WEBVTT - Javier Blas on China's Rare Earths Dominance 0:00:02.480 --> 0:00:16.400 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.000 --> 0:00:21.240 Hello and welcome to another episode of the Odd Lots podcast. 0:00:21.320 --> 0:00:23.439 I'm Jill Wisenthal and I'm Tracy Alloway. 0:00:23.560 --> 0:00:24.800 Tracy, we're in London. 0:00:25.079 --> 0:00:26.640 Yes, how do you like it? 0:00:26.720 --> 0:00:28.480 I love it so far. I'm having a great time. 0:00:28.560 --> 0:00:30.400 You know what, I've realized I always make the mistake. 0:00:30.480 --> 0:00:32.479 So I lived in London for a long time. I 0:00:32.520 --> 0:00:34.879 went to university here, I met my husband here, and 0:00:34.960 --> 0:00:37.760 I stayed here for like over a decade. But I 0:00:37.800 --> 0:00:40.120 realized whenever I go back, I always make the mistake 0:00:40.200 --> 0:00:44.160 of doing it on that one glorious spring day where 0:00:44.280 --> 0:00:48.000 the temperature is like seventy five fahrenheit, like twenty one 0:00:48.120 --> 0:00:52.200 celsias and everything's blooming in central London and it's sunny 0:00:52.240 --> 0:00:55.160 and it's beautiful, and I think, wait, why did I leave? 0:00:55.640 --> 0:00:57.680 But then the next day it's great. 0:00:57.720 --> 0:00:59.840 Yeah, okay, there is that, But I really I need 0:00:59.880 --> 0:01:02.880 to come back in like January when it's dark at 0:01:02.960 --> 0:01:05.720 three or four pm and remind myself that there are 0:01:05.760 --> 0:01:07.479 in fact some downsides of living here. 0:01:07.520 --> 0:01:09.480 But it is very nice to be back for a visits. 0:01:09.840 --> 0:01:12.360 This is actually my first time being in the city, 0:01:12.600 --> 0:01:14.640 right because I haven't really stated this part of the 0:01:14.640 --> 0:01:15.319 city before. 0:01:15.440 --> 0:01:17.360 It's really nice, all the history and everything. 0:01:17.840 --> 0:01:21.320 Despite being here, we have no choice but to continue 0:01:21.440 --> 0:01:28.600 covering various repercussions, fallouts, updates, ongoing developments in the trade 0:01:28.600 --> 0:01:32.120 war or whatever we're calling it, the tariff whatever. 0:01:32.319 --> 0:01:34.920 You would rather be thinking of actual war history and 0:01:35.000 --> 0:01:37.200 going to the Imperial War Museum or something like that. 0:01:37.959 --> 0:01:40.640 On my one free day here, I did the boomer 0:01:40.760 --> 0:01:42.640 thing and I went to the Imperial War Museum, and 0:01:42.680 --> 0:01:45.160 I saw a lot of things that I've only read 0:01:45.160 --> 0:01:49.080 about referenced in books anyway, all kinds of dimensions in 0:01:49.120 --> 0:01:51.920 the trade tensions and everything. But one thing that's going 0:01:51.960 --> 0:01:54.360 on is big impact on commodity markets. We've seen the 0:01:54.360 --> 0:01:58.080 price of oil plunge as recession fears get priced in. 0:01:58.440 --> 0:02:01.880 And there was this headline in the New Times about 0:02:02.160 --> 0:02:05.680 China halting export of rare earth metals as a retaliation, 0:02:06.440 --> 0:02:09.480 and I just have to say, I've been reading about 0:02:09.520 --> 0:02:12.799 China halting exports of rare earth metals and retaliation for 0:02:12.919 --> 0:02:15.240 my entire life. It never seems to matter, It never 0:02:15.280 --> 0:02:17.240 really seems to be a thing, but it always is 0:02:17.280 --> 0:02:18.840 a really scary headline. 0:02:19.320 --> 0:02:20.160 But I've never. 0:02:20.040 --> 0:02:22.960 Actually, nothing, as far as I ever call, ever gets 0:02:23.200 --> 0:02:27.359 shut down or grinds to from these supposed export restrictions. 0:02:27.400 --> 0:02:30.320 This is one of the greatest branding exercises of all time. 0:02:30.400 --> 0:02:33.200 It's because it has the word rare in the title. 