WEBVTT - China Hits Back Against Trump Tariffs

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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<v Speaker 2>China hitting back against Trump's tariffs.

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<v Speaker 3>But many are saying, and now that it's like measured

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<v Speaker 3>that they could have been a lot worse. It was

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<v Speaker 3>still friendly the way they put it out. Having covered

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<v Speaker 3>Asian and lived in Asia for so many years, What

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<v Speaker 3>did you make of it?

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<v Speaker 4>I think it was immediately in its response was clearly

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<v Speaker 4>thought out and they were ready to go with this. Alex,

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<v Speaker 4>I was just looking at the list. There's the antitrust

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<v Speaker 4>probe of Google, which is an especially effective given to

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<v Speaker 4>controls and limitations of Google. There there are tariffs on

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<v Speaker 4>a cultural equipment like tractors and other vehicles. There's tariffs

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<v Speaker 4>on energy imports a colon LNG for example, expert controls

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<v Speaker 4>on tungsen and other critical and minerals. And then some

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<v Speaker 4>of those companies like Calvin Klein own her PVH Core

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<v Speaker 4>are put on that entry list. So you know it's

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<v Speaker 4>a reasonable list in terms of a in terms of

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<v Speaker 4>his breath, I had a responding to the US, but

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<v Speaker 4>it's nowhere near the dollar for dollar kind of matching

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<v Speaker 4>figure that you might have expected to give them, the US

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<v Speaker 4>to put ten percent on all goods coming out of China.

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<v Speaker 4>It is somewhat restrained. It's being interpreted as a signal,

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<v Speaker 4>which is that, hey, look, we can retaliate, we can

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<v Speaker 4>retaliate further, but in the meantime we're probably here to talk.

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<v Speaker 4>And of course we do know that Cole is expected

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<v Speaker 4>at some point between both leaders, she and Trump. Overcoming dates.

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<v Speaker 4>Will have to see if that changes the story or not.

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<v Speaker 2>Yeah, that's kind of where I wanted to go.

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<v Speaker 5>And because we saw yesterday with Mexico the leaders of

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<v Speaker 5>Mexico and Canada, looks like a phone call can fix

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<v Speaker 5>a lot of things. And these Chinese taffs don't kick

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<v Speaker 5>into February tenth. So does that give some potential for again,

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<v Speaker 5>as you mentioned, a phone call between Trump and and

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<v Speaker 5>g maybe an opportunity to kind of some of the

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<v Speaker 5>stuff off the front burner.

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<v Speaker 4>On paper, you would say absolutely, Maybe both leaders are

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<v Speaker 4>looking for an off framp and maybe there will be negotiations.

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<v Speaker 4>You know, the new administration in their executive orders that

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<v Speaker 4>they put out said one of the first things they

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<v Speaker 4>want to do is sit down and have a look

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<v Speaker 4>at what happened the original trade deal between China. It's

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<v Speaker 4>so called Phase one trade deal between China the US

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<v Speaker 4>that would all lend itself towards the new administration having

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<v Speaker 4>an assessment to see where things are and then come back.

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<v Speaker 4>But nonetheless, things have moved pretty fast. I mean, and

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<v Speaker 4>I'm not sure anyone expected, you know, an almost full

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<v Speaker 4>scale trade war against Mexico and Canada that we came

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<v Speaker 4>close to yesterday. If anything, President Trump has been very

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<v Speaker 4>consistent in terms of its hocushness on China and on

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<v Speaker 4>the trade deficit with China, and of course in Parentsannel

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<v Speaker 4>and all of the other issues as well. So there

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<v Speaker 4>are plenty of ballets whore saying that of all of

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<v Speaker 4>the news over the past week, the tariffs on China

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<v Speaker 4>were probably not a surprise, maybe to tell me of

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<v Speaker 4>it more, but not a surprise. They were to be expected,

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<v Speaker 4>and it just it does signal intent on President Trump's side. Now,

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<v Speaker 4>of course, as you say, early days, we'll have to

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<v Speaker 4>see those talks go. But right here, right now, the

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<v Speaker 4>US with new tariffs on all goods coming out of China.

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<v Speaker 4>That's something that they hadn't done before.

