1 00:00:02,440 --> 00:00:14,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:17,880 --> 00:00:21,919 Speaker 2: Hello and welcome to another episode of the Odd Lads podcast. 3 00:00:21,960 --> 00:00:26,120 Speaker 2: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy Copper has 4 00:00:26,120 --> 00:00:27,040 Speaker 2: been on a tear again. 5 00:00:27,360 --> 00:00:30,400 Speaker 3: Yes, yes it has. It's kind of weird because I 6 00:00:30,480 --> 00:00:34,800 Speaker 3: remember recording a number of commodities related podcasts a couple 7 00:00:34,800 --> 00:00:39,199 Speaker 3: of years ago where everyone was super excited about copper, 8 00:00:39,360 --> 00:00:43,159 Speaker 3: and there was this long term, you know, structural theme 9 00:00:43,720 --> 00:00:48,440 Speaker 3: about systemic undersupply. So the idea that we hadn't invested 10 00:00:48,520 --> 00:00:51,520 Speaker 3: in new minds for ages, and it took so long 11 00:00:51,600 --> 00:00:53,800 Speaker 3: for new minds to come on stream that there just 12 00:00:54,000 --> 00:00:57,320 Speaker 3: wasn't going to be enough copper to power all these 13 00:00:57,400 --> 00:01:01,480 Speaker 3: new electric vehicles or electrified the grid, all these big 14 00:01:01,520 --> 00:01:04,959 Speaker 3: things that the world wants to do. And then for 15 00:01:05,040 --> 00:01:07,640 Speaker 3: a couple of years, copper just kind of went away. 16 00:01:08,000 --> 00:01:10,679 Speaker 3: The price started dropping, and now it's back. 17 00:01:11,080 --> 00:01:13,720 Speaker 2: Well, this is the problem, right, And I think that 18 00:01:13,720 --> 00:01:17,600 Speaker 2: that interim fall, and it did for like twenty twenty 19 00:01:17,640 --> 00:01:19,560 Speaker 2: two and much of twenty twenty three is sort of 20 00:01:19,600 --> 00:01:21,840 Speaker 2: back in the basement a little bit. This does seem 21 00:01:21,880 --> 00:01:24,800 Speaker 2: to be the core problem that people have identified, which 22 00:01:24,840 --> 00:01:27,640 Speaker 2: is that we can be almost certain that there is 23 00:01:27,680 --> 00:01:31,480 Speaker 2: a long term huge demand for copper from all the 24 00:01:31,520 --> 00:01:36,040 Speaker 2: capital spending that's going on for electrification in particular evs, 25 00:01:36,080 --> 00:01:38,880 Speaker 2: et cetera. And we can also, i think, you know, 26 00:01:38,880 --> 00:01:43,399 Speaker 2: as many analysts have observed, forecast supply fairly easily because 27 00:01:43,440 --> 00:01:45,400 Speaker 2: we know what mines are out there, We know that 28 00:01:45,520 --> 00:01:48,600 Speaker 2: minds have a really long lead time et cetera from 29 00:01:48,680 --> 00:01:51,840 Speaker 2: decision to break new ground to actually producing copper. So like, 30 00:01:51,840 --> 00:01:54,360 Speaker 2: there are these certainties, but then the problem is, like 31 00:01:54,360 --> 00:01:56,720 Speaker 2: in the meantime, when you have these sort of periods 32 00:01:56,720 --> 00:02:00,120 Speaker 2: of spot weakness where there isn't a supply shortage or 33 00:02:00,120 --> 00:02:03,200 Speaker 2: there's plenty of copper, you know, those periods don't exactly 34 00:02:03,280 --> 00:02:06,440 Speaker 2: like encourage companies to like get mining or get digging, 35 00:02:06,520 --> 00:02:10,160 Speaker 2: and in fact, they could slow down expansion plans. Even 36 00:02:10,160 --> 00:02:13,800 Speaker 2: if everyone sort of knows the long term math checks out. 37 00:02:13,800 --> 00:02:16,840 Speaker 3: Absolutely, there's that mismatch between the short term and the 38 00:02:16,919 --> 00:02:20,799 Speaker 3: long term outlook. There's also that tension on the ESG 39 00:02:21,360 --> 00:02:23,760 Speaker 3: side of things as well, this idea that you want 40 00:02:23,880 --> 00:02:28,120 Speaker 3: abundant copper in order to decarbonize the energy system, but 41 00:02:28,200 --> 00:02:30,919 Speaker 3: at the same time, a lot of people who are 42 00:02:31,240 --> 00:02:34,880 Speaker 3: ESG minded are going to feel very uncomfortable about encouraging 43 00:02:35,680 --> 00:02:37,720 Speaker 3: new minds in Chile or something like that. 44 00:02:37,919 --> 00:02:38,880 Speaker 4: Yeah, yeah, that's right. 45 00:02:38,960 --> 00:02:42,240 Speaker 2: And you know, obviously they have big environmental impact, they 46 00:02:42,240 --> 00:02:45,240 Speaker 2: have big water impact and so forth. But you know, 47 00:02:45,320 --> 00:02:48,000 Speaker 2: as we said at the beginning, copper is once again 48 00:02:48,480 --> 00:02:51,080 Speaker 2: front and center. The price is back on the rise, 49 00:02:51,280 --> 00:02:56,160 Speaker 2: we're back talking about this long term structural mismatch, et cetera. 50 00:02:56,480 --> 00:02:58,440 Speaker 2: And so I think it's time to sort of delve 51 00:02:58,480 --> 00:03:01,480 Speaker 2: deeper into this question and like see where the math 52 00:03:01,600 --> 00:03:02,680 Speaker 2: is today, so to speak. 53 00:03:02,800 --> 00:03:05,480 Speaker 3: Yeah, I have the Ghostbusters theme in my head, and 54 00:03:05,520 --> 00:03:07,799 Speaker 3: it's like, whenever you want to talk about Copper, who 55 00:03:07,840 --> 00:03:09,520 Speaker 3: are you going to call this guy? 56 00:03:09,680 --> 00:03:12,120 Speaker 2: We're going to talk to Jeff Curry. So we've had 57 00:03:12,160 --> 00:03:15,560 Speaker 2: him on the podcast at least a couple of times before. 58 00:03:16,120 --> 00:03:18,320 Speaker 2: Back in twenty twenty one, we talked to him and 59 00:03:18,360 --> 00:03:20,760 Speaker 2: he talked about this idea of like a new commodity 60 00:03:20,919 --> 00:03:23,000 Speaker 2: super cycled. Of course, oil was surging and all these 61 00:03:23,040 --> 00:03:26,800 Speaker 2: commodities were surging as the global economy was reopening. Then 62 00:03:26,840 --> 00:03:29,360 Speaker 2: we talked to him again in twenty twenty two and 63 00:03:29,400 --> 00:03:32,160 Speaker 2: he said that Hopper specifically may end up being one 64 00:03:32,160 --> 00:03:36,120 Speaker 2: of the the tightest commodity markets he's ever seen, so real, 65 00:03:36,480 --> 00:03:40,840 Speaker 2: real issues with supply and again looking pretty good these days. 66 00:03:40,840 --> 00:03:43,680 Speaker 2: So we are back with Jeff Curry, who is now 67 00:03:43,840 --> 00:03:46,080 Speaker 2: in a new role. So when we talked to him before, 68 00:03:46,120 --> 00:03:48,560 Speaker 2: he was the head of Commodities research at Goldman Sachs, 69 00:03:48,600 --> 00:03:51,600 Speaker 2: but today he is the chief Strategy Officer of Energy 70 00:03:51,680 --> 00:03:55,560 Speaker 2: Pathways at the Carlisle Group. So, Jeff, thank you so 71 00:03:55,640 --> 00:03:57,640 Speaker 2: much for coming back on odd lots. 72 00:03:58,000 --> 00:04:00,360 Speaker 4: Great, it's a pleasure to be here. And hey, copper 73 00:04:00,400 --> 00:04:03,680 Speaker 4: ten thousand and odd lots here I come. Let's go 74 00:04:03,800 --> 00:04:04,640 Speaker 4: like a clock. 75 00:04:04,800 --> 00:04:07,440 Speaker 2: There's our headline right there. So Jeff, what do you 76 00:04:07,680 --> 00:04:09,480 Speaker 2: talk to us about the last few years. It's been 77 00:04:09,560 --> 00:04:11,520 Speaker 2: like over two years since we've talked to you, So 78 00:04:11,560 --> 00:04:14,920 Speaker 2: what's happening in copper world or commodity world over that time. 79 00:04:15,080 --> 00:04:19,280 Speaker 4: Well, let's go back and lay out the supercycles thesis 80 00:04:19,279 --> 00:04:23,080 Speaker 4: that we put forth back in it was October twenty twenty. 81 00:04:23,520 --> 00:04:27,599 Speaker 4: The bottom line is the stories more compelling today than 82 00:04:27,640 --> 00:04:31,240 Speaker 4: it was then. So you really have to ask what 83 00:04:31,440 --> 00:04:33,840 Speaker 4: went wrong? So let's start with the story, and then 84 00:04:33,920 --> 00:04:37,160 Speaker 4: let's go to what went wrong over the last twelve 85 00:04:37,200 --> 00:04:39,800 Speaker 4: to eighteen months. So if we go back and review 86 00:04:39,839 --> 00:04:43,559 Speaker 4: the story, there was structural supply constraints, which we called 87 00:04:43,640 --> 00:04:47,400 Speaker 4: the revenge of the old economy. Put bluntly poor returns 88 00:04:47,400 --> 00:04:51,120 Speaker 4: in the old economy, saw capital redirected to the new economy, 89 00:04:51,520 --> 00:04:54,400 Speaker 4: starving the old economy of the investment it needed to 90 00:04:54,400 --> 00:04:58,320 Speaker 4: grow the supply base. Pretty straightforward story. Still the story 91 00:04:58,560 --> 00:05:02,360 Speaker 4: in markets like upper or even oil to a lesser extent, 92 00:05:02,680 --> 00:05:06,880 Speaker 4: but it's pretty much apparent across the old economy. So 93 00:05:07,120 --> 00:05:12,960 Speaker 4: structural supply story very much intact. What about demand? If anything, 94 00:05:13,520 --> 00:05:17,000 Speaker 4: the structural demand stories have been turbocharged. Let's go and 95 00:05:17,040 --> 00:05:21,839 Speaker 4: review the three big policy initiatives we saw driving demand. 