Daily Energy Standup Episode #140 – Breaking Barriers: Debt Ceiling Provisions and Energy Fuels Game-Changing LIV and PGA Tour Merger

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Debt Ceiling Permitting Provisions Offer Good First Step to Meaningful Reform

President Biden has signed the Fiscal Responsibility Act (FRA) into law which suspends the debt ceiling into 2024 and avoids a U.S. default. The bill contains several historic reforms to the National Environmental Policy Act […]

Game Day: It’s a new world for golf fans after LIV and PGA Tour merger – How did energy make this happen?

ENB Publishers Note: While watching all of the fallout from this wild merger with LIV and the PGA, it occurred to me that we have to wonder how this came about. In stark contrast to […]

Highlights of the Podcast

00:00 – Intro
02:25 – Debt Ceiling Permitting Provisions Offer Good First Step to Meaningful Reform
09:34 – Game Day: It’s a new world for golf fans after LIV and PGA Tour merger – How did energy make this happen?
15:04 – Market Updates
16:19 – 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 is going on Everybody, Welcome into another edition of the Daily Energy News Beat Stand up here on this gorgeous Thursday, June 8th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas. Stu is out on assignment today wrapping up Saudi and the PGA Tour merger. [00:00:36][21.2]

Michael Tanner: [00:00:37] He’s he’s been around the world the past couple of weeks up in Russia now Saudi I only kid he is out on assignment today so I’m going to rock a quick solo show. But we do have a packed menu. I teased the Liv golf PGA Tour because I want to talk about that a little bit today. It’s going to divert a little bit from the normal oil and gas talk. But I think Stu ironically ran an article on Energy News Beat and sort of tied in what I think is some more geopolitical games that are going on so I want to cover that a little bit. [00:01:03][26.3]

Michael Tanner: [00:01:03] We also did see President Biden go ahead and sign that Fiscal Responsibility Act, which does have some pretty interesting revisions to the NEPA process, which if you’re in mining and metals, you’re very familiar with that by National Environmental Policy Act, which basically is the entire review board that you have to do to your order to get really large projects, regulatory projects approved, like gas pipelines, mines and or board renewable projects. This funding that came from the avoidance of the debt ceiling or what they call the Fiscal Responsibility Act, which is hilarious, by the way. [00:01:34][30.8]

Michael Tanner: [00:01:34] Will cover what changes to NEPA and what Mike to look at and then we’ll kick it over. I quickly touch on oil prices. We did see the EIA come out with know only a 500,000 barrel draw, which was a little bit less than what we expected but we did see prices rise. I think Reuters is just pulling for the headline. So we’ll cover all that and a bag of chips, guys. [00:01:52][17.5]

Michael Tanner: [00:01:52] But first, check us out as always www.EnergyNewsBeat.com the best place for all of your energy news really appreciate everybody who visits us. You know it’s it’s pretty awesome we appreciate again the support hit the description below you can see links to all of the articles Dashboard.EnergyNewsBeat.com the best place for all of your data and energy news combined get it while you still can its definitely go to paywall soon. So you’re going to be you’re going to miss out on that.But let’s go ahead and dive into it here. [00:02:18][25.9]

Michael Tanner: [00:02:19] Let’s talk debt ceiling first, mainly because I think that’s the, you know, your top line energy headline of the day. President Biden goes in signs that Fiscal Responsibility Act, a.k.a. the FRC, which goes ahead and suspends the debt ceiling into 2024 and goes ahead and avoids a US default due yesterday. [00:02:35][16.4]

Michael Tanner: [00:02:36] A lot of different reforms, mainly to the National Environmental Policy Act, known as NEPA, really was burdensome in terms of regulating new prices for those of you who aren’t familiar, NEPA is the governing document that basically controls how large and new energy projects get developed and not oil and gas wells per say those are regulated under another set of rules and more at the state level. [00:02:59][22.9]

Michael Tanner: [00:02:59] This is a nationwide process, this is a nationwide review in which large energy projects, say mines, you know, infrastructure projects, pipelines, you name it, they all go through very intense, intense process. And, you know, I remember sitting in a class, you know, learning about project finance for mining. And I mean, you spent four or five years in the NEPA process is what it’s called under this these guidelines try to. [00:03:24][24.7]

Michael Tanner: [00:03:24] But before you even are able to go even attempt to raise money it’s it’s a pretty crazy game. I don’t envy anybody in the mining space. It’s literally like you work 40 years in the business you go through two mines I mean, that’s insane. Just how long in the lifecycle that these things go, which is a good thing but you know, you need some fresh projects to work on. [00:03:41][17.3]