0:02:33.360 --> 0:02:36.760 Everyone can really easily apparently make the case that these 0:02:36.800 --> 0:02:38.680 are rare and you really need to snap them up 0:02:38.720 --> 0:02:42.400 get the exposure before China starts limiting exports and we 0:02:42.440 --> 0:02:44.320 all have to pay through the nose for these things. 0:02:44.360 --> 0:02:47.600 But yeah, it's never happened. And the rare as I. 0:02:47.600 --> 0:02:49.240 Don't know if we've ever discussed on this show, but 0:02:49.280 --> 0:02:51.919 certainly other people have discussed it at various points in time. 0:02:52.200 --> 0:02:54.480 The rare actually isn't that rare. 0:02:54.639 --> 0:02:56.799 It turns out there's a lot of them out there. 0:02:56.880 --> 0:02:59.400 It's just no one really likes getting them out of 0:02:59.400 --> 0:03:00.440 the ground that much. 0:03:00.760 --> 0:03:03.919 So since we're here in London, we can never talk 0:03:03.960 --> 0:03:07.240 to him enough about commodity things, and because their commodity 0:03:07.240 --> 0:03:10.680 thing is going on, I'm thrilled to be in person 0:03:11.160 --> 0:03:15.519 with our colleague Bloomberg Opinion scribe Javier Blass and knows 0:03:15.560 --> 0:03:19.440 everything about all things commodities. Javier, can you just rent 0:03:19.520 --> 0:03:21.520 for a couple of minutes about reverts. I'm not even 0:03:21.560 --> 0:03:22.440 gonna ask you a question. 0:03:22.600 --> 0:03:23.320 You just go on a. 0:03:23.360 --> 0:03:27.200 Rant about headlines about China limiting earth experts. 0:03:27.200 --> 0:03:30.800 Where deal go go, Joe Tracy, thank you for having me. 0:03:31.480 --> 0:03:35.080 You have been listening to these headlines and getting very 0:03:35.240 --> 0:03:35.800 scary out. 0:03:35.920 --> 0:03:37.680 There's gonna be a shortage. 0:03:37.160 --> 0:03:41.160 Of Red ad All for a loan period of my 0:03:41.280 --> 0:03:44.400 professional life, which is beginning to be more than twenty 0:03:44.480 --> 0:03:47.200 five years, and it's a song gray Head. To prove it, 0:03:47.800 --> 0:03:50.920 I have to deal with editors will come to me 0:03:51.080 --> 0:03:56.840 and say, rival publication is saying xyzat Red Earth Metals panic. 0:03:57.120 --> 0:03:59.760 No, it's great for clicks, So I get why editors. 0:03:59.480 --> 0:04:02.040 Like it, and then my editors will say, should we'll 0:04:02.040 --> 0:04:04.760 be writing something about it? And my default answer has 0:04:04.760 --> 0:04:07.120 been no. There is not going to be a shortage, 0:04:07.160 --> 0:04:09.920 and if there is a shortage, the consequences are not 0:04:09.960 --> 0:04:13.040 going to be nearly as material as people think that 0:04:13.120 --> 0:04:16.160 they're going to be. So a couple of numbers, Okay, 0:04:17.040 --> 0:04:21.040 The United States imported last year in twenty twenty four, 0:04:21.080 --> 0:04:26.039 according to US government data, a grand total of give 0:04:26.080 --> 0:04:30.800 Me the Theme Music one hundred and seventy million dollars 0:04:30.839 --> 0:04:36.279 of metals, not a billion million, one hundred and seventy million. 0:04:36.600 --> 0:04:39.840 I'm pretty sure that the United States imported more olive 0:04:39.880 --> 0:04:41.800 oil from Spain. 0:04:41.960 --> 0:04:44.320 I like that olive oil is your baseline. That's that's 0:04:44.480 --> 0:04:45.480 very value. 