96 00:05:22,240 --> 00:05:25,599 Speaker 4: The way we talked about them back then was redlining 97 00:05:25,640 --> 00:05:32,360 Speaker 4: commodity demand. Reed, they are standard for redistribution policies. Basically, 98 00:05:32,920 --> 00:05:37,760 Speaker 4: as lower income groups consumed with higher wages, higher income, 99 00:05:37,839 --> 00:05:41,480 Speaker 4: they consume a greater share of commodities than the higher 100 00:05:41,480 --> 00:05:44,920 Speaker 4: income groups. That's very much alive and kicking. You look 101 00:05:44,960 --> 00:05:48,480 Speaker 4: at the low unemployment rate, who's the biggest benefactor of that? 102 00:05:48,640 --> 00:05:51,880 Speaker 4: It is the lower income groups. And you know, policies 103 00:05:52,080 --> 00:05:55,440 Speaker 4: still very much in play all over the world, right 104 00:05:55,480 --> 00:05:59,599 Speaker 4: now reinforcing these lower income groups in the consumption of 105 00:05:59,640 --> 00:06:02,760 Speaker 4: commodit They so you are. And then you had e 106 00:06:03,040 --> 00:06:07,000 Speaker 4: the environmental policy turbocharged from the last time we talked, 107 00:06:07,040 --> 00:06:12,039 Speaker 4: you have the IR the repower EU China now part 108 00:06:12,080 --> 00:06:15,359 Speaker 4: of the reason why coppers rallied recently. China's growth was 109 00:06:15,400 --> 00:06:18,760 Speaker 4: over one hundred percent in green capex last year, thirty 110 00:06:18,800 --> 00:06:21,839 Speaker 4: percent this year. So everywhere you look in the world, 111 00:06:22,120 --> 00:06:27,960 Speaker 4: we see environmental policy through green capac stimulating demand for commodities. 112 00:06:28,440 --> 00:06:31,320 Speaker 4: And then the third one, which was the D the 113 00:06:31,480 --> 00:06:35,560 Speaker 4: D globalization. Again that's far greater than we ever thought. 114 00:06:35,600 --> 00:06:38,919 Speaker 4: Look at the potential military spin in the US ninety 115 00:06:38,960 --> 00:06:42,320 Speaker 4: five billion dollars on munitions. We look at what's going 116 00:06:42,360 --> 00:06:45,160 Speaker 4: on in places like Germany one hundred billion dollars of 117 00:06:45,400 --> 00:06:49,919 Speaker 4: military spend. So you've got all three going much stronger 118 00:06:49,960 --> 00:06:53,039 Speaker 4: than what we would have thought two to three years ago. 119 00:06:53,120 --> 00:06:56,440 Speaker 4: So what went wrong? I want to first start with 120 00:06:57,040 --> 00:06:59,880 Speaker 4: the disinflation story, and then I want to finish by 121 00:07:00,080 --> 00:07:02,320 Speaker 4: talking about the dollar. The dollar has been a big 122 00:07:02,400 --> 00:07:06,719 Speaker 4: headwind to commodities. When we think about the disinflation that 123 00:07:06,800 --> 00:07:09,160 Speaker 4: occurred late last year in the early part of this year, 124 00:07:09,440 --> 00:07:11,920 Speaker 4: One thing to keep in mind is that it was 125 00:07:12,280 --> 00:07:16,800 Speaker 4: globally correlated. It occurred against the backdrop of record commodity 126 00:07:16,880 --> 00:07:20,920 Speaker 4: demand and incredibly strong GDP growth in US and even 127 00:07:21,000 --> 00:07:24,480 Speaker 4: China was plus five percent. So what does that tell you? 128 00:07:24,640 --> 00:07:27,480 Speaker 4: Was it demand driven weakness and prices or was it 129 00:07:27,680 --> 00:07:30,559 Speaker 4: supply driven? It tells you it had to be supply driven. 130 00:07:30,720 --> 00:07:32,520 Speaker 4: It's the only thing that could give you that pattern 131 00:07:32,920 --> 00:07:36,960 Speaker 4: of observations. So the supply driven. Where did they get 132 00:07:37,080 --> 00:07:40,920 Speaker 4: the supply? I would argue is through regulatory easy whether 133 00:07:40,920 --> 00:07:45,360 Speaker 4: if it was you know, on sanctions allowing sanctioned oil 134 00:07:45,440 --> 00:07:51,040 Speaker 4: to flow more freely, particularly in places like US, Iran, Venezuelan. 135 00:07:51,160 --> 00:07:54,200 Speaker 4: Obviously that had a cost with Iranian hoodies or even 136 00:07:54,240 --> 00:07:58,400 Speaker 4: the Venezuelans attacking Guyana, but that was a source of supply. 137 00:07:59,040 --> 00:08:01,960 Speaker 4: The other source of supply apply was turning a blind 138 00:08:02,000 --> 00:08:05,120 Speaker 4: eye to environmental policy around the world. We have record 139 00:08:05,160 --> 00:08:09,760 Speaker 4: coal production out of China, Indonesia, and India. Actually that 140 00:08:09,840 --> 00:08:13,720 Speaker 4: increase in coal production was bigger than Saudi Arabia. Im 141 00:08:13,720 --> 00:08:17,320 Speaker 4: backed up gas prices and power prices around the world. 142 00:08:17,440 --> 00:08:20,960 Speaker 4: We saw you know, cutting down mangroves in Malaysia or 143 00:08:21,280 --> 00:08:26,040 Speaker 4: deforestation for more food in places like Latin America. And 144 00:08:26,080 --> 00:08:30,360 Speaker 4: then the third one, regulatory easing was through immigration, so 145 00:08:30,400 --> 00:08:34,680 Speaker 4: you got more energy, more food, and you had more labor, 146 00:08:34,920 --> 00:08:37,559 Speaker 4: which helped create the disinflationary pressures that we saw the 147 00:08:37,640 --> 00:08:38,920 Speaker 4: last sever years. I'm not going to say it's the 148 00:08:38,960 --> 00:08:42,479 Speaker 4: only cause, but it put you know, a big headwind 149 00:08:42,520 --> 00:08:45,120 Speaker 4: to the commodity story. And by the way, that's going 150 00:08:45,160 --> 00:08:47,840 Speaker 4: to run its course, particularly after the election, because you 151 00:08:47,880 --> 00:08:51,040 Speaker 4: look at you know, the clamping down on Iranian sanctions 152 00:08:51,160 --> 00:08:54,120 Speaker 4: one hundred and eighty days from now. Surprise, surprise, that's 153 00:08:54,160 --> 00:08:57,480 Speaker 4: after the November election. Now let's turn let's talk about 154 00:08:57,520 --> 00:09:01,840 Speaker 4: the dollar. That's the other big headwind here. Historically, when 155 00:09:01,880 --> 00:09:05,240 Speaker 4: commodity prices would rise, you would have places like Saudi 156 00:09:05,280 --> 00:09:10,000 Speaker 4: Arabia become long US dollars. They would recycle those dollars 157 00:09:10,040 --> 00:09:13,960 Speaker 4: into US treasuries. Interest rates would go down as they 158 00:09:14,000 --> 00:09:18,120 Speaker 4: bought treasuries. This would create a weaker dollar that would 159 00:09:18,200 --> 00:09:21,680 Speaker 4: reinforce higher reflation. If we called it the three rs. 160 00:09:21,720 --> 00:09:25,640 Speaker 4: You'd start with releveraging in China so you get growth 161 00:09:25,720 --> 00:09:29,160 Speaker 4: outside of outside of the US, and then you would 162 00:09:29,200 --> 00:09:32,400 Speaker 4: have convergence in global growth, and then you would have 163 00:09:32,679 --> 00:09:35,520 Speaker 4: the purchases and the stronger growth in the emerging markets 164 00:09:35,559 --> 00:09:38,920 Speaker 4: buy US treasuries and that would create the weaker dollar 165 00:09:39,040 --> 00:09:42,040 Speaker 4: in hence the reflation, and you were in a virtuous loop. 166 00:09:42,280 --> 00:09:44,200 Speaker 4: That's how we went to one hundred and forty seven 167 00:09:44,280 --> 00:09:46,800 Speaker 4: dollars oil in the two thousands, and the same thing 168 00:09:46,840 --> 00:09:50,200 Speaker 4: happened in the seventies for the first time ever. That 169 00:09:50,440 --> 00:09:54,839 Speaker 4: dollar recycling is not a curry and what is replacing it? 170 00:09:55,120 --> 00:09:57,600 Speaker 4: I like to call it gold recycling. It explains a 171 00:09:57,640 --> 00:09:59,760 Speaker 4: lot why goal prices are as strong as they are, 172 00:10:00,080 --> 00:10:02,360 Speaker 4: and what is the evidence of that is that the 173 00:10:02,400 --> 00:10:05,880 Speaker 4: emerging markets, the brick countries all met with Saudi Arabia 174 00:10:05,880 --> 00:10:09,679 Speaker 4: and other key participants November of last year and discuss 175 00:10:09,720 --> 00:10:12,400 Speaker 4: how they're going to trade with one another using local 176 00:10:12,440 --> 00:10:16,040 Speaker 4: currencies and then whatever it nets out and settling, they 177 00:10:16,080 --> 00:10:20,040 Speaker 4: would settle in gold. So you've taken out that dollar recycling. 178 00:10:20,200 --> 00:10:22,319 Speaker 4: China's not doing it, and think about why would they 179 00:10:22,320 --> 00:10:24,640 Speaker 4: do it with everything they've seen with Russia over the 180 00:10:24,679 --> 00:10:27,120 Speaker 4: course of the last several years. So that's an important 181 00:10:27,200 --> 00:10:31,240 Speaker 4: difference here. It doesn't mean it's a very supercycle, but 182 00:10:31,280 --> 00:10:34,760 Speaker 4: you're unlikely to see that dollar recycling playing out probably 183 00:10:34,840 --> 00:10:37,520 Speaker 4: ever again, which means that what do they do with this? 184 00:10:37,679 --> 00:10:40,800 Speaker 4: If they're buying physical goods like gold, they could be 185 00:10:40,920 --> 00:10:43,800 Speaker 4: buying things like oil, copper, and other commodities as we 186 00:10:43,880 --> 00:10:46,360 Speaker 4: look forward. So those are the two big headwinds why 187 00:10:46,360 --> 00:10:49,440 Speaker 4: I'd argue we're wrong, But the fundamental story still very 188 00:10:49,520 --> 00:10:51,160 Speaker 4: much intact, particularly with copper. 