Daily Energy Standup Episode #120 – Unleashing Green Potential: Challenging the Resistance to Clean Energy Subsidies!

LAWRENCE, Kan.—The federal government has ignited a green-energy investment spree that’s expected to reach as high as $3 trillion over the next decade. The road to spending that money, though, is increasingly hitting speed bumps from the […]

Highlights of the Podcast

00:00 – Intro
02:08 – ExxonMobil is in no hurry to spend it’s a $32 billion cash war chest
05:22 – Let’s find a way to get tax subsidies for clean energy right
09:27 – Over our dead bodies. Backlash builds against 3 trillion clean energy push
12:05 – Market Updates
13:51 – Saudi Aramco Earnings
16:16 – Outro

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

Michael Tanner: [00:00:14] What is going on. Everybody, Welcome into another edition of the Daily Energy News Beat Stand Up here on this gorgeous Wednesday, May 10th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show the purveyor of the show, the Director and Publisher of the world’s greatest website, EnergyNewsBeat.com, Stuart Turley. My man, how are we doing today? [00:00:36][22.1]

Stuart Turley: [00:00:37] Its a beautiful day in a neighborhood we’re going to have a lot of fun today. [00:00:39][2.2]

Michael Tanner: [00:00:40] Yeah, we are going to have a lot of fun we have a great show lined up today. First up on the menu, guys, ExxonMobil is in no hurry to spend its $32.7 billion cash war chest high-levelt. Neither would I in this environment. So Stu’s going to dive in to do some high level stuff on what ExxonMobil is thinking. [00:00:58][18.1]

Michael Tanner: [00:00:58] Next up, Let’s find a way to get tax subsidies for clean energy right, this is a great opinion piece that Stu is going to walk through from the Council on Economic Policies. And then finally, Over our dead bodies, The Backlash begins to build against $3 Trillion Clean Energy push. This is a good article that Stu is going to come on what’s going on out in Kansas. [00:01:22][23.5]

Michael Tanner: [00:01:22] He’ll kick it over to me. I’ll quickly cover what’s going on in the oil and gas markets. We’ve got oil prices up 73, 54. And then just it really will just hit a few different earnings. I’d again recommend going to our website and finding all of those earnings. But we will cover it at the end and we’ll let you get out of here and start your day, guys. So appreciate you checking this out. [00:01:40][18.2]

Michael Tanner: [00:01:41] As always. The stories we are about to cover are courtesy the world’s greatest website www.EnergyNewsBeat.com. Dashboard.EnergyNewsBeat.com Is our combo energy news combo where you can kind of see a lot of the data that we talk about we’re trying to throw up there, get it while you still can you never know where it might go. [00:01:56][15.5]

Michael Tanner: [00:01:56] And we appreciate all of our people who are who are reading them, even with some fantastic views some of our website so we appreciate everybody there enough of the pleasantries, though, Stu, where do you want to begin? [00:02:06][9.3]

Stuart Turley: [00:02:07] Hey, let’s start with ExxonMobil is in no hurry to spend it’s a $32 billion cash war chest. Michael, what’s a few billion between friends? [00:02:16][9.6]

Michael Tanner: [00:02:17] I don’t know you could you could throw us one. [00:02:19][1.7]

Stuart Turley: [00:02:20] Oh you bet. My credit card will go that high the oil giant’s plan to patiently wait for the right acquisition and opportunity to arise. I love this. Exxon is swimming in cash. That’s a good way to say it. Kind of like what? Scrooge McDuck, you know, when he’s swimming around in there yeah in the cartoon. [00:02:41][20.5]

Stuart Turley: [00:02:43] The oil giant, giant generated Michael 16.3 billion in cash, Q1 one this year, spending billions. That’s even after spending billions on capital projects. It their cash cash on hand went up 3 billion after that. [00:03:01][18.8]

Stuart Turley: [00:03:02] But Michael, here’s where this article kind of gets a little bit more interesting Denbury it was at last fall, several media outlets reported exxon had held preliminary talks to acquire Denbury resources and the deal would have been for more than 5 billion. Well, when you got that money, billions what’s 5 million between friends. So. [00:03:26][24.4]

