January 23, 2025 • 18 mins
Trump 2.0 has officially begun...and everything from stocks to currencies to crypto is moving in response. But what about ENERGY? How will underlying commodities like crude oil and natural gas – not to mention energy stocks – behave in the second Trump Administration? What impact will “Drill, baby, drill” policy...a lighter regulatory touch...and other factors have on production, supply, pricing, and more? I sat down with @RobertBryce – noted energy-sector author, lecturer, filmmaker, and podcaster – to get the answers for this week’s MoneyShow MoneyMasters Podcast.
We begin by chatting about Robert’s extensive, multi-decade career covering the industry, which includes projects like the docuseries “Juice: Power, Politics & The Grid” and the book A Question of Power: Electricity and the Wealth of Nations. Then we discuss the impact of President Trump’s policies and politics on the energy markets. That includes what regulatory rollbacks and the opening up of new regions to oil and gas drilling means (and DOESN’T mean) for US exploration and production. Robert also weighs in on the future of US LNG exports…the impact of data center growth and AI-driven demand for electricity on energy prices...and which subsector of the natural gas industry he thinks investors should focus on.
We next pivot to geopolitics, discussing what Russia’s invasion of Ukraine and rising US-Iran tensions mean for energy markets and investors. Plus, we talk about why “Drill, baby, drill” supply concerns haven’t kept US crude oil futures from rising 10% since the November election – or natural gas prices from surging an astonishing 46%. Finally, Robert previews what he’ll cover at the MoneyShow Masters Symposium Dallas, scheduled for April 4-6 at the Hilton DFW Lakes. Click here to register: https://www.mmsdallas.com/?scode=061246
We begin by chatting about Robert’s extensive, multi-decade career covering the industry, which includes projects like the docuseries “Juice: Power, Politics & The Grid” and the book A Question of Power: Electricity and the Wealth of Nations. Then we discuss the impact of President Trump’s policies and politics on the energy markets. That includes what regulatory rollbacks and the opening up of new regions to oil and gas drilling means (and DOESN’T mean) for US exploration and production. Robert also weighs in on the future of US LNG exports…the impact of data center growth and AI-driven demand for electricity on energy prices...and which subsector of the natural gas industry he thinks investors should focus on.
We next pivot to geopolitics, discussing what Russia’s invasion of Ukraine and rising US-Iran tensions mean for energy markets and investors. Plus, we talk about why “Drill, baby, drill” supply concerns haven’t kept US crude oil futures from rising 10% since the November election – or natural gas prices from surging an astonishing 46%. Finally, Robert previews what he’ll cover at the MoneyShow Masters Symposium Dallas, scheduled for April 4-6 at the Hilton DFW Lakes. Click here to register: https://www.mmsdallas.com/?scode=061246
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Trump two point zero is officially underway and many markets
are moving in response. Currencies like the Mexican peso and
Canadian dollar just dropped in responses to tariff threats. For instance,
oh bitcoin briefly hit a record high above one hundred
and nine thousand dollars and expectations for looser regulation.
Speaker 2 (00:20):
But what about energy?
Speaker 1 (00:21):
I will underlying commodities and energy sector equities, trade and
a new Trump administration?
Speaker 2 (00:26):
What impact will drill baby drill.
Speaker 1 (00:28):
Policy, a lighter regulatory touch and other factors have on production, supply,
pricing and more. Joining me to get you answers is
one of the nation's foremost sector specialists. He's Robert Bryce,
noted author, lecturer, filmmaker and podcaster.
Speaker 2 (00:43):
Robert Welcome to the Moneymaster's podcast.
Speaker 3 (00:45):
Happy to be with you, Mike.
Speaker 1 (00:47):
I know your experience in the sector goes way back.
You're a new guest and obviously have some new perspectives
to share on the show, So why don't you start
by talking a little bit about your background.
Speaker 2 (00:56):
And the energy sector and what it is your work
in that entails.
Speaker 3 (01:01):
Sure well. First, glad to be with you and looking
forward to being at the Money Show event in Dallas
coming up in April fourth, isn't it. I think that's right. Yeah.
So I've been a reporter of my whole career and
focused on energy and power for that whole time. Now
going almost forty years as a professional journalist, so starting
(01:22):
to get the hang of it. I've been reported my
whole career, never had a real job. That's what I
do as my profession. What I'm really about is my family,
my wife and kids. I've been married to this Lauren,
my wife for now thirty eight and a half years.
We got three great kids, Marry, Michael, and Jacob. I
live in Austin, Texas, and really count myself very fortunate
to do what I do. I've written six books on
(01:43):
the energy and power sectors. My first book was on Enrun.
My latest book is called A Question of Power, Electricity
and the Wealth of Nations. Co produced two documentaries, and
I travel a lot, I speak a lot on energy
and power issues. Going to be in London next month.
