Big Digital Energy

00:00:01 [Speaker 1]
Hey, everybody.
00:00:02 [Speaker 1]
Welcome to BDE.
00:00:04 [Speaker 1]
Guess who's back?
00:00:05 [Speaker 1]
Back again.
00:00:07 [Speaker 1]
Mark is back.

00:00:08 [Speaker 1]
Tell a friend.
00:00:10 [Speaker 1]
That's who's back.
00:00:11 [Speaker 1]
Guess who's back?
00:00:12 [Speaker 1]
Guess who

00:00:12 [Speaker 2]
Dude, it's OU weekend, boys.
00:00:15 [Speaker 2]
What a great week to be back in Dallas of

00:00:18 [Speaker 1]
all of that.
00:00:19 [Speaker 1]
Red River Shootout.

00:00:20 [Speaker 3]
Sir, as in Aggie, it's baseball season.

00:00:24 [Speaker 2]
Gosh.
00:00:27 [Speaker 2]
Wah wah.

00:00:28 [Speaker 1]
Hold on.
00:00:28 [Speaker 1]
We actually need

00:00:29 [Speaker 2]
that we talk about non energy stuff on this show, and I'd say, you know what?
00:00:35 [Speaker 2]
Keep the comments coming.

00:00:37 [Speaker 3]
It's all energy.

00:00:38 [Speaker 1]
Well, hold on.
00:00:40 [Speaker 1]
Actually, it's gonna be a bit of a sad moment for just...
00:00:43 [Speaker 1]
It was six years ago today.
00:00:46 [Speaker 1]
I was sitting in my office.
00:00:48 [Speaker 1]
It was middle of COVID.

00:00:50 [Speaker 1]
Daughter, Sarah, was having a field hockey game, and a buddy texted me and said, Chuck, I am so sorry.
00:01:00 [Speaker 1]
And I texted back, oh my god.
00:01:01 [Speaker 1]
What are you talking about?
00:01:03 [Speaker 1]
And he texted back the, news that Eddie Van Halen had passed away.
00:01:08 [Speaker 1]
And I went out, got in my car to drive into Houston to see Sarah's field hockey game.

00:01:13 [Speaker 1]
I played jump, and I wept.
00:01:17 [Speaker 1]
Eddie was always my dude.

00:01:20 [Speaker 3]
Yep.
00:01:21 [Speaker 3]
I

00:01:21 [Speaker 2]
don't know if that's blasphemous Chuck, but Chuck wept.
00:01:24 [Speaker 2]
It might be That's a fair

00:01:27 [Speaker 1]
fair fair fair enough.
00:01:29 [Speaker 1]
Real quick while we're still on, Eddie.
00:01:31 [Speaker 1]
Two things about Eddie.
00:01:34 [Speaker 1]
One, and most importantly, no one enjoyed playing the guitar more than Eddie Van Halen, and it showed.
00:01:41 [Speaker 1]
I mean, you could not go to a Van Halen show and not just see Eddie tickled pink that he was getting to play the guitar.

00:01:49 [Speaker 1]
It was awesome.
00:01:51 [Speaker 1]
And second, and I think this is somewhat underappreciated, he was really our first guitar hero that wasn't a blues guitarist.
00:02:03 [Speaker 1]
If you think about, you know, Jimi Hendrix, Jimmy Page, Eric Clapton, all those guys we think of that came before, all driven by kind of, like, bluesy backgrounds, Keith Richards, all those guys.
00:02:17 [Speaker 1]
Eddie was the first one that wasn't a blues dude.
00:02:20 [Speaker 1]
Probably grew up more on the Beach Boys.

00:02:22 [Speaker 1]
So, anyway, rest in peace, Eddie Van Halen.
00:02:25 [Speaker 1]
I still miss you.

00:02:27 [Speaker 2]
Thanks, Chuck.

00:02:29 [Speaker 3]
And another sad news,

00:02:32 [Speaker 2]
Chuck

00:02:33 [Speaker 1]
Oh, man.
00:02:34 [Speaker 1]
Let's just pile on.

00:02:36 [Speaker 3]
Rice Stadium is no more.
00:02:41 [Speaker 3]
As of, what, Saturday's game, it's now 1st Community Stadium?
00:02:46 [Speaker 3]
I mean, is nothing sacred?

00:02:49 [Speaker 1]
This this is actually kind of, like, tugging at me because the the goal of my lifetime was always Yates Stadium at right...
00:03:01 [Speaker 1]
You know, at Rice University.
00:03:05 [Speaker 1]
And, I never made enough money that I could give the naming gift, for Rice Stadium and have it changed to to Yates Stadium, and I was gonna put a statue of myself out front.
00:03:19 [Speaker 1]
So...

00:03:19 [Speaker 2]
You know, U of h U of h plays at TDECU Stadium.
00:03:25 [Speaker 2]
Rice plays at 1st Community Stadium.
00:03:29 [Speaker 2]
The Bayou bucket is now a deposit rate war.
00:03:33 [Speaker 2]
And as a Texan whose family received land grants from general Santa Ana himself, I find this personally offensive.
00:03:42 [Speaker 2]
And by the way, JFK said, remember, we choose to go to the moon brought to you by competitive auto loan rates and free checking with direct deposit.

00:03:54 [Speaker 2]
I mean, this is ridiculous, Chuck.
00:03:56 [Speaker 2]
And what I don't understand is, are you renewing the...
00:03:59 [Speaker 2]
Your season tickets or demanding free checking for alumni reparations?

00:04:04 [Speaker 1]
Oh, I like that.
00:04:06 [Speaker 1]
Maybe that...
00:04:06 [Speaker 1]
Maybe that's when they call and ask for the, the check.
00:04:09 [Speaker 1]
I'll, do that.
00:04:11 [Speaker 1]
Supposedly, two two great Rice stories on the stadium.

00:04:16 [Speaker 1]
Brown and Root was building the stadium, and it was built in, like, a rush job.
00:04:22 [Speaker 1]
And the first game was September 11 on a Saturday.
00:04:27 [Speaker 1]
So come about August, the foreman of the job from Brown and Root calls the athletic director and says, hey.
00:04:36 [Speaker 1]
When's that, when's the first game?
00:04:38 [Speaker 1]
And he goes, Saturday, September 11.

00:04:40 [Speaker 1]
He goes, okay.
00:04:41 [Speaker 1]
Great.
00:04:41 [Speaker 1]
Got it.
00:04:42 [Speaker 1]
Three weeks later, he called back and said, hey.
00:04:45 [Speaker 1]
Is it a day game or a night game?

00:04:54 [Speaker 3]
My first my first experience in Rice Stadium boys was Super Bowl eight.
00:05:01 [Speaker 3]
I was but a wee young man.
00:05:03 [Speaker 3]
And the sum total of Super Bowl entertainment, both pregame and halftime, was the University of Texas marching band.

00:05:14 [Speaker 2]
Well, I mean, the fact that Super Bowl eight needed UT's marching band because the mob was apparently too weird for national television.
00:05:25 [Speaker 2]
Tells you everything about Rice's institutional priorities, but I love it.
00:05:30 [Speaker 2]
Like, I love it.
00:05:32 [Speaker 2]
I mean, they'll take naming rights money, but the Super Bowl, the NFL won't even let the mob even near a a television camera.
00:05:45 [Speaker 2]
I I went to the games at Rice Stadium when the Horns were playing, of course, for one reason, one reason alone, to watch the mob.

00:05:53 [Speaker 2]
They're hilarious.

00:05:55 [Speaker 1]
And I think the Super Bowl was...
00:05:58 [Speaker 1]
And the reason the Rice ban wasn't there is that was just less than two years removed from the Texas Aggies surrounding Rice Stadium, the core with their saber drawn because the Rice band had gone out, on stage...
00:06:15 [Speaker 1]
On the field at halftime, and Reveille had just died.
00:06:18 [Speaker 1]
So they formed a fire hydrant in Play Doh, where, oh, where is my little dog gone?
00:06:23 [Speaker 1]
And it it pissed the coral.

00:06:26 [Speaker 1]
Little known fact about that Rice Mob show, Marvin Zendler was out there twirling the baton.

00:06:34 [Speaker 2]
Oh, wow.
00:06:35 [Speaker 2]
Yeah.
00:06:35 [Speaker 2]
You know what's so funny is why is...
00:06:37 [Speaker 2]
Why are Aggies all...
00:06:39 [Speaker 2]
Why are the...

00:06:39 [Speaker 2]
Why is the Aggie core, Mark, always pulling their sabers out?
00:06:43 [Speaker 2]
Like...

00:06:44 [Speaker 3]
I was at that game in Kyle Field.

