Biden vs. Oil

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Daily Standup Top Stories

China’s state planner warns intensified EV price war on oversupply

Biden’s damaging war against American energy production

Kurdish Media Allege OPEC Request for Resumption of Oil Exports to Turkey

US crude futures climb back into positive territory

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

Michael Tanner: [00:00:15] What’s going on, everybody? Welcome into the Tuesday, April 23rd, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, China’s state planner warns intensified EV price war on oversupply. Next up Biden’s damaging war against American. Any product. Ooh. Next up week diesel prices reflect global economic slowdown, though truckers do. Say yay. Interesting article here. Next up, Kurdish media alleged OPEC request for resumption of oil exports to Turkey. Interesting, interesting. And finally, rooftop solar panels are flooding California’s grid. That’s a problem. A great opinion piece here. That ended up actually in the Washington Post. So not often we bring an article in from the Washington Post. So stu will have a lot of fun with that. He will then toss it over to me. I will quickly cover what’s going on in the oil and gas markets today. And then Silver Bow decides to fight back against Cambridge and launches their own customized website, which always means there’s a war going on. So we will describe and cover all that in a bag of chips. Guys. As always, I’m Michael Tanner, joined by Stuart Turley. Go ahead and kick us off. [00:01:35][79.7]

Stuart Turley: [00:01:35] I’ll tell you what. Let’s start with our buddies over there in China. State planner warns intensified EV price war on oversupply. I’ll tell you what. You can’t buy this kind of entertainment, man. Not only do we have plants that they’re trying to drop into Mexico so they can flood the U.S., they’re lined up and they’re going to flood the European market. But let’s start in Shanghai. I’m going to get a little tired here. The National Development and Reform Commission, the N r C, expects more than 110 new energy vehicle models, including a tunnel total of 150 new car launches this year. Intensifying. And what is going on? Not only are they over populating the world and they figured out what’s in the water now there’s they’re breeding like rats over there. [00:02:28][52.4]

Michael Tanner: [00:02:29] Yeah, it is a little crazy. You wonder what this means for Tesla as they’ve continued to take a hit in the overall market with the recalling of the Cybertruck. They’re, you know, they were over $1 trillion market cap. They’ve now fallen below Exxon. This is going to put a lot of heat on them to continue to kind of if they’re going to compete in this race to the bottom on price, it’s going to be very interesting to see what happens. But China is is, you know, China is going to do and China is going to do. If you didn’t expect them to flood the market with their EVs, what what do we think they were going to do. [00:03:01][32.0]

Stuart Turley: [00:03:02] In, in the amount of money? And what kills me is and I’m just going to talk about this in the Biden, misnomer of support, they are destroying the US automakers and destroying jobs by subsequently supporting this. I don’t get it. Well. [00:03:23][21.4]

Michael Tanner: [00:03:24] You know, we could say a lot about it, but point is, China is going to come in and they’re going to continue to put pressure on the US carmakers. It’ll be interesting to see if they take the pivot again. Not this is not an American company, but we’ve always praised Toyota for their carving out the hybrid lane. You wonder if some of these carmakers begin to switch to a little bit of that. [00:03:42][18.3]

Stuart Turley: [00:03:43] And boy, there’s a lot of, rumblings around there about the Hindenburg, cars. I mean, the hydrogen cars that are going nuts now. [00:03:51][8.2]

Michael Tanner: [00:03:52] So let’s let’s move to the next one. [00:03:54][2.6]

Stuart Turley: [00:03:55] Okay. Let’s go to our buddy Biden. Biden’s damaging war against, American energy production. This one is I got a lot in this article. And it comes down to, a couple points. This is from the Hill. There is, the bottom couple paragraphs here. Michael, this isn’t just incompetence, although there’s plenty of that. It’s an ideological effort to smother American energy along with the jobs and income it generates. There is a boom in oil production by waging war against President Biden could make it more resilient. More could make us more reliant on OPEC, Venezuela and Russia and and the I, years ahead. This is coming up into a lot of different things. The LNG ban that you and I talked about is just absolutely part of this. And it is also in the geopolitical things. Think about the economy. If we could help our own environment by getting rid of coal. Yay. From a standpoint of going to natural gas, well, if we make more natural gas, we can export more and it’s already dirty and better for the environment. [00:05:12][76.8]

