1 00:00:02,520 --> 00:00:08,280 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:18,920 --> 00:00:21,959 Speaker 2: This is Wall Street Week. I'm David Weston, bringing you 3 00:00:22,360 --> 00:00:27,840 Speaker 2: stories of capitalism, prediction markets successfully called President Trump's election victory, 4 00:00:28,200 --> 00:00:31,280 Speaker 2: So what could be next? From the Fed's next move 5 00:00:31,440 --> 00:00:34,320 Speaker 2: to the monthly jobs report. We talked to Calshi and 6 00:00:34,400 --> 00:00:38,480 Speaker 2: Interactive Brokers about how event contract exchanges work and why 7 00:00:38,520 --> 00:00:41,960 Speaker 2: they're not simply a new form of betting. And the 8 00:00:42,000 --> 00:00:45,360 Speaker 2: story of the dangers and lost revenue from methane leaks, 9 00:00:45,800 --> 00:00:49,200 Speaker 2: with new technology coming online to help natural gas producers 10 00:00:49,280 --> 00:00:52,800 Speaker 2: do well by doing good and helping stop valuable product 11 00:00:52,840 --> 00:00:56,880 Speaker 2: from simply escaping into the atmosphere. But we start with 12 00:00:56,960 --> 00:00:59,520 Speaker 2: the big story on the minds of Wall Street this week, 13 00:00:59,680 --> 00:01:03,720 Speaker 2: and they be every week going forward. President Trump's continuing 14 00:01:03,760 --> 00:01:08,160 Speaker 2: announcements of sweeping changes in US economic policy. Larry Summers 15 00:01:08,160 --> 00:01:10,720 Speaker 2: of Harvard has been at the center of policy making 16 00:01:10,800 --> 00:01:14,000 Speaker 2: and negotiation at the Treasury and in the White House. 17 00:01:15,640 --> 00:01:19,959 Speaker 3: This is the beginning of making America rich again. 18 00:01:20,280 --> 00:01:21,960 Speaker 2: What do you make of what's going on with the 19 00:01:22,000 --> 00:01:24,319 Speaker 2: tariff situation? Insofar as we can. 20 00:01:24,200 --> 00:01:27,959 Speaker 3: Tell, look, the steel and aluminum tariffs which have been 21 00:01:28,000 --> 00:01:33,479 Speaker 3: imposed are a uniquely bad policy they're a uniquely bad 22 00:01:33,560 --> 00:01:38,440 Speaker 3: policy because fifty times as many workers work or more 23 00:01:38,959 --> 00:01:42,640 Speaker 3: work in industries that you steal in aluminum as work 24 00:01:42,680 --> 00:01:45,320 Speaker 3: in the steel and aluminum industry. So even if you 25 00:01:45,440 --> 00:01:48,040 Speaker 3: protect a few jobs or certain number of jobs and 26 00:01:48,120 --> 00:01:52,720 Speaker 3: steal and aluminum, the jobs you lose in the downstream 27 00:01:52,840 --> 00:01:58,200 Speaker 3: industries that have to compete, industries like cars, industries like 28 00:01:58,480 --> 00:02:04,520 Speaker 3: construction are more than any benefit you save in steel. 29 00:02:04,840 --> 00:02:08,239 Speaker 3: One estimate found that it was more than seven hundred 30 00:02:08,280 --> 00:02:14,440 Speaker 3: thousand dollars per job saved in burdens on consumers. And 31 00:02:14,480 --> 00:02:17,080 Speaker 3: that's even before you get to the costs of the 32 00:02:17,200 --> 00:02:24,680 Speaker 3: jobs lost in automobiles and construction. And Lydia Cox at 33 00:02:24,800 --> 00:02:29,519 Speaker 3: Yale has done a hugely important study where she's looked 34 00:02:29,520 --> 00:02:34,519 Speaker 3: at what happened with past steel tariff exercises when President 35 00:02:34,720 --> 00:02:38,000 Speaker 3: Bush did it in the early two thousands, when President 36 00:02:38,040 --> 00:02:43,200 Speaker 3: Trump imposed it in the twenty eighteen period. And what 37 00:02:43,320 --> 00:02:46,840 Speaker 3: she found is that when you take the tariffs off, 38 00:02:47,320 --> 00:02:50,120 Speaker 3: things don't go back. That people have. 39 00:02:50,240 --> 00:02:58,000 Speaker 4: Disrupted their normal relationships, and so the damage to competitiveness 40 00:02:58,680 --> 00:03:00,800 Speaker 4: is permanent, even. 41 00:03:00,720 --> 00:03:05,800 Speaker 3: From a temporary tariff increase. And that says that all 42 00:03:05,840 --> 00:03:09,960 Speaker 3: this jocking around threatening. Putting them on, taking them off 43 00:03:10,600 --> 00:03:13,920 Speaker 3: is going to create a real cost to our economy 44 00:03:14,520 --> 00:03:19,600 Speaker 3: in terms of the uncertainty. Less than one tenth of 45 00:03:19,639 --> 00:03:22,720 Speaker 3: one percent of people of the workers in the United 46 00:03:22,760 --> 00:03:27,240 Speaker 3: States are in these two industries. But it's so important 47 00:03:27,800 --> 00:03:31,560 Speaker 3: downstream that even if you thought tariffs were a good 48 00:03:31,680 --> 00:03:37,000 Speaker 3: strategy sometimes in general, to use as a bargaining chip, 49 00:03:37,680 --> 00:03:41,160 Speaker 3: starting with steel and aluminum seems to me to be 50 00:03:41,440 --> 00:03:47,160 Speaker 3: exactly the wrong place to start, precisely because there's such 51 00:03:47,200 --> 00:03:50,080 Speaker 3: an important input to so many things. 52 00:03:50,720 --> 00:03:53,880 Speaker 2: Some say that dramatic announcements on things like tariffs are 53 00:03:53,920 --> 00:03:57,440 Speaker 2: really only a negotiating tool. This from a president whose 54 00:03:57,440 --> 00:04:00,640 Speaker 2: memoir from nineteen eighty seven was The Art of the Deal. 55 00:04:01,200 --> 00:04:04,280 Speaker 2: The book traces President Trump's real estate career and the 56 00:04:04,280 --> 00:04:07,880 Speaker 2: path he took to make his name a brand. Stephanie 57 00:04:07,920 --> 00:04:11,000 Speaker 2: Flanders is the head of Government and Economics for Bloomberg 58 00:04:11,080 --> 00:04:14,080 Speaker 2: News and the host of the new podcast Trump and Amacs. 59 00:04:14,480 --> 00:04:17,520 Speaker 2: We asked her what the Art of the Deal really is. 60 00:04:19,240 --> 00:04:21,200 Speaker 5: His first rule of Art of the Deal was to 61 00:04:21,200 --> 00:04:24,760 Speaker 5: think big, but also to speak big, and to make 62 00:04:24,920 --> 00:04:30,640 Speaker 5: sometimes have outlandish plans or extravagant real estate schemes, which 63 00:04:31,279 --> 00:04:35,080 Speaker 5: overturn the chess board and unsettle his adversaries in a 64 00:04:35,120 --> 00:04:38,240 Speaker 5: way that ends up benefiting him. We clearly saw that 65 00:04:38,279 --> 00:04:41,320 Speaker 5: in the first term with the saying he's going to 66 00:04:41,320 --> 00:04:44,560 Speaker 5: force Mexico to pay for the wall, the way he 67 00:04:44,640 --> 00:04:46,919 Speaker 5: put all of his NATO allies on the back foot 68 00:04:46,920 --> 00:04:49,640 Speaker 5: by saying he was going to threatening to withdraw from NATO, 69 00:04:49,680 --> 00:04:53,280 Speaker 5: which seemed like an extraordinary thing but actually did instill change. 70 00:04:53,320 --> 00:04:54,800 Speaker 5: So this is something we've seen before. 71 00:04:55,720 --> 00:04:59,040 Speaker 2: We've seen leaders think big, take big positions off, and 72 00:04:59,120 --> 00:05:01,839 Speaker 2: we want them to do that. But it's not just big, 73 00:05:01,880 --> 00:05:04,720 Speaker 2: but it's many. I mean, it's across a wide range 74 00:05:04,760 --> 00:05:07,359 Speaker 2: of subjects. It seems like every day we get several 75 00:05:07,400 --> 00:05:10,160 Speaker 2: new policy pronouncements coming out of the White House. 