¶ Intro / Opening
Hey there, au thu Oughts listeners. Joe and I are very excited to announce that we will be holding our first ever live show in London. That's right.
We've done shows around the country around the US affair amount always a lot of fun. Me guests record live episodes on stage, fans of the podcast get to meet other fans of the podcast, and so forth. But this is our first time doing one of these outside the US in London.
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¶ Introduction: War in Iran, Changing World
Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway and I'm Joe. Why isn't thal Joe in the Odd Lots tradition of Spring of twenty twenty six. I'm going to start this podcast by saying that we are recording on April seventeenth at one pm.
One on one pm. Yes, And of course the reason we have to specified dates is because this is yet another episode about commodities, oil, do war on Iran and so forth. And we've already had multiple mixed headlines today. But by and large, even with the mixed headlines, and again, who knows what's going to happen, but you know, the market is moving past the acute phase of the war.
Pretty clearly, possibly possibly right.
Now, the market is moving past it now.
The market, the market is certainly interpreting this as moving past. Yes, absolutely, But again things are very fluid. They can always change on a dime, which they have been. I'm convinced that one day in early twenty twenty six will be able to record one of these energy related episodes without saying
exactly what time and date it is. But not yet. However, I think that no matter what happens with the status of the ceasefire, it seems very clear that what we've just experienced has been I'm not even sure if you could say a wake up call, but certainly an acute phenomenon that is being interpreted very differently by different players in the world.
I would say three things that, regardless of how this ultimately resolves itself, are on my mind right now, and they all relate to past episodes. So of course, we did that episode with Bob Brackett. We talked about, Okay, this is perhaps going to be a change in global and ad gas flows, maybe to the benefit of American producers of LNG, depending on how much that can be expanded. We did that episode with Alex Turnbull who said in East Asia there's going to be an appetite for really
starting more nuclear plans. And also we've seen this surge in ev buying there, so already a change in East Asia. And then I'm thinking back to our and this was before the war, but our most recent conversation with Jeff Curry, who's talked about this sort of the story of global commodity hoarding and this being like a sort of real post twenty twenty story in generally and so wondering whether this will accelerate structural shifts towards more resource nationalism, et cetera.
Resource guarding. Yeah, I mean, whatever you can say about the current environment, one thing seems very certain, which is if you compare where we are now to say, I don't know, twenty eighteen or twenty nineteen before the pandemic just feels so different totally. If you think about that energy environment, it was all about you know, cheap us shale. It was about lots of money flowing into green energy and VSG and aiding the energy transition. Russian gas was
going to power Europe for pretty much forever. And now we are just in a very different worlds. So the long term trajectory of the energy layout, let's put it that way, seems to happen altered, like no matter what happens immediately with Iran. And who do we call when we want to talk about longer term structural changes in global energy market? Only one name, only one name. So I'm very happy to say that we do, in fact have the perfect guest again, he's coming back on the podcast.
Daniel Jurgen. He is, of course vice chairman of S and P Global. He's the author of the prize the Epic Quest for Oil, Money and Power, basically the book on oil history, as well as the new book, The New Map, Energy Climate and the Clash of Nations. So Dan, thank you very much for coming back on the podcast. Really appreciate it.
¶ Hormuz Crisis: Nightmare Scenario Unfolds
Well, thank you, And as you said, it could not be more timely, but things do change very quickly.
Yes, okay, the caveat is right up front. But I guess if we go back to early March, I would just love to get a sense of what you were thinking as you saw some of these headlines about the Straight of Horror Moves being closed, Because for anyone who's read the book, I mean the closure of the Strait of Horror Moves is basically kind of the nightmare scenario which has been looming in a lot of energy analyst minds for a very long time, and here you were
seeing it actually happen. What was going through your head.
Well, it was that, in fact, the nightmare scenario that had been not only for energy but for strategic planners for decades had happened. I think it's one of those things that people looked at as a scenario but thought it would never happen. But then it happened, and it does change the world and it changes the way people think about energy. We've had supply chain shocks, but this was the mother of all supply chain shocks in terms of the closure of the strait of horror moves.
