1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,119 --> 00:00:12,399 Speaker 2: Carlisle, chief strategy Officer of Energy Pathways, Jeff Curry, let's 3 00:00:12,440 --> 00:00:16,600 Speaker 2: go to alex right now. Hey, Paul, thanks lot, really 4 00:00:16,640 --> 00:00:19,120 Speaker 2: appreciate it. Jeff, I've been asking CEOs for the last 5 00:00:19,160 --> 00:00:20,799 Speaker 2: day and a half, what do you do with twenty 6 00:00:20,880 --> 00:00:22,480 Speaker 2: five percent tariffs? And now it's going to be what 7 00:00:22,480 --> 00:00:24,040 Speaker 2: do you do with fifty percent tariffs? 8 00:00:24,800 --> 00:00:25,280 Speaker 1: What's going to. 9 00:00:25,200 --> 00:00:26,040 Speaker 2: Happen to the market. 10 00:00:26,440 --> 00:00:29,000 Speaker 3: Well, it's pricing it in, you know, cut coppers, you know, 11 00:00:29,640 --> 00:00:31,720 Speaker 3: heading towards five dollars a pound right now. But I 12 00:00:31,720 --> 00:00:35,360 Speaker 3: think aluminum is the one to really watch because the 13 00:00:35,440 --> 00:00:38,800 Speaker 3: question is can you on shore aluminum production and the 14 00:00:38,840 --> 00:00:40,000 Speaker 3: answer is absolutely not. 15 00:00:40,200 --> 00:00:42,320 Speaker 1: You know, if you think data centers and. 16 00:00:42,360 --> 00:00:45,600 Speaker 3: AI are power intensive, aluminum smelting is in a whole 17 00:00:45,600 --> 00:00:49,479 Speaker 3: different world. It's six times more power intensive per dollar 18 00:00:49,560 --> 00:00:51,400 Speaker 3: revenue than AI data centers. 19 00:00:51,680 --> 00:00:54,080 Speaker 1: So if you're already power constrained, there's. 20 00:00:53,840 --> 00:00:55,560 Speaker 3: No possible way you're going to bring all of this 21 00:00:56,120 --> 00:00:57,960 Speaker 3: aluminum smelting into the United States. 22 00:00:58,040 --> 00:00:59,640 Speaker 2: So where do we get most of our aluminum and 23 00:00:59,600 --> 00:01:01,280 Speaker 2: steel that the refined products, Well, a. 24 00:01:01,280 --> 00:01:03,800 Speaker 3: Lot of it comes from the hydro electric power up 25 00:01:03,840 --> 00:01:07,280 Speaker 3: in Quebec, so it comes down into the US from that. 26 00:01:07,480 --> 00:01:09,959 Speaker 1: So shutting down that cheap source. 27 00:01:09,720 --> 00:01:13,120 Speaker 3: Of aluminum supply and trying to replace it with really 28 00:01:13,160 --> 00:01:16,640 Speaker 3: expensive produced, domestically produced supply, I think it's going to 29 00:01:16,640 --> 00:01:17,720 Speaker 3: be a tall ordered ask. 30 00:01:18,120 --> 00:01:20,360 Speaker 2: It's been a tough commodity road in the last couple 31 00:01:20,360 --> 00:01:22,119 Speaker 2: of weeks. And we did with this molatility right oil 32 00:01:22,160 --> 00:01:24,120 Speaker 2: was it a six month low? That's on recession fears, 33 00:01:24,160 --> 00:01:27,600 Speaker 2: tear fears, growth fears, et cetera. What kind of cycle 34 00:01:27,640 --> 00:01:28,480 Speaker 2: are we in right now? 35 00:01:28,840 --> 00:01:31,600 Speaker 3: Well, I think what we're going through is a huge 36 00:01:31,880 --> 00:01:36,120 Speaker 3: shift in the global order around security. And I think, 37 00:01:36,200 --> 00:01:38,680 Speaker 3: you know, what is the response that probably Ontario is 38 00:01:38,720 --> 00:01:40,640 Speaker 3: going to do to these tariffs. They're probably going to 39 00:01:40,720 --> 00:01:42,960 Speaker 3: cut power. The governor's already threatened he's going to do it. 40 00:01:43,080 --> 00:01:46,400 Speaker 3: He cuts power into the US. Energy security is top 41 00:01:46,440 --> 00:01:49,120 Speaker 3: of mind, and I think that's what's going on right now, 42 00:01:49,240 --> 00:01:53,080 Speaker 3: whether it's in Germany. Actually Germany, the Norwegians threatened to 43 00:01:53,080 --> 00:01:55,840 Speaker 3: cut power into Germany back in December when a crisis 44 00:01:55,920 --> 00:01:59,360 Speaker 3: occurred there. So I think energy security is top of 45 00:01:59,360 --> 00:02:01,200 Speaker 3: mind for every around the world right now. 46 00:02:01,280 --> 00:02:02,960 Speaker 2: Okay, so what does that look like? Because what's so 47 00:02:02,960 --> 00:02:06,080 Speaker 2: interesting about commodities is it will always clear it a price, right, 48 00:02:06,160 --> 00:02:08,160 Speaker 2: you'll always buy something, It just depends on what price 49 00:02:08,160 --> 00:02:09,320 Speaker 2: you'll buy it. 50 00:02:09,360 --> 00:02:11,680 Speaker 1: Is that still true? Absolutely? 