Latest / The 47 Morning Update with Ben Ferguson / Running On Empty ft. Wil VanLoh

Transcript

Running On Empty ft. Wil VanLoh · The 47 Morning Update with Ben Ferguson

• 0:00
  Speaker 1: A global pandemic, over sixteen thousand Americans dead, and over
• 0:06
  Speaker 1: seventeen million Americans have lost their job and global energy
• 0:10
  Speaker 1: markets crushed by collapsing oil prices. These are extraordinary times
• 0:16
  Speaker 1: in which we live. This is Verdict with Ted Cruz.
• 0:27
  Speaker 1: Welcome back to Verdict with Ted Cruz. I'm Michael Knowles, Senator.
• 0:30
  Speaker 1: You're starting us off on a little bit of a
• 0:32
  Speaker 1: downer there, but I guess we're living in fairly down times.
• 0:36
  Speaker 1: I want to focus in on something you said there
• 0:38
  Speaker 1: about the energy markets, because last I checked, oil was
• 0:41
  Speaker 1: trading at something like twenty two dollars a barrel. It
• 0:44
  Speaker 1: is very, very low, and I think for most people
• 0:47
  Speaker 1: the interaction we have with the oil industry is when
• 0:50
  Speaker 1: we fill up our gas tanks. So low oil prices
• 0:53
  Speaker 1: are not necessarily a bad thing when we look at it.
• 0:55
  Speaker 1: What are we missing here? Well, I think right now
• 0:57
  Speaker 1: we're facing three different crises all the same time. We've
• 1:01
  Speaker 1: got a global pandemic, the Corona virus crisis. We're all
• 1:04
  Speaker 1: familiar with the cases, the deaths, and we're taking extraordinary
• 1:07
  Speaker 1: steps to try to stop the spread of that virus.
• 1:11
  Speaker 1: There's an economic crisis, say a disaster seventeen million people
• 1:15
  Speaker 1: in last three weeks have filed for unemployment. We've seen
• 1:18
  Speaker 1: entire industries decimated and that's producing enormous damage. But at
• 1:22
  Speaker 1: the same time, you've got energy markets, and in particular,
• 1:25
  Speaker 1: the global price of oil has dropped more than in half,
• 1:30
  Speaker 1: and the consequence of that is it potentially risk bankrupting most,
• 1:35
  Speaker 1: if not every, American energy producer, and particularly in my
• 1:39
  Speaker 1: home state of Texas. That's devastating. But if you end
• 1:42
  Speaker 1: up seeing American energy producers driven out of business, that
• 1:46
  Speaker 1: also has massive implications in terms of you and me
• 1:49
  Speaker 1: paying higher prices at the pump in years to come,
• 1:52
  Speaker 1: and also geopolitically making us dependent on foreign countries in
• 1:57
  Speaker 1: a way that we just now managed to yet free
• 2:00
  Speaker 1: and independent front. So what you're saying is we shouldn't
• 2:02
  Speaker 1: be celebrating maybe a little dip in the gas prices
• 2:05
  Speaker 1: right now because in the long term, financially, that could
• 2:08
  Speaker 1: really hurt us. And also it has these national security
• 2:11
  Speaker 1: implications that look pretty bad down the road. I just
• 2:14
  Speaker 1: want to point out something you said center. You said
• 2:16
  Speaker 1: you flew out and met with the president. You met
• 2:18
  Speaker 1: with the president specifically because of this energy crisis that's
• 2:22
  Speaker 1: how bad it's gotten. No, that's exactly right. On Friday,
• 2:25
  Speaker 1: I got on a plane on a United commercial flight
• 2:28
  Speaker 1: that was practically empty. They were there, only maybe ten
• 2:30
  Speaker 1: fifteen of us on it. Flew up to Dcent, went
• 2:34
  Speaker 1: to the White House, had a two hour meeting, and
• 2:36
  Speaker 1: we're all from states that are big energy producers. And
• 2:39
  Speaker 1: we started by writing a letter to the Saudi ambassador.
• 2:42
  Speaker 1: Then a couple of weeks ago we did a conference
• 2:44
  Speaker 1: call with the Saudi ambassador, nine of us. I gotta
• 2:47
  Speaker 1: tell you it was the most bare knuckled, candid conversation
• 2:51
  Speaker 1: really I've ever had with a foreign leader in eight
• 2:53
  Speaker 1: years in the Senate. Can get cursior, I can. So
• 2:58
  Speaker 1: we're on a conference call with the ambassador. Here's what
• 3:00
  Speaker 1: I said. I said, Listen, no state in the Union
• 3:03
  Speaker 1: does more business with Saudi Arabia than Texas. And right
• 3:06
  Speaker 1: now you're taking advantage of a global health pandemic to
• 3:10
  Speaker 1: try to screw and bankrupt people across Texas. And it
• 3:16
  Speaker 1: is devastating. And the thirteen of us who signed on
• 3:20
  Speaker 1: to the letter is a matter of national security, have
• 3:23
  Speaker 1: consistently been allies of the Saudi Saudia is an important
• 3:26
  Speaker 1: counterpart to Iran. Iran and the Ayatola are really dangerous
• 3:29
  Speaker 1: for national security. But I said, listen, you know we've
• 3:33
  Speaker 1: we've been with you, but you're now trying to bankrupt
• 3:36
  Speaker 1: people in my state and that is not going to stand. Now,
• 3:40
  Speaker 1: here's the Saudi ambassador's defense. But Russia. But Russia, And
• 3:45
  Speaker 1: it sounds like three media for the last three years.
• 3:48
  Speaker 1: Well they do they And I said, listen, Russia is
• 3:52
  Speaker 1: our enemy. We know that they behave like our enemy.
• 3:55
  Speaker 1: We treat him as our enemy. You're supposed to be
• 3:58
  Speaker 1: our friend. You want us to treat you like Russia? Fine,
• 4:02
  Speaker 1: you want to be our enemy, how about we pull
• 4:04
  Speaker 1: up all our soldiers out of Saudi Arabia, we pull
• 4:06
  Speaker 1: our Patriot missiles out there. Because every time someone screws
• 4:09
  Speaker 1: with you in the Middle East, you pick up the
• 4:11
  Speaker 1: phone to call the American military and say save our asses. Well,
• 4:16
  Speaker 1: then don't bankrupt people in my state. And I was pissed. Yeah,
• 4:19
  Speaker 1: I gotta tell you it was interesting that call. I
• 4:24
  Speaker 1: think it got the e fact, I know it got
• 4:25
  Speaker 1: their attention. So you and I we've invited a guest.
• 4:28
  Speaker 1: It's it's a long time friend of mine, will Van Lowe.