Look if the ceasefire is durable and the strait opens up in a short period of time, and look, Okay, it made sense that oil prices surged, but didn't go to say, two hundred dollars plus, because you know, we'll be able to say in retrospect it turned out to
be a short war. We had buffer stocks, et cetera. Nonetheless, I think, like in the middle of March, there was this feeling that something is weird because you hear the mother of all supply shocks, and what's like and the aunt of all what's like the aunt of like what's like?
Oh, you mean I thought you meant the actual No, no.
The mother of all supply shocks, and then the aunt of all like pricey.
I'm trying to say, like second cousin removed, the second removed.
I mean, it was like, remember we had two different prices going at the same time. We had the Brent, the futures price, which was always saying, well, this is going to end and prices are going to come down, and then there was a dated Brent the near term. We said, we are having a major dislocation and prices are really going up, and we've never seen that dislocation on that scale before. It was like two different visions of the world almost.
So, actually, why don't you I've read like ten explainers on some of these gaps between the front month price and the data brand or the quote, physical price, etc. But how were you at the time thinking about this gap. Was it as simple as the market simply does not believe that the straight will stake to well.
I did think that there was a difference between how the financial markets, which were processing things like statements by the president's statements from Iran and so forth, looking at the future, and the way the physical market, the industry market, and at SERA week, I remember one of the CEOs said in one of the dialogues that risk is being underpriced in the market because I think from the industry point of view, they saw there are major dislocations and
those dislocations are playing out unevenly across the world. Asia hit the hardest, Europe feeling it, and then the US mainly seeing it in terms of rising prices at the gasoline pub but no problem getting supplies. But in Asia, a big problem getting supplies.
¶ Market Dislocation and Regional Impacts
So I'm glad you mentioned Siera Week, and this is also one of the reasons we wanted to talk to you. So Sarah Week, which is the sort of annual energy industry gathering in Houston right every year, that took place in sort of mid to late March, smack dab in the middle of all of these very changing headlines which we've been discussing. What was the mood like over there when you were talking to you know, actual participants in the market.
I think in terms of actual participants in the market, particularly you know, the CEOs of the companies. On the interviews that I did on stage platform, they were all feeling that there was a real dislocation, a real scramble. They had worried about getting their employees to safety, worried about the safety their colleagues, their facilities, and then just how these markets are going to be supplied and what would be the demand destruction what would happen to price.
So they were very concerned with the logistics of, you know, of having lost the biggest supply of oil that had ever happened in history. And by the way, it was not oil but also natural gas, which people have focused on because I think there was less awareness of how
significant it was in terms of LNG. And then I think the eye opener that maybe all these scenarios that people had been doing for the years about the closure of the Strait of Horror moves people not thought about fertilizer, They're not thought about petrochemicals, they've not thought about sulfur, they'd not thought about helium, which the semiconductor industry in
Taiwan desperately needs. And so actually one of the other things that came out of this was the recognition of how the Gulf countries Saudi Arabia had become much more integrated into the world economy. And by the way, there were also exporters of one other extremely valuable commodity called money with the size of their reserves.
Well, I'm glad you just listed a bunch of all thoughts episodes basically, so I feel like we've ticked each of those boxes in separate episodes, including Golf Capital. So that's good. But just going back to Joe's question, do you have a framework in your mind to explain why the physical market and the actual CEOs of energy companies are freaking out versus what's going on with the futures price or was going on with.
Well, yeah, well I think it is because the futures price is responding to so many forces there, and the people investing in futures, a lot of them, they don't have to worry about supplying a customer. They don't have to worry about how do we get jet fuel to sure that the airplanes keep flying, And as you know in Asia, flights have been canceled. In India, you know, restaurants were closed because they use LPG for cooking and they didn't have enough cooking LKPG for that. So for
Asia it is a real shortage situation. And I think that's what if you have a global perspective, that's what you were coping with in the United States. You know, one difference between this and previous energy crises, the famous energy crisis of the past that I've written about in the Prize and the New Map, and so forth is the position of the United States so dramatically changed, and that has been a huge buffer for consumers in this country and for the economy.