Michael Tanner: [00:03:42] I get off topic a little bit, but what this streamlined and then what was piped into this Fiscal Responsibility Act was a streamlining of this process. You know, they mainly seemed to codify the regulations that were released in 2022 by the Council on Environmental Quality, which has always been the the overseeing body implementing the the NEPA regulations and it’s procedural stuff. [00:04:03][21.0]

Michael Tanner: [00:04:04] You know, these regulations that they rolled out last week contain many opportunities for what they’re describing, quote, as energy or senior agency officials to work around rules and extend permitting timelines. These provisions that are in the FRA will make it harder for these legislators to come back in an undue or lengthen the time or age limits for finishing these environmental rules is just crazy. I mean, these documents you’re talking are like 60 pages long. [00:04:27][22.8]

Michael Tanner: [00:04:27] I remember reading one of these it was the debate mine up in Idaho. And you can go to it right now. You get side perpetual per patch you I’m doing this right now mining perpetual minerals. I don’t think it’s perpetual perpetual production now It’s not it’s something else. It’s I, it’s what am I trying to say it’s, it’s perpetual, perpetual mining that’s what it is, and perpetual resources okay. [00:04:52][24.7]

Michael Tanner: [00:04:52] You can look them up, it’s a.k.a The Stibnite gold project, which is basically the only thing and they’re basically refurbishing a mine in Idaho and they’re currently in this NEPA project right now so I’ll put the description here. [00:05:03][11.0]

Michael Tanner: [00:05:03] But if you go to their website and you hit materials and you hit factsheets and reports, you go to this page and you’ll notice, I mean, let’s go look, let’s go see here. NEPA Reports, white paper, dark skies, economic impact, yes, this was intense. I mean, one of their economic impact reports I mean, we had I remember having to read this. So this is the first step of the NEPA process I mean, we’re talking 600 pages. Kill me. Absolutely kill me with these intense things. [00:05:31][28.3]

Michael Tanner: [00:05:31] So, again, these are burdensome projects you want to get a large-scale energy project to develop, whether it’s a mine, whether it’s a win for get ready for thousands of pages of legislation, tens of millions of dollars to comply with the regulations. [00:05:43][11.9]

Michael Tanner: [00:05:44] I mean, this goes back to my whole argument why this is why large entities, why ExxonMobil and Chevron if you got them in a room secretly, they love regulations and their lawyers and their business dev team love regulations. Why? Because regulations raise the cost of entry for new incumbents it makes it harder if you make it harder to permit a well or be require more information and need all of this other stuff. Chevron has the ability to eat and Exxon can do that. You know, smaller operators can’t you squeeze them out because now all of a sudden the cost to operator well goes up. [00:06:18][33.4]

Michael Tanner: [00:06:18] And so the streamlining regulations make it easy for incumbents to be washed out by new incumbents, because that’s what we want the life cycle of you know, the reason why prices over time in industries go down is because you have competition you don’t have competition that’s when we see prices rise. Commodities, again are a little bit different but if you just think about it from a… [00:06:38][20.3]

Michael Tanner: [00:06:38] You know, I like to go back to first principles for a second economics. You allow more, aren’t you? You know, pure competition? Well, in pure competition, the price is always at the lowest level. Why? Because there’s the barriers to entry or zero most of the time. Now, that’s not feasible in some industries. It is you know, like a hot dog, you know, I mean, you know, Uber, for example, and it’s a hard example I can’t come with examples as well. [00:07:02][23.5]

Michael Tanner: [00:07:02] But the point is pure competition is going to tell you, hey, the price will always be the lowest it will ever be because the barriers to entry are so little that if someone raises their price a bit, somebody undercuts them and causes them move the price down that’s not how most industries work. [00:07:16][13.5]

Michael Tanner: [00:07:16] Most industries are what we would categorize as monopolistic competition. Okay, where there is some barrier to entry that makes it hard for new entrants to come in. And the more you then shift towards oligopoly, which is a small amount of companies controlling a large percentage of the market share, there’s some specific chicanery with numbers in there. We don’t need dive in but the point is monopolies to competition there’s some barriers to entry, but there’s still a lot there’s still competition but price is not always at the lowest point. In oligopoly where you have a few number of players controlling the price. As you can then see, you get closer and closer to a monopoly as prices continue to rise. [00:07:50][33.8]

