Daily Energy Standup Episode #286 – EV Fleet Downsizing, Self-Driving Repo Cars, Germany’s Net Zero Challenge, ESG Taboos, Arctic Storm Gas Outage, and Biden’s Natural Gas Tax Crackdown

Daily Standup Top Stories

Hertz cites weak demand, high damage costs in decision to downsize EV fleet

The Price Germany Pays for Net Zero

Highlights of the Podcast

00:00 – Intro01:35 – Hertz cites weak demand, high damage costs in decision to downsize EV fleet04:10 – Would you buy a Ford self-driving car that would automatically drive to a repo company if you missed a payment? 06:36 – The Price Germany Pays for Net Zero09:19 – ESG Becomes Corporate America’s New Taboo – What is next?11:16 – Massive Gas Outage Threatens Millions Of Americans’ Energy Supplies Amid Arctic Storm14:04 – Biden admin issues new natural gas tax in latest fossil fuel crackdown17:58 – Markets Update20:48 – Outro

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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 in to the Monday, January 15th, 2024 edition of the Daily Energy News Beat stand up. Here are your top headlines for the day. Hertsz cites weak demand, high damage costs amid decision to downsize EV fleet. Next article up. Would you buy a Ford self-driving car that would automatically drive to a repo company if you missed a payment? Oh, I’m not sure. Next up, the price Germany pays for net zero. Next up, ESG becomes corporate America’s new taboo. What is next? Next article up. The massive gas outage threatens millions of Americans energy supplies amid the Arctic storm. Hope everybody’s staying warm. And finally, in a new segment, Biden admin issues new natural gas tax in latest fossil fuel crackdown. We will then shift over to finance and quickly cover what’s going on in the oil and gas markets. We saw prices rise and then fall, mainly after some strikes in the Middle East and some oil being diverted from the Red sea. We did see rig count drop on Friday, so we will cover all that and a bag of chips guys. As always, I am Michael Tanner, joined by the executive producer of the show, the premiere of the show, and the director and publisher of the world’s greatest website, Energy News beat.com, Stuart Turley. I’m. Turn it over to you, man. What do we got? [00:01:32][77.3]

Stuart Turley: [00:01:32] Hey, let’s get rocking and rolling. Let’s go to Hertz cites weak demand cost in decision to downsize EV fleet. Hey I’ll tell you what. This is huge, because, uh, Hertz said that it expects to book 245 million in charges in the fourth quarter, sending in stock. Ooh, there’s, uh, there’s the I our guy of the week. Let’s see what he comes up with after this earnings announcement. They’re down 6% in early trading. And, uh, its rival Avis is uh, also looking at this in Michael, this was triggered by insurance and as these things and you can’t sell these things uh, because of the amount, you know, $24,000 is the average cost of a new battery that’s come in here. Uh, so it’s insurance, and then the resell, they lose resale because that’s how hurt, uh, really does. Here’s a quote in here. Uh, going forward, the company will continually actively manage the total size of its EV fleet, as well as the allocation of EVs among customer segments, including leisure, corporate, government, and ride share. [00:02:46][73.8]

Michael Tanner: [00:02:48] Yeah, I think it’s important to point out that, yes, it was an interest, but they also mentioned in their regulatory filing that collision and damage costs remain high for all of their EVs. Why all those special tools that it cost to replace and the specialized knowledge to repair and layering on top of the low resale value? It’s of course they were going to have to take a charge. So you wonder if this is the first domino to fall among a lot of these car renters, and you’re going to see this. We know that Ford Motor Company posted a less than, um, expected quarterly earnings, down about 1.3 percentage points, which adjusted for about a $1.3 billion loss coming from their EV. You know, we covered that a few months ago or a few weeks ago. So pretty insane. What’s going on it. And I mean, we’re sitting right here in the midst of as we record this over the course of this Arctic storm that’s going all through the Midwest right now. We hope everybody staying warm. Now’s not the time. You want an EV? [00:03:42][53.6]

Stuart Turley: [00:03:42] No. Uh, Ford, t his is a quote said the customers interested in EVs were unwilling to pay the vehicles premium prices in the company. Paws, Michael. Billions of dollars in long term investment. Nevs. Uh, what’s a few billion between friends? I call it profit. Yeah. [00:04:00][18.0]

