1 00:00:03,520 --> 00:00:08,000 Speaker 1: This is Bloomberg Surveillance opex stranglehold over world oil as 2 00:00:08,080 --> 00:00:10,799 Speaker 1: less than it was simply mathematically, and then the internal 3 00:00:10,800 --> 00:00:12,920 Speaker 1: politics so much weaker than they like. There is a 4 00:00:12,960 --> 00:00:17,759 Speaker 1: tremendous amount of market conjecture with respect to distinslation trajectory 5 00:00:17,800 --> 00:00:20,599 Speaker 1: given the mulletility of energy prices than anyone who watches 6 00:00:20,640 --> 00:00:22,840 Speaker 1: the im who leads to their forecast, I think, knows 7 00:00:23,040 --> 00:00:25,000 Speaker 1: that it takes them a while to get to where 8 00:00:25,000 --> 00:00:28,200 Speaker 1: the world is going. Bloomberg Surveillance your link to the 9 00:00:28,280 --> 00:00:34,920 Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good morning, 10 00:00:35,240 --> 00:00:38,040 Speaker 1: Michael McKee along with Tom Keane at seven am on 11 00:00:38,080 --> 00:00:42,200 Speaker 1: Wall Street and seven am in the swamp Gainesville, home 12 00:00:42,240 --> 00:00:45,080 Speaker 1: of the University of Florida, where I am speaking on 13 00:00:45,120 --> 00:00:47,920 Speaker 1: a panel today at the Warrington College of Business. We 14 00:00:47,960 --> 00:00:51,280 Speaker 1: thank them for their hospitality. The news of the day 15 00:00:51,320 --> 00:00:54,520 Speaker 1: in New York signing of the Paris Agreement on Climate 16 00:00:54,600 --> 00:00:57,440 Speaker 1: Change at the u N In just a moment time, 17 00:00:57,480 --> 00:00:59,920 Speaker 1: we'll have a very special guest to Secretary of Energy 18 00:01:00,000 --> 00:01:04,800 Speaker 1: Earnest Money's. First, let me give you a quick tour 19 00:01:04,880 --> 00:01:08,320 Speaker 1: of the markets. Mixed is the word Europe is lower 20 00:01:08,360 --> 00:01:10,320 Speaker 1: at the moment with the stock six hundred down to 21 00:01:10,360 --> 00:01:13,160 Speaker 1: point three tents. Here in the U s C SNP 22 00:01:13,680 --> 00:01:16,960 Speaker 1: evening futures are up three points a tenth. Dal evenis 23 00:01:17,000 --> 00:01:19,839 Speaker 1: are up ten points. That is just about eight tenth 24 00:01:19,840 --> 00:01:22,280 Speaker 1: the ten year not yield one point eight seven, the 25 00:01:22,319 --> 00:01:25,200 Speaker 1: five year one point three four eighty one basis points 26 00:01:25,240 --> 00:01:28,520 Speaker 1: for your two year, and oil a good lead into 27 00:01:28,720 --> 00:01:32,680 Speaker 1: this whole topic. West Texas is at forty thirty three, 28 00:01:32,959 --> 00:01:36,240 Speaker 1: up by four tenths this morning. Brent crude forty four 29 00:01:36,560 --> 00:01:41,399 Speaker 1: sixty two is up two tents. Tom, very good, Michael, 30 00:01:41,480 --> 00:01:44,680 Speaker 1: Good morning, sir. You're in You're in Florida, right, I'm 31 00:01:44,680 --> 00:01:49,040 Speaker 1: in Florida, certainly globally warmer down here, globally warmer else 32 00:01:49,080 --> 00:01:51,760 Speaker 1: Earth days, so you're down there with the beasts of 33 00:01:51,800 --> 00:01:56,120 Speaker 1: the Everglades bloomers. Surveillance this morning brought you by Investco. 