Michael Tanner: [00:07:50] So I say all that to say that the last one still talks about, you know, regulations and why regulations hurt and why taxation to deregulation, and, you know, and why legislation through regulation is real. He says that because you could it’s much harder to legislate away a problem when you could just regulate it and cause it to where now you only have to deal with four companies. [00:08:15][25.3]

Michael Tanner: [00:08:16] You make it so hard to drill in oil and gas well, you only have to regulate for companies. That’s what they do with the banking sector, which is what they we’ve seen that with this whole that’s what they want to do now with these banking laws. [00:08:25][9.3]

Michael Tanner: [00:08:26] We don’t want to change our regulations so that we do a better job of doing our job. We want to now just lower the number of people there are to regulate. I mean, they want to make the law. They want to change the laws in such a way that they’re so complex that there’s only four banks that can hold them instead of the…. What you have on the books is fine you’re just not going to do your job in oversight. [00:08:46][20.7]

Michael Tanner: [00:08:47] It’s like the SCC, it’s like they’re just now coming out and charging Coinbase and Binance. It’s like, Well, didn’t you know this like two years ago? So not that I’m I’d have nothing to do with the crypto space, but I do think it’s interesting they’re choosing to come out now versus like they told everybody this in their last one so a little bit there. [00:09:02][15.2]

Michael Tanner: [00:09:02] But again, my point is the more regulations, the harder it is for new entrance and the more these energy projects have lower regulations, the more you’re going to see the cost of these projects go down and the more you’re going to see new entrance come in the field. This is probably great for the nuclear business my hope is that these rules, extended nuclear will have Stu check in next week on that. But all in all, these large energy projects, I’m good for less regulation if that’s what if that’s a pipe, I will checkmark that. But we need to be very careful on it. Okay,. [00:09:33][30.5]

Michael Tanner: [00:09:33] Let’s talk a little bit of Liv Golf and PGA Tour, and I’ll take a step back for those of you who are you know, most people probably are golfers. I’m not a golfer myself. I’m more of a sports fan so I take a more of a sports angle. But I saw this news got broken on when I was watching on CBC and it’s kind of funny. [00:09:49][16.1]

Michael Tanner: [00:09:50] David Faber on CNBC, CNBC got this scoop, The Liv Golf PGA Tour merger, CNBC got this, not ESPN, which is funny, but to back it up Liv Golf or the PGA Tour is kind of the established, you know, most exclusive and highest graded professional tour for men’s golfers. [00:10:08][18.4]

Michael Tanner: [00:10:09] You know, two years ago or a year and a half ago, Saudi Arabia started lease. The Saudi Arabian Public Investment Fund the PFI for the PIF is what it’s called, decided to start there only and pay an enormous sum of money for some of the top players. We’re talking 2-3 $400 million contracts for players. And remind you the PGA Tour, there are no contracts you win purses based upon your standings in each event. So completely changing the way players were paid and caused a huge rift in the golf community. Some people loved Liv, some people hated Liv. [00:10:41][32.5]

Michael Tanner: [00:10:41] Well, now the two are merging in incomplete Michael Scott, Paper Company, Fashion Liv Golf is now going to merge with the PGA Tour. The public investment sun of Saudi Arabia is going to become basically the premier corporate sponsor and dump billions of dollars into the PGA and it shocked both the business and the sports world. [00:11:03][21.5]

Michael Tanner: [00:11:03] And was a really interesting moment where two things collide and of course, what we do in Energy News Beat is we figure out how to we have to figure out how that comes in with energy. So I’m going to read you the publisher’s note that Stu wrote, and then we’ll kind of dive into the fallout. [00:11:16][12.4]

Michael Tanner: [00:11:16] Well, watching all of the fallout from this wild merger with Liv and the PGA, it occurred to me that we have to wonder how this came about. In stark contrast to the United States energy policy, Saudi Arabia has implemented a Saudi first energy policy for years. Well, I do not agree with everything going on with the Saudi leaders I’ve always applauded their energy policies. [00:11:34][17.9]

Michael Tanner: [00:11:34] They are spending billions on the energy transition and social programs for the Saudi citizens so don’t blame the PGA leadership look to the United States for do have the icing on the merger with our weaponizing the dollar, printing money and destroying the United States energy independence. Stu says all that while brokering the deal between Saudi Arabia and the United States he’s he’s he’s he’s with them by reaching his hand out. [00:11:56][22.0]

