WEBVTT - Running On Empty ft. Wil VanLoh 0:00:00.280 --> 0:00:05.960 A global pandemic, over sixteen thousand Americans dead, and over 0:00:06.040 --> 0:00:10.240 seventeen million Americans have lost their job and global energy 0:00:10.280 --> 0:00:16.079 markets crushed by collapsing oil prices. These are extraordinary times 0:00:16.079 --> 0:00:19.560 in which we live. This is Verdict with Ted Cruz. 0:00:27.160 --> 0:00:30.480 Welcome back to Verdict with Ted Cruz. I'm Michael Knowles, Senator. 0:00:30.560 --> 0:00:32.400 You're starting us off on a little bit of a 0:00:32.440 --> 0:00:35.839 downer there, but I guess we're living in fairly down times. 0:00:36.000 --> 0:00:37.960 I want to focus in on something you said there 0:00:38.200 --> 0:00:41.839 about the energy markets, because last I checked, oil was 0:00:41.840 --> 0:00:44.560 trading at something like twenty two dollars a barrel. It 0:00:44.640 --> 0:00:47.080 is very, very low, and I think for most people 0:00:47.240 --> 0:00:50.200 the interaction we have with the oil industry is when 0:00:50.200 --> 0:00:53.080 we fill up our gas tanks. So low oil prices 0:00:53.120 --> 0:00:55.880 are not necessarily a bad thing when we look at it. 0:00:55.880 --> 0:00:57.800 What are we missing here? Well, I think right now 0:00:57.840 --> 0:01:01.200 we're facing three different crises all the same time. We've 0:01:01.240 --> 0:01:04.360 got a global pandemic, the Corona virus crisis. We're all 0:01:04.400 --> 0:01:07.800 familiar with the cases, the deaths, and we're taking extraordinary 0:01:07.800 --> 0:01:10.440 steps to try to stop the spread of that virus. 0:01:11.000 --> 0:01:14.959 There's an economic crisis, say a disaster seventeen million people 0:01:15.000 --> 0:01:17.959 in last three weeks have filed for unemployment. We've seen 0:01:18.120 --> 0:01:22.560 entire industries decimated and that's producing enormous damage. But at 0:01:22.560 --> 0:01:25.679 the same time, you've got energy markets, and in particular, 0:01:25.760 --> 0:01:29.920 the global price of oil has dropped more than in half, 0:01:30.560 --> 0:01:35.720 and the consequence of that is it potentially risk bankrupting most, 0:01:35.760 --> 0:01:38.920 if not every, American energy producer, and particularly in my 0:01:39.200 --> 0:01:42.640 home state of Texas. That's devastating. But if you end 0:01:42.760 --> 0:01:46.360 up seeing American energy producers driven out of business, that 0:01:46.480 --> 0:01:49.280 also has massive implications in terms of you and me 0:01:49.640 --> 0:01:52.440 paying higher prices at the pump in years to come, 0:01:52.920 --> 0:01:57.400 and also geopolitically making us dependent on foreign countries in 0:01:57.400 --> 0:02:00.520 a way that we just now managed to yet free 0:02:00.520 --> 0:02:02.920 and independent front. So what you're saying is we shouldn't 0:02:02.960 --> 0:02:05.800 be celebrating maybe a little dip in the gas prices 0:02:05.880 --> 0:02:08.680 right now because in the long term, financially, that could 0:02:08.680 --> 0:02:11.600 really hurt us. And also it has these national security 0:02:11.639 --> 0:02:14.440 implications that look pretty bad down the road. I just 0:02:14.480 --> 0:02:16.160 want to point out something you said center. You said 0:02:16.200 --> 0:02:18.400 you flew out and met with the president. You met 0:02:18.440 --> 0:02:22.040 with the president specifically because of this energy crisis that's 0:02:22.040 --> 0:02:25.360 how bad it's gotten. No, that's exactly right. On Friday, 0:02:25.400 --> 0:02:28.600 I got on a plane on a United commercial flight 0:02:28.680 --> 0:02:30.760 that was practically empty. They were there, only maybe ten 0:02:30.840 --> 0:02:34.000 fifteen of us on it. Flew up to Dcent, went 0:02:34.040 --> 0:02:36.280 to the White House, had a two hour meeting, and 0:02:36.320 --> 0:02:38.919 we're all from states that are big energy producers. And 0:02:39.760 --> 0:02:42.359 we started by writing a letter to the Saudi ambassador. 