34 00:01:56,320 --> 00:02:00,000 Speaker 1: Markets may be volatile, but Investcos value managers are finding 35 00:02:00,080 --> 00:02:04,080 Speaker 1: high conviction opportunities. Find out where at invesco dot com 36 00:02:04,120 --> 00:02:09,280 Speaker 1: slash interactive. He is the most interesting and hugely qualified. 37 00:02:09,720 --> 00:02:15,320 Speaker 1: Secretary of Energy. Secretary Monies is um out of Boston College, 38 00:02:15,360 --> 00:02:19,639 Speaker 1: Stanford and the Massachusetts Institute of technology, where other academics 39 00:02:19,639 --> 00:02:22,320 Speaker 1: I think are pretty much in awe of his thinking 40 00:02:22,400 --> 00:02:26,360 Speaker 1: on our physics, Mr Secretary, to begin our discussion, how 41 00:02:26,720 --> 00:02:30,440 Speaker 1: is our global physics right now? When we talk about 42 00:02:31,320 --> 00:02:36,240 Speaker 1: earthwarming and water ice smelting, rather ice smelting, water rising? 43 00:02:36,639 --> 00:02:42,400 Speaker 1: What's the urgency right now? Well, the urgency to to respond. 44 00:02:42,440 --> 00:02:44,720 Speaker 1: It's really it's really quite great. First of all, UH, 45 00:02:44,720 --> 00:02:48,880 Speaker 1: there's no denying the patterns of just essentially every year 46 00:02:48,919 --> 00:02:51,399 Speaker 1: seems to get warmer than the last, and uh that 47 00:02:51,560 --> 00:02:54,280 Speaker 1: is projected to be true this year. We've seen uh 48 00:02:54,360 --> 00:02:58,880 Speaker 1: the sea level rise which amplifies the impact of storms 49 00:02:58,880 --> 00:03:02,000 Speaker 1: and are on our coastline patterns of drought. Uh. These 50 00:03:02,000 --> 00:03:06,360 Speaker 1: are all becoming quite evident, quite in line with projections 51 00:03:06,480 --> 00:03:08,720 Speaker 1: that have been made for a long long time. Uh. 52 00:03:08,840 --> 00:03:10,680 Speaker 1: We have a lot of inertia in the system from 53 00:03:10,680 --> 00:03:13,960 Speaker 1: all the carbon dioxide we've put into the atmosphere. We 54 00:03:14,000 --> 00:03:17,520 Speaker 1: have to start bending that curve dramatically right now. And 55 00:03:17,560 --> 00:03:21,160 Speaker 1: that's why today's events in New York are so important. Uh. 56 00:03:21,200 --> 00:03:24,320 Speaker 1: It's really a great day in terms of recognizing, uh, 57 00:03:24,480 --> 00:03:28,640 Speaker 1: the entire community of nations responsibility to uh just start 58 00:03:28,680 --> 00:03:32,079 Speaker 1: addressing in a serious way. Uh, this question if we 59 00:03:32,200 --> 00:03:35,600 Speaker 1: how's gas emissions? Uh, and today we'll go down I 60 00:03:35,640 --> 00:03:39,760 Speaker 1: think in history as as a major turning point. Well, 61 00:03:40,080 --> 00:03:42,400 Speaker 1: it may be, but it is just a small start 62 00:03:42,640 --> 00:03:46,240 Speaker 1: down the path. Uh. The administration's compliance plan is on 63 00:03:46,360 --> 00:03:50,040 Speaker 1: hold pending a Supreme Court review. That's complicated by the 64 00:03:50,600 --> 00:03:53,680 Speaker 1: inability apparently to fill that vacancy on the Supreme Court. 