Daily Standup Top Stories
Warren Buffett Was Right About Wind Energy, and You Should Not Invest in It Without Tax Breaks and Subsidies
In the world of renewable energy, few voices carry as much weight as Warren Buffett, the legendary investor and CEO of Berkshire Hathaway. Buffett has long been candid about the economics of wind power, famously […]
Rising Natural Gas Costs Make Wind and Solar More Expensive, Too
ENB Pub Note: This article is from the Energy Bad Boys on Substack. Isaac Orr and Mitch Rolling are fantastic energy thought leaders and we highly recommend subcribing to their Substack. They make some great […]
California faces a self-created oil and gas crisis. Lawmakers should consider these steps next
California lawmakers just passed legislation to support the oil and gas industry in an attempt to lower costs for consumers. Below, a business professor says the package is overdue but also a piecemeal approach for […]
Iraq’s Gas Deal Through Iran Blocked by U.S.
In a significant setback for Iraq’s efforts to address its ongoing energy crisis, the United States has blocked a proposed natural gas import deal that would have routed supplies from Turkmenistan through Iran. This decision, […]
Oil Pipeline Lifeline for Canada Comes Under Siege in Michigan
The Michigan Supreme Court has agreed to hear a case regarding the Line 5 pipeline tunnel permit, challenged by Tribal Nations and environmental groups. The legal challenge centers on whether the state’s Public Service Commission […]
U.S. Oil Rig Count Rises for Third Consecutive Week
The U.S. oil and gas drilling sector showed continued signs of modest recovery this week, with the total active rig count climbing to its highest level since July. According to the latest data from Baker […]
Chord Energy to acquire XTO Energy’s Williston Basin assets for $550m
Chord Energy has announced a definitive agreement to purchase assets in the Williston Basin from XTO Energy, a subsidiary of ExxonMobil Corporation, for $550m. The acquisition encompasses 48,000 net acres in the Williston Basin, with […]
Highlights of the Podcast
00:00 – Intro
00:12 – Warren Buffett Was Right About Wind Energy, and You Should Not Invest in It Without Tax Breaks and Subsidies
03:37 – Rising Natural Gas Costs Make Wind and Solar More Expensive, Too
06:49 – California Won’t Replace Expiring $7,500 Federal EV Tax Credit
09:15 – Iraq’s Gas Deal Through Iran Blocked by U.S.
10:58 – Oil Pipeline Lifeline for Canada Comes Under Siege in Michigan
16:28 – Market Update
17:27 – U.S. Oil Rig Count Rises for Third Consecutive Week
17:46 – Frac Count Update
18:02 – Chord Energy to acquire XTO Energy’s Williston Basin assets for $550m
19:14 – Outro
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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.
Michael Tanner: [00:00:00] Warren Buffett was right about wind energy. Next on the Energy Newsbeat Standup. [00:00:04][4.5]
Stuart Turley: [00:00:12] Warren Buffett was right about wind energy, and you should not invest in it without tax breaks and subsidies, and now that they’re gone? What do you think you ought to do, Michael? In the world of renewing energy, energy voice few voices carry as much weight as Warren Buffett, the legendary investor and CEO of Berkshire Hathaway. Michael, I had a lot of fun writing this article. We get a tax credit if we build a lot wind farms. That’s the only reason to build them, he said in 2014. They don’t make sense without a tax-credit. He- [00:00:47][34.6]
Michael Tanner: [00:00:47] Can we have a quick, uh, can we just have a quick moment of silence for wind energy? All right. That was enough of that. [00:00:52][5.3]
Stuart Turley: [00:00:52] Okay, that was good enough. Okay, let’s keep going. Let’s go down to this bottom line here. I really want to ask a question. As a consumer and a taxpayer, nobody ever talks about who pays for all the profits that Warren Buffett put in his pocket. Consumer electricity costs have been dramatically increasing across around the world due to the addition of wind and solar, and the subsidies and the printed money are only part of the equation. I want to sit here and take a of this, Warren Buffett, while BHE, Berkshire Hathaway, represents a direct foray into energy production, the conglomerate’s overall portfolio reflected a diversification approach. Listen to this, how many millions it is right here. Berkshire Hathaway harvested approximately 6.1 billion in tax payments from the federal government. Holy smokes, Batman, 6. 1 billion in-tax returns paid in subsidies. That was just how much money could you have built out of that? I will cover that here in a sec. [00:02:02][70.0]
