Big Digital Energy

00;00;00;00 - 00;00;30;08
Unknown
You know, I totally wanted to. I've always wanted to start an episode with this native Maya. Dead worms are dead. You know that whole thing? Screaming petroleum inventory. Dead o screaming petroleum inventory declines are very much alive. Yes, exactly. Inventory dead. We used to say when, you know, some big eye popping numbers would come out on Tuesday night with the APIs.

00;00;30;08 - 00;00;56;23
Unknown
The macro analysts who all man, which was Dave O, always said, well, we need to wait for the Dodgers to confirm. Of course, the equity salespeople are chomping at the bit to go out with a hard trading idea on the API. So there was always the voice of moderation and reason. Although we have seen some pretty consistent confirming across the API's.

00;00;56;23 - 00;01;40;11
Unknown
And the deal is we had, a mere 24.1 million barrel total stock draw, 7.1 million of which was from the Strategic Petroleum Reserve, which is now sitting under 400 million barrels a day. And fall, if you recall, is around 714 million barrels a day. Somebody tweeted out, get who it was that that weekly draw. And I think there are 60 different independent or individual, containers in the salt caverns throughout the complex of the Gulf Coast.

00;01;40;13 - 00;02;18;19
Unknown
As PR, that single week draws the equivalent to more than 60% of one of those, you know, one of those units of the SPR. Just to provide a point of reference. And, you know, I think the expectation, just given the trajectory and where exports have gone over the last, you know, few weeks now, a putting a I think we're approaching six, if not 7 million barrels a day of, of weekly exports.

00;02;18;21 - 00;02;44;08
Unknown
Go look at the graphs that we're going to attach on the, on the product lines, the two key products gasoline and diesel jets. No picnic either. And so we're already about to breach the, the, five year kind of average low mark. Now part of that is influenced a little bit. And it will move out this year as the 2020 gets out of the five year baseline.

00;02;44;11 - 00;03;27;18
Unknown
Now this is crazy because I mean, you you basically are sitting here, you know, laying down petroleum inventory declines the upcoming midterm election, the price of gasoline, Iranian red rhetoric. And I don't know, this just feels like a boom about to happen. Not in a good way. Not even the end of April yet. We just had 430 a gallon nationally, which seems like a lot in a very short period of time in terms of an increase.

00;03;27;20 - 00;03;55;16
Unknown
Drove around Houston last week. It was pretty evident relative to my mark compared to the prior trip. It was about a at least a buck more, but it's still down in the threes. Three 5375 is kind of what I saw driving around Houston. I think of this, you know, this stock situation, these flow situations don't don't solve themselves quickly, which they're not likely to.

00;03;55;16 - 00;04;28;12
Unknown
We're going to we're going to push to we're going to push to uncomfortable highs heading into the summer driving season. And you combine that with kind of anecdotes of the total CEOs out this week saying, look, ordering their, you know, their refiners within their system, max jet and then Max diesel, which are obviously very problematic from a global stock perspective, and particularly for Europe.

00;04;28;14 - 00;04;53;20
Unknown
And then you had you know, Chuck, we're talking about it. I just saw a piece, an update from remember they had that fire at Valero's Port Arthur refinery. A couple of months ago. And while the the main crude unit that was damaged in the FCC, which is a gasoline, centric unit, are going to be back to kind of normal normalized levels, whatever that may means.

00;04;53;21 - 00;05;21;03
Unknown
Pretty shortly you have the hydro traders for, jet and diesel that were damage that for diesel, it's on an indefinite recovery timeline. And, the jet hydro crater recovery and return to to production is still several months away and are at a really uncomfortable time. And no one added a rig this week. I don't think I didn't see rig count, but wouldn't be surprised.

00;05;21;03 - 00;05;50;01
Unknown
You know, you're looking at the outer part of the curve now, just a little bit north of 70, pretty far out, but the the slope of the backwardation changes. Seems like with every yeah, every true social post, you know. So it's been interesting to thing I talked to two bankers this week and got kind of best of all times, worst of all times type messages.

