Daily Energy Standup Episode #311 – EV Market Slump, California Oil Battles, and Nuclear Power Advancements

Daily Standup Top Stories

Even the World’s Biggest Electric-Vehicle Market Is Slowing

February 18, 2024 Stu Turley

 

Highlights of the Podcast

00:00 – Intro
01:26 – Even the World’s Biggest Electric-Vehicle Market Is Slowing
06:11 – China’s stock market collapse is the end of the road for many foreign investors
09:14 – Jaishankar’s Defense Of India’s Russian Oil Purchases Proves That His Country Is The Vishwaguru
12:22 – Government Approves Construction Permit for New Type of Nuclear Reactor for First Time in Decades
14:14 – BlackRock invests $550M in world’s largest direct air capture plant
19:05 – Markets Update
22:53 – ExxonMobil Dismisses Court Bid to Truck Oil in Santa Barbara
25:54 – Outro

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

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Michael Tanner: [00:00:13] What’s going on, everybody? Welcome in to the Monday, February 19th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, even the world’s biggest E. The market is slowing. And I’ll give you a hint that’s China guys. Because the next article that rolls right into it is China’s stock market collapse is the end of the road for many foreign investors. Those really go together well over two. In a very interesting article, actually, as Stu points out, a lecture, to the American specifically with and, our secretary of state over there, Anthony Blinken. Next up, government approves construction permit for a new type of nuclear reactor for the first time in decades. We love this. And then finally, Blackrock invest 550 million into the world’s largest direct air capture plant Stu, then toss it over. I will quickly cover what happened in the oil and gas markets. We didn’t really see anything besides, rig counts come out. We’re going to see a lot of earnings roll out next week. So we’ll let you guys get out of here here quickly. And make sure to hit you back with all the earnings as the week rolls out. As always I’m Michael Tanner. That is Stuart Turley. Go ahead and kick us off my friend. [00:01:25][71.6]

Stuart Turley: [00:01:26] All right. Hey let’s get rolling around the country here. Excuse me. The world, even the world’s biggest electric vehicle market is slowing. Boy. Michael, you take a look at that big picture. Well, that’s a lot of EVs on racks, man. That looks like, Hot Wheels just all lined up. The explosion growth. Michael is just nuts on what they were trying to do to the rest of the world, as they were just building the cheap EV cars. And now they’re, just proliferating around the world, and they’re piling up everywhere. This is an interesting point. B why did the crown jewel, the, the Chinese carmakers is backed by Warren Buffett? Interest added in a factory capacity alone by December to churn out 4 million cars a year. But California can’t put any, charging stations in. So I find this quite humorous. That figure is a million more than it sold in 2023. That is not that goes along with our next story coming around the corner. It’s foreign, factory making EVs, delivering cars from Uzbekistan. And a second in Thailand starts in July. Brazil and Hungary in the coming years are setting up a plant in Mexico which would consider exporting to the U.S. that sells for $11,000 in China. Is that a scooter? Is that. Yeah, I don’t know, man. Is that Holy smokes. [00:03:03][97.4]

Michael Tanner: [00:03:04] Well, I think the first thing that that’s interesting is that there’s a, you know, there’s a map. You know, there was this boom of buying electric vehicles around the world. I mean, there’s a reason guys like Warren Buffett got in on it. You know, the last I would say, outside of 2023, 2018 to 2022, there was quote unquote, this explosive growth in EVs. But now that growth has slowed. And as Stu mentioned, you’re you’re cranking out 4 million cars a year when you’re only selling 3 million. That’s where it’s going to get you. You know, Miss Producer, you can throw up this the, the head image, and that’s where you get the Hot Wheels. You know, you just pick them out right there. Just start running them down the tracks. Point is, this is now going to only make EVs cheaper. And if they plan on moving and trying to take market share in the United States, it’ll be interesting to see if that happens because I’m not convinced. I mean, I’m with you. I wouldn’t want to get in an $11,000 car. That’s really a scooter. I mean, it’s like every European movie, you see when the bad guys are running by and he slams into one of those, like, smart clients, all I can think about is now I’m just, oh, no, I’m going to end up on, get my car stolen as an extra in an action movie. But what this will do is this will only make it cheaper. And I wonder what this will do to Tesla’s dominance in the United States. You know, another interesting point of this article is they point out that Tesla is not the major EV provider worldwide. They’re only the major EV provider in the United States. And what happens when these these cars will inevitably make themselves make it into America? It’s just going to happen. Like Hyundai, like Toyota, it eventually things just migrate into the United States, from overseas in terms of top brands. So it’ll be interesting to see how consumers differentiate. I mean, I think, oh yeah, Tesla has going for is the autopilot in the self-driving. And you could argue that that is the reason Tesla is more valuable than the fact that it’s an EV. It’s that they sell this theoretically revolutionary technology that could allow us to basically all stop driving. [00:05:02][117.9]