¶ AI's Insatiable Energy Demand, Nuclear Revival
Had it not been for the war, how much would a seero week in twenty twenty six have been dominated by conversations about powering AI data centers and so forth. How much would that have been the story had it not been for the war and around well.
It was anyway. You know, we had the president of Google, the president of Microsoft there, we had people from Navidia, from other chip manufacturers. It was a real change. The focus was, you know, the tech industry meets the energy industry and how do we get along and kind of this panic about do we have enough electricity, particularly in
the United States. And I would have said it then that energy security had shifted from oil and gas to electricity, but of course with this crisis it was back also was about oil and gas, but that was you know, the big discussion that ran through it, and about particularly the role of natural gas because on the one hand, the US has built up this big LNG industry, which plays a much bigger role in our economy than people recognize.
I mean, our latest numbers are seventy five percent of the value of all semiconductor exports is represented by LNG, you know, twice the value of all Hollywood and television and entertainment exports. But now natural gas is coming back into It's already the significant, but more significant for electric generation. And what a change from the Biden administration which wanted to have hydrocarbons out of electric generation by twenty thirty five.
So this question of what are the supply chains to assure electricity to support this AI boom, which is represents in the United States about half of GDP growth?
So what were people saying on that front? So, you know, we've had episodes of the show where we've talked about maybe over capacity when it comes to building out energy for data centers. There are still plenty of people out there who think that the energy demands are just going to be so enormous that we're always going to be playing catch up. There's a debate over who should bear
responsibility for building out that new energy supply. So should it be the tech companies themselves or you know, someone else, given it's a strategic technology. What are you hearing on the ground, Well.
I think the tech companies are going to be a much bigger player's electricity than they would have been in the past. I remember again the CEO of one of the president of one of those companies said in two thousand and eight, when they built their first data center, they didn't talk about electricity, they didn't worry about electricity. So it's been a huge learning and as one of them said, we've had to learn to talk to the
power industry. You know, a software engineer, maybe I don't know, it's a month or two of work to do software. It's seven or eight or ten years from an energy company for an engineer to get a project done. And that's the gulf between the two of them, and the sense that there is a race, and it's you know, it's always said it's the US China race, but it's
also a race, very definitely among companies to build capacity. Now, one question I think you were getting at is that the sense that there is the contrarian view that chips will become more efficient and maybe electricity demand will not be as great as it is. But at this point, every time you know, you talk to you know, a utility executive, they say, and we heard this at Sarah, you know, and they had years and years of no
growth or very flat growth in demand. They'll say this year it's going to grow five percent, or it's going to grow eight percent. And there are only so many electricians, there are only so many transformers. So again, those supply chains are very important there too.
How much do you expect to be truly internalized or vertically integrated within the tech industry when it comes to energy. We see headlines from here and there, like you know, like Google will make an investment in a small module or reactor startup, but I never I know how like serious that is. Or from time to time it's like, oh, Meta hired an energy trader and this is new and
this is different, et cetera. Like what do you think that the big tech companies are ultimately going to internalize as we need to have this be as part of our core competency rather than we are going to work with some third party partner on.
Yeah, we can see that they've hired people who come out of the energy industry, either from the oil and gas industry or in electric power industry. So they're building up the capacity to do that and their investments show it. You mentioned, you know, one company. But look at Amazon, They've invested in x Energy, which is a small modular
reactor company. And I think the idea is that I hear from other of these tech companies too, will invest in them and help drive down the costs and see them as part of the way of meeting the electricity demand. And I think, I know I wrote down, as you said, the themes that you had talked about on nuclear. I mean, this crisis is a boost to nuclear, but I think AI has been a big boost to nuclear in terms of the sense among tech companies that nuclear has to
be part of the picture. And just this morning I was talking with the head of one of the largest government funds, and you know, they're invested a non US fund and they're invested in fusion. So you know, there's just a different attitude towards nuclear, and I think the needs of the tech companies is one of the things that's really driven that well.
