Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3: I'm Jill Wisenthal and I'm Tracy Alloway.
Speaker 4: Tracy, we're in London.
Speaker 3: Yes, how do you like it?
Speaker 4: I love it so far. I'm having a great time.
Speaker 5: You know what, I've realized I always make the mistake.
Speaker 5: So I lived in London for a long time. I
Speaker 5: went to university here, I met my husband here, and
Speaker 5: I stayed here for like over a decade. But I
Speaker 5: realized whenever I go back, I always make the mistake
Speaker 5: of doing it on that one glorious spring day where
Speaker 5: the temperature is like seventy five fahrenheit, like twenty one
Speaker 5: celsias and everything's blooming in central London and it's sunny
Speaker 5: and it's beautiful, and I think, wait, why did I leave?
Speaker 4: But then the next day it's great.
Speaker 5: Yeah, okay, there is that, But I really I need
Speaker 5: to come back in like January when it's dark at
Speaker 5: three or four pm and remind myself that there are
Speaker 5: in fact some downsides of living here.
Speaker 3: But it is very nice to be back for a visits.
Speaker 2: This is actually my first time being in the city,
Speaker 2: right because I haven't really stated this part of the
Speaker 2: city before.
Speaker 4: It's really nice, all the history and everything.
Speaker 2: Despite being here, we have no choice but to continue
Speaker 2: covering various repercussions, fallouts, updates, ongoing developments in the trade
Speaker 2: war or whatever we're calling it, the tariff whatever.
Speaker 5: You would rather be thinking of actual war history and
Speaker 5: going to the Imperial War Museum or something like that.
Speaker 2: On my one free day here, I did the boomer
Speaker 2: thing and I went to the Imperial War Museum, and
Speaker 2: I saw a lot of things that I've only read
Speaker 2: about referenced in books anyway, all kinds of dimensions in
Speaker 2: the trade tensions and everything. But one thing that's going
Speaker 2: on is big impact on commodity markets. We've seen the
Speaker 2: price of oil plunge as recession fears get priced in.
Speaker 2: And there was this headline in the New Times about
Speaker 2: China halting export of rare earth metals as a retaliation,
Speaker 2: and I just have to say, I've been reading about
Speaker 2: China halting exports of rare earth metals and retaliation for
Speaker 2: my entire life. It never seems to matter, It never
Speaker 2: really seems to be a thing, but it always is
Speaker 2: a really scary headline.
Speaker 6: But I've never.
Speaker 2: Actually, nothing, as far as I ever call, ever gets
Speaker 2: shut down or grinds to from these supposed export restrictions.
Speaker 5: This is one of the greatest branding exercises of all time.
Speaker 5: It's because it has the word rare in the title.
Speaker 5: Everyone can really easily apparently make the case that these
Speaker 5: are rare and you really need to snap them up
Speaker 5: get the exposure before China starts limiting exports and we
Speaker 5: all have to pay through the nose for these things.
Speaker 3: But yeah, it's never happened. And the rare as I.
Speaker 5: Don't know if we've ever discussed on this show, but
Speaker 5: certainly other people have discussed it at various points in time.
Speaker 5: The rare actually isn't that rare.
Speaker 3: It turns out there's a lot of them out there.
Speaker 5: It's just no one really likes getting them out of
Speaker 5: the ground that much.
Speaker 2: So since we're here in London, we can never talk
Speaker 2: to him enough about commodity things, and because their commodity
Speaker 2: thing is going on, I'm thrilled to be in person
Speaker 2: with our colleague Bloomberg Opinion scribe Javier Blass and knows
Speaker 2: everything about all things commodities. Javier, can you just rent
Speaker 2: for a couple of minutes about reverts. I'm not even
Speaker 2: gonna ask you a question.
Speaker 4: You just go on a.
Speaker 2: Rant about headlines about China limiting earth experts.
Speaker 7: Where deal go go, Joe Tracy, thank you for having me.
Speaker 7: You have been listening to these headlines and getting very
Speaker 7: scary out.
Speaker 6: There's gonna be a shortage.
