California's an energy crisis waiting to happen the iea has destroyed its reputation as a neutral Arbiter and provider of realistic statistics and forecasts we're running out of such entities do you think that Israel's retaliation against Iran it is expected that could have any real impact on the energy markets whatsoever crude oil has fallen from its highs on October 7th with the WTI price retracing from $77 or barrel down to $70 today on October 17th it seems that fears of an escalation in the Middle East are receding is that true we'll examine that today prices have jumped in recent weeks amidst fears that Israel would strike Iran's oil facilities Israeli Prime Minister Benjamin Netanyahu signals to the US how it plans to retaliate against Iran's latest attack two weeks ago and that Iran May close the straight of hermuz which transports roughly 20 to 30% of the world's oil supply however Israel has since assured its allies that any strikes on Iran would be limited to military targets and Military facilities only avoiding civilian infrastructure meanwhile OPEC and the International Energy agency have revised downwards to forecast for Oil demand due to weakness in China's economy opec's monthly report said that oil demand would rise by 1. 9 million barrels per day in 2024 down from the 2 million barrels per day it expected last last month so what will happen to energy markets next will energy Spike on Rising escalations the Middle East or will a bare Market follow joining us to discuss this is doomberg headwriter of the doomberg substack welcome back to the show doomberg good to see you as always David Lynn never a dull moment as it pertains to geopolitics and and the energy markets that's one thing for sure it's just been a very volatile year for both geopolitics and energy uh like I mentioned in the introduction oil has fallen from its highs a little bit I want to revisit what you told me earlier in the year you were on the show six months ago and you said that conflict between the US and Iran or in this case us proxy Israel and Iran you could see $150 or $200 roil how close are we now 6 months later to that scenario and by the way you talked to me about this before things blew up with Israel and Iran just a few weeks ago yeah and to be clear that was not our base case that was a worst case scenario and then and that was more testimony to the inelasticity of of uh pricing with respect to primary energy Commodities we have um a bit of a bit of a unusual take on what's going down and one that we almost wrote about then decided not to but we've mentioned to a few of our friends um and hind say I kind of wish maybe we had written about it we think everything changed October 1st um we watched on Twitter like everybody else dozens of missiles piercing Iran's allegedly sophisticated air defense system which shocked us I would say that was a an earthquake a geopolitical earthquake that very few are internalizing um we knew immediately that that was a very important event so for those that aren't aware I mean you know hundreds of missiles ballistic missiles of various quality and sophistication were launched from Iran and it seemed as though many were getting through and then even the Washington Post later an article two days later conceded that you know an air base in Israel had been hit with what appeared to be Precision guided missiles uh perhaps the technology is on loan from Russia or maybe it's domestically produced in Iran who knows but the leaders of Israel now know that Iran is capable of piercing the air defense system at least the one they had on October 1st and we think that changed the game in sort of a a mutually assured destruction way because we've studied Israel we studied all countries through the lens of energy and Israel is a very small country it's the size of New Jersey with roughly the same population it's surrounded by much larger countries much more populous countries and some of those countries don't like Israel very much um and Israel because of its small size is very vulnerable um 85% of its electricity comes from five thermal uh power plants 80% of its drinking water comes from desalination facilities and the five biggest ones account for a great majority of that number so you're talking about 10 targets and two big natural gas fields that you know Supply the majority of its natural gas um W targets say if you include those if Iran is capable of launching missiles with Precision then Iran is capable of making Israel unlivable that was the conclusion we made in the moment and I think that means that Israel is not going to attack their nuclear facilities and not going to attack their oil facilities this was something we've been calling privately for yeah since the first and we saw confirmation our alleged confirmation of that earlier this weekend look by the time this publishes I could be made to look very foolish never afraid to be made to look foolish I mean our the only thing worse than being wrong is having no opinion um our view is even Netanyahu recognizes that the game has changed and in the intervening period by the way we're seeing the US rush into Israel its most sophisticated air defense system the Thad um anti-missile system um much to the Chagrin of the ukrainians that we're we seem to be um directing resources to Israel