Recall that 278 00:17:38,080 --> 00:17:41,720 Speaker 1: OPEQ just cut its output and Europe is already running 279 00:17:41,800 --> 00:17:46,760 Speaker 1: dangerously low on oil and gas. Logically, this will only 280 00:17:46,800 --> 00:17:50,120 Speaker 1: add to inflation. On the flip side, there are many 281 00:17:50,160 --> 00:17:53,439 Speaker 1: who believe that China is intent on continuing its zero 282 00:17:53,480 --> 00:17:57,960 Speaker 1: pandemic policy indefinitely. Their evidence for this is that China 283 00:17:58,080 --> 00:18:02,959 Speaker 1: continues to build isolation for abilities and continue stockpiling record 284 00:18:03,080 --> 00:18:06,439 Speaker 1: levels of food, which is also adding to inflation around 285 00:18:06,440 --> 00:18:10,640 Speaker 1: the world. But what if these isolation facilities are not 286 00:18:10,760 --> 00:18:14,400 Speaker 1: intended for those who test positive in the future, And 287 00:18:14,600 --> 00:18:17,800 Speaker 1: what if the primary purpose of stockpiling all this food 288 00:18:18,160 --> 00:18:22,760 Speaker 1: isn't to cause inflation without the pandemic. These actions look 289 00:18:22,880 --> 00:18:26,840 Speaker 1: like a country that's preparing for a serious war. Prisons 290 00:18:26,880 --> 00:18:32,359 Speaker 1: for dissenters, food for the army. Then there's the economic element. 291 00:18:33,000 --> 00:18:35,960 Speaker 1: In case you missed the memo, China's economy is kind 292 00:18:36,000 --> 00:18:39,159 Speaker 1: of in the toilet. It's housing market is falling apart. 293 00:18:39,440 --> 00:18:42,480 Speaker 1: People are getting locked out of their bank accounts, institutions 294 00:18:42,480 --> 00:18:47,159 Speaker 1: aren't investing, and those pandemic restrictions are doing serious economic 295 00:18:47,200 --> 00:18:50,200 Speaker 1: damage as well. If you watched one of our older 296 00:18:50,280 --> 00:18:53,080 Speaker 1: videos about how to prepare for a bear market, you 297 00:18:53,160 --> 00:18:55,280 Speaker 1: might recall that one of the ways to get out 298 00:18:55,280 --> 00:18:58,440 Speaker 1: of a crappy economic situation is to start a war. 299 00:18:58,960 --> 00:19:03,120 Speaker 1: What's annoying is that only the CCP knows whether China's 300 00:19:03,119 --> 00:19:07,520 Speaker 1: economic situation is bad enough to justify this kind of solution. 301 00:19:08,040 --> 00:19:10,880 Speaker 1: What we do know is that China has at least 302 00:19:11,119 --> 00:19:15,280 Speaker 1: thirty five million more extra men than women. This is 303 00:19:15,320 --> 00:19:18,800 Speaker 1: because of China's infamous one child policy, which resulted in 304 00:19:18,880 --> 00:19:23,919 Speaker 1: families choosing to have boys over girls. China's gender imbalance 305 00:19:24,080 --> 00:19:27,359 Speaker 1: has since become a big problem, and it's going to 306 00:19:27,400 --> 00:19:31,680 Speaker 1: become an even bigger problem. That's because young and middle 307 00:19:31,720 --> 00:19:34,640 Speaker 1: aged men tend to be the ones who start riots 308 00:19:34,720 --> 00:19:38,040 Speaker 1: and revolutions. With the c c P constantly on a 309 00:19:38,080 --> 00:19:41,480 Speaker 1: shaky footing, having such a large portion of the population 310 00:19:41,680 --> 00:19:45,520 Speaker 1: that's willing and able to fight is not ideal. An 311 00:19:45,600 --> 00:19:48,120 Speaker 1: easy way to get rid of all these men would 312 00:19:48,160 --> 00:19:51,560 Speaker 1: be to send them all to war. On that note, 313 00:19:51,640 --> 00:19:55,040 Speaker 1: the seventh bit of circumstantial evidence relates to what would 314 00:19:55,040 --> 00:19:59,800 Speaker 1: happen between other countries if China invaded Taiwan. While China 315 00:20:00,040 --> 00:20:02,600 Speaker 1: has a large number of extra men, it's actually in 316 00:20:02,720 --> 00:20:07,120 Speaker 1: second place. The first placed country in this contest is India, 317 00:20:07,400 --> 00:20:10,760 Speaker 1: with over fifty five million more extra men. As it 318 00:20:10,880 --> 00:20:14,760 Speaker 1: so happens, India has some territorial disputes of its own, 319 00:20:15,680 --> 00:20:18,840 Speaker 1: Although the most well known of these involved Pakistan, India 320 00:20:18,920 --> 00:20:22,879 Speaker 1: actually has a few territorial disputes with China as well. 321 00:20:23,720 --> 00:20:26,239 Speaker 1: The idea that India would make a move in the 322 00:20:26,280 --> 00:20:29,359 Speaker 1: southeast could be a part of why the CCP hasn't 323 00:20:29,400 --> 00:20:33,399 Speaker 1: moved on Taiwan just yet. It's not just China or 324 00:20:33,480 --> 00:20:37,400 Speaker 1: India either. There are dozens of countries with disputed territories. 