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<v Speaker 2>What's the ask here?

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<v Speaker 3>So clearly with President Trump in Mexico and Canada, the

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<v Speaker 3>ask was clear, and how to do with fentanyl?

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<v Speaker 2>What's the ask for China.

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<v Speaker 4>I mean, it's a whole different order of spectrum when

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<v Speaker 4>it comes to the conversation, right you're covering national security,

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<v Speaker 4>You're covering IP protection, You're covering the merchandise goods death said,

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<v Speaker 4>the idea that the US doesn't think China buys enough

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<v Speaker 4>stuff off of it. You've got the fentinal issue. I mean,

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<v Speaker 4>it's covering a whole range of issues here, and China's

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<v Speaker 4>role in the global stage too, perhaps in terms of

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<v Speaker 4>its support for Russia, for example, but nonetheless at least

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<v Speaker 4>one thread on that is the merchandise goods deaths. That

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<v Speaker 4>part of the President Trump was highlighted at consistently. China

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<v Speaker 4>in the past have signaled they are willing to buy

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<v Speaker 4>more US produce, and of course that was had and

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<v Speaker 4>officially made the point without naming the US. He said,

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<v Speaker 4>you know, they're also willing to step up in the

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<v Speaker 4>global marketing buy things. So there's there are ways where

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<v Speaker 4>we'll say the merchandise good deaths that could be reached,

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<v Speaker 4>could reach some kind of a midpoint on but the

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<v Speaker 4>national security, the technology, the export controls, the IP protection, frientannel,

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<v Speaker 4>the human rights issues, all of that's more complicated and

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<v Speaker 4>maybe a different channel to the trade side of things.

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<v Speaker 5>And the one could argue that the US economy is

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<v Speaker 5>in a stronger position than that of China. Therefore the

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<v Speaker 5>US may have some leverage here. Is that a feeling

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<v Speaker 5>that you're hearing her sid a policy backdrop that you're

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<v Speaker 5>seeing in Washington at all, or hearing about.

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<v Speaker 4>I think it's certainly considered to be the backdrop a

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<v Speaker 4>US economy broadly doing okay. Obviously there are areas of weakness,

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<v Speaker 4>but consumers sell spending. That means the US remains the

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<v Speaker 4>engine of global growth. We know the China story still

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<v Speaker 4>hampered by the real estate slowdown, but they're still pushing

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<v Speaker 4>hard on innovation, as we saw with deep Seek last week.

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<v Speaker 4>So yes, there's a view that the US is the upperhand.

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<v Speaker 4>But also practically, because if you're talking about getting into

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<v Speaker 4>an argument over merchandise goods, and I'll put Taris and newers,

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<v Speaker 4>new put Taris and mind will. China can't match that

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<v Speaker 4>dollar for dollars because they don't buy the same amount

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<v Speaker 4>of stuff of the US that the US boys out

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<v Speaker 4>of China. So they're already at an imbalance in terms

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<v Speaker 4>of starting point. But they can retaliate and kind of

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<v Speaker 4>those measures we just talked about there. They can make

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<v Speaker 4>life awkward for US companies operating in China and make

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<v Speaker 4>life awkward for US personnel operating in China in terms

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<v Speaker 4>of visas and the like. And they can also divers

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<v Speaker 4>fine punish the US in other ways the verse find

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<v Speaker 4>find new markets, which you have been doing when it

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<v Speaker 4>comes to soybeans, for example, other agricultural produce. But to

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<v Speaker 4>be clear, the US economy is strong at the moment,

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<v Speaker 4>of course if the upperhand if it comes to tariff tennis,

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<v Speaker 4>but there are ways where China can respond.

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<v Speaker 3>Yeah, I didn't think that like PVH was going to

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<v Speaker 3>be on my Bingo list for like companies that China

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<v Speaker 3>was going to go after.

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<v Speaker 2>All right, and thanks a lot.

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<v Speaker 3>In the current Bloomberg a senior economy reporter joining us

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<v Speaker 3>from DC.