when Ukraine needs them as well but I think that's proof that something happened on October 1st that shocked people and as much as everyone assumes and it's kind of common knowledge that Israel has nuclear weapons if Iran can overwhelm Israel's defense system and make the country unlivable how is that really different than a nuclear weapon I mean I suppose it is but um that there's there's a real mutually destruction strategic aspect to this that is now on the table I think we will see a the theatrical strike on Iran um but the odds of a major energy War breaking out in the Middle East seems to have gone down on the retaliation of Iran's story Israel has said that it would limit or it intends to limit strikes to only military facilities so you are correct in your in your prognostication there I think that the worry is that things may get out of hand from there um how confident are you that things will be contained to only a tiff for tap military strike military facility strike and it won't force or incentivize should I say the Iranians to do something like closing the street of Hormuz yeah I don't so again Game Theory says that people act rationally and the big concern is that extremists on either side of both countries precipitate a cascading series of escalatory counter strikes to the point where you lose control I I don't think that's the basic case but it's not a zero probability the markets have severely discounted it um the price action in oil this week is inconsistent with the market ascribing a high probability of uh events spiraling out of control and by the way I hope that's true like nobody should be hoping for um such a catastrophe to unfold um so I hope that serer heads prevail war is always a failure of diplomacy uh there are no win in Wars they're just degrees of losers um and so we should hope for that um I how confident am I I I'm I'm more hopeful than confident sure um the market is sometimes wrong but you know you saw like I did oil Dr from you know 78 to 70 on the blink in the blink of an eye basically in the past week um because of these headlines that are coming out and I do think they're very consistent with the fact that October 1st was in fact a game changer the the title for the piece that we had sort of drafted but never published was October surprise um because we were surprised and by the way I was watching it on Twitter I'm sure you were and then to see the spin afterwards like none of the missiles got through like I saw the missiles get through you saw the missiles get through some of that film was really astonishing and that's a real game changer I think um it it landed home that the Iron Dome and the other sort of you know David's arrow and and the other Advanced uh air defense systems might not be impenetrable and if that's the case because of Israel's inherent vulnerabilities which everybody recognized look it's small it punches above its weight it's surrounded by enemies but it doesn't take many missiles to really do a lot of damage to Israel and I think as a demonstration as a capability demonstration October first was way more important than the Strategic impact of what was destroyed so what do you think Israel will do now that the Iron Dome system has shown vulnerabilities let's say do you think that they'll double down on striking Iran and its allies uh pursuing a perhaps offense is the greatest defense Doctrine look you have an enormous sort of soup of complexity going on here you have the election in in the US and the Biden Administration slash the Harris campaign probably doesn't want a war breaking out of the Middle East ahead of that election Benjamin Netanyahu Israel is is a democracy he is not a dictator he has his own political pressures internally his own scandals to deal with um he's got forces on the right and forces on the left that are angling and jockeying for various you know domestic political reasons and so it's very complex and I think I think in the end there seems to be a concerted effort to find the minimum acceptable retaliation that allows Netanyahu and his government to say they responded but not so hard that it forces another response from Iran and so time will tell uh we hope that that's that's what happens how would in theory the Iranians shut down the street of Hormuz so one thing they could do yeah I'll let you answer that I don't think I think that's a bit of a Canard I I don't think that's in anybody's interest for that to happen I think more dangerous would have been overt attacks on Iran export Terminals and so on like I I don't think it's in anybody's interest to shut down uh those Straits um I think look there's a lot of people who are long Commodities or talking their book or sort of betting on on that outcome um I I think that's a low probability event again everything we're seeing right now could come back and and come back to bite me but this my honest view that I believe right now as I'm talking to you um that I think that's a bit of a Canard is that even possible from Iran because here here's the argument you have Iranian ships potentially blockading the straight but those could be shut down or you know destroyed quite easily by uh the US and its allies Case Case in point 1988 operation pre man as the Iranian Navy was destroyed in manner of you know less than 48 hours they