WEBVTT - White House Readies Tariffs 0:00:00.080 --> 0:00:10.080 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.119 --> 0:00:13.880 Bloomberg Balance of Power podcast. Catch us live weekdays at 0:00:13.920 --> 0:00:17.119 noon and five pm Eastern on Apple, Cocklay and Android 0:00:17.160 --> 0:00:20.520 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:20.600 --> 0:00:25.080 you get your podcasts, or watch us live on YouTube. 0:00:25.560 --> 0:00:28.280 The White House Press Secretary Caroline Lovitt, she said she 0:00:28.400 --> 0:00:31.200 saw the reporting from moritters around a March first deadline, 0:00:31.200 --> 0:00:32.960 the idea that this would be bumped back. She says 0:00:32.960 --> 0:00:35.320 it is false that she was just with the President 0:00:35.360 --> 0:00:37.720 in the Oval Office and can confirm that tomorrow, the 0:00:37.720 --> 0:00:40.879 February first deadline that President Trump put into place with 0:00:40.920 --> 0:00:45.200 a statement several weeks ago continues. So I guess that's 0:00:45.280 --> 0:00:47.600 where we stand at this moment. We could hear from 0:00:47.600 --> 0:00:50.519 Donald Trump himself on this later today. He is expected 0:00:50.560 --> 0:00:53.159 to be signing executive orders this afternoon, and we'll be 0:00:53.159 --> 0:00:55.440 traveling from Joint Bass Andrews down to Florida and mar 0:00:55.480 --> 0:00:58.440 A Lago, another opportunity for him to potentially address the cameras. 0:00:58.600 --> 0:00:59.960 Yeah, this is all anecdotal. 0:01:00.120 --> 0:01:02.400 We have no paper on this and there's nothing official, 0:01:02.480 --> 0:01:05.080 so we're just trying to follow the verbal cues here 0:01:05.160 --> 0:01:07.760 from the Press Secretary and reporting that's coming out of 0:01:07.760 --> 0:01:09.800 the White House. If we can bring in our panel here, 0:01:09.920 --> 0:01:13.360 Rick Davis and Genie Shanzano or with us Bloomberg Politics contributors. 0:01:14.000 --> 0:01:16.440 Rick is of course our Republican strategist partner at Stone 0:01:16.440 --> 0:01:19.920 Court Capital, and Genie is our Democratic analyst and political 0:01:19.920 --> 0:01:24.320 science professor at Iona University. Genie, once it's official here, 0:01:24.400 --> 0:01:26.520 I guess we'll assume that this is going to be 0:01:26.640 --> 0:01:29.960 the case. Canada, Mexico twenty five percent, China ten percent. 0:01:30.319 --> 0:01:33.240 There's been talk of off ramps already. Is this just 0:01:33.319 --> 0:01:36.920 the opening salvo here? And these could be pulled back 0:01:37.040 --> 0:01:39.200 if certain conditions are met, or this is the new 0:01:39.240 --> 0:01:40.560 reality for these three countries. 0:01:42.400 --> 0:01:44.520 You know, I don't think we know yet. And I 0:01:44.560 --> 0:01:48.520 thought it was fascinating your conversation with the representative because 0:01:48.560 --> 0:01:52.160 what she said speaks to this directly. She said he 0:01:52.280 --> 0:01:55.680 should come to Congress on such sweeping tariffs, just as 0:01:55.720 --> 0:01:58.800 he should have come to Congress on freezing federal grants 0:01:58.800 --> 0:02:02.520 and loans. And this is something that Donald Trump and 0:02:02.640 --> 0:02:06.000 Russell Vote have talked about. Russell Vote said Donald Trump 0:02:06.000 --> 0:02:11.200 will make impoundment great again. They are trying to ensure 0:02:11.639 --> 0:02:15.160 that the power of the purse, given an Article one 0:02:15.160 --> 0:02:18.400 to Congress, moves to the executive branch, and they are 0:02:18.440 --> 0:02:21.359 trying to do that and trying to challenge the Impoundment 0:02:21.400 --> 0:02:26.400 Act and so be sweeping tariffs which may go into 0:02:26.440 --> 0:02:28.960 effect tomorrow, may go into effect in a month. It 0:02:29.000 --> 0:02:31.440 sounds like this Press secretor is saying tomorrow and this 0:02:31.600 --> 0:02:34.840 federal freeze is setting up not just a fight with 0:02:35.160 --> 0:02:39.200 countries and an impact on our economy directly, but also 0:02:39.320 --> 0:02:43.600 a fight between the