Michael Tanner: [00:02:03] Oh, here’s even the craziest part. That represents a negative tax rate. OK, so why does Warren Buffett so? Absolutely. So Warren Buffett on one hand says they don’t make sense without the tax credit, but then I’m going to use that tax credit to lower my over taxes. I am the first one. If you listen to this show at all, you hear when we pay the bills, we love that investing in oil and gas, you get a tax benefit, but there’s a difference from a tax benefit than a tax credit. There are two different things. So when people say the oil industry is subsidized, I say, no, no no no, it’s incentivized. And there’s a difference between subsidies and there’s difference between incentive. This is a subsidy. This is tax subsidy. It’s unbelievable. I mean, here, and you mentioned that 6.1 tax pain, billion tax payments from these credits that occurred from 2019 to 2022. In that time period, basically they had about six billion in profits. Meaning, so it’s a tax harvest way, it’s, you know, if you’re a sports fan and you’ve been following this whole Steve Ballmer may have been giving illegal payments to Kawhi Leonard, well, what was the mechanism to do that? It was carbon credits. That’s the funniest part that nobody talks about. Why is probably Steve Baller, I don’t want to say innocent, we’re going down a hard, but he’s probably innocent because he wasn’t investing in this to give Kawhai Leonard money. He was investing in it because he wanted the negative tax credit associated with the carbon credit that this aspiration company was able to do. So you see it all over the, you know, all over the economy. [00:03:34][91.8]
Stuart Turley: [00:03:35] It’s unbelievable. Oh, absolutely. But let’s go through to where costs are going. This next story from the energy bad boys is really a cool one. I really enjoy working with those guys. Isaac or, and Mitch rolling are the energy, bad boys and the rising natural gas costs makes wind and solar more expensive to the new cost of natural gas plants and how it impacts solar Michael. We’re not going to go into all of the, the cool things that these guys have in this story, go to the, their link, go search them out and then follow the story, but I want to put out a couple of points here and you take a look at the cost of the turbines is going up. There’s a five year wait to get new turbines. But as he puts in here, the chart always, the chart is down here at the bottom, always on energy research, thermal resources versus solar plus battery. And you take a look at the cost of a, a megawatt hour is $600 per megawat hour for solar and battery. It’s $67 per megawatts hour at on natural gas, Michael. Huge difference and why are people sitting down and saying oh solar is so much cheaper it’s not i feel like you know you know to the moon i feel like oh the old jackie gleason i feel like running through there going to the BANG BOOM BOOM [00:05:09][94.7]
Michael Tanner: [00:05:09] Loved me a good old honeymooners reference, but here’s what I think, what I find hilarious and this goes back to when tying it back into some oil and gas stuff here, you hear this all the time when you’re evaluating different oil and cast companies to possibly invest. I see this all the times when I’m doing diligence on it. They say, well, you’re going to get a 20% return. And then you read the fine print below and it says, well, that’s actually inclusive of the tax benefit. So your IRR is actually 9%, but we’ve bumped it up and we’re telling you 20 because it’s with the tax. So I always tell people when you’re doing your diligence, ask, what is my cash on cash IRR? It’s no different than right here. What is the combined cash on-cash cost of natural gas versus all this other stuff, because if you throw in the tax credits, we just saw the last article. Well, of course, you’re probably going to come out even or slightly ahead on wind, but that’s because you’re basically lowering your tax burden on other parts of your business to make wind profitable. But in a cash on cash cost base, it doesn’t quite compare. [00:06:09][59.5]