I was in Chile last year. You know, I'm insanely
fortunate to do what I'm doing, really happy to talk
(02:04):
about these issues because energy is the most important sector
in the world, and every other sector depends on it.
Speaker 2 (02:11):
Yeah.
Speaker 1 (02:11):
Absolutely, I've got to start with the obvious topic here,
I mean, the impact of Trump two point zero and
energy markets and energy pricing. If you had to kind
of start from thirty six thousand feet up, what are
you seeing is some of the primary drivers there over
the next year.
Speaker 3 (02:24):
Sure. Well, I've just been finishing an article on this
very thing. And the point that I'm making is that
in his first day in office on January twentieth, Trump
issued a bunch of executive orders, including withdrawing from the
Paris Climate Accord, another on wind energy, and another on
what is it unleashing America's energy? This is the biggest
(02:46):
single day turnaround in energy policy in American history from
the Biden administration now to Trump. I mean, it could
scarcely be more stark. It is one hundred and eighty
degree turn and nearly every policy and mandate that was
implemented during the Biden administration of any substance has been
revoked or is going to be reversed by the Biden
(03:07):
by the new Trump administration. Now, what does that mean
for pricing and what does it mean for investors? Cheez?
I mean, you know a lot of potential things. One
of the things I'm hopeful about, and this is something
that I'll probably mention in Dallas, but is that that
our new Secretary of Energy, Chris Wright, will be able
to move the needle forward on nuclear energy, which is
(03:28):
desperately needed. We need a more diverse fuel supply. But
I think also it's very clear regardless of I think
this would have been the case, regardless whether it was
Trump or Biden or rather Kamala Harris and the new administration,
We're going to see a lot more demand for natural gas.
And that's something I'm going to be one of the
focal points of my discussion in Dallas. Robert.
Speaker 1 (03:49):
You know, a late person might think or hear drill,
baby drill and think, you know, higher production, higher supply,
lower prices, you know, a simplistic way, I guess, But
is there any accuracy to that?
Speaker 2 (03:58):
And I guess I would say why or why not?
Speaker 3 (04:00):
Sure? You know, it's interesting because you know there are
all these claims over we're going to see a lot
more drilling. Well, we have a lot of drilling already,
and despite the Biden administration. And I don't say this
is a partisan I'm not a partisan. I'm not a Democrat,
I'm not a Republican. I'm disgusted. But it's clear that
the US oil and gas production grew dramatically under the
(04:21):
Biden administration, and it's kind of ironic in many ways,
and that this has been the most anti hydrocarbon administration
in American history. I think that's very clear the Biden administration.
And despite that, US oil and gas production is at
record levels. Now, why is that happening? Well, because so
much of that production is occurring on private land, and
(04:42):
in particular in the Permian Basin in West Texas and
eastern New Mexico. So they the you know, there are
major efforts, including one of his last moves in office,
to you know, fence off wide swaths of six hundred
and fifty million acres. I think it was of offshore
federal lands from future drilling. But the drilling is ongoing,
(05:03):
so I don't know. I mean, to the bottom line,
the short answer to your question is drill, baby, drill.
I don't know that the only gas industry needs to
drill anymore. They're at prices now where they're profitable generally,
and so I don't necessarily see a big increase in
production I'm glad.
Speaker 1 (05:19):
You brought that up as part of you know, when
I look at the industry obviously in the mid twenty tens,
the huge shill oil boom and then bust you had
in twenty twenty with the pandemic negative oil prices. Do
you think those kinds of events still sort of lingering
memory or business experience back then, are going to lead
to more restraints on a more disciplined production, even in
a looser regulatory environment.
Speaker 3 (05:41):
Well, this is the key, right, and you hit on
it exactly right, Mike. What we saw in the two
thousands in the wake of the shale boom and the
discovery of shale, and it was a very little discipline
among the drillers, right that they were just drilling to drill,
and they burned up by some estimates, three hundred billion
dollars in capital was just destroyed by these drillers because
(06:03):
they were you know, just would know who did not
concern themselves with return to his shareholders. I think those
days are over now and you see a lot more
capital discipline among the upstream companies, both the publicly held
wins and the private companies, and I think that's going
to continue where I think the interesting play is and
(06:25):
it's you know, I don't claim to be an investing expert.
I'm a reporter. But as I look at these issues
and these sectors, what to me seems to be the
area where investors, if they're interested in the long term,
look at the pipelines. Don't bet on the don't bet
on the price of natural gas or the commodity, because
that's a that's a hard game to win at pricing
any kind of commodity. Instead play the volume game, and
(06:47):
that's a pipeline story.
Speaker 1 (06:50):
Pipelines, And I guess my other question would be what
about the LG the export policies of this country and
the trend there, how do you think that should impact
particularly knack gas in the next couple of years.
