Subscribe
Share
Share
Embed
TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
We have Alex Epstein. He's the author of Fossil Future live in the TBPN UltraDumb. Welcome to the show. Good to see you. See you.
Speaker 1:Thank you so much for coming down on
Speaker 2:short notice. What are your what are your what are your texts been like the last forty eight hours?
Speaker 1:Because it's over.
Speaker 2:Because you're
Speaker 1:because because
Speaker 2:John and I were thinking, who's our oil guy? We had one. We had one.
Speaker 3:Yeah. And I'm local too. So, yeah. If I'm in town, it's great. I was like coming in person versus Thank you so much.
Speaker 3:Much. Other stuff.
Speaker 1:Yeah. Appreciate
Speaker 3:So I got lots I mean, there's so much in energy, but I'm happy to explain
Speaker 1:why you lead the conversation however you think it should go. What are what's going on? What do what what how should we even be thinking about oil prices right now, the impact of the war in Iran? How do we how should we be processing this news?
Speaker 3:Okay. So we did this so there's a million things to comment on, so I'm gonna try to segment what I comment on. But we did get involved militarily in Iran
Speaker 1:Yes.
Speaker 3:Which I would just say in my non area of expertise, in general, that is a good idea. I think it's a better idea to have congress involved if you can get them involved. And I think it's a good idea to have a lot of expertise on international oil markets being brought to bear Sure. When you do this. And I think this administration does a lot of good stuff on energy, but I think it's pretty clear at this point that there was not maximum expertise brought in on this.
Speaker 3:And so the the standard issue when
Speaker 2:you're Indicators talking there would be like the strategic petroleum reserve hadn't been refilled.
Speaker 3:I mean, we we can talk about that. So let's let's make sure to get back to that one.
Speaker 1:Mhmm.
Speaker 3:But the main thing is just, you know, rough numbers, you know, straight of Hormuz, which Iran has control over, is 20% of the world's oil production is flowing through that every day. And so whether you're looking backward or looking forward, there is no replacement whatsoever for opening that straight and keeping it open. Mhmm. And one of the things we've heard from different people is, oh, we have a lot of options on the table. Like, there's a lot of things that we can do.
Speaker 3:There are definite things that you can do, but none of them is 20,000,000. Right? So it's just I mean, that's that's more than US oil production just flowing through that one place.
Speaker 1:Mhmm.
Speaker 3:So there yeah. That we can talk about the other things, but I think the first thing people need to recognize is if you do not get that thing open, then you have dramatically higher oil prices. And then the other thing to get is oil prices really matter.
Speaker 1:From use. Oh, that's really from use. Dumb question. Can't you just go around?
Speaker 3:I I mean, you can you can try to some extent, but there's a reason why 20,000,000 a day are being routed through.
Speaker 1:Because it actually comes out of there as well. Right?
Speaker 3:Yeah. There's just I mean, all of these things are very, very optimized. One of the thing about just understanding the energy industry is, like, things are just very optimized in terms of where the infrastructure is.
Speaker 2:Yep.
Speaker 3:You're doing all of these things. So it's there are other and we'll talk about this. I mean, there are certain pipelines you can pipe more oil through. There are alternate routes, but we're talking about in the millions a day maybe. Yeah.
Speaker 3:Most of our other options are sort of in the one to 2,000,000 barrels a day. And just so people know, barrel is 42 gallons, so you're talking about almost a 100,000,000 gallons a day for this stuff. But yeah. So so you don't have a lot of great options. And I think that's that's very important for I'm gonna give some options.
Speaker 1:Mhmm.
Speaker 3:But the number one option is keep that thing open. Mhmm. And there are basically two ways to do that. Mhmm. One is you just win the war, if you wanna call it that a lot more quickly.
Speaker 3:Sure. Like, if you get some form of surrender Yeah. And you have friendly people controlling it, then guess what? It can open.
Speaker 1:They'll
Speaker 3:open. That that's one thing. And so I I'm not an expert on how to do that, but schematically, doing that is very effective. Yeah. The other thing which is a little bit
Speaker 2:But but game game theory for Iran is they actually benefit from global markets being in turmoil because it gives them some leverage over over any type of negotiation.
Speaker 3:I mean, this is the biggest damage that they can do. I mean, clearly, we've seen they're not gonna do they're not gonna send missiles to Israel and get rid of Israel, let alone do anything to The US. Sure. But they have this incredible control of the one of the centers of the world economy. Yeah.
