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Speaker 1: I think we have to start in the Red Sea.

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Speaker 1: That's where the urgency is right now. Clearly a lot

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Speaker 1: of businesses have to reroute business. We saw that from

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Speaker 1: ap Mulabus, the contenter shipping giant a number of weeks ago.

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Speaker 1: Some breaking news in the last couple of hours on show.

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Speaker 1: Could you give us the update for you and the

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Speaker 1: team what if you had to change, if anything at all.

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Speaker 2: Sure. We you know, we engage with the US Navy

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Speaker 2: and other security organizations for all of our movements to

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Speaker 2: the Arabian Gulf, the Red Sea and on every voyage

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Speaker 2: we have a security plan and it's really shipped by

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Speaker 2: ship that we we evaluate the situation. So we're working

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Speaker 2: very closely with you know, the maritime security authorities. Risks

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Speaker 2: in the region have been accelerating over the last several weeks.

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Speaker 2: These are risks we deal with all the time. Last

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Speaker 2: year we had a couple of ships attacked by the

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Speaker 2: Iranian Navy. Actually one of them was boarded and hijacked

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Speaker 2: into an Iranian port. So this is a part of

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Speaker 2: our business that we deal with. We take it very serious.

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Speaker 2: The safety of our people is the most important thing,

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Speaker 2: and the risks in that part of the world are

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Speaker 2: very dynamic and volatile right now.

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Speaker 1: Have you made any changes in the last few weeks.

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Speaker 2: We've made changes that we don't talk about publicly in

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Speaker 2: terms of the security protocols. We have not made fundamental

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Speaker 2: changes to how we've been moving ships over the last

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Speaker 2: few weeks.

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Speaker 3: Are you surprised that we haven't seen any influence on

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Speaker 3: prices whatsoever?

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Speaker 2: I actually am. That's an important part of the world

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Speaker 2: for oil supply, and traditionally when risks elevate in the

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Speaker 2: Middle East, you see it reflected in markets. We've not

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Speaker 2: really seen that yet, and so I'm a little surprised.

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Speaker 3: So what would you think it would take? I mean,

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Speaker 3: do you think that the excuse that people use, which

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Speaker 3: is that the US is just overwhelming the world with

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Speaker 3: oil and that's the reason why oil prices have remained

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Speaker 3: completely immune to any tension in the Middle East? Do

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Speaker 3: you buy that story?

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Speaker 2: Well, certainly, US supply growth has surprised people to the upside,

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Speaker 2: and I think it has helped calm markets a little bit,

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Speaker 2: but it certainly it has no ability to cover up

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Speaker 2: a big disruption in the Middle East that will fundamentally

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Speaker 2: change the supply dynamics in the world if you were

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Speaker 2: to see shipping halted, disrupted, or seriously disturbed. And so

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Speaker 2: I do think that the US supply has helped kind

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Speaker 2: of calm markets over the longer cycle, but there's no

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Speaker 2: no capacity to respond in the short term to an interruption.

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Speaker 1: Like thirteen million barrels a day. Can we just sort

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Speaker 1: of frame this just for a moment, how much potential

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Speaker 1: is left? How much hard can that number go?

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Speaker 2: It can go higher. The US is blessed with an

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Speaker 2: abundant resource base. The constraints tend to be right now,

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Speaker 2: the capital spending of suppliers, how fast suppliers will go.

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Speaker 2: A decade ago, companies in our industry were growing too

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Speaker 2: fast in the Permian basin in particular, and investors were

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Speaker 2: unhappy with that. I think I've seen companies throttle back

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Speaker 2: capital spending return cash to shareholders more consistently. If they

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Speaker 2: were to return to the ways of the past, I

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Speaker 2: think you could see that number go high. I don't

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Speaker 2: see that going on right now, but the US has

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Speaker 2: upside well.

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Speaker 3: But this is the reason why people are wondering about

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Speaker 3: the potential disruption. And I'd love it if you could

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Speaker 3: quantify where we could see prices go if some of

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Speaker 3: the disruptions that you're talking about come to pass, If

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Speaker 3: the US still has the ability to produce more oil, right,

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Speaker 3: if there is the ability to ratchet it back up,

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Speaker 3: couldn't that offset the disruption that potentially could happen that

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Speaker 3: we haven't seen yet.

