October 24, 2025 • 44 mins
A few years ago, governments and corporations were brimming with optimism about the prospect of getting to net-zero in the efforts against climate change. Today, you hear a lot less about that. And while there's renewables getting added to the mix all the time, one energy source that's really booming is natural gas. And coal is booming too. So what happened? And is there any prospect of the world getting back on track? On this episode, we speak with acclaimed energy historian Daniel Yergin, current Vice Chairman of S&P Global. He's also, of course, the author of the Pulitzer Prize-winning book The Prize, as well as, more recently, The New Map. We talk about all of the factors that changed the energy picture in recent years and the energy priorities of nations right now.
Read more:
Russia’s Crude Shipments Climb Close to a Post-Invasion High
Trump to Buy 1 Million Barrels to Help Refill Oil Reserve
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Authoughts podcast.
I'm Tracy Alloway.
Speaker 3 (00:22):
And I'm Joe Wasenthal.
Speaker 2 (00:24):
Joe, you know what's weird.
Speaker 3 (00:26):
Tell me what's weird.
Speaker 2 (00:27):
There's a lot that's weird. Actually, But we seem to
be living in this extremely high tech world where you
can get a chat bot to write you an essay
or create a video. Sure, you could buy a robot
dog to play with all that stuff, and yet we
still seem to be struggling somewhat to provide cheap and
(00:50):
affordable and abundant energy to power all these things. And
in fact, because all this new technology guzzles so much energy,
data centers you so much power, it feels like energy
is becoming even more strategically important in many ways.
Speaker 3 (01:05):
It definitely feels like we're in an age of sort
of people remembering the deep constraints that energy, yeah imposes,
whether it's data center, all kinds of things. Energy is
not a solve problem by any stritch, although I would
say that in my limited sort of reading of the
history of energy, it's never a solved problem. I know,
at the moment we find we're in a period of
(01:27):
energy surplus, we quickly find something to do with that energy,
and once again we are in a period of constraint.
But it does feel like we're in some sort of
period of constraint right now.
Speaker 2 (01:36):
When Caines was doing his whole abundance theory, did he
mention energy at all? What do you say, Well, I'm
just gonna assume that Kaines promised us all abundant energy
as well as everything else, and it's not here. So
we're all upset. Okay. So even though we've had all
these breakthroughs in alternative energy technologies, you know, things like
solar and wind, we're still using more coal, more oil
(01:57):
than ever. And in fact, there's sort of some old
school energy behaviors going on with China stockpiling massive amounts
of oil.
Speaker 3 (02:06):
Yeah, as you said, coal is booming, China stockpiling oil.
Electricity prices in the US on the rise, maybe perhaps
due to some of this AI data centered demand. It
feels like I would say pre COVID at least. I
don't know if people got a little bit naive or
optimistic or goldilocks, but this view is it's only a
matter of time before energy is solved because we're gonna
(02:29):
have all this wind and solar is gonna be cheap,
it's gonna be clean. We see all these cost curves
coming down with like batteries and wind and so forth.
It's only a matter of time before we don't need
the dirty stuff. And right now it doesn't feel we're
anywhere close to that. And I'm sort of curious what happened.
Speaker 2 (02:42):
Yeah, well, everyone talked about the energy transition, but so
far it's not really a transition. It's like a compliment
to existing sources. Anyway, we could keep talking, but why
not go to our guest, who is truly, truly the
perfect guest. We're gonna be speaking with someone I wanted
to speak with on the podcast for a very long time. Dan,
you're he is, of course, the author of the Pulitzer Prize,
(03:03):
winning the prize the Epic Quest for Oil, Money and Power.
He's also vice chairman of SMP Global, and he also
has a new book out called The New Map, Energy,
Climate and the Clash of Nations. So a lot to
talk about, Dan, Thank you so much for coming on
all thoughts, It's great to be on with you all.
So does it feel like energy and security is still
(03:24):
with us in many forms.
Speaker 4 (03:26):
Yes, it goes through cycles. You know, you mentioned COVID.
I think during COVID demand went down, prices went down,
and people kind of forgot about energy, and there was
a sense in twenty twenty one, International Energy Agency did
this scenario about getting to basically a renewable world by
twenty fifty. But now we're in twenty twenty five, going
(03:46):
into twenty six, energy demand is going up wind and solar,
but also coal, oil, and natural gas. And this share
of hydrocarbons and energy has gone from about eighty one
percent to about eighty point five five percent roughly.
Speaker 3 (04:01):
So it's going to take a while to get down
to zero in a while.
Speaker 4 (04:04):
You know, though you mentioned energy transition. I think it's
time to do some rethinking about the energy transition.
Speaker 3 (04:10):
Well good, That's what I was going to ask you about.
So when people talk about the energy transition, this fantasy
or you know, maybe fantasy is a little bit scenario
scenario scenario of Okay, we're going to get to net zero,
et cetera. Is this just a matter of the timeline
has been pushed back, or is there a fundamental flaw
with the premise.
Speaker 4 (04:28):
I think certainly the timeline has been pushed back, the
notion by twenty fifty the closer we get to twenty fifty,
the farther way, it seems the goal of net zero
by twenty fifty zero. And what Tracy said before energy
transition has been energy addition.
Speaker 3 (04:43):
And what happened.
Speaker 4 (04:44):
What happened is I think the reality came back in
that we live in a world that rests on an
energy foundation, and that you just can't overnight take one
hundred and fifteen trillion dollar world economy and change it
from one thing to another.
Speaker 2 (04:59):
Are there any scenarios you could see where I guess
new technologies like AI, the data centers that are getting
built encourage new players to come in and provide capital
for energy, so you know, Google building their own gas port.
Speaker 4 (05:12):
Well, exactly what we have now is the tech world
meeting the energy world, and these two worlds have very
different cultures. Tech world, things go happen pretty fast energy.
You know, in your software engineer come out with new software.
In the energy world, an engineer takes seven years to
build something. And these cultures have come together, and I
(05:33):
think one of the reasons that we're seeing kind of
this called the easy or simple notions and transition pushed
out is what you've mentioned. It's going to take a
lot more electricity, and some of that will come from
windows solar. But what's come back into the picture is
natural gas is an electric generation. If you wanted to
go out and buy a gas turbine today, you could
get it delivered in twenty thirty. If we back go
(05:55):
back to twenty twenty two. I was talking to one
of the big companies in the field and the guy
said that year, all over the world, exactly one gas
turbine was sold and it wasn't one of ours. So
we said, our market share that year was zero. Now
they're all sold out.
Speaker 3 (06:09):
Is there an increase in capacity? We talked about this
recently and this has come up, the shortage of gas turbans.
Is the scarcity being addressed or is there still this
phenomenon where no one really wants to do the initial
upfront investment in a say, factory that makes the gas
turbans because there's still uncertainty about say twenty thirty.
Speaker 4 (06:29):
What I you know, when I talked to the companies,
those who are around in about two two and a
half decades ago, remember there was a huge rush turbance
and then it all collapsed.
Speaker 3 (06:40):
And there were and that was coincidentally or incidentally that
boom was also at a time of massive tech investment
the late nineties. That was another period of the sort
of marriage of tech and energy at the time.
Speaker 4 (06:52):
Absolutely, that's right, and so I think they are expanding capacity,
but they're not doing it helter skelter. Also, like so
many other companies, the shortage of the talent that you need.
I mean, these are not simple things to build.
Speaker 2 (07:04):
One of the reasons we wanted to talk to you
is because you do such a fantastic job of connecting
the oil space with capital markets, and I've always maintained
that oil is very much a capital market story. Can
you talk about the difference between how capital is sourced
for something like oil or gas versus clean energy, and
whether attitudes towards the two have changed at all.
Speaker 4 (07:26):
Well, I mean it was quite different with clean energy,
and a lot of it, you know, had tax credits
and ability to you know, to sell tax credits and
things like that, and a lot of the oil and
gas development may be funded by financial institutions, but a
lot of it is funded by the companies themselves.
Speaker 3 (07:41):
What is it like we see these lines on charts
that show the collapsing price of solar production, or the
collapsing price of wind production, or the improvements in battery technology.
All true, all true, and yet there is still so
much public money that goes into these areas, and so
many tax credits and subsidies, etc. To kind of accelerate
(08:03):
them along. Why is it that you have these lines
going down and yet they don't undercut traditional sources in
the way that maybe the tech mindset.
Speaker 2 (08:12):
We yes so well.
Speaker 4 (08:13):
First, remember the renewables, wind and solar. Really we're not
competing with oil until you started to have electric cars
coming onto the scene. But you know, it's interesting. I
was talking to a company that's developing a big battery
project in Europe I probably shouldn't say which country, and
they're very excited about it. It's really big. They said, Oh,
by the way, they couldn't do it on their own.
(08:35):
They had to go to the government and get incentive
subsidies or a partnership with it. So the costs are
still up there, and I think we're seeing a testing
now for wind and solar. Everybody's rushing right now to
get steel into the ground so they can get the
tax credits which will expire in not very long time,
so the testing will be how competitive will they be?
(08:56):
And I think we'll still see wind and solar, particularly
solar put in, but it won't be enough. And what
they concern right now is about the reliability of the
electric power system. And you see prognostications about this area
that stretches from Illinois, you know, as far as New Jersey,
that by the end of this decade, which is not
so far away now, we'll be looking at very tight
(09:19):
markets with really great pressure on it. And I'll tell
you the kind of regulators. The people looking at it
but are starting to get pretty alarmed. And that's why
you see a lot of a lot of discussion and
focus on can we get permitting reform so you can
actually get something built?
Speaker 3 (09:34):
Can you just what is the source of alarm? Is
it about the generation of electrons or is it about
the transmission and with the grid capacity to balance and
take in all these things.
