Episode Transcript
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Speaker 1 (00:01):
Welcome to the nationally syndicated Energy Mix Radio Show produced
by the Energy Network Media Groups.
Speaker 2 (00:07):
The Energy Mixed.
Speaker 1 (00:07):
Radio Show will give you an inside look at the
energy industry and how it affects you by talking with
industry leaders, experts, and government officials on the Energy Mix
Radio Show.
Speaker 3 (00:17):
And welcome to another edition of the Energy Mix Radio Show,
where we cut through the noise and bring you the
voices shaping the future of energy. I'm your host, Kimbalato,
and today my guest is Robert Rapier, who is the
editor in chief of Shell Magazine, and we are going
to dive deep into the forces that are driving oil markets,
renewables and policy decisions that impact us all. So rather
(00:39):
you're in the field, the boardroom, or just trying to
understand your energy bill, this show is for you.
Speaker 4 (00:46):
Now.
Speaker 3 (00:47):
Joining me today is Robert Rapier, who again is the
editor in chief of Shell Magazine and a senior contributor
at Forbes. Robert, you are a chemical engineer with over
twenty five years and international experiences in oil refining, synthetic fuels,
and renewable energy. Your insights have appeared in outlets like
The Wall Street Journal, c NBC, and PPS. And you're
(01:10):
also known for a very clear eyed analysis of the
energy markets, policies, and technology. You also authored power plays,
and you are a frequent voice on Investment Daily. Robert,
Welcome back to the Energy Mixed Radio Show.
Speaker 4 (01:26):
Thanks for having me Kim always.
Speaker 3 (01:28):
You know, I love to give you a great intro
because even though I know you very well as the
editor in chief of show magazine, there's just so much
that you do in different areas, and so I really
like to give you a very nice, warm welcome and
have our listeners really understand the just the depth of
information you have on a lot of different ranges when
(01:49):
we talk about energy, and then how investment also turns
into energy as well, and so hopefully you can talk
to us a little bit about that in the show.
But there's a lot going on, and then there's a
lot not going on. So let's start with just kind
of basics of get us up to speed. Okay, so Trump,
President Trump his administration has been in office. We've heard
(02:11):
the drill, Baby drill. You came out on a major
network not too long ago that was discussing what is
really going on here pertaining to the Trump administration's policies.
The drilling. What is the difference between the different administrations.
He's been in office for a while and he has
(02:31):
some great agency directors, the Secretary of Energy Chris Wright,
Secretary of Interior Doug Bergham. I think we are somewhere
where we feel in the energy sector anyway, that we
have knowledgeable and well rounded people kind of giving President
Trump guidance. So that being said, we're what almost a
(02:56):
year into his presidency. What do you think, how do
you see it going so far? What are some of
the major things that you think you need to clear
up as far as what the perception is and versus
what he's actually doing and how is he varying when
we're talking about oil and gas.
Speaker 4 (03:11):
So, you know, the most important thing, and I emphasize
this over and over and over again, no matter who
the president is, the most important thing that drives the
oil industry is the price of oil. And if the
price of oil is falling, the most pro oil administration
is probably going to see not good conditions for the
(03:32):
oil industry. And what we've seen this year, we've seen
the rig count fall. The rig count I just checked
again is down year over year. Steel, we've seen oil
prices fall, and oil prices have fallen for a couple
of reasons. And President Trump likes to tout that he
likes to taut you know, low oil prices, but you know,
(03:53):
the US is now a net exporter of oil and
finished products. Low oil prices means lower prices for those
exported products. It means lower employment in the oil and
gas industry. There's been a lot of layoffs this year.
So you know, the price of oil, it was down
by fifty eight dollars yesterday. That's not a good place
(04:15):
for the oil industry to be. So I think President
Trump is trying to balance two things. He wants low
gas prices for people. Consumers love low gasling prices. Of
course I love low gasling prices, but I know what
it does to the oil industry. And the oil industry
is one of the most important industries in the country.
(04:36):
And if oil prices are low, we're going to see
a slowdown. Now, having said that, we did set a
new production record, a new monthly production record in July.
We eclipsed the previous production record. We've been setting oil
production records for the last several years. We set one
(04:58):
in twenty twenty two three under Biden, twenty twenty four
under Biden, We're gonna set one twenty twenty five under Trump.
But the production growth is slowing. If you look at
the growth from the previous year, this year, we're only
about one point nine percent higher than last year. And
a lot of that is, you know, it's not Trump's
(05:20):
policies right now that are driving production. We've got, you know,
years and you know now at this point two decades
of shale drilling that has increased oil production and is
continue to increase oil production, but we're seeing that slow
down now finally. So you know, the president has very
(05:40):
pro oil policies, but I think if you ask the
oil industry, they don't want to see oil prices at
fifty eight dollars. They want to see a little bit
higher oil prices to support and you can just see,
you know, the layoffs or you know, major companies will
land off people, and that's a function of lower oil prices,
and viral price is low. Well, the a couple of reasons.
(06:03):
US oil production has continued to grow. But Opek is
out there now, you know, pumping more oil and putting
more oil out on the market. China's imports have slowed down.
So demand from China, which has helped drive oil prices
for many years, is starting to slow. They've got a
major uttery vehicle push over there, and you know, their
(06:23):
their growth is starting to slow. So all those factors
are leading to you know, sluggish oil prices.
Speaker 3 (06:31):
Well, if that's happening all of these different things, so
then where does that put So you said that the
energy companies really like higher prices, we understand that. So
how do you think they're navigating in the in the
pr you know area or pr world When we have
like Conico Phillips announcing layoffs. We're starting to see a
(06:52):
lot of layoffs in the energy industry and yet there
hasn't been any major ripples either that have really caused
anything massive. And this is that slowdown that you're talking about.
So have you heard anything from the administration that do
they understand some of their policies what they're actually doing
to the energy industry? Are they still on the path
of drill baby drill And we're still going to see
(07:15):
further slow down because of the permitting and all the
things that they are doing that are kind of leading
up to massive layoffs and low crewde prices.
Speaker 4 (07:25):
Yeah, sometimes I think there seems to be a disconnect
between you know, you can't just chant drill, baby, drill
and impact the oil industry. The price of oil is
what's going to dictate whether oil companies are drilling or not.
And you know, I know Chris Wright understands this. I
know he understands what's happening. And I'm sure that privately
(07:47):
he would tell you he doesn't want to see oil
prices at fifty eight dollars. But if President Trump is
out there saying, hey, old price, fifty eight dollars, this
is great, puts him in a little bit of a
tough spot. And I think I think the average oil company,
as they're laying people off, we'll say, you know, it's
a low price of oil, that's what's doing it. I'd
never heard President Trump address this that that you know
(08:11):
is the is a low price of oil really a
good thing for the US economy overall? There's no question
that it benefits certain sectors of the economy, and there's
no question that it benefits people at the pump, But
it impacts millions of jobs, and it impacts our trade
deficit because you know, we're earning a lot less money
(08:34):
on those exports now, so it was a very different
situation twenty years ago. Twenty years ago, we were net
importers of about, you know, twelve thirteen million barrels a day,
so any decrease in oil prices was a net benefit
overall the US economy. But it's not that way anymore.
Speaker 3 (08:54):
And is there also any can you explain why when
some of these major E and peace exploration companies and
production exploration production companies announced their layoffs, they didn't just
cite low prices. They also cited technology efficiencies, and they
also mentioned, you know, these were acquisitions and they were
(09:14):
trying to you know, you know, look at the amount
of money they had spent. So there was other factors
that were coming into play on why. So I can't
really lay it at President Trump's feet that he's the
real you know, his policies. There's a lot of different
things that were coming into why we're seeing this pricing
right right now.
Speaker 4 (09:34):
I'm not saying President Trump's policies are the factor here.
I don't think President Trump's policies have driven down oil prices.
This is more of a function of OPEC being out
there pumping more crude. At the same time, China is
importing less crude that has driven down oil prices. I
think the disconnect with President Trump is is he seems
(09:56):
to I heard him yesterday talking about, Hey, we're d
eight dollars. That's a great thing. I don't think that's
a great thing. On balance, I don't think that's a
great thing. So when the oil companies are saying we're
laying people off, yes, technology has gotten better and more efficient.
They're able to produce more oil per well drilled, and
(10:19):
so there are some efficiencies there. There's some mergers that
go on and they and they can get rid of
some people. Then there's some redundancies. But by and large,
the biggest factor, by far is the price of oil.
I mean that dictates, you know, whether people are getting
laid off.
Speaker 3 (10:35):
Yeah, and I think, you know, when I was thinking
about that, I was like, it isn't just President Trumpet's everything.
But there is a certain price point that most energy
companies look at as this is the baseline that we
need to be at in order for us to you know,
not d not lay down rigs. So we're making a profit.
