WEBVTT - Surveillance: Gas Prices with Hochstein (Podcast) 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.200 with Jonathan Farrell and Lisa Abramowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.840 --> 0:00:23.799 To find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:31.160 and of course, on the Bloomberg terminal. Amos Hochstein, Presidential 0:00:31.160 --> 0:00:34.239 Coordinator for Energy Circuit Security for the President of the 0:00:34.320 --> 0:00:38.200 United States, would like West Texas Intermediate quickly to get 0:00:38.240 --> 0:00:41.640 back to eighty dollars a barrel. Amos, I'm gonna cut 0:00:41.640 --> 0:00:44.400 to the chase. You've read the Washington Post, Anny Hoyer 0:00:44.479 --> 0:00:48.880 and others. Uh lukewarm here on the microeconomics of price 0:00:48.960 --> 0:00:53.199 theory of an eighteen cents tax on a galon of gas. 0:00:53.640 --> 0:00:57.920 What's the plan to get oil back to eighty dollars 0:00:57.920 --> 0:01:02.040 a barrel? Well, good morning, Tom for a little thank 0:01:02.080 --> 0:01:05.640 you for having me. Uh. Look, since the since the 0:01:05.720 --> 0:01:10.760 late fall when Putin had a massive troops around Ukraine 0:01:10.800 --> 0:01:15.520 and ultimately the invasion followed by global sanctions, uh, the 0:01:15.560 --> 0:01:18.759 price of gasoline at the pump of Americans has gone 0:01:18.840 --> 0:01:21.640 up about two dollars UH, and diesel probably a little 0:01:21.640 --> 0:01:24.520 bit more than that. So what we are looking at 0:01:25.160 --> 0:01:28.560 is this historic increase in price as a result not 0:01:28.720 --> 0:01:32.720 of normal economic times, but under a time of war, 0:01:33.440 --> 0:01:37.480 at a time of of global security instability that is 0:01:37.840 --> 0:01:42.000 affecting the market and as a result, as we go 0:01:42.080 --> 0:01:46.720 into the into the driving season the summer, the President 0:01:46.760 --> 0:01:50.080 really wants to give a break to American families during 0:01:50.120 --> 0:01:52.720 these three months of the summer, and that's why he's 0:01:52.720 --> 0:01:57.520 asked Congress to suspend uh the eighteen cent gas tacks 0:01:57.600 --> 0:02:00.480 and he's called on governors to do that the same. 0:02:00.560 --> 0:02:03.600 So if the governor's match that, uh, that we're talking 0:02:03.600 --> 0:02:06.400 about fifty cents a gallon less. But I want to 0:02:06.440 --> 0:02:10.440 answer your question Tom directly. Look, we have done everything 0:02:10.680 --> 0:02:14.320 that we can to encourage the industry to increase production, 0:02:14.360 --> 0:02:17.960 which they have, which they are going to this year record. 0:02:18.040 --> 0:02:20.160 We're gonna get to record oil production at the end 0:02:20.280 --> 0:02:22.760 by the end of this year or the next next 0:02:22.800 --> 0:02:26.320 year's first quarter. Uh. We've released the President's ordered the 0:02:26.360 --> 0:02:30.160 release of a million barrels a day from the strategic petroleumers, 0:02:31.080 --> 0:02:35.239 and he led the effort to do two million barrels. 0:02:35.520 --> 0:02:38.880 Here's the problem, and I know you're sitting in the Oval, Uh, 0:02:38.960 --> 0:02:41.840 the Oval Office with a Bloomberg terminal next to you 0:02:41.919 --> 0:02:44.240 as you talk to the President, and you can bring 0:02:44.360 --> 0:02:48.240 up log West Texas Intermediate quarterly like I can't. Anybody 0:02:48.240 --> 0:02:52.359 can do this, bologny. It's about distillates, and it's about 0:02:52.440 --> 0:02:56.960 not in my backyard. How is a centrist Democrat going 0:02:57.000 --> 0:03:01.160 to explain to left Democrats they need to come up 0:03:01.400 --> 0:03:05.920 with a nod in my backyard policy to advocate greater 0:03:06.160 --> 0:03:12.239 distillate capacities in America? How do you do that? So time, 0:03:12.280 --> 0:03:14.680 you raise an excellent point that people tend to focus 0:03:14.720 --> 0:03:17.320 a lot on the oil production, but in reality, Uh, 0:03:17.320 --> 0:03:21.160 it's that's not the issue alone, right. Uh. During the pandemic, 0:03:21.360 --> 0:03:24.560 just during the years of the