Stuart Turley: [00:05:03] Which I’ll tell you, I don’t know enough about this one yet. But Michael, the insurance around the world for EVs is. Is doubling and tripling. And so I think you’re going to see a slowdown in heavy purchases because of insurance. And quite honestly, when you have an EV break, all you have to do is crack one small, battery panel and then in the EVs, totaled. Yeah. So, you know, I don’t know. [00:05:33][30.0]

Michael Tanner: [00:05:34] oh. No, I don’t know if I want to own. I’m not owning an EV. I think and I think what this article points out specifically is that there’s a there’s kind of an inflection point coming with EVs where supply is outpacing demand. And that as an economist, that always leads to a massive price drop. So maybe this will allow more people who want an EV to get it. The question is where do those price cuts come in? Do we see. [00:05:58][24.2]

Stuart Turley: [00:05:58] Test. [00:05:58][0.0]

Michael Tanner: [00:05:59] Prices or is it China and this bid pushing really hard to get its cars into the United States because they have the price advantage? [00:06:07][8.1]

Stuart Turley: [00:06:08] But you know Michael, this goes along into the next story here. China stock market collapse is the end of the road for many foreign investors, just like Warren Buffett. If you notice in that other article, Michael, when you take a look, I had another source reach out to me over the weekend. And there’s been over this. I haven’t verified this, but there’s 500,000 people that have committed suicide in China because of the failure of the stock market in China right now. So how bad is it? The state media is not letting it out. How bad, are the EVs being pushed out when you get the, million, you know, overflowing on that? I don’t know, but I sure wouldn’t want to be invested in the, Chinese, stock market right now, because these two stories go hand in hand. But, boy, if that is true, that all those people are killing themselves because they’ve lost all their fortunes. My my heart goes out to them on that. So. Yeah. [00:07:07][58.8]

Michael Tanner: [00:07:07] Well, and we we’ve been covering on this show what’s been happening in the commercial real estate market in China. A lot of this stuff is propped up by this. What was the supposed massive expansion of real estate? And it’s it’s clearly now, as we saw in, in, in the late 2000 when we had a, you know, at some point, you know, you can’t keep having a housing boom. We’ve talked about the ghost cities that are out there that were built and nobody’s there. And, and it’s seeming now to affect, specifically Wall Street, you know, it comes in, you know, 13 trillion of debt in terms of the real estate market over there in in China. Yeah. And what’s funny is now, I don’t want to get us off course here, but we have a better. And I know this would be controversial, but I would rather have the United States debt situation than China’s debt situation. It’s that. Well, because we have a much higher and resilient GDP than China in terms of the amount of the amount of the ratio of our debt to GDP is a lot better than China’s. We’ll have to go verify, you know, and so I it’s interesting from the standpoint as everybody is now, you know, everybody for the longest time was worried about the United States debt. Still horrible. But it’s better than what’s going on in China right now. And the issue is China. Part of the reason why you’d rather be the United States is China will always need the United States to help buy goods from them, because China won’t consume. They own the goods they made. You see it? I mean, we could stop buying goods from China and buy them from elsewhere. We’re going to have to pay more for them and do a bunch of stuff. But we could do that. China will always need to sell us stuff. And that’s where I think the, you know, of two terrible situations. I’d almost rather be the one that maybe has another option or two. [00:08:59][112.0]