Michael Tanner: [00:05:13] Yeah. No. You’re absolutely right. Again, the the devil’s advocate here is that everyone’s making money right now at $80 oil, where there’s a lot of activity going on the, you know, and we’re about to cover specifically the diesel prices. Finally, diesel prices have come down to a specific level, because I love how the title of the article implies that low diesel prices are somehow bad because that means growth isn’t happening. Well, it also means we can transport things a lot farther and for cheaper, and we see lower inflation. So some of this is a little bit of topsy turvy. Yes, we would all love President Trump to get elected, but he’s going to massively lower oil price just by the effect of having his hand on the lever. And that’s going to, you know, these these revenue, all this revenue that we’re making right now may go away. So it’s weird the war on oil actually makes it more valuable. So, yes. [00:06:11][58.4]

Stuart Turley: [00:06:12] Here’s the problem. With this though, this is a downstream article. In the next article you bring up is weak diesel prices reflect global economic slowdown. And here’s part of this. Reuters. John Kent wrote in the recent column that institutional speculators are were selling their diesel positions as prices began to decline. That decline, for its part, as a result of the global trade flow adjustment after the string of ship attacks by the Hutus and the bluefish over in the Red sea. Here’s part of the problem is the deindustrialization in many parts of the world is attributing for this in the March reading of the U.S. Purchasing Managers Index. Now, anything over 50 is a sign of growth. But it is, disappointed as it stood at 51.9 while forecasts had been different. Yeah. [00:07:11][58.7]

Michael Tanner: [00:07:11] You know. [00:07:11][0.4]

Stuart Turley: [00:07:12] I guess totally different. [00:07:13][1.1]

Michael Tanner: [00:07:14] No, it’s it’s totally different. But, you know, weakness in diesel demand. You know, again I love Bloomberg is you know here’s a nice little section down here. Bloomberg’s also suggested that the weakness in diesel demand and prices may be temporary occurrence. Very similar to the tightness in the market last year, with the analyst warn about potential shortages, which recently a six month. Luckily that tightness didn’t really happen, which is good news. Though we did see higher fuel prices get passed on the consumers contributing to inflation, all of the fact that it cost more to transport. So I think you’ve got there’s this weird balance that’s going on right now. And I think we’re seeing it play out right now. [00:07:50][35.5]

Stuart Turley: [00:07:50] You bet. You mentioned something, Michael. And I just want to say that the Biden administration regulatory and energy policies, when they go ahead, they are going to pull more out of the strategic oil reserves. The salt domes in the strategic oil reserve infrastructure is failing because you cannot leave those. It’s about to happen. So anyway, that goes back with that first, that other article. Let’s go to the Kurdish, media, led allege, alleged, OPEC request for resumption, of oil exports to Turkey. There is a significant problem, Michael, going on right now around the world. The Iraqi media claims of a request from OPEC have not been in in meet independently confirmed the new day’s news agency. A formal appeal to the Iraqi oil minister. OPEC is allegedly requested that the Kurdistan Kurds regional government be allowed to export 200,000 barrels of oil per day via the Kurdish export sector. Part of this is that the OPEC plus has been over shipping over quota. Saudi Arabia has been really taking it in the teeth, because they’ve been cutting their production. They need a $100 oil. So this is a very great article with second order discussion threads in it. Because of the Saudis needing higher oil, Biden needs lower oil. And then there’s stopping oil production in the U.S. And so this is just a holy smokes, Batman, that there are forces at play around the world. [00:09:57][126.5]

Michael Tanner: [00:09:57] Right? There are. And it it goes to show that a lot of what goes on in geopolitics has to do with oil. And so you always need to be aware of these dynamics. You did a great job of breaking that down. I don’t I mean, I don’t really have much to add here. This is this is your neck of the woods. Where how do you see. This playing out, maybe, is the real question. [00:10:15][17.8]

