Latest / Energy Empire / Why the War in Iran Is Speeding Up the Clean Energy Transition

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Why the War in Iran Is Speeding Up the Clean Energy Transition · Energy Empire

• 0:00
  What incentive does the US have to protect LNG carriers
• 0:03
  transiting the straits? Well, actually none.
• 0:05
  When the US became energy independent, we lost the
• 0:09
  incentive to protect global energy supply chains.
• 0:17
  Hello, my name is Jigger Shah and I'm a clean energy
• 0:21
  entrepreneur. And I'm Jamie Nolan, a clean
• 0:23
  energy communications strategist.
• 0:25
  And this is Energy Empire. Hi, Jigger.
• 0:29
  How was your Saturday morning? My Saturday morning, well, I was
• 0:34
  en route to Philadelphia. I go every year to the
• 0:38
  Philadelphia Flower Show. So I was on an Amtrak train,
• 0:42
  which is not It was like not the most comfortable place to be.
• 0:46
  When you find out that we have just bombed, you're on because,
• 0:50
  you know, then your mind immediately goes to security
• 0:52
  risks in major public places in transportation.
• 0:55
  But I made it back. What about you?
• 0:58
  Where were you? What were you up to?
• 1:00
  Well, we were up in Deep Creek. Honestly, my brain went straight
• 1:02
  back to like the Iraq war and 911 right, because I was like, I
• 1:10
  mean, the Venezuela thing I thought, you know, was well
• 1:12
  thought through. They sort of left the number 2IN
• 1:14
  charge. It was not we're not like nation
• 1:17
  building. I mean, when they reported that
• 1:22
  the supreme leader had died and all of the other people who
• 1:27
  were, you know, like in the chain of command had died, I'm
• 1:31
  like, who's going to run this place?
• 1:34
  Like, are we going to be in Iran for the next like 10 years?
• 1:38
  Like I immediate. And then we heard that three
• 1:41
  service members had tragically died.
• 1:44
  And I'm just like, what the hell are we doing?
• 1:47
  Like, what are we doing? Like I, I like, I am not here to
• 1:52
  defend the supreme leader. I don't think Iran has been well
• 1:55
  run as a country. I think the people of Iran are
• 1:58
  extraordinary entrepreneurs and like, if let free and like
• 2:03
  allowed to realize their full potential would be one of the
• 2:07
  most productive economies probably in the world, certainly
• 2:11
  in the Middle East. And so I want that for them.
• 2:14
  But I worry that I'm not sure that, you know, like we're going
• 2:17
  to achieve that goal here. Absolutely.
• 2:20
  I mean, I'm an elder millennial and these conflicts in the
• 2:24
  Middle East have defined my entire adulthood.
• 2:28
  And I was a freshman in college when we invaded Iraq.
• 2:32
  And, you know, I, I have lots of friends that served overseas.
• 2:39
  I have not personally lost anyone, but no plenty of
• 2:43
  contemporaries, peers of mine, you know, acquaintances that,
• 2:47
  that were lost. And a, a good friend of mine
• 2:51
  actually is soon to deploy to the Middle East.
• 2:55
  She's an attorney in the Army. And I was like scrambling on
• 3:00
  Saturday morning to figure out where she was and was was very
• 3:04
  relieved to discover that she's still sitting on a base in here
• 3:09
  in the United States waiting to ship out.
• 3:11
  But you know, she's headed out on a long term deployment.
• 3:14
  And so I can only imagine how, you know, families are feeling
• 3:17
  that have have service members that are are there or probably
• 3:22
  will be there soon. That being said, obviously, I
• 3:26
  care very deeply about women's rights and particularly, you
• 3:30
  know, the right of girls to an education.
• 3:32
  And so no one appreciates how the the regime in Iran has
• 3:39
  treated women. That being said, I I also just
• 3:44
  don't believe that you can liberate a people by bombing
• 3:47
  them. Like most things, it's very
• 3:48
  complicated and it's scary. And, you know, there are major
• 3:51
  energy implications though. So you and I had a whole plan
• 3:54
  for today and we completely threw it out with like just a
• 3:56
  few hours notice to put together a completely different episode.
• 4:00
  I'm glad we did it. It did help me process some of
• 4:03
  that and, and it made me, you know, think kind of more
• 4:06
  tangibly about the real world impacts here.
• 4:10
  And I think it it had helped me to catastrophize a little bit
• 4:15
  less. Well, I mean, we're having on my
• 4:18
  good friend James Gutman, and he's one of the original
• 4:22
  co-authors of the New Jewel Order, which is, you know, been,
• 4:26
  frankly, an extraordinarily prescient document that came out
• 4:30
  last year. And it does feel like a lot of
• 4:32
  people have read it and are following it.
• 4:35
  And largely what it makes the case for is that, you know,
• 4:38
  everyone needs to localize energy.
• 4:40
  Everyone needs energy sovereignty.
• 4:42
  And you know, like one of the things one of my investment
• 4:45
  bankers told me today that I talked to was like everybody's
• 4:49
  solar company just doubled in value, right?
• 4:52
  Like everybody is now like going to be installing way more clean
• 4:57
  energy technologies, way more sustainability related
• 4:59
  technologies because it's a natural hedge against the fossil
• 5:03
  fuel economy, right? And, and James is a big, big
• 5:08
  thinker. So I don't know how successful
• 5:10
  we are going to be to like have him think about consumers and
• 5:13
  this and, and the localized impacts.
• 5:16
  But I always find his insights to just be, you know, something
• 5:21
  I learned a lot from. One thing I we should mention,
• 5:24
  even though we don't typically, is that we are recording this
• 5:27
  episode on the afternoon of Monday, March 2nd.
• 5:30
  And just because in an armed conflict things change very
• 5:34
  quickly. That is the context with which
• 5:37
  we entered this conversation with James.
• 5:44
  This episode is supported by S2G Investments.
• 5:48
  If you've been listening to me, you know that I'm done talking
• 5:51
  about R&D. We have the technology.
• 5:54
  The real question is can we deploy it at scale?
• 5:58
  When I joined Sanjeev Krishnan on the S2G podcast, we skipped
• 6:03
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  across the real economy. Listen to the S2G podcast on
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  your favorite podcast app now and start with my episode on
• 6:33
  energy affordability. All right, James, it has been
• 6:42
  too long. I think in the last 12 months
• 6:45
  you and I have done like 3 events together.
• 6:48
  We keep coming across each other in all the.
• 6:50
  Right places Saturday morning, I think I, like many other people,
• 6:56
  picked up my phone and we're like, oh, we're at war with
• 6:59
  Iran. And so we we changed up our
• 7:03
  schedule and I was like, what's James doing?
• 7:06
  We should get James on the podcast.
• 7:09
  And so just to like maybe start at the highest level.
• 7:14
  You and your colleague, Jeff Curry wrote a paper for The
• 7:19
  Carlyle Group called the New Jewel order, which came out
• 7:22
  about a year ago. And it has been dominating the
• 7:27
  conversation, I think ever since, as you are want to do.
• 7:32
  And so I appreciate you coming on.
• 7:35
  We'll get into the paper in a second, but I, I wanted to bring
• 7:39
  you on because I think your thought process, I think is far
• 7:44
  more expansive across a lot of these areas of energy and energy
• 7:50
  sovereignty and clean energy. And so welcome to the podcast.
• 7:55
  Thank you and, and thank you very much for those kind words.
• 7:58
  I, I, I think there might be a little bit overdone, but I'll,
• 8:00
  I'll take them. Well, take it, take them all
• 8:04
  right. So I mean, when you're working
• 8:06
  on commodities, I mean you're certainly involved in many
• 8:09
  countries around the world mining these large corporations
• 8:13
  like Glencore and others who, you know, help make these
• 8:16
  markets. You know, I, it's, it's a
• 8:18
  fascinating thing that we find ourselves in, right, because we
• 8:21
  had the, you know, the Venezuela surprise right at the beginning
• 8:24
  of the year and now we've have the Iran surprise my.
