Daily Energy Standup Episode #329 – California Prices Surge, Biden Budget Impact, Shell’s Shift, and Currency Changes

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Exploding Energy Prices in California

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Thursday, March 14th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, exploding energy prices in California, our favorite state. Next up, Biden’s full year 2025 budget hurts oil and gas industry by repealing longstanding tax provisions, and the IPA admonishes it. This is a big one, folks. You’re gonna have to. I stick around for that one for sure. Next up, shell considers slowing pace of carbon emission cuts as CEO refocuses on oil and gas. You can’t make these headlines up, folks. And finally, many countries want to start rupee trade with India in quote game changing the dollarization step. We love a good little, stew headline there. He’ll then toss it over to me. I’ll quickly cover what’s going on in the oil and gas finance markets. We did see the IEA come out and confirm a pretty big draw from the Strategic Petroleum Reserve, and Cambridge goes out and makes a plea to, merge Silver Bow with its gas assets. So we’ll cover all that and a bag of chips, guys, as always, I’m Michael Tanner, joined by Stuart Turley, the editor of Energy beat.com. Go ahead and kick us off. [00:01:29][74.7]

Stuart Turley: [00:01:30] Hey, let’s get rolling around. Michael, this is, got about six other stories that really flew along with it exploding. Yeah. Energy prices in California. This is really, Miss Producer, if you could fly in electricity price increases in all sectors from 2008 to 2023. Look at Texas. It went down. [00:01:55][25.1]

Michael Tanner: [00:01:56] Well. [00:01:56][0.0]

Stuart Turley: [00:01:58] Look at California. It’s up almost 98% from 2008 to 2024. Yeah. Here’s where some numbers that aren’t in this article that matter Michael, prices or market share of energy produced by wind and solar has gone up from 4% to 15% over the last, same amount of time period. Okay. But guess where most of that went? It’s in Texas and California, but Texas has actually been using coal, natural gas and nuclear. And so it’s kind of interesting to see how that all that happens in there. The transition, 1.75GW of utility scale solar and 14 gigawatt on residential rooftop solar, which is failing. So here’s where it gets really scary in the course. And the reason why grid scale batteries to backup renewable generators multiplies the cost of utility scale solar programs about $1 million per megawatt of rated grid capacity, with four hours of discharge duration, cost about $1.5 million per megawatt. These batteries can only last for four hours. Holy smokes! Okay, here’s the difference Texas has natural gas for backup and for standby in that they’re trying to put in no natural gas in batteries. That’s where it’s really coming in. So when you sit back and take a look, conclusion California leaders know that rising prices are a huge problem. Really? Does they think they actually know? I don’t think they know. I got tickled when I read that one. Michael. [00:04:09][130.7]

Michael Tanner: [00:04:09] Yeah, I, I think the big I mean, it’s California doing California things. I mean, $1 million or $1.5 million per megawatt capacity for four hours. Oh, that’s that’s cost effective. [00:04:25][15.4]

Stuart Turley: [00:04:26] It’s not. And and and so the, the average, price per cent per megawatt. [00:04:32][6.2]

Michael Tanner: [00:04:32] So it’s not, it’s a little bit different, but still that’s horrible. [00:04:36][3.2]

Stuart Turley: [00:04:36] The price per kilowatt hour, went from $0.03 to an average of $0.17 during that same time period in the US. What was the only difference in that whole time period? The addition of 15%, in the U.S.. Renewables. Oh, wow. So 98% increase. And the average bill in California is reverse. Anyway, so I gotta love that story. [00:05:08][31.7]

Michael Tanner: [00:05:09] All right, what’s next? This one sucks. [00:05:10][1.3]

Stuart Turley: [00:05:11] This one sucks. Biden’s full year 2025 budget hurts oil and gas industry by repealing longstanding tax provisions the IP admonishes. Michael, this is a quote out of it. Repealing this provision and raising taxes on oil and gas tax payers is a reckless policy proposal. IP continues to fight to preserve the energy tax treatment, particularly idcs and percentage depletion allowance, and prevent new taxes that would hinder independents ability to operate and produce energy for the American people and our allies. Michael, this is despicable. Here’s the thing. 50% of the oil generated out of the United States, the number one oil producer in the world is by independence. And if we take away the tax incentive, not only have you declare war on energy because they’re declared war on renewables just as equally as they have is oil and gas, it’s the consumers that are going to pay through the nose. [00:06:24][73.3]