Speaker 7: Of Red ad All for a loan period of my
Speaker 7: professional life, which is beginning to be more than twenty
Speaker 7: five years, and it's a song gray Head. To prove it,
Speaker 7: I have to deal with editors will come to me
Speaker 7: and say, rival publication is saying xyzat Red Earth Metals panic.
Speaker 4: No, it's great for clicks, So I get why editors.
Speaker 7: Like it, and then my editors will say, should we'll
Speaker 7: be writing something about it? And my default answer has
Speaker 7: been no. There is not going to be a shortage,
Speaker 7: and if there is a shortage, the consequences are not
Speaker 7: going to be nearly as material as people think that
Speaker 7: they're going to be. So a couple of numbers, Okay,
Speaker 7: The United States imported last year in twenty twenty four,
Speaker 7: according to US government data, a grand total of give
Speaker 7: Me the Theme Music one hundred and seventy million dollars
Speaker 7: of metals, not a billion million, one hundred and seventy million.
Speaker 7: I'm pretty sure that the United States imported more olive
Speaker 7: oil from Spain.
Speaker 3: I like that olive oil is your baseline. That's that's
Speaker 3: very value.
Speaker 6: And how much is that?
Speaker 7: As the second number we are going here, how much
Speaker 7: is one hundred and seventy million? You compare that to
Speaker 7: total trade between the United States and China that is
Speaker 7: zero point zero three percent, So it's not a lot.
Speaker 6: And the United States school phase say at.
Speaker 7: Ten times increase in the price of rare earth metals
Speaker 7: and I still will have no impact whatsoever on the
Speaker 7: kind of the American economy or the global economy. And
Speaker 7: then what really drives me mad is that you are
Speaker 7: writing about rare earth metals. Look, they are important, and
Speaker 7: they obviously for some very niche applications you really need
Speaker 7: rare earth metals, but prices could go higher and those
Speaker 7: applications will just pay the price. But typically writer like myself,
Speaker 7: you want to sex up a bit of the story.
Speaker 7: You will say rare earth metals critical for the weapons industry,
Speaker 7: for missiles and high take applications. Do you know where
Speaker 7: every one of us have some rare earth metals at home,
Speaker 7: they are used in super permanent magnets and therefore on
Speaker 7: that absolutely critical instrument of economic warfare, which is called
Speaker 7: the vacuum cleaner, there.
Speaker 5: Is I will say, I sympathize with editors not wanting
Speaker 5: headlines about vacuum cleaners versus you know, military equipment and
Speaker 5: all of those important strategic there.
Speaker 7: But you see, mind the story, the price of rare
Speaker 7: earth metals may increase and making vacuum cleaners a bit
Speaker 7: more expensive.
Speaker 6: Okay, I don't know you're gonna click.
Speaker 5: Yeah, Okay, not to get all Judy Bloom on everyone,
Speaker 5: but rare earth they're not as rare as the name
Speaker 5: would imply.
Speaker 3: But walk us through where they actually come from.
Speaker 7: A lot of them come from China. About eighty eighty
Speaker 7: five percent of the world's rare earth metals come from China.
Speaker 7: It's a question of digging them out of the ground
Speaker 7: and then processing. The big difficult part is processing, because
Speaker 7: it's very polluting, and it's a reason why all the
Speaker 7: processing has moved from everywhere else in the planet into China,
Speaker 7: because on one wanted to deal with how nasty the
Speaker 7: process is. And here is also the other question you
Speaker 7: want to do rare earth metals processing, in particular outside China,
Speaker 7: when you need is much higher prices. If anything, the
Speaker 7: problem today with rare earth metals and if we want
Speaker 7: to develop an industry of rare earth metals outside China,
Speaker 7: is that prices are too low. We need much higher prices,
Speaker 7: and then everyone will do rare earth metals. The other
Speaker 7: thing that will happen is that if the price goes
Speaker 7: to a level that incentivized everyone taking a bit of care, well,
Speaker 7: a lot of engineers on the vacuum cleaning industry will
Speaker 7: find ways to do it without rare earth metals. And
Speaker 7: also people will actually collect the vacuum cleaners and recycle
Speaker 7: the magnets for other use.