• 8:29
  God was that this year that also occurred this.
• 8:32
  Year that also occurred this year, right?
• 8:34
  And so you and I have been talking about this happening all
• 8:38
  of 2025. Like you had sort of said to me,
• 8:41
  you're like this is going to happen.
• 8:42
  And I was like, you know, that guy seems pretty smart.
• 8:45
  I think like, you know, maybe I should listen to him.
• 8:49
  I didn't make any investments based on that.
• 8:50
  But you know, I'm curious, you know, how do you view this,
• 8:55
  right? I mean, I saw that the markets
• 8:57
  had already bid oil prices up a little bit.
• 9:00
  You know, like Qatar is like shut down their LNG export, you
• 9:03
  know, terminals already, you know, like how, how do you
• 9:07
  assess, you know, not the implications of the conflict,
• 9:10
  but you know, the effect on commodities, on our energy
• 9:13
  supply chain on sort of some of the tensions that you know,
• 9:16
  frankly, I think you guys were ahead of your time on when you
• 9:19
  described the new dual order and actually maybe go in a little
• 9:22
  bit about the new dual order here too.
• 9:24
  Yeah. I mean, I thank you for that.
• 9:26
  So I think I think it's really important to sort of start at a
• 9:30
  very, very high level and just look at like basic incentives.
• 9:34
  So I spent a lot of time talking to traders and, you know, I keep
• 9:38
  telling them to like, stop focusing so much on the micro.
• 9:42
  Like you're, you're, you're, you're asking me, you're, you're
• 9:44
  asking me how many? Like, you know, LNG carriers are
• 9:47
  transiting the straights on any given day.
• 9:49
  And I'm like, that doesn't really matter.
• 9:52
  What really matters is that there's a serious risk to LNG
• 9:57
  carriers that transit the straights now.
• 9:59
  So how does that drive the incentives facing other people
• 10:03
  around the world like Beijing, like Brussels?
• 10:06
  You know, what incentive does a US have to protect LNG carriers
• 10:10
  transiting the straits? Well, actually none.
• 10:14
  You know, that was. And so that kind of a way of
• 10:16
  approaching, you know, energy economics and energy politics is
• 10:21
  what really kind of motivated the new dual order.
• 10:23
  It starts with the observation that when the US became energy
• 10:26
  independent, we lost the incentive to protect global
• 10:30
  energy supply chains. You know, the first wave of, you
• 10:35
  know, investment in nuclear and renewables happened when the US
• 10:40
  was, you know, on its knees because of an oil embargo in
• 10:44
  1973. That changed everything.
• 10:48
  When that, you know, the the 73 oil embargo only lasted a few
• 10:52
  months. The price impact, you know, was
• 10:56
  a spike and then a retracement, but a higher overall level that
• 11:02
  led to a sequence of events inflationary with respect to the
• 11:06
  dollar and the, and the global, you know, balance of payments
• 11:10
  with respect to the, to the, the distribution of power between
• 11:14
  East and West. Eventually, you know, that set
• 11:17
  in motion a chain of events that saw the collapse of communism.
• 11:20
  Like all of these things happen with this fork right there.
• 11:24
  The price of oil was important, but it wasn't the most
• 11:27
  important, wasn't even the top five most important things that
• 11:30
  happened. So when I look at where we are
• 11:32
  today, you know, again, I, I, I see a lot of echoes, whether
• 11:38
  like we've got us, we've got an oil price spike.
• 11:41
  We're not really an oil price spike, but we've got a gas price
• 11:43
  spike because of what's going on in Iran.
• 11:46
  That spike, you know, there's going to be a moment to fade it.
• 11:51
  Maybe that moment is now, I don't know.
• 11:53
  But that will not be what people remember 10 years from now.
• 11:57
  What people remember 10 years from now is that was a moment
• 12:02
  where other capitals said, wow, Venezuela no longer in the
• 12:07
  picture, Iran no longer in the picture.
• 12:10
  We need to change our behavior. Let's think about those two
• 12:13
  countries in particular, right? So Venezuela, we, we wrote a
• 12:17
  piece last September, Jeff and I about effectively how how
• 12:24
  Russia, Iran and and and and Venezuela had become commodity
• 12:28
  colonies of China. These are places which are
• 12:33
  almost entirely dependent on commodity exports for their for
• 12:36
  their, for their earnings, export earnings.
• 12:40
  Those commodity exports are almost entirely energy that go
• 12:44
  to China or in the case of Russia, China and India.
• 12:48
  They're paid for mostly with Chinese RnB with yuan rather and
• 12:56
  is transacted over a Chinese payment system.
• 12:58
  So they're sort of locked into this trading network that
• 13:02
  frankly, it looks like the British system of imperial
• 13:04
  preferences in the 19th century, like they.
• 13:08
  Boil that down for people. What you're basically saying is,
• 13:11
  is that, you know, that, like, Venezuela sold 1,000,000 barrels
• 13:14
  a day to China. China paid for it in their
• 13:17
  currency. And then Venezuela in some ways
• 13:20
  was forced to use that Chinese currency to buy more Chinese
• 13:24
  stuff, right? Like, and so they weren't
• 13:26
  allowed to buy US stuff or other people's stuff.
• 13:29
  It was like Chinese stuff, right?
• 13:30
  And they sort of did the same thing to Iran and in some ways
• 13:35
  to Russia, right? And so in some ways, at the time
• 13:41
  of which we invaded Venezuela, everybody was like, oh, we're
• 13:44
  going to like, get Venezuelan oil back to 3,000,000 barrels a
• 13:46
  day. It was never about 3 million
• 13:49
  barrels a day. It was about like not, you know,
• 13:52
  having Venezuela oil be paid for buy Chinese currency and instead
• 13:57
  a lot of that is going to go to Texas refiners now and you know,
• 14:03
  that's going to offset Canadian, you know, imports and the ripple
• 14:06
  effects. Of that yeah.
• 14:08
  So you're so there's a lot in what you just said and I just
• 14:11
  want to be careful that we don't like unpack like a single
• 14:15
  motivation for U.S. policy that's.
• 14:18
  No, Marco Rubio's wanted to do that for 10 years.
• 14:20
  I totally get that. But.
• 14:22
  But there are a lot of different things that are going on here.
• 14:24
  And you're, and you're absolutely right about how, you
• 14:26
  know, Venezuelan crude, you know, if it's no longer going to
• 14:28
  China, that's great. It's going into, you know, US
• 14:30
  refineries that are keyed to the the heavy sour, the Canadian
• 14:35
  crude, which used to go in there, now get sent to China via
• 14:38
  a new pipeline that they'll build like you're just
• 14:41
  reshuffling, you know, the plates.
• 14:43
  But the end result is some people make more money, some
• 14:46
  people make less money. I think what's really important
• 14:49
  here is that it's sent a signal to Beijing.
• 14:52
  So Venezuela was never a huge part of China's energy import
• 14:57
  mix. So China has kept its fossil
• 15:00
  fuel imports, oil and gas from these three colonies that I
• 15:05
  should be careful about that. They're not technically
• 15:06
  colonies, but these three states to roughly 30% of Chinese energy
• 15:11
  consumption, right. So I'm sorry, Chinese energy
• 15:14
  imports, so they they don't allow themselves to become
• 15:19
  overly dependent on these three, these three places, but it's
• 15:23
  still a meaningful, A meaningful chunk of their imports.
• 15:27
  You take Venezuela out, does China really hurt?
• 15:30
  No, not especially. You take Iran out, you're
• 15:35
  starting to get a little bit closer to home.