189 00:10:51,679 --> 00:10:54,199 Speaker 3: Jeff, that was an amazing overview. I'm just going to 190 00:10:54,240 --> 00:10:56,840 Speaker 3: say for our listeners that we are talking to Jeff 191 00:10:56,920 --> 00:10:59,880 Speaker 3: from his office in London. There's a little bit of 192 00:11:00,240 --> 00:11:04,920 Speaker 3: sound quality issue. Obviously, we need more transatlantic copper cables 193 00:11:05,240 --> 00:11:07,680 Speaker 3: running under the ocean thanking tracing. 194 00:11:07,760 --> 00:11:08,040 Speaker 4: Thank you. 195 00:11:08,080 --> 00:11:10,040 Speaker 3: That's a good sig. Right, all right. I have a 196 00:11:10,160 --> 00:11:13,480 Speaker 3: very important question for Jeff, which is are you wearing 197 00:11:13,480 --> 00:11:14,920 Speaker 3: a copper bracelet right now? 198 00:11:15,600 --> 00:11:20,560 Speaker 4: Absolutely? It is the most compelling a trade I have 199 00:11:20,720 --> 00:11:24,360 Speaker 4: ever seen in my thirty plus years of doing this. 200 00:11:24,720 --> 00:11:28,120 Speaker 4: You look at the demand story, it's got green cap backs, 201 00:11:28,200 --> 00:11:32,480 Speaker 4: it's got AI. Remember AI can't happen without the energy demand, 202 00:11:32,760 --> 00:11:35,840 Speaker 4: and the constraint on the electricity grid is going to 203 00:11:35,840 --> 00:11:38,000 Speaker 4: be copper. And then you have the military demand, so 204 00:11:38,440 --> 00:11:43,640 Speaker 4: unprecedented demand growth against unprecedented weakness in supply growth. Because 205 00:11:43,640 --> 00:11:46,280 Speaker 4: we have not been investing. It's ted you up for 206 00:11:46,480 --> 00:11:49,200 Speaker 4: what I would argue is the most bullish commodity that 207 00:11:49,400 --> 00:11:51,839 Speaker 4: actually I just quote many of our clients and other 208 00:11:51,960 --> 00:11:55,360 Speaker 4: market participants say, you know, it's the highest conviction trade 209 00:11:55,360 --> 00:11:56,040 Speaker 4: they've ever seen. 210 00:12:11,559 --> 00:12:14,559 Speaker 3: Earlier, you were talking about the sort of general commodities 211 00:12:14,640 --> 00:12:17,840 Speaker 3: supercycle and why that didn't necessarily play out in the 212 00:12:17,880 --> 00:12:20,760 Speaker 3: timeframe that we initially thought it would. But can you 213 00:12:20,800 --> 00:12:23,360 Speaker 3: dig a little bit more into copper because this is 214 00:12:23,400 --> 00:12:25,880 Speaker 3: something that I see over and over again. We talked 215 00:12:25,920 --> 00:12:29,160 Speaker 3: to a lot of commodities experts on the show. Everyone 216 00:12:29,440 --> 00:12:32,760 Speaker 3: seems to have a high conviction on the copper trade, 217 00:12:32,960 --> 00:12:38,000 Speaker 3: or at a minimum see lots of upside potential. Why 218 00:12:38,080 --> 00:12:41,840 Speaker 3: didn't that play out in the sort of immediate post 219 00:12:41,960 --> 00:12:43,520 Speaker 3: pandemic years. 220 00:12:43,840 --> 00:12:48,360 Speaker 4: Because investors were unwilling to take on blind faith that 221 00:12:48,600 --> 00:12:51,640 Speaker 4: China property market could sink and you could still be 222 00:12:51,800 --> 00:12:55,400 Speaker 4: long copper in other base metals because as for as 223 00:12:55,440 --> 00:12:58,120 Speaker 4: long as many of these people had been trading commodities 224 00:12:58,520 --> 00:13:02,040 Speaker 4: without China, you could not be bullish. And what happened 225 00:13:02,040 --> 00:13:05,080 Speaker 4: in twenty two and twenty three was the Chinese property 226 00:13:05,120 --> 00:13:08,559 Speaker 4: market started to sink and sink very quickly, and that 227 00:13:08,720 --> 00:13:11,439 Speaker 4: discouraged investors to get long and I think they have 228 00:13:11,559 --> 00:13:14,920 Speaker 4: now seen enough evidence last year and this year. For example, 229 00:13:15,200 --> 00:13:17,520 Speaker 4: you know, copper demand so far this year is up 230 00:13:17,600 --> 00:13:22,440 Speaker 4: six percent year over year despite an incredibly weak property 231 00:13:22,480 --> 00:13:25,280 Speaker 4: market in China. So I think what has shifted here 232 00:13:25,920 --> 00:13:30,720 Speaker 4: is confidence from investors in metals that you can buy 233 00:13:31,120 --> 00:13:34,920 Speaker 4: these markets based upon the green cap back story despite 234 00:13:35,000 --> 00:13:37,520 Speaker 4: a weak China property story. And I think that's what 235 00:13:37,679 --> 00:13:41,160 Speaker 4: has really changed in the last let's say six to 236 00:13:41,200 --> 00:13:42,200 Speaker 4: eighteen months. 237 00:13:42,760 --> 00:13:46,400 Speaker 2: Let's talk more about the long term supply outlooks. So 238 00:13:46,480 --> 00:13:48,960 Speaker 2: the basics, Yes, it takes a really long time to 239 00:13:49,080 --> 00:13:51,640 Speaker 2: get a new copper mind online. Maybe it takes even 240 00:13:51,720 --> 00:13:54,840 Speaker 2: longer than in the past due to local opposition and 241 00:13:54,920 --> 00:13:58,960 Speaker 2: concerns about the environmental impact. What's happened in terms of 242 00:13:59,120 --> 00:14:03,240 Speaker 2: planned new minds over the last three years. Are there 243 00:14:03,400 --> 00:14:06,400 Speaker 2: new projects that are breaking ground or at least pencils 244 00:14:06,440 --> 00:14:08,440 Speaker 2: down yet that we hadn't seen in twenty twenty one. 245 00:14:08,440 --> 00:14:09,840 Speaker 2: What's happening in the planning cycle. 246 00:14:10,320 --> 00:14:12,840 Speaker 4: You don't have to look any further than the Anglo 247 00:14:12,960 --> 00:14:18,199 Speaker 4: American bids BHP finds it cheaper to buy Anglo American 248 00:14:18,360 --> 00:14:21,800 Speaker 4: then putting a drill into the ground, And that's pretty 249 00:14:21,840 --> 00:14:24,240 Speaker 4: much been the case across the board, is that they're 250 00:14:24,280 --> 00:14:28,800 Speaker 4: finding ways to increase supply, particularly through MNA activity as 251 00:14:28,800 --> 00:14:32,480 Speaker 4: opposed to having to do it through organic let's call 252 00:14:32,520 --> 00:14:35,600 Speaker 4: it green field investment. When we look at, you know, 253 00:14:35,640 --> 00:14:38,760 Speaker 4: the commodity supercycle in the two thousands, how did it 254 00:14:38,800 --> 00:14:42,680 Speaker 4: start off? Started off with the creation of BHP REO. 255 00:14:43,160 --> 00:14:46,480 Speaker 4: You know, then you had exceon Mobile, VP Shell, all 256 00:14:46,480 --> 00:14:50,920 Speaker 4: the super majors were all created, both in metals and 257 00:14:51,080 --> 00:14:53,560 Speaker 4: energy at the beginning of that supercycle because it was 258 00:14:53,680 --> 00:14:57,120 Speaker 4: easier to consolidate to grow your supply than it was 259 00:14:57,160 --> 00:15:00,080 Speaker 4: to do it through green field investment. And so well, 260 00:15:00,320 --> 00:15:02,920 Speaker 4: because we observe that going on, it tells you we're 261 00:15:02,960 --> 00:15:05,160 Speaker 4: not at the point right now where people are willing 262 00:15:05,200 --> 00:15:08,280 Speaker 4: to make greenfield investments because they can buy other companies 263 00:15:08,320 --> 00:15:11,320 Speaker 4: more cheaply, which means prices got to go higher and 264 00:15:11,320 --> 00:15:13,960 Speaker 4: the conviction has got to be greater before you start 265 00:15:13,960 --> 00:15:16,840 Speaker 4: to see that substantial rise in greenfield investment. 266 00:15:17,120 --> 00:15:19,160 Speaker 3: So one thing I wanted to ask is what is 267 00:15:19,200 --> 00:15:23,240 Speaker 3: the impact of price on investment here. This is a 268 00:15:23,400 --> 00:15:25,960 Speaker 3: kind of a weird question, but like, does it actually 269 00:15:26,040 --> 00:15:29,000 Speaker 3: make much of a difference if copper prices start rallying? 270 00:15:29,480 --> 00:15:32,640 Speaker 3: If we do see another record in the price per ton, 271 00:15:33,040 --> 00:15:36,480 Speaker 3: would you expect to see an investment response of some 272 00:15:36,680 --> 00:15:41,520 Speaker 3: sort eventually, Yeah, even if it's on a longer term timescale. 273 00:15:41,480 --> 00:15:44,320 Speaker 4: Yeah, eventually you should. We saw it in the two thousands. 