Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Wisenthal and I'm right, Tracy Trivia time. You already know the answer. I know the answer because you talked about this yesterday. But but prior, okay, okay, prior to yesterday, yes had I asked you, do you know the fastest GDP growing country in the world, would you have known the answer, I would have said, wait for it, Guianna. Really did you really know that? No, of course not. But now that I know it, I can't lie about it.
I can't reverse engineer my lack of knowledge Guiana, which is kind of surprising, you know, relatively unknown South American country. People don't talk about it that much. People do not talk about it that much, but it is the fastest growing economy in the world. I think it was like they had a year of like for GDP growth or something like that recently. But where people are talking about Guiana a lot more specifically is in the energy industry.
In the oil industry specifically, there's a lot of oil there and a lot of oil being discovered all the time. Like I think, you know, we talked about us supply a lot on the show. But outside the US, I think like almost all the oil is being discovered in Guiana these days. Yeah. I actually saw a tweet in the course of this research saying that since one out of every three barrels of new oil discovered has been
in Guiana. And of course there's a lot of interest in it right now, not just because it could be a potential source of additional crude at a time when the world seems to really need some extra oil, but also because it's the sort of new player in the market. Right It hasn't necessarily declared an allegiance to anyone country or anyone group of oil producing nations. I'm thinking of OPEC in particular, of course, and so it's sort of like it kind of feels like it's up for graps. Yeah.
So when we think about oil, we talk all the time about what's going on in US production. We talked about OPEC, talked about OPEC plus including Russia. But here is this new entity and potentially could be very significant, and so it readsones all sorts of interesting questions. What's it going to mean to the global oil market and what are you know? Okay, the incredible GDP growth of Guiana right now, how sustainable is it and what is the best prospect for the sort of oil ridges to
really translate into meaningful economic development from them? Right? So this is something I find very interesting because when we think of a lot of oil producing nations, or we think about countries that are blessed with lots of resources, we automatically start thinking about something known as the resource curse. So even if you have a ton of valuable things that the rest of the world really wants, it doesn't
automatically translate into really good economic growth. And in fact, over the course of history, a lot of countries that have been blessed with natural resources have experienced subpar development. So the question for a country like Giana is cannot avoid the resource curse? And also in an environment where we're talking about commodity shortages, oil and gas shortages, things like that, does the resource curse still exist? Maybe things start to change now, Yeah, that's a great that's a
great question. And then of course, just how successfully will the country be in developing its own resources, Because you can have theoretically abundant resources, but it takes skill and it takes some sort of you know, basic you know, a certain like their degrees to which how well a country can exploit their own natural resources. Anyway, I'm really
excited about our guests. We're going to be speaking to a historian of oil who's going to help us sort of contextualize and understand what's going on in Guiana and in the oil market more broadly. We're gonna be speaking to Gregory brew. He is a postdoctoral fellow at the Jackson School for Global Affairs at Yale University and the and he is the author of two forthcoming books on oil and we'll get to those, but let's bring him in. Gregory, thank you so much for coming on the podcast. Hi Joe,
Hi Tracy, thanks so much for having me on. Yeah, really excited to chat with you. So let's just start. I mean, like, outside of a few conversations about energy, you don't hear much people talking about the fastest growing economy in the world Guiana. But how big of a deal are they and these ongoing new discoveries that keep being made there in terms of the oil market. Yeah, So I think the statistics he throughout just a moment
ago is accurate. I think the last two years, Guiana has an access of GDP growth, which is obviously just astounding, it's incredible. Yeah. And the other statistic which was noted was, Yeah, since one out of every three new barrels that have been discovered worldwide have been discovered in Guiana, specifically off the off the coast and offshore off were blocked. So Guiana has been, I would argue, one of the most sort of exciting oil stories of the last five or
six or seven years. And it's really where a lot of the attention is on UM when you get outside of the United States, when you get off of the shale patch places like the Permian or the Bakin or Marcella shale fields, Guiana is really where the action is, especially for you know, for the companies that are involved there like Egson has Shale Totel. Yeah, full disclosure. I think I got that stat about UM the oil barrels one in every three oil barrels UH discovered having been
in Guiana. I think I got that from your Twitter account, so from Bloomberg. Yet you know I'm not holding those bets very circular. Yeah, all right, but actually so I have a question on this. So I believe the oil Indiana was discovered in twenty fifteen, and you already mentioned that most of it is off shore, maybe all of it is off shore. Why did it take so long, Like was there new technology developed that made those oil serves viable or did no one know that they were there?