0:04:45.640 --> 0:04:46.760 And how much is that? 0:04:46.760 --> 0:04:48.920 As the second number we are going here, how much 0:04:49.040 --> 0:04:52.679 is one hundred and seventy million? You compare that to 0:04:52.680 --> 0:04:56.680 total trade between the United States and China that is 0:04:57.000 --> 0:05:01.599 zero point zero three percent, So it's not a lot. 0:05:01.800 --> 0:05:06.279 And the United States school phase say at. 0:05:06.200 --> 0:05:09.640 Ten times increase in the price of rare earth metals 0:05:09.920 --> 0:05:13.479 and I still will have no impact whatsoever on the 0:05:13.560 --> 0:05:17.200 kind of the American economy or the global economy. And 0:05:17.240 --> 0:05:20.520 then what really drives me mad is that you are 0:05:20.520 --> 0:05:23.719 writing about rare earth metals. Look, they are important, and 0:05:23.760 --> 0:05:27.400 they obviously for some very niche applications you really need 0:05:27.480 --> 0:05:30.880 rare earth metals, but prices could go higher and those 0:05:30.920 --> 0:05:36.040 applications will just pay the price. But typically writer like myself, 0:05:36.080 --> 0:05:38.679 you want to sex up a bit of the story. 0:05:38.760 --> 0:05:43.000 You will say rare earth metals critical for the weapons industry, 0:05:43.080 --> 0:05:47.480 for missiles and high take applications. Do you know where 0:05:47.760 --> 0:05:51.120 every one of us have some rare earth metals at home, 0:05:51.560 --> 0:05:56.080 they are used in super permanent magnets and therefore on 0:05:56.120 --> 0:06:02.520 that absolutely critical instrument of economic warfare, which is called 0:06:02.720 --> 0:06:04.599 the vacuum cleaner, there. 0:06:04.520 --> 0:06:07.400 Is I will say, I sympathize with editors not wanting 0:06:07.440 --> 0:06:12.200 headlines about vacuum cleaners versus you know, military equipment and 0:06:12.320 --> 0:06:14.000 all of those important strategic there. 0:06:13.839 --> 0:06:16.880 But you see, mind the story, the price of rare 0:06:16.920 --> 0:06:22.279 earth metals may increase and making vacuum cleaners a bit 0:06:22.440 --> 0:06:23.520 more expensive. 0:06:24.080 --> 0:06:26.080 Okay, I don't know you're gonna click. 0:06:26.560 --> 0:06:30.560 Yeah, Okay, not to get all Judy Bloom on everyone, 0:06:30.720 --> 0:06:34.040 but rare earth they're not as rare as the name 0:06:34.080 --> 0:06:34.680 would imply. 0:06:34.920 --> 0:06:37.720 But walk us through where they actually come from. 0:06:37.839 --> 0:06:41.360 A lot of them come from China. About eighty eighty 0:06:41.400 --> 0:06:44.640 five percent of the world's rare earth metals come from China. 0:06:45.200 --> 0:06:48.000 It's a question of digging them out of the ground 0:06:48.040 --> 0:06:52.400 and then processing. The big difficult part is processing, because 0:06:52.400 --> 0:06:55.480 it's very polluting, and it's a reason why all the 0:06:55.520 --> 0:06:59.559 processing has moved from everywhere else in the planet into China, 0:06:59.600 --> 0:07:02.760 because on one wanted to deal with how nasty the 0:07:02.839 --> 0:07:07.000 process is. And here is also the other question you 0:07:07.120 --> 0:07:11.400 want to do rare earth metals processing, in particular outside China, 0:07:11.760 --> 0:07:15.720 when you need is much higher prices. If anything, the 0:07:15.760 --> 0:07:18.360 problem today with rare earth metals and if we want 0:07:18.440 --> 0:07:21.840 to develop an industry of rare earth metals outside China, 0:07:22.360 --> 0:07:25.640 is that prices are too low. We need much higher prices, 0:07:25.640 --> 0:07:28.280 and then everyone will do rare earth metals. The other 0:07:28.320 --> 0:07:31.320 thing that will happen is that if the price goes 0:07:31.360 --> 0:07:36.400 to a level that incentivized everyone taking a bit of care, well, 0:07:36.440 --> 0:07:39.400 a lot of engineers on the vacuum cleaning industry will 0:07:39.440 --> 0:07:42.720 find ways to do it without rare earth metals. And 0:07:42.760 --> 0:07:46.760 also people will actually collect the vacuum cleaners and recycle 0:07:46.800 --> 0:07:48.240 the magnets for other use. 0:07:48.760 --> 0:07:51.160 But if rare earths are there's such a small component 0:07:51.240 --> 0:07:53.640 of something like a vacuum cleaner, I imagine the prices 0:07:53.680 --> 0:07:57.320 would have to go up absolutely astronomically for that even 0:07:57.360 --> 0:08:00.280 to be a consideration for a company making. 