Michael Tanner: [00:03:27] Yeah I mean again what is Denbury there are there are carbon they’re big into the carbon dioxide game so is this an easy entry to get into that space acquire some IP probably. I mean that’s that makes sense to me not so much the deal size but what what Denbury is good at. [00:03:41][14.7]

Stuart Turley: [00:03:42] Oh absolutely And that’s the way that oxy is headed off and doing it right. Well meanwhile Exxon was you know you are all over that story with them trying to preliminary to acquire pioneer natural resources and you said it right who let that cat out of the bag? Was it somebody from Pioneer saying, oh, we want to test it or was it somebody from Exxon wanting to test and see how, though? [00:04:12][30.2]

Michael Tanner: [00:04:13] Oh, it definitely is Exxon, in my opinion, because they’re trying to get a feel for they’re going have to finance this. And so they need to know if they’re leveraging their stock to make this purchase. They need to make sure that the Street likes this deal. So that would be my guess. [00:04:25][12.4]

Michael Tanner: [00:04:25] I think what’s interesting in the next paragraph below, in addition to Pioneer, Exxon has reportedly had mergers guys, which is at least one other company. While they identify the identity of the Exxon, other potential target remains unknown. It’s likely a large scale producer in the Permian Basin. Stu, I think you tipped my hand. [00:04:40][15.0]

Michael Tanner: [00:04:41] I think they’re going to end up buying oxy. I think, you know, I really believe that is going to be the move if and it’s going to be huge. But that would be my my analysis in which they buy oxy and then shed Colorado so they only buy Oxy’s Permian business. [00:04:57][16.2]

Stuart Turley: [00:04:58] I couldn’t agree more and it’s because of the way it was managed and the way Oxy turned out to be the number one on the Dow 500. So,. [00:05:06][8.3]

Michael Tanner: [00:05:06] Yes. Now, did they overpay for Anadarko that. Is still true, but that’s for another conversation. What’s next? [00:05:14][7.9]

Stuart Turley: [00:05:16] Anyway, you heard it here first, Michael. You and I are you knew where I was going on that one. Okay, Let’s find a way to get tax subsidies for clean energy right. Hmm. Fiscal support will stimulate private investments in clean energy and foster innovation. But there are risks, says the first paragraph. Governments must get it right to avoid a wasted opportunity, says Guston donor Patrick Lang, and for him, Alu, the Council of Economic Policies. [00:05:51][35.4]

Stuart Turley: [00:05:52] After years of procrastination, governments worldwide are finally providing substantial fiscal support to clean energy. They’ve been doing it all along, dude. I mean, they have flat doing it. I do like this. [00:06:07][14.2]

Stuart Turley: [00:06:07] The Oxy Oxford Global Recovery Observatory and International Energy Agency estimate global fiscal commitments on green measures between 1,000,000,000,001.2 trillion since 2020. Kind of goes with what I just said. The OECD Green Recovery database estimates roughly similar amount of €1.1 trillion in government spending allocated to environmentally positive measures. [00:06:40][33.2]

Stuart Turley: [00:06:41] Here’s where the problem is on the Inflation Reduction Act. That’s the next paragraph down. All of the inflation reduction items, including the tax credits and tax deductions for EVs, had a lot of strings on them. Michael, It was almost like a can of worms. [00:06:59][17.8]

Stuart Turley: [00:06:59] And in fact, they wanted a bill in the U.S. they wanted the minerals done in the U.S. None of the minerals are done in the U.S. So when they actually came through with all of these things put in there, the unions were upset because it meant that not many union jobs would be getting money from the Inflation Reduction Act. Last week, the unions walked away from Biden. So you sit back and kind of go, he’s lost a lot of his base based off the tax credits being a first. [00:07:35][35.5]

Michael Tanner: [00:07:36] Yeah, well, I agree with most of what you said I think what’s interesting in this, what this article does is bring up what I’ve been preaching is the unintended consequences of, quote unquote, subsidizing clean energy the right way they bring it up. [00:07:50][14.3]

Michael Tanner: [00:07:50] Another concern is that law may not be as environmentally friendly as presented to lawmakers. There are always unintended consequences to harm natural ecosystems, particularly in developing economies. Due to the supply chain components of clean attacked they go on to citing the example of the, as you mentioned, the EV, which is already showing huge. You know, as we’ve talked about deforestation and biodiversity. [00:08:14][23.6]