• 4:31
  Speaker 1: Will is the CEO of Quantum Energy Partners Now that
• 4:34
  Speaker 1: is an eighteen billion dollar private equity energy fund. Quantum
• 4:40
  Speaker 1: is the third largest driller in North America. And I
• 4:43
  Speaker 1: gotta tell you Will is someone who knows the energy
• 4:46
  Speaker 1: markets as well, if not better than anyone I know.
• 4:49
  Speaker 1: And so in the last couple of weeks, as I
• 4:52
  Speaker 1: went up to meet with the president major energy CEO's
• 4:54
  Speaker 1: last week, Will was someone we literally spent probably six
• 4:58
  Speaker 1: seven hours on the phone trying to unders and what's
• 5:00
  Speaker 1: happening here and the real threat to jobs and energy
• 5:05
  Speaker 1: security O country, and so well, welcome to verdict Will.
• 5:07
  Speaker 1: For so many years we complained about how we're dependent
• 5:09
  Speaker 1: on the Middle East for energy, we are totally trapped
• 5:13
  Speaker 1: for energy, and yet this technology helped to lead us
• 5:18
  Speaker 1: away from that and get us to what I guess
• 5:19
  Speaker 1: we'd call energy independence until maybe five minutes ago, that's right,
• 5:24
  Speaker 1: And I think that is a huge when you think
• 5:26
  Speaker 1: about the United States has had more wells drilled in
• 5:29
  Speaker 1: it than the rest of the world combined. That's a
• 5:31
  Speaker 1: pretty amazing statistic to think about. When it comes to shale.
• 5:35
  Speaker 1: Do we have a lot of it here? Yeah? Oh? Well,
• 5:36
  Speaker 1: for sure. Probably ninety five percent of all shale production
• 5:41
  Speaker 1: in the world is in United States. Part of that's
• 5:43
  Speaker 1: due to our geology, right, so they've tried it. For example,
• 5:47
  Speaker 1: in Europe, they don't have the same rocks over there.
• 5:50
  Speaker 1: Now there's other parts of the world where there's a
• 5:52
  Speaker 1: lot of shale, but those are parts of the world
• 5:54
  Speaker 1: that typically have a lot of conventional oil and gas
• 5:57
  Speaker 1: as well. And if you don't need to drill, it
• 5:59
  Speaker 1: calls more money to drill wells unconventionally horizontally and put
• 6:03
  Speaker 1: the big fracts on them. So places like in the
• 6:05
  Speaker 1: Middle East where they have a lot of conventional production,
• 6:08
  Speaker 1: they don't need to drill horizontal wells. So last ten
• 6:12
  Speaker 1: years we have this technological innovation. We discover how to
• 6:16
  Speaker 1: access massive reserves that were there but we didn't know
• 6:20
  Speaker 1: how to get to it right. And suddenly America passes everybody.
• 6:24
  Speaker 1: We pass Audi Arabia, we pass Russia, We become the
• 6:27
  Speaker 1: top producer in the world. Who is it that drove that?
• 6:31
  Speaker 1: And is the energy industry? Look, I think a lot
• 6:35
  Speaker 1: of people think of energy and they think of big oil.
• 6:37
  Speaker 1: They think of a couple of you know, giant companies
• 6:39
  Speaker 1: Xon and Shell, and you know these giant companies, is
• 6:42
  Speaker 1: that who did this innovation? No, And that's you know,
• 6:44
  Speaker 1: that's the interesting thing because so much the dialogue right
• 6:47
  Speaker 1: now in Washington is involving the Xons and the Chevrons
• 6:51
  Speaker 1: of the world. And there're certainly big players in Shell today,
• 6:54
  Speaker 1: but they didn't drive the innovation. It was actually the
• 6:56
  Speaker 1: independence that drove that innovation in the United States. So
• 6:59
  Speaker 1: what's an UM. Well, an independent is basically an oil
• 7:03
  Speaker 1: and gas company that's not a major. So the majors
• 7:05
  Speaker 1: are typically integrated companies. They're the largest companies in the
• 7:09
  Speaker 1: world in terms of publicly or privately owned outside of
• 7:14
  Speaker 1: government owned oil companies. And these majors, I mean, they're
• 7:17
  Speaker 1: they're massive. I mean some of them they have GDPs
• 7:20
  Speaker 1: that rival company so well they do like that's on
• 7:22
  Speaker 1: for example, they produce over four million barrels a day. Right,
• 7:25
  Speaker 1: there's only a couple, there's only a handful of countries
• 7:28
  Speaker 1: in the world that produce over four million barrels a day.
• 7:30
  Speaker 1: But the shale revolution was started and driven by independence
• 7:36
  Speaker 1: and independence you're talking. You and I both spent a
• 7:39
  Speaker 1: lot of time out in Midland, Texas. You're talking sometimes
• 7:43
  Speaker 1: five ten twenty guys in a little office who were
• 7:47
  Speaker 1: raising some money and going out and drilling holes and innovating.
• 7:52
  Speaker 1: That's what drove this entire revolution and change the entire geopolitics.
• 7:57
  Speaker 1: It did. And to be fair that the technology is
• 8:00
  Speaker 1: probably driven more by the larger public independence companies like Chesapeake,
• 8:04
  Speaker 1: companies like Pioneer, those types. They drove the technology, but
• 8:09
  Speaker 1: the smaller independence were very quick to get in and
• 8:13
  Speaker 1: really take that and they're much more nimble than the
• 8:17
  Speaker 1: public companies. So they take the big, the big technology revolutions,
• 8:22
  Speaker 1: and they do a lot of evolutionary changes in that technology,
• 8:26
  Speaker 1: and they get it out there very quick. They're and
• 8:29
  Speaker 1: they're able to access large amounts of land. And so
• 8:32
  Speaker 1: the independence, both the public, the larger public independence as
• 8:35
  Speaker 1: well as the thousands of smaller kind of mom and
• 8:38
  Speaker 1: pop independence, they're really the ones that have made this
• 8:42
  Speaker 1: independence of energy possible as well. I don't want to
• 8:45
  Speaker 1: reign on your parade here, but this sounds too good.
• 8:49
  Speaker 1: This sounds too good to be true right now because
• 8:52
  Speaker 1: you've you've got this great energy revolution here, you're empowering
• 8:55
  Speaker 1: so many people American ingenuity, and then the prices all
• 9:00
  Speaker 1: plummets so I understand how it worked out. So well,
• 9:04
  Speaker 1: what went wrong? Well, let's back up a little bit
• 9:09
  Speaker 1: and you think about prices plummeting. Prices plummeted from about
• 9:12
  Speaker 1: sixty dollars a barrel at the beginning of the year
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  Speaker 1: down about twenty dollars a barrel a few weeks ago.
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  Speaker 1: Now they're up in the mid to high twenties now.