0:02:42.800 --> 0:02:44.520 Then a couple of weeks ago we did a conference 0:02:44.520 --> 0:02:47.440 call with the Saudi ambassador, nine of us. I gotta 0:02:47.440 --> 0:02:50.880 tell you it was the most bare knuckled, candid conversation 0:02:51.120 --> 0:02:53.760 really I've ever had with a foreign leader in eight 0:02:53.840 --> 0:02:58.080 years in the Senate. Can get cursior, I can. So 0:02:58.120 --> 0:03:00.920 we're on a conference call with the ambassador. Here's what 0:03:00.960 --> 0:03:03.080 I said. I said, Listen, no state in the Union 0:03:03.120 --> 0:03:06.560 does more business with Saudi Arabia than Texas. And right 0:03:06.560 --> 0:03:10.680 now you're taking advantage of a global health pandemic to 0:03:10.720 --> 0:03:16.200 try to screw and bankrupt people across Texas. And it 0:03:16.400 --> 0:03:20.040 is devastating. And the thirteen of us who signed on 0:03:20.080 --> 0:03:22.440 to the letter is a matter of national security, have 0:03:23.000 --> 0:03:26.280 consistently been allies of the Saudi Saudia is an important 0:03:26.320 --> 0:03:29.800 counterpart to Iran. Iran and the Ayatola are really dangerous 0:03:29.800 --> 0:03:33.480 for national security. But I said, listen, you know we've 0:03:33.560 --> 0:03:36.520 we've been with you, but you're now trying to bankrupt 0:03:36.600 --> 0:03:40.120 people in my state and that is not going to stand. Now, 0:03:40.280 --> 0:03:45.160 here's the Saudi ambassador's defense. But Russia. But Russia, And 0:03:45.280 --> 0:03:47.480 it sounds like three media for the last three years. 0:03:48.640 --> 0:03:52.640 Well they do they And I said, listen, Russia is 0:03:52.680 --> 0:03:55.920 our enemy. We know that they behave like our enemy. 0:03:55.960 --> 0:03:58.920 We treat him as our enemy. You're supposed to be 0:03:58.920 --> 0:04:01.880 our friend. You want us to treat you like Russia? Fine, 0:04:02.000 --> 0:04:04.080 you want to be our enemy, how about we pull 0:04:04.160 --> 0:04:06.760 up all our soldiers out of Saudi Arabia, we pull 0:04:06.760 --> 0:04:09.640 our Patriot missiles out there. Because every time someone screws 0:04:09.640 --> 0:04:11.520 with you in the Middle East, you pick up the 0:04:11.520 --> 0:04:16.000 phone to call the American military and say save our asses. Well, 0:04:16.000 --> 0:04:19.480 then don't bankrupt people in my state. And I was pissed. Yeah, 0:04:19.800 --> 0:04:24.000 I gotta tell you it was interesting that call. I 0:04:24.040 --> 0:04:25.800 think it got the e fact, I know it got 0:04:25.800 --> 0:04:28.479 their attention. So you and I we've invited a guest. 0:04:28.480 --> 0:04:30.719 It's it's a long time friend of mine, will Van Lowe. 0:04:31.520 --> 0:04:34.680 Will is the CEO of Quantum Energy Partners Now that 0:04:34.800 --> 0:04:40.039 is an eighteen billion dollar private equity energy fund. Quantum 0:04:40.279 --> 0:04:43.719 is the third largest driller in North America. And I 0:04:43.720 --> 0:04:46.360 gotta tell you Will is someone who knows the energy 0:04:46.440 --> 0:04:49.560 markets as well, if not better than anyone I know. 0:04:49.640 --> 0:04:52.000 And so in the last couple of weeks, as I 0:04:52.040 --> 0:04:54.760 went up to meet with the president major energy CEO's 0:04:54.839 --> 0:04:58.000 last week, Will was someone we literally spent probably six 0:04:58.040 --> 0:05:00.839 seven hours on the phone trying to unders and what's 0:05:00.880 --> 0:05:05.359 happening here and the real threat to jobs and energy 0:05:05.400 --> 0:05:07.680 security O country, and so well, welcome to verdict Will. 0:05:07.720 --> 0:05:09.919 For so many years we complained about how we're dependent 0:05:09.960 --> 0:05:13.440 on the Middle East for energy, we are totally trapped 0:05:13.760 --> 0:05:18.000 for energy, and yet this technology helped to lead us 0:05:18.000 --> 0:05:19.840 away from that and get us to what I guess 0:05:19.880 --> 0:05:23.599 we'd call energy independence until maybe five minutes ago, that's right, 0:05:24.120 --> 0:05:26.120 And I think that is a huge when you think 0:05:26.160 --> 0:05:29.719 about the United States has had more wells drilled in 0:05:29.760 --> 0:05:31.760 it than the rest of the world combined. That's a 0:05:31.800 --> 0:05:35.000 pretty amazing statistic to think about. When it comes to shale. 