51 00:02:12,440 --> 00:02:14,360 Speaker 3: And I think what we're going to start to see 52 00:02:14,639 --> 00:02:17,240 Speaker 3: is that's what's going on with aluminum and copper today. 53 00:02:17,360 --> 00:02:20,480 Speaker 3: Is there going to price in a security premium to 54 00:02:20,520 --> 00:02:24,880 Speaker 3: make sure you have that supply in your country domestically protected, 55 00:02:25,280 --> 00:02:27,960 Speaker 3: in duty paid. You're seeing it in gold, and you're 56 00:02:28,000 --> 00:02:31,360 Speaker 3: seeing it across the metal space and then particularly an energy. 57 00:02:31,400 --> 00:02:33,720 Speaker 3: We're beginning to see that and I think that that 58 00:02:33,880 --> 00:02:36,000 Speaker 3: is going to be the primary driver of the you know, 59 00:02:36,200 --> 00:02:38,000 Speaker 3: let's call it the new cycle and commodities. 60 00:02:38,040 --> 00:02:40,840 Speaker 2: So it's not geopolitical risk, it's not a green premium, 61 00:02:40,880 --> 00:02:43,680 Speaker 2: it's a security premium. Correct, you're going to pay up 62 00:02:43,720 --> 00:02:44,400 Speaker 2: to produce this. 63 00:02:44,440 --> 00:02:46,040 Speaker 1: Stuff at home? Yep, exactly. 64 00:02:46,800 --> 00:02:48,400 Speaker 2: That that's a humongous shift. 65 00:02:48,520 --> 00:02:50,720 Speaker 3: It was huge, huge, and it's going to be really 66 00:02:50,720 --> 00:02:52,720 Speaker 3: difficult to do, you know, whether or not. 67 00:02:52,960 --> 00:02:54,679 Speaker 1: And I think the argument we take. 68 00:02:54,560 --> 00:02:58,280 Speaker 3: Is it's going to be a diversified set of energies. 69 00:02:58,280 --> 00:03:01,040 Speaker 3: That's why we call it the new jewel Order, is 70 00:03:01,080 --> 00:03:04,280 Speaker 3: because you're gonna want oil and gas. You're gonna want renewables, nuclear, 71 00:03:04,320 --> 00:03:06,880 Speaker 3: You're gonna want everything. And you want to diversify yourself 72 00:03:07,040 --> 00:03:09,919 Speaker 3: because if you lose one of those supplies, you want 73 00:03:09,919 --> 00:03:11,919 Speaker 3: to be diversified so that you can deal with that 74 00:03:12,240 --> 00:03:15,160 Speaker 3: that disruption. And I think the key point here is 75 00:03:15,200 --> 00:03:18,160 Speaker 3: when we think about fossil fuels, why do we like 76 00:03:18,240 --> 00:03:21,480 Speaker 3: fossil fuels so much, is because they're tradable, they're portable, 77 00:03:21,639 --> 00:03:24,679 Speaker 3: they're stortable, and they have high energy density, which is 78 00:03:24,720 --> 00:03:27,400 Speaker 3: why we move them around the world. Those same reasons 79 00:03:27,440 --> 00:03:29,440 Speaker 3: we like them, it's the same reasons they're so dangerous 80 00:03:29,440 --> 00:03:31,480 Speaker 3: because somebody can just take them from you. And so 81 00:03:31,520 --> 00:03:34,880 Speaker 3: when we think about what's driving I think this new 82 00:03:35,000 --> 00:03:39,080 Speaker 3: environment we're living in, let's call it peak trade instead 83 00:03:39,080 --> 00:03:41,480 Speaker 3: of you know peak Actually, look at the. 84 00:03:41,400 --> 00:03:43,000 Speaker 1: Evolution of peak oil. 85 00:03:43,040 --> 00:03:45,880 Speaker 3: It started out peak supply, we're gonna run out of supply, 86 00:03:46,200 --> 00:03:48,720 Speaker 3: and then peak demand. We got too much of the stuff, 87 00:03:49,320 --> 00:03:51,600 Speaker 3: so we need to reduce you know, the emissions. 