No one is drilling regardless if they're great American citizens
(10:59):
to lose money, and that sweet spot is somewhere above
fifty eight dollars, right or no, I'm sorry, it's a
little bit lower than that. But there's not a whole
lot of profit in there. So it's not really forcing
energy companies to want to really put rigs out there
and drill because it's so low. And I don't understand
why they're not understanding that. And it's not about the price.
(11:21):
So I'm very confused with how they look at it
and not understand that we really need to get those
prices up if you want to see drill, baby, drill right.
Speaker 4 (11:29):
I think the problem is you have so many people
who gas prices are the most important thing in their lives.
I mean, like, if you got lower gas prices, they're happy,
and regardless of whether that is a net benefit. I mean,
think about farmers. I mean, we'd all like to pay,
you know, ten cents a pound for beef, except for
(11:50):
the beef people raising the beef. You know, they don't
want to see that. So isn't a net good for
the economy If beef costs ten cents a pound, well,
many people would say, hey, it's good for me personally,
but it's not good for the economy overall because it
put beef producers out of business, and that's the same
situation we have here. It may benefit some consumers and
(12:13):
it may free up some money for them to spend elsewhere,
but overall, the oil industry is so important and employs
so many people that aill really needs to be about
seventy seventy five dollars for them to be humming along
and doing well.
Speaker 3 (12:28):
Yeah, and we're at fifty eight. Let's take a quick break.
When we returned, you wrote a piece recently about what's
going on in California. We remember the refinery fire. I
want to cover that, and I really want to get
a little bit more of your opinion on what's happening
in California as a whole, because we do recognize California's
policies are entirely different when they look at their energy
(12:50):
policy versus Texas. So if you can break that down
for us as well, Let's take a quick break here
listening to the Energy Mixed radio show, and we'll be
right back. And we're back. You're listening to the Energy
Mix radio show. My guest is the editor in chief
of Shell Magazine, Robert Rapier. Robert, it's no secret you
(13:11):
write for Shell Magazine and we're very happy that you
write first, but you're also a senior contributor of Forbes.
With your years and years and years of experience in
the energy industry, also being an engineer as well working
for some of the majors, you just bring a lot
of wealth of information of how you look at things
(13:32):
and have the ability to break it down for people
like us, people who've never worked in the energy industry,
to help us to understand. I want to ask you
about a recent piece that you wrote. It is on
Shell mag dot com. It was talking about a Chevron
the refinery fire. Believe it made national news, but I
(13:54):
want you to back it up a little bit and explain.
Everybody that's listening to the show is aware that California
has a lot of regulations pertaining to energy and that's
why they pay higher prices at the pump. They're not
as friendly to the energy sector, that's what people say.
And so, first of all, what is the current price
(14:17):
out there the Chevron the Chevron refinery fire. Can you
tell us about did gas prices spike because of this?
And what are going to be the ripple effects expecting
for them, and does it affect us too in the
United States, which I would assume it does in the
coming months.
Speaker 4 (14:38):
Yes, gas prices did go up out in California. I
haven't checked them in a few days, but they did.
Speaker 3 (14:45):
They weren't high enough, right.
Speaker 4 (14:48):
And you know, the fundamental problem with California is their
energy policies are so dysfunctional. On the one hand, they say, look,
we want to be off of fossil fuels, and you go, okay, Well,
many people say that's a laudable goal. That's that's fine.
So they go out and they promote electric vehicles and they,
(15:11):
you know, have a lot of green initiatives, but at
the same time they declare war on the fossil fuel industry.
California is still a major oil producer. California at one
time was the largest oil producer in the country. They've
made a lot of money off of the oil industry,
and yet they have become extremely hostile to that industry,
(15:35):
even though they still consume a lot of gasoline. And
so what has happened over the years is California has
driven oil producers there out of business and out of
the out of the state, and they have become increasingly
dependent on the Middle East. California is more dependent on
the Middle East than any other state they pull, they
(15:55):
bring more oil in from there. So I wrote an
article a few years ago it's really national security concern.
California's energy policies put them at greater risk for disruptions
because of their high dependence on the Middle East and
on foreign imported oil. They passed a lot of laws
(16:17):
out there that make it really uncomfortable for energy companies
to operate. They they have sued the oil industry out there.
I mean, the irony to me is, you know, they
try to blame the oil industry for climate change when
everybody out there who drives a car is putting carbon
(16:38):
in the atmosphere. And if it was really if they
really believed this was a dire emergency, why are they
still driving gasoline vehicles. I mean, they they've known this
for a long time. And they say, well, the oil
industry has known, and they've still producing fossil fuels. That's
because people are still buying them, because people still demand them.
(17:00):
So it's it's funny to me to point to the
oil producers and say it's your fault when it's really,
you know, eight billion people's fault that carbon is going
into the atmosphere. I mean, we're all contributing, but they
have adopted this really hostile tone toward their oil industry
(17:20):
out there, and that's driven companies out of state. That's
I'm Chevron's leaving. Refineries are shutting down, and they've also
got a really special boutique blend of gasoline there, and
it makes it where, you know, when there's a shortage,
gasoline supplies can't flow in from neighboring states. But it
(17:41):
also means that, you know, what happens in California doesn't
necessarily affect surrounding states that much because the gas is
not going into surrounding states, and surrounding states can't put
their gas in there. So you know, that's that's California
in a nutshell. It's really some dysfunctional pol These have
led them to where they are right now, and they
(18:03):
continue to try to point. You know, I've said before
that California makes a lot more money off a gallon
gasoline than a refiner does out there, But California blames
the refiner for price gouging because of their own policies
that end up driving prices up.
Speaker 3 (18:20):
Well, let's talk about in your article. So we know
that we had a ripple effect, so prices went up.
But one of the hardest markets that a lot of
people don't know is so we talk a lot about
exploration companies to Conico Phillips, but refineries that actually provide
us the gas, how did how were they doing versus like,
(18:44):
maybe I need to ask it in a different way,
how how did the third quarter go for oil and
gas companies versus refinery companies on the third quarter because
there's some differences there and maybe it might help us
understand how California and this Chevron fire, how it affects
the whole thing when we look at it.
Speaker 4 (19:04):
Okay, so third quarter generally, energy companies really really mixed bag.
On average. The whole sector did okay, but upstream companies
didn't do that well. Midstream companies didn't do that well,
but the refiners did tremendously well. And the reason for
(19:27):
that is when oil prices are falling, refiner margins tend
to swell. And that's that's been studied for many years.
Why that happens. The reason it happens is consumers are
much more discriminating when prices are falling than when they're
(19:47):
I mean when they're rising than when they're falling. So
you'll see companies, You'll see consumers drive across town to
save a nickel a gallon when prices going up, but
when they're coming back down, they don't do that. And
that I mean, we call that in the refinery, in
refining rockets and feathers. Gasoline prices go up like a
(20:08):
rocket and down like a feather. But when they're coming down,
margins are expanding. And we saw following oil prices in
the third quarter, which hurts the oil companies oil producers,
but it's really beneficial for the refiners. I mean, we
saw huge gains in the third quarter from the major refiners.
Speaker 3 (20:26):
So who were some of the top performers.
Speaker 4 (20:30):
I always look at the big three. I always call
them Marathon Valero and Phillip sixty six and pull out
my article here.
Speaker 3 (20:41):
Well, Robert, that's a great opportunity. While you grab your data,
let's take a quick break. You're listening to the Energy
Mixed radio show and we'll be right back.
Speaker 5 (20:50):
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(21:13):
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Concerts and Clays.
Speaker 3 (21:21):
And we're back. You're listening to the Energy Mix radio show.
My guest today is the editor in chief of Shell magazine,
Robert Rapier. Robert, before the break, we talked a little
bit about California and the fire that happened and how
fragile the fuel supply is out there and what happened,
and then you know, you also wrote another great article
talking about how the energy companies of refineries, the upmid
(21:46):
and downstream, how they did third quarter. And I think
that's kind of important that we look at because I
think that there's like, where are we going? Sometimes it
looks like we have we're having a good day. There's
low gas prices at the pump, but the energy sector
is not doing so well in the way their price
and their profits. So can you explain to our listeners
(22:06):
it looks good, but it's not really good. And I
think this was the interview that you had when you
went on National TV to say President Trump's policies are good,
but we are actually not drilling as much as we
did under Biden. So things that might look a certain
way actually are the opposite. And it's so hard to
wrap your head around that.
Speaker 4 (22:26):
Yeah, and it comes back to aill prices. I mean,
that's that's the reason. So you know, I've said before
it's funny that the largest expansion of oil production in
US history happened under Obama. And the reason it happened
is because that just happened to be when the shale
boom happened. It had absolutely zero to do with Obama's policies,
(22:47):
but he was in office when shale and when you know,
hydraulic fracturing and horizontal drilling, that marriage started to pay
dividends and he presided over that. And we've seen you know,
a huge expansion in you U S oil and natural
gas production. So back to the third quarter. So third quarter,
the the energy sector overall did turn into positive quarter.