executive branch and potentially Congress when 0:02:43.639 --> 0:02:46.799 they wake up and realize that the president is trying 0:02:46.800 --> 0:02:51.040 to get enormous executive power by taking over the power 0:02:51.080 --> 0:02:54.280 of the purse since seventeen eighty nine in the hands 0:02:54.320 --> 0:02:57.960 of Congress. But that's what they promised in Project twenty five, 0:02:58.240 --> 0:03:00.440 that's what russ Vote has talked about, and that's what 0:03:00.520 --> 0:03:02.920 the President has done in his first two weeks. And 0:03:03.000 --> 0:03:04.400 he's continuing down that. 0:03:04.400 --> 0:03:08.800 Road well, and the briefing is continuing as well at 0:03:08.840 --> 0:03:11.400 the White House. Genie, we're still hearing from Caroline Levitt 0:03:11.440 --> 0:03:14.280 on these tariffs. She does reiterate they are incoming tomorrow 0:03:14.560 --> 0:03:17.560 on Canada, citing reasons for that as being both Canada 0:03:17.600 --> 0:03:20.480 and Mexico have allowed an unprecedented invasion of a legal 0:03:20.520 --> 0:03:25.280 fentanyl that is killing American citizens and allowing legal immigrants 0:03:25.600 --> 0:03:28.079 into the country. I guess the question here, Rick, is 0:03:28.120 --> 0:03:31.080 if these tariffs are intended to create a behavioral change 0:03:31.080 --> 0:03:33.720 to make something different be happening at the northern and 0:03:33.800 --> 0:03:35.920 southern borders. Do we have an idea of what the 0:03:36.040 --> 0:03:39.480 metrics are around that what the administration is going to 0:03:39.480 --> 0:03:43.640 decide is good progress for these things to potentially be lifted. 0:03:44.960 --> 0:03:45.160 Yeah. 0:03:45.360 --> 0:03:47.880 I think it's pretty subjective, right. I mean, if they 0:03:48.480 --> 0:03:53.600 see progress that governments are taking, not necessarily on you know, 0:03:53.680 --> 0:03:57.800 sort of quantity, but even you know, measures that these 0:03:57.840 --> 0:04:02.640 governments might put in place sequent to the tariffs, then 0:04:02.800 --> 0:04:05.320 maybe they see the behavioral change being enough to be 0:04:05.400 --> 0:04:09.080 able to relax these tariffs. Original reporting was we might 0:04:09.120 --> 0:04:11.880 see these tariffs going to effect March first. We would 0:04:11.880 --> 0:04:15.040 have had twenty eight days to actually see what kind 0:04:15.040 --> 0:04:20.000 of response the governments in Mexico and Canada would produce, 0:04:20.240 --> 0:04:23.080 and maybe that would be part of the negotiation and say, well, 0:04:23.120 --> 0:04:26.279 you're trying the best you can, maybe reduce the tariffs 0:04:26.320 --> 0:04:28.440 in half. I mean, like, it just seems to me 0:04:28.600 --> 0:04:31.680 that if these are going into effect tomorrow, you know, 0:04:31.839 --> 0:04:37.120 it puts these both these countries in a significant defensive 0:04:37.200 --> 0:04:41.360 crouch and they'll have to wonder do we meet these 0:04:41.400 --> 0:04:46.160 tariffs with retaliation of our own? Do we take the 0:04:46.480 --> 0:04:51.839 suggestion that we actually implement more drastic efforts around the stent, 0:04:52.640 --> 0:04:56.760 the stop of fentanyl and immigration. I would mention that 0:04:57.120 --> 0:05:01.239 immigration statistics are significant lower than they've been for nearly 0:05:01.279 --> 0:05:06.279 half a decade right now. So what's as you say, Kaylee, 0:05:06.360 --> 0:05:09.200 what's the metric that you're going to judge progress from? 0:05:09.240 --> 0:05:12.880 And typically we'd have people from the administration out briefing 0:05:12.920 --> 0:05:15.800 on this, so everybody could be prepared for whatever the 0:05:15.839 --> 0:05:19.200 president announces, but not in this White House. We're going 0:05:19.279 --> 0:05:22.400 to hear it first from the President, probably through a 0:05:22.440 --> 0:05:25.760 tweet and echoed then throughout his administration. 