Michael Tanner: [00:08:15] You love to talk about how the whales are dying because we’re rolling out offshore wind. You know, it clearly the unintended consequences of this drug needs to be taken into account. So if we’re going to do anything subsidy wise, understanding those second-order effects are critical,. [00:08:31][16.2]

Stuart Turley: [00:08:32] Right? And in the right under the unknown fiscal cost I love this, Michael. In this, it says the tax and climate law is already subject to debate which will prompt useful lessons for other countries. They’re printing money just as fast as we can right now. [00:08:48][16.3]

Stuart Turley: [00:08:48] First, providing tax credits without funding gap could turn out to have a very costly impact on government coffers. The Congressional Budget Office has estimated that the energy and climate provisions would cost over 369 billion over ten years, but they also admit they don’t know how much it’s going to cost let’s ask for an open checkbook can’t do it. [00:09:15][26.5]

Michael Tanner: [00:09:15] Yeah, I mean, I’ll I’ll take a I’ll take it easy check, please. What’s next? [00:09:21][5.2]

Stuart Turley: [00:09:21] Okay, let’s go to the last one here. Over our dead bodies. Michael, I got it. Real tickle on this one. Over our dead bodies. Backlash builds against 3 trillion clean energy push. Ballooning size of wind and solar projects draws local ire as they march closer to populated areas. [00:09:43][21.8]

Stuart Turley: [00:09:44] Michael, let me tell our listeners from the podcast they need to go to EnergyNewsBeat.com Take a look at that picture on this. Michael It is a scrawny looking cow, looking at the cat, looking at the camera in a wind farm in a Bismol field. I mean,. [00:10:01][17.7]

Michael Tanner: [00:10:01] I hate to say that, but I hope my Beef Stock start coming off that guy. [00:10:05][4.0]

Stuart Turley: [00:10:06] You’re going to need a thousand more hit the cattle because there’s not much me know now. Bowen Okay. The Green Investment Spree. I love this article. Let’s see, a year ago when we were a nice, quiet neighborhood, said Mrs. Kaufman, who has attended a series of contentious public meetings over several months as the county county considers revising regulations for wind farm. [00:10:32][25.8]

Stuart Turley: [00:10:33] County by county battles are raging as wind and solar projects balloon in size edge closer to cities and encountering mounting pushback in communities from Niagara Falls to the Great Plains Project have slowed, and it’s because of permitting and a few other things that they didn’t get in there. [00:10:54][20.9]

Michael Tanner: [00:10:54] Well, I think it’s important to note that she got approached to hang a wind power transmission line across her land. They’re going to give her six grand to do it. She said no. She also said that she was offered a store if they could store storage equipment, she could make an additional 4000. She also said no. So, you know, I mean, not that ten grand is a huge sum of money, but I mean, that’s enough to where, you know, you might think, yeah, sure, go ahead and just, you know, I’d take 10. [00:11:20][25.5]

Stuart Turley: [00:11:20] No, not when you’re talking. It’s going to be there for 30 years or excuse me, it’s going to be there for eight years, then nobody’s going to haul it off when it loses its ability to function. You’re going to have this boat anchor out there that they’re never going to get rid of. So what are you going to do? Let it sit there and then now it starts evaluating your property. Are you going to get any tax credits? Are those tax credits going to be any good? [00:11:47][26.3]

Stuart Turley: [00:11:47] So I think it’s abysmal of what they’re asking landowners to do. You know, in trying to do it, people don’t want things in their backyard. It’s the NIMBY and not Gumby. It’s NIMBY. Not in my backyard. [00:12:01][13.8]

Michael Tanner: [00:12:02] It’s true. [00:12:02][0.2]

Stuart Turley: [00:12:02] All right, man. Hey, back. You Dude. [00:12:04][1.9]

Michael Tanner: [00:12:05] Yeah, I think in in, in, in in finance, we’ve got a couple of things, really, besides earnings. Oil prices up to 73, 52, really off the back of a really nice EIA short term energy outlook. They dropped these really the first week of every month they quote coming out there says we expect seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months. That pretty much buoyed prices up to where we see now. [00:12:30][25.4]