0:08:00.640 --> 0:08:03.440 And most of the time the prices don't go nearly 0:08:03.480 --> 0:08:07.600 as high. Prices are beginning to rise again now, but 0:08:07.760 --> 0:08:13.080 prices stay relatively low compared to where historically prices have been, 0:08:13.600 --> 0:08:17.120 and we have had the latest headlines are about rare 0:08:17.160 --> 0:08:22.080 earth metals and esport restrictions. We have some similar headlines 0:08:22.080 --> 0:08:25.760 for other category of metals that we call critical minerals 0:08:25.800 --> 0:08:29.800 and other fantastic exercise of labeling. I mean, like you 0:08:29.880 --> 0:08:33.920 want to sell something called critical minerals and we have. 0:08:34.440 --> 0:08:38.080 You know, people were really concerned because China was imposing 0:08:38.160 --> 0:08:44.360 some esport restrictions on tuxten, tellurian, bismuth, molybdenon and Indian. 0:08:44.480 --> 0:08:47.800 This sounds to me like high school chemistry. And you 0:08:47.800 --> 0:08:49.600 will think, oh my god, what is happening with the 0:08:49.600 --> 0:08:51.640 price of all of this. I mean, this was not 0:08:51.679 --> 0:08:54.320 announced yesterday, This was announced a couple of months ago. 0:08:54.520 --> 0:08:58.360 And prices move, and yes, the price of say Indian 0:08:58.840 --> 0:09:02.480 moved to three one hundred and forty five dollars par kilogram, 0:09:02.720 --> 0:09:04.960 And you will say, well, is that a lot is Look, yeah, 0:09:05.000 --> 0:09:07.400 it's twenty percent increase run where we were at the 0:09:07.520 --> 0:09:12.120 end of last year. But about ten years ago, that 0:09:12.320 --> 0:09:15.920 is cost today three hundred and forty five was worth 0:09:16.000 --> 0:09:20.079 eight hundred dollars parkilogram. And did you notice ten years 0:09:20.080 --> 0:09:22.840 ago that it was a crisis on the Indian market 0:09:23.280 --> 0:09:26.360 and everyone was a bit worried about it because I didn't. 0:09:27.520 --> 0:09:28.400 I didn't know. 0:09:28.480 --> 0:09:31.199 You know, we're still going to give this a provocative headline, 0:09:31.400 --> 0:09:33.880 even though you know that people listen to the episode 0:09:33.920 --> 0:09:34.920 and reveal that there is. 0:09:35.400 --> 0:09:37.679 Why why everyone's talking about the rare earth. 0:09:38.360 --> 0:09:41.560 Of the truth about the Earth. You know, we'll still 0:09:41.679 --> 0:09:42.440 make it exciting. 0:09:42.679 --> 0:09:43.480 You know. What I want to. 0:09:43.440 --> 0:09:46.880 Say also is, look, yes, it's a serious issue, and yes, 0:09:47.040 --> 0:09:50.840 I mean depending by eighty percent of a single country 0:09:51.320 --> 0:09:54.400 is never a good idea. But there is an element 0:09:54.559 --> 0:09:59.040 of panic that every time. And look, a lot of 0:09:59.080 --> 0:10:04.000 this panic comes from the halmpful of minors and processes 0:10:04.080 --> 0:10:07.640 or rare earth metals outside China. And you ass a 0:10:07.679 --> 0:10:11.840 consultant on the rare earth metals industry. Is this something 0:10:11.840 --> 0:10:14.160 that we shall be caring about? Well, the answer is 0:10:14.160 --> 0:10:15.600 going to be yeah, hell yes. 0:10:16.640 --> 0:10:18.640 So Marth, by the way, says he has access to 0:10:18.720 --> 0:10:21.559 rare earth minerals, he's invested in some companies, So we're fine. 0:10:21.679 --> 0:10:41.199 That fits so perfectly with this entire thing. You did 0:10:41.240 --> 0:10:43.480 an amazing video the other day. I really I think 0:10:43.520 --> 0:10:47.560 it was true art. Actually, whether we're talking about rare 0:10:47.600 --> 0:10:52.200 earth metals or quote critical minerals unquote, what are the 0:10:52.240 --> 0:10:54.079 economics of getting them in Greenland. 