Dow Jones Futures: Market Rally Closes Poorly Again; Tesla Stock Setting Up For Investor Day
Biden Administration Bets $74 Million on ‘Enhanced’ Geothermal Power
Tesla App To Remotely Control Cars Crashes Across Europe With “503” Error
Oil and gas industry earned $4 trillion last year, says IEA chief
Biden Restarts $10 Billion Tax Credit for Clean-Energy Makers
Highlights of the Podcast
00:00 – Intro
03:33 – Biden administration bet 74 million on enhanced geothermal power.
06:58 – Tesla app Two remotely controlled cars crashes across Europe with five O3 air.
09:00 – Ford cuts one in nine jobs in Europe as it turns electric
11:42 – The IEA has come out and said the oil and gas industry earned 4 trillion last year in a new report
17:51 – Biden restarts $10 billion tax credit for clean energy makers
27:07 – Outro
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Follow Michael On LinkedIn and Twitter
Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.
Michael Tanner [00:00:07] What is going on Everybody, Welcome into another edition of the Daily Energy News Beat Stand Up here on this gorgeous Thursday, February 16th, 2023. I am your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas. As always, joined by the executive producer of the show the day of the Show and the director, publisher of the world’s greatest Web site, EnergyNewsBeat.com, Stuart Turley, my man, how we doing today?
Stuart Turley [00:00:33] Its a beautiful day in neighborhood. I mean, it was a fabulous day today.
Michael Tanner [00:00:36] It was a fabulous day, we’ve had some Internet issues so this is like take 70 of this intro, so hopefully we’ve got it lined up for you guys. We have a great show for you lined up stu, as always, is common with some banger articles.
Michael Tanner [00:00:48] First up, Biden administration bet 74 million on enhanced geothermal power. Stu will talk about what’s going on in the geothermal market.
Michael Tanner [00:00:58] Tesla app Two remotely controlled cars crashes across Europe with five O3 air. Yeah pretty smart to have your keys on your phone but still will cover what’s happening with their app.
Michael Tanner [00:01:12] Next we have Ford cuts one in nine jobs in Europe as it turns electric, interesting. So Ford is moving into the electric space and we’ll see what that’s all about.
Michael Tanner [00:01:22] Next. The IEA has come out and said the oil and gas industry earned 4 trillion last year in a new report, there’s an article that we’ll cover. I’m talking about what they say.
Michael Tanner [00:01:33] And then finally, Biden restarts $10 billion tax credit for clean energy makers. And we’ve seen this time and time again from this administration’s dual cover,.
Michael Tanner [00:01:45] What’s going on to the renewable markets. He’ll kick it over to me, not much superficially, really that happened in the overall markets other than to say that the E.I.A or the the E.I.A dropped today crude oil storage of 16 million barrel billed and that was offset by the fact that this of this IEA report which basically comes out and says demand’s going to be a little bit stronger. I’ll cover what that means.
Michael Tanner [00:02:10] Natural gas slightly falls two stories. I think it’s interesting to point out. One, Comstock Resources being a pure gas player, I think it’s interesting just to take a look at what their earnings look like. They dropped them yesterday.
Michael Tanner [00:02:23] And then an interesting tweet from one of my favorite Twitter accounts looking at some unrealized losses from Southwestern.
Michael Tanner [00:02:31] So it’ll be pretty interesting to dive into all that and a bag of chips, guys, but first, check us out on the world’s greatest website, EnergyNewsBeat.Com Dashboard.EnergyNewsBeat.Com. If you were on that website today, you saw this insane crude oil build of 16 million barrels. It’s the best place to check it out. It’s our combination of data and news. We are hard at work at V2. Trust me people, we are working hard for you, the common listener, and we appreciate it. But as always, EnergyNewsBeat.Com all the stories are there. Enough the pleasantries those do. Where do you want to begin?
Stuart Turley [00:03:05] Common Listener Holy smokes Dude. Did your mom raise you to be a bum?
Michael Tanner [00:03:12] I’m a bum.
Stuart Turley [00:03:14] Right? That’s why.
Michael Tanner [00:03:16] I’m the surf. I’m a surfer.
