How much influence do U.S. presidents really have on oil prices? Our latest episode promises an eye-opening discussion with Dr. Anas Alhajji, an esteemed expert in the energy sector, who unpacks this and other critical topics. Dr. Alhajji sheds light on the often-misunderstood relationship between Middle Eastern politics and oil, and how Western media narratives miss crucial local stories with global ramifications. We also explore the strategic significance of the Strategic Petroleum Reserve (SPR) in the lead-up to elections.
Get ready to reimagine the energy landscape as we delve into the evolving role of natural gas and LNG. Dr. Alhajji critiques current climate policies and the unrealistic assumptions baked into energy transition models. He highlights the need for a cautious and nuanced approach to energy forecasts, particularly in light of factors like electric vehicle adoption and China's economic shifts. You'll gain a deeper understanding of why businesses, rather than short-term political policies, are the true drivers of long-term energy trends.
Our conversation takes a futuristic turn as we assess the potential of nuclear energy to meet the world's growing energy demands amidst climate change challenges. Dr. Alhajji discusses the pivotal role of nuclear energy in the Arab world and its geopolitical implications. We also confront the complexities of energy market data and the inflationary impacts of AI advancements. Tune in for a balanced, insightful, and at times humorous episode, complete with an amusing anecdote about weather forecasting with a chicken, as we reflect on the significance of reliable information sources and offer a cautious outlook on the future of global energy markets.
The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
My name is Michael Guyatt, publisher of the Lead
Lag Report.
Joining me for the rough houris Dr Anas Al-Hajib, who I
always enjoy talking to.
Dr Anas, I know a lot of peopleon Twitter know about you, but
a lot of people may not befamiliar with your background.
So introduce yourself.
Who are you, what have you donethroughout your career and what
are you doing currently?
Speaker 2 (00:27):
Sure, my background basically started with academia.
I was teaching at severaluniversities, then I moved to
the private sector.
I worked for NGP Energy CapitalManagement, which was the
premier private equity in oiland gas, probably around the
world, not only in North Americaand I stayed there for several
(00:51):
years.
Then I left in 2016.
I wear several hats since thenand I'm still wearing most of
them, and one of them basicallyis being the kind of an advisory
role on the first and onlyenergy focused media platform in
(01:15):
Arabic, and it was justtremendous success for the last
three years.
Speaker 1 (01:24):
So it's interesting that you're strictly saying it's
in Arabic, because obviouslywhen we talk about a US audience
, right, they think about theMiddle East, they think about
OPEC, but you're targeting morethat end of things, the Middle
(01:45):
East, and knowing that part ofthe world, I am curious to hear
your perspective on how MiddleEastern politics, and how oil in
particular, gets shaped bywhoever is president Trump or
Biden.
Speaker 2 (01:54):
Sure, just before I do that, I just want to clarify
one important thing that theWestern media, when they cover
events and oil in the MiddleEast, they cover it within their
own lens and within theirpriorities and therefore what
people get out of their peoplewho are in Dubai or in other
places is probably less than 1%of what they should hear.
(02:17):
This is one of the market casesfor Attaqa.
Basically is that there is alot of information that traders,
investors and others want toknow about, but the Western
media is not interested.
For example, we broke out thestories about the power outages
in Egypt, about Egypt basicallybeing or was an LNG exporter and
(02:43):
it's becoming an LNG importerand what is the impact of that.
We broke those stories becausethe Western media was not
interested.
When you talk about powershortages power shortages in
Kuwait, power outages in Kuwaitwhat is the impact of that?
What is the impact of that onoil exports?
What is the impact of that onLNG imports, etc.
So the Western media is reallynot that interested in the local
(03:05):
stories.
That has an internationalimpact and we cover that.
But to go back to the elections,people have this general view
that Trump is bullish for oil.
When we say bullish, bullishfor what?
If you are talking about prices?
No, in fact, let's be clearabout it.
(03:26):
If you look at variouspresidents and their
relationship with the oilindustry and their impact on the
oil industry, president trumpwould be one of the worst in us
history.
President trump want oil pricesto be low.
President trump wants wants lowgasoline prices.
So, yes, he can give youpermits if you want to, but why
(03:48):
are you going to invest whenprices are low?
If you look at and I'm notsaying this, I'm trying to be
apolitical here If you look atthe period since Biden came into
office, we got very high prices, very high oil prices.
Oil production reached thehighest level ever.
Natural gas production reachedthe highest level ever.
(04:11):
Lng exports reached the highestlevel ever.
So what do you need better thanthat?
Of course, I'm not suggestingthat you need to elect a
president based on that, but theidea here is, if President
Trump comes back to the WhiteHouse, it's really not that good
for the oil industry.
That's what the bottom line isadministrations.
Speaker 1 (04:49):
The energy sector, just stock market-wise, tends to
do better versus when you havea Democrat in office, probably
because, to your point of thatperception right.
Do you think that there'ssomething about the energy
market that might make thatdifferent going forward the next
four years, if Trump does winthe presidency?
Not?
Speaker 2 (05:04):
really because if you go back and look what happened,
investors, especially in shale,lost a lot of money.
I mean lost billions andbillions of dollars during the
Trump presidency.
They did not make much money atall.
I mean those who invested in 13and 14, they literally lost
billions of dollars during Trump.
But we got to remember thefollowing you are not constantly
(05:29):
under threat, you are not beingattacked, you are not being bad
mouthed, you are not getting avery bad reputation.
And here, to think about it fromkind of a leadership point of
view and academic point of view,kind of a leadership point of
view, an academic point of viewthe oil industry.
One of the problems of the oilindustry is that it got relaxed
for a long time under variousRepublican administrations.
(05:51):
And the fact is the oilindustry should be on its toes
all the time to survive, becausemost losses that happened
happened because they reallykind of went to sleep, because
they thought they are safe andbeing under threat all the time
is good for the industry, goodfor the society, good for
(06:14):
everyone, because they reallyshould pay attention to various
things that make the industrybetter at doing business.
Better at doing business.
And one more point basicallythat's coming up is related to
the use of the strategicpetroleum reserves.
President Biden was filling upthe SPR with about 3 million
(06:36):
barrels a month and they plan topurchase 6 million barrels for
August and September and thenthey cancel that.
They cancel that Now.
They are free to withdraw justbefore the elections, to
withdraw oil from the SPR inAugust and September if they
want to.
Our view was they will withdrawoil from the SPR if oil prices
(07:00):
I'm talking about WTI here isaround $90.
I'm talking about WTI here isaround $90.
But when it comes to politicsand it comes to the current
events as they are, I think theyare so desperate they might
even use the SPR, even at lowerprices.
Let's be clear here that anypresident, whether Republican or
(07:21):
Democrat, they will use the SPRbefore the elections and we
have enough history basicallybasically to prove that point.
So it's not only a Biden thing.
Speaker 1 (07:31):
It's funny how those in power want to stay in power.
Speaker 2 (07:34):
Absolutely.
Speaker 1 (07:35):
And doing things that they probably shouldn't.
I haven't looked at the numbersrecently, but how far away is
the SPR to being replenishedprior to?
Speaker 2 (07:43):
Oh, very far away, very far away.
We are around 370 millionbarrels right now.
We used to be about 610.
So we are very far away.
But really I mean, the fact isand there is an old video from
like 2022 explaining all thosepoints that I would like to
mention quickly here that wedon't need 600 million.
(08:04):
And those who are talking aboutBiden drained the SBR no,
that's absolutely not correct350,.
Basically we went to about 345,that's the lowest.
Even at that, we can handle anycrisis.
This is not a big deal.
And we got to remember that evenPresident Trump wanted to sell
half of the SBR, which is morethan what the Biden
(08:27):
administration sold, and therewas an agreement between several
Republicans and Democrats thatwe don't need that much SBR,
especially sweet crude.
And the reason why?
Because when President Bush,george W Bush, built the SBR to
700, at that time we did nothave shale.
(08:48):
Shale came in after 2010.
And now shale added between 8to 9 million barrels a day.
So why?
I need to store oil in theStrategic Petroleum Reserve and
I have the oil under my feet, sothere is no reason to keep the
600.
I can survive with 300 andmostly it will be sour, which is
(09:11):
what we import from overseasand what is or what will be
affected by the hurricanes inthe Gulf of Mexico, because
that's an emergency I need touse oil for.
But it's all sour, it's notsweet, so I don't need that much
sweet crude to use, and if Ireally want sweet crude, it
should not be in Texas, by theway, it should be somewhere in
(09:32):
the Northeast, because they areimporting the sweet crude from
Nigeria and other places.
Which is one of the sad storiesin the United States is that
the United States is the largestproducer of oil, yet the
Northeast imports oil.
The US is the largest LNGexporter, yet the Northeast
imports LNG from other countries.
Speaker 1 (09:54):
Let's talk about LNG for a moment, because a lot of
the focus is much more on oil intraditional media and I know
you want to focus on more thanjust what the traditional media
puts out there.
Any thoughts on liquid naturalgas as far as how it's trending
and any sort of volatility thatcould be coming?
Speaker 2 (10:10):
We do publish, by the way, a weekly report on natural
gas and LNG and then we publisha very comprehensive report on
Europe and LNG and its importfrom Russia.
So for those who are interested, basically they will find a
wealth of information in ourreport and we usually get
information way before the media.