325 00:20:37,880 --> 00:20:41,119 Speaker 1: All these countries are facing their own sets of internal 326 00:20:41,119 --> 00:20:44,800 Speaker 1: issues that their politicians know they could solve by going 327 00:20:44,840 --> 00:20:48,080 Speaker 1: to war with their enemies next door. The only thing 328 00:20:48,119 --> 00:20:51,479 Speaker 1: stopping them is the World Police a k a. The West. 329 00:20:51,920 --> 00:20:55,080 Speaker 1: But as I mentioned a few moments ago, Europe is 330 00:20:55,119 --> 00:20:57,960 Speaker 1: more or less guaranteed to be in crisis, and it's 331 00:20:58,000 --> 00:21:00,960 Speaker 1: more than likely that the United States will experience some 332 00:21:01,160 --> 00:21:04,560 Speaker 1: internal strife in the next month or so. Does this 333 00:21:04,640 --> 00:21:09,720 Speaker 1: mean we will see more territorial conflicts emerge. Possibly, but 334 00:21:10,200 --> 00:21:14,959 Speaker 1: that would be guaranteed if China invades Taiwan. That's because 335 00:21:15,040 --> 00:21:18,320 Speaker 1: all the other countries with disputed territories will know, or 336 00:21:18,440 --> 00:21:22,240 Speaker 1: rather assume that the United States will focus its military 337 00:21:22,240 --> 00:21:26,680 Speaker 1: attention on Taiwan. If China invades, as such, it will 338 00:21:26,680 --> 00:21:29,840 Speaker 1: make it the perfect time for all these countries to 339 00:21:29,920 --> 00:21:32,960 Speaker 1: go to war with their neighbors. Now, the reason I 340 00:21:33,000 --> 00:21:36,639 Speaker 1: say assume is because there's a very real possibility the 341 00:21:36,760 --> 00:21:40,760 Speaker 1: United States would focus its military attention on another ally 342 00:21:40,800 --> 00:21:44,760 Speaker 1: if all hell breaks loose. Israel is the elephant in 343 00:21:44,800 --> 00:21:47,320 Speaker 1: the room, and it looks like the U s intelligence 344 00:21:47,359 --> 00:21:51,000 Speaker 1: agencies are already at work to undermine Iran so that 345 00:21:51,080 --> 00:21:55,120 Speaker 1: it doesn't attack Israel. That's because the US military knows 346 00:21:55,240 --> 00:21:57,560 Speaker 1: damn well that it would not be a world war 347 00:21:57,840 --> 00:22:01,160 Speaker 1: where it's East versus West. It will be a series 348 00:22:01,320 --> 00:22:06,680 Speaker 1: of long held territorial disputes evolving into kinetic war. That's 349 00:22:06,760 --> 00:22:09,520 Speaker 1: just because the information age has once again made this 350 00:22:09,640 --> 00:22:13,520 Speaker 1: kind of two sided global war impossible. Going to war 351 00:22:13,600 --> 00:22:17,240 Speaker 1: against a hated neighbor. However, that's still possible in the 352 00:22:17,320 --> 00:22:20,760 Speaker 1: information age, and that's what the next world war will 353 00:22:20,800 --> 00:22:24,240 Speaker 1: look like. The question is which hat will be the 354 00:22:24,280 --> 00:22:27,919 Speaker 1: first to drop. Will it be China versus Taiwan, or 355 00:22:28,040 --> 00:22:31,720 Speaker 1: will there be another significant conflict that comes first to 356 00:22:31,840 --> 00:22:35,040 Speaker 1: light the spark. To my mind, it's only a matter 357 00:22:35,080 --> 00:22:38,600 Speaker 1: of time before one of these sparks comes around. China 358 00:22:38,840 --> 00:22:42,239 Speaker 1: versus Taiwan will then be one of many conflicts, and 359 00:22:42,280 --> 00:22:45,120 Speaker 1: there would be no way for anyone to stop them all. 360 00:22:45,760 --> 00:22:49,640 Speaker 1: What happens after that is anyone's guess. For what it's worth, 361 00:22:49,920 --> 00:22:53,400 Speaker 1: we probably won't see many, if any, nukes get used 362 00:22:53,440 --> 00:22:57,600 Speaker 1: in local conflicts in some then it's arguably not a 363 00:22:57,720 --> 00:23:02,560 Speaker 1: question of if China invades Taiwan on But when circumstances 364 00:23:02,600 --> 00:23:05,880 Speaker 1: are about as favorable as they could be for the CCP, 365 00:23:06,840 --> 00:23:10,280 Speaker 1: the next few weeks will present the perfect opportunity to 366 00:23:10,320 --> 00:23:13,800 Speaker 1: take advantage of these circumstances, as most of them will 367 00:23:13,880 --> 00:23:17,680 Speaker 1: be reaching their apex. For Z, it will be the 368 00:23:17,800 --> 