Michael Tanner: [00:06:27] But it’s it’s a this is and this is a, you know, this is a and this is where I always get a little there’s a difference between subsidies and and tax write offs. There’s a difference. A subsidize is directly paying you to not do something when we subsidize you know, you know, when we do ethanol, you know, even ethanol isn’t necessarily a subsidy for the for the farming and sheep. But farmers will get paid not to grow certain crops. That’s a subsidy. Tax write offs is different because you actually have to go out and do the work. You know, work has been done. And once you’ve invested the capital, the IDC’s in, I see them attempting to get rid of them is really a war, because that it’s it’s really what people are talking about when they talk about subsidies. They’re not talking about actual subsidies. They’re talking about the ITC and the ICC. [00:07:17][49.5]

Stuart Turley: [00:07:18] Oh, absolutely. And the ICC is in the I feces, which is the feces which is in the driveway that you step on. So when here. That was funny, by the way. And and so when you, you sit back and you sit back and kind of go, wait a minute. EVs have the same problem. A tax incentive, for buying an EV is only available on certain models in certain levels of income can afford them. [00:07:48][29.5]

Michael Tanner: [00:07:48] Yeah. A subsidy is you getting $5,000 directly to go purchase a EV. It’s not. Once you purchase the EV, you can then write off 5000 on your taxes. There’s your difference. [00:07:59][10.8]

Stuart Turley: [00:08:00] That is correct. [00:08:01][0.5]

Michael Tanner: [00:08:02] So good for something this. Yeah. And you know I think the IPR we stand with you. We hope this doesn’t go through. It won’t cost us. [00:08:10][8.9]

Stuart Turley: [00:08:12] Don’t we don’t give investment advice. But, Michael, I quit saying, oh, it won’t get passed. Not in this day and age, dude. Sure. Okay, let’s go to the next one before I throw up. Shell consider slowing pace of carbon emission cuts as CEO refocuses on oil and gas. Michael, you and I have had so much fun over the last three years seeing the flip flop. This is an NBA move I cannot get over. I mean, Harden. I remember getting, on when I was on floor seats at the Thunder game and Hart and all. Harden wooden ball. He was a fear the beard he. [00:08:56][44.1]

Michael Tanner: [00:08:56] Was he was old days back when he was on the. [00:08:58][2.6]

Stuart Turley: [00:08:59] Thunder. Oh he was great I love me some harden. Now listen to this. Shell initiated his plan to become net 0 in 2020. Under previous Ben Van Burden. Key to its emission reduction pathway is net carbon intensity, a measure of emissions from the energy it sells to customers. In 2021, the company pledged to decrease that intensity by 20%. Well, now they’re kind of going. Listen to this. By the Colonel. We listen. We look forward to publishing our energy Transition strategy report on March 14th, the shell spokesperson said publication will contain details of our plans to become net zero emissions by 2050. They added 20 years. [00:09:47][48.8]

Michael Tanner: [00:09:49] Well, again, I love this. Shell initiated its plan to become a net zero company in 2020 under previous CEO Ben Bergman. And whoop, previous, here’s here’s, you know, not to bring you behind the curtain, but it’s clear this came from board of directors down. Why? Because they switched out CEOs because of this. When did they start changing tune? When this new CEO came in, which means this was something that the board was concerned about from the board level. So what is second order of magnitude, as I like to say? What’s this mean? This means that they’re not the only company thinking about. No, he was thinking about this. And you know, why did the the CFO take over BP? Well, because now it’s all about finances. And people aren’t dumb. When you look at a spreadsheet and say, where’s my make my profit? Where am I making my losses? So this is going to have a magnitude. Remember, Shell and Exxon or Exxon and Chevron have stayed within the oil and gas upstream. They’ve they’ve shied away from going as far as shell and BP. And as everybody said, who was going to be the first one to blame Chevron or Exxon or BP and shell? Well guess what. Both BP and shell have blink and are now coming back over to the upstream side. [00:11:06][76.9]