76 00:05:10,360 --> 00:05:12,640 Speaker 5: I mean, I think obviously the sort of journalistic sort 77 00:05:12,680 --> 00:05:16,520 Speaker 5: of conspiracy theory or suspicion is that this is just 78 00:05:16,680 --> 00:05:19,520 Speaker 5: this is partly a way to make it very hard 79 00:05:19,640 --> 00:05:22,480 Speaker 5: for people to focus on everything that's going on at 80 00:05:22,520 --> 00:05:26,320 Speaker 5: the same time, you know, the flood, the zone strategy. 81 00:05:26,520 --> 00:05:28,720 Speaker 5: But I do think also it's the level of ambition 82 00:05:29,080 --> 00:05:32,520 Speaker 5: that you see on multiple fronts, and you know, I 83 00:05:32,560 --> 00:05:36,160 Speaker 5: guess there's an element of you know Teddy Roosevelt's big 84 00:05:36,200 --> 00:05:41,200 Speaker 5: stick diplomacy. There's the so called Madman theory of diplomacy 85 00:05:41,240 --> 00:05:43,159 Speaker 5: that you saw from Richard Nixon. It's this idea that 86 00:05:43,200 --> 00:05:46,200 Speaker 5: you behave so erratically on so many different fronts that 87 00:05:46,240 --> 00:05:48,719 Speaker 5: you actually convince people that you could be about to 88 00:05:48,720 --> 00:05:51,520 Speaker 5: do something crazy if they don't change the way they're 89 00:05:51,520 --> 00:05:54,599 Speaker 5: looking at something. So we have seen that before. I 90 00:05:54,640 --> 00:05:58,000 Speaker 5: think the shock this time, particularly around the economic threats, 91 00:05:58,560 --> 00:06:02,039 Speaker 5: is the apparent willingness to turn the volume up to 92 00:06:02,080 --> 00:06:07,640 Speaker 5: a max or eleven on major economic relationships in pursuit 93 00:06:07,640 --> 00:06:10,440 Speaker 5: of actually quite small gains. I mean we saw him 94 00:06:10,480 --> 00:06:14,239 Speaker 5: sort of effectively threaten to blow up America's most important 95 00:06:14,320 --> 00:06:17,040 Speaker 5: economic relationships over tariffs. 96 00:06:17,160 --> 00:06:19,000 Speaker 6: I look at some of the deals made, I say, 97 00:06:19,080 --> 00:06:20,320 Speaker 6: who the hell made? 98 00:06:20,320 --> 00:06:20,840 Speaker 4: These deals? 99 00:06:20,920 --> 00:06:21,640 Speaker 3: Are so bad? 100 00:06:21,760 --> 00:06:25,919 Speaker 2: But that uncertainty is definitely a bug for business. Is 101 00:06:25,960 --> 00:06:27,840 Speaker 2: it a bug for Donald Trump? Or is it a feature? 102 00:06:27,880 --> 00:06:30,080 Speaker 2: I mean, that's something I can't quite get my head around. 103 00:06:30,080 --> 00:06:31,800 Speaker 2: Maybe he likes that uncertainty. 104 00:06:32,320 --> 00:06:35,520 Speaker 5: I think he does like the uncertainty as a negotiating tactic. 105 00:06:35,600 --> 00:06:37,760 Speaker 5: We saw that. I think it's particularly true on the 106 00:06:37,760 --> 00:06:41,000 Speaker 5: geopolitical stage. We saw it with North Korea negotiations. We've 107 00:06:41,000 --> 00:06:43,520 Speaker 5: seen it in other areas. I think with the economics 108 00:06:44,200 --> 00:06:47,360 Speaker 5: he uses it up to a point, but we've seen 109 00:06:47,440 --> 00:06:49,560 Speaker 5: in the past. We saw certainly in the way he 110 00:06:49,600 --> 00:06:53,240 Speaker 5: dealt with China in the first term. Once there appear 111 00:06:53,360 --> 00:06:58,880 Speaker 5: to be quite widespread economic costs for the US, that's 112 00:06:58,920 --> 00:07:02,440 Speaker 5: when he goes into dealmaking mode and becomes much more conciliatory. 113 00:07:02,480 --> 00:07:06,400 Speaker 5: We saw that in the first term when they had 114 00:07:06,480 --> 00:07:10,720 Speaker 5: moved through quite targeted tariffs against China that didn't affect 115 00:07:10,920 --> 00:07:14,400 Speaker 5: ordinary consumers. Once they went to the Class four A products, 116 00:07:14,400 --> 00:07:17,119 Speaker 5: which I'm sure you've memorized all the terms of these negotiations, David. 117 00:07:17,320 --> 00:07:19,600 Speaker 5: But once they went to the group of large number 118 00:07:19,640 --> 00:07:22,720 Speaker 5: of consumer goods, mobile phones, all these things that people 119 00:07:22,720 --> 00:07:26,560 Speaker 5: actually buy, that's when you started to see a macroeconomic hit. 120 00:07:26,680 --> 00:07:30,760 Speaker 5: Investment falling, consumption weakening, federal reserve, cutting interest rates, and 121 00:07:30,800 --> 00:07:33,600 Speaker 5: that was when he sort of pushed the negotiators to 122 00:07:33,680 --> 00:07:36,960 Speaker 5: do quite a rapid deal with China. 123 00:07:37,080 --> 00:07:39,640 Speaker 2: One of the challenges in taking on very big challenges 124 00:07:40,160 --> 00:07:43,520 Speaker 2: is actually trying to measure success and get something done. 125 00:07:44,160 --> 00:07:48,280 Speaker 2: How will we measure success, Donald Trump? And maybe as important, 126 00:07:48,400 --> 00:07:50,640 Speaker 2: do we have any sense of how he measures success 127 00:07:50,920 --> 00:07:52,040 Speaker 2: in his negotiations. 128 00:07:52,720 --> 00:07:56,120 Speaker 5: I think he declares success, and we know that he's 129 00:07:56,200 --> 00:07:58,800 Speaker 5: done that many times. And he indeed declared success when 130 00:07:58,840 --> 00:08:02,200 Speaker 5: he renegotiated n after and created these new trade deals, 131 00:08:02,600 --> 00:08:06,080 Speaker 5: which I think did change the game, were more favorable 132 00:08:06,080 --> 00:08:09,480 Speaker 5: to the US in certain ways. I think again, it's 133 00:08:09,520 --> 00:08:12,000 Speaker 5: harder for us to see with this administration, because if 134 00:08:12,040 --> 00:08:15,760 Speaker 5: you set very high targets, you know, the full balancing 135 00:08:15,840 --> 00:08:20,320 Speaker 5: of global trade, a system in which America gets full 136 00:08:20,360 --> 00:08:23,520 Speaker 5: advantage of all its trading relationships, it's quite hard to 137 00:08:23,560 --> 00:08:26,600 Speaker 5: see where the benefit lies. But if he has managed 138 00:08:26,600 --> 00:08:31,640 Speaker 5: to extract a change in behavior from other countries around 139 00:08:31,640 --> 00:08:34,320 Speaker 5: the world, if he extracts a lot more defense spending 140 00:08:35,160 --> 00:08:38,600 Speaker 5: from European governments and doesn't tank the US economy in 141 00:08:38,640 --> 00:08:40,840 Speaker 5: the process of doing all of this kind of throwing 142 00:08:40,920 --> 00:08:43,120 Speaker 5: up of the chessboard, that I'm sure he would consider 143 00:08:43,160 --> 00:08:45,040 Speaker 5: that success, and many others will too. 144 00:08:45,200 --> 00:08:47,640 Speaker 2: I expect that a good number of investors in our 145 00:08:47,679 --> 00:08:51,120 Speaker 2: audience are trying to figure out how to respond with 146 00:08:51,240 --> 00:08:54,280 Speaker 2: their investments. How do they position themselves from your experience 147 00:08:54,280 --> 00:08:56,840 Speaker 2: as they both in government and covering business and economics 148 00:08:56,920 --> 00:08:59,280 Speaker 2: for so many years. What advice do you have for 149 00:08:59,360 --> 00:09:01,400 Speaker 2: investors of how to respond to this, Well, I. 150 00:09:01,400 --> 00:09:03,640 Speaker 5: Think we always would say try not to respond to everything, 151 00:09:03,679 --> 00:09:05,559 Speaker 5: and I think in this case particularly, you would be 152 00:09:05,640 --> 00:09:08,520 Speaker 5: changing your portfolio twenty five times a day if you 153 00:09:08,559 --> 00:09:10,679 Speaker 5: were listening to everything coming out of the White House. 