Because you know, I think about its geographic location. It's not that far away from Venezuela. We know Venezuela has oil, so why would we not have assumed that maybe Kean it does too. Yeah. Absolutely, I think it stemmed from three sort of core causes. U. The first was the government in Guiana got interested in opening up areas for oil exploration around two thousand to two thousand three, so there was a local sort of policy change that opened
areas up for exploration. I think there was a technological shift, like obviously deep water and offshore oil drilling has become much more advanced in the last twenty thirty years. You're able to conduct more sort of intensive seismic geological surveys, so finding oil is a little bit easier. Um. But it was also just a function of majors like Exxon.
We're interested in searching areas that a companies other places hadn't really looked at, and Guiana was you know, something of a of a new area, but it did take a while. I think eggs On, which is sort of the major player here when you're looking at the companies that are involved down there. Exson started looking offshore Guiana in about two thousand and eight. Uh, and I think you know, drilling started an earnest in, so it took a while and then you know, really started coming on in.
So it took a while. You know, as we all know, there are pretty long lead times on greenfield oil exploration production operations, and Guiana was no different. Can I ask just one more sort of process question. But when we say that Exon is the major player there and they decided to start exploring, how does it actually work. Does you know an oil company comes to a government and they say, hey, we think there might be some oil under the ground or offshore or wherever. We're interested in
exploring it. And then they start doing that and then they get like a first mover advantage before other people start coming in, or do they get exclusive rights. How
does it work? Yeah, that's a great question. So you know, historically companies like Exon, you know, the big international companies, they have the resources to do this kind of exploration because they can go to a country like Guiana and say, you know, if you give us a concession, if you give us rights to an offshore or an onshore block, then we'll, you know, we'll pay a royalty, We'll give you a sheriff the profits once we've recouped our investment. Right,
so we'll put up the money, will search. If we find something, you'll get a piece of it. But if not, then we're really the ones who are on the hook here. The government doesn't really have to put up much upfront. The company is taking on the risk. Um as far as the offshore fields are concerned. Exons down there working in a consortium of companies along with hash Hess, Total Shell, and that's you know, that's just a way of spreading
the risk around, right. A big even a big company like Exon, doesn't want to take on all the risk for a big offshore operation like Guiana. So I think the stats, I mean, I think it's something like a thirty five percent share is what Exxon has down there. I might be a little bit off on that, but as far as how it's splitting things up with the government, Exon pays a two percent royalty and profits after recouping
the investment. And now that they have you know, now that they have done, they've earned back the money that they spent exploring and drilling. Both Eggson and the government of Guiana are starting to make a significant profit from
the off shore operations. So I've seen some stories and I'm not exactly sure what's going on, but is there some thought within the government there to just set up a state owned oil company and cut out these international majors because it's still like their oil they set the laws, Like, what is this sort of stance currently in terms of, uh, the sort of future of this relationship. I guess i'd
put it right. So the relationship is still fairly new, you know, We're operations have only really been on going for a couple of years. Guiana is a fairly small country. It has a population of about eight hundred thousand people. I think a fairly small, underdeveloped economy outside of the
oil industry. Uh. And I think as far as setting up a state owned oil company, I don't think the government is there yet, but I wouldn't be surprised if, you know, if momentum started to build towards that because you know, if you look at history, if you look at how uh these things have gone in places like Venezuela, Iran, Iraq, Saudi Arabia. Generally speaking, for foreign companies, very often American companies.