Stuart Turley: [00:11:07] It’s not going to say they blink, Michael. They curl up in the fetal position and they. Yeah, they they wish that Scooby would pull the mask off that, invader very quickly. In this article, Michael, it says shareholders rewarded BP with a more than 8% jump the same day when they announced the same thing. You’re spot on. All right, let’s roll with the next one here, man. Okay. Many countries want to start rupee trade with India. And game changing dollar is Asian step. This is just part of the, type thing expanded out because around the world, Michael, there is a movement for countries to trade with their own currency. This is going to have every bit as big of an impact as BRICs because it’s moving away from the dollar. Listen to this. At some point, more developed countries and countries in the Far East will also join the bandwagon. The India’s union minister, he said, adding that more and more, countries are realizing the advantages of trading in their own domestic currencies, and a shift toward direct transactions between local currencies is gaining traction. The U.S. has shot itself in play and just pulled a Dick Cheney. I don’t know how you have a Dick Cheney moment and shoot yourself in the foot. Go shoot. Don’t you boom! You know, don’t go hunting with Dick Cheney, I guarantee you. But we went hunting with Dick Cheney, and the U.S. dollar got shot, so. All right. Anyway, they started with it. I thought it was pretty interesting. Hats off to the Indian leaders. I applaud them for doing it. And I’m, they’ve got to defend themselves against the U.S.. [00:13:03][115.9]

Michael Tanner: [00:13:04] Absolutely. We applaud what Prime Minister Modi is doing over there. You know, he’s looking out for the people. He and he’s looking out for the for the Indian people. Which you should do as a leader. [00:13:14][10.0]

Stuart Turley: [00:13:15] I love the, Indian culture. And I just every everybody I like, I like everybody. [00:13:21][6.2]

Michael Tanner: [00:13:21] Now that this does not bode well for the United States, though, because the petrodollar has been one of the the best forms of defense that we had when all else failed. We were the currency that oil was traded in. Not anymore. Not anymore. [00:13:37][15.4]

Stuart Turley: [00:13:38] And and everybody was saying, oh, it would take years for the the dollar is Asian to occur because of the Petro dollar. And I said, what did I say, Michael? I said, it’s going to happen sooner than people realize that I’m done after you now. [00:13:54][15.6]

