Latest / Energy Empire / No Fertilizer. No Data Centers. No Birthday Balloons. The Iran War Is Not Just Impacting Oil.

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No Fertilizer. No Data Centers. No Birthday Balloons. The Iran War Is Not Just Impacting Oil. · Energy Empire

• 0:00
  Egypt is able to charge fees for going through Suet, right?
• 0:04
  You know, is that a deal where you go to Iran and say, OK,
• 0:07
  fine, you get to charge a fee for going to the Straits of
• 0:10
  Hormuz and, you know, like, you're going to abandon your
• 0:13
  nuclear ambitions, but you're going to get all this windfall
• 0:17
  of cash? Like is that how this thing
• 0:19
  ends? That's already happening, right?
• 0:20
  So they the Iranians have scored a massive win because now
• 0:26
  instead of stopping them from putting a toll booth on the
• 0:29
  straights, now you have to try and convince them to to take
• 0:32
  down the toll booth on the restraints.
• 0:34
  So like, they're already one step ahead.
• 0:42
  Hello, my name is Sugar Shaw. I'm a clean energy entrepreneur.
• 0:45
  Hi, I'm Arnab Powell and I'm a clean energy policy whisperer.
• 0:50
  I was, I was wondering what you were going to call yourself
• 0:52
  right now. Like, there you go.
• 0:54
  That's, that's amazing. Well, I mean, I don't know if
• 0:59
  you slept at all, but you know, Illinois is in the final four.
• 1:02
  So. So I'm wearing my orange.
• 1:05
  When was the last time you guys were in the Final Four?
• 1:07
  2005. Yeah, I still think the the, the
• 1:10
  biggest feat in Illinois basketball history is that I
• 1:13
  think Michael Jordan's son played for your team.
• 1:16
  So, you know, you know, good luck in the Final Four and
• 1:20
  hopefully that won't be your biggest feat, but right now it
• 1:22
  still is. Well, our our good friend
• 1:24
  Brandon Hurlbut texted me. He's like, he's like getting his
• 1:28
  next ticket to Indianapolis to to see the game.
• 1:31
  He and I both went to Illinois together so.
• 1:33
  There you go. Well, you know, I'm a UCLA
• 1:35
  Bruins, so we we still hold the record for the most national
• 1:39
  championships. But I think the last time we won
• 1:42
  one, Bill Clinton was in his first term as president.
• 1:44
  So, you know, it's been a while. Well, this week we got James
• 1:49
  Gutman back on. I love James.
• 1:52
  I am always in awe of just how much he's thought about this
• 1:56
  over the last 15 months, even before the Iran conflict
• 1:59
  started. But I do think that this time is
• 2:02
  going to be a lot more somber. I mean, it is very obvious that
• 2:05
  in day 31, we're starting to see a whole bunch of the effects
• 2:09
  that people predicted could happen.
• 2:11
  But I think just, we're not interested in like, thinking
• 2:15
  deeply about it. You know, part of the way that I
• 2:17
  described it was that we need to stop treating the Strait of
• 2:20
  Hormuz like a thought experiment because it's not anymore like,
• 2:24
  it's real people, real lives. It's like, you know, real
• 2:28
  humanitarian outcomes. Yeah, well, in some ways it is a
• 2:31
  thought experiment and we've been thinking about it for
• 2:34
  almost 50 years. And there's been 50 years of war
• 2:37
  gaming that has shown us what would happen if we were to
• 2:41
  engage in this conflict. And it is playing out exactly
• 2:45
  like the war games the last 50 years have shown, which is why
• 2:48
  no one else has done it before. My God, it's like, it's so
• 2:52
  crazy, but you've got, you know, folks in India like who don't
• 2:55
  have LPG to cook, right? You've got, you know, like folks
• 2:59
  in, you know, Pakistan, other places that are cutting down the
• 3:02
  number of days that people go to school.
• 3:03
  Like they're trying to get people to work from home.
• 3:06
  Like I mean, they're basically replicating like COVID like
• 3:09
  mechanisms to save fuel. It's I don't see how this
• 3:13
  doesn't lead to economic consequences.
• 3:16
  Yeah. And look, This is why, as
• 3:18
  someone who's always see themselves maybe a little bit
• 3:20
  more of a globalist, I have respect for what I think is a
• 3:24
  bipartisan opinion amongst some really MAGA conservatives and
• 3:29
  progressives that Americans should not wade around the world
• 3:33
  and get into military conflict because there are unintended
• 3:36
  consequences both for Americans and for other people around the
• 3:39
  world who had nothing to do with this.
• 3:41
  And and that's what we're saying.
• 3:43
  Look, I mean, I think Obama got elected as an anti war
• 3:46
  president. I think Trump got elected as an
• 3:48
  anti war president in 2016. I think he got elected again in
• 3:51
  2024 as an anti war president. It's kind of shocking that he
• 3:56
  would like be like the number one source of conflict in the
• 4:00
  second administration. Yeah, in some ways, but in some
• 4:04
  ways, you know, not. I think about James the, the
• 4:08
  most interesting thing and I think we, we peeled this out at
• 4:11
  the end was sort of what he saw as the end game.
• 4:14
  And I, I just don't know how you can explain to people if we do
• 4:18
  all of this and the end game is a fee or tax on the Strait of
• 4:22
  Hormuz that we all pay for. I mean that, I mean, it's not.
• 4:26
  There are much worse things that can come from this, but that's
• 4:30
  not a good outcome for the amount of time and effort and
• 4:34
  money and lives on the line that are being put into this.
• 4:38
  I mean, it's unfortunate, but we've structured this such that
• 4:42
  Iran has all the cards, and I think what you're going to see
• 4:45
  is a big fat Taco. Oh man, oh man.
• 4:48
  Well, it's not. It's not the kind of Taco
• 4:50
  Tuesday I'm looking forward to Jigger.
• 4:52
  No, no, it is not. This episode is supported by S2G
• 5:03
  Investments. If you've been listening to me,
• 5:05
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• 5:47
  and start with my episode on energy affordability.
• 5:57
  All right, James, we're going to jump right in.
• 5:59
  The last time you were here, you talk, you talked about Trump
• 6:03
  being the clean energy president.
• 6:05
  Is that still the case? I mean, I think that's pretty
• 6:08
  much a done deal now, right, Jigger, everywhere you go.
• 6:12
  I, I mean the people I talked to in Europe and the UK, all they
• 6:20
  seem to be focused on is how they can get a long term
• 6:24
  sustainable path to localized energy, which is mostly, but not
• 6:30
  exclusively about renewables and nuclear.
• 6:33
  So nuclear is on there. I, I think if you put that in
• 6:37
  clear energy, then I think so too.
• 6:40
  So, and this is a, this is a function of, you know, of
• 6:44
  Trump's choices that he's made. So I, I, I guess the only thing
• 6:49
  that I'd want to say is that, you know, whereas Trump has, has
• 6:54
  really kind of pushed this whole thing forward, not because he
• 6:59
  wanted to make the world greener, but, you know, for
• 7:02
  other reasons. This is also a, a, an energy
• 7:06
  transition that had its own legs.
• 7:08
  So it's not simply about responding to the policies of a
• 7:11
  president. It's about there are reasons why
• 7:14
  we are using renewables and nuclear and other alternative
• 7:17
  energy solutions and why they are, you know, coming to
• 7:21
  dominate, quite frankly. Well, folks have been planning
• 7:24
  for this moment for some time. And, you know, a lot of those
• 7:28
  plans, frankly, were gathering dust and we're not being
• 7:31
  deployed at scale, but they were written.
• 7:35
  And so, like, those plans are now getting dusted off and, you
• 7:39
  know, it sounds like folks are starting to implement them.