274 00:15:44,440 --> 00:15:46,880 Speaker 4: Let's review what happened in the two thousands, because it 275 00:15:46,960 --> 00:15:50,520 Speaker 4: think is pretty instructive to right now, that supercycle lasted 276 00:15:50,520 --> 00:15:54,840 Speaker 4: twelve years from basically two to around thirteen or fourteen, 277 00:15:55,280 --> 00:15:59,640 Speaker 4: and the supercycle in the seventies basically lasted sixty eight 278 00:15:59,760 --> 00:16:03,400 Speaker 4: to eighty, again twelve years. Why the twelve years years 279 00:16:03,480 --> 00:16:08,720 Speaker 4: one through three are usually higher prices creates a confidence 280 00:16:08,880 --> 00:16:11,960 Speaker 4: that hey, this is real. We're three years into this 281 00:16:12,200 --> 00:16:15,920 Speaker 4: and the confidence is so so, you know, the diehards 282 00:16:15,960 --> 00:16:18,040 Speaker 4: that I talk to have a lot of confidence, which 283 00:16:18,080 --> 00:16:21,360 Speaker 4: means you probably need more higher prices for people become 284 00:16:21,480 --> 00:16:26,000 Speaker 4: convicted that it's actually for real. What creates the second 285 00:16:26,040 --> 00:16:30,040 Speaker 4: big uptick in prices because once these companies start to spend, 286 00:16:30,720 --> 00:16:33,560 Speaker 4: then you get cost inflation and that drives you up 287 00:16:33,600 --> 00:16:35,200 Speaker 4: to the next level. And if you look at what 288 00:16:35,320 --> 00:16:38,520 Speaker 4: happened with copper in the two thousands, we went from 289 00:16:38,600 --> 00:16:41,200 Speaker 4: let's say two thousand a ton to four thousand a 290 00:16:41,240 --> 00:16:44,400 Speaker 4: ton over that first three years, and then around six 291 00:16:44,480 --> 00:16:48,080 Speaker 4: throughh eight it exploded to eight thousand dollars a ton 292 00:16:48,120 --> 00:16:50,560 Speaker 4: because that's when they started to spend. But they had 293 00:16:50,640 --> 00:16:55,040 Speaker 4: to achieve that confidence that still is not apparent in 294 00:16:55,080 --> 00:16:58,400 Speaker 4: this market. And then let's say, you know, the final 295 00:16:58,480 --> 00:17:01,240 Speaker 4: five to six years is when you begin to deep 296 00:17:01,240 --> 00:17:04,640 Speaker 4: bottle neck the system and then the investment plays out 297 00:17:04,720 --> 00:17:07,639 Speaker 4: and you know, it takes another let's say seven years 298 00:17:07,680 --> 00:17:10,439 Speaker 4: and you get actual supply. So where are we in 299 00:17:10,480 --> 00:17:13,440 Speaker 4: that process? We're still in that first three years creating 300 00:17:13,520 --> 00:17:16,760 Speaker 4: conviction around Is this for real, our estmates? You need 301 00:17:16,800 --> 00:17:20,080 Speaker 4: to be above nine ten thousand dollars a done before 302 00:17:20,119 --> 00:17:23,360 Speaker 4: people really start to be confident that they can make 303 00:17:23,400 --> 00:17:25,680 Speaker 4: this type of investment. And I think the other thing 304 00:17:25,720 --> 00:17:28,680 Speaker 4: too is not only does their prices have to reach 305 00:17:28,800 --> 00:17:31,399 Speaker 4: those levels where the breake events begin to happen, but 306 00:17:31,440 --> 00:17:34,280 Speaker 4: they got to go above to create some type of 307 00:17:34,320 --> 00:17:37,000 Speaker 4: confidence that they have some type of cushion, which means 308 00:17:37,080 --> 00:17:39,840 Speaker 4: we like to see much higher prices before you start 309 00:17:39,840 --> 00:17:41,120 Speaker 4: to see that supply response. 310 00:17:42,119 --> 00:17:45,840 Speaker 2: I have a very odd ball question, but I've been 311 00:17:46,040 --> 00:17:48,280 Speaker 2: wanting to ask this question to someone who knows for 312 00:17:48,280 --> 00:17:51,200 Speaker 2: a long time. So very brief story. Sometimes they take 313 00:17:51,280 --> 00:17:53,600 Speaker 2: ubers to work. I haven't in a while, but I 314 00:17:53,680 --> 00:17:55,840 Speaker 2: used to sometimes take ubers to work, and when the 315 00:17:55,920 --> 00:17:57,840 Speaker 2: driver's seas I'm working for Bloomberg, they want to bring 316 00:17:57,920 --> 00:18:00,240 Speaker 2: up something finance, and usually it's like, what do you 317 00:18:00,280 --> 00:18:02,640 Speaker 2: think about like dogecoin or bitcoin or something like that. 318 00:18:02,680 --> 00:18:05,639 Speaker 2: But one time I had an Uber driver and he's like, 319 00:18:05,760 --> 00:18:07,720 Speaker 2: I'm really you know, you're talking about gold, he said, 320 00:18:07,720 --> 00:18:11,880 Speaker 2: I'm really bullish silver because I believe there's not enough 321 00:18:11,920 --> 00:18:15,320 Speaker 2: copper mining going on in the world, and silver is 322 00:18:15,359 --> 00:18:18,560 Speaker 2: often a byproduct of copper mining, and there's a lot 323 00:18:18,600 --> 00:18:21,440 Speaker 2: of silver content and some of this evy stuff, particularly 324 00:18:21,560 --> 00:18:24,320 Speaker 2: solar panels, he said, and therefore there's going to be 325 00:18:24,359 --> 00:18:26,159 Speaker 2: a shortage of silver. And I know this is like 326 00:18:26,160 --> 00:18:28,320 Speaker 2: a little diversion, but I just had to get this 327 00:18:28,400 --> 00:18:30,679 Speaker 2: off my head because we're here talking to Jeff Curry. 328 00:18:30,880 --> 00:18:33,040 Speaker 2: What do you think about my uber drivers thesis? 329 00:18:33,080 --> 00:18:35,600 Speaker 3: I like that you're asking questions on behalf of your. 330 00:18:35,600 --> 00:18:38,560 Speaker 2: Uber I'm yeah, and I still have his context. I 331 00:18:38,640 --> 00:18:40,760 Speaker 2: still have his context. So two years later, I'm finally 332 00:18:40,760 --> 00:18:42,880 Speaker 2: gotta get a chance to get back to him on this. 333 00:18:43,440 --> 00:18:46,160 Speaker 2: What do you think about my uber driver's silver thesis. 334 00:18:46,800 --> 00:18:51,360 Speaker 4: I definitely think there's legitimate arguments behind his solar thesis, 335 00:18:51,400 --> 00:18:53,359 Speaker 4: and you know, it's one of the arguments we put 336 00:18:53,400 --> 00:18:56,040 Speaker 4: forth for prices moving higher. But the one thing that 337 00:18:56,080 --> 00:18:59,320 Speaker 4: we watched, you know, particularly back in you know, it 338 00:18:59,359 --> 00:19:02,800 Speaker 4: was in March April of twenty twenty one when everybody 339 00:19:02,880 --> 00:19:05,840 Speaker 4: it was actually during that GameStop era when people were 340 00:19:05,840 --> 00:19:07,119 Speaker 4: they were going to move and they were going to 341 00:19:07,200 --> 00:19:10,760 Speaker 4: try to short squeeze silver. The problem with silver is 342 00:19:10,800 --> 00:19:14,040 Speaker 4: there's just too much of the stuff around. There's you know, 343 00:19:14,240 --> 00:19:18,520 Speaker 4: millennia of production is sitting above ground, like gold, but 344 00:19:18,760 --> 00:19:22,040 Speaker 4: unlike gold, it is not as rare, so it's more plentiful. 345 00:19:22,080 --> 00:19:24,520 Speaker 4: So I think, yeah, it will behave similar to what 346 00:19:24,640 --> 00:19:27,040 Speaker 4: he said, But I'm never going to be jumping on 347 00:19:27,080 --> 00:19:31,000 Speaker 4: the super bowlish bandwagon on silver just because of the 348 00:19:31,040 --> 00:19:33,520 Speaker 4: fact that there's just so much of it around the 349 00:19:33,560 --> 00:19:36,399 Speaker 4: world and it's not nearly as rare as something like gold. 350 00:19:36,720 --> 00:19:38,800 Speaker 3: Yeah, even I have a bunch of silver I think 351 00:19:38,840 --> 00:19:41,280 Speaker 3: we've talked about this first. For my dad keeps giving 352 00:19:41,320 --> 00:19:45,240 Speaker 3: me silver coins from his collection for my birthday and 353 00:19:45,320 --> 00:19:48,800 Speaker 3: for Christmas, and so I'm expanding this collection of silver 354 00:19:48,880 --> 00:19:51,320 Speaker 3: coins to the point where I think I could successfully 355 00:19:51,720 --> 00:19:55,040 Speaker 3: have one of those silver stacking channels on YouTube at 356 00:19:55,040 --> 00:19:57,520 Speaker 3: this point. That would be fun. Jeff, There's one other 357 00:19:57,560 --> 00:19:59,400 Speaker 3: thing I want to ask you, So you know we're 358 00:19:59,400 --> 00:20:04,159 Speaker 3: talking about the price of copper, the future's price, I 359 00:20:04,200 --> 00:20:08,280 Speaker 3: want to ask you about the copper concentrates market and 360 00:20:08,400 --> 00:20:10,840 Speaker 3: get into like a little bit of the discrepancy between 361 00:20:11,040 --> 00:20:16,360 Speaker 3: like maybe the financialized price versus the physical price. Can 362 00:20:16,359 --> 00:20:19,119 Speaker 3: you walk us through what's been happening there, because in 363 00:20:19,160 --> 00:20:23,000 Speaker 3: some respects like this is where the immediate shortage is 364 00:20:23,040 --> 00:20:26,040 Speaker 3: playing out, even if it hasn't been reflected up until 365 00:20:26,080 --> 00:20:28,280 Speaker 3: recently in the overall futures price. 366 00:20:29,040 --> 00:20:32,879 Speaker 4: Very good question, Tracy. You know, when we think about metals, 367 00:20:33,040 --> 00:20:36,639 Speaker 4: the or that comes out of the mind that typically 368 00:20:37,000 --> 00:20:40,240 Speaker 4: gets turned into concentrate and ship you know somewhere around 369 00:20:40,280 --> 00:20:43,720 Speaker 4: the world where it basically has to be smelted into 370 00:20:44,040 --> 00:20:47,280 Speaker 4: you know, a refined type of hopper that it can 371 00:20:47,359 --> 00:20:50,399 Speaker 4: be used and sent on into you know, markets like 372 00:20:50,480 --> 00:20:53,720 Speaker 4: wiring and so forth. But it's there where you saw 373 00:20:53,760 --> 00:20:56,280 Speaker 4: the very first signs of a shortage. It actually was 374 00:20:56,320 --> 00:21:01,720 Speaker 4: in sk in Korea, where there was not enough concentrate 375 00:21:01,840 --> 00:21:04,960 Speaker 4: to go around to be able to smell into something 376 00:21:05,000 --> 00:21:08,520 Speaker 4: that was more useful. And so it's called the you know, 377 00:21:08,560 --> 00:21:12,800 Speaker 4: the TC charges, the concentrate charges, And right now everybody's oh, 378 00:21:12,800 --> 00:21:16,640 Speaker 4: they're negative, which is telling you the shortage is at 379 00:21:16,760 --> 00:21:21,639 Speaker 4: the mine and that concentrate not at the inn used consumer. 