0:05:35.000 --> 0:05:36.800 Do we have a lot of it here? Yeah? Oh? Well, 0:05:36.960 --> 0:05:41.360 for sure. Probably ninety five percent of all shale production 0:05:41.440 --> 0:05:43.920 in the world is in United States. Part of that's 0:05:43.960 --> 0:05:47.640 due to our geology, right, so they've tried it. For example, 0:05:47.640 --> 0:05:50.120 in Europe, they don't have the same rocks over there. 0:05:50.279 --> 0:05:51.960 Now there's other parts of the world where there's a 0:05:52.000 --> 0:05:54.279 lot of shale, but those are parts of the world 0:05:54.320 --> 0:05:57.279 that typically have a lot of conventional oil and gas 0:05:57.279 --> 0:05:59.719 as well. And if you don't need to drill, it 0:05:59.760 --> 0:06:03.480 calls more money to drill wells unconventionally horizontally and put 0:06:03.520 --> 0:06:05.719 the big fracts on them. So places like in the 0:06:05.720 --> 0:06:08.120 Middle East where they have a lot of conventional production, 0:06:08.440 --> 0:06:12.640 they don't need to drill horizontal wells. So last ten 0:06:12.720 --> 0:06:16.839 years we have this technological innovation. We discover how to 0:06:16.920 --> 0:06:20.520 access massive reserves that were there but we didn't know 0:06:20.520 --> 0:06:24.560 how to get to it right. And suddenly America passes everybody. 0:06:24.600 --> 0:06:27.039 We pass Audi Arabia, we pass Russia, We become the 0:06:27.080 --> 0:06:31.560 top producer in the world. Who is it that drove that? 0:06:31.800 --> 0:06:35.160 And is the energy industry? Look, I think a lot 0:06:35.160 --> 0:06:37.240 of people think of energy and they think of big oil. 0:06:37.279 --> 0:06:39.480 They think of a couple of you know, giant companies 0:06:39.680 --> 0:06:42.040 Xon and Shell, and you know these giant companies, is 0:06:42.440 --> 0:06:44.640 that who did this innovation? No, And that's you know, 0:06:44.680 --> 0:06:47.280 that's the interesting thing because so much the dialogue right 0:06:47.279 --> 0:06:51.080 now in Washington is involving the Xons and the Chevrons 0:06:51.080 --> 0:06:53.880 of the world. And there're certainly big players in Shell today, 0:06:54.120 --> 0:06:56.640 but they didn't drive the innovation. It was actually the 0:06:56.640 --> 0:06:59.360 independence that drove that innovation in the United States. So 0:06:59.440 --> 0:07:03.159 what's an UM. Well, an independent is basically an oil 0:07:03.200 --> 0:07:05.760 and gas company that's not a major. So the majors 0:07:05.760 --> 0:07:09.560 are typically integrated companies. They're the largest companies in the 0:07:09.600 --> 0:07:14.480 world in terms of publicly or privately owned outside of 0:07:14.480 --> 0:07:17.760 government owned oil companies. And these majors, I mean, they're 0:07:17.840 --> 0:07:20.400 they're massive. I mean some of them they have GDPs 0:07:20.440 --> 0:07:22.480 that rival company so well they do like that's on 0:07:22.600 --> 0:07:25.440 for example, they produce over four million barrels a day. Right, 0:07:25.960 --> 0:07:28.280 there's only a couple, there's only a handful of countries 0:07:28.280 --> 0:07:30.880 in the world that produce over four million barrels a day. 0:07:30.960 --> 0:07:36.520 But the shale revolution was started and driven by independence 0:07:36.560 --> 0:07:39.080 and independence you're talking. You and I both spent a 0:07:39.080 --> 0:07:42.120 lot of time out in Midland, Texas. You're talking sometimes 0:07:43.000 --> 0:07:47.160 five ten twenty guys in a little office who were 0:07:47.200 --> 0:07:51.120 raising some money and going out and drilling holes and innovating. 0:07:52.360 --> 0:07:56.960 That's what drove this entire revolution and change the entire geopolitics. 