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<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast catch us live

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<v Speaker 1>weekdays at ten am on Applecarcklay and Android Otto with

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<v Speaker 5>Alex Steele and Paul Swen, you were live here in

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<v Speaker 5>our Bloomberg Inactive Broker studio. We're streaming live on YouTube

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<v Speaker 5>as well. Head over to YouTube dot com Sturch Bloomberg

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<v Speaker 5>Podcast Live and that's where you'll find it. Boy, we're

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<v Speaker 5>race back in the middle of earnings, but it seems

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<v Speaker 5>to be overshadowed by just news flowing. Last week it

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<v Speaker 5>was Deep Seek and it's impact on AI and calling

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<v Speaker 5>that whole tech thing into question. This week it's tariffs

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<v Speaker 5>to kind of lose focus on some of the fundamentals.

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<v Speaker 5>We want to get back to that a little bit here.

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<v Speaker 5>R J Gallow, Senior portfolio Manager, Fixing Come and Federated

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<v Speaker 5>Hermes joins us. So r J. Again, we've had a

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<v Speaker 5>lot of earnings in the past couple of weeks, but

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<v Speaker 5>a lot of noise as well. How do you and

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<v Speaker 5>your teams kind of try to navigate through some of

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<v Speaker 5>that noise and focus on some of the fundamentals.

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<v Speaker 6>Well, And there's a lot of noise the Trump administration.

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<v Speaker 6>You know, they must drink a lot of coffee. Very active,

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<v Speaker 6>very active, and I think that's on purpose, both for

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<v Speaker 6>political purposes and for substantive purposes.

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<v Speaker 3>Uh.

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<v Speaker 6>You know, many executive orders, a lot of changes, the

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<v Speaker 6>sort of aggressive behavior of Doge.

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<v Speaker 4>You know, the the.

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<v Speaker 6>Novel use of tariffs invoked under an emergency statute that

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<v Speaker 6>previously have been had not been used to justify tariffs.

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<v Speaker 3>Uh.

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<v Speaker 6>You know, we expected this to be an eventful time.

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<v Speaker 6>You know, the big four policies you have trade, immigration, Uh,

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<v Speaker 6>you know, deregulation, and fiscal policy or tax they're all

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<v Speaker 6>up in the air with the change and control in Washington.

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<v Speaker 6>From a bond investor's standpoint, Uh, the overall tone coming

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<v Speaker 6>out of the Trump administration seems a little bit more inflationary,

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<v Speaker 6>a little bit more deficit ridden, and you would think

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<v Speaker 6>yields would be heading higher. I think that got priced

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<v Speaker 6>in October into November and as we started the year.

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<v Speaker 6>So at this point you just have to wait to

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<v Speaker 6>see how those big four policy areas unfold, and it's

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<v Speaker 6>hard to take a big bet on just rates, so

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<v Speaker 6>we're trying to be patient. One thing that's nice yields

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<v Speaker 6>north of four percent are a height of the inflation rate,

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<v Speaker 6>and that's good for some padding to your total return

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<v Speaker 6>as each day goes by.

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<v Speaker 3>So that's a great point in terms of it's too

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<v Speaker 3>soon to tell, because are we going to look at

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<v Speaker 3>treasuries as a safe haven or a risk asset now

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<v Speaker 3>under President Trump?

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<v Speaker 6>It's another good question. I think that US fixed income

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<v Speaker 6>faces a number of challenges. There's more of it. There's

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<v Speaker 6>more treasuries outstanding than ever before, both in the dollar

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<v Speaker 6>value of outstanding securities and in a relative sense debt

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<v Speaker 6>to GDP. You know, that's the result of the long

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<v Speaker 6>path of fiscal imbalances that we've had under both Republican

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<v Speaker 6>and Democratic leadership that I think is manifesting itself in

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<v Speaker 6>just higher volatility.

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<v Speaker 7>You know.