Speaker 3 (06:59):
Yeah, Well, the story in energy growth in the US
is natural gas. Yes, solar and wind are growing, but
last year the numbers have just come in for twenty
twenty four gas fire generation in the US. Again, the
growth in gas fire generation again grew was faster than
the growth in solar and wind, which is remarkable, and
(07:20):
that was true in twenty twenty three as well. So
you add in the growing tendency in the electric sector
to burn more gas. And remember Enron was a pioneer,
and my first book was on Enron in two thousand
and two. Ron pioneered that. And now what we're seeing
is natural gas accounts now for about forty five percent
of all the electricity produced in the US. Data center
(07:41):
demand is all of that new demand is going to
be fueled by natural gas fire generation because solar and
wind are useless expectively when it comes to data centers.
We can't build nuclear fast enough. Add in the increase
now in LNG exports that is almost certain under the
Trump administration, and I think there's a bullish case for
gas demand. What will that mean in terms of gas price?
(08:02):
I wish I knew, Mike, and if I knew, I
would own the Money Show and all the hotels downtown
Austin and everything else. Predicting price on commodities, as everyone knows,
is devilishly difficult.
Speaker 2 (08:15):
I hear you, I hear you.
Speaker 1 (08:16):
Let's talk about the whole AI demand, the AI related
consumption and electricity and center demand. I mean, how how
big is that story? Is an overhyped, under hyped I'm
kind of curious is your take on that?
Speaker 3 (08:28):
You know, I try when I look at those issues,
I try and be very disciplined and how I think
about it. Okay, well, I see the bullish case. What
could be the thing that undermines that? And let me
just talk about what would undermine that AI? That bullish
AI story is, well, the history of computing is one
of increasing efficiency, right you know, we you know, we
(08:49):
walk around with these these phones and we just you know,
but this is really would have been a supercomputer, you know,
twenty years ago. I mean, you know, it's astonishing how
it's become. To quote the title of one of my book, Smaller, faster, lighter,
debts are cheaper, right, Well, so the power draw in
this phone is a fraction of what an older phone
was twenty years ago, or even a or a desktop computer.
(09:09):
My my laptop now doesn't even have a cooling fan
in it right where the because it doesn't create that
much heat, Whereas you know, the first laptop, those things
would burn your leg because they were so the ships
were so hot, and that was an indicator of how
inefficient they were. So the barish case on the AI demand,
of course, is that you know, there's going AI is
going to help these data centers become more efficient themselves.
(09:33):
The bullish case, of course, everyone knows. And when you
look at the bullish case, where well, you know, there's
this latent demand, you know, whether the hyperscalers as they
call them, Google, Amazon, Meta, you know, the rest. They're
going to build as much capacity as they can, but
it's going to have to come from gas. And what
we're seeing already is about seven and a half gigawats
(09:53):
at seventy five hundred megawatts of new gas fired capacity
under construction in the US, which is roughly, by the way,
about to the amount of new demand that is expected
from the data centers that are under construction. So this
it's clear gas demand is going to rise, and it's
it rose about two percent last year. It's going to
continue rising for a you know, displacing coal AI. You know,
(10:15):
all the reasons we've been talking about.
Speaker 2 (10:19):
Fair enough, when I.
Speaker 1 (10:20):
Go back to you know, I actually pulled some figures
I wanted to kind of see from election days. Sure, now,
how different underlying commodities and stocks in the sector are performing.
And you know that gas is the big star, up
forty six percent price, crude oil is about ten percent.
Speaker 2 (10:33):
Energy stocks are slightly outperforming, but not by much versus
the S and P.
Speaker 1 (10:37):
Is that just a case of you know, whether Trump's
all and that's what's going on in gas or what
else is leading to? Again, if the the mainstream story
is Trump's going to be drilling, you know the underlying commodities,
it's going to be tough for prices to rise.
Speaker 2 (10:48):
Why are we actually seeing basically a big.
Speaker 1 (10:50):
Rise in that gas and a solid rise in crude
oil from election day through now.
Speaker 3 (10:55):
Well, one of the reasons that we're seeing higher gas
prices at the moment is cold weather. I'm in Austin, Texas,
and there's snow on my porch. We don't get a
lot of snow in Austin, so we're seeing a lot
of gas being used for power burn. But I think
the cautionary note here is that, remember the drilling sector
is in the upstream oil and gas sector is incredibly innovative.
(11:19):
I mean, this is the story since Spindletop, It's the
story since the discovery of the East Texas Field in
nineteen thirty one by Dad Joiner. And that is again, smaller, faster, lighter,
dets are cheaper. The drillers are just getting so much
better at drilling and completing wells and bringing them online.