Speaker 5: But if rare earths are there's such a small component
Speaker 5: of something like a vacuum cleaner, I imagine the prices
Speaker 5: would have to go up absolutely astronomically for that even
Speaker 5: to be a consideration for a company making.
Speaker 7: And most of the time the prices don't go nearly
Speaker 7: as high. Prices are beginning to rise again now, but
Speaker 7: prices stay relatively low compared to where historically prices have been,
Speaker 7: and we have had the latest headlines are about rare
Speaker 7: earth metals and esport restrictions. We have some similar headlines
Speaker 7: for other category of metals that we call critical minerals
Speaker 7: and other fantastic exercise of labeling. I mean, like you
Speaker 7: want to sell something called critical minerals and we have.
Speaker 7: You know, people were really concerned because China was imposing
Speaker 7: some esport restrictions on tuxten, tellurian, bismuth, molybdenon and Indian.
Speaker 7: This sounds to me like high school chemistry. And you
Speaker 7: will think, oh my god, what is happening with the
Speaker 7: price of all of this. I mean, this was not
Speaker 7: announced yesterday, This was announced a couple of months ago.
Speaker 7: And prices move, and yes, the price of say Indian
Speaker 7: moved to three one hundred and forty five dollars par kilogram,
Speaker 7: And you will say, well, is that a lot is Look, yeah,
Speaker 7: it's twenty percent increase run where we were at the
Speaker 7: end of last year. But about ten years ago, that
Speaker 7: is cost today three hundred and forty five was worth
Speaker 7: eight hundred dollars parkilogram. And did you notice ten years
Speaker 7: ago that it was a crisis on the Indian market
Speaker 7: and everyone was a bit worried about it because I didn't.
Speaker 4: I didn't know.
Speaker 2: You know, we're still going to give this a provocative headline,
Speaker 2: even though you know that people listen to the episode
Speaker 2: and reveal that there is.
Speaker 3: Why why everyone's talking about the rare earth.
Speaker 2: Of the truth about the Earth. You know, we'll still
Speaker 2: make it exciting.
Speaker 6: You know. What I want to.
Speaker 7: Say also is, look, yes, it's a serious issue, and yes,
Speaker 7: I mean depending by eighty percent of a single country
Speaker 7: is never a good idea. But there is an element
Speaker 7: of panic that every time. And look, a lot of
Speaker 7: this panic comes from the halmpful of minors and processes
Speaker 7: or rare earth metals outside China. And you ass a
Speaker 7: consultant on the rare earth metals industry. Is this something
Speaker 7: that we shall be caring about? Well, the answer is
Speaker 7: going to be yeah, hell yes.
Speaker 5: So Marth, by the way, says he has access to
Speaker 5: rare earth minerals, he's invested in some companies, So we're fine.
Speaker 2: That fits so perfectly with this entire thing. You did
Speaker 2: an amazing video the other day. I really I think
Speaker 2: it was true art. Actually, whether we're talking about rare
Speaker 2: earth metals or quote critical minerals unquote, what are the
Speaker 2: economics of getting them in Greenland.
Speaker 7: Okay, let me just put my polar outfaid. And so
Speaker 7: now there are not natural resources in Greenland period, unless
Speaker 7: we are use mining eyes. Yes, there are some small
Speaker 7: concentrations of.
Speaker 6: Rare earths in the south.
Speaker 7: There is a bit of uranium here and there, there
Speaker 7: is this and that, but the concentrations are very low,
Speaker 7: and the course of mining in Greenland is prohibitively expensive,
Speaker 7: and you are not going to develop anything of even
Speaker 7: medium sized mining operations in Greenland.
Speaker 6: I think that here is the exaggeration.
Speaker 7: But you have better chance of finding some minerals on
Speaker 7: there on my back garden in West London that you
Speaker 7: have in Greenland. Now I fear in that I'm going
Speaker 7: to become the fifty five state.
Speaker 3: That's fine.