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  Speaker 1: But let's not forget before the shell revolution started in
• 9:23
  Speaker 1: two thousand and eight, Well, it was one hundred and
• 9:25
  Speaker 1: forty seven dollars a barrel. Okay, wow, so hold on,
• 9:27
  Speaker 1: hold on a second, one hundred and forty seven dollars
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  Speaker 1: a barrel, and then it came down to fifty sixty
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  Speaker 1: dollars a barrel. And now it's plummeted to the twenties
• 9:36
  Speaker 1: right right, And through American innovation and ingenuity, we were
• 9:40
  Speaker 1: able to get the cost. Initially, these shell wells were
• 9:43
  Speaker 1: very expensive and you didn't recover a lot of hydrocarbon.
• 9:46
  Speaker 1: And through a lot of science, through a lot of
• 9:48
  Speaker 1: just innovation and trial and error, we were able to
• 9:51
  Speaker 1: meaningfully perfect, if you will, the way we drilled and
• 9:54
  Speaker 1: completed these wells, and we got the cost down to
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  Speaker 1: a level where at fifty to sixty dollars, the US
• 10:01
  Speaker 1: on gas companies can make a respectable profit, and the
• 10:06
  Speaker 1: industry for the last four or five years has been
• 10:08
  Speaker 1: chugging along. And fifty to sixty dollars. Look, most of
• 10:11
  Speaker 1: us don't buy a barrel of oil, so that number
• 10:13
  Speaker 1: doesn't mean anything to us. What does that mean fifty
• 10:16
  Speaker 1: sixty oil? What does that mean in terms of a
• 10:19
  Speaker 1: gallon of gas? Gas? And understanding a lot of the
• 10:22
  Speaker 1: cost of gas is actually taxes, right, and those don't change.
• 10:27
  Speaker 1: So three three to four dollars, depending on the state
• 10:30
  Speaker 1: and city you live in, is what fifty to sixty
• 10:32
  Speaker 1: dollars oil. So Michael will pay a lot more in
• 10:34
  Speaker 1: California than dollars. He will absolutely pay more. Although I
• 10:39
  Speaker 1: don't know that you need to fill your electric scooter, Michael,
• 10:41
  Speaker 1: so that hell, that's the thing. We actually just run
• 10:43
  Speaker 1: on moonbeams out here, so we don't need any sort
• 10:46
  Speaker 1: of energy. So what I'm hearing though, is you don't
• 10:49
  Speaker 1: want the price of oil to be so expensive that
• 10:51
  Speaker 1: it's going to kill us all at the pump. But
• 10:53
  Speaker 1: you also don't want the price of oil to be
• 10:55
  Speaker 1: so low that you put all of these companies out
• 10:57
  Speaker 1: of business. You want there to be some meat m
• 11:00
  Speaker 1: in there. What are the odds that we're going to
• 11:02
  Speaker 1: be able to get back to that before the American
• 11:04
  Speaker 1: energy industry is just destroyed. Yeah, you know, right now
• 11:08
  Speaker 1: it's not looking good. It's not looking good for two reasons.
• 11:11
  Speaker 1: One was Saudi and Russia have decided they we're going
• 11:15
  Speaker 1: to basically launch a market share war on the US.
• 11:18
  Speaker 1: And as Senator Crew said a minute ago, you know,
• 11:21
  Speaker 1: the US went from being a huge energy importer. You know,
• 11:24
  Speaker 1: we imported more than twelve million barrels a day less
• 11:27
  Speaker 1: than a decade ago to literally over the last six
• 11:31
  Speaker 1: months or so, we given on any given week, we
• 11:33
  Speaker 1: will export or import a few hundred thous you know,
• 11:36
  Speaker 1: so we'll be a net export or a net import
• 11:38
  Speaker 1: or maybe one hundred or two hundred thousand barrels, right,
• 11:41
  Speaker 1: And so that if you think about that and you
• 11:43
  Speaker 1: think about the impact on our economy. That's depending on
• 11:46
  Speaker 1: the price of oil. But say at fifty dollars oil,
• 11:48
  Speaker 1: that's about two hundred and fifty billion dollars a year
• 11:52
  Speaker 1: that stays here in the US. That US oil and
• 11:55
  Speaker 1: gas industry has created additional revenue. The taxes that come
• 11:58
  Speaker 1: off of that, the millions of jobs were created. What
• 12:01
  Speaker 1: does that mean for jobs? How does that Whose jobs
• 12:04
  Speaker 1: are we talking about here? Well, we're talking about very
• 12:08
  Speaker 1: high paying middle and upper middle class jobs. We're talking
• 12:11
  Speaker 1: about engineers, geologist, geophysicist, production engineers. We're talking about a
• 12:17
  Speaker 1: lot of jobs out in the field, so for both
• 12:21
  Speaker 1: lots of of blue collar job but also a lot
• 12:23
  Speaker 1: of white collar jobs. So if we lose American energy production,
• 12:29
  Speaker 1: if these companies go bankrupt, we're still going to need
• 12:34
  Speaker 1: energy when the economy comes back, right, We're still going
• 12:37
  Speaker 1: to drive our cars, We're gonna fly airplanes. And so
• 12:39
  Speaker 1: if the American companies are bankrupt, where are we going
• 12:43
  Speaker 1: to get our energy? We're going to get it where
• 12:45
  Speaker 1: we used to get it, and that's from foreign sources
• 12:48
  Speaker 1: like the Middle East, like Russia. And that's really to me, Senator,
• 12:52
  Speaker 1: that the key question the US has to ask itself
• 12:55
  Speaker 1: is do we want to be energy independent or not?
• 12:59
  Speaker 1: In the answer to that question, all policy will flow
• 13:02
  Speaker 1: from whether the answer is yes or no. Sorry to interrupt,
• 13:06
  Speaker 1: will because most people, I think want that energy independence.
• 13:09
  Speaker 1: That's what we always hear our politicians talking about. Certainly,
• 13:11
  Speaker 1: what I want for US, But what you're describing is
• 13:14
  Speaker 1: the problem here. I just assumed it was all the
• 13:16
  Speaker 1: coronavirus that's upsetting all the global markets. You're saying there's
• 13:19
  Speaker 1: something else in play, which is this price war between
• 13:23
  Speaker 1: Russia and Saudi Arabia going after the United States. What
• 13:27
  Speaker 1: does that mean? I mean, is that related to the
• 13:29
  Speaker 1: virus or is that a totally separate issue. Totally separate,
• 13:32
  Speaker 1: and to be fair, the demand destruction that's associated with
• 13:36
  Speaker 1: coronavirus is a much bigger issue today in the near term,
• 13:40
  Speaker 1: if I understand it. Globally, the demand for oil in
• 13:43
  Speaker 1: normal times four months ago was between ninety five and
• 13:47
  Speaker 1: one hundred million barrels a day, about one hundred million
• 13:49
  Speaker 1: barrels a day. As a result of the economy slowing
• 13:54
  Speaker 1: down and grinding to a halt in the US and globally,
• 13:58
  Speaker 1: it's dropped to about what about seventy million barrels a day.