could also use missiles though that's the other argument they could they could in theory do what the houthis did in the Red Sea which is to deter ships from entering the red the straight of hormo with long range missiles is that you know I think that's the most likely I don't think I don't see a nation state closing down those Straits I think more a proxy armed with missiles um you know like we see in the Red Sea today right um and so I I think that's I I put that as a low probability event and again if the markets thought that was possible we would not be sitting at literally flat $70 WTI I'm talking to you um at my Bloomberg I mean I I just don't think the market is pricing that in and so um I I I that's a low probability event um that's the type of stuff that gets a lot of clicks which I understand of course I mean we're all in the click business in one way or the other but um I I don't think that's a high probability event I understand and $70 barrel uh Sol $70 a barel barel which is what we're looking at today the market is pricing in um what is their base case exactly because it was $77 uh just a week and a half ago and uh now it's gone down to basically its late September levels yeah I think it's basically the market is in equilibrium if you look at the the landed cost of liquefied natural gas in Europe at 1250 time 6 you basically get the oil price of 70 it it kind of seems like the market is saying physical Commodities are well supplied and they're putting zero geopolitical price premium on oil right now and I think zero is probably the wrong number like if you pushed me I would say the risk is greater than zero and there's probably more risk to the upside than downside from here but if piece does break out of course everything goes down because like we're well supplied in in the primary energy markets especially natural gas coal there's plenty of it um engine switching is happening at a able rate I know we've talked about that before but just yesterday in the financial times there was a huge spread about how China is just rapidly changing their Long Haul Trucking away from diesel towards liquified natural gas which is affecting demand for oil and it would be a significant headwind if we had peace in the Middle East right now so I think um you know the market is pricing in no risk um we we would prefer to fade the spike that would come as opposed to try to predict it and game it so if you see the Straits Clos and oil goes to 150 the easiest trade in the world is wait for it to pull back to 135 and then buy puts that have to strike because um shortages are always followed by gluts and those gluts come pretty quickly um and so instead of trying to predict such an outcome I think the better the smarter play is to wait for it to happen and then bait it so bottom line finishing off in the Middle East do you think that Israel's retaliation against Iran in some form which is expected we just don't know exactly what they're going to do and when it is expected that could have any real impact on the energy markets whatsoever immediately I don't think so and I think what you'll see is the description of what went down will be radically different in the western media versus the Middle Eastern media and that would be the way that everything sort of simmers down I think Israel has its handsful in Gaza and Lebanon its economy is struggling there's a lot of political division in Israel right now um there's some questioning of the wisdom of of some of these Adventures um Netanyahu is not as firmly place as as we might believe over here and so I think he himself who is a Survivor right I mean he's he's politically very Savvy I think he's been around for a very long time um he will um navigate a way to thread the needle that's what the markets are telling us that's what I believe October 1st taught us and that's our base case all bets are off if we're wrong who knows what happens some extremist comes and you know um does a terrorist attack that then leads to a series of escalations you always have to have that risk but the market is pricing that risk very low right now well let's talk about longer term Trends perhaps the market is pricing in this IA report that was just uh released take a look at my screen here I'll let you comment on this um this is from Reuters reporting on it uh the age of the age of electricity to follow looming fossil fuel Peak IA says the world is on the brink of a new age of electricity with fossil fuel demand to set to Peak by the end of the decade meaning Surplus oil and gas suppliers would drive in investment into green energy says the iea on Wednesday flaged a high level of uncertainty as conflicts and bril the oil and gas producing Middle East and Russia um basically oil Demand peing by 2030 uh at less than 102 um million barrels per day l& uh demand growth to be outpaced by capacity growth by 2030 are the key highlights of their findings what's your reaction uh the Ia is indistinguishable from Green piece or the Sierra Club in our view and their pronunciations can be safely ignored um basically this is a uh we call it wish casting um the demand for fossil fuels is infinite um all primary energy sources are additive um doomberg postul is that every molecule of fossil fuel produced in the world will be burned by somebody somewhere and local