Stuart Turley: [00:09:00] You’re seeing a major change, in the manufacturing shifting to India. And so India is stepping up and causing a lot of the problems with Chinese manufacturing. Absolutely. Let’s roll to the next one. Speaking of India. Doctor, Subrahmanyam Jaishankar? I hope I pronounce that right. Defense. Defense of India’s Russian oil purchases proves that his country is the, this year. Raag, guru vinegar guru. I cannot pronounce Indian. My apologies to, the entire Indian, culture. Indian Prime Minister Modi has conceptualized growing his role in global affairs over the past few years as being the world teacher. And I gotta hand it to him. They they are actually stepping up where, the U.S. is, going backwards. They’re going ahead and in this, article, aam Secretary Blinken was there and was pretty much handed a oh his head in. Hand when he says, we’re teaching the rest of the world on our policies. We’re buying Russian oil. And it was kind of funny, [00:10:19][78.9]

Michael Tanner: [00:10:23] Well, is it Anthony Blinken sitting next to him? [00:10:25][1.7]

Stuart Turley: [00:10:25] Yes. He’s on here. You can’t buy that kind of entertainment. Whoever trained our political staff needs to have a new interview. [00:10:37][11.8]

Michael Tanner: [00:10:38] Well, what India has shown us and and what they’ve said. And I don’t know if you can take this. You can take this. For what it’s worth, they shown us is they are going to look out for the Indian people. We’re going to continue to buy as cheap of energy as possible, because we understand that the easiest way to rise people out of poverty, it’s provide them low cost energy. You may not like the tactics, you may not like the road, but the end in order to raise India up in economically is only going to come through specifically to our, cheap, cheap energy. We’re going to talk about specifically in my segment that the inflation data that came out. I mean, we are experiencing inflation here primarily due to how expensive energy was. I mean, as an oil man, I love $80 oil as a consumer. And I’d love I. Covid was nice. It cost me like 20 bucks to fill my 30 gallon tank up, you know, and it’s it’s that give and take of if you want to see economic expansion, you need to have cheap, cheap energy wherever it comes from. Right now, the cheapest place is Russia. I promise you, if tomorrow solar was the cheapest form of energy, India would cover themselves and solar everybody would. I mean, that’s the funny part is the market will always go towards the most efficient, which is generally the cheapest option. Right? [00:11:57][78.2]

Stuart Turley: [00:11:57] And that’s why I don’t know about the EVs that we had on this energy thread today. Because I EVs the insurance companies let’s add this other as a rule insurance come the market will go to the cheapest form of energy until the insurance companies get involved, and then they will determine what. [00:12:16][18.5]

Michael Tanner: [00:12:17] What what you just follow the insurance companies, if they’re assuring it, it’s probably safe. [00:12:20][3.7]

Stuart Turley: [00:12:21] That’s exactly right. Let’s go to the next one here. Government approves construction permit for a new type of nuclear reactor first time in decades. This is huge. Plus, the U.S. Nuclear Regulatory Commission has issued a construction permit for a new type of nuclear test reactor in Oak Ridge, Tennessee. Molten fluoride salt instead of water is a coolant. This is really huge. Kairos power is, thrilled to have, its archive and its major regulatory milestone is five final preparations to start construction at the Hermes site next year, said Mark LaFleur, Kairos Power chief executive. I’m going to reach out to him and see if I can get him on fact, I already have. I’ll have to reach out again, so that’s pretty darn cool. [00:13:10][48.6]

Michael Tanner: [00:13:10] Yeah, it’s it’s going to be very interesting. And they specifically mentioned, our favorite Miss America. Gray. Stanky. [00:13:16][5.8]

Stuart Turley: [00:13:17] Oh, yeah. [00:13:17][0.2]

Michael Tanner: [00:13:19] We got to give a look. We’ve had her on the podcast multiple times. I mean, this is good, you know, because talking about the cheapest and most efficient form of energy that really is nuclear, you know, guys like Doug Sandridge have accurately laid out why, if we could do this properly, nuclear is the best move. The problem is you’ve got these regulatory commissions, you know, legislation through regulation. It’s making it’s becoming it’s so hard to permit these that we we get all excited when just a new construction permit is there. It’s a test reactor as much I’d love to jump up and down. What’s that going to do. It’s a test reactor. [00:13:58][38.7]