00:23:28,080 Speaker 1: only opportunity. Oil is a country's lifeblood. It's what powers 369 00:23:28,080 --> 00:23:31,000 Speaker 1: the economy, and those with limited supplies of it are 370 00:23:31,080 --> 00:23:34,919 Speaker 1: at a strategic and material disadvantage. This is why the 371 00:23:35,040 --> 00:23:40,240 Speaker 1: United States has the Strategic Petroleum Reserve or SPR. However, 372 00:23:40,359 --> 00:23:44,480 Speaker 1: in recent weeks the SPR has been at dangerously low levels, 373 00:23:44,840 --> 00:23:50,000 Speaker 1: levels not seen since. It's gotten so low that there 374 00:23:50,040 --> 00:23:54,600 Speaker 1: are many wondering if it could threaten America's security. This 375 00:23:54,760 --> 00:23:57,520 Speaker 1: is exactly what I'm going to cover in this video today, 376 00:23:57,600 --> 00:24:02,120 Speaker 1: So don't go anywhere. Okay, before we go any further, 377 00:24:02,200 --> 00:24:04,440 Speaker 1: we need a bit of an intro into the SPR. 378 00:24:04,680 --> 00:24:07,840 Speaker 1: Back in the nineteen seventies, there was an oil price crisis, 379 00:24:07,920 --> 00:24:12,120 Speaker 1: unlike any scene before. This was caused by the Organization 380 00:24:12,320 --> 00:24:16,200 Speaker 1: of the Petroleum Exporting Countries or OPEC, deciding to cut 381 00:24:16,240 --> 00:24:20,080 Speaker 1: off supplies to all those countries that supported Israel during 382 00:24:20,160 --> 00:24:24,440 Speaker 1: the Yom Kippur War. This played out in nineteen seventy three, 383 00:24:24,440 --> 00:24:27,160 Speaker 1: when the price of oil tripled in less than a year. 384 00:24:27,920 --> 00:24:31,639 Speaker 1: It got so bad that in November President Richard Nixon 385 00:24:31,680 --> 00:24:36,119 Speaker 1: asked citizens to lower their thermostats, refrain from driving on Sundays, 386 00:24:36,160 --> 00:24:39,560 Speaker 1: and go easy on their Christmas light displays, not too 387 00:24:39,560 --> 00:24:42,840 Speaker 1: dissimilar from some of the policies being suggested in Europe 388 00:24:43,040 --> 00:24:46,320 Speaker 1: right now. Any who. The result of this crisis was 389 00:24:46,400 --> 00:24:49,919 Speaker 1: that the US embarked on a strategy of energy independence, 390 00:24:50,320 --> 00:24:53,359 Speaker 1: and part of that initiative was the creation of the 391 00:24:53,480 --> 00:24:59,200 Speaker 1: Strategic Petroleum Reserve. The SPR consists of federally controlled oil 392 00:24:59,240 --> 00:25:02,880 Speaker 1: stocks that are stored in huge underground salt cabins at 393 00:25:03,000 --> 00:25:06,200 Speaker 1: four sites along the coastline of the Gulf of Mexico. 394 00:25:07,000 --> 00:25:10,280 Speaker 1: The total storage limit of the SPR is over seven 395 00:25:10,400 --> 00:25:15,080 Speaker 1: hundred and fourteen million barrels, and because of its location 396 00:25:15,320 --> 00:25:18,679 Speaker 1: near big US refineries, the SPR can ship up to 397 00:25:18,760 --> 00:25:23,080 Speaker 1: four point four million barrels per day. By some estimates, 398 00:25:23,119 --> 00:25:26,440 Speaker 1: it can take only thirteen days from a presidential say 399 00:25:26,480 --> 00:25:30,360 Speaker 1: so for the first oil to enter the US market. Now, 400 00:25:30,400 --> 00:25:33,080 Speaker 1: in terms of the mechanics of how it all works, 401 00:25:33,280 --> 00:25:36,680 Speaker 1: the Energy Department usually holds an online auction in which 402 00:25:36,800 --> 00:25:40,399 Speaker 1: energy companies will bid on the oil. There are also 403 00:25:40,600 --> 00:25:43,960 Speaker 1: separate swap agreements where oil companies will take the crude, 404 00:25:44,080 --> 00:25:48,000 Speaker 1: but they are required to return at plus interest. The 405 00:25:48,160 --> 00:25:52,359 Speaker 1: SPR was originally conceived to address supply shortages, but it 406 00:25:52,440 --> 00:25:56,680 Speaker 1: has increasingly been used as a price suppression tool. Oil 407 00:25:56,720 --> 00:25:59,960 Speaker 1: has been released from the SPR on three previous occasions. 