Stuart Turley [00:03:18] Okay, that’s why we get along so well. Michael. Okay, The first one, I you know, I’m not a Biden fan, and it just depends, you know, about how he’s doing. But this first article, Biden administration bet 74 million on enhanced geothermal power. The Energy Department grants aims to cut the cost of new gear geothermal systems that generate electricity from heat miles and underground.
Stuart Turley [00:03:49] Basically, this is a very nice thing, more than five terawatts of heat resources exist in the United States, according to the D.O.E. Enough power to meet the electricity needs of the entire world. Okay, hogwash that’s always a nice way to do that.
Stuart Turley [00:04:07] Here’s where Matt Welch, who is a friend of the the firm. We did a webinar or excuse me, a whole webinar series for him last year, and he is the head of the Texas Geological Geothermal industry there.
Stuart Turley [00:04:29] And so Geothermal, Michael, you know, you got to the number one thing he had to do to get geothermal going is drill a well. All right. Hey, you’re already there with all these wells and so this is the fantastic ideas that get this moving. Think about the ducks. Think about the, you know, the wells, this is huge for Texas. This is a huge, great thing.
Stuart Turley [00:04:56] But here’s where I’m going to go into a little bit of chowder head on this, we we’re now at 30 some odd trillion dollars in debt. They’re going to do 74 million, there’s more than five terawatts of heat resources exist in the United States. I’m not even with my crayon. This is sounding like a better investment than most of what they’re doing.
Stuart Turley [00:05:22] This is quoting out of here from successful ESG projects require multiple rounds of fracturing to connect those two wells. The drilling skills that hydraulic fracturing or fracking industry mastered decades ago enhanced geothermal. So it would be wonderful for the oilfield service companies to open up a arm and do geothermal drilling to keep some of their hands working and everything else. Love it that they’re spending money there is not spending their money wisely out of the other areas and can really spend, spend. That makes sense.
Michael Tanner [00:06:05] Yeah. I mean, to make this feasible, I’m sure you’re going to spend a lot more than 74 million. But we’ll give credit where credit is due. Shout out to the Biden administration for actually coming through on some legitimate funding I won’t quibble at this. What do you got next for us? I got to hear about Tesla’s app.
Stuart Turley [00:06:24] You always love the blue screen at death Michael in your.
Michael Tanner [00:06:28] Oh.. You know, when you were younger everyone had an Xbox or like a PlayStation. You get the red light of death when that means you know you’re done. You just had to go buy a new one.
Stuart Turley [00:06:39] Yes. The new Tesla app allows drivers to remotely view the status of their vehicles, lock or unlock doors, manage, claim control and control, charging the inability to access this app could create headaches for drivers. One of the tweets about the Tesla app being down from a person in Germany on Tuesday morning, the iPad, it’s like you’ll lose it. You can’t get in your car.
Michael Tanner [00:07:09] Yeah, I mean, it is funny. We’re going to this world of all digital and you know what happens if you don’t have your phone on you? What happens if your phone gets, you know, lost or you, you know, you leave your phone somewhere, you leave your keys somewhere. I mean, it’s it’s things getting all bundled into one is great until you lose it. Having a password manager is great until you fall for the phishing scandal and now they have access to all of your passwords on everything. So.
Stuart Turley [00:07:36] Right.
Michael Tanner [00:07:36] I think I take it, you know, I obviously people were still able to get into their car. They have a physical key and there are other things that can open the car. But it is funny, we start trying to consolidate everything onto this tech. That doesn’t work all the time. Trust me. I know we’re trying to build a tech app right now. It’s not fun. It I mean, it is fun, don’t get me wrong.
Michael Tanner [00:07:55] But it’s it’s not. It’s not just, oh, click a button and boom, you’ve got a mobile app like, no, it requires huge amounts of, you know, undertaking. It’s, you know, numerous, you know, multiple people collaborating, especially to bring an app together, like one that works on the Tesla. I mean, yeah, you know, I can only imagine how hard it is. So, you know, be wary.