• 14:01
  Speaker 1: There's a lot of different estimates out there, but I'd
• 14:04
  Speaker 1: say they range anywhere from a twenty to as much
• 14:06
  Speaker 1: as probably thirty five million barrel a day demand destruction,
• 14:09
  Speaker 1: So that would say somewhere between sixty five and eighty
• 14:12
  Speaker 1: million barrels a day is currently what the globe is
• 14:15
  Speaker 1: using today. So that had a big negative impact on price.
• 14:18
  Speaker 1: When when when a third or more of the demand disappears, right,
• 14:23
  Speaker 1: that it's never happened. That that's it's it's beyond without precedent.
• 14:27
  Speaker 1: That is, well, that's everybody's car sitting in their driveways
• 14:30
  Speaker 1: and everyone's airplane staying parked at the hangar and nobody
• 14:32
  Speaker 1: nobody flying, and very few people drop. And to put
• 14:35
  Speaker 1: that into context, during the Great Financial Crisis, total global
• 14:39
  Speaker 1: demand dropped by only about two and a half to
• 14:41
  Speaker 1: three million barrels a day. Wow, so we're looking at
• 14:45
  Speaker 1: ten times as much reduction in demand now as as
• 14:49
  Speaker 1: during the financial meltdown. That's exactly right. So but then
• 14:52
  Speaker 1: you've got a second component, which is you have the
• 14:55
  Speaker 1: Saudis and the Russians right as coronavirus is breaking. Yes,
• 14:59
  Speaker 1: decide this is a great opportunity to screw the Americans,
• 15:04
  Speaker 1: to bankrupt the American energy business. And listen what you're
• 15:08
  Speaker 1: doing drilling in in West Texas shale. The Saudis and
• 15:12
  Speaker 1: Russians have hated it because you pass them up with
• 15:16
  Speaker 1: America as the top producer and so they're sitting there.
• 15:19
  Speaker 1: If I understand this right, they're taking this as an opportunity.
• 15:21
  Speaker 1: All right, we've got a crisis. Let's put these guys
• 15:24
  Speaker 1: out of business. Let's bankrupt them so that when all
• 15:27
  Speaker 1: is said and done, we're the only players left in
• 15:30
  Speaker 1: the game. Senator, if you think back to when the
• 15:32
  Speaker 1: oil shell revolution started and you look at total global
• 15:36
  Speaker 1: supply growth since then, about eight or nine years ago,
• 15:40
  Speaker 1: eighty percent of total global supply growth has come from
• 15:43
  Speaker 1: the United States of America. Okay, that's a country that
• 15:46
  Speaker 1: today produces about thirteen fourteen percent, maybe fifteen if you
• 15:51
  Speaker 1: had in all the NGLs and other liquids. What's an
• 15:54
  Speaker 1: I'm sorry, natural gas liquids. But let's say the US
• 15:57
  Speaker 1: today produces about fifteen percent of global liquid supply. Yet
• 16:01
  Speaker 1: we've accounted for eighty percent of total global liquids growth
• 16:06
  Speaker 1: over the last decade. That's extraordinary, and that challenged OPEC supremacy,
• 16:11
  Speaker 1: and it challenged russ A supremacy. And it also helped,
• 16:15
  Speaker 1: if I understand right, drive the price down quite a bit,
• 16:18
  Speaker 1: by two thirds. It drove prices. If had the US
• 16:22
  Speaker 1: share revolution not happened, think about we were one hundred
• 16:25
  Speaker 1: and forty seven dollars a barrel, and that was pre
• 16:27
  Speaker 1: oil shells. Prices probably would have gone a lot higher
• 16:30
  Speaker 1: from there, and so that that huge drop. And what
• 16:34
  Speaker 1: Russian Saudi I actually think that they may not have
• 16:38
  Speaker 1: chosen to launch this price war had it not been
• 16:40
  Speaker 1: for coronavirus, because both countries if you look at their
• 16:44
  Speaker 1: ability to how long can they go and with low
• 16:48
  Speaker 1: oil prices, you know, Saudi today is much worse equipped
• 16:52
  Speaker 1: for a long price war than they were back in
• 16:55
  Speaker 1: twenty fourteen during the last big collapse in prices, right,
• 16:58
  Speaker 1: because they've they've deployed needed a lot of their sovereign
• 17:00
  Speaker 1: wealth funds and their their break even costs today is
• 17:05
  Speaker 1: probably eighty dollars a barrel. And what I mean by
• 17:07
  Speaker 1: that is they fund their entire government out of their
• 17:09
  Speaker 1: oil revenues, whereas Russia's is only about forty to forty
• 17:13
  Speaker 1: five dollars a barrel. So Russia, but they're doing it
• 17:17
  Speaker 1: used to be what we would call an antitrust law
• 17:19
  Speaker 1: predatory pricing, right, and that they're when they flooded the
• 17:23
  Speaker 1: market with oil and they announced they were going to
• 17:25
  Speaker 1: do that and drove the prices way down, they were
• 17:28
  Speaker 1: taking a big hit themselves, but they were doing it
• 17:30
  Speaker 1: to bankrupt their competitors and then sweep in and dominate
• 17:34
  Speaker 1: the market. That's right. Let me let me pause for
• 17:38
  Speaker 1: a second and kind of play Devil's advocate. You mentioned
• 17:40
  Speaker 1: two technological innovations that helped us access all these massive
• 17:45
  Speaker 1: shale reserves. One was horizontal drilling, but it was combining
• 17:48
  Speaker 1: that with hydraulic fracturing fracking. Look, fracking, I've heard a
• 17:53
  Speaker 1: lot of scary things on the internet about that. I've
• 17:55
  Speaker 1: heard it messes with the water table. You can light
• 17:58
  Speaker 1: the water on fire, that's what they say. So is
• 18:01
  Speaker 1: that is that for real? Should I be worried that
• 18:04
  Speaker 1: fracking makes it dangerous to drink the water? No? You know,
• 18:09
  Speaker 1: there's probably not a bigger set of environmentalists in terms
• 18:12
  Speaker 1: of people that like the outdoors, that like the water,
• 18:15
  Speaker 1: that are you know, really love the earth than people
• 18:17
  Speaker 1: the good people you'll find any on gas business, right,
• 18:20
  Speaker 1: and I think there is. Uh. You gotta remember, when
• 18:23
  Speaker 1: we frack a well, these wells are anywhere between eight
• 18:26
  Speaker 1: and fifteen thousand feet below the air's surface. The surface
• 18:30
  Speaker 1: water that people drink is anywhere from fifty feet to
• 18:33
  Speaker 1: maybe three or four hundred feet below. So let me
• 18:36
  Speaker 1: make sure I understand that you got the surface fifty
• 18:38
  Speaker 1: to three hundred feet down. That's not that far down.