(23:11):
It lagged the S and p five hundred overall, so
it was a you know, it was behind the average
a little bit. Upstream did okay. Overall, Public got had
a gain of five point eight percent. And I pull
all this data in with a data provider called fact set,
I can pull in all the financial information for all
these companies. Apache was the big standout among the upstream
(23:37):
and upstream. Yes, they they gained nearly thirty five percent
in the third quarter alone, So I said Apache. I
guess they've changed or they've changed their name there now
APA Corporation, but I still refer to them as Apache.
They they gained nearly thirty five percent. Conical Phillips is
(23:58):
the largest upstream producer and they they posted a six
point three percent gain. So upstream is the ones that produce,
the companies that produce the oil and gas. They are upstream,
so that from there the oil and gas flows downstream
into midstream, which connects the oil and gas companies to
the refiners, to the storage, to the shippers. And so
(24:22):
midstream gained eight point two percent. But the real story
there was the tanker companies. The tanker companies in the
third quarter, all all the major tank companies had gains
above forty percent for the quarter. It's a huge quarter
for the tanker companies, but the pipeline companies, you know,
not as not as good a quarter. But the standout
(24:44):
of the whole sector upstream, midstream, downstream was downstream. You know,
all of the downstream companies, the big major companies, and
that's Valero, that's Phillip sixty six, that's Marathon, We're all
above ten percent returns. They were all in double digits.
And Valero had a twenty seven point seven percent game
in the third quarter, and that's because oil prices were
falling and their margins were expanding. The super majors, BP
(25:10):
was the big winner there. They gained nearly seventeen percent,
which is quite a game for a super major in
a quarter. All of them gained something in the single
digits except total Energies actually decline nearly two percent. European
policy pressures weighed on the company there. So you know, overall,
the energy stector did okay. You know, it lagged S
(25:32):
and P five hundred, but you know, if you were
invested in refining, you probably did very well in the
third quarter.
Speaker 3 (25:39):
And you know, Robert, we're going to go to break
before I get into another big question, which is more
or less you know, you wrote an article and it
was discussing how the Dallas Federal Energy Survey showed that
it's slowing, and so I want to get into that.
But I guess my point is is to leave us
thinking most people really don't understand how complicated energy is
(25:59):
when I began trying to cover it. And again I've
always stated I've never worked today in the energy industry.
I just want to learn as a consumer. It's extremely hard.
You mentioned words like upstream, midstream, downstream, then you've got pipelines, petrochemicals.
But then if that's not complicated enough, well, all of
this must happen in order for the energy markets to
(26:22):
produce things like the utilities that we get to enjoy
air conditioning, heating, AI data centers, electric batteries. It's just
massive of how all of these things must work together
to produce these products that we all enjoy, and then
yet some of them don't make money. Some of them do.
We've got solar, we've got wind. We're going to get
(26:44):
into nuclear a little bit in the show Hydrogen. It's
a large, massive, massive topic when you just take it
and look at it as a whole, and I think
all we ever really do is just take the red
headed stepchild, if you will, and whip the oil and gas.
And yet without them we have nothing. So this is
a pretty important topic that we understand. When we return,
(27:06):
I want you to break down what the Dallas Federal
Survey told us because you wrote an article on it.
Is the oil patch cooling. But I want to take
a quick break. You're listening to the Energy Mix radio show,
and we'll be right back. And we're back. You're listening
to the Energy Mixed radio show. My guest today is
the editor in chief of Shell magazine, Robert Rapier. Robert,
(27:29):
thank you for explaining who are the winners who outperform
for third quarter and how really large and massive the
energy sector is when we talk about the whole entire picture.
But you recently wrote an article too. It was titled
America's oil patches cooling as cost rise and uncertainty mounts. Now,
(27:51):
that is definitely a what do they call it, a
click baier or bait clicker? I would have clicked on
it too, because it really is like, wait, are we
chilling out? Are we cooling while everything is uncertain? And
rising costs. But this article was written by the latest
Dallas Federal Energy Survey and it was it gave you
some data. So basically it was your article discusses how
(28:15):
US oil growth is slowing as cost or rising. Of course,
we know volatility never stops, it persists, and producers are
shifting from rapid drilling to capital discipline, meaning they are
watching what they're spending and are not drill baby drill
as much unless the economics are there. So talk to
(28:36):
me about that article. What is happening there and should
we be putting our fear hats on at this point?
When when do we start looking at this and saying
this might not be a good good thing here.
Speaker 4 (28:48):
Well, so, the Dallas Federal Reserve they do energy surveys
on a regular basis, and they send out these surveys
to energy companies and you know, they ask them questions,
is about you know, their spending and their activity and
so forth, and then they get comments back and the
comments are very interesting. You know, there were several themes
(29:10):
that dominated the survey response. Versus rising costs, they say,
you know, inflation is killing us. You know, one executive said, quote,
we can make money at today's oil prices, but with
cost climbing and politics in play, we'd rather pay dividends
and take big risks. So and the ironic thing about
that is when he said that we can make money
(29:32):
at today's oil prices, oil prices were still in the seventies,
so you know where they're at now. You can bet
that oil companies are getting much more conservative. You know,
crude was trading in the seventies and eighties. Now it's
in you know, I even checked today, but yesterday it
was below sixty. So you know, another oil executive said,
(29:55):
you know, prices aren't bad, but volatility is killing our
ability to plan. We'd rather stay disciplined and chase barrels.
And then they've got labor shortages and that's causing a problem,
and that's inflationary as well. They have to pay more
money to get people in. And at the same time,
you've got some companies laying off people. So you've got
shortages in one area of the company and you're laying
(30:17):
people off in another area, and you know it's it's
causing them some headaches. So you know, the outlook for
them is kind of a little bit negative, I would say,
especially with oil prices going down. You know, I typically
make all price or an old production prediction old in
(30:39):
January every year. I didn't do that this year because
I just wasn't sure. I felt like production was gonna slow.
And while I thought there's probably a sixty chance we'd
set a record, I wasn't certain enough about it to
go out and make a prediction on it. And next
year is going to be I think next year we
could see a decline for the first time in three years.
(31:03):
I think we'll see records twenty twenty three, twenty four,
twenty five, and then we could see a pullback next
year because it is really flattened. You know, this year,
even though we did set you know, we set a
production record in July with thirteen points five something million
barrels or thirteen point six It was about one hundred
(31:23):
thousand above the previous record. But you know, year today,
we're less than two percent higher than we were a
year ago. And that's definitely slowing down.
Speaker 3 (31:32):
Yeah, but isn't that also months back anyway, just because
of due to permitting and all the stuff that the
energy companies are having to do to get ready for it. Anyway,
that it would slow down eventually because it's that lagging
and how they like, you don't just get to drill
a well in thirty days through getting through everything. It
takes some time to get caught up.
Speaker 4 (31:53):
Yeah, but they're always working on that though, all the time.
So you've always got these new wells coming on. So
wells they're coming on and they've been working on for
months and and you know, wells are drilling today won't
come online for a while.
Speaker 3 (32:07):
I was wondering that because now with the slowdown, are
they I wonder if they're filing as many permits as
they were before due to this, uh you know, inflation
and the cost and everything that they're going through, that
maybe that's why it's slowing down.
Speaker 4 (32:23):
Well, we know they're drilling less. I mean, we know
that's the bottom line. Although you know you said earlier,
you know they're becoming more efficient. They can drill less
and still produce more oil. We saw that in natural gas.
We saw the rig count in natural gas plummet, you know,
years ago, and yet natural gas production just kept going
(32:43):
up and up and up because they got more efficient
with their with their rigs and that has happened. So
that is one of the reasons that drilling is slowing,
but you know, it's it's we're definitely not drill baby drilling.
We're not we're not doing that. We're not increasing drilling,
but they are because coming more efficient with what they
are drilling.
Speaker 3 (33:02):
And let's flip and think on the other side of
the world, because in Forbes you had noted that US
oil production is surging to some degree, but there's also
it had been now it's slowing, but that affects US
as well. If global demand is off the charts, then
(33:22):
who's going to step up? It's going to be as
we're going to see prices go back up, and then
of course rigs are going to and people are going
to get back into the field. But then how how
also with global demand, how effective is that along with
is there any real environmental pressures now that we're facing
whereas before, you know, we really I think President Trump
(33:43):
has kind of come in and quieted down that environmental question.
Speaker 4 (33:47):
I agree he has, And you know, we are we
produce oil pretty environmentally responsible in the US and there
are plays.
Speaker 3 (33:55):
The best in the world world.
Speaker 4 (33:57):
That's another thing about California. They're importing oil from places
that have far less safety concerns, far left environmental concerns
that we do here in the US. So you know,
they're producing not very you know, environmentally conscious oil. If
you if you will like like you know, you might
get out of Texas. You get you know, cleaner all
(34:18):
out of Texas than you do out of a lot
of these Middle Eastern countries.
Speaker 3 (34:21):
Absolutely, they're going to slap a label on them. Stop
being a hypocrite. Let's we're getting ready to go to break.
But there's been a lot of chatter also on AI.