Stuart Turley [00:08:19] Analog is not all that bad and I had a 1943 Willys, which was a the original Jeep, like it looked like MASH World War Two. And it had like 18 forward speeds and it would crawl up a building. No electro magnetic pulse would take it out.
Michael Tanner [00:08:41] And yeah, I mean a fun fact for for, for our listeners to do is actually one of the test drivers of the original four Ford model T.
Stuart Turley [00:08:50] Yes, I love the Love Me Model T. Um, okay. Speaking of Ford, we’re going to go to Ford now in Europe, and Ford cuts one in nine jobs in Europe as it turns electric. Okay. Let’s take a look at why.
Stuart Turley [00:09:10] Cutting 4000 jobs in Europe over the next three years as it hastens to transition from petrol and diesel engines to an all electric fleet by 2035. Michael, This is in response to the EU voting to actually kill fossil fuel cars, internal combustion cars, by 2035.
Michael Tanner [00:09:34] Yup.
Stuart Turley [00:09:35] Dumbest thing on the planet. I mean, this, this is just. This is Forrest Gump, stupid. I mean,.
Michael Tanner [00:09:45] Yeah,.
Stuart Turley [00:09:46] I think Forrest Gump is smarter than they are. Anyway so,.
Michael Tanner [00:09:51] Yeah, I mean, it’s going to be very interesting all of these car manufacturers are pivoting hard into EVs outside of what is it, Toyota, who’s pivoting into gas? I think I’m pretty sure it’s Toyota who’s pivoting more back into hybrid, into gas, in my opinion, is the way that is the way we should go.
Michael Tanner [00:10:09] I think, you know, it’s clear, though, it’s just their European factories. I mean, look at if you look at the chart, it’s.
Stuart Turley [00:10:15] Right.
Michael Tanner [00:10:15] It’s all Germany in the United and United Kingdom so it’s not the the U.S. where I don’t think we’re necessarily going to see gasoline. You know, we’re not going to see California like combustion engine gasoline bands for the rest of the United States.
Michael Tanner [00:10:29] You know, also getting rid of some admin jobs I’m always in favor of trimming the fat, especially, you know, in the age of software where a lot of this stuff can be can be automated, but it just goes to show they’re really put their money where their mouth is on these EVs. And it’s interesting, I mean, at some point you’re you’re down, you’re so far down the road, it’s hard it’s hard to come back and there just isn’t talented engineers out there they’re gonna need a job.
Stuart Turley [00:10:54] Oh, yeah. Hey, one bit on Toyota. The last I think 8 days ago, the CEO of Toyota was asked to step down because his position of not going E.V. So the board.
Michael Tanner [00:11:10] Proxy battle. Fine!
Stuart Turley [00:11:12] Yeah! the board got him, and so they’re going to you’re going to see a quiet change here pretty quick that they are going to follow everybody else on their planet. And I think it was because they were they were hearing that about that from Europe going that way. Anyway, just a tidbit there for you.
Stuart Turley [00:11:34] Okay. Let’s go to the next oil and gas industry, Michael earned there’s a lot in this one and it earned $4 trillion, says I.E.A. First thing about the I.E.A is the guy is a real knucklehead. And I’d even go far as far as the I.E.A and the U.N. should both be disbanded. But that’s just my personal opinion.
Stuart Turley [00:12:02] Okay. The global oil and gas industry profits in 2022 jump some $44 trillion. Here’s an interesting tidbit we talked about earlier this week on how much money is needed to drill just to keep normal decline curves in check. Over half of that $2 trillion would get us at least to think about it. They made 4 trillion in profit. Hmm.
Stuart Turley [00:12:33] That would go a long way to keeping the price down if demand stayed the same, especially the countries in the Middle East that have to diversify their economies. In my view, COP 28 Climate Summit could be an excellent milestone to change the density of Middle East countries. Now the COP 28 ahead of the COP 28 Michael came out and said natural gas is something we’re going to need. So he’s pushing a big natural gas push. So more fun there than you can shake a stick at your thought.
Michael Tanner [00:13:10] Well, I think it’s it’s. 4 trillion is a lot of money. There’s a lot that could be put back into the ground.
Stuart Turley [00:13:19] According to the U.S. Congress. They keep printing.