(10:32):
So we are really bullishOutside the United States.
We are bullish on natural gasand, in general, we are bullish
on LNG.
In fact, we are a big fan ofLNG.
I think the story of gasolineand LNG is way bigger than oil
in the future.
People say, well, natural gasis the bridge to the future.
(10:56):
No, it's no longer a bridge.
If you look at all the evidencefrom around the world, it is
the future.
If you look, in fact, at justwhat we've seen in the last
couple of months major gasdiscoveries around the world it
is the future.
If you look, in fact, at justwhat we've seen in the last
couple of months major gasdiscoveries around the world
everyone is looking for gas, ofcourse.
One of the reasons why becauseit is the cleanest fuel anyway.
At the same time, now gas isbecoming as global as oil,
(11:21):
because I can transport that inthe form of LNG, and technology
has improved substantially inrecent years where I can use
those floating ships.
And with floating ships, thisis kind of an amazing business
model because, like now inKuwait, for example, the
temperature, by the way, it was123 degrees just three days ago,
(11:45):
123 in Kuwait the consumptionof power basically led to power
shortages in Kuwait.
So what they do is they rentthose ships and they regasify.
They receive the LNG, regasifythe gas, put it in pipelines and
take it to power stations.
Well, at the end of the summerthey don't need it.
(12:06):
Well, that ship can go to SouthAmerica after that, because
that's when they have the summerand they need that.
So this development oftechnology basically makes
natural gas a global commodity,and what we see here is we have
a retreat from climate goals, aswe see around the world.
(12:28):
On the other side, we haveclimate policy failure and, by
default, when you have a climatepolicy failure, you have to
rely on another source of energy, and that source is going to be
mostly natural gas, but it isgoing to be coal too.
So the idea and this will bringus to another topic those who
(12:51):
are talking about peak oil, peaknatural gas, peak coal, they
are missing the point, and oneof the points they are missing
is that most of the decline wesee today, even in China, is
really about economic growth.
It's not about electricvehicles.
It is the low economic growthin China that is leading to
(13:12):
lower oil demand.
By the way, this is the subjectof today's Daily Energy Report,
and we have a very long reporton this, too, coming up this
week.
The whole idea here is thateverything you see about peak
oil has some wrong assumptions,and, whether you talk about PP,
(13:33):
they are expecting oil to peakin 2025.
Chinese oil companies theyexpect oil demand in China to
peak before 2030.
Well, here is the problem.
One of the problems is whenthey model the impact of
electric vehicles.
They model only the directimpact, which means that you are
buying an electric vehicleinstead of a gasoline vehicle
(13:57):
and they say, well, I just losta gasoline vehicle and they
calculate the impact of it.
Well, to make that electricvehicle, you need a lot of oil,
and you need more oil than thegas vehicle for a simple reason
the batteries are extremelyheavy and to compensate for the
weight, manufacturers are usingsome composite materials that
(14:20):
are made from better chemicalsinstead of metals and other
heavy materials in the icevehicle, and that's where the
consumption of LPG and NAFTAincreases substantially, and
that's not being counted.
That's why you see peopletalking about oh, there is
strong demand for oil frombitter chemicals, absolutely,
but because of EVs.
(14:40):
They are missing that point.
Evs, they are missing thatpoint.
They are missing the point that, even if you look at China, for
example, about 15 to 20 percentof those who are buying EVs
today are replacement for olderEVs, but they are still counting
them as a cost to the oildemand and that's absolutely a
(15:05):
mistake.
So there are many problems here.
That's why we, for examplehere's another one they assume
that anything that thegovernments want to do and it's
on the books will happen and itwill succeed 100%, which is
(15:27):
nonsense, because we know forthe last 100 years.
We have thousands and thousandsof books and articles.
And others talk aboutgovernment policy failure.
Why, when it comes to climatechange, the assumption is always
100% success.
Look at Germany.
Look at the failure in Germany.
We have serious problems.
Look at the retreat we areseeing around the world right
(15:48):
now from climate goals.
Why?
Because of the failure ofgovernment policies.
Yet they assume it is a success, 100% success.
Why they do that.
This is very important foreveryone to know that when it
comes to the IEA for example,the International Energy Agency
or OPEC or any others these areinternational organizations with
(16:10):
paying members.
So if Germany comes in with aplan and institute regulations
and laws and submit that to theIEA and say, here is what I want
to do, and I work for the IEAand I'm looking at the German
plans as an expert and say thereis no way this can materialize,
this is just a dream, these arewishes, this is crazy, it's not
(16:33):
going to happen.
Well, guess what?
Because they are paying member,I cannot even criticize the
plan, I cannot even modify it, Icannot even put a footnote.
I have to take it as is andmodel it within my model, as if
this is the truth.
And therefore the IEA is goingcrazy with this forecast of peak
(16:55):
oil, peak this, peak this, peakthis, simply because they are
taking the policies as is andsaying, okay, here is what I
have and this is going to happen.
And simply because they arepaying members, I cannot say
anything.
If I say something, most likelyI'll be fired or be punished.
That applies to all theinternational organizations and
therefore we have to be verycareful taking information from
(17:17):
them.
Related to this and please allowme just one more point and that
does not mean the outlooks bythe oil majors are also correct.
We have PP basically predictingoil demand to peak in 2025, and
we have ExxonMobil and others.
All of them have outlooks.
We have to be very careful withthis, for the simple reason
(17:39):
that those companies createseveral scenarios, then a
committee will meet and pick upthe scenario they want to invest
based on, and that remains topsecret.
That's really the secret sauceof the company and they will
never share that with anyoneelse.
Now they look at variousscenarios and then they will
(17:59):
choose which scenario to makepublic and it's not the one that
we'll invest on, and thereforewe have to be very careful
dealing with that too.
That's why the information wehave is really bad.
The outlooks, the divergenceamong them, the differences, are
huge.
If you look at demand forecasts, even for this year, opec has
(18:20):
the demand growing at 2.2million barrels a day.
The IEA is less than a million,and you can see the problems in
those forecasts and theirimpact.
Speaker 1 (18:32):
I like that point about the retreat from climate
change and I'll share that post.
You put up on X around thatbefore.
Presumably that's only going toget accelerated under a Trump
presidency, so whoever is inoffice will dictate the
deceleration of that energytransition now comes to the oil
(18:57):
majors and oil companies.
Speaker 2 (18:59):
These are very old companies I mean, you're talking
about some of them like 130years old.
They don't like changes everyfour years and they are not
going to go.
Remember when gasoline pricesincreased substantially in 2022
and the Biden administration metwith the refiners and told them
(19:19):
oh, we are going to relax someregulations so you can produce
more?
But the companies did not likeit because these flip-flop
policies are not good forinvestment, not good for the
future of the business.
So they like really steady step.
They don't like changes.
So the first thing is, even ifTrump changes things, we are not
(19:39):
going to see major changes inthe behavior of oil companies,
because they know this is onlyfour years and I'm looking at
the next 30 years, I'm lookingat the next 50 years.
So the oil companies may notrespond.
I mean, there will be peoplewho will take advantage of it
anyway, but we are not going tosee that much change.
The other issue we have to becareful with is that the failure
(20:04):
of the green policies is goingto happen, with Trump or without
.
Yeah, we can take the idea ofthe acceleration, but the
failure is happening anyway.
If you look at GM, you look atFord, you look at others, you
look at the decline in growth insales in electric vehicles, you
(20:25):
look at the problems we havewith offshore wind, et cetera.
So the issues are there,whether Trump is there or not.
What we are going to savebasically is just the money
that's being wasted.
If you look at the programsthat have been advocated by the
Biden administration, especiallyon offshore wind, probably we
(20:47):
can save that.
So there will be some savings,there will be some changes, but
not much, simply becausecompanies do not like those
changes every four years.
Speaker 1 (20:59):
I wonder what you think would be more
consequential to the energymarket policy or companies and
when I say companies I'm talkingabout tech companies.
So there was a comment fromsomebody I'm going to show it on
the screen from Oliver said Iwish I could join.
I'm going to watch it later.
Critical topic Microsoft takingownership positions in multiple
(21:21):
energy companies in Scandinavia.
Now you've been seeing at theperiphery, I think, some more of
these headlines around big techcompanies that are basically
trying to secure their ownenergy because of the demands
from the AI side.
Any thoughts on that sort ofshaping the landscape of the
energy sector?
Speaker 2 (21:38):
Again, we go back to this idea that companies look at
the next 30 years and 50 yearsand therefore their plans
basically would outlive thepoliticians' plans.
So that's a fact.
So over the long term,companies basically dictate
those strains anyway andpolicies have an impact, but
(21:58):
most of the time what we seethey are disruptive more than
they are pro-business, and theyare disrupting business.
And if you look at countries,for example, like you look at
the UK and look at India inparticular, what we see is we
see those flip-flop policies andcontradicting policies and
companies basically will shyaway from investing period.
(22:20):
The UK decided OK, I'm going tobe energy independent, I am
going to allow companies toinvest in the North Sea, but at
the same time I want to maintainthe windfall profit tax.
But companies just run away.
Even if you allow it, itdoesn't matter.
And then when the newgovernment came in and said we
(22:40):
are going to ban any developmentof oil and gas in certain areas
, it really did not matterbecause companies already left.