I actually was with Rudy Garza last night, who is
a CEO of City Public Service. It's the only municipality
in Texas that actually is regulated. And they just purchased
(34:44):
a whole bunch of assets in Houston, so now they're
kind of all over the state. And it's amazing because
they are actually producing a whole lot of energy. And
when I look at Texas, you know, I told you
when I went to Pennsylvania to cover the AI summit,
so that they all these companies pledge ninety billion dollars
(35:04):
to fund the great AI revolution that's coming. And I
think we asked questions like, well, wait a minute, where
is Texas in this and now with you know there's
a lot of progress in the area too. I just
want to get on that topic and see what you
think about how the electric bills are going to rise,
but how are we going to meet the demand? And
(35:24):
of course the LNG exports. But we'll get into all
of that. Let's take a quick break. When we've returned,
we'll get on that topic here listening to the Energy
Mixed Radio Show.
Speaker 4 (35:32):
We'll be right back.
Speaker 2 (35:34):
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(35:54):
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Speaker 3 (36:11):
And we're back. You're listening to the Energy Mix Radio Show.
My guest is Robert Raypier, the editor in chief of
show magazine Robert Recently, in Forbes, you noted that the
US oil production is surging, and it had been. It's
going up, it's going down, it's going all over the
place due to regulations, geopolitical unrest, global demand, environmental pressures.
So when we say these things literally, we could be
(36:33):
talking about this today and within three weeks everything has changed, right,
Something has happened, We've had an explosion, there's a war,
war's broken out somewhere. This is how fast things change.
But my question to you is, you know, looking at
all of this stuff, you warned about not too long
ago rising electric bills and this was due to AI
(36:53):
data centers and the LNG natural liquefied gas exports. So
we're going to start seeing and some consumers are in
parts of the United States their bills have been going
up on their electricity. I read it in the newspaper.
I'm very fortunate to live in San Antonio where we're regulated,
so it's pretty consistent. But I think I read an
article that we're considered high. What given global demand, how
(37:16):
can consumers and regulators, you know, what can they do
to mitigate these costs? Are there anything that we can
do to you know, help us with our bills. Are
we we're just going to continue to see this, We're
seeing this, we're seeing water go up as well. What
can we do pertaining so.
Speaker 4 (37:34):
So from an individual perspective, all right, So if you're
trying to control your electric bill, there are certain things
you can do. I mean, there are time of use
programs that utilities have where you know, if you will
only run your dishwasher and run your you know, washer
and dryer at certain times of the day, you can
pay lower prices for that. And my utility here in
(37:56):
Arizona is that way. They have time of use programs
where I can pay substanction less if I mitigate my
usage during peak times. So from a personal standpoint, there
are certain things you can do, uh, you know, simply
turning lights off or replacing you know, sixty watt incandescent
bulbs with LEDs and things like that low much lower
(38:17):
energy usage. There are things you can do. Uh. But
from a from a national perspective, from a policy perspective, uh,
we've got to have more power. I mean this the
AI data centered phenomenon was not foreseen a decade ago.
And utilities are like the oil industry. They're they're pretty conservative,
you know, they're not out there, you know, investing in
(38:40):
a lot of new capacity because utility usage. Electricity usage
had grown very slowly over the previous you know, thirty
or forty years, and now we're seeing expectations is going
to grow rapidly because AI has changed the game. I've
been writing about after three or four years, and the
first time I really encountered it, I wrote some articles
(39:00):
for Investing Daily and I said, there are some things
in my life that have changed everything. The Internet changed everything,
smartphones changed everything, and then AI is going to change everything.
One of those things that you look back and go, Okay,
everything is different now. You know, imagine sitting in a
(39:21):
restaurant twenty five years ago, not a single person were
looking down at a phone, and now you go in,
everybody's looking down at.
Speaker 3 (39:27):
The flag flass, what's a barcode? Right? You had to
get your menu on. We learned from COVID.
Speaker 4 (39:31):
You know, when I was in college was when the
World Wide Web, the first browser became available, and that
changed everything. I mean the Internet. You know what people say,
what what did you do before the Internet? You know,
it was it was quite different. And AI is going
to be that way. But what that means is energy
demand is going to continue to go up. Now they
(39:52):
are making you know, some more efficient chips maybe that
you know, lower powered demands. But at the same time,
the AI use is just growing and growing and growing,
and people are using it more and more, and you know,
we're going to have to have more power. And nuclear
power is one of those things that we really need
to be out there, uh planning and trying to put
(40:14):
more more nuclear power. And I would say, you know,
China has an all of the above strategy. I mean,
I've heard President Trump say China doesn't do wind power.
China produces more wind power than anybody in the world,
and they are continuing to grow their wind, their solar,
They're drilling more oil, they're producing more natural gas, They're
(40:35):
building nuclear reactors like crazy, They're building coal fired power plants.
They're doing everything. And I think we need to be
doing a little bit more of that all of the above.
I wouldn't disincentivize, you know, solar farms or wind power
if it makes sense. If somebody thinks, hey, we can
put a solar farm in here and make money, don't
(40:56):
discourage them from doing that. We need all the power
that we can get. But you know, there's nothing quite
like nuclear power. We've got a nuclear power plant right
outside Phoenix here, and that's one reason I haven't seen
my electric bills skyrocket with all these data centers. You
know that nuclear power plant produces clean firm power twenty
four to seven. And if we had more nuclear power plants,
(41:18):
you know that that is a solution to our to
our issue. But it takes years and years. So we
need to be on this right now. We need to
be planning. We need to be uh, you know, getting
getting these things permitted and you know, under construction.
Speaker 3 (41:32):
You know, Robert, the other day, my grandson came over.
This is you're gonna laugh and laugh and laugh. Some
are the listeners. He came over and I had an
old antique table because I like shopping frantikes and it
had a it was a table and it has a
rotary phone on it. You know that the round.
Speaker 4 (41:48):
Rotary Okay, was one of those.
Speaker 3 (41:50):
Yes, And of course we're showing our age, which I
love it because I'm like he had he's ten years old.
He's like, Nana, what is this? And I'm like, it's
a phone. He says, how's it a phone? He had
no idea. I've never seen it, doesn't understand what a
phone was, none of that. And while yeah, that was
a while back, think about how fast we've come that
a ten year old has never even seen a house phone.
(42:12):
And this morning when I left the doctor just to
get simple, a simple lab work done, I had to
fill out an entire application on an iPad that they
gave me that they are now conducting. There's no more
paper anymore. We're saving trees, but we're using these online
platforms that require this energy that you're talking about, and
(42:33):
just that fast we are moving from you know, we're
just jumping so fast. And my point that I wanted
to make is for people listening to understand we have
to find the solution of how we're going to continue
to provide power to all of this and the world
who still needs our energy. And that being said, I
(42:54):
want to close with the geopolitical tension that had been rising.
Now I think we have a president has gone around
and is the peace president. He's managed to produce peace
all over the world. You're closing on thoughts on the
geopolitical tension and is it have anything, does it bring
it back home to energy? I mean, with him finally
getting Gaza and Israel to cease fire. You know, are
(43:16):
any of these things that he's doing, Are we going
to see anything in supply chain? We need to be
worried about policy volatility, anything pertaining to energy that you
want to keep an eye on, that we should keep
eye on.
Speaker 4 (43:27):
I mean, when the tensions settle down in the Middle least,
that's always a good thing for oil prices. I mean,
but it's especially so if the supply and demand are tight,
and right now they're not all that tight, so it'll
probably help. It'll probably help lower oil price that we're
talking about old prices being too low. But you know,
(43:48):
with OPEC out they're pumping what they're pumping. I don't
expect we'll see much of an impact on oil prices.
The market is just not that tight right now. And
in fact, if tensions escalated right now, I don't think
we'd see much of a rise in prices. So you know, normally,
if something happens in Iran or Iraq or Saudi Arabia,
you see a spike and oil prices. I'm not sure
(44:09):
we've see that right now. Because there's just so much
oil out there on the market.
Speaker 3 (44:13):
So we're pretty much going to just stay even keeled.
Does this go all the way through to the end
of the year.
Speaker 4 (44:20):
I think so. I don't see any catalysts on the
horizon that should drive all prices back to seventy dollars
by the end of the year.
Speaker 3 (44:28):
Okay, So then I guess we just rerun this show
because there's not going to be very much to talk
about it.
Speaker 4 (44:33):
There's always something to talk about, there's always something to
talk about.
Speaker 3 (44:37):
Well, Robert, thank you for joining me today and helping
us understand what's going on in the oil and gas market,
and I look forward to having you back, hopefully next month.
We can talk about your latest issue and what articles
you produced, and of course who's on the next cover
show magazine sounds great, Thank you.
Speaker 4 (44:53):
We'll see then.
Speaker 1 (44:54):
The Energy Mix Radio Show is where we explore topics
that affect us all in the oil and gas industry.
Every week, will interview the movers and shakers in this
fast paced industry. You'll hear from industry experts, elected officials,
and many more. On the Energy Mix Radio Show.