Speaker 3:And they have a bunch of stuff going on there. So let's talk it. So option one is Mhmm. You get a surrender Mhmm. And they don't use all of their options.
Speaker 3:But then let's talk about their options. So they have mines Mhmm. In this thing. So they can blow up mines. Yeah.
Speaker 3:They have missiles. Mhmm. Maybe the worst thing they have, and this is a change in recent years, I you've had Palmer on here and Ethan on here. Like, the drone thing is just a total game changer because you can have a small vehicle. You can launch one of these, you know, shaw heads out of the back of a truck.
Speaker 3:They can go really far.
Speaker 1:Yeah.
Speaker 3:And that's a lot harder to deal with than a fixed installation.
Speaker 2:Yeah. They have something like 500 miles of range on a typical
Speaker 3:Yeah. Depending on yeah. Right. So
Speaker 1:The truck drives up to a beach, drone launches, as soon as it finds that cargo tanker that has a bunch of oil on it, it hits
Speaker 3:Yeah. And then and then there's the you're you're worried about that
Speaker 2:Sure.
Speaker 3:As you're gonna go. As as you're going through. So you have you have to think about those are the kinds of threats you face, so how do you deal with that? I mean, basically, you need The US to lead some sort of convoy Mhmm. Where people have sufficient security and economic assurances that'll go through.
Speaker 3:So what's involved in that? Well, one thing is, if possible, you wanna get allies involved. And it's it's even possible you get unconventional allies like China
Speaker 2:Mhmm.
Speaker 3:Who has well, they depend on this. Okay. Now they have a bunch of unlike us, you wanna go back to SPR, they've been filling up their reserves. So they have more reserves relative to their imports Mhmm. Than we do relative to ours.
Speaker 3:If you think about ours, we have about 400 in the SPR, and we can release about 4,000,000 a day. Okay. So we don't have as much but but still, they really care about this, and a protracted thing is bad. So but for sure, Japan, South Korea, India. So one thing is just at a high level if you're doing this convoy, can we get these countries that are aligned economically?
Speaker 3:Maybe China, but definitely these others. Sure. Can we get them involved? Because then it's an they have military presence there. That's an additional threat to Iran if they attack one of their ships.
Speaker 3:So but that's a macro thing. It's just can you do this alone or can you do it with allies? I think ideally you would do it with allies. Then there's a question of what you do about these these various things, and I think the biggest I mean, the other macro thing you can do is just in some way credibly threaten Iran and say, hey. If you and I can't give the details of how to do it, but if you attack us if you attack in the Strait Of Hormuz, it's gonna be very, very bad
Speaker 2:Mhmm.
Speaker 3:For you. So just at a high level, can you make that threat so they understand Incredibly. This is gonna be very, very no. You know, we've wiped out a couple layers of leadership, so Yeah. They might be taking these things Mhmm.
Speaker 3:After that, I think the biggest thing from what I've heard from military experts is just these drones. Like, what do you do about these drones? How do you give any kinds of assurances? And as far as I can tell, we don't have any one perfect solution, but you can do a certain amount of stuff from the air. Mhmm.
Speaker 3:You can do a certain amount of stuff from the ground, although it's very, very expensive. And then most cost effective where you can do it is you can take out certain stockpiles and facilities Mhmm. With the And, of course, I have no specific knowledge about where they are.
Speaker 1:But in theory, if there's the the suicide drone, the Shahid, that's there's a factory and you take out that factory Yeah. You have reduced that
Speaker 3:capacity. That's gonna be it. And, you know, you you I know you guys had on Ethan Thornton, who I'm friends with, and, you know, he talks about this a lot. It's just this cost asymmetry issue. Is you just wanna be doing things.
Speaker 3:Even if you're way wealthier, you do not wanna be spending $3,000,000 to take out $30,000.
Speaker 1:Which might be what happening with a Patriot missile battery.
Speaker 3:This this this. Yeah. Yeah. That's the kind of thing that happens. So you need you need a combination Mhmm.
Speaker 3:Of those kinds of things. And then the other thing so that's all the security stuff. So you get the allies involved. You take these actions specifically against drones. I think the, what was I gonna say about the, the other thing you can do I'm just making
Speaker 1:sure They're still just
Speaker 2:Well, like, the other big
Speaker 3:companies have
Speaker 2:lost okay. Insurance.
