Sanctions Don’t Work and Pipelines Matter!

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Lessons from Texas for California, New York and Other Green Virtue Signaling States

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Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Thursday, May 9th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up lessons from Texas to California, New York and other green virtual signaling states. Next up, Russia to supply China with gas by almost 30% cheaper than European consumers by 2027. Interesting. That’s according to Bloomberg. We’ll have a lot to say about that one. Next up, Wisconsin ratepayers are still paying off coal plants of the past and have now asked for 2 billion for future gas plants of the future, which maybe I’m not mad about, but interesting article. We’ll then finish up the news segment by talking about the Chinese and U.S. influence in Europe’s energy industry. Stu. Then toss it over to me. I will quickly cover what’s going on in the oil and gas markets. We did see the EIA. Pretty surprising. Crude oil inventories draw, which sort of buoyed markets, to where they currently stand right now. We were we were up relative to where the market opened the day. But we were also see, we also did see oxy go ahead and release earnings. And it wasn’t great studios to, to say the least. So we’ll dive into all that and a bag of chips guys. As always I am Michael Tanner joined by Stuart Turley. Where do you want to begin? [00:01:31][77.7]

Stuart Turley: [00:01:32] Hey, let’s start with our buddies there. Lessons from Texas for California, New York and other green virtual signaling states that we love me some Texas. Michael, you know, Texas has really done a lot. And, this first chart right out of the block price per kilowatt on, on in California, 25.37, new York 19.37. What is it in Texas? $9.68. You just gotta love some good old Texas energy. But, Michael, this is where it really sits down and where I did not know some of this in this article. And wind in Texas, falls down during the summer. So we’re adding more solar. The only reason that we’re able to stay below the $10 price cap as compared to the 25 for California and the 19 for New York, is the reason is because we have coal, we have gas, and we have nuclear. And sun during the summer doesn’t work at night. So you have to have the natural gas. Ercot will see the solar increase this summer. But here’s the conclusion. Texas has the most wind capacity in the country, but wind generation had seasonal lows during the summer due to wind speeds. Just when demand increases the high use of air conditioners. Texas is adding more solar to its grid, which produce more energy during the summer. But solar power is limited and does not produce generation at night. You got to have all the above in order to save money. [00:03:21][108.6]

Michael Tanner: [00:03:21] Yeah, it it just goes to show that having the free market compete is a better system than regulating exactly what energy should be produced as part of your mix. It’s pretty crazy. I think people think Texas, yes, Ercot has its issues. Were the first to say Ercot doesn’t have much figured out, but what the free market system that Ercot oversees allows or is lower energy rates. And this is, you know, going back to that charger, that’s the EIA and that’s February 2024. So that’s recent and that’s the EIA, who would love nothing more than to show California and New York having the lowest electrical rates. [00:03:57][35.6]

Stuart Turley: [00:03:58] Exactly. So I mean this this article was so way cool in so many different ways. But you have to have an all the above. And that feeds right into and a couple other stories here. But let’s jump to Russia right now. This is, this one is actually kind of funny. Michael. Sanctions. Do you think they were in. No, no. Let’s have a moment of silence for some sanctions. Okay. Russia to supply China with gas almost 30% cheaper than European consumers by 2027. You know why, Michael? [00:04:32][34.6]

Michael Tanner: [00:04:33] Sanctions don’t work. [00:04:34][0.8]

Stuart Turley: [00:04:34] Sanctions don’t work, and pipelines matter. [00:04:36][1.9]

Michael Tanner: [00:04:36] So put that on a t shirt. [00:04:39][2.8]

Stuart Turley: [00:04:40] Iron pipelines matter. Yes, but sanctions don’t work and pipelines matter. That is actually a good quote. With reference to the, forecast for the Ministry of Economic Development for the Russian Federation, quote, gas prices for the Asian nation are expected to be as much as 28% below for Russia’s remaining European clients, at least for 2027. And this is on the heels of, the. EU and the U.S. are trying to now impose sanctions on LNG. For Russia. You can’t buy this kind of stupid. I’m sorry, this is just. Absolutely. The ministry expects gas exports to China to cost $257 per 1000m³, compared to, U.S. $320 per flows to Western Market. That’s a lot. [00:05:38][57.9]