• 7:42
  Yeah, I think that's right. And and and I think what's
• 7:44
  what's what's really important now for for team Green.
• 7:48
  I think what I, what I want to say is take the win.
• 7:52
  Like, like take a deep breath, look around.
• 7:56
  The world is transitioning to clean energy.
• 8:00
  Not perhaps because we're all holding hands and singing
• 8:02
  kumbaya and saying this is the best way to decarbonize and, you
• 8:06
  know, bring abundance to the, to the masses for other reasons.
• 8:10
  Well. I mean, some of those reasons
• 8:12
  are not great, right? I mean, we're on a 31, right?
• 8:15
  Forget the barrel price for a second, but what does this
• 8:18
  crisis actually look like on the ground right now for a family in
• 8:22
  Thailand or Pakistan or Kenya? Well, and that's exactly where
• 8:26
  I, where I'm going here. I mean, if you, if you're
• 8:27
  talking about people who have few options today, the, the, the
• 8:33
  option, the only option they have is rationing.
• 8:35
  So if you're on the ground and you know, some of these emerging
• 8:38
  markets, you know, you don't get LPG for your cooker, you just
• 8:43
  don't, you know, you don't drive your car, you just don't.
• 8:47
  And that's just the way it is because you can't afford this
• 8:50
  now scarce commodity. If you just Fast forward though
• 8:54
  a bit to tomorrow, you're, you're installing solar like you
• 8:59
  know, you're, you know, you're patching yourself into the grid.
• 9:01
  You're, you're, you're getting the, the Bev or, you know,
• 9:05
  you're, you're doing what you have to do in order to not
• 9:07
  repeat, you know, the experience of having this, this, this, this
• 9:12
  fossil fuel cut off from you yet again.
• 9:16
  And that is how we are transitioning.
• 9:17
  Not because, you know, we're all holding hands and saying this is
• 9:22
  a really good idea. It's because this is how I get
• 9:25
  to have my lights and my on and my food hot, you know, cook, you
• 9:32
  know, cook my food and, you know, have a hot shower when I
• 9:34
  need it because that's what's really important to me.
• 9:37
  And it's going to be renewables for a lot of these people.
• 9:40
  Well, I, I got to say this is, this is not the way I envisioned
• 9:43
  US winning. But that is a, that is an
• 9:45
  interesting way to look at it, James.
• 9:49
  In, in, in, in Pakistan, they're, they're telling people
• 9:51
  to watch cricket from home to save fuel.
• 9:55
  In Thailand, government employees are being told to take
• 9:58
  the stairs instead of the elevator.
• 10:00
  Some countries are adding extra public holidays just to reduce
• 10:04
  energy consumption and hundreds of gas stations in Australia are
• 10:08
  running dry. Airlines are cancelling flights
• 10:10
  across Southeast Asia over and over again.
• 10:12
  There's there's issues that we're seeing.
• 10:14
  This isn't really a price story anymore.
• 10:16
  It's it's a rationing story. And and my question is how far
• 10:19
  does this go? So all rationing stories are
• 10:22
  price stories, right? So let's just agree that, you
• 10:25
  know, at the end of the day, the market will decide, you know,
• 10:29
  who gets what in a, you know, scarce commodity for which you
• 10:33
  can't, you know, borrow from the future.
• 10:35
  And that's really what we're talking about here.
• 10:36
  You can't, you know, you can't print molecules.
• 10:39
  You know, you can print, you can print government bonds, you
• 10:42
  know, to your heart's consent, but you can't print molecules.
• 10:45
  Whatever you got in storage or coming out of the ground today,
• 10:48
  that's what you got. So how you will ration that
• 10:51
  painfully is through price. There's just no two ways about
• 10:55
  it. So the people who are at, you
• 10:58
  know, that first level of, you know, willingness to pay are the
• 11:02
  people who get squeezed out. And those are people in First
• 11:06
  off, there are people in emerging markets.
• 11:09
  But it's also kind of important to note that because of the
• 11:12
  geography of where this curtailment and energy supply is
• 11:16
  happening, you know, it's, it's coming out of the Straits of
• 11:19
  Hormuz that feeds first and foremost into Asian refineries.
• 11:25
  So it's the Asian refineries that you're waking up and
• 11:27
  saying, right, yeah, I, I don't have heating oil for you.
• 11:31
  I'm very, very sorry. So that's where it hits first.
• 11:33
  So it's the emerging markets countries and they're the first
• 11:37
  in line to kind of take the blow.
• 11:41
  Where does this, like, where does this go?
• 11:45
  I mean, I don't, I really don't want to get into like this game
• 11:49
  of, you know, trying to forecast how long this will last because
• 11:53
  I did this a couple podcasts ago with you, Jigger, and it turned
• 11:56
  out to be like, yeah. You were overly.
• 11:59
  Rational cast I So on day three ish of this I felt like you know
• 12:07
  the US should walk away and say we won but just let it be.
• 12:11
  And the reason I felt like that is because everything which has
• 12:14
  transpired since has been perfectly forecastable.
• 12:19
  The behavior of the Iranians has been conditional upon their not
• 12:24
  caving. You know, early on has been
• 12:27
  exactly what you would expect. And, you know, anybody sitting
• 12:31
  down in Washington and sort of playing that game backwards in
• 12:35
  that subgame, what is said, right?
• 12:37
  I don't want this outcome. Therefore declare victory, go
• 12:42
  home and conserve my munitions. That isn't what happened.
• 12:45
  So, you know, I still think that the way this ends is with one or
• 12:51
  both sides sort of declaring victory and you know, there's a
• 12:56
  new regime or not a regime. That's a bad word, a new order
• 13:01
  that sort of exists in the global community in in
• 13:05
  geopolitics and in their in the energy relationships.
• 13:09
  What I don't want to do is say, you know, this ends today, this
• 13:13
  ends in two weeks. Here's what I will say.
• 13:16
  We've already lost, I don't know, call it 200 million
• 13:19
  barrels of just shut in production.
• 13:21
  Like that's just gone. And you know, it's going to take
• 13:25
  time. Even if you know, sweetness and
• 13:28
  light breaks out tomorrow, you know to to get those wells
• 13:33
  producing again, to get the tankers picking it up to start
• 13:36
  moving the flow. And we're not even talking about
• 13:38
  the damage infrastructure, you know, particularly to the LNG
• 13:42
  trends that the Iranians have attacked.
• 13:45
  But I. Want to double down a little
• 13:47
  bit, James, around the fact that this really is a humanitarian
• 13:51
  crisis. I feel like people continue to
• 13:54
  talk about this in sanitized terms around, you know, figuring
• 13:58
  out what the rationing story looks like or the price story
• 14:02
  looks like. But I, it does feel like
• 14:05
  fundamentally there are hospitals that will run out of
• 14:08
  backup diesel power, right? There are like, you know, like
• 14:12
  there are people who will not be able to, you know, use
• 14:16
  fertilizer this year right there.
• 14:18
  There are things that are going to happen that will have these
• 14:21
  ripple effects for, you know, months, years to come.
• 14:26
  And, you know, and, and, and then once it becomes a
• 14:29
  humanitarian story, this becomes seared in the minds of people
• 14:33
  for the rest of their lives, right?
• 14:34
  Like, these are things that people don't forget about for,
• 14:38
  you know, 50 years. Yeah, and, and, and sort of, you
• 14:41
  know, talking about how the humanitarian crisis and, and how
• 14:47
  those that are benefiting it potentially looking at like oil
• 14:51
  isn't just a fuel, right. So it's also a feedstock, you
• 14:55
  know, 90%, ninety, 2% of the world's sulfur comes from
• 14:58
  refining oil and gas. And sulfuric acid is how we
• 15:02
  extract copper and cobalt. And if, you know, seaborne
• 15:09
  sulfur is now cut in half. Is this something that traders
• 15:14
  are looking at? You know, this impacts
• 15:16
  Transformers, batteries, data centers, our economy even beyond
• 15:20
  what the humanitarian concerns are are are at risk.