¶ Green Transition, Global EV Adoption
Actually, on this note, I wanted to ask you about renewables and you know, the green energy transition and all of that. It feels like in some parts of the world recent events in the golf have maybe hastened some of that transition. Although I can't even call it a transition because, as we discussed with Alex Turnbull, it's like, yes, people are buying a bunch more evs, but those evs are going to be powered by coal for you know,
the foreseeable future, because there's an energy shortage. What exactly is going on with renewables now is are people still seeing that as a substitute for traditional energy or is this more of an addition to bolster I guess diversification.
Well, first, we have to note that over ninety percent of the new electric capacity worldwide that was installed last year was wind and solar, so it is a growing business. Secondly, like I've heard of an example of a project in Vietnam that was going to be done with energy, they're buying solar panels. I think that wind and solar gain less about climate now and more about a part of diversification,
part of energy security. So I think that dialogue that has changed maybe and certainly we'll hear it in Europe and well I hear it at least not from everybody, but from people in the United States as well. So it's a different way of looking at wind and solar as a way to be more independent more secure, more diversified. Doesn't answer the question of how you power an airplane, or the fact that only about six percent of the new cars being sold in the US today, even with this crisis, are evs.
It's pretty crazy how little evs have taken off, you know, something just you know, like, you know, here's something I think about, Like in the US, we are, obviously our lands are blessed with commodities, including abundant oil and gas, especially since we've gotten really good at high tech and
sideways drilling and all of these things like that. Could it be a curse in this sense that you know, the world is getting electrified one day, maybe not in our lifetimes, but one day there'll probably electric airplanes, right, batteries will eventually get good enough and airplanes will no longer need jet fuel, et cetera. Is part of the story that the US is going to stay on this path of the internal combustion engine and so forth, in part because we are just so blessed with fossil fuels.
Well, I think that's part of it that I think I'm just reflecting on that. I think that's part of it. It's part of what consumers wanted. I think that the notion that there would be this big pickup and electric cars hasn't occurred here in Europe. I think it's about twenty percent. Then you go to China, and of course it's much higher because not only of the price point, but also government policies of all kinds. You know, you're not going to get a license for new car in
Beijing unless it's an electric car. But here's some numbers that may not be clear. I mean, we were looking at this when we were doing our copper study, because electric cars use almost three times as much copper as a conventional car. And it turns out that in twenty twenty five, about twenty three million, twenty two twenty three million electric cars were sold worldwide compared to the entire US new car market of sixteen seventeen million new cars.
So you see that it's happened worldwide. Now a big portion of them are in China. But China is also really you know, they have reoriented their exports much more to outside of the United States than even Europe, to the developing world, and they're going to really be pushing their electric cars. But of course you do need reliable electricity supplies. If you're going to have a penetration of electric cars.
¶ Geopolitics of Hormuz: Drones and New Risks
I just want to go back to the situation in the Strait of hormones directly for a few minutes. So you mentioned initially that this was something that people thought would never happen because the stakes were so high. If around, I.
Thought they would do scenarios about it. But assume that all these things could happen.
But not that right, So I mean, this is the surprising thing, Like it actually happened despite the stakes being so high, and you know, despite the world relying on the straight for twenty percent of its oil and gas. What's your take on, like why this particular moment, Like what are the conditions that allowed the closure of the strait of hormones.
Well, I think it was the war. Here's a war in which the United States, the mightiest military was at war with the country. As somebody I heard somebody remark the day half the GDP of Belgium, but with a lot of missiles and a lot of drones and kind of leading to a standoff. And it was the moment for Iran two pounce, even though the very senior leadership was destroyed right at the beginning of the war. Clearly
they had decentralized. This was a war when you look at the amount of drones and missiles they had and they continue to have. This is a war that they had prepared for for a long time to struggle with the United States, and they seize the moment. And you know, maybe it was it's the advent of drones that was able for them to pull off saying that we control the strait, and when you shend your ship through the strait,
you'll follow the route that we tell you. And by the way, it's actually a canal and you're going to pay a toll, and the toll is going to go to the IRGC. Maybe it was the capability of drones that enabled that.