Michael Tanner: [00:05:39] Yeah, it it it really. It really is. You know, considering 220, I mean, it’s it’s pretty funny. And that price they say over 2520, 25 to 2027, that price for China will gradually fall while the price deliveries to the west is expected to remain roughly constant. [00:05:56][17.1]

Stuart Turley: [00:05:56] Oh, yes. And higher. And I guarantee it’s going to go up because Putin is tired of being monkey. Monkey mixed around, if you would, as a way to say that from Texas. And let’s roll over to Wisconsin here. I in this article is a lot longer and is worth our time on energy news beat.com who is concerned ratepayers still paying off the coal plants in the past? Ask for $2 billion for gas plants of the future. This title of this article is kind of misleading, and a little bit is the reason they’re asking for the new gas plant is for dispatchable, energy, because the coal plants are coming offline and they have wind and solar, and they need the dispatchable, energy. So if you did not have to go to dispatchable, you could go to these plants cheaper in an organized fashion and, have to have the $2 billion. So let’s go through this here real quick. This is just unbelievable. The company says it needs more gas capacity for three main reasons. Its coal plants are being retired because of the Biden administration, the Clean Air Act, regional transmission organization. Mismo. Miss. oh. Is, giving renewable less credit toward you utilities capacity obligations meaning their formula in mesmo has changed so that you have to have X number dispatchable power in your reserves. They need to be, dispatchable. Natural gas is the only way that they’re going to be able to get this up there. Based off of the formulas that they have to have. [00:07:44][107.9]

Michael Tanner: [00:07:45] Yeah. I mean, first off, whoever came up with the name of this company, we energies, they need to be just taken out of the back and shot. Mean not a great branding move, in my opinion, to call yourselves we energy. But we’ll save that for another one. Again, who would have thought people just want elect? Who? Who would have gas? People just want electricity when want on a whim. Who would have thought, oh, I need to plug something in. I like the electricity to be on. [00:08:11][26.1]

Stuart Turley: [00:08:11] Oh, you know, it’s now become a way of life. And we are, the way it’s designing, Michael, is you could see rolling blackouts. I’m not predicting this. The the federal government is now predicting that due to long lead time. Listen to this. Due to long lead time in high demand of some equipment, we have requested to be able to procure certain items to make sure they’re available in a timely manner. Consumer advocates argue that companies shouldn’t be allowed to bill ratepayers for these supplies before the new power plants. Here’s part of the problem. We’re talking two years that you have to plan for a supply chain now for trans, for part of the grid components now, two years. [00:08:57][45.7]

Michael Tanner: [00:08:58] Well, and I mean, there’s also you called this about three years ago when you said natural gas is going to become the new renewable fuel of the future. Listen to this email that we, energy spokesperson Brendan Conaway said in an email. So he’s like putting this in an email. He’s the spokesperson for wie energy. Quote. The key to the renewable energy transition is to have quick start gas plants available for those times when zero carbon generation cannot meet energy customers need. Then he goes on to say, as we transition our baseload power to renewable energy, these proposed plants will support our customers. When solar and wind are not able to provide enough power. I mean, they’re just saying the quiet part out loud. [00:09:41][43.7]

Stuart Turley: [00:09:42] Yeah. When your health is your number one focus, this is another quote. And here it has to be about getting pollutants gone, not making them less, there is no safe number of kids having asthma attack. The air is cleaner now than it was when I was growing up. And it’s because of natural gas. [00:10:00][17.7]

Michael Tanner: [00:10:01] So we energy’s not looking out for you, trust me. [00:10:04][2.9]

Stuart Turley: [00:10:04] No. And no, we need to talk about Chinese and. U.S. influence in Europe’s energy industry. While there are two countries on this planet that I would not want to do business with, the U.S. government or the Chinese government, and the poor old EU is just as dumb. The EU climate agenda is in trouble. This is the first paragraph out of the article, Michael. The Green Deal, which aims to slash the bloc’s carbon emissions by 55% in 2030, has a carbon border tax. How do you put in a carbon border halt, Mr. Carbon? Don’t you know cross-border? [00:10:45][41.0]