pandemic, we lost a 0:03:24.600 --> 0:03:28.400 remarkable amount of refining capacity in the United States. And 0:03:28.720 --> 0:03:31.320 those refineries that went out, some of them are gone 0:03:31.320 --> 0:03:33.800 and they're not coming back. We know that they're you know, 0:03:33.919 --> 0:03:36.720 one of them has turned into a terminal. Uh. The others, though, 0:03:36.720 --> 0:03:39.400 are there, and we can invest before we start talking 0:03:39.440 --> 0:03:43.760 about building new refineries. Uh, we can bring back potentially 0:03:44.240 --> 0:03:46.640 the old refineries that have been taken out of commission 0:03:46.680 --> 0:03:49.000 that are still there and what we've with the President 0:03:49.040 --> 0:03:51.400 has asked is for the industry to come to Washington 0:03:51.680 --> 0:03:54.960 to meet with Secretary Grant Holme UH and to bring ideas. 0:03:55.280 --> 0:03:58.320 As he said in his letter, look, he has taken 0:03:58.360 --> 0:04:01.080 extraordinary measures over the last several months in a number 0:04:01.080 --> 0:04:05.080 of areas, both in energy and beyond UH, he is 0:04:05.120 --> 0:04:08.120 willing to take those measures again. We're asking the industry 0:04:08.160 --> 0:04:10.640 to come and to give us their ideas. What do 0:04:10.760 --> 0:04:15.120 you need from the federal government from from us that 0:04:15.160 --> 0:04:18.480 we can be weak to work with you to increase 0:04:18.600 --> 0:04:21.880 the capacity or finding capacity and distill it's in order 0:04:21.920 --> 0:04:25.240 to get gasoline not only produced, but then ultimately get 0:04:25.320 --> 0:04:27.760 gasoline and diesel to the right places around the country. 0:04:27.760 --> 0:04:29.599 I mean, at least, what's so important and what almost 0:04:29.640 --> 0:04:31.600 is talking about is what are we going to do 0:04:31.680 --> 0:04:34.640 to politically shift the distillate debate? To me, that's the 0:04:34.680 --> 0:04:36.400 heart of the matter. The other heart of the matter, 0:04:36.480 --> 0:04:39.479 almost is this idea that the response to that letter 0:04:39.520 --> 0:04:42.080 that we're talking about from the President, from X and 0:04:42.560 --> 0:04:45.039 from Phillip sixty six, from a whole host of other 0:04:45.080 --> 0:04:49.040 companies was that the current administration has had obstructionist policies 0:04:49.080 --> 0:04:51.400 when it comes to the oil and gas industries, and 0:04:51.440 --> 0:04:53.800 that they have not been very clear. What is your 0:04:53.839 --> 0:04:56.240 response at a time when they have been increasing production 0:04:56.279 --> 0:04:58.760 and they invested more than they brought in during the 0:04:58.760 --> 0:05:04.719 heart of the pandemic. So look, that's that's the difficulty here. 0:05:05.360 --> 0:05:08.160 People say that we are standing in the way of 0:05:08.200 --> 0:05:10.800 increased production, but look at the numbers, look at the 0:05:10.800 --> 0:05:14.279 increase in production under the Biden administration. It's hard to 0:05:14.400 --> 0:05:17.120 argue that we have done anything to stand in the 0:05:17.120 --> 0:05:21.920 way of increased production. Uh, there's been an rise in 0:05:22.000 --> 0:05:24.160 oil production. We know that by the end of the year, 0:05:24.200 --> 0:05:26.880 at the beginning of next year, we're gonna hit record production. 0:05:27.160 --> 0:05:29.800 So on average, the old production in the United States 0:05:29.800 --> 0:05:31.479 in this last year and a half has been higher 0:05:31.520 --> 0:05:36.919 than the one under our predecessor. Excuse me those records, Lisa. 0:05:37.080 --> 0:05:39.560 Have you met with the CEOs of the big oil 0:05:39.600 --> 0:05:41.960 companies to talk about this and to talk about how 0:05:42.000 --> 0:05:44.880 things can be clear for them to produce more? You have, 0:05:45.960 --> 0:05:51.960 and are there going to be certain well, sorry, go ahead, 0:05:52.080 --> 0:05:53.839 let me know. I mean they're going to be scheduled 0:05:53.960 --> 0:05:57.400 changes in terms of more specific policies that you'll put 0:05:57.440 --> 0:05:59.880 out there that you think will allow