380 00:21:21,680 --> 00:21:24,040 Speaker 4: Yet it's gonna work its way down there. By the way, 381 00:21:24,080 --> 00:21:26,760 Speaker 4: it's the same thing happens in refining margins. When you 382 00:21:26,800 --> 00:21:28,879 Speaker 4: have a real big shortage in oil, it crushes the 383 00:21:28,920 --> 00:21:31,600 Speaker 4: refining margins. And so the fact that you have zero 384 00:21:31,680 --> 00:21:35,959 Speaker 4: or negative TC charges right now is an indication that 385 00:21:36,000 --> 00:21:39,439 Speaker 4: you have shortages at the mine, which says eventually this 386 00:21:39,520 --> 00:21:42,120 Speaker 4: is going to work further downstream, which as we look 387 00:21:42,160 --> 00:21:44,720 Speaker 4: out further, particularly towards the end of the year, we'd 388 00:21:44,760 --> 00:21:48,520 Speaker 4: expect those shortages to work further downstream, more towards this 389 00:21:48,560 --> 00:21:51,920 Speaker 4: consumer in a way from the mind, but absolutely, I 390 00:21:51,920 --> 00:21:54,040 Speaker 4: think that's a critical And it was about two or 391 00:21:54,040 --> 00:21:55,919 Speaker 4: three weeks ago. One morning I was looking at the 392 00:21:55,960 --> 00:21:59,879 Speaker 4: Koreans and go, wow, here we are finally physical shortages 393 00:22:00,240 --> 00:22:03,199 Speaker 4: happening at the concentrate level, which is telling you just 394 00:22:03,200 --> 00:22:04,960 Speaker 4: a matter of time before we see it at the 395 00:22:04,960 --> 00:22:06,160 Speaker 4: inn us consumer level. 396 00:22:06,560 --> 00:22:09,080 Speaker 3: So, Jeff, I just want to nail you down on 397 00:22:09,280 --> 00:22:12,000 Speaker 3: the price target for copper and the timeframe just so 398 00:22:12,040 --> 00:22:15,399 Speaker 3: that you know when we have you back on in Yeah, 399 00:22:15,440 --> 00:22:18,159 Speaker 3: in a year or two. We know exactly what our 400 00:22:18,200 --> 00:22:21,000 Speaker 3: priors were and what our expectations were for the move. 401 00:22:21,080 --> 00:22:24,479 Speaker 3: But where do you see copper going from here? Where's 402 00:22:24,520 --> 00:22:27,119 Speaker 3: the sort of upside risk? And what timeframe are we 403 00:22:27,160 --> 00:22:28,120 Speaker 3: talking about? 404 00:22:28,440 --> 00:22:31,240 Speaker 4: Yeah, our view over you know, call it a two 405 00:22:31,280 --> 00:22:33,919 Speaker 4: to three year horizon is it's got to reach somewhere 406 00:22:33,960 --> 00:22:36,960 Speaker 4: around fifteen thousand dollars a ton. Where do we get 407 00:22:37,000 --> 00:22:40,000 Speaker 4: the fifteen thousand dollars a ton is you go back 408 00:22:40,040 --> 00:22:43,000 Speaker 4: to nineteen sixty eight, the beginning of that super cycle, 409 00:22:43,080 --> 00:22:45,040 Speaker 4: and it was a big housing boom driven by the 410 00:22:45,080 --> 00:22:49,399 Speaker 4: War on Poverty through the Great Society. We saw copper 411 00:22:49,440 --> 00:22:52,520 Speaker 4: prices reached the equivalent of fifteen thousand dollars a ton. 412 00:22:53,000 --> 00:22:56,520 Speaker 4: We know that demand destruction occurred. Now, we'd never had 413 00:22:56,520 --> 00:23:00,880 Speaker 4: another opportunity other than that time period to observe demand destruction, 414 00:23:01,240 --> 00:23:04,359 Speaker 4: because that's basically, you know, at the inn us consumer level, 415 00:23:04,400 --> 00:23:08,919 Speaker 4: you're out of supply, like that Korean concentrate situation, you 416 00:23:09,040 --> 00:23:11,960 Speaker 4: ran out of supply, you're short, and now you have 417 00:23:12,040 --> 00:23:14,920 Speaker 4: to get the in US consumer to ration their demand out. 418 00:23:15,240 --> 00:23:17,919 Speaker 4: That's to find out how high these commodity prices can go. 419 00:23:18,400 --> 00:23:21,840 Speaker 4: And at fifteen thousand dollars, a Ton was saying, Okay, 420 00:23:22,040 --> 00:23:26,200 Speaker 4: the only time in history we've observed actual physical demand 421 00:23:26,240 --> 00:23:30,000 Speaker 4: destruction or rationing of physical supplies was that time period. 422 00:23:30,119 --> 00:23:32,240 Speaker 4: Whether or not that holds in the current environment, we'll 423 00:23:32,280 --> 00:23:35,360 Speaker 4: find out. But that's our best guess of where prices 424 00:23:35,400 --> 00:23:38,040 Speaker 4: could go because we've seen it before. How long does 425 00:23:38,080 --> 00:23:40,359 Speaker 4: it take to get to that dynamic? You know, I 426 00:23:40,359 --> 00:23:42,480 Speaker 4: thought we would have been to that dynamic by now. 427 00:23:42,640 --> 00:23:43,920 Speaker 4: I would tend to think of, you know, if we 428 00:23:44,400 --> 00:23:46,879 Speaker 4: meet back up in the next twelve to eighteen months, 429 00:23:47,000 --> 00:23:49,520 Speaker 4: there's a probability that where we're looking at prices in 430 00:23:49,520 --> 00:23:53,240 Speaker 4: that twelve, five hundred and fifteen thousand dollars range, because 431 00:23:53,240 --> 00:23:56,000 Speaker 4: if we know what's happening at the concentrate level, it's 432 00:23:56,119 --> 00:23:58,320 Speaker 4: just a matter of time before it starts to physically 433 00:23:58,359 --> 00:24:01,159 Speaker 4: happen at the inn us level and that's where places, 434 00:24:01,200 --> 00:24:03,880 Speaker 4: you know, the markets like the LM and the comacs 435 00:24:03,880 --> 00:24:05,679 Speaker 4: are pricing it and that's where you would see that 436 00:24:05,720 --> 00:24:06,200 Speaker 4: price bike. 437 00:24:22,119 --> 00:24:24,240 Speaker 2: Last time we talked to you, you were at Goldman. 438 00:24:24,320 --> 00:24:27,200 Speaker 2: Now you're at Carlow. What is the Energy Pathways group 439 00:24:27,200 --> 00:24:28,679 Speaker 2: in Carlo? What are you up to these days? 440 00:24:28,960 --> 00:24:33,360 Speaker 4: Well, the whole idea is to focus on the pathways 441 00:24:33,440 --> 00:24:37,439 Speaker 4: between the brown in the green. You know, so far 442 00:24:37,640 --> 00:24:40,720 Speaker 4: this transition has been you know, to use it lack 443 00:24:40,760 --> 00:24:44,520 Speaker 4: of a better word, chaotic, and it's primarily been focused 444 00:24:44,560 --> 00:24:47,520 Speaker 4: on the green. But you need to be able to 445 00:24:47,560 --> 00:24:51,600 Speaker 4: think about this transition and manage it. You need to 446 00:24:51,640 --> 00:24:54,919 Speaker 4: think about moving from the brown to the green. And 447 00:24:54,960 --> 00:24:58,680 Speaker 4: we talk about pathways. It's those pathways between the brown 448 00:24:58,680 --> 00:25:00,280 Speaker 4: and the green. And I have a saying I like 449 00:25:00,320 --> 00:25:04,040 Speaker 4: to say it's critical here is if you don't own 450 00:25:04,119 --> 00:25:07,840 Speaker 4: the emissions, you cannot control the emissions. So you have 451 00:25:08,240 --> 00:25:11,200 Speaker 4: investors out there, you know that they don't have emissions 452 00:25:11,200 --> 00:25:14,200 Speaker 4: in their portfolio, but it doesn't mean emissions are going down. 453 00:25:14,240 --> 00:25:15,920 Speaker 4: In fact, what do they do with the last Every 454 00:25:16,000 --> 00:25:18,800 Speaker 4: year since started this process, they've gone up. They haven't 455 00:25:18,840 --> 00:25:20,800 Speaker 4: gone down, and the only way you're going to make 456 00:25:20,840 --> 00:25:23,680 Speaker 4: them go down is start concentrating. Instead of thinking about 457 00:25:23,680 --> 00:25:26,840 Speaker 4: net zero, think about what happens this year versus next year, 458 00:25:26,840 --> 00:25:29,240 Speaker 4: and are we going to get them down, particularly inside 459 00:25:29,320 --> 00:25:32,600 Speaker 4: of the portfolio, because by taking them completely out of 460 00:25:32,640 --> 00:25:35,640 Speaker 4: the portfolio, there's no way you can control or say 461 00:25:35,640 --> 00:25:38,000 Speaker 4: anything that they actually went down. And so when we 462 00:25:38,080 --> 00:25:41,360 Speaker 4: think about the dynamic here is we don't know the pathway. 