Michael Tanner: [00:10:48] Here’s the thing. Europe has put himself in a really interesting position because they you know, Trump pointed this out five years ago. You really shooting yourself in your foot Europe, if you’re going to rely on Russia for all of your energy needs, because then when Russia does what Russia has always done, going back to the 1800s there, and this invasion of Ukraine is unfortunately nothing new. If you if you’ve listened to Putin, he’s talked for he’s a, you know, a history buff. He did. He went back in that interview with Tucker and started in like your 1000 and went back all the way there. So it’s not like what? It’s not like Russia decided to just invade Ukraine. And this is something they’ve never done before. So now if you’re going to rely on China or you’re going to rely on the U.S., who the U.S. has shown they’re only looking out for the United States, which is fine as a U.S. and as somebody lives news, I want my government looking out for me. Unfortunately, as we’ve seen the government, the U.S. government is really not just looking out for you and me and they’ll and you, the listener, they’re really looking out for their corporate, you know, government interests which sometimes align with the U.S. people. Most of the times it doesn’t, but sometimes it does. And now, now and then and then you’re looking over and you’re going to now rely on the CCP. Oh, good luck with that. [00:12:02][74.8]

Stuart Turley: [00:12:04] No. So the bottom line is supply chain supply chain and supply chain. And it is Secretary Yellen yesterday was out there saying oh bad China bad bad China. we’re going to sanction you on your on things. The Green New Deal for the US has got a supply chain problem with China bad. The EU has it even worse. [00:12:30][26.2]

Michael Tanner: [00:12:31] Oh yeah. They’ve got it. They’ve they’ve got it. They’ve I mean, I wouldn’t want to be the EU. Yeah I, you wouldn’t want to trust me. [00:12:39][7.4]

Stuart Turley: [00:12:39] No. And anyway, with that, this is, there’s a lot of great stories out there on energy news. Broadcom today they’re men. It’s been a lot of fun. After you. [00:12:48][9.0]

Michael Tanner: [00:12:49] Yeah we’ll go ahead and and pay the bills here guys before we jump into finance. As always thanks for checking out the world’s greatest website www.energyNewsBeat.com the best place for all your energy and oil and gas news. A lot of great stuff coming down the pipeline 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 energy and the oil and gas business. You can hit the description below for all the links to the timestamps, articles, and stuff we cover. As always guys. Energy news beat.com. [00:13:22][32.9]

Michael Tanner: [00:13:24] I mean overall markets today’s news is a little bit choppy. Overall markets actually sentiment was fairly good even though we see markets flat Nasdaq down a little less than than a percentage a little less than about one, 10th of a percentage point, mainly off the fact that Uber missed, revenue expectations and absolutely kind of pulled down the entire market there. We did see two year yields rise about, 2/10 of a percentage point ten year yields up 7/10 of a percentage point. So long term outlook looking a lot better than the short term outlook with yeah you know what that means. Woo fun for us. That’s a that’s a joke. yeah. dollar index up about 1.5 or 0.15 percentage points. and we did see bitcoin stable out only up about a half a percentage point. Still trading $62,000. Crude oil, actually up three quarters of a percentage points. We did see natural gas, drop about one percentage point to $2.18. Brant oil 8386. Mainly why we’re why we saw oil price rally really in the face of the rising dollar index was the fact that we did have a surprise EIA crude oil inventory draw. Miss producer if you don’t mind throwing up that the the the image here we we see crude oil inventories from the straight from the, commercial SPR or from the commercial reserves excluding the SPR dropped to 1.4 million barrel. [00:14:50][86.3]

Stuart Turley: [00:14:51] Draw. [00:14:51][0.0]