0:07:57.080 --> 0:08:00.120 It did. And to be fair that the technology is 0:08:00.160 --> 0:08:04.680 probably driven more by the larger public independence companies like Chesapeake, 0:08:04.720 --> 0:08:09.280 companies like Pioneer, those types. They drove the technology, but 0:08:09.440 --> 0:08:13.440 the smaller independence were very quick to get in and 0:08:13.520 --> 0:08:17.200 really take that and they're much more nimble than the 0:08:17.200 --> 0:08:22.120 public companies. So they take the big, the big technology revolutions, 0:08:22.440 --> 0:08:26.200 and they do a lot of evolutionary changes in that technology, 0:08:26.640 --> 0:08:29.120 and they get it out there very quick. They're and 0:08:29.120 --> 0:08:31.960 they're able to access large amounts of land. And so 0:08:32.040 --> 0:08:35.079 the independence, both the public, the larger public independence as 0:08:35.080 --> 0:08:38.240 well as the thousands of smaller kind of mom and 0:08:38.280 --> 0:08:41.320 pop independence, they're really the ones that have made this 0:08:42.400 --> 0:08:45.679 independence of energy possible as well. I don't want to 0:08:45.679 --> 0:08:49.000 reign on your parade here, but this sounds too good. 0:08:49.280 --> 0:08:51.800 This sounds too good to be true right now because 0:08:52.040 --> 0:08:55.800 you've you've got this great energy revolution here, you're empowering 0:08:55.840 --> 0:09:00.280 so many people American ingenuity, and then the prices all 0:09:00.320 --> 0:09:04.320 plummets so I understand how it worked out. So well, 0:09:04.960 --> 0:09:09.120 what went wrong? Well, let's back up a little bit 0:09:09.160 --> 0:09:12.240 and you think about prices plummeting. Prices plummeted from about 0:09:12.280 --> 0:09:14.280 sixty dollars a barrel at the beginning of the year 0:09:14.679 --> 0:09:16.839 down about twenty dollars a barrel a few weeks ago. 0:09:16.920 --> 0:09:18.920 Now they're up in the mid to high twenties now. 0:09:19.760 --> 0:09:23.000 But let's not forget before the shell revolution started in 0:09:23.040 --> 0:09:25.000 two thousand and eight, Well, it was one hundred and 0:09:25.000 --> 0:09:27.839 forty seven dollars a barrel. Okay, wow, so hold on, 0:09:27.880 --> 0:09:29.959 hold on a second, one hundred and forty seven dollars 0:09:29.960 --> 0:09:32.960 a barrel, and then it came down to fifty sixty 0:09:33.000 --> 0:09:35.880 dollars a barrel. And now it's plummeted to the twenties 0:09:36.000 --> 0:09:40.240 right right, And through American innovation and ingenuity, we were 0:09:40.240 --> 0:09:43.079 able to get the cost. Initially, these shell wells were 0:09:43.160 --> 0:09:45.960 very expensive and you didn't recover a lot of hydrocarbon. 0:09:46.240 --> 0:09:48.320 And through a lot of science, through a lot of 0:09:48.320 --> 0:09:51.120 just innovation and trial and error, we were able to 0:09:51.360 --> 0:09:54.360 meaningfully perfect, if you will, the way we drilled and 0:09:54.360 --> 0:09:57.440 completed these wells, and we got the cost down to 0:09:57.480 --> 0:10:00.880 a level where at fifty to sixty dollars, the US 0:10:01.080 --> 0:10:06.240 on gas companies can make a respectable profit, and the 0:10:06.280 --> 0:10:08.600 industry for the last four or five years has been 0:10:08.679 --> 0:10:11.079 chugging along. And fifty to sixty dollars. Look, most of 0:10:11.120 --> 0:10:13.480 us don't buy a barrel of oil, so that number 0:10:13.520 --> 0:10:16.440 doesn't mean anything to us. What does that mean fifty 0:10:16.480 --> 0:10:19.040 sixty oil? What does that mean in terms of a 0:10:19.040 --> 0:10:22.520 gallon of gas? Gas? And understanding a lot of the 0:10:22.559 --> 0:10:26.360 cost of gas is actually taxes, right, and those don't change. 0:10:27.400 --> 0:10:30.240 So three three to four dollars, depending on the state 0:10:30.440 --> 0:10:32.880 and city you live in, is what fifty to sixty 0:10:32.920 --> 0:10:34.720 dollars oil. So Michael will pay a lot more in 0:10:34.760 --> 0:10:39.439 California than dollars. He will absolutely pay more. Although I 0:10:39.480 --> 0:10:41.600 don't know that you need to fill your electric scooter, Michael, 0:10:41.640 --> 0:10:43.840 so that hell, that's the thing. We actually just run 0:10:43.880 --> 0:10:46.440 on moonbeams out here, so we don't need any sort 0:10:46.480 --> 0:10:49.600 of energy. So what I'm hearing though, is you don't 0:10:49.640 --> 0:10:51.560 want the price of oil to be so expensive that 0:10:51.600 --> 0:10:53.400 it's going to kill us all at the pump. But 0:10:53.480 --> 0:10:55.200 you also don't want the price of oil to be 0:10:55.240 --> 0:10:57.520 so low that you put all of these companies out 0:10:57.520 --> 0:11:00.199 of business. You want there to be some meat m 0:11:00.240 --> 0:11:02.599 in there. What are the odds that we're going to 0:11:02.640 --> 0:11:04.480 be able to get back to that before the American 0:11:04.559 --> 0:11:08.760 energy industry is just destroyed. Yeah, you know, right now 0:11:08.760 --> 0:11:11.720 it's not looking good. It's not looking good for two reasons. 