But in the long term, companiesdictate those trends.
To go back to the AI issue, theimpact is really severe and
people have not caught the ideayet because all this climate
(23:04):
change issue.
All those policies that areintended to replace coal, oil
and gas are going to failmiserably because of AI.
And, of course, another issueis the autonomous vehicles, too,
because that consumes massiveamount of energy too.
And what happened to thosetrends?
(23:26):
If you look at the AI and theautonomous vehicles, those
trends basically are going toconsume so much energy that all
the solar and wind and renewableenergy we are building are
barely enough to cover thegrowth.
Wind and renewable energy weare building are barely enough
to cover the growth.
But look, climate changeprofits those profits of climate
(23:48):
change.
They really wanted to replacecoal, oil and gas with renewable
energy.
Now this is not going to happenand therefore all those
outlooks, especially from theIEA and the companies around the
IEA those outlooks basicallyare all of them a complete
nonsense right now, and thedemand for oil and coal and gas
(24:11):
is going to be way higher.
So if you are looking for aninvestment in the next few years
, this is really worth to lookat, because the failure of the
green policies by default isgoing to increase the demand for
oil, gas and coal.
That is the problem.
This increase is going tohappen all of a sudden.
It's not like we are going tosee it over several years just
(24:32):
going little by little.
All of a sudden we are going tosee a jump.
All we need is economic growthand that's it On the economic
growth front here I would liketo point out another point that
I've been repeating all over, soI apologize for those who
listen to this several times now, but I know that people need to
hear this In the media.
(24:54):
In the media now you see a lotof stories about oh, spain,
dependence on renewable energyis 80% or 60%, and all the
electricity this morning was inthe UK was from wind, et cetera,
and basically renewable energyis gaining ground.
Of course, there are all kindsof lies coming from the media
(25:14):
and notice that when it comes torenewable energy, they always
focus on capacity.
They don't talk aboutgeneration.
When they talk about EV sales,all of a sudden, when they talk
about ICE vehicles and thequarterly reports of auto
companies, they mention thenumbers and the percentages, but
when they cover the EV section,they focus only on percentages.
(25:36):
They don't focus on the numbers.
So they tell you look, growthof this is 150%, but come on,
for the whole quarter they soldjust 900 trucks.
They don't report the 900.
They tell you the 150%.
So there is this bias in themedia toward climate change
policies or in support ofclimate change policies, solar
(25:58):
and wind.
But what people should realizeis the following In periods of
recessions and slow economicgrowth, the share of renewables
naturally increases.
This is not a trend.
This is literally correlated toeconomic growth.
(26:19):
And now what we see is all thoseon the left are building their
models and their view is basedon what we've seen in the last
two years.
Look Europe.
If the country was not in arecession, it was in slow
economic growth.
And what happened here is thesun shines every day, whether
(26:40):
you have economic growth or arecession, it doesn't matter.
Wind is going to blow whetheryou have economic growth or you
have a recession.
So the only thing that managers,utility managers, can control
is literally coal and gas, andtherefore, when you have a
recession and demand for energydeclines, they reduce the amount
(27:04):
of coal and gas and, as aresult, the share of renewable
increases.
This has nothing to do withgovernment policy.
This has nothing to do withanything related to climate
change.
This is just pure management onthe part of utilities in
periods of recession and sloweconomic growth.
Now you turn to high economicgrowth.
(27:26):
Give me 3% or 4% economicgrowth.
Now you turn to high economicgrowth.
Give me three or four percenteconomic growth in Europe.
How are you going to cover theenergy demand in this case?
The sun is going to rise thesame thing every day.
Wind is going to blow the samething every day.
The only way to meet thisgrowth is coal and natural gas.
So all those conclusions we'vebeen hearing about in the last
(27:46):
two years are completely off andthey are contributing to this
idea of peak oil or peak gas orpeak coal.
Speaker 1 (27:57):
From everything I've seen, it seems like the only
real very long-term answer toexploding demand for electricity
is nuclear or to explodingdemand for electricity as
nuclear and I've heard you talkabout uranium in this.
But I am curious if thatresults in sort of the Venn
diagram crossing in terms of theclimate change activists, the
(28:18):
green energy transition and thenthe reality of the demands of
AI.
I mean, if nuclear fits both ofthose diagrams.
Speaker 2 (28:28):
A couple of things here.
The first one is energy demand,and I'm talking about energy in
total.
Energy demand worldwide isexploding and will continue to
explode for years to come.
How are we going to meet that?
We cannot just build our way byhaving all those low density,
(28:49):
low energy density wind andsolar and, if you look even at
batteries.
Let me give you an exampleabout what happened in
California last month.
This is one Sunday I think itwas the third Sunday of last
month it was a perfect day inCalifornia and if you look at
the sources, the solar wasdominating during the day.
(29:11):
Again, this is a perfect dayand the the share of gas was
only 11% and the moment the Sunset, the share of gas went up to
36%.
Now they already have batteries, so they stored energy in
batteries and they usedbatteries throughout the night.
(29:31):
By 4 am, all the batteries werecompletely empty and that was a
normal day.
So imagine if temperaturereaches 110 in California or we
have a major power outage forthree, four days.
Batteries are gone.
That's it.
They serve for several hoursand they are gone.
So there are no batteries andsolar.
(29:53):
There is no solar at night.
We already have the data.
So how they are going to getthe energy.
Of course it's going to benatural gas and they are going
to import a lot of electricityfrom other states at very high
prices.
So the story of Californiabasically tells you the whole
story why we need nuclear.
And you know they reneged onclosing the last nuclear plant
(30:14):
they have.
Simply because of that, thewhole world basically needs
nuclear.
Technology has improvedsubstantially.
It's now more efficient, it'ssmaller, it's safe.
It's now more efficient, it'ssmaller, it's safe.
And if you look around the worldright now, there are countries
that benefit more from nuclearthan others.
And, ironically, if you look atcountries like Saudi Arabia
(30:37):
today, they benefit more fromnuclear than any other country
in the world, simply becausenuclear will enable them to
export oil and gas more oil andgas and make their position in
energy more dominant than ever.
And there are four countries inthe Arab world that need
(30:58):
nuclear energy as soon aspossible, before a major crisis.
That include I mentioned SaudiArabia.
That include Egypt, algeria andMorocco.
You have population growth,urbanization growth and Egypt
already suffering from majorpower shortages and the
government in fact being changedjust recently.
Because of that, we have eightcountries in the Middle East
(31:20):
that are suffering from, not inthe Arab world, because once you
talk about the Middle East, wehave to add Iran and others too.
All of them are suffering frompower shortages.
So we already have powershortages.
And how to deal with that?
The only way?
Renewables are not going to doit, but nuclear is going to
solve the problem.
So we do need nuclear in manycountries around the world, and
(31:43):
as soon as possible.
Here in the United States, insome states we do need new
nuclear plants.
Otherwise, I mean in Texas,every day, every day we look at
the temperatures we are above100.
We are scared to death from apower outage.
Speaker 1 (32:03):
I do not envy you being in Texas with that kind of
heat.
I want to share the screen.
Going back to your point aboutIndia, you put out this post on
the 14th.
If Trump returns to the WhiteHouse in 2025, he will make it
easier for India to import oiland gas from Russia, but in my
view, he will go againstinvesting in Russian LNG.
(32:24):
Let's talk about thegeopolitical landscape in terms
of how, again under a Trumpadministration, how energy can
be used to affect certainchanges from a geopolitical
front.
Speaker 2 (32:36):
Sure.
For those, of course, who areinterested in more details, if
they go through the timeline onTwitter, you will see a very
long article on this and thenyou will see a space on this too
.
India got the green light fromthe Biden administration to
(32:56):
import oil from Russia, and theyare importing a lot of oil
about 2 million barrels a daythat comes from Russia and they
have serious problems becausesome banks, especially the banks
that are dependent on theremittances of the Indian
diaspora around the world andthey have branches around the
(33:18):
world they are afraid to dealwith Russia or make payments on
behalf of their customers,because if the sanctions are
applied, then they might stoptheir operations around the
world and then the Indiandiaspora cannot return money to
India.
So this is one issue that needsto be resolved.
The other issue is you haveIndian oil companies that are
(33:40):
owned by the government.
They are scared too becausethey have accounts and their
stocks are listed on someexchanges, et cetera, and they
have bank accounts around theworld and they are scared too if
the sanctions, even by mistake,being implemented, then they
will suffer those local ones andothers.
Basically, they can work it out.
So this is not a big deal, butwith the Biden sorry to go back
(34:06):
to the Biden administration theBiden administration, of course,
supported what they call theprice cap, but they keep talking
about the success of the pricecap.
It's a total failure.
It never worked and it willnever work.
But Secretary Blinken basicallygave the green light to India
when he was in New Delhi for theG20 meeting and he said
(34:29):
something along the line oh,india is not importing any oil
above 60.
At that time, india wasimporting it at 72.
But everyone understood thatthat was a green line regardless
.
So with Trump, right now, trumpbasically likes Moody and Moody
(34:51):
basically likes Trump.
At the same time, we have thishistoric relationship between
Putin and Trump and the ideahere is Trump wants low prices,
so he will help Russia basicallyproduce more and at the same
time, he will encourage India tobuy more and the Indians
basically tell him look, it ismy problems.