They come in, they put up the investment, they do the exploration, they start production, and within a few years a decade or so, the local government has built up the resources, the technical know how, the proficiency that it needs to set up a national oil company and to start thinking like, hey, why do we need these foreign companies to do this. We can operate this industry ourselves. Then you start seeing momentum towards nationalization or taking a
more significant share in the operation. I don't think that's started yet, but I wouldn't be surprised if the momentum builds towards that in the next years. So we've been talking about corporate interest in Guiana's oil. What about I guess interest from a sort of sovereign strategic political level. If Exxon comes in starts developing oil, Exxon is an American company, does that like automatically equate to suddenly Gianna is going to be America's new best best friend, and
maybe a sort of offset to UM. You know, OPEC countries in Saudi Arabia, which doesn't seem to be playing ball with the Biden administration at the moment. I'm not sure if there's really much focused on that quite yet, because it's still fairly early days. UM I think, you know, I think there is often an association that a company like Eggson works as an arm of US for policy,
and that generally really isn't the case. Ex on Mobile, other U other major energy companies aren't in business for themselves, and they see operations like the operation in Guiana as a commercial operation. I don't know if the US government sees it that way. I don't know if there are discussions inside the Biden administration about getting closer to Guiana, trying to form a closer relationship with an eye towards developing you know, as you say, sort of relationships relationships
with non OPEC oil producers. But again, I wouldn't be surprised if we started seeing conversations like that. If the US relationship with OPEC continues to get frostier, continues to get more antagonistic, I think there will be more interest in that. Again, you know, as a historian, I'm always seeing parallels in history, and this is something that occurred in the nineteen eighties, when the US was very interested
in moving away from reliance on opec. It formed closer relationships with places like Canada, Mexico, Norway, the United Kingdom. These sources of non opec oil seem much more important. So it's entirely possible that we could see something like that happened between the US and Guiana in the years ahead.
So let's stick with the history theme your specialty. Is there another country throughout history that sort of has a parallel where for a long time, maybe people weren't thinking of it as a power player, and then it emerged very fast. And so when you see the rise of Guiana, does it make you think of anything else? Sure? I mean, you know, in preparing to come on today, I did
I did some background reading. I refreshed myself a little bit on the history of things like the resource curse, you know, the Dutch disease, the paradox and plenty all
of that. And you really do see stark parallels between what is happening in Guiana and what happened in Venezuela, Saudi Arabia in the nineteen fifties and sixties, these were relatively you know, you go back sixty seventy years, go back to say, right the end of World War Two, Venezuela, Saudi Arabia fairly small countries economically, fairly small populations, but as far as their footprint geo politically or or you know, sort of geoeconomically, they became very important, very quickly to
the global economy because of their status as major oil exporters. So as far as where Guiana is headed, you know, as the operations continue to expand. Right now it's producing about three thousand barrels a day. Within a year, it could be producing a million. Within three or four years, it could be producing two million. I mean, it had to keep expanding the estimates of proven reserves as they find more and more oil, so you know, things could
just keep going up from here. So I think there are definitely parallels between where Guiana is and where these sort of more mature or more sort of older petro states like Venezuela Saudi Arabia where they were sixty or seventy years ago. In many ways, history does seem to
be repeating itself. So one thing that has happened historically as well, is we do get these periods of excitement about a new commodity producing nation, And the one that I can remember most recently was Mozambique and natural gas, and everyone got really excited, Oh, they have all these gas reserves and they're going to be a new powerhouse on the global commodities markets. And you know, fast forward
many many years. I was reading today that Mozambique is going to send its first l en G shipment to Europe relatively soon, I think this month. And that's after years and years and years of people talking about Mozambique being the next big gas exporter. What are the sort of challenges or potential problems that can come on stream as resource production gets ramped up? Like why do we have these periods of excitement only sometimes to be disappointed? Right? Absolutely, so,
you're absolutely right. You know, very often when these big fines are made, when these big discoveries are made, there's an intense early period of very high expectations. Right, where could this lead? You know, how could this develop and do an even larger find How do we transform reserves into exports? Right? Because you need to manage the resource in order to develop it, in order to in order for it to grow turn into something that could be exported.
And I think in the case of Guiana and other early stage resource rich states, the question really comes down to local government, local resource management, and the relationship between the local government and foreign companies. So in some cases, I'm not too familiar with the Mozambique case, but in some cases there's a fairly early pushback from the local
government to foreign companies. You see expropriations, you see nationalizations, you see a local attempt to seize control of the resource at a very early stage, and that can sometimes lead to resource mismanagement. It can lead to capital being drained away or in some cases being sort of scared off, and very quickly the expectations, the excitement drains away, and you're left with UH, an industry or resource that can't
get off of its feet. And I think right now, in the course of doing research for this UH, you know, for this appearance, I was reading a little bit about the Guiana government's attitude towards Exxon, and they're interested in maintaining a close relationship with Exxon. They have a lot of grievances with Exons approach to things like royalty and tax payments. But they're very interested in maintaining this relationship because they want the resource to grow, because they want
exports to come on. They're worried about following the footsteps of a Mozambique or even in of a Venezuela, where an oil and the oil industry is you know, almost entirely collapsed in the last six or seven years as the result of various state management policies and that sort
of thing. So, you know, there is this early period of excitement, but where it goes from here depends in large part on how the local government decides to act, on the kinds of policies it tries to implement, and on how it manages its relationship with the big foreign companies. So I have two questions. The first one is kind of short, but when we talk about, okay, maybe at some point Guiana could set up a state owned oil company.