Let's say the straight reopens, but as you mentioned, you know, all cheap drones, the Shahid drone may maybe enough, and Iron will has a lot of them, and they'll probably keep We're seeing a lot of them. Maybe that is enough to close the street, even against the mightiest military in the world. Does that permanently change how the world
thinks about energy security? We see that because they were capable of doing this, Therefore we know it could happen again, right, We know it could happen down the Fuure and does that change energy planning?
Yeah, I was thinking, you know, the beta test for World War two is the Spanish Civil War, and in a sense the beta test for the new world of warfare is Ukraine. And now we've seen it played out in the Gulf with what Iran does, and I think it introduces a sense of risks that wasn't there before. I remember I was in Kuwait in January when they were announcing new policy for investment, international investment in their oil and gas industry, and it felt very optimistic time,
it felt. And you've had that excitement, you know, really the optimism around in Dubai and Abu Dhabi Vision twenty thirty in Saudi Arabia. Well, it's going to be as optimistic now. And I think there is going to be deeper thought about energy security and diversification and what kind of security premium. And by the way, also that you need to spend more money, more share of your sovereign wealth fund on defense. So I think all of those changes.
I mean, you know, we don't know what the full outline of this settlement is, if it is a settlement, but we do know that it is going to be a different world than the one that existed before the war began.
Do you see the possibility or I guess in what sense would this particular eventuality like change oil routes and markets. But if the US maintained some sort of control or input in the Strait, collecting a toll, maybe alongside Iran at some you know, at one point, I think Trump was talking about this being on the table. How would that change global oil flows? If you had a sort of like US involvement in that particular area.
Well, that would be a pretty dramatic expansion of the authority of the US. I mean, some have talked about a international authority which would be composed of Iran, Oman and the UE, which are the three countries that border
the strait, that some sort of international system. But I think also that for the Gulf countries, for Saudi Arabia, I don't think it's tolerable for them to be paying a toll to Iran and having Iran have that domination over supplied and having those funds that they pay go to the IRGC, which apparently is what would be the
destiny of those funds. So I think there's things here that are just unresolved, and obviously at the top of that list is the Strait along with what Iran is or is not going to do in terms of nuclear weapons.
¶ The 'Different World': Macro Security Shifts
I'm glad that you said there's going to be a different world regardless after the war, because thank you for giving us the headline that we're going to use to run this episode. Always nice to get a nice, clean phrase like that. But what else could we see in this different world? Maybe from the you mentioned how the golf regions would react or maybe completely find it unacceptable for Iran to take that toll. But what else do you see as some of the potential fallouts in this
different world after what we've seen. I liked what you put a beta test to. I mean Ukraine may have been a beta test for this this I don't want to be dark, but we see the incredible power of drones here. What else do countries do for their own energy security in this different world?
Well, one is drone capacity. And you know a year ago we heard that Ukraine was told they had no cards. It turns out they do have cards. Which is there no country is more experienced in terms of dealing with drones, And there's the President of Ukraine in the Gulf doing drone deals with those countries to give them protection. I think there are other consequences too. I think that the I guess we'll call this the hor Moose crisis. It
sounds like the Suez crisis, the Horrormones crisis. But I think it's also accentuates really a crisis for NATO, which really began with of course well it has years in the making, but over Greenland, and you know, now you have the Europeans talking about a NATO without the United States, and so I think the relationship there's been less focus on that. But I think that's one of the lasting
questions that come out of this too. You know, one thing that you don't see, you don't think about unless it's not there is trust, and trust has been eroded things that become more transactional and yet to solve. Really to deal with global energy issues, you need kind of global cooperation. That was a very fundamental idea that led to the establishment of the International Energy Agency as a way to coordinate so that you don't have sort of bruising competition among countries.
If I could ask you to put your sort of macro hat on for a second. If I think about the current world, you know, it seems like one where people are going to be more focused on energy security. Maybe they're going to be building out their own production capacity, their own stockpiles of oil. They're probably going to be increasing their defense budgets. Maybe it's also a world where smaller powers, because of drones, are able to mount their own offensive campaigns and sort of hold the line and
create their own choke points in different geographies. When I think about that world, it strikes me as inherently inflationary. Does that seem to be the case for you? Is there a new term premium that comes about? I guess because of everything that we've just seen in the Gulf.