Michael Tanner [00:13:22] Yeah, that’s a good point. Again, I think the issue is that a lot of this money was made by national oil companies. Was it necessarily I mean, it was made by big independents. Don’t get me wrong. It was made by United States oil companies. And yes, United States oil companies are turning around and giving them out to shareholders. Why?
Michael Tanner [00:13:43] Because from 2000 to 20 10 to 2016, investors got slaughtered on oil and gas. Everyone was worried about B.O.E, B.O.E more volume, more volume versus like, Oh, are you making money? What’s cash flow look like? And so now that that shift is happened, you’re seeing investors mainly talk about, you know, I want my return to capitalist why all these companies are increasing dividends is why all these companies are doing stock buybacks in order to pay back the investors who theoretically have stuck with them through the hard times, through…
Michael Tanner [00:14:17] And actual companies are different tho Stu, a lot of this money is getting either a lot of this money either resides in that national oil company or gets funneled into the rest of the economy, allowing these economies to grow.
Michael Tanner [00:14:29] I mean, Saudi Arabia is experiencing insane growth right now why are they experiencing an insane growth? Well, because there’s plentiful money to go around. If you just start pouring money into public projects, you will see growth. I mean, not that we’re spending, not that the United States doesn’t spend that much money, but we don’t necessarily spent with you. Do the you know,.
Michael Tanner [00:14:49] The Saudis can spend more money on public projects per per person than we ever could dream of because they have a much smaller population and a much larger discretionary budget, specifically because 90% of the revenue is tied to oil and gas and $100 a barrel looks pretty good on a balance sheet. If you’re doing to you know, if you’re doing, you know,.
Michael Tanner [00:15:07] I mean, just to a million barrels a day, stew times 100. Do the math. Just do the math. It’s a lot of money. So you can think about you know, I think that’s where a lot of this is coming from. So, you know, to say that. You know, to say that, you know. Oh, you know.
Michael Tanner [00:15:29] Supply’s going to fall because we’re not reinvesting. Isn’t that on you to just reinvest more? I mean, I love yesterday the you know, two days ago, the Saudi Aramco CEO comes out, talks about how we’re not you know, the world’s not investing enough. Well, you are the world, dude. So what are you doing? You know, it’s like, you know, you know, the US schools, but not for me.
Stuart Turley [00:15:55] Well, the US companies are not and.
Michael Tanner [00:15:57] But there are public markets different. I already told you, it’s a whole. It’s different. It is a in the United States is a different market, if only because there’s competition of multiple firms. There is no competition in Saudi Arabia. There is no competition, you know, you wait they are in legitimately a open cartel, so. Yeah.
Michael Tanner [00:16:17] So I only say this and point out that, yes, a lot of money is being made and we’ve got a lot of people coming out and saying, well, we can’t invest more. Can you or do you just want to pour this money back into your economies in order to make them grow? Not a bad thing. Not a bad thing. But that’s the reality, in my opinion, of the situation. So you see it as you much?
Stuart Turley [00:16:41] Oh, yeah, I think it’ll be interesting. So.
Michael Tanner [00:16:46] What do you got next? We got one more, says Biden. Oh, it’s a solar panel tax. Kill me.
Stuart Turley [00:16:53] We’re going to cover this one with about two and a half seconds. The program provides a 30% tax credit for technologies, including carbon capture systems, grid monitored monitor modernization. I have a problem with that one as well, too. Modernization, clean hydrogen production and electric fuel.
Stuart Turley [00:17:14] I was watching a thing the grid, in order to put all renewables by 2035, we have to double the size of the grid in order to double the size of the grid. It will take 140 years to double the size of the grid. It ain’t going to happen. So even if we put this much of a tax credit on it, it’s like flush and money down the toilet or hoping it’ll work.
Michael Tanner [00:17:50] This is just he’s getting that 10 billion that’s going into the pockets of somebody. So.
Stuart Turley [00:17:55] Yeah, it’s funding elections, but we’ll leave that alone.
Michael Tanner [00:18:01] So this is all back to Ukraine, back into MAXINE Waters pockets, I’m telling you. I’m taking notes.