them to refine 0:06:00.000 --> 0:06:04.640 more or create more production in the near term. Well, 0:06:04.640 --> 0:06:07.720 I think that they have. My point is that they 0:06:07.920 --> 0:06:10.560 have the tools they need. When I meet with the 0:06:10.600 --> 0:06:13.560 oil company executives and the c e o s, and 0:06:13.600 --> 0:06:15.800 I've asked them over the last several months, do what 0:06:15.839 --> 0:06:19.039 do you need from US? And and beyond what we've 0:06:19.040 --> 0:06:20.880 talked about the last several days and the press about 0:06:20.920 --> 0:06:23.800 the tone, what do you need? They don't need anything. 0:06:24.000 --> 0:06:25.880 They all say they have what they need. There are 0:06:25.920 --> 0:06:29.840 some labor shortages, there are some spare parts and so on, 0:06:30.040 --> 0:06:32.200 but they don't need policy changes from the from the 0:06:32.240 --> 0:06:35.840 US administration. They have what they need. In fact, when 0:06:35.880 --> 0:06:37.560 it comes to federal land, they have more than what 0:06:37.640 --> 0:06:40.760 they need. But as you and I both know, federal 0:06:40.839 --> 0:06:44.080 lands where government leases are are less than ten percent 0:06:44.160 --> 0:06:47.960 of the overall US production. So the companies actually don't 0:06:48.000 --> 0:06:51.360 need anything. What they do need is bankers in New 0:06:51.440 --> 0:06:55.800 York and and their funds funders to send their investors 0:06:55.839 --> 0:06:59.920 to say, use the profits that you're having under these 0:07:00.000 --> 0:07:02.520 record prices for the last level of months and invest 0:07:02.520 --> 0:07:07.200 them back into the into production, investment, back into refinery, investment, 0:07:07.240 --> 0:07:12.400 back into equipment, where that's where the rubbeats. It's not 0:07:12.480 --> 0:07:15.120 just about the availability of the crude, it's about the 0:07:15.200 --> 0:07:18.400 ability to turn that into product to refine it. Refining 0:07:18.400 --> 0:07:20.440 capacity is really a critical issue here. And when you 0:07:20.440 --> 0:07:22.480 speak to an oil executive, they say, why would I 0:07:22.520 --> 0:07:26.240 invest in a new refinery, which is a long term investment, 0:07:26.480 --> 0:07:29.120 when it is known that there is an intention to 0:07:29.200 --> 0:07:32.480 get to net zero, albeit in a few decades from now. 0:07:32.920 --> 0:07:34.880 They want they want to pivot to clean energy. So 0:07:34.920 --> 0:07:36.680 what is your messaging to c e O S when 0:07:36.680 --> 0:07:39.560 you're asking them to pump more also knowing that eventually 0:07:39.840 --> 0:07:41.440 there wants to be you want to wean off of 0:07:41.520 --> 0:07:46.680 fossil fuels. So two points one right, it is not 0:07:46.800 --> 0:07:50.280 just about the crude oil production. It is about refining. 0:07:50.480 --> 0:07:52.600 And as I said before, we lost a lot of 0:07:52.600 --> 0:07:55.320 refining over the last several years, specifically during the pandemic 0:07:55.800 --> 0:07:57.640 UH and we'd like to see that come back. But 0:07:57.680 --> 0:07:59.760 you raise it a fair question, why why do you 0:07:59.800 --> 0:08:01.760 make those investments and that and that's what we have 0:08:01.840 --> 0:08:04.520 to talk about. We need to make sure that we 0:08:04.600 --> 0:08:07.920 have enough oil and gas in the economy now over 0:08:07.960 --> 0:08:10.880 the next several years to meet the demand that we 0:08:10.920 --> 0:08:13.239 have in the economy. And you're right, we're not shying 0:08:13.280 --> 0:08:16.320 away from our climate goals, and they're aggressive, and we 0:08:16.360 --> 0:08:20.240 want to accelerate. We want to see the accelerate the 0:08:20.320 --> 0:08:24.360 movement to electric vehicles. UH the goals of I know 0:08:24.400 --> 0:08:28.800 the goal is about new car sales. You have several 0:08:28.840 --> 0:08:35.200 American companies and global car companies saying that their vehicles 0:08:35.200 --> 0:08:38.760 will be electric, so and that that's just new car sales. 