0:11:11.800 --> 0:11:15.040 One was Saudi and Russia have decided they we're going 0:11:15.120 --> 0:11:18.520 to basically launch a market share war on the US. 0:11:18.720 --> 0:11:21.680 And as Senator Crew said a minute ago, you know, 0:11:21.720 --> 0:11:24.440 the US went from being a huge energy importer. You know, 0:11:24.480 --> 0:11:27.600 we imported more than twelve million barrels a day less 0:11:27.600 --> 0:11:31.079 than a decade ago to literally over the last six 0:11:31.120 --> 0:11:33.880 months or so, we given on any given week, we 0:11:33.960 --> 0:11:36.960 will export or import a few hundred thous you know, 0:11:36.960 --> 0:11:38.559 so we'll be a net export or a net import 0:11:38.640 --> 0:11:40.800 or maybe one hundred or two hundred thousand barrels, right, 0:11:41.200 --> 0:11:43.559 And so that if you think about that and you 0:11:43.600 --> 0:11:46.480 think about the impact on our economy. That's depending on 0:11:46.520 --> 0:11:48.400 the price of oil. But say at fifty dollars oil, 0:11:48.640 --> 0:11:51.760 that's about two hundred and fifty billion dollars a year 0:11:52.280 --> 0:11:55.160 that stays here in the US. That US oil and 0:11:55.240 --> 0:11:58.160 gas industry has created additional revenue. The taxes that come 0:11:58.160 --> 0:12:01.200 off of that, the millions of jobs were created. What 0:12:01.240 --> 0:12:04.200 does that mean for jobs? How does that Whose jobs 0:12:04.200 --> 0:12:08.120 are we talking about here? Well, we're talking about very 0:12:08.240 --> 0:12:11.800 high paying middle and upper middle class jobs. We're talking 0:12:11.840 --> 0:12:17.600 about engineers, geologist, geophysicist, production engineers. We're talking about a 0:12:17.600 --> 0:12:21.120 lot of jobs out in the field, so for both 0:12:21.320 --> 0:12:23.760 lots of of blue collar job but also a lot 0:12:23.800 --> 0:12:29.160 of white collar jobs. So if we lose American energy production, 0:12:29.160 --> 0:12:34.400 if these companies go bankrupt, we're still going to need 0:12:34.480 --> 0:12:37.400 energy when the economy comes back, right, We're still going 0:12:37.440 --> 0:12:39.600 to drive our cars, We're gonna fly airplanes. And so 0:12:39.840 --> 0:12:43.679 if the American companies are bankrupt, where are we going 0:12:43.720 --> 0:12:45.640 to get our energy? We're going to get it where 0:12:45.640 --> 0:12:48.160 we used to get it, and that's from foreign sources 0:12:48.200 --> 0:12:52.880 like the Middle East, like Russia. And that's really to me, Senator, 0:12:52.960 --> 0:12:55.480 that the key question the US has to ask itself 0:12:55.640 --> 0:12:58.800 is do we want to be energy independent or not? 0:12:59.320 --> 0:13:02.839 In the answer to that question, all policy will flow 0:13:02.920 --> 0:13:06.080 from whether the answer is yes or no. Sorry to interrupt, 0:13:06.120 --> 0:13:09.079 will because most people, I think want that energy independence. 0:13:09.200 --> 0:13:11.840 That's what we always hear our politicians talking about. Certainly, 0:13:11.840 --> 0:13:14.200 what I want for US, But what you're describing is 0:13:14.200 --> 0:13:16.120 the problem here. I just assumed it was all the 0:13:16.160 --> 0:13:19.480 coronavirus that's upsetting all the global markets. You're saying there's 0:13:19.480 --> 0:13:23.600 something else in play, which is this price war between 0:13:23.800 --> 0:13:27.120 Russia and Saudi Arabia going after the United States. What 0:13:27.559 --> 0:13:28.959 does that mean? I mean, is that related to the 0:13:29.040 --> 0:13:32.200 virus or is that a totally separate issue. Totally separate, 0:13:32.240 --> 0:13:36.040 and to be fair, the demand destruction that's associated with 0:13:36.080 --> 0:13:40.160 coronavirus is a much