Speaker 5: Joe's embraced his middle aged man destiny of becoming a
Speaker 5: military historian expert.
Speaker 3: So there's that.
Speaker 5: That's why he's at the Imperial War Museum. So no shame,
Speaker 5: no shame. But since we're talking strategy approaches and maybe
Speaker 5: acquiring Greenland could be one of them, the thing I
Speaker 5: don't understand is if we agree that rare earth's rare
Speaker 5: minerals are of some strategic importance, for the US, and
Speaker 5: there are something you would want access to. But on
Speaker 5: the other hand, we actually have plenty of them. It's
Speaker 5: just we don't necessarily historically want to get them out
Speaker 5: of the ground. Would the better approach not have been
Speaker 5: to just build massive inventories of these things? Just get
Speaker 5: them on the cheap from China. Let China tear up
Speaker 5: its countryside, and we could buy those things from China,
Speaker 5: and then once supply starts running out, or if relations
Speaker 5: really start to deteriorate, then we could start our own industry.
Speaker 3: Or is that is that difficult? What's the startup process
Speaker 3: like for something like that?
Speaker 7: No, and that's what some companies, I mean, governments have
Speaker 7: not done their stockpiling, but some companies have done their
Speaker 7: stockpiling themselves. They are Japanese high tech companies that they
Speaker 7: are running more than a year worth of their demand
Speaker 7: for rare earth as a stockpile. And again, this in
Speaker 7: certain ways makes sense because if you think about Japan,
Speaker 7: a country that probably imports fifty to seventy five million
Speaker 7: dollars a year of rare earth metals, importing a stockpiling,
Speaker 7: say a year or a couple of years worth of
Speaker 7: the staff is not that expensive. I mean for Japanese companies,
Speaker 7: this is going to be like completely random error under
Speaker 7: huge balance sheet. So we have seen a bit of
Speaker 7: a stockpiling and companies that they really require some particular
Speaker 7: rare earth metals for a very particular application. They will
Speaker 7: have done it, and then government what they can do
Speaker 7: is say, look, this is critical. We're going to support
Speaker 7: our domestic industry. The United States has rare earth accumulations.
Speaker 7: There is a mind called mountain pass. We can't develop that.
Speaker 7: The government can get into the business and developing that.
Speaker 7: The price is going to be that we need higher prices.
Speaker 7: So you're going to have to protect either you effectively.
Speaker 7: I mean, here is the irony. The best way to
Speaker 7: develop an industry the United States and develop the local
Speaker 7: mining supply or red earth will be to impose so
Speaker 7: on huge tariffs on red earth from China, so the
Speaker 7: Chinese don't don't dump into the market.
Speaker 6: I mean this seism.
Speaker 2: I mean, this might be the vision more or less
Speaker 2: across a range of industries, which is sort of like
Speaker 2: take a wrecking ball to a lot of you know,
Speaker 2: elite things. There are comfortable jobs in government and finance
Speaker 2: and media et cetera and send, you know, free up
Speaker 2: that workforce to mine Malidna.
Speaker 3: We're all going to be working in the mines.
Speaker 4: I mean, this is kind of the vision.
Speaker 2: All right, let's talk about something that may actually be
Speaker 2: real and substantive.
Speaker 4: Now that you've convinced me not to worry too much.
Speaker 2: And also like if it wherever a crisis, government could
Speaker 2: just come door to door and demand your vacuum cleaner,
Speaker 2: right like for the missiles and whatever like in the end,
Speaker 2: if they're like, all right, we're going to confiscate your
Speaker 2: vacuum cleaner.
Speaker 7: If it's really how you call the man the broom.
Speaker 7: So with the government comes knocks at your door, you
Speaker 7: return your fancy dice on vacuum cleaner and they give
Speaker 7: you a broom.
Speaker 5: The government will prim i Dyson out of my hands
Speaker 5: saying that.