0:05:27.000 --> 0:05:29.920 Genie does the implementation of tariffs, is getting some details 0:05:30.000 --> 0:05:34.720 on this finally actually inform or even accelerate the debate 0:05:35.080 --> 0:05:38.200 around taxes. This is the other component, of course, that 0:05:38.279 --> 0:05:41.560 lawmakers have been dealing with here. How you balance tax 0:05:41.640 --> 0:05:46.039 cuts with potential revenue from tariffs? Could this actually help 0:05:46.120 --> 0:05:49.440 to accelerate the debate on Capitol Hill. 0:05:49.680 --> 0:05:52.440 It certainly could. I mean, I think I would say 0:05:52.480 --> 0:05:54.520 we have to take a wait and see approach on 0:05:54.640 --> 0:05:57.920 if it does. And I think part of our problem 0:05:58.000 --> 0:06:01.000 here is that we simply have not gotten a lot 0:06:01.000 --> 0:06:04.360 of direction from the White House. To Rick's point as 0:06:04.400 --> 0:06:07.360 to what this is going to look like. What we 0:06:07.440 --> 0:06:10.200 can rely on is what Donald Trump did in his 0:06:10.360 --> 0:06:15.520 first term when he imposed much more targeted tariffs. The 0:06:15.640 --> 0:06:19.720 impact on the US economy was dramatic in terms of 0:06:19.839 --> 0:06:24.320 factory jobs, in terms of real median household income, and 0:06:24.360 --> 0:06:28.320 that's what economists have been responded to, but responding to rather, 0:06:28.560 --> 0:06:32.640 you know, I don't think anyone disagrees with Donald Trump 0:06:32.760 --> 0:06:36.719 that tariffs in a targeted manner can be used to 0:06:36.920 --> 0:06:41.240 ensure that there is equanimity in terms of trade, that 0:06:41.440 --> 0:06:46.160 we have a ability to compete fairly with other countries 0:06:46.200 --> 0:06:50.040 in the world. But we have so little information on 0:06:50.080 --> 0:06:52.600 this at this point to go on beyond the fact 0:06:52.680 --> 0:06:56.800 we were told that tariffs are his favorite word and 0:06:56.839 --> 0:06:59.599 that he intends to go a whole hog, if you will, 0:06:59.800 --> 0:07:03.960 in implementing them, and in an economy this strong, that 0:07:04.160 --> 0:07:07.719 is a concerning way forward. And so we don't know 0:07:07.760 --> 0:07:10.000 what happens in the future, but in the past, the 0:07:10.080 --> 0:07:14.480 targeted tariffs had a real impact on people's lives, and 0:07:14.520 --> 0:07:18.360 the American public paid for those, including farmers in the Midwest. 0:07:19.880 --> 0:07:22.080 Well, and we're seeing just news around Terris having a 0:07:22.080 --> 0:07:25.160 real impact in financial markets today. What was dollar weakness 0:07:25.200 --> 0:07:27.120 is turning into a little bit more dollar strength. You're 0:07:27.120 --> 0:07:29.640 seeing movement in the Mexican peso and the looney, the 0:07:29.680 --> 0:07:32.640 Canadian dollar. You're seeing oil coming off the lows as well. 0:07:32.640 --> 0:07:34.440 We're only down about a tenth of a percent here, 0:07:34.480 --> 0:07:36.880 because that's a big factor in this equation with Canada, 0:07:36.920 --> 0:07:40.720 specifically Rick. The vast majority of heavy crude imports that 0:07:40.760 --> 0:07:43.320 the United States brings into the country come from Canada, 0:07:43.320 --> 0:07:45.480 and that's not easily replaceable unless you want to turn 0:07:45.560 --> 0:07:49.000 to Venezuela, which obviously has its own complications. And Donald 0:07:49.000 --> 0:07:51.640 Trump suggested at the White House yesterday that a lot 0:07:51.680 --> 0:07:53.560 of his decision making on whether there would be, say, 0:07:53.560 --> 0:07:57.480 an exemption for oil, will depend on price. How price 0:07:57.560 --> 0:07:59.720 reactive do we think a president who in his first 0:07:59.760 --> 0:08:02.320 turn cared very much about what the stock market was doing, 0:08:02.600 --> 0:08:05.080 for example, do you think Trump will be around these policies, 0:08:05.080 --> 0:08:07.920 whether it's oil prices or the things genies referring to 0:08:07.960 --> 0:08:12.000 prices at the grocery store, things Americans will see, Okay. 0:08:11.760 --> 0:08:13.559 Lee, I mean, we heard a lot about the price 0:08:13.600 --> 0:08:17.080 of eggs all during this campaign, but since they've skyrocketed 