bigger issue today in the near term, 0:13:40.440 --> 0:13:43.680 if I understand it. Globally, the demand for oil in 0:13:43.800 --> 0:13:47.680 normal times four months ago was between ninety five and 0:13:47.720 --> 0:13:49.760 one hundred million barrels a day, about one hundred million 0:13:49.760 --> 0:13:54.600 barrels a day. As a result of the economy slowing 0:13:54.679 --> 0:13:57.959 down and grinding to a halt in the US and globally, 0:13:58.760 --> 0:14:01.760 it's dropped to about what about seventy million barrels a day. 0:14:01.880 --> 0:14:04.000 There's a lot of different estimates out there, but I'd 0:14:04.000 --> 0:14:06.719 say they range anywhere from a twenty to as much 0:14:06.720 --> 0:14:09.440 as probably thirty five million barrel a day demand destruction, 0:14:09.520 --> 0:14:12.360 So that would say somewhere between sixty five and eighty 0:14:12.360 --> 0:14:14.959 million barrels a day is currently what the globe is 0:14:15.040 --> 0:14:18.320 using today. So that had a big negative impact on price. 0:14:18.360 --> 0:14:22.280 When when when a third or more of the demand disappears, right, 0:14:23.120 --> 0:14:27.520 that it's never happened. That that's it's it's beyond without precedent. 0:14:27.680 --> 0:14:30.160 That is, well, that's everybody's car sitting in their driveways 0:14:30.160 --> 0:14:32.840 and everyone's airplane staying parked at the hangar and nobody 0:14:32.960 --> 0:14:35.920 nobody flying, and very few people drop. And to put 0:14:35.960 --> 0:14:39.600 that into context, during the Great Financial Crisis, total global 0:14:39.640 --> 0:14:41.520 demand dropped by only about two and a half to 0:14:41.560 --> 0:14:45.280 three million barrels a day. Wow, so we're looking at 0:14:45.320 --> 0:14:49.000 ten times as much reduction in demand now as as 0:14:49.120 --> 0:14:52.880 during the financial meltdown. That's exactly right. So but then 0:14:52.920 --> 0:14:55.120 you've got a second component, which is you have the 0:14:55.160 --> 0:14:58.960 Saudis and the Russians right as coronavirus is breaking. Yes, 0:14:59.400 --> 0:15:04.560 decide this is a great opportunity to screw the Americans, 0:15:04.600 --> 0:15:08.720 to bankrupt the American energy business. And listen what you're 0:15:08.760 --> 0:15:12.880 doing drilling in in West Texas shale. The Saudis and 0:15:12.960 --> 0:15:16.480 Russians have hated it because you pass them up with 0:15:16.560 --> 0:15:19.240 America as the top producer and so they're sitting there. 0:15:19.240 --> 0:15:21.720 If I understand this right, they're taking this as an opportunity. 0:15:21.760 --> 0:15:24.560 All right, we've got a crisis. Let's put these guys 0:15:24.560 --> 0:15:27.520 out of business. Let's bankrupt them so that when all 0:15:27.640 --> 0:15:30.160 is said and done, we're the only players left in 0:15:30.200 --> 0:15:32.440 the game. Senator, if you think back to when the 0:15:32.520 --> 0:15:36.480 oil shell revolution started and you look at total global 0:15:36.560 --> 0:15:39.200 supply growth since then, about eight or nine years ago, 0:15:40.200 --> 0:15:43.840 eighty percent of total global supply growth has come from 0:15:43.840 --> 0:15:46.800 the United States of America. Okay, that's a country that 0:15:46.920 --> 0:15:51.160 today produces about thirteen fourteen percent, maybe fifteen if you 0:15:51.200 --> 0:15:53.560 had in all the NGLs and other liquids. What's an 0:15:54.000 --> 0:15:57.120 I'm sorry, natural gas liquids. But let's say the US 0:15:57.200 --> 0:16:01.600 today produces about fifteen percent of global liquid supply. Yet 0:16:01.640 --> 0:16:06.080 we've accounted for eighty percent of total global liquids growth 0:16:06.480 --> 0:16:11.880 over the last decade. That's extraordinary, and that challenged OPEC supremacy, 0:16:11.920 --> 0:16:15.240 and it challenged russ A supremacy. And it also helped, 0:16:15.280 --> 0:16:18.720 if I understand right, drive the price down quite a bit, 0:16:18.760 --> 0:16:21.920 by two thirds. It drove prices. If had the US 0:16:22.000 --> 0:16:25.280 share revolution not happened, think about we were one hundred 0:16:25.320 --> 0:16:27.320 and forty seven