Speaker 2: Right now, let's talk about a commodity that really actually
Speaker 2: has real significance. Part of We've mentioned this a couple
Speaker 2: of times on the show. Secretary of the Treasury Scott
Speaker 2: Bessant Head in the run up to the election or
Speaker 2: post election, talked about his three to three three plan
Speaker 2: three get the budget deficit down to three percent, grow GDP,
Speaker 2: by three percent and increase three million more barrels of
Speaker 2: US oil per year. It seems like we're going in
Speaker 2: the opposite direction of that.
Speaker 7: Yeah, at current prices, certainly we are likely to see
Speaker 7: lower American oil production than Haiger. I mean, Secretary Basset
Speaker 7: was quite clever on the way that he expressed. He
Speaker 7: talked about growing three million borrows a day of energy. No,
Speaker 7: he didn't say specifically oil. I mean when you talk
Speaker 7: about barrels, you think that he's talking about oil, but
Speaker 7: he means barrel equivalent. So you could put anything there.
Speaker 7: At the moment, the administration is already including natural gas
Speaker 7: and that three I have been hearing some officials in
Speaker 7: the administration saying, look, energy is energy. So we are
Speaker 7: growing electricity, we are growing uranium, we are growing cold.
Speaker 7: You put it on a basis of oil equivalent and
Speaker 7: there you get. I would not be surprised if we
Speaker 7: are also growing more California and olive oil and we
Speaker 7: are adding it into the barrel. But look West Texas Intermediate,
Speaker 7: the US oil bench match is trading close to sixty
Speaker 7: dollars a barrel. You are there borderline where is economical
Speaker 7: for shale on average for shale companies to drill new wells.
Speaker 7: So we still start to see a significant slowdown in
Speaker 7: the growth rate of the US oil industry. And if
Speaker 7: prices to continue at this level or lower, that is,
Speaker 7: low down, soon will be turning into a contraction and
Speaker 7: we will see lower American oil production.
Speaker 5: Yeah. I mean, even if we think the administration was
Speaker 5: talking about energy units rather than just oil per se,
Speaker 5: it does seem clear that there are a lot of
Speaker 5: people in the energy patch itself which seem to have
Speaker 5: had a different idea, right, they thought the administration was
Speaker 5: going to be very, very friendly to the shale industry
Speaker 5: and instead Joe and I have mentioned this a few
Speaker 5: times before, but we've seen anecdotally, you know, some statements
Speaker 5: from the Dallas FEDS Energy Survey where people are going like,
Speaker 5: this is not what we signed up for at fifty
Speaker 5: dollars per pare or oil prices. This is not only
Speaker 5: bad for increased investment in the industry, but could potentially
Speaker 5: be a sort of existential threat.
Speaker 7: So absolutely, I mean increased right. The Secretary of Energy
Speaker 7: is an oil person. He founded and ran his own
Speaker 7: oil company service company called Liverty Energy, and a lot
Speaker 7: of people in the industry saw that. Know, to quote
Speaker 7: an executive I spoke recently in Kuston, he thought of
Speaker 7: the industry, thought that Chris Ray was our guy, was
Speaker 7: one of ours, one of us. And this executive said, like,
Speaker 7: what we have came to realize is that he's not
Speaker 7: one of us.
Speaker 6: He is Trump's guy. And that is a big difference.
Speaker 7: And yes, the comments in this anonymous Dallas Fed survey
Speaker 7: were quite shocking. And you're talking private to executives in
Speaker 7: the oil industry. I almost have to pinch myself at times.
Speaker 7: It's like, hold on a second, is Biden still on
Speaker 7: the White House? Because you guys seems to really dislike everything.
Speaker 5: Replace Trump with the word Biden and it would make sense.
Speaker 7: It's like, when I was reading that series of comments
Speaker 7: from the Dallas Fed, I joke at that you have
Speaker 7: been sleeping for six months and wake up you will
Speaker 7: sink that the Democrats are still running the White House
Speaker 7: and Congress and exter. I mean, this was a dream
Speaker 7: for the oil industry. It is a Republican at the
Speaker 7: White House. The Secretary of the Treasury is a Wallace
Speaker 7: Street heads fund manager, and the Secretary of Energy is
Speaker 7: the founder of an oil company.