Stuart Turley [00:18:07] Well, good. But this one, it will go to the renewable companies. It will go to those lobbyists.
Michael Tanner [00:18:14] It’ll end up on K Street. Right? Some fancy lunch. Someone’s eating while someone’s eating well.
Stuart Turley [00:18:22] You bet. Hey, after, you know.
Michael Tanner [00:18:25] Yeah. I mean, not much to cover other than I think oil prices, as we saw, were up kind of up and down all day. They were down off of an insane. E.I.A crude oil storage build of 16 million barrels again the best place to check that out Dashboard.EnergyNewsBeat.Com. Shameless plug.
Michael Tanner [00:18:44] I mean fourth largest crude oil build in the history of keeping track of these things the fourth largest. And prices were down all the way to 7750. Then the I.E.A comes out and in this same report we just talked about with a $4 trillion revenue for these oil and gas producers come to find out that they think world oil demand is going to be higher than the original estimates, which buoyed prices up from 7750 all the way to a max of a little over $79. And as time stands here at 625 on the 15th, we’re currently trading 7873.
Michael Tanner [00:19:20] So you can really tell the demand side of the equation is driving the sentiment in oil and gas. I mean, think about it. We had a physical crude oil supply build. Fourth largest in history.
Stuart Turley [00:19:34] That’s not.
Michael Tanner [00:19:34] Offset completely and even negated by an estimate the demand will be higher than original estimates. So if that’s the clearest picture in my opinion, on what’s what’s going to drive oil prices one way or the other. So if you hear about supplies getting too much. It’s demand.
Michael Tanner [00:19:54] If we it’s you know, supply is supply. Right now it’s all demand side. Right now we hear demand. You know, revising demand down or, oh, you know, China’s shutting in or oh, you know, Russia’s stopping more oil. That’s I think could have a more negative effect on prices than a lot of what’s going on is on the supply side and vice versa. So take that into account. We don’t give investment advice, but if you’re a trader, take that into account. Demand side seems to be much stronger than the supply side.
Michael Tanner [00:20:26] On the nat gas side, I mean, it’s it’s pretty boring other than, you know, it’s a little bit warmer. So we did see prices drop $2.45 all the way up over to 60 today. We do get as you listen to this show on Thursday, you will get the natural gas storage numbers in. Well, actually, you know, range of expectations are somewhere between 82 and 120 a BCF draw.
Michael Tanner [00:20:51] Last year they had a 165 Bcf draw and the five year average weekly changed about 166. So, you know, we’ll probably you know, I don’t want to guesstimate where we’ll come in, but, you know, my guess is probably around 100. You know, so be interesting to see what that number comes in.
Michael Tanner [00:21:11] I think there’s two things quickly to cover before you get out of there. Comstock Resources. They announced their earnings. Just to give you an idea on what natural gas producers are doing. The one line that I found interesting, adjusted EBIT. It doesn’t really matter. That’s a fake term EBITDAX. It’s actually adjusted EBITDAX. I mean, that sounds like a lot like a men’s health pill.
Stuart Turley [00:21:38] Hey, Michael. Earnings before taxes and exploration. You always got to let people know because EBITDAX people don’t know that it’s, you know, removing exploration or.
Michael Tanner [00:21:50] Exactly. Because you lose all your money in exploration. But whatever it is, adjusted EBIT tax in 2022 increased 72% and in the fourth quarter was up 61%. So just to give you an idea on how natural gas on how pricing plays into these natural specifically these pure play natural gas producers, it’s right there. It’s right there. They love it! They’re not loving it now. Q2 will be pretty cool. Quarter one going to be pretty, you know. Jerry Jones is probably you know, he’s he’s he’s saving his pennies because he knows what’s coming.
Stuart Turley [00:22:27] What’s coming up.
Michael Tanner [00:22:30] I thought this was interesting, Stu. Southwestern. This is one of my favorite. We talked about this before. The show is my favorite Twitter accounts and an energy peddler. But he goes by the name Lou Pi CEO, Enron Energy Services, one of the best. I mean, first up, just a side note, one of the best. Troll natural names, but, you know, low key, funny Twitter names out there so loopy. CEO of Enron Energy Services. Have you ever seen Stu, the documentary The Smartest Guys in the Room?