I think you're absolutely right. I think it really began. You know, what drove the incredible development of supply chains so complicated. I remember looking at one for automobile parts that look like a bowl of spaghetti as the fact that it drove down costs. It was all about efficiency and increasingly security, predictability, reliability, resilience has come to the fore in it. And I think, as you describe, that
is going to be even more true today. So spending more money on defense and trying to localize production, build security, and that's inherently adds costs that we're not there. It's reversing a trend that had been decades in the making. So I think that builds it in.
¶ AI, Recovery, ESG's Future in Energy
You know, obviously the AI industry needs the energy industry or it needs energy expertise, and so either it'll be working more closely in partnership with companies. It'll bring some of it in the house. When you're down in Houston, do you hear anything about the reverse in terms of how AI is going to change the change energy, in terms of the usage of artificial intelligence or robots in terms of production and mining and all that.
Well, absolutely certainly we had a big mining track there and more of that now. Robots, by the way, are also copper and cant which is goes back to this whole question about this kind of potential gap and copper supplies that you need for electrification. Again, supply chains back on the table in a different version. But of course the question there is what does it due to jobs?
What is it due to efficiency? And I think every CEO was talking about how we're applying AI in all these different cases in our companies and probably there's the same anxiety about jobs there what the future of work will be that you see generally reflected and we'll probably hear more about as we go into the November midterm election.
You know, there's a part in Landman where they're they're at an oil they're in an oil industry gathering or something, and they see a robot. One of the providers is there. Show it's like you can replace some of your workers with robots. But also, as a to Daniel's point, after we build humanoid robots, probably the first thing that they'll be used for us to go into the copper minds so that they can reproduce themselves and then build more robots.
You know, that would be don't even think they have to be humanoids.
I think I think that I believe that's the movie script that you're with right now.
I see the thing is, Joe, if you keep talking about land Man, I'm never going to watch it because all those give it all. Like I know, I do think there's a real.
Thing that makes sense though, Like it's going to be all about the copper to keep building robots in the national security, So what are you to do?
I think I see your movie with the robots go down there and they're reproducing themselves.
Yeah, they got to get that robots.
Yeah. Okay. I think there's one other thing that's important to talk about, which is, you know, assuming that we are going to go into a stabilization and a more ceasefire, et cetera, how long does it take to actually recover from this? And I think this goes back to Tracy
to your comments about inflation. It's not going to be This is not something that's solved overnight, and at least it will take probably if peace breaks out, you know, maybe a couple of months before the oil markets are back in position, because remember the last tankers had already
left and it had docked from before the war. Inventories have been run down, so and that captains have to be sure and their crews have to be willing to go through the Gulf, and so it's a couple of months before the oil market starts to get you know,
get back into balance. And then I know one of the CEOs said that if you look at the overall disruption including petrochemicals and everything in the destruction of refineries, it might be as much as two thirds of a year before things are really cleared up and back to normal, So it isn't there's no light switch here, and so that will be reflected in prices. Yeah.
So, just going back to AI and electrification for a minute, I mentioned in the intro that one of the things that's different to today is the almost complete absence of ESG investing in today's world. So we used to hear so much about it pre twenty twenty, and I got the sense maybe this was a bit of advertising, but you certainly got the sense there was a lot of money flowing into ESG funds for green energy or socially beneficial programs or whatever. You do not get that sense
today at all. Is there a possibility though, that ESG sort of gets rebranded, either under an energy security umbrella or under a sort of AI electrification umbrella and we start to see capital flow into it in a meaningful way.
Yet again, Well, I think I think that's a very reasonable expectation, and I think we'll see even the tech companies still have their net zero objectives, so they may be using gas, but then they'll be looking to invest in renewables as well to show that they're net zero. So one of the things that we've got to get used to in the United States is to have these one hundred and eighty degrees swings from one administration to another.
And I do see that people one way, that people kind of investing in energy but still maybe have ESG in the back of their mind or concerned about it. You're rebranded as infrastructure, and then you're not investing in energy, you're investing in infrastructure, and infrastructure generally considered a very good thing to invest in as long as you get a return.