65 00:03:53,800 --> 00:03:56,280 Speaker 1: And you get two leading Republican presidential candidates who are 66 00:03:56,320 --> 00:03:58,280 Speaker 1: members of the Flat Earth Society and don't believe in 67 00:03:58,280 --> 00:04:03,600 Speaker 1: global warming. So how frat chill is this effort? Well, first, 68 00:04:03,920 --> 00:04:06,200 Speaker 1: I would agree with the characterization of the first step, 69 00:04:06,360 --> 00:04:09,520 Speaker 1: although I would say it's a big first step. Uh. Nevertheless, 70 00:04:09,520 --> 00:04:13,080 Speaker 1: you're right, we will need more ambition going forward. Now 71 00:04:13,080 --> 00:04:16,360 Speaker 1: in terms of the debate going on right now, Uh, 72 00:04:16,400 --> 00:04:18,920 Speaker 1: it's it's quite clear. I think that first of all, 73 00:04:19,560 --> 00:04:23,640 Speaker 1: Mother Nature will keep speaking to us about our responsibilities, 74 00:04:24,360 --> 00:04:28,919 Speaker 1: the costs of adaptation to this. Uh. Florida, for example, 75 00:04:29,000 --> 00:04:32,120 Speaker 1: with sea level rise and and extreme weather is a 76 00:04:32,120 --> 00:04:36,040 Speaker 1: good case in point. Uh. And the public is recognizing this. 77 00:04:36,680 --> 00:04:40,760 Speaker 1: I believe the the overwhelming weight of what nature is 78 00:04:40,800 --> 00:04:43,520 Speaker 1: telling us in a public opinion will keep us on 79 00:04:43,560 --> 00:04:45,919 Speaker 1: this path. And I might say in the United States. 80 00:04:46,360 --> 00:04:49,960 Speaker 1: You're right, the Clean Power Plan, which is an important 81 00:04:50,000 --> 00:04:53,480 Speaker 1: part of the Climate Action Plan, has been stayed. That's 82 00:04:53,520 --> 00:04:55,760 Speaker 1: not a ruling, and we are quite confident that the 83 00:04:55,800 --> 00:04:58,440 Speaker 1: plan will go into effect. I also want to point 84 00:04:58,440 --> 00:05:02,000 Speaker 1: out there are many other very important parts of the 85 00:05:02,040 --> 00:05:05,520 Speaker 1: Climate Action Plan that are going forward full speed ahead, 86 00:05:05,839 --> 00:05:10,400 Speaker 1: things like efficiency standards for appliance, equipment, vehicles, and and 87 00:05:10,520 --> 00:05:14,520 Speaker 1: uh and the like. So we're on track for our goals. 88 00:05:14,839 --> 00:05:18,680 Speaker 1: Will need to double down on our lowering our our 89 00:05:18,800 --> 00:05:22,960 Speaker 1: carbon emissions UH. After that, UH, and then we will 90 00:05:23,000 --> 00:05:26,800 Speaker 1: need to be even more ambitious in the longer term future. UH. 91 00:05:26,800 --> 00:05:29,120 Speaker 1: And you won't be surprised that I, as a physicist, 92 00:05:29,120 --> 00:05:34,760 Speaker 1: perhaps UH see that continued technology innovation driving down costs 93 00:05:34,960 --> 00:05:37,840 Speaker 1: will be an important part of that increased ambition in 94 00:05:37,920 --> 00:05:41,280 Speaker 1: the United States and into other countries. You mentioned a 95 00:05:41,400 --> 00:05:45,720 Speaker 1: very important word, The agreement has costs. Half the coal 96 00:05:45,800 --> 00:05:49,480 Speaker 1: mind in the US comes from bankrupt companies. Now, UH, 97 00:05:49,839 --> 00:05:53,080 Speaker 1: what's to be done with people who work in the 98 00:05:53,200 --> 00:05:58,279 Speaker 1: energy industry that is no longer going to be wanted? Well, 99 00:05:58,320 --> 00:05:59,840 Speaker 1: first of all, I want I do you want to 100 00:06:00,080 --> 00:06:04,080 Speaker 1: Besides that, the