Speaker 4 (09:45):
Well, it's both, and certainly the transmission is a very
key part of it. But what we have been doing
has been retiring coal plants. We thought, you know, we
re mar going to have any more gas and electric generation,
but that's coming back. And now you see kind of
slow down and closing these coal plants. And also we
see an election coming up in New Jersey where electricity
(10:06):
prices are an issue, and suddenly this whole issue. I
was looking at our numbers, and electricity prices have been
going up at twice the rate of inflation in the
United States.
Speaker 2 (10:16):
Why can't clean energy seem to exist without subsidies? Given
that electricity prices are going up, and we all agree
that energy is strategically important, why can't it, you know,
fund itself.
Speaker 4 (10:29):
Well, it has to, you know, ultimately, it has to
be that. But you know, obviously there's a lot of
debate about what happened in this big beautiful bill where
they you know, basically are cutting back and then eliminating
the subsidies. And at least this administration says, well, wait,
these were put in thirty two years ago for infant
in industries, and now the prices come down, why are
(10:50):
we were doing it? So I think these industries are
going to have to stand on their own right now.
Speaker 2 (10:55):
Would they be economical in their current form?
Speaker 4 (10:57):
I think, you know, it depends on the circumstances and
where they're built and whether they have access to transmission,
because of course you can have solar, but then you
need you need to connect it to the grid, and
grid connection becomes a very important issue.
Speaker 2 (11:10):
That's the expensive thing. That's why with my solar panels
on my farm, I mooch off of the entire Connecticut
system grid.
Speaker 4 (11:17):
How is your solar panels working?
Speaker 2 (11:19):
They're fantastic. Our energy bills are like maybe twenty dollars
a month. Sometimes we get paid so you.
Speaker 4 (11:25):
Put it back in the system. You didn't get any
tax creditors.
Speaker 2 (11:29):
Well, the house had it when we bought it. Oh,
but I'm just very happy with the low electricity bill
and not having to shoulder the costs of the grid.
Speaker 4 (11:37):
Yeah, and somebody else will take care of it, that's right,
somebody else's problem.
Speaker 3 (11:57):
I want to talk a little bit more about the
return of natural gas or LNG. What do you think
the prospects are for the US as an LNG export powerhouse?
Can you continue to grow well at the pace that
it's been growing, especially given some of the bottlenecks and constraints.
Speaker 4 (12:14):
Yeah, well, obviously you need pipes to get gas to
the Gulf coast or to tide water in order to
ship the gas, and that ability to build pipes is
really difficult, or has been difficult. It's going to get
easier now unless you're in Texas where you could build
them anyway. But it's an amazing story. A decade ago,
the US was not exporting any LNG in fact, and
(12:35):
now it's the world's largest exporter of LNG. And our
own numbers say that the next half decade or so,
global capacity will increase by over fifty percent. Half of
that increase will be in the United States, you know,
and people don't think about it this way, but we're
not for USLNG. Putin might well have succeeded using the
(12:57):
energy weapon cutting off gas to Europe and shouted the
coalition supporting Ukraine. And what prevented him from doing that
was USLNG, which he hadn't counted on. In the book
you mentioned the new Map. I have this story about
where I had this interaction with Putin in twenty thirteen,
and it was at the Saint Petersburg International Economic Forum,
(13:19):
which was his version of Davos, was before he enexed Crimea,
and he was up there on the platform with Chancellor Merkel,
and you could see the ice between them, and they
said to me, oh, you get to ask the first question.
So I thought I was just asking the question. Yeah, exactly,
no pressure, the normal question about you know, what are
you going to do? Your budget is over dependent on
(13:40):
oil and gas. By accident, I mentioned shale and he
started shouting at me in front of all these people
and said, shale is barbaric, it's terrible, poisoned people. He
went on and on like that, and I can tell
you it was very unpleasant being shouted at by Vladimir
Putin in front of three thousand people.
Speaker 3 (13:55):
But it's a good story.
Speaker 4 (13:56):
Yeah, but it's a good story, you know exactly it
did at the time and think it's a good story.
At the time, I wanted to get out of there,
But afterwards I thought he was actually precient. He saw
that shale gas in the form of then LNG would
augment us influence in the world, which it certainly has,
and it would compete with his jewels crown jewel gas problem,
(14:17):
which has also happened because now Russian gas is being
pushed out of Europe. So I think, you know, people
don't connect speaking of connecting the dots that the shale
gas revolution there tied into the ability to support Ukraine
in this war that's now gone on almost as long
as World War One.
Speaker 3 (14:36):
It sounds like you're saying, Aubrey McClinton was a great
hero for the West and democracy and all of this stuff.
Speaker 4 (14:42):
Well, i'd say a great entrepreneurial. Yes.
Speaker 2 (14:45):
When it comes to old school energy sources, whether it's
oil or your term old school, is there any low
hanging fruit left in terms of making the technologies more efficient?
I remember, maybe like almost ten years ago now, there
was a big standardization push and all these you know,
drills that used to have custom parts started to standardize
(15:08):
them and that actually brought down prices quite a bit
or helped ease some of the pressure at a time
when oil prices were quite low. Is there anything like
that on the horizon.
Speaker 4 (15:17):
Well, I think you're right. I mean shale. The development
of shale revolution is to kind of continue your memory,
it really became a manufacturing process. It's a very repetitive
manufacturing process. And you know, no one back then when
days of you mentioned Ay mcclennan was one of the
pioneers could have possibly envisioned the US being the world's
largest oil producer, the largest natural gas producer. I think
(15:40):
right now you know about maybe ten percent of the
oil has recovered from shale. So one thing companies are
working on, can we increase that output? Can we increase
it be more efficient? But there is the sense now
which you wasn't even had a year ago, that maybe
shale has peaked out, peaked out at a very high number,
but peaked doubt And people I start to see are
(16:02):
starting to talk about what's known as exploration, going out
and finding new oil sources in parts of the world
where nobody really looked for them.
Speaker 2 (16:10):
Does it make you nervous to use the word peak
in an oil conversation.
Speaker 4 (16:14):
Now that you mentioned it at times? What should I say? Plateau?
How's plateau?
Speaker 2 (16:20):
Ok?
Speaker 4 (16:21):
Yeah? Peak oil. I remember when when people were talking
about peak oil back in you know, decade and a
half ago, and that the world was going to run
out of oil. I remember I said, I better go
back and look in the prize and went back and said, oh,
the world's actually run out of oil five times, and
every time it's where you pointed before. It's new technologies
and new geographies, that changed the game.
Speaker 3 (16:43):
Tell us a little bit more about some of those
times were, so, I guess probably the seventies, when else
have there been well, right at the air of peak
oil running out.
Speaker 4 (16:51):
World War One turned out to be a war that
really sort of elevated oil because it started with people
on horses and cavalry, it ended up with banks and
airplanes and trucks and all of that. And there was
this great fear after World War One that the US
had what was it, nine years worth supply left, and
so what happened as American companies started to go out
(17:13):
and it went out to the Middle East and of
course found lots of oil. So that was a period.
Then after World War Two there was that concern because
oil had been so important there had been an oil
war within the larger war, and then of course the seventies.
But it even happened in the nineteenth century that you know,
people start ringing the bell saying, you know, it's all over,
and technology keeps expanding the frontier.
Speaker 2 (17:35):
So, speaking of oil supplies and stockpiles, one of the
big stories in energy markets has been China buying enormous
amounts of oil and stockpiling them for reasons that we
don't know for certain how important has that dynamic been
to you know, a fairly resilient oil price. Crewd has
come down a little bit, but it's still, you know,
(17:56):
around sixty dollars a barrel, I think, and why are
they doing it?
Speaker 4 (18:00):
In your rod, that is always the question of why
they're Chinese stockpiling. I've we've been working on minerals too,
and looking at the stockpile minerals too. It's what they do.
Is it because they think there may be a conflict?
Is there a problem? Are they worried about the South
China Sea which I write about in the new map?
And they know that during World War Two the US
cut off the oil line to Japan, and so they
(18:23):
want to be sure they have supplies. Or is it
just because it's cheap and they're expecting it to go up.
We don't know. I'll be there in a couple months
and I'll ask them again. I'm not sure I'll get
an answer. But they're doing it. But the role of
China's changed because for two decades the growth in oil
demand worldwide, half of it was in China. And now
(18:44):
the view, I won't use the word peak I'll use
the word plateau. That demand in China is plateauing at
a high level. But they're importing seventy five percent of
their oil and they don't want to continue to do that.
That's why they've been pushing one of the reasons they've
been pushing electric cars. The other reason is because I
see it as a way to an export market, so
(19:05):
you don't have the growth engine of China. And so
you know, there's a fair amount of debate today at
what rate at oil de Man will grow, but is
it how how much will grow? Will be a million
barrels a day, a million and a half barrels a day,
And that is a subject within oil circles of a
great deal of vigorous debate.
Speaker 3 (19:23):
We obviously don't know what chision ping strategic plans are,
potential military plans in the future. But for all of
the EVY adoption in China, which has of course been
huge military conflict, whatever the source, will still be an
incredibly oil intensive process.
Speaker 4 (19:42):
Yes, I think exactly. I mean, that's right. All you're
not going to have battleships, you know, you know, solar
power times yeah, yeah, yeah, I mean you do mention,
I mean what is we know some things that are
ensoes Youping's mind, because he said it, and he does
talk about the dominating the new indust supply chains, which
means evs, which means solar panels, which means when and
(20:06):
of increasingly critical importance batteries, which is another issue that's
going to actually is percolating up about here. We have
regulations against batteries that come from foreign entities of concern
and you say, what's a foreign entity of concern? And
it tends to be mean parentheses China in the energy discussion, could.
Speaker 2 (20:28):
You ever envision a time where where earths are more
important strategically than oil?
Speaker 4 (20:34):
No, but I can tell you that they're really important,
and I would say in the last six months there
has been, if you are here in Washington, a crisis
mentality about them, because I think that was a shock
when Trump was rolling out all of his tariffs and
the country that they were going to be most aimed at,
which was China. Suddenly China said, well, you know, to
complay this game. And then that is, of course, in
(20:56):
recent days is once again come up the Chinese, whether
for strategic reasons, but again new supply chains. You know,
they produce process ninety percent of the rarers and they
know it. And when you hear an automobile maker saying,
you know, we have a week and a half supply,
you realize how urgent it is, and so you know
(21:16):
it's really come up and trying to grapple with it.
