Latest / Brian Thomas / Brigham McCown - Energy and War in Iran

Transcript

Brigham McCown - Energy and War in Iran · Brian Thomas

• 0:00
  Speaker 1: Station.
• 0:02
  Speaker 2: Hey forty fifty five, care see the talk station. Happy Monday.
• 0:04
  Speaker 2: Try to make it so anyway, And I guess gurdir
• 0:07
  Speaker 2: Lluin's for the gas pump coming up.
• 0:09
  Speaker 1: Thank you.
• 0:10
  Speaker 2: Brigham Accown from the Hudson Institute, our energy policy expert,
• 0:13
  Speaker 2: joined the program this morning to talk about just that
• 0:15
  Speaker 2: maybe a little bit more. Brigham account, Welcome back, my friends.
• 0:17
  Speaker 2: Great having you on this morning.
• 0:19
  Speaker 1: Hi Brian, thanks great to be with you.
• 0:21
  Speaker 2: Hudson dot Org is where you find Brigham in the
• 0:24
  Speaker 2: team at the Hudson Institute. I recommend you do that
• 0:26
  Speaker 2: all right straight at Horror Moves seems to be the bottleneck.
• 0:28
  Speaker 2: We got a problem there. It's effectively shut down. While
• 0:30
  Speaker 2: everything I've read this morning, they've been jamming the GPS
• 0:33
  Speaker 2: signals for the ships. They've threatened to blow them up.
• 0:35
  Speaker 2: They actually have attacked three of them. Fog of war's
• 0:38
  Speaker 2: a little difficult, but clearly with that much oil, like
• 0:41
  Speaker 2: twenty percent of the daily global consumption goes to that
• 0:44
  Speaker 2: tiny little stretch it is. And we talked about this
• 0:47
  Speaker 2: with Brian James a moment ago. Energy prices are going
• 0:50
  Speaker 2: to go up, but thankfully we ain't. In the Opek
• 0:52
  Speaker 2: dominant years back in the seventies. We're gonna have a
• 0:54
  Speaker 2: better opportunity to to keep the supply up to maybe
• 0:59
  Speaker 2: it won't be as bad. What's your take on this
• 1:01
  Speaker 2: Brigham account?
• 1:03
  Speaker 1: Yeah, well, Brian, you've you've you've already nailed it. I
• 1:06
  Speaker 1: don't even need to say anything. Uh No, in all seriousness, Yeah,
• 1:11
  Speaker 1: this straight over moves is not it's functionally disrupted. That
• 1:15
  Speaker 1: disruption is being driven by two things. Obviously the risk
• 1:18
  Speaker 1: of anti ship missiles and attacks uh from Iran and
• 1:21
  Speaker 1: its proxies. But really one of the things we're not
• 1:23
  Speaker 1: talking about yet you're gonna hear a lot more about
• 1:25
  Speaker 1: today is a lot of this is going to be
• 1:27
  Speaker 1: driven by the insurance markets, not navies. Yeah, I read that.
• 1:31
  Speaker 2: They're they're canceling the insurance policies.
• 1:33
  Speaker 1: Effectively, they are they are withdrawing their war risk coverage.
• 1:39
  Speaker 1: Think about that. You can get insurance against war for
• 1:41
  Speaker 1: the Persian Gulf and what that means is without the
• 1:44
  Speaker 1: war risk insurance, ship owners are reluctant to transit, charters
• 1:49
  Speaker 1: will not contract, and banks you're not going to finance
• 1:52
  Speaker 1: these voyages. So hundreds of tankers are either anchored or erotic. Now,
• 1:56
  Speaker 1: the good news for America is, as you pointed out,
• 1:59
  Speaker 1: we're not dependent on Middle East or Noiland longer, and
• 2:02
  Speaker 1: that twenty percent of world volume mainly headed to Asia. Yeah,
• 2:07
  Speaker 1: and the number one supplier is China. So they've got
• 2:10
  Speaker 1: a bigger problem than we've got right now. And you know,
• 2:13
  Speaker 1: we'll see how long this goes on for because as
• 2:16
  Speaker 1: you know, there are stockpiles in place. Most places have
• 2:20
  Speaker 1: thirty to forty five days supply. Short term prices are
• 2:23
  Speaker 1: up about ten percent today. The longer term, we'll see
• 2:26
  Speaker 1: how long this lasts.