408 00:26:00,400 --> 00:26:03,600 Speaker 1: These were in ninety one during the First Gulf War 409 00:26:04,080 --> 00:26:07,280 Speaker 1: two thousand and five in the wake of Hurricane Katrina 410 00:26:07,359 --> 00:26:11,120 Speaker 1: and twenty eleven during the war in Libya. I should 411 00:26:11,160 --> 00:26:14,040 Speaker 1: also note that the United States is not alone in 412 00:26:14,080 --> 00:26:17,440 Speaker 1: its storage of strategic oil. Other members of the i 413 00:26:17,600 --> 00:26:21,639 Speaker 1: e A or International Energy Agency, such as Britain, German, EA, Japan, 414 00:26:21,720 --> 00:26:25,159 Speaker 1: and Australia, are required to hold ninety days worth of 415 00:26:25,240 --> 00:26:30,000 Speaker 1: net oil imports in reserve. China, the world's second largest 416 00:26:30,040 --> 00:26:34,760 Speaker 1: oil consumer, also created its SPR fifteen years ago, Speaking 417 00:26:34,760 --> 00:26:37,639 Speaker 1: of which, China has been filling up its reserves at 418 00:26:37,680 --> 00:26:41,359 Speaker 1: an increasingly frenetic pace. It may interest you to know 419 00:26:41,640 --> 00:26:44,320 Speaker 1: that back in February of this year, just before the 420 00:26:44,359 --> 00:26:47,880 Speaker 1: invasion of Ukraine, the Chinese were doing exactly this at 421 00:26:47,880 --> 00:26:50,320 Speaker 1: a time when the rest of the world was frantically 422 00:26:50,440 --> 00:26:54,880 Speaker 1: releasing its stocks in order to stave off rising prices. Now, 423 00:26:54,920 --> 00:26:58,840 Speaker 1: moves like this are generally coordinated between countries, but not 424 00:26:59,040 --> 00:27:02,880 Speaker 1: this time so effectively. We had a situation in which 425 00:27:03,000 --> 00:27:06,120 Speaker 1: China was buying while the rest of the world was selling, 426 00:27:06,560 --> 00:27:09,280 Speaker 1: almost as if they knew something the rest of us 427 00:27:09,320 --> 00:27:14,320 Speaker 1: didn't m HM. So that brings us to late March. 428 00:27:14,440 --> 00:27:17,119 Speaker 1: With the war in Ukraine by now in full swing, 429 00:27:17,560 --> 00:27:20,520 Speaker 1: the price of oil was skyrocketing and even breached the 430 00:27:20,560 --> 00:27:24,000 Speaker 1: one and thirty dollars a barrel level. Not only that, 431 00:27:24,280 --> 00:27:27,359 Speaker 1: but the sanctions being rolled out against Russia were leading 432 00:27:27,400 --> 00:27:30,400 Speaker 1: to even further disruptions in the oil market, as countries 433 00:27:30,440 --> 00:27:34,280 Speaker 1: in Europe were severely restricted from buying Russian oil. More 434 00:27:34,320 --> 00:27:38,120 Speaker 1: about that in the description. The impact of these higher 435 00:27:38,160 --> 00:27:41,959 Speaker 1: oil prices was that consumers around the world started feeling 436 00:27:41,960 --> 00:27:45,720 Speaker 1: the pinch at the pump, and global leaders started needing 437 00:27:45,760 --> 00:27:49,679 Speaker 1: to come up with solutions. The quickest and easiest option was, 438 00:27:49,720 --> 00:27:52,560 Speaker 1: of course, to turn to their strategic oil reserves, and 439 00:27:52,640 --> 00:27:56,400 Speaker 1: that is exactly what they did. The White House announced 440 00:27:56,480 --> 00:27:59,720 Speaker 1: that it would release one million barrels a day for 441 00:27:59,760 --> 00:28:03,200 Speaker 1: a period of over six months. According to the press 442 00:28:03,200 --> 00:28:05,919 Speaker 1: release from the White House at the time, quote, the 443 00:28:06,040 --> 00:28:10,000 Speaker 1: scale of this release is unprecedented. The world has never 444 00:28:10,080 --> 00:28:12,959 Speaker 1: had a release of oil reserves at this one million 445 00:28:13,000 --> 00:28:16,479 Speaker 1: per day rate for this length of time. This record 446 00:28:16,560 --> 00:28:19,760 Speaker 1: release will provide a historic amount of supply to serve 447 00:28:19,800 --> 00:28:22,120 Speaker 1: as a bridge until the end of the year when 448 00:28:22,160 --> 00:28:26,639 Speaker 1: domestic production ramps up. This wasn't just bluster by the 449 00:28:26,680 --> 00:28:30,960 Speaker 1: White House either, It was indeed an unprecedented release of reserves. 450 00:28:31,960 --> 00:28:35,320 Speaker 1: The release had a notable impact on the price of oil, 451 00:28:35,560 --> 00:28:38,720 Speaker 1: yet fell by almost five percent on the day as 452 00:28:38,760 --> 00:28:42,440 Speaker 1: the markets digested the exact impact the White House's decision 453 00:28:42,480 --> 00:28:45,520 Speaker 1: would have going forward. The thing is that this was 454 00:28:45,560 --> 00:28:48,720 Speaker 1: supposed to be a temporary release that would hold the 455 00:28:48,760 --> 00:28:52,720 Speaker 1: country over for the next six months, as noted by 456 00:28:52,840 --> 00:28:57,160 Speaker 1: Goldman Sacks though quote this would remain, however, a release 457 00:28:57,320 --> 00:29:01,600 Speaker 1: of oil infantries, not a persistent of supply for coming years. 