It's not something you can solve overnight, because it takes
a long time to open a mind, put up a
processing a thing. And the Chinese are putting not only
controls on rareers, they put controls on the machinery and
equipment for processing rarers, and they put controls on the
(21:37):
people who have to know how that they may not
be able to have passports anymore.
Speaker 3 (21:42):
Let's talk about US energy policy. It seems a little
unfocused to me.
Speaker 4 (21:48):
Or we might say variable, okay.
Speaker 3 (21:51):
Go on, Like how would you characterize it? Or like
when you say, let's say it's variable, how would you
characterize what's going on? I think there was a US
energy security or energy policy.
Speaker 4 (22:03):
And under Biden, of course, it was all about basically renewables,
climate change, the goal that have no gas, natural gas
or coal and electric generation. By twenty thirty five, half
the new cars in America were to be electric by
twenty thirty. That was then, this is now. It's just
pretty much in the opposite direction.
Speaker 3 (22:24):
Can the US, you know, I think Trump would like
powerful dominant US energy industry.
Speaker 4 (22:33):
He uses that word.
Speaker 3 (22:34):
Yeah, is that realistic? Can you get there? I mean,
there's wanting to expand drilling, but with the price of oil,
actually it's a below fifty blow six and now it's
fifteen seventy five today. For like, can these things hang together?
Can we have prices at these levels and booming domestic
oil coustrut No.
Speaker 4 (22:52):
I think that's one reason we get into not the peaking,
but the plateauing for that reason. And you know, you
look at the survey from the Dallas Federal Reserve that
came out, and you know, below sixty, people don't you know,
they just pull back and they husband capital. And you know,
it certainly seemed that it was possible that we would
(23:14):
see oil prices below sixty in the latter part of
the year. And it's come. Maybe it's come earlier than
people might have expected, and very much affected by the
trade war between the US and China, among other things.
But the US is the dominant player right now and
energy you know, the new trade deal the Europe supposed
(23:34):
to have with the US, They're supposed to buy more
natural gas from US and so forth, and they set
up something called the National Energy Dominance Council, which is
you know, kind of the view of the US in
this position. But it is tough to both want to
have a very vibrant domestic industry and have low prices
at the same time.
Speaker 2 (23:55):
I know you just mentioned that Europe is still going
to be getting US oil, But do you foresee a
more I guess autaric energy future for the world, because
it does feel like, at least with manufacturing goods and
some strategically important goods, people are stockpiling and people are
focused on building out their own capacity. Is that going
(24:16):
to be the case in energy or will it be
that energy is just so geographically specific and expertise oriented
that not everyone will well do.
Speaker 4 (24:25):
We've already seen a partitioning of the global oil market
in terms of Russian oil not going to its natural
market Europe, but going to China, which was a market before,
in India, which was not a market before. We see
that in natural gas. So I think call it economic
nationalism or economic sovereignty. I think that the you, and
(24:48):
in a sense, that's what all the teriff policies are about.
I think Europe is in a very difficult position because
they would like to continue to pursue zero as it's called,
since by twenty fifty, but now they have this other problem,
which is called being competitive, or rather not being competitive
and losing industry. And on the other hand, they're now
(25:08):
supposed to spend not one and a half percent, but
five percent of GDP on defense. So I think Europe
is in a very tough position.
Speaker 2 (25:18):
And I know you speak to a lot of experts
in the energy industry, but what's your sense of the
mood on the ground among I guess oil and gas
workers specifically, because on the one hand, Trump has been
a friend of oil and gas and has said that
he wants oil and gas to be dominant. But on
the other hand, a lot of the policies that he's
(25:39):
actually put in place, you see people in like the
Dallas Fed survey complaining about them, and the mood seems
to be kind of bad.
Speaker 4 (25:46):
Well, I think it's both. I mean, I remember CEO
of one Oil Companies saying that he was actually too
surprise was invited to I don't know if he's joking
or not to the Biden White House, but he said
he had to go in through the basement door. And now,
of course they're very you know, accepted, and you know,
in part of the dialogue, you know, I think it's
a mixed message. They're glad to see a reduction in
(26:09):
all these new regulations that have been imposed and kind
of just the general hostility to an important US industry.
But on the other hand, they at low prices. You've seen,
you know, layoffs in the industry, you see people putting
down drilling rigs, you know, at this prices, I think
if they persist, we'll see more of a negative impact.
Speaker 2 (26:44):
So the US is producing massive amounts of oil and gas.
How does this sort of change the geography or the
energy industry.
Speaker 4 (26:52):
Well, it really has changed it dramatically. It was really
brought home in twenty nineteen when the Iranians attacked the
most important infrastructure in the entire world oil industry in
Saudi Arabia, and the price went up for a day
or two and then went down. And I think that's
because of the existence of shale and just as it
kept growing and growing and it gave a sense of
security that wasn't there before.
Speaker 2 (27:14):
I totally forgot about that, but I think I was
actually in the Middle East when that happened. Does Opek
matter anymore? U?
Speaker 4 (27:21):
Yes, Well, it's really OPEK plus that matters right now.
And they took a lot of oil off the market,
basically giving room market share to the US. They're now
begun the process of taking back their market share, and
that's partly what's reflected in price.
Speaker 3 (27:38):
One of the things that is a constant theme on
the podcast, and it comes up in numerous industries, whether
we're talking about housing or lumber or anything else, is that,
you know, periods of surplus or periods of slack, you
end up paying for it at the end. You end
up maybe paying for it five ten years down the
road because you get this declined in production. The talent
leaves the industry, the labor moves the industry, the parts run,
(28:00):
and you can't just take them out of the warehouse,
et cetera and start drilling or whatever. Again, when you
look at the declining price of oil today, are we
going to pay for this?
Speaker 4 (28:09):
I so yeah, I think it's interesting because you know,
I had to write this new epilogue for the new edition,
thirtieth edition of the Prize, and I was thinking about
what are the lessons And one of the lessons to
me is, among the hundreds of characters in the book,
there are only two who really matter. One is supply
and one is demand, and they're always fluctuating between the
two of them. And I could see that today. Let
(28:30):
me give you an exact because there's a natural decline
that goes on in oil, which is people now saying
and gas maybe it's five percent a year. So in
twenty twenty one you had the International Energy Agency come
out with a scenario for net zero by twenty fifty
in terms of emissions, and all these steps to get
there made it look rather easy. Because the demand was
down and price was down. They just came out with
(28:51):
a new study saying the world needs five hundred and
forty billion dollars of investment every year between now and
twenty fifty just to kind of stay where we are
with oil. So it is that cycle that people forget.
There's a whole decline there, and I think if you
have a period of slack, you pay for it down
the road in terms of the tight market, because investment
(29:12):
leaves and I think you made a really important point.
People leave too, They say, I don't want to be
in this industry.
Speaker 3 (29:17):
Did some episodes a couple of years ago, like actually,
when oil is much higher about one of the constraints
that's been well, a bunch of like the petroleum schools,
they didn't have the same pipeline of engineering talent because
in twenty nineteen or whatever those years were, who was
going into majoring in petroleum engineering?
Speaker 4 (29:33):
Right here exactly Now it's actually looks like it's a
more attractive industry, but it's.
Speaker 2 (29:39):
A competition from geothermal as well. If you want to
go drilling some rocks somewhere, you don't have options.
Speaker 4 (29:44):
Well, actually we didn't talk about geothermal, but in fact
there is now the notion can you apply shale technology
and drilling to geos?
Speaker 3 (29:52):
Are you optimistic about that?
Speaker 4 (29:54):
I don't go through optimist or pessimism. I'd just say,
but it's promising. Let's see how it plays out.
Speaker 3 (30:00):
I want to talk more about Europe. You mentioned the
industrial economies getting clobbord. I mean German. Let's just talk
about just Germany. Maybe they were able to substitute LNG
imported from the US from some of its Russian sources,
but the price is up and industrial production in Germany
has been terrible. Do you think at some point European
leaders will sort of cry on goal or cave on
(30:22):
the net zero ambition because it feels like the politics
of that have been running on fumes first.
Speaker 4 (30:27):
Well, you know, it's interesting because of course they're it's
so entrenched that it's hard for them. I mean, you
could say, okay, we're for net zero, but maybe not
by twenty fifty. But Europe continues to you know, it's
not just energy costs, it's this incredible weight and burden
of regulations that are designed without any connection to the markets.
(30:48):
I was talking to one company on Sunday and they
said they just closed one facillit plant in Europe. They
had another one that was eighty percent built that they've
decided not to go ahead with. Talking to another company
that's also closing. I mean, they impose these policies with
no connection to the marketplace or to technology, saying seventy
(31:09):
percent of jet fuel has to be so called sustainable
aviation fuel. Well it's less than one percent now, and
so it's just if you say it, it's going to happen.
So I think maybe in Germany we're starting to see
some of that easing up, But I think that those
economic realities are weighing down with them and if they
don't step back, and as I say, it's not just
(31:32):
climate policies, but it's this whole regulatory straight jacket that
helps people go invest. In the United States, I.
Speaker 2 (31:39):
Do feel like even before Russia invaded Ukraine, there was
a sense that I guess ESG in general was kind
of failing. You know, inflation started to.
Speaker 3 (31:51):
Pick up, er bureau phenomenon.
Speaker 2 (31:53):
Yeah, well, inflation started to pick up, and suddenly there
was what I thought was an inevitable backlash against East
and targets net zero and things like that. Do you
think that ever comes back or how would you characterize
I guess the helpfulness of ESG when it comes to
building out clean energy, well.
Speaker 4 (32:14):
I think it was clearly that all is a package together.