154 00:09:11,160 --> 00:09:16,360 Speaker 5: I think the general approach of considering where the market 155 00:09:16,480 --> 00:09:20,160 Speaker 5: is and how much if you like, is already priced in, 156 00:09:20,679 --> 00:09:23,640 Speaker 5: and trying to keep your eyes on the sort of 157 00:09:23,960 --> 00:09:29,560 Speaker 5: longer term picture. Is this a business friendly environment? Is 158 00:09:29,880 --> 00:09:33,280 Speaker 5: the market priced for the best of all possible trumps 159 00:09:33,520 --> 00:09:38,160 Speaker 5: with no downside to economic activity from all this uncertainty? 160 00:09:38,200 --> 00:09:40,439 Speaker 5: There has to be a question mark about. 161 00:09:40,160 --> 00:09:45,600 Speaker 2: That coming up the difference between betting and making money 162 00:09:45,640 --> 00:09:48,840 Speaker 2: off of projections. We explore the brave new world of 163 00:09:48,880 --> 00:09:53,040 Speaker 2: those prediction markets that got the last presidential election right. 164 00:10:03,040 --> 00:10:06,400 Speaker 2: This is a story about the future. Just about all 165 00:10:06,400 --> 00:10:09,280 Speaker 2: of us have hunches about what's coming next, from who's 166 00:10:09,320 --> 00:10:11,560 Speaker 2: going to win March Madness to who will get the 167 00:10:11,600 --> 00:10:14,680 Speaker 2: Oscar for best picture. Many of us put our money 168 00:10:14,720 --> 00:10:18,480 Speaker 2: where those hunches are, at casinos and betting on sports, 169 00:10:18,920 --> 00:10:22,640 Speaker 2: and some might even say in playing the markets. Now 170 00:10:22,679 --> 00:10:25,600 Speaker 2: there's a new game in town. One that's regulated not 171 00:10:25,720 --> 00:10:29,080 Speaker 2: as gaming but as a market, something that moved into 172 00:10:29,120 --> 00:10:31,960 Speaker 2: the spotlight by beating the polls and predicting the results 173 00:10:32,160 --> 00:10:34,160 Speaker 2: of the most recent presidential election. 174 00:10:34,679 --> 00:10:39,520 Speaker 7: I believe the greatest political movement of all time. 175 00:10:39,600 --> 00:10:42,679 Speaker 6: There's ever been anything like this in this country and maybe. 176 00:10:42,360 --> 00:10:48,760 Speaker 2: The These prediction markets are based on event contracts traded 177 00:10:48,840 --> 00:10:51,760 Speaker 2: on an open exchange, and they told us to expect 178 00:10:51,760 --> 00:10:55,920 Speaker 2: a Trump win weeks before the election. So what is 179 00:10:56,040 --> 00:10:57,319 Speaker 2: an event contract? 180 00:10:58,120 --> 00:11:04,760 Speaker 8: Event contracts are basically yes or no questions about upcoming events, 181 00:11:05,400 --> 00:11:11,400 Speaker 8: and people form various opinions and expectations about them, and 182 00:11:11,679 --> 00:11:15,880 Speaker 8: we ask them what do they think The probability is 183 00:11:16,400 --> 00:11:18,960 Speaker 8: that the event is going to happen or it is 184 00:11:19,000 --> 00:11:23,480 Speaker 8: not going to happen, And we ask that in the 185 00:11:23,520 --> 00:11:28,160 Speaker 8: way where we say that you can buy a yes 186 00:11:28,320 --> 00:11:32,560 Speaker 8: or a no answer, and if you are correct, we 187 00:11:32,679 --> 00:11:39,360 Speaker 8: will pay you a dollar. So, therefore, the appropriate price 188 00:11:39,520 --> 00:11:44,040 Speaker 8: for buying a yes or a no is the probability 189 00:11:44,760 --> 00:11:48,679 Speaker 8: that the outcome will be the yes or the no. 190 00:11:49,040 --> 00:11:53,000 Speaker 2: Thomas Petterphy is the founder of Interactive Brokers, a brokerage 191 00:11:53,000 --> 00:11:57,640 Speaker 2: firm that launched its own prediction website last year called forecast. 192 00:11:57,360 --> 00:12:04,559 Speaker 8: X four text currently deals with climate questions, economic indicators, 193 00:12:05,000 --> 00:12:11,480 Speaker 8: political questions in the future, deal with questions having to 194 00:12:11,559 --> 00:12:16,640 Speaker 8: do with the economy, having to do with cultural developments, 195 00:12:17,160 --> 00:12:23,720 Speaker 8: having to do with demographic questions, and basically the large 196 00:12:23,840 --> 00:12:29,120 Speaker 8: questions that people are faced with in their lives. 197 00:12:29,360 --> 00:12:32,440 Speaker 9: I think our goal with prediction markets is really to 198 00:12:32,520 --> 00:12:34,920 Speaker 9: allow every person that has an opinion on something to 199 00:12:34,960 --> 00:12:37,840 Speaker 9: find the market and that big event that they care 200 00:12:37,840 --> 00:12:39,120 Speaker 9: about to be able to trade on. 201 00:12:39,480 --> 00:12:43,040 Speaker 2: Forecast x isn't the first or the only prediction market 202 00:12:43,080 --> 00:12:46,960 Speaker 2: in the United States. Founded in twenty eighteen and launched 203 00:12:47,000 --> 00:12:50,600 Speaker 2: in twenty twenty one, cals She is the first CFTC 204 00:12:50,880 --> 00:12:55,640 Speaker 2: regulated exchange, and it's taken the market by storm. Calshy's 205 00:12:55,640 --> 00:12:59,280 Speaker 2: app has been downloaded about two million times and it's 206 00:12:59,320 --> 00:13:04,200 Speaker 2: seen nearly two billion dollars in contracts. Luana Lopez Lara 207 00:13:04,440 --> 00:13:06,920 Speaker 2: is the company's co founder and COO. 208 00:13:07,320 --> 00:13:09,520 Speaker 9: While we were in MIT, one thing we realized is 209 00:13:09,559 --> 00:13:12,560 Speaker 9: that most trading happens when you have an opinion about 210 00:13:12,559 --> 00:13:14,120 Speaker 9: what's going to happen in the future and you find 211 00:13:14,120 --> 00:13:16,200 Speaker 9: a way to put that in the market. So you 212 00:13:16,200 --> 00:13:17,920 Speaker 9: think this country is going to go into a recession, 213 00:13:18,160 --> 00:13:20,080 Speaker 9: or you think this person's going to win an election, 214 00:13:20,200 --> 00:13:23,000 Speaker 9: or Brexit's going to happen, and you find a way 215 00:13:23,080 --> 00:13:26,080 Speaker 9: to express that view in the market to hedge some 216 00:13:26,200 --> 00:13:28,480 Speaker 9: risks that you have, or also to get exposure to something. 217 00:13:28,480 --> 00:13:30,160 Speaker 9: And what we realized was there should be a better 218 00:13:30,200 --> 00:13:32,160 Speaker 9: way to do it, and for us it was why 219 00:13:32,280 --> 00:13:34,560 Speaker 9: is there no direct exchange that you can just trade 220 00:13:34,559 --> 00:13:36,280 Speaker 9: directly on what you think is going to happen. 