(35:12):
One, two, three, four, five,and I think Trump can solve at
least three, four of them,especially those related to
sanctioning certain tankers, theissue of the price gap, the
issue of payments banksbasically having serious
problems transferring payments.
I think Trump can work on allof those and solve those
problems.
So India will not violate thesanctions.
Speaker 1 (35:38):
So but given how immersed you are in this, how
you yourself invest your ownmoney right and position based
on your analysis, are yououtright playing ETFs, for
example, that do futures onnatural gas, on oil?
Are you doing individual stocks, broad-based funds?
How does natural gas invest?
Speaker 2 (36:03):
When we talk about long-term, in particular
long-term, I'm tilting towardnatural gas and LNG.
This is really big Long-termnuclear uranium this is very
clear and not oil.
I'm not talking about oil here,despite the fact that I expect
oil prices to go higher, but Ithink there is more money in
(36:24):
natural gas, lng and nuclearthan others.
In terms of oil, I've beenfocusing on Canadian oil for a
long time and I'm still focusingon Canadian oil, regardless For
shale companies.
Shale companies basicallybecause of all the recent
(36:45):
mergers and acquisitions.
We need to wait until thingssettle Because before we were
really counting on those smaller, mid-sized companies, they've
been doing amazingly well invarious ways.
They are the ones who have beenthere since day one.
They have the experience We'vegot to remember shale did not
(37:05):
come from Exxons and Chevrons.
Shale came in from the smallcompanies that became large
later on.
So they have the experience.
So we got to see how those bigcompanies are going to deal with
shale and how they are going toperform financially.
So there are still some smallercompanies in shale are doing
(37:27):
very well.
I do not believe that shale isgoing to peak forever.
If we see any peak this year,it's a temporary peak.
It's a function of severalfactors.
I think the decline in rigcounts and completion activities
recent months are related tothe mergers and acquisitions.
(37:49):
Companies are busy basicallyfinishing up the mergers and
acquisitions and they don't haveany appetite right now to make
big decisions on drillingprograms.
So some of those companies thesmaller companies basically are
going to benefit from the factthat big companies now and the
medium-sized companies that havebeen acquired are busy with
(38:10):
these things, so they willbenefit from that.
At $80 oil, basically that's areally good price for shale.
The fear is, if prices declineto $60 or lower, then shale is
not going to be attractive inthis case.
But will that 60 last for along time?
(38:30):
I don't think so, but we willhave to be careful.
Speaker 1 (38:39):
I want to get your thoughts on how the longer-term
dynamics for the energy marketrelate to inflation.
Ai should be disinflationary,deflationary, as all tech is,
but exploding electricity andenergy man probably means that
gets countered right From debtto have inflation, to cause the
(39:00):
disinflation on the outputs.
From the AI side of things,from the AI side of things, is
there a world where that energydemand ends up, maybe surprising
to the downside, where there'sa disinflationary impact of AI
overwhelms the inflationaryimpact of rising energy?
Speaker 2 (39:19):
demand.
It's exactly the opposite.
It's exactly the opposite.
First of all, all those climatechange policies.
I mean, even when Trump wins,he cannot eliminate the impact
or what already happened.
There is a trend.
He can reduce the speed of thattrend, but he cannot stop it.
(39:42):
Those green policies or theenergy transition is naturally
inflationary, naturallyinflationary.
And the sad part is it isinflationary and we are not
getting something new.
We are just replacing the oldand that old, basically, is
still functional.
So you can see that additionalcost that we have.
It's not like we reach the endof age for what we are replacing
(40:05):
and therefore we need toreplace it anyway.
No, we are replacing thingsthat are still functional and we
are just getting rid of them.
So it is inflationary by nature.
So that's number one.
Number two AI is increasingdemand for energy substantially
and for energy projects.
They don't come in in a linearform.
(40:27):
You got to look at it as like astaircase, and one staircase is
like five inches high and theother one is five feet high, and
then it's 10 feet wide and theother one is one foot wide.
So it does not come that way.
Energy investment comes thisway, like staircase, and the
(40:47):
results of it comes like astaircase.
It does not match the demandfor AI and therefore we are
going to end up.
If you imagine AI as a lineversus something like staircase,
you can see those gaps, andthose gaps are extremely
inflationary talk about the, uh,the research.
Speaker 1 (41:12):
I'm going to share it on screen here, uh, but with
the daily energy report onsubstack, talk to us a little
bit about the source of sourcesof information, because you
mentioned now you're gettingdata from a lot of different
places that traditional media isnot focusing on.
So what are those types ofsources?
How?
How do you synthesize it?
And, for those that are curious, what would they learn from
(41:33):
what you put out?
Speaker 2 (41:34):
The whole idea of the daily energy report basically
was for two things.
First of all, when we startedthe newsletter on Substack, many
people complained it's tooexpensive and it wasn't really
intended for individuals.
I mean, it wasn't intended forcompanies anyway, especially
that the material we provide issimilar to any big consulting
(41:56):
houses around the world.
So we decided, okay, we needsome kind of something that is
reasonable, but it has still thematerials.
That does not exist anywhere.
So that's the basic idea.
But what made it better is thefact that data has deteriorated
(42:19):
substantially data in the energymarkets, especially in the oil
market, since 2017.
And it started because of shale.
By the way, and if we have time, I don't know how much time we
have, but I want to explain oneidea.
The problem with shale is thatshale wells produce a lot of gas
(42:42):
and a lot of natural gasliquids, unlike the conventional
oil.
And because of definitions, theAIA got stuck because there are
natural gas liquids that arenot coming from gas wells.
They are coming from oil wellsand they don't know what to do
with it.
So they decided to add it tooil anyway.
So that's how the data starteddeteriorating, and that's when
(43:06):
people talk about thisadjustment and we have an
adjustment and the adjustment istoo large and the data is bad
and people did not understandwhat's going on.
Well, we were the first one.
We'd like to claim that we werethe first one who did this in
2017, when we created thehashtag Crude Equality Matters.
That was exactly about theadjustment of the EIA and we did
(43:28):
propose solutions for thatabout the adjustment of the EIA,
and we did propose solutionsfor that.
The EIA tried but failed untiltoday.
And the reason why?
Because shale comes in with alot of light products and a lot
of gas and natural gas liquids.
So now we have a lot of naturalgas liquids in GLs of natural
(43:49):
gas liquids NGLs and some smartpeople discovered that I don't
need to make a major investment,basically to make money, and I
don't need refineries.
I can buy those natural gasliquids.
I am in Houston, I can buythose natural gas liquids or
certain type of them, and I canbuy that Canadian crude coming
(44:11):
through Keystone to Houston andliterally blend them and come up
with a new crude that I canexport to the rest of the world.
So what happened here is Ialready have NGLs that being
classified as NGLs in the EIAdata and it's being sold Now.
It's being sold now it's demand, but those who demanded it took
(44:33):
it, mix it with another crudeand exported that officially as
crude.
So you can see how the databasically being counted twice
and that created a big problem,because whatever was ng elves
now is being exported as crudeand that does not match the
(44:55):
crude numbers.
So we have some seriousproblems.
Then COVID hit.
The situation got really worse.
Then Putin went to Ukraine,went to Ukraine.
The situation became worsebecause we have one of the
largest producers in the worldwith ghost ships that it's very
hard to follow.
(45:15):
So the situation got really badafter that.
And then we have an electionyear and this election year,
basically in the United States,india and others, as you know,
just like in previous years,they pay a lot of money for the
media, for the advertisement andothers.
All of a sudden we have newsstories that are not correct or
(45:36):
biased or literally tilted tobenefit a candidate and
therefore we have bad data onone side, bad reporting on the
other.
That's where the value of thedaily energy report is that we
distill this information and weliterally sometimes our comments
are literally we send it to ourclients and say ignore the news
(45:57):
, this is fake news or this iskind of tilted toward this and
the fact that this and that'swhat we do in many of the
stories in the daily energyreport.
So in a sense, on personallevel, we benefit from this but
at the same time we feel sadthat we reached this point in
our society.
Speaker 1 (46:19):
Maybe as we get close to the top of the hour here, Dr
Rast, everybody, please makesure you check out that subset
as well.
Thoughts on where the world isheaded into the end of the year
and where it could be headednext year.
I mean, I know nobody canpredict the future, but you
might have some sense of atleast directionally up or down.
Speaker 2 (46:36):
Sideways, literally sideways.
We've been sideways since thebeginning of the year.
We are going to continue withsideways.
Yes, we do have some brightspots in terms of oil demand,
but we do have serious problemsin China, we do have serious
problems in India and one of theironies is, by the end of the
(46:56):
year some people might getsurprised basically, that the
best story in the oil market iscoming out of Europe, out of all
places in the world, not fromChina and India.
On LNG, the general sense isthat people are bearish.
We have oversupply.
We don't think so.
In all our reports we pointedout look, we have many issues
(47:19):
still in the LNG industry and weare not bearish in any way.
Even this year.
The demand is huge.
A heat wave, basically, willincrease the demand for LNG
substantially and we see thisheat wave around the world right
now.
So the general story in themedia being bearish on LNG, we
(47:40):
don't believe it.
In terms of oil, it's sideways.
And one more point on coal.