0:08:38.800 --> 0:08:41.520 So we'll have a tail on that as the rest 0:08:41.520 --> 0:08:45.040 of the industry catches catches up. So the argument that 0:08:45.080 --> 0:08:47.880 we're we don't want to invest in refining or invest 0:08:48.000 --> 0:08:52.520 in oil production now because of these policies, I don't 0:08:52.520 --> 0:08:55.720 know that that really follows through UM and and meets 0:08:55.720 --> 0:08:58.440 the fact. We know we have the demand. So I 0:08:58.440 --> 0:09:00.080 think that we'd like to work together with the IT 0:09:00.200 --> 0:09:03.160 with the with the industry, tell us, tell us what 0:09:03.200 --> 0:09:06.520 you need, and tell us how you plan to use 0:09:06.559 --> 0:09:11.559 your record profits investing back into UH, into the industry, 0:09:11.840 --> 0:09:14.839 into production, into refining so that Americans can pay a 0:09:14.880 --> 0:09:17.960 little bit less at the pump and have the products 0:09:17.960 --> 0:09:21.040 that they need during this time almost we just have 0:09:21.160 --> 0:09:23.360 a little bit of time left. Has there been any 0:09:23.400 --> 0:09:28.400 discussion about reducing demand or possibly putting out some sort 0:09:28.440 --> 0:09:31.280 of guideline to pull back in terms of how much 0:09:31.320 --> 0:09:33.920 people use, akin to what we're seeing in the gas 0:09:34.000 --> 0:09:40.240 base over in Germany. Well, first, I think on natural gas, 0:09:40.880 --> 0:09:43.960 Europe and the United States are are vastly different UH 0:09:44.040 --> 0:09:46.960 in our systems. Our price here is about six dollars. 0:09:46.960 --> 0:09:50.320 There's about forty dollars on natural glass. But look, the 0:09:50.559 --> 0:09:54.760 we're we have provided record investment through the infrastructure legislation 0:09:54.760 --> 0:09:59.440 that passed UH into mass transit UH and into into 0:09:59.679 --> 0:10:03.640 rail UH that these are the things to convert people from. 0:10:03.679 --> 0:10:06.640 If we had a better rail and mass transit system 0:10:06.679 --> 0:10:10.400 that was efficient and fast, then people All studies show 0:10:10.440 --> 0:10:13.720 people would move from using vehicles to moving mass transit 0:10:14.000 --> 0:10:16.640 to using mass transit. So yes, we we'd like to 0:10:16.679 --> 0:10:19.440 put the investments to work. That's what President Biden has 0:10:19.480 --> 0:10:22.840 been offering all along. How can we move people away 0:10:22.920 --> 0:10:26.640 from driving their cars to mass transit UH and to rail, 0:10:27.080 --> 0:10:29.640 and how do we move from gasoline cars to electric 0:10:29.760 --> 0:10:33.320 vehicles which will also reduce the demand for gasoline. But 0:10:33.400 --> 0:10:35.520 we have to also be realistic that we need that 0:10:35.720 --> 0:10:39.040 supply today as we get towards that better future that 0:10:39.080 --> 0:10:41.880 you're talking about. Thank you for the brief. Almost Axtein 0:10:42.000 --> 0:10:45.000 is with the White House and with President Biden with 0:10:45.160 --> 0:10:56.000 energy policy. Maria today, oh in Brussels, and now is 0:10:56.040 --> 0:10:59.560 the Baltic States consider Ukraine as they consider Russia a 0:10:59.640 --> 0:11:03.600 convert station with the President of Lithuania, Maria, good morning, 0:11:05.000 --> 0:11:07.240 Thanks Toma. Let's go straight of course, with the President 0:11:07.240 --> 0:11:10.640 of Lithuania, Mr. And Alzeta. From day one you've said 0:11:11.080 --> 0:11:14.280 Russia is a threat to European security. Ukraine has to 0:11:14.320 --> 0:11:17.000 win and we need to see native troops deployed in 0:11:17.080 --> 0:11:19.360 big numbers on the eastern flank. But I want to 0:11:19.400 --> 0:11:22.120 ask you about a very delicate situation for you, a 0:11:22.120 --> 0:11:25.920 so I appreciate you taking the time today on Kleinigrad. 