Michael Tanner: [00:14:52] Which if you listen to show yesterday the a, the API was guesstimating somewhere about a 500,000 barrel build. So flip that a little bit. One of the reasons why we’re seeing prices rise a little bit. We also did see, gasoline inventories increased by about 900,000 barrels, with a. Production, averaging about 9.5 million barrels daily. Last week we saw about a 3 million or 300,000 barrel build in the gasoline markets. We also did see gasoline inventories. Or excuse me, distillates. Inventories build by about 600,000 barrels. And, we did see 700,000. That was, less. That was more than what we saw last week. We saw a draw of about 700,000 barrels prior to last week. You know, we also did see the latest short term energy outlook, which sort of, you know, kind of puts, as I mentioned yesterday, puts the IEA kind of in the IEA category of they’re a little more bearish. You got the IEA over here EIA and you’ve got OPEC. On the other hand who thinks that things are about to go gangbuster here. So we’re going to be following all of that. You know earnings season is in full swing guys. you can again go toward energynewsbeat.com/earnings. That’s going to go ahead and get you all of the different earnings releases. We’re making sure everything’s up to speed there. But oxy comes out and not a great not a great day. I mean, you know if you if you’re listening to Reuters, the title was Occidental beats profit estimates on higher oil prices, but revenues down by about ten percentage points. So market reacted fairly negatively with oil prices up today. Oxy dropped about two full percentage points. And I thought another thing that’s interesting. You know obviously everybody was dealing with some weather in quarter one. So some of those volumes were down. In terms of actual sales volumes. But I want to look I want to show this to you. Oil production was down. Let me find it here. They got about 7000 pages on their earnings release. Oil production, was down to, 1.1 million barrels per day or, you know, BOE per day, which was down about ten percentage points month over or quarter over quarter. Yet like EOG, they spent about 1.5 billion in CapEx. So I would. [00:17:08][136.2]

Stuart Turley: [00:17:08] Absolutely love. [00:17:09][1.2]

Michael Tanner: [00:17:10] To have that type of budget. So if we can work on getting that for the show here. Yeah, absolutely pleased to be able to lower oil prices or be able to lower revenue, but have an oil sales but have increasing production. Unbelievable. Oxy also gets hit by some, some midstream misses. We know they deal with a lot of stuff there with their you know, they obviously they’ve divested of Western midstream. They still own a nice big chunk of that. But they also do have some internal stuff. So oxy did not post a great quarter. It’s really all I saw in the in the markets today. So do we we we you know earnings season is about to come to an end. We’ll see a few more drop. But then we’ll we’ll be full swing into quarter two and quarter three. So, what do we miss. Do we gotta we gotta, you know, we great week. Couple solo shows, but, we’re we’re we’re fired up and getting ready for the weekend. [00:17:59][48.7]

Stuart Turley: [00:17:59] Oh, yeah. It’s going to be fantastic. It’s also interesting to see what’s happening with, Total Energy and Saudi Aramco and other earnings going on around the world. When you have shell and total energy is looking to go to the Nasdaq. Honestly. And if they’re starting to take a look and saying, we want to have be, listed on the US stock market, that’s not. [00:18:22][23.2]

Michael Tanner: [00:18:23] Yeah. No, it would be. It would be super interesting though. Maybe they’ll keep selling, phantom carbon credits. But, we did see. [00:18:31][7.7]

Stuart Turley: [00:18:32] That wasn’t that wild. [00:18:32][0.7]

Michael Tanner: [00:18:33] We talked a little bit about that yesterday. But know guys appreciate everybody. We got a great week coming up next week. I’ve got a great interview, with Bennett Williams on the deal spotlight that we just recorded yesterday, talking all things Exxon, Chevron and Hess. We go about an hour breaking down everything. He’s he’s a he’s a great listen guys he’s got a wealth of knowledge. So I’m really excited to drop that one. And we got a lot of other stuff coming up the pipeline. So appreciate everybody sticking with us. You will hear Stu, what do you have tomorrow for, the, conversations with Stu Turley? [00:19:05][31.2]

Stuart Turley: [00:19:06] Depends on who’s got coming out of the corner here. Let me take a look. Here. Hold, please. Let me, pull the production schedule up. We’ve got a few others coming around the corner. Don’t don’t don’t don’t don’t do that. Production. Production? We just had Paul Tice release. That was a lot of fun. That was a great one with ESG investing. And we have, waiting on two of them here. So we’ll, put a surprise in there for you. [00:19:37][30.9]

Michael Tanner: [00:19:38] No. Absolutely. Well, well, it’ll be good, guys, as always, check us out. EnergyNewsBeat.Com. Have a great Friday. Have a great weekend. We will be back in the chair Monday. You can hear our weekly recap as always though on Saturdays though. But I’m Michael Tanner. We will see you tomorrow folks. [00:19:38][0.0][1138.2]

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