And this is the part where we talked about discipline
before that. You know, drillers want a drill man, you know,
(11:43):
that's who they are. And when you see gas prices
get to four bucks and they stay there, you know.
I My assumption is those guys are going to say, hey,
we could make money at four bucks. We weren't making
money at two, we'll make money at four. And because
they're cost of drilling and completion relative to the overall
value of the will has declined, that's going to test
(12:06):
their discipline. So again that's one of the cautionary notes
about investing on the price. And the other, of course,
is the basis differential, right, the basin differential. So one
of the things that happened last summer in a trading
hub called Waha in West Texas, which is right near
the Permian basin, gas prices were negative and they stayed negative.
(12:26):
In fact, they went negative to three or four dollars
per million BTUs. So if you had a friend of
mine helps or works with a fertilizer plant out in
that region, imagine you're in business and you use a
lot of natural gas and the gas supplier is paying
you to take their fuel. Now, that's a good deal
if you're the take off taker, right. If you're a driller,
it's lousy. But those are the cases where you have
(12:49):
you're going to have higher prices in the Rockies where
you know the producers there are making a lot of money.
I talked to a gas broker just yesterday was saying
they were getting, you know, a long term or month
month long contracts for ten or twelve dollars well per
million bt use. That's way above the two bucks they
usually get. And that why is that off take capacity?
So you know, we talk about price, but price depends
(13:12):
on a lot of things, including the quality of the
gas where and more particularly where it is got it?
Speaker 2 (13:18):
Uh, what would you want to add?
Speaker 1 (13:20):
I guess as we get close to wrapping things up
On the geopolitical side, I mean, obviously US relations with
countries like Iran are going to change under a Trump administration.
Speaker 2 (13:28):
The thoughts and impacts that might.
Speaker 3 (13:29):
Have, well, I think it's critical one of the points
on the LNG side, and we've talked about that just
a little bit, but it's very clear and the EIA,
the energy and Information Administration has pointed this out several times.
The US is now the most important supplier of LNG
into the European market. So what is clear now in
the wake of Russia's invasion of Ukraine is that the
(13:52):
internationalization of natural gas has accelerated yet again. It was
underway because of the broadening LNG trade before that, but
now with Putin and and and you know, invading Ukraine,
the Europeans not wanting to rely on Russian gas. What
are they doing in response? Well, many of them are
building nuclear reactors, but the other ones, including Poland and others,
(14:15):
are are relying more on US LNG. So there is
a geostrategic element that is making US natural gas from
the Permian Basin in Texas, from Oklahoma, from Louisiana, those
molecules going into the European market. That are about energy security.
But there's also this broader geostrategic issue around Okay, Well,
(14:36):
is Russia going to stay out of the game. Are
the Germans going to make up and play nice with
the Russians? But you know, Germany has driven themselves into
the ditch, and you know, I feel sorry for them
if they just didn't do it with such great a gusto.
But that's a longer story than what we have time
for now. But Europe is in is in a world
of hurt when it comes to natural gas supplies, and
(14:57):
that makes us gas that much more important to the
European continent.
Speaker 1 (15:02):
Got it, Robert, You're going to be joining us, as
you mentioned earlier, for the twenty five Money Show Master
Symposium in Dallas.
Speaker 2 (15:08):
It's in April.
Speaker 1 (15:08):
And your topic title, I know these I have to
kind of be set pretty far advantage, but your topic
title is don't bet on natural gas prices that ungased volumes.
You just give a little bit of a preview of
what people attend that session are going to hear about.
Speaker 3 (15:19):
Sure, well, it's just basically that pipeline story. And you know,
I know this industry, you know fairly well, and I
think it's something that you know. Now. I'm old, right,
I'm sixty four, and I think about, okay, well, if
I retire soon and I might want to have some income,
what's what seems like a safe sector? Well, the pipeline
(15:40):
seem from what I see, are safe in terms of
that return because they are effectively a monopoly. You can't
there's no one else that's going to come in there.
I mean, you know, anyone can open an ice cream shop, right,
you know, and you could put it right next door
to it. Nobody can. If you have a pipeline, a
forty eight inch gas pipeline goes from Texas to you know,
(16:02):
let's say Boston, not very many companies are going to
be able to come in and duplicate what you have.
Those assets are extraordinarily difficult to duplicate, and now, particularly
with all the issues around permitting, you know, it's it's
effectively impossible. So these companies that have these these rights
of way, you know, Kinder, Morgan Williams, Energy Transfer, Enterprise Products, Magellan,
(16:28):
they have not I'm not going to say a monopoly,
but they have control over the movement of critical commodities
for the US economy. So given that, it just seems
to me, you know, and again, you know, I'm a
pretty simple guy, if I can understand it. I don't
understand bitcoin, but this that the pipeline business, to me
(16:49):
seems very it's very obvious about what their strategic advantages is.