0:11:26.000 --> 0:11:27.839 When you look at it on a map, it's between 0:11:27.920 --> 0:11:31.720 your country Lithuania Poland, but it belongs to the Russian Federation, 0:11:31.800 --> 0:11:35.680 and the Russian Federation now openly accuses you your country 0:11:36.000 --> 0:11:39.679 a blocking transport from the Russian Federation to Klenigrat. They 0:11:39.720 --> 0:11:44.000 say there could be real repercussions. Are you concerned. We 0:11:44.520 --> 0:11:49.120 got used to that kind of manipulation, this information and 0:11:49.559 --> 0:11:55.520 threatening it comes very often, and you've got used to 0:11:55.559 --> 0:12:01.000 have this very dangerous neighbor very near to and this 0:12:01.200 --> 0:12:04.640 is nothing special. I just want to say that this 0:12:04.720 --> 0:12:09.280 issue we are talking this is not bilateral issue between 0:12:09.520 --> 0:12:13.480 Lithuenia and Russia. I would like to remind you that 0:12:14.320 --> 0:12:19.640 in March, the European Council decided on the fourth package 0:12:19.679 --> 0:12:26.760 of sanctions, which include some ferous metals iron steel and 0:12:26.960 --> 0:12:31.600 also some luxury goods. And what is Luthenia is doing. 0:12:31.720 --> 0:12:36.760 Luthenia is just implementing those sanctions according to the rules 0:12:36.840 --> 0:12:41.360 and prescriptions of European Commission. Now we are in the 0:12:41.480 --> 0:12:45.640 situation they where we have to apply those sanctions in 0:12:45.800 --> 0:12:50.840 post and this creates, of course some tension between Lithenia 0:12:50.920 --> 0:12:55.040 and Russia. But I think that Russia is just acting 0:12:55.440 --> 0:13:00.000 this proportionally and they are trying to use the supportunity 0:13:00.040 --> 0:13:03.680 the just to blow the propaganda bubble. I would name 0:13:03.720 --> 0:13:06.680 this like this, but when you say it's the propaganda bubble, 0:13:07.000 --> 0:13:09.559 was specifically because the Russians what they say is that 0:13:09.880 --> 0:13:14.080 you're preventing the Russian Federation from supplying a territory of 0:13:14.080 --> 0:13:17.280 the Russian Federation, that is kelen Grad. What's the propaganda 0:13:18.640 --> 0:13:22.520 no blockade? If we are talking about passengers, because you're 0:13:22.559 --> 0:13:27.040 talking in action blocade could be seen by Russia's knowledge located, 0:13:27.120 --> 0:13:31.440 because if we are talking about non sanctioned goods, we 0:13:31.520 --> 0:13:35.520 are talking about passengers, there's not locate. There's absolutely free 0:13:35.559 --> 0:13:42.440 movement between the territory of Russian mainland and region rout 0:13:42.520 --> 0:13:45.760 the territory of Luthenia. Now we are talking about this 0:13:45.960 --> 0:13:52.640 concrete group, and of course we need precise setting of 0:13:54.960 --> 0:13:59.920 just specifical features and tragulement how we can apply these 0:14:00.440 --> 0:14:04.440 this fourth package of sanctions, and we are waiting for 0:14:05.160 --> 0:14:09.320 European Commission's explanation to give that guidance. I wonder ever 0:14:09.400 --> 0:14:11.920 since the ward started, is Vladimir Putting always on your 0:14:11.920 --> 0:14:15.360 mind the idea that for Lithuania the Baltics, this is 0:14:15.400 --> 0:14:19.480 almost an existential threat potentially too. No, we are concentrated 0:14:19.840 --> 0:14:24.240 on our economic progress, prosperity of our people, and you know, 0:14:24.760 --> 0:14:27.720 we don't have the time to think all the time 0:14:27.720 --> 0:14:32.520 about Vladimir Puttin. Of course, we understand that situation in 0:14:32.560 --> 0:14:38.280 the eastern part of Europe is really dangerous and we 0:14:38.880 --> 0:14:43.760 strongly condemned this war against Ukraine. We are a very 0:14:43.840 --> 0:14:48.800 keen support of Ukraine trying to help to assist down 0:14:48.840 --> 0:14:54.160 by all means, by military mean, economically, homanitarian means, and 0:14:54.280 --> 0:14:58.640 of course political component is very important too. So this 0:14:58.800 --> 0:15:02.040 is a reason why I in his very enthusiastic supporter 0:15:02.360 --> 0:15:07.680 of candidate granting candidate status to Ukraine, and I hope 0:15:07.800 --> 0:15:10.880 very much, I am. I am looking forward that it 0:15:11.240 --> 0:15:15.320 it will happen this this evening. And of course you've 0:15:15.320 --> 0:15:17.720 said Ukraine has to win because it's the right thing. 