Stuart Turley: [00:10:16] Well, there’s about 16 different things on there, and, I see that Saudi Arabia needs it above 90. I’m going to just say, hey, okay, Saudi Arabia is going to manage their numbers around. They are cutting back a lot of, kingdom spending, trying to match their budgets in Europe. Is is really coming in Russia. You and I laughed about Russia yesterday. Their, growth is more than the US. More than all these other countries, though the. Oh, Putin may not be a nice guy, and I don’t agree with everything he does, but he’s got Russia first and he’s growing his economy. You know what’s. So anyway, let’s go to rooftop solar panels that are flooding California’s grid. And that’s a problem. This one is Holy smokes, Batman as electricity. The subtitle is, is electricity prices go negative. The Golden State is struggling to offload a glut of solar power. Michael the old dreaded. The chart is in this article. And if, Mr. Producer, we can bring this chart. In California, ample solar power floods the grid in the middle of the day, and you can see the duck is alive and well. Duck soup is rolling here. Here’s the problem. The grid option known as Casio, later dubbed the effect as the duck curve. And they have had some serious problems. Homeowners are expecting money back, when it’s been sold this way for all of the rooftop solar. The grid operator now cannot give money back. All the money for these homeowners have a ten year payback in order to make it, available for them. The battery storage is not working. This is an absolute disaster. Here’s a quote from Michelle Davis. These are not insurmountable challenges. The head of global solar at the energy research consulting firm wood in, McKinsey. But they are challenges that a lot of grid, breaker operators have never had to deal with, nor do they have a government agency that understand how to fix it. [00:12:48][152.0]

Michael Tanner: [00:12:50] Yeah, it’s the unintended consequences when your grid cannot handle the supply that it’s taking or it’s not optimized. The take that I mean, you know, this is a second and third order effect that, you know, on the show we talk about coming, but I don’t think the public or the people who are setting the policies even know. [00:13:06][15.5]

Stuart Turley: [00:13:07] No. Absolutely not. And, you know, Michael, I absolutely love Solar panel. I love I’m trying to figure it out, you know, that I’ve got, dual generators coming online. For propane. I got hydro from my local hydro. I got solar panels. I love solar panels. I love me building this entire mini grid and Michael Brown, I’m telling you what, though, it’s a nightmare. But then again, I’m using this as a learning curve. I do love the sitting there going. I’m like a little kid looking at that meter going, I get free energy. And I look over at the bill, how much I paid for the solar versus how much my free hydro is. Yeah. [00:13:50][43.8]

Michael Tanner: [00:13:51] No. Very interesting. And of course, this is happening. California can’t. Yeah. It’s that’s obviously. Yeah. Makes us laugh. [00:13:59][7.4]

Stuart Turley: [00:13:59] You gotta love our buddies over there in California. [00:14:01][1.6]

Michael Tanner: [00:14:03] All right, all right, well, we’ll go ahead and pop over to finance before we do that. Guys, as always, will pay the bills here. Check us out. Energy News Beat.com all the news and analysis you just heard is brought to you by that website. 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. Everything you need to know to be the tip of the spear when it comes to the oil and gas and energy business. Hit the description below for all the links to the timestamps. Links to the articles. So you can hop around back and forth. Check us out on YouTube, Spotify, Apple Podcasts. You can also check us out. Dashboard.EnergyNewsbeat.com A lot of really cool stuff coming. [00:14:43][40.3]