463 00:25:41,880 --> 00:25:43,959 Speaker 4: I like to point out in the War on Acid 464 00:25:43,960 --> 00:25:48,560 Speaker 4: reign during the nineteen seventies and eighties, when we took 465 00:25:48,600 --> 00:25:52,000 Speaker 4: the sulfur and the aerosols out of the atmosphere, it 466 00:25:52,080 --> 00:25:56,199 Speaker 4: was a smashing success. They remain technologically agnostic, and I 467 00:25:56,280 --> 00:25:58,720 Speaker 4: like to point out, who would have ever think that 468 00:25:58,800 --> 00:26:01,680 Speaker 4: if you put platinum platium in your tail pipe you're 469 00:26:01,720 --> 00:26:04,880 Speaker 4: going to get rid of these aerosols. But it took 470 00:26:05,320 --> 00:26:09,240 Speaker 4: trial and error trying those different pathways until you found 471 00:26:09,280 --> 00:26:12,440 Speaker 4: the one that actually worked. And so we're using the 472 00:26:12,560 --> 00:26:16,040 Speaker 4: term pathways here is to really denote this whole idea 473 00:26:16,200 --> 00:26:18,760 Speaker 4: that we don't know what the answer is. We're going 474 00:26:18,800 --> 00:26:20,560 Speaker 4: to be trying these different ones. We may have the 475 00:26:20,600 --> 00:26:22,679 Speaker 4: one we need right now, we may own it, But 476 00:26:23,040 --> 00:26:25,800 Speaker 4: finding that exact pathways is really the goal here, and 477 00:26:25,840 --> 00:26:29,720 Speaker 4: looking at that connection between the brown and grain is 478 00:26:29,760 --> 00:26:33,320 Speaker 4: going to be central to creating a managed transition that 479 00:26:33,440 --> 00:26:35,440 Speaker 4: is less chaotic than what we've already seen. 480 00:26:36,320 --> 00:26:39,080 Speaker 3: So we've obviously been talking a lot about that energy 481 00:26:39,160 --> 00:26:44,080 Speaker 3: transition and the impact of price on investment and maybe 482 00:26:44,240 --> 00:26:47,639 Speaker 3: the transition itself. We would be very remiss if we 483 00:26:47,720 --> 00:26:50,520 Speaker 3: didn't ask you about what's going on with oil prices 484 00:26:50,760 --> 00:26:53,200 Speaker 3: at the moment, and I think the big story for 485 00:26:53,440 --> 00:26:56,880 Speaker 3: everyone in the market is probably that non OPEC supply 486 00:26:57,080 --> 00:26:59,760 Speaker 3: that has really ramped up a lot quicker than a 487 00:26:59,760 --> 00:27:04,000 Speaker 3: lot of people expected. How much has that changed the 488 00:27:04,040 --> 00:27:07,680 Speaker 3: way you view and analyze the oil market. How big 489 00:27:07,680 --> 00:27:08,880 Speaker 3: of a difference has that made. 490 00:27:09,840 --> 00:27:12,560 Speaker 4: Let's start with the big one that everybody's focusing on US. 491 00:27:12,920 --> 00:27:16,960 Speaker 4: US increased above expectations four hundred thousand barrels per day 492 00:27:17,080 --> 00:27:19,959 Speaker 4: last year. It was a lot more. Basically, expectations at 493 00:27:19,960 --> 00:27:21,800 Speaker 4: the end of last year were for five hundred thousand 494 00:27:21,800 --> 00:27:23,760 Speaker 4: barrel per day growth and you got something close to 495 00:27:23,840 --> 00:27:26,439 Speaker 4: nine hundred. By the way of that, two hundred was 496 00:27:26,480 --> 00:27:30,320 Speaker 4: in Golf of Mexico, one hundred in Permian, one hundred 497 00:27:30,440 --> 00:27:32,920 Speaker 4: in Bachan. You're not repeating the Bacan and the Golf 498 00:27:32,960 --> 00:27:35,200 Speaker 4: of Mexico, which means the only ones that you can 499 00:27:35,240 --> 00:27:38,200 Speaker 4: repeat are really the permium. Now, let's take that aside, 500 00:27:38,320 --> 00:27:40,480 Speaker 4: and then let's put this in the context of the 501 00:27:40,480 --> 00:27:43,199 Speaker 4: supply increases that you saw out of i Rant. You know, 502 00:27:43,240 --> 00:27:46,040 Speaker 4: it was eight hundred and fifty thousand barrels per day. 503 00:27:46,400 --> 00:27:48,919 Speaker 4: Out of Venezuela. It was one hundred and fifty thousand 504 00:27:48,920 --> 00:27:52,080 Speaker 4: barrels per day, so you're well over. You're talking about 505 00:27:52,080 --> 00:27:55,320 Speaker 4: a surprise. Last year, the surprise out of that sanctioned 506 00:27:55,359 --> 00:27:58,520 Speaker 4: oil was well in excess of a million barrels per day, 507 00:27:58,560 --> 00:28:01,359 Speaker 4: more than two x what you got out of the US. Also, 508 00:28:01,440 --> 00:28:05,199 Speaker 4: remember natural gas prices were extraordinarily high last year. That 509 00:28:05,320 --> 00:28:09,160 Speaker 4: reinforced even more US production. So you know, I mean, 510 00:28:09,200 --> 00:28:11,760 Speaker 4: we'll see what's happening this year. So far, you know, 511 00:28:11,840 --> 00:28:14,359 Speaker 4: the surprise is coming out of the US or nothing 512 00:28:14,440 --> 00:28:16,600 Speaker 4: like what they were last year. And then when you 513 00:28:16,640 --> 00:28:19,920 Speaker 4: look at places like Mexico, if anything, many of those 514 00:28:19,960 --> 00:28:22,840 Speaker 4: places are struggling to bring on their production. So yes, 515 00:28:22,920 --> 00:28:24,520 Speaker 4: it was a factor of the last year. Is it 516 00:28:24,640 --> 00:28:28,000 Speaker 4: something that we need to be conscious of? Yes, is 517 00:28:28,040 --> 00:28:31,200 Speaker 4: it something I'm focused on, Yes, But is it derailed 518 00:28:31,200 --> 00:28:34,359 Speaker 4: the story? I would argue that the increases in the 519 00:28:34,400 --> 00:28:37,720 Speaker 4: sanctioned oil derailed the story far larger than what those 520 00:28:37,960 --> 00:28:40,760 Speaker 4: other surprises that you're referred to did. And let's think 521 00:28:40,760 --> 00:28:44,640 Speaker 4: about the cost of allowing that sanctioned oil to come online. 522 00:28:44,680 --> 00:28:47,480 Speaker 4: You know, it had an impact on the Iranian hoodies, 523 00:28:47,800 --> 00:28:49,560 Speaker 4: you know. In fact, I thought the one that actually 524 00:28:49,600 --> 00:28:53,160 Speaker 4: surprised me throughout this whole process was a British flagship 525 00:28:53,200 --> 00:28:57,240 Speaker 4: carrying Russian material owned by Swiss trapp Era shot by 526 00:28:57,280 --> 00:29:01,160 Speaker 4: an Iranian backed hoodie. If that's not, you know, emblematic 527 00:29:01,240 --> 00:29:03,120 Speaker 4: of the problem, I don't know what it is. And 528 00:29:03,120 --> 00:29:08,320 Speaker 4: then Venezuela similarly, you know, invading. They clearly focused on 529 00:29:08,360 --> 00:29:11,520 Speaker 4: this because they've made the efforts to cut back on 530 00:29:11,640 --> 00:29:14,240 Speaker 4: those you know, saying sinned oil. But it's not unlikely 531 00:29:14,280 --> 00:29:16,920 Speaker 4: to take effect until you go after the elections. But 532 00:29:16,960 --> 00:29:19,440 Speaker 4: the bottom line, that was a lot of supply hitting 533 00:29:19,480 --> 00:29:22,960 Speaker 4: the market at a time when demand was relatively weak 534 00:29:23,000 --> 00:29:25,040 Speaker 4: as we're going through what we like to call is 535 00:29:25,040 --> 00:29:28,080 Speaker 4: a mid cycle pause in the economy, meaning that if 536 00:29:28,120 --> 00:29:30,200 Speaker 4: you look at that period in twenty twenty two and 537 00:29:30,200 --> 00:29:33,000 Speaker 4: twenty twenty three. It was your classic mid cycle pause, 538 00:29:33,160 --> 00:29:36,640 Speaker 4: huge run up in rates, energy prices. The system had 539 00:29:36,680 --> 00:29:39,880 Speaker 4: to adjust to the higher rates, higher energy prices. It 540 00:29:40,040 --> 00:29:42,240 Speaker 4: slows down, and then it begins the second leg of 541 00:29:42,320 --> 00:29:44,600 Speaker 4: the business cycle, which is where we are right now. 542 00:29:44,640 --> 00:29:47,160 Speaker 4: By the way, never in the history of the post 543 00:29:47,160 --> 00:29:49,520 Speaker 4: war era, as you go into that second half of 544 00:29:49,520 --> 00:29:52,120 Speaker 4: the business cycle do commodities not act as the best 545 00:29:52,120 --> 00:29:55,680 Speaker 4: performing asset class. And there is very little history that 546 00:29:55,840 --> 00:29:58,360 Speaker 4: OPEC ever tames that price bike as you go in. 547 00:29:58,400 --> 00:30:01,080 Speaker 4: They can't bring it on fast enough. So that's why 548 00:30:01,320 --> 00:30:03,120 Speaker 4: it's not as bullish as copper. And I'm not going 549 00:30:03,160 --> 00:30:05,440 Speaker 4: to try to say it's as bullish as copper, but 550 00:30:05,560 --> 00:30:08,240 Speaker 4: it is part of the overall story here, and you know, 551 00:30:08,280 --> 00:30:10,200 Speaker 4: we never thought it was going to be as bullish 552 00:30:10,200 --> 00:30:13,080 Speaker 4: as the base complex. But also when you look at 553 00:30:13,080 --> 00:30:18,760 Speaker 4: these commodities supercycle, it's rare, whether if it's grain, softs, oil, base, precious, 554 00:30:19,120 --> 00:30:21,600 Speaker 4: that these markets can get that far away from one another, 555 00:30:21,680 --> 00:30:23,800 Speaker 4: because there's ultimately arbitrages across them. 556 00:30:24,440 --> 00:30:28,480 Speaker 2: What about on the demand side. You know, obviously evs 557 00:30:28,520 --> 00:30:32,960 Speaker 2: in theory over time should cut into oil demand, but 558 00:30:33,160 --> 00:30:35,600 Speaker 2: in practice and you know it's hard to see it 559 00:30:35,680 --> 00:30:38,400 Speaker 2: showing up just yet. And you know there's still tons 560 00:30:38,400 --> 00:30:40,760 Speaker 2: and tons of ice cars on the road. What is 561 00:30:40,840 --> 00:30:43,720 Speaker 2: this sort of I don't know, medium term prospect for 562 00:30:43,920 --> 00:30:47,880 Speaker 2: actually reaching peak oil demand or bending that demand curved down? 563 00:30:48,440 --> 00:30:50,959 Speaker 4: Right now? We have used a lot of carrots to 564 00:30:51,000 --> 00:30:53,320 Speaker 4: try to solve this problem, you know, if it's the 565 00:30:53,360 --> 00:30:57,160 Speaker 4: IRA repower EU subsidies. When I say carrots, there's no 566 00:30:57,280 --> 00:31:00,520 Speaker 4: sticks in this. Yeah, you really want to get oil 567 00:31:00,600 --> 00:31:02,800 Speaker 4: demand down? And how did we always do these other 568 00:31:02,880 --> 00:31:05,760 Speaker 4: transitions or when we had to, you know, environmental issues, 569 00:31:05,880 --> 00:31:08,560 Speaker 4: we use sticks, but a tax on sulfur as we 570 00:31:08,600 --> 00:31:11,240 Speaker 4: have in