• 2:28
  Speaker 2: Well, you know, the litigation attorney to me that did
• 2:31
  Speaker 2: a lot of insurance coverage litigation is quick to sort
• 2:33
  Speaker 2: of glom onto the Wait a second, it sounds to
• 2:36
  Speaker 2: me like these insurers of these ships during offering these
• 2:39
  Speaker 2: wartime policies maybe at a risk of a bad faith lawsuit.
• 2:42
  Speaker 2: It's like if my insurance company canceled my paid for
• 2:45
  Speaker 2: and in place fire insurance while a fire was raging
• 2:49
  Speaker 2: in my home. I could probably see them.
• 2:53
  Speaker 1: Yeah, I think you could. And war risk insurance covers,
• 2:56
  Speaker 1: I mean, this is this is crazy stuff, right, covers,
• 2:59
  Speaker 1: missile tax drone attacks, mines, terrorism, this creates a market
• 3:06
  Speaker 1: driven choke point even without a blockade. If the insurers
• 3:10
  Speaker 1: are able to cancel.
• 3:10
  Speaker 2: Policies, well, it sounds to me like it's probably dollar
• 3:14
  Speaker 2: for dollar coverage.
• 3:15
  Speaker 1: Brig them, Yeah, it is. It's pre paid insurance, I guess,
• 3:20
  Speaker 1: but you know, I think you know back to oil
• 3:23
  Speaker 1: price outlook, they're elevated based on risk premium right, likely
• 3:27
  Speaker 1: trading in the load to mid eighties today, there are
• 3:30
  Speaker 1: future is around seventy five to seventy eight. But what
• 3:33
  Speaker 1: we'll call the markets is restoration of the war risk
• 3:36
  Speaker 1: insurance or a clear protection of shipping lanes like the
• 3:40
  Speaker 1: United States did back during the Desert Storm War. When
• 3:42
  Speaker 1: I was there, we used the US flag tankers and
• 3:45
  Speaker 1: US warship. That may be a little bit different deal today.
• 3:50
  Speaker 1: So far, the US and it's coalition partners have hit
• 3:53
  Speaker 1: more than a thousand targets. The idea now that they
• 3:56
  Speaker 1: have complete air supremacy is to knock out every thing
• 4:00
  Speaker 1: that can launch something.
• 4:02
  Speaker 2: Well, given that China is so heavily relying on the
• 4:05
  Speaker 2: Iranian oil supply as with other Asian nations, doesn't this
• 4:08
  Speaker 2: provide an incentive for them to not try to protract
• 4:11
  Speaker 2: this in other words, help the Iranians fend off this attack,
• 4:14
  Speaker 2: because if we get a stable Iran, in spite of
• 4:17
  Speaker 2: the fact they're no longer a thorn in the western side,
• 4:19
  Speaker 2: you know, militarily long term objective, it will free up
• 4:23
  Speaker 2: their oil and drive the prices down.
• 4:26
  Speaker 1: It will and you know, what some people have pointed
• 4:29
  Speaker 1: to is a little bit of a three D chess
• 4:31
  Speaker 1: game going on. China has a lot of those critical
• 4:34
  Speaker 1: minerals we've talked about on the program, but they are
• 4:37
  Speaker 1: so highly reliant seventy plus percent on external oil sources.
• 4:41
  Speaker 1: Venezuela gone, Iran possibly gone. What's happening is their sources
• 4:46
  Speaker 1: of oil are being removed from the global market. That's
• 4:49
  Speaker 1: not by accident, that's intentional. So China doesn't want to
• 4:55
  Speaker 1: see the regime fail, and so I think one of
• 4:58
  Speaker 1: the things they'll be doing is try to b a
• 5:00
  Speaker 1: peace deal. Hey guys, let's stop this. The more and
• 5:04
  Speaker 1: longer this goes on and the more targets Iran hits,
• 5:07
  Speaker 1: including into the Gulf neighbors, the less appetite there is
• 5:10
  Speaker 1: to let this regime continue.
• 5:12
  Speaker 2: Well in timing is rather interesting, and some are suggesting
• 5:15
  Speaker 2: that this was an intentional timing thing. We launched the
• 5:18
  Speaker 2: attack on Iran after we kind of shored things up
• 5:21
  Speaker 2: in Venezuela, keeping their supply of oil on and actually
• 5:24
  Speaker 2: maybe improving the supply of oil out of Venezuela. The
• 5:27
  Speaker 2: very corrupt and incompetent nation it well, it probably still is,
• 5:31
  Speaker 2: but certainly wasn't the Maduro regime.
• 5:35
  Speaker 1: Well, that's true. We'll have to see how Venzuela goes.