88 00:03:51,760 --> 00:03:53,880 Speaker 1: And now it's peak trade, meaning I can't get my 89 00:03:53,920 --> 00:03:54,520 Speaker 1: hands on it. 90 00:03:54,800 --> 00:03:56,520 Speaker 2: So it's gonna be really interesting then is if we 91 00:03:56,560 --> 00:03:59,600 Speaker 2: get a piece in the Ukraine War, what happens with 92 00:03:59,720 --> 00:04:02,000 Speaker 2: Germ in Europe and buying Russian. 93 00:04:01,720 --> 00:04:04,400 Speaker 3: Gas, they're going to be hesitant. They'll probably take a 94 00:04:04,440 --> 00:04:06,360 Speaker 3: little bit. Yeah, they're still buying it, but they're going 95 00:04:06,400 --> 00:04:08,640 Speaker 3: to diversify their sources. And I think that's the key 96 00:04:08,720 --> 00:04:11,720 Speaker 3: message here is diversify your sources so you're not so 97 00:04:11,840 --> 00:04:15,120 Speaker 3: dependent on one supplier one type of energy. And I 98 00:04:15,200 --> 00:04:17,320 Speaker 3: like to point out what is the best selling car 99 00:04:17,360 --> 00:04:20,840 Speaker 3: out there, a PHEV, a plug in hybrid. Why because 100 00:04:20,880 --> 00:04:24,359 Speaker 3: it operates off oil, gas, solar, wind, nuclear, the entire 101 00:04:24,480 --> 00:04:25,120 Speaker 3: gambit of. 102 00:04:25,120 --> 00:04:26,320 Speaker 1: All the energy sources. 103 00:04:26,360 --> 00:04:28,880 Speaker 3: And I think that that type of diversity is going 104 00:04:28,960 --> 00:04:30,479 Speaker 3: to be key in this new jewel order. 105 00:04:30,520 --> 00:04:32,279 Speaker 2: Okay, so if I'm looking at prices in general, like 106 00:04:32,360 --> 00:04:36,720 Speaker 2: does the band move up prices become more volatile? Do 107 00:04:36,839 --> 00:04:38,880 Speaker 2: they move down? Like if I'm looking at say oil 108 00:04:39,000 --> 00:04:40,840 Speaker 2: or copper, what's my trading band. 109 00:04:41,040 --> 00:04:43,719 Speaker 3: I think that the volatility is going to explode across 110 00:04:43,760 --> 00:04:46,240 Speaker 3: all these markets. You're already seeing it in power and 111 00:04:46,320 --> 00:04:49,320 Speaker 3: the metals and across the space. That's going to lead 112 00:04:49,360 --> 00:04:52,160 Speaker 3: to a higher average price. By the way, the volatility 113 00:04:52,200 --> 00:04:53,440 Speaker 3: then discourages the ms MA. 114 00:04:53,800 --> 00:04:55,799 Speaker 1: I don't want to invest in this thing is too volatile. 115 00:04:56,080 --> 00:04:59,000 Speaker 3: Lower investment creates more volatility, and it just feeds off 116 00:04:59,000 --> 00:04:59,560 Speaker 3: of itself. 117 00:05:00,080 --> 00:05:02,640 Speaker 2: You're one of the first to invent the word supercycle, right, 118 00:05:02,680 --> 00:05:05,440 Speaker 2: I mean, have big supercycles. There's big ups, there's big downs, 119 00:05:05,440 --> 00:05:07,400 Speaker 2: and there's an investment cycle that goes with it. 120 00:05:07,640 --> 00:05:10,440 Speaker 1: Are we no longer in that, you know? I think 121 00:05:10,440 --> 00:05:14,360 Speaker 1: that's a great question. And those supercycles. 122 00:05:13,560 --> 00:05:18,520 Speaker 3: Before were created by demand pull creating big shortages, created 123 00:05:18,560 --> 00:05:21,320 Speaker 3: these big trends that created that supercycle. 124 00:05:21,720 --> 00:05:23,360 Speaker 1: This one's a malinvestment cycle. 125 00:05:23,600 --> 00:05:29,320 Speaker 3: It's industrial policy push, which creates pockets of imbalances. I 126 00:05:29,320 --> 00:05:31,800 Speaker 3: like to call that cyc a bubbling cauldron, a little 127 00:05:31,880 --> 00:05:35,039 Speaker 3: mini supercycles everywhere, and you get these high volatility and 128 00:05:35,080 --> 00:05:35,760 Speaker 3: that's what we're seeing. 129 00:05:35,839 --> 00:05:38,680 Speaker 1: By the way, the opportunity for investors in this environment 130 00:05:38,800 --> 00:05:39,400 Speaker 1: is phenomenal. 