significant reduction UH in coal use of 101 00:06:04,120 --> 00:06:08,120 Speaker 1: the United States UH, largely has come from the market 102 00:06:08,200 --> 00:06:12,200 Speaker 1: dynamics are very very low plate low priced natural gas. 103 00:06:12,720 --> 00:06:16,640 Speaker 1: Not just yesterday I conducted a meeting in Kentucky, which 104 00:06:16,680 --> 00:06:20,400 Speaker 1: obviously is coal country. UH. No one's going to deny 105 00:06:20,480 --> 00:06:25,359 Speaker 1: the facts that the coal supply chain is under considerable stress, 106 00:06:25,600 --> 00:06:29,119 Speaker 1: as I mentioned, mainly because of the low natural gas 107 00:06:29,120 --> 00:06:33,000 Speaker 1: prices to date. But our message was once again, innovation 108 00:06:33,520 --> 00:06:36,680 Speaker 1: UH is very important because coal can still play a 109 00:06:36,760 --> 00:06:39,920 Speaker 1: role in a low carbon future. UH as we keep 110 00:06:40,000 --> 00:06:43,560 Speaker 1: driving down the costs of carbon capture and sequestration. And 111 00:06:43,640 --> 00:06:47,360 Speaker 1: secondly in coal country and everywhere else in this country, 112 00:06:47,920 --> 00:06:51,760 Speaker 1: we will keep innovating. We will keep diversifying the economy UH. 113 00:06:51,800 --> 00:06:56,839 Speaker 1: And the administration is pursuing this in multiple ways, innovation 114 00:06:56,920 --> 00:07:01,560 Speaker 1: for technology, addressing directly the knee of of families and 115 00:07:01,640 --> 00:07:06,680 Speaker 1: communities in cold country UH and demonstrating the new technologies. 116 00:07:07,120 --> 00:07:10,280 Speaker 1: What would you like from big oil? They're sort of 117 00:07:10,320 --> 00:07:12,760 Speaker 1: out there and people either own the stocks and say 118 00:07:12,800 --> 00:07:15,120 Speaker 1: thank you, and other people hate them and all that. 119 00:07:15,520 --> 00:07:20,440 Speaker 1: You're a relatively balanced, rational, very smart guy from m 120 00:07:20,520 --> 00:07:24,120 Speaker 1: I T when you talk to them, what would you 121 00:07:24,160 --> 00:07:28,120 Speaker 1: like from big Oil? Well, first of all, let me say, 122 00:07:28,160 --> 00:07:32,560 Speaker 1: whether it's big oil or any other industry UH in 123 00:07:32,600 --> 00:07:37,400 Speaker 1: the energy sector or energy intensive industries. I think what 124 00:07:37,480 --> 00:07:39,640 Speaker 1: what we need and what they need, is to get 125 00:07:39,680 --> 00:07:44,480 Speaker 1: the rules of the road uh UH laid out so 126 00:07:44,520 --> 00:07:49,080 Speaker 1: that companies understand what the trajectory is in terms of 127 00:07:49,080 --> 00:07:52,680 Speaker 1: of carbon reduction. And then I feel confident that UH 128 00:07:52,840 --> 00:07:56,280 Speaker 1: companies are very creative in figuring out how to do 129 00:07:56,320 --> 00:07:58,360 Speaker 1: their business in that world. The same is true for 130 00:07:58,440 --> 00:08:01,720 Speaker 1: oil companies. We see a lot of them looking to 131 00:08:01,800 --> 00:08:08,720 Speaker 1: diversify their their portfolios. UH. And secondly, UH, we as 132 00:08:08,760 --> 00:08:13,800 Speaker 1: a country, UH, we remain major oil importers. We have 133 00:08:13,920 --> 00:08:19,560 Speaker 1: to keep working on lowering our oil dependence. That means 134 00:08:19,640 --> 00:08:25,280 Speaker 1: efficient vehicles, it means alternative fuels, it means electrifying our fleet. 