Stuart Turley: [00:13:59] You’re still 5 to 10 years away. [00:14:00][1.4]

Michael Tanner: [00:14:01] And then you got to get another permit to build the actual one. [00:14:03][2.3]

Stuart Turley: [00:14:04] Right? [00:14:04][0.0]

Michael Tanner: [00:14:05] So we need to you know, once I hear about nuclear regulation reform, then I’ll get excited. [00:14:11][6.2]

Stuart Turley: [00:14:12] Right. All right. Hey, let’s go to Blackrock here. There’s a huge, change in paradigm shift changing Blackrock. Invest 550 million and world’s largest direct air capture plant Michael. Warren Buffett yeah, we just talked about you can see where he pops back up in this energy thread today here. Direct air capture systems by oxy. Or the only way to do this machine sucking air out of the atmosphere, extract the CO2 and then release the air back into the environment. It cost up to $1,000 to remove a ton of CO2 existing in a direct air capture system. Who is doing air capture? [00:14:59][47.5]

Michael Tanner: [00:15:00] Occidental. [00:15:00][0.0]

Stuart Turley: [00:15:02] There you go. This joint venture. [00:15:04][1.7]

Michael Tanner: [00:15:04] Is the largest non majority shareholder of Occidental, Warren Buffett. It is Warren Buffett. Black Rock getting into bed together. Interesting. [00:15:12][7.6]

Stuart Turley: [00:15:13] Imagine that. Now, here’s where this is tied in with the ESG investing. Hypocrisy has now come full circle. And again, why did Warren Buffet, you and I stripped apart the oxy, merger that they just did. Why did he drop in another $2.7 million in investment and oxy? Michael. Because I picked out that the direct air capture, his tax benefits and everything else. Whenever Warren Buffett sees tax money or, in, in, the Inflation reduction Act money available, he invests. And that’s exactly what this is all about, is oh, it’s now okay for Blackrock to invest in oil and gas. But they’re going to look at Occidental as a huge win because they’re oil and gas. They’re profitable. And they’re taking advantage of the direct air capture. I thought it was pretty interesting. The Strato system is 30% complete. [00:16:15][61.8]

Michael Tanner: [00:16:15] Yeah. I mean, to be honest, it’s this 1.5, which is the name of the the, the name was the name of the original company. It’s now the new joint venture between oxy and Blackrock. It’s now called Stratus. Or Stratus. Excuse me, is the facility 1.5 is the name of the entity. They’ve already got Amazon and Airbus pre purchasing credits, equivalent to about 250,000 and 400,000 metric tons. So the real question is what is that. What’s that? BlackRock’s gotta know what that value of that stream is. It’s like a ramble. I mean, you’ve already it’s it’s the best way to do business. Resell. Yeah. Resell your. [00:16:55][39.4]

Stuart Turley: [00:16:55] Product. Why not? Well, if you take a look, this also goes into some of the other stories that we’ve ran last week. And that is the, climate and carbon taxes that are coming in on oil and gas companies. Oxy will survive this because they have their own credit. If you take a look at other, legislation coming through regulatory actions, and that is the carbon methane taxes is going to be in the same thing coming around the corner. [00:17:24][29.5]

Michael Tanner: [00:17:25] Absolutely, absolutely. But I don’t think Warren Warren Buffett is a smart guy. So I have a hard time now. Do I think oxy and yes, hey, we could talk a lot about this, but I do think Warren Buffett is a smart guy. And it could become very clear that Occidental, as you’ve always said, becomes the leader in the carbon credit capture space, which is going to skyrocket its Wall Street value because Wall Street’s going to love that exact who’s at the center of it, Warren Buffett. [00:17:55][30.1]

Stuart Turley: [00:17:56] Well, the yes. But I still think that, that’s this is not even the discussion of whether or not CO2 captures even whether or not it’s necessary or not. Plants love CO2, but we’ll leave that discussion for another day. [00:18:11][15.0]