221 00:13:36,640 --> 00:13:39,560 Speaker 2: Cal she saw around a half a billion dollars put 222 00:13:39,600 --> 00:13:42,240 Speaker 2: down on the twenty twenty four election, but its value 223 00:13:42,360 --> 00:13:45,040 Speaker 2: might not be in the money placed, but in what 224 00:13:45,120 --> 00:13:49,120 Speaker 2: it told us. Calshi's prediction market had Trump comfortably ahead 225 00:13:49,200 --> 00:13:51,400 Speaker 2: of Kamala Harris in the lead up to the election, 226 00:13:51,720 --> 00:13:56,720 Speaker 2: even as Poles saw Harris narrowly ahead. Production markets and 227 00:13:56,800 --> 00:13:58,840 Speaker 2: Calshia in particular, got a lot of attention because of 228 00:13:58,880 --> 00:14:03,199 Speaker 2: the most recent president cential election in which the polls 229 00:14:03,240 --> 00:14:05,920 Speaker 2: sort of showed it was really close and you said 230 00:14:06,000 --> 00:14:09,760 Speaker 2: not so much. Why was there such difficulty in getting 231 00:14:09,760 --> 00:14:11,760 Speaker 2: approved of that? Because you had to fight the CFTC. 232 00:14:11,840 --> 00:14:14,640 Speaker 9: As I recall, after we got we launched in twenty 233 00:14:14,679 --> 00:14:17,959 Speaker 9: twenty one, a couple months after we realized that, well, 234 00:14:18,160 --> 00:14:20,360 Speaker 9: we really needed to add presidential elections. It's a big 235 00:14:20,400 --> 00:14:23,320 Speaker 9: event that has massive impact throughout the world and the 236 00:14:23,360 --> 00:14:26,160 Speaker 9: country as you can see what's happening now with tariffs 237 00:14:26,200 --> 00:14:28,880 Speaker 9: and everything. They're so tied to this event, and we 238 00:14:28,880 --> 00:14:31,000 Speaker 9: started engaging with the CFTC. They had a lot of 239 00:14:31,000 --> 00:14:33,600 Speaker 9: concerns that it would like destroy democracy, that people would 240 00:14:33,640 --> 00:14:36,560 Speaker 9: change their votes based on who they would vote for 241 00:14:36,960 --> 00:14:39,280 Speaker 9: and things like that, or the perception that people would 242 00:14:39,320 --> 00:14:41,840 Speaker 9: change their votes based on who would win. They thought 243 00:14:41,840 --> 00:14:44,680 Speaker 9: it was too close to gambling and all of those things. 244 00:14:44,720 --> 00:14:47,040 Speaker 9: We engaged with them for over a year and it 245 00:14:47,120 --> 00:14:48,680 Speaker 9: got to a point that we saught the only way 246 00:14:48,760 --> 00:14:50,760 Speaker 9: to go forward is if we sue them, because they're 247 00:14:50,760 --> 00:14:53,560 Speaker 9: just acting on lawfully. We ended up winning on the 248 00:14:53,600 --> 00:14:55,360 Speaker 9: stay of the appeal to be able to list it. 249 00:14:55,560 --> 00:14:58,840 Speaker 9: And I think that all of their concerns were also 250 00:14:59,160 --> 00:15:01,320 Speaker 9: after the election to not be true. Right Like we 251 00:15:01,400 --> 00:15:05,040 Speaker 9: know now that the election was not manipulated by election markets, 252 00:15:05,080 --> 00:15:07,280 Speaker 9: even though billions of dollars were traded. We know they 253 00:15:07,320 --> 00:15:09,360 Speaker 9: didn't destroy democracy. We know all of these things that 254 00:15:09,400 --> 00:15:11,560 Speaker 9: we were saying we're true are actually true. And it's 255 00:15:11,760 --> 00:15:15,040 Speaker 9: great to be kind of vindicated that this was actually 256 00:15:15,240 --> 00:15:18,120 Speaker 9: a great thing to actually enhance democracy exposed were so 257 00:15:18,280 --> 00:15:21,800 Speaker 9: bad during the election season. That was kind of the 258 00:15:21,960 --> 00:15:23,080 Speaker 9: larity that we were pushing. 259 00:15:23,120 --> 00:15:26,400 Speaker 2: It was the presidential election, the largest single event in 260 00:15:26,440 --> 00:15:27,400 Speaker 2: your volume so far? 261 00:15:27,600 --> 00:15:30,520 Speaker 9: Yeah, yes, how big was it? The actual who's going 262 00:15:30,520 --> 00:15:32,080 Speaker 9: to win? I think it was like five hundred million 263 00:15:32,120 --> 00:15:34,480 Speaker 9: or six hundred million on just that one. But we 264 00:15:34,560 --> 00:15:38,040 Speaker 9: had actually markets on who's going to win Pennsylvania, for example, 265 00:15:38,080 --> 00:15:40,880 Speaker 9: and the margin of victory and a lot of other 266 00:15:41,240 --> 00:15:43,720 Speaker 9: I guess derivatives of that main event that took the 267 00:15:43,800 --> 00:15:45,040 Speaker 9: bye to like over a billion dollars. 268 00:15:45,240 --> 00:15:46,680 Speaker 2: For some of us who are not as familiar with 269 00:15:46,680 --> 00:15:50,600 Speaker 2: prediction markets, you said earlier it's not betting. Why is 270 00:15:50,640 --> 00:15:52,720 Speaker 2: it not? Because it sort of looks and talks and 271 00:15:52,760 --> 00:15:55,360 Speaker 2: walks a little bit like betting. What's the difference between 272 00:15:55,400 --> 00:15:58,000 Speaker 2: prediction market taking event contract and betting. 273 00:15:58,440 --> 00:16:00,480 Speaker 9: The easiest way I think to explain this is we 274 00:16:00,520 --> 00:16:02,800 Speaker 9: are pretty much like the New York Stock Exchange or 275 00:16:02,880 --> 00:16:06,200 Speaker 9: the Chicagun Meercantile Exchange in terms of structure. We are 276 00:16:06,400 --> 00:16:08,840 Speaker 9: a trade matching engine. Right, so you can come and 277 00:16:08,880 --> 00:16:10,920 Speaker 9: say I want to take a position on this, someone 278 00:16:10,920 --> 00:16:12,360 Speaker 9: else says, I want to take a position on this. 279 00:16:12,760 --> 00:16:14,720 Speaker 9: I think a big difference there is like we're in exchange. 280 00:16:14,720 --> 00:16:16,800 Speaker 9: We're not a house. We don't make money if people lose. 281 00:16:16,960 --> 00:16:20,040 Speaker 9: Let's say you think hiking rates will hurt your suit loans. 282 00:16:20,080 --> 00:16:22,200 Speaker 9: You can actually buy a contract that says if they hike, 283 00:16:22,240 --> 00:16:24,840 Speaker 9: will pay. You can use that to up said basically hedge. 284 00:16:25,240 --> 00:16:27,280 Speaker 9: And I think that that's the underlying difference, is that 285 00:16:27,280 --> 00:16:30,200 Speaker 9: we're in exchange, or we don't offer margin. We actually 286 00:16:30,240 --> 00:16:32,320 Speaker 9: pay interest on all your positions and your cash and 287 00:16:32,400 --> 00:16:34,840 Speaker 9: the platform, and we offer contracts that we think are 288 00:16:34,880 --> 00:16:38,520 Speaker 9: even safer because you can have more information about a 289 00:16:38,560 --> 00:16:40,480 Speaker 9: lot of the markets that we have than you have 290 00:16:40,560 --> 00:16:43,400 Speaker 9: about some obscure financials of some company that you don't 291 00:16:43,440 --> 00:16:46,480 Speaker 9: know about. We are fully regulated federally as in exchange, 292 00:16:46,480 --> 00:16:48,600 Speaker 9: and have all the supports there. But obviously people do 293 00:16:49,240 --> 00:16:51,720 Speaker 9: as in the stock market. Some people gamble, some people hedge, 294 00:16:51,760 --> 00:16:54,520 Speaker 9: some people short sell. There's some people these crazy things, 295 00:16:54,520 --> 00:16:55,680 Speaker 9: and I think they'll do the same. 296 00:16:56,880 --> 00:17:01,680 Speaker 10: These platforms say well, this isn't betting, this isn't sports betting. 297 00:17:01,720 --> 00:17:04,440 Speaker 10: For example, when you can buy a contract on whether 298 00:17:04,440 --> 00:17:07,399 Speaker 10: the chiefs will beat the eagles, betting against the house, 299 00:17:07,920 --> 00:17:11,480 Speaker 10: you know, against the casino, against the bookie whatever. Here 300 00:17:11,560 --> 00:17:15,399 Speaker 10: you're trading with other people. That seems to me to 301 00:17:15,400 --> 00:17:18,640 Speaker 10: be a distinction, that's somewhat without a difference. 