In effectively, you know what they call in the business
the moat, right, and they have a moat around their businesses.
Speaker 1 (17:00):
Listen, Robert, thank you so much for taking some time
out to share your insights.
Speaker 2 (17:03):
Viewers.
Speaker 1 (17:03):
If you're watching this you want to learn more from Robert.
He is going to be speaking at that Money Show
money Master Symposium in Dallas. It runs April fourth to
the sixth at the Hilton DFW Wakes. You find out
more information on the conference and actually register if you like,
in the link in the video description below.
Speaker 2 (17:18):
Robert can't wait to see you there. Appreciate you taking the
time out again.
Speaker 3 (17:21):
Always happy and for everyone else listening. Just if you
want to look at my other writing, check out Robert
Brice dot Sepstack dot com.
Speaker 2 (17:29):
Perfect. Thank you, thanks a lot.
Speaker 1 (17:32):
We'll have more interviews for you every week, so I
encourage you to subscribe to the Money Master's podcast so
you can stay up to date with the insights from
top money experts.
Speaker 2 (17:40):
You can follow me on Twitter at real Mike Larson and.
Speaker 1 (17:43):
Follow Money Show for more investing and trading content on Twitter,
Instagram and YouTube at Money Show.
Speaker 2 (17:49):
Thanks for listening, See you next time.
Trump two point zero is officially underway and many markets
are moving in response. Currencies like the Mexican peso and
Canadian dollar just dropped in responses to tariff threats. For instance,
oh bitcoin briefly hit a record high above one hundred
and nine thousand dollars and expectations for looser regulation.
Speaker 2 (00:20):
But what about energy?
Speaker 1 (00:21):
I will underlying commodities and energy sector equities, trade and
a new Trump administration?
Speaker 2 (00:26):
What impact will drill baby drill.
Speaker 1 (00:28):
Policy, a lighter regulatory touch and other factors have on production, supply,
pricing and more. Joining me to get you answers is
one of the nation's foremost sector specialists. He's Robert Bryce,
noted author, lecturer, filmmaker and podcaster.
Speaker 2 (00:43):
Robert Welcome to the Moneymaster's podcast.
Speaker 3 (00:45):
Happy to be with you, Mike.
Speaker 1 (00:47):
I know your experience in the sector goes way back.
You're a new guest and obviously have some new perspectives
to share on the show, So why don't you start
by talking a little bit about your background.
Speaker 2 (00:56):
And the energy sector and what it is your work
in that entails.
Speaker 3 (01:01):
Sure well. First, glad to be with you and looking
forward to being at the Money Show event in Dallas
coming up in April fourth, isn't it. I think that's right. Yeah.
So I've been a reporter of my whole career and
focused on energy and power for that whole time. Now
going almost forty years as a professional journalist, so starting
(01:22):
to get the hang of it. I've been reported my
whole career, never had a real job. That's what I
do as my profession. What I'm really about is my family,
my wife and kids. I've been married to this Lauren,
my wife for now thirty eight and a half years.
We got three great kids, Marry, Michael, and Jacob. I
live in Austin, Texas, and really count myself very fortunate
to do what I do. I've written six books on
(01:43):
the energy and power sectors. My first book was on Enrun.
My latest book is called A Question of Power, Electricity
and the Wealth of Nations. Co produced two documentaries, and
I travel a lot, I speak a lot on energy
and power issues. Going to be in London next month.
I was in Chile last year. You know, I'm insanely
fortunate to do what I'm doing, really happy to talk
(02:04):
about these issues because energy is the most important sector
in the world, and every other sector depends on it.
Speaker 2 (02:11):
Yeah.
Speaker 1 (02:11):
Absolutely, I've got to start with the obvious topic here,
I mean, the impact of Trump two point zero and
energy markets and energy pricing. If you had to kind
of start from thirty six thousand feet up, what are
you seeing is some of the primary drivers there over
the next year.
Speaker 3 (02:24):
Sure. Well, I've just been finishing an article on this
very thing. And the point that I'm making is that
in his first day in office on January twentieth, Trump
issued a bunch of executive orders, including withdrawing from the
Paris Climate Accord, another on wind energy, and another on
what is it unleashing America's energy? This is the biggest
(02:46):
single day turnaround in energy policy in American history from
the Biden administration now to Trump. I mean, it could
scarcely be more stark. It is one hundred and eighty
degree turn and nearly every policy and mandate that was
implemented during the Biden administration of any substance has been
revoked or is going to be reversed by the Biden
(03:07):
by the new Trump administration. Now, what does that mean
for pricing and what does it mean for investors? Cheez?