0:10:56.440 --> 0:10:59.800 Okay, let me just put my polar outfaid. And so 0:11:00.720 --> 0:11:05.720 now there are not natural resources in Greenland period, unless 0:11:05.720 --> 0:11:10.360 we are use mining eyes. Yes, there are some small 0:11:11.520 --> 0:11:12.560 concentrations of. 0:11:12.679 --> 0:11:13.800 Rare earths in the south. 0:11:14.120 --> 0:11:17.040 There is a bit of uranium here and there, there 0:11:17.160 --> 0:11:21.640 is this and that, but the concentrations are very low, 0:11:21.840 --> 0:11:26.720 and the course of mining in Greenland is prohibitively expensive, 0:11:27.320 --> 0:11:30.880 and you are not going to develop anything of even 0:11:31.920 --> 0:11:34.880 medium sized mining operations in Greenland. 0:11:35.480 --> 0:11:37.960 I think that here is the exaggeration. 0:11:38.120 --> 0:11:42.240 But you have better chance of finding some minerals on 0:11:42.280 --> 0:11:46.280 there on my back garden in West London that you 0:11:46.400 --> 0:11:48.960 have in Greenland. Now I fear in that I'm going 0:11:49.000 --> 0:11:50.760 to become the fifty five state. 0:11:51.480 --> 0:11:52.000 That's fine. 0:11:52.240 --> 0:11:55.240 Joe's embraced his middle aged man destiny of becoming a 0:11:55.240 --> 0:11:57.040 military historian expert. 0:11:57.160 --> 0:11:57.839 So there's that. 0:11:57.840 --> 0:12:00.720 That's why he's at the Imperial War Museum. So no shame, 0:12:00.840 --> 0:12:04.720 no shame. But since we're talking strategy approaches and maybe 0:12:04.880 --> 0:12:07.640 acquiring Greenland could be one of them, the thing I 0:12:07.679 --> 0:12:11.040 don't understand is if we agree that rare earth's rare 0:12:11.080 --> 0:12:14.840 minerals are of some strategic importance, for the US, and 0:12:14.880 --> 0:12:17.440 there are something you would want access to. But on 0:12:17.480 --> 0:12:19.840 the other hand, we actually have plenty of them. It's 0:12:19.960 --> 0:12:23.960 just we don't necessarily historically want to get them out 0:12:24.040 --> 0:12:26.600 of the ground. Would the better approach not have been 0:12:26.640 --> 0:12:29.920 to just build massive inventories of these things? Just get 0:12:29.920 --> 0:12:32.840 them on the cheap from China. Let China tear up 0:12:32.840 --> 0:12:36.600 its countryside, and we could buy those things from China, 0:12:36.720 --> 0:12:39.920 and then once supply starts running out, or if relations 0:12:39.960 --> 0:12:43.280 really start to deteriorate, then we could start our own industry. 0:12:43.600 --> 0:12:46.280 Or is that is that difficult? What's the startup process 0:12:46.360 --> 0:12:47.199 like for something like that? 0:12:47.280 --> 0:12:50.080 No, and that's what some companies, I mean, governments have 0:12:50.160 --> 0:12:53.079 not done their stockpiling, but some companies have done their 0:12:53.080 --> 0:12:56.800 stockpiling themselves. They are Japanese high tech companies that they 0:12:56.800 --> 0:12:59.920 are running more than a year worth of their demand 0:13:00.160 --> 0:13:03.720 for rare earth as a stockpile. And again, this in 0:13:03.800 --> 0:13:06.480 certain ways makes sense because if you think about Japan, 0:13:06.520 --> 0:13:09.600 a country that probably imports fifty to seventy five million 0:13:09.679 --> 0:13:14.079 dollars a year of rare earth metals, importing a stockpiling, 0:13:14.240 --> 0:13:16.760 say a year or a couple of years worth of 0:13:16.800 --> 0:13:20.160 the staff is not that expensive. I mean for Japanese companies, 0:13:20.160 --> 0:13:23.280 this is going to be like completely random error under 0:13:23.360 --> 0:13:25.440 huge balance sheet. So we have seen a bit of 0:13:25.440 --> 0:13:30.120 a stockpiling and companies that they really require some particular 0:13:30.240 --> 0:13:33.480 rare earth metals for a very particular application. They will 0:13:33.520 --> 0:13:36.040 have done it, and then government what they can do 0:13:36.160 --> 0:13:38.640 is say, look, this is critical. We're going to support 0:13:38.640 --> 0:13:43.480 our domestic industry. The United States has rare earth accumulations. 