00;05;50;04 - 00;06;29;21
Unknown
The sub billion dollar market property market supposedly is gone nuts. People are signing PSA cars lock in their hedges the day after they sign the, PSA. It's rocking and rolling, going crazy. And supposedly what's happened there is the market was kind of buyer expectations were 10% high coming into the war. And the price spike the the short term oil prices being up and then the like you said the back half going to just above 70 was just enough to bridge that gap.

00;06;29;21 - 00;06;59;08
Unknown
So everything's happening so long as sellers don't change their expectations. That's rocking and rolling. We haven't seen $1 billion asset trade. I don't think kind of since the announcement of the war, although I've heard big, big buyers. So people willing to pay more than $1 billion for something, have have resigned themselves to $70, goes into the long term price forecasts these days.

00;06;59;10 - 00;07;27;17
Unknown
And we haven't seen that in a long time. Well, we did see a significant corporate deal in the form of shell and and Arc. Yeah, that's that's a different animal that that's fair. That's money. That's that's montney gas. Yeah. So that's that's fair, which feels like a combination of LNG. And you know, maybe it will be building off grid powered data centers in the Great White North.

00;07;27;19 - 00;08;08;17
Unknown
It just felt like we need to be back in the ENP. Well, we'll take that. It's funny because they had a major exit back in. I think it was in the late 90s, early 2000. They sold a, right, you know, right. For kind of the salad days of the early 2000 pre shale when, when gas got got a bid, sold all that, fairly sizable producing asset to, to Apache when Apache was hoovering up Canadian assets and an older under exploited, cast offs.

00;08;08;17 - 00;08;34;16
Unknown
So. All right, Kirk, what do you make of all this? May and Mark have been just stumbling about? Give our audience some wisdom. Well, what's it I mean, what what's really happening here? I mean, I don't have a great comment. I mean, we all we're all watching it. You know, we're in a real war. There's real chokepoints.

00;08;34;19 - 00;09;08;23
Unknown
There's real mines out there and straight. And I think it's now all coming to roost is what I'm. What I'm saying here. I'm watching, like. I mean, shit, man. I'm watching oil prices. I'm just thinking, I mean, it is what it is. I mean, this is what happens, I guess maybe a closing thought on this is, I'm going to Venice, Italy next week, and, hopefully there's enough jet fuel to get me back.

00;09;08;26 - 00;09;37;20
Unknown
Well, I, I would be interested in, you know, it's it's going to be may like in a few hours and, you know, is there enough time reasonably or practically to fix this from a political standpoint between now and November? No way. I mean, again, going back a couple of we talked about that, but let's talk about the food shortages.

00;09;37;22 - 00;10;02;07
Unknown
You know, let's talk about the farmers. So that's going ahead in the when the when the crop estimations are terrible because diesel prices now are impacting farmers. I think it's going to be I mean food prices are going to are going to rock it up. I think that's what's interesting. So I think that's a good point. Why? No it's not.

00;10;02;07 - 00;10;35;11
Unknown
We don't have enough time to turn it around. Finally. So the political argument that we need to be thinking about, completely nuclear defying Iran is worth the cost that we're absorbing now as citizens of the US. You know, I predict of, you know, if the summer process for gets worse for the, the driver, the individual consumer and all the derivative things like you know, fertilizer prices, which we've talked about before have gone asymptotic and it's going to be felt across the board.

00;10;35;13 - 00;11;02;24
Unknown
And that moves if it's not already, to the top of the the midterm agenda for, for voters. So I think there's, you know, a pretty elevated level of risk that we see a change in, in power, in both houses of Congress. I'm still old enough to remember when the Democrats used to say we needed higher gasoline prices so that people would stop using it.

00;11;02;26 - 00;11;29;26
Unknown
Until you actually experience that on an individual level than ever, that it's that it's every man for himself until the other guy's in office. If you're in Congress, you're wealthy beyond means because you're trading on insider information and controlling stock prices. So, they don't care. It's not their gas money. They're not having to spend it. Help is on the way from our friends in the in the UAE, UAE.

00;11;29;29 - 00;12;10;05
Unknown
I mean, what what an interesting I mean, what an interesting revelation. I mean, they're there. They've been basically Saudi has been forcing the UAE to cap their production. They have a 1.5 million barrels a day equivalent of capacity. They haven't been producing. That's roughly, you know, what is it, 60 billion to 60 billion a year in revenue? They're leaving on the table by being part of a cartel, which a one of the Qatar Cartel members don't even follow their on their own, caps anyway.