Stuart Turley [00:23:09] Right. How do you spell it?
Michael Tanner [00:23:10] It’s it’s just search energy, energy peddler, E, n e, r g, y p, e d d l e r.
Stuart Turley [00:23:19] L. E. R. Okay, great.
Michael Tanner [00:23:21] Thank you. Energy panel. Lou Pae, CEO, Enron Energy Supply. How do you see? Have you seen the documentary on Enron, The Smartest Guys in the Room? Have you seen that one?
Stuart Turley [00:23:34] I just saw parts of it. It was great.
Michael Tanner [00:23:36] So remember who Lou Pi is? Lou, Pi is the scumbag who pocketed 200 million. But remember what his thing was? He loved strippers and was always at the strip club. And there’s a famous story is we took one of his his associates out with him to the strip club and at the after beat all night at the strip club. He’s driving home when they stop at a gas station. A guy goes, Why are we gassing up? He’s like, Well, we’re not gas in the car.
Michael Tanner [00:24:06] Lou Pi proceeds to put gasoline on himself because apparently it kills the smell of stripper. And his wife didn’t like it, so his wife didn’t know. Lou Pae, CEO, Enron Energy Services, look up. Smartest Guys drew a great Twitter handle. So whoever’s running this account. Absolutely incredible. I love it. That’s me up.
Stuart Turley [00:24:29] He’s paying the 11 bucks for a blue check.
Michael Tanner [00:24:32] Of course. Of course. He tweets this about 4 hours ago. Looking into Southwestern, looks like they will have lost around 7.5 billion on hedges in 2022. He should have said unrealized losses. But whatever 7.5 billion of unrealized losses on 2022 hedges, it gets worse, too. The company’s only worth 5.8 billion. They’re going to finish the year with 1.5 times levered leverage, which means they’ve got about 5 billion in debt.
Michael Tanner [00:25:04] They only need 800 million of free cash flow in 2022. To put that in perspective, they lost ten times that in unrealized losses on realized free cash flow on those hedges. What what that would equate to a 200% increase in the company valuation had they not had those hedges. Wow.
Michael Tanner [00:25:27] Now. You know, before I go and rip Southwestern, a lot of the times you have to hedge a lot of the times your banks make you hedge. Why? Well, because the bank wants to know you could repay the loan, especially if you’re known to default on your loan.
Michael Tanner [00:25:44] Southwestern through bankruptcy. A couple, you know, they’re you know, they’re they’re not they’re not the, you know, pristine cash flow operator. You know, maybe like a Diamondback is or, you know, one of the larger super caps should, you know, they’ll be able to restructure their debt at any level. So.
Stuart Turley [00:26:01] Right.
Michael Tanner [00:26:03] His thing. It’s interesting. You know, everyone talks about hedge, hedge, hedge. Well, yes. Or lose 7.5 billion. Now, I’d love to see, you know, what the constraints were from their bank. Was it their bank forcing them to do this? Was this an overaggressive ness based upon whether they saw prices? I don’t know, but. That’s a lot of that’s a lot of good a lot of cheese. Stupid all out of money with that.
Stuart Turley [00:26:32] Oh, you bet. That gasoline story I missed. But it’s a good thing I don’t do that anymore.
Michael Tanner [00:26:39] Yeah, it’s a good thing. Little did little. Does everybody know Stu’s the associate? Oh, well, Lou Pi.
Stuart Turley [00:26:46] So now I would.
Michael Tanner [00:26:47] Save those stories for later. You got anything else tonight?
Stuart Turley [00:26:50] Now it’s a beautiful day. We’re going to have a absolutely wonderful Thursday.
Michael Tanner [00:26:55] Absolutely. So with that, guys, we’ll let you get out of here, get back to work. We appreciate you checking out the world’s greatest podcast, The EnergyNewsBeat daily stand up for Stuart Turley. I’m Michael Tanner. We’ll see you tomorrow, folks. You’ll be Friday week, you.