Welcome to the nationally syndicated Energy Mix Radio Show produced
by the Energy Network Media Groups.
Speaker 2 (00:07):
The Energy Mixed.
Speaker 1 (00:07):
Radio Show will give you an inside look at the
energy industry and how it affects you by talking with
industry leaders, experts, and government officials on the Energy Mix
Radio Show.
Speaker 3 (00:17):
And welcome to another edition of the Energy Mix Radio Show,
where we cut through the noise and bring you the
voices shaping the future of energy. I'm your host, Kimbalato,
and today my guest is Robert Rapier, who is the
editor in chief of Shell Magazine, and we are going
to dive deep into the forces that are driving oil markets,
renewables and policy decisions that impact us all. So rather
(00:39):
you're in the field, the boardroom, or just trying to
understand your energy bill, this show is for you.
Speaker 4 (00:46):
Now.
Speaker 3 (00:47):
Joining me today is Robert Rapier, who again is the
editor in chief of Shell Magazine and a senior contributor
at Forbes. Robert, you are a chemical engineer with over
twenty five years and international experiences in oil refining, synthetic fuels,
and renewable energy. Your insights have appeared in outlets like
The Wall Street Journal, c NBC, and PPS. And you're
(01:10):
also known for a very clear eyed analysis of the
energy markets, policies, and technology. You also authored power plays,
and you are a frequent voice on Investment Daily. Robert,
Welcome back to the Energy Mixed Radio Show.
Speaker 4 (01:26):
Thanks for having me Kim always.
Speaker 3 (01:28):
You know, I love to give you a great intro
because even though I know you very well as the
editor in chief of show magazine, there's just so much
that you do in different areas, and so I really
like to give you a very nice, warm welcome and
have our listeners really understand the just the depth of
information you have on a lot of different ranges when
(01:49):
we talk about energy, and then how investment also turns
into energy as well, and so hopefully you can talk
to us a little bit about that in the show.
But there's a lot going on, and then there's a
lot not going on. So let's start with just kind
of basics of get us up to speed. Okay, so Trump,
President Trump his administration has been in office. We've heard
(02:11):
the drill, Baby drill. You came out on a major
network not too long ago that was discussing what is
really going on here pertaining to the Trump administration's policies.
The drilling. What is the difference between the different administrations.
He's been in office for a while and he has
(02:31):
some great agency directors, the Secretary of Energy Chris Wright,
Secretary of Interior Doug Bergham. I think we are somewhere
where we feel in the energy sector anyway, that we
have knowledgeable and well rounded people kind of giving President
Trump guidance. So that being said, we're what almost a
(02:56):
year into his presidency. What do you think, how do
you see it going so far? What are some of
the major things that you think you need to clear
up as far as what the perception is and versus
what he's actually doing and how is he varying when
we're talking about oil and gas.
Speaker 4 (03:11):
So, you know, the most important thing, and I emphasize
this over and over and over again, no matter who
the president is, the most important thing that drives the
oil industry is the price of oil. And if the
price of oil is falling, the most pro oil administration
is probably going to see not good conditions for the
(03:32):
oil industry. And what we've seen this year, we've seen
the rig count fall. The rig count I just checked
again is down year over year. Steel, we've seen oil
prices fall, and oil prices have fallen for a couple
of reasons. And President Trump likes to tout that he
likes to taut you know, low oil prices, but you know,
(03:53):
the US is now a net exporter of oil and
finished products. Low oil prices means lower prices for those
exported products. It means lower employment in the oil and
gas industry. There's been a lot of layoffs this year.
So you know, the price of oil, it was down
by fifty eight dollars yesterday. That's not a good place
(04:15):
for the oil industry to be. So I think President
Trump is trying to balance two things. He wants low
gas prices for people. Consumers love low gasling prices. Of
course I love low gasling prices, but I know what
it does to the oil industry. And the oil industry
is one of the most important industries in the country.
(04:36):
And if oil prices are low, we're going to see
a slowdown. Now, having said that, we did set a
new production record, a new monthly production record in July.
We eclipsed the previous production record. We've been setting oil
production records for the last several years. We set one
(04:58):
in twenty twenty two three under Biden, twenty twenty four
under Biden, We're gonna set one twenty twenty five under Trump.
But the production growth is slowing. If you look at
the growth from the previous year, this year, we're only
about one point nine percent higher than last year. And
a lot of that is, you know, it's not Trump's
(05:20):
policies right now that are driving production. We've got, you know,
years and you know now at this point two decades
of shale drilling that has increased oil production and is
continue to increase oil production, but we're seeing that slow
down now finally. So you know, the president has very
(05:40):
pro oil policies, but I think if you ask the
oil industry, they don't want to see oil prices at
fifty eight dollars. They want to see a little bit
higher oil prices to support and you can just see,
you know, the layoffs or you know, major companies will
land off people, and that's a function of lower oil prices,
and viral price is low. Well, the a couple of reasons.
(06:03):
US oil production has continued to grow. But Opek is
out there now, you know, pumping more oil and putting
more oil out on the market. China's imports have slowed down.
So demand from China, which has helped drive oil prices
for many years, is starting to slow. They've got a
major uttery vehicle push over there, and you know, their
(06:23):
their growth is starting to slow. So all those factors
are leading to you know, sluggish oil prices.
Speaker 3 (06:31):
Well, if that's happening all of these different things, so
then where does that put So you said that the
energy companies really like higher prices, we understand that. So
how do you think they're navigating in the in the
pr you know area or pr world When we have
like Conico Phillips announcing layoffs. We're starting to see a
(06:52):
lot of layoffs in the energy industry and yet there
hasn't been any major ripples either that have really caused
anything massive. And this is that slowdown that you're talking about.
So have you heard anything from the administration that do
they understand some of their policies what they're actually doing
to the energy industry? Are they still on the path
of drill baby drill And we're still going to see
(07:15):
further slow down because of the permitting and all the
things that they are doing that are kind of leading
up to massive layoffs and low crewde prices.
Speaker 4 (07:25):
Yeah, sometimes I think there seems to be a disconnect
between you know, you can't just chant drill, baby, drill
and impact the oil industry. The price of oil is
what's going to dictate whether oil companies are drilling or not.
And you know, I know Chris Wright understands this. I
know he understands what's happening. And I'm sure that privately
(07:47):
he would tell you he doesn't want to see oil
prices at fifty eight dollars. But if President Trump is
out there saying, hey, old price, fifty eight dollars, this
is great, puts him in a little bit of a
tough spot. And I think I think the average oil company,
as they're laying people off, we'll say, you know, it's
a low price of oil, that's what's doing it. I'd
never heard President Trump address this that that you know
(08:11):
is the is a low price of oil really a
good thing for the US economy overall? There's no question
that it benefits certain sectors of the economy, and there's
no question that it benefits people at the pump, But
it impacts millions of jobs, and it impacts our trade
deficit because you know, we're earning a lot less money
(08:34):
on those exports now, so it was a very different
situation twenty years ago. Twenty years ago, we were net
importers of about, you know, twelve thirteen million barrels a day,
so any decrease in oil prices was a net benefit
overall the US economy. But it's not that way anymore.
Speaker 3 (08:54):
And is there also any can you explain why when
some of these major E and peace exploration companies and
production exploration production companies announced their layoffs, they didn't just
cite low prices. They also cited technology efficiencies, and they
also mentioned, you know, these were acquisitions and they were
(09:14):
trying to you know, you know, look at the amount
of money they had spent. So there was other factors
that were coming into play on why. So I can't
really lay it at President Trump's feet that he's the
real you know, his policies. There's a lot of different
things that were coming into why we're seeing this pricing
right right now.
Speaker 4 (09:34):
I'm not saying President Trump's policies are the factor here.
I don't think President Trump's policies have driven down oil prices.
This is more of a function of OPEC being out
there pumping more crude. At the same time, China is
importing less crude that has driven down oil prices. I
think the disconnect with President Trump is is he seems
(09:56):
to I heard him yesterday talking about, Hey, we're d
eight dollars. That's a great thing. I don't think that's
a great thing. On balance, I don't think that's a
great thing. So when the oil companies are saying we're
laying people off, yes, technology has gotten better and more efficient.
They're able to produce more oil per well drilled, and
(10:19):
so there are some efficiencies there. There's some mergers that
go on and they and they can get rid of
some people. Then there's some redundancies. But by and large,
the biggest factor, by far is the price of oil.
I mean that dictates, you know, whether people are getting
laid off.
Speaker 3 (10:35):
Yeah, and I think, you know, when I was thinking
about that, I was like, it isn't just President Trumpet's everything.
But there is a certain price point that most energy
companies look at as this is the baseline that we
need to be at in order for us to you know,
not d not lay down rigs. So we're making a profit.
No one is drilling regardless if they're great American citizens
(10:59):
to lose money, and that sweet spot is somewhere above
fifty eight dollars, right or no, I'm sorry, it's a
little bit lower than that. But there's not a whole
lot of profit in there. So it's not really forcing
energy companies to want to really put rigs out there
and drill because it's so low. And I don't understand
why they're not understanding that. And it's not about the price.