302 00:17:18,840 --> 00:17:22,240 Speaker 2: Tim Massittt is the former Commodity Futures Trading Commission Chairman, 303 00:17:22,320 --> 00:17:26,000 Speaker 2: an independent federal agency established in nineteen seventy four to 304 00:17:26,080 --> 00:17:30,280 Speaker 2: regulate the United States derivatives markets. The CFTC now oversees 305 00:17:30,359 --> 00:17:33,959 Speaker 2: online forecasting, and Massett says he's not against prediction markets, 306 00:17:34,200 --> 00:17:36,640 Speaker 2: but has these doubts about how best to regulate them. 307 00:17:36,800 --> 00:17:39,879 Speaker 10: There wasn't much activity here when I was chair. We 308 00:17:40,000 --> 00:17:45,160 Speaker 10: had a proposal for a political contract on elections, and 309 00:17:45,200 --> 00:17:50,600 Speaker 10: we limited that to a university setting, where you know, 310 00:17:50,640 --> 00:17:53,760 Speaker 10: the volume was really very limited. But over the last 311 00:17:53,800 --> 00:17:57,879 Speaker 10: few years we've seen firms startup that want to do 312 00:17:57,920 --> 00:18:00,639 Speaker 10: a lot more of these, and that's made the regulatory 313 00:18:00,760 --> 00:18:05,840 Speaker 10: challenge really big. Congress tried to give the CFTC some 314 00:18:06,040 --> 00:18:09,960 Speaker 10: tools to limit the range of these things back in 315 00:18:10,080 --> 00:18:13,159 Speaker 10: twenty ten, when the Dodd Frank Law was passed. The 316 00:18:13,240 --> 00:18:20,720 Speaker 10: Congress said the CFTC can not certify something if it 317 00:18:21,000 --> 00:18:24,200 Speaker 10: determines that the contract is not in the public interest 318 00:18:24,520 --> 00:18:29,119 Speaker 10: and it falls into one of basically five categories. It 319 00:18:29,160 --> 00:18:36,639 Speaker 10: pertains to war, terrorism, assassination, an activity that's unlawful, or gaming, 320 00:18:37,320 --> 00:18:39,560 Speaker 10: but those are the only categories, and it said gaming 321 00:18:39,680 --> 00:18:44,760 Speaker 10: not gambling. The CFTC put out a rule proposal last 322 00:18:44,840 --> 00:18:48,919 Speaker 10: year that basically tried to take an expansive view of 323 00:18:48,960 --> 00:18:52,199 Speaker 10: this as to what gaming was and to how to 324 00:18:52,240 --> 00:18:58,320 Speaker 10: define public interest. If we want to allow this, that's fine, 325 00:18:58,560 --> 00:19:01,119 Speaker 10: but I wouldn't make the CFDC the regulator of it. 326 00:19:01,920 --> 00:19:05,560 Speaker 10: The CFTC is a small agency. It's got other things 327 00:19:05,600 --> 00:19:08,919 Speaker 10: to do that I think are more central to its mission. 328 00:19:09,320 --> 00:19:14,240 Speaker 2: So why is it the CFTC's job to regulate event contracts. 329 00:19:14,320 --> 00:19:18,840 Speaker 8: It's a financial contract and is not married to the 330 00:19:18,920 --> 00:19:23,400 Speaker 8: performance of any specific company. It is not a security. 331 00:19:23,520 --> 00:19:27,520 Speaker 8: It is a commodity. The distinction between commodity or a 332 00:19:27,600 --> 00:19:32,360 Speaker 8: security is kind of vague, and it's more for lawyers 333 00:19:32,560 --> 00:19:37,040 Speaker 8: than people like me to say which is a commodity 334 00:19:37,080 --> 00:19:39,080 Speaker 8: and which is a security. 335 00:19:39,200 --> 00:19:42,359 Speaker 2: Whoever regulates them. It certainly looks like prediction markets are 336 00:19:42,400 --> 00:19:45,320 Speaker 2: here to stay. Looking to build on its success in 337 00:19:45,320 --> 00:19:48,439 Speaker 2: the presidential election, Kelsey this year announced to deal with 338 00:19:48,520 --> 00:19:51,399 Speaker 2: robin Hood to let people trade on contracts for the 339 00:19:51,440 --> 00:19:55,680 Speaker 2: Super Bowl from their brokerage account, although the CFTC once 340 00:19:55,720 --> 00:19:59,720 Speaker 2: again stepped in to put the deal on hold. Super 341 00:19:59,760 --> 00:20:01,760 Speaker 2: Bowl obviously is a very big event, and it's in 342 00:20:01,760 --> 00:20:04,679 Speaker 2: one of the events on which you took contracts. You 343 00:20:04,720 --> 00:20:07,760 Speaker 2: also had a special relationship with Robinhood, but at the 344 00:20:07,760 --> 00:20:09,960 Speaker 2: same time the regulars weren't done with you yet. What 345 00:20:10,080 --> 00:20:12,320 Speaker 2: is the issue there? Do you know why is the 346 00:20:12,320 --> 00:20:14,640 Speaker 2: CFTC particularly concerned about that the. 347 00:20:14,600 --> 00:20:16,879 Speaker 9: Same way that we opened a very big buy in 348 00:20:16,880 --> 00:20:20,800 Speaker 9: our opinion with elections, sports or another big one, and 349 00:20:20,840 --> 00:20:23,840 Speaker 9: I think we expected a bit of a scrutiny. We 350 00:20:23,880 --> 00:20:27,000 Speaker 9: think they're completely legal markets that should be offered in 351 00:20:27,040 --> 00:20:30,800 Speaker 9: prediction markets and CFC regulated exchanges as well. But I 352 00:20:30,840 --> 00:20:33,720 Speaker 9: think there's just more engagement on that front from the 353 00:20:33,760 --> 00:20:37,040 Speaker 9: regulators that we were somewhat expecting in terms of the 354 00:20:37,119 --> 00:20:40,159 Speaker 9: Robinhood specifics. If we're very excited to expand into sports, 355 00:20:40,160 --> 00:20:41,800 Speaker 9: we think that this year is going to be very 356 00:20:41,880 --> 00:20:45,600 Speaker 9: very big for us growing there, and we're excited to 357 00:20:45,600 --> 00:20:47,680 Speaker 9: connect with brokers and have THEMN with sports and mix 358 00:20:47,960 --> 00:20:48,679 Speaker 9: everything together. 359 00:20:49,440 --> 00:20:53,440 Speaker 2: Exchange trading in event contracts is here and it's regulated. 360 00:20:53,680 --> 00:20:56,600 Speaker 2: But ultimately, what does it do for the markets and 361 00:20:56,800 --> 00:21:00,639 Speaker 2: to the markets. Does it provide useful information to investors 362 00:21:00,800 --> 00:21:02,879 Speaker 2: or is it more a form of recreation. 