131 00:05:39,440 --> 00:05:41,760 Speaker 3: In fact, one of the themes going around here in 132 00:05:41,800 --> 00:05:46,360 Speaker 3: Seer Week is the oil market. These markets are micro bullish, 133 00:05:46,440 --> 00:05:50,400 Speaker 3: but macro bearish, so that micro creates these little opportunities 134 00:05:50,440 --> 00:05:52,320 Speaker 3: inside there that you can take advantage of. 135 00:05:52,480 --> 00:05:54,600 Speaker 1: But you don't get that big upward trend. 136 00:05:54,640 --> 00:05:57,560 Speaker 3: And I think this bubbling cauldron of a little supply 137 00:05:57,640 --> 00:05:59,920 Speaker 3: and demand imbalance is probably the best way to descrive 138 00:06:00,040 --> 00:06:00,480 Speaker 3: change the. 139 00:06:00,400 --> 00:06:03,240 Speaker 2: Time horizon for investments or the return for those investments. 140 00:06:03,600 --> 00:06:07,440 Speaker 3: When we think about long term investments, it's going to 141 00:06:07,520 --> 00:06:10,359 Speaker 3: provide a very similar return, but you got to manage 142 00:06:10,400 --> 00:06:12,400 Speaker 3: that risk. And I think that that's the real the 143 00:06:12,720 --> 00:06:16,800 Speaker 3: message here we think about you know, the focus before 144 00:06:17,000 --> 00:06:19,159 Speaker 3: was on levelized cost of energy, get. 145 00:06:19,000 --> 00:06:22,800 Speaker 1: The l c OE down. We got it down, but 146 00:06:22,880 --> 00:06:25,320 Speaker 1: we were unable to deliver the jewels. So you think 147 00:06:25,320 --> 00:06:26,080 Speaker 1: about Germany. 148 00:06:26,400 --> 00:06:30,520 Speaker 3: It got it's levelized cost down, but it could only 149 00:06:30,600 --> 00:06:34,039 Speaker 3: produce the power when the wind blew or the sunshine. 150 00:06:35,120 --> 00:06:37,520 Speaker 3: Now the focus is on that delivered jewel. You can 151 00:06:37,560 --> 00:06:41,240 Speaker 3: think about Now the focus is on Roe instead of 152 00:06:41,520 --> 00:06:44,200 Speaker 3: l c OE. And so our other way to say 153 00:06:44,240 --> 00:06:48,400 Speaker 3: it is dispatched power that goes to the consumers opposed 154 00:06:48,400 --> 00:06:50,320 Speaker 3: to a centralized production of power. 155 00:06:50,440 --> 00:06:53,360 Speaker 2: Okay, fascinating. One more quick question, because you're you and 156 00:06:53,480 --> 00:06:57,280 Speaker 2: it's an oil conference. What's the lowest price of oil 157 00:06:57,320 --> 00:06:58,640 Speaker 2: you think we're going to see this year and what's 158 00:06:58,680 --> 00:06:59,200 Speaker 2: the highest? 159 00:07:00,720 --> 00:07:01,760 Speaker 1: Totally any bad question. 160 00:07:02,200 --> 00:07:04,400 Speaker 3: I think that's a great question because about this drill, 161 00:07:04,440 --> 00:07:07,359 Speaker 3: baby drill, we're sitting on the bottom of the cost structure. 162 00:07:07,720 --> 00:07:10,400 Speaker 3: You already see it drillings coming off. You know, you 163 00:07:10,440 --> 00:07:13,640 Speaker 3: know all the OPEC countries are under pressure. Yeah, maybe 164 00:07:13,640 --> 00:07:16,000 Speaker 3: you can get down into the low sixties or something 165 00:07:16,040 --> 00:07:16,360 Speaker 3: like that. 166 00:07:16,640 --> 00:07:18,840 Speaker 1: I would argue, you know, the markets to the upside, 167 00:07:18,880 --> 00:07:21,160 Speaker 1: you know, looking at the amount of investment out there. 168 00:07:21,360 --> 00:07:23,920 Speaker 3: Inventories are low, by the way, and now you put 169 00:07:23,920 --> 00:07:25,920 Speaker 3: the security premium, people are going to be scrambling to 170 00:07:25,920 --> 00:07:28,000 Speaker 3: get the barrels bringing in and I think that that's 171 00:07:28,000 --> 00:07:29,480 Speaker 3: going to be going to be the key message. 172 00:07:29,640 --> 00:07:32,040 Speaker 2: Jeff, always a pleasure love chatting with you is always 173 00:07:32,040 --> 00:07:34,480 Speaker 2: going to count w at Sarah as well. Jeff Curray Carlisle, 174 00:07:34,520 --> 00:07:36,840 Speaker 2: Chief Strategy Officer of Energy Pathways