(11:21):
So I'm very confused with how they look at it
and not understand that we really need to get those
prices up if you want to see drill, baby, drill right.
Speaker 4 (11:29):
I think the problem is you have so many people
who gas prices are the most important thing in their lives.
I mean, like, if you got lower gas prices, they're happy,
and regardless of whether that is a net benefit. I mean,
think about farmers. I mean, we'd all like to pay,
you know, ten cents a pound for beef, except for
(11:50):
the beef people raising the beef. You know, they don't
want to see that. So isn't a net good for
the economy If beef costs ten cents a pound, well,
many people would say, hey, it's good for me personally,
but it's not good for the economy overall because it
put beef producers out of business, and that's the same
situation we have here. It may benefit some consumers and
(12:13):
it may free up some money for them to spend elsewhere,
but overall, the oil industry is so important and employs
so many people that aill really needs to be about
seventy seventy five dollars for them to be humming along
and doing well.
Speaker 3 (12:28):
Yeah, and we're at fifty eight. Let's take a quick break.
When we returned, you wrote a piece recently about what's
going on in California. We remember the refinery fire. I
want to cover that, and I really want to get
a little bit more of your opinion on what's happening
in California as a whole, because we do recognize California's
policies are entirely different when they look at their energy
(12:50):
policy versus Texas. So if you can break that down
for us as well, Let's take a quick break here
listening to the Energy Mixed radio show, and we'll be
right back. And we're back. You're listening to the Energy
Mix radio show. My guest is the editor in chief
of Shell Magazine, Robert Rapier. Robert, it's no secret you
(13:11):
write for Shell Magazine and we're very happy that you
write first, but you're also a senior contributor of Forbes.
With your years and years and years of experience in
the energy industry, also being an engineer as well working
for some of the majors, you just bring a lot
of wealth of information of how you look at things
(13:32):
and have the ability to break it down for people
like us, people who've never worked in the energy industry,
to help us to understand. I want to ask you
about a recent piece that you wrote. It is on
Shell mag dot com. It was talking about a Chevron
the refinery fire. Believe it made national news, but I
(13:54):
want you to back it up a little bit and explain.
Everybody that's listening to the show is aware that California
has a lot of regulations pertaining to energy and that's
why they pay higher prices at the pump. They're not
as friendly to the energy sector, that's what people say.
And so, first of all, what is the current price
(14:17):
out there the Chevron the Chevron refinery fire. Can you
tell us about did gas prices spike because of this?
And what are going to be the ripple effects expecting
for them, and does it affect us too in the
United States, which I would assume it does in the
coming months.
Speaker 4 (14:38):
Yes, gas prices did go up out in California. I
haven't checked them in a few days, but they did.
Speaker 3 (14:45):
They weren't high enough, right.
Speaker 4 (14:48):
And you know, the fundamental problem with California is their
energy policies are so dysfunctional. On the one hand, they say, look,
we want to be off of fossil fuels, and you go, okay, Well,
many people say that's a laudable goal. That's that's fine.
So they go out and they promote electric vehicles and they,
(15:11):
you know, have a lot of green initiatives, but at
the same time they declare war on the fossil fuel industry.
California is still a major oil producer. California at one
time was the largest oil producer in the country. They've
made a lot of money off of the oil industry,
and yet they have become extremely hostile to that industry,
(15:35):
even though they still consume a lot of gasoline. And
so what has happened over the years is California has
driven oil producers there out of business and out of
the out of the state, and they have become increasingly
dependent on the Middle East. California is more dependent on
the Middle East than any other state they pull, they
(15:55):
bring more oil in from there. So I wrote an
article a few years ago it's really national security concern.
California's energy policies put them at greater risk for disruptions
because of their high dependence on the Middle East and
on foreign imported oil. They passed a lot of laws
(16:17):
out there that make it really uncomfortable for energy companies
to operate. They they have sued the oil industry out there.
I mean, the irony to me is, you know, they
try to blame the oil industry for climate change when
everybody out there who drives a car is putting carbon
(16:38):
in the atmosphere. And if it was really if they
really believed this was a dire emergency, why are they
still driving gasoline vehicles. I mean, they they've known this
for a long time. And they say, well, the oil
industry has known, and they've still producing fossil fuels. That's
because people are still buying them, because people still demand them.
(17:00):
So it's it's funny to me to point to the
oil producers and say it's your fault when it's really,
you know, eight billion people's fault that carbon is going
into the atmosphere. I mean, we're all contributing, but they
have adopted this really hostile tone toward their oil industry
(17:20):
out there, and that's driven companies out of state. That's
I'm Chevron's leaving. Refineries are shutting down, and they've also
got a really special boutique blend of gasoline there, and
it makes it where, you know, when there's a shortage,
gasoline supplies can't flow in from neighboring states. But it
(17:41):
also means that, you know, what happens in California doesn't
necessarily affect surrounding states that much because the gas is
not going into surrounding states, and surrounding states can't put
their gas in there. So you know, that's that's California
in a nutshell. It's really some dysfunctional pol These have
led them to where they are right now, and they
(18:03):
continue to try to point. You know, I've said before
that California makes a lot more money off a gallon
gasoline than a refiner does out there, But California blames
the refiner for price gouging because of their own policies
that end up driving prices up.
Speaker 3 (18:20):
Well, let's talk about in your article. So we know
that we had a ripple effect, so prices went up.
But one of the hardest markets that a lot of
people don't know is so we talk a lot about
exploration companies to Conico Phillips, but refineries that actually provide
us the gas, how did how were they doing versus like,
(18:44):
maybe I need to ask it in a different way,
how how did the third quarter go for oil and
gas companies versus refinery companies on the third quarter because
there's some differences there and maybe it might help us
understand how California and this Chevron fire, how it affects
the whole thing when we look at it.
Speaker 4 (19:04):
Okay, so third quarter generally, energy companies really really mixed bag.
On average. The whole sector did okay, but upstream companies
didn't do that well. Midstream companies didn't do that well,
but the refiners did tremendously well. And the reason for
(19:27):
that is when oil prices are falling, refiner margins tend
to swell. And that's that's been studied for many years.
Why that happens. The reason it happens is consumers are
much more discriminating when prices are falling than when they're
(19:47):
I mean when they're rising than when they're falling. So
you'll see companies, You'll see consumers drive across town to
save a nickel a gallon when prices going up, but
when they're coming back down, they don't do that. And
that I mean, we call that in the refinery, in
refining rockets and feathers. Gasoline prices go up like a
(20:08):
rocket and down like a feather. But when they're coming down,
margins are expanding. And we saw following oil prices in
the third quarter, which hurts the oil companies oil producers,
but it's really beneficial for the refiners. I mean, we
saw huge gains in the third quarter from the major refiners.
Speaker 3 (20:26):
So who were some of the top performers.
Speaker 4 (20:30):
I always look at the big three. I always call
them Marathon Valero and Phillip sixty six and pull out
my article here.
Speaker 3 (20:41):
Well, Robert, that's a great opportunity. While you grab your data,
let's take a quick break. You're listening to the Energy
Mixed radio show and we'll be right back.
Speaker 5 (20:50):
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(21:13):
dot giverge dot com Slash twenty twenty five San Antonio
Concerts and Clays.
Speaker 3 (21:21):
And we're back. You're listening to the Energy Mix radio show.
My guest today is the editor in chief of Shell magazine,
Robert Rapier. Robert, before the break, we talked a little
bit about California and the fire that happened and how
fragile the fuel supply is out there and what happened,
and then you know, you also wrote another great article
talking about how the energy companies of refineries, the upmid
(21:46):
and downstream, how they did third quarter. And I think
that's kind of important that we look at because I
think that there's like, where are we going? Sometimes it
looks like we have we're having a good day. There's
low gas prices at the pump, but the energy sector
is not doing so well in the way their price
and their profits. So can you explain to our listeners
(22:06):
it looks good, but it's not really good. And I
think this was the interview that you had when you
went on National TV to say President Trump's policies are good,
but we are actually not drilling as much as we
did under Biden. So things that might look a certain
way actually are the opposite. And it's so hard to
wrap your head around that.
Speaker 4 (22:26):
Yeah, and it comes back to aill prices. I mean,
that's that's the reason. So you know, I've said before
it's funny that the largest expansion of oil production in
US history happened under Obama. And the reason it happened
is because that just happened to be when the shale
boom happened. It had absolutely zero to do with Obama's policies,
(22:47):
but he was in office when shale and when you know,
hydraulic fracturing and horizontal drilling, that marriage started to pay
dividends and he presided over that. And we've seen you know,
a huge expansion in you U S oil and natural
gas production. So back to the third quarter. So third quarter,
the the energy sector overall did turn into positive quarter.