Speaker 6: And here we are everyone in the oil part.
Speaker 7: Perhaps because of this, he is absolutely mad with the administration.
Speaker 4: I have a really dumb question, and I'm gonna ask
Speaker 4: you real question. What do we call it the oil patch?
Speaker 3: I don't know?
Speaker 4: Oh sorry, I didn't mean the somebody?
Speaker 6: No, this is Can I use Google?
Speaker 2: Oh sorry, we can cut this? Can we keep this
Speaker 2: in some can we keep this in?
Speaker 5: Yeah?
Speaker 3: I don't know why I have a poetic license.
Speaker 4: Wow, I thought for sure.
Speaker 3: Okay, oil patch it kind of speaking of gardening.
Speaker 5: It kind of sounds like, you know, you're growing vegetables
Speaker 5: on your oil patch, except things on.
Speaker 7: The oil pot, like the pipe that you used to
Speaker 7: drill is called Octe oil County tubula good. Oh yeah,
Speaker 7: I have no idea why oil county, but it is
Speaker 7: oil pats oil County is you know, it's it's the
Speaker 7: oil place.
Speaker 4: And I have a real question the oil place. What
Speaker 4: the oil place?
Speaker 3: I'm going to start. We're all going to go down
Speaker 3: to the oil place.
Speaker 4: Are talking the oil place?
Speaker 1: Okay?
Speaker 2: I have a real question. The substantive one, which is
Speaker 2: one of these sort of like booming export industries for
Speaker 2: the US, was a natural gas and the sort of
Speaker 2: LNG terminals, and I think Biden put a pause on
Speaker 2: them and that pauses. I don't know if it's been lifted,
Speaker 2: but it will be lifted almost certainly construction of new.
Speaker 4: Ones with the trade war.
Speaker 2: Have the economics of LNG export change at all with
Speaker 2: the decline and oil prices like cause anything, Have any
Speaker 2: dials moved.
Speaker 6: On that front?
Speaker 7: Not yet, And potentially yes, because one big buyer of
Speaker 7: American lergy was China, and China has not bought any
Speaker 7: LNG from America in a long while. And also if
Speaker 7: oil productions start to decline, when you drill for oil,
Speaker 7: you usually get a mix of hydro out of the ground.
Speaker 6: You will get oil, you will get gets.
Speaker 4: So if you like I fewer wells, yeah, so.
Speaker 7: You have fewer oil wells, you're gonna have fewer or
Speaker 7: gas wells. So the input cause of gas is gonna
Speaker 7: go higher, and you may have a bit of lack
Speaker 7: of demand on the other side from China. So far
Speaker 7: all is good because the European Union and the UK
Speaker 7: still need a lot of natural gas from the United States.
Speaker 7: The big expansion of Catar is still about twelve to
Speaker 7: eighteen months away, and Russia is fighting with Ukraine and
Speaker 7: it's not exporting what they used to do in a
Speaker 7: years time.
Speaker 6: That could be a big deal.
Speaker 7: The other, to me, very important topic in trade and
Speaker 7: oil is that oil used to be almost the largest
Speaker 7: component of the American trade deficit in goods.
Speaker 6: Yeah, you go to two.
Speaker 7: Thousand and eight, the US trade deficit was around running
Speaker 7: around eight hundred billion dollars a year. Of that nearly
Speaker 7: four hundred billion US oil. Today we are on a
Speaker 7: surplus for oil.
Speaker 3: How times have changed?
Speaker 5: I have one more question just on oil specifically, but
Speaker 5: one of the hallmarks of the Trump administration is they
Speaker 5: tend to promise everything to all people, and arguably that's
Speaker 5: been a big component of their success. And I think
Speaker 5: when it comes to energy policy specifically, one of the
Speaker 5: promises was we're going to be good for the energy industry,
Speaker 5: for oil specifically, and at the same time, we're going
Speaker 5: to be good for inflation. We're going to bring down prices.