Speaker 3:Yeah. The insurance. So and this this has been floated by the president, and it's it's a reasonable idea. But my understanding is the insurance vehicle we have, the development corporation, does not have enough funding, so you might need to go to congress. But, basically, you wanna be able to say, hey.
Speaker 3:You it's we're gonna lead this as The United States. We're gonna lead it with allies. Mhmm. If Iran does anything, it's big trouble for them, and we can counter their specific attacks. Mhmm.
Speaker 3:And if something goes wrong, you're insured. You're you're trying to create that confidence to get enough people going through, and then you get a certain amount of stability, and then you start to get closer to your 20,000,000 Mhmm. Barrels a day. Either that or you just defeat them really quickly Okay. Or both.
Speaker 2:So so the other factor is the loss of production, disruption to production, plants shutting down, plants being damages damaged. How does that factor in? Do do those do those do refineries get brought back? And I'm talking about an allied allied country.
Speaker 3:You mean just the the trend over time or what?
Speaker 2:Yeah. Generally, I mean just seeing seeing the videos coming out. You've seen places I think like Qatar, Kuwait, places like Yeah. Basically just saying like, yeah, we're gonna pause production because we don't even have place to store this
Speaker 3:Yeah.
Speaker 2:And or they're suffering damages, and it doesn't make sense to keep, you know, refineries online.
Speaker 3:This is all but this is all just downstream of do you have the root Yeah. Open. Yeah. Got it. Like, if if you have the root open
Speaker 1:Then you're good.
Speaker 3:It solves everything. Okay. If you don't the way to think of the other things, so we do have some other interesting options, we have to think of them as these are temporary stop gaps. Yeah. None like, if anyone says I mean, you hear some crazy things.
Speaker 3:People are like, oh, Venezuela. Like, we talked about this last
Speaker 1:time. You.
Speaker 3:Venezuela is less than a million. It's just I mean, it's beyond crazy. It's just impossible. We it's not like Venezuela has the ability to just increase their oil production by any significant amount in the near future. I mean, we're talking about companies considering going in harm's way to get some incremental boosts.
Speaker 3:So Venezuela is essentially useless
Speaker 1:right now. So best case scenario in the next year, Venezuela goes from under a million to 2,000,000?
Speaker 3:No. I I mean Not even that. Million would be insane. I mean, we made it our entire goal in life, I don't know. But but why would you for that?
Speaker 1:Venezuela was at, like, 3,000,000, like
Speaker 3:Yeah. Yeah. Some ago or something. Some years ago. Yeah.
Speaker 2:Yeah. Yeah.
Speaker 3:Right. But but So 3,000,000.
Speaker 1:But there's a lot there. It's not gonna happen.
Speaker 3:It's just so yeah. So Venezuela, would not even that's just in the category of it's not even a bad idea. It's just not an idea. Sure. There's nothing there's nothing there's nothing there.
Speaker 2:No. No.
Speaker 1:That's right.
Speaker 3:So so the bad the bad ideas, by the way, are the worst idea imaginable is ban oil exports from The United States, which I have heard floating in conversation.
Speaker 1:Seems somewhat reasonable. I want the
Speaker 3:oil oil we have oil, so we don't wanna sell so, I mean, so many different things. But one obvious one not obvious one, but it's obvious if you know how these things work is the refiners in The US do not match up well to the oil produced in The United States. Mhmm. The the refineries in The United States are based on heavier crude. Like, crude is rated in terms of weight and sourness.
Speaker 1:Okay.
Speaker 3:And so our refineries are mostly for heavier crude. It's actually one reason why Venezuela has some appeal. Canada has a lot of appeal because they
Speaker 1:heavier crude.
Speaker 3:Yeah. And we're gonna talk
Speaker 1:about Canada. We're good it. But we produce a lighter crude
Speaker 3:here. Because the shale revolution was just this dramatic shift Yeah. Very quickly in oil production. So our refineries are not primarily equipped. That's why when we ended the crude export oil ban, forget, was 2014 or something like that, it was just this huge unlock.
Speaker 3:So because it allows the global mark it allows us to produce for a global market.
Speaker 1:You can't you can't look at American oil production as a monolith.
Speaker 3:Yeah. It's not it's not fungible.