Michael Tanner: [00:04:01] All right, what’s next? [00:04:01][0.7]

Stuart Turley: [00:04:02] Let’s go to the next one. Hey, Michael. This might be a feature, though, that Hertz and Amos and everybody would want to use, but would you buy a Ford self-driving car that automatically would drive to a repo company if you missed a payment? This is not headline news. I didn’t I found this on a little local TV station. So I’ve embedded the video here, and I just thought it was absolutely who the, the, uh, newscasters from the local ten or, like going home. Can you imagine having your car wake up in the middle of the night and go, you a bad man and then run out and go to the collection agency? [00:04:43][40.4]

Michael Tanner: [00:04:44] So, so, yeah. So, so to bring you guys into the fold here, Ford has filed a patent for self-driving cars that would basically drive the car away from the owner after a series of missed payments in catch. I mean, it’s kind of funny, to be honest, and it’s something I didn’t even think about when it comes to self-driving. And in this, I mean, self-driving EV cars are different, but it’s one of those second order effects that we like to talk about of, oh yeah, this is payment. Now, instead of having the. Guy come up in and try to slip your car into it into a tow truck as fast as possible. You just saw a sudden move down to see your car just driving away. [00:05:22][38.5]

Stuart Turley: [00:05:23] Now here’s where I bring up a couple warning. They said the first infractions would be, uh, the heater going on. Uh. Really bad. Uh, and then the sound. No. They didn’t. [00:05:33][10.5]

Michael Tanner: [00:05:34] They’re just going to blast you with heat in the summer. [00:05:35][1.5]

Stuart Turley: [00:05:36] Oh, yeah, and then they’d play rap where they would play some music that is not in your, you know, your, uh, venue. You know, some people hate country western. Some people hate rap. They would just go to whatever you never listen to and play it. Really, for. [00:05:49][13.4]

Michael Tanner: [00:05:50] Some people, they would just blast the Energy News Beat podcast 24 over seven. [00:05:53][3.4]

Stuart Turley: [00:05:54] Hey, there’s some advertising for you. Hey, here’s another beer. Is actually is is, uh, terrorism. Uh, and we know that the EVs are capable of being hacked. So what happens if, uh, Big Brother U. Here’s where it gets really, uh, once they get the disinformation done. Can you imagine putting something out on Twitter and they go, you bad, you very bad. And then they take that almost sound like Elmer Foote. They take the car and it goes away. It goes into government prison, your car because you put something bad on Twitter. Hey, let’s go to the next one. What is the price that pay? Germany pays for net zero. Michael, for years you and I have always been laughing at Germany. You can’t buy this kind of entertainment. Especially when California and New York followed Germany down off the cliff. The lemmings. The construction of new energy, uh, generation, which is a small part of the net zero transition, the largest estimate from the Institute of Energy Economics at the University of Cologne. It is. Germany faces 60,000,000,065.5 billion US, a financing gap up to 2030 to build sufficient power generation. That’s not even including the higher cost, the cost per kilowatt hour that these things cost. Because again, everybody is going out there saying you gotta you can put in low cost and renewable. Well, Michael, for every nameplate that you have, you have to add 180 more, uh, one wind turbine just because of the nameplate. So, uh, then you also have to put in the natural gas and or the coal. Germany just announced yesterday or the day before, they’re increasing their coal production because they don’t want to get mud. All the German farmers are protesting, and they realize they’re about to get, uh, thrown out. Kind of like a Frankenstein movie where you always see the villagers come running in. Uh. [00:08:04][130.4]

Michael Tanner: [00:08:05] But what this article really does is point out the fact that these numbers are being hidden from the public. I mean, separate research that they quoted from this other think tank estimated the cost of reaching net zero between now and the end of 2030 will approach $1.9 trillion. That’s 240 billion per year. Again, those keeping score at home, it’s that’s what’s really going to it’s this whole thing with with this net zero push. It’s I would love to get to net zero, but it’s unfeasible to think we can spend 240 billion a year. And that’s only the cost to basically get the new generation. What about replacing all the stuff that goes down and and you know, if you’re talking about ten year life cycles for renewables, well, stuff that was installed from 2020, it’s already cycling out here. [00:08:53][48.2]