0:15:17.800 --> 0:15:20.320 But if it doesn't and it gets defeated by Russia, 0:15:20.720 --> 0:15:23.760 the repercussions of that could be enormous for the rest 0:15:23.840 --> 0:15:25.560 of Europe. What do you mean by that and what 0:15:25.600 --> 0:15:29.200 does victory Ukraine mean for you? The victory of Ukraine 0:15:29.240 --> 0:15:35.040 means a victory of just historic truth, because they are 0:15:35.080 --> 0:15:40.720 fighting for their freedom, for the right of the country, 0:15:40.960 --> 0:15:44.120 of the people of the country to decide about the future, 0:15:44.280 --> 0:15:50.320 about their destiny, and nobody else and especially external forces 0:15:50.680 --> 0:15:55.000 cannot decide where Ukraine have to do, what Ukraine have 0:15:55.080 --> 0:15:58.600 to do, and we have it should go. Ukraine is 0:15:58.720 --> 0:16:03.960 according to to to I am fully convinced that Ukraine 0:16:04.440 --> 0:16:12.160 is European nation because they prove every day by fighting 0:16:12.960 --> 0:16:18.680 against the aggressor that they defend European values, they defend 0:16:18.840 --> 0:16:22.560 democratic values, and so they are fighting not only for 0:16:22.680 --> 0:16:25.680 the freedom, they are fighting for our freedom from the 0:16:25.800 --> 0:16:29.000 freedom of European Union too. And certain next week there's 0:16:29.040 --> 0:16:31.360 a NATO meeting, of course President Biden will be there. 0:16:31.400 --> 0:16:34.920 The Boltics your country. You've said, we need more troops here, stations. 0:16:34.960 --> 0:16:37.600 The eastern flank needs to be a priority. This is 0:16:37.640 --> 0:16:40.720 not just about China. Russia's an equal threat. What are 0:16:40.760 --> 0:16:42.920 you going to tell the President of the States. This 0:16:43.000 --> 0:16:48.720 is very important to have very adequate evaluation of the situation. 0:16:48.760 --> 0:16:52.760 What is happening in the eastern flank of Natal And 0:16:52.880 --> 0:16:57.320 we see the security issue is becoming more and more important. 0:16:57.800 --> 0:17:03.680 The threats are becoming char lines very fast. I don't 0:17:03.760 --> 0:17:08.560 want to to to to talk about some some some 0:17:09.040 --> 0:17:12.000 threats which are theoretical, but we first of all, we 0:17:12.080 --> 0:17:15.760 have to spend much more attention to the security of 0:17:15.800 --> 0:17:21.240 feast and flank in order to make deterrence factors as 0:17:21.359 --> 0:17:26.879 most effective if it is possible. And this is very important, 0:17:27.280 --> 0:17:31.720 not to show our willingness in case of aggression, but 0:17:31.840 --> 0:17:35.920 to show that we are ready to increase a number 0:17:35.960 --> 0:17:41.199 of troops, to increase military equipment, in our countries, and 0:17:41.320 --> 0:17:44.760 of course very important is to switch to the current 0:17:44.920 --> 0:17:49.880 ear policy regime in Bolti countries to air defense regime. 0:17:50.160 --> 0:17:53.880 It is very important too, and I'm looking forward that 0:17:54.000 --> 0:18:00.200 conclusion text of NATO will be suitable to cooperate who 0:18:00.240 --> 0:18:04.800 work with the leading country of our e FB troops 0:18:04.800 --> 0:18:10.240 in Lithuenia, namely Germany. I signed the communic with the 0:18:10.720 --> 0:18:16.119 German Chancellor all of Charles two weeks ago and according 0:18:16.160 --> 0:18:21.960 to this communic, Germany is committed to send additional troops 0:18:22.040 --> 0:18:25.840 up to brigade level so that scale up for a 0:18:25.880 --> 0:18:29.240 military presence in Lithenia. And I think this is very 0:18:29.240 --> 0:18:32.960 important to increase ort to scale up the military presence 0:18:33.359 --> 0:18:36.480 of other countries in Baltic, other Baltic countries too in 0:18:36.560 --> 0:18:39.080 Latin Estonian. Namely, Well, President, thank you so much for 0:18:39.080 --> 0:18:41.360 your time. We appreciate it, of course, and Bloomberg has 0:18:41.359 --> 0:18:43.240 always and your message is clear a peacement is not 0:18:43.280 --> 0:18:46.919 gonna work with Russia. Thanks so much, Tom, Thank you 0:18:46.960 --> 0:18:50.520 so much Maria. Today in a conversation, folks, I honestly 0:18:50.560 --> 0:18:53.119 never framed in my