• 15:24
  So, so the, the short answer is yes, the closer you get to a
• 15:29
  trading desk where they actually buy and sell, you know, crude
• 15:34
  oil or gas, the more palpable that tension becomes.
• 15:38
  And the more sort of, I wouldn't say panicked, but like
• 15:42
  profoundly concerned they are with the, with the implications
• 15:46
  further down the supply chain for, for everything that
• 15:48
  happens. You know, Jigger was asking
• 15:50
  about the humanitarian concern. So we're talking about, you
• 15:52
  know, can I cook my meal for my children?
• 15:55
  You know, can I, you know, provide air conditioning and
• 16:00
  sweltering heat like these are like very real tangible things.
• 16:03
  Now, what you're talking about are, you know, first world
• 16:06
  problems, you know, am I going to get the helium that I need
• 16:10
  to, you know, feed my AI economy?
• 16:13
  Oh, dear me, you know, I probably will, but it's going
• 16:16
  to, you know, a third of the world.
• 16:18
  Well, it's helium. More than that actually passes
• 16:21
  through the Straits of Hormuz. You know, I mean, come on,
• 16:24
  James, like screw like the the silicon data chips.
• 16:28
  Am I going to get helium for my kids birthday party?
• 16:32
  I mean, that's a humanitarian, that's.
• 16:34
  Humanitarian crisis. I mean, come on James, like
• 16:37
  there are going to be a lot of unhappy kids.
• 16:39
  No, I agree that the whole helium thing though came out of
• 16:42
  left field to me. Like the fact that, you know,
• 16:44
  all of you know our fabs require helium, right?
• 16:48
  Like that this is, this is really like a much bigger deal
• 16:53
  than I think anyone really had contemplated.
• 16:56
  Yeah. I mean, I think I, I think it's
• 16:57
  important to to, to just bear in mind that, you know, the people
• 17:01
  in the emerging markets, you know, who are going to be
• 17:03
  struggling with this humanitarian aspect that you're
• 17:05
  talking about. What they're losing out on is
• 17:07
  the jewels. They're losing out on the heat
• 17:09
  and the energy. I think what we're talking about
• 17:12
  in these first world sort of problems that that Arnab's
• 17:16
  mentioning, you know, this is where you've got, you know, the,
• 17:20
  the, the, the oil or the gas as a feedstock into another
• 17:23
  process. And this is going to have ripple
• 17:26
  effects down the, down, down the chain.
• 17:28
  So it's going to affect everything from the production
• 17:30
  of copper, as you mentioned, to sulfur and fertilizer.
• 17:34
  So crop yields in the US will go down because we will have less
• 17:39
  fertilizer. Crop yields everywhere will go
• 17:41
  down. So the price of everything
• 17:44
  that's grown, we'll just have to grow up because there's going to
• 17:48
  be a shortage on fertilizer. So, you know, from the AI supply
• 17:53
  chain to, you know, the grocery store supply chain, you know,
• 17:56
  it's going to hit everything. And I think if you talk to
• 18:01
  people who like, actually have to figure out how they're going
• 18:03
  to get the pet Cam to, you know, wrap the tomatoes that end up on
• 18:08
  the grocery store in London, you know, they're scratching their
• 18:11
  head. They're thinking, yeah, I don't
• 18:12
  know how this is going to work out.
• 18:15
  Now, at the end of the day, it will work out.
• 18:18
  Some people would do without and other people will pay up.
• 18:21
  And gradually over time, you know, supply will, will, will
• 18:25
  adjust, but it's going to be painful.
• 18:28
  And, and, and I think that, you know, something that Jigger, you
• 18:31
  mentioned a couple, a couple minutes ago, which I think is
• 18:34
  like, actually the most important part of this
• 18:36
  conversation is this will be seared into people's memories,
• 18:41
  like everybody's memories. You know, I think, you know, if
• 18:45
  you look back at the, at the 1970s and the first oil shock,
• 18:49
  you know, it only lasted a couple months.
• 18:50
  It, it wasn't, you know, it's not actually the change in the
• 18:54
  price or the curtailment in, you know, oil availability that
• 18:58
  that, you know, was really the important take away from the
• 19:01
  first oil shock. It's that everything then
• 19:03
  changed on the geopolitical landscape.
• 19:06
  I think what we're looking at now is a sequence of very, very
• 19:13
  substantial changes in the geopolitical landscape.
• 19:17
  And I think there's going to be something that like echoes, you
• 19:20
  know, for for years to come. So it's not just about, oh,
• 19:24
  we're going to have, you know, this hit to growth and this
• 19:28
  boost to inflation because we're going to have these supply chain
• 19:30
  bottlenecks that come out of the closer of of the Strait
• 19:33
  performance. That sucks.
• 19:36
  And it's going to hit the poor harder than the rich, and that's
• 19:38
  going to suck. But more importantly is that
• 19:42
  it's going to change how countries look at each other and
• 19:46
  who they play with. Yeah.
• 19:49
  So let's dig a little deeper into that.
• 19:52
  How is that going to change? Like how, how are alliances
• 19:58
  going to change going forward given, you know, sort of we're
• 20:03
  in day 31 and we might be, you know, like you double that
• 20:07
  before this crisis gets, you know, fully resolved.
• 20:11
  I mean, knock on wood, let's just hope that by the time we're
• 20:13
  done with this podcast, which is, you know, March 31st at 7:22
• 20:18
  London time, we're going to turn on our, our, our screens and,
• 20:22
  and everything's going to be resolved.
• 20:23
  So let's hope it doesn't extend another 31 days, but the damage
• 20:28
  is done. So I think, you know, one of
• 20:32
  the, one of the points that I've been sort of pushing for the
• 20:34
  past couple years is that you need to look at the incentives
• 20:37
  that nation states have when they when they deal with each
• 20:40
  other. So, you know, we focused a lot
• 20:42
  on the US and energy independence meant that the US
• 20:46
  no longer felt like obligated to protect global energy supply
• 20:51
  chains because it wasn't an energy importer anymore.
• 20:53
  It wasn't pulling in oil and gas, oil rather from from the
• 20:57
  Gulf states. Fine, you know, the Carter
• 20:59
  Doctrine no longer applies as you can see.
• 21:02
  So now flip that around. If you're sitting, you know, in
• 21:06
  the Gulf states, you know, your your immediate concern is
• 21:10
  finding, you know, an end to the pain.
• 21:12
  Make Iran stop and make Iran not do this again in the immediate
• 21:17
  future. But where are like, who do you
• 21:21
  now have common cause with? And I think what's really
• 21:24
  fascinating is that Donald Trump in one of his many tweets,
• 21:28
  actually spelled it out perfectly.
• 21:30
  He keeps spelling it out perfectly.
• 21:32
  You know, China, India, you know, the Europeans, the
• 21:37
  Japanese and Koreans, the people who take the energy through the
• 21:40
  Straits of Hormuz, they should be cooperating and dealing with
• 21:45
  the people in the Gulf, the Gulf states, in order to manage and
• 21:50
  protect the supply. So what you now have is a shared
• 21:55
  interest between the Europeans and the Chinese and the Gulf
• 22:00
  states. They don't have to like each
• 22:03
  other. They don't have to say we, we,
• 22:05
  we love, you know, you're, we, we have shared political values.
• 22:09
  All they have to do is say we have a shared interest in making
• 22:15
  sure that the straits remain open.