I think now really the clean energy argument, the argument
for solar now is less about that, and it's about
that you can do it quickly and lay it down
quickly and get those electrons into the grid. So it's
more about the economics are working economics rather than virtue
(32:35):
and ESG clearly is faded away. I can't see it
coming back with the full force that it did because
it has a built in backlash, which we're seeing now.
So I think it means that these things have to
be more market driven.
Speaker 3 (32:51):
Does the boom and energy exports from the US raised
prices for American households?
Speaker 4 (32:56):
That is, of course a very critical question was raised
at the end of the Biden administration. We did a
study on that, you know, we being S ANDP and
the Commodity Insight team there and concluded that we have
a lot of natural gas so that it's not a
threat in terms of prices. Natural gas is not as
constrained as oil.
Speaker 2 (33:17):
What about nuclear? We've gone this entire conversation without talking
about nuclear, but nuclear, you know, could solve all these
problems well.
Speaker 4 (33:23):
And it's also interesting because that circles back to one
of the points we talked about before, because you say, well,
what's brought nuclear back? Partly it's you know, just time,
Partly its need, but I think it's also the entry
of the tech companies from being just consumers, you know,
for software, to really worrying about data centers. And you
(33:45):
look at it last time I looked, there's been six
billion dollars of venture capital infusion. Nobody ever used to
do venture capital in fusion. That was what the government
did because it was fifty years away. And we had
an event at our SERRAH conference in Houston this year
where we had Commonwealth Fusion, which came out of MIT.
The head of the largest, the main utility in Virginia
(34:06):
and the governor of Virginia saying, you know, we think
we're going to have fusion here by twenty thirty two.
So nuclear is definitely back. Small modular reactors are a
hot topic. I think the first ones will be deployed
around twenty thirty.
Speaker 3 (34:20):
So you think they're actually going to happen because this
seems like another technology that's always five or ten years old.
Speaker 4 (34:25):
Well, I think it's going to happen, But I think
the test will be then can you bring down the
cost and is it a more flexible way to add nuclear?
But it is. I think that it's really the tech
companies who I mean there you had Amazon investing in
one of the SMR companies with the notion that they
will then buy successive reactors with the idea that each
(34:46):
one the cost will come down. Now that will still
be tested. It still has to go through a regulatory
process at the Nuclear Regulatory Commission and all of that,
but there's certainly you have the sort of entrepreneurial Silicon
Valley spirit now imbued into nuclear, which of course is
not an overnight thing, but it is back on the agenda,
(35:07):
and I think history will go back and say, in
Germany Chancellor Mercles one of her two biggest mistakes was
shutting down the nuclear basically in a weekend. Well was
the other and that was and that was twenty five
percent of her electricityke The other mistake was saying, you know, immigration,
the door is open.
Speaker 2 (35:26):
This might be a dumb question, but you know, if it's.
Speaker 4 (35:29):
Not such any dumb there's not such a thing. I
better watch out now.
Speaker 2 (35:32):
Okay, But if Amazon or someone invests in a small
nuclear reactor or some other type of energy plant, how
are those agreements actually structured in terms of the off take?
Because I assume they get priority, and then does whatever
is left over get sent into the grid?
Speaker 4 (35:50):
Well, I guess it depends if it is a reactor
that's owned by a utility, or is it possible that
these would be like merchant nuclear reactors. You have seen
examples already where some of the I guess we used
to call them big tech. Now we call them hyperscalers.
Speaker 3 (36:06):
When did that happen? We just all started using that term.
Speaker 4 (36:10):
Yeah, exactly. I think it's about a year. Yeah, I
mean for the first time you had to think, what's
a hyperscale? Is like an elephant, But it's scaling. But
where they've signed where they will take the entire off
take of nuclear power plant. So they are very these
companies are very concerned about power because it's so electricity intensive.
(36:31):
The other day there was a story saying that the
two data centers that that Elon muskis building in Memphis
will use more electricity than all the households. So this
is a big issue for regulators of what are you
going back to the question you raised before about who
pays for this? How do these costs get disaggregated?
Speaker 3 (36:50):
Right now, you mentioned electricity costs having gone up faster
than inflation. Right now, can we draw a line between
these prices and the data enter boom or is this
two things that happened to be happening. Well, I've seen
different views on how directly data centers are right now.
Speaker 4 (37:09):
I think it's it's part of it, but it's just
the general increase of demand, including you know, evs, although
not on the scale that had been envisioned, So all
those things and just having I mean, we had gone
for twenty five years with flat demand in electricity the
United States then and now it's just recently that it
(37:29):
started to grow again. And so you have a whole
generation of utilities who've grown up in flat demand and
now figuring out how do you get things built, how
do you get into the regulatory process, and even when
you get it approved and you end up in court
because somebody challenges it.
Speaker 2 (37:44):
Are we ever going to solve the energy problem?
Speaker 4 (37:46):
No? I think it will just I mean, it will
always be there as long as industrial society will be
one form or another. Maybe fusion, the dream.
Speaker 2 (37:56):
Of ah fusion. Yes, I used to play some city
and that was all was the ultimate goal. You work
out from the gas plant to nuclear and then to.
Speaker 4 (38:04):
Confusion solves everything. But it's also striking to me what
I've noticed, you know, having studied the energy for you know,
some time that you get a consensus about energy and
it lasts about three years and then something new comes
along and just changes the view.
Speaker 3 (38:21):
Are past periods we actually talked, we talked a little
bit about the late nineties when there's the gas boom.
Then are there any other past periods that people should
study right now that might help them form the current environment.
Speaker 4 (38:34):
Well, I think that what we have to remember, which
to me is absolutely critical, is energy security, and that
it gets forgotten. And for me, I have this story
and the prize about Winston Churchill converting the Royal Navy
from coal to oil before the First World War, which
to me is that is what made oil a strategic commodity,
(38:57):
that transition.
Speaker 3 (38:59):
Why do you do that?
Speaker 4 (39:00):
He did it because he gained speed, flexibility, you didn't
need to have all these guys shoving coal on board,
and you gained thirty percent extra cargo space.
Speaker 2 (39:09):
That's the very start of the book, right, that's opening exactly.
Speaker 4 (39:12):
And I've always thought that phrase. He said safety in oil,
but we could say an energy lies in variety and
rite alone that you don't want to be overdependent on anything.
You want variety, whether in terms of your suppliers, in
terms of your sources.
Speaker 3 (39:26):
We're never going to bring whale oil back, you know.
Speaker 4 (39:29):
I said there's not a single energy source that has
not increased, even wood has increased. The only one that
hasn't increased is whale oil.
Speaker 2 (39:39):
All right, joke and dream, I guess Dan Jurgen, author
of the probably I'm pretty sure, the best book on
the oil market ever, thank you so much for coming
on all thoughts.
Speaker 4 (39:48):
Thank you.
Speaker 2 (39:49):
It's great, Joe, that was so much fun. I'm so
glad we finally got to take You can't.
Speaker 3 (40:05):
Believe it took us that long to talk to Dan,
but that was great.
Speaker 2 (40:08):
I know, well, fortuitous meeting in Washington, DC. I gotta
say his point about the sort of interconnection between energy
and technology, Definitely, it does seem to be a driving force, right,
And as soon as you get new advancements in weaponry
or transport or in this case software, you do tend
(40:31):
to get a sudden like rethinking of what your energy
needs actually are or some sort of transition.
Speaker 3 (40:37):
And then on the flip side, like if you ever
are in an era of energy surplus, you're gonna find
something to do with it. Yeah, Like you never just
sit around it, like here's a bunch of cheap energy,
let's not do anything.
Speaker 2 (40:49):
With Although China is stockpiling successfully, right.
Speaker 3 (40:52):
Well, they are stockpiling. We don't know for what exactly,
but yes.
Speaker 2 (40:55):
They haven't spent it yet.
Speaker 3 (40:57):
They haven't spent it yet, although they're spending I guess
sense to acquire all the oil. It does feel to me,
And it's not like this is that new, but there
was a phase in probably the US and Europe in
the late twenty tens, and maybe it extended through twenty
twenty magical thinking with respect to energy being solved. We're
(41:18):
you know that there is just like this, like clear
path towards cheap, clean, abundant energy and some sort of
realities clearly smacked a lot of policymakers in the face.
And I guess the question is how locked into current
plans are they? What has to give? It does feel
like in Europe specifically, the constraints when it comes to industry, energy,
(41:40):
climate security are pretty real.
Speaker 2 (41:43):
It seems to me like the big problem is the
cyclicality of the industry, Like you're constantly going through booms
and bus and as soon as you get a boom
in oil production, it inevitably leads to a collapse in
oil prices, and then you struggle to build out capacity
for years and years, and then there's not enough oil,
and then prices start to rise and everyone goes back
(42:03):
in again. If we could find some way to moderate that,
I don't know how you would do it, but that
might be a way forward.
Speaker 3 (42:10):
I feel like an underrated element of the Chinese economic
story over the last however many decades has just been
this like sustained boom without major downturn, et cetera. And
so then you don't get these like big periods of
people leaving an industry or whatever that are really hard
to escape out of. It's like I sort of think
(42:31):
the cure for the boom bus cycle is just perpetual boom,
Like that's the answer. Just always be booming, always be booming, booming.
Speaker 2 (42:38):
I like that, But I also have to say China
as a source of energy demand. You know, they're buying
for stockpiles right now, but they're using so many electric
vehicles that their gas consumption is actually going down. Gasoline
very impressive. All right, shall we leave it there.
Speaker 3 (42:52):
Let's leave it there.
Speaker 2 (42:53):
This has been another episode of the All Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 3 (42:58):
And I'm Jill wasn't the Oh. You can follow me
at the Stalwart, follow our producers Kerman Rodriguez at Kerman
armand Dshel Bennett at Dashbot and Kilbrooks at Kilbrooks. From
more Oddlots content, go to Bloomberg dot com slash odd Lots.