Michael Tanner: [00:12:31] They also forecasted U.S. crude oil production will rise by 5.1 percentage points to about 12.5. 3 million barrels per day did lower its estimate from this year and from previous forecast cut their WTI and Brant forecasts by 7% each. We did see the API, which is interesting. We saw the API then come out an estimated 3.6 million barrel build in the Strategic Petroleum Reserves. That’s their estimate for tomorrow. [00:12:56][24.9]

Michael Tanner: [00:12:56] Analysts were expecting a drawdown of about a 900,000 so a big swing there. It’ll be interesting to see what the EIA says yesterday. You know we did see some Chinese imports contract a little bit which which isn’t going to be as bullish for prices but again upward actually you know some good price action on oil and gas in oh CNN about 73-62 and currently trading about 73-59. Nat gas prices, decided to shop around all day, currently trading $2.25. [00:13:22][25.5]

Michael Tanner: [00:13:24] Again, sort of as as as we shift from from from from bill to our from storage or draw season to storage season, you know, prices are going to be fairly choppy depending on things we see there. We expect about an 80 Bcf build in the natural gas reserves that will drop on Friday, pretty big range of estimates so if you go look at nat gas intel, they’ll give you a pretty big range of what to expect. It’s not good. [00:13:48][24.7]

Michael Tanner: [00:13:49] On the market’s front I just thought it’d be interesting. Saudi Aramco, they did drop you know if you go you know they’ll probably only earnings will go ahead and cover here. They did see a increase in net income over what the analysts were expecting. They were expecting about a 30.5 billion net in net profit, which is pretty insane. [00:14:08][19.5]

Michael Tanner: [00:14:09] They ended up posting a 31.9 billion, which is 19% year over year for them. And they pretty much cite falling oil prices. What’s interesting, from net income to net profit, even though was a drop in 8 billion of net income, their net profit was actually up 3.5 percentage points from the fourth quarter, mainly offset due to lower taxes and higher financials and other income associated with oil and gas. [00:14:33][23.8]

Michael Tanner: [00:14:33] So ARAMCO’S shares were actually up about 3.2 percentage points in the early trading day, which they’ve got about 5% free float. They did go ahead and say they increase their first quarter dividend to 19.5 billion, which will be paid in the second quarter, cash flow from operating activities, 39.6 and free cash flow of 30.9 billion. I mean, woo hoo hoo hoo hoo. [00:14:53][19.6]

Stuart Turley: [00:14:54] That’s pretty cool. [00:14:55][0.7]

Michael Tanner: [00:14:55] We’re still open for sponsorship. It’s pretty we’re pretty good. [00:14:58][2.8]

Stuart Turley: [00:14:59] Well, we almost had that consulting gig where you are going to be going over to Dubai all the time so. [00:15:04][5.5]

Michael Tanner: [00:15:05] High I don’t know if that was real, but who knows? Who knows? You got anything else to Stu? [00:15:11][6.2]

Stuart Turley: [00:15:12] Yeah. I just want to give a shout out to all of the Chinese hackers they’ve been trying to get in the News Beat we had over 38,000 people on the site today. We had 312 school injection attacks today on one of the best news sites around. Pretty incredible when you start considering what an SQL injection will do to a saying. [00:15:38][25.8]

Michael Tanner: [00:15:39] Yeah, it’ll take it down I don’t know who wants to shut us down, but I guess someone is listening. [00:15:43][4.5]

Stuart Turley: [00:15:44] They are listening and they don’t like us, so. [00:15:46][1.9]

Michael Tanner: [00:15:46] No. Well, I don’t either. So it’s actually half of those are me half of those are actually me. [00:15:51][5.3]

Stuart Turley: [00:15:52] You don’t even know what an equal injection is Dude, you’re a programmer, but not that good. [00:15:56][3.8]

Michael Tanner: [00:15:57] I don’t. Well, with that, guys, we’ll let you get out of here get back to hacking our website. We appreciate you check us out www.EnergyNewsBeat.com We’ll see you tomorrow, guys. [00:15:57][0.0]