• 15:37
  Like now you're starting to put a little bit of pressure on the
• 15:40
  Chinese import pipeline. The Straits of Hormuz is where a
• 15:46
  lot of their Saudi oil goes through.
• 15:47
  Absolutely, absolutely. Although I, so I'm, I'm, I, I
• 15:52
  tell people to maybe sort of dial it down a little bit on the
• 15:55
  risk factors associated with the straits.
• 15:57
  Closing this to start with closing the straits, It's, it's
• 16:00
  not that easy. So the Iranians have to be able
• 16:03
  to do this without getting blown up by the Americans.
• 16:06
  The Americans have the capacity to to sort of sweep away a lot
• 16:10
  of the Iranian offensive equipment.
• 16:13
  The the smart thing for the one way the Iranians could do this
• 16:16
  is through mining. But you know that again requires
• 16:19
  the Iranians to do this in front of the Americans, who will then
• 16:21
  try. To mining, meaning actually
• 16:23
  putting down landmine equivalents in at sea, yeah.
• 16:28
  I mean, that would be a solution.
• 16:30
  I mean, I think the problem there is that, you know, the
• 16:32
  mines, you know, will blow up the ship that passes by if it's
• 16:37
  a Chinese or a an Iranian or a Russian tanker, goodbye.
• 16:41
  And I think what the Iranians have sort of made clear is, you
• 16:44
  know, those those allied, so to speak, tankers, you know, that's
• 16:49
  not going to be their target of interest.
• 16:50
  So you get into you get into this really strange dynamic
• 16:54
  where the Iranians, you know, potentially could threaten, you
• 16:58
  know, non Chinese and non Russian cargoes, but not
• 17:03
  everybody else. And the US will be in there
• 17:06
  maybe trying to protect the straits.
• 17:08
  But I'm not sure why the US does because we don't depend on their
• 17:11
  oil imports. So it's, I, I think it's, I
• 17:14
  think the straits aren't really where you want to focus your
• 17:17
  attention. I think that the Iranians hit
• 17:19
  back everywhere else. I think what the Iranians, if
• 17:24
  they're thinking about this, will want to do is to switch on
• 17:30
  that network, that international network of proxies that they
• 17:34
  have been nurturing and feeding. And I'm, you know, go beyond
• 17:38
  Hezbollah and Hamas and the Houthis and try to use them to
• 17:42
  create instability, uncertainty to global sea trade around the
• 17:48
  world and force the US to be Everything Everywhere all at
• 17:51
  once, which you can't do, the US simply can't do.
• 17:55
  In the meantime, if you're China, I think, you know, it's
• 17:59
  kind of obvious what sort of incentives you have.
• 18:03
  One you do what you need to do to keep the straits open for
• 18:07
  your traffic. Iran, that's your guy O at some
• 18:11
  point you step in and you say my ship, my protection, my
• 18:15
  insurance, everybody else figure it out.
• 18:17
  I think the second thing you do is you land all of that floating
• 18:24
  storage, that oil glut that people have been talking about,
• 18:26
  you know 100 million a 150 million barrels that are just
• 18:28
  sitting out there. You take that into strategic
• 18:31
  reserves in China and. They've been buying it all the
• 18:34
  last 12 months. So like China has been a big
• 18:37
  buyer of oil for their own strategic petroleum reserve.
• 18:40
  They have, but think about what that does to the oil market
• 18:42
  because because right now OECD inventories, which is what sort
• 18:45
  of the market is trained to key off are pretty tight.
• 18:48
  And that's been that that's been a very bullish sort of signal.
• 18:53
  But the market has been, you know, sort of stuck in a bearish
• 18:55
  narrative because they see keep seeing these floating barrels,
• 18:58
  you know, this, this glut at sea.
• 19:00
  And I think what I'm trying to suggest here, and it's a paper
• 19:02
  that that that Jeff and I wrote just a few weeks ago, what I'm
• 19:07
  trying to suggest here is that if there is a security driven
• 19:11
  imperative to land those floating barrels, there is no
• 19:14
  glut. It is gone.
• 19:16
  That market is tight. At that point, you've got a
• 19:19
  steady backwardation. It pushes up all of the meaning.
• 19:23
  Oil prices go up. Meaning oil prices go up.
• 19:26
  I don't think they go up to, you know, unlike unseemly levels.
• 19:30
  Not to $147 a barrel like we saw in 2000 and seven, 2000 and. 8
• 19:35
  Jagger I've been I've been forecasting prices long enough
• 19:37
  to to to know that you don't forecast prices.
• 19:40
  You'll never get a price forecast.
• 19:42
  I mean, I don't think it matters what the price forecast is.
• 19:44
  I think what matters is what to your point with the Arab oil
• 19:48
  embargo of 1973, like what are the 50 largest oil importing
• 19:55
  countries take from 2026 right like you've got you've got a
• 20:02
  China that has been working its butt off to figure out how to
• 20:07
  stave off its. Oil addiction, right?
• 20:11
  And so they're moving fast on electric cars, fast, fast on
• 20:14
  solar, plus battery storage. They're ramping up nuclear
• 20:17
  power, right? They're doing all these things,
• 20:19
  right? So they now have a set of
• 20:21
  solutions that they're exporting around the world, right?
• 20:23
  To Indonesia, to Brazil, to Mexico, to India, to others.
• 20:28
  And you know, like, what are their mindsets today?
• 20:32
  Like, you know, what are all of these other oil importing
• 20:35
  mindsets? And then obviously Europe is its
• 20:37
  own kettle of fish that we probably should get into.
• 20:40
  But start with the emerging markets.
• 20:41
  Start with like Indonesia or India or Brazil or Mexico.
• 20:46
  Like what do they take from the events of 2026?
• 20:50
  So, so I think, I think the take away here is, is clear, it's
• 20:53
  telegraphed, it's obvious, it's easy to predict, and it's also
• 20:56
  what they're saying. So I mean, it's, sometimes it
• 20:58
  helps to just like listen to people and like, like and think
• 21:02
  that when they say this, maybe they, maybe they mean it.
• 21:06
  If they have oil and gas, they're going to develop it.
• 21:08
  And you know, I, I, you know, you can't really.
• 21:11
  Blame it still has oil and gas, but India doesn't really and.
• 21:14
  And it doesn't. So which means that they're
• 21:15
  going to look for something. Mexico is in a tough spot.
• 21:19
  Mexico and Canada are in tough spots, but the Indian solution
• 21:22
  is not to develop oil and gas. They don't have.
• 21:25
  The Indian solution is to double down and triple down on
• 21:28
  renewables. And that just makes sense.
• 21:30
  Like that's just smart. Depending on where you are in
• 21:34
  Africa, again, you know if you're Nigeria, fine, but
• 21:38
  everybody else like but. Even Nigeria, I don't think has
• 21:42
  the ability to process all of their oil right.
• 21:47
  So they've got, they've, they've been, they've obviously they
• 21:48
  built the Dangodi refinery and you know, that helps.
• 21:52
  And so they're, they've, they are moving, you know, upstream,
• 21:57
  but I'm sorry, they're moving downstream.
• 22:00
  So, and so that helps a lot. But I think with, with, with
• 22:03
  Nigeria, there's a lot of other chaos in the, in the system that
• 22:06
  makes it rather rather tricky. I think one of the things that
• 22:08
  also helps with with renewables is that it facilitates the the
• 22:14
  distributed grid and the micro grid and the sort of
• 22:20
  incrementalized, modularized development of the grid.
• 22:23
  I've been talking, you know, to some people I've known for some
• 22:25
  years about how demand for their their micro grid and their home
• 22:31
  solar solutions has just skyrocketed all throughout
• 22:35
  Africa as people are moving away from diesel generators and, and,
• 22:40
  you know, take advantage of these technological.