We've a daily newsletter and all of our episodes, and
you can chat about all of these topics twenty four
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Speaker 2 (43:19):
And if you enjoy odd Lots, if you like it
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All you need to do is find the Bloomberg channel
on Apple Podcasts and follow the instructions there. Thanks for listening,
(44:07):
E
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Authoughts podcast.
I'm Tracy Alloway.
Speaker 3 (00:22):
And I'm Joe Wasenthal.
Speaker 2 (00:24):
Joe, you know what's weird.
Speaker 3 (00:26):
Tell me what's weird.
Speaker 2 (00:27):
There's a lot that's weird. Actually, But we seem to
be living in this extremely high tech world where you
can get a chat bot to write you an essay
or create a video. Sure, you could buy a robot
dog to play with all that stuff, and yet we
still seem to be struggling somewhat to provide cheap and
(00:50):
affordable and abundant energy to power all these things. And
in fact, because all this new technology guzzles so much energy,
data centers you so much power, it feels like energy
is becoming even more strategically important in many ways.
Speaker 3 (01:05):
It definitely feels like we're in an age of sort
of people remembering the deep constraints that energy, yeah imposes,
whether it's data center, all kinds of things. Energy is
not a solve problem by any stritch, although I would
say that in my limited sort of reading of the
history of energy, it's never a solved problem. I know,
at the moment we find we're in a period of
(01:27):
energy surplus, we quickly find something to do with that energy,
and once again we are in a period of constraint.
But it does feel like we're in some sort of
period of constraint right now.
Speaker 2 (01:36):
When Caines was doing his whole abundance theory, did he
mention energy at all? What do you say, Well, I'm
just gonna assume that Kaines promised us all abundant energy
as well as everything else, and it's not here. So
we're all upset. Okay. So even though we've had all
these breakthroughs in alternative energy technologies, you know, things like
solar and wind, we're still using more coal, more oil
(01:57):
than ever. And in fact, there's sort of some old
school energy behaviors going on with China stockpiling massive amounts
of oil.
Speaker 3 (02:06):
Yeah, as you said, coal is booming, China stockpiling oil.
Electricity prices in the US on the rise, maybe perhaps
due to some of this AI data centered demand. It
feels like I would say pre COVID at least. I
don't know if people got a little bit naive or
optimistic or goldilocks, but this view is it's only a
matter of time before energy is solved because we're gonna
(02:29):
have all this wind and solar is gonna be cheap,
it's gonna be clean. We see all these cost curves
coming down with like batteries and wind and so forth.
It's only a matter of time before we don't need
the dirty stuff. And right now it doesn't feel we're
anywhere close to that. And I'm sort of curious what happened.
Speaker 2 (02:42):
Yeah, well, everyone talked about the energy transition, but so
far it's not really a transition. It's like a compliment
to existing sources. Anyway, we could keep talking, but why
not go to our guest, who is truly, truly the
perfect guest. We're gonna be speaking with someone I wanted
to speak with on the podcast for a very long time. Dan,
you're he is, of course, the author of the Pulitzer Prize,
(03:03):
winning the prize the Epic Quest for Oil, Money and Power.
He's also vice chairman of SMP Global, and he also
has a new book out called The New Map, Energy,
Climate and the Clash of Nations. So a lot to
talk about, Dan, Thank you so much for coming on
all thoughts, It's great to be on with you all.
So does it feel like energy and security is still
(03:24):
with us in many forms.
Speaker 4 (03:26):
Yes, it goes through cycles. You know, you mentioned COVID.
I think during COVID demand went down, prices went down,
and people kind of forgot about energy, and there was
a sense in twenty twenty one, International Energy Agency did
this scenario about getting to basically a renewable world by
twenty fifty. But now we're in twenty twenty five, going
(03:46):
into twenty six, energy demand is going up wind and solar,
but also coal, oil, and natural gas. And this share
of hydrocarbons and energy has gone from about eighty one
percent to about eighty point five five percent roughly.
Speaker 3 (04:01):
So it's going to take a while to get down
to zero in a while.
Speaker 4 (04:04):
You know, though you mentioned energy transition. I think it's
time to do some rethinking about the energy transition.
Speaker 3 (04:10):
Well good, That's what I was going to ask you about.
So when people talk about the energy transition, this fantasy
or you know, maybe fantasy is a little bit scenario
scenario scenario of Okay, we're going to get to net zero,
et cetera. Is this just a matter of the timeline
has been pushed back, or is there a fundamental flaw
with the premise.
Speaker 4 (04:28):
I think certainly the timeline has been pushed back, the
notion by twenty fifty the closer we get to twenty fifty,
the farther way, it seems the goal of net zero
by twenty fifty zero. And what Tracy said before energy
transition has been energy addition.
Speaker 3 (04:43):
And what happened.
Speaker 4 (04:44):
What happened is I think the reality came back in
that we live in a world that rests on an
energy foundation, and that you just can't overnight take one
hundred and fifteen trillion dollar world economy and change it
from one thing to another.
Speaker 2 (04:59):
Are there any scenarios you could see where I guess
new technologies like AI, the data centers that are getting
built encourage new players to come in and provide capital
for energy, so you know, Google building their own gas port.
Speaker 4 (05:12):
Well, exactly what we have now is the tech world
meeting the energy world, and these two worlds have very
different cultures. Tech world, things go happen pretty fast energy.
You know, in your software engineer come out with new software.
In the energy world, an engineer takes seven years to
build something. And these cultures have come together, and I
(05:33):
think one of the reasons that we're seeing kind of
this called the easy or simple notions and transition pushed
out is what you've mentioned. It's going to take a
lot more electricity, and some of that will come from
windows solar. But what's come back into the picture is
natural gas is an electric generation. If you wanted to
go out and buy a gas turbine today, you could
get it delivered in twenty thirty. If we back go
(05:55):
back to twenty twenty two. I was talking to one
of the big companies in the field and the guy
said that year, all over the world, exactly one gas
turbine was sold and it wasn't one of ours. So
we said, our market share that year was zero. Now
they're all sold out.
Speaker 3 (06:09):
Is there an increase in capacity? We talked about this
recently and this has come up, the shortage of gas turbans.
Is the scarcity being addressed or is there still this
phenomenon where no one really wants to do the initial
upfront investment in a say, factory that makes the gas
turbans because there's still uncertainty about say twenty thirty.
Speaker 4 (06:29):
What I you know, when I talked to the companies,
those who are around in about two two and a
half decades ago, remember there was a huge rush turbance
and then it all collapsed.
Speaker 3 (06:40):
And there were and that was coincidentally or incidentally that
boom was also at a time of massive tech investment
the late nineties. That was another period of the sort
of marriage of tech and energy at the time.
Speaker 4 (06:52):
Absolutely, that's right, and so I think they are expanding capacity,
but they're not doing it helter skelter. Also, like so
many other companies, the shortage of the talent that you need.
I mean, these are not simple things to build.
Speaker 2 (07:04):
One of the reasons we wanted to talk to you
is because you do such a fantastic job of connecting
the oil space with capital markets, and I've always maintained
that oil is very much a capital market story. Can
you talk about the difference between how capital is sourced
for something like oil or gas versus clean energy, and
whether attitudes towards the two have changed at all.
Speaker 4 (07:26):
Well, I mean it was quite different with clean energy,
and a lot of it, you know, had tax credits
and ability to you know, to sell tax credits and
things like that, and a lot of the oil and
gas development may be funded by financial institutions, but a
lot of it is funded by the companies themselves.
Speaker 3 (07:41):
What is it like we see these lines on charts
that show the collapsing price of solar production, or the
collapsing price of wind production, or the improvements in battery technology.
All true, all true, and yet there is still so
much public money that goes into these areas, and so
many tax credits and subsidies, etc. To kind of accelerate
(08:03):
them along. Why is it that you have these lines
going down and yet they don't undercut traditional sources in
the way that maybe the tech mindset.
Speaker 2 (08:12):
We yes so well.
Speaker 4 (08:13):
First, remember the renewables, wind and solar. Really we're not
competing with oil until you started to have electric cars
coming onto the scene. But you know, it's interesting. I
was talking to a company that's developing a big battery
project in Europe I probably shouldn't say which country, and
they're very excited about it. It's really big. They said, Oh,
by the way, they couldn't do it on their own.
(08:35):
They had to go to the government and get incentive
subsidies or a partnership with it. So the costs are
still up there, and I think we're seeing a testing
now for wind and solar. Everybody's rushing right now to
get steel into the ground so they can get the
tax credits which will expire in not very long time,
so the testing will be how competitive will they be?
(08:56):
And I think we'll still see wind and solar, particularly
solar put in, but it won't be enough. And what
they concern right now is about the reliability of the
electric power system. And you see prognostications about this area
that stretches from Illinois, you know, as far as New Jersey,
that by the end of this decade, which is not
so far away now, we'll be looking at very tight
(09:19):
markets with really great pressure on it. And I'll tell
you the kind of regulators. The people looking at it
but are starting to get pretty alarmed. And that's why
you see a lot of a lot of discussion and
focus on can we get permitting reform so you can
actually get something built?
Speaker 3 (09:34):
Can you just what is the source of alarm? Is
it about the generation of electrons or is it about
the transmission and with the grid capacity to balance and
take in all these things.
Speaker 4 (09:45):
Well, it's both, and certainly the transmission is a very
key part of it. But what we have been doing
has been retiring coal plants. We thought, you know, we
re mar going to have any more gas and electric generation,
but that's coming back. And now you see kind of
slow down and closing these coal plants. And also we
see an election coming up in New Jersey where electricity
(10:06):
prices are an issue, and suddenly this whole issue. I
was looking at our numbers, and electricity prices have been
going up at twice the rate of inflation in the
United States.
Speaker 2 (10:16):
Why can't clean energy seem to exist without subsidies? Given
that electricity prices are going up, and we all agree
that energy is strategically important, why can't it, you know,
fund itself.