Michael Tanner: [00:18:13] All right. Well, before we hop over to finance, we’ll go ahead and pay the bills here. As always, the news and analysis, that you’re hearing is brought to you by the world’s greatest website, Energy news Beat.com The best place for all of your energy and oil and gas news. Stu in the team do a tremendous job making that sure that website’s 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, go ahead and hit the description below. Find all the links to the articles. Find, links to the transcripts. We’re going to be rolling out a survey in the next few days. We really hope you guys, I’ll go ahead and fill that out. So check out the description below. We’ll give you everything that you need to know. To that. You can also check us out. Dashboard.energynewsbeat.com. It’s our data news combo product. We’ve got a lot of cool stuff rolling out alongside of that. So please check that out. [00:19:04][50.9]

Michael Tanner: [00:19:05] But let’s go ahead and end and talk finances for a second guys S&P 500 a little bit of a bull market this week after after kind of tumbling Monday morning in terms of the open. What was interesting though is we did see a pretty hot inflation report that came out on Friday, specifically when it comes to, the producer price index, which is, again, it’s kind of that measure of wholesale inflation. We saw an increase of 0.3 percentage points, which is again higher than the expectation, of 0.1. Go ahead include excluding food and energy. This is another interesting fact. So for producer price index removing food and energy, which they sort of look on a different scale rose 0.5%, which was higher than the expectation of 0.1. So both of those numbers kind of blowing it out of the water. And what does that mean for the overall markets. Why did the markets why did. [00:19:58][53.4]

Stuart Turley: [00:19:58] They do that Michael. Because if they take food and gasoline out, because of the regulatory issues going on and it’s an effective interest rate, I mean, inflation. Rate at 18% if you leave those in there. But that’s what people feel when they go to the store. [00:20:16][17.8]

Michael Tanner: [00:20:17] Yeah, it’s a little bit of a cat and mouse game when you talk about like poor producer price index versus the wholesale producer price index. You know, the. [00:20:24][7.4]

Stuart Turley: [00:20:24] Cat and mouse sounds illegal to me. [00:20:26][1.8]

Michael Tanner: [00:20:27] Yeah. I mean, ironically, energy prices have come down a little bit on average since the peak. The problem is, you know, when when when when when the administration in the Biden administration says inflation is coming down. I mean, they’re not wrong. The problem is they were also there for the highest inflation ever. So when you’re coming down from a peak, yeah, at some point before you hit the next notches below you, you technically if you if you start measuring at the top, you are going down. But this is a you know, this is they’re going. [00:20:55][28.6]

Stuart Turley: [00:20:55] To raise interest rates again this. [00:20:58][2.3]

Michael Tanner: [00:20:58] Year. Oh yeah. That’s I mean and that’s what the market was fuel for. And that’s you know specifically if rates you know, if they continue if this continues the idea of three rate cuts this year is going to turn into two. And that’s going to continue. The market’s already above 5000 five 5000 right now for the S&P 500. Nasdaq about 17 six. So I mean there’s still juice in there. But it’s man it’s it’s becoming pretty big. You know the interesting part is the producer price index is the cost of the goods and services that people that things that produce producers feel. The consumer price index came out on Tuesday. That was 3.1 percentage points. So you have to remember consumer price index is what we feel. Producer price is the prices that producers feel. And then things happen in the market happens in the middle. That changes those percentages. So specifically, you know, we also did see the CPI come out at 3.1 again expected to be 2.9 percentage points. So just a little bit higher than expected. You know, in terms of what that did for the overall oil and gas markets, we didn’t really see much on Friday. We saw rig counts drop, by about two guys. That came out via our friends over at Baker huge 621. So, you know, it’s funny, last week we saw a, you know, a rise in, in, in two rigs ironically came from the natural gas, which is as we record this right now, $1.60. Oh that’s not good. Dollar 60 is is going to be tough to make a little bit of money on. But as, as as I think operators move forward, they’re going to become a little bit more cautious. Those two rigs were actually dropped from the gas side. So we’re still we’re still about 139 rigs lower than we were last year where oil traded about this amount. So it’s pretty interesting to see I saw this pop ups do yeah on Thursday but or yesterday. But I wanted to go ahead on Saturday. I want to go ahead and talk about it. ExxonMobil is abandoning or ExxonMobil dismisses court bid to truck oil in Santa Barbara. This is yeah, it just it’s another nail in the coffin for what California oil used to be. Exxon Mobil on Saturday announced it’s abandoning its legal challenge against Santa Barbara County, effectively ending the company’s proposal to transport, oil up and down the coast, halting its plan to revive the three shutdown drilling platforms off shore. In given to us. The proposal would have allowed the company to truck millions of gallons of oil per week on highway 101 and route 166, in what is seen as an effort to resume the operations of the region and restart three offshore platforms that were shut down following the 2015 oil spill at Vigo Refinery. You know, Santa Barbara denied the plan. They file you know, there was originally denied by Santa Barbara of Exxon filed a lawsuit. They went ahead on Thursday or excuse me on Friday and went ahead and notified the US they’d be dismissing the lawsuit. After an intense amount of pushback, everybody said, oh, yay! But what does this mean for Exxon? Or excuse me, our our favorite state, California. Higher energy prices. You probably have to keep buying from Russia. [00:24:02][184.0]