Speaker 5: You're not going to have to pay, you know, these
Speaker 5: exorbitant dollar amounts at the pump. Is there any way,
Speaker 5: you know, let's assume that the tariffs start working, maybe
Speaker 5: growth expectations start to pick up. Is there any way
Speaker 5: that the Trump administration can end up fulfilling its various
Speaker 5: policies when it comes to energy. To everyone involved, here,
Speaker 5: is there a way where eventually, maybe maybe they you know,
Speaker 5: make up with the oil industry, the shelle industry, and
Speaker 5: maybe somehow they I don't know, encourage energy from other
Speaker 5: sources and inflation still, you know, comes down.
Speaker 3: What's the best case scenario here?
Speaker 7: I think the best case of scenario you're putting me
Speaker 7: here on this spot. But if I think it probably
Speaker 7: something like let's call it, I mean, let's call it
Speaker 7: the Goldilocks, the middle ground. What you know, the oil
Speaker 7: patch will laugh and a main stream will be happy. Say,
Speaker 7: seventy five dollars a barrel. Okay, seventy five dollars a
Speaker 7: barrel is not breaking the budget of any middle class
Speaker 7: family or working class family when it comes to gasoline
Speaker 7: in the United the States, and seventy five dollars a barrel,
Speaker 7: the American oil industry is making money, no problem whatsoever.
Speaker 7: Whoever is complaining at seventy five probably it doesn't have
Speaker 7: a very very good business case. The main problem is
Speaker 7: to make it everything more at seventy five and just
Speaker 7: for the sake of the argument, let's say that the
Speaker 7: magic number is seventy five. You cannot get that running
Speaker 7: unless you get OPEC on board, and they keep restraining
Speaker 7: production and losing market share because seventy five dollars a
Speaker 7: barrels means that the consumers are happy and they continue
Speaker 7: to consume, but also that the ushail industry continues to grow,
Speaker 7: and at some points someone needs to produce less. So
Speaker 7: you can even if that magic number existed, and I
Speaker 7: think that seventy five probably is about right, you need
Speaker 7: OPEK to play ball and accept that they're gonna lose
Speaker 7: market share forever and ever, and I don't think that
Speaker 7: they're on that business.
Speaker 2: So last question for me, but how has Trump maybe
Speaker 2: tariffs and is provocative action starts literally or virtually every
Speaker 2: country in the world. How is it interacting with OPEK specifically?
Speaker 7: I think that for on one side, the turn administration
Speaker 7: is putting quite a lot of diplomatic pressure on open
Speaker 7: countries to increase production, and we saw Saudi Arabia increasing production.
Speaker 6: Secretary of Energy is in.
Speaker 7: Saudi Arabia right now and it's discussing mostly nuclear affairs
Speaker 7: about the Southeast one American technology for nuclear Sibylian or
Speaker 7: least civilian quote unquote nuclear technology. So there are a
Speaker 7: lot of things that the Saudiast made, one from the
Speaker 7: United States and the United States one the Southeast to
Speaker 7: increase production to put prices down, but used by large.
Speaker 7: If I can't summarize what is the feeling of my
Speaker 7: open sources right now, I think it's very similar to
Speaker 7: what you know, the bankers and traders that you guys
Speaker 7: are talking every day probably as saying it's.
Speaker 6: Like what or hard it's going on here? Because no
Speaker 6: one really knows.
Speaker 7: I mean, how do you plan you are an old
Speaker 7: pet country and you're trying to decide oil production policy
Speaker 7: for the next three months. How do you plan that
Speaker 7: where you don't really know what tomorrow morning or maybe
Speaker 7: tonight brings.
Speaker 5: Yeah, and even if we assume that this, you know,
Speaker 5: this was it, nothing else was going to change. Now
Speaker 5: that uncertainty premium is in the market, and regardless of
Speaker 5: what Trump actually changes from now on, we know.
Speaker 3: That it looks like global growth is going to slow, right,
Speaker 3: So you're.
Speaker 5: Asking opek to basically boost production into a slowing global economy.
Speaker 7: I mean we that is to me, that was because
Speaker 7: every other asset class was dealing effectively with one shock,
Speaker 7: and that was a demand shock.