363 00:21:03,560 --> 00:21:07,320 Speaker 10: You know, there's a view among economists that at least 364 00:21:07,359 --> 00:21:11,480 Speaker 10: some economists that well, these are useful. They generate information, 365 00:21:12,160 --> 00:21:16,639 Speaker 10: and they're more useful than polls. You can certainly argue 366 00:21:16,680 --> 00:21:21,560 Speaker 10: they generate important information. A lot of some economists at 367 00:21:21,640 --> 00:21:24,119 Speaker 10: least have said, look, these are better than polls in 368 00:21:24,160 --> 00:21:28,120 Speaker 10: many cases. So I don't quarrel with that. I think 369 00:21:28,240 --> 00:21:34,240 Speaker 10: they can generate interesting information, and so from that standpoint, 370 00:21:34,280 --> 00:21:36,280 Speaker 10: you could say, sure, it's a public good. 371 00:21:36,520 --> 00:21:41,840 Speaker 8: We need a mechanism for people to express their reviews 372 00:21:42,240 --> 00:21:48,399 Speaker 8: so that legislators can come out with appropriate legislation to 373 00:21:48,640 --> 00:21:55,640 Speaker 8: basically channel the future for the people. And the way 374 00:21:55,720 --> 00:22:00,040 Speaker 8: to do that, I think is one way to do that, 375 00:22:00,600 --> 00:22:04,080 Speaker 8: and probably the most effective way to do that is 376 00:22:04,119 --> 00:22:11,840 Speaker 8: to continuously get feedback from the population as to what 377 00:22:12,200 --> 00:22:15,479 Speaker 8: legislators are trying to do whether that is going to 378 00:22:15,520 --> 00:22:17,280 Speaker 8: get the people where they want to go. 379 00:22:19,200 --> 00:22:22,080 Speaker 2: Coming up, as President Trump seeks to ramp up oil 380 00:22:22,119 --> 00:22:25,600 Speaker 2: and gas production, leaks of methane will go up as well. 381 00:22:25,680 --> 00:22:29,320 Speaker 2: Unless we do something about it. We travel to Wyoming 382 00:22:29,400 --> 00:22:33,080 Speaker 2: to see firsthand new technology that can help producers keep 383 00:22:33,119 --> 00:22:36,960 Speaker 2: their product from escaping. That's next on Wall Street Week. 384 00:22:48,720 --> 00:22:51,879 Speaker 2: This is a story about doing well by doing good. 385 00:22:52,480 --> 00:22:55,560 Speaker 2: Methane leaks are a big problem for the climate, but 386 00:22:55,720 --> 00:23:03,040 Speaker 2: also for gas producers. An odorless, colorless gas, methane enters 387 00:23:03,040 --> 00:23:06,920 Speaker 2: the atmosphere as leaks from natural gas production, but also 388 00:23:07,040 --> 00:23:12,280 Speaker 2: from agriculture and natural sources like melting permafrost. The oil 389 00:23:12,320 --> 00:23:15,119 Speaker 2: and gas industry has long treated methane leaks as an 390 00:23:15,200 --> 00:23:19,400 Speaker 2: unavoidable hazard, but saving all that methane could be one 391 00:23:19,400 --> 00:23:23,040 Speaker 2: of the fastest and most effective ways to fight climate 392 00:23:23,119 --> 00:23:26,679 Speaker 2: change while also conserving valuable natural gas. 393 00:23:27,520 --> 00:23:30,720 Speaker 1: So here you see a retractable tower and at the 394 00:23:30,720 --> 00:23:33,080 Speaker 1: top of the tower is a laser spectrometer. 395 00:23:34,119 --> 00:23:37,760 Speaker 2: Caroline Alden is co founder and chief scientist of Long 396 00:23:37,800 --> 00:23:41,119 Speaker 2: Path Technologies, a tech startup with a new way of 397 00:23:41,160 --> 00:23:46,639 Speaker 2: detecting those methane leaks with laser based sensors. Here in 398 00:23:46,680 --> 00:23:50,160 Speaker 2: the Wyoming sagebrush step, near the foothills of the Wind 399 00:23:50,240 --> 00:23:54,399 Speaker 2: River Mountains, pronghorn, antelope and wild horses roam above one 400 00:23:54,440 --> 00:23:57,680 Speaker 2: of the largest natural gas reserves in the United States, 401 00:23:58,320 --> 00:24:00,679 Speaker 2: and the Jonah Field has become a p moving ground 402 00:24:00,800 --> 00:24:02,560 Speaker 2: for cutting edge technology. 403 00:24:03,480 --> 00:24:06,480 Speaker 1: So the laser is going around collecting all its concentration 404 00:24:06,600 --> 00:24:09,399 Speaker 1: data right up there in that little tiny box, and 405 00:24:09,520 --> 00:24:13,840 Speaker 1: inside that box is a laser, a detector, and all 406 00:24:13,960 --> 00:24:16,480 Speaker 1: the computing that you need to crunch the numbers on 407 00:24:16,520 --> 00:24:19,160 Speaker 1: emissions from any of the well sites you can see 408 00:24:19,160 --> 00:24:23,200 Speaker 1: around here. This is a kind of a fun place 409 00:24:23,240 --> 00:24:25,080 Speaker 1: to be as a climate scientist because it's a place 410 00:24:25,119 --> 00:24:27,280 Speaker 1: we can all kind of row in the same direction. 411 00:24:27,640 --> 00:24:30,960 Speaker 1: The industry also, you know, doesn't want to have methane emissions. 412 00:24:30,960 --> 00:24:33,760 Speaker 1: This is their product that we're keeping in the pipeline 413 00:24:33,760 --> 00:24:36,119 Speaker 1: for them when we catch leaks, and so it's a 414 00:24:36,160 --> 00:24:38,240 Speaker 1: real win win where if we can give them data 415 00:24:38,359 --> 00:24:43,159 Speaker 1: to help them make their operations better while also reducing emissions, 416 00:24:43,680 --> 00:24:46,080 Speaker 1: that's a win win for the climate and the industry. 417 00:24:47,160 --> 00:24:50,600 Speaker 2: In twenty twenty two, the US emitted around six billion 418 00:24:50,720 --> 00:24:54,640 Speaker 2: metric tons of greenhouse gases. Methane made up about eleven 419 00:24:54,720 --> 00:24:58,880 Speaker 2: percent of that, but it's a particularly potent and toxic gas. 420 00:25:00,040 --> 00:25:04,280 Speaker 1: Methane as a molecule is interesting because compared to CO two, 421 00:25:04,359 --> 00:25:07,320 Speaker 1: which is the greenhouse gas folks are most familiar with. 422 00:25:07,840 --> 00:25:11,239 Speaker 1: It's about eighty times more powerful in terms of the 423 00:25:11,280 --> 00:25:14,560 Speaker 1: warming potential on a molecule per molecule basis. 424 00:25:15,560 --> 00:25:19,000 Speaker 2: Its potency makes the market for methane detection technology that 425 00:25:19,119 --> 00:25:22,119 Speaker 2: much more important, and JP Morgan projects it will be 426 00:25:22,119 --> 00:25:25,200 Speaker 2: more than nine hundred million dollars by twenty twenty five, 427 00:25:25,560 --> 00:25:28,879 Speaker 2: with a potential global market as high as fourteen point 428 00:25:29,000 --> 00:25:30,280 Speaker 2: nine billion dollars. 429 00:25:31,160 --> 00:25:34,480 Speaker 6: I believe this is really going to fundamentally change how 430 00:25:34,560 --> 00:25:37,720 Speaker 6: operators view leak detection and repair, and I think it 431 00:25:37,760 --> 00:25:40,440 Speaker 6: will change how regulators view leaked detection and repair. 432 00:25:41,160 --> 00:25:44,800 Speaker 2: Howard Deeter, JONAH Energy's vice president in charge of environmental 433 00:25:44,880 --> 00:25:47,560 Speaker 2: health and safety, says his goal is twenty four to 434 00:25:47,640 --> 00:25:52,000 Speaker 2: seven monitoring using long pass continuous laser system and then 435 00:25:52,040 --> 00:25:56,040 Speaker 2: following up using optical gas imaging cameras and validating those 436 00:25:56,080 --> 00:25:59,160 Speaker 2: measurements with drones, aircraft and satellites. 437 00:25:59,800 --> 00:26:04,040 Speaker 6: I do think that as this technology becomes better, as 438 00:26:04,080 --> 00:26:08,520 Speaker 6: it becomes more affordable to deploy, that it really is 439 00:26:08,560 --> 00:26:12,439 Speaker 6: a game changer in how we think about operating and 440 00:26:12,520 --> 00:26:13,719 Speaker 6: managing our facilities. 