00;12;10;05 - 00;12;49;23
Unknown
But why are they to stay in the cartel and keep and produce the extra million that, that's what I'm. But Senator set us up. What happened? UAE pulled out of. Okay. Yeah. And it's, you know, I think there's, a lot of things off the radar that are influencing those. You know, they're certainly worried about their ability to bring more production on for their own benefit in the midst of what we're going through right now and perhaps get away from the but certainly get away from the quota constraints.

00;12;49;23 - 00;13;17;13
Unknown
And it's not a trivial amount, as you pointed out, relative to their 5 million barrels a day production capacity, they've been constrained by quotas around 3.5 million barrels a day. And so that's readily available. And then do they make sovereign decisions on what do they do and where do they move that product? Is there, you know, an option to bypass the strait altogether, ultimately over the long term or significantly, build other options.

00;13;17;15 - 00;13;45;10
Unknown
I mean, this is the question every oil trader should be asking right now is, does this sort of test case I mean, if UAE would save left and starts pumping freely into a $100 plus oil market, why would I rack stay? Why would Nigeria stay? I mean, what say you guys? My favorite part about this is we're still committed to working with OPEC and price stability and all that.

00;13;45;10 - 00;14;12;27
Unknown
It's like, yeah, yeah, I'm still friends with my ex. It doesn't matter that you're bopping some other dude. You know, we're, we'll still be friends. Call each other when it rains. I think the most recent and on top of just OPEC proper, they are not going to be part of OPEC. Plus, which gives them free rein to make their own decisions about production levels.

00;14;13;00 - 00;14;52;23
Unknown
I think is structurally bearish. And I saw a, bit of a summary of a piece Fred Olsen was talking about the UAE and just the dynamics of higher cost short cycle shale that can ramp within 12 months, at least on paper, to deliver another million barrels a day. If you're a low cost producer, which out of big conventional reservoirs in the Middle East, you inherently are your your best approach is to run flat out.

00;14;52;25 - 00;15;20;02
Unknown
Because you're going to you're going to win, at all points of the price. And the cost curve. Right. So, and, you know, this is a I think this is a bigger or a higher profile departure, given that the UAE was the third ranked third and among among the member nations in terms of productive capacity. So it's a it's a big player leaving.

00;15;20;05 - 00;15;41;05
Unknown
I don't think it's quite 10%, but it's close. Yes it does it start a cascade. What's your bad guys. What do you think's going to happen the other what would just OPEC in general. You think this is the only one that that clicks out. And we start seeing more and more drop. By the way they couldn't get along when they were together anyway.

00;15;41;05 - 00;16;13;24
Unknown
And so you see the you see the the other the ex doing well without you. So, yeah, you'll, you'll take off. So I think we see more defections. Not not that this was part of the decision, but if you recall, we talked about it some months ago when EOG announced that it had a 900,000 acre, it sided on, a 3 or 900,000 acre unconventional exploratory license in the UAE.

00;16;13;26 - 00;16;52;03
Unknown
You know, again, short cycle, you want to have the flexibility thinking way down the road, assuming success and development to a meaningful degree. You want to have flexibility to do what you can to generate the highest returns possible on those short cycle investments. Just a maybe a little bit of a tangential way of thinking about it. But so I think this, you know, this whole upset of the applecart in the region may have motivated a, a rethinking of the risk framework that all those member countries are operating under.

00;16;52;05 - 00;17;24;01
Unknown
And maybe it had some influence on the next sub topic in the in this whole mix, which is Ferc. I know you've been paying attention here. The Saudi Public Investment Fund announced that it will no longer fund live golf after the end of the 26 season. What say you about that? I mean, Friedman once said, if you put the federal government in charge of the Sahara Desert in five years, there'd be a shortage of sand.

00;17;24;03 - 00;18;07;14
Unknown
Well, the Saudis put the sovereign wealth fund, the chairman in charge of professional golf. And in four years, there was a shortage of fans, a shortage of relevance and a $5 billion shortage of returns. Same principle, different design. So what do we make of this? And I think this is really interesting. And that's the lesson is nobody in Silicon Valley, nobody in Riyadh and nobody in Washington DC ever seems to learn you cannot you cannot outspend economics.