People have been predicting thepeak demand for coal for years
and we are going to hit anotherrecord in coal demand this year.
Speaker 1 (48:01):
Everybody.
Please make sure you follow DrNas Al-Hajjian next and check
out his sub stack as well.
I always learn a lot fromlistening to him.
Hopefully you did as well.
Appreciate those that watchthis stream live and hopefully I
will see you all on the nextepisode of Lead Lag Live.
Get that air conditioning on,dr Adas.
If the heat is like that,you've got to get cool.
Speaker 2 (48:22):
Absolutely.
My chicken tells me how theweather is going to look like,
so I can watch my chicken andsee how the day is going to go.
Speaker 1 (48:31):
Appreciate everybody that was here, thank you.
My name is Michael Guyatt, publisher of the Lead
Lag Report.
Joining me for the rough houris Dr Anas Al-Hajib, who I
always enjoy talking to.
Dr Anas, I know a lot of peopleon Twitter know about you, but
a lot of people may not befamiliar with your background.
So introduce yourself.
Who are you, what have you donethroughout your career and what
are you doing currently?
Speaker 2 (00:27):
Sure, my background basically started with academia.
I was teaching at severaluniversities, then I moved to
the private sector.
I worked for NGP Energy CapitalManagement, which was the
premier private equity in oiland gas, probably around the
world, not only in North Americaand I stayed there for several
(00:51):
years.
Then I left in 2016.
I wear several hats since thenand I'm still wearing most of
them, and one of them basicallyis being the kind of an advisory
role on the first and onlyenergy focused media platform in
(01:15):
Arabic, and it was justtremendous success for the last
three years.
Speaker 1 (01:24):
So it's interesting that you're strictly saying it's
in Arabic, because obviouslywhen we talk about a US audience
, right, they think about theMiddle East, they think about
OPEC, but you're targeting morethat end of things, the Middle
(01:45):
East, and knowing that part ofthe world, I am curious to hear
your perspective on how MiddleEastern politics, and how oil in
particular, gets shaped bywhoever is president Trump or
Biden.
Speaker 2 (01:54):
Sure, just before I do that, I just want to clarify
one important thing that theWestern media, when they cover
events and oil in the MiddleEast, they cover it within their
own lens and within theirpriorities and therefore what
people get out of their peoplewho are in Dubai or in other
places is probably less than 1%of what they should hear.
(02:17):
This is one of the market casesfor Attaqa.
Basically is that there is alot of information that traders,
investors and others want toknow about, but the Western
media is not interested.
For example, we broke out thestories about the power outages
in Egypt, about Egypt basicallybeing or was an LNG exporter and
(02:43):
it's becoming an LNG importerand what is the impact of that.
We broke those stories becausethe Western media was not
interested.
When you talk about powershortages power shortages in
Kuwait, power outages in Kuwaitwhat is the impact of that?
What is the impact of that onoil exports?
What is the impact of that onLNG imports, etc.
So the Western media is reallynot that interested in the local
(03:05):
stories.
That has an internationalimpact and we cover that.
But to go back to the elections,people have this general view
that Trump is bullish for oil.
When we say bullish, bullishfor what?
If you are talking about prices?
No, in fact, let's be clearabout it.
(03:26):
If you look at variouspresidents and their
relationship with the oilindustry and their impact on the
oil industry, president trumpwould be one of the worst in us
history.
President trump want oil pricesto be low.
President trump wants wants lowgasoline prices.
So, yes, he can give youpermits if you want to, but why
(03:48):
are you going to invest whenprices are low?
If you look at and I'm notsaying this, I'm trying to be
apolitical here If you look atthe period since Biden came into
office, we got very high prices, very high oil prices.
Oil production reached thehighest level ever.
Natural gas production reachedthe highest level ever.
(04:11):
Lng exports reached the highestlevel ever.
So what do you need better thanthat?
Of course, I'm not suggestingthat you need to elect a
president based on that, but theidea here is, if President
Trump comes back to the WhiteHouse, it's really not that good
for the oil industry.
That's what the bottom line isadministrations.
Speaker 1 (04:49):
The energy sector, just stock market-wise, tends to
do better versus when you havea Democrat in office, probably
because, to your point of thatperception right.
Do you think that there'ssomething about the energy
market that might make thatdifferent going forward the next
four years, if Trump does winthe presidency?
Not?
Speaker 2 (05:04):
really because if you go back and look what happened,
investors, especially in shale,lost a lot of money.
I mean lost billions andbillions of dollars during the
Trump presidency.
They did not make much money atall.
I mean those who invested in 13and 14, they literally lost
billions of dollars during Trump.
But we got to remember thefollowing you are not constantly
(05:29):
under threat, you are not beingattacked, you are not being bad
mouthed, you are not getting avery bad reputation.
And here, to think about it fromkind of a leadership point of
view and academic point of view,kind of a leadership point of
view, an academic point of viewthe oil industry.
One of the problems of the oilindustry is that it got relaxed
for a long time under variousRepublican administrations.
(05:51):
And the fact is the oilindustry should be on its toes
all the time to survive, becausemost losses that happened
happened because they reallykind of went to sleep, because
they thought they are safe andbeing under threat all the time
is good for the industry, goodfor the society, good for
(06:14):
everyone, because they reallyshould pay attention to various
things that make the industrybetter at doing business.
Better at doing business.
And one more point basicallythat's coming up is related to
the use of the strategicpetroleum reserves.
President Biden was filling upthe SPR with about 3 million
(06:36):
barrels a month and they plan topurchase 6 million barrels for
August and September and thenthey cancel that.
They cancel that Now.
They are free to withdraw justbefore the elections, to
withdraw oil from the SPR inAugust and September if they
want to.
Our view was they will withdrawoil from the SPR if oil prices
(07:00):
I'm talking about WTI here isaround $90.
I'm talking about WTI here isaround $90.
But when it comes to politicsand it comes to the current
events as they are, I think theyare so desperate they might
even use the SPR, even at lowerprices.
Let's be clear here that anypresident, whether Republican or
(07:21):
Democrat, they will use the SPRbefore the elections and we
have enough history basicallybasically to prove that point.
So it's not only a Biden thing.
Speaker 1 (07:31):
It's funny how those in power want to stay in power.
Speaker 2 (07:34):
Absolutely.
Speaker 1 (07:35):
And doing things that they probably shouldn't.
I haven't looked at the numbersrecently, but how far away is
the SPR to being replenishedprior to?
Speaker 2 (07:43):
Oh, very far away, very far away.
We are around 370 millionbarrels right now.
We used to be about 610.
So we are very far away.
But really I mean, the fact isand there is an old video from
like 2022 explaining all thosepoints that I would like to
mention quickly here that wedon't need 600 million.
(08:04):
And those who are talking aboutBiden drained the SBR no,
that's absolutely not correct350,.
Basically we went to about 345,that's the lowest.
Even at that, we can handle anycrisis.
This is not a big deal.
And we got to remember that evenPresident Trump wanted to sell
half of the SBR, which is morethan what the Biden
(08:27):
administration sold, and therewas an agreement between several
Republicans and Democrats thatwe don't need that much SBR,
especially sweet crude.
And the reason why?
Because when President Bush,george W Bush, built the SBR to
700, at that time we did nothave shale.
(08:48):
Shale came in after 2010.
And now shale added between 8to 9 million barrels a day.
So why?
I need to store oil in theStrategic Petroleum Reserve and
I have the oil under my feet, sothere is no reason to keep the
600.
I can survive with 300 andmostly it will be sour, which is
(09:11):
what we import from overseasand what is or what will be
affected by the hurricanes inthe Gulf of Mexico, because
that's an emergency I need touse oil for.
But it's all sour, it's notsweet, so I don't need that much
sweet crude to use, and if Ireally want sweet crude, it
should not be in Texas, by theway, it should be somewhere in
(09:32):
the Northeast, because they areimporting the sweet crude from
Nigeria and other places.
Which is one of the sad storiesin the United States is that
the United States is the largestproducer of oil, yet the
Northeast imports oil.
The US is the largest LNGexporter, yet the Northeast
imports LNG from other countries.
Speaker 1 (09:54):
Let's talk about LNG for a moment, because a lot of
the focus is much more on oil intraditional media and I know
you want to focus on more thanjust what the traditional media
puts out there.
Any thoughts on liquid naturalgas as far as how it's trending
and any sort of volatility thatcould be coming?
Speaker 2 (10:10):
We do publish, by the way, a weekly report on natural
gas and LNG and then we publisha very comprehensive report on
Europe and LNG and its importfrom Russia.
So for those who are interested, basically they will find a
wealth of information in ourreport and we usually get
information way before the media.
(10:32):
So we are really bullishOutside the United States.
We are bullish on natural gasand, in general, we are bullish
on LNG.
In fact, we are a big fan ofLNG.
I think the story of gasolineand LNG is way bigger than oil
in the future.
People say, well, natural gasis the bridge to the future.
(10:56):
No, it's no longer a bridge.
If you look at all the evidencefrom around the world, it is
the future.
If you look, in fact, at justwhat we've seen in the last
couple of months major gasdiscoveries around the world it
is the future.
If you look, in fact, at justwhat we've seen in the last
couple of months major gasdiscoveries around the world
everyone is looking for gas, ofcourse.