• 22:42
  Well, I mean, last year we had all these stories about Pakistan
• 22:45
  and how 10% of their entire grid has shifted to solar and battery
• 22:48
  storage, all DIY through WhatsApp groups where people
• 22:52
  were just like teaching each other how to do it.
• 22:55
  I mean, it's just, it's crazy. I mean, I am a senior fellow
• 22:59
  with the World Resources Institute and, you know, they've
• 23:02
  got offices in Indonesia and Colombia, etcetera.
• 23:06
  And they've suddenly been getting their phone like, you
• 23:08
  know, has been ringing saying we actually don't know how to
• 23:11
  manage this. Like, could you help us?
• 23:14
  Like, what should our utilities be doing?
• 23:16
  What should like this be doing? Like Indonesia spends a huge
• 23:19
  percentage of its federal budget on subsidies for energy costs
• 23:23
  for poor people. And they're saying, well, maybe
• 23:25
  we should just give people solar panels and battery storage
• 23:27
  instead of giving them energy subsidies every year.
• 23:30
  I, you know, because part of this to me is also just
• 23:32
  technical assistance and like helping people understand and
• 23:36
  how to do this right. Yeah, I, I think that's right.
• 23:39
  And I think, and you know, this actually goes back to the
• 23:41
  comments we were were making before about an industrial
• 23:44
  policy. Like it, it isn't necessarily
• 23:46
  about like writing people a check and saying spend it on
• 23:48
  this. It's about sort of enabled
• 23:50
  enabling people to understand that if they cooperate or they
• 23:54
  converge on this set of solutions that this can create
• 23:58
  this set of beneficial outcomes. Let me show you how that works,
• 24:02
  you know, let me unlock a few doors for you, you know, or, or
• 24:05
  help you understand, you know who you need to talk to.
• 24:08
  A lot of is is also about just like knowing who to call.
• 24:11
  Yeah, I know, I know. That's right.
• 24:13
  Like that's, it's a huge, huge part of it.
• 24:15
  And I think, you know, something that we forget in the West is,
• 24:20
  you know, there's a lot of very understandable, you know,
• 24:22
  concern about China, You know, it, it looks very scary.
• 24:26
  But if you're sitting in a lot of these emerging markets, China
• 24:29
  doesn't look that scary. I mean, we look scary.
• 24:32
  I mean, you know, we're not, we're not especially after
• 24:35
  Saturday. The advertising's not great.
• 24:38
  The imaging's not wonderful for us.
• 24:41
  And China doesn't look like it's, you know, such a, such a
• 24:44
  bad character in, in comparison. Why wouldn't I take high
• 24:48
  quality, low cost, you know, materials they've got a, you
• 24:53
  know, they've they've not done some themselves many favors with
• 24:55
  the way they've, you know, sort of rolled out the belt and road
• 24:58
  with the loans and the investment.
• 25:00
  Like the Chinese have have their own mixed record.
• 25:04
  But I think we need to like bear in mind that if you're if you're
• 25:07
  talking about sub-Saharan Africa, they're not starting
• 25:10
  with the same set of preconceptions that we have with
• 25:13
  respect to Chinese tech. So so yeah, think about those
• 25:19
  so. Now let's move this conversation
• 25:21
  to a more complicated set of equations, right?
• 25:24
  So let's talk about Europe, right?
• 25:26
  And the UK, right? Because they just start
• 25:30
  importing a ton of US allergy, right?
• 25:32
  They also import a lot of Chinese solar modules.
• 25:35
  I think they're importing Chinese cars, which I don't
• 25:38
  think Volkswagen and the folks in Germany like very much like.
• 25:42
  So how did they view the Venezuela, Iran events of 2026?
• 25:49
  I mean, I think, you know, I, I don't want to speak on behalf of
• 25:53
  anybody, but if you just just open up your Bloomberg and look
• 25:57
  at what Macron has announced with respect to French nuclear,
• 26:03
  the French nuclear deterrence, you know, they're doubling down.
• 26:06
  So that at a very high level, at a strategic level, is saying
• 26:10
  they think that what's going on in Iran is indicative of a world
• 26:14
  which is scarier and a world in which they do not feel like
• 26:19
  their traditional safe sources of security or energy supply are
• 26:25
  going to be, you know, protected When it comes to LNG, You know,
• 26:33
  Europe made a decision to stop taking Russian pipe gas.
• 26:38
  You know, the issue with pipe gas is, you know, it's great,
• 26:41
  it's cheap, but it it's got to start here and it's got to end
• 26:44
  there. And you can't move the pipe like
• 26:46
  it doesn't work that way. And the, and the Russians sort
• 26:49
  of played around with, oh, we can turn it off.
• 26:51
  And then the Europeans said, well, actually, so can we LNG is
• 26:56
  a less bad solution if you're weaning yourself off of pipe gas
• 27:02
  from Russia. Because now I can take LNG
• 27:04
  cargoes from a variety of places, not just the US Gulf
• 27:08
  Coast. I can take them from the Middle
• 27:11
  East, unless of course, the straits are blocked.
• 27:14
  So this, this does sort of create a lot of anxiety and
• 27:18
  tension for for the Europeans. And you can see in TTF, you
• 27:21
  know, TTF spiked 40%. What's TTF?
• 27:25
  So that's that's a European natural gas marker.
• 27:28
  It's the the it's it's. Like our Henry hub?
• 27:32
  It's like our Henry hub and, and it's, it's, it's basically the,
• 27:37
  the, the, the price benchmark that helps to set the price for
• 27:42
  cargoes of LNG into Europe. It's increasingly now arbitrage
• 27:48
  with JKM, which is a similar pricing benchmark for East Asia,
• 27:52
  for Japan and Korea, because those cargoes out of the Middle
• 27:56
  East can now go sort of east or West depending on the price
• 27:59
  signals. Those two have really converged
• 28:02
  and emerge and have and have been arbitraged into a balance
• 28:06
  Henry Hub, which is the US price benchmark.
• 28:10
  Now that the US has invested quite a lot in, in new trains
• 28:15
  that will allow Liqu LNG to be exported out of out of the US
• 28:22
  into the Atlantic basin. That Henry Hub price is I expect
• 28:26
  going to continue to converge with with TTF.
• 28:29
  So you can get this global natural gas market which didn't
• 28:32
  really exist before. You have to understand, like
• 28:35
  natural gas, up until a couple decades ago, it was a localized
• 28:39
  pipeline driven phenomena. Like you had these little
• 28:42
  islands. It was a waste fuel.
• 28:44
  I remember when I worked at BP and John Brown had bought Amoco
• 28:49
  and Arco, he had this like they were like, what's your big idea?
• 28:53
  He's like natural gas, my boy. Natural gas, right?
• 28:57
  And everyone's like, what are you talking about?
• 28:59
  Like it was like you just. Burn it.
• 29:00
  That was the whole thing about his strategy.
• 29:03
  Yeah. But it turns out that like if
• 29:05
  you don't burn it and you pipe it, you can it starts to have
• 29:07
  value. And if you store it, you can
• 29:09
  start to trade it. And if you, you know, liquefy
• 29:11
  it, you can, you know, start to ship it and it starts to become,
• 29:15
  you know, pretty attractive. And I think that actually what
• 29:18
  happens is that in this transition away for from traded
• 29:23
  energy in the form of fossil fuels.
• 29:25
  And it's something we talked about in the past.
• 29:26
  I mean, if you think about it, there's, there's, there's really
• 29:29
  only one way that you can move energy across time and space in
• 29:32
  any meaningful way. Rock liquid gas, rock is coal,
• 29:36
  liquid is oil, gas is well gas. And, and I think you know.
• 29:41
  You can also move it via solar panels across the ship.
• 29:47
  The 20 like 25 years of electricity and one like cargo.