Speaker 1:Import heavy crude and export light crude. Is that roughly correct?
Speaker 3:That's roughly correct. Yeah. So that's one thing is that it's just insane Okay. To do that. But in general, think about it.
Speaker 3:What is the value of higher prices? Is it stimulates production? We're gonna talk about all these different ways where we wanna unlock oil.
Speaker 1:Yep.
Speaker 3:So you wanna tell American oil producers, hey. We're gonna actually totally screw you over. It's actually gonna be worse for you maybe than it was before because you don't even have a market. Yeah. So you're gonna strand all this.
Speaker 3:So that's that's terrible. There's also this financial manipulation idea, which has been floated, which I think is terrible. Hey. Let's manipulate the financial markets basically in a way that we're you're selling future short on a certain time period, and then you're buying them. What you're trying to do is lower the near term price
Speaker 1:Oh, like Fed
Speaker 3:raise the long term treasury. Yeah. So you're
Speaker 2:American way to try to
Speaker 3:solve this. So this is problem.
Speaker 1:A lot of people that like that.
Speaker 3:The only solutions involve unlocking oil Okay. In one way or another. You do not wanna screw up the markets Okay. So that people are less inclined to unlock oil. Mhmm.
Speaker 3:Nor do you wanna screw up the the markets to destroy information. Mhmm. So, again, the the main unlock is reopen that straight. Yeah. There's no way around that.
Speaker 3:But then we can talk about other things. So one one category is what you call spare or emergency capacity.
Speaker 1:Okay.
Speaker 3:And this this is there's some uncertainty here, but
Speaker 1:it Quickly. This is separate from the strategic reserve?
Speaker 3:Yeah. Yeah. So well, emergency capacity is the strategic reserve.
Speaker 1:Oh, it is.
Speaker 3:So spare means you could be you could pretty easily be producing more per day Mhmm. But you're not because you're not happy with the price. And this is mainly Saudi Arabia is is considered exhibit a in terms of amount of this. Now now there's debate among experts about how much they have. Yeah.
Speaker 3:But, you know, some people estimate they have one, two, 3,000,000 barrels a day of spare capacity. They could ramp up on some kind of
Speaker 1:And do they know how much capacity they have and they're just not sharing it, or does no one know?
Speaker 2:I mean, that's always been the story.
Speaker 3:They know.
Speaker 2:That's been the story of The Gulf. Right? They're not gonna if they just flooded the market with every single barrel that they could possibly produce, they would be getting a worse a much worse price.
Speaker 3:Yeah. And there's this cartel arrangement that does. I mean, in a sense, everyone has this on different time scales. You think about US shale producers. If if if prices were sustained at a $100, guess what?
Speaker 3:There's a whole bunch of shale deposits that they could produce at $75 a barrel and make a fortune on that they're not gonna do Got it. Four weeks ago when it was around $60 Mhmm. A barrel. But but in terms of the thing about the Saudi oil is it's produced at a much lower cost. Okay.
Speaker 3:So this is them saying, hey. We have some of this on the table. And then the question is you need to be able to produce it Mhmm. And then you need to be able to transport it. So you have estimates around maybe you could get one to 2,000,000 barrels
Speaker 2:Mhmm.
Speaker 3:A day. Yeah. So that's one of them. Mhmm. In terms of emergency, if you look around the world, you don't have a lot of immediate spare capacity besides that.
Speaker 3:So we have what's called emergency capacity or strategic petroleum reserve.
Speaker 2:Mhmm.
Speaker 3:You know, it's it's Geordie mentioned that we didn't fill up our strategic petroleum reserve. I think this is unequivocally, a mistake. I mean, if you look at the the whole thing of the strategic petroleum reserve is you want it for when you need it, and the best possible time to fill it up is when prices are low.
Speaker 1:And is that physically a place with a bunch of barrels that
Speaker 3:we There's a bunch of different parts
Speaker 1:of oil?
Speaker 3:Well, there's multiple different places. But but in you you can think of it But we
Speaker 1:basically cash the physical oil in America.
Speaker 3:Yes. Physical
Speaker 1:We own it or ex can
Speaker 3:access it. Yes. Exactly.
Speaker 1:Sitting there going unused until we're
Speaker 3:Yeah. Now there's issues of Biden. Biden definitely misused it, so they they used it to basically have lower gasoline prices during midterm elections. Okay. Even though parenthetically their entire policy goal was get rid of fossil fuels, which means you want the price to go up so people can't afford it.