00:06:47 [Speaker 2]
I just, like, look at him, like, what are you doing?

00:06:50 [Speaker 3]
Greg Hood pulled his saber on the SMU cheerleaders.

00:06:54 [Speaker 1]
There you go.

00:06:55 [Speaker 3]
Nineteen eighty one.

00:06:56 [Speaker 1]
Alright.
00:06:57 [Speaker 1]
One last trivia question, then we will get to, energy.
00:07:01 [Speaker 1]
There have been four stadiums that have hosted a Super Bowl but did not host an NFL team during the regular season.
00:07:12 [Speaker 1]
Rice Stadium being one of them, name the other three.

00:07:17 [Speaker 2]
I mean, no idea.

00:07:19 [Speaker 3]
Tulane?

00:07:21 [Speaker 2]
Tulane.
00:07:21 [Speaker 2]
Yes.
00:07:22 [Speaker 2]
Rose Bowl.

00:07:23 [Speaker 1]
Rose Bowl.
00:07:24 [Speaker 1]
Rose Bowl.
00:07:24 [Speaker 1]
Yes.

00:07:25 [Speaker 2]
For sure.

00:07:26 [Speaker 3]
And the

00:07:26 [Speaker 1]
final one, Stanford.
00:07:27 [Speaker 1]
Stanford hosted us at Super Bowl back in the day.
00:07:31 [Speaker 1]
So...

00:07:32 [Speaker 2]
Alright.
00:07:33 [Speaker 2]
Now look that up.

00:07:35 [Speaker 1]
Now now this is, like, so depressing.
00:07:38 [Speaker 1]
Let's go to diesel or some shit like that.

00:07:42 [Speaker 3]
Hey.
00:07:42 [Speaker 3]
At least it's not the IEA.

00:07:43 [Speaker 2]
People are listening.
00:07:44 [Speaker 2]
So, Mark, set it up.

00:07:47 [Speaker 3]
Yeah.
00:07:48 [Speaker 3]
You know, another BDE leading off with diesel, which seems like a month of Sunday's worth of diesel leading the way.
00:07:56 [Speaker 3]
But, you know, the...
00:07:59 [Speaker 3]
There there have been some pivots on the so called outright ban that Trump was talking about early on in considering.
00:08:08 [Speaker 3]
Several in his cabinet apparently, advised otherwise.

00:08:11 [Speaker 3]
And then last week we hear that Europeans are finally going to authorize a release of a 100,000,000 barrels.
00:08:18 [Speaker 3]
And keep in mind, most of European storage is refined product.
00:08:22 [Speaker 3]
So a 100,000,000 barrels, diesel kind of shrugged that off yesterday.
00:08:27 [Speaker 3]
I mean, Valero reached another high, on its closed almost 04:20.
00:08:33 [Speaker 3]
And so, you know, what do you guys make of this?

00:08:37 [Speaker 3]
Did...
00:08:38 [Speaker 3]
Was was the president acting on impulse before kinda consulting the experts and figuring out the realities, or was this all a master plan to arm twist the Europeans to release refined product?

00:08:56 [Speaker 2]
Well, I mean, I think Trump's on Ritalin for sure, but let let let me just go through the timeline and you you tell me.
00:09:04 [Speaker 2]
Monday, the president threatens to ban diesel exports.
00:09:09 [Speaker 2]
Tuesday, his energy secretary tells oil CEOs a ninety day ban is coming.
00:09:14 [Speaker 2]
Wednesday, his energy secretary, his interior secretary, and his treasury secretary all publicly say it won't work.
00:09:23 [Speaker 2]
Thursday, Exxon's CEO walks into the White House.

00:09:27 [Speaker 2]
Friday, a joint letter from the Chamber of Commerce, the business roundtable, NAM, and API arrives.
00:09:34 [Speaker 2]
Saturday, the White House calls the whole thing fake news.
00:09:38 [Speaker 2]
The following Friday, Europe releases a 100,000,000 barrels of emergency reserves, and the president calls it a victory.
00:09:46 [Speaker 2]
I mean, what do you say?
00:09:49 [Speaker 2]
That sounds like there's a bunch of chaos going on.

00:09:53 [Speaker 1]
Felt kinda like whack a mole to me on the on the whole thing, but if Trump wants to come out and say it was the art of the deal and he backed the Europeans down, I mean, fair enough.
00:10:06 [Speaker 1]
Go go, girl.
00:10:08 [Speaker 1]
Go.
00:10:08 [Speaker 1]
I, I am a little, pissed off that they've lectured Texas...
00:10:13 [Speaker 1]
Europeans have lectured Texas Now they want payback in barrels.

00:10:20 [Speaker 1]
Come on.
00:10:20 [Speaker 1]
Right.
00:10:21 [Speaker 1]
Exactly.
00:10:21 [Speaker 1]
Thank you.
00:10:22 [Speaker 1]
Come on, guys.

00:10:23 [Speaker 1]
You're welcome.

00:10:26 [Speaker 2]
Doomburg had a piece...

00:10:27 [Speaker 3]
Doomburg had a piece out this weekend talking about, you know, the the industry needs to be careful here and essentially needs to play ball, via the whatever voluntary measures they can take.
00:10:45 [Speaker 3]
Because the notion of a change in power in Congress and ultimately looking ahead to 2028, the administration is much more damaging to the industry than playing a little political ball here.
00:11:02 [Speaker 3]
What do you guys think about that?

00:11:09 [Speaker 2]
Yeah.
00:11:09 [Speaker 2]
Good good good good bad guys.

00:11:11 [Speaker 1]
I'm I'm I'm I'm hoping Kirk goes on that one.

00:11:15 [Speaker 2]
No.
00:11:15 [Speaker 2]
I was just thinking about some of the...
00:11:17 [Speaker 2]
I mean, there's so much news to talk about here that's actually relatively interesting, but I I thought Chris Wright publicly contradicting the president is the underrated story here.
00:11:28 [Speaker 2]
I mean, he said it wouldn't work.
00:11:30 [Speaker 2]
And I don't know if it was either brave, coordinated, or a signal that Wright is the only person in the cabinet who understands how the energy industry works.

00:11:43 [Speaker 2]
That to me is the store...
00:11:45 [Speaker 2]
Is one of the stories, but then the market told us everything.
00:11:48 [Speaker 2]
I mean, European diesel fell 8%.
00:11:51 [Speaker 2]
Diesel futures dropped five and a half percent.
00:11:56 [Speaker 2]
Brent moved 6¢.

00:11:57 [Speaker 2]
6¢.
00:11:59 [Speaker 2]
So the product market treated this as a product fix.
00:12:06 [Speaker 2]
I I don't know.
00:12:08 [Speaker 2]
And by the way, Hormuz is still contested.
00:12:11 [Speaker 2]
So I I know anyway, let me let me stop there because there's so much more to to jump into.

00:12:18 [Speaker 1]
Well well, I do think at the end of the day, Europe talked about releasing from their strategic reserve.
00:12:26 [Speaker 1]
Doesn't strategy mean you have a plan?
00:12:29 [Speaker 1]
It doesn't feel like they have a plan.
00:12:31 [Speaker 1]
So I'm a...
00:12:33 [Speaker 1]
I'm I'm kinda with you on Kirk that this is just all over the place.

00:12:37 [Speaker 1]
The one point I will make about this of, you know, playing ball and need to do this, Trump is missing a huge campaign opportunity.
00:12:46 [Speaker 1]
The Republicans tomorrow ought to introduce a bill to just build more refineries.
00:12:52 [Speaker 1]
We want cheaper gasoline prices.
00:12:54 [Speaker 1]
Let's produce more.
00:12:55 [Speaker 1]
Those damn Democrats haven't let us do it since 1977.

00:13:00 [Speaker 1]
Make them shoot down that bill because you know they will, but give them, like, thirty days for environmental review.
00:13:07 [Speaker 1]
We've talked about this on previous episodes.
00:13:10 [Speaker 1]
Give them the litany, introduce it, and just campaign.
00:13:13 [Speaker 1]
Go to every single democratic district that's on the fence.
00:13:17 [Speaker 1]
You want lower fuel prices?

00:13:20 [Speaker 1]
Go ahead and vote for this bill.

00:13:23 [Speaker 2]
Hey, Chuck.
00:13:24 [Speaker 2]
Question from the audience.
00:13:25 [Speaker 2]
Did Chris Wright publicly contradict Trump on the diesel ban make him stronger or weaker inside the administration?
00:13:36 [Speaker 2]
And did you talk to Chris?