Does does the existence of a state owned oil company preclude the possibility of Exxon having a significant role or could you have a state owned oil company in name but still outsourced a lot of operational decisions to a
multinational with significant expertise. Yeah? Absolutely, so generally how this has gone is, you know, after the initial discovery, after the early stage investment where you mostly have foreign companies operating the industry, a national energy company is established and then it proceeds to mature over the course of you know, several years and decades, several decades. It develops technical expertise, it develops a professional workforce, and at some point it
obtains a share or participation in the general industry. So it operates in partnership with companies like Exon. In some cases there's a total exproke aation, there's a total nationalization, Exxon is kicked out, the operations are taken over by
the state oil company. But in other cases you do see it sort of a transitional stage where there's more partnership, there's more participation between the state owned energy company and the foreign international So that does happen, and I would imagine, you know, where the Gayana government currently is and where it wants to go. I think in managing this resource, I wouldn't be surprised if that's the course they decided
to take. Establish a state owned firm, you know, gradually enter the operations take on an increasing share and gradually nationalized the industry, keeping a role for uh, you know, foreign companies like Exxon to continue to grow the reserve, to continue to explore, and to take advantage of the foreign technical expertise and the foreign capital. Right so, even if even as they develop, you know, greater resources and greater earnings, they're still going to be looking for foreign
capital to further develop the industry. So what does histories say about the countries that have done this best, not just in terms of building out their domestic production, but distributing it widely so that you know, you don't have the sort of resource curse Dutch disease phenomenon. What are the best examples of paths the countries have taken so that the benefits really do accrew across the country and you have like widespread economic development. Absolutely, this is the
big question, right There are a few good examples. Um. The classic example that people point to is Norway. Norway discovered offshore oil and gas in the late nineteen sixties. By the nineteen nineties nine eighties, it was a major exporter. It's still a major exporter today, and yet it doesn't
seem to have suffered from governance issues. It doesn't seem to have suffered from, you know, widespread state corruption, and it's been able to develop its resource efficiently, it's been able to distribute revenues in an acceptable and sort of equitable way. Other examples would be the United Kingdom, which discovered oil in the late nineteen sixties in the North Sea,
became a major exporter in the nineteen eighties. Um, but there really aren't many, you know, in many cases where oil is discovered, uh, it doesn't generate the kinds of viable, positive economic results you want to see. And there are many reasons for that. And one of the reasons for it is that very often, and this is this is some of the one of the more troubling aspects. Very often the resource is controlled and dominated at an early
stage by foreign capital. So foreign companies, you know, like they're interested in developing oil, they're not very interested in general national economic development, right. What they want to do is developed resources that they can produce profit frums to
return to their shareholders. So in states like Guiana, or looking back into history, states like Iran, Venezuela, Saudi Arabia, in early stages of the development of oil industries, where you had an oversized role being played by foreign capital.
You had these problems around governance, you have these problems around corruption and a lack of adequate economic development appel appearing at an early stage, and you know, once they had matured, once they had become sort of set in stone, it was very difficult for national governments to correct them.
So the problem of you know, what role foreign capital can play in this, you know, in the so called resource curse, is something that I have a great interest in as an academic, as a scholar, but I think it's also something that governments like Guiana are conscious of.
You know, how do we manage this resource adequately on a national level while still retaining the support of foreign capital that we need to develop our industry, knowing that foreign capital may not share our same political, economic, and social interests in the development of that resource. That's a huge question that has faced states throughout the point in century and faces Gianna today. So I realized in the intro, I said, well, maybe things are different and the resource
curse doesn't exist anymore because everyone needs boil. But actually actually you could very easily argue it the other way around and say, since people need more oil, prices are higher, you're going to get even more interest in the scarce commodity. And I have heard a really basic analogy for the resource curse. I've heard people compare it to a lottery.