¶ US Energy Power, Iran's Enduring Role
You know, we've mentioned some of these big, mega trends that the war has brought to light, including obviously the resource nationalism. Is the potential for US l G exports is that tapped out? Like, are we already going as fast as we can to build out that capacity or plausibly, is there an even further a higher gear that that could go into.
Oh, there is much additional capacity in process that will Gutter has a very big expansion plan, but we'll see the US coming on with it. If we'd been having this call, you know, if we're in January, of course and looking out on twenty twenty six, the big concern would be is there going to be too much LNG capacity and market. But there is a concern too about demand destruction. Will people feel as confident about it, you know in Southeast Asia gone back to coal, or will
they push in other directions renewables. But I think still we expect, you know, roughly that by twenty forty the LNG market could be fifty percent bigger than it is. But of course that market has to be there, and it has to be at a price that people are willing to pay incompetent. And it also means I think countries, and this is a question. There are a lot of Europeans at Sarah Week who were there about tying up LN supplies long term and wanting to have those supplies.
But you know, there's always the question of you know, wanting to be sure that the US is a reliable provider and you're not going to see something like the Biden administration where they'd put a freeze on energy. But the US ellen G is by far the largest supplier now and with part of Gutter really damaged, at least for a few years out of it be even more reliance on US llergy.
You know, I have another question, So the US is just such an energy powerhouse now, with both respect to oil and gas obviously, and we're oil independent, although I know these things are technical because of refining capacity and
so forth, but we're an oil powerhouse too. I'm just sort of curious, however, like costs in the oil fields are rising, is US oil self sufficiency a guaranteed thing for decades to come or would it be plausible with shale decline, ray and rising domestic costs, et cetera, that the US ever like sort of returns. So I don't know what it looked like in the nineties or something like that, Like how guaranteed is our oil security? Just because we've had these sort of twenty really good years.
You never want to say anything is for sure forever, because things really do change any even I think tracing your remarks at the beginning about how the world looked in twenty nineteen and here seven years later, the world looks very different, so many changes could happen. I think
there's been the general view and this. You know, there was a debate really at SIERA week among the CEOs about shale that question, some saying well, it's plateaued or going to plateau pretty soon now, it's platawing at a very high number, I mean almost fourteen million barrels a day and maybe going a little higher than that. Others say, no, technology is going to unlock the recovery rates now like seven percent, and if you can get it to ten
or twelve percent, it will go on longer. So I think it's at least if we look out at a few decades, the US will continue to be a big producer of oil in as something dramatically changes, and even longer that we have very abundant gas forever. I you know, things can change, policy can change. You know, if you have a Bernie Sanders administration some day, you know it will be a very different picture than what we have today.
Again, going back to the Straight of War Moves and your book, I looked up how many times you mentioned the straight of War moves in the prize, and it actually wasn't that much. It was like just four or five times. But then I looked up how many times you mentioned Iran, and it's like five hundred times. You know, Iran is really central to the history of oil, and so you would say the situation is like very central
to our thinking about oil. What's been most surprising to you in you know, watching these events, historic events really unfold over the past month or so.
Well, I feel what I'm struck by is the continuity that the Iranian oil workers went on strike in nineteen seventy eight, and that was the beginning of the Iranian Revolution and then the Second Revolution where the Islamisist captured the whole system and it's chanted death to America. So in a sense, it's like this war has been brewing
for forty seven years. But you know, it is interesting because of course, you know, oil was discovered in then Persian Iran in nineteen oh eight, and Winston Churchill made the decision to convert the Royal Navy from coal to oil, and it was going to be dependent on Iranian oil. And in Parliament people were saying, you're going to be turned it on Persia. That's very dangerous, and he came up with well, first of all, he said, the prize of the venture is world mastery itself, and that's where
I got the title of the book from. And then he said, the basic axium of energy security, which is on variety in oil, is variety is the source of safety diversification. So that continues to be the principle, even though at that point he was making the Royal Navy very dependent upon Iran Persia. But so it is. You know how central Iran has been to the oil story since nineteen oh eight, and here it is today, We're in twenty twenty six, and it is still central. It's
not the large producer it was. There was a day when Iran and Saudi Arabia vied with each other to be the biggest producer in OPAK. But its ability to influence what happens in the entire Gulf and to shut down the Gulf shows that it too has a form of mastery, which it has exerted with drones and missiles.