Stuart Turley: [00:08:53] Oh yeah. And that’s where the all the renewable the solar panels and everything is going into the junk yards and it’s all toxic. Um, it’s just amazing. And so you’re going to see some major pushback, uh, on all this around the world. I’m just hoping the US doesn’t, uh, get into some problems. We’re gonna talk about that on another, uh, story here in this, uh, news thread. Let’s go to the next one, Michael. ESG becomes the corporate America’s taboo. What’s next? Michael, you and I have been covering this for several months now, and if not more than six. ESG was always talking about you. Always. I heard the the consultants talking about ESG, kind of like your favorite consultants, Bob and his other brother, Bob. Um, the shift away from ESG, as evidenced by the reduced mentions in the earnings call, changes in corporate reports in the closure of, uh, relevant realm related investment policies. Here’s a quote. ESG has gone from the buzzword, uh, that every investment advisor or company or government official had to be familiar with and append to every single piece of business they were involved with, to becoming the latest dirty word in corporate America. There’s, uh, one of the top. Because box was in the, uh, Wall Street Journal article. It’s amazing. [00:10:17][83.8]

Michael Tanner: [00:10:18] Well, the sleight of hand that this article also points out that they’re doing is rephrasing it from ESG to responsible business. [00:10:25][7.3]

Stuart Turley: [00:10:26] Right. And in this came from are you ready? Our buddies over there at Blackrock. Uh, because they wanted to keep their job. Uh, so they can rule the world. And also Bill gates when Bill gates comes out and says, well, we’re not going to be quite dead yet from the climate change because there is no climate change. And then you have Larry Fink coming out and saying, well, ESG also includes investing in nuclear and oil and gas. You’re like, that is hypocrisy at its finest. Um, anyway, so, uh, 30 billion had been shaved off the value of clean energy stocks the previous six months. 30 billion. [00:11:10][43.5]

Michael Tanner: [00:11:12] As we always say. What few billion between friends. Man, what a scam. What’s next? [00:11:16][3.8]

Stuart Turley: [00:11:16] Let’s go to the massive gas outage that threatens millions of Americans. Energy supplies amid Arctic storm. This is also coupled with craziness going up in Alberta, Canada. They have had the heavy, heavy push going to, uh, renewables and their gas shortage is also down. This is up in the upper western portion. And I’ve also included a, uh, thing that was last night. And you had it was lighting up like a, uh, warning, you know, on, uh, on a ship you had roughly in Oregon, 212,000. There’s about half a million people on this map that were out of power, and it could have gone, uh, even worse. So you got to have natural gas to keep the grid up. And, uh, let’s see the storage facility that came out that had enough gas to power upward of 6 million homes, if at all, was used to generate electricity. The gas network also had supplies for heating furnaces like city in Seattle, freezing the coldest temperature in the city in 14 days. Wow. [00:12:26][70.0]

Michael Tanner: [00:12:27] Yeah. So, I mean, when natural gas is going down, it’s not good. I think the one thing to point out is that a lot of the reasons for the power outages when you get into, like, specifically like in Texas and you get into, you know, places where one the infrastructure is not quite, uh, wasn’t quite designed to be this cold. I think it’s it’s crazy. It’s 15 degrees here. That’s cold here in Dallas. Uh, I, I come from Denver, though. Three feet of snow. You got to move out of your apartment that day. Sucks to suck. You’re moving. It doesn’t shut. So there is a is a shift of perspective that I think we have to think like cold weather areas are designed to hold this. You also have to realize, you know, the grid grid generation. And then to your actual where you live is a whole nother thing. Because what happened in Oregon was winds knocked down a lot of the supply coming from your central power stations to the actual end user. So we also have to realize that places like, again, Colorado, Wyoming, Colorado, places, you know, you know, mid you know, Minnesota, places that are used to freezing temperatures have a lot of this worked out. So, uh, you know, we can’t blame this all specifically on the you know, what it is is just bad design. You know, we you should always design your systems to until the worst possible conditions that you could come across. And that, I think, is where Texas specifically got itself into trouble. Is it never retrofitted anything or, you know, it just assumed that the once in 100 year flood, as it’s called, you know, the the 100 year flood only show would never show up. Well, it does show up and then you get in trouble, right? [00:13:57][89.9]