So the same thing that happens to someone who wins a big powerball prize, you know, rarely does that actually lead to a good outcome for them in terms of standards of living. I would be different from me to me, I'm sure we would all be very everyone listening to the podcast. I would also I would also not letting the same thing. Okay, great, we've established that. But does an era of resource scarcity, does that maybe make the danger of a resource curse more acute? That's a good question.
I think it can, and I think part of the reason that it can is that the problems associated with the resource curse often become worse if the price of said resource is perceived to be high and is expected to rise in future years. Right, So the temptation to develop a dependence on this resource, it's very easy to to accept if you think like, well, this is selling.
You know, this is selling for eighty dollars a barrel now, But as it becomes more scarce moving forward, it's going to sell for a hundred and hundred twenty dollars barrel in the future. We would be fools not to not to grow this industry, right, we would be fools not to invest in it. So I think the expectation of scarcity or the expectation, let's say, of high prices, can encourage the development of the resource curse. But that leads to you know, even bigger problems, which is this the
problem of volatility. Right, if your national economy is based around an export that you hope will retain its value, then you're surrendering your economic agency to the vagaries of a market. Right. A producer, even a prolific producer like Diana, can't be expected to, you know, exert influence over the global price of oil at least, you know, the outside of a very marginal impact. They're essentially surrendering their economic
fortuns to the global oil market. So that is, you know, that's that's sort of inherent to the dilemma of the resource curse, the dilemma of resource exporting nations like Guiana, and I imagine it's going to raise some difficult questions for Dian and bomb makers, policymakers as they sort of continue to grow their center national industry. So, since you mentioned the boom bust of oil, I think that's a good opportunity to sort of broaden things out a little bit.
But before we do, what is the prospect of a future relationship between Guiana and OPEC. It's not currently a member of OPEC? Could it be at some point in the future. What would have to happen for it to become one? And were it to become a member of OPEC, like, how big of a player with it? Like put it in context of where it would stand versus some other exporters, other big players. Right. So an important thing to know
about OPEC is it's membership has always been changing. It was founded in nineteen sixty by core members Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela. It was later joined by countries like Libya, Algeria, later countries like Indonesia, Ecuador, um, you know, so it's broadened its membership over the course of the last several decades. In some cases members have left, you know. Cutar is no longer a member of OPEC. So the membership of
OPEC has been changing. For Guiana to join OPEC, it would need to develop what we discussed earlier, which is a national oil company. UH, it would have to develop the national oil Ministry. It would need to have a slightly more advanced infrastructure around governing its resource because an important, you know, an important part of how OPEC works is the management of loyal not only on a national level,
but on an international level. UM So I wouldn't you know, I wouldn't close the door on Guiana joining OPEC at some point in the future. I think we're some ways away from that happening. I think we're to join now. This is of course contingent on how guiana oil production developed, but were it to join, Guiana would be a fairly
important member of OPEC. Were it to reach a point where it's producing and exporting upwards of a million, even a million and a half barrels a day, that would place it, you know, that place along lines of countries like Iraq, Uh and Iran that are exporting that much. And again, as Guiana's reserves grow, which is an even more important question. Right now, it's reserves are estimated around eleven billion barrels, but that number has grown quite significantly
over the last several years. So as its reserves grow, then its role within the international oil economy and its potential role in OPEC could become even more significant. Can you remind me why can't the US join OPEC? Is it um like price fixing law something like that. I'm just thinking the US has an interest in smoothing oil booms and bus so you know, maybe maybe they can join OPEC too. No, I know they can't, But why is that? This is funny the meaning that Joe referenced
that we were at last week UM. I gave a little talk about oil policy in the oil dilemma facing the United States, and someone in the room asked, uh, you know, how does the US solve its problem? And I said, well, the US can joan oil Oka that that was selves a problem. No, I think there are obviously a number of reasons. Antitrust law is one of them. UM. The other one is, uh, you know, sort of a basic question of oil policy. The US has no national
oil company. It has really no national oil policy. It has hundreds of private companies that manage oil resources porting to you know, commercial incentives, market incentive. UM. In the past, the US has had production management policies that in many ways mirror went OPEC was open like inspired by the Texas Railroad Commission, Like, didn't Texas sort of invent OPEC?