lifetime. I never thought we would 0:18:53.160 --> 0:18:56.879 hear a kind of tone those statements from a member 0:18:57.280 --> 0:19:04.600 of the Baltic States, and Rita soon joins us here 0:19:04.920 --> 0:19:07.080 with energy aspects, and I do want to note we 0:19:07.160 --> 0:19:10.200 protect the copyright of all of our guests. I can't 0:19:10.200 --> 0:19:13.879 say enough about the acuity of energy aspects. Uh notes 0:19:13.960 --> 0:19:16.400 you can get them from their people as you can. 0:19:16.920 --> 0:19:20.160 And Dr Son, I want to speak here about demand, 0:19:20.880 --> 0:19:24.359 which the fears are premature. And what I love about 0:19:24.440 --> 0:19:28.800 the energy aspects note is our geographic it is the 0:19:29.000 --> 0:19:34.600 elosticities are responsiveness of demand. It's different on the Pacific 0:19:34.680 --> 0:19:38.520 RIM than it is in Europe, etcetera, etcetera. What part 0:19:38.680 --> 0:19:41.960 of your oil demands study now is the most important 0:19:42.000 --> 0:19:47.360 for our listeners and viewers. I would say, first of all, 0:19:47.440 --> 0:19:49.840 thank you Tom, very kind words indeed, but I would 0:19:49.840 --> 0:19:52.560 say have to we have to focus on Asia because 0:19:52.600 --> 0:19:54.600 all the focus right now is on the US in 0:19:54.680 --> 0:19:57.000 terms of the market right and obviously with the US 0:19:57.080 --> 0:20:00.840 federising interest rates, everybody is now expect geting a recession. 0:20:01.119 --> 0:20:03.520 The questions have moved from oh are we going to 0:20:03.560 --> 0:20:05.800 be in a recession to how deep is it going 0:20:05.840 --> 0:20:08.080 to be? To how does it compare to pass recessions? 0:20:08.320 --> 0:20:12.679 Whereas nobody is actually looking at emerging markets Asia is 0:20:12.760 --> 0:20:15.840 eighteen months behind us in the reopening cycle. They have 0:20:16.080 --> 0:20:19.080 just started to reopen from COVID and by the way, 0:20:19.200 --> 0:20:22.760 China hasn't even started to reopen, So there's quite a 0:20:22.800 --> 0:20:25.680 lot of upside to those demands. Even our own demount 0:20:25.760 --> 0:20:30.120 numbers depending on that cadence of the Chinese reopening at least, 0:20:30.160 --> 0:20:34.320 so this is absolutely critical. The hyper analysis of microeconomics 0:20:34.359 --> 0:20:37.639 of Emerita send different from what we see at JP Morgan, 0:20:38.040 --> 0:20:42.240 but both of them are completely focused on demand responsiveness 0:20:42.280 --> 0:20:45.080 on the Pacific RIM. That's the common feature of two 0:20:45.119 --> 0:20:48.159 different houses, and sure there's a lot of distinction in 0:20:48.240 --> 0:20:51.639 each region. The overall picture, though, is a tight oil market, 0:20:51.720 --> 0:20:54.680 and I'm rita you highlight that as well. How much 0:20:54.880 --> 0:20:58.000 is what we're seeing right now a brief cooling in 0:20:58.119 --> 0:21:01.439 some of the fears of the tightness of the market 0:21:01.520 --> 0:21:05.399 before we reassert price up for there for a barrel 0:21:05.440 --> 0:21:08.520 of crude, especially as some people think that there already 0:21:08.720 --> 0:21:11.520 is a recession and our word baked into the price 0:21:11.560 --> 0:21:16.840 of oil. Yeah, I mean, look, have the balances necessarily 0:21:16.880 --> 0:21:19.800 turned out to be exactly what we had forecast after 0:21:19.800 --> 0:21:23.119 the Russian invasion? No, Russian supplies are still hitting the 0:21:23.160 --> 0:21:26.960 market probably about a million barrels per day or more 0:21:27.000 --> 0:21:29.520 more or less more than what we had expected. But 0:21:29.560 --> 0:21:31.720 they are still down about a million barrels per day. 0:21:31.880 --> 0:21:34.600 But equally we've had the SPR at the same time, 0:21:34.640 --> 0:21:36.800 demand is still coming in higher. So to your point, 0:21:36.840 --> 0:21:40.639 the market is incredibly tight despite some of those moving parts. 