• 18:41
  Speaker 1: That's the water table. That's where the water is that
• 18:43
  Speaker 1: we get our drinking one. That's correct. So that's not
• 18:46
  Speaker 1: where you're fracking. No, you're fracking ten thousand feet below
• 18:50
  Speaker 1: that and ten thousand feet if my math is right,
• 18:52
  Speaker 1: that's two miles two miles of rock downlow. So where
• 18:55
  Speaker 1: you're doing this is two miles away from the water, right. Um,
• 19:01
  Speaker 1: let me ask a different question. So my daughter Caroline,
• 19:03
  Speaker 1: you know Caroline, she's eleven. She actually said to me
• 19:05
  Speaker 1: last night, she said, you know, everything that's that's happened
• 19:09
  Speaker 1: in this crisis has been really good for the environment.
• 19:11
  Speaker 1: The environment is cleaning up right, And listen, it is
• 19:14
  Speaker 1: true if we have no production, if if all human
• 19:18
  Speaker 1: activity stops, that would be good for the environment. It's
• 19:21
  Speaker 1: just not very good for people, It's right. Let me
• 19:24
  Speaker 1: ask you something. What happens if all these independent energy
• 19:30
  Speaker 1: producers go out of business, the economy gets going again
• 19:35
  Speaker 1: after the crisis, and we're dependent once again on the
• 19:40
  Speaker 1: Middle East for oil. Is that good or bad for
• 19:42
  Speaker 1: the environment? You know, it's a great question because I
• 19:46
  Speaker 1: think so many people think, you know, hey, let's let's
• 19:48
  Speaker 1: put the US on gas producer out of business, and
• 19:51
  Speaker 1: because oil and gas is bad for the environment. But
• 19:54
  Speaker 1: that doesn't mean people are going to stop driving your cars.
• 19:56
  Speaker 1: It doesn't mean people are going to stop flying in airplanes.
• 19:58
  Speaker 1: It doesn't mean people are going to stop buying iPhones, which,
• 20:01
  Speaker 1: by the way, take hydrocarbon energy and the plastics, a
• 20:05
  Speaker 1: lot of the parts everything we have in our modern life,
• 20:07
  Speaker 1: Senator is revolves around hydrocarbons in some form or fashion.
• 20:11
  Speaker 1: So they're not the need. Form is not going to
• 20:14
  Speaker 1: go away. We will just shift the source where we
• 20:17
  Speaker 1: secure those from, and we'll go back to where we
• 20:19
  Speaker 1: were a decade ago, which is sending hundreds of billions
• 20:21
  Speaker 1: of dollars overseas to people that quite frankly don't like
• 20:25
  Speaker 1: us very much. We will lose significant geopolitical and if
• 20:29
  Speaker 1: I remember right, an awful lot of the nine to
• 20:31
  Speaker 1: eleven terrorists who attacked us, we're from Saudi Arabia. They've
• 20:35
  Speaker 1: had their funding stores from there, and so fueling the
• 20:38
  Speaker 1: Middle East with billions of American dollars is not good
• 20:42
  Speaker 1: for keeping America say it's not, and it will also
• 20:44
  Speaker 1: cause the loss. If you think about the biggest growth
• 20:47
  Speaker 1: engine in US jobs coming out of the Great Financial
• 20:50
  Speaker 1: Crisis was the energy industry and the tens, if not
• 20:54
  Speaker 1: hundreds of billions of dollars in taxes that the energy
• 20:57
  Speaker 1: industry pays every year to school districts, to other municipalities, hospitals,
• 21:03
  Speaker 1: building roads, bridges, infrastructure. Right there. But this is just Texas, right,
• 21:09
  Speaker 1: I mean, we're only talking Texas jobs. There's none anywhere
• 21:11
  Speaker 1: else in the cold There's there's a number of other
• 21:13
  Speaker 1: places throughout the United States, both like where Uh, well,
• 21:17
  Speaker 1: you've got the baking it's in North Dakota. Uh, You've
• 21:20
  Speaker 1: got the dj that's in Colorado, the powder that's in Wyoming.
• 21:24
  Speaker 1: You've got the Permian which is New Mexico. You've got
• 21:27
  Speaker 1: several plays in the scoop stack in Oklahoma. That's just
• 21:31
  Speaker 1: on the all side. In Pennsylvania, as I say, on
• 21:33
  Speaker 1: the gas side, the largest gas field in the United States,
• 21:36
  Speaker 1: really one of the largest, maybe the largest in the
• 21:38
  Speaker 1: world sits under Pennsylvania, West Virginia, Ohio, and New York.
• 21:43
  Speaker 1: So California. California is a huge producer, right, they are
• 21:46
  Speaker 1: a huge producer in many ways. I can speak to California.
• 21:49
  Speaker 1: It's a completely lost cause. But of course we don't
• 21:51
  Speaker 1: want the industry to go out here. I just I
• 21:54
  Speaker 1: see will your point that this is all over the
• 21:56
  Speaker 1: United States, that we're talking about a lot of jobs
• 21:59
  Speaker 1: and a lot of history all over the place. So
• 22:01
  Speaker 1: what do we do now? I mean, looking down at
• 22:04
  Speaker 1: this crisis, you've got the markets collapsing. Rather, how do
• 22:08
  Speaker 1: we fix it? What are our options before it's too late? Well,
• 22:12
  Speaker 1: you know, I think we have again we have to
• 22:13
  Speaker 1: start with. We got to decide we want to fix it,
• 22:16
  Speaker 1: because that is part of part of the issue is
• 22:19
  Speaker 1: obviously the Saudian Russian what they've done and tried to
• 22:21
  Speaker 1: flood the market with additional barrels um to drive down prices.
• 22:26
  Speaker 1: But the other, but the much bigger issue in the
• 22:27
  Speaker 1: short term is obviously demand destruction associated with coronavirus. And
• 22:32
  Speaker 1: so you know, at these prices, the US independent cannot
• 22:36
  Speaker 1: make money. Okay, they just flat can't make money. So
• 22:39
  Speaker 1: there's there is there is that fact they're just revenues
• 22:41
  Speaker 1: will not exceed their their expenses UM. But the other
• 22:45
  Speaker 1: thing we have to also look at as an industry
• 22:47
  Speaker 1: is and that's just simple math that that that that
• 22:50
  Speaker 1: it costs a US producer, what about forty dollars a
• 22:53
  Speaker 1: barrel to produce, and so twenty dollars a barrel. It
• 22:56
  Speaker 1: doesn't work. If it costs twice as much as the
• 22:58
  Speaker 1: price to produce, you're out of business at these prices.