0:08:17.120 --> 0:08:20.320 almost doubled in price since the president came into office, 0:08:20.760 --> 0:08:23.440 we haven't heard Donald Trump talk much about his interest 0:08:23.520 --> 0:08:27.080 in egg prices. So look, everything is transactional. I mean, 0:08:27.240 --> 0:08:29.800 one thing we know from the first term of Donald 0:08:29.840 --> 0:08:34.199 Trump is he is a transactional president. When he sets 0:08:34.240 --> 0:08:37.079 out these kinds of tariffs there to elicit a response, 0:08:37.200 --> 0:08:42.200 it's a deal. And if that deal includes, you know, 0:08:42.280 --> 0:08:45.320 watching the price of gasoline at the pump to determine 0:08:45.320 --> 0:08:48.680 whether or not he creates an exemption for Canadian crew 0:08:48.840 --> 0:08:52.719 coming into the United States outside the tariff regime, then 0:08:53.200 --> 0:08:55.160 those are the kinds of things that he's simply. 0:08:54.840 --> 0:08:55.240 Going to do. 0:08:55.559 --> 0:08:58.080 We should expect that. I mean, I would remind people 0:08:58.480 --> 0:09:01.559 that Canada put tariffs on there our own crude coming 0:09:01.559 --> 0:09:04.720 into the United States last year. That hurt some of 0:09:04.760 --> 0:09:10.200 the producers who take Canadian crude and refine it. So 0:09:11.120 --> 0:09:15.040 this little tit for tat crude war has been going 0:09:15.040 --> 0:09:18.080 on for some time, and I wouldn't be surprised if 0:09:18.120 --> 0:09:20.360 it doesn't get caught up in this terraf regame itself. 0:09:21.520 --> 0:09:25.760 The Press Secretary has been talking about the conditions here 0:09:26.080 --> 0:09:30.400 and the causes for these tariffs, Genie pointing to fentanyl 0:09:30.640 --> 0:09:33.920 as a primary cause when it comes to Canada, for instance, 0:09:34.800 --> 0:09:38.640 Mexico has its own obviously situation when it comes to fentanyl, 0:09:38.640 --> 0:09:41.800 but also illegal immigration. I just wonder, if we're looking 0:09:41.800 --> 0:09:44.200 at these two countries differently, is there something Canada can 0:09:44.240 --> 0:09:47.360 do on fentanyl that, for instance, wouldn't trigger a pullback 0:09:47.360 --> 0:09:48.600 of tariffs in Mexico. 0:09:50.240 --> 0:09:53.040 You know, I think there probably is. And you know, 0:09:53.160 --> 0:09:56.360 fentanyl is something that people on all sides of the aisle, 0:09:56.520 --> 0:10:00.800 and rightly so, have been terribly concerned about. President is 0:10:00.920 --> 0:10:03.680 absolutely right to focus on that and if he can 0:10:03.760 --> 0:10:08.720 use targeted tariffs to improve the situation, that is important. 0:10:09.040 --> 0:10:12.480 But the problem is, you know, perhaps those conversations are 0:10:12.480 --> 0:10:15.880 going forward and they're not being reported at this point. 0:10:16.200 --> 0:10:19.520 The problem is what we're hearing about are really really 0:10:19.720 --> 0:10:23.760 massive tariffs against our neighbors. And you know, just to 0:10:23.840 --> 0:10:26.320 use an example, Donald Trump has talked about the fact 0:10:26.360 --> 0:10:28.680 that he is concerned that China is in the Panama 0:10:28.720 --> 0:10:31.439 Canal and people have pushed back on that. Well, what 0:10:31.559 --> 0:10:35.000 we do know is that China is making inroads with 0:10:35.080 --> 0:10:37.959 our allies in this part of the hemisphere where the 0:10:38.080 --> 0:10:42.680 United States reigns and should reign supreme. We have to 0:10:42.720 --> 0:10:47.119 be very careful long term about doing things to disrupt 0:10:47.160 --> 0:10:50.920 our relationships with our allies. And so, yes, we do 0:10:51.040 --> 0:10:54.000 need to get a handle on fetanol. He's right on that. 0:10:54.320 --> 0:10:56.920 But do you need to take a hammer or is 0:10:56.960 --> 0:10:58.760 there sort of a chisel. I don't even know if 0:10:58.760 --> 0:11:01.360 that's the right metaphor guys, or a way to approach 0:11:01.440 --> 0:11:04.240 it that gets you where you want to be with fentanyl, 0:11:04.480 --> 0:11:08.280 but doesn't long term destroy our relationships with our allies 