441 00:26:14,840 --> 00:26:19,120 Speaker 2: How has the whole process of detecting methamas has changed, so. 442 00:26:19,560 --> 00:26:23,800 Speaker 6: Historically the way leak detection and repair has worked, and 443 00:26:24,000 --> 00:26:27,480 Speaker 6: even the way the EPA regulations and state regulations work. 444 00:26:28,240 --> 00:26:32,480 Speaker 6: You're obligated to do a certain inspection once a quarter 445 00:26:32,760 --> 00:26:35,199 Speaker 6: or once every six months or once a year, and 446 00:26:35,280 --> 00:26:37,679 Speaker 6: in the intervening time, you may have a leak, and 447 00:26:37,720 --> 00:26:40,320 Speaker 6: so the next time you have a chance to see 448 00:26:40,359 --> 00:26:44,280 Speaker 6: that leak would be eighty five days, you know, following 449 00:26:44,320 --> 00:26:47,320 Speaker 6: when that leak started. We're really at the precipice of 450 00:26:47,480 --> 00:26:51,800 Speaker 6: moving from a scheduled driven leak detection and repair program, 451 00:26:51,920 --> 00:26:55,720 Speaker 6: whether it's quarterly or semi annually, to an actual data 452 00:26:55,800 --> 00:26:59,040 Speaker 6: driven leak detection and repair program. So we're able to 453 00:26:59,240 --> 00:27:02,720 Speaker 6: roll an operator out to a site when we have 454 00:27:02,800 --> 00:27:05,320 Speaker 6: something going on that they need to fix, and we 455 00:27:05,400 --> 00:27:07,560 Speaker 6: fix the vast majority of things we find at the 456 00:27:07,560 --> 00:27:11,159 Speaker 6: time we find them, which really reduces the time in 457 00:27:11,200 --> 00:27:12,360 Speaker 6: which a leak is occurring. 458 00:27:13,680 --> 00:27:17,240 Speaker 2: Deeter recalls how a recent leak response team was dispatched 459 00:27:17,280 --> 00:27:20,080 Speaker 2: to fix an outside contract or mistake at one of 460 00:27:20,119 --> 00:27:21,680 Speaker 2: Jonah's production facilities. 461 00:27:22,320 --> 00:27:24,639 Speaker 6: How did you first find out about it through the 462 00:27:24,680 --> 00:27:27,280 Speaker 6: dashboard from walcath So they picked it up within the 463 00:27:27,359 --> 00:27:29,920 Speaker 6: laser system. We got a notification. There was a cap 464 00:27:29,960 --> 00:27:32,119 Speaker 6: on the top that hadn't been fit back, and so 465 00:27:32,200 --> 00:27:34,480 Speaker 6: there was venting that was coming out of that. So 466 00:27:34,760 --> 00:27:39,320 Speaker 6: within three hours of it being detected, noticed, we found 467 00:27:39,400 --> 00:27:41,200 Speaker 6: it and fixed it. 468 00:27:41,200 --> 00:27:44,840 Speaker 1: It's product in the pipe. So every leak that we catch, 469 00:27:45,240 --> 00:27:48,520 Speaker 1: it's not just reducing emissions of methane to the atmosphere, 470 00:27:48,880 --> 00:27:51,200 Speaker 1: it's keeping their product in the pipe. 471 00:27:51,880 --> 00:27:54,880 Speaker 2: President Trump has made no secret about the importance heat 472 00:27:54,880 --> 00:27:56,760 Speaker 2: places on US energy production. 473 00:27:57,520 --> 00:27:59,840 Speaker 6: We will drill baby. 474 00:28:03,760 --> 00:28:07,000 Speaker 2: But those concerned about the climate worn about the dangers 475 00:28:07,000 --> 00:28:10,400 Speaker 2: of increasing methane emissions and their effect on the planet. 476 00:28:10,560 --> 00:28:12,960 Speaker 3: Police Department evacuated. 477 00:28:12,240 --> 00:28:16,560 Speaker 7: Mele leaks of the problem with methane all around the world. 478 00:28:17,400 --> 00:28:20,480 Speaker 7: Methane is twenty to eighty times more damaging than CO 479 00:28:20,680 --> 00:28:24,840 Speaker 7: two David, so it has a profound impact in adding 480 00:28:24,880 --> 00:28:26,240 Speaker 7: the amount of methane in the air. 481 00:28:27,080 --> 00:28:30,800 Speaker 2: In twenty twenty three, US production topped twenty billion cubic 482 00:28:30,840 --> 00:28:34,879 Speaker 2: feet a day, raising the risk of more leaks and venting. 483 00:28:35,560 --> 00:28:40,400 Speaker 2: New satellite technology reveals intentional emissions and hidden leaks, making 484 00:28:40,440 --> 00:28:44,440 Speaker 2: it possible to shine a light on those responsible. Now 485 00:28:44,480 --> 00:28:47,960 Speaker 2: we have satellites as well looking around the globe. What 486 00:28:48,040 --> 00:28:51,640 Speaker 2: potential effect could that have actually in highlighting places in 487 00:28:51,680 --> 00:28:54,480 Speaker 2: the globe and even particular producers per apps that are 488 00:28:54,520 --> 00:28:57,000 Speaker 2: really having substantial problems with ethane emissions. 489 00:28:57,120 --> 00:29:00,880 Speaker 6: It definitely has increased awareness of things that are going on. 490 00:29:02,120 --> 00:29:05,120 Speaker 6: Within the Oil and Gas Methane Partnership. The International Methane 491 00:29:05,120 --> 00:29:09,640 Speaker 6: Emissions Observatory started a program called MARS Methane Alert and 492 00:29:09,720 --> 00:29:12,400 Speaker 6: Response System and all of the Oil and Gas Methane 493 00:29:12,440 --> 00:29:16,160 Speaker 6: Partnership signatories participate in that, and so we get the 494 00:29:16,200 --> 00:29:20,560 Speaker 6: benefit of IMEOS sending US alerts on something that's going on. 495 00:29:20,720 --> 00:29:23,400 Speaker 6: So it's an extra set of viys and on one 496 00:29:23,440 --> 00:29:26,840 Speaker 6: hand it can be somebody kind of looking over your operations, 497 00:29:26,880 --> 00:29:28,880 Speaker 6: but on the other hand it can give you actionable 498 00:29:29,000 --> 00:29:30,640 Speaker 6: data at certain levels. 499 00:29:32,040 --> 00:29:36,440 Speaker 2: Still, many operators show little sense of urgency, some pointing 500 00:29:36,440 --> 00:29:39,840 Speaker 2: to difficulties in capturing the leaking methane and transporting it. 501 00:29:40,360 --> 00:29:44,080 Speaker 2: Others say the economics just don't work to deploy monitoring 502 00:29:44,120 --> 00:29:48,720 Speaker 2: systems across thousands of sites. Is Jonahan outlier? I mean, 503 00:29:48,720 --> 00:29:52,440 Speaker 2: you've been an early adopter. What are the attitudes within 504 00:29:52,520 --> 00:29:56,400 Speaker 2: the industry, What are the various thoughts about the reaction 505 00:29:56,520 --> 00:29:58,240 Speaker 2: to methane emission regulations. 506 00:29:58,440 --> 00:30:03,280 Speaker 6: We have really top professionals that are experts in their fields. 507 00:30:03,440 --> 00:30:07,240 Speaker 6: They like the energy industry, They believe in the energy industry, 508 00:30:07,400 --> 00:30:10,880 Speaker 6: the oil and gas energy industry. They absolutely want to 509 00:30:10,920 --> 00:30:15,080 Speaker 6: do the right thing from a methane standpoint. What's interesting, 510 00:30:15,320 --> 00:30:18,080 Speaker 6: Jonah was the first US company to sign onto the 511 00:30:18,080 --> 00:30:21,400 Speaker 6: Oil and Gas Methane Partnership in November twenty twenty when 512 00:30:21,400 --> 00:30:25,560 Speaker 6: it was formed, and now there's over twenty US companies, 513 00:30:25,840 --> 00:30:30,040 Speaker 6: including majors and the largest natural gas producers in the 514 00:30:30,160 --> 00:30:33,360 Speaker 6: US that have signed onto that partnership. I think what 515 00:30:33,400 --> 00:30:36,600 Speaker 6: we're seeing is a growing recognition that we have the 516 00:30:36,680 --> 00:30:39,800 Speaker 6: ability to do this work. We have the ability to 517 00:30:39,880 --> 00:30:43,720 Speaker 6: demonstrate that we produce natural gas in a very very 518 00:30:43,760 --> 00:30:46,600 Speaker 6: efficient way, and we can do it in a way 519 00:30:46,640 --> 00:30:47,960 Speaker 6: that meets these regulations. 