• 23:01
  Speaker 1: There's not probably you know, less than five percent of
• 23:04
  Speaker 1: all locations in the United States are economic at these prices. Okay,
• 23:10
  Speaker 1: that's uh, well, Michael, you know one of the things
• 23:13
  Speaker 1: I mean, you asked, what do we do about it?
• 23:15
  Speaker 1: There's there's both a component of it we get our
• 23:19
  Speaker 1: economy going again, but there's also a component of it,
• 23:22
  Speaker 1: the foreign policy component. I'll tell you, and you and
• 23:24
  Speaker 1: I have talked about this. That's something I've been really
• 23:27
  Speaker 1: active in is taking on the Saudis. In my office,
• 23:30
  Speaker 1: I brought my national security team in. I said, all right,
• 23:33
  Speaker 1: I want a list of steps we can take to
• 23:35
  Speaker 1: ratchet up heat on the Saudis to make it more
• 23:38
  Speaker 1: and more painful. We looked at things like sanctions on
• 23:41
  Speaker 1: individual officials in the Saudi government that had directly targeted
• 23:46
  Speaker 1: American businesses and said, if you're going to weighe economic
• 23:49
  Speaker 1: warfare on us. Well, well, welcome to the game, and
• 23:52
  Speaker 1: you better be prepared for the consequences. Rewind it last
• 23:56
  Speaker 1: week Friday in the Oval Office meeting with the President.
• 23:59
  Speaker 1: The President had spoken in the preceding week both to
• 24:02
  Speaker 1: Putin and MBS, the head of Saudi's. He had leaned
• 24:05
  Speaker 1: in hard, and it's interesting the President didn't start out
• 24:09
  Speaker 1: that way. I talked to the President a couple of
• 24:10
  Speaker 1: weeks ago, and his instinct is actually where you started
• 24:14
  Speaker 1: this show, Michael. He was like, well, you know, aren't
• 24:16
  Speaker 1: low oil price is good? And then a good thing?
• 24:18
  Speaker 1: He was thinking of it. He's a real estate guy
• 24:20
  Speaker 1: from a consumer's perspective. Until I and others started explaining, Listen,
• 24:25
  Speaker 1: we're looking at millions of jobs that go away, and
• 24:27
  Speaker 1: if we destroy America's producing capability, it makes the bad
• 24:32
  Speaker 1: guys who hate us more powerful. Yes, and it makes
• 24:34
  Speaker 1: America weeker. That's a bad outcome. Well, what the President
• 24:38
  Speaker 1: said is that MBS at Putin had agreed to stop
• 24:44
  Speaker 1: flooding the market to reduce their production. He tweeted out
• 24:48
  Speaker 1: two weeks ago they were reducing their production ten million
• 24:51
  Speaker 1: barrels a day. That resulted in oil, just that announcement
• 24:55
  Speaker 1: going from twenty bucks a barrel to twenty seven in
• 24:59
  Speaker 1: the White House, what he told us is he said
• 25:01
  Speaker 1: it's actually going to be more more than ten. It's
• 25:03
  Speaker 1: going to be more like fifteen million. And just today
• 25:07
  Speaker 1: the news broke that they're talking about twenty million. Now
• 25:11
  Speaker 1: the proof is in the pudding, and we'll see if
• 25:13
  Speaker 1: they actually do it. Yeah, but if they stop flooding
• 25:16
  Speaker 1: the market, if they pull back, that will help. It
• 25:19
  Speaker 1: won't solve the problem. Problem won't get solved until the
• 25:22
  Speaker 1: economy comes back and people are able to drive their
• 25:24
  Speaker 1: cars and fly airplanes. But but but if Russia and
• 25:28
  Speaker 1: the Saudis follow through and stop flooding the market, stop
• 25:32
  Speaker 1: taking advantage in the meantime before the economy comes back.
• 25:36
  Speaker 1: If they're talking about cutting daily production by twenty million barrels, okay,
• 25:40
  Speaker 1: that's great. How much do we need to actually see
• 25:43
  Speaker 1: an impact on the American energy sector? Right? So, you know,
• 25:47
  Speaker 1: going back again, I think there's somewhere between twenty five
• 25:51
  Speaker 1: and forty million barrels of demand destruction right now. And
• 25:55
  Speaker 1: so look, is ten or fifteen or twenty million barrels
• 25:58
  Speaker 1: a lot? It is? It's nowhere close to what we
• 26:01
  Speaker 1: need to really balance supply and demand. And the fact
• 26:05
  Speaker 1: is is prices were cratering long before this. You know,
• 26:10
  Speaker 1: it became apparent of how bad because most of the
• 26:13
  Speaker 1: price drop happened when people were thinking demand destruction was
• 26:16
  Speaker 1: three to five million barrels a day. Historically, if a
• 26:19
  Speaker 1: producer like if Opec were to flood the market, even
• 26:22
  Speaker 1: with a couple million barrels a day of excess supply,
• 26:25
  Speaker 1: meaning only a million or two million barrels difference in
• 26:27
  Speaker 1: supply and demand, prices would drop in half. Okay, So
• 26:31
  Speaker 1: what we're talking about here is it's it's a number
• 26:34
  Speaker 1: that's really irrelevant. Number one. Number two, there's a conditionality
• 26:38
  Speaker 1: on everything Saudi, and Saudi and Russia both have said
• 26:42
  Speaker 1: in order to enact these cuts, So for the ECON
• 26:44
  Speaker 1: walks out there, there's high price elasticity. There's very high
• 26:48
  Speaker 1: price elasticity. And and if you and Saudi and Russia
• 26:53
  Speaker 1: both said, if if we're going to do these cuts,
• 26:55
  Speaker 1: we want contributions from all the major exporting countries in
• 26:59
  Speaker 1: the world, including the US, including Norway, including Mexico. So
• 27:04
  Speaker 1: there's all these other countries that they want to participate
• 27:06
  Speaker 1: in this and I think the President has been very
• 27:08
  Speaker 1: clear the US is not going to deliver a production cut. Now.
• 27:12
  Speaker 1: He has talked about there's going to be natural shut
• 27:15
  Speaker 1: ins and declines, and that is going to be the case.