• 22:17
  And so then extend that to sort of like the next level.
• 22:21
  There's no point of obvious friction between Europe and
• 22:25
  China, you know, apart from Taiwan.
• 22:28
  I mean, that's a real, that's a hard nut to crack.
• 22:32
  But like, they don't share a border.
• 22:33
  They don't have any, you know, points of friction or conflict.
• 22:37
  So, you know, it's not out of the realm of possibility for the
• 22:42
  Europeans to say, look, you know, China, let's take more of
• 22:47
  your clean tech. You know, it's a stopgap.
• 22:50
  It's a, you know, we're not handing over our industry to you
• 22:55
  forever, but we want to do this now in a sort of planned and
• 23:00
  thoughtful way. Let's talk about technology
• 23:02
  transfer. Let's talk about, you know, you
• 23:05
  reconfiguring, you know, your clean tech so that it's
• 23:09
  modularized so that we can start to remove and replace with
• 23:13
  European components the bits that we think are really
• 23:16
  crucial. I'm just, I'm just, you know,
• 23:18
  spitballing here. But what I'm saying is you have
• 23:20
  that conversation with somebody that you actually have a shared
• 23:25
  interest with. And I think that's what's being
• 23:27
  forced out of this whole sort of crisis that's been created with
• 23:32
  the Straits of Hormuz. One more area I wanted to make
• 23:35
  sure we covered here is that when you study the 1970s,
• 23:41
  there's this whole concept of the Petro dollar where, you
• 23:44
  know, all of these excess profits made by the Gulf were
• 23:50
  reinvested into New York banks and ultimately provided cheap
• 23:55
  credit, right? How does that cash cycle change?
• 24:00
  Because you guys covered that in a few other reports that you did
• 24:03
  with Jeff Curry. Like how does like where does
• 24:07
  this go in terms of the Petro dollar cash cycle?
• 24:11
  So when, when Jeff and I originally wrote the neutral
• 24:17
  order, I think that the idea, one of the phrases that I used
• 24:20
  in there was, you know, barrels, bombs and bonds.
• 24:24
  And we we talked about the barrels in the neutral order and
• 24:29
  you know, what energy independence meant for the US
• 24:32
  and their force for the world. And in another follow up piece
• 24:35
  called the new Marshall Plan, we talked about what, you know, no
• 24:38
  longer being afraid of a Eurasian hyperpower, the Soviet
• 24:41
  Union meant for the security arrangement.
• 24:44
  And then the follow up piece, which is in process is, you
• 24:48
  know, looking at how the US financial underpinning for the
• 24:53
  global system, which in is has, has it had a lot to do with the
• 24:57
  Petro dollar story that starts in the 1970s.
• 25:00
  And the people who are buying those bonds and holding those
• 25:03
  bonds. How that is changing in, you
• 25:07
  know, in this sort of in a grand set of set of ships that we're
• 25:11
  looking at. I think in the immediate term,
• 25:15
  what you have is, yeah, a financial market that is sort of
• 25:20
  unable to wean itself off of the dollar.
• 25:23
  It's just too big. So to the extent that people
• 25:27
  have choices at the margins, they're trying to, you know,
• 25:30
  take on less dollar exposure. Now, what the Straits crisis has
• 25:36
  created are sort of two additional effects.
• 25:39
  First off, the Gulf states are no longer exporting crude,
• 25:43
  therefore they're not as much, therefore they're not getting
• 25:47
  paid dollars, which then feedback into the financial
• 25:50
  system to buy US bonds, amongst other things.
• 25:54
  Secondly, they're taking their assets that they do have gold,
• 25:59
  for example, and they're liquidating them because they
• 26:01
  need to buy stuff like it's it, This is why you save money for a
• 26:06
  rainy day. I mean, it's, it's, it's, it's
• 26:08
  pouring for them. So that's like sort of the first
• 26:11
  impact. The second is that I think
• 26:16
  Chinese efforts to push the yuan as a as a settlement currency
• 26:22
  have gained momentum here because the Iranians, you know,
• 26:26
  they're clearly not taking dollars or euros in exchange for
• 26:30
  cargoes. And, you know, the, the cargoes
• 26:32
  that do pass through the straits, you know, I think the,
• 26:35
  the Iranians are, are insisting that that these that these
• 26:39
  cargoes have, you know, Chinese links as far as the financial
• 26:43
  settlement. So, you know, what ends up
• 26:45
  happening is there's just this nudge towards more yuan as a
• 26:51
  settlement recourse in the energy space.
• 26:54
  Does this mean that like the dollar is on the cusp of being
• 26:58
  dethroned? No, but it's just like another
• 27:02
  chip in that story that starts to that that that's just sort of
• 27:07
  corrodes the primacy of the US financial system.
• 27:12
  I really want to be clear here. I am not saying that the US
• 27:16
  dollar is in any way at risk of immediately being dethroned as
• 27:23
  the linchpin for the global financial system or that the US
• 27:26
  Treasury market is going to somehow find itself suddenly
• 27:30
  starved for capital. But on a marginal basis, you're
• 27:34
  losing the Gulf dollars and the Chinese are gaining effectively
• 27:40
  golf you want. So let's pivot here.
• 27:43
  I mean, Arnab, you're sort of, you know, the political expert
• 27:47
  here, right? Trump promised cutting energy
• 27:51
  bills in half, right? Gas is going up above $4.00,
• 27:56
  might hit $5. Groceries are going up.
• 27:59
  Consumer price index jumped from 2.4% to 3.4% in a single month,
• 28:04
  right? At what point do Americans
• 28:07
  actually blame the president for, you know, prices going up
• 28:14
  and, you know, when does this become a political crisis for
• 28:17
  the president? Yeah.
• 28:18
  So look, I think we have to, you know, take a step back and and
• 28:23
  figure out why do we, why do we want to talk about the politics
• 28:25
  of this? Because I think a lot of times
• 28:27
  people just want to talk about it for sport.
• 28:29
  And I think in this case, it's really important because the
• 28:32
  decisions that are going to affect the markets, the
• 28:35
  humanitarian crises, the things that James here is talking
• 28:38
  about, those seem to be inherently made based on
• 28:41
  political calculations by the president right now in terms of
• 28:44
  how we're going to cooperate with other countries to keep the
• 28:47
  straight open who, who's going to get the blame, Who's not.
• 28:50
  And, and your question is important here, Jigger, because
• 28:54
  look, ultimately one of the strongest predictors of
• 28:57
  presidential approval has been gas prices over the years.
• 29:00
  And that's irrespective of how the economy is doing.
• 29:04
  So my take here is the longer this goes, the more untenable it
• 29:09
  becomes because we have someone who promised to cut energy bills
• 29:13
  in half, and we're doing the exact opposite now.
• 29:16
  So, you know, I think I see this as a political crisis already.
• 29:23
  And I think you're seeing some some irrational actions that are
• 29:27
  taking place based on that. James, I'm curious what you
• 29:30
  think. At what point do you think this
• 29:32
  this war becomes a a domestic political crisis in your eyes?
• 29:40
  Well, I mean, I think in, in, in sort of a weird and perverse
• 29:45
  way, you know, I, I, I think we're probably going to see
• 29:49
  people in the US say, yeah, it's bad for us, but like, at least
• 29:55
  it's not as bad for all these other people we screwed over,
• 30:00
  which is kind of unpleasant. So it becomes kind of a talking
• 30:03
  point. I, I think that like, it's
• 30:07
  already at that level where it starts to pinch pocketbooks and
• 30:12
  that's where American voters, you know, really respond.