restrictions against such activities merely change who gets to benefit from that privilege um we will be burning way more than 102 barrels a million barrels a day of oil by 2030 we will be burning more coal in 2030 than we do today if there's an overc capacity for LG in the world suddenly we'll build a bunch of machines that can burn natural gas and do work for us the global South 7 billion people operate at less than a third of our BTU per uh per capita energy consumption that we do in the west they would all like our lifestyle we're not going to stand in their way um the gating function of demand for fossil fuels is production Europe for example doesn't produce anything and so what they think about this kind of stuff is irrelevant uh and so I I just think it is um it's just well I it's just nonsense the Ia has destroyed its reputation as a neutral Arbiter and provider of realistic statistics and forecasts um we're running out of such entities but I I I this um we would file this report in a polyethylene lined bin 2030 though uh oil demand to Peak I mean what core assumptions are behind that kind of forecast um a couple of fatal flaws which is um they are totally ignoring what's known as jeevan's Paradox U Energy Efficiency is going to reduce our demand no uh increased efficiency in the consumption of energy just increases the net demand of energy over time which is why when the steam engine was invented the demand for coal skyrocketed because it became easier to mine for coal the demand for energy is infinite energy is life all humans everywhere want a higher standard of living your standard of living is defined by how much energy you get to harvest All Humans everywhere want a higher standard of living like this is the greatest Mega trend of all time and why people continue to bet against it is baffling to me so no whatever we produce will burn people will burn anything that's produced and there's always going to be somebody willing to overproduce we are swimming in hydrocarbons today U we just did a piece on Turkmenistan they have the same basically the same Natural Gas resource base that the US does and they produce only 7% of what we do like there's an enormous amount of cheap energy that will be tapped there's seven billion people that live in energy poverty today that is a Infinite Source of demand for energy and it will be served and and forecasts like this which are hyper politicized uh not based in reality so the first is that you know Energy Efficiency jeevan's Paradox the second big flaw in this piece is a ass uming that demand is what drives production it's wrong it's just wrong it's just not true anybody who spent any time in Industry knows that's not true the more you produce the more people will burn okay I have here the report itself um so let's take a look at this paragraph from 2023 to 2030 so the next six years five years growth of clean power sources outpaces electricity demand growth globally by 20% under current policy settings and market conditions Renewables account for the vast majority of clean power growth to 2030 and Renewables investment setups uh steps up from around $680 billion us to $850 billion in 2030 I think that's another key assumption they're making let's address that it's nonsense I mean look at the demand for electricity just from AI alone in the US now like we're going to see an explosion in demand for electricity that will far outpace any quote unquote clean power uh capacity we bring online look at Microsoft reopening up through Mile Island and we're we're talking about burning natural gas in the US in in enclosed pods where natural gas goes in and data comes out and you don't have to connect to the grid and you don't have to worry about transmission lines like these people there's an expression for this kind of analysis which I we used to joke about when I was in Industry it works in universities this is spreadsheet dwellers who have never operated in the real world they they wear nice clothes they go to flashy buildings they go to nice parties they feel really important they have no earthly idea what they're talking about like to assume that a bunch of bureaucrats in Europe understand how the electricity Market is going to unfold in the next six years let next 50 years is is insane this this is a total waste of time begs yeah go ahead it begs the question though doomberg so we do know that electricity demand will rise over the next 5 to S years what will fill that Gap in demand if not for Renewables natural gas and and nuclear Renewables can't fill the demand so here's a big fallacy people assume electricity is electricity it's not comparing stable Basel load high quality electricity from a nuclear power plant to intermittent renewable energy and electricity from wind and solar is like comparing bananas to a to a bag of potato chips they're both calories they're both food but nobody would confuse the two for nutritional value Microsoft is voting with its feet right we Three Mile Island like the home of the great meltdown the the dagger to the US you know uh nuclear industry is being reopened not not the one that melted down but the the reactor next to it is being reopened by Microsoft paying a very heavy price price is irrelevant what matters is consistency of Supply because okay this will happen and so it'll