• 27:17
  Speaker 1: The question is is that going to be good enough
• 27:20
  Speaker 1: for the Saudis and for the Russians. The other thing, though,
• 27:22
  Speaker 1: to keep in mind is every time or OPEC plus
• 27:25
  Speaker 1: has said we're going to make a cut, there's generally
• 27:29
  Speaker 1: speaking not great adherence to those cuts. So they may
• 27:31
  Speaker 1: say they're going to make a cut, but the actual
• 27:33
  Speaker 1: cuts usually are much less. To trust, but verify, and
• 27:37
  Speaker 1: maybe even don't trust. Let me bring out one other issue,
• 27:40
  Speaker 1: because it's an important issue to understand, and this is
• 27:44
  Speaker 1: something you and I have talked a lot about it
• 27:45
  Speaker 1: and it was the one deliverable that came out of
• 27:47
  Speaker 1: the White House meeting last week. So we spent two
• 27:49
  Speaker 1: hours talking about energy. We talked about pressuring the Saudis
• 27:53
  Speaker 1: and Russians that seems to have produce some results, But
• 27:55
  Speaker 1: we also talked about access to capital. And this is
• 27:58
  Speaker 1: a piece where I think a lot of people don't
• 28:00
  Speaker 1: understand what's going on, but it's really important. Wall Street.
• 28:04
  Speaker 1: The last couple of years has been cutting off more
• 28:07
  Speaker 1: and more capital to energy. There's a movement called the
• 28:10
  Speaker 1: SG movement, which you're putting pressure on Wall Street to
• 28:13
  Speaker 1: say we're not going to fund American energy producers, and
• 28:18
  Speaker 1: the consequence of that has been really significant. So, well,
• 28:23
  Speaker 1: I want us to understand it. Let's say you're a
• 28:26
  Speaker 1: small independent producer. You're in West Texas, you're in New Mexico,
• 28:30
  Speaker 1: you're in Colorado, and you're in Pennsylvania, and the banks
• 28:37
  Speaker 1: decide to cut off your capital. How does that happen,
• 28:40
  Speaker 1: How does that work? Why, why does capital matter? And
• 28:42
  Speaker 1: what would that how would that impact you? So in
• 28:45
  Speaker 1: any only gas business companies obtain capital from banks and
• 28:50
  Speaker 1: what's called rbl's reserve based loans, and those rbls are
• 28:54
  Speaker 1: redetermined every six months. Okay, so think about public companies.
• 28:58
  Speaker 1: They go issue debt and it's fifteen twenty year debt.
• 29:02
  Speaker 1: They don't have to think about refinancing or having that
• 29:04
  Speaker 1: debt called for a very long time. The independent producers
• 29:08
  Speaker 1: in this country, the vast majority of them, can't access
• 29:10
  Speaker 1: that kind of public capital to turn out their debt,
• 29:13
  Speaker 1: and so they go to banks and the bank loans
• 29:15
  Speaker 1: if they get redetermined every six months. So historically it's
• 29:18
  Speaker 1: been a very symbiotic system, and the banks understand the
• 29:21
  Speaker 1: importance of the business and they understand, you know, they
• 29:24
  Speaker 1: loan companies money, and they're not going to change it
• 29:26
  Speaker 1: a lot quickly in terms of the amount they're loaning them. Well,
• 29:29
  Speaker 1: what's happening now, Because prices have dropped so much and
• 29:32
  Speaker 1: the banks have actually had some significant losses on those rbls,
• 29:37
  Speaker 1: they've made the decision they are going to significantly tighten
• 29:39
  Speaker 1: the amount of credit to the sector. But they had
• 29:42
  Speaker 1: made that decision really before this price drop. They'd made that.
• 29:45
  Speaker 1: To your point, they've been getting a lot of pressure
• 29:47
  Speaker 1: from you know, esg centric groups. So the pressure is
• 29:52
  Speaker 1: energy is bad, it's you know, the killing the climate,
• 29:56
  Speaker 1: and so don't invest in energy companies. Here's the fallacy
• 29:59
  Speaker 1: of that, Senator, is, as we said earlier, unless people
• 30:03
  Speaker 1: are going to quit driving cars and flying in airplanes
• 30:05
  Speaker 1: and buying products, they're going to keep consuming the energy.
• 30:09
  Speaker 1: You were talking about reserve base lending. And I want
• 30:12
  Speaker 1: to make an analogy to to say a home mortgage.
• 30:16
  Speaker 1: Let's say you've got a home that's valued at four
• 30:19
  Speaker 1: hundred thousand dollars. So you get a mortgage, let's say
• 30:23
  Speaker 1: for three hundred and fifty thousand dollars, you're paying your mortgage,
• 30:26
  Speaker 1: and it's based on the value of the home. Now,
• 30:28
  Speaker 1: drawing that analogy too, if you get an energy producer,
• 30:31
  Speaker 1: they get a loan based on the value of their reserves,
• 30:34
  Speaker 1: the reserves that they're they're producing and going to produce.
• 30:38
  Speaker 1: But you said in the energy business, every six months
• 30:41
  Speaker 1: they come readeterminate. So what that would mean if you
• 30:44
  Speaker 1: think about your home mortgage. You got a three hundred
• 30:46
  Speaker 1: fifty thousand dollars mortgage on what you think is a
• 30:48
  Speaker 1: four hundred thousand dollar house. Suddenly the bank comes to
• 30:52
  Speaker 1: you six months later and says, Michael, you're four hundred
• 30:55
  Speaker 1: though thousand dollars house we now think is a two
• 30:57
  Speaker 1: hundred thousand dollar house. You borrow three hundred and fifty thousand,
• 31:01
  Speaker 1: so write me a check for one hundred and fifty
• 31:03
  Speaker 1: thousand now. And that's what's happening, Senator. That is literally
• 31:06
  Speaker 1: we're hearing stories now every single day about banks going
• 31:10
  Speaker 1: to companies and saying you need to put equity in
• 31:14
  Speaker 1: and pay down this loan or we're going to throw
• 31:16
  Speaker 1: your loan over to the workout group. And so in
• 31:19
  Speaker 1: terms of deliverables from the White House meeting, what I
• 31:21
  Speaker 1: suggested to the President on Friday, said, mister President, there
• 31:24
  Speaker 1: is a real problem with the banks cutting off capital
• 31:28
  Speaker 1: to these American energy producers and ending American energy production,
• 31:32
  Speaker 1: and we need to make sure that that energy is
• 31:35
  Speaker 1: not discriminated against. And so I suggested to him, as
• 31:39
  Speaker 1: to President, you should ask the Energy Secretary, Dan Bryette,
• 31:42
  Speaker 1: who is a Texan and a good friend, ask him
• 31:45
  Speaker 1: to work with Stephen Manuche, the Treasury Secretary, to work
• 31:48
  Speaker 1: with the bank regulators to make sure that the banks
• 31:53
  Speaker 1: are not discriminating and bankrupting these energy companies in America
• 31:57
  Speaker 1: and causing millions of people to lose their jobs. And
• 31:59
  Speaker 1: the and said, I'll do it. He directed Dan, Dan
• 32:02
  Speaker 1: was sitting in the meeting, make it happen. I can
• 32:05
  Speaker 1: tell you I've spoken with Dan almost every single day
• 32:09
  Speaker 1: since then in order to make sure that we just
• 32:13
  Speaker 1: have the capital so these guys can survive. Well, that's
• 32:15
  Speaker 1: great news, because it does seem from what I'm hearing
• 32:18
  Speaker 1: like it's one damn thing after another that the American
• 32:21
  Speaker 1: energy industry has to face and This leads to my
• 32:25
  Speaker 1: last question. We're running out of time here, but I
• 32:27
  Speaker 1: suspect we're running out of time to solve this problem.