00;18;07;17 - 00;18;41;29
Unknown
You can delay it. You can obscure it, but you can't throw. $5 billion is what piss spent on live and by every golfer on the planet, and lose $600 million a year and say, we're going to keep going. So what this Iran war has done is it has actually put so much pressure on Saudi and on the pig farm that they've got to divert their attention away from these projects, like professional golf, and focus on pumping oil and making money.

00;18;42;02 - 00;19;06;17
Unknown
And that's what I think is so interesting. And I think that was part of the argument when the PGA tour was threatened by by Liv, which I love competition. It's great for the consumer. But I think what the argument originally when when Liv came around was, well, it's the Pip fund. They're the biggest, you know, sovereign wealth fund next to Norway.

00;19;06;23 - 00;19;31;24
Unknown
I believe it that you can't compete against the biggest banker. But what what I think the we just have to continue to remind ourselves, remember in 1999 when it was the internet and you could just spend money is economics. Wins will always win in the long run. I was going to say, what is the path back look like for the Liv golfers?

00;19;31;24 - 00;20;01;08
Unknown
Is this all is forgiven? Everybody's happy. Or is, no, it's a, it's actually quite it's quite entertaining. Brooks Koepka is back. Read Patrick Reed left, with. So this is what the PGA tour is doing. They're kind of being, punitive. If you're a big man, you can come back, you'll have a minor slap, maybe take, you know, six months off.

00;20;01;10 - 00;20;30;24
Unknown
If you're not a big player, that brings in a lot of dollars in terms of fan and winnings, you're you're going to have to pay a pretty hefty price. You're sitting out for at least a year. There's some other, you know, punishments at, so I think for a lot of these players that took the check, I mean, you better spend that money wisely, because I think it's going to be it's going to be, pretty painful.

00;20;30;24 - 00;20;59;13
Unknown
It might be the end of your career, because sitting out a year plus is, is pretty tough when you're a competitor. So they, in essence, have to requalify. Absolutely. You know, you don't have a tour card anymore. So you're running on your exemptions. Which one of these guys on on live don't have exemptions? Yeah, it's definitely the end of Phil Mickelson, even though he's one of the most fun guys to watch and listen to.

00;20;59;15 - 00;21;08;14
Unknown
I think you see and a lot of these guys careers, you don't think Phil makes it back not to the PGA tour. He made too many in his.

00;21;08;16 - 00;21;31;16
Unknown
Now the PGA tour could forgive him because he's you know he's a he's a golfer that people love to watch. And he'd be great for the Champions Tour. But again I think this is you know this is this is interesting. This is the first time I'm thinking and I've always laughed at, you know, how huge pro Trumpers are.

00;21;31;16 - 00;21;58;14
Unknown
Like, he's playing chess. Why? Everyone's playing checkers. They're always saying they're maybe, maybe in some ways. And here's my thought. And I'm, I'm pivoting back over to Saudi versus golf. But we can all taunt us all day. But is this a crack of Saudi Arabia's control over the region? Is is did did the Iran war sort of force?

00;21;58;17 - 00;22;31;26
Unknown
I mean, we're seeing Piff is just there cracking on live is interesting and fun for us golfers. But is this cracking I mean, UAE leading attack. You're seeing Saudi themselves crack and deep, committing to big investments and focusing on, on their own oil demand. What is going to happen here? I'm not getting credit to Trump. I'm just saying, like this is some interesting, interesting stuff.

00;22;31;26 - 00;23;10;11
Unknown
And I think we're still early in this year. On the ramifications of what's happening here. I think there's going to be structural shifts, namely things like maybe a, a bit more unraveling of OPEC and thinking of alternatives to route away from the straight unless we get a complete capitulation and, you know, the West and, and, and the friendlies in the Middle East, control all of that choke point and de-risk it completely.

00;23;10;13 - 00;23;52;26
Unknown
But I do think there's going to be moves afoot. And I actually think perf is, you know, kind of maybe had a blackout moment and thought, hey, this would be a lot of fun to throw several billion dollars of professional golf, that are acting like a portfolio manager or CIO. Again, unlike as I've throw this in there, I was stunned, I hurt, I thought Mary Barra, who was the chairman CEO of GM, got challenged on, you know, the EV folly, that the big three and others have since paid a fair price for in the form of multi-billion dollar impairments.