One of the reasons why becauseit is the cleanest fuel anyway.
At the same time, now gas isbecoming as global as oil,
(11:21):
because I can transport that inthe form of LNG, and technology
has improved substantially inrecent years where I can use
those floating ships.
And with floating ships, thisis kind of an amazing business
model because, like now inKuwait, for example, the
temperature, by the way, it was123 degrees just three days ago,
(11:45):
123 in Kuwait the consumptionof power basically led to power
shortages in Kuwait.
So what they do is they rentthose ships and they regasify.
They receive the LNG, regasifythe gas, put it in pipelines and
take it to power stations.
Well, at the end of the summerthey don't need it.
(12:06):
Well, that ship can go to SouthAmerica after that, because
that's when they have the summerand they need that.
So this development oftechnology basically makes
natural gas a global commodity,and what we see here is we have
a retreat from climate goals, aswe see around the world.
(12:28):
On the other side, we haveclimate policy failure and, by
default, when you have a climatepolicy failure, you have to
rely on another source of energy, and that source is going to be
mostly natural gas, but it isgoing to be coal too.
So the idea and this will bringus to another topic those who
(12:51):
are talking about peak oil, peaknatural gas, peak coal, they
are missing the point, and oneof the points they are missing
is that most of the decline wesee today, even in China, is
really about economic growth.
It's not about electricvehicles.
It is the low economic growthin China that is leading to
(13:12):
lower oil demand.
By the way, this is the subjectof today's Daily Energy Report,
and we have a very long reporton this, too, coming up this
week.
The whole idea here is thateverything you see about peak
oil has some wrong assumptions,and, whether you talk about PP,
(13:33):
they are expecting oil to peakin 2025.
Chinese oil companies theyexpect oil demand in China to
peak before 2030.
Well, here is the problem.
One of the problems is whenthey model the impact of
electric vehicles.
They model only the directimpact, which means that you are
buying an electric vehicleinstead of a gasoline vehicle
(13:57):
and they say, well, I just losta gasoline vehicle and they
calculate the impact of it.
Well, to make that electricvehicle, you need a lot of oil,
and you need more oil than thegas vehicle for a simple reason
the batteries are extremelyheavy and to compensate for the
weight, manufacturers are usingsome composite materials that
(14:20):
are made from better chemicalsinstead of metals and other
heavy materials in the icevehicle, and that's where the
consumption of LPG and NAFTAincreases substantially, and
that's not being counted.
That's why you see peopletalking about oh, there is
strong demand for oil frombitter chemicals, absolutely,
but because of EVs.
(14:40):
They are missing that point.
Evs, they are missing thatpoint.
They are missing the point that, even if you look at China, for
example, about 15 to 20 percentof those who are buying EVs
today are replacement for olderEVs, but they are still counting
them as a cost to the oildemand and that's absolutely a
(15:05):
mistake.
So there are many problems here.
That's why we, for examplehere's another one they assume
that anything that thegovernments want to do and it's
on the books will happen and itwill succeed 100%, which is
(15:27):
nonsense, because we know forthe last 100 years.
We have thousands and thousandsof books and articles.
And others talk aboutgovernment policy failure.
Why, when it comes to climatechange, the assumption is always
100% success.
Look at Germany.
Look at the failure in Germany.
We have serious problems.
Look at the retreat we areseeing around the world right
(15:48):
now from climate goals.
Why?
Because of the failure ofgovernment policies.
Yet they assume it is a success, 100% success.
Why they do that.
This is very important foreveryone to know that when it
comes to the IEA for example,the International Energy Agency
or OPEC or any others these areinternational organizations with
(16:10):
paying members.
So if Germany comes in with aplan and institute regulations
and laws and submit that to theIEA and say, here is what I want
to do, and I work for the IEAand I'm looking at the German
plans as an expert and say thereis no way this can materialize,
this is just a dream, these arewishes, this is crazy, it's not
(16:33):
going to happen.
Well, guess what?
Because they are paying member,I cannot even criticize the
plan, I cannot even modify it, Icannot even put a footnote.
I have to take it as is andmodel it within my model, as if
this is the truth.
And therefore the IEA is goingcrazy with this forecast of peak
(16:55):
oil, peak this, peak this, peakthis, simply because they are
taking the policies as is andsaying, okay, here is what I
have and this is going to happen.
And simply because they arepaying members, I cannot say
anything.
If I say something, most likelyI'll be fired or be punished.
That applies to all theinternational organizations and
therefore we have to be verycareful taking information from
(17:17):
them.
Related to this and please allowme just one more point and that
does not mean the outlooks bythe oil majors are also correct.
We have PP basically predictingoil demand to peak in 2025, and
we have ExxonMobil and others.
All of them have outlooks.
We have to be very careful withthis, for the simple reason
(17:39):
that those companies createseveral scenarios, then a
committee will meet and pick upthe scenario they want to invest
based on, and that remains topsecret.
That's really the secret sauceof the company and they will
never share that with anyoneelse.
Now they look at variousscenarios and then they will
(17:59):
choose which scenario to makepublic and it's not the one that
we'll invest on, and thereforewe have to be very careful
dealing with that too.
That's why the information wehave is really bad.
The outlooks, the divergenceamong them, the differences, are
huge.
If you look at demand forecasts, even for this year, opec has
(18:20):
the demand growing at 2.2million barrels a day.
The IEA is less than a million,and you can see the problems in
those forecasts and theirimpact.
Speaker 1 (18:32):
I like that point about the retreat from climate
change and I'll share that post.
You put up on X around thatbefore.
Presumably that's only going toget accelerated under a Trump
presidency, so whoever is inoffice will dictate the
deceleration of that energytransition now comes to the oil
(18:57):
majors and oil companies.
Speaker 2 (18:59):
These are very old companies I mean, you're talking
about some of them like 130years old.
They don't like changes everyfour years and they are not
going to go.
Remember when gasoline pricesincreased substantially in 2022
and the Biden administration metwith the refiners and told them
(19:19):
oh, we are going to relax someregulations so you can produce
more?
But the companies did not likeit because these flip-flop
policies are not good forinvestment, not good for the
future of the business.
So they like really steady step.
They don't like changes.
So the first thing is, even ifTrump changes things, we are not
(19:39):
going to see major changes inthe behavior of oil companies,
because they know this is onlyfour years and I'm looking at
the next 30 years, I'm lookingat the next 50 years.
So the oil companies may notrespond.
I mean, there will be peoplewho will take advantage of it
anyway, but we are not going tosee that much change.
The other issue we have to becareful with is that the failure
(20:04):
of the green policies is goingto happen, with Trump or without
.
Yeah, we can take the idea ofthe acceleration, but the
failure is happening anyway.
If you look at GM, you look atFord, you look at others, you
look at the decline in growth insales in electric vehicles, you
(20:25):
look at the problems we havewith offshore wind, et cetera.
So the issues are there,whether Trump is there or not.
What we are going to savebasically is just the money
that's being wasted.
If you look at the programsthat have been advocated by the
Biden administration, especiallyon offshore wind, probably we
(20:47):
can save that.
So there will be some savings,there will be some changes, but
not much, simply becausecompanies do not like those
changes every four years.
Speaker 1 (20:59):
I wonder what you think would be more
consequential to the energymarket policy or companies and
when I say companies I'm talkingabout tech companies.
So there was a comment fromsomebody I'm going to show it on
the screen from Oliver said Iwish I could join.
I'm going to watch it later.
Critical topic Microsoft takingownership positions in multiple
(21:21):
energy companies in Scandinavia.
Now you've been seeing at theperiphery, I think, some more of
these headlines around big techcompanies that are basically
trying to secure their ownenergy because of the demands
from the AI side.
Any thoughts on that sort ofshaping the landscape of the
energy sector?
Speaker 2 (21:38):
Again, we go back to this idea that companies look at
the next 30 years and 50 yearsand therefore their plans
basically would outlive thepoliticians' plans.
So that's a fact.
So over the long term,companies basically dictate
those strains anyway andpolicies have an impact, but
(21:58):
most of the time what we seethey are disruptive more than
they are pro-business, and theyare disrupting business.
And if you look at countries,for example, like you look at
the UK and look at India inparticular, what we see is we
see those flip-flop policies andcontradicting policies and
companies basically will shyaway from investing period.
(22:20):
The UK decided OK, I'm going tobe energy independent, I am
going to allow companies toinvest in the North Sea, but at
the same time I want to maintainthe windfall profit tax.
But companies just run away.
Even if you allow it, itdoesn't matter.
And then when the newgovernment came in and said we
(22:40):
are going to ban any developmentof oil and gas in certain areas
, it really did not matterbecause companies already left.
But in the long term, companiesdictate those trends.
To go back to the AI issue, theimpact is really severe and
people have not caught the ideayet because all this climate
(23:04):
change issue.
All those policies that areintended to replace coal, oil
and gas are going to failmiserably because of AI.
And, of course, another issueis the autonomous vehicles, too,
because that consumes massiveamount of energy too.
And what happened to thosetrends?
(23:26):
If you look at the AI and theautonomous vehicles, those
trends basically are going toconsume so much energy that all
the solar and wind and renewableenergy we are building are
barely enough to cover thegrowth.
Wind and renewable energy weare building are barely enough
to cover the growth.
But look, climate changeprofits those profits of climate
(23:48):
change.