I mean, you know a lot of potential things. One
of the things I'm hopeful about, and this is something
that I'll probably mention in Dallas, but is that that
our new Secretary of Energy, Chris Wright, will be able
to move the needle forward on nuclear energy, which is
(03:28):
desperately needed. We need a more diverse fuel supply. But
I think also it's very clear regardless of I think
this would have been the case, regardless whether it was
Trump or Biden or rather Kamala Harris and the new administration,
We're going to see a lot more demand for natural gas.
And that's something I'm going to be one of the
focal points of my discussion in Dallas. Robert.
Speaker 1 (03:49):
You know, a late person might think or hear drill,
baby drill and think, you know, higher production, higher supply,
lower prices, you know, a simplistic way, I guess, But
is there any accuracy to that?
Speaker 2 (03:58):
And I guess I would say why or why not?
Speaker 3 (04:00):
Sure? You know, it's interesting because you know there are
all these claims over we're going to see a lot
more drilling. Well, we have a lot of drilling already,
and despite the Biden administration. And I don't say this
is a partisan I'm not a partisan. I'm not a Democrat,
I'm not a Republican. I'm disgusted. But it's clear that
the US oil and gas production grew dramatically under the
(04:21):
Biden administration, and it's kind of ironic in many ways,
and that this has been the most anti hydrocarbon administration
in American history. I think that's very clear the Biden administration.
And despite that, US oil and gas production is at
record levels. Now, why is that happening? Well, because so
much of that production is occurring on private land, and
(04:42):
in particular in the Permian Basin in West Texas and
eastern New Mexico. So they the you know, there are
major efforts, including one of his last moves in office,
to you know, fence off wide swaths of six hundred
and fifty million acres. I think it was of offshore
federal lands from future drilling. But the drilling is ongoing,
(05:03):
so I don't know. I mean, to the bottom line,
the short answer to your question is drill, baby, drill.
I don't know that the only gas industry needs to
drill anymore. They're at prices now where they're profitable generally,
and so I don't necessarily see a big increase in
production I'm glad.
Speaker 1 (05:19):
You brought that up as part of you know, when
I look at the industry obviously in the mid twenty tens,
the huge shill oil boom and then bust you had
in twenty twenty with the pandemic negative oil prices. Do
you think those kinds of events still sort of lingering
memory or business experience back then, are going to lead
to more restraints on a more disciplined production, even in
a looser regulatory environment.
Speaker 3 (05:41):
Well, this is the key, right, and you hit on
it exactly right, Mike. What we saw in the two
thousands in the wake of the shale boom and the
discovery of shale, and it was a very little discipline
among the drillers, right that they were just drilling to drill,
and they burned up by some estimates, three hundred billion
dollars in capital was just destroyed by these drillers because
(06:03):
they were you know, just would know who did not
concern themselves with return to his shareholders. I think those
days are over now and you see a lot more
capital discipline among the upstream companies, both the publicly held
wins and the private companies, and I think that's going
to continue where I think the interesting play is and
(06:25):
it's you know, I don't claim to be an investing expert.
I'm a reporter. But as I look at these issues
and these sectors, what to me seems to be the
area where investors, if they're interested in the long term,
look at the pipelines. Don't bet on the don't bet
on the price of natural gas or the commodity, because
that's a that's a hard game to win at pricing
any kind of commodity. Instead play the volume game, and
(06:47):
that's a pipeline story.
Speaker 1 (06:50):
Pipelines, And I guess my other question would be what
about the LG the export policies of this country and
the trend there, how do you think that should impact
particularly knack gas in the next couple of years.
Speaker 3 (06:59):
Yeah, Well, the story in energy growth in the US
is natural gas. Yes, solar and wind are growing, but
last year the numbers have just come in for twenty
twenty four gas fire generation in the US. Again, the
growth in gas fire generation again grew was faster than
the growth in solar and wind, which is remarkable, and
(07:20):
that was true in twenty twenty three as well. So
you add in the growing tendency in the electric sector
to burn more gas. And remember Enron was a pioneer,
and my first book was on Enron in two thousand
and two. Ron pioneered that. And now what we're seeing
is natural gas accounts now for about forty five percent
of all the electricity produced in the US. Data center
(07:41):
demand is all of that new demand is going to
be fueled by natural gas fire generation because solar and
wind are useless expectively when it comes to data centers.
We can't build nuclear fast enough. Add in the increase
now in LNG exports that is almost certain under the
Trump administration, and I think there's a bullish case for
gas demand. What will that mean in terms of gas price?
(08:02):
I wish I knew, Mike, and if I knew, I
would own the Money Show and all the hotels downtown
Austin and everything else. Predicting price on commodities, as everyone knows,
is devilishly difficult.
Speaker 2 (08:15):
I hear you, I hear you.