dollars a barrel, and that was pre 0:16:27.720 --> 0:16:30.720 oil shells. Prices probably would have gone a lot higher 0:16:30.720 --> 0:16:34.560 from there, and so that that huge drop. And what 0:16:34.720 --> 0:16:38.720 Russian Saudi I actually think that they may not have 0:16:38.800 --> 0:16:40.760 chosen to launch this price war had it not been 0:16:40.800 --> 0:16:44.640 for coronavirus, because both countries if you look at their 0:16:44.680 --> 0:16:47.960 ability to how long can they go and with low 0:16:48.000 --> 0:16:52.360 oil prices, you know, Saudi today is much worse equipped 0:16:52.640 --> 0:16:55.160 for a long price war than they were back in 0:16:55.200 --> 0:16:58.760 twenty fourteen during the last big collapse in prices, right, 0:16:58.800 --> 0:17:00.920 because they've they've deployed needed a lot of their sovereign 0:17:00.960 --> 0:17:04.719 wealth funds and their their break even costs today is 0:17:05.200 --> 0:17:07.880 probably eighty dollars a barrel. And what I mean by 0:17:07.880 --> 0:17:09.840 that is they fund their entire government out of their 0:17:09.840 --> 0:17:13.480 oil revenues, whereas Russia's is only about forty to forty 0:17:13.480 --> 0:17:16.320 five dollars a barrel. So Russia, but they're doing it 0:17:17.040 --> 0:17:19.000 used to be what we would call an antitrust law 0:17:19.040 --> 0:17:23.240 predatory pricing, right, and that they're when they flooded the 0:17:23.280 --> 0:17:25.080 market with oil and they announced they were going to 0:17:25.160 --> 0:17:28.520 do that and drove the prices way down, they were 0:17:28.560 --> 0:17:30.639 taking a big hit themselves, but they were doing it 0:17:30.680 --> 0:17:34.440 to bankrupt their competitors and then sweep in and dominate 0:17:34.480 --> 0:17:37.960 the market. That's right. Let me let me pause for 0:17:38.000 --> 0:17:40.880 a second and kind of play Devil's advocate. You mentioned 0:17:40.920 --> 0:17:45.479 two technological innovations that helped us access all these massive 0:17:45.480 --> 0:17:48.800 shale reserves. One was horizontal drilling, but it was combining 0:17:48.920 --> 0:17:53.439 that with hydraulic fracturing fracking. Look, fracking, I've heard a 0:17:53.440 --> 0:17:55.800 lot of scary things on the internet about that. I've 0:17:55.880 --> 0:17:58.520 heard it messes with the water table. You can light 0:17:58.560 --> 0:18:01.399 the water on fire, that's what they say. So is 0:18:01.480 --> 0:18:03.920 that is that for real? Should I be worried that 0:18:04.320 --> 0:18:08.760 fracking makes it dangerous to drink the water? No? You know, 0:18:09.520 --> 0:18:12.480 there's probably not a bigger set of environmentalists in terms 0:18:12.520 --> 0:18:14.879 of people that like the outdoors, that like the water, 0:18:15.000 --> 0:18:17.760 that are you know, really love the earth than people 0:18:17.800 --> 0:18:19.920 the good people you'll find any on gas business, right, 0:18:20.400 --> 0:18:23.440 and I think there is. Uh. You gotta remember, when 0:18:23.440 --> 0:18:26.800 we frack a well, these wells are anywhere between eight 0:18:26.840 --> 0:18:30.480 and fifteen thousand feet below the air's surface. The surface 0:18:30.520 --> 0:18:33.720 water that people drink is anywhere from fifty feet to 0:18:33.800 --> 0:18:36.159 maybe three or four hundred feet below. So let me 0:18:36.160 --> 0:18:38.919 make sure I understand that you got the surface fifty 0:18:38.920 --> 0:18:41.000 to three hundred feet down. That's not that far down. 0:18:41.840 --> 0:18:43.919 That's the water table. That's where the water is that 0:18:43.920 --> 0:18:46.119 we get our drinking one. That's correct. So that's not 0:18:46.160 --> 0:18:49.960 where you're fracking. No, you're fracking ten thousand feet below 0:18:50.000 --> 0:18:52.119 that and ten thousand feet if my math is right, 0:18:52.119 --> 0:18:55.720 that's two miles two miles of rock downlow. So where 0:18:55.760 --> 0:19:00.560 you're doing this is two miles away from the water, right. Um, 0:19:01.160 --> 0:19:03.320 let me ask a different question. So my daughter Caroline, 0:19:03.320 --> 0:19:05.399 you know Caroline, she's eleven. She actually said to me 0:19:05.520 --> 0:19:09.240 last night, she said, you know, everything that's that's happened 0:19:09.240 --> 0:19:11.280 in this crisis has been really good for the environment. 