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Speaker 2: It could lease it, but not immediately. So between the

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Speaker 2: time we actually have all of our plans ready to

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Speaker 2: drill a well in the Permian Basin and when it

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Speaker 2: comes on production fastest is like nine months, and our

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Speaker 2: plans are set for years in advance. I mean, we've

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Speaker 2: got a big system that you run to do this,

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Speaker 2: and so there's not a light switch that says, okay,

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Speaker 2: we had a disruption in the Middle East today, next

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Speaker 2: week we can have more production in the Permian Basin.

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Speaker 2: There's a lead time involved here, so you could see

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Speaker 2: short term locations in the market. It's a very hypothetical.

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Speaker 2: When we saw the Russia Ukraine conflict begin, you saw

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Speaker 2: price as well above one hundred dollars. That's conceivable if

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Speaker 2: you were to see a significant disruption. Red Sea may

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Speaker 2: be less than the Arabian golf because there's alternatives for

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Speaker 2: shipping through the Red Sea. The supply that comes out

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Speaker 2: of from Saudi Arabia Kuwait golf producers, that comes through

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Speaker 2: the strait of horror moves. If that were to be

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Speaker 2: closed down, that's a significant supply shortfall which could really

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Speaker 2: impact markets.

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Speaker 1: You delivered a big deal at the end of last year,

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Speaker 1: I think fifty billion plus. Do you think the demise

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Speaker 1: of fossil fuse is greatly exaggerated?

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Speaker 2: I think people have an unrealistic expectation for how quickly

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Speaker 2: the energy system can change. The energy system is enormous.

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Speaker 2: If you look at the overall mix of supply, twenty

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Speaker 2: years ago, eighty four eighty threety four percent of the

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Speaker 2: global energy system was fossil fuels. Today it's eighty one

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Speaker 2: or eighty two percent. Despite all the advances we've seen

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Speaker 2: in wind and solar and renewables and electric vehicles, the

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Speaker 2: demand is much higher and the mix hasn't changed much,

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Speaker 2: and so fossil fuels will be used for many years

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Speaker 2: to come. Oil and gas will be used for decades

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Speaker 2: to come. So I do think that there's been an

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Speaker 2: underappreciation of the longevity that this business has.

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Speaker 1: A delicate question, slightly provocative. Does California have maybe a

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Speaker 1: little bit too much confidence hope that things can change

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Speaker 1: that quickly.

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Speaker 2: Well, California has been on a path for a couple

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Speaker 2: of decades to tighten up regulations rules related to our industry,

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Speaker 2: to try to encourage other forms of energy, and we've

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Speaker 2: certainly seen We've get a large position where we made

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Speaker 2: the first discovery in California back in eighteen seventy nine.

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Speaker 2: We're really the only large oil company left in California.

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Speaker 2: We've seen the investment climate change dramatically, and we've got

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Speaker 2: a very large business there, but we won't be investing

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Speaker 2: as much in the future because those investments just are

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Speaker 2: less and less attractive because of the policy environment, and

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Speaker 2: I do think that ultimately is to the risk of

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Speaker 2: California and California consumers.

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Speaker 3: Has any politician reached out to you after you've made

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Speaker 3: your announcement to say, just kidding, come on back, we'll

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Speaker 3: make things change, We'll make things easier for you. Did

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Speaker 3: anyone reach out. No.

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Speaker 2: We have means through which we work on policy with

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Speaker 2: the state of California. But these are decisions that have

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Speaker 2: been long thought out. In fact, in many ways, we're

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Speaker 2: justifying on the belief that a new energy system would

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Speaker 2: emerge and that California should wind down the current energy

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Speaker 2: system that it has today. And so the policy is

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Speaker 2: very consistent, I think, with the intent of the policy makers,

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Speaker 2: and so we're just seeing that play out.

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Speaker 1: I'm going to get shouted out, but I think we've

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Speaker 1: got about forty seconds. Does it matsa who's in the

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Speaker 1: White House? Given that we have a Democrat who wants

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Speaker 1: to get rid of fossil fuels, but we also have

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Speaker 1: thirteen million pouds at air production in America? Does it

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Speaker 1: matter who's in the White House.

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Speaker 2: Well, because of some of the lead times I was

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Speaker 2: mentioning earlier, what happens our decisions to make permitting more difficult,

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Speaker 2: to cancel lease sales, to cancel pipelines, those have impact

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Speaker 2: down the road. What we see going on in the

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Speaker 2: market today is a result of plans and permits that

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Speaker 2: have been issued in years prior, and so there's a

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Speaker 2: lag time in some of these things, and so some

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Speaker 2: of the policies that you see coming into play the

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Speaker 2: manifestation of that I mentioned California twenty years of policy

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Speaker 2: making that's playing out today. Same thing applies at a

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Speaker 2: federal level,