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<v Speaker 6>You say you have sort of the same universe of

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<v Speaker 6>securities dealers making markets out there, but the market that

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<v Speaker 6>they're that they're playing in, the size of the market

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<v Speaker 6>has only gotten bigger. So so that's a challenge, and

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<v Speaker 6>that could eat into a little bit of the allure

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<v Speaker 6>of treasuries as a safe haven bet. A safe haven

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<v Speaker 6>bet shouldn't be extra volatile, it should be less volatile, right,

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<v Speaker 6>that said, I think the credit quality the United States

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<v Speaker 6>is unimpeachable. I think that the depth of the market,

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<v Speaker 6>massive liquidity, the strength of the US economy in a

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<v Speaker 6>US exceptionalism sense, uh, the underlying legal underpinnings, and the

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<v Speaker 6>fact that we're the one of the world's actually the

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<v Speaker 6>world's dominant power economically and militarily. Yeah, that all supports

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<v Speaker 6>treasuries still having a pretty hallowed places as a as

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<v Speaker 6>a where safe capital can reside.

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<v Speaker 5>So we were talking earlier today about the debt of

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<v Speaker 5>the cruise lines alex and Red Headline crossing the Bloomberg Criminal.

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<v Speaker 5>That Royal Caribbean has been raised to investment greates by

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<v Speaker 5>S and P. So good news there, Hey.

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<v Speaker 2>Ar Jie.

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<v Speaker 5>I mean, I look across the fixed income space. I'm

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<v Speaker 5>wondering if do I just clip coupons here? Is that

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<v Speaker 5>my game? Because that's not a bad place to be,

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<v Speaker 5>whether it's in treasuries or even if I'm taking some

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<v Speaker 5>credit risk. It really seems like I can get a

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<v Speaker 5>meaningful carry here and that might be good enough.

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<v Speaker 7>Yeah.

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<v Speaker 6>Well, the year the yield on the ag, the Bloomberg

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<v Speaker 6>AG is for eighty seven. That's higher than sof SO

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<v Speaker 6>it's you're getting more yield, more carried from a diversified

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<v Speaker 6>taxable investment grade bond portfolio than you are from money markets.

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<v Speaker 6>And you know that wasn't true a year ago. So

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<v Speaker 6>that's that's a welcome turn of events. It could motivate

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<v Speaker 6>some investors who are in cash to move out the

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<v Speaker 6>curb as a little bit rather than watch rates continue

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<v Speaker 6>to decline on cash if the Fed gets going on

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<v Speaker 6>the easing side again. Number one. Number two, I think

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<v Speaker 6>that you know, at this point, as we wait to

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<v Speaker 6>see how those big policy areas unfold, the economies doing

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<v Speaker 6>pretty well. Inflation not two percent, but not apparently reaccelerating,

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<v Speaker 6>and it feels like the bond market could be in

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<v Speaker 6>for some choppy range trade all along. You're clipping a

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<v Speaker 6>higher level of income that exceeds money markets and inflation.

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<v Speaker 6>So Carrie is in fact an attractive aspect right now

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<v Speaker 6>of bond returns for investors.

0:11:21.559 --> 0:11:23.560
<v Speaker 2>All right, ur Ja appreciate it, Thanks very much.

0:11:23.679 --> 0:11:23.839
<v Speaker 7>RJ.

0:11:24.440 --> 0:11:27.280
<v Speaker 3>Gallo, Senior portfolio manager, Fixed Income and federate HERMEI is

0:11:27.320 --> 0:11:28.160
<v Speaker 3>really appreciate that.

0:11:29.800 --> 0:11:33.480
<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

0:11:33.559 --> 0:11:36.959
<v Speaker 1>weekdays at ten am Eastern on Applecarplay and Android Auto

0:11:37.040 --> 0:11:40.120
<v Speaker 1>with the Bloomberg Business App. Listen on demand wherever you

0:11:40.160 --> 0:11:43.559
<v Speaker 1>get your podcasts, or watch us live on YouTube.

0:11:43.600 --> 0:11:46.640
<v Speaker 3>For broadcasting to live from Interactive Broker Studio right here

0:11:46.640 --> 0:11:49.600
<v Speaker 3>in Midtown Manhattan. We are also broadcasting too live on YouTube,

0:11:49.760 --> 0:11:52.720
<v Speaker 3>so definitely check us out on that. We've been talking

0:11:52.760 --> 0:11:54.760
<v Speaker 3>a lot about different sectors and the effect of a

0:11:54.760 --> 0:11:58.040
<v Speaker 3>Trump administration, whether tariffs or no tariffs. In one sector

0:11:58.240 --> 0:12:01.320
<v Speaker 3>that's really in the crosshairs energy, So joining us for

0:12:01.360 --> 0:12:04.800
<v Speaker 3>more on that is Ernie Miller, CEO at Verday Clean Fuels.