• 5:37
  Speaker 1: I think you know what the current administration has learned
• 5:40
  Speaker 1: is this notion of nation building hasn't gone so well.
• 5:42
  Speaker 1: It's on the ground not gone so well. So you
• 5:45
  Speaker 1: know the strategy they're applying and we'll see if it
• 5:47
  Speaker 1: works is eliminate the threat and move on. And if
• 5:51
  Speaker 1: you resume the threat, we'll come back and do it
• 5:54
  Speaker 1: to you again.
• 5:55
  Speaker 2: Brig McCown, I'm want to bring it back to ask
• 5:56
  Speaker 2: you about what's going on here in the state of Ohio.
• 5:58
  Speaker 2: Headline leaked GEO bill would allow for electric companies to
• 6:02
  Speaker 2: own kr cdtalk station. Bryan Thomas with Hudson Institute find
• 6:06
  Speaker 2: them online at Hudson dot org. Brigham account our energy
• 6:08
  Speaker 2: policy expert. He does know what he's talking about. I
• 6:11
  Speaker 2: think all my listeners remember First Energy House Bill six
• 6:14
  Speaker 2: that resulted in the end of Larry Householder, the trial
• 6:16
  Speaker 2: of executives involved in it. Kind of like a pay
• 6:18
  Speaker 2: to play scheme. Here, you bail me out with a
• 6:21
  Speaker 2: billion dollars because I have a struggling nuclear or have
• 6:24
  Speaker 2: struggling nuclear facilities, and we'll give you fat bank and response.
• 6:27
  Speaker 2: So that's still unfolding and playing out. But I guess,
• 6:30
  Speaker 2: first off, as we pivot over to this new described
• 6:33
  Speaker 2: as leaked gop bill, why and how is it that
• 6:38
  Speaker 2: First Energy was struggling with their nuclear facilities and even
• 6:41
  Speaker 2: needed a bailout. I thought nuclear power was good and
• 6:43
  Speaker 2: it worked well, But is there something going on behind
• 6:46
  Speaker 2: the scenes, like maybe too many regulations or something associated
• 6:49
  Speaker 2: with using nuclear power?
• 6:50
  Speaker 1: Brigham? Yeah, the capital costs up front for nuclear power
• 6:54
  Speaker 1: is enormous, and that's something a current administration and secretary
• 6:57
  Speaker 1: right is trying to get under control of. The last reactor,
• 7:00
  Speaker 1: of course, that went online down in Georgia, the Vocal reactor,
• 7:03
  Speaker 1: I think, cost twice as much as it was expected
• 7:06
  Speaker 1: to cost from the beginning. That's frankly because of the
• 7:10
  Speaker 1: permitting process and not yes, although government permitting not necessarily
• 7:17
  Speaker 1: environmental permitting, although that can play an issue, But the
• 7:20
  Speaker 1: National Regulatory Commission the NRC, seems to have spent more
• 7:25
  Speaker 1: time avoiding licensing nuclear reactors during the history of its
• 7:28
  Speaker 1: lifetime than it has actually getting them done. Plus, the
• 7:33
  Speaker 1: industry has some fault here because there are not two
• 7:35
  Speaker 1: reactors in America that are the same. Right, It's like
• 7:38
  Speaker 1: guys build the same car, license it, and then build
• 7:42
  Speaker 1: it again. Not that hard.
• 7:44
  Speaker 2: Well, let me ask you a really quick sort of
• 7:46
  Speaker 2: tongue in cheet question, Briga Mcowan. Does the military have
• 7:49
  Speaker 2: to go through the same regulatory process that people out
• 7:52
  Speaker 2: here in the real world go through? Because are my
• 7:54
  Speaker 2: submarine or friend curubage MIC's out there? He was on
• 7:57
  Speaker 2: a nuclear powered sub That thing had been in action
• 7:59
  Speaker 2: for like decks. That's what happens with nuclear powered subs
• 8:02
  Speaker 2: and aircraft carries in alike. The things last for like
• 8:05
  Speaker 2: twenty to forty years, and they've been used since late
• 8:08
  Speaker 2: nineteen fifties. They have no problem with them, Brigham, how
• 8:11
  Speaker 2: come we can't have some of those?