Speaker 3:Yeah. So it's a very cynical kind
Speaker 2:of move.
Speaker 1:Got it.
Speaker 3:They did it in a way that degraded the facility. So Interesting. Let's say we're at about 4,000,000 barrels a day. We can get out of the thing. We have 400,000,000 in there.
Speaker 3:We should have over 700,000,000. We could have easily filled it up. I mean, it was a perfect time when you're talking about $50 an barrel oil, $60 a barrel oil. Yeah. Now it's
Speaker 1:a And and and can I do the basic arithmetic of 4,000,000 a day, 400,000,000 in the reserve, a hundred days of oil? But but that's not actually if we're talking about, like, relieving price pressure, you could you could trickle it out over a year and have one twenty or one quarter of the effect.
Speaker 3:But just think about a $100,000,000 a day a 100,000,000 barrels a day is roughly the global market.
Speaker 1:Okay. Okay.
Speaker 3:So so 4,000,000 is just that's its maximum Throughput. Capacity. Got it. Okay. It's kind of an analogy to batteries.
Speaker 3:Sure. Sure. We're talking about batteries. So there's a certain amount like, with a battery, if you hear there's a four gig there's a one gigawatt battery installation. That means that's the it usually means there's one gigawatt for four hours.
Speaker 3:Sure. But if you wanted to do half a gigawatt, then you could do eight hours. Yep. Right? Yep.
Speaker 3:It's it's the same deal with Okay. But keep in mind, this is not a hundred days of US oil demand. And by the way, for the refinery reasons, we can't just supply it all with our HPR. It's just the maximum output is but but, you know, 4,000,000 barrels a day is something we're talking that's one fifth of what's flowing through the Strait Of Hormuz. So if yeah.
Speaker 3:It's it's a But but, yeah, you can think of, yeah, maybe we'd be willing to do one to 2,000,000 barrels a day from ours. Now interestingly, the International Energy Agency we are part of the International Energy Agency reserve program.
Speaker 2:Mhmm.
Speaker 3:So we have about 400, but they have about one point four four hundred million. They have 1,400,000,000. So we have allies around the world
Speaker 1:Okay.
Speaker 3:That can also release this oil. So maybe we could get one to 2,000,000 from them. Now last at least last I checked the news, they hadn't agreed to do this because they don't think it's an emergency.
Speaker 2:Sure.
Speaker 3:But that's what it's there for. Yeah. So notice the pattern is we're
Speaker 2:What point would they think it's an emergency?
Speaker 3:I don't know. I mean and we, you know, we can put pressure on them. I I think I think some of these determinations have to be made in conjunction with the military determinations. You you can't make them in isolation. Because if you think about what's the military objective, how close are we to that?
Speaker 3:Or how close are we at least to opening this up via high security and financially backed convoys Mhmm. Then you can think about the timetable here. If you think about, well, the Strait Of Gormuz is gonna be closed for five years, let's just get used to being poor.
Speaker 1:Black pill.
Speaker 3:No. I mean, this is because people don't get oil. Like, oil is there's a reason why I focus a lot of my life on oil. Like, there is nothing more there's no material in the world of energy that is more valuable than oil because oil is just so unique in terms of it has this very high energy density and portability. And there there's nothing like I mean, nuclear has We're plutonium.
Speaker 3:Yeah. Yeah. Doesn't have the same portability.
Speaker 1:We're gonna be rich. We're gonna have energy too cheap to meter in five years. Yeah. I talked to a lot of nuclear founders.
Speaker 3:Well, look. I love nuclear as much anyway. They don't they don't even have a portability solution, though, for the near future unless you're talking about aircraft carrier or an icebreaker or something like that. So I'm just saying the world runs on mobility. Oh.
Speaker 3:And oil is ideal for mobility.
Speaker 1:So are gonna Portability in the sense of, like, using nuclear to actually power trade and commerce and moving ships around.
Speaker 3:Yeah. Yeah. I mean Even if
Speaker 1:you can power the grid, you will be poor because you will not be able to trade.
Speaker 3:Is that what Yeah. Trade is really important.
Speaker 1:Trade is really important.
Speaker 3:Trade is trade and well and also it's within the country too. We don't have the nuclear trucks to move things around. Sure. Sure. Sure.