00;23;52;28 - 00;24;13;22
Unknown
She was asked a question about, well, what about, you know, what about, gas hybrid when she said she kind of waffled on the question. And the most stunning thing to me was we, a GM, believe that EVs are the ultimate end game.

00;24;13;24 - 00;24;39;20
Unknown
And she's she's sitting on, you know, an economic portfolio, at least as far as GM concerned, that is strictly Ice vehicles. Today. So I don't think we're going to see PEV say or say, hey, look, we'll we'll come back to this later. It's just a tough time for us right now. I think they learn the, the, the real kind of market economic lesson.

00;24;39;22 - 00;25;13;26
Unknown
Well what's, what's really funny. We didn't talk about the CEO of live, Scott O'Neill, who's brought in first. Greg Norman is such a combative figure. Again, it's funny how history loves to look at guys like Greg Norman. If Greg Norman won a few masters and didn't show, maybe the I mean, he's kind of a material in terms of whether he love them or hate them, but they brought in to see a guy named Scott O'Neill who says, the, the, the pistol commit.

00;25;13;29 - 00;25;44;26
Unknown
It's not different from any other private equity funded business. Unlike foe your major benefactor basically just says, I'm d committee on my investment and you're like, it's no any different. I think live is probably dead, but but but what's interesting is going back to your GM comment, I mean, the hybrid model isn't I mean, using electric in an engine is the most efficient part.

00;25;44;28 - 00;26;19;19
Unknown
You're seeing all that, you know, BMW you're looking at, you're seeing all these different people pivot because you can create a much more efficient, faster engine with less metal. It's the hybrid model. The hybrid idea is a great idea, and in fact, it's probably the most logical. If you're long infrastructure and the infrastructure says, ISIS, you know that the oil and gas global infrastructure is not going away.

00;26;19;21 - 00;26;54;04
Unknown
That was something we've been talking about here in Clyde for forever. Is, you're not going to just remove to renewables overnight because the infrastructure is not there and it's going to take 30 to 50 years to build it. Oh, and by the way, it doesn't that counseling makes sense even with all that structure. But when you think about the global sort of AIS versus, you know, pure battery, driven car, well, the ice infrastructure is too gray.

00;26;54;06 - 00;27;16;06
Unknown
So how do you sort of put the both maybe putting both together is the most efficient way to do it. And then it actually turns out it really it I love, you know, EVs. But for me personally, it's, you know, I have a few cocktails and let my car drive me home. I love that concept. Let's have the exit question on this.

00;27;16;06 - 00;27;50;13
Unknown
And I believe that everything happens in threes. So lives gone. OpEx imploding. What is the third entity that implodes? And I'll go ahead and say it within a year. NATO's done I would say that. And it may not be within a year. But just given all the pain, the disproportionate pain that Europe is suffering and will suffer more in the coming months, is this finally the straw that breaks the EU's back?

00;27;50;15 - 00;28;16;18
Unknown
And then NATO follows, or NATO gets? Yeah, a reimagined NATO. The world order is, if you look at the dictator model of the world order, Putin, you can go ahead and have Ukraine, China, you can go ahead and have Taiwan. Let me get my semiconductors out of there. And, Trump, you don't have to kowtow to, Europe anymore as part of NATO.

00;28;16;26 - 00;28;22;11
Unknown
So, I was going to go a little bit off script and think.

00;28;22;14 - 00;28;51;09
Unknown
Why does it someone maybe the US why isn't someone just take over the Strait of Hormuz? Why is the why does Iran control it? That's what I Blackrock, Blackstone KKR let's just privatized empire just to say I own it I'm I'm the troll that it that controls the strait I don't think pipelines you can build infrastructure out fast enough to to route away and it's just too efficient.

00;28;51;11 - 00;29;20;24
Unknown
It's too important. I think it's just that's going to be a tough one. But I love this Europe concept because Europe kids kind of floating in and out of being relevant, you know, like their taxes are too high. They went long renewables like total idiots. Germany went from like the strongest economy in the planet to literally like, what is Germany's relevance today?