be natural gas until we could spool up nuclear and then it'll be both because all primary energy is is itive nobody's going to turn off cheap natural gas electricity to run their data centers no um wind and solar can't do the job period and so they won't so this is just again this is University stuff it works in universities all right one one more point from this report uh going back to the uh projection of 102 million barrels per day by 2030 and then it says here in the report it falls back to 2023 levels of 99 billion barrels per day by 2035 overall oil consumption is pulled down by A reduced demand for oil and Road Transport surging EV sales since 2015 have already displaced around 1 million barrels per day of gasoline I think they're making the assumption that if this trend continues we're going to see a peak and then the curve uh starts to flatten and then reverses uh okay so in some parts of the world like China EV sales are surging uh transport trucks are being electrified are they right though in making the assumption that Road Transport will continue to be more electrified to the Future at this rate at least what happens when a car reaches end of life in the US David uh what happens is it gets Shi to the emerging economies and it has a whole second and third life um very rare is a car total like it of course there's accidents and things like that um if this is true which it's not all it would mean is temporarily it'd be really cheap for people to buy gasoline in these countries and guess what they'll do they'll buy gasoline like we are going to be if there was a security that like gave you 50x return on the Delta between this forecast and reality I would I would mortgage my house and and get long it um we are going to be producing and consuming way more than 99 million barrels a day of oil in 2035 that's Happy Talk from uh people who know nothing what do you think is the future of power transfer cars uh either uh commercial vehicles and or private cars the gas is it going to be hydrogen is it going to be electricity is it going to be hybrid what do you think makes most sense well the thing that has to happen is the existing Fleet will persist for another 12 years as is basically because these things don't turn over very fast I mean all the cars that you own now aren't going away um that's the thing like people conflate new car sales with the uh proportion of cars in a fleet that are burning gas or diesel or those types of things it's meaningful but again all energy will be consumed by somebody somewhere um the the dominant drivetrain we think is um gasoline battery electric uh hybrids um byd has a car right now that you can buy byd is the biggest electric vco manufacturer in the world twice the size of Tesla most people don't know that they have a plug-in hybrid that sells for $14,000 Us in China that on a full take of gas and a full charge of the battery can go 2,000 kilometers like how's how is anything going to compete with that the problem is solved it's going to be plug in hybrids um and the cheaper gas gets the more people will use it and the and look it's cyclical there'll be a glut prices will go down people will say the world is ending for oil and these assets are going to be stranded it's the same it's it's forever thus the slope of the demand for primary energy integrated across the globe is up and to the right with a gentle cotal wave aspect to it and and this is a great great Mega trend of all time this this is according to their research okay electric IA another separate report electric car sales neared 14 million in 2023 95% of which were China Europe and the US so 14 million new electric cars registered globally in 2023 that number is up um significantly um from the previous couple years this is more than six times higher it says than in 2018 just five years earlier okay so that was the past Trend going back to my question what will be the future Trend because I a lot of car companies that have promised to make an all EV flea by 2030 2035 they're now taking that back they're now saying hey look let's extend our ice Vehicles because that's what customers want their EV sales are flopping yeah look 14 million sounds impressive until you go to your Google machine and type in total number of cars on the road worldwide and it fits back 1 475 billion right yeah it's it's this is a very heavy boat that is difficult to turn um these cars unless they're crashed and toted basically last forever and so like again there's seven billion people if just take the three countries you know Europe not country but you know Europe us and China the rest of the world is 6. 5 billion people right like none of them are buying electric vehicles today they're buying any vehicle they can afford um they all want a vehicle they all want a higher standard of living and so no I I just that that if you go back to that paragraph you don't have to pull it back up but that's is is sort of here's here's an example another one for my time in Industry you know um one part per million of a pollutant in the water stream doesn't sound that is that impressive right but 1,000 part per trillion sure does they they're playing with big numbers without giving you the proper context of just the size of the existing Fleet there's 1.