00:13:38 [Speaker 1]
I I I have not talked to Chris in in in quite a while.
00:13:41 [Speaker 1]
But the, I mean, the fact that Trump didn't come out and blast him on on truth social to me seems like maybe there was some coordination there.
00:13:52 [Speaker 1]
So maybe Chris is in good standing.

00:13:54 [Speaker 3]
He didn't get Rex Tillerson.

00:13:57 [Speaker 1]
He did not get Rex Tillerson.
00:13:58 [Speaker 1]
Exactly.

00:13:59 [Speaker 2]
Hey.
00:14:00 [Speaker 2]
I'm curious.
00:14:01 [Speaker 2]
Mark, is a 100,000,000 barrels enough?
00:14:03 [Speaker 2]
I mean, Russia's hoarding, China's hoarding.
00:14:06 [Speaker 2]
The g seven releases less than a million barrels a day for four months.

00:14:12 [Speaker 3]
Don't forget about India.

00:14:14 [Speaker 2]
Russia alone used to export 1,100,000 barrels a day of seaborne diesel that is now gone.
00:14:21 [Speaker 2]
So it doesn't cover the Russia hole.
00:14:24 [Speaker 2]
And let him...
00:14:24 [Speaker 2]
Let alone the Hormuz hole, what what do you think?
00:14:28 [Speaker 2]
Does it just buy time?

00:14:29 [Speaker 2]
Or is it

00:14:30 [Speaker 3]
Yeah.
00:14:30 [Speaker 3]
I think it buys time.
00:14:32 [Speaker 3]
And, you know, with respect to ultimately the the lever that gets pulled hardest here is demand.
00:14:39 [Speaker 3]
That hasn't really shown up in size in terms of of relief in product inventory build.
00:14:44 [Speaker 3]
So we're still in a very tight global product situation.

00:14:48 [Speaker 3]
It is it is a refining capacity and and throughput issue, which again brings up the question of how hard and how fast can they continue to run, particularly as you enter fall regular turnaround season.
00:15:06 [Speaker 3]
So...

00:15:07 [Speaker 2]
I mean, just midterm math here, November 3 is four weeks out.
00:15:12 [Speaker 2]
The 25 to 50¢ pump relief takes two to three weeks to show up, and that's not even even close to enough if it shows up at all, by the way, which means voters go to the polls seeing $6 diesel dropping towards, you know, maybe the high fives.
00:15:34 [Speaker 2]
That's not a victory lap at all.
00:15:35 [Speaker 2]
I I see this potentially for the pubs gonna be a bloodbath.
00:15:41 [Speaker 2]
And by the way, I know what happened, last, senate election in The US, but Tallerico, you might have to...

00:15:51 [Speaker 2]
I I hate to say it, sitting in Dallas.
00:15:54 [Speaker 2]
That dude has a chance here in Texas.

00:15:58 [Speaker 1]
Yeah.
00:15:58 [Speaker 1]
No.
00:15:58 [Speaker 1]
I think so.
00:15:59 [Speaker 1]
Now, Kirk, I apologize for...
00:16:03 [Speaker 1]
In advance for what I'm about to do.

00:16:06 [Speaker 1]
This is gonna be painful.
00:16:07 [Speaker 1]
I'm even gonna apologize to our listeners, but this is how much I love Mark Meyer, my my brother in arms here.
00:16:15 [Speaker 1]
Mark, wasn't it the IEA that actually coordinated the release of these barrels?

00:16:21 [Speaker 3]
Yeah.
00:16:22 [Speaker 3]
Way back when.
00:16:22 [Speaker 3]
What was it?
00:16:23 [Speaker 3]
Was it 400 or 472,000,000 barrels, back in the spring or early summer.
00:16:30 [Speaker 3]
Yeah.

00:16:31 [Speaker 3]
It was the IEA.

00:16:32 [Speaker 1]
Yeah.
00:16:33 [Speaker 1]
And what have those guys been telling us for the last decade?

00:16:39 [Speaker 3]
Don't don't invest in future exploration and development and growth in oil capacity.

00:16:45 [Speaker 2]
The only the only reason, Chuck, I'll ever let you forgive you for going to the IEA is if in a year from now, Mark Myers is actually chairman of IEA, and you and I would just be laughing our asses off.

00:17:02 [Speaker 1]
Oh, yeah.
00:17:02 [Speaker 1]
No.
00:17:02 [Speaker 1]
I, I totally was just setting up the line.
00:17:05 [Speaker 1]
We're gonna we're gonna congratulate the arsonist for showing up with a bucket of water to put out the fire.

00:17:15 [Speaker 2]
Touche, well played.
00:17:16 [Speaker 2]
Well played.
00:17:17 [Speaker 2]
Hey, man.

00:17:17 [Speaker 3]
You said it.
00:17:18 [Speaker 3]
I didn't.

00:17:19 [Speaker 1]
I know.
00:17:20 [Speaker 1]
The the amount of reserve you just displayed there was, was quite impressive.

00:17:26 [Speaker 3]
So so thinking back to more than two years ago, we started talking about, you know, in the midst of the the late stages of the campaign, the presidential campaign, we started talking about gasoline prices and your repeat mantra that Trump is a loyal oil price guy.
00:17:48 [Speaker 3]
And, you know, there are a lot of people saying, well, that doesn't really matter anymore.
00:17:52 [Speaker 3]
Gasoline's been one of the best bargains.
00:17:54 [Speaker 3]
And I think we made the counterargument is that's what you see as a consumer every day.
00:17:59 [Speaker 3]
So, Jacob, play the first TikTok clip.

00:18:04 [Speaker 3]
And I think this is indicative of the mindset going into November 3.

00:18:10 [Speaker 4]
Or the government telling private businesses they can't sell their product internationally.
00:18:18 [Speaker 4]
You're for that.
00:18:19 [Speaker 4]
So you love big government.
00:18:22 [Speaker 4]
You love the president being able to tell a private company they can't sell their product internationally.
00:18:31 [Speaker 4]
You could just end the war that you started.

00:18:34 [Speaker 4]
You could just finally admit defeat or just say you won, walk away, but, no, you wanna ban diesel exports because you think that's a short term solution?
00:18:48 [Speaker 4]
Interesting.

00:18:49 [Speaker 1]
So you're

00:18:54 [Speaker 3]
I I just think there's, you know, plenty of carryover residual anger and knee jerk going into the voting booth in November 3, have it...
00:19:02 [Speaker 3]
Having gone through a summer of very elevated gasoline and diesel prices, against the backdrop of campaign promises that were, you know, suggesting that we're gonna get below three and in some cases below two.
00:19:19 [Speaker 3]
So those optics really matter.
00:19:21 [Speaker 3]
And I I think the simple analysis is I'm still hurting or I remember how painful this summer was.
00:19:28 [Speaker 3]
I'm gonna try something else.

00:19:30 [Speaker 3]
That...
00:19:30 [Speaker 3]
That's what I worry about.
00:19:31 [Speaker 3]
I just don't think there's enough runway left to to really make a sea change from an actual price experience for the consumer, to make a big difference going into November 3.
00:19:42 [Speaker 3]
What do you guys think?

00:19:43 [Speaker 1]
Well, I mean, let's just...
00:19:46 [Speaker 1]
Let's take this simply.
00:19:47 [Speaker 1]
We haven't built a major refinery in The United States since 1977.
00:19:53 [Speaker 1]
Show of hands, who thinks the Republicans have said no versus who the Democrats have said no?
00:19:59 [Speaker 1]
I'm old enough to remember when the Democratic Party's stated position was we need higher fuel prices to cut demand because demand was gonna end the world.

00:20:10 [Speaker 1]
We then spent the last few years democratic led, but on a bipartisan basis, I will admit, funding Ukraine, and we have totally given Ukraine permission to go in and blow up Russian refineries, and they're...
00:20:28 [Speaker 1]
And we're we're fanning that flame.
00:20:31 [Speaker 1]
How dare you come back and say, oh my gosh.
00:20:35 [Speaker 1]
Product prices are too high.
00:20:37 [Speaker 1]
Give me a freaking break.

00:20:38 [Speaker 1]
I mean, the logical inconsistency here of this is all Trump's fault when we've had a discombobulated energy policy driven by environmentalist wackos for the last twenty five years is just...
00:20:53 [Speaker 1]
It's brain dead.
00:20:54 [Speaker 1]
It's nonsensical.
00:20:57 [Speaker 1]
Give me a fucking break.

00:20:59 [Speaker 2]
I mean, you have you have people that are just gonna be, like...
00:21:03 [Speaker 2]
You have the hardliners.
00:21:04 [Speaker 2]
The Democrats vote Democrat, straight ticket.
00:21:07 [Speaker 2]
The hardcore Republicans vote, straight ticket.
00:21:11 [Speaker 2]
But I think you're having more swing voters more...