0:12:04.960 --> 0:12:07.120
<v Speaker 2>He's joining us in the studio in New York. ARENI

0:12:07.200 --> 0:12:07.800
<v Speaker 2>great to see you.

0:12:07.840 --> 0:12:08.960
<v Speaker 7>Thanks all, it's great to be here.

0:12:09.000 --> 0:12:11.160
<v Speaker 3>So we'll get to all the distinctions and tariffs and

0:12:11.200 --> 0:12:13.760
<v Speaker 3>policies in a second, but just clean slate here.

0:12:13.880 --> 0:12:16.199
<v Speaker 2>What does your company do? What is Veritay Clean Fuels.

0:12:16.400 --> 0:12:20.200
<v Speaker 7>Veritay Clean Fuels is a gasoline business, and so we

0:12:20.200 --> 0:12:24.240
<v Speaker 7>we operate in the Permian basin and under a joint

0:12:24.280 --> 0:12:27.840
<v Speaker 7>venture with Diamondback Energy out there where we take their

0:12:28.240 --> 0:12:31.600
<v Speaker 7>natural gas, which in West Texas as zero you know,

0:12:31.760 --> 0:12:33.839
<v Speaker 7>or even negative value, and turn that into a high

0:12:33.880 --> 0:12:36.280
<v Speaker 7>value refined product just commodity grade gasoline.

0:12:36.559 --> 0:12:39.200
<v Speaker 3>And the idea it's word zero is because there's only

0:12:39.240 --> 0:12:41.440
<v Speaker 3>pipeline to take oil out, for example, But when you

0:12:41.440 --> 0:12:43.280
<v Speaker 3>produce oil, you produce natural gas and just kind of

0:12:43.280 --> 0:12:44.319
<v Speaker 3>like hangs out and does nothing.

0:12:44.520 --> 0:12:44.960
<v Speaker 2>That's right.

0:12:45.040 --> 0:12:47.400
<v Speaker 7>So when you produce oil, there's there are a lot

0:12:47.400 --> 0:12:50.800
<v Speaker 7>of other products coming to the surface, natural gas being

0:12:50.800 --> 0:12:54.120
<v Speaker 7>the largest of those, and there's limited takeaway capacity, so

0:12:54.160 --> 0:12:56.920
<v Speaker 7>that leaves an excess of gas in the basin that

0:12:56.960 --> 0:12:57.760
<v Speaker 7>can't get the market.

0:12:57.880 --> 0:13:00.440
<v Speaker 5>So, without getting too much into the chemistry it.

0:13:00.600 --> 0:13:01.240
<v Speaker 2>How do you do it?

0:13:01.920 --> 0:13:05.120
<v Speaker 7>Well, the chemistry was actually developed by Mobile in the

0:13:05.240 --> 0:13:09.680
<v Speaker 7>nineteen seventies, and so our process starts with synthesis gas,

0:13:09.720 --> 0:13:13.200
<v Speaker 7>which is a mix of carbon monoxide and hydrogen. We

0:13:13.400 --> 0:13:16.440
<v Speaker 7>take that to methanol and then methanol downstream to gasoline.

0:13:16.920 --> 0:13:20.880
<v Speaker 7>And so our product is just commodity grade refined gasoline

0:13:21.040 --> 0:13:22.360
<v Speaker 7>made from natural gas.

0:13:22.480 --> 0:13:25.160
<v Speaker 2>And you're cool with takeaway capacity? Do they hit that

0:13:25.200 --> 0:13:25.640
<v Speaker 2>in land man?

0:13:25.679 --> 0:13:25.839
<v Speaker 1>Yet?

0:13:26.080 --> 0:13:27.800
<v Speaker 5>That was episode three?

0:13:28.320 --> 0:13:29.000
<v Speaker 2>Great episode?

0:13:29.160 --> 0:13:29.280
<v Speaker 7>Right?

0:13:29.880 --> 0:13:30.200
<v Speaker 2>All right?