• 29:52
  So, so, so I think that that's a really interesting line there.
• 29:56
  And I and I want to take that up and, and, but just give, just
• 29:58
  just give me a moment here. Let me, let me let me finish
• 30:00
  with with, with, with one line of of thought here.
• 30:03
  So, so natural gas is, is a solution to this energy storage
• 30:09
  across time and space problem. And I think that in the same way
• 30:13
  that that crude oil in the past was sort of the queen of energy
• 30:17
  prices, I think you're going to see natural gas as being that
• 30:20
  balancing term. It doesn't mean that natural gas
• 30:22
  has to be the largest component of energy supply.
• 30:26
  It just has to be the balancing term.
• 30:28
  It has to be what you switch on and off when you're starting to
• 30:33
  run into a shortfall. Now, as far as like what we do
• 30:38
  with those solar panels, you know, the most interesting thing
• 30:41
  about the solar panel is the battery storage that's sitting
• 30:45
  next to it. Well, yeah, that's all batteries
• 30:47
  all the time these days. Absolutely.
• 30:50
  And again, we wrote about this almost two years ago and it's
• 30:55
  funny, I got criticism at the time.
• 30:57
  It was when it was when, when, when the European power price
• 31:01
  was starting to go seriously negative.
• 31:03
  And I wrote this paper and I was like, you know, that's
• 31:05
  fantastic. Like this is a great
• 31:08
  opportunity. People like, what are you
• 31:10
  talking about? I've got solar farms, you know,
• 31:12
  like this is socks that I hate this.
• 31:14
  And like no, it means that if you if you invest in the
• 31:17
  storage, you can now trade it like a commodity.
• 31:20
  Well, that's exactly what we've done, obviously in Texas.
• 31:23
  But just going back to Europe for a second, Europe's biggest
• 31:26
  problem, at least that I've experienced, having gone to
• 31:29
  Brussels a few times last year, is that they don't actually
• 31:33
  operate as the European Union. They operate as 27 member
• 31:36
  states, right? So like, so how, how does this
• 31:40
  work? I mean, going back to my
• 31:41
  original question with Venezuela and Iran, right?
• 31:45
  Like, you know, like, you know, the Europeans have been shocked
• 31:48
  with the Ukraine crisis, right? And so like, you would have
• 31:51
  thought that that would have caused them to build out their
• 31:55
  electricity grid. Like, I mean, part of the reason
• 31:57
  why Spain had all those challenges is there's not enough
• 31:59
  transfer capacity between France and Spain, right?
• 32:02
  And so, like, do we start to see a desire within Europe to fix
• 32:07
  all of these things so that they can become more, you know,
• 32:11
  localized in terms of energy? Yeah, I mean, look, I, I, I
• 32:16
  understand exactly where you're coming from and it's really
• 32:18
  frustrating. One of the things that I I've
• 32:19
  been going to Brussels back and forth as well and, you know,
• 32:22
  throughout Europe and you know, there's this, there's this like
• 32:24
  sort of self flagellation that's sort of like, you know, this,
• 32:27
  this the self criticism that you always get.
• 32:30
  And, and the Americans in particular, like we, we cannot
• 32:33
  wait to tell them, you know, just how pathetic and useless
• 32:36
  they are. And The thing is, I just want to
• 32:38
  like shake them and say you're fantastic.
• 32:41
  Like, yes, it is hard compromising.
• 32:44
  It is hard to negotiate mutually beneficial solutions where
• 32:49
  everybody has to give up something so that everybody can
• 32:52
  have more. And it it's something you're
• 32:55
  good at. Like 75 years ago, you were
• 32:58
  crawling out of the rubble from centuries of slaughtering each
• 33:01
  other. And it started by agreeing to
• 33:04
  build, you know, to share coal and steel.
• 33:06
  And then it turned in to an Economic Community.
• 33:09
  And then it turned into a free 8A free trade area and a shared
• 33:12
  currency and shared political institutions.
• 33:15
  And it's hard, you know, it's like marriage.
• 33:18
  It's it's work and it's like hundreds of little failures that
• 33:24
  stack up to enormous successes. Right?
• 33:27
  Focus on that. I agree.
• 33:30
  Like the Spanish need to integrate their grid with the
• 33:34
  rest of Europe, and the French could be a little bit more
• 33:36
  helpful in accommodating and they'll work it out.
• 33:40
  They've learned lessons the hard way, and that's how people adapt
• 33:46
  and adjust. Do I see the Europeans as being
• 33:49
  very focused? Heck, yeah.
• 33:51
  Like, this situation in Ukraine has really, really focused
• 33:55
  people's attention. It's not just about the war.
• 33:59
  It's about energy. And that energy is something
• 34:02
  that people are like, they are ready to compromise.
• 34:08
  They are ready to negotiate. They just need to have that
• 34:13
  process continue. Yeah, they need, they need, they
• 34:17
  need time. Sorry I I I got off a little
• 34:21
  bit. On it, no, that was great.
• 34:22
  You sounded very passionate, James.
• 34:24
  I was hoping we could we could circle up a little bit to about
• 34:28
  what the impacts might be for like an average American
• 34:32
  consumer from this conflict in Iran.
• 34:35
  What would you expect kind of to be the short term impacts like
• 34:38
  on energy prices, on natural gas on on gas internal combustion
• 34:44
  engines, not Jigger and I both Dr. Uvs, but we know that the
• 34:47
  rest of you out there are a lot of you are still driving your
• 34:50
  your ICE vehicles. What are the impacts going to be
• 34:54
  on the pocketbooks of American consumers kind of short, medium
• 34:58
  and long term? Yeah.
• 35:00
  I mean, look, one of the reasons why we're doing this is because
• 35:03
  the short answer to your question is not that much.
• 35:07
  I mean, yeah, they're going to feel it, but they're not going
• 35:10
  to feel it like everybody else on the planet because the US is
• 35:13
  energy independent. We actually, at a high level, it
• 35:20
  kind of doesn't matter what happens to the global oil and
• 35:24
  gas balance. You know, we've, we export on
• 35:29
  net. Some refineries will do better.
• 35:32
  You know, some LNG producers will do better, but as far as
• 35:36
  like the average American consumer, yeah, Henry Hub might
• 35:39
  go up by a buck or two. Is that a lot?
• 35:43
  No, it's not. I mean, people complain about
• 35:47
  it, but it's it's not the end of the world.
• 35:49
  But it does feel like we're like, you know, I think there
• 35:53
  was a feeling at the beginning of the Trump administration that
• 35:57
  we wanted to force everybody to buy more American energy
• 36:00
  products, right? Whether it's LNG or other
• 36:03
  things, I think that we were even trying to export some of
• 36:05
  our coal. But I think that now we're at a
• 36:10
  place where it sounds like what you're saying is that everybody
• 36:13
  wants to be fully diversified, including away from us.
• 36:16
  Absolutely. I mean, yeah.
• 36:19
  So, so let's bear in mind that like in in, in the the the world
• 36:22
  we had before, it was a global energy market.
• 36:26
  So, you know, if you sort of pushed on one part of the
• 36:28
  balloon, it didn't really matter because the other part of the
• 36:31
  balloon sort of sort of accommodated.
• 36:33
  And I think where we are now is, you know, supply chains get
• 36:37
  longer. So, you know, it's going to
• 36:40
  require more cost just to move from one point to another.
• 36:43
  Inventories get larger. It takes money in order to fill
• 36:48
  inventory, but it also takes money to maintain them.
• 36:50
  Like you can't just like store Nat gas for years.
• 36:54
  It doesn't work that way. Not even letting petroleum
• 36:57
  products like you like it. There's a process involved.
• 36:59
  So there's a lot of costs that gets built into there.