• 30:15
  I think where you're going to start to get real frustration
• 30:20
  and angst is when you start seeing products that just don't
• 30:23
  show up on the shelves because there's a disruption in the
• 30:25
  supply chain someplace. And people are saying, well, why
• 30:29
  isn't, you know, Amazon able to deliver that thing I wanted?
• 30:33
  And it's because there's some guy in, you know, Vietnam who
• 30:36
  wasn't able to produce it for you.
• 30:38
  And it wasn't able to get onto a boat and come over and, you
• 30:41
  know, get unloaded in Long Beach.
• 30:43
  So sorry. There you go.
• 30:45
  I think that's when you know you might start to see consumers a
• 30:48
  bit. I mean, the other challenge I
• 30:50
  see though, on the politics side is there's this escalation
• 30:54
  occurring, right? Because we didn't get out in day
• 30:57
  three, right? And so, you know, we're already
• 31:00
  sending special forces into the region, right?
• 31:03
  I mean if like, I mean, how do you open up the Straits of
• 31:08
  Hormuz without a ground game? I, I don't even think, I mean,
• 31:12
  I, I want to be careful here on, you know, I'm not a, a military
• 31:15
  expert and you know, I don't want to, you know, like
• 31:18
  pronounce. I don't want to get too far out
• 31:20
  of my lane, but, like, I think you probably don't.
• 31:24
  I mean, the idea that we would be able to put boots on that
• 31:28
  much ground and, you know, cover me, I don't know how many, you
• 31:34
  know, dozens of miles inland. We'd have to, you know, clear.
• 31:38
  And the mountainous terrain that has been, you know, I would
• 31:43
  presume prepared for just such an event.
• 31:46
  This strikes me as implausible. Now maybe, you know, a Marine
• 31:52
  Expeditionary unit could, you know, take possession of Karg
• 31:55
  and, you know, squeeze Iranian revenues.
• 31:59
  OK. So I can I could see how that
• 32:01
  would would potentially work. But then you just got like, you
• 32:05
  know, American, you know, men and women sitting there, you
• 32:08
  know, with a target on their back, which doesn't seem like a
• 32:10
  sustainable long term strategy. And I think we applied that sort
• 32:14
  of strategy in Vietnam and it didn't really work.
• 32:17
  So I got to think that like the deployment of of a paratroopers
• 32:23
  and Marines to the Gulf is as much about signaling and about
• 32:27
  demonstrating as sort of a negotiating position.
• 32:32
  You know, they are negotiating as much as the Iranians insist
• 32:35
  that they're not. You know, every time they insist
• 32:37
  that they're not, they're saying something with respect to the
• 32:41
  negotiations as to what they are rejecting or where they see
• 32:46
  something that they want. So they are negotiating.
• 32:48
  They're negotiating through tweet.
• 32:50
  They're negotiating through demonstrations of force,
• 32:53
  through, you know, blowing up innocent targets on, you know,
• 32:58
  elsewhere in the Gulf. That is what negotiation looks
• 33:00
  like. Can you force the Straits of
• 33:04
  Hormuz open at this stage? I mean, short of the Iranians
• 33:10
  running out of drones, which I don't really see happening, I'm
• 33:14
  I'm not really sure how that works.
• 33:16
  Well, well, James, I want to click back real quickly to to
• 33:18
  where I think your expertise does make a lot of sense.
• 33:21
  Trump, for what everyone says about him, positive or negative,
• 33:25
  is a very sophisticated political actor.
• 33:28
  And he is very smart enough to know that when people can't get
• 33:32
  the things they want on Amazon, that's when it's kind of going
• 33:36
  to be over for him in terms of like, does he have any chance of
• 33:39
  explaining this war to people? So, so my question to you is,
• 33:42
  is, you know, how much time do you think we have to till we're
• 33:46
  at that point? Because I think that'll explain
• 33:48
  a lot of where this is going. Yeah, we're already there.
• 33:52
  I mean and you know the, so there is a pipeline and a lot of
• 33:59
  stuff is in the pipeline and as long as the stuff is coming to
• 34:03
  us, you know, through the pipeline, we don't realize that
• 34:08
  actually, you know, there's been a seizure, you know, upstream
• 34:13
  and you know that's just coming. So there is already a disruption
• 34:19
  to you know, production of a lot of these these goods that you
• 34:24
  know, eventually find their way into Amazon warehouses.
• 34:28
  It's just going to take time to get there.
• 34:31
  You know, there's a reluctance in financial markets to kind of
• 34:35
  price that in. And, you know, I think a lot of
• 34:38
  people sort of scratch their heads as to why that is.
• 34:42
  And I know that President Trump pays a lot of attention to the
• 34:44
  financial markets, and that may be giving him some solace.
• 34:48
  But I think, like, I think you need to be careful about, you
• 34:51
  know, reading too much into that sort of dog not barking.
• 34:57
  First off, for the past 15, for the past 20 years, markets have
• 35:01
  been repeatedly schooled and trained to buy debts, right?
• 35:05
  Like over and over and over again.
• 35:08
  You have been told by dips. Second, you know, Trump himself
• 35:14
  has kind of created a, an impression that, you know, when
• 35:17
  push comes to shove, he will do what it takes to back down,
• 35:21
  declare victory, move on, forget about whatever happened in order
• 35:25
  to protect, you know, the stock market or the bond market.
• 35:28
  Like he's kind of made that, you know, pretty clear.
• 35:30
  So there is sort of a almost like an implicit Trump put that
• 35:34
  that you might put in there. And then I think as a third and
• 35:38
  probably the most important, like we have an incredibly
• 35:42
  sophisticated energy system. Like it's really it's, it's,
• 35:46
  it's breathtaking and it's beautiful to behold, you know,
• 35:49
  where there's all sorts of, you know, there are stockpiles that
• 35:55
  are, that are built into the system and there is a supply
• 35:57
  chain which is resilient and able to adapt.
• 36:00
  But to an extent, you know, I think, you know, earlier I
• 36:04
  mentioned that like we've already burned through, I don't
• 36:06
  know, maybe 200, two, 150 million barrels of shut in
• 36:09
  production. Like by shut in, I mean, like
• 36:11
  that's not like stuff which is, you know, sort of been produced
• 36:17
  and it's kind of sitting on the take.
• 36:18
  Like that's not coming like that.
• 36:20
  That's in the ground. Like it's not coming out until
• 36:23
  like stuff restarts. You could see 500 million
• 36:26
  barrels that just doesn't get pulled out.
• 36:29
  You know, that is 2/3 times these sort of oil glut that
• 36:36
  people were looking at that was, you know, floating on the seeds.
• 36:39
  Like, you know, there's only so much SPR release that you can,
• 36:44
  that you can do before you just don't have the, the product that
• 36:50
  ultimately has, you know, has a financial consequence.
• 36:54
  Now we haven't seen that I think fully played out in, in, in the
• 36:59
  financial markets yet because they haven't felt it.
• 37:02
  Now, when you think about the end game here like it does, you
• 37:06
  know Egypt is able to charge fees for going through Suez,
• 37:11
  right? You know, is that a deal where
• 37:15
  you go to Iran and say, OK, fine, you get to charge a fee
• 37:18
  for going to the Straits of Hormuz and you know, like you're
• 37:22
  going to abandon your nuclear ambitions, but you're going to
• 37:25
  get all this windfall of cash. Like, you know, like is that, is
• 37:29
  that how this thing ends? I mean, 1st, that's already
• 37:35
  happening, right? So the the Iranians have scored
• 37:38
  a massive win because now instead of stopping them from
• 37:44
  putting a toll booth on the straights, now you have to try
• 37:46
  and convince them to to take down the toll booth on the
• 37:49
  restraints. So like, they're already one
• 37:51
  step ahead. I think like there's nobody
• 37:56
  who's really excited about the idea of putting, you know,
• 38:01
  tolling transactions on, on the Straits.