00:21:14 [Speaker 2]
Now more than ever.
00:21:16 [Speaker 2]
And you've been watching the Republicans grift off Ukraine and all this bullshit, not really standing up, but, in fact, getting rich just like everyone else in the...
00:21:29 [Speaker 2]
In congress.
00:21:31 [Speaker 2]
I I see this not working out well for the Republicans at all because memories are short lived.
00:21:39 [Speaker 2]
I mean, we remember, but no one under...

00:21:42 [Speaker 2]
Younger than us remembers anything and care...
00:21:45 [Speaker 2]
Nor cares.
00:21:46 [Speaker 2]
But they see $6 at the pump, that changes everything for them, especially with these millennials that aren't making as much as our generation.
00:21:58 [Speaker 2]
I mean, what does that do to them?
00:22:00 [Speaker 2]
It changes everything.

00:22:02 [Speaker 2]
Their credit card bills are worse.
00:22:06 [Speaker 2]
I'm just saying, like, this is...
00:22:08 [Speaker 2]
The Trump administration, like, that's an...
00:22:11 [Speaker 2]
That's a big f for how they've handled this whole situation.
00:22:14 [Speaker 2]
And I love that guy's voice, by the way.

00:22:16 [Speaker 2]
It kinda creeps me out.
00:22:19 [Speaker 2]
I love that.

00:22:24 [Speaker 3]
Look.
00:22:25 [Speaker 3]
It's it's it's just simple association.
00:22:28 [Speaker 3]
Right?
00:22:29 [Speaker 3]
That...
00:22:30 [Speaker 3]
We...

00:22:31 [Speaker 3]
We've said often, differentiate between energy ignorance and stupidity.
00:22:37 [Speaker 3]
People aren't stupid.
00:22:39 [Speaker 3]
They just haven't cared enough to kind of dig in and do root cause analysis.

00:22:44 [Speaker 1]
Well, and quite frankly, it's on us too in the energy business of not articulating this.
00:22:49 [Speaker 1]
I mean, we sit in our our little silos there and say, oh, we can't go out and say our story because people will be mean to us.
00:22:57 [Speaker 1]
And in a vacuum, we know what happens.
00:23:00 [Speaker 1]
The other side fills and wins.
00:23:02 [Speaker 1]
And so we've kinda seeded the narrative to the other side.

00:23:06 [Speaker 1]
And and then when we go out and we try to do energy education, we throw facts, figures, and logic at it, which is the worst way.
00:23:16 [Speaker 1]
Nobody tells a story.
00:23:17 [Speaker 1]
And I love I love Epstein.
00:23:21 [Speaker 1]
He's good.
00:23:22 [Speaker 1]
He gets out there.

00:23:23 [Speaker 1]
He does a great job of fighting, but he also just comes off as so belligerent.
00:23:28 [Speaker 1]
We need to have some cheery people, some fat, happy people that go out.
00:23:33 [Speaker 1]
Oh, energy is great.
00:23:34 [Speaker 1]
You know, kinda lovey dovey stuff.
00:23:36 [Speaker 1]
But we, we just haven't done it.

00:23:38 [Speaker 1]
So to some degree, it's on us too.

00:23:41 [Speaker 2]
I mean, maybe, Chuck.
00:23:42 [Speaker 2]
Maybe you're right.
00:23:44 [Speaker 2]
I'll start eating more....
00:23:46 [Speaker 2]
To the I'm moving on to the next story because because I'm...
00:23:50 [Speaker 2]
We're on a roll here.

00:23:53 [Speaker 2]
16 trucking companies filed bankruptcy in one month.
00:23:58 [Speaker 2]
So the gas prices, not only is...
00:24:01 [Speaker 2]
It's impacting the entire supply chain.
00:24:04 [Speaker 2]
16 trucking companies.
00:24:06 [Speaker 2]
And, I mean, I think, Mark, thank you for putting together Run a Show, But most of these companies were already in trouble.

00:24:15 [Speaker 2]
High leverage, old financial problems from 2022 to 2025, freight recession ground them down, by the way.
00:24:24 [Speaker 2]
Now diesel at $6.53 is not necessarily the killer.
00:24:27 [Speaker 2]
It's the corner.
00:24:29 [Speaker 2]
And I think there's a...
00:24:32 [Speaker 2]
It's just gonna...

00:24:33 [Speaker 2]
It just continues to impact and impact because, really, the the gas prices is a lagging indicator, and we've been talking about, you know, in the spring how how, you know, the fall is gonna be time time to come home and roost and pay pay the piper.
00:24:52 [Speaker 2]
We're seeing it.
00:24:54 [Speaker 2]
And it happens to be an election year.

00:24:58 [Speaker 3]
And we're gonna see more of it to come as it as it flows through or trickles down.
00:25:03 [Speaker 3]
Right?
00:25:04 [Speaker 3]
I mean, you look at these cross country load estimates, that's $3,000 in fuel for a cross country haul at six fifty and assuming seven miles a gallon, and it's landing during harvest season.
00:25:19 [Speaker 3]
So there is that harvest season competition for the fuel as well.
00:25:24 [Speaker 3]
You're right.

00:25:25 [Speaker 3]
I mean, this...
00:25:25 [Speaker 3]
There...
00:25:25 [Speaker 3]
There's a lot of parallels here with trucking and what have we seen in the past couple of down cycles on the E and P side.
00:25:33 [Speaker 3]
Who are the guys that end up getting in trouble and file chapter 11 and reinvent themselves and then file chapter 22 as it's somewhat referred to.
00:25:44 [Speaker 3]
But, yeah, debt debt is a problem.

00:25:48 [Speaker 3]
And Arjun Murthy has been out for the last ten years talking about the need for a fortress balance sheet.
00:25:53 [Speaker 3]
So you're right.
00:25:54 [Speaker 3]
Diesel didn't cause this, but it was it was a hell of a spark.
00:25:58 [Speaker 3]
And I don't know if

00:25:59 [Speaker 2]
Ray Ray makes a good point.
00:26:02 [Speaker 2]
Is diesel killing these trucking companies or just finishing off ones already in trouble?
00:26:06 [Speaker 2]
Absolutely.
00:26:07 [Speaker 2]
These guys...
00:26:08 [Speaker 2]
I mean, if you've...

00:26:09 [Speaker 2]
I've known a few trucking companies, by the way.
00:26:11 [Speaker 2]
In fact, my neighbor owns one or owned.
00:26:14 [Speaker 2]
I don't know.
00:26:14 [Speaker 2]
I need to call them.
00:26:17 [Speaker 2]
These are not necessarily the most well run machines.

00:26:21 [Speaker 2]
Most of many family businesses, but they've been in debt for years now.
00:26:25 [Speaker 2]
This just...
00:26:26 [Speaker 2]
Absolutely, Ray.
00:26:27 [Speaker 2]
Good point.
00:26:28 [Speaker 2]
This just finished them off, and it's the worst thing that could happen when you have sustained long term high fuel prices.

00:26:37 [Speaker 2]
It just washed them out.
00:26:39 [Speaker 2]
So I'm...
00:26:40 [Speaker 2]
And and here's the second order effect nobody in Washington's modeling is that fewer trucks means diesel crisis is bankrupting truckers today and inflating your grocery bill in November.
00:27:01 [Speaker 2]
So same crisis, different lag.
00:27:04 [Speaker 2]
And if you think about what we've been talking about for for months now, it's harvest season.

00:27:10 [Speaker 2]
So, you know, the diesel that fuels the combine and the truck that moves the grain to the elevator is almost $7.
00:27:18 [Speaker 2]
So I don't know if you guys are buying corn or cotton or soybeans or even even mistake.
00:27:28 [Speaker 2]
The grass that is, you know, that these cows eat to make them fat...
00:27:34 [Speaker 2]
Well, actually, it's the corn, by the way, when they send them out to the, when they ship them up, at auction.
00:27:41 [Speaker 2]
But the point is is that we are in for shit.

00:27:48 [Speaker 3]
Well And

00:27:48 [Speaker 2]
I'm gonna go...
00:27:49 [Speaker 2]
I'm gonna ride this out at Chuck's house in, in Rosenberg.

00:27:54 [Speaker 1]
Oh, ouch.

00:27:56 [Speaker 2]
I know.
00:27:56 [Speaker 2]
I'm sorry, Chuck.
00:27:57 [Speaker 2]
That's that was a dig to get back in...