0:11:08.480 --> 0:11:13.959 and in the wash impact our economy unnecessarily, which doesn't 0:11:14.000 --> 0:11:14.760 help any of us. 0:11:16.720 --> 0:11:20.280 All Right, Jeanie Shanzano and Rick Davis, our signature political panel, 0:11:20.320 --> 0:11:22.920 helping us out on this Friday as we grapple with 0:11:23.120 --> 0:11:25.040 the breaking news from the White House. Thank you so 0:11:25.120 --> 0:11:27.880 much again. The White House Press Secretary Caroline Lovitt confirming 0:11:27.920 --> 0:11:30.720 that it is tomorrow, February first, the President intends to 0:11:30.720 --> 0:11:32.480 put in place twenty five percent tariffs. 0:11:34.800 --> 0:11:38.280 You're listening to the Bloomberg Balance of Power podcast. Catch 0:11:38.320 --> 0:11:41.400 us live weekdays at noon and five pm Eastern on 0:11:41.520 --> 0:11:44.760 Apple Cocklay and Android Auto with the Bloomberg Business app. 0:11:44.800 --> 0:11:47.800 You can also listen live on Amazon Alexa from our 0:11:47.840 --> 0:11:53.040 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:11:53.840 --> 0:11:56.280 Where we need to get something more official than just 0:11:56.360 --> 0:11:58.240 the words of the press secretary. But that's what we 0:11:58.320 --> 0:11:59.800 have to go on right now, and we may well 0:12:00.000 --> 0:12:02.880 even more. Donald Trump's going to be signing some executive 0:12:02.960 --> 0:12:04.600 orders and we'll be keeping our eyes on the president 0:12:04.640 --> 0:12:07.199 round three o'clock, i think, is what the plan was 0:12:07.240 --> 0:12:09.559 at this point. Knowing as well, about forty five minutes 0:12:09.559 --> 0:12:11.439 from now he's set to be meeting with Jensen Wong, 0:12:11.520 --> 0:12:14.320 the CEO of Nvidia. Will there be news on export 0:12:14.360 --> 0:12:17.120 controls on this same day that we hear about tariffs, 0:12:17.120 --> 0:12:18.680 Will of course let you know if that's the case. 0:12:18.679 --> 0:12:21.000 That's why we have multiple editions of Balance and Power. 0:12:21.360 --> 0:12:24.000 We need more than one at this point. It's a 0:12:24.000 --> 0:12:26.080 great pleasure to bring in Dan Briget. What a perfect 0:12:26.080 --> 0:12:28.960 time to have the former Energy secretary from of course 0:12:29.000 --> 0:12:31.840 the first Trump administration as we watch crude oil turn 0:12:31.920 --> 0:12:35.439 positive here with what appears to be an exemption. We'll 0:12:35.480 --> 0:12:37.760 let you know if that is made official. But Secretary, 0:12:37.760 --> 0:12:39.240 it's good to see you and thanks for joining us 0:12:39.280 --> 0:12:41.600 here at the table today. How are you looking at 0:12:41.679 --> 0:12:44.280 this as tariffs are detailed now with your eye on 0:12:44.280 --> 0:12:45.040 the energy space. 0:12:45.440 --> 0:12:46.840 Well, I think it's going to be important to see 0:12:46.840 --> 0:12:48.920 the impact obviously on an individual company. So as we 0:12:48.960 --> 0:12:50.920 look at the earnings reports today and we watch what 0:12:51.000 --> 0:12:53.680 the CEOs are talking about, we'll have to evaluate what 0:12:53.800 --> 0:12:55.640 is exactly done by the White House and then what 0:12:55.720 --> 0:12:59.360 will be the exact impact on our company's producers here 0:12:59.360 --> 0:13:01.560 in the United States. But when we think about tariffs, 0:13:01.559 --> 0:13:04.640 so I think the simplistic economic analysis has been a 0:13:04.720 --> 0:13:07.760 tariff as attacks attacks is usually paid by the consumer, 0:13:07.880 --> 0:13:10.720 so prices will go up. It's not quite that simple 0:13:10.760 --> 0:13:13.120 in this case with Canada. We do import about four 0:13:13.160 --> 0:13:17.120 million barrels per day from Canada of heavy crude, and 0:13:17.240 --> 0:13:19.400 many of our refiners in the West and the Midwest 0:13:19.400 --> 0:13:22.120 are dependent upon that crude. But when you think about 0:13:22.160 --> 0:13:24.960 tariffs and who ultimately pays, it really boils down to 0:13:25.000 --> 0:13:28.199 who has options, who has optionality, and then the United 