• 38:05
  You know, the straits are not just owned by the Iranians like,
• 38:10
  you know, the UAE and Oman, you know, have big pieces of
• 38:14
  territorial claim to those waters as well.
• 38:17
  And there's a precedent here which is really, you know, sort
• 38:20
  of deeply negative. I mean, as I going to start
• 38:22
  seeing, you know, tolling through the Straits of Malacca,
• 38:24
  you know, or into, you know, the Red Sea like this is a this is
• 38:28
  just a terrible kettle of fish. However, I can see where a
• 38:34
  settlement might involve, you know, something that's not a
• 38:38
  toll, but that's a toll. And the Iranians are able to,
• 38:42
  you know, have some sort of, you know, financial compensation
• 38:46
  that does reflect the fact that there's traffic going through
• 38:49
  and it's unmolested. I can't see the Iranians at this
• 38:53
  stage, you know, backing down on their nuclear ambitions.
• 38:56
  Like, like, why would you like, you know, there's everybody saw
• 39:02
  what happened to Gaddafi. Like at this point it seems
• 39:05
  like, you know, you've already paid the price.
• 39:08
  But I can see, you know, a world where you know, the Chinese are
• 39:14
  invited along with the Europeans and along with other interested
• 39:18
  parties to, to help to create some sort of a buffer or some,
• 39:22
  some stability there. And there might, you know, be a
• 39:27
  demand that many people around the world might think makes
• 39:30
  sense for the US to kind of take a a step back.
• 39:34
  If you if you just play that scenario out.
• 39:36
  And I'm not making forecasts and I'm not trying to say what I
• 39:37
  think is good or bad or right or wrong, you know, please, please
• 39:40
  don't interpret that. But if you just sort of like
• 39:42
  look at how the incentives align, you know, if you're in
• 39:48
  the Gulf states, once the immediate shock of this like
• 39:52
  sort of a attack upon your civilian infrastructure from
• 39:55
  Iran sort of has, has become a, a, a recent memory.
• 40:01
  You know, you're going to ask, how do I involve other great
• 40:07
  powers in order to keep a flow of crude and product through the
• 40:12
  Strait? How do I keep Iran compensated
• 40:16
  enough? So that they don't feel like
• 40:18
  it's in their interest to try and take the plunge.
• 40:21
  And how do I work out a new sort of status quo?
• 40:25
  Nobody's going to be happy. But I kind of think that's where
• 40:28
  we're going to end up. And it does look like that might
• 40:31
  have a reduced footprint for the US in the region.
• 40:35
  I mean, that's just one possibility.
• 40:38
  James, if you're right, let's, and I'm not saying you are, you
• 40:41
  will be basically the net result of this, we will have spent
• 40:45
  hundreds of billions of dollars risk the lives of American
• 40:47
  troops, risk the lives of Iranian people and those all
• 40:51
  around the Middle East. Also, we can pay more for gas
• 40:55
  because that's that's what I'm interpreting from this.
• 40:59
  Well, so that's already happened.
• 41:01
  So like if that's what I said, then I'm already right.
• 41:04
  I'm, I think what I'm actually pointing at is in addition, it
• 41:11
  is so that we can, you know, reshuffle the playing cards for
• 41:17
  the political and the energy system so that other people have
• 41:20
  a bigger role and we have a lesser role.
• 41:23
  We being the United States. I know that last time I was on
• 41:27
  here, Jane, Jamie got really sort of exercised by the idea
• 41:30
  that, you know, that I think that Trump's, you know,
• 41:32
  effectively, you know, the, the midwife for the green
• 41:35
  transition. And I and, and we talked about
• 41:37
  that at the start of this podcast, and I think that's
• 41:38
  exactly right. I think that Trump, he may
• 41:42
  inadvertently, you know, be the guy who helps to, you know,
• 41:47
  revive the Middle Kingdom because it's China, which looks
• 41:52
  like they may have sort of the power and the presence to be
• 41:56
  that stabilizing force here. I don't think that's a good
• 42:00
  outcome for for anybody, but it kind of makes sense and you can
• 42:06
  see how we could end up there. So you're talking about like
• 42:09
  spending hundreds of billions of dollars and putting people's
• 42:12
  lives, you know, in harm so that we can have higher gasoline
• 42:15
  prices, and I'm talking about all of that and so that we can
• 42:21
  have less influence in the world.
• 42:23
  This just seems like the exact opposite of, you know, building
• 42:27
  a wall and having Mexico pay for it.
• 42:29
  You know, this seems like we're building.
• 42:31
  Something for that wall. What's that?
• 42:34
  Did Mexico pay? Did we build that wall and did
• 42:36
  Mexico pay for it? Those are two questions.
• 42:39
  I think there are answers there and the answer is no and no.
• 42:43
  So when you think about the fact that 36 governors are running
• 42:47
  for office this year, right? No matter how this plays out,
• 42:52
  right, no matter what the deal looks like in the end, right, it
• 42:57
  doesn't look like an awesome deal.
• 42:59
  It doesn't look like America's stronger after this effort,
• 43:03
  right? How does this play into the
• 43:05
  election cycle? Yeah, I mean, look, I, I think
• 43:09
  it's, it's in some ways it's hard as a governor because the
• 43:14
  people of your state are going to be suffering because of this
• 43:17
  and everyone's going to be paying more for gas.
• 43:19
  And the vast majority of the company, the country, they will,
• 43:23
  they will feel that immediately. But in other ways, it's quite
• 43:26
  easy because it's very easy to point to whose fault this is,
• 43:31
  right? And if you're a Democratic
• 43:33
  governor in a Democratic state, like if you're Gavin Newsom and
• 43:36
  everyone's been blaming you and your policies for high gas
• 43:39
  prices, I think it's pretty easy.
• 43:40
  You're like, actually it's Donald Trump and and everyone's
• 43:44
  going to be like, yeah, that seems right.
• 43:47
  And if you're, you know, a a governor in any of these other
• 43:50
  states, it's the same thing. You, you know who to blame for
• 43:52
  these high gas prices. And the the best political
• 43:56
  statements are the ones that are just true.
• 43:59
  And this is one that's true. Now, if you're a Republican
• 44:01
  governor, you're going to have to make some, some real, you
• 44:04
  know, some, some real calculus here in terms of do I stand with
• 44:09
  the president as gas prices go to five, 6-7 dollars a barrel?
• 44:13
  And and yeah. Why don't they just all turn on
• 44:16
  the president? Aren't they going to turn on the
• 44:18
  president? Well, if, if.
• 44:19
  I mean, the rational thing was if I'm a governor, Republican
• 44:23
  governor running in 26, knowing that I would run for re election
• 44:26
  in 20-30 or be termed out, I would probably after my primary,
• 44:33
  the day after it, I would turn against the president and be
• 44:36
  like, I agree with him on all these other things.
• 44:38
  But when it comes to gas prices in this war, I'm not with him,
• 44:41
  right? And this is what you saw in
• 44:43
  2006, seven and eight with another unpopular Republican
• 44:49
  president who decided to have a war in the Middle East over oil.
• 44:54
  And you saw people leaving. And if you're a smart political
• 44:57
  actor on the Republican side, and I'm not saying they are or
• 44:59
  aren't, you would leave the day after your primary's over
• 45:04
  because, you know, I think regardless of what's going on
• 45:07
  and how unpopular the president is, he's still largely popular
• 45:10
  with his Republican. Base, yeah.
• 45:12
  Can I push back a little bit on that, Arna, because you know,
• 45:17
  I'm, I'm very comfortable with sort of the voting model that
• 45:19
  you have in your mind, you know, where, you know, people make
• 45:22
  this sort of semi rational calculation based on, you know,
• 45:26
  the pain they feel and the pain that they don't feel.