• 37:03
  But I think like when you talk about the implications of price
• 37:07
  spikes in energy markets because of attacks on Venezuela or
• 37:12
  attacks on Iran or whatever is going to happen, you know, in
• 37:15
  the next few months, these are spikes which get felt back home,
• 37:20
  hit the pocketbook, but proportionately aren't anything
• 37:24
  close to what we would have seen in the 1970s because the US just
• 37:28
  doesn't have that energy dependence anymore.
• 37:31
  And proportionately, it's a lot more significant for other
• 37:35
  countries around the world. And they're going to react in a
• 37:38
  comparable way to the what the US did in the 1970s.
• 37:42
  So let's circle. Back place though than we were
• 37:44
  in the 1970s. I mean in the 1970's the US
• 37:48
  decided to create the Department of Energy, but we now have like
• 37:52
  you know, 45 years of innovations and inventions and
• 37:55
  as you suggested, industrial strategy scale UPS, most of it
• 37:58
  in China, although we built a lot in the United States,
• 38:01
  whether it's battery manufacturing or solar panel
• 38:03
  manufacturing. And so I mean, I feel like these
• 38:06
  other countries don't have to go on a 40 year journey.
• 38:09
  Like if they're if inertia has been moved enough, based on the
• 38:14
  events of this year, they could start deploying next week.
• 38:20
  Yeah, I don't know about next week, but yeah.
• 38:21
  I mean, I think I So the US experience of the past 50 years
• 38:26
  in energy has been nothing short of miraculous.
• 38:28
  I mean, you know, you played your own small part in that, but
• 38:30
  like, it's incredible, like what the US has accomplished and what
• 38:35
  the US has shared with the rest of the world, not just in like
• 38:39
  that long period of energy stability and security, but also
• 38:42
  just in technology, in know how and in markets.
• 38:46
  You know, this is another area where, like, you know, the US
• 38:49
  has developed something which is now has the potential to enable,
• 38:53
  you know, rapid growth in the energy infrastructure throughout
• 38:55
  the world, You know, futures markets, Why did the US have the
• 39:00
  shale revolution? I mean, there are a variety of
• 39:03
  reasons, you know, you know, geologic and, and, and, and
• 39:06
  related to the engineering. But actually a big component was
• 39:10
  that you could hedge your, your production in a very deep liquid
• 39:15
  futures market, you know, very, very low cost, very little
• 39:19
  friction. So instead of having to, you
• 39:22
  know, laboriously negotiate with banks or with other providers of
• 39:26
  credit in order to Wildcat your wells, you just went on to the
• 39:30
  futures. Yeah, our friend John Arnold
• 39:32
  made a lot of money off of that. Absolutely.
• 39:35
  So, yeah, OK. But the point is, is that like,
• 39:38
  the point is, is that this is something that gave that capital
• 39:42
  to the shale industry and enabled them to go out there and
• 39:47
  just like completely revolutionary revolutionize the
• 39:49
  entire space. And that's that's incredible.
• 39:52
  Let's look at power markets in Europe.
• 39:53
  And this is another one of like my little pet projects.
• 39:57
  Like remember we were talking about TTF, you know, the, the,
• 40:02
  the tidal transfer facility in, in, in Holland, which is
• 40:04
  basically the benchmark for, for European natural gas.
• 40:07
  And you know, just over the weekend, you know that that
• 40:10
  price spiked 3740%, which is not like completely unheard of.
• 40:15
  A natural gas, like natural gas is very volatile for a very good
• 40:19
  reason. Like as soon as you run out of
• 40:21
  gas, like, people get very deeply, profoundly unhappy and
• 40:27
  they will pay. Whatever they have to pay to
• 40:30
  keep the heat on. So I'm not that surprised Europe
• 40:33
  is walking into the storage season this year with very
• 40:37
  little inventories. They've sort of banked on the
• 40:41
  LNG sort of surge that's coming out of the US.
• 40:44
  They assumed there wasn't going to be any disruption to Middle
• 40:47
  East supply. So they're going to be competing
• 40:49
  for these cargoes, which, you know, they may have some some
• 40:52
  difficulties. That's why you you've seen this
• 40:54
  spike. But if you go beyond 12 months,
• 40:57
  TTF hasn't budged. It's 55 EUR, a MW hour lower
• 41:03
  than it was a year ago, basically unchanged, right?
• 41:07
  OK, I've got one more strand I want to.
• 41:11
  Pull. Before I let you go, so I think
• 41:16
  coming into 26, China was overproducing, right?
• 41:21
  Everything around the world and, and putting manufacturers around
• 41:24
  the world at risk, right? Whether it was in, you know,
• 41:27
  India or Brazil or in Europe or other places, right?
• 41:30
  So there was a feeling that even though the US wasn't
• 41:32
  coordinating it, that people were going to try to box in
• 41:34
  China and create tariffs and all this other stuff to protect
• 41:37
  their manufacturers, right? What does Europe do with its
• 41:41
  relationship with China out of the Iran news this week?
• 41:47
  Yeah. So look, I think there's a wide
• 41:51
  gulf between Europe and China on a variety of issues relating to,
• 41:56
  you know, values, political traditions, just sort of way of
• 41:59
  life sort of stuff. And I don't think that's going
• 42:01
  away. But if you look at the
• 42:03
  geopolitical and the Geo economic shape of the landscape,
• 42:08
  they have more in common than than not increasingly so.
• 42:15
  You know, China's natural adversary is actually Russia.
• 42:20
  Like they fought wars with Russia.
• 42:21
  There's a very ambiguous border that they have with Russia.
• 42:25
  Russia has a lot of, you know, resources that look very
• 42:28
  attractive to China, etcetera and so forth.
• 42:30
  Europe is not a threat to China. There is no border between
• 42:35
  Europe and China. There's no, you know, conflict
• 42:39
  over resources that are disputed between Europe and China.
• 42:43
  In many respects. China and Europe are sort of
• 42:46
  actually, if I wouldn't say natural allies, definitely
• 42:49
  wouldn't say that. But they have reasons to
• 42:52
  cooperate. Now, when you look at what's
• 42:53
  going on with Iran right now, they're both dependent or are
• 42:58
  are are, you know, are, are takers of energy that flows
• 43:02
  through the straits. The LNG goes to Europe for the
• 43:05
  most part. The oil goes to China for the
• 43:08
  most part when those straits are disrupted.
• 43:12
  Those are the two people who look at it and say I want the
• 43:15
  straits not disrupted. What is the US doing?
• 43:18
  What is Iran doing? I don't like what that's what
• 43:20
  that that sort of dynamic. So again, you create a a
• 43:23
  carrier, an area of shared interest.
• 43:27
  I don't think that like, I don't think, you know, you're going to
• 43:30
  see some sort of like great, you know, alliance structure set up
• 43:34
  between, you know, China and, and, and the European Union or
• 43:38
  European states. But I think what you're going to
• 43:41
  increasingly see is Europe saying, you know what, we can
• 43:45
  work with China or we can work with India or we can work with
• 43:48
  Brazil on these areas where we've got shared interests.
• 43:51
  And, you know, they may not necessarily be areas that align
• 43:56
  with what our American friends want us to do.
• 43:59
  But maybe we're going to do this because we feel like we need a
• 44:01
  bit more strategic autonomy. And this is one way of getting
• 44:05
  there. And along the way, maybe we'll
• 44:07
  take some of those Chinese solar panels or Chinese EVs and, you
• 44:11
  know, we'll figure something out What?
• 44:13
  Maybe that's a short term, maybe we'll work out some sort of a
• 44:15
  technology sharing agreement. I don't know, like a lot of
• 44:17
  different things can happen, but we're going to, we're going to
• 44:20
  compromise and we're going to make deals, you know,
• 44:24
  accommodate. This is not always going to be
• 44:28
  something that I think people on on the other side of the
• 44:31
  Atlantic are necessarily going to appreciate, but it kind of
• 44:35
  makes sense. Like, why would it be different?