Michael Tanner: [00:11:57] Again. I say all that as a joking matter to say, you know, we how this impacts energy I think is is a step back and it’s more of a geopolitical. Saudi Arabia is attempting to ingratiate itself with the west is trying to do that they’re paying they’re doing the same thing with some of the top soccer players. Cristiano Ronaldo now plays in Saudi Arabia there are other players as they attempted to get Lionel Messi he’s now looks like as of today going to be getting a little bit of an ownership stake in Inter Miami so he’s coming to the MLS, which is interesting. [00:12:26][29.3]

Michael Tanner: [00:12:27] But in doing all of these moves, they’re attempting to ingratiate themselves and continue to gain influence over the Western world. I mean, they all I mean, think about when a step back. This is very little, in my opinion, with golf from a Saudi perspective and a way for them to continue to ingratiate themselves in Western society. [00:12:46][19.5]

Michael Tanner: [00:12:47] You know, they’ve been going back to the unfortunate murder of Jamal Khashoggi there they’ve had a dark cloud over them. And I mean remember, the original Liv Golf outcry from PGA Tour was the 911 crowd. They weren’t happy yesterday, and rightfully so. I mean, Saudi Arabia was most likely responsible for 911. [00:13:06][19.1]

Michael Tanner: [00:13:07] How do you manage those two things together in terms of, you know, okay, those things are now going to be at the forefront of people’s minds and how do we continue, again, to ingratiate because they feel like we were responsible for 911 and we were definitely responsible for the murder of Jamal Khashoggi. How do we continue to win some of that stuff back? And this is, you know, one step. [00:13:29][22.2]

Michael Tanner: [00:13:29] And I think Stu brought it up first that Saudi has been a country of energy, of Saudi first when it comes to everything, specifically energy, specifically oil and gas. And this type of investment is an attempt to diversify, is not so much, in my opinion, an attempt to diversify away from oil and gas. I heard that all of that conversation going on. But in my opinion, it’s about ingratiating themselves with Western society so that they can continue to do what they want and their bread and butter and continue to boil prices there. [00:13:59][30.0]

Michael Tanner: [00:14:00] If all this renewables happens, oil prices will rise Soudi is going to make a ton of money trust me they will make a ton of money. I thought it was funny you know the last thing on this Liv Golf thing, Trump called it. [00:14:11][11.0]

Michael Tanner: [00:14:11] So two years or last year, July 18, 2022, on the almost dead social platform TruthSocial@Real DonaldTrump Quote All of those golfers that remain, quote, loyal to the very disloyal PGA in all of its different forms will pay a big price when it comes the inevitable merger with or the inevitable merger with Liv comes and you will get nothing but a big quote. [00:14:32][21.1]

Michael Tanner: [00:14:33] Thank you from the PGA officials who are making millions of dollars a year. If you don’t take the money now, you will get nothing after the merger takes place and only say how smart the original signings were. And good luck to all congratulations to the talented Cam Smith on an incredible win. I think there was the U.S. Open when Cam Smith won that immediately jump to Liv. [00:14:47][14.2]

Michael Tanner: [00:14:47] Trump called it last year the PGA Liv merger you heard it on Truth Social First so about four people heard it. Stu heard it for sure. In between running Putin’s campaign in and in and basically getting all this set up, he snuck that news to Trump last year. [00:15:03][16.0]

Michael Tanner: [00:15:04] Let’s do oil prices quickly, 72 46 as we record this about 612 here on July seven, we did see the EIA come out and only do about 500 barrel or 500,000 draw from this promo we’re expecting about 1.6 I’m still a little weak on that. [00:15:19][15.9]

Michael Tanner: [00:15:20] The only interesting thing I saw that came out really was the fact that, you know, they’re trying to blame more fallout from that from the Saudi lollipop. I know this entire episode was all about Saudi, but, you know, with them cutting back the million barrels, that seems to be, quote unquote, the overwhelming export. [00:15:34][14.2]

Michael Tanner: [00:15:35] There is some weak Chinese export data out there that didn’t signify too much strength in the market but we did see prices pop a little bit. So the real answer is nobody knows what’s going on I wouldn’t trust the headlines on this one. Again, as the US dollar goes down in about 6/10 of a percentage point, I think you’ll see prices or oil prices respond in just that way. [00:15:51][16.5]

Michael Tanner: [00:15:51] I appreciate you guys hanging in with us we will get a recap tomorrow for the week so tune in for that. And then you’ll hear Stu and I on Monday and we’ll be covering everything. We appreciate you guys tuning in to the show. As always, you can hit us up Questions@EnergyNewsBeat.com for Stuart Turley, who’s on assignment, I’m Michael Tanner we’ll see you tomorrow, folks. [00:15:51][0.0]




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