0:13:30.280 --> 0:13:33.040
<v Speaker 5>So I mean, so are you doing that now? Are

0:13:33.080 --> 0:13:35.959
<v Speaker 5>you create are you refining it into the gas?

0:13:36.000 --> 0:13:39.760
<v Speaker 7>Now? We are our first commercial scale project is in

0:13:40.480 --> 0:13:42.920
<v Speaker 7>is well into engineering with Diamondback and that first plant

0:13:43.200 --> 0:13:45.680
<v Speaker 7>will be built in Midland County, Texas, just south of

0:13:45.800 --> 0:13:48.920
<v Speaker 7>south of Midland, and it'll be commercial in twenty twenty seven.

0:13:49.080 --> 0:13:49.320
<v Speaker 4>Cool.

0:13:49.559 --> 0:13:51.080
<v Speaker 2>Being a refiners not easy.

0:13:51.920 --> 0:13:53.800
<v Speaker 3>We saw that with Excent and schev run in their earnings.

0:13:53.840 --> 0:13:57.440
<v Speaker 3>Now clearly they have a different input, right, They're inputting oil,

0:13:57.640 --> 0:13:59.280
<v Speaker 3>which obviously their margins got.

0:13:59.200 --> 0:14:01.920
<v Speaker 2>Squeezed of oil goes higher. But it's a tough biz.

0:14:02.000 --> 0:14:04.960
<v Speaker 3>And then you put on you know, policy under Trump administration,

0:14:05.080 --> 0:14:07.440
<v Speaker 3>and then questions about tariffs, what's your biggest concern?

0:14:08.120 --> 0:14:13.000
<v Speaker 7>Well, you're right, refining is a very tough business. And

0:14:13.000 --> 0:14:15.760
<v Speaker 7>and you know, when you think about the terraffs that

0:14:16.200 --> 0:14:18.720
<v Speaker 7>are being proposed right now, you know, a ten percent

0:14:18.800 --> 0:14:22.600
<v Speaker 7>tariff on on crude oil coming out of Canada will

0:14:22.640 --> 0:14:24.840
<v Speaker 7>be a major hit to refiners, primarily in the in

0:14:24.880 --> 0:14:28.400
<v Speaker 7>the Midwest. You know, we we import four million barrels

0:14:28.440 --> 0:14:31.280
<v Speaker 7>of oil a day from Canada. It's about sixty percent

0:14:31.280 --> 0:14:37.160
<v Speaker 7>of US imports, and a tariff on those volumes will

0:14:37.480 --> 0:14:40.040
<v Speaker 7>will hit those Midwest refiners who, by the way, their

0:14:40.160 --> 0:14:44.320
<v Speaker 7>their equipment is set up to process that heavy sour

0:14:44.480 --> 0:14:47.280
<v Speaker 7>Canadian crude. So it's you know, while they could go

0:14:47.360 --> 0:14:51.480
<v Speaker 7>and buy and buy US produced shale crude, which is

0:14:51.520 --> 0:14:54.920
<v Speaker 7>generally lighter and sweeter, but their refineries will not operate

0:14:54.960 --> 0:14:57.960
<v Speaker 7>nearly as efficiently, so fees dog costs will go down,

0:14:58.000 --> 0:15:02.080
<v Speaker 7>but they'll operate much less efficient and probably negative. So

0:15:02.120 --> 0:15:02.720
<v Speaker 7>it's and.

0:15:02.680 --> 0:15:05.960
<v Speaker 5>There's nothing I mean, do they pess that along.

0:15:05.680 --> 0:15:09.560
<v Speaker 7>To me and ultimately ultimately is going to land in

0:15:09.600 --> 0:15:10.960
<v Speaker 7>the consumer's lapse.

0:15:11.080 --> 0:15:14.960
<v Speaker 3>Yes, interesting when you take a look at clean fuel,

0:15:15.080 --> 0:15:17.960
<v Speaker 3>like this is clean er, but it's not like E

0:15:18.120 --> 0:15:19.360
<v Speaker 3>gasoline or anything like that.