• 8:13
  Speaker 1: Well, they don't. In the new versions of those reactors
• 8:15
  Speaker 1: may not even need to be refueled. Ever, during the
• 8:18
  Speaker 1: entire fifty plus year lifespan. Yeah, you're right, and we're
• 8:24
  Speaker 1: talking about small modular reactors. Now, that's what the Navy's
• 8:27
  Speaker 1: done since, frankly the nineteen fifties. And no, it is
• 8:31
  Speaker 1: a slightly differencing different program. The Bureau of Naval Reactors
• 8:36
  Speaker 1: in the Navy does talk closely with the DOE, but
• 8:40
  Speaker 1: the designs are simpler, they're consistent. We don't have eighty
• 8:45
  Speaker 1: nine designs. We have far fewer, so it's much easier
• 8:49
  Speaker 1: to do. But you know, Brian, you're really getting back
• 8:51
  Speaker 1: to Diltman questions. Why is the GOP wanting to return
• 8:56
  Speaker 1: and move us away from? Quite frankly, you know, we
• 9:02
  Speaker 1: moved away from utility companies being able to own their
• 9:06
  Speaker 1: own generation and allowing regulated utilities to own their own
• 9:11
  Speaker 1: generation inside a competitive market. It distorts wholesale pricing. It's
• 9:15
  Speaker 1: frankly not very capitalistic. And to your point, that twenty
• 9:19
  Speaker 1: nineteen seemed yesterday, and I think they're gonna have some
• 9:21
  Speaker 1: issues here.
• 9:22
  Speaker 2: Oh they are. And I got a kick out of
• 9:24
  Speaker 2: this shocking. No one has any understanding of how legislation
• 9:28
  Speaker 2: is written. Local wcpo's Morgan trial seems like appalled at
• 9:32
  Speaker 2: the idea that this was the particular legislation we're talking
• 9:35
  Speaker 2: about here was co written by an energy company. That's
• 9:38
  Speaker 2: what they do. I mean, our elected officials don't know
• 9:41
  Speaker 2: jack squat about energy, so they have to rely on
• 9:43
  Speaker 2: folks in the no lobbyists for the energy companies. Right
• 9:46
  Speaker 2: stuff handed to the legislators. They look at it, they
• 9:49
  Speaker 2: have it explained to them. It's pre prepared and if
• 9:51
  Speaker 2: it looks appealing and as it's written, it seems appealing
• 9:54
  Speaker 2: and it's good for the Ohioans, then that's how you
• 9:56
  Speaker 2: get something written. If you left it to any one
• 9:58
  Speaker 2: of our elected officials to literally write something on their own,
• 10:01
  Speaker 2: nothing would get done.
• 10:03
  Speaker 1: Yeah, well, if I may in our closing minutes. The
• 10:06
  Speaker 1: reason it distorts the market is you have two scenarios. One,
• 10:10
  Speaker 1: you have the utility companies that own all their stuff.
• 10:13
  Speaker 1: That's in several states other states like us, the electric
• 10:16
  Speaker 1: company buys power from a generator, a different company that
• 10:22
  Speaker 1: is privately backed, privately funded, hence private risk. When you
• 10:27
  Speaker 1: allow the utility company to own their own generation, now
• 10:31
  Speaker 1: that becomes a public risk and we're all going to
• 10:34
  Speaker 1: pay for it.
• 10:36
  Speaker 2: Is that why our energy bills are going up? Brigham account,
• 10:38
  Speaker 2: You just have to answer that final question for a
• 10:40
  Speaker 2: part company. Mine have gone through the roof. And is
• 10:43
  Speaker 2: it just the price of energy? Is this the transmission
• 10:45
  Speaker 2: lines that they're busily rebuilding or extending. Why are we
• 10:48
  Speaker 2: all paying so much more on our energy bills?
• 10:51
  Speaker 1: Yeah, it's There are numerous factors, but the bottom line
• 10:54
  Speaker 1: is the energy company can just pass costs along to you.
• 10:58
  Speaker 1: There's no incentive not to do that.
• 11:00
  Speaker 2: And the old days, they used to build it and
• 11:02
  Speaker 2: then recoup the cost after it was built. Right, Yes,
• 11:07
  Speaker 2: that's true, not the way it is anymore. The sorry
• 11:09
  Speaker 2: we have you, Brigham Acount to explain all these things
• 11:11
  Speaker 2: to us. We've got to get you back on the
• 11:12
  Speaker 2: show for a full hour in studio to talk broader
• 11:14
  Speaker 2: energy energy policy, and maybe we'll do that again real soon. Brigham.
• 11:19
  Speaker 2: I appreciate your willingness to come on the program and
• 11:21
  Speaker 2: talk with my listeners and.
• 11:22
  Speaker 1: Me absolutely, And you've just give me a couple of
• 11:25
  Speaker 1: ideas for charged conversation.
• 11:26
  Speaker 2: So glad you mention