• 45:28
  And they, you know, attribute this rightly or wrongly to the
• 45:31
  president, right. And here it's pretty clear that
• 45:32
  they can, you know, great. So that's what they do when they
• 45:35
  go to the polls. But then if I look at the way
• 45:37
  people have voted in 2016 and you know, like in 20 in in 2024,
• 45:45
  I don't know, man, I like it. I don't get like the sense that
• 45:48
  he is actually like when you had midterms in the first round and
• 45:56
  when you have midterms this round.
• 45:58
  Like, I don't know that people are voting with that, you know,
• 46:04
  pocketbook impulse that we traditionally expect them to do
• 46:10
  so. And and the reason why I'm why
• 46:12
  I'm taking in this direction, RM, is because I feel like the
• 46:15
  Democrats might have made like the same mistake over and over
• 46:18
  and over again. They point to the policy, they
• 46:21
  point to the outcome and they say, isn't it clear?
• 46:24
  Vote for me because the other guy stuffed you.
• 46:27
  And then they vote for the other guy.
• 46:29
  And we're like, huh? Yeah.
• 46:31
  Look, I, I think there's, so there's a, there's a very valid
• 46:35
  point you're making here in that the electorate inelastic than it
• 46:39
  was 20 years ago. So I think, you know, if this
• 46:42
  was 2006 or 7, I don't think Trump's approval rating would be
• 46:46
  around 3940%. I think it'd probably be around
• 46:49
  27, which is sort of where Bush's was.
• 46:51
  And I think the electorate is hardened, at least both sides.
• 46:55
  That being said, you know, the number one issue in the 2024
• 46:58
  election was an immigration. It wasn't, you know, transgender
• 47:04
  rights, it was inflation in the economy.
• 47:06
  And there, there is no, there is no doubting that, right.
• 47:10
  And his approval rating has declined 10 or 11 points, you
• 47:15
  know, partially on immigration and how he's handled it, but
• 47:17
  mostly based on the economy. So I do think that's still the
• 47:21
  prevalent issue, even if it's not as strong of a predictor of
• 47:26
  large swings of the electorate as it was before.
• 47:30
  So, you know, I, I agree the Democrats make a lot of
• 47:33
  mistakes. I think everybody kind of agrees
• 47:35
  with that. But in this case, I think if
• 47:37
  they're really honing in on cost of living, I do think that is
• 47:40
  why people went to the polls in 2024 and that is why people are
• 47:44
  going to the polls in 2026. So I think they're on strong
• 47:47
  ground there. But if you want to talk like tie
• 47:49
  this back to the Straits, if you want to think about the one
• 47:52
  thing which is, you know, even worse than a higher cost of
• 47:56
  living for Republicans, it would be body bags.
• 48:01
  You start seeing body bags coming back from the Gulf for a
• 48:03
  war that nobody can explain. You're done.
• 48:08
  Yeah. And look, I think, you know,
• 48:11
  we're, we're at that point, we're so beyond, beyond
• 48:14
  politics. I think if people, if we're
• 48:16
  going to a war that people don't have rationale for and you're
• 48:18
  seeing, you know, we've already had, you know, casualties and
• 48:21
  we've already had, you know, dozens, if not hundreds of
• 48:24
  American soldiers that have been injured.
• 48:26
  So I, I do agree with you. But I think at that point we're,
• 48:30
  we're at a place where, you know, I think we're so much
• 48:33
  further than the midterm elections at that point.
• 48:35
  But I agree with you all. Right.
• 48:38
  Last topic, I think we talked about the fact that China comes
• 48:43
  out looking better, I think out of this situation.
• 48:47
  The other thing that China has is they have, you know, been
• 48:50
  accused of a ton of overcapacity.
• 48:53
  Well, now that overcapacity has a place to go, right?
• 48:56
  There's a lot of people who probably want to buy cheap
• 48:58
  Chinese electric vehicles. There's a lot of people who want
• 49:00
  to buy cheap Chinese solar panels and cheap Chinese
• 49:03
  batteries. And the Chinese don't seem to
• 49:04
  want to raise prices on anybody. They're happy to sell them at
• 49:07
  the same price they were selling them at two months ago.
• 49:10
  I mean, you know, like, and the, the other thing we talked about
• 49:13
  is that they were providing about $250 billion with a trade
• 49:16
  credit, according to Michael Assemblest over at High in the
• 49:19
  Market from JP Morgan's, you know, Asset Management Group.
• 49:23
  And so, you know, like, talk a little bit about what China does
• 49:29
  in this moment to help folks decarbonize or, you know,
• 49:33
  localize or, you know, practice energy sovereignty or whatever,
• 49:38
  you know, strategy it is that you're describing.
• 49:41
  Yeah, I mean, I think I, I think China does precisely 0 to help
• 49:45
  people decarbonize or to achieve energy sovereignty or, or any of
• 49:50
  those things. I think what China does is finds
• 49:54
  a way to increase Chinese influence and presence in the
• 49:58
  world and to sell Chinese products.
• 50:01
  So the Chinese own the clean energy space because this was a
• 50:05
  strategic important for them and they were right and they did an
• 50:11
  an amazing job and it's theirs now.
• 50:14
  They're going to sell us their stuff if we'll let them, not
• 50:18
  because it makes us better, because it makes them better.
• 50:21
  Now the smart thing for everybody in the world to do is
• 50:25
  to say, all right, we're going to buy your stuff.
• 50:27
  But here are the terms, You know, here's what we want for
• 50:30
  local manufacturing. Here's one for technology
• 50:33
  transfer. You know, here's how we want to
• 50:34
  control the standards so that there's an easy way for us to
• 50:38
  slot out what you produce with what we produce.
• 50:40
  Here's how we want to control the software or the text so that
• 50:43
  we don't think that you're whatever.
• 50:45
  Like there's a whole list of things.
• 50:46
  So when you talk to European leaders.
• 50:49
  Yeah. Right.
• 50:51
  Are they going to do any of that?
• 50:54
  I, I mean, I, I just think they're like, I mean, I was in
• 50:58
  Brussels like 3 times last year. Like I, I, I said exactly the
• 51:03
  same thing to them. I didn't, I didn't hear them
• 51:05
  say, Oh yeah, let's do this. You know, I'm an optimist.
• 51:11
  I'm an. Optimist.
• 51:12
  Well, I mean, hopefully they actually take your advice and do
• 51:15
  it. Like, I mean, even if you're not
• 51:17
  like going to do stuff in Germany or Croatia or other
• 51:20
  places, like even just buying your solar panels from Turkey or
• 51:24
  Ethiopia. Yeah, I know, I know other.
• 51:26
  Places that are non Chinese like, I just think that the most
• 51:30
  basic things that we can do to diversify the supply chain and
• 51:34
  to partner with the Chinese like these best practices.
• 51:38
  I don't know whether everyone has those muscles.
• 51:41
  Yeah. I mean, so I do think that the
• 51:43
  that like you know, the tide has turned in European capitals like
• 51:48
  they are much, much more focused on the vulnerabilities that they
• 51:53
  face. I think that there is little
• 51:55
  appetite to doubling or to restoring dependence on Russia.
• 52:00
  And I think there is serious concern with their dependence on
• 52:04
  LNG. I think allowing the Chinese to
• 52:08
  help them, you know, to expand renewables and and to to roll
• 52:13
  out, you know, the tech is unpleasant and unpalatable, but
• 52:18
  something that they can probably get their head around if they
• 52:21
  can, you know, sort of find a way amongst themselves to
• 52:28
  negotiate and compromise something that works.