0:13:43.520 --> 0:13:46.560 There is a mind called mountain pass. We can't develop that. 0:13:46.640 --> 0:13:49.280 The government can get into the business and developing that. 0:13:49.720 --> 0:13:52.240 The price is going to be that we need higher prices. 0:13:52.320 --> 0:13:55.600 So you're going to have to protect either you effectively. 0:13:56.080 --> 0:13:58.480 I mean, here is the irony. The best way to 0:13:58.559 --> 0:14:01.840 develop an industry the United States and develop the local 0:14:02.200 --> 0:14:05.680 mining supply or red earth will be to impose so 0:14:05.760 --> 0:14:10.120 on huge tariffs on red earth from China, so the 0:14:10.240 --> 0:14:14.280 Chinese don't don't dump into the market. 0:14:14.720 --> 0:14:15.920 I mean this seism. 0:14:16.440 --> 0:14:18.640 I mean, this might be the vision more or less 0:14:18.640 --> 0:14:21.560 across a range of industries, which is sort of like 0:14:21.680 --> 0:14:24.720 take a wrecking ball to a lot of you know, 0:14:26.360 --> 0:14:31.000 elite things. There are comfortable jobs in government and finance 0:14:31.040 --> 0:14:34.120 and media et cetera and send, you know, free up 0:14:34.120 --> 0:14:36.280 that workforce to mine Malidna. 0:14:36.480 --> 0:14:37.840 We're all going to be working in the mines. 0:14:37.920 --> 0:14:40.160 I mean, this is kind of the vision. 0:14:40.160 --> 0:14:43.760 All right, let's talk about something that may actually be 0:14:43.960 --> 0:14:45.359 real and substantive. 0:14:45.600 --> 0:14:47.880 Now that you've convinced me not to worry too much. 0:14:48.000 --> 0:14:50.760 And also like if it wherever a crisis, government could 0:14:50.800 --> 0:14:53.240 just come door to door and demand your vacuum cleaner, 0:14:53.320 --> 0:14:56.360 right like for the missiles and whatever like in the end, 0:14:56.440 --> 0:14:58.480 if they're like, all right, we're going to confiscate your 0:14:58.520 --> 0:14:59.120 vacuum cleaner. 0:14:59.160 --> 0:15:01.720 If it's really how you call the man the broom. 0:15:01.960 --> 0:15:04.840 So with the government comes knocks at your door, you 0:15:05.040 --> 0:15:08.520 return your fancy dice on vacuum cleaner and they give 0:15:08.520 --> 0:15:09.040 you a broom. 0:15:09.640 --> 0:15:13.120 The government will prim i Dyson out of my hands 0:15:13.800 --> 0:15:14.120 saying that. 0:15:14.200 --> 0:15:17.440 Right now, let's talk about a commodity that really actually 0:15:17.760 --> 0:15:21.160 has real significance. Part of We've mentioned this a couple 0:15:21.160 --> 0:15:23.760 of times on the show. Secretary of the Treasury Scott 0:15:23.840 --> 0:15:26.320 Bessant Head in the run up to the election or 0:15:26.360 --> 0:15:29.040 post election, talked about his three to three three plan 0:15:29.680 --> 0:15:33.360 three get the budget deficit down to three percent, grow GDP, 0:15:33.480 --> 0:15:36.400 by three percent and increase three million more barrels of 0:15:36.520 --> 0:15:39.400 US oil per year. It seems like we're going in 0:15:39.440 --> 0:15:40.480 the opposite direction of that. 0:15:41.120 --> 0:15:44.200 Yeah, at current prices, certainly we are likely to see 0:15:44.520 --> 0:15:48.360 lower American oil production than Haiger. I mean, Secretary Basset 0:15:48.600 --> 0:15:51.160 was quite clever on the way that he expressed. He 0:15:51.240 --> 0:15:55.520 talked about growing three million borrows a day of energy. No, 0:15:55.680 --> 0:15:58.440 he didn't say specifically oil. I mean when you talk 0:15:58.480 --> 0:16:01.040 about barrels, you think that he's talking about oil, but 0:16:01.160 --> 0:16:05.280 he means barrel equivalent. So you could put anything there. 