Stuart Turley: [00:13:57] Well, the Biden administration is about to just absolutely make it all worse. Uh, you gotta love a quality administration. This last article, uh, Biden administration issues a new natural gas tax in the latest fossil fuel crackdown. This is just absolutely despicable. Um, this was on Fox News, and the EPA spearheaded the proposal, said it will help tackle wasteful methane emissions from the oil and gas sector, encouraging facilities with the highest emissions to level or meet or exceed levels of performance. You’re going to get taxed, which begins at 900 per metric ton of wasteful emissions in 2024 and increases to 1200 for 2025 and 1500 for 20 and 26. I just had another great interview with, um, some folks, and this is a lot of money to the oil and gas industry. Unbelievable. [00:15:01][63.4]

Michael Tanner: [00:15:02] Well, again, it’s going to put the smaller companies out of business and it’s going to lock in large, you know, you know, large international companies. I mean, when it comes down to it, Chevron, Exxon and BP love these type of rules. Oh, sure. Yeah. Add a little tax on there. You know who can’t stand it? The 90% of oil and gas operators who are considered small cap. So they don’t account for a large amount of production, but what they do account for is a large amount of, you know, and they do actually account for a large amount of production relative to what the big companies do. But I think this is where I always. [00:15:34][31.7]

Stuart Turley: [00:15:34] 20% of the oil, Michael, in the country is made by private companies. [00:15:39][4.7]

Michael Tanner: [00:15:39] Yeah, but I’m talking about your mom and pop, your mom and pop operators, the companies that, you know, the guys that are supplying, you know, are selling 15 loads, you know, 150 loads a month versus are doing 2 million barrels of oil a day. What I’m saying is Exxon loves it when they come out with this. There’s a reason why the API, who is funded by the large oil and gas companies, have come out for a carbon tax. You think it’s because they like the carbon tax? Well, no, it’s because eight companies provide their funding, and all eight of those companies would love nothing more than to raise the cost of oil and gas slightly, to the point where it drives out their competitors and allows them to acquire them and half the cost. [00:16:20][40.9]

Stuart Turley: [00:16:21] Your second order and third order magnitude are creeping up in these regulatory issues that I’ve been looking at, Michael. They have. Are you ready? Uh, the first class one, class two and class three. It is absolutely bonkers on what they’re doing in those. And then this goes in with their regulatory issues of shutting down coal that we just talked about. Germany is bringing all their coal back on line. Uh, the Biden administration is cutting all of our coal plants quickly. [00:16:55][33.8]

Michael Tanner: [00:16:56] Nope. I’m with. [00:16:57][0.9]

Stuart Turley: [00:16:57] Whoops. So off to you. [00:16:58][1.4]

Michael Tanner: [00:16:59] All right, well, before we go ahead and dive into finance, guys, we got to pay the bills around here. Um, this show is sponsored by the world’s greatest website, energy news beat.com. All the news and analysis. I say that in quotes, um, that you’re that you’ve heard, um, our courtesy that websites do in the team do a fantastic job of 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 and oil and gas business. You can check out the description below. Put all the links to the articles. You can also see the timestamps are available if you want to pop around, go back, listen to one of our segments. Pop ahead. And here’s what’s happening with Rig Counts. Um, you can also check out um dashboard.energy newsbeat.com. The best place for all your data energy news combo. We’re going to be pushing that hard here in Q1, so we appreciate all the feedback there. Uh, you can email the show questions@Energynewsbeat.com. Sign up for our Substack. Um, on our website. You can also sign up for our email newsletter. Um, but as always, guys, we appreciate you checking out the show. [00:17:57][58.3]