• 44:37
  You're going to, people are going to look after their
• 44:40
  incentives and their interests. That's what we wrote about with
• 44:42
  the new Jewel Order. It's what we wrote about with
• 44:44
  the the new Marshall Plan. When the US had its incentive
• 44:48
  structure change, its behavior changed.
• 44:51
  While Europe is seeing its incentives change, their
• 44:54
  behavior is going to change. And right now, their incentives
• 44:57
  point to less friction with China.
• 45:01
  A little more collaboration A. Little bit more collaboration, I
• 45:05
  think, I think Taiwan is going to remain a very difficult spot
• 45:11
  between the two of them. That's I think the real issue.
• 45:15
  And I think until Taiwan is resolved, China will keep Russia
• 45:21
  close, and by keeping Russia close, that will keep Europe at
• 45:26
  a distance. At some point there's going to
• 45:28
  be some resolution with Taiwan. When that happens, I think
• 45:32
  China's desire to support Russia goes down and that point of
• 45:38
  conflict with Europe goes down. So that could also reshape the
• 45:43
  energy landscape. You could see them cooperating
• 45:45
  to more to a greater extent once those two geopolitical cards
• 45:49
  have sort of been played. All right, James, over, under on
• 45:55
  when the Iran, you know, conflict will come to a close.
• 46:01
  So First off, very flat distribution of outcomes here.
• 46:07
  So I don't want anybody to think that, you know, I have some sort
• 46:10
  of like, inside knowledge or that it's like, really obvious.
• 46:15
  I think that in the short term, there's no capacity or incentive
• 46:21
  for the US to continue to run down scarce stockpiles or scarce
• 46:27
  resources, you know, stopping the Iranian barrage of drones
• 46:31
  and missiles. So the US is probably not going
• 46:35
  to be invested in, you know, attacking Iran for, for weeks.
• 46:41
  So I would, I would be looking at days, but I could be wrong.
• 46:45
  And I, and I really wouldn't want anybody to like come back
• 46:48
  and say you said it wasn't going to last.
• 46:51
  What I do think is that the low level of hostility and conflict
• 46:56
  is, is going to persist. So the message that's gone out
• 47:00
  is that every country in the world that can develop a nuclear
• 47:03
  weapon should develop a nuclear weapon.
• 47:06
  If you can get close to China and acquire Chinese hardware,
• 47:13
  you probably should as far as, you know, conflict with Iran,
• 47:19
  you know, there's there's unless the regime is changed with boots
• 47:24
  on the ground or, you know, people in the street, it's going
• 47:28
  to be just a continual sore spot for the foreseeable future.
• 47:34
  So the short, sharp conflict that we're seeing now, I don't
• 47:39
  think that goes on for a great deal longer.
• 47:43
  But this sort of bubbling cauldron of conflict, not just
• 47:47
  with Iran but with other countries around the world, I
• 47:51
  think that's a that's going to be a characteristic of the next
• 47:53
  several years at least. Sober.
• 47:57
  Are you dizzy yet? I'm getting dizzier.
• 48:01
  Yeah, sorry, nobody, Nobody calls.
• 48:03
  Nobody calls me up when they want to feel better about their
• 48:06
  about their future. Like seriously, nobody does.
• 48:09
  Well, I always feel less dizzy talking to you, James, so I
• 48:14
  appreciate you coming on and stop me from spinning in circles
• 48:18
  and, you know, give us a little more insight as to how to think
• 48:22
  about the events in the last few days.
• 48:25
  I really appreciate the opportunity.
• 48:26
  It was great. It was great having a chance to
• 48:28
  talk to you and Jamie. Thank you and I look forward to
• 48:31
  doing it again. Wow.
• 48:39
  It's always a Tour de force when you talk to James Gutman.
• 48:43
  I think I only picked up about 70% of that.
• 48:45
  I'm going to have to listen to the interview a few times to
• 48:48
  pick up more of what he said, but it does feel like he thinks
• 48:56
  of the new jewel order continues to apply to what's happening in
• 49:00
  the world today. Absolutely.
• 49:01
  I mean, I think James, he, he touched a little bit upon the
• 49:05
  consumer impacts here. I definitely want you and I to
• 49:08
  kind of explore that a little bit more.
• 49:10
  But importantly, he really did make the point that the
• 49:13
  localization that the global energy industry has, I mean, and
• 49:18
  that encompasses so many industries, just the entire
• 49:21
  marketplace has undergone in the last 50 years since we had huge
• 49:25
  oil shocks in the 70s. That's it's transformed the
• 49:29
  experience of so many people where we, you know, we aren't
• 49:32
  seeing the type of fallout that historically we would from a big
• 49:36
  conflict like this. So I thought that was great.
• 49:39
  But I, I would really like to understand a little bit more
• 49:43
  from you Jigger, what, how you could translate some of what
• 49:47
  James was saying about the consumer impacts first here in
• 49:51
  the US like when we're talking about the cost of natural gas
• 49:56
  going up by 1 M MB TU, is that how he was describing that?
• 50:02
  Yeah. So I think there's a few things.
• 50:04
  One is that, you know, oil prices are going up right
• 50:06
  already. And so I think you're going to
• 50:08
  see some impact of the pump, probably $0.20 a gallon.
• 50:11
  And that's not nothing. And so particularly for a
• 50:14
  president who has touted the fact that he's been able to get
• 50:17
  oil prices down during his presidency, I think seeing oil
• 50:19
  prices go back up, I think and probably stay up for a little
• 50:23
  while is going to be something that folks are going to watch
• 50:26
  for. I think on the natural gas
• 50:28
  prices, you know, right now you pay 350 at Henry Hub or so,
• 50:33
  $4.00 for per million BTU's for natural gas.
• 50:38
  So if it goes up by a dollar or $2.00, that's like a 60%
• 50:42
  increase in in your natural gas prices, which I get.
• 50:46
  I think his point was that it's low.
• 50:48
  And so it's going to stay low compared to what we pay in
• 50:50
  Europe. But in the United States, like
• 50:52
  that's a lot. And so particularly for people
• 50:54
  who just went through this polar vortex that we have experienced
• 50:59
  in the month of February in the Northeast, where people got
• 51:02
  electricity bills and natural gas bills that were double what
• 51:05
  they were expecting. I don't know how how you know
• 51:10
  that's going to be received. And then on top of that,
• 51:11
  everyone wants to build a natural gas generator next to
• 51:14
  their AI data center. So that's another ten, you know,
• 51:18
  billion cubic feet a day that we talked about with Tim Haid.
• 51:21
  And so that's a lot more. And then if Qatar is shut down
• 51:25
  their LNG export through the Straits of Hormuz, and all of
• 51:29
  that's going to come from Texas, from all the LNG export
• 51:33
  terminals that we have, well, then they're going to suck even
• 51:35
  more natural gas out of our country to send to Europe.
• 51:39
  And so like right now, like, I feel like, you know, like part
• 51:44
  of what he said was that our natural gas prices might
• 51:47
  converge into a global price. I don't want that.
• 51:51
  I like having cheap natural gas. I don't know that I want
• 51:54
  everyone in America to pay global natural gas prices.
• 51:57
  So I don't know. I mean, I I don't think that the
• 52:01
  consumer should be feeling protected right now.
• 52:07
  I mean, I have to say I'm glad that it's March 2nd because I
• 52:10
  know for a lot of people they cannot afford for their natural
• 52:14
  gas heating bill to go up by 25 to 60%.
• 52:18
  And like, you know, a lot of our seniors are on fixed incomes.