458 00:29:02,320 --> 00:29:05,960 Speaker 1: Such a release would therefore not resolve the structural supply 459 00:29:06,080 --> 00:29:10,600 Speaker 1: deficit years in the making. So, quite simply, there were 460 00:29:10,800 --> 00:29:14,120 Speaker 1: structural issues in US supply that wouldn't be able to 461 00:29:14,160 --> 00:29:17,680 Speaker 1: make up for the shortfall in the longer term. Why 462 00:29:17,760 --> 00:29:22,160 Speaker 1: is that exactly, Well, it's the result of a combination 463 00:29:22,200 --> 00:29:26,080 Speaker 1: of factors which mostly come down to either market dynamics 464 00:29:26,200 --> 00:29:30,720 Speaker 1: or politics. From the market dynamics perspective, during the COVID pandemic, 465 00:29:30,800 --> 00:29:35,480 Speaker 1: oil demand was completely crushed, which sent prices through the floor. 466 00:29:35,520 --> 00:29:38,800 Speaker 1: And I mean that quite literally. There was a point 467 00:29:38,840 --> 00:29:42,480 Speaker 1: at which the price of oil actually went negative for 468 00:29:42,600 --> 00:29:46,360 Speaker 1: a period of time. Many energy companies went under as 469 00:29:46,400 --> 00:29:49,280 Speaker 1: a result of this, while many more decided to completely 470 00:29:49,360 --> 00:29:54,120 Speaker 1: curtail any further investment in new energy supply. This meant 471 00:29:54,240 --> 00:29:57,960 Speaker 1: that US oil production had fallen to below ten million 472 00:29:58,000 --> 00:30:01,160 Speaker 1: barrels a day, and there was no incentive to source 473 00:30:01,280 --> 00:30:05,680 Speaker 1: new supply. So that was the impact on demand from 474 00:30:05,720 --> 00:30:09,160 Speaker 1: the pandemic. But then, of course you also had the 475 00:30:09,160 --> 00:30:13,440 Speaker 1: political slant. There is no doubt that the new US 476 00:30:13,480 --> 00:30:17,240 Speaker 1: administration wasn't in favor of policies that would boost fossil 477 00:30:17,280 --> 00:30:21,480 Speaker 1: fuel production. With climate change in mind, sustainable energy initiatives 478 00:30:21,520 --> 00:30:25,400 Speaker 1: were pursued at the expense of the oil and gas industry. 479 00:30:25,520 --> 00:30:29,160 Speaker 1: For example, producers claim that limits on fracking by states 480 00:30:29,480 --> 00:30:33,480 Speaker 1: and the closing of certain coastlines such as Alaska and California, 481 00:30:33,640 --> 00:30:37,880 Speaker 1: have also impeded their ability to drill new wells. Not 482 00:30:38,000 --> 00:30:41,720 Speaker 1: only that, but the Biden administration froze new oil and 483 00:30:41,720 --> 00:30:45,120 Speaker 1: gas leases earlier this year. This amid a legal battle 484 00:30:45,240 --> 00:30:48,840 Speaker 1: over the cost of climate change. The crux of the 485 00:30:48,880 --> 00:30:52,320 Speaker 1: issue was the quote social cost of carbon, a metric 486 00:30:52,400 --> 00:30:55,240 Speaker 1: that uses economic models to put a value on each 487 00:30:55,280 --> 00:30:58,680 Speaker 1: ton of carbon dioxide emitted. Speaking of which you can 488 00:30:58,720 --> 00:31:02,040 Speaker 1: watch our video on individual carbon credits, which will be 489 00:31:02,040 --> 00:31:05,000 Speaker 1: linked to in the description for you any who. The 490 00:31:05,040 --> 00:31:07,960 Speaker 1: goal of this measure was to quantify the economic harm 491 00:31:08,160 --> 00:31:11,040 Speaker 1: caused by the climate crisis from the likes of sea 492 00:31:11,120 --> 00:31:15,960 Speaker 1: level rise, more destructive hurricanes, extreme wildfire seasons, and flooding. 493 00:31:16,960 --> 00:31:19,520 Speaker 1: The only issue was that a federal judge found this 494 00:31:19,560 --> 00:31:23,280 Speaker 1: tool to be illegal and issued an injunction. As a 495 00:31:23,320 --> 00:31:26,440 Speaker 1: result of that, the administration decided to freeze the issuance 496 00:31:26,520 --> 00:31:29,560 Speaker 1: until there was clarity around the measure. This all took 497 00:31:29,560 --> 00:31:32,920 Speaker 1: place in early February, just a few weeks before Russia 498 00:31:33,160 --> 00:31:38,080 Speaker 1: invaded Ukraine. Talk about bad timing. Then, of course, there's 499 00:31:38,120 --> 00:31:42,640 Speaker 1: the much larger, more pressing question of the infamous Keystone Pipeline. 