Speaker 1 (08:16):
Let's talk about the whole AI demand, the AI related
consumption and electricity and center demand. I mean, how how
big is that story? Is an overhyped, under hyped I'm
kind of curious is your take on that?
Speaker 3 (08:28):
You know, I try when I look at those issues,
I try and be very disciplined and how I think
about it. Okay, well, I see the bullish case. What
could be the thing that undermines that? And let me
just talk about what would undermine that AI? That bullish
AI story is, well, the history of computing is one
of increasing efficiency, right you know, we you know, we
(08:49):
walk around with these these phones and we just you know,
but this is really would have been a supercomputer, you know,
twenty years ago. I mean, you know, it's astonishing how
it's become. To quote the title of one of my book, Smaller, faster, lighter,
debts are cheaper, right, Well, so the power draw in
this phone is a fraction of what an older phone
was twenty years ago, or even a or a desktop computer.
(09:09):
My my laptop now doesn't even have a cooling fan
in it right where the because it doesn't create that
much heat, Whereas you know, the first laptop, those things
would burn your leg because they were so the ships
were so hot, and that was an indicator of how
inefficient they were. So the barish case on the AI demand,
of course, is that you know, there's going AI is
going to help these data centers become more efficient themselves.
(09:33):
The bullish case, of course, everyone knows. And when you
look at the bullish case, where well, you know, there's
this latent demand, you know, whether the hyperscalers as they
call them, Google, Amazon, Meta, you know, the rest. They're
going to build as much capacity as they can, but
it's going to have to come from gas. And what
we're seeing already is about seven and a half gigawats
(09:53):
at seventy five hundred megawatts of new gas fired capacity
under construction in the US, which is roughly, by the way,
about to the amount of new demand that is expected
from the data centers that are under construction. So this
it's clear gas demand is going to rise, and it's
it rose about two percent last year. It's going to
continue rising for a you know, displacing coal AI. You know,
(10:15):
all the reasons we've been talking about.
Speaker 2 (10:19):
Fair enough, when I.
Speaker 1 (10:20):
Go back to you know, I actually pulled some figures
I wanted to kind of see from election days. Sure, now,
how different underlying commodities and stocks in the sector are performing.
And you know that gas is the big star, up
forty six percent price, crude oil is about ten percent.
Speaker 2 (10:33):
Energy stocks are slightly outperforming, but not by much versus
the S and P.
Speaker 1 (10:37):
Is that just a case of you know, whether Trump's
all and that's what's going on in gas or what
else is leading to? Again, if the the mainstream story
is Trump's going to be drilling, you know the underlying commodities,
it's going to be tough for prices to rise.
Speaker 2 (10:48):
Why are we actually seeing basically a big.
Speaker 1 (10:50):
Rise in that gas and a solid rise in crude
oil from election day through now.
Speaker 3 (10:55):
Well, one of the reasons that we're seeing higher gas
prices at the moment is cold weather. I'm in Austin, Texas,
and there's snow on my porch. We don't get a
lot of snow in Austin, so we're seeing a lot
of gas being used for power burn. But I think
the cautionary note here is that, remember the drilling sector
is in the upstream oil and gas sector is incredibly innovative.
(11:19):
I mean, this is the story since Spindletop, It's the
story since the discovery of the East Texas Field in
nineteen thirty one by Dad Joiner. And that is again, smaller, faster, lighter,
dets are cheaper. The drillers are just getting so much
better at drilling and completing wells and bringing them online.
And this is the part where we talked about discipline
before that. You know, drillers want a drill man, you know,
(11:43):
that's who they are. And when you see gas prices
get to four bucks and they stay there, you know.
I My assumption is those guys are going to say, hey,
we could make money at four bucks. We weren't making
money at two, we'll make money at four. And because
they're cost of drilling and completion relative to the overall
value of the will has declined, that's going to test
(12:06):
their discipline. So again that's one of the cautionary notes
about investing on the price. And the other, of course,
is the basis differential, right, the basin differential. So one
of the things that happened last summer in a trading
hub called Waha in West Texas, which is right near
the Permian basin, gas prices were negative and they stayed negative.
(12:26):
In fact, they went negative to three or four dollars
per million BTUs. So if you had a friend of
mine helps or works with a fertilizer plant out in
that region, imagine you're in business and you use a
lot of natural gas and the gas supplier is paying
you to take their fuel. Now, that's a good deal
if you're the take off taker, right. If you're a driller,
it's lousy. But those are the cases where you have
(12:49):
you're going to have higher prices in the Rockies where
you know the producers there are making a lot of money.
I talked to a gas broker just yesterday was saying
they were getting, you know, a long term or month
month long contracts for ten or twelve dollars well per
million bt use. That's way above the two bucks they
usually get. And that why is that off take capacity?
So you know, we talk about price, but price depends
(13:12):
on a lot of things, including the quality of the
gas where and more particularly where it is got it?