Speaker 6: Everyone was just like assuming, okay, we are going to
Speaker 6: slow down.
Speaker 7: Oil was dealing simultaneously with a demand shock and what I.
Speaker 6: Will call a supply surprise.
Speaker 7: I'm not gonna I mean, the increasing OPEC production is
Speaker 7: not yet enough call it that shock, but let's call
Speaker 7: it that supply surprise that can very quickly became a shock.
Speaker 7: So you know, that is why oil prices went down
Speaker 7: so much, and that's also why oil equity is really
Speaker 7: absolutely tank aave blast.
Speaker 4: Always great at catching up with you, so great to
Speaker 4: do it.
Speaker 2: Finally here in your home court appreciation on his home patch,
Speaker 2: on his home patch, thankk.
Speaker 6: You for having me.
Speaker 7: And I'm gonna be googling now oil patch.
Speaker 2: Okay, that was fun. I can't believe I got to
Speaker 2: stumph on a energy related question.
Speaker 3: Yeah, okay, fair enough.
Speaker 5: But I strongly suspect that's just like a literary term
Speaker 5: that someone came up with and it sounds kind of nice.
Speaker 3: It sounds kind of down home.
Speaker 5: Down and people went with it. But I do think
Speaker 5: there's so much. There's so much going on.
Speaker 2: Can I say, yeah, you as only importing one hundred
Speaker 2: and seventy million dollars worth of that is a very
Speaker 2: good stat By the way, everyone should stay listening. Hopefully
Speaker 2: they're listening. Odd lots listeners can now repeat this at
Speaker 2: part like that is one of those good stats that
Speaker 2: like odd lots listeners can repeat it parties.
Speaker 5: It's a good party trivia for au thoughts listeners, assuming
Speaker 5: that they're actually getting invited to parties with the chat
Speaker 5: like that they.
Speaker 4: Are there, did you know you know?
Speaker 3: Actually, so we all.
Speaker 4: Know that they're not rare?
Speaker 6: Like that part we do.
Speaker 2: At this point, I did not quite realize how small
Speaker 2: the scale of.
Speaker 5: The important If a guy came up to me at
Speaker 5: a party and said, did you know in fact that
Speaker 5: rare earths were not in fact that rare? I would
Speaker 5: be what's that you know that meme of the guy
Speaker 5: like whispering into a girl's ear?
Speaker 3: What if that would be my face? Like? Whatever?
Speaker 4: What if you followed that up with the vacuum cleaner's part?
Speaker 5: Though, yeah, that's mildly more interesting.
Speaker 4: I'm saying there's a little something there.
Speaker 5: Although then I would be like, why are you talking
Speaker 5: to me about vacuum cleaners? Do you think this is
Speaker 5: something that I'm especially interested in a well anyway.
Speaker 3: Lots to talk about.
Speaker 5: I'm sure we will continue our spate of basically daily
Speaker 5: episodes at this point, but should we leave it there
Speaker 5: for now?
Speaker 4: Let's leave it there.
Speaker 5: This has been another episode of the Audlots podcast. I'm
Speaker 5: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guest Javier Bloss, He's at Javier Bloss. Follow
Speaker 2: our producers Carmen Rodriguez at Carman Arma Dash, Ol Bennett
Speaker 2: at Dashbod and Kelbrooks at Kelbrooks. And thank you to
Speaker 2: our producer Moses Ondam, who's here with us in studio
Speaker 2: in London. For more odd Lodge content, go to Bloomberg
Speaker 2: dot com slash odd Lots, where we have all of
Speaker 2: our episodes and a daily newsletter that you should subscribe to.
Speaker 2: And you could shout about all of these topics twenty
Speaker 2: four to seven in our discord Discord dot gg slash
Speaker 2: od Loots.
Speaker 5: And if you enjoy odd Lots, if you like it
Speaker 5: when we talk about the oil patch on Haavier's Home Patch,
Speaker 5: then please leave us a positive review on your favorite
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Speaker 3: Thanks for listening.