500 00:31:43,120 --> 00:31:46,240 Speaker 1: For those unfamiliar, the Keystone Pipeline was a nine billion 501 00:31:46,280 --> 00:31:49,160 Speaker 1: dollar project that was expected to bring at least nine 502 00:31:49,240 --> 00:31:54,040 Speaker 1: hundred thousand barrels a day from Alberta to Nebraska, of 503 00:31:54,120 --> 00:31:57,640 Speaker 1: the amount released from the strategic reserves earlier this year. 504 00:31:57,680 --> 00:32:01,360 Speaker 1: By the way, this has been a hot political issue 505 00:32:01,440 --> 00:32:06,880 Speaker 1: for almost twelve years and was constantly delayed on environmental grounds. However, 506 00:32:07,320 --> 00:32:11,600 Speaker 1: matters reached fever pitch last year when Biden officially canceled 507 00:32:11,640 --> 00:32:15,720 Speaker 1: a key permit. Many had expected this, given that he'd 508 00:32:15,720 --> 00:32:19,240 Speaker 1: made it a key campaign promise. However, once it was done, 509 00:32:19,440 --> 00:32:21,840 Speaker 1: there were many who pointed out how this could threaten 510 00:32:22,080 --> 00:32:26,240 Speaker 1: energy security. That's because, according to the US State Department, 511 00:32:26,240 --> 00:32:30,400 Speaker 1: back in America's energy system had a need for more 512 00:32:30,440 --> 00:32:34,280 Speaker 1: heavy crude from Canada to replace declining volumes from Mexico 513 00:32:34,440 --> 00:32:37,760 Speaker 1: and Venezuela, the latter not a country you want to 514 00:32:37,800 --> 00:32:41,880 Speaker 1: have to rely on for oil imports, and paradoxically, that 515 00:32:42,040 --> 00:32:44,880 Speaker 1: oil coming from Canada has to be brought down to 516 00:32:44,920 --> 00:32:48,480 Speaker 1: the refineries using either trucks or rail, which cause a 517 00:32:48,480 --> 00:32:51,520 Speaker 1: fair bit of environmental harm themselves. I'll leave a link 518 00:32:51,560 --> 00:32:54,200 Speaker 1: to this Forbes article in the description, which goes into 519 00:32:54,240 --> 00:32:57,320 Speaker 1: it all in a lot more detail. Now, I don't 520 00:32:57,320 --> 00:32:59,560 Speaker 1: want to get into the politics of all this. My 521 00:32:59,720 --> 00:33:03,480 Speaker 1: point is that US domestic energy production and imports have 522 00:33:03,680 --> 00:33:06,200 Speaker 1: not been able to keep up with demand, which means 523 00:33:06,240 --> 00:33:09,800 Speaker 1: that the administration has had to tap that strategic reserve 524 00:33:10,200 --> 00:33:14,520 Speaker 1: more often than absolutely needed. The latest release from the 525 00:33:14,640 --> 00:33:18,200 Speaker 1: SPR came last week when OPEC announced that they would 526 00:33:18,240 --> 00:33:21,520 Speaker 1: be cutting oil production by two million barrels per day 527 00:33:21,680 --> 00:33:26,520 Speaker 1: from November. This was the largest supply cut since and 528 00:33:26,680 --> 00:33:30,760 Speaker 1: is equivalent to about two per cent of global supply. Now, 529 00:33:30,760 --> 00:33:34,080 Speaker 1: the White House pushed hard to prevent the OPEC cut. 530 00:33:34,440 --> 00:33:38,080 Speaker 1: For example, three months ago, Biden made his first official 531 00:33:38,200 --> 00:33:41,480 Speaker 1: visit to Saudi Arabia and was seen fist bumping the 532 00:33:41,520 --> 00:33:46,000 Speaker 1: crown Prince pretty awkward. But more recently there has been 533 00:33:46,160 --> 00:33:49,880 Speaker 1: intense lobbying by the US government behind the scenes to 534 00:33:50,000 --> 00:33:54,040 Speaker 1: try and prevent the cut. Officials from across the administration 535 00:33:54,080 --> 00:33:57,720 Speaker 1: were involved in reaching out to OPEC members. Even Janet 536 00:33:57,760 --> 00:34:01,120 Speaker 1: Yellen herself made the case for not cutting oil production, 537 00:34:01,200 --> 00:34:04,560 Speaker 1: explaining that it could be damaging to the global economy. 538 00:34:05,000 --> 00:34:09,040 Speaker 1: Of course, one can't dismiss the ulterior motives here. The 539 00:34:09,160 --> 00:34:11,960 Speaker 1: U S is about to head into a midterm election 540 00:34:12,040 --> 00:34:15,760 Speaker 1: and high gas prices don't sit well with the voting public. 