Michael Tanner: [00:17:58] But let’s move to finance. You know, I think from an oil and gas standpoint, we saw on Friday, prices rise mainly off the fact that there was some oil being diverted from the Red sea after we, you know, the US takes an interesting move and goes ahead and, you know, does a strike on the Saudis, um, which, you know, Lindsey Graham, you know, loving that. Um, you know, you know, inches closer to me getting drafted. So if all of a sudden, if I, if I don’t show up one day, just know I’ve been drafted into World War three. Um, and stew will take over the show from there. Um, but it what’s interesting was the fact that prices rose at. Then we saw really at about noon, prices diverted back down, and we only ended up about a quarter of a percentage point relative to where it opened. We we opened around $72, ran all the way up to a little bit above $75 off the back of this news. And then while Treasury yields fell off the back that the producer price index fell, we saw oil prices naturally come down where they closed that at 7268. We looked to open somewhere a little bit above that. Specifically when it comes to when it comes to what happened this weekend, it seems like we’re probably going to have a gap up as we record this on the 14th in the afternoon. So I think what you’re going to see is a gap upward will probably if you listen to this on Monday, probably seen prices rise uh, and be above that that that $73 that mark. That would be my guess I think on the natural gas side with this cold weather, we’ve seen just boop boop boop boop boop or all the way up to $3.33. I expect to see that roll over. And probably somewhere around that $3 and four, uh, $3.50 mark as we roll through the night session into the 15th. Um, you know, it just absolutely that all this cold weather is absolutely going to help push prices up in the short term. Hopefully. No, no pipes freeze. And this is, you know, throughout the Rockies, if if we see a freeze that causes oil production to shut down, it takes a while for that to come online. So I think that’s the storyline follow within years. How much of this cold weather throughout the Midwest knocks off oil and gas production? You know, you’ve got a lot of mid-continent natural gas, you’ve got a lot of oil that’s producing that Oklahoma, you know, bandwidth, um, that, that, that runs up, down and then down into Texas in that Mid-Continent area. So how much of that gets knocked off line? How quickly can it come back? You. We’ll see prices rise in the short term. You know, it read in the headline, Stu. The only other interesting thing on Friday I saw we saw rig counts drop, you know, uh, by two from week over week. So on uh, 619 again, that’s a drop of two relative to last week, down from 156 from last year. Canada saw an increase of 88 rigs. Internationally we saw a drop of 23. So you know the the rig count continues to be an interesting story. Um, and in the US we continue to see though that rig count kind of tick tick tick tick tick down to be interesting to see where it goes. Um, that’s all I’ve got to do. What else you got for us? [00:20:49][170.9]

Stuart Turley: [00:20:49] Well, hey, we just released, uh, two really, really cool, uh, podcast. One with, uh, Hugo Kruger, and he is a international, uh, really, really good thought leader. Uh, he was in Paris when I interviewed him. And then he is from South Africa. Great episode. Then also a shout out to Doug Sandridge. Uh, wow. He is the, uh, executive director for the oil and gas executives, uh, that support nuclear. And he and Chris Wright and I are going to be doing a podcast here in the next few months. Uh, pretty big one about how, uh, Liberty Energy is really becoming, uh, a leader in that. So pretty cool stuff. [00:21:33][43.8]

Michael Tanner: [00:21:33] But possibly Brittany, Chris Wright, the CEO over there, we we really enjoy that. Who else is going to be releasing? Um, we’ve released our latest deal, spotlight episode number three. For all of you minerals junkies. We need to we need to do more of a public post on that, so we’ll get out probably. Now I was really looking at the Apache Kalon deal. They’re a little bit vague on the number of, uh, locations that they’ve got to visit. So I’m gonna have to do a little back calculation to figure. Oh, it’s never a good sign when they don’t tell you how many locations they’ve got. Yeah, it’s not a good sign because that’s that’s why you’re you you’re buying these public mergers are based off the undeveloped locations. I mean, that’s right. If you’re buying it for the PDP value, they way overpaid. So we will look to see there there are some other deals obviously the southwestern Chesapeake deal we need to look at, but that there’s a little bit more to that deal than necessarily just undeveloped locations. But, um, we’ll break it all down getting fired up for Nate guys. So go ahead, um, and reach out to us nape@sandstone-group.com. If you are interested in, uh, in hooking up with Seth there, we’re going to be doing a bunch of live podcast, probably doing some live deal valuations with our friends over at, well database and combo curve. Shout out to uh, um, both of those guys for, for some swag. Um, and we will go ahead and do that. But uh, with that guys, we’ll let you get out of here, get back to work, start your Monday. Hopefully you stay warm. Um, you know, depending on whether you guys are forced to go back into the office or not, but, but but stay warm. Uh, stay hydrated. Stu. Hope you feel a little better. You’re playing a little less sick right now, so we appreciate you filling in, but, uh, we’ll let you guys get out of here. We’ll see you Tuesday. [00:21:33][0.0][1257.9]

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