¶ Drone Warfare and Podcast Wrap-up
Yeah, for sure. I realized. I actually have one more question, which is are you also watching Landman Down alongside your.
Well, yeah, I listened. I watched it, and there was that famous episode at the wind turbine. The hero got in an argument with the ell lawyer from Houston. Yeah, yeah, the wold lawyer. That's right about how everything, including everything she was wearing, was made an oil product. And I
thought that was really interesting. But then I stopped watching it because of the subplot got a little sidetracked, but then I started watching it again, So now I'm not up there with Joe, but I'm going to catch up with it because, you know, I got to find out how the oil industry really works, and what better way to learn it by watching Landman.
You need to ask for a cameo. I think they should you Know?
In season three they really should you Know has a cameo in it. The owner of the Dallas Cowboys who like comes There's like a scene where like he comes in the really important people, like yeah, exactly. He talks about like the first his first oil lease or something like. She tells the story about I think his daughters were to college and like paid for it by like doing an oil lease like around where their dorm was or something like.
I don't know.
It's really good, but I think, like I am, we're putting this out there in the world. That Taylor shirt.
Would you put a recommendation in me?
Now the Taylor Sharton needs to have, you know, it needs to happen. This was first of.
All, Taylor Sheridan also needs to come on all Bots.
But this is the scene. Okay, the scene is at Sero Week and it's you interviewing the head of M text Oil, because that's the that's it's Dan, you're going to interviewing the CEO of M text oil or what we're actually billy about Thornton. I don't want to give a spoiler. If if you ever got to the very end maybe about expansion plans live on stage, that would be such a what they call an easter egg for oil nerds to see. Okay, yeah, I'm putting that into the world. Okay, this episode, Okay.
I'm all on board with it, and if you could just make it happen.
This is this is We'll try, we'll try.
I know your show is very influential, but this is going to demonstrate the true past.
Oh god, okay, so we actually need to make this happen nowt okay, Dan, that was fantastic as always, really appreciate you coming back on all thoughts and fingers crossed on the landman cameo.
Thank you, great to be on with you. Vote, Thanks a lot, and we'll see how it all uncold.
Joe, that was very fun. I really hope you're gonna get like, if there's anyone great, Yeah, that would be fantastic. There's a lot to pick out of there. I mean, one thing I thought was that was really interesting just in the context of geopolitics, was the point about the drones and the idea of like this new technology being an enabling factor in allowing like some powers to assert control over areas that perhaps would have been much more difficult to assert control over before.
Sometimes while we're doing episodes, you know, like I'll like browse on my computer and like look something up and mental Wikipedia page twenty eleven Iran US RQ one seventy incident. Do you know what that is? No, it's when Iran captured a Lockheed Martin RQ one seventy Sentinel on mandarial vehicle, and it is believed that this is a pivotal moment in being able to reverse engineer the technology of that drone.
Interesting that then became an enabler of the Shiheid one ninety one, and that you know, this idea, it's like, are we seeing like sort of the beta tests for World War three here, or beta test for war starting
with Ukraine? This there's like an incredible leveler of the playing field or the ability of a non lesser powers to inflict incredible to put up an incredible fight in some respect, you know that incident in twenty eleven could be like sort of like a key moment in history that doesn't get enough, get enough attention.
Wait, since you're quizzing me on history, yea, even though it's recent history. Which oil company is descended from the Anglo Persian Oil National? I can't remember the exact name, but Iran State National Oil Company? What is it now? B?
Yes?
Okay, well away I did yeah?
Yeah?
Did I say Anglo?
Did you said Anglo? So there's like our al star from my Oh yeah, I.
Totally gave it away. Yeah, I'm gonna have to come up with a better question. All right, Well next time, next time, shall we leave it there?
Let's save it there.
This has been another episode of the Authoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
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