0:19:11.320 --> 0:19:14.480 The environment is cleaning up right, And listen, it is 0:19:14.520 --> 0:19:18.040 true if we have no production, if if all human 0:19:18.080 --> 0:19:21.880 activity stops, that would be good for the environment. It's 0:19:21.920 --> 0:19:24.359 just not very good for people, It's right. Let me 0:19:24.359 --> 0:19:30.480 ask you something. What happens if all these independent energy 0:19:30.480 --> 0:19:35.720 producers go out of business, the economy gets going again 0:19:35.760 --> 0:19:40.439 after the crisis, and we're dependent once again on the 0:19:40.480 --> 0:19:42.919 Middle East for oil. Is that good or bad for 0:19:42.960 --> 0:19:46.040 the environment? You know, it's a great question because I 0:19:46.040 --> 0:19:48.760 think so many people think, you know, hey, let's let's 0:19:48.800 --> 0:19:51.080 put the US on gas producer out of business, and 0:19:51.640 --> 0:19:54.119 because oil and gas is bad for the environment. But 0:19:54.240 --> 0:19:56.480 that doesn't mean people are going to stop driving your cars. 0:19:56.520 --> 0:19:58.720 It doesn't mean people are going to stop flying in airplanes. 0:19:58.720 --> 0:20:01.040 It doesn't mean people are going to stop buying iPhones, which, 0:20:01.080 --> 0:20:05.000 by the way, take hydrocarbon energy and the plastics, a 0:20:05.000 --> 0:20:07.600 lot of the parts everything we have in our modern life, 0:20:07.600 --> 0:20:11.520 Senator is revolves around hydrocarbons in some form or fashion. 0:20:11.880 --> 0:20:14.159 So they're not the need. Form is not going to 0:20:14.240 --> 0:20:17.040 go away. We will just shift the source where we 0:20:17.080 --> 0:20:19.040 secure those from, and we'll go back to where we 0:20:19.040 --> 0:20:21.920 were a decade ago, which is sending hundreds of billions 0:20:21.960 --> 0:20:25.480 of dollars overseas to people that quite frankly don't like 0:20:25.600 --> 0:20:29.880 us very much. We will lose significant geopolitical and if 0:20:29.920 --> 0:20:31.639 I remember right, an awful lot of the nine to 0:20:31.680 --> 0:20:35.440 eleven terrorists who attacked us, we're from Saudi Arabia. They've 0:20:35.480 --> 0:20:38.560 had their funding stores from there, and so fueling the 0:20:38.600 --> 0:20:42.359 Middle East with billions of American dollars is not good 0:20:42.400 --> 0:20:44.680 for keeping America say it's not, and it will also 0:20:44.760 --> 0:20:47.520 cause the loss. If you think about the biggest growth 0:20:47.560 --> 0:20:50.040 engine in US jobs coming out of the Great Financial 0:20:50.040 --> 0:20:54.480 Crisis was the energy industry and the tens, if not 0:20:54.600 --> 0:20:57.320 hundreds of billions of dollars in taxes that the energy 0:20:57.320 --> 0:21:03.000 industry pays every year to school districts, to other municipalities, hospitals, 0:21:03.600 --> 0:21:08.960 building roads, bridges, infrastructure. Right there. But this is just Texas, right, 0:21:09.000 --> 0:21:11.639 I mean, we're only talking Texas jobs. There's none anywhere 0:21:11.640 --> 0:21:13.600 else in the cold There's there's a number of other 0:21:13.640 --> 0:21:17.119 places throughout the United States, both like where Uh, well, 0:21:17.160 --> 0:21:20.240 you've got the baking it's in North Dakota. Uh, You've 0:21:20.240 --> 0:21:24.320 got the dj that's in Colorado, the powder that's in Wyoming. 0:21:24.400 --> 0:21:27.800 You've got the Permian which is New Mexico. You've got 0:21:27.880 --> 0:21:31.480 several plays in the scoop stack in Oklahoma. That's just 0:21:31.560 --> 0:21:33.560 on the all side. In Pennsylvania, as I say, on 0:21:33.600 --> 0:21:36.240 the gas side, the largest gas field in the United States, 0:21:36.359 --> 0:21:38.399 really one of the largest, maybe the largest in the 0:21:38.440 --> 0:21:43.000 world sits under Pennsylvania, West Virginia, Ohio, and New York. 0:21:43.160 --> 0:21:46.479 So California. California is a huge producer, right, they are 0:21:46.480 --> 0:21:49.280