(23:11):
It lagged the S and p five hundred overall, so
it was a you know, it was behind the average
a little bit. Upstream did okay. Overall, Public got had
a gain of five point eight percent. And I pull
all this data in with a data provider called fact set,
I can pull in all the financial information for all
these companies. Apache was the big standout among the upstream
(23:37):
and upstream. Yes, they they gained nearly thirty five percent
in the third quarter alone, So I said Apache. I
guess they've changed or they've changed their name there now
APA Corporation, but I still refer to them as Apache.
They they gained nearly thirty five percent. Conical Phillips is
(23:58):
the largest upstream producer and they they posted a six
point three percent gain. So upstream is the ones that produce,
the companies that produce the oil and gas. They are upstream,
so that from there the oil and gas flows downstream
into midstream, which connects the oil and gas companies to
the refiners, to the storage, to the shippers. And so
(24:22):
midstream gained eight point two percent. But the real story
there was the tanker companies. The tanker companies in the
third quarter, all all the major tank companies had gains
above forty percent for the quarter. It's a huge quarter
for the tanker companies, but the pipeline companies, you know,
not as not as good a quarter. But the standout
(24:44):
of the whole sector upstream, midstream, downstream was downstream. You know,
all of the downstream companies, the big major companies, and
that's Valero, that's Phillip sixty six, that's Marathon, We're all
above ten percent returns. They were all in double digits.
And Valero had a twenty seven point seven percent game
in the third quarter, and that's because oil prices were
falling and their margins were expanding. The super majors, BP
(25:10):
was the big winner there. They gained nearly seventeen percent,
which is quite a game for a super major in
a quarter. All of them gained something in the single
digits except total Energies actually decline nearly two percent. European
policy pressures weighed on the company there. So you know, overall,
the energy stector did okay. You know, it lagged S
(25:32):
and P five hundred, but you know, if you were
invested in refining, you probably did very well in the
third quarter.
Speaker 3 (25:39):
And you know, Robert, we're going to go to break
before I get into another big question, which is more
or less you know, you wrote an article and it
was discussing how the Dallas Federal Energy Survey showed that
it's slowing, and so I want to get into that.
But I guess my point is is to leave us
thinking most people really don't understand how complicated energy is
(25:59):
when I began trying to cover it. And again I've
always stated I've never worked today in the energy industry.
I just want to learn as a consumer. It's extremely hard.
You mentioned words like upstream, midstream, downstream, then you've got pipelines, petrochemicals.
But then if that's not complicated enough, well, all of
this must happen in order for the energy markets to
(26:22):
produce things like the utilities that we get to enjoy
air conditioning, heating, AI data centers, electric batteries. It's just
massive of how all of these things must work together
to produce these products that we all enjoy, and then
yet some of them don't make money. Some of them do.
We've got solar, we've got wind. We're going to get
(26:44):
into nuclear a little bit in the show Hydrogen. It's
a large, massive, massive topic when you just take it
and look at it as a whole, and I think
all we ever really do is just take the red
headed stepchild, if you will, and whip the oil and gas.
And yet without them we have nothing. So this is
a pretty important topic that we understand. When we return,
(27:06):
I want you to break down what the Dallas Federal
Survey told us because you wrote an article on it.
Is the oil patch cooling. But I want to take
a quick break. You're listening to the Energy Mix radio show,
and we'll be right back. And we're back. You're listening
to the Energy Mixed radio show. My guest today is
the editor in chief of Shell magazine, Robert Rapier. Robert,
(27:29):
thank you for explaining who are the winners who outperform
for third quarter and how really large and massive the
energy sector is when we talk about the whole entire picture.
But you recently wrote an article too. It was titled
America's oil patches cooling as cost rise and uncertainty mounts. Now,
(27:51):
that is definitely a what do they call it, a
click baier or bait clicker? I would have clicked on
it too, because it really is like, wait, are we
chilling out? Are we cooling while everything is uncertain? And
rising costs. But this article was written by the latest
Dallas Federal Energy Survey and it was it gave you
some data. So basically it was your article discusses how
(28:15):
US oil growth is slowing as cost or rising. Of course,
we know volatility never stops, it persists, and producers are
shifting from rapid drilling to capital discipline, meaning they are
watching what they're spending and are not drill baby drill
as much unless the economics are there. So talk to
(28:36):
me about that article. What is happening there and should
we be putting our fear hats on at this point?
When when do we start looking at this and saying
this might not be a good good thing here.
Speaker 4 (28:48):
Well, so, the Dallas Federal Reserve they do energy surveys
on a regular basis, and they send out these surveys
to energy companies and you know, they ask them questions,
is about you know, their spending and their activity and
so forth, and then they get comments back and the
comments are very interesting. You know, there were several themes
(29:10):
that dominated the survey response. Versus rising costs, they say,
you know, inflation is killing us. You know, one executive said, quote,
we can make money at today's oil prices, but with
cost climbing and politics in play, we'd rather pay dividends
and take big risks. So and the ironic thing about
that is when he said that we can make money
(29:32):
at today's oil prices, oil prices were still in the seventies,
so you know where they're at now. You can bet
that oil companies are getting much more conservative. You know,
crude was trading in the seventies and eighties. Now it's
in you know, I even checked today, but yesterday it
was below sixty. So you know, another oil executive said,
(29:55):
you know, prices aren't bad, but volatility is killing our
ability to plan. We'd rather stay disciplined and chase barrels.
And then they've got labor shortages and that's causing a problem,
and that's inflationary as well. They have to pay more
money to get people in. And at the same time,
you've got some companies laying off people. So you've got
shortages in one area of the company and you're laying
(30:17):
people off in another area, and you know it's it's
causing them some headaches. So you know, the outlook for
them is kind of a little bit negative, I would say,
especially with oil prices going down. You know, I typically
make all price or an old production prediction old in
(30:39):
January every year. I didn't do that this year because
I just wasn't sure. I felt like production was gonna slow.
And while I thought there's probably a sixty chance we'd
set a record, I wasn't certain enough about it to
go out and make a prediction on it. And next
year is going to be I think next year we
could see a decline for the first time in three years.
(31:03):
I think we'll see records twenty twenty three, twenty four,
twenty five, and then we could see a pullback next
year because it is really flattened. You know, this year,
even though we did set you know, we set a
production record in July with thirteen points five something million
barrels or thirteen point six It was about one hundred
(31:23):
thousand above the previous record. But you know, year today,
we're less than two percent higher than we were a
year ago. And that's definitely slowing down.
Speaker 3 (31:32):
Yeah, but isn't that also months back anyway, just because
of due to permitting and all the stuff that the
energy companies are having to do to get ready for it. Anyway,
that it would slow down eventually because it's that lagging
and how they like, you don't just get to drill
a well in thirty days through getting through everything. It
takes some time to get caught up.
Speaker 4 (31:53):
Yeah, but they're always working on that though, all the time.
So you've always got these new wells coming on. So
wells they're coming on and they've been working on for
months and and you know, wells are drilling today won't
come online for a while.
Speaker 3 (32:07):
I was wondering that because now with the slowdown, are
they I wonder if they're filing as many permits as
they were before due to this, uh you know, inflation
and the cost and everything that they're going through, that
maybe that's why it's slowing down.
Speaker 4 (32:23):
Well, we know they're drilling less. I mean, we know
that's the bottom line. Although you know you said earlier,
you know they're becoming more efficient. They can drill less
and still produce more oil. We saw that in natural gas.
We saw the rig count in natural gas plummet, you know,
years ago, and yet natural gas production just kept going
(32:43):
up and up and up because they got more efficient
with their with their rigs and that has happened. So
that is one of the reasons that drilling is slowing,
but you know, it's it's we're definitely not drill baby drilling.
We're not we're not doing that. We're not increasing drilling,
but they are because coming more efficient with what they
are drilling.
Speaker 3 (33:02):
And let's flip and think on the other side of
the world, because in Forbes you had noted that US
oil production is surging to some degree, but there's also
it had been now it's slowing, but that affects US
as well. If global demand is off the charts, then
(33:22):
who's going to step up? It's going to be as
we're going to see prices go back up, and then
of course rigs are going to and people are going
to get back into the field. But then how how
also with global demand, how effective is that along with
is there any real environmental pressures now that we're facing
whereas before, you know, we really I think President Trump
(33:43):
has kind of come in and quieted down that environmental question.
Speaker 4 (33:47):
I agree he has, And you know, we are we
produce oil pretty environmentally responsible in the US and there
are plays.
Speaker 3 (33:55):
The best in the world world.
Speaker 4 (33:57):
That's another thing about California. They're importing oil from places
that have far less safety concerns, far left environmental concerns
that we do here in the US. So you know,
they're producing not very you know, environmentally conscious oil. If
you if you will like like you know, you might
get out of Texas. You get you know, cleaner all
(34:18):
out of Texas than you do out of a lot
of these Middle Eastern countries.
Speaker 3 (34:21):
Absolutely, they're going to slap a label on them. Stop
being a hypocrite. Let's we're getting ready to go to break.
But there's been a lot of chatter also on AI.