0:21:40.680 --> 0:21:44.879 I think the bottom line is underlying infantries are so low. 0:21:45.119 --> 0:21:48.320 Spec capacity is so low that you only need a 0:21:48.359 --> 0:21:51.080 little bit of movement, like such as Libya going offline 0:21:51.080 --> 0:21:53.600 for a couple of days. You can really swing balances 0:21:53.600 --> 0:21:56.639 from being solvable to unsolvable in the matter of hours. 0:21:56.960 --> 0:22:00.280 So what we're seeing right now is again this fear 0:22:00.320 --> 0:22:03.879 of a recession turning people to kind of doubt the 0:22:03.920 --> 0:22:06.639 demand recovery and say, Okay, you know, we've got all 0:22:06.680 --> 0:22:10.119 these SPR barrels, but if demand doesn't keep up, prices 0:22:10.160 --> 0:22:12.280 are going to come down. But I will also highlight 0:22:12.320 --> 0:22:15.160 a couple of other things, more technical factors. We tend 0:22:15.200 --> 0:22:19.919 to get sovereign producer hedging at this time, large producers 0:22:19.960 --> 0:22:23.720 in North America, even in Asia, and that has started. 0:22:23.760 --> 0:22:27.479 And it's a low liquidity environment, which means that even 0:22:27.640 --> 0:22:31.160 take away all the fundamentals, there will be some downward 0:22:31.160 --> 0:22:34.640 pressure on prices in the near term, but ultimately, especially 0:22:34.640 --> 0:22:36.520 going into the winter, we think prices are going to 0:22:36.560 --> 0:22:38.359 get head back higher. And so I'm reading maybe the 0:22:38.359 --> 0:22:40.720 best way to characterize this is a head fake if 0:22:40.760 --> 0:22:44.840 you believe that this is hedging by sovereign entities. How 0:22:44.960 --> 0:22:46.920 much of a head fake could it be? How much 0:22:46.960 --> 0:22:49.840 do you still see energy prices rising heading into the 0:22:49.840 --> 0:22:54.479 winter months. I mean, do we think prices are going 0:22:54.520 --> 0:22:59.639 to go back to a hundred forty dollar range for crude? Yes? Absolutely, 0:23:00.040 --> 0:23:03.240 But does that mean that we don't fall ten dollars first? 0:23:03.320 --> 0:23:05.520 I think we could definitely go down first, and I 0:23:05.520 --> 0:23:08.040 think for traders that matters a lot, right, it's always 0:23:08.040 --> 0:23:10.480 about the entry point, But I think more in terms 0:23:10.480 --> 0:23:14.680 of consumers and refiners, ultimately the trajectory is higher. And again, 0:23:14.760 --> 0:23:17.760 forget crew prices for a second. Think about diesel gasoline. 0:23:17.960 --> 0:23:21.400 Those prices are barely moved because the underlying fundamentals are 0:23:21.480 --> 0:23:24.200 so strong right now. Crew tends to move a lot 0:23:24.280 --> 0:23:27.720 more with these macro headlines. Product prices don't, and I 0:23:27.760 --> 0:23:30.879 think that really tells you where the fundamentals are. And 0:23:30.920 --> 0:23:33.280 I think going into the winter, the risk of a 0:23:33.359 --> 0:23:36.360 diesel price bike is much much higher. Okay, Well in Rita. 0:23:36.440 --> 0:23:38.400 As we talk about going into the winter, let's talk 0:23:38.400 --> 0:23:41.000 about whether or not Europe is going to be adequately 0:23:41.040 --> 0:23:43.600 prepared for the cold weather. You are Germany today triggering 0:23:43.600 --> 0:23:46.800 phase two of its emergency gas plan, the alarm phase. 0:23:46.840 --> 0:23:49.520 I believe it's called what happens if we start to 0:23:49.560 --> 0:23:54.800 see actual gas rationing in Europe. I think there's a 0:23:54.840 --> 0:23:56.840 real risk of that. I mean, we believe that our 0:23:56.880 --> 0:23:59.880 team absolutely believes that we've already put together a list 0:23:59.880 --> 0:24:04.120 of which industry is going to be hurt, so steel, cement, fertilizer, 0:24:04.200 --> 0:24:07.040 and so on. But I would say that we are 0:24:07.080 --> 0:24:10.560 starting to see countries restart cold plants. So I think 0:24:10.560 --> 0:24:12.920 the choice has been made again. It was always about 0:24:12.960 --> 0:24:15.800 kind of green energy versus energy security. I do think 0:24:16.040 --> 0:24:19.680 we're starting to see the move towards guaranteeing let's keep 0:24:19.680 --> 0:24:22.680 the lights on, UH and as long as whoever has 0:24:22.760 --> 0:24:26.360 coal capacity decides to bring cold capacity back, then I 0:24:26.440 --> 0:24:29.439