520 00:30:48,040 --> 00:30:49,600 Speaker 2: As much as people sign up for it, are they 521 00:30:49,680 --> 00:30:52,000 Speaker 2: changing their behavior because of that signing up? 522 00:30:53,160 --> 00:30:57,320 Speaker 6: They are changing their behavior. Companies are using the data 523 00:30:57,360 --> 00:31:00,880 Speaker 6: and information that we're collecting through this partnership and the 524 00:31:00,920 --> 00:31:04,920 Speaker 6: framework in order to really understand their emissions, to deploy 525 00:31:05,000 --> 00:31:08,440 Speaker 6: capital to reduce emissions, and to position themselves really well 526 00:31:08,480 --> 00:31:09,080 Speaker 6: on the market. 527 00:31:09,960 --> 00:31:13,960 Speaker 2: Environmental, health, and safety. That makes me think about past 528 00:31:14,040 --> 00:31:17,760 Speaker 2: history with safety in the workplace, and we had OSHRA 529 00:31:17,880 --> 00:31:22,040 Speaker 2: regulations Likecipicial Safety Health Administration, and it really I think 530 00:31:22,400 --> 00:31:25,239 Speaker 2: changed a lot of American industry and the safety of 531 00:31:25,560 --> 00:31:29,640 Speaker 2: workers on the premises. Do you hope and expect something 532 00:31:29,680 --> 00:31:31,640 Speaker 2: similar happened when it comes to methane emissions? 533 00:31:32,640 --> 00:31:36,600 Speaker 6: I think we're already there a lot of the foundational 534 00:31:36,720 --> 00:31:39,240 Speaker 6: change that we saw in the seventies with how safety 535 00:31:39,280 --> 00:31:44,080 Speaker 6: culture changed. Methane emissions is about changing culture, and it's 536 00:31:44,080 --> 00:31:48,560 Speaker 6: about helping people understand that businesses as usual isn't where 537 00:31:48,600 --> 00:31:52,120 Speaker 6: we need to be anymore. It's not what's expected. Even 538 00:31:52,160 --> 00:31:56,360 Speaker 6: when you look at the younger workforce, if we were 539 00:31:56,440 --> 00:31:58,760 Speaker 6: killing two people a year, they wouldn't want to work here. 540 00:31:58,920 --> 00:32:00,640 Speaker 6: You wouldn't want to work for a comp like that. 541 00:32:00,960 --> 00:32:02,880 Speaker 6: And it's the same way with emissions. If you're not 542 00:32:03,080 --> 00:32:08,280 Speaker 6: continuously improving how you operate and understanding and utilizing new 543 00:32:08,320 --> 00:32:11,880 Speaker 6: tools that come out data driven tools, then you're not 544 00:32:11,920 --> 00:32:14,320 Speaker 6: attracting the best and brightest talent. People aren't going to 545 00:32:14,360 --> 00:32:16,160 Speaker 6: want to work for you, and people aren't going to 546 00:32:16,200 --> 00:32:16,920 Speaker 6: want your product. 547 00:32:18,000 --> 00:32:22,320 Speaker 2: As a climate scientist, are you hopeful that we actually 548 00:32:22,320 --> 00:32:25,320 Speaker 2: will make some of those targets that are out there 549 00:32:25,360 --> 00:32:26,560 Speaker 2: for reducing method images. 550 00:32:26,760 --> 00:32:29,080 Speaker 1: I think the thing that makes me most hopeful is 551 00:32:29,120 --> 00:32:33,120 Speaker 1: actually seeing that the driver for folks to use long 552 00:32:33,200 --> 00:32:36,000 Speaker 1: path to reduce emissions from oil and gas. It's not 553 00:32:36,200 --> 00:32:39,800 Speaker 1: necessarily just because it's the right thing to do. It's 554 00:32:39,840 --> 00:32:43,960 Speaker 1: because the market drivers are evolving to push this kind 555 00:32:43,960 --> 00:32:46,400 Speaker 1: of thing. It's not because the regulations are forcing you to. 556 00:32:46,920 --> 00:32:49,640 Speaker 1: It's because the market is asking you to. And that 557 00:32:49,720 --> 00:32:52,040 Speaker 1: makes me hopeful as a climate scientist to say we're 558 00:32:52,040 --> 00:32:54,360 Speaker 1: getting the flywheel rolling now that this is how we 559 00:32:54,400 --> 00:32:56,440 Speaker 1: need to operate in a new world, and we need 560 00:32:56,480 --> 00:32:58,880 Speaker 1: to track emissions, and that's good for business. 561 00:33:00,360 --> 00:33:04,560 Speaker 2: New technology can help natural gas producers stop those damaging 562 00:33:04,600 --> 00:33:08,520 Speaker 2: methane lenks, but will the market provide the needed incentives 563 00:33:08,680 --> 00:33:10,000 Speaker 2: if the government does not. 564 00:33:14,280 --> 00:33:17,959 Speaker 6: There is an interest in the methane and or carbon 565 00:33:18,040 --> 00:33:22,320 Speaker 6: intensity of the product that we produce, and that's for 566 00:33:22,440 --> 00:33:25,680 Speaker 6: both utility customers, so they're using our product to distribute 567 00:33:25,680 --> 00:33:29,920 Speaker 6: to their customers using it to produce power, or a 568 00:33:29,960 --> 00:33:34,080 Speaker 6: company that is bringing natural gas into their system and 569 00:33:34,120 --> 00:33:36,320 Speaker 6: they're looking at an overall net zero goal. 570 00:33:36,920 --> 00:33:40,640 Speaker 2: Fixing methane leaks also helps producers like Jonah Energy meet 571 00:33:40,680 --> 00:33:42,920 Speaker 2: the needs of investors and insurers. 572 00:33:43,640 --> 00:33:47,200 Speaker 6: A lot of insurers, a lot of investors today, our 573 00:33:47,240 --> 00:33:51,560 Speaker 6: management team. They also look at risk and not having 574 00:33:51,600 --> 00:33:54,760 Speaker 6: the ability to operate. The social license to operate, as 575 00:33:54,760 --> 00:33:58,120 Speaker 6: people like to say, I think is an intangible value. 576 00:33:58,160 --> 00:34:00,520 Speaker 6: It's hard to put a dollar value on that. But 577 00:34:00,840 --> 00:34:03,920 Speaker 6: when we are able to say, look, we know what 578 00:34:03,960 --> 00:34:07,280 Speaker 6: our emissions are, it gives our investors, it gives our 579 00:34:07,320 --> 00:34:10,160 Speaker 6: insurers confidence in the work that we do well. 580 00:34:10,160 --> 00:34:13,560 Speaker 2: It's interesting do investors really ask questions about methane emissions 581 00:34:13,560 --> 00:34:16,160 Speaker 2: when they decide whether put capital into your company. 582 00:34:16,560 --> 00:34:16,960 Speaker 3: They do. 583 00:34:17,760 --> 00:34:21,960 Speaker 6: There's typically a series of questions and it isn't just emissions. 584 00:34:22,040 --> 00:34:24,440 Speaker 6: It has to do with all of the things that 585 00:34:24,480 --> 00:34:27,440 Speaker 6: we do environmentally on an operations basis. 586 00:34:27,760 --> 00:34:30,800 Speaker 2: Why are insurers concerned about methane emissions? 587 00:34:30,840 --> 00:34:34,080 Speaker 6: From the questions that they ask, the things that are 588 00:34:34,080 --> 00:34:38,080 Speaker 6: interested in our long term environmental issues such as a 589 00:34:38,280 --> 00:34:45,760 Speaker 6: large spill of fluid, a major release of natural gas. 590 00:34:45,920 --> 00:34:49,480 Speaker 6: So understanding that we have the best practices and the 591 00:34:49,520 --> 00:34:53,759 Speaker 6: best tools and technologies available to us to minimize those things, 592 00:34:53,800 --> 00:34:55,920 Speaker 6: I think is very important to an ensure. 593 00:34:57,160 --> 00:34:59,200 Speaker 2: That does it for us here at Wall Street Week, 594 00:34:59,360 --> 00:35:02,200 Speaker 2: I'm David West, and this is Bloomberg. See you next 595 00:35:02,200 --> 00:35:11,399 Speaker 2: week for more stories of capitalism.