0:16:05.480 --> 0:16:09.040 At the moment, the administration is already including natural gas 0:16:09.040 --> 0:16:12.680 and that three I have been hearing some officials in 0:16:12.720 --> 0:16:15.880 the administration saying, look, energy is energy. So we are 0:16:15.880 --> 0:16:20.080 growing electricity, we are growing uranium, we are growing cold. 0:16:20.200 --> 0:16:23.080 You put it on a basis of oil equivalent and 0:16:23.160 --> 0:16:25.840 there you get. I would not be surprised if we 0:16:25.920 --> 0:16:29.880 are also growing more California and olive oil and we 0:16:29.920 --> 0:16:33.520 are adding it into the barrel. But look West Texas Intermediate, 0:16:33.600 --> 0:16:36.000 the US oil bench match is trading close to sixty 0:16:36.040 --> 0:16:40.640 dollars a barrel. You are there borderline where is economical 0:16:40.760 --> 0:16:44.400 for shale on average for shale companies to drill new wells. 0:16:44.640 --> 0:16:48.120 So we still start to see a significant slowdown in 0:16:48.160 --> 0:16:51.480 the growth rate of the US oil industry. And if 0:16:51.520 --> 0:16:54.880 prices to continue at this level or lower, that is, 0:16:54.960 --> 0:16:58.360 low down, soon will be turning into a contraction and 0:16:58.400 --> 0:17:00.480 we will see lower American oil production. 0:17:00.800 --> 0:17:03.560 Yeah. I mean, even if we think the administration was 0:17:03.600 --> 0:17:08.040 talking about energy units rather than just oil per se, 0:17:08.640 --> 0:17:10.040 it does seem clear that there are a lot of 0:17:10.040 --> 0:17:13.560 people in the energy patch itself which seem to have 0:17:13.600 --> 0:17:16.760 had a different idea, right, they thought the administration was 0:17:16.880 --> 0:17:19.920 going to be very, very friendly to the shale industry 0:17:20.040 --> 0:17:22.200 and instead Joe and I have mentioned this a few 0:17:22.200 --> 0:17:27.400 times before, but we've seen anecdotally, you know, some statements 0:17:27.560 --> 0:17:30.800 from the Dallas FEDS Energy Survey where people are going like, 0:17:30.920 --> 0:17:33.600 this is not what we signed up for at fifty 0:17:33.640 --> 0:17:37.520 dollars per pare or oil prices. This is not only 0:17:37.640 --> 0:17:41.719 bad for increased investment in the industry, but could potentially 0:17:41.760 --> 0:17:43.440 be a sort of existential threat. 0:17:43.800 --> 0:17:47.480 So absolutely, I mean increased right. The Secretary of Energy 0:17:47.760 --> 0:17:52.520 is an oil person. He founded and ran his own 0:17:52.520 --> 0:17:57.160 oil company service company called Liverty Energy, and a lot 0:17:57.200 --> 0:18:01.080 of people in the industry saw that. Know, to quote 0:18:01.119 --> 0:18:05.879 an executive I spoke recently in Kuston, he thought of 0:18:06.040 --> 0:18:09.440 the industry, thought that Chris Ray was our guy, was 0:18:09.720 --> 0:18:13.000 one of ours, one of us. And this executive said, like, 0:18:13.040 --> 0:18:15.600 what we have came to realize is that he's not 0:18:15.960 --> 0:18:17.399 one of us. 0:18:17.720 --> 0:18:21.399 He is Trump's guy. And that is a big difference. 0:18:21.560 --> 0:18:26.760 And yes, the comments in this anonymous Dallas Fed survey 0:18:26.960 --> 0:18:31.439 were quite shocking. And you're talking private to executives in 0:18:31.480 --> 0:18:35.840 the oil industry. I almost have to pinch myself at times. 0:18:35.880 --> 0:18:38.560 It's like, hold on a second, is Biden still on 0:18:38.600 --> 0:18:42.479 the White House? Because you guys seems to really dislike everything. 0:18:43.200 --> 0:18:46.200 Replace Trump with the word Biden and it would make sense. 