00:27:59 [Speaker 1]
As as as Sarah Yates said, grandpa, we're not riffraff from Rosenberg.
00:28:04 [Speaker 1]
We're from Richmond.
00:28:07 [Speaker 1]
Now I'm gonna take the other side of this, and I'm gonna sound cool and and heartless.
00:28:12 [Speaker 1]
I actually think the bankruptcies are gonna be a good thing.
00:28:16 [Speaker 1]
At the end of the day, it's gonna put not well run businesses out of their misery.

00:28:22 [Speaker 1]
The trucks are not gonna stop moving, though.
00:28:24 [Speaker 1]
I mean, bankruptcy is people losing losing money.
00:28:31 [Speaker 1]
But at the end of the day, the trucks are still gonna keep keep moving.
00:28:34 [Speaker 1]
They're still gonna keep operating so long as their cash flow breakeven are slightly better, which they were.
00:28:42 [Speaker 1]
This is a balance sheet type problem.

00:28:44 [Speaker 1]
And if these trucks wind up in the hands of better operators, I think it's actually good for the good for the, for prices going forward.
00:28:54 [Speaker 1]
So I'm I'm thinking it's gonna wind up being a a good thing even though some people are gonna there gonna be some sob stories that people always point to.
00:29:03 [Speaker 1]
You know, Becky, Lou, and her high school boyfriend, Markie Beau, or whatever his name is, lost their trucking company.
00:29:11 [Speaker 1]
We'll hear those stories.
00:29:13 [Speaker 1]
But I think overall, it's a positive when businesses fail.

00:29:18 [Speaker 3]
So I have no specific knowledge on how fragmented the trucking industry is, but 16 companies so far doesn't sound like a lot.
00:29:28 [Speaker 3]
I mean, how many of you have taken long distance trips up and down the interstate and lose count of how many trucking companies you see.
00:29:36 [Speaker 3]
Right?
00:29:37 [Speaker 3]
So this is consolidation at the margin.
00:29:39 [Speaker 3]
You're right.

00:29:40 [Speaker 3]
It is a balance sheet issue.
00:29:41 [Speaker 3]
It cleans things up, makes, you know, the the reallocated fleet more efficient arguably.
00:29:51 [Speaker 3]
And, you know, things like this will continue to motivate further.
00:29:56 [Speaker 3]
And what why did the E and P industry consolidate?
00:29:59 [Speaker 3]
A lot of cost pressures, a lot of balance sheet problems, etcetera, and the assets move to better, more efficient hands that have some, you know, some scale advantages on things like fuel purchases.

00:30:11 [Speaker 2]
The...
00:30:11 [Speaker 2]
Scum.
00:30:11 [Speaker 2]
Scum.
00:30:12 [Speaker 2]
Scum.
00:30:13 [Speaker 2]
Go back to where you're from.

00:30:15 [Speaker 2]
You guys are heartless.
00:30:16 [Speaker 2]
No wonder...
00:30:17 [Speaker 2]
I mean, god.
00:30:18 [Speaker 2]
Facts don't care about your feelings, Mark and Chuck, clearly.

00:30:23 [Speaker 1]
So so the...
00:30:24 [Speaker 1]
I cannot guarantee that these two, stories are true.
00:30:29 [Speaker 1]
It's just stuff I heard back in the day.
00:30:32 [Speaker 1]
You know?
00:30:33 [Speaker 1]
Stevens was Little Rock, Arkansas based, And where are all the trucking companies headquartered?

00:30:39 [Speaker 1]
They're all...

00:30:40 [Speaker 2]
Yeah.
00:30:40 [Speaker 2]
They had money in these...
00:30:42 [Speaker 2]
Good.
00:30:43 [Speaker 2]
Keep going, Chuck.

00:30:44 [Speaker 1]
Yeah.
00:30:44 [Speaker 1]
So they're they're...
00:30:46 [Speaker 1]
All the trucking companies there in our Arkansas, we had the greatest trucking franchise.
00:30:51 [Speaker 1]
And, two funny stories both, revolving around JB Hunt.
00:30:56 [Speaker 1]
Supposedly, when he was going public, you know, you always required the company to get a Keyman life insurance policy on the CEO.

00:31:05 [Speaker 1]
So if something happened to the CEO, you had enough money to pay the search firm and go get a new CEO.
00:31:11 [Speaker 1]
I mean, that's just IPO basics one zero one.
00:31:14 [Speaker 1]
Right?
00:31:15 [Speaker 1]
And Stevens came in and said, alright.
00:31:18 [Speaker 1]
We need to do this.

00:31:19 [Speaker 1]
And JB Hunt said, no freaking way.
00:31:22 [Speaker 1]
What do you mean no way?
00:31:23 [Speaker 1]
This is what we always do.
00:31:24 [Speaker 1]
I don't want anyone to have any incentive to kill me, period.
00:31:29 [Speaker 1]
So so so, supposedly, Warren's supposedly, one of the Stevens family members told Wall Street, don't worry.

00:31:40 [Speaker 1]
We'll pay the placement fee if something happens to him.
00:31:44 [Speaker 1]
That's story number one.
00:31:45 [Speaker 1]
Story number two, is there was a...
00:31:49 [Speaker 1]
The guy who was head of capital markets, and I don't think he'd mind if I said his name, Scott Davis.
00:31:55 [Speaker 1]
Great dude.

00:31:56 [Speaker 1]
Played golf at Arkansas with John Daly.
00:31:58 [Speaker 1]
Scott Davis is just, like, the best dude on the planet.
00:32:01 [Speaker 1]
In fact, I need to look him up and go grab a beer with him.
00:32:04 [Speaker 1]
Anyway, great dude.
00:32:06 [Speaker 1]
He was the young associate on the JB Hunt, trucking IPO, and they just had this hockey stick forecast.

00:32:15 [Speaker 1]
I mean, like, they were ramping up.
00:32:17 [Speaker 1]
Revenue was gonna quadruple in eighteen months.
00:32:20 [Speaker 1]
And so, anyway, Scott sat down with JB Hunt and was like, hey.
00:32:25 [Speaker 1]
We need to go through these projections.
00:32:26 [Speaker 1]
I need to do some due diligence so I can get the investment committee comfortable with this.

00:32:31 [Speaker 1]
JB Hunt stood up, put his arm on Scott's children, said, son, I got me a green light.
00:32:36 [Speaker 1]
I'm a go go go, baby, and walked out of the room.
00:32:39 [Speaker 1]
And Scott said...
00:32:40 [Speaker 1]
And I went into the investment committee and hustled the fuck out of those projections.

00:32:47 [Speaker 2]
Well, b Dunham seventy seven twelve says, who survives the diesel spike?
00:32:52 [Speaker 2]
The big fleets or the owner operators?

00:32:55 [Speaker 1]
I don't know if I know trucking well enough to to know who who does in that, scenario, I mean, there'll be some consolidation.
00:33:05 [Speaker 1]
There will be some sales.
00:33:06 [Speaker 1]
There will be some discombobulation, but we're always gonna have trucks on the road.

00:33:12 [Speaker 2]
I mean, it...
00:33:12 [Speaker 2]
And every time prices get high and we go into recession, it's flight to quality.
00:33:17 [Speaker 2]
So those with the better balance sheet wins.
00:33:21 [Speaker 2]
The smart owner operators that can play in the margins, I think the smaller you are, the less negotiating leverage you have against the people moving goods and services.
00:33:32 [Speaker 2]
So, to me, I'm saying that I bet the big fleets, but it'll be interesting to watch.

00:33:37 [Speaker 2]
Maybe, Clyde could, come back and hold us accountable, in a few months once we have data.
00:33:47 [Speaker 2]
Alright.
00:33:48 [Speaker 2]
What do we else have we got?
00:33:49 [Speaker 2]
We got something going on with Delta's refinery.
00:33:51 [Speaker 2]
What's going on, Mark Meyer?

00:33:53 [Speaker 3]
Yeah.
00:33:54 [Speaker 3]
I just caught my John Arnold posted about it, you know, talking about the, long saga of Delta that started back in 2012 when they bought the, idled trainer refinery in Pennsylvania, and we're pretty heavily pilloried by the analyst community and everyone else, why is an airline buying a refinery?
00:34:14 [Speaker 3]
Well, it's been a struggle since that time, save for some episodes where, you know, product pricing has has spiked, like, back in 2022 and certainly the last several months of this year.
00:34:28 [Speaker 3]
And so if you look at what what that asset has done, it came off a 10,000,000 loss in 2025.
00:34:39 [Speaker 3]
And in the first half of this year alone in operating income, they generated $311,000,000.

00:34:48 [Speaker 3]
That offset about half their...
00:34:50 [Speaker 3]
Half of Delta's drop in the, segments profit.
00:34:55 [Speaker 3]
And they guilt, they further guided to a 300,000,000 refinery benefit in q two alone.
00:35:01 [Speaker 3]
So, you know, you're never wrong.
00:35:05 [Speaker 3]
You're just early.