Speaker 3:So so you obviously want super cheap electricity, and you want super cheap transport fuel. And for and and we wanna see if we can electrify some of this stuff Yeah. If you can do it cost effectively.
Speaker 2:It's just
Speaker 1:some people working on, like, electric bulldozers, for example. It's very hard. And
Speaker 3:And and get by the way, guess what? You need a lot of oil to even get that whole supply chain started because you need the mine. Yep. So, anyway, bottom line, yes. I I meant that thing about we can all be poor.
Speaker 3:Very serious. Yeah. Yeah. Yeah. Seriously.
Speaker 3:So we have if you look at the spare capacity, I think Mhmm. That's all of them. So we have the I the rest of the IEA. Mhmm. We have ours.
Speaker 3:And Mhmm. Then to my knowledge, we have Saudi slash UAE. Mhmm. Them using spare capacity and then piping it Mhmm. Where they can.
Speaker 3:So maybe combined, we're talking about 6,000,000 a day. Mhmm. If you use all of those, I mean, somebody could imagine 10,000,000 a day. And all of these have time, particularly the emergency reserve things. These all like, the at least the Saudi one is you're sort of you have a deposit a big deposit here.
Speaker 3:It's just you have a small reserve, so you can't do this forever. Sure. And, of course, there's a risk of if you deplete the SPR more. Yeah. What if you really, really need it Yep.
Speaker 3:In the future? And then there's a bunch of nearer term stuff that you can do. Mhmm. And some of which I like just because it could be done anyway. So number one to piss a whole bunch of people off is let's stop using this Jones Act.
Speaker 3:Do you know what this Jones Act thing is?
Speaker 1:Yeah. I've heard of it, but explain.
Speaker 3:So the Jones Act is a set of restrictions that say that you can only transport things among ports in The United States if you have everything is basically American. So it's owned by an American. It's run
Speaker 2:I don't know. All the it is all Yeah. It's basically American ship,
Speaker 1:American crew. Yes.
Speaker 3:Yes. So it's it's it leads to all these crazy crazy things like we end up importing things from like, instead of importing it from one part of the country to another, you end up importing it from some really faraway place. It it leads to that kind of thing. In this case in particular, this this as Californians, we should all recognize this. Yeah.
Speaker 3:We don't have oil being piped into California.
Speaker 1:Yeah.
Speaker 3:So we want very efficient maritime transportation. And if you suspend the Jones Act, then you can get more efficient transportation, which means we can at least have lower prices here, and we can have less of a price shock. Mhmm. But in general, I want people to get used to having no Jones Act because I want there to be no Jones Act. Sure.
Speaker 3:Sure. So that's that's a good thing to do. Mhmm. My favorite idea here
Speaker 2:And and the the I imagine there's a bunch of powerful lobbies that will fight for the Jones Act because there's Correct. Entire industry built around
Speaker 3:Yeah. They they that we can only have a good shipbuilding industry. Like, I don't know what people think is happening with our shipping our ship building industry is
Speaker 2:not going as well as other people. It didn't exactly work.
Speaker 3:Yeah. I mean, it worked to protect certain people's
Speaker 1:No.
Speaker 2:I'm just saying if you look at American shipbuilding, it's it's certainly Yes. Allowed us to be competitive on on a global state.
Speaker 1:The shipbuilders would say we're early, but I take your point.
Speaker 2:Early, but you've seen but I'm just saying,
Speaker 3:like It's like know,
Speaker 2:how many decades of declines
Speaker 3:Yeah. Okay.
Speaker 2:Well do you need?
Speaker 3:I I think John's like, we're still early.
Speaker 1:It's like a it's like a smiling curve, like churn. It goes down and then goes back up.
Speaker 3:So That's that's the bull case. That's that's the alright.
Speaker 1:Well, let's Yes.
Speaker 3:It's definitely not gonna help us. So so the here's the most interesting thing
Speaker 1:Yeah.
Speaker 3:Which I is a pet issue of mine Yeah. Is we're we're this administration, I should say, does a lot of good stuff on energy. Okay. I say that I you know, I'm in a fortunate position where I get a lot of people ask for advice and stuff like that. Mhmm.