I actually was with Rudy Garza last night, who is
a CEO of City Public Service. It's the only municipality
in Texas that actually is regulated. And they just purchased
(34:44):
a whole bunch of assets in Houston, so now they're
kind of all over the state. And it's amazing because
they are actually producing a whole lot of energy. And
when I look at Texas, you know, I told you
when I went to Pennsylvania to cover the AI summit,
so that they all these companies pledge ninety billion dollars
(35:04):
to fund the great AI revolution that's coming. And I
think we asked questions like, well, wait a minute, where
is Texas in this and now with you know there's
a lot of progress in the area too. I just
want to get on that topic and see what you
think about how the electric bills are going to rise,
but how are we going to meet the demand? And
(35:24):
of course the LNG exports. But we'll get into all
of that. Let's take a quick break. When we've returned,
we'll get on that topic here listening to the Energy
Mixed Radio Show.
Speaker 4 (35:32):
We'll be right back.
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Speaker 3 (36:11):
And we're back. You're listening to the Energy Mix Radio Show.
My guest is Robert Raypier, the editor in chief of
show magazine Robert Recently, in Forbes, you noted that the
US oil production is surging, and it had been. It's
going up, it's going down, it's going all over the
place due to regulations, geopolitical unrest, global demand, environmental pressures.
So when we say these things literally, we could be
(36:33):
talking about this today and within three weeks everything has changed, right,
Something has happened, We've had an explosion, there's a war,
war's broken out somewhere. This is how fast things change.
But my question to you is, you know, looking at
all of this stuff, you warned about not too long
ago rising electric bills and this was due to AI
(36:53):
data centers and the LNG natural liquefied gas exports. So
we're going to start seeing and some consumers are in
parts of the United States their bills have been going
up on their electricity. I read it in the newspaper.
I'm very fortunate to live in San Antonio where we're regulated,
so it's pretty consistent. But I think I read an
article that we're considered high. What given global demand, how
(37:16):
can consumers and regulators, you know, what can they do
to mitigate these costs? Are there anything that we can
do to you know, help us with our bills. Are
we we're just going to continue to see this, We're
seeing this, we're seeing water go up as well. What
can we do pertaining so.
Speaker 4 (37:34):
So from an individual perspective, all right, So if you're
trying to control your electric bill, there are certain things
you can do. I mean, there are time of use
programs that utilities have where you know, if you will
only run your dishwasher and run your you know, washer
and dryer at certain times of the day, you can
pay lower prices for that. And my utility here in
(37:56):
Arizona is that way. They have time of use programs
where I can pay substanction less if I mitigate my
usage during peak times. So from a personal standpoint, there
are certain things you can do, uh, you know, simply
turning lights off or replacing you know, sixty watt incandescent
bulbs with LEDs and things like that low much lower
(38:17):
energy usage. There are things you can do. Uh. But
from a from a national perspective, from a policy perspective, uh,
we've got to have more power. I mean this the
AI data centered phenomenon was not foreseen a decade ago.
And utilities are like the oil industry. They're they're pretty conservative,
you know, they're not out there, you know, investing in
(38:40):
a lot of new capacity because utility usage. Electricity usage
had grown very slowly over the previous you know, thirty
or forty years, and now we're seeing expectations is going
to grow rapidly because AI has changed the game. I've
been writing about after three or four years, and the
first time I really encountered it, I wrote some articles
(39:00):
for Investing Daily and I said, there are some things
in my life that have changed everything. The Internet changed everything,
smartphones changed everything, and then AI is going to change everything.
One of those things that you look back and go, Okay,
everything is different now. You know, imagine sitting in a
(39:21):
restaurant twenty five years ago, not a single person were
looking down at a phone, and now you go in,
everybody's looking down at.
Speaker 3 (39:27):
The flag flass, what's a barcode? Right? You had to
get your menu on. We learned from COVID.
Speaker 4 (39:31):
You know, when I was in college was when the
World Wide Web, the first browser became available, and that
changed everything. I mean the Internet. You know what people say,
what what did you do before the Internet? You know,
it was it was quite different. And AI is going
to be that way. But what that means is energy
demand is going to continue to go up. Now they
(39:52):
are making you know, some more efficient chips maybe that
you know, lower powered demands. But at the same time,
the AI use is just growing and growing and growing,
and people are using it more and more, and you know,
we're going to have to have more power. And nuclear
power is one of those things that we really need
to be out there, uh planning and trying to put
(40:14):
more more nuclear power. And I would say, you know,
China has an all of the above strategy. I mean,
I've heard President Trump say China doesn't do wind power.
China produces more wind power than anybody in the world,
and they are continuing to grow their wind, their solar,
They're drilling more oil, they're producing more natural gas, They're
(40:35):
building nuclear reactors like crazy, They're building coal fired power plants.
They're doing everything. And I think we need to be
doing a little bit more of that all of the above.
I wouldn't disincentivize, you know, solar farms or wind power
if it makes sense. If somebody thinks, hey, we can
put a solar farm in here and make money, don't
(40:56):
discourage them from doing that. We need all the power
that we can get. But you know, there's nothing quite
like nuclear power. We've got a nuclear power plant right
outside Phoenix here, and that's one reason I haven't seen
my electric bills skyrocket with all these data centers. You
know that nuclear power plant produces clean firm power twenty
four to seven. And if we had more nuclear power plants,
(41:18):
you know that that is a solution to our to
our issue. But it takes years and years. So we
need to be on this right now. We need to
be planning. We need to be uh, you know, getting
getting these things permitted and you know, under construction.
Speaker 3 (41:32):
You know, Robert, the other day, my grandson came over.
This is you're gonna laugh and laugh and laugh. Some
are the listeners. He came over and I had an
old antique table because I like shopping frantikes and it
had a it was a table and it has a
rotary phone on it. You know that the round.
Speaker 4 (41:48):
Rotary Okay, was one of those.
Speaker 3 (41:50):
Yes, And of course we're showing our age, which I
love it because I'm like he had he's ten years old.
He's like, Nana, what is this? And I'm like, it's
a phone. He says, how's it a phone? He had
no idea. I've never seen it, doesn't understand what a
phone was, none of that. And while yeah, that was
a while back, think about how fast we've come that
a ten year old has never even seen a house phone.
(42:12):
And this morning when I left the doctor just to
get simple, a simple lab work done, I had to
fill out an entire application on an iPad that they
gave me that they are now conducting. There's no more
paper anymore. We're saving trees, but we're using these online
platforms that require this energy that you're talking about, and
(42:33):
just that fast we are moving from you know, we're
just jumping so fast. And my point that I wanted
to make is for people listening to understand we have
to find the solution of how we're going to continue
to provide power to all of this and the world
who still needs our energy. And that being said, I
(42:54):
want to close with the geopolitical tension that had been rising.
Now I think we have a president has gone around
and is the peace president. He's managed to produce peace
all over the world. You're closing on thoughts on the
geopolitical tension and is it have anything, does it bring
it back home to energy? I mean, with him finally
getting Gaza and Israel to cease fire. You know, are
(43:16):
any of these things that he's doing, Are we going
to see anything in supply chain? We need to be
worried about policy volatility, anything pertaining to energy that you
want to keep an eye on, that we should keep
eye on.
Speaker 4 (43:27):
I mean, when the tensions settle down in the Middle least,
that's always a good thing for oil prices. I mean,
but it's especially so if the supply and demand are tight,
and right now they're not all that tight, so it'll
probably help. It'll probably help lower oil price that we're
talking about old prices being too low. But you know,
(43:48):
with OPEC out they're pumping what they're pumping. I don't
expect we'll see much of an impact on oil prices.
The market is just not that tight right now. And
in fact, if tensions escalated right now, I don't think
we'd see much of a rise in prices. So you know, normally,
if something happens in Iran or Iraq or Saudi Arabia,
you see a spike and oil prices. I'm not sure
(44:09):
we've see that right now. Because there's just so much
oil out there on the market.
Speaker 3 (44:13):
So we're pretty much going to just stay even keeled.
Does this go all the way through to the end
of the year.
Speaker 4 (44:20):
I think so. I don't see any catalysts on the
horizon that should drive all prices back to seventy dollars
by the end of the year.
Speaker 3 (44:28):
Okay, So then I guess we just rerun this show
because there's not going to be very much to talk
about it.
Speaker 4 (44:33):
There's always something to talk about, there's always something to
talk about.
Speaker 3 (44:37):
Well, Robert, thank you for joining me today and helping
us understand what's going on in the oil and gas market,
and I look forward to having you back, hopefully next month.
We can talk about your latest issue and what articles
you produced, and of course who's on the next cover
show magazine sounds great, Thank you.
Speaker 4 (44:53):
We'll see then.
Speaker 1 (44:54):
The Energy Mix Radio Show is where we explore topics
that affect us all in the oil and gas industry.
Every week, will interview the movers and shakers in this
fast paced industry. You'll hear from industry experts, elected officials,
and many more. On the Energy Mix Radio Show.
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