541 00:34:16,560 --> 00:34:20,600 Speaker 1: The U S administration is also trying to reduce Russia's revenue, 542 00:34:21,200 --> 00:34:24,719 Speaker 1: so Biden and co. Weren't too happy with OPEX move, 543 00:34:25,080 --> 00:34:28,400 Speaker 1: and it could further strain relations between the White House 544 00:34:28,719 --> 00:34:33,240 Speaker 1: and Saudi Arabia's royal family. Indeed, given the Biden visited 545 00:34:33,280 --> 00:34:35,920 Speaker 1: the kingdom in July, it could have been seen as 546 00:34:35,920 --> 00:34:39,640 Speaker 1: a personal slight. Now, whatever the politics behind the move, 547 00:34:39,800 --> 00:34:43,080 Speaker 1: the cut happened, and that sent oil prices up on 548 00:34:43,160 --> 00:34:46,120 Speaker 1: the day and at a local level. In the US, 549 00:34:46,360 --> 00:34:49,120 Speaker 1: gas prices were already starting to creep up in a 550 00:34:49,239 --> 00:34:53,360 Speaker 1: number of states. For example, last week, the national average 551 00:34:53,480 --> 00:34:57,160 Speaker 1: breached three dollars eight year gallon, the second straight week 552 00:34:57,239 --> 00:35:00,880 Speaker 1: of increases. This, of course, prompt to the government to 553 00:35:00,960 --> 00:35:04,320 Speaker 1: dip into those savings again. On Friday last week, Biden 554 00:35:04,400 --> 00:35:07,640 Speaker 1: said that he would release another ten million barrels from 555 00:35:07,680 --> 00:35:11,239 Speaker 1: the SPR. Here you can see a graph of the 556 00:35:11,400 --> 00:35:15,239 Speaker 1: SPR releases over the past thirty five years. As you 557 00:35:15,280 --> 00:35:18,440 Speaker 1: can see, twenty two has been a bumper year for 558 00:35:18,520 --> 00:35:23,080 Speaker 1: releases and has seen almost two hundred million barrels drained, 559 00:35:23,760 --> 00:35:26,920 Speaker 1: and based on the current trajectory, it's possible that the 560 00:35:27,160 --> 00:35:34,080 Speaker 1: SPR could be completely drained by November three. Crazy that's 561 00:35:34,160 --> 00:35:38,120 Speaker 1: also assuming that there aren't even larger releases later this year. 562 00:35:38,760 --> 00:35:42,200 Speaker 1: Note that the Russian oil price cap has officially been 563 00:35:42,280 --> 00:35:46,120 Speaker 1: signed off, Essentially, any country that buys Russian oil above 564 00:35:46,160 --> 00:35:50,480 Speaker 1: the cap risks being sanctioned. Of course, Russia isn't going 565 00:35:50,520 --> 00:35:53,200 Speaker 1: to take that well and has threatened to restrict supply 566 00:35:53,280 --> 00:35:57,360 Speaker 1: to any country that engages with the cap. Less supply 567 00:35:57,719 --> 00:36:02,680 Speaker 1: higher prices, more strategic leases from a rapidly depleting reserve 568 00:36:03,200 --> 00:36:07,440 Speaker 1: the picture doesn't look good. Why is that? Well, the 569 00:36:07,480 --> 00:36:12,240 Speaker 1: world is becoming seemingly more dangerous by the day. Russia 570 00:36:12,360 --> 00:36:15,600 Speaker 1: has threatened to use nuclear weapons in Ukraine, while China 571 00:36:15,880 --> 00:36:20,840 Speaker 1: is adopting an increasingly aggressive stance towards Taiwan. This latter 572 00:36:20,880 --> 00:36:24,640 Speaker 1: point is particularly concerning because of China's own stockpiling of 573 00:36:24,680 --> 00:36:29,360 Speaker 1: oil and fun fact, some Chinese companies have also bought 574 00:36:29,440 --> 00:36:34,800 Speaker 1: oil from the US Strategic Reserve. This caused political uproar 575 00:36:34,880 --> 00:36:38,120 Speaker 1: in the States, and some Republican politicians introduced a bill 576 00:36:38,320 --> 00:36:41,880 Speaker 1: to stop the administration from selling oil to foreign enemies. 577 00:36:42,719 --> 00:36:46,279 Speaker 1: There's also the broader question of whether using the Strategic 578 00:36:46,360 --> 00:36:49,120 Speaker 1: Reserve as a method of price control is a wise one. 579 00:36:49,760 --> 00:36:54,000 Speaker 1: That's because the sprs original intent was to address shortages 580 00:36:54,160 --> 00:36:58,520 Speaker 1: that threatened energy security. However, by using the SPR to 581 00:36:58,600 --> 00:37:02,520 Speaker 1: drive down prices are effectively meddling with the free markets 582 00:37:02,560 --> 00:37:07,200 Speaker 1: allocation of resources. For example, shale oil drillers and other 583 00:37:07,239 --> 00:37:10,080 Speaker 1: companies in the US are less incentivized to drill for 584 00:37:10,120 --> 00:37:14,279 Speaker 1: new supply if the price is artificially controlled. The end 585 00:37:14,400 --> 00:37:18,359 Speaker 1: result is a more precarious longer term position, especially if 586 00:37:18,400 --> 00:37:22,640 Speaker 1: the SPR runs out under investment brings the supply down 587 00:37:22,800 --> 00:37:26,640 Speaker 1: still further supply that would be sorely needed if, for instance, 588 00:37:26,840 --> 00:37:30,040 Speaker 1: a war were to break out. So the lesson here 589 00:37:30,160 --> 00:37:33,319 Speaker 1: is clear. Don't raid the rainy day fund because you 590 00:37:33,400 --> 00:37:41,799 