0:15:19.440 --> 0:15:23.640
<v Speaker 7>That's right, this is cleaner. Verde can produce fully renewable

0:15:23.680 --> 0:15:26.880
<v Speaker 7>and even carbon negative gasoline. But the fact is that

0:15:27.320 --> 0:15:29.840
<v Speaker 7>when you do that, the revenues are heavily dependent on

0:15:29.920 --> 0:15:35.000
<v Speaker 7>carbon credits. There's no there's no term market for carbon credits.

0:15:34.800 --> 0:15:37.520
<v Speaker 7>It's very much a spot kind of short term market.

0:15:37.600 --> 0:15:40.320
<v Speaker 7>So that does not lend itself well to project financy.

0:15:40.760 --> 0:15:43.600
<v Speaker 7>When we use natural gas as of feedstock, when when

0:15:43.640 --> 0:15:46.760
<v Speaker 7>you can make the connection between a flare going away

0:15:47.280 --> 0:15:50.600
<v Speaker 7>and we and us taking that natural gas would would

0:15:50.600 --> 0:15:53.360
<v Speaker 7>have otherwise been flared to produce gasoline, that gasoline is

0:15:53.360 --> 0:15:56.880
<v Speaker 7>about thirty percent less carbon intensive than gasoline that comes

0:15:56.920 --> 0:15:59.520
<v Speaker 7>from crude oil. So there is a there is a

0:15:59.520 --> 0:16:03.240
<v Speaker 7>pretty mean meaningful you know, environmental win there. But you

0:16:03.280 --> 0:16:06.280
<v Speaker 7>know that's the focus is commercial. This is taking zero

0:16:06.400 --> 0:16:09.440
<v Speaker 7>value natural gas or negative value natural gas and turn

0:16:09.480 --> 0:16:11.320
<v Speaker 7>it into something that has a lot of value.

0:16:11.440 --> 0:16:14.400
<v Speaker 5>You guys are based in Houston, Yes, okay, so the

0:16:14.440 --> 0:16:19.280
<v Speaker 5>center of this country's energy industry in Houston. What's the

0:16:19.320 --> 0:16:22.960
<v Speaker 5>feeling there about the transition or the evolution the transition

0:16:23.080 --> 0:16:27.400
<v Speaker 5>to greener energy in general? Is the momentum slowing because

0:16:27.520 --> 0:16:28.120
<v Speaker 5>of who's in.

0:16:28.120 --> 0:16:28.720
<v Speaker 2>The White House?

0:16:28.840 --> 0:16:31.480
<v Speaker 5>Is it Is there some inevitability that it's just going

0:16:31.520 --> 0:16:32.440
<v Speaker 5>to go at its own pace?

0:16:32.720 --> 0:16:35.400
<v Speaker 7>How do you well, you know, it's I kind of

0:16:35.440 --> 0:16:38.000
<v Speaker 7>think that you know, most of the capacity to make

0:16:38.040 --> 0:16:41.400
<v Speaker 7>this transition lives within the major empcome the major oil

0:16:41.480 --> 0:16:44.840
<v Speaker 7>integrated oil companies you know already. So so those are

0:16:44.840 --> 0:16:46.440
<v Speaker 7>the those are the players that are going to make

0:16:46.440 --> 0:16:51.280
<v Speaker 7>the largest contribution to an energy transition. And so, you know,

0:16:51.320 --> 0:16:53.280
<v Speaker 7>I think I think that we're we're going to see

0:16:53.280 --> 0:16:55.480
<v Speaker 7>a lot less in the way of mandates and and

0:16:55.520 --> 0:16:59.160
<v Speaker 7>a lot less of regulators picking winners and loss losers,

0:16:59.280 --> 0:17:02.560
<v Speaker 7>and and it'll be much much more market driven, I

0:17:02.560 --> 0:17:05.240
<v Speaker 7>think as it as it should be. But the ultimately

0:17:05.280 --> 0:17:07.760
<v Speaker 7>the people that can contribute most of that are the

0:17:07.960 --> 0:17:11.160
<v Speaker 7>are the legacy integrated energy companies.

0:17:11.480 --> 0:17:15.800
<v Speaker 3>How did the conversation and development with a Diamondback come about.