0:13:28.240 --> 0:13:31.880 States for refiners, it is possible. I'm not suggesting it's easy, 0:13:31.960 --> 0:13:35.720 but it is possible for refiners to retool their facilities 0:13:35.720 --> 0:13:38.680 to do sweet crude rather than heavy sour that comes 0:13:38.679 --> 0:13:41.240 out of Canada. If you think, if you put yourself 0:13:41.240 --> 0:13:43.560 in the shoes of Canada, how many markets do you 0:13:43.640 --> 0:13:46.079 have for your crude oil? It's very difficult to get 0:13:46.080 --> 0:13:49.319 that oil to the coast, so Asia and Europe become 0:13:49.360 --> 0:13:53.400 difficult customers. It raises their costs as well. So it 0:13:53.480 --> 0:13:56.600 looks like on the surface, we may have more options 0:13:56.920 --> 0:13:59.480 than they have for the product itself, which means that 0:13:59.480 --> 0:14:02.360 they would low or their prices to maintain access to 0:14:02.400 --> 0:14:05.760 the US market. So the notion that tariffs by definition 0:14:05.840 --> 0:14:09.240 mean higher prices not always the case in economics. And 0:14:09.320 --> 0:14:11.719 I think, as I watch the President, as I look 0:14:11.760 --> 0:14:13.800 at his words and I look at his actions, he's 0:14:13.840 --> 0:14:15.959 a very shrewd negotiator, I think. 0:14:15.760 --> 0:14:17.079 He knows this well. 0:14:17.120 --> 0:14:19.640 So when we consider optionality here in this suggestion that 0:14:19.680 --> 0:14:23.160 you can retool your refining capacity for different products, how 0:14:23.160 --> 0:14:25.520 long would that process actually take? Because if we're saying 0:14:25.560 --> 0:14:27.840 this goes into effect tomorrow, suddenly you're cut off of 0:14:27.840 --> 0:14:31.000 that heavy crud that's not instantly replaceable. What is the 0:14:31.080 --> 0:14:32.760 immediate impact on pricing? 0:14:33.000 --> 0:14:36.720 It's difficult. I mean, you're right that the timetable does matter. 0:14:36.720 --> 0:14:38.520 So in the short run you may see some increase 0:14:38.560 --> 0:14:41.080 in prices, but in the long run, infrastructure gets built, 0:14:41.440 --> 0:14:45.640 production continues as it does today, and prices ultimately come down. 0:14:45.680 --> 0:14:48.160 The question is who pays the tariff, And I think 0:14:48.200 --> 0:14:49.960 that's what we need to focus on over the course 0:14:50.000 --> 0:14:51.960 of the next couple weeks and months, as the President 0:14:52.040 --> 0:14:55.640 determines how to negotiate with Canada, not really over the 0:14:55.680 --> 0:14:57.680 price of oil. I mean, we have to remember what 0:14:57.720 --> 0:15:00.280 this is really about. It's about a border, and it's 0:15:00.280 --> 0:15:03.640 about another product called fentanyl, and that's really what the 0:15:03.680 --> 0:15:06.800 President's interests are here, I suspect, so we have to 0:15:06.920 --> 0:15:09.720 keep in mind what this ultimate negotiation is about. 0:15:09.920 --> 0:15:14.840 I still go back to the original question about incentivizing producers. 0:15:14.920 --> 0:15:16.480 When prices are falling. 0:15:17.160 --> 0:15:21.400 The whole drill, baby, drill construct is you just keep 0:15:21.400 --> 0:15:24.560 producing more. Prices, according to the President, could fall by 0:15:24.680 --> 0:15:28.800 half and then inflation as a whole drops around it. 0:15:29.200 --> 0:15:32.960 But if you're exon, if you're pioneer, if you're marathon, 0:15:33.000 --> 0:15:34.040 how does that work for you. 0:15:34.560 --> 0:15:37.480 Well, you know, demand drives pricing, I mean free markets. 0:15:38.120 --> 0:15:40.360 This is again you know economics one oh one in 0:15:40.360 --> 0:15:43.280 some respect. So that's going to determine the ultimate price 0:15:43.400 --> 0:15:44.280 of oil. 0:15:44.120 --> 0:15:45.880 Even as supplies ballooning under that. 0:15:46.080 --> 0:15:48.480 Even as supplies ballooning. So what's happening is, you know 0:15:48.520 --> 0:15:50.720 what has happened over the last few years is our 0:15:50.720 --> 0:15:53.840 production has gone up, which you would think would reduce 0:15:53.920 --> 0:15:57.280 prices for consumers. You're eliminating a scarcity in the marketplace. 