Speaker 4 (10:29):
Well, it has to, you know, ultimately, it has to
be that. But you know, obviously there's a lot of
debate about what happened in this big beautiful bill where
they you know, basically are cutting back and then eliminating
the subsidies. And at least this administration says, well, wait,
these were put in thirty two years ago for infant
in industries, and now the prices come down, why are
(10:50):
we were doing it? So I think these industries are
going to have to stand on their own right now.
Speaker 2 (10:55):
Would they be economical in their current form?
Speaker 4 (10:57):
I think, you know, it depends on the circumstances and
where they're built and whether they have access to transmission,
because of course you can have solar, but then you
need you need to connect it to the grid, and
grid connection becomes a very important issue.
Speaker 2 (11:10):
That's the expensive thing. That's why with my solar panels
on my farm, I mooch off of the entire Connecticut
system grid.
Speaker 4 (11:17):
How is your solar panels working?
Speaker 2 (11:19):
They're fantastic. Our energy bills are like maybe twenty dollars
a month. Sometimes we get paid so you.
Speaker 4 (11:25):
Put it back in the system. You didn't get any
tax creditors.
Speaker 2 (11:29):
Well, the house had it when we bought it. Oh,
but I'm just very happy with the low electricity bill
and not having to shoulder the costs of the grid.
Speaker 4 (11:37):
Yeah, and somebody else will take care of it, that's right,
somebody else's problem.
Speaker 3 (11:57):
I want to talk a little bit more about the
return of natural gas or LNG. What do you think
the prospects are for the US as an LNG export powerhouse?
Can you continue to grow well at the pace that
it's been growing, especially given some of the bottlenecks and constraints.
Speaker 4 (12:14):
Yeah, well, obviously you need pipes to get gas to
the Gulf coast or to tide water in order to
ship the gas, and that ability to build pipes is
really difficult, or has been difficult. It's going to get
easier now unless you're in Texas where you could build
them anyway. But it's an amazing story. A decade ago,
the US was not exporting any LNG in fact, and
(12:35):
now it's the world's largest exporter of LNG. And our
own numbers say that the next half decade or so,
global capacity will increase by over fifty percent. Half of
that increase will be in the United States, you know,
and people don't think about it this way, but we're
not for USLNG. Putin might well have succeeded using the
(12:57):
energy weapon cutting off gas to Europe and shouted the
coalition supporting Ukraine. And what prevented him from doing that
was USLNG, which he hadn't counted on. In the book
you mentioned the new Map. I have this story about
where I had this interaction with Putin in twenty thirteen,
and it was at the Saint Petersburg International Economic Forum,
(13:19):
which was his version of Davos, was before he enexed Crimea,
and he was up there on the platform with Chancellor Merkel,
and you could see the ice between them, and they
said to me, oh, you get to ask the first question.
So I thought I was just asking the question. Yeah, exactly,
no pressure, the normal question about you know, what are
you going to do? Your budget is over dependent on
(13:40):
oil and gas. By accident, I mentioned shale and he
started shouting at me in front of all these people
and said, shale is barbaric, it's terrible, poisoned people. He
went on and on like that, and I can tell
you it was very unpleasant being shouted at by Vladimir
Putin in front of three thousand people.
Speaker 3 (13:55):
But it's a good story.
Speaker 4 (13:56):
Yeah, but it's a good story, you know exactly it
did at the time and think it's a good story.
At the time, I wanted to get out of there,
But afterwards I thought he was actually precient. He saw
that shale gas in the form of then LNG would
augment us influence in the world, which it certainly has,
and it would compete with his jewels crown jewel gas problem,
(14:17):
which has also happened because now Russian gas is being
pushed out of Europe. So I think, you know, people
don't connect speaking of connecting the dots that the shale
gas revolution there tied into the ability to support Ukraine
in this war that's now gone on almost as long
as World War One.
Speaker 3 (14:36):
It sounds like you're saying, Aubrey McClinton was a great
hero for the West and democracy and all of this stuff.
Speaker 4 (14:42):
Well, i'd say a great entrepreneurial. Yes.
Speaker 2 (14:45):
When it comes to old school energy sources, whether it's
oil or your term old school, is there any low
hanging fruit left in terms of making the technologies more efficient?
I remember, maybe like almost ten years ago now, there
was a big standardization push and all these you know,
drills that used to have custom parts started to standardize
(15:08):
them and that actually brought down prices quite a bit
or helped ease some of the pressure at a time
when oil prices were quite low. Is there anything like
that on the horizon.
Speaker 4 (15:17):
Well, I think you're right. I mean shale. The development
of shale revolution is to kind of continue your memory,
it really became a manufacturing process. It's a very repetitive
manufacturing process. And you know, no one back then when
days of you mentioned Ay mcclennan was one of the
pioneers could have possibly envisioned the US being the world's
largest oil producer, the largest natural gas producer. I think
(15:40):
right now you know about maybe ten percent of the
oil has recovered from shale. So one thing companies are
working on, can we increase that output? Can we increase
it be more efficient? But there is the sense now
which you wasn't even had a year ago, that maybe
shale has peaked out, peaked out at a very high number,
but peaked doubt And people I start to see are
(16:02):
starting to talk about what's known as exploration, going out
and finding new oil sources in parts of the world
where nobody really looked for them.
Speaker 2 (16:10):
Does it make you nervous to use the word peak
in an oil conversation.
Speaker 4 (16:14):
Now that you mentioned it at times? What should I say? Plateau?
How's plateau?
Speaker 2 (16:20):
Ok?
Speaker 4 (16:21):
Yeah? Peak oil. I remember when when people were talking
about peak oil back in you know, decade and a
half ago, and that the world was going to run
out of oil. I remember I said, I better go
back and look in the prize and went back and said, oh,
the world's actually run out of oil five times, and
every time it's where you pointed before. It's new technologies
and new geographies, that changed the game.
Speaker 3 (16:43):
Tell us a little bit more about some of those
times were, so, I guess probably the seventies, when else
have there been well, right at the air of peak
oil running out.
Speaker 4 (16:51):
World War One turned out to be a war that
really sort of elevated oil because it started with people
on horses and cavalry, it ended up with banks and
airplanes and trucks and all of that. And there was
this great fear after World War One that the US
had what was it, nine years worth supply left, and
so what happened as American companies started to go out
(17:13):
and it went out to the Middle East and of
course found lots of oil. So that was a period.
Then after World War Two there was that concern because
oil had been so important there had been an oil
war within the larger war, and then of course the seventies.
But it even happened in the nineteenth century that you know,
people start ringing the bell saying, you know, it's all over,
and technology keeps expanding the frontier.
Speaker 2 (17:35):
So, speaking of oil supplies and stockpiles, one of the
big stories in energy markets has been China buying enormous
amounts of oil and stockpiling them for reasons that we
don't know for certain how important has that dynamic been
to you know, a fairly resilient oil price. Crewd has
come down a little bit, but it's still, you know,
(17:56):
around sixty dollars a barrel, I think, and why are
they doing it?
Speaker 4 (18:00):
In your rod, that is always the question of why
they're Chinese stockpiling. I've we've been working on minerals too,
and looking at the stockpile minerals too. It's what they do.
Is it because they think there may be a conflict?
Is there a problem? Are they worried about the South
China Sea which I write about in the new map?
And they know that during World War Two the US
cut off the oil line to Japan, and so they
(18:23):
want to be sure they have supplies. Or is it
just because it's cheap and they're expecting it to go up.
We don't know. I'll be there in a couple months
and I'll ask them again. I'm not sure I'll get
an answer. But they're doing it. But the role of
China's changed because for two decades the growth in oil
demand worldwide, half of it was in China. And now
(18:44):
the view, I won't use the word peak I'll use
the word plateau. That demand in China is plateauing at
a high level. But they're importing seventy five percent of
their oil and they don't want to continue to do that.
That's why they've been pushing one of the reasons they've
been pushing electric cars. The other reason is because I
see it as a way to an export market, so
(19:05):
you don't have the growth engine of China. And so
you know, there's a fair amount of debate today at
what rate at oil de Man will grow, but is
it how how much will grow? Will be a million
barrels a day, a million and a half barrels a day,
And that is a subject within oil circles of a
great deal of vigorous debate.
Speaker 3 (19:23):
We obviously don't know what chision ping strategic plans are,
potential military plans in the future. But for all of
the EVY adoption in China, which has of course been
huge military conflict, whatever the source, will still be an
incredibly oil intensive process.
Speaker 4 (19:42):
Yes, I think exactly. I mean, that's right. All you're
not going to have battleships, you know, you know, solar
power times yeah, yeah, yeah, I mean you do mention,
I mean what is we know some things that are
ensoes Youping's mind, because he said it, and he does
talk about the dominating the new indust supply chains, which
means evs, which means solar panels, which means when and
(20:06):
of increasingly critical importance batteries, which is another issue that's
going to actually is percolating up about here. We have
regulations against batteries that come from foreign entities of concern
and you say, what's a foreign entity of concern? And
it tends to be mean parentheses China in the energy discussion, could.
Speaker 2 (20:28):
You ever envision a time where where earths are more
important strategically than oil?
Speaker 4 (20:34):
No, but I can tell you that they're really important,
and I would say in the last six months there
has been, if you are here in Washington, a crisis
mentality about them, because I think that was a shock
when Trump was rolling out all of his tariffs and
the country that they were going to be most aimed at,
which was China. Suddenly China said, well, you know, to
complay this game. And then that is, of course, in
(20:56):
recent days is once again come up the Chinese, whether
for strategic reasons, but again new supply chains. You know,
they produce process ninety percent of the rarers and they
know it. And when you hear an automobile maker saying,
you know, we have a week and a half supply,
you realize how urgent it is, and so you know
(21:16):
it's really come up and trying to grapple with it.
It's not something you can solve overnight, because it takes
a long time to open a mind, put up a
processing a thing. And the Chinese are putting not only
controls on rareers, they put controls on the machinery and
equipment for processing rarers, and they put controls on the
(21:37):
people who have to know how that they may not
be able to have passports anymore.