Michael Tanner: [00:14:44] You know markets actually are are positive a little bit. Today we see S&P 500 up about 1.8 percentage point Nasdaq up about 1.5 percentage points. 30 year yields down about a quarter of a percentage point. two year yields down two quarter. about quarter of a percentage point ten year yields actually up about a 10th of a percentage point. So that, unfortunately means we have some, some economic. So some interesting economic woes coming. Dollar index fairly flat. We. Did see Bitcoin now up two and a half percentage points, sitting somewhere around $66,300. Crude oil fairly flat $82. Relative to. To where? We opened from last night. We have seen a little bit of a rise, from the open relative, to where I think I think we opened about 80 to 11. So we’re still hovering right around that. Open for crude oil. Brant oil 87 and natural gas, still sitting about $1.78. So netback still aren’t great. You know, mainly when you dive into those crude oil numbers. A lot of what we’re looking at is, is that wider geopolitical fear of what’s happening in the Middle East has continued to come down. You know, there is you know, ironically, there is some analysts out there that are talking about some of the, some of the spare capacity that OPEC is flinging around. You know, though we do low it does look like as we move into the summer, there will be some strength in the supply side. So I think there’s there’s a little bit of both. UBS strategist I love him, Giovanni Stabenow. He added that the high spare capacity not could actually, along with the geopolitical risk premiums, could drive prices lower depending on how things happen. So it’s a very I love the little counterintuitive look, you know, where the Federal Reserve came out, they had a little bit of a speech, earlier today commenting mainly on what’s happening, some of this, hotter inflation data. So I think things are, are shaping out, you know, not much happened really on the oil and gas market. Said we did see Silver Bow, who’s in the middle of a proxy battle with Cambridge, come out and basically, announced their own website, The Future of Silver Baucom. You absolutely got to see it. Their, their main claim, as exciting as they’re fighting, this proxy season is that Cambridge’s is obviously significant. Overvaluing Katie G, which is Laredo Crowley. They’re claiming massive, dilution, relative to silver, both shareholders. And again, they’re, they’re they’re convinced that Silver Bow you’re they’re convinced that the CG assets which again, which is Laredo Petroleum, are much lower quality. And that’s what’s hilarious. They were told or and they say, if we go to this future of Silver Bow site, you can go look at this. Pretty advanced and I wouldn’t call it an infographic. I would call it a, a slide deck where they basically say, they really call out camera. This is absolutely hilarious. They say they’ve attempted to engage with them multiple times. This was hilarious. They were told by Cambridge not to participate in the in the Laredo auction, which is interesting because that means, you know, circle the wagons there. You could go through and read it all. I’m not going to sit up here and and show for Silver Bow, because I do think the underlying question going on here is, has silver bow management actually maximize the value? There is. Have they actually, over the course of the options presented to them absolutely maximize shareholder value. And I don’t know the answer to all I know is they hear the noise because they got a whole slide pointed to their quote unquote outperformance of other said companies within their zop. If you go take a look on that future for Silver Bow. Now, the real question is, you know, this also assumes dividends reinvested when received. You don’t know how they break that number down. They claim, you know, since 2011, they’re at 500%, outperformance, whereas relative the Xlp is only 372. So super interesting to see kind of how they break that down again. They, they, they, they don’t want any part of this. And they’re making very public. They’ll fight to go back. So how will this end? I don’t know, I do think we need to get a deal spotlight recorded on this. So I’m going to be you know, if anybody listening to this is is fairly familiar with what’s going on with the Silver bow. Kate off, please. Let’s get a deal. Spotlight recorded. Because this could be super interesting. [00:19:19][274.6]

Stuart Turley: [00:19:20] I want to give you a shout out. I have thoroughly enjoyed the deal spotlight you had with our guests that you’ve been interviewing. I thoroughly enjoy those, dude. Those that you’re a rockstar with our, other guests. We’ve had some hellacious, deals that you’ve covered. Well done. [00:19:39][19.2]

Michael Tanner: [00:19:40] Yeah, I mean, I appreciate it. It’s fun. We do, you know, not to promote too much, but we do have a new one coming out on Schlumberger Champion X with the wonderful Jeff Criminal over there at Criminal Strategy Group. He’s, he’s an energy and offers expert. So I it was great to bring him on. We’ll probably have that out Wednesday or Thursday this week to to get it. So it’ll be that’s a really good one. Big nuggets. We go about 50, 55 minutes. Just pretty much talking oilfield service valuations. The diving into the deals specifically team. He’s working on getting kind of the edits. As always, there’s edits. I’m not 100% great. So unlike this, where we just do it live. [00:20:19][38.8]

Stuart Turley: [00:20:20] One of the things that I, I do want to give a shout out because Emily Easley, she is, pretty cool cat that, I’m hoping to, get interviewed from oil and gas and solar and wind and regulatory and everything else. Our deal evaluations. We’ve been looking at even wind and solar evaluations as well, too. [00:20:41][20.3]

Michael Tanner: [00:20:41] So here’s my evaluation doing it. [00:20:43][2.4]

Stuart Turley: [00:20:44] Well. [00:20:44][0.0]

Michael Tanner: [00:20:45] It’s like, well you your on a solar farm don’t there. [00:20:48][3.1]

Stuart Turley: [00:20:49] There is residuals. There is how do in fact, I’ve got a few folks that have been doing royalties. [00:20:57][8.3]

Michael Tanner: [00:20:58] Don’t, don’t, don’t invest your own money in solar. If you want to stand up a solar farm and collect fees, it’s a great way to make money. [00:21:04][6.0]

Stuart Turley: [00:21:05] I absolutely. And and it’s about deal evaluations. You don’t have to talk to experts. Amen. I’m learning. [00:21:13][7.9]

Michael Tanner: [00:21:14] Now. Whoa, whoa. They were down to collect those fees, I tell you that much. But. All right, guys, we’ll let you get out of here. Get back to appreciation for checking us out here on this gorgeous Tuesday. We’ll see you, around the corner. See you Next time. [00:21:14][0.0][1231.0]

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