5 billion internal combustion engines on the Earth today um the percent of new car sales that happens to not have an ice engine in it is an afterthought look at look at Norway Norway has effectively displaced virtually all new car sales and made them electric Bev or plug-in hybrid or mild hybrid their demand for oil is flat it hasn't gone down um it it's because there's the fleet effect it takes forever so anybody talking confidently about 2030 collapse in in the demand for oil look if demand for oil temporarily dissipates and prices collapse guess what happens demand goes up like The Cure the cure to low prices is low prices and vice versa it's cyclical but people have this tendency to draw tangent lines to sine waves and and that's just a fallacy like this I honestly you called it research I think that's a very generous um descriptor of the Ia report that's very indistinguishable from puff propaganda well yeah there's a lot of assumptions behind their forecast but okay so do you think I mean 2030 notwithstanding do you think there could come a point in the future whether it be it doesn't matter when we don't know when but could there be a point in the future when oil demand Peaks is that theoretically going to be in the works I mean not in our lifetime no again demand is not relevant it's production and I don't believe in peep oil and I think the definition of oil is changing and I think we have an a super abundance of natural gas and we'll just what's oil demand if you're going to replace it with natural gas we're still going to power much of our life with fossil fuels and so now I mean over the next two decades the the resource space should be modeled as effectively infinite and um there's an infinite demand for what we produce all that's our view I know that's look I I'll give you a number by 2030 have me back on in 2030 okay over under 106 million barrels a day yeah that's my that's my guess just going back to the Middle East for one more minute doomberg suppose tensions do escalate there we have a shortage of Supply due to a shock do you think that the uh strategic petroleum Reserve in the US will be sufficient in quantity to overcome or offset these shocks uh we're way better prepared than most and way better prepared than we were in the 1970s um but that storm would last 3 to 6 months so yeah we're we're probably all right I mean there are other countries on the sort of the cost curve that would get slammed more than we China among them by the way which is another reason why we don't think that um things are going to get too crazy in the Middle East China is in there and and very dependent because they're net short oil um bigly and so um you know that's another dampener to crisis you know Iran and China have a very close and complex relationship um so I yeah I mean but yeah the US is US Canada uh Mexico um if we close the borders you know we'd be pretty much fine um it would disrupt the markets significantly but we are a net energy exporter now the US is a global Energy gigap power that's a far far better position to be in than say in the 1970s when everyone in the US assumed peak oil was real and we were short oil and the Saudis and and the other members of OPC had us over the barrel uh pun intended um that's no longer the case uh and so um we would be mostly fine we have oil we have gas we have uranium we have fertilizers we have Farmland we have corn we have soy we have wheat We have basically we're self-sufficient there's a few tweaks to our refineries that would need to be made because they're kind of optimized for heavy oils and we're producing light sweet crude uh and even lighter crudes uh in the in the sh patch today but by and large we would be dealing from a position of strength in such a scenario moving on to domes IC oil policies I want to play for you this clip from uh California governor Gavin new I'm I'm just going to show you the entire animation here I want to get your response it's a minut long take a listen it looks like big oil big wigs are up to more of their oily Shenanigans here in California they want to keep Drlling in our communities then export that oil out of state oh while keeping our supply dangerously low and prices painfully high for California drivers these same Big Oil execs are Cahoots with Donald Trump pushing prices even higher during election season hoping to scare voters into voting for their guide they know if they scratch his back he'll scratch theirs if he wins by overturning critical Environmental Protections and letting Big Oil call the shots that's why California is passing a law to require oil companies to increase their gas supplies to prevent price spikes on you at the pump saving consumers billions I'm cutting off their dirty politics and telling oil CEOs and Donald Trump to export their lies somewhere [Music] else I love it pass pass a bill to make the gas suppliers do what exactly so look this is we have again a sort of counterintuitive interpretation of events here Donald Trump is the worst thing that could happen to oil and gas equities here's why Joe baby drill is not good for the equities of oil and gas companies they have no discipline and in a way in a perverse way the Gavin news and the Joe bidens and the Cala harrises of the world and their Legions of bureaucrats from the EPA act as a gating function to supply which is what the oil