Speaker 3:And I feel like one of my jobs is to tell people things they're not doing. Mhmm. A lot of things they'll just do right on their own, but but Canada is not one of those things right now. We are just absolutely sleeping on Canada as an opportunity. So Canada has no people and infinite resources
Speaker 1:Oh, yeah.
Speaker 3:And is really friendly. Yeah. So you do they have these oil sands. You know what these things are?
Speaker 1:You know, explain.
Speaker 3:So so they're just like these deposits of oil. It's like nature basically committed an oil spill Yeah. Is the way to think of it.
Speaker 1:Okay.
Speaker 3:So it's all these oil sands. For years, they were not very useful.
Speaker 1:They weren't viable because it's not just you drill down, black gold comes up. It's like buried in the sands need to
Speaker 3:be refined. Kinds of things. You can mine it out directly, or you can do what's called in situ, which is you heat it up underground.
Speaker 1:Oh, and it liquefies.
Speaker 3:In any case, we they have just this unbelievable oil seep. They have way more oil deposits than we do, way more oil reserves
Speaker 1:Okay.
Speaker 3:But they have on the order of a third of the production. Okay. And in part, because they have absolutely terrible policies, which are their fault. But in part, we have had terrible policies including getting rid of the Keystone XL pipeline
Speaker 1:Oh, yeah.
Speaker 3:And this kind of thing. So but if you just think of Canada, it's just we should be so they have water. I mean, they get no people, one tenth the population, infinite raw materials. They got everything. They got timber.
Speaker 3:They got natural gas. Yeah. They got oil. Yeah. Like and we're talking about Venezuela.
Speaker 3:They're a friendly country. Right? Where they got smart people there. They're they haven't been driven out of the country because they're afraid of getting killed by Chavez or Maduro or whatever. So this is an opportunity to say, hey.
Speaker 3:Canada, let's work. Let's have a task force. You guys are at a low in terms of we don't have pipelines, but we can do rail. At least we can do rail, maybe trucks, but at least rail. Rail transports from Canada are really low right now.
Speaker 1:K.
Speaker 3:So let's have an initiative where maybe you bring a couple 100,000 depending on your expectations, maybe we can add a couple 100,000 barrels a day. Mhmm. So that's one that excites me because I wanna be like, The US Canada superpower thing is this huge opportunity that we're sleeping on because of the idea of, oh, we should only be doing it in, quote, America. Oh, interesting. By the way, unbelievable.
Speaker 3:I think they have the best uranium in the world.
Speaker 1:Yeah.
Speaker 3:It's Maple syrups up there. Yeah. I don't have a Canadian personality, but I love that place.
Speaker 1:No.
Speaker 3:Strategically. That makes Strategically, and they're very friendly. Yes. They're very friendly.
Speaker 1:Maybe we should be friendlier.
Speaker 3:Yes. You know, we should, and we have trade agreements coming up. So there's that. Yes. Okay.
Speaker 3:Other thing is we have some you know, we can increase capacity here, as I mentioned, depending on prices going up. Yeah. So there's that. But that might be a couple $100,000 barrels a day. Mhmm.
Speaker 3:But so high level, open the Strait Of Hormuz. That's the only thing that really works. Mhmm. Then you can talk about Saudi Mideast spare capacity, our emergency capacity, and IEA emergency capacity. And then below that, you have Canada Jones Act and US That's great.
Speaker 3:Production.
Speaker 1:That's a really, really thorough list. Thank you. I appreciate that. Anything else, Jordy?
Speaker 2:What are you what are you gonna be paying attention to most closely? Do you
Speaker 1:watch price chart? Is that important to you?
Speaker 3:Well, it's important. I mean, I I'm it's weird. I work with I run, like, a kind of a network of energy executives, but I'm focused on the policy side of things.
Speaker 1:Sure.
Speaker 3:So I'm often laughably out of touch. I mean, I know in general within $10 usually what it is. Yeah. But I as a policy, I don't I don't invest in energy.
Speaker 1:Looking at longer term five
Speaker 3:But but also, like, I'm deliberately avoiding exposure to the commercial part of it because Of course.
Speaker 1:Yeah. You wanna be independent.
Speaker 3:Yeah. I would I wanna be independent. So That makes sense. Yeah. I'm not but at the moment, yes, I am looking I I am looking at the prices.
Speaker 3:Okay. But but I'm I I don't do predictions, but I'm just saying I think there's a service right now in just laying out the options for people because
Speaker 1:Yeah.