0:17:16.040 --> 0:17:19.560
<v Speaker 7>Well, we were in the process of of going public

0:17:19.600 --> 0:17:23.240
<v Speaker 7>of listing on on Nasdaq and Diamondback UH. Diamondback came

0:17:23.280 --> 0:17:26.280
<v Speaker 7>to us with UH and said, you know, we've we

0:17:26.400 --> 0:17:29.280
<v Speaker 7>have been canvassing the market and and have really kind

0:17:29.280 --> 0:17:32.040
<v Speaker 7>of zeroed in on your process as one that can

0:17:32.080 --> 0:17:34.919
<v Speaker 7>really help us with this, with this natural gas problem

0:17:34.960 --> 0:17:39.360
<v Speaker 7>that we have in the Permian basin. And post Diamondbacks

0:17:39.520 --> 0:17:42.879
<v Speaker 7>and UH merger with Endeavor, they they went from a

0:17:43.359 --> 0:17:45.760
<v Speaker 7>you know, a large, a large old company with a

0:17:45.880 --> 0:17:48.040
<v Speaker 7>with a with a gas problem to a very large

0:17:48.080 --> 0:17:50.879
<v Speaker 7>old company with an even bigger gas Yeah. Yeah, and

0:17:50.960 --> 0:17:54.480
<v Speaker 7>so now so now they've got meaningful volumes of natural

0:17:54.520 --> 0:17:57.280
<v Speaker 7>gas that you know, that are not getting the value

0:17:57.320 --> 0:17:57.919
<v Speaker 7>that that that it.

0:17:57.920 --> 0:18:01.440
<v Speaker 3>Should ask one more questions and looking at Okay, if

0:18:01.440 --> 0:18:04.080
<v Speaker 3>we wind up getting easier permitting though from the Trump administration,

0:18:04.119 --> 0:18:06.040
<v Speaker 3>and we get the ability to get natural gas out

0:18:06.040 --> 0:18:08.239
<v Speaker 3>of the Permian an efficient way to then export it,

0:18:08.240 --> 0:18:09.879
<v Speaker 3>does that mess up your model? You know?

0:18:09.920 --> 0:18:12.960
<v Speaker 7>It really doesn't. There's there is such an overhang of

0:18:13.040 --> 0:18:17.080
<v Speaker 7>natural gas and and and Texas is already the most

0:18:17.119 --> 0:18:20.240
<v Speaker 7>friendly environment, you know, in the in the States for

0:18:20.359 --> 0:18:22.520
<v Speaker 7>building pipeline capacity. You know, in the last couple of

0:18:22.560 --> 0:18:24.920
<v Speaker 7>years there have been there have been at least two

0:18:24.960 --> 0:18:28.439
<v Speaker 7>forty eight inch you know, enormous pipeline taking gas out

0:18:28.480 --> 0:18:31.000
<v Speaker 7>of the basin. You know, the Permian has the benefit

0:18:31.040 --> 0:18:33.280
<v Speaker 7>of the Gulf Coast and the Lergy and the LG

0:18:33.480 --> 0:18:37.040
<v Speaker 7>terminals there in Corpus Christi. So there there are places

0:18:37.080 --> 0:18:39.879
<v Speaker 7>to go with that natural gas. But but the volumes

0:18:39.920 --> 0:18:43.879
<v Speaker 7>are just enormous, and so there we are. We are

0:18:43.960 --> 0:18:46.320
<v Speaker 7>very comfortable that we have a very long runway in

0:18:46.359 --> 0:18:49.480
<v Speaker 7>the in the Permian with Diamondback and others where there

0:18:49.520 --> 0:18:51.959
<v Speaker 7>there's there's always going to be gas that can't get

0:18:52.000 --> 0:18:52.679
<v Speaker 7>out of that basin.

0:18:53.119 --> 0:18:55.960
<v Speaker 5>Interesting, fascinating story, learning a lot here sitting next to

0:18:56.040 --> 0:18:58.159
<v Speaker 5>alex Ernie Miller. Thank you so much for joining a

0:18:58.160 --> 0:19:00.960
<v Speaker 5>starting militi and CEO Verde Fuels.

0:19:01.800 --> 0:19:06.480
<v Speaker 1>This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

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0:19:14.040 --> 0:19:17.560
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