and gas companies actually want so if Trump wins we will see an avalanche of new drilling which is actually very bearish for oil and gas equities like they make all their money on price but they're seduced by the concept of growth and they have no track record of discipline so gav new is the best thing that could ever happen to the oil and gas industry um the more some sort of discipline is enforced on them and they can only drill so much that keeps prices higher which pads their profit so even though 95% of oil and gas Executives probably will vote for Trump if they were voting for their pocketbooks they would vote for the Democratic party because they can't impose discipline on themselves um now I think the Trump win would be very bullish for supplies which would be bearish for price and deeply bearish for energy equities and so that the whole thesis of that you know uh political uh video that you just played is that somehow producing more is good for the oil and gas companies I it's just it's funny but it's just not true um and so yeah that's let take a look at the theory of this legislation here I have the legislation opened up Governor Newsome signs legislation to prevent gas price spikes and save California's money this legislation allows the state to require oil refiners to maintain a minimum inventory or of fuel to avoid supply shortages that create higher gasoline prices for consumers and higher profits for the industry would this work theoretically so this is a very complex situation we wrote about it um recently uh in a piece called Baywatch um California is an energy Island because California requires a very specific and cleaner burning gasoline Formula that the rest of the world doesn't produce um it is beholden to a small lopoly of refiners in their state that's all true um I note with interest that after what you just read was released Philip 66 announced I believe yesterday that they are closing one of their major refineries in Los Angeles anytime government interferes in the market like this prices go up right which is proof of what I just said by the way high prices means more profits so it goes up it's supposed to make it go down I mean why would it right please any government interference in a market economy causes price to go up look at the price of gasoline in Califor today tell me show me where Gavin mome has lowered prices for Californians right um so what happens is California creates a very specialized blend that nobody else makes and that means necessarily the trading in that the futures for example um so that refiners can hedge their exposure to the commodity stuff is very thin which means small players can interfere in that market and move prices around these are all consequences these are all things that California invited uh to Itself by the way there are no pipelines connecting California to the rest of the US any incremental supply of either oil or finished products has to come by sea and Northern California in particular is an energy Island because there's no pipelines connecting the North and the South North California's an energy crisis waiting to happen um and and of course who will be blamed for it of course you know big big oil and all that stuff that's a very slick ad look gav Newsome is a talented politician not to be underestimated I mean um you know we're not super political here but we can appraise somebody's skills he's a very skilled politician that is a slick video it's totally wrong but it doesn't matter it's not going to be wrong in ways that the average person is going to be able to deduce just by watching it but can we just finish off on this Energy prices waiting to happen what do you what do you mean by that what what what's wrong with their policies fundamentally okay let's just take a look Northern California um three refineries period uh 11 days 11 days of inventory of gasoline on hand and one of those three refineries sits on a giant fault that is a couple of decades overdue for a big earthquake um so what happens if that earthquake comes and that refiner is knocked out um you're talking San Francisco right uh it's it's truly we're sleepwalking into a a a crisis in California and you know um government mandates and look it's not a friendly place for oil companies to do business right and so they don't want to be there Exxon left the state famously after a refinary explosion um and and so what we're seeing is the the the people just don't understand like as critical as energy is to life not having it is a big deal right and so um the the the the um just pulling up the Richmond Refinery that's right it's on the Hayward fall it's literally 10 miles from the line itself and um we haven't had a major earthquake there since 1868 um and so we're 16 years overdue for one so that's they they produce by the way 40% of the gasoline that Northern California consumes one Refinery sitting on a fault produces 40% of the gasoline and the state has 11 days of inventory do the math it's it's going to happen just a matter of when we'll take a look at some of these stats from the California energy Commission Now doomberg in the first three months of 2024 Californians purchased over 100,000 zero emission Vehicles currently um in the State uh the current total is more than 1. 8 million zero emission vehicle sales and 23.