Speaker 3:Even in the government, I mean, you know, not everyone has a lot of expertise in Mhmm. In oil. And this is the kind of thing where yeah. It's kind of why I think you texted me this morning. I mean, sometimes you need to know sometimes you need to know about oil today, and sometimes you don't.
Speaker 3:But when you need to know, you need to
Speaker 1:You know me.
Speaker 3:You really need to know.
Speaker 1:Yeah. Well, it seems like whether you're in the business community or just, you know, humanitarian, everyone should be rooting for a swift and peaceful resolution.
Speaker 2:Yeah. Do you do you have any insight? This this might be totally out of your wheelhouse, but insight into how how people running businesses that are most impacted by fluctuations in oil prices. Like, are they were they have they been actively hedging over the last couple weeks? Are they doing like, how how do you run your business when your input costs can go up dramatically potentially at a much higher rate than you can adjust your own prices?
Speaker 3:I mean, just in general, these guys are sophisticated, I think, within the bounds of doing it. I don't think you can hedge indefinitely for this bigger price kind of differential like somebody's gonna say. I mean but it's it's also you you think about there's on the consumer side, but on the production side is is even more dramatic if you just look at the margins of these guys. The I mean, the oil industry is just just fascinating. I mean, I just remember anecdotally when I I came out with my first major book, the moral case for fossil fuels in 2014.
Speaker 3:Even I could see speaking engagements correlated to these prices because you had a big price crash around them. Yeah. And then you think, wow. Like Yeah.
Speaker 2:We don't need we don't need Alex.
Speaker 3:Yeah. Yeah. Variable variable yeah. It might be nice to keep the troops motivated, but, you know, they'd probably rather be employed. That's right.
Speaker 3:Yeah. But it it's it's a hard it's a hard business. Yeah. And one of these things is you just the people who survive have a very strong constitution. Mhmm.
Speaker 3:And and they they they can manage the risk very, very Mhmm. Well, I was talking with with a bunch of these these guys and actually some people we know in common. And, like, some of the better ones, some of the two of the young superstars in in the industry, they're just saying, like, like, we love the chaos because we can just no. We can handle it, like, when the prices go down.
Speaker 1:Sure.
Speaker 3:Because that that's you think about what they've been dealing with over the last year. They've increased production. Prices have gone down. Yeah. And and you look at this.
Speaker 3:This administration is very focused, I would say, too much focused on having prices go low. Like, this is this is one of the variables here is although the administration, I don't think, was fully was not fully prepared for this situation. In general, they are maniacal about prices going low. Like, Trump in his mind has a very strong focus on $50 a barrel, which I think he feels like that's always the perfect price for oil. Sure.
Speaker 3:And the people in the oil industry say, wait a second. Like, we had inflation of everything else. Why does our one product Yeah.
Speaker 1:Yeah. Yeah.
Speaker 3:Have to stay at $50? And that's part of the appeal of Venezuela rightly or wrongly because it's not gonna make a big difference soon. But it's like, how do we keep oil prices Low. Low.
Speaker 1:Yeah.
Speaker 3:But that's that's hard to be in that industry as a consumer
Speaker 1:Mhmm.
Speaker 3:As as a as a producer rather, and it's hard as a consumer. So they have financial instruments, but the main thing is you just you need to you need to just have the flexibility in your business in your business model. And it's it's oil is, again, it's the most valuable material in the world of energy Mhmm. Which is why everyone uses it, but it's also why it's so inelastic and you have these price fluctuations. So you just need to come to terms with that, or somebody needs to figure out something better.
Speaker 3:But it's it's really hard. And, of course, policy wise, we can have better policy to make it more stable, but it's still that thing where it's so valuable that guess what? You get a little extra demand, a little less supply. Price goes up a lot. It's it's it's different than other things which you can substitute for much more rapidly.
Speaker 1:You're out of a job when we build the Dyson sphere.
Speaker 3:Oh, man. I got I'm I'm working on this AI thought leader thing we talked about last time. So I got Okay. I got plenty to do. We'll cross
Speaker 1:that bridge when we get
Speaker 3:I got plenty to do with my time.
Speaker 2:Yeah. You're Thank you. As long as we need energy, you'll you'll be doing just fine.
Speaker 3:Alright, guys.
Speaker 1:Thank you so much for coming on the show.