00;29;20;26 - 00;29;30;09
Unknown
Because even even now, here's the most relevant country in Europe right now.

00;29;30;11 - 00;29;59;22
Unknown
Probably France, because we had nukes that I mean, they're my only unclear Poland. Yes. Their economies growing like a weed. Like a weed. Why it all comes down to the large and growing deficit. And if you recall, the UK and the EU combined consume 37 joules of energy per year. They produce only five of it. And that's the pain point.

00;29;59;27 - 00;30;27;29
Unknown
That's the crux of it. Ultimately, that directly impacts the voting citizenry of these of these countries. Yeah. We're going through a way of a pretty hard populist rightward shift. And some of that has has reversed course. But I do think there are fundamental issues with the member countries of the EU that go through successive rounds of this type of, crises moments.

00;30;28;01 - 00;30;51;27
Unknown
A lot of them driven by, you know, tight supplies, if not outright shortages, which we're seeing and about to see in some key products that, okay, I've had enough of this. How do we affect a change or we're not going to take kind of the the Kumbaya from Brussels and blindly follow it because it has had real consequences.

00;30;51;29 - 00;31;15;14
Unknown
So I, I think that's that's the first thing in the EU, NATO succession. But I agree with you, I think, I think NATO is is going to look a lot different and in a relatively short period of time. All right. Take us to, take us to a, world real quick, and then we'll, then we'll hit the natural gas knife fight.

00;31;15;16 - 00;31;46;28
Unknown
So it's kind of a move, kind of cross and I data centers, I was surprised to see, I guess, and maybe there are kind of fundamental cost pressures that may the capital number inherently goes higher because all the inputs are costing more. But you have the big four essentially go from a 2026, a data center CapEx spend of around 606, 609 billion I've seen is adjusted numbers.

00;31;46;28 - 00;32;15;16
Unknown
Now, based on the most recent earnings reports that have that combined number north of 700. I think in one place I saw 750 billion. And when you start comparing it to the largest line items in the in the US budget, you know, it's it's our, it's let's say 750, it's half of what the Pentagon is asking for for a defense budget.

00;32;15;18 - 00;32;42;10
Unknown
Can we still call it the defense budget? Sometimes the depart war budget, the war budget kind of feels like that. You know, it was it was interesting. So Cuppy, who's a great follow, runs a hedge fund, actually, in Puerto Rico, in Puerto Rico, yeah. Actually made the, point today or yesterday on Twitter saying this feels a lot like 2015 shale.

00;32;42;12 - 00;33;06;21
Unknown
It's, we're just going to spend, spend, spend with no path towards profitability because you go I mean, anthropic came out and said they may or, no, I guess OpenAI came out and said they may be out of money by 2027, etc. their energy costs are out the wazoo. Yeah. I mean, they're all running negative gross margin.

00;33;06;21 - 00;33;41;03
Unknown
I mean, I know we all learned what we needed to know about economics from the drug dealer in high school. You give the crack away for free to get everybody hooked. And, they've certainly done that. But how much? True, power do they have to, to raise prices going forward is going to be interesting, and it's going to be wild to watch the the other good analogy that we talked about is laying all those fiber optic lines, back for the internet because as com none of those companies wound up making it.

00;33;41;06 - 00;34;09;23
Unknown
Well, there's this great, article published this week about AI driving layoffs and how it's going to destroy the economy. We'll talk about it next week. I've got a huge opening here, but but what Mark was saying is there's this fight going on between the chemical industry and AI, and this is something to watch. This is actually probably the third.

00;34;09;24 - 00;34;29;17
Unknown
This is that this is the third piece of the pie that you were talking about. Chuck, I think this is the most important fight. I mean, they're in war is very important. Sure. But this is a really interesting knife fight that we're about to see. You want to set us up, Mark? I'm going to die. Then talk about some of the pieces.

00;34;29;18 - 00;35;10;08
Unknown
I saw a, post yesterday, and it it just feed my curiosity. Go UB Chakrabarty who, Lead in Houston, I believe a company called Sawyer Jam. So they're doing a lot of stuff and, you know, bleeding edge chemical innovation. From what I understand, I haven't dug into the company itself, but he just posted about, you know what, what's emerged here, where I go back to guts, least probably 15 years ago, I was at a conference.