Yeah no, Yeah. Abdullah Tariki, one of the founders of OPEC, imagined a pro rantioning scheme by which Peck could manage global oil production, and he modeled his scheme on the TRC, on the Texas Railroad Commission. I took a class in college on the history of Texas oils, and that the one fact that I remembered. I don't remember anything else about the class, but I do remember that the Railroad Commission was like this sort of uh, you know, inspiration for OPEC. So I'm glad I got a chance to
use that professionally. It's the famous, the famous Texas institution with the funny name that does that does something completely different from what it sounds like. Yeah, that Texas Railroad Commission used to manage Texas oil. Um. But yeah, I mean the US, the United States had mandatory import quotas, it had progression production in Texas and the whee Ciana and Oklahoma. You know, he used to have a lot of oil management, oil production management, policies that it no
longer really has. So I think, you know, the question of whether or not the U s could join OPEC is sort of neither here nor there. But could the US and OPEC work together on managing the global supply the global price of oil. That I imagine could be a possibility. It would take you quite a lot to happen. It would take quite a change in the relationship between the United States and OPEC, but I could certainly see it developing in the future as the US grows, if
we were more important oil exporter oil producer. Right, So it's not really about whether or not they could join OPEC, but the fact that we're even talking about it kind of highlights this ongoing problem for America and maybe that maybe that's our queue to get back into the boom
bus stuff. So we have spent the better part of this year talking about ways to bring down oil prices different ways, whether it's oil companies just ramping up production, or whether or not it's something um more, I guess complex, like the derivative solution, the hedging solution that Scanda proposed and successfully um you know, got accepted by the Biden administration. But maybe we just jumped to the big question. Is there something about oil that makes it inherently cyclical? Is
this always going to be a cyclical industry? Are there limits to the extent to which we can actually smooth those cycles? Yeah, I think there's sort of an inherent volatility to the oil industry, and it's based on just how oil is produced. Right, And when I say produced, what I really mean is mine. Oil is in some
ways a mineral that's mine from the earth. The problem with producing oil mining oil is that you can't store it very effectively, and once you start producing it, it's hard to stop, right, So you can move through periods of scarcity and into periods of abundance or oversupply very easily, because managing production can be very difficult. Uh, you have a constant chase for revenue for profit because you need to recoup your investment. Oil is famously very expensive industry
to get into. It's very expensive. It's very costly to develop a field. But once you do develop that field, you can produce large amounts of oil very quickly, potentially flooding in the market. So historically, you know, looking back to the early days of the industry, the seventies the eighteen eighties, where in many cases the producers would take the oil that they produced from their drills and they would flood fields with it because they had no market
for it, they had nowhere to store it. Uh. You see a recurrence of this boom bust cycle throughout the history of oil. But what you also see our efforts by entities like the TRC, by OPEC and by you know, the current alignment OPEC, plus you see efforts to stabilize that boom bust volatility, efforts to stabilize the cycle. I think saying that it's sort of naturally cyclical is a little hard for me to accept because of these constant efforts to you know, moderate that that that cycle, moderate
that volatility. In many ways, the oil industry can't really function without some effort to mitigate the inherent volatility. And this was something that I mentioned to Joe last week. One of the may your problems that everyone has had to grapple with has been the return of the United States as a major oil exporter. Because of what I mentioned before, the US has no central oil and ministry. You can't go to OPEC and talk about prorentioning production control.