00:35:07 [Speaker 2]
Hey, Mark.
00:35:07 [Speaker 2]
So Kelle s Wright says, is Delta's refinery a smart strategy or a lucky bet that finally paid off?
00:35:15 [Speaker 2]
And Marcus jumps in on that, saying should United or American buy a refinery now?
00:35:22 [Speaker 2]
What do you think, boys?

00:35:24 [Speaker 3]
It kinda makes Lyondell's, you know, industry player decision to shutter its, was it Crosby or, Deer Park Refinery back in, what, 2025?
00:35:36 [Speaker 3]
Missed opportunity.
00:35:38 [Speaker 3]
It's just such a viciously cyclical and thin margin business.
00:35:44 [Speaker 3]
I I guess...
00:35:45 [Speaker 3]
Look.

00:35:46 [Speaker 3]
As a as kind of a...
00:35:48 [Speaker 3]
An old equity analyst, I never liked it when my company is under coverage took on things like OFS assets.
00:35:55 [Speaker 3]
You know, diluted your multiple, it it wasn't, you know, it it wasn't a, wasn't really a real physical limitation.
00:36:04 [Speaker 3]
You know, you had some backward integrate into into things like, or forward integrate into things like pressure pumping as well.
00:36:14 [Speaker 3]
It it was just never very helpful to the the multiple of the core business, and and that may be a a relic of the desire for pure play business models.

00:36:27 [Speaker 3]
But I I do think it's a bit of an odd fit because, you don't need to own the kind of inherently, problematic asset class as a refiner when you've got your own your own specific safety and regulatory issues to deal with as an airline, you can hedge jet fuel.

00:36:48 [Speaker 2]
But, you know, maybe maybe Arnold understood something the analyst didn't hear.
00:36:54 [Speaker 2]
I mean, physical integration is the only hedge that works in a supply shock.
00:36:59 [Speaker 2]
I mean, and Arnold took physical.
00:37:01 [Speaker 2]
He took delivery.
00:37:03 [Speaker 2]
So you can hedge financially with derivatives, but derivatives settle in cash.

00:37:08 [Speaker 2]
So in a physical supply crisis, cash doesn't buy you a barrel when there's no barrel to buy.
00:37:15 [Speaker 2]
So in Delta's case, they own the barrel.
00:37:18 [Speaker 2]
It owns the refinery.
00:37:20 [Speaker 2]
It owns the conversion.
00:37:21 [Speaker 2]
And when the crack blows out, Delta pays itself versus paying it to Valero.

00:37:26 [Speaker 2]
So maybe maybe there...
00:37:29 [Speaker 2]
I mean, I don't know.
00:37:30 [Speaker 2]
Maybe I'm some, you know, dude in a vest pitch Delta way back when to buy a refinery saying, hey.
00:37:38 [Speaker 2]
We will have supply shocks, and the only way to control it is to own the actual asset.
00:37:47 [Speaker 2]
Maybe it's a genius move.

00:37:49 [Speaker 2]
I don't know.
00:37:49 [Speaker 2]
I mean, who knows?

00:37:52 [Speaker 3]
Yeah.
00:37:52 [Speaker 3]
Well, I mean, PSX PSX is making the case against, you know, the breakup or the spin off of its midstream is that we're in the midst of a...
00:38:01 [Speaker 3]
Of what you described as a supply shock, and they seem to be at least having the potential for increase in frequency just given how chaotic the world is right now.
00:38:12 [Speaker 3]
And you always kinda forecast from where you are anyway.
00:38:15 [Speaker 3]
Mhmm.

00:38:15 [Speaker 3]
And so, you know, do we see United or American or other carriers move in that direction?
00:38:22 [Speaker 3]
I I don't know.
00:38:24 [Speaker 3]
I doubt it.
00:38:26 [Speaker 3]
But, you know, do do the, do the structural rules of the game change if you're an airline?
00:38:31 [Speaker 3]
Hey.

00:38:31 [Speaker 3]
That that that in this very high profile and very impactful circumstance of this crisis or this supply shock we're in, you know, that that looks now in retrospect like a brilliant move.
00:38:47 [Speaker 3]
Talk to me in a, you know, twelve months from now.

00:38:50 [Speaker 2]
You know, United CEO Kirby said sustained jet, fuel prices could add 11,000,000,000 to United's annual fuel bill, and that's more than twice United's best ever annual profit.
00:39:03 [Speaker 2]
So that is an existential number.
00:39:06 [Speaker 2]
And Delta's sitting there with 75% of its jet fuel coming from a refinery it owns, paying itself, while United's writing checks to a...
00:39:16 [Speaker 2]
To third party refiners at record crack.
00:39:18 [Speaker 2]
So, I mean, it seem...

00:39:23 [Speaker 2]
Right now, in a...
00:39:25 [Speaker 2]
It...
00:39:26 [Speaker 2]
Is it really a black swan event, but maybe maybe it is?
00:39:29 [Speaker 2]
It seems genius.
00:39:30 [Speaker 2]
But the question is, should United or American buy a refinery now?

00:39:35 [Speaker 2]
Absolutely not.
00:39:37 [Speaker 2]
That's how you lose money in refining when you buy at the top of the of the cycle.
00:39:41 [Speaker 2]
So at this point, it's too late to buy in because you're paying a premium.
00:39:47 [Speaker 2]
And and and when you're paying a premium, especially in low margin businesses, you're never gonna get your money out.

00:39:56 [Speaker 1]
I'm sure there is a Harvard Business School professor that has taught this as a case study for the last eleven years, and I would love to hear his pompous 180 degree turn from, you know, single, focus companies, strategic, etcetera, to genius of this purchase or whatever he's done.
00:40:22 [Speaker 1]
That would, that that would be kind of funny.
00:40:25 [Speaker 1]
I'm a I'm a go do some research to see if that human being actually exists.
00:40:29 [Speaker 1]
But, you know, somebody somewhere has gone a 180 degrees

00:40:33 [Speaker 2]
on it.
00:40:33 [Speaker 2]
And and, Chuck, while you're there, here's the PE question.
00:40:37 [Speaker 2]
Who won the trade, Delta or PSX?
00:40:40 [Speaker 2]
That's what I'm curious about.

00:40:41 [Speaker 1]
Yeah.
00:40:42 [Speaker 1]
There you there you go.
00:40:44 [Speaker 1]
There you go.
00:40:45 [Speaker 1]
Who who won it and when?

00:40:48 [Speaker 2]
Yeah.
00:40:48 [Speaker 2]
Exactly.
00:40:49 [Speaker 2]
And and here's an interesting piece.
00:40:52 [Speaker 2]
A big chunk of trainer's barrel is diesel and gasoline swapped for jet fuel.
00:40:58 [Speaker 2]
So Delta is quietly one of the beneficiaries of the same diesel crisis bankrupting truckers.

00:41:07 [Speaker 2]
So, I mean, the airline prints $311,000,000.
00:41:13 [Speaker 2]
Interesting.
00:41:14 [Speaker 2]
I I I would Again, there's a lot we need to probably go figure out.
00:41:19 [Speaker 2]
This isn't really interesting.

00:41:21 [Speaker 1]
I would, I would definitely be signing up Goldman Sachs or Morgan Stanley or somebody to run the sale for the refinery right now.
00:41:29 [Speaker 1]
At least see what a number is on, on that.
00:41:33 [Speaker 1]
And then the, the, the the second thing I would do is even if you were disappointed in that number, I'd go ahead and take it.

00:41:45 [Speaker 2]
Time to get out.

00:41:46 [Speaker 1]
Time to get out.
00:41:47 [Speaker 1]
Alright.
00:41:47 [Speaker 1]
What else

00:41:48 [Speaker 2]
is going on?
00:41:48 [Speaker 2]
Mark, what's going on in The Middle East?

00:41:53 [Speaker 3]
Well, apparently, there was a, secret meeting at Camp David last Friday.
00:42:02 [Speaker 3]
If we're talking about it, how was it secret?
00:42:05 [Speaker 3]
And the subject...
00:42:05 [Speaker 3]
There you go.
00:42:07 [Speaker 3]
As you guys know, the, I guess, the tensions between the Saudis and the Yemenis of the Houthis has been ramping up quite a bit with, you know, notion that there was a ground invasion in the works by Saudi of, you know, over a 100,000 troops.