the past, and it's not a closed loop. 571 00:31:11,600 --> 00:31:14,520 Speaker 4: And if we're really serious about getting the demand down, 572 00:31:14,720 --> 00:31:17,840 Speaker 4: we would create impediments to the demand growing. I don't 573 00:31:17,840 --> 00:31:19,760 Speaker 4: want to get into the politics of that because they 574 00:31:20,040 --> 00:31:24,320 Speaker 4: become relatively sticky. But I think the key point here 575 00:31:24,560 --> 00:31:28,640 Speaker 4: is we have the tools at our disposal to get 576 00:31:28,680 --> 00:31:32,360 Speaker 4: that demand down, but nowhere in the world is there 577 00:31:32,400 --> 00:31:35,000 Speaker 4: the political will. And I think where I was really 578 00:31:35,040 --> 00:31:37,880 Speaker 4: wrong on all of this is if we go back, 579 00:31:38,120 --> 00:31:43,240 Speaker 4: let's say, twelve eighteen months ago, I fully overestimated the 580 00:31:43,280 --> 00:31:47,280 Speaker 4: willingness of Western governments to pay for their politics, whether 581 00:31:47,280 --> 00:31:50,840 Speaker 4: if it was through sanctions, environmental policy. And I don't 582 00:31:50,840 --> 00:31:52,840 Speaker 4: care which country wantn't you use? You can all come 583 00:31:52,920 --> 00:31:55,640 Speaker 4: up where they loosened it. Yeah, I live here in 584 00:31:55,640 --> 00:31:57,880 Speaker 4: the UK, and you know there's good examples there where 585 00:31:58,040 --> 00:32:00,240 Speaker 4: they loosened it. But I think the key point point 586 00:32:00,280 --> 00:32:04,080 Speaker 4: here is that when the going got tough and the 587 00:32:04,120 --> 00:32:08,640 Speaker 4: cost of decarbonization became very apparent and very high, that 588 00:32:08,720 --> 00:32:12,680 Speaker 4: political will didn't carry through. And if we're serious about 589 00:32:12,720 --> 00:32:15,440 Speaker 4: getting that demand down, which I firmly believe we should be. 590 00:32:15,680 --> 00:32:17,680 Speaker 4: And by the way, I'm not going to demean the 591 00:32:17,720 --> 00:32:21,520 Speaker 4: politics at all whatsoever here because I know they're really difficult, 592 00:32:21,840 --> 00:32:24,120 Speaker 4: but that needs to be front and center before we're 593 00:32:24,120 --> 00:32:27,600 Speaker 4: going to start to see a significant decrease in overall demand. 594 00:32:27,840 --> 00:32:30,000 Speaker 4: And part of the you know, the reasons is people 595 00:32:30,240 --> 00:32:31,720 Speaker 4: I know somebody who I'm not going to make it 596 00:32:31,760 --> 00:32:34,400 Speaker 4: the name. They have one of the plug in hybrids. 597 00:32:34,400 --> 00:32:36,800 Speaker 4: They don't ever plug them in, and that's god has 598 00:32:36,880 --> 00:32:38,680 Speaker 4: a very common problem. But if you want people to 599 00:32:38,720 --> 00:32:41,400 Speaker 4: plug them in, make it expensive for them not to 600 00:32:41,400 --> 00:32:43,960 Speaker 4: plug it in, then they'll plug it in. So I 601 00:32:44,040 --> 00:32:46,200 Speaker 4: think we got a ways to go. But I think 602 00:32:46,280 --> 00:32:48,880 Speaker 4: the key here is, you know, I actually point this 603 00:32:48,920 --> 00:32:51,080 Speaker 4: out historically. I think I made this point when we 604 00:32:51,120 --> 00:32:55,560 Speaker 4: were on last time. Is that historically when you got 605 00:32:55,560 --> 00:32:59,000 Speaker 4: to get a tipping point where you actually see policy 606 00:32:59,120 --> 00:33:02,360 Speaker 4: really get serious about the problem. And when we think 607 00:33:02,400 --> 00:33:04,400 Speaker 4: about the War on Acid Rain, it was the lake 608 00:33:04,440 --> 00:33:08,120 Speaker 4: Erie effect nineteen sixty eight, lake Erie caught on fire. 609 00:33:08,520 --> 00:33:11,400 Speaker 4: Richard Nixon had to respond. He created the Clean Air 610 00:33:11,440 --> 00:33:14,800 Speaker 4: Act Amendment, the EPA. We went to town and we 611 00:33:14,880 --> 00:33:17,840 Speaker 4: solved the problem. We used tools at our disposal which 612 00:33:17,840 --> 00:33:19,760 Speaker 4: we've all learned in econ one on one, What do 613 00:33:19,800 --> 00:33:22,440 Speaker 4: you do with the negative externality? You tax it, so 614 00:33:22,520 --> 00:33:24,640 Speaker 4: we know what to do. We just got to get 615 00:33:24,680 --> 00:33:26,800 Speaker 4: to the point where the political will is there to 616 00:33:26,840 --> 00:33:27,959 Speaker 4: do what we know how to do. 617 00:33:28,360 --> 00:33:30,440 Speaker 3: Jeff, I want to go back to what you were 618 00:33:30,480 --> 00:33:33,440 Speaker 3: talking about with petro dollars and the idea of this 619 00:33:33,600 --> 00:33:36,480 Speaker 3: being a sort of key difference in the current commodities 620 00:33:36,560 --> 00:33:40,480 Speaker 3: rally versus commodities rallies in history, where you know the 621 00:33:40,520 --> 00:33:43,680 Speaker 3: price of oil would go up and then that additional 622 00:33:43,720 --> 00:33:46,920 Speaker 3: cost would get recycled into US assets like treasuries, and 623 00:33:46,920 --> 00:33:48,800 Speaker 3: that would end up having an impact on the dollar, 624 00:33:48,840 --> 00:33:51,520 Speaker 3: and you would get that sort of self reinforcing cycle. 625 00:33:52,040 --> 00:33:54,320 Speaker 3: But you know, a lot of commentators tend to be 626 00:33:54,400 --> 00:33:58,240 Speaker 3: kind of cynical on the idea of dollar diversification. But 627 00:33:58,280 --> 00:34:01,160 Speaker 3: it sounds like you think that the that's one of 628 00:34:01,200 --> 00:34:03,719 Speaker 3: the things that's happening here, this idea that there are 629 00:34:03,800 --> 00:34:06,479 Speaker 3: countries out there who are getting together and saying that 630 00:34:06,520 --> 00:34:09,719 Speaker 3: we want to trade in our own currencies and diversify 631 00:34:09,840 --> 00:34:12,720 Speaker 3: away from the dollar. How do you see that playing out? 632 00:34:12,960 --> 00:34:15,160 Speaker 4: I think it's going to become more and more apparent 633 00:34:15,280 --> 00:34:18,600 Speaker 4: because owning those dollars. So let's take we know Russia 634 00:34:18,600 --> 00:34:20,680 Speaker 4: and India do this with they trade oil in I 635 00:34:20,920 --> 00:34:24,480 Speaker 4: and R and so anything that's left over, they're the 636 00:34:24,520 --> 00:34:27,120 Speaker 4: ones who can settle this up in gold. And by 637 00:34:27,160 --> 00:34:30,799 Speaker 4: the way, Western governments are very careful in maintaining the 638 00:34:30,840 --> 00:34:34,840 Speaker 4: integrity of the Russian frozen assets, the four hundred billion, 639 00:34:35,040 --> 00:34:37,719 Speaker 4: because they don't want to create that concern. But I 640 00:34:37,719 --> 00:34:40,760 Speaker 4: think the damage has been done because you don't see, 641 00:34:40,960 --> 00:34:44,239 Speaker 4: you know, these countries are not trading in dollars anymore 642 00:34:44,520 --> 00:34:46,399 Speaker 4: because of fear of what are they going to do 643 00:34:46,440 --> 00:34:48,560 Speaker 4: with these dollars? And you don't see the Chinese, who 644 00:34:48,640 --> 00:34:52,239 Speaker 4: actually still get substantial dollars lining up to buy US 645 00:34:52,360 --> 00:34:55,000 Speaker 4: treasuries anymore. So again I don't want to get in 646 00:34:55,080 --> 00:34:58,319 Speaker 4: the politics of this, but the question is, have we 647 00:34:58,440 --> 00:35:00,759 Speaker 4: passed that point of no retur are we going to 648 00:35:00,800 --> 00:35:04,360 Speaker 4: see that recycling play out again? By the way, I 649 00:35:04,360 --> 00:35:06,439 Speaker 4: don't think you need it to be bullish commodities, because 650 00:35:06,440 --> 00:35:08,800 Speaker 4: what if they start taking those dollars in those rupees 651 00:35:08,840 --> 00:35:11,560 Speaker 4: and everything else and just buying raw commodities with them, 652 00:35:11,960 --> 00:35:13,919 Speaker 4: which is what they're doing with gold. We know they're 653 00:35:13,920 --> 00:35:15,919 Speaker 4: doing it with gold. You know what if they start 654 00:35:15,960 --> 00:35:19,680 Speaker 4: doing it with copper oil and other commodities and building 655 00:35:19,719 --> 00:35:22,480 Speaker 4: strategic dog piles or something like that, it starts to 656 00:35:22,480 --> 00:35:25,000 Speaker 4: get pretty bullish again. But it's a very different dynamic 657 00:35:25,360 --> 00:35:28,239 Speaker 4: than what we've seen in the past. And I would say, 658 00:35:28,280 --> 00:35:30,520 Speaker 4: if you asked me really, what I got wrong was 659 00:35:30,920 --> 00:35:32,879 Speaker 4: I don't know why I thought we would keep doing 660 00:35:32,920 --> 00:35:36,680 Speaker 4: that dollar recycling dynamic be given everything that's happened. But 661 00:35:36,960 --> 00:35:39,680 Speaker 4: that's one point where I would say that caught me 662 00:35:39,800 --> 00:35:40,680 Speaker 4: really by surprise. 