Michael Tanner: [00:13:55] All right. Well, we’ll go ahead and dive into oil and gas, finance happenings. But before we do that, we’ll go ahead and pay the bills here. As always. Thank you guys, for checking us out at Energynewsbeat.com. The best place for all your energy and oil and gas news. Doing the team do a tremendous job making sure that website stays up to speed. With everything you need to know to be at the tip of the spear when it comes to the energy business. Go ahead and check out the description below. In all of your podcast platforms, you can hit the and see all the timestamps, all the articles that we cover. And you can also take our new beta survey, and we highly recommend doing that. Get you access to our new premium new services that we’re going to be rolling out here in the next couple months. We just we love hearing feedback from everybody. And as always you can check out dashboard.energynewsbeat.com for our MVP data news product. Maybe something that goes behind a premium, news paywall. So get it free while you still can. Well. Let’s go. And dive in here, folks. Oil prices actually, today we’re we’re we’re, you know, rebounded a little bit. We are up about three percentage points, to what we would call quote unquote, a four month high. We didn’t quite crack $80, but we got really close. And this was mainly off the back of two things. One, geopolitically. Ukraine has been bombing, drone bombing Russian refineries. I mean, it’s getting scary over there, guys. You never know what’s going to happen. But that on the back of the EIA coming out and confirming what the are coming out and confirming a draw from the Strategic Petroleum Reserve API yesterday said about 5.4 million barrels was only a drop of about 1.5 million barrels. But still it was enough, to drive things. We also saw a big drop in gasoline stocks. While distillates did go up a little bit, but that, that difference of about 3 million barrels on a week to week basis was actually in line with what everybody thought. The API both had higher prices. You know, the EIA had about 5.5 or excuse me, the estimated draw from gasoline was about 5.7 million barrels. So, pretty big gasoline draw there. Mainly what rose to prices. We saw gas based off the back of warmer weather still drop about one, to $1.66. I mean, this warm weather is just absolutely killed us in a specifically from natural gas pricing perspective. So, you know, we will, we will see how that goes. The other interesting thing I saw Stu was, was Cambridge goes ahead and makes a new, offer to buy and merge Camry or, and merge, Silver Bow with one of their subsidiaries. They’re calling it, what it’s called. It’s called Cambridge, Texas Gas, which is basically their South Texas assets. They’re going to go ahead and they want to make a $2.1 billion offer, or which would be about $34 a share relative to what Silver Bow was trading at. That stock was actually up about 3.3 percentage points in early trading. So a little bit of a premium there. You know an interesting time I think obviously with Silver Bow being an Eagle Ford, and an Austin chalk producer, the majority of that being natural gas. You know, the funny part is it’s just they’ve submitted an offer. They’ve gone public with this offer, so everything looks kosher. But, trust me, if they wanted to really do this deal, it would have gotten done. Silver bow had to come out, and. And now. Well, we will carefully review and consider the proposal to determine the course of action. It believes in the best interest of the company and all its shareholders. Why? Don’t. Deal’s just. Just happened behind the scenes. And they both announced that it’s going to happen again. What does that tell you? Silver Bow does not want to do this. And it could be a variety of reasons. They could not want to necessarily, go private. Maybe they like the public market. Maybe they don’t want Kim Ridge, Texas Gas, which is 85% natural gas. And they’re not necessarily interested in taking on this. They would get $500 million in the combined company. According to Cambridge, to help pay down the debt. But from, from a high level standpoint, I can’t imagine that this is something that’s going to happen under these deal terms or it would have already happened. That’s the funny part. So this is the first step in what is Cambridge known for activist stance. So, you know, this is what they they were a long time activist in Colorado. They were instrumental in getting Civitas to come together. Whatever you think of that deal. They’ve been pushing for consolidation. So this isn’t really a consolidation of the business more this is them just trying to add on their gas assets to Silver Bow possibly. Again, my my assumption goes this deal is not going to happen under these terms or it already would have been accepted. I know that’s a crazy take, but it would be interesting. Managing partner over there at Cambridge, Ben Dell, he says that this combined company would trade between 60 and $65 a share. Probably not. Probably not. But, hey, you know, someone you can dream. You can, you could. You’re always allowed to dream. Now, what will it end up being? Who knows? But. [00:19:02][307.2]

Stuart Turley: [00:19:03] Unless there’s too much carbon in that dream and then you’re going to have a carbon credit. The tax on your dreams. [00:19:08][5.6]

Michael Tanner: [00:19:09] Hopefully their Bitcoin mining over there. [00:19:11][1.3]

Stuart Turley: [00:19:11] Oh, snap. All right. [00:19:14][2.5]

Michael Tanner: [00:19:14] That’s about all I’ve got to do. What’s what else do you have for folks. [00:19:17][2.4]

Stuart Turley: [00:19:18] Oh hey. Just released out, the Uncovering Antarctica inconsistencies in climate information. Frits Buningh, he was a absolute who, he found about 20 different sensors. So you have to ask the question that they were manipulating data. So, are the sensors being censored or are the sensors being censored? [00:19:44][26.3]

Michael Tanner: [00:19:45] I think the sensors are being censored. [00:19:46][1.0]

Stuart Turley: [00:19:47] I think so that’s on. [00:19:49][2.4]

Michael Tanner: [00:19:49] It. So I guys would. That. Well, let’s get out of here. Get back to work. Have a great Thursday. You will see our weekly recap on Saturday. What have We Got podcast coming up from you, Stu? [00:19:58][8.9]

Stuart Turley: [00:19:59] Oh, we’ve got a ton of them coming around the corner here. We have, number coming out next week with. Yes. Chris. Right. And we have about 4 or 5 others, that are coming along as well too. So we. [00:20:13][14.0]

Michael Tanner: [00:20:13] Got amazing. Amazing. We’ll definitely look for that one. We’re going to be promoting the doomberg. Chris. Right. One heavy. So get ready for that, guys. Appreciate it. We’ll see you, tomorrow on the podcast. We’ll see you weekly recap on Saturday, and then we’ll be back in the chair Monday. [00:20:13][0.0][1168.1]

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