135 00:08:26,040 --> 00:08:29,080 Speaker 1: But again, let's get the rules in the road laid out. 136 00:08:29,400 --> 00:08:33,240 Speaker 1: Let's have Congress UH come to this legislatively, and our 137 00:08:33,280 --> 00:08:35,720 Speaker 1: companies I think we'll do. Do you do you feel 138 00:08:35,720 --> 00:08:38,600 Speaker 1: that price can work here? I mean within price Chicago 139 00:08:38,679 --> 00:08:42,719 Speaker 1: price theory or the microeconomics of m I T economics, 140 00:08:42,920 --> 00:08:46,160 Speaker 1: can price actually work here? Or is that just not 141 00:08:46,280 --> 00:08:51,160 Speaker 1: a correct vehicle? And it's all got to be policy. Well, 142 00:08:51,200 --> 00:08:54,120 Speaker 1: first of all, as I said already. I mean price 143 00:08:54,320 --> 00:08:58,280 Speaker 1: market dynamics is what's been happening largely in this coal 144 00:08:58,400 --> 00:09:02,440 Speaker 1: to gas UH transition over the last UH five to 145 00:09:02,480 --> 00:09:06,040 Speaker 1: ten years. That's an example of market dynamics working in 146 00:09:06,080 --> 00:09:09,760 Speaker 1: the direction of lowering carbon emissions. Now in terms of 147 00:09:09,760 --> 00:09:13,280 Speaker 1: the oil sector UH as as I said, we need 148 00:09:13,360 --> 00:09:17,959 Speaker 1: to have policies like efficient vehicles so called cafe standards 149 00:09:18,200 --> 00:09:20,920 Speaker 1: UH and UH and the like. But I cannot leave 150 00:09:20,960 --> 00:09:24,800 Speaker 1: the theme of innovation as a major part of the 151 00:09:24,920 --> 00:09:28,640 Speaker 1: of the solution UM. I think I am Department of Energy. 152 00:09:28,840 --> 00:09:33,360 Speaker 1: We are solutions people, UH through advancing our science and 153 00:09:33,360 --> 00:09:37,160 Speaker 1: technology basis Mr Secretary, honor to speak to you this 154 00:09:37,240 --> 00:09:39,599 Speaker 1: Earth Day, and of course with the signing of copy 155 00:09:39,679 --> 00:09:42,440 Speaker 1: one UM as well, Mike, it was something to be 156 00:09:42,480 --> 00:09:46,840 Speaker 1: in Paris with Francine for that signing. I was really 157 00:09:46,880 --> 00:09:52,280 Speaker 1: taken aback by the being there, in seeing the sense 158 00:09:52,440 --> 00:09:55,199 Speaker 1: of local I did just simply, Mike, did not expect 159 00:09:56,080 --> 00:10:00,440 Speaker 1: a international or national debate to be so local as 160 00:10:00,440 --> 00:10:04,160 Speaker 1: it was. Embarrassed with each individual. Well, interestingly enough, I'm 161 00:10:04,200 --> 00:10:06,920 Speaker 1: going to, uh, you know, do a shameless plug here 162 00:10:06,960 --> 00:10:09,880 Speaker 1: for our boss UH, Michael Bloomberg, who is of course, 163 00:10:09,920 --> 00:10:13,480 Speaker 1: the founder of majority owner of Bloomberg LP, which owns 164 00:10:13,480 --> 00:10:16,320 Speaker 1: this radio station, etcetera. He has a very interesting piece 165 00:10:16,320 --> 00:10:20,920 Speaker 1: on the Bloomberg View website suggesting that um as as 166 00:10:20,920 --> 00:10:24,000 Speaker 1: Earnest as Secretary Ernest Bonies is it isn't the federal 167 00:10:24,040 --> 00:10:26,680 Speaker 1: government that's going to solve the problem. That cities and 168 00:10:26,800 --> 00:10:30,320 Speaker 1: states and price as you mentioned, are doing a lot. 169 00:10:30,679 --> 00:10:33,560 Speaker 1: And he's actually quite optimistic that the US can meet 170 00:10:33,600 --> 00:10:36,560 Speaker 1: its targets whether or not Washington gets its act together. 