00;35;10;11 - 00;35;39;02
Unknown
And I think I've told this story before, but it's been a long time ago. And Steve Chazen was still running oxy, and they talked about, you know, their reallocation of capital more toward the pet chem side of the business. And at that time, it was, you know, the only path to success and value among most analysts was you better be pouring as much into the upstream as you can.

00;35;39;05 - 00;36;09;26
Unknown
And Chazen and his brilliant y. And sometimes the servic way responded to all that with luck, and this seemed hyperbolic coming from somebody like k them rest, rest in peace. We believe in the permanence of cheap U.S. natural gas. And of course, none of what we're seeing now from the power sector as it relates to the very aggressive growth rates.

00;36;09;26 - 00;36;35;17
Unknown
That and, in a sector that hasn't seen meaningful demand growth for a long time, and now we're heaping wedges of demand growth not only in the form of the, data center buildout, but also, as it relates to LNG ramp up. And that's that's only accelerating from the US because what's what's happened in Qatar and the straight and so is, are there going to be enough molecules to go around.

00;36;35;22 - 00;37;21;22
Unknown
And so the, the, the specter of gas gas per gas molecule, competition, you know, the chemical industry has been, you know, been enjoying, pretty low feedstock cost for, you know, of ethane to produce polyethylene, which is ultimately a building block and hundreds if not thousands of consumer products and other industrial products. And now we've got, you know, a growth, high growth segment that is not only willing to pretty much pay anything for power, it's also very quickly pivoting to what we realize most of the stuff within the next 3 to 5 years.

00;37;21;22 - 00;37;55;26
Unknown
If we have a hope of getting things online reliably, has got to be fueled by natural gas. The power has to be generated by natural gas. So we're going to talk next week about this I layoff thing setting. It's super important. I'll I'll circulate the building. You guys in the report. There's actually a research report. But in the interim the irony here is when I was back in the shell days, I laughed at like, you know, Amazon, all the Fang people were hiring people from energy to build.

00;37;55;26 - 00;38;36;15
Unknown
They're like, how do we, you know, build these data centers with powered by renewables. All that's gone right out of the window, by the way, because of a, they have $725 billion in CapEx and maybe gas turbines to power the data centers. And the problem is they're showing up at the same equipment, suppliers as the oil and gas industry, especially as the chemical industries specifically that, you know, manufactures all your water bottles and your kid's car seat and Amazon boxes, etc..

00;38;36;17 - 00;39;17;10
Unknown
So that's the that's the knife fight. So the collateral damage going on here is gas turbines are up 195% since 2019. Process turbines, the things the chemical industry needs up four times in a single year for X in one year. So if you're a petrochemical operator in the Gulf Coast, which was the reason the Gulf Coast already had these big petrochemical plants, but the shale revolution just sort of put it into hyper power mode, because all this cheap gas could come down to the Gulf Coast.

00;39;17;10 - 00;39;45;02
Unknown
So it's it's and that's where you're getting your petrochemical, being developed. But that's the knife side. Now, if you take the grand vision of, say, a five gigawatt campus, and let's just assume that it's for a meaningful period of time, certainly from its its early start up, what are we gas fired. You're looking at, you know, depending on your your turbine efficiency, you're only on a b c f a day.

00;39;45;03 - 00;40;07;16
Unknown
That's one campus. Yeah. The problem with our chemical industry is they're running on single digit margin so that when big tech shows up saying, hey, I need these turbines because I have 20 to 35% net margins, who's going to pay more for the tech big tech. So this is interesting. So what's going to happen? Computer always beats Tupperware I mean right.

00;40;07;18 - 00;40;35;27
Unknown
You'll notice a shortage of Tupperware if you can't get if you're bottled water you'll notice a shortage of Tupperware. You'll notice higher electrical prices. And that's not going to be good for, the consumer either. So it's going to start. Electrical prices along with insurance are going to start right. Rivaling gasoline as kind of that barometer of inflation that people see on a daily basis.

00;40;35;29 - 00;41;05;02
Unknown
But back to the previous segment. If you can't build it, you can't consume the gas. And we saw one data point we failed to mention. I think there were 12 to 16GW of projects that were supposed to be starting construction this year, and seven of those have been canceled or significantly deferred. And there's a lot of supply chain bottlenecks like, grand scale transformers.