Speaker 3 (21:42):
Let's talk about US energy policy. It seems a little
unfocused to me.
Speaker 4 (21:48):
Or we might say variable, okay.
Speaker 3 (21:51):
Go on, Like how would you characterize it? Or like
when you say, let's say it's variable, how would you
characterize what's going on? I think there was a US
energy security or energy policy.
Speaker 4 (22:03):
And under Biden, of course, it was all about basically renewables,
climate change, the goal that have no gas, natural gas
or coal and electric generation. By twenty thirty five, half
the new cars in America were to be electric by
twenty thirty. That was then, this is now. It's just
pretty much in the opposite direction.
Speaker 3 (22:24):
Can the US, you know, I think Trump would like
powerful dominant US energy industry.
Speaker 4 (22:33):
He uses that word.
Speaker 3 (22:34):
Yeah, is that realistic? Can you get there? I mean,
there's wanting to expand drilling, but with the price of oil,
actually it's a below fifty blow six and now it's
fifteen seventy five today. For like, can these things hang together?
Can we have prices at these levels and booming domestic
oil coustrut No.
Speaker 4 (22:52):
I think that's one reason we get into not the peaking,
but the plateauing for that reason. And you know, you
look at the survey from the Dallas Federal Reserve that
came out, and you know, below sixty, people don't you know,
they just pull back and they husband capital. And you know,
it certainly seemed that it was possible that we would
(23:14):
see oil prices below sixty in the latter part of
the year. And it's come. Maybe it's come earlier than
people might have expected, and very much affected by the
trade war between the US and China, among other things.
But the US is the dominant player right now and
energy you know, the new trade deal the Europe supposed
(23:34):
to have with the US, They're supposed to buy more
natural gas from US and so forth, and they set
up something called the National Energy Dominance Council, which is
you know, kind of the view of the US in
this position. But it is tough to both want to
have a very vibrant domestic industry and have low prices
at the same time.
Speaker 2 (23:55):
I know you just mentioned that Europe is still going
to be getting US oil, But do you foresee a
more I guess autaric energy future for the world, because
it does feel like, at least with manufacturing goods and
some strategically important goods, people are stockpiling and people are
focused on building out their own capacity. Is that going
(24:16):
to be the case in energy or will it be
that energy is just so geographically specific and expertise oriented
that not everyone will well do.
Speaker 4 (24:25):
We've already seen a partitioning of the global oil market
in terms of Russian oil not going to its natural
market Europe, but going to China, which was a market before,
in India, which was not a market before. We see
that in natural gas. So I think call it economic
nationalism or economic sovereignty. I think that the you, and
(24:48):
in a sense, that's what all the teriff policies are about.
I think Europe is in a very difficult position because
they would like to continue to pursue zero as it's called,
since by twenty fifty, but now they have this other problem,
which is called being competitive, or rather not being competitive
and losing industry. And on the other hand, they're now
(25:08):
supposed to spend not one and a half percent, but
five percent of GDP on defense. So I think Europe
is in a very tough position.
Speaker 2 (25:18):
And I know you speak to a lot of experts
in the energy industry, but what's your sense of the
mood on the ground among I guess oil and gas
workers specifically, because on the one hand, Trump has been
a friend of oil and gas and has said that
he wants oil and gas to be dominant. But on
the other hand, a lot of the policies that he's
(25:39):
actually put in place, you see people in like the
Dallas Fed survey complaining about them, and the mood seems
to be kind of bad.
Speaker 4 (25:46):
Well, I think it's both. I mean, I remember CEO
of one Oil Companies saying that he was actually too
surprise was invited to I don't know if he's joking
or not to the Biden White House, but he said
he had to go in through the basement door. And now,
of course they're very you know, accepted, and you know,
in part of the dialogue, you know, I think it's
a mixed message. They're glad to see a reduction in
(26:09):
all these new regulations that have been imposed and kind
of just the general hostility to an important US industry.
But on the other hand, they at low prices. You've seen,
you know, layoffs in the industry, you see people putting
down drilling rigs, you know, at this prices, I think
if they persist, we'll see more of a negative impact.
Speaker 2 (26:44):
So the US is producing massive amounts of oil and gas.
How does this sort of change the geography or the
energy industry.
Speaker 4 (26:52):
Well, it really has changed it dramatically. It was really
brought home in twenty nineteen when the Iranians attacked the
most important infrastructure in the entire world oil industry in
Saudi Arabia, and the price went up for a day
or two and then went down. And I think that's
because of the existence of shale and just as it
kept growing and growing and it gave a sense of
security that wasn't there before.
Speaker 2 (27:14):
I totally forgot about that, but I think I was
actually in the Middle East when that happened. Does Opek
matter anymore? U?
Speaker 4 (27:21):
Yes, Well, it's really OPEK plus that matters right now.
And they took a lot of oil off the market,
basically giving room market share to the US. They're now
begun the process of taking back their market share, and
that's partly what's reflected in price.
Speaker 3 (27:38):
One of the things that is a constant theme on
the podcast, and it comes up in numerous industries, whether
we're talking about housing or lumber or anything else, is that,
you know, periods of surplus or periods of slack, you
end up paying for it at the end. You end
up maybe paying for it five ten years down the
road because you get this declined in production. The talent
leaves the industry, the labor moves the industry, the parts run,
(28:00):
and you can't just take them out of the warehouse,
et cetera and start drilling or whatever. Again, when you
look at the declining price of oil today, are we
going to pay for this?
Speaker 4 (28:09):
I so yeah, I think it's interesting because you know,
I had to write this new epilogue for the new edition,
thirtieth edition of the Prize, and I was thinking about
what are the lessons And one of the lessons to
me is, among the hundreds of characters in the book,
there are only two who really matter. One is supply
and one is demand, and they're always fluctuating between the
two of them. And I could see that today. Let
(28:30):
me give you an exact because there's a natural decline
that goes on in oil, which is people now saying
and gas maybe it's five percent a year. So in
twenty twenty one you had the International Energy Agency come
out with a scenario for net zero by twenty fifty
in terms of emissions, and all these steps to get
there made it look rather easy. Because the demand was
down and price was down. They just came out with
(28:51):
a new study saying the world needs five hundred and
forty billion dollars of investment every year between now and
twenty fifty just to kind of stay where we are
with oil. So it is that cycle that people forget.
There's a whole decline there, and I think if you
have a period of slack, you pay for it down
the road in terms of the tight market, because investment
(29:12):
leaves and I think you made a really important point.
People leave too, They say, I don't want to be
in this industry.
Speaker 3 (29:17):
Did some episodes a couple of years ago, like actually,
when oil is much higher about one of the constraints
that's been well, a bunch of like the petroleum schools,
they didn't have the same pipeline of engineering talent because
in twenty nineteen or whatever those years were, who was
going into majoring in petroleum engineering?
Speaker 4 (29:33):
Right here exactly Now it's actually looks like it's a
more attractive industry, but it's.
Speaker 2 (29:39):
A competition from geothermal as well. If you want to
go drilling some rocks somewhere, you don't have options.
Speaker 4 (29:44):
Well, actually we didn't talk about geothermal, but in fact
there is now the notion can you apply shale technology
and drilling to geos?
Speaker 3 (29:52):
Are you optimistic about that?
Speaker 4 (29:54):
I don't go through optimist or pessimism. I'd just say,
but it's promising. Let's see how it plays out.
Speaker 3 (30:00):
I want to talk more about Europe. You mentioned the
industrial economies getting clobbord. I mean German. Let's just talk
about just Germany. Maybe they were able to substitute LNG
imported from the US from some of its Russian sources,
but the price is up and industrial production in Germany
has been terrible. Do you think at some point European
leaders will sort of cry on goal or cave on
(30:22):
the net zero ambition because it feels like the politics
of that have been running on fumes first.
Speaker 4 (30:27):
Well, you know, it's interesting because of course they're it's
so entrenched that it's hard for them. I mean, you
could say, okay, we're for net zero, but maybe not
by twenty fifty. But Europe continues to you know, it's
not just energy costs, it's this incredible weight and burden
of regulations that are designed without any connection to the markets.
(30:48):
I was talking to one company on Sunday and they
said they just closed one facillit plant in Europe. They
had another one that was eighty percent built that they've
decided not to go ahead with. Talking to another company
that's also closing. I mean, they impose these policies with
no connection to the marketplace or to technology, saying seventy
(31:09):
percent of jet fuel has to be so called sustainable
aviation fuel. Well it's less than one percent now, and
so it's just if you say it, it's going to happen.
So I think maybe in Germany we're starting to see
some of that easing up, But I think that those
economic realities are weighing down with them and if they
don't step back, and as I say, it's not just
(31:32):
climate policies, but it's this whole regulatory straight jacket that
helps people go invest. In the United States, I.
Speaker 2 (31:39):
Do feel like even before Russia invaded Ukraine, there was
a sense that I guess ESG in general was kind
of failing. You know, inflation started to.
Speaker 3 (31:51):
Pick up, er bureau phenomenon.
Speaker 2 (31:53):
Yeah, well, inflation started to pick up, and suddenly there
was what I thought was an inevitable backlash against East
and targets net zero and things like that. Do you
think that ever comes back or how would you characterize
I guess the helpfulness of ESG when it comes to
building out clean energy, well.
Speaker 4 (32:14):
I think it was clearly that all is a package together.
I think now really the clean energy argument, the argument
for solar now is less about that, and it's about
that you can do it quickly and lay it down
quickly and get those electrons into the grid. So it's
more about the economics are working economics rather than virtue
(32:35):
and ESG clearly is faded away. I can't see it
coming back with the full force that it did because
it has a built in backlash, which we're seeing now.
So I think it means that these things have to
be more market driven.
Speaker 3 (32:51):
Does the boom and energy exports from the US raised
prices for American households?