President Biden can give a speech where he talks to oil and gas companies, but at the end of the day, he has a very little control over domestic oil production. So this is a big problem, right, how do you manage a global, volatile, global oil market when your biggest producer has no control? Right? And I wanted to talk more about this point exactly because I think when the US oil industry really started booming like crazy in the
last decade, there was probably some optimism. They're like, oh, we're gonna like wean ourselves off of UH or we're gonna we're no longer going to be dependent on oil independence, oil independence, right, and that and that oil independence seemed like it was going to be great. And for a while, obviously the price of oil plunge, but now it's really expensive again. And so you know, even with all of the US capacity either currently producing or available to produce,
it hasn't curbed. It doesn't seem like it's done anything to curb curb the boom bus cycles and sort of to listen to you, it sounds like it's very unnatural and a historical to have a significant amount of oil out on the global market. That is not subject to some sort of curbs setting aside, like the selling of the spr like that is just very unusual to have this. I guess now Guiana would be part of this, But now there is a lot more and more oil that
just isn't part of any production management plan. Absolutely. You know, there's the US oil that's being pumped into the market. There's also a tremendous amount of sanctioned oil that's being moved through the global market at discounted prices. It's being moved through illicit market channels. You have actors like Russia, Venezuela, Iran, they're trying to evade Western sanctions by selling oil uh
through sort of illicit means. So that's creating greater uncertainty, and that's making control even harder, right, it's making mitigating volatility even harder. So yeah, looking back through history, you constantly see efforts by various state, international, or even local actors to try to control this flow. You saw efforts by major Western oil companies in the fifties and sixties to moderate production to try to make sure that supply
could match demand. And we don't have a similar structure, a similar system for managing that and the additional problem is that in the past, you know, the past thirty years, it was possible to manage supply with demand because you knew the demand was going to increase in the years ahead. And that is no longer a certainty. If anything, we're
certain the demand is going to decline. So that's making it a lot harder for private companies, but also for OPEC members to know how much they need to invest, to know how much they need to produce, because there's great uncertainties about the availabilities of markets moving forward. If anything, shortage of market is going to be a bigger problem
than shortage of supply. Imagine going back ten years ago and saying we're going to have an eavy revolution and the US is going to be this huge producer and oil is going to get more expensive because of all those things. That would have like broken so many minds, but that's exactly what happened. Gregory Brew is such a treat to have you on. I learned so much in that forty minutes. I really appreciate you coming on oddlots.
Thank you so much of us great crazy. I really I feel like I learned a lot in that last oil history is fun. Yeah, and he Gregory is a really good at talking about it and contextualizing it. But I do want to start without that last point because it is pretty wild. The thing. We had this huge US oil boom in the last decade. It become the biggest oil producer in the world, the e V Revolution, which everyone expects is going to curb demand, and yet here we are. But like the cost of gasoline surgery,
everyone was wrong. Everyone was wrong in all of the most unexpected way. That's so weird. The other thing I thought that really stood out to me was his point about how we know that the US has come online as a big oil producer, but actually they don't have a lot of ways to control production, which causes problems for the rest of the world. I mean, especially in when we have the show revolution and then prices collapsed.
We saw a lot of that, but now it's the opposite problem, right, like, how do we get everyone to actually start pumping oil? Right? And you know there's a lot of people we need to pump more oil in the US. And why isn't the White House doing more to boost domestic oil? And I don't think it's impossible to think that the White House has levers to compull
that it hasn't. But there's no national It is not like the countries where we say, okay, we're going to expand our daily quota todd thousand more barrels like that. There's just no went to be right, and telling private companies what to do is not historically a very like successful American political strategy. I think, um, that's fascinating, And
now I'm going to be following Guiana's economic trajectory for years. Well, I think the cool thing about that and was really helpful is we know that there are so many countries, as Gregory talked about, that have gone through a similar trajectory or a similar path, find a lot of oil, figure out how to manage the relationship between the domestic interests and the foreign multinationals interest So it'll be very interesting to see if, with the knowledge of so much
history of other countries that have gone this route, whether Guiana can maintain you know, there's like extremely rapid you can i'm a growth, and whether it could be high quality, well distributed growth. You know. The other thing I was thinking about, one of the persistent commodity mysteries to me, has always been Morocco and it's fertilizer reserves. I think it has like the world's biggest supply of phosphates or something, and yet it never actually seems to translate into a
significant economic boom. Let's do acc Moroccan fertilizer episode. Okay, alright, anyone know any Moroccan phosphate du Yeah, please let us know. Shall we leave it there? Let's leave it there? Okay. This has been another episode of the Odd Blots podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Wisn't All. You can follow me on Twitter at the Stalwart. Follow our guest Gregory Brew.
He's at g brew twenty four. Follow our producer Carmen Rodriguez at Carmen Arman, and check out all of our podcasts under the handle at Podcasts and for more Odd Lots content, go to Bloomberg dot com slash odd Loves Tracy and I blog there. We pushed the transcripts and there's a once a week newsletter for listeners when we talk about all the things and related topics that we discussed on the show. Thanks for listening.