663 00:35:41,680 --> 00:35:44,759 Speaker 2: Jeff Curry of the Carlisle Group, so great to have 664 00:35:44,960 --> 00:35:46,759 Speaker 2: you back on. I always feel like it's such a 665 00:35:46,760 --> 00:35:50,800 Speaker 2: masterclass and how these commodity markets really work. Great chatting 666 00:35:50,840 --> 00:35:52,840 Speaker 2: with you, and we'll chat with you again in eighteen 667 00:35:52,880 --> 00:35:54,640 Speaker 2: months or two years, and we'll see how this is 668 00:35:54,680 --> 00:36:09,760 Speaker 2: all playing out perfect, Racy. I love talking to Jeff 669 00:36:09,800 --> 00:36:10,160 Speaker 2: so much. 670 00:36:10,600 --> 00:36:10,880 Speaker 4: I know. 671 00:36:11,080 --> 00:36:14,680 Speaker 3: I remember when he left Goldman he published that like 672 00:36:15,080 --> 00:36:19,120 Speaker 3: ten Things I Learned in Commodities Markets, and I encourage 673 00:36:19,120 --> 00:36:21,400 Speaker 3: everyone to go, like seek it out and read it 674 00:36:21,480 --> 00:36:25,239 Speaker 3: because even though he was very forthcoming in that conversation 675 00:36:25,400 --> 00:36:28,080 Speaker 3: just now about what he got wrong. But of course, 676 00:36:28,160 --> 00:36:31,719 Speaker 3: like anyone who is in this investment world analyzing things, 677 00:36:31,719 --> 00:36:33,160 Speaker 3: if you do it for long enough, you're going to 678 00:36:33,239 --> 00:36:35,680 Speaker 3: get some things wrong. And so it's really useful to 679 00:36:35,760 --> 00:36:38,000 Speaker 3: go back and look at his lessons and kind of 680 00:36:38,080 --> 00:36:41,360 Speaker 3: understand the framework for the way he thinks about things. 681 00:36:42,040 --> 00:36:44,400 Speaker 2: No, totally, he's just so clear, right, And you know 682 00:36:44,440 --> 00:36:47,120 Speaker 2: what I think is interesting because some of the stuff, 683 00:36:47,320 --> 00:36:50,360 Speaker 2: you know, is like rebuilding on themes we had talked about. 684 00:36:50,520 --> 00:36:52,440 Speaker 2: But one thing I thought was really interesting is some 685 00:36:52,520 --> 00:36:55,439 Speaker 2: of the easing that he described that took place over 686 00:36:55,480 --> 00:36:58,160 Speaker 2: the last couple of years, which is not like the 687 00:36:58,200 --> 00:37:00,799 Speaker 2: sort of conventional easing as we think about it, but 688 00:37:00,840 --> 00:37:04,239 Speaker 2: a little bit more stealth and so less sanctions enforcement, 689 00:37:04,560 --> 00:37:07,560 Speaker 2: a little bit environmental regulation, yeah, a little bit more 690 00:37:07,600 --> 00:37:11,319 Speaker 2: tolerance on environmental restrictions to minings and things like that, 691 00:37:11,520 --> 00:37:13,880 Speaker 2: things that don't show up. You know, no one comes 692 00:37:13,880 --> 00:37:16,160 Speaker 2: out and really makes an announcement, Oh we're going to 693 00:37:16,239 --> 00:37:17,680 Speaker 2: be lax on sanctioning. 694 00:37:17,719 --> 00:37:18,279 Speaker 4: You just hear it. 695 00:37:18,360 --> 00:37:20,239 Speaker 2: People like sort of deduce it from the data. Oh 696 00:37:20,280 --> 00:37:22,880 Speaker 2: there must be this Ornian oil getting out or whatever 697 00:37:22,920 --> 00:37:24,839 Speaker 2: it is. Or no one really comes out and says, oh, 698 00:37:24,880 --> 00:37:28,399 Speaker 2: we don't really care about the environment anymore, and we're 699 00:37:28,480 --> 00:37:30,719 Speaker 2: going to drop all our rules. You know, again, you 700 00:37:30,800 --> 00:37:33,359 Speaker 2: sort of deduce it from like what activity is going on. 701 00:37:33,560 --> 00:37:35,320 Speaker 2: I thought that was a really interesting point. 702 00:37:35,200 --> 00:37:37,400 Speaker 3: You know, I was thinking the exact same thing. So 703 00:37:37,760 --> 00:37:39,960 Speaker 3: I asked him about what's sort of different in the 704 00:37:39,960 --> 00:37:43,960 Speaker 3: oil market right now and US oil production and non 705 00:37:44,000 --> 00:37:46,760 Speaker 3: OPEC production, because that tends to get a lot of attention, 706 00:37:46,840 --> 00:37:49,200 Speaker 3: It gets a lot of headlines. So the spr release 707 00:37:49,320 --> 00:37:52,439 Speaker 3: and the Biden administration maybe has a little bit of 708 00:37:52,560 --> 00:37:56,279 Speaker 3: an unusual relationship with oil drilling at the moment. But 709 00:37:56,400 --> 00:37:58,880 Speaker 3: like we do see those headlines that the US is 710 00:37:58,960 --> 00:38:02,440 Speaker 3: making a difference in world oil markets. But then to 711 00:38:02,520 --> 00:38:05,239 Speaker 3: Jeff's point, he was saying that he thinks actually the 712 00:38:05,320 --> 00:38:08,960 Speaker 3: lack's enforcement of the sanctions was a bigger factor in 713 00:38:09,080 --> 00:38:12,040 Speaker 3: all of this. But it's exactly right that, like we 714 00:38:12,120 --> 00:38:15,759 Speaker 3: don't talk about it as much because it's not out 715 00:38:15,800 --> 00:38:19,520 Speaker 3: in the open. You can't see those official statistics about 716 00:38:19,560 --> 00:38:22,480 Speaker 3: how much oil supply is getting out of Russia. And 717 00:38:22,600 --> 00:38:25,879 Speaker 3: same thing with environmental regulation as well. So I thought 718 00:38:25,880 --> 00:38:26,920 Speaker 3: that was a really good point. 719 00:38:27,320 --> 00:38:30,280 Speaker 2: His last point about the lack of sticks I thought 720 00:38:30,440 --> 00:38:34,120 Speaker 2: was particularly interesting too, And this idea of like, yeah, 721 00:38:34,280 --> 00:38:36,640 Speaker 2: carrots are easy, but if you actually like there is 722 00:38:36,760 --> 00:38:39,080 Speaker 2: not a lot of appetite to say, just like, you know, 723 00:38:39,280 --> 00:38:41,480 Speaker 2: raise the gasoline tax in the US, or is he 724 00:38:41,520 --> 00:38:43,640 Speaker 2: put raised the sulfur tax, Like these are things you 725 00:38:43,680 --> 00:38:47,200 Speaker 2: could do, people wouldn't like them, but you know, in 726 00:38:47,280 --> 00:38:49,960 Speaker 2: a world in which practically trade offs exist, it's like 727 00:38:50,000 --> 00:38:53,000 Speaker 2: how much political will is there to your point just now, 728 00:38:53,120 --> 00:38:55,640 Speaker 2: obviously we've talked about this a little bit before, but 729 00:38:55,719 --> 00:38:59,239 Speaker 2: even with Russia's war in Ukraine, the sort of obviously 730 00:38:59,360 --> 00:39:01,919 Speaker 2: arming Ukraine back in Ukraine, but you know, not being 731 00:39:01,960 --> 00:39:06,839 Speaker 2: particularly excited about Ukraine's attacks on Russian oil facilities and 732 00:39:06,880 --> 00:39:09,120 Speaker 2: the costs that that would add to the sort of 733 00:39:09,400 --> 00:39:12,680 Speaker 2: overall global war effort. Like, it's sort of interesting to 734 00:39:12,719 --> 00:39:15,520 Speaker 2: think about him saying he's been a little bit surprised 735 00:39:15,960 --> 00:39:18,040 Speaker 2: by I guess the lack of will to take the 736 00:39:18,080 --> 00:39:19,759 Speaker 2: painful part of the transition. 737 00:39:20,080 --> 00:39:20,400 Speaker 4: Yeah. 738 00:39:20,560 --> 00:39:23,480 Speaker 3: The other thing I was thinking about was the evolution 739 00:39:23,680 --> 00:39:26,880 Speaker 3: of environmental problems. Ye, let's say, and he mentioned acid 740 00:39:26,960 --> 00:39:29,960 Speaker 3: rain there and the sort of Lake Eerie moment that 741 00:39:30,120 --> 00:39:33,120 Speaker 3: led to a lot of additional regulation that made it 742 00:39:33,160 --> 00:39:37,319 Speaker 3: sort of salient and politically palatable. I guess, so that 743 00:39:37,400 --> 00:39:40,840 Speaker 3: you could do that, and now there's a tendency to 744 00:39:40,840 --> 00:39:42,920 Speaker 3: think about like all the things going wrong in the 745 00:39:43,040 --> 00:39:46,200 Speaker 3: environment and focus on everything else that we need to do. 746 00:39:46,320 --> 00:39:48,600 Speaker 3: But if you think about acid rain, this was such 747 00:39:48,600 --> 00:39:52,840 Speaker 3: a big talking point in like especially the like seventies, eighties, 748 00:39:52,880 --> 00:39:57,000 Speaker 3: maybe even into the nineties. But nowadays, because of those regulations, 749 00:39:57,239 --> 00:40:00,520 Speaker 3: acid rain has a lot less impact, at least places 750 00:40:00,520 --> 00:40:01,680 Speaker 3: like Europe in North America. 751 00:40:01,840 --> 00:40:04,080 Speaker 2: So now when we when we are kids, or least 752 00:40:04,120 --> 00:40:05,480 Speaker 2: when I was a kid, who is acid rain in 753 00:40:05,520 --> 00:40:06,200 Speaker 2: the ozone last? 754 00:40:06,280 --> 00:40:09,400 Speaker 3: That's right? And to save the whales, it was like, yeah, 755 00:40:09,560 --> 00:40:12,320 Speaker 3: that was the trifecta of environmental concerns. 756 00:40:12,400 --> 00:40:14,200 Speaker 2: It's certainly in my memory. 757 00:40:14,360 --> 00:40:16,319 Speaker 3: Yeah, all right, well shall we leave it there. 758 00:40:16,400 --> 00:40:17,160 Speaker 2: Let's leave it there. 759 00:40:17,320 --> 00:40:20,040 Speaker 3: This has been another episode of the Odd Thoughts podcast. 760 00:40:20,120 --> 00:40:23,400 Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway. 761 00:40:23,200 --> 00:40:25,719 Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart. 762 00:40:25,960 --> 00:40:29,600 Speaker 2: Follow our producers Carmen Rodriguez at Carmen Arman, Dashel Bennett 763 00:40:29,640 --> 00:40:32,600 Speaker 2: at Dashbot and kel Brooks at Kelbrooks. Thank you to 764 00:40:32,680 --> 00:40:35,680 Speaker 2: our producer Moses Onam. 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