Speaker 1: never know when a thunderstorm may hit. Okay, time for 591 00:37:41,840 --> 00:37:44,520 Speaker 1: some of my personal thoughts on this. If there's one 592 00:37:44,600 --> 00:37:46,799 Speaker 1: thing that the past few months has taught us is 593 00:37:46,840 --> 00:37:50,920 Speaker 1: that energy security should be paramount. Europe is learning that 594 00:37:51,040 --> 00:37:53,640 Speaker 1: the hard way, and other countries should sit up and 595 00:37:53,680 --> 00:37:56,680 Speaker 1: take note when it comes to the United States, and 596 00:37:56,880 --> 00:38:00,840 Speaker 1: under investment in oil exploration and transportation means that it 597 00:38:00,880 --> 00:38:05,240 Speaker 1: could be held hostage by OPEC. Indeed, the intense lobbying 598 00:38:05,239 --> 00:38:08,239 Speaker 1: actions of the Biden administration prior to the cut are 599 00:38:08,360 --> 00:38:12,239 Speaker 1: proof that they desperately needed to avoid these cuts, especially 600 00:38:12,480 --> 00:38:15,879 Speaker 1: with the midterms around the corner. Now that OPEC has 601 00:38:15,960 --> 00:38:19,920 Speaker 1: snubbed the US government, those spr reserves are being tapped 602 00:38:20,000 --> 00:38:24,040 Speaker 1: once again. However, it's only a finite supply and it's 603 00:38:24,040 --> 00:38:28,320 Speaker 1: at risk of eventually running dry. The nation's energy security 604 00:38:28,400 --> 00:38:31,560 Speaker 1: should not be compromised by using an emergency tool to 605 00:38:31,680 --> 00:38:35,560 Speaker 1: lower gas prices, especially if the ends are potential votes 606 00:38:35,600 --> 00:38:38,759 Speaker 1: in an election. Not only that, but the price suppression 607 00:38:38,800 --> 00:38:41,959 Speaker 1: caused by tapping the spr could lead to further under 608 00:38:42,000 --> 00:38:45,759 Speaker 1: investment at a time when that is sorely needed. The 609 00:38:45,800 --> 00:38:49,440 Speaker 1: world has become an increasingly dangerous place, and America's enemies 610 00:38:49,520 --> 00:38:53,560 Speaker 1: have been working to secure their own oil supplies. They 611 00:38:53,760 --> 00:38:57,279 Speaker 1: have no issue buying Russian oil and stockpiling it in 612 00:38:57,320 --> 00:39:00,720 Speaker 1: their own reserves. In a time of war, any oil 613 00:39:00,760 --> 00:39:03,520 Speaker 1: will be a scarce commodity, and whether that came from 614 00:39:03,520 --> 00:39:07,480 Speaker 1: a sanctioned country or not won't be of concern. So 615 00:39:07,680 --> 00:39:10,879 Speaker 1: then what do we do Well, It's a tricky one. 616 00:39:11,440 --> 00:39:15,560 Speaker 1: OPEC still wields an outsize control on the global oil markets, 617 00:39:15,600 --> 00:39:20,120 Speaker 1: and investment into sourcing new supply takes time. However, there 618 00:39:20,239 --> 00:39:23,520 Speaker 1: is no time like the present. Perhaps they should once 619 00:39:23,560 --> 00:39:28,000 Speaker 1: again consider the potential merits of the Keystone pipeline. Is 620 00:39:28,040 --> 00:39:31,319 Speaker 1: shelving that project really in America's best interests at a 621 00:39:31,360 --> 00:39:35,279 Speaker 1: time like this. I also think that politicians should allow 622 00:39:35,320 --> 00:39:39,239 Speaker 1: the dynamics of supply and demand to address supply shortages. 623 00:39:39,680 --> 00:39:44,200 Speaker 1: Price increases are unpalatable, yes, but they are a necessary 624 00:39:44,280 --> 00:39:47,920 Speaker 1: evil to source new supply. In the longer term, we 625 00:39:47,960 --> 00:39:51,360 Speaker 1: could have a situation whereby more sustainable prices are possible 626 00:39:51,560 --> 00:39:55,320 Speaker 1: without having to rely on the goodwill of OPEC. Those 627 00:39:55,400 --> 00:39:59,799 Speaker 1: are just my opinions, though you may think otherwise. Thank 628 00:39:59,840 --> 00:40:02,800 Speaker 1: you so much for listening to the coin Bureau podcast. 629 00:40:02,880 --> 00:40:05,719 Speaker 1: If you'd like to learn more about cryptocurrency, you can 630 00:40:05,800 --> 00:40:09,120 Speaker 1: visit our YouTube channel at YouTube dot com forward slash 631 00:40:09,120 --> 00:40:11,919 Speaker 1: coin Bureau. You can also go to coin bureau dot 632 00:40:11,960 --> 00:40:14,799 Speaker 1: com for loads more information about all things crypto. You 633 00:40:14,840 --> 00:40:17,360 Speaker 1: can follow me on Twitter at at coin burea or 634 00:40:17,440 --> 00:40:21,440 Speaker 1: one word, and I'm also active on TikTok and Instagram too.