They really wanted to replacecoal, oil and gas with renewable
energy.
Now this is not going to happenand therefore all those
outlooks, especially from theIEA and the companies around the
IEA those outlooks basicallyare all of them a complete
nonsense right now, and thedemand for oil and coal and gas
(24:11):
is going to be way higher.
So if you are looking for aninvestment in the next few years
, this is really worth to lookat, because the failure of the
green policies by default isgoing to increase the demand for
oil, gas and coal.
That is the problem.
This increase is going tohappen all of a sudden.
It's not like we are going tosee it over several years just
(24:32):
going little by little.
All of a sudden we are going tosee a jump.
All we need is economic growthand that's it On the economic
growth front here I would liketo point out another point that
I've been repeating all over, soI apologize for those who
listen to this several times now, but I know that people need to
hear this In the media.
(24:54):
In the media now you see a lotof stories about oh, spain,
dependence on renewable energyis 80% or 60%, and all the
electricity this morning was inthe UK was from wind, et cetera,
and basically renewable energyis gaining ground.
Of course, there are all kindsof lies coming from the media
(25:14):
and notice that when it comes torenewable energy, they always
focus on capacity.
They don't talk aboutgeneration.
When they talk about EV sales,all of a sudden, when they talk
about ICE vehicles and thequarterly reports of auto
companies, they mention thenumbers and the percentages, but
when they cover the EV section,they focus only on percentages.
(25:36):
They don't focus on the numbers.
So they tell you look, growthof this is 150%, but come on,
for the whole quarter they soldjust 900 trucks.
They don't report the 900.
They tell you the 150%.
So there is this bias in themedia toward climate change
policies or in support ofclimate change policies, solar
(25:58):
and wind.
But what people should realizeis the following In periods of
recessions and slow economicgrowth, the share of renewables
naturally increases.
This is not a trend.
This is literally correlated toeconomic growth.
(26:19):
And now what we see is all thoseon the left are building their
models and their view is basedon what we've seen in the last
two years.
Look Europe.
If the country was not in arecession, it was in slow
economic growth.
And what happened here is thesun shines every day, whether
(26:40):
you have economic growth or arecession, it doesn't matter.
Wind is going to blow whetheryou have economic growth or you
have a recession.
So the only thing that managers,utility managers, can control
is literally coal and gas, andtherefore, when you have a
recession and demand for energydeclines, they reduce the amount
(27:04):
of coal and gas and, as aresult, the share of renewable
increases.
This has nothing to do withgovernment policy.
This has nothing to do withanything related to climate
change.
This is just pure management onthe part of utilities in
periods of recession and sloweconomic growth.
Now you turn to high economicgrowth.
(27:26):
Give me 3% or 4% economicgrowth.
Now you turn to high economicgrowth.
Give me three or four percenteconomic growth in Europe.
How are you going to cover theenergy demand in this case?
The sun is going to rise thesame thing every day.
Wind is going to blow the samething every day.
The only way to meet thisgrowth is coal and natural gas.
So all those conclusions we'vebeen hearing about in the last
(27:46):
two years are completely off andthey are contributing to this
idea of peak oil or peak gas orpeak coal.
Speaker 1 (27:57):
From everything I've seen, it seems like the only
real very long-term answer toexploding demand for electricity
is nuclear or to explodingdemand for electricity as
nuclear and I've heard you talkabout uranium in this.
But I am curious if thatresults in sort of the Venn
diagram crossing in terms of theclimate change activists, the
(28:18):
green energy transition and thenthe reality of the demands of
AI.
I mean, if nuclear fits both ofthose diagrams.
Speaker 2 (28:28):
A couple of things here.
The first one is energy demand,and I'm talking about energy in
total.
Energy demand worldwide isexploding and will continue to
explode for years to come.
How are we going to meet that?
We cannot just build our way byhaving all those low density,
(28:49):
low energy density wind andsolar and, if you look even at
batteries.
Let me give you an exampleabout what happened in
California last month.
This is one Sunday I think itwas the third Sunday of last
month it was a perfect day inCalifornia and if you look at
the sources, the solar wasdominating during the day.
(29:11):
Again, this is a perfect dayand the the share of gas was
only 11% and the moment the Sunset, the share of gas went up to
36%.
Now they already have batteries, so they stored energy in
batteries and they usedbatteries throughout the night.
(29:31):
By 4 am, all the batteries werecompletely empty and that was a
normal day.
So imagine if temperaturereaches 110 in California or we
have a major power outage forthree, four days.
Batteries are gone.
That's it.
They serve for several hoursand they are gone.
So there are no batteries andsolar.
(29:53):
There is no solar at night.
We already have the data.
So how they are going to getthe energy.
Of course it's going to benatural gas and they are going
to import a lot of electricityfrom other states at very high
prices.
So the story of Californiabasically tells you the whole
story why we need nuclear.
And you know they reneged onclosing the last nuclear plant
(30:14):
they have.
Simply because of that, thewhole world basically needs
nuclear.
Technology has improvedsubstantially.
It's now more efficient, it'ssmaller, it's safe.
It's now more efficient, it'ssmaller, it's safe.
And if you look around the worldright now, there are countries
that benefit more from nuclearthan others.
And, ironically, if you look atcountries like Saudi Arabia
(30:37):
today, they benefit more fromnuclear than any other country
in the world, simply becausenuclear will enable them to
export oil and gas more oil andgas and make their position in
energy more dominant than ever.
And there are four countries inthe Arab world that need
(30:58):
nuclear energy as soon aspossible, before a major crisis.
That include I mentioned SaudiArabia.
That include Egypt, algeria andMorocco.
You have population growth,urbanization growth and Egypt
already suffering from majorpower shortages and the
government in fact being changedjust recently.
Because of that, we have eightcountries in the Middle East
(31:20):
that are suffering from, not inthe Arab world, because once you
talk about the Middle East, wehave to add Iran and others too.
All of them are suffering frompower shortages.
So we already have powershortages.
And how to deal with that?
The only way?
Renewables are not going to doit, but nuclear is going to
solve the problem.
So we do need nuclear in manycountries around the world, and
(31:43):
as soon as possible.
Here in the United States, insome states we do need new
nuclear plants.
Otherwise, I mean in Texas,every day, every day we look at
the temperatures we are above100.
We are scared to death from apower outage.
Speaker 1 (32:03):
I do not envy you being in Texas with that kind of
heat.
I want to share the screen.
Going back to your point aboutIndia, you put out this post on
the 14th.
If Trump returns to the WhiteHouse in 2025, he will make it
easier for India to import oiland gas from Russia, but in my
view, he will go againstinvesting in Russian LNG.
(32:24):
Let's talk about thegeopolitical landscape in terms
of how, again under a Trumpadministration, how energy can
be used to affect certainchanges from a geopolitical
front.
Speaker 2 (32:36):
Sure.
For those, of course, who areinterested in more details, if
they go through the timeline onTwitter, you will see a very
long article on this and thenyou will see a space on this too
.
India got the green light fromthe Biden administration to
(32:56):
import oil from Russia, and theyare importing a lot of oil
about 2 million barrels a daythat comes from Russia and they
have serious problems becausesome banks, especially the banks
that are dependent on theremittances of the Indian
diaspora around the world andthey have branches around the
(33:18):
world they are afraid to dealwith Russia or make payments on
behalf of their customers,because if the sanctions are
applied, then they might stoptheir operations around the
world and then the Indiandiaspora cannot return money to
India.
So this is one issue that needsto be resolved.
The other issue is you haveIndian oil companies that are
(33:40):
owned by the government.
They are scared too becausethey have accounts and their
stocks are listed on someexchanges, et cetera, and they
have bank accounts around theworld and they are scared too if
the sanctions, even by mistake,being implemented, then they
will suffer those local ones andothers.
Basically, they can work it out.
So this is not a big deal, butwith the Biden sorry to go back
(34:06):
to the Biden administration theBiden administration, of course,
supported what they call theprice cap, but they keep talking
about the success of the pricecap.
It's a total failure.
It never worked and it willnever work.
But Secretary Blinken basicallygave the green light to India
when he was in New Delhi for theG20 meeting and he said
(34:29):
something along the line oh,india is not importing any oil
above 60.
At that time, india wasimporting it at 72.
But everyone understood thatthat was a green line regardless
.
So with Trump, right now, trumpbasically likes Moody and Moody
(34:51):
basically likes Trump.
At the same time, we have thishistoric relationship between
Putin and Trump and the ideahere is Trump wants low prices,
so he will help Russia basicallyproduce more and at the same
time, he will encourage India tobuy more and the Indians
basically tell him look, it ismy problems.
(35:12):
One, two, three, four, five,and I think Trump can solve at
least three, four of them,especially those related to
sanctioning certain tankers, theissue of the price gap, the
issue of payments banksbasically having serious
problems transferring payments.
I think Trump can work on allof those and solve those
problems.
So India will not violate thesanctions.
Speaker 1 (35:38):
So but given how immersed you are in this, how
you yourself invest your ownmoney right and position based
on your analysis, are yououtright playing ETFs, for
example, that do futures onnatural gas, on oil?
Are you doing individual stocks, broad-based funds?
How does natural gas invest?
Speaker 2 (36:03):
When we talk about long-term, in particular
long-term, I'm tilting towardnatural gas and LNG.