• 52:21
  And if that bill goes up $50.00 a month, that's the difference
• 52:24
  in whether or not they're able to pay that or buy their
• 52:27
  medicine that month. So these these impacts are real
• 52:30
  and I definitely don't think we can minimize them.
• 52:32
  Even though we aren't wouldn't see the price shocks that we
• 52:36
  would have seen 50 years ago. I think it's shown us that
• 52:38
  there's still a lot that needs to be done.
• 52:42
  You know, I definitely, if I'm a European leader, I'm sweating a
• 52:45
  little bit right now. But again, I'm glad spring is
• 52:48
  coming. Well, for sure.
• 52:50
  And I also think that energy is on the minds, as you know, of a
• 52:53
  lot of Americans. The president announced it or
• 52:56
  discussed it in the State of the Union address.
• 52:58
  And we have 36 governors races this fall.
• 53:03
  And energy is usually like a #22 political issue, but has
• 53:07
  recently been sort of a #2 and #3 issue around affordability.
• 53:12
  And so I, you know, part of my concern in this moment is that
• 53:19
  is that, you know, things are going to heat up even more.
• 53:22
  And, you know, right now I think we need people to be sober
• 53:26
  around the fact that we have a extraordinary list of
• 53:29
  technologies that are super cost effective from solar and battery
• 53:32
  storage to heat pumps, to energy efficiency for homes, battery
• 53:37
  storage everywhere. But I think we need to get the
• 53:40
  policies lined up to be able to get that stuff deployed, you
• 53:44
  know, 234X faster than we're doing it now.
• 53:48
  Absolutely. I mean, if anything, this is
• 53:50
  just, you know, one more, one more vote for electrification
• 53:56
  and localization of our energy system.
• 53:59
  And so, you know, we of course, hope that this conflict in Iran
• 54:04
  is resolved quickly and to the benefit of the Iranian people
• 54:07
  and that minimal lives are lost. But that being said, I think we
• 54:11
  already need to take the signal from this conflict that there's
• 54:15
  still more work to be done. So install those heat pumps,
• 54:20
  people get a. Well, and I think those fifty
• 54:24
  other countries that are oil importing countries around the
• 54:27
  world are accelerating their imports of, you know, Chinese
• 54:31
  EVs, solar panels of batteries. They're looking to see exactly
• 54:34
  how Pakistan transformed 10% of their total grade in the last
• 54:38
  three years towards solar and see how they can do it
• 54:41
  themselves. I mean, I just think that when
• 54:43
  you think about just how much pain people felt during the
• 54:47
  Ukraine crisis in 2022, I don't think we're going to see as much
• 54:51
  pain as we had then. But I do think people are going
• 54:55
  to remember what that pain felt like in Ukraine and remind
• 54:59
  themselves that a lot of the plans that they plan to
• 55:02
  implement in 2022, they've been slow on.
• 55:05
  And I think they're going to accelerate those plans.
• 55:06
  And so I think we're going to have an extraordinarily busy
• 55:09
  year in the sustainability industry globally.
• 55:12
  So, Jigger, 1 outstanding question that I bet a lot of our
• 55:16
  listeners have is did we go into Iran for oil?
• 55:20
  Is, is this just another conflict for us to try and
• 55:23
  control the oil reserves of this country?
• 55:25
  What do you think? I thought James was really
• 55:29
  articulate about this point, right?
• 55:31
  I mean, as you know, President Trump basically said it was
• 55:33
  about the oil for Venezuela. And I don't think it really was
• 55:37
  about the oil per SE. I mean, we wanted to shift a
• 55:40
  million barrels a day away from going to China towards the US
• 55:44
  Gulf. And, you know, we didn't like
• 55:46
  the fact that China and Russia were having this big impact in
• 55:50
  the Western Hemisphere. And it was very clear that James
• 55:53
  talked about, you know, the Chinese were demanding that the
• 55:55
  oil be paid for in their currency and then that then was
• 56:00
  being used to buy Chinese goods, right?
• 56:05
  And so, so, you know, it does feel like it's more geopolitical
• 56:10
  like that in Iran, but, you know, like it's, it's, it's one
• 56:16
  of those things where I feel like everyone always assumes
• 56:21
  it's about the oil, right? I mean, for a long time, people
• 56:24
  thought Iraq was about the oil. And I don't think we actually
• 56:27
  got a lot of oil. And President Trump got mad
• 56:29
  about that, remember? Like he was like, oh, for all
• 56:31
  that work we did in Iraq, we should have taken their oil,
• 56:34
  right? But like, you know, I just, I do
• 56:37
  think that this is more geopolitical in nature.
• 56:39
  And, and, and so as a result, I think that, you know, you heard
• 56:44
  James talk about all the downstream effects from it and
• 56:48
  it didn't sound like it was. One thing, though he did say,
• 56:51
  which I thought was fascinating, was he said, if China wanted to,
• 56:55
  they might buy all the floating oil storage in the world, which
• 56:59
  is basically just a bunch of tankers driving around with oil
• 57:02
  in them. And that would take up all the
• 57:04
  slack capacity in the world and that would drive oil prices
• 57:07
  higher. So I thought that was
• 57:08
  fascinating because I was checking the strategic Petroleum
• 57:11
  Reserve numbers. You know, we can store about 700
• 57:14
  million barrels of oil. We're at like 419 right now in
• 57:18
  the United States in terms of how many barrels we have in the
• 57:22
  Fusion Petroleum Reserve. So interestingly enough, I mean
• 57:26
  we could buy up all the tankers that are floating around and
• 57:28
  stick them in our strategic oil reserve.
• 57:32
  Yeah, that, that was wild. I hadn't, I hadn't thought about
• 57:35
  that, That there's just, there are just millions and millions
• 57:38
  of barrels of oil just floating all over the planet at any given
• 57:42
  time. I mean, I think for, for an
• 57:45
  average American, it's an easy way to think about it and it's
• 57:49
  an easy way to explain a very complex geopolitical situation
• 57:54
  to just say that it's about the oil.
• 57:56
  But the thing that has fundamentally changed since we
• 57:59
  went into Iraq back in 2003 is now we're one of the largest oil
• 58:04
  producing countries on the planet.
• 58:06
  And I still think a lot of people don't realize that that
• 58:10
  we are and that we are a net exporter of oil now.
• 58:13
  So, you know, the the dynamics have really changed and we kind
• 58:17
  of like took back our power in that way.
• 58:19
  And so, I mean, one would hope that that would reduce conflict
• 58:23
  in the Middle East because that would, you know, at least reduce
• 58:27
  the impact of 1 great forcing mechanism or one of our primary,
• 58:32
  you know, historic interests in that region.
• 58:35
  Yet here we are. Here we are again.
• 58:39
  My goodness. I mean, the other thing he said,
• 58:41
  which frankly was scary to me, was he was like, you know,
• 58:46
  Hezbollah and Hamas are not the only two proxies that Iran has.
• 58:49
  And one of the things they might do is actually unleash all their
• 58:51
  proxies around the world to go after soft targets.
• 58:55
  I mean, I thought we were done with all that stuff with Iraq
• 58:59
  and, you know, and like all of the, you know, suicide bombers
• 59:02
  and this and that. And, I mean, you know, scary
• 59:05
  times. Well, thanks, everybody, for
• 59:07
  joining us. As always, we are sponsored by
• 59:12
  S2G and we're so grateful for their sponsorship.
• 59:15
  You can find us wherever you listen to podcasts.
• 59:19
  So Apple Podcasts, Spotify, you can watch us in full video on
• 59:25
  YouTube. Smash the subscribe button, as
• 59:28
  my son likes to say. And we're just really thankful
• 59:31
  for Simon Bergbaum and all of the folks who are just really
• 59:35
  helping us to put together these emergency episodes when we find
• 59:40
  out about a new event that occurs on a Saturday.
• 59:43
  So thanks everybody for listening.