00:42:27 [Speaker 3]
But, you know, what we've seen in the last several days in concert with that is a lot of constructive and positive talk about what the East West pipeline is doing in terms of recapturing its throughput rates, prior to all the damage that was inflicted.
00:42:48 [Speaker 3]
So, you know, The US has taken a fairly hands off approach here.
00:42:55 [Speaker 3]
I know we're in the background offering intelligence support and the like to the Saudis, but it just seems like this is a, kind of a simmering flash point.
00:43:06 [Speaker 3]
And if you look at what has happened to kind of Saudi tanker rates and risk premiums up, like, 3%, which is a lot.

00:43:16 [Speaker 1]
Well, Mark, I'm gonna correct you.
00:43:19 [Speaker 1]
It was a secret meeting because it never made it to truth social.

00:43:26 [Speaker 2]
Right?

00:43:28 [Speaker 3]
I mean...
00:43:29 [Speaker 3]
Nobody...
00:43:29 [Speaker 3]
Nobody's ever seen anything in secret before.

00:43:32 [Speaker 1]
So I wanna go to Kirk on this one.
00:43:34 [Speaker 1]
Where does this fit in with your taco trade?
00:43:37 [Speaker 1]
What number margarita is this Donald Trump having?
00:43:40 [Speaker 1]
Is this what?
00:43:41 [Speaker 1]
The sixth or the seventh one?

00:43:43 [Speaker 2]
One tequila, two tequila, three tequila floor.
00:43:48 [Speaker 2]
Yeah.
00:43:49 [Speaker 2]
I think we're at floor...
00:43:50 [Speaker 2]
At at the floor right now.
00:43:53 [Speaker 2]
I mean, this is how...

00:43:54 [Speaker 2]
Like, everything we've been talking about converges on kind of this discussion because Hormu...
00:43:59 [Speaker 2]
Hormuth, as we call it, is contested by Iran.
00:44:03 [Speaker 2]
The East West pipeline to Yanbu was hit by drones.
00:44:08 [Speaker 2]
The Red Sea exit from Ranbu is held by the Houthis.
00:44:12 [Speaker 2]
And now Saudis are planning a ground offensive to retake Bab Al Mandeb because it's the last choke point between its oil and the open ocean.

00:44:22 [Speaker 2]
And we're hearing, like, oh, you know, Hormuz is...
00:44:26 [Speaker 2]
I mean, you know, the straits flowing.
00:44:30 [Speaker 2]
But we've been talking about this since March, and we've run out of choke points to lose.
00:44:35 [Speaker 2]
So if Hormuz, the pipeline, are all contested simultaneously, Saudi crude has no way of getting oil out of the Gulf except around Africa.
00:44:50 [Speaker 2]
And that adds two more weeks.

00:44:52 [Speaker 2]
Right?

00:44:53 [Speaker 3]
What what do you think the administration's position is politically?
00:44:56 [Speaker 3]
Do they want the Saudis to attack after the midterms or before?

00:45:02 [Speaker 1]
Well, I mean, clearly, that was the message from Camp David.
00:45:05 [Speaker 1]
It it's kinda wild that, vice president Vance chaired it and Trump showed up.
00:45:12 [Speaker 1]
That's that's a little interesting to me.
00:45:16 [Speaker 1]
But, clearly, I mean, on the 24 page PowerPoint slide deck, I mean, all 23 out of 24 pages were wait until November.
00:45:29 [Speaker 1]
I mean, that's clear.

00:45:34 [Speaker 2]
I mean, for a a, community that's built all around little tribal...
00:45:42 [Speaker 2]
They're all little tribal fiefdoms.
00:45:44 [Speaker 2]
The 100,000 troop option in The Middle East and a ground war in Yemen.
00:45:50 [Speaker 2]
Like, when's the last time you've heard that?
00:45:53 [Speaker 2]
You...

00:45:53 [Speaker 2]
We've never said that.
00:45:55 [Speaker 2]
I don't know if anyone's ever said that live anywhere.
00:45:58 [Speaker 2]
This is a first in the world, but it definitely tells you the salaries are serious.
00:46:04 [Speaker 2]
I mean, this is a big...
00:46:05 [Speaker 2]
The salaries are hurting too, by the way.

00:46:09 [Speaker 2]
So they've got their own issues, but this is a major issue.

00:46:13 [Speaker 3]
Yeah.
00:46:13 [Speaker 3]
They're having to cut prices because their, you know, transport cost on their barrels of crude is just continue to go higher.
00:46:23 [Speaker 3]
Yeah.
00:46:24 [Speaker 3]
Alright, boys.
00:46:24 [Speaker 3]
We're gonna close out with an absolutely oldie but a goodie in terms of favorite topics, and this is climate change litigation.

00:46:33 [Speaker 2]
Oh, gosh.
00:46:34 [Speaker 2]
But we have a question first from mister Wen.
00:46:38 [Speaker 2]
Is Washington asking Rian to wait until after the midterms to launch the offensive?

00:46:46 [Speaker 3]
My guess is yes.

00:46:52 [Speaker 1]
Yeah.
00:46:53 [Speaker 1]
I'm with Mark on this.

00:46:54 [Speaker 3]
I I think the kinetic, any kind of kinetic act...
00:46:58 [Speaker 3]
Activity just, you know, kinda spikes the risk premium.
00:47:05 [Speaker 3]
Regardless I know

00:47:06 [Speaker 2]
I'm gonna get flogged for saying this.
00:47:08 [Speaker 2]
Should should we invite Tallerico on our show to make one last desperate attempt to get the conservative vote?

00:47:17 [Speaker 1]
I'd...
00:47:18 [Speaker 1]
I'd...
00:47:18 [Speaker 1]
I...
00:47:18 [Speaker 1]
Last time on the railroad commission, I had the libertarian on who was a delightful dude, And I actually had the Democratic candidate on.
00:47:28 [Speaker 1]
I'm always happy to to talk to the, to the other side.

00:47:32 [Speaker 1]
I'd love for Talrica to come on.

00:47:35 [Speaker 2]
Alright.
00:47:35 [Speaker 2]
So what's going on with climate change litigation, and what does that even mean, Mark?

00:47:41 [Speaker 3]
Well, there's a Boulder City and County issue.
00:47:46 [Speaker 3]
They sued Suncor and ExxonMobil in 2018 under Colorado state law claiming that the companies deceive the public about climate change.
00:47:59 [Speaker 3]
And the Supreme Court started hearing these cases in the last couple of days.
00:48:05 [Speaker 3]
So Boulder and Boulder County are not the only ones.
00:48:11 [Speaker 3]
There are dozens of these things.

00:48:14 [Speaker 3]
None of them have gone to trial.
00:48:17 [Speaker 3]
This is the kind of bellwether, the test case for all of them.
00:48:26 [Speaker 3]
If you look at what the administration and the companies themselves, the defendants are arguing, it's on the basis of the Clean Air Act.
00:48:36 [Speaker 3]
And what do we see?
00:48:38 [Speaker 3]
What was it roughly a year ago?

00:48:41 [Speaker 3]
It's maybe been a little bit less than that, the rescission of the endangerment finding.
00:48:46 [Speaker 3]
And the legal basis for that was climate change and global warming are, as is in the name global warming, are global issues and not, you know, not legally enforceable under the the purview of the Clean Air Act.

00:49:08 [Speaker 2]
So I mean, the the real stakes here, Mark, it's not climate.
00:49:13 [Speaker 2]
It's jurisdiction.
00:49:15 [Speaker 2]
If if Boulder...
00:49:17 [Speaker 2]
Of course, it's Boulder.
00:49:18 [Speaker 2]
I mean, of course, it's Boulder.

00:49:20 [Speaker 2]
But if Boulder wins, every city and county of America can sue energy companies in state court under state consumer protection law for the consequences of fossil fuel combustion.
00:49:33 [Speaker 2]
And that's not just one lawsuit.
00:49:35 [Speaker 2]
That's 3,000 judicial lawsuits in 50 state court systems with 50 different standards.
00:49:41 [Speaker 2]
So judge Roberts called it a recipe for chaos, which he's right.
00:49:48 [Speaker 2]
The question is whether the conservative majority acts on the instinct or whether Alita's recusal creates that four four split, and they just pump the whole thing.

00:50:01 [Speaker 2]
Look, man.
00:50:01 [Speaker 2]
You gotta...
00:50:02 [Speaker 2]
Like, there's been crazier things that continue to happen in in this country and and around the world.
00:50:08 [Speaker 2]
I I think this is one to watch.
00:50:10 [Speaker 2]
I I I think it's a good, good discussion, Mark.

00:50:13 [Speaker 2]
She brought it up because it could be terrifying, especially if you're an energy company right now.

00:50:19 [Speaker 3]
Well, this stuff is this stuff is gonna re reaccelerate at the Democrats' tech congress in the midterms.
00:50:25 [Speaker 3]
And I I think the, political winds are gonna push pretty hard in their favor.