0:15:57.520 --> 0:15:59.720 But if you look at prices for retail products like 0:15:59.800 --> 0:16:02.480 DA solar gasoline, over the course of the last few years, 0:16:02.520 --> 0:16:05.120 i've actually gone up. So why would production go up 0:16:05.160 --> 0:16:07.440 and the prices go up? And the reasoning for that, 0:16:07.960 --> 0:16:10.880 I think is because we've made that production more expensive. 0:16:11.120 --> 0:16:13.200 We've made it harder to drill here, We've made it 0:16:13.240 --> 0:16:17.560 harder through litigation in some cases, through regulation in other cases. 0:16:17.960 --> 0:16:20.080 If the President is correct, what he's going to do 0:16:20.200 --> 0:16:22.680 is to start to reduce some of that, reduce the 0:16:22.720 --> 0:16:25.760 regulatory burden that is now borne by consumers, so you 0:16:25.840 --> 0:16:29.840 can have increased production but also lower prices. That's his goal, 0:16:30.120 --> 0:16:32.080 and I think you can do both in this environment. 0:16:32.280 --> 0:16:34.720 But isn't that they're a factor here that has nothing 0:16:34.760 --> 0:16:36.920 to do with the US, really, and that's Opek when 0:16:36.920 --> 0:16:39.800 we consider ultimately supply and demand dynamics. They've been keeping 0:16:39.880 --> 0:16:42.760 quotas and caps on their production. We've heard the President 0:16:42.760 --> 0:16:44.880 in the last week on multiple occasions say he's going 0:16:44.920 --> 0:16:47.480 to be asking favors of Opek essentially when it comes 0:16:47.760 --> 0:16:50.080 to that production. Do you have any reason to believe 0:16:50.120 --> 0:16:51.640 that they would oblige. 0:16:52.160 --> 0:16:54.960 I can't speak for OPEK, and I don't can the president. 0:16:56.240 --> 0:16:59.760 I think Opek speaks for OPEK, but I do think that. Look, 0:17:00.040 --> 0:17:02.000 Peck's a big player in the marketplace, and as I 0:17:02.040 --> 0:17:05.920 mentioned earlier in the US, in free market economies, demand 0:17:05.960 --> 0:17:09.000 actually sets the price demand in production. Opex a little 0:17:09.040 --> 0:17:10.520 different in that they are a cartel and they can 0:17:10.520 --> 0:17:12.440 snap their fingers and set the price, or they can 0:17:12.440 --> 0:17:15.919 set a production number. They are important players in the marketplace, 0:17:16.000 --> 0:17:19.320 but that being said, they do have to drive their 0:17:19.320 --> 0:17:22.160 own economies and they're heavily dependent upon the price of oil. 0:17:22.640 --> 0:17:24.240 So we'll see what happens over the course of the 0:17:24.280 --> 0:17:24.960 next few weeks. 0:17:25.000 --> 0:17:26.720 How long will it take to feel the impact of 0:17:26.800 --> 0:17:29.080 lifting the ban on LERG exports. 0:17:29.119 --> 0:17:31.480 I think it's going to be fairly immediate. I would 0:17:31.480 --> 0:17:35.440 imagine the US Department of Energy will probably start approving 0:17:35.480 --> 0:17:39.560 some of the pending applications for export authorization very very quickly. 0:17:39.560 --> 0:17:41.520 And I know that there are several projects that were 0:17:41.520 --> 0:17:45.640 somewhat halted by this pause, and I think you'll see 0:17:45.680 --> 0:17:49.480 them speed up construction really quickly. So my expectation would 0:17:49.480 --> 0:17:51.080 be within the next year or two you'll start to 0:17:51.080 --> 0:17:54.200 see again this rise in the exports. 0:17:53.760 --> 0:17:56.480 Of luc building those pipelines in that time. 0:17:56.320 --> 0:17:58.760 Yes, And that's what's really the critical factor here. It's 0:17:58.840 --> 0:18:01.000 getting the product to market. As we just talked about, 0:18:01.080 --> 0:18:03.000 we know how to produce oil here in the United States, 0:18:03.119 --> 0:18:05.240 we know how to produce gas. We can make electrons 0:18:05.240 --> 0:18:07.800 to drive data centers and everything else. Our challenge in 0:18:07.800 --> 0:18:10.639 this country has been getting that product to the actual market, 0:18:10.960 --> 0:18:14.000 putting the electricity to the load through transmission and distribution, 0:18:14.440 --> 0:18:18.080 and getting those gas molecules to the open ocean building pipelines. 