Speaker 4 (32:56):
That is, of course a very critical question was raised
at the end of the Biden administration. We did a
study on that, you know, we being S ANDP and
the Commodity Insight team there and concluded that we have
a lot of natural gas so that it's not a
threat in terms of prices. Natural gas is not as
constrained as oil.
Speaker 2 (33:17):
What about nuclear? We've gone this entire conversation without talking
about nuclear, but nuclear, you know, could solve all these
problems well.
Speaker 4 (33:23):
And it's also interesting because that circles back to one
of the points we talked about before, because you say, well,
what's brought nuclear back? Partly it's you know, just time,
Partly its need, but I think it's also the entry
of the tech companies from being just consumers, you know,
for software, to really worrying about data centers. And you
(33:45):
look at it last time I looked, there's been six
billion dollars of venture capital infusion. Nobody ever used to
do venture capital in fusion. That was what the government
did because it was fifty years away. And we had
an event at our SERRAH conference in Houston this year
where we had Commonwealth Fusion, which came out of MIT.
The head of the largest, the main utility in Virginia
(34:06):
and the governor of Virginia saying, you know, we think
we're going to have fusion here by twenty thirty two.
So nuclear is definitely back. Small modular reactors are a
hot topic. I think the first ones will be deployed
around twenty thirty.
Speaker 3 (34:20):
So you think they're actually going to happen because this
seems like another technology that's always five or ten years old.
Speaker 4 (34:25):
Well, I think it's going to happen, But I think
the test will be then can you bring down the
cost and is it a more flexible way to add nuclear?
But it is. I think that it's really the tech
companies who I mean there you had Amazon investing in
one of the SMR companies with the notion that they
will then buy successive reactors with the idea that each
(34:46):
one the cost will come down. Now that will still
be tested. It still has to go through a regulatory
process at the Nuclear Regulatory Commission and all of that,
but there's certainly you have the sort of entrepreneurial Silicon
Valley spirit now imbued into nuclear, which of course is
not an overnight thing, but it is back on the agenda,
(35:07):
and I think history will go back and say, in
Germany Chancellor Mercles one of her two biggest mistakes was
shutting down the nuclear basically in a weekend. Well was
the other and that was and that was twenty five
percent of her electricityke The other mistake was saying, you know, immigration,
the door is open.
Speaker 2 (35:26):
This might be a dumb question, but you know, if it's.
Speaker 4 (35:29):
Not such any dumb there's not such a thing. I
better watch out now.
Speaker 2 (35:32):
Okay, But if Amazon or someone invests in a small
nuclear reactor or some other type of energy plant, how
are those agreements actually structured in terms of the off take?
Because I assume they get priority, and then does whatever
is left over get sent into the grid?
Speaker 4 (35:50):
Well, I guess it depends if it is a reactor
that's owned by a utility, or is it possible that
these would be like merchant nuclear reactors. You have seen
examples already where some of the I guess we used
to call them big tech. Now we call them hyperscalers.
Speaker 3 (36:06):
When did that happen? We just all started using that term.
Speaker 4 (36:10):
Yeah, exactly. I think it's about a year. Yeah, I
mean for the first time you had to think, what's
a hyperscale? Is like an elephant, But it's scaling. But
where they've signed where they will take the entire off
take of nuclear power plant. So they are very these
companies are very concerned about power because it's so electricity intensive.
(36:31):
The other day there was a story saying that the
two data centers that that Elon muskis building in Memphis
will use more electricity than all the households. So this
is a big issue for regulators of what are you
going back to the question you raised before about who
pays for this? How do these costs get disaggregated?
Speaker 3 (36:50):
Right now, you mentioned electricity costs having gone up faster
than inflation. Right now, can we draw a line between
these prices and the data enter boom or is this
two things that happened to be happening. Well, I've seen
different views on how directly data centers are right now.
Speaker 4 (37:09):
I think it's it's part of it, but it's just
the general increase of demand, including you know, evs, although
not on the scale that had been envisioned, So all
those things and just having I mean, we had gone
for twenty five years with flat demand in electricity the
United States then and now it's just recently that it
(37:29):
started to grow again. And so you have a whole
generation of utilities who've grown up in flat demand and
now figuring out how do you get things built, how
do you get into the regulatory process, and even when
you get it approved and you end up in court
because somebody challenges it.
Speaker 2 (37:44):
Are we ever going to solve the energy problem?
Speaker 4 (37:46):
No? I think it will just I mean, it will
always be there as long as industrial society will be
one form or another. Maybe fusion, the dream.
Speaker 2 (37:56):
Of ah fusion. Yes, I used to play some city
and that was all was the ultimate goal. You work
out from the gas plant to nuclear and then to.
Speaker 4 (38:04):
Confusion solves everything. But it's also striking to me what
I've noticed, you know, having studied the energy for you know,
some time that you get a consensus about energy and
it lasts about three years and then something new comes
along and just changes the view.
Speaker 3 (38:21):
Are past periods we actually talked, we talked a little
bit about the late nineties when there's the gas boom.
Then are there any other past periods that people should
study right now that might help them form the current environment.
Speaker 4 (38:34):
Well, I think that what we have to remember, which
to me is absolutely critical, is energy security, and that
it gets forgotten. And for me, I have this story
and the prize about Winston Churchill converting the Royal Navy
from coal to oil before the First World War, which
to me is that is what made oil a strategic commodity,
(38:57):
that transition.
Speaker 3 (38:59):
Why do you do that?
Speaker 4 (39:00):
He did it because he gained speed, flexibility, you didn't
need to have all these guys shoving coal on board,
and you gained thirty percent extra cargo space.
Speaker 2 (39:09):
That's the very start of the book, right, that's opening exactly.
Speaker 4 (39:12):
And I've always thought that phrase. He said safety in oil,
but we could say an energy lies in variety and
rite alone that you don't want to be overdependent on anything.
You want variety, whether in terms of your suppliers, in
terms of your sources.
Speaker 3 (39:26):
We're never going to bring whale oil back, you know.
Speaker 4 (39:29):
I said there's not a single energy source that has
not increased, even wood has increased. The only one that
hasn't increased is whale oil.
Speaker 2 (39:39):
All right, joke and dream, I guess Dan Jurgen, author
of the probably I'm pretty sure, the best book on
the oil market ever, thank you so much for coming
on all thoughts.
Speaker 4 (39:48):
Thank you.
Speaker 2 (39:49):
It's great, Joe, that was so much fun. I'm so
glad we finally got to take You can't.
Speaker 3 (40:05):
Believe it took us that long to talk to Dan,
but that was great.
Speaker 2 (40:08):
I know, well, fortuitous meeting in Washington, DC. I gotta
say his point about the sort of interconnection between energy
and technology, Definitely, it does seem to be a driving force, right,
And as soon as you get new advancements in weaponry
or transport or in this case software, you do tend
(40:31):
to get a sudden like rethinking of what your energy
needs actually are or some sort of transition.
Speaker 3 (40:37):
And then on the flip side, like if you ever
are in an era of energy surplus, you're gonna find
something to do with it. Yeah, Like you never just
sit around it, like here's a bunch of cheap energy,
let's not do anything.
Speaker 2 (40:49):
With Although China is stockpiling successfully, right.
Speaker 3 (40:52):
Well, they are stockpiling. We don't know for what exactly,
but yes.
Speaker 2 (40:55):
They haven't spent it yet.
Speaker 3 (40:57):
They haven't spent it yet, although they're spending I guess
sense to acquire all the oil. It does feel to me,
And it's not like this is that new, but there
was a phase in probably the US and Europe in
the late twenty tens, and maybe it extended through twenty
twenty magical thinking with respect to energy being solved. We're
(41:18):
you know that there is just like this, like clear
path towards cheap, clean, abundant energy and some sort of
realities clearly smacked a lot of policymakers in the face.
And I guess the question is how locked into current
plans are they? What has to give? It does feel
like in Europe specifically, the constraints when it comes to industry, energy,
(41:40):
climate security are pretty real.
Speaker 2 (41:43):
It seems to me like the big problem is the
cyclicality of the industry, Like you're constantly going through booms
and bus and as soon as you get a boom
in oil production, it inevitably leads to a collapse in
oil prices, and then you struggle to build out capacity
for years and years, and then there's not enough oil,
and then prices start to rise and everyone goes back
(42:03):
in again. If we could find some way to moderate that,
I don't know how you would do it, but that
might be a way forward.
Speaker 3 (42:10):
I feel like an underrated element of the Chinese economic
story over the last however many decades has just been
this like sustained boom without major downturn, et cetera. And
so then you don't get these like big periods of
people leaving an industry or whatever that are really hard
to escape out of. It's like I sort of think
(42:31):
the cure for the boom bus cycle is just perpetual boom,
Like that's the answer. Just always be booming, always be booming, booming.
Speaker 2 (42:38):
I like that, But I also have to say China
as a source of energy demand. You know, they're buying
for stockpiles right now, but they're using so many electric
vehicles that their gas consumption is actually going down. Gasoline
very impressive. All right, shall we leave it there.
Speaker 3 (42:52):
Let's leave it there.
Speaker 2 (42:53):
This has been another episode of the All Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 3 (42:58):
And I'm Jill wasn't the Oh. You can follow me
at the Stalwart, follow our producers Kerman Rodriguez at Kerman
armand Dshel Bennett at Dashbot and Kilbrooks at Kilbrooks. From
more Oddlots content, go to Bloomberg dot com slash odd Lots.
We've a daily newsletter and all of our episodes, and
you can chat about all of these topics twenty four
seven in our discord Discord dot gg slash odd Lots.
Speaker 2 (43:19):
And if you enjoy odd Lots, if you like it
when we talk about the future landscape of the energy industry,
then please leave us a positive review on your favorite
podcast platform. And remember, if you are a Bloomberg subscriber,
you can listen to all of our episodes absolutely ad free.
All you need to do is find the Bloomberg channel
on Apple Podcasts and follow the instructions there. Thanks for listening,
(44:07):
E
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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