• 32:30
  Speaker 1: Will do you have any sense of the timeline here
• 32:33
  Speaker 1: before we reach a point at which we can't turn
• 32:35
  Speaker 1: this around anymore. Well, if you think about the amount
• 32:38
  Speaker 1: of capital that it took to basically get the show
• 32:42
  Speaker 1: revolution to where it is today, it's about a trillion
• 32:44
  Speaker 1: and a half dollars, okay, And that capital, a lot
• 32:49
  Speaker 1: of it was not spent very efficiently, and public investors
• 32:53
  Speaker 1: lost a lot of money over the last decade on
• 32:56
  Speaker 1: their investments in energy space. The problem is today is
• 32:59
  Speaker 1: that magnitude of capital will never come back to our
• 33:02
  Speaker 1: sector again. And so if we lose the momentum. The
• 33:05
  Speaker 1: problem with shale wells is they come on at prolific rates,
• 33:10
  Speaker 1: but they decline very rapidly. And so what's going to
• 33:13
  Speaker 1: happen over the next twelve to eighteen months is US
• 33:16
  Speaker 1: production will decline probably two to two and a half
• 33:20
  Speaker 1: million barrels a day. Okay, that's off a base of
• 33:23
  Speaker 1: thirteen million barrels. That's very significant, and we'll never be
• 33:26
  Speaker 1: able to recover that. And if you shut in those wells,
• 33:28
  Speaker 1: we don't know if you could open up again. Well,
• 33:30
  Speaker 1: you'll open them up, but there's a big chance you've
• 33:33
  Speaker 1: damaged the reservoirs. Okay, so they'll come back on less productive.
• 33:37
  Speaker 1: But the bigger problem is is that in shale is
• 33:41
  Speaker 1: very expensive to develop. It's like a treadmill, and the
• 33:44
  Speaker 1: more you produce, the faster the treadmill goes. And you've
• 33:48
  Speaker 1: got to keep reinvesting and reinvesting and reinvesting. And as
• 33:51
  Speaker 1: soon as you break that cycle of reinvestment, you can
• 33:54
  Speaker 1: never get back up unless you put a lot of
• 33:57
  Speaker 1: outside capital back into the system. Again. So for every
• 34:00
  Speaker 1: dollar that came in the door, the energy industry was
• 34:03
  Speaker 1: spending about a dollar fifty. Okay, that's how we grew
• 34:06
  Speaker 1: production from five million barrels a day in twenty ten
• 34:09
  Speaker 1: to thirteen million barrels a day this month. But now
• 34:15
  Speaker 1: that that cycle has been broken to thirteen million in
• 34:18
  Speaker 1: ten years. Ten years. But now that cycle has been broken.
• 34:21
  Speaker 1: So you asked the question, how much time do we have?
• 34:22
  Speaker 1: Not much? And that's that really is the critical, critical
• 34:25
  Speaker 1: question in terms of this crisis that's hitting the energy
• 34:29
  Speaker 1: sector and the American energy producers. I gotta tell you
• 34:32
  Speaker 1: for me. This is very personal and real. As you know.
• 34:37
  Speaker 1: I grew up in Houston. Houston's my hometown. When I
• 34:41
  Speaker 1: was a kid, my parents owned a small business and
• 34:43
  Speaker 1: it was in the oil services world. It was a
• 34:46
  Speaker 1: seismic data processing company. So my parents are both mathematicians,
• 34:49
  Speaker 1: computer programmers. And in nineteen eighty six oil collapsed. It
• 34:55
  Speaker 1: dropped to seven dollars a barrel. Texas went into a
• 34:58
  Speaker 1: full on depression a high school at the time, and
• 35:01
  Speaker 1: I still remember my dad. It was one Monday. Now
• 35:04
  Speaker 1: this was his was a small, small business. He had
• 35:06
  Speaker 1: twenty five employees. I still remember the Monday where he
• 35:10
  Speaker 1: had to layoff nineteen of the twenty five employees. He
• 35:13
  Speaker 1: came home. I've never seen my father look as unhappy.
• 35:19
  Speaker 1: He looked like he'd been beaten with a stick, and
• 35:21
  Speaker 1: he had employees arguing with him, going Raphael, I'm not
• 35:23
  Speaker 1: gonna leave. No, I'm gonna stay that. This company is
• 35:27
  Speaker 1: my home. And he said, look, I don't have the
• 35:29
  Speaker 1: money to pay you. You have a family. And so
• 35:33
  Speaker 1: my parents went bankrupt. We lost the company, We lost
• 35:38
  Speaker 1: our home, the home I grew up in. And it's look,
• 35:41
  Speaker 1: I've lived through that firsthand. Well, you know, it really
• 35:45
  Speaker 1: shows you that in the price of oil, there is
• 35:47
  Speaker 1: a whole lot more going on. There are a lot
• 35:50
  Speaker 1: of jobs, there are a lot of families, There's an
• 35:52
  Speaker 1: entire sector of the American economy that's being destroyed. It
• 35:55
  Speaker 1: has implications for national security. There's so much more to
• 35:58
  Speaker 1: talk about. Unfortunately we were at a time, but thank
• 36:00
  Speaker 1: you will thank you so much for giving your insight
• 36:03
  Speaker 1: and Senator I had never heard that story. I mean,
• 36:05
  Speaker 1: it really brings it home on a personal level, and
• 36:08
  Speaker 1: we'll see. Thank you by the way for your leadership
• 36:10
  Speaker 1: and going to the president trying to turn this around.
• 36:12
  Speaker 1: We will just have to wait and see in the
• 36:14
  Speaker 1: coming days. Hopefully we turn it around before it's too late.
• 36:17
  Speaker 1: In the meantime, I'm Michael Knowles. This is Verdict with
• 36:20
  Speaker 1: Ted Cruz. This episode of Verdict with Ted Cruz is
• 36:31
  Speaker 1: being brought to you by Jobs, Freedom and Security Pack,
• 36:34
  Speaker 1: a political action committee dedicated to supporting conservative causes, organizations,
• 36:39
  Speaker 1: and candidates across the country. In twenty twenty two, Jobs
• 36:42
  Speaker 1: Freedom and Security Pack plans to donate to conservative candidates
• 36:46
  Speaker 1: running for Congress and help the Republican Party across the
• 36:49
  Speaker 1: nation