171 00:10:36,679 --> 00:10:40,520 Speaker 1: You wonder about the getting of the act together. Well, 172 00:10:40,520 --> 00:10:42,839 Speaker 1: we said, I remember the first Earth Stay Michael, you're 173 00:10:42,840 --> 00:10:46,800 Speaker 1: too young to remember that. I was there. I was there. 174 00:10:47,160 --> 00:10:54,960 Speaker 1: What is this? This is Bloomberg surveillance. This hour of surveillance, 175 00:10:55,000 --> 00:10:57,520 Speaker 1: brought to you by Volvo Cars, White Planes. Visit Volvo Cars, 176 00:10:57,520 --> 00:11:01,560 Speaker 1: White Planes dot Com. Here's Michael Bahara with the latest 177 00:11:01,640 --> 00:11:04,360 Speaker 1: world in national headlines. My Tom, thank you very much. 178 00:11:04,400 --> 00:11:08,040 Speaker 1: President Obama has waited into the Brexit debate. The President, 179 00:11:08,080 --> 00:11:10,440 Speaker 1: while in the UK, wrote in an op ed piece 180 00:11:10,559 --> 00:11:13,520 Speaker 1: for the Telegraph, a strong Europe is not a threat 181 00:11:13,559 --> 00:11:17,360 Speaker 1: to Britain's global leadership. President Obama will meet today with 182 00:11:17,440 --> 00:11:20,560 Speaker 1: British Prime Minister David Cameron. Buildings have been lit up 183 00:11:20,559 --> 00:11:22,680 Speaker 1: in purple as fans more in the death of singer 184 00:11:22,720 --> 00:11:26,480 Speaker 1: Prince Madison Square Garden glowed in purple and on Topsy 185 00:11:26,480 --> 00:11:29,000 Speaker 1: will be conducted today on Prince, who was fifty seven. 186 00:11:29,320 --> 00:11:31,280 Speaker 1: The death toll us climbed the twenty four after an 187 00:11:31,280 --> 00:11:34,959 Speaker 1: explosion at a petrochemical plant in Mexico. BEC says nineteen 188 00:11:35,000 --> 00:11:38,720 Speaker 1: others were injured and Wednesday's blasts. More on these now, 189 00:11:38,720 --> 00:11:42,600 Speaker 1: the stories coming up within the hour. Mike, Tom, Michael Barr, 190 00:11:42,640 --> 00:11:45,520 Speaker 1: thanks so much. We look at UC when these bonds, currencies, commodities. 191 00:11:45,559 --> 00:11:48,839 Speaker 1: We do a sophisticated data check, except there's not much 192 00:11:48,880 --> 00:11:52,160 Speaker 1: to check right now. Yeah and weaker one ten fifty 193 00:11:52,280 --> 00:11:55,480 Speaker 1: seven with some doubt strength, but yeah and really sticks 194 00:11:55,480 --> 00:11:58,800 Speaker 1: out for its weakness one ten Right now. Fisture is 195 00:11:58,840 --> 00:12:07,000 Speaker 1: up three from Florida, from New York, Bloomberg Surveillance. Bloomberg 196 00:12:07,000 --> 00:12:09,600 Speaker 1: Surveillance is brought to you by your tri State BMW centers. 197 00:12:09,640 --> 00:12:12,720 Speaker 1: Isn't the online at try State BMW dot com. At BMW, 198 00:12:12,920 --> 00:12:17,640 Speaker 1: they make only one thing, the ultimate driving machine.