Stuart Turley: [00:24:03] Well, considering I you you heard it here second, Michael, that, in my opinion, they will be buying gasoline and diesel from China because China has increased their, downstream capacity by a million barrels per day. And considering their, Governor Newsom, has potential contracts in place, you’ll be buying all of your refined products from China. Tell me that’s not good for the environment. [00:24:34][31.1]

Michael Tanner: [00:24:35] It’s not good. I mean, I’m also, I’m also for I’m also pro U.S pipe. I mean, this is also what’s funny is they keep saying that. Oh, there’s all these oil truck spills. Oh, cool. Can we get a pipeline permitted then. No you can’t. No. Okay. So you know, I think this is an absolutely scary quote if you’re a California oil producer. A the executive director of the wish Toyo Kush Marsh Foundation, quote, we celebrate this massive victory against Exxon in warn any and all future resource extractors that we will not stop fighting. I mean, it’s all out war over there. No. [00:25:09][34.6]

Stuart Turley: [00:25:10] If I was a oil company, I would never do business in Colorado or New York or California. [00:25:16][5.9]

Michael Tanner: [00:25:17] It’s hard to. Luckily, there’s no oil and gas really, in New York, so you don’t to worry about. [00:25:20][3.1]

Stuart Turley: [00:25:21] Well, I vote that we cut them all off of fossil fuels. All those in favor? [00:25:25][4.4]

Michael Tanner: [00:25:26] I, I guess, but, you’re you’re basically writing the death of all those people. I mean, we don’t got enough to supply, so that’s the crazy part. If you were to actually do that, if these people got their wish and had no oil and gas in their state, they would eviscerate their population with exactly months. Well, well, New York would be even worse because you’d freeze to death. California, you might be able to survive a little bit because at least it’s nice. [00:25:47][21.1]

Stuart Turley: [00:25:48] Be careful what you vote in or you ask for. [00:25:51][2.7]

Michael Tanner: [00:25:52] Absolutely, so I do. What else? What should people be, watching for this week? [00:25:56][3.6]

Stuart Turley: [00:25:57] Well, I’m going to be kind of interested to see how, the political situation rolls around here. Things are heating up. Tucker Carlson stuff is really, coming out there around the world. And, I think you’re going to see a crazier world in this next few months. It’s about to happen. [00:26:15][18.2]

Michael Tanner: [00:26:16] I’m shocked. You think the world’s getting crazy. I’m telling you, I’m shocked. I just it’s just. [00:26:21][5.5]

Stuart Turley: [00:26:22] I just like to give a shout out to all of our listeners and all of the feedback that we’re getting. And I’d also like to thank CNN, CBS, ABC, all of the other major news stream, for lying and giving us a chance. Michael, I think that our podcast is going off the roof thanks to this. Michael. [00:26:42][20.5]

Michael Tanner: [00:26:44] Yeah. No, it’s it’s it’s very convenient. We appreciate everybody. Feel free to leave us a five star review on on any and all platforms. Just say as a knucklehead. But, but but the show is good, so. All right, guys, with that, we’ll let you get out of here, get back to work, start your Monday. Hope it’s a great one. We’ll see you tomorrow. [00:26:44][0.0][1545.7]

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