0:18:18.560 --> 0:18:20.399 Well, so when we consider it this kind of wider 0:18:20.480 --> 0:18:22.760 energy picture, obviously we all had a bit of a 0:18:22.840 --> 0:18:24.760 reset perhaps or there was a reset in the markets 0:18:24.760 --> 0:18:26.879 on Monday because of deep seek about what kind of 0:18:26.960 --> 0:18:30.639 energy capacity may actually be needed to fuel artificial intelligence, 0:18:30.640 --> 0:18:33.520 whether or not it's less than expected. Have you retooled 0:18:33.520 --> 0:18:35.560 your thinking around that at all? Are you expecting that 0:18:35.560 --> 0:18:39.560 there still is going to be an incredibly pointed increase 0:18:39.600 --> 0:18:41.919 in demand due to all of these data centers and 0:18:41.960 --> 0:18:43.520 the facilitation of this technology. 0:18:43.600 --> 0:18:44.600 Yeah, the demand's coming. 0:18:45.040 --> 0:18:47.480 With or without AI. We are without deep sea Yeah. 0:18:47.560 --> 0:18:50.000 Yeah, with or without deep SEEK, and with or without AI, 0:18:50.160 --> 0:18:52.359 we are short on electrons here in the United States. 0:18:52.480 --> 0:18:55.080 We simply do not generate enough to meet the current demand. 0:18:55.480 --> 0:18:58.320 So as we think about this, the Federal Energy Regulatory Commission, 0:18:58.320 --> 0:19:00.600 for instance, put out a report that I think it's 0:19:00.640 --> 0:19:03.080 twenty thirty maybe it's a little earlier than that. We 0:19:03.119 --> 0:19:06.960 may be about twenty five to thirty gigawatts short on 0:19:07.080 --> 0:19:11.760 electricity today. That's without AI, that's without all of these 0:19:11.760 --> 0:19:14.600 announcements that were just made. If that is true, we 0:19:14.680 --> 0:19:16.879 have to put that in scale. New York City on 0:19:16.920 --> 0:19:19.600 an average day uses about six gigawatts, So we're talking 0:19:19.600 --> 0:19:23.159 about four to five New York City sized grids that 0:19:23.240 --> 0:19:25.800 we have to build between now and twenty thirty five 0:19:25.880 --> 0:19:29.000 years away. That demand is coming, whether we want it 0:19:29.119 --> 0:19:29.280 or not. 0:19:29.359 --> 0:19:31.760 Well, I'm guessing you're not building any new nuke plants 0:19:31.800 --> 0:19:33.399 in that period of time, even if that is a 0:19:33.400 --> 0:19:34.280 long term solution. 0:19:34.440 --> 0:19:36.320 So the answer is gas, right. 0:19:36.119 --> 0:19:37.200 The ANSWER's natural gas. 0:19:37.240 --> 0:19:37.760 That's correct. 0:19:37.760 --> 0:19:39.800 I mean the short run, the answer is going to 0:19:39.800 --> 0:19:42.080 be natural gas. It's going to be all forms of energy, 0:19:42.119 --> 0:19:44.720 to be honest. We need more renewable power, we need 0:19:44.760 --> 0:19:47.400 more natural gas, we need more nuclear we need every 0:19:47.400 --> 0:19:49.760 form of generation that we currently know how to do 0:19:49.800 --> 0:19:52.240 because we need those electrons. But in the long run, 0:19:52.280 --> 0:19:55.639 it's going to be newer technologies, small modular advanced reactors, 0:19:55.800 --> 0:19:58.320 perhaps even fusion energy at some point in our lifetimes. 0:19:58.680 --> 0:20:01.400 Well, and as we consider this whole equation, it's all 0:20:01.440 --> 0:20:04.200 going to be inherited by Chris Wright. Presumably he's pasted 0:20:04.200 --> 0:20:06.119 some hurdles in the Senate. He could be confirmed to 0:20:06.160 --> 0:20:08.960 be the new Secretary of Energy, your old job within 0:20:09.000 --> 0:20:11.080 the day or the days to come. What would your 0:20:11.080 --> 0:20:13.920 advice be to him on navigating the environment we are 0:20:13.920 --> 0:20:16.600 currently And obviously he's very familiar with the energy industry. 0:20:16.680 --> 0:20:18.639 He's very familiar and this is not going to be 0:20:18.680 --> 0:20:20.320 new to him. And that's why I think he's such 0:20:20.320 --> 0:20:23.359