0:18:46.760 --> 0:18:50.080 It's like, when I was reading that series of comments 0:18:50.080 --> 0:18:53.840 from the Dallas Fed, I joke at that you have 0:18:54.000 --> 0:18:56.880 been sleeping for six months and wake up you will 0:18:56.880 --> 0:18:59.760 sink that the Democrats are still running the White House 0:18:59.800 --> 0:19:02.840 and Congress and exter. I mean, this was a dream 0:19:03.240 --> 0:19:06.119 for the oil industry. It is a Republican at the 0:19:06.119 --> 0:19:09.440 White House. The Secretary of the Treasury is a Wallace 0:19:09.480 --> 0:19:13.719 Street heads fund manager, and the Secretary of Energy is 0:19:13.760 --> 0:19:15.520 the founder of an oil company. 0:19:16.000 --> 0:19:19.640 And here we are everyone in the oil part. 0:19:19.880 --> 0:19:24.120 Perhaps because of this, he is absolutely mad with the administration. 0:19:40.520 --> 0:19:42.840 I have a really dumb question, and I'm gonna ask 0:19:42.880 --> 0:19:44.840 you real question. What do we call it the oil patch? 0:19:46.280 --> 0:19:46.760 I don't know? 0:19:47.480 --> 0:19:48.879 Oh sorry, I didn't mean the somebody? 0:19:49.400 --> 0:19:51.159 No, this is Can I use Google? 0:19:51.480 --> 0:19:53.720 Oh sorry, we can cut this? Can we keep this 0:19:53.880 --> 0:19:57.400 in some can we keep this in? 0:19:57.720 --> 0:19:57.920 Yeah? 0:19:59.080 --> 0:20:01.840 I don't know why I have a poetic license. 0:20:02.840 --> 0:20:03.920 Wow, I thought for sure. 0:20:03.920 --> 0:20:06.399 Okay, oil patch it kind of speaking of gardening. 0:20:06.680 --> 0:20:08.840 It kind of sounds like, you know, you're growing vegetables 0:20:08.880 --> 0:20:11.560 on your oil patch, except things on. 0:20:11.520 --> 0:20:15.159 The oil pot, like the pipe that you used to 0:20:15.280 --> 0:20:21.919 drill is called Octe oil County tubula good. Oh yeah, 0:20:21.960 --> 0:20:25.760 I have no idea why oil county, but it is 0:20:25.840 --> 0:20:28.399 oil pats oil County is you know, it's it's the 0:20:28.480 --> 0:20:29.399 oil place. 0:20:29.520 --> 0:20:32.159 And I have a real question the oil place. What 0:20:32.600 --> 0:20:33.280 the oil place? 0:20:33.520 --> 0:20:35.000 I'm going to start. We're all going to go down 0:20:35.040 --> 0:20:35.720 to the oil place. 0:20:37.200 --> 0:20:38.480 Are talking the oil place? 0:20:38.680 --> 0:20:38.920 Okay? 0:20:38.920 --> 0:20:42.439 I have a real question. The substantive one, which is 0:20:42.840 --> 0:20:46.280 one of these sort of like booming export industries for 0:20:46.400 --> 0:20:48.520 the US, was a natural gas and the sort of 0:20:48.800 --> 0:20:51.600 LNG terminals, and I think Biden put a pause on 0:20:51.640 --> 0:20:54.280 them and that pauses. I don't know if it's been lifted, 0:20:54.280 --> 0:20:57.240 but it will be lifted almost certainly construction of new. 0:20:57.160 --> 0:20:58.640 Ones with the trade war. 0:20:58.720 --> 0:21:02.720 Have the economics of LNG export change at all with 0:21:02.720 --> 0:21:05.240 the decline and oil prices like cause anything, Have any 0:21:05.280 --> 0:21:05.960 dials moved. 0:21:05.840 --> 0:21:06.399 On that front? 0:21:06.680 --> 0:21:10.280 Not yet, And potentially yes, because one big buyer of 0:21:10.359 --> 0:21:13.400 American lergy was China, and China has not bought any 0:21:13.640 --> 0:21:17.760 LNG from America in a long while. And also if 0:21:17.880 --> 0:21:20.840 oil productions start to decline, when you drill for oil, 0:21:21.240 --> 0:21:24.040 you usually get a mix of hydro out of the ground. 0:21:24.040 --> 0:21:25.760 You will get oil, you will get gets. 0:21:26.359 --> 0:21:28.240 So if you like I fewer wells, yeah, so. 0:21:28.280 --> 0:21:31.960 You have fewer oil wells, you're gonna have fewer or 0:21:32.280 --> 0:21:35.680 gas wells. So the input cause of gas is gonna 0:21:35.720 --> 0:21:39.240 go higher, and you may have a bit of lack 0:21:39.280 --> 0:21:41.920 of demand on the other side from China. So far 0:21:41.960 --> 0:21:44.640 all is good because the European Union and the UK 0:21:44.800 --> 0:21:48.960 still need a lot of natural gas from the United States. 0:21:49.320 --> 0:21:52.320