• 52:30
  I think if you're talking about let's move out of Europe and
• 52:33
  you're talking about sort of the rest of the world, it's much
• 52:35
  easier sell, I think, you know, for the rest of the world,
• 52:39
  buying Chinese tech just, you know, as a way of insulating
• 52:43
  them from, you know, the volatility in these energy
• 52:45
  markets just seems like like an easier process.
• 52:49
  I think the path for Europe is relatively clear.
• 52:54
  The process by which Europe gets there is going to be very
• 52:58
  European. And that means discourse, you
• 53:01
  know, and I and I and I try to emphasize this every, every
• 53:04
  chance I get, You know, that is a core European value and
• 53:08
  strength. Now this idea that we talk and
• 53:11
  don't force our opinions through and it's messy and it's
• 53:16
  frustrating and it's, it's, it's exactly what people like to
• 53:22
  criticize Europe for. But that process of negotiating
• 53:26
  and compromising and finding second best solutions is
• 53:30
  actually a European strength. Now, in this case, that second
• 53:33
  best solution might be finding a way to come to terms with having
• 53:39
  a greater Chinese role in your clean tech supply stock.
• 53:44
  Hopefully the Europeans will do so with a very strategic and
• 53:50
  calculated eye on how they can leverage the Chinese tech and
• 53:56
  the Chinese skills in order to rebuild a European manufacturing
• 54:01
  base. That's how the Chinese did it.
• 54:03
  They took a lot of skill and a lot of tech from the West, and
• 54:07
  they used clever processes and made it theirs.
• 54:11
  We might just have to do the same.
• 54:13
  Jigger Based on what James is saying, it's almost as if like
• 54:15
  Congress needed to pass this really big bill to support
• 54:20
  domestic manufacturing for clean energy in the United States to
• 54:23
  help combat, you know, what's going on in geopolitics today.
• 54:28
  It's like, has that ever been done before, Jigger?
• 54:32
  I mean, if not, someone should do it.
• 54:35
  I think we should call it the Inflation Reduction Act when we
• 54:38
  do it. And I think we should hire 450
• 54:41
  of the smartest private sector people possible and put out 107
• 54:45
  1/2 billion dollars worth of loans the loan programs office.
• 54:48
  But. I think that's a great idea, but
• 54:51
  I'd like to and I'd like to nominate you to to spearhead
• 54:53
  this movement. My God.
• 54:56
  Well, James, you know, I know that all of us hope that the
• 55:00
  Straits of Hormuz are open tomorrow, but unfortunately,
• 55:04
  it's not open now. And so you have joined us.
• 55:07
  Thank you for sharing your wisdom and insights, Arnab.
• 55:11
  Thanks for filling in for Jamie. I think you did a admirable job,
• 55:15
  if not fashionable, but like admirable.
• 55:18
  I'll take at least fashionable. But with that, thank you.
• 55:23
  Thanks for joining me. Wow.
• 55:31
  You know, I have never seen James so somber.
• 55:34
  So like, I don't know whether it was low energy or just somber.
• 55:38
  I think last time we talked to him, it was like 1 in the
• 55:40
  morning, London time. This time it was like 7:00 PM
• 55:43
  But I mean, I think that like when you think about just how
• 55:48
  many impacts there are on the global economy and just how many
• 55:53
  of the 7 billion around the world who don't have access to
• 55:56
  energy are going to be negatively impacted.
• 56:00
  And I mean, it kind of brings down the energy level in the
• 56:02
  room. Yeah.
• 56:03
  And I think the the, the most sombre part is the worst is yet
• 56:08
  to come, which was sort of his, his, his read on.
• 56:11
  Like, you know the thing, the bad things that will happen that
• 56:14
  you can't get your Amazon packages.
• 56:15
  And look, these are first world problems.
• 56:17
  I understand. Like we haven't quite felt it
• 56:20
  yet is what James is telling us. Meaning if this thing continues
• 56:24
  it, it's going to be even more deeply unpopular and it's going
• 56:27
  to hurt Americans in ways that go beyond five, 6-7 dollars of
• 56:33
  gas, a gallon of gasoline. Well, I think it's worse than
• 56:37
  that because part of what he was saying is that America is going
• 56:39
  to feel the impacts last. And so that means we are going
• 56:43
  to have all these horrific impacts and all these other
• 56:46
  countries. And that by the time the
• 56:48
  politics actually catches up with Trump, it might be another
• 56:51
  30 days from now, right? Because we're the center of
• 56:54
  global finance because we've got a lot of cheap natural gas.
• 56:58
  And so those costs are not going up, right?
• 57:00
  Because of all of these long supply chains, we may not see
• 57:04
  the full impacts for another few weeks or another, you know,
• 57:07
  month and all these other countries are starting to see
• 57:10
  the full impacts today. Yeah.
• 57:13
  And I and I, and I think what I was trying to get James to, and
• 57:16
  I think maybe he was hesitant to respond on was does this
• 57:19
  accelerate the process of some sort of truce or ceasefire
• 57:24
  knowing that, hey, this is about to get a lot worse than 30 days?
• 57:27
  And I do think for for all of Donald Trump's inabilities, I
• 57:33
  think one thing he's able to do is read the room of the American
• 57:36
  people. And I don't think he's going to
• 57:38
  want to be the one telling people why they can't get, you
• 57:42
  know, their packages from Amazon and their things from Target.
• 57:46
  Well, I think he's trying to get out.
• 57:47
  I think he's trying to figure out a way to get out.
• 57:48
  But like, I just think like, how do you get out when the Straits
• 57:52
  of Hormuz are not open, right? So I think he just needs to
• 57:54
  figure it out. I think the part we, you know,
• 57:57
  we didn't get into this all the way till the end with James.
• 57:59
  I think that the, the saddest part about this and this is I
• 58:02
  think personally, you know, effects you and I in terms of
• 58:05
  the work we did is, you know, we had a plan in place to make sure
• 58:10
  something like this in the long term, maybe not in 2026,
• 58:13
  wouldn't affect the country in the ways that it is right now,
• 58:16
  right? Which is a, you know, America
• 58:19
  can build things in its country. We can be energy independent.
• 58:23
  We ripped all that apart last year and what we've done is
• 58:27
  basically re exposed ourselves the way we were 20 years ago.
• 58:31
  It's it's brutal to watch. I mean, especially because the
• 58:35
  entrepreneurs who really bought it to the framework, the tax
• 58:39
  credits, all that stuff, I mean, they, they started construction
• 58:43
  of 920 projects around the country, right?
• 58:45
  And a lot of those projects failed to raise equity, right?
• 58:49
  They failed to be able to get to the finish line because of all
• 58:53
  of the stuff that got ripped up last year, right?
• 58:55
  And so now restarting is pretty brutal.
• 58:58
  So we'll see where it goes. But I, like James said, I mean,
• 59:02
  I pray that this conflict ends by the time people hear this.
• 59:07
  Yeah, I'm with you there 100%. Well, thanks for joining our
• 59:10
  Nob. It was fantastic to have you on
• 59:13
  and you know, would always would rather have Jamie but you know,
• 59:17
  but it's fantastic to have you on.
• 59:18
  I can be a poor person's Jamie and, you know, acceptable pass
• 59:24
  and I'm here to do it anytime you need me to.
• 59:28
  Well, thanks everybody for joining us.
• 59:31
  As you know, we're backed by S2G Investments.
• 59:34
  Just super excited for their sponsorship.
• 59:38
  You can find us wherever you listen to your podcasts or
• 59:42
  vodkas, I mean, on YouTube these days.
• 59:45
  Obviously, subscribe if you can. And with that, thank you so much
• 59:49
  for joining us.