Speaker 2 (13:18):
Uh, what would you want to add?
Speaker 1 (13:20):
I guess as we get close to wrapping things up
On the geopolitical side, I mean, obviously US relations with
countries like Iran are going to change under a Trump administration.
Speaker 2 (13:28):
The thoughts and impacts that might.
Speaker 3 (13:29):
Have, well, I think it's critical one of the points
on the LNG side, and we've talked about that just
a little bit, but it's very clear and the EIA,
the energy and Information Administration has pointed this out several times.
The US is now the most important supplier of LNG
into the European market. So what is clear now in
the wake of Russia's invasion of Ukraine is that the
(13:52):
internationalization of natural gas has accelerated yet again. It was
underway because of the broadening LNG trade before that, but
now with Putin and and and you know, invading Ukraine,
the Europeans not wanting to rely on Russian gas. What
are they doing in response? Well, many of them are
building nuclear reactors, but the other ones, including Poland and others,
(14:15):
are are relying more on US LNG. So there is
a geostrategic element that is making US natural gas from
the Permian Basin in Texas, from Oklahoma, from Louisiana, those
molecules going into the European market. That are about energy security.
But there's also this broader geostrategic issue around Okay, Well,
(14:36):
is Russia going to stay out of the game. Are
the Germans going to make up and play nice with
the Russians? But you know, Germany has driven themselves into
the ditch, and you know, I feel sorry for them
if they just didn't do it with such great a gusto.
But that's a longer story than what we have time
for now. But Europe is in is in a world
of hurt when it comes to natural gas supplies, and
(14:57):
that makes us gas that much more important to the
European continent.
Speaker 1 (15:02):
Got it, Robert, You're going to be joining us, as
you mentioned earlier, for the twenty five Money Show Master
Symposium in Dallas.
Speaker 2 (15:08):
It's in April.
Speaker 1 (15:08):
And your topic title, I know these I have to
kind of be set pretty far advantage, but your topic
title is don't bet on natural gas prices that ungased volumes.
You just give a little bit of a preview of
what people attend that session are going to hear about.
Speaker 3 (15:19):
Sure, well, it's just basically that pipeline story. And you know,
I know this industry, you know fairly well, and I
think it's something that you know. Now. I'm old, right,
I'm sixty four, and I think about, okay, well, if
I retire soon and I might want to have some income,
what's what seems like a safe sector? Well, the pipeline
(15:40):
seem from what I see, are safe in terms of
that return because they are effectively a monopoly. You can't
there's no one else that's going to come in there.
I mean, you know, anyone can open an ice cream shop, right,
you know, and you could put it right next door
to it. Nobody can. If you have a pipeline, a
forty eight inch gas pipeline goes from Texas to you know,
(16:02):
let's say Boston, not very many companies are going to
be able to come in and duplicate what you have.
Those assets are extraordinarily difficult to duplicate, and now, particularly
with all the issues around permitting, you know, it's it's
effectively impossible. So these companies that have these these rights
of way, you know, Kinder, Morgan Williams, Energy Transfer, Enterprise Products, Magellan,
(16:28):
they have not I'm not going to say a monopoly,
but they have control over the movement of critical commodities
for the US economy. So given that, it just seems
to me, you know, and again, you know, I'm a
pretty simple guy, if I can understand it. I don't
understand bitcoin, but this that the pipeline business, to me
(16:49):
seems very it's very obvious about what their strategic advantages is.
In effectively, you know what they call in the business
the moat, right, and they have a moat around their businesses.
Speaker 1 (17:00):
Listen, Robert, thank you so much for taking some time
out to share your insights.
Speaker 2 (17:03):
Viewers.
Speaker 1 (17:03):
If you're watching this you want to learn more from Robert.
He is going to be speaking at that Money Show
money Master Symposium in Dallas. It runs April fourth to
the sixth at the Hilton DFW Wakes. You find out
more information on the conference and actually register if you like,
in the link in the video description below.
Speaker 2 (17:18):
Robert can't wait to see you there. Appreciate you taking the
time out again.
Speaker 3 (17:21):
Always happy and for everyone else listening. Just if you
want to look at my other writing, check out Robert
Brice dot Sepstack dot com.
Speaker 2 (17:29):
Perfect. Thank you, thanks a lot.
Speaker 1 (17:32):
We'll have more interviews for you every week, so I
encourage you to subscribe to the Money Master's podcast so
you can stay up to date with the insights from
top money experts.
Speaker 2 (17:40):
You can follow me on Twitter at real Mike Larson and.
Speaker 1 (17:43):
Follow Money Show for more investing and trading content on Twitter,
Instagram and YouTube at Money Show.
Speaker 2 (17:49):
Thanks for listening, See you next time.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!