This is really big Long-termnuclear uranium this is very
clear and not oil.
I'm not talking about oil here,despite the fact that I expect
oil prices to go higher, but Ithink there is more money in
(36:24):
natural gas, lng and nuclearthan others.
In terms of oil, I've beenfocusing on Canadian oil for a
long time and I'm still focusingon Canadian oil, regardless For
shale companies.
Shale companies basicallybecause of all the recent
(36:45):
mergers and acquisitions.
We need to wait until thingssettle Because before we were
really counting on those smaller, mid-sized companies, they've
been doing amazingly well invarious ways.
They are the ones who have beenthere since day one.
They have the experience We'vegot to remember shale did not
(37:05):
come from Exxons and Chevrons.
Shale came in from the smallcompanies that became large
later on.
So they have the experience.
So we got to see how those bigcompanies are going to deal with
shale and how they are going toperform financially.
So there are still some smallercompanies in shale are doing
(37:27):
very well.
I do not believe that shale isgoing to peak forever.
If we see any peak this year,it's a temporary peak.
It's a function of severalfactors.
I think the decline in rigcounts and completion activities
recent months are related tothe mergers and acquisitions.
(37:49):
Companies are busy basicallyfinishing up the mergers and
acquisitions and they don't haveany appetite right now to make
big decisions on drillingprograms.
So some of those companies thesmaller companies basically are
going to benefit from the factthat big companies now and the
medium-sized companies that havebeen acquired are busy with
(38:10):
these things, so they willbenefit from that.
At $80 oil, basically that's areally good price for shale.
The fear is, if prices declineto $60 or lower, then shale is
not going to be attractive inthis case.
But will that 60 last for along time?
(38:30):
I don't think so, but we willhave to be careful.
Speaker 1 (38:39):
I want to get your thoughts on how the longer-term
dynamics for the energy marketrelate to inflation.
Ai should be disinflationary,deflationary, as all tech is,
but exploding electricity andenergy man probably means that
gets countered right From debtto have inflation, to cause the
(39:00):
disinflation on the outputs.
From the AI side of things,from the AI side of things, is
there a world where that energydemand ends up, maybe surprising
to the downside, where there'sa disinflationary impact of AI
overwhelms the inflationaryimpact of rising energy?
Speaker 2 (39:19):
demand.
It's exactly the opposite.
It's exactly the opposite.
First of all, all those climatechange policies.
I mean, even when Trump wins,he cannot eliminate the impact
or what already happened.
There is a trend.
He can reduce the speed of thattrend, but he cannot stop it.
(39:42):
Those green policies or theenergy transition is naturally
inflationary, naturallyinflationary.
And the sad part is it isinflationary and we are not
getting something new.
We are just replacing the oldand that old, basically, is
still functional.
So you can see that additionalcost that we have.
It's not like we reach the endof age for what we are replacing
(40:05):
and therefore we need toreplace it anyway.
No, we are replacing thingsthat are still functional and we
are just getting rid of them.
So it is inflationary by nature.
So that's number one.
Number two AI is increasingdemand for energy substantially
and for energy projects.
They don't come in in a linearform.
(40:27):
You got to look at it as like astaircase, and one staircase is
like five inches high and theother one is five feet high, and
then it's 10 feet wide and theother one is one foot wide.
So it does not come that way.
Energy investment comes thisway, like staircase, and the
(40:47):
results of it comes like astaircase.
It does not match the demandfor AI and therefore we are
going to end up.
If you imagine AI as a lineversus something like staircase,
you can see those gaps, andthose gaps are extremely
inflationary talk about the, uh,the research.
Speaker 1 (41:12):
I'm going to share it on screen here, uh, but with
the daily energy report onsubstack, talk to us a little
bit about the source of sourcesof information, because you
mentioned now you're gettingdata from a lot of different
places that traditional media isnot focusing on.
So what are those types ofsources?
How?
How do you synthesize it?
And, for those that are curious, what would they learn from
(41:33):
what you put out?
Speaker 2 (41:34):
The whole idea of the daily energy report basically
was for two things.
First of all, when we startedthe newsletter on Substack, many
people complained it's tooexpensive and it wasn't really
intended for individuals.
I mean, it wasn't intended forcompanies anyway, especially
that the material we provide issimilar to any big consulting
(41:56):
houses around the world.
So we decided, okay, we needsome kind of something that is
reasonable, but it has still thematerials.
That does not exist anywhere.
So that's the basic idea.
But what made it better is thefact that data has deteriorated
(42:19):
substantially data in the energymarkets, especially in the oil
market, since 2017.
And it started because of shale.
By the way, and if we have time, I don't know how much time we
have, but I want to explain oneidea.
The problem with shale is thatshale wells produce a lot of gas
(42:42):
and a lot of natural gasliquids, unlike the conventional
oil.
And because of definitions, theAIA got stuck because there are
natural gas liquids that arenot coming from gas wells.
They are coming from oil wellsand they don't know what to do
with it.
So they decided to add it tooil anyway.
So that's how the data starteddeteriorating, and that's when
(43:06):
people talk about thisadjustment and we have an
adjustment and the adjustment istoo large and the data is bad
and people did not understandwhat's going on.
Well, we were the first one.
We'd like to claim that we werethe first one who did this in
2017, when we created thehashtag Crude Equality Matters.
That was exactly about theadjustment of the EIA and we did
(43:28):
propose solutions for thatabout the adjustment of the EIA,
and we did propose solutionsfor that.
The EIA tried but failed untiltoday.
And the reason why?
Because shale comes in with alot of light products and a lot
of gas and natural gas liquids.
So now we have a lot of naturalgas liquids in GLs of natural
(43:49):
gas liquids NGLs and some smartpeople discovered that I don't
need to make a major investment,basically to make money, and I
don't need refineries.
I can buy those natural gasliquids.
I am in Houston, I can buythose natural gas liquids or
certain type of them, and I canbuy that Canadian crude coming
(44:11):
through Keystone to Houston andliterally blend them and come up
with a new crude that I canexport to the rest of the world.
So what happened here is Ialready have NGLs that being
classified as NGLs in the EIAdata and it's being sold Now.
It's being sold now it's demand, but those who demanded it took
(44:33):
it, mix it with another crudeand exported that officially as
crude.
So you can see how the databasically being counted twice
and that created a big problem,because whatever was ng elves
now is being exported as crudeand that does not match the
(44:55):
crude numbers.
So we have some seriousproblems.
Then COVID hit.
The situation got really worse.
Then Putin went to Ukraine,went to Ukraine.
The situation became worsebecause we have one of the
largest producers in the worldwith ghost ships that it's very
hard to follow.
(45:15):
So the situation got really badafter that.
And then we have an electionyear and this election year,
basically in the United States,india and others, as you know,
just like in previous years,they pay a lot of money for the
media, for the advertisement andothers.
All of a sudden we have newsstories that are not correct or
(45:36):
biased or literally tilted tobenefit a candidate and
therefore we have bad data onone side, bad reporting on the
other.
That's where the value of thedaily energy report is that we
distill this information and weliterally sometimes our comments
are literally we send it to ourclients and say ignore the news
(45:57):
, this is fake news or this iskind of tilted toward this and
the fact that this and that'swhat we do in many of the
stories in the daily energyreport.
So in a sense, on personallevel, we benefit from this but
at the same time we feel sadthat we reached this point in
our society.
Speaker 1 (46:19):
Maybe as we get close to the top of the hour here, Dr
Rast, everybody, please makesure you check out that subset
as well.
Thoughts on where the world isheaded into the end of the year
and where it could be headednext year.
I mean, I know nobody canpredict the future, but you
might have some sense of atleast directionally up or down.
Speaker 2 (46:36):
Sideways, literally sideways.
We've been sideways since thebeginning of the year.
We are going to continue withsideways.
Yes, we do have some brightspots in terms of oil demand,
but we do have serious problemsin China, we do have serious
problems in India and one of theironies is, by the end of the
(46:56):
year some people might getsurprised basically, that the
best story in the oil market iscoming out of Europe, out of all
places in the world, not fromChina and India.
On LNG, the general sense isthat people are bearish.
We have oversupply.
We don't think so.
In all our reports we pointedout look, we have many issues
(47:19):
still in the LNG industry and weare not bearish in any way.
Even this year.
The demand is huge.
A heat wave, basically, willincrease the demand for LNG
substantially and we see thisheat wave around the world right
now.
So the general story in themedia being bearish on LNG, we
(47:40):
don't believe it.
In terms of oil, it's sideways.
And one more point on coal.
People have been predicting thepeak demand for coal for years
and we are going to hit anotherrecord in coal demand this year.
Speaker 1 (48:01):
Everybody.
Please make sure you follow DrNas Al-Hajjian next and check
out his sub stack as well.
I always learn a lot fromlistening to him.
Hopefully you did as well.
Appreciate those that watchthis stream live and hopefully I
will see you all on the nextepisode of Lead Lag Live.
Get that air conditioning on,dr Adas.
If the heat is like that,you've got to get cool.
Speaker 2 (48:22):
Absolutely.
My chicken tells me how theweather is going to look like,
so I can watch my chicken andsee how the day is going to go.
Speaker 1 (48:31):
Appreciate everybody that was here, thank you.
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