00:50:29 [Speaker 1]
No.
00:50:30 [Speaker 1]
You get...
00:50:30 [Speaker 1]
You you guys are both missing.

00:50:32 [Speaker 3]
We're wrong.

00:50:33 [Speaker 1]
You're both missing this.
00:50:34 [Speaker 1]
Here's what Exxon does.
00:50:36 [Speaker 1]
Exxon says yes.
00:50:38 [Speaker 1]
You're right.
00:50:40 [Speaker 1]
What are damages?

00:50:41 [Speaker 1]
Well, one, damages are plastics that everybody in America is using.
00:50:48 [Speaker 1]
And the worst purveyor of that is the shoe company croc.
00:50:54 [Speaker 1]
And you bastards in Boulder shove crocs down our throat.
00:50:58 [Speaker 1]
You countersued for 10 times the amount that, Boulder sued you over.
00:51:04 [Speaker 1]
And it's all your fault, Boulder, because you unleashed crocs on America.

00:51:10 [Speaker 2]
Well, good point, Chuck.
00:51:12 [Speaker 2]
Linda Pruitt says with Alito sitting out, could a four four split hand Boulder a win by default?
00:51:19 [Speaker 2]
Absolutely.
00:51:20 [Speaker 2]
Absolutely.
00:51:21 [Speaker 2]
And then Jay Halverson, three.

00:51:24 [Speaker 2]
If the Supreme Court sides with Exxon and Suncor, did the other climate lawsuits die?
00:51:30 [Speaker 2]
No.
00:51:31 [Speaker 2]
What's the one thing we've learned about attorneys?
00:51:34 [Speaker 2]
You can get sued by anyone, anywhere, anyhow, even if you've been sued by that same issue.
00:51:42 [Speaker 2]
Yeah.

00:51:42 [Speaker 2]
And There's no double jeopardy in civil civil law, unfortunately, is there?

00:51:48 [Speaker 3]
The Not

00:51:48 [Speaker 2]
that I know about.

00:51:49 [Speaker 3]
Really the misalignment between, you know, how how do you get to damage assessment?
00:51:54 [Speaker 3]
Well, it's attribution by cause.
00:51:57 [Speaker 3]
Well, does that mean Boulder County and the city of Boulder have a self contained climate atmosphere that reaches all the way to infinity?
00:52:06 [Speaker 3]
How do you measure, you know, if we if we agree is, that climate change and and global warming are global scale issues, and the atmosphere is anything but attain, steady state system, you know, all of the things that are moving around in the atmosphere and impacting upon climate.
00:52:30 [Speaker 3]
How do you, you know, how do you factor that down to specific municipalities or counties?

00:52:37 [Speaker 3]
And, you know, this this just spins up into, let...
00:52:42 [Speaker 3]
Let's just see what we can get.
00:52:43 [Speaker 3]
And an endless stream endless stream of litigation that does nothing but add cost to the businesses that are doing business legally in these jurisdictions.
00:52:55 [Speaker 3]
You know, we saw it, what, in New England, in New York, the kind of similar liability assignment based upon, you know, the amount of product or the amount of their their global emissions, and it was gonna be attributed that way.
00:53:12 [Speaker 3]
And those those end up being pretty big numbers pretty quickly.

00:53:17 [Speaker 2]
Look.
00:53:17 [Speaker 2]
One of my best friends went to went to CU Boulder, and I took my daughter there for...
00:53:22 [Speaker 2]
When she was looking at colleges on 04/20 of all dates.
00:53:29 [Speaker 2]
They absolutely believe they're in their own atmosphere.
00:53:32 [Speaker 2]
So, I can I can, I can assure you of that?

00:53:38 [Speaker 1]
Well, you know, I mean, the city of Boulder did spend $30,000,000 trying to take their power grid away from Excel.
00:53:47 [Speaker 1]
So, I mean, shame on

00:53:48 [Speaker 2]
you, Boulder.
00:53:50 [Speaker 2]
If, I was there with Matt.
00:53:53 [Speaker 2]
I I...
00:53:53 [Speaker 2]
You know, Boulder's been talking about building...
00:53:56 [Speaker 2]
I mean, the the the University of Colorado has talked about building their own microgrid, and they have a pretty strong little community there.

00:54:05 [Speaker 2]
It's actually a great city to do...
00:54:08 [Speaker 2]
To run a little test where people share power amongst themselves and the and the grid settles.
00:54:14 [Speaker 2]
They have the opportunity to actually prove what a distributed grid could really do.
00:54:21 [Speaker 2]
So I'm actually...
00:54:23 [Speaker 2]
They're progressively thinking in the right ways here, but this litigation is, you know, a huge step backwards on...

00:54:32 [Speaker 2]
For myriad reasons.

00:54:33 [Speaker 3]
Do without or pay more than you want for an extended period of time.
00:54:37 [Speaker 3]
And

00:54:38 [Speaker 2]
We got a great quote, dude.
00:54:39 [Speaker 2]
I just...
00:54:40 [Speaker 2]
I gotta read it out loud from m ferrell underscore 12.
00:54:43 [Speaker 2]
Does a town full of Subarus and ski trips have standing to sue over fossil fuels?
00:54:52 [Speaker 2]
That reminds me when I was at Shell, I was I was yelling about someone driving a Subaru, and my colleague goes, I drive a Subaru.

00:55:01 [Speaker 2]
I go, exactly.
00:55:03 [Speaker 2]
Exactly.
00:55:05 [Speaker 2]
That's freaking fantastic.
00:55:07 [Speaker 2]
And, Farrell, I don't know you, but I want to.
00:55:09 [Speaker 2]
No.

00:55:09 [Speaker 1]
That was very good.
00:55:10 [Speaker 1]
Fantastic.
00:55:11 [Speaker 1]
I do respect...
00:55:12 [Speaker 1]
I I will say this.
00:55:13 [Speaker 1]
I respect Boulder on all the chaos, the...

00:55:17 [Speaker 1]
As Kirk laid out, the 50 different states, the numerous municipalities all suing.
00:55:23 [Speaker 1]
I love them saying, I don't care.
00:55:25 [Speaker 1]
I just wanna go first.
00:55:27 [Speaker 1]
So god god bless you, Boulder.

00:55:31 [Speaker 2]
You know, if rice was in Boulder, what...
00:55:34 [Speaker 2]
It wouldn't be any different most likely at all except you just smell more weed.
00:55:42 [Speaker 2]
You know?
00:55:42 [Speaker 2]
I think, that's probably one of your sister cities.
00:55:46 [Speaker 2]
Maybe not as smart.

00:55:47 [Speaker 2]
No no offense, but I'll give Rice the credit for being a really, you know, academically strong university, but, they've got something in common.
00:55:59 [Speaker 2]
The Bringing it all the way back to the original story, by the way, just letting you know.

00:56:03 [Speaker 1]
I love it.
00:56:03 [Speaker 1]
One one final, parting thought speaking of Rice.
00:56:08 [Speaker 1]
Supposedly this, Doug was, I think, last week, and somebody was on stage.
00:56:14 [Speaker 1]
And, the question came up.
00:56:16 [Speaker 1]
Hey.

00:56:17 [Speaker 1]
Talk about dress code in the industry, kinda post COVID.
00:56:20 [Speaker 1]
What's it like?
00:56:21 [Speaker 1]
And the guy thought for just a second.
00:56:23 [Speaker 1]
He goes, well, it's kinda all over the place.
00:56:25 [Speaker 1]
You got everything from Chuck Yates to Bobby Tudor.

00:56:31 [Speaker 1]
This is And that and that is Rice's legacy.
00:56:34 [Speaker 1]
Chuck Yeager.

00:56:35 [Speaker 2]
That's Rice's legacy.
00:56:37 [Speaker 2]
God bless it.
00:56:38 [Speaker 2]
K Paulson underscore eight makes another great good point.
00:56:43 [Speaker 2]
How many Boulder Planters flew out of Denver for Thanksgiving last year?

00:56:50 [Speaker 3]
That's a good ender.

00:56:51 [Speaker 1]
That's a perfect ender.

00:56:53 [Speaker 3]
I gotta run, boys.

00:56:54 [Speaker 1]
Hey, everybody.
00:56:55 [Speaker 1]
If you enjoyed the show, please tune in.
00:56:56 [Speaker 1]
We're trying to do this every Tuesday at 10AM central.
00:57:01 [Speaker 1]
Mark, Kirk, always a pleasure seeing you guys.

00:57:04 [Speaker 3]
See you next week.

00:57:05 [Speaker 2]
Signing off, everybody....
00:57:07 [Speaker 2]
Out, everyone.