00;41;05;04 - 00;41;30;26
Unknown
Obviously, the turbines interconnect, timelines and the like, what you're saying, and a lot of these areas too, a resurgence in kind of Nimby pushback that, you know, sponsors are just walking away after a few few rounds of a few months of trying. So here's the fact that we make own. But, I mean, meanwhile, ship channel gas is what to be 60.

00;41;30;29 - 00;41;35;19
Unknown
Yeah, US natural gas right now.

00;41;35;22 - 00;42;04;06
Unknown
And by the way, natural gas in the middle of the global energy crisis caused by this war in the middle East is trading well under $3 here. Here in the US, Henry Howard is basically a slate was negative. The gas in the Permian Basin, the richest gas province on the face of the Earth, is literally worth less than nothing.

00;42;04;09 - 00;42;29;29
Unknown
Significantly less than nothing. At least over the weekend it was back down to minus ten. So we're in a world where the Strait of Hormuz is mined. A Brant crude is trading over 100 bucks. Europe is scrambling for LNG. They're screwed. Asia is rationing energy, and the one hydrocarbon the United States has is in absurd abundance. It's so cheap we can't even give it away.

00;42;30;02 - 00;42;49;25
Unknown
So the bottleneck is geology. It's infrastructure, pipelines, processing plants, export terminals. That is crazy. So I'm just like, man. And we've been talking about Tony Rice. I've been talking about this.

00;42;49;28 - 00;43;15;04
Unknown
And now we have this rogue competitor out of the Silicon Valley fighting for turbines, which is hilarious. Like it's they need it more than anybody. I mean, there's so much gas, man. We could and mean, why don't we just make the Permian Basin a big data center, power the entire world? That's that's to me is is, opportunity.

00;43;15;06 - 00;43;48;01
Unknown
Well, that's what that's what, Chevron and Microsoft are trying to get started. My own personal opinion. The reason I think that, you know, the the market, the gas market is going in the US is going to remain fairly well behaved is we just have so much gas potential, both in the form of associated gas. And there's so much there's so much reserve potential, that we get longer term price signals.

00;43;48;01 - 00;44;14;04
Unknown
That motivates the development of, of Beyond food. But and we're, we're producing hundred nine BCF today as of a recent peak in the US, you bring on a million barrels a day of new production in the Permian, and it's another, you know, four plus BCF a day. We'll continue the discussion next week on AI and data centers for.

00;44;14;07 - 00;44;38;27
Unknown
I think it I think it behooves us to close out with a, in memoriam. Both you and I were talking about it or got on. You have better anecdotes from the history of this icon than I do. So why don't you, Yeah. No, Mixed emotions. Right now, obviously. Rest in peace David Allen co always enjoyed, his concerts.

00;44;38;27 - 00;45;01;10
Unknown
I do think you never even called me by my name is up there for the greatest, country songs of all time. I was drowned the day my mom got out of prison. Got out of prison? How many times is everyone in the state of Texas sung that song? After a few foretells. Let me, let me, let me, let me, let me.

00;45;01;10 - 00;45;16;20
Unknown
Yeah. The, one time I went and saw him, I was at Billy Bob's, and somebody was drunk on the front row. And literally as soon as he walked out on stage, started saying, yelling, you don't even call me by my name. And he looked down and he said, you dumb son of a bitch. When I play that song, I'm out of here.

00;45;16;25 - 00;45;43;11
Unknown
And, that being said, I always had a problem though, with the merch table and his underground album and selling KKK gear and Nazi years. So, it's it's with, it's with mixed emotions on his passing, respected him as an artist, but might have had might have had problems with him if I'd had known him as a human.

00;45;43;13 - 00;46;09;24
Unknown
Yeah. I didn't know that shot. Yep. Yeah. So. All right, boys, it was fun. The, we will, definitely rally up. Well, y'all will rally up next week because I will be in Venice. I don't think I'll be calling in from across the sea. Let's try to get you on one of those, like little Venice houseboats. I'll have pictures.

00;46;09;24 - 00;46;24;07
Unknown
I'll definitely, I'll definitely have, have, have pictures. If you enjoyed the show, please share it with a friend. Leave comments and we'll see you next week.