Stuart Turley: [00:06:09] But nobody talks about who pays for those benefits. All of the printed money in the inflation reduction porculous bill have cost taxpayers into the Biden administration, the inflation that was going on through all the printing, the consumers pay. And now with the new types of technology coming in for gas turbines, you’re gonna see new combined cycle gas turbines come down to 37 megawatts instead of the 60 side. So here I am. I’m trying to be like brutal about it, but it’s actually going to get cheaper. Yeah. Anyway, no, it’s unbelievable. California won’t replace the expiring 7,000 federal EV tax credit. Governor Newsom, I absolutely am not surprised that he can’t do it. Newsom described the federal expiration of federal vandalism, but emphasized that California simply can’t afford to compensate for the loss, opting to instead prioritize investments in EV charging infrastructure. This man is absolutely a walking billboard for stupidity. If Trump kills the federal EV tax credits and California will replace it for its residents, Newsom declared at the time, framing it was a standard national, you know, he was trying to save it. Well, he can’t cause he doesn’t have any money. He’s bankrupted. He took a state that had billions in surplus to billions in deficit and ruined his economy. [00:07:44][95.0]
Michael Tanner: [00:07:45] Yeah, it’s extremely, I mean this is extremely predictable. Okay. I mean, if you have, again, that does not like a broke record, but if you had a wall of listening to the show, you saw the root California was going, they run up to the line. Oh, we’re going to do all this crazy stuff. And then when it actually gets down to it, they actually, ironically act rationally, at least, you know, extension of this tax credit would have been just insane. You would have said, okay, well, these people actually are, are living on a different planet than we are. At least with this ruling, we know, okay. Well, they, they can at least look at data. And even if it goes against their narrative, we’re going to go ahead and play it. So from that standpoint, I can’t necessarily say, you know, they’re idiots. At least they saw the data and was like, maybe we should kill this. [00:08:30][45.0]
Stuart Turley: [00:08:30] Well, it’s because he had no money. The other thing that’s really critical is that they’re now trying to- Well, time out, Stu. Well, time out, Stu. [00:08:36][5.3]
Michael Tanner: [00:08:36] I know a lot of people that don’t have any money, but still spend like they do. So that’s usually not an answer, you know? [00:08:41][4.7]
Stuart Turley: [00:08:40] That’s because they had the fed to print the money. So let’s get rid of the fed. Hey, uh, the next thing I had to slide that in, but the next thing is, is governor Newsom is now trying to get permitting reform done. He’s listened to Steve. Who I just interviewed and that was a great interview. And he’s saying, oh, we need to go ahead and do more drilling, but that’s not going to help the closing downstream refineries. So he is, I think he’s done too much, too far. And the crisis is going to be coming around the corner. Let’s go to this next story. Iraq gas deal through Iran is blocked by the U S Trump goes, no gas for you today. The agreement in question was first proposed in 2023 in a swapped agreement where Turkmenistan would supply natural gas to Iraq via Iran’s national Iranian gas company the NIGC under the terms Iran would facilitate the transit of the gas and retain up at 23% of the daily volume for its. Domestic needs. Trump is blocking the deal because he doesn’t want to do anything good for Iran until they calm down. I think it’s pretty interesting. The White House has not issued a formal public statement specifically in this blockage, but the move is consistent with broader things in there. U.S. Treasury declined to comment. [00:10:05][84.2]
Michael Tanner: [00:10:05] Well, I mean, it’s, it, it it’s really interesting and, and tough when geopolitics get in the way of what is probably a good thing for migrating all of this oil to where it needs to go. I mean this is the problem when again, I don’t want to say this is, this is Trump’s fault, but when you, you know, when you do this stuff and you put this maximum pressure campaign on, on Iran, which they’re not great people to begin with, but also what I mean they don’t, they don’t affect us in a way that they may affect other people. So. Again, it goes back to why are we fans of what Prime Minister Modi is doing in India? Well, it’s because he’s looking out for the Indian people. I’m for making decisions that benefit the American people. Who cares about everybody else? [00:10:46][41.0]
Stuart Turley: [00:10:46] I agree. And I just want to say that we don’t know about the Iranian people, maybe great people. There are, I know some Iranians that are good people. It is the leaders that just want to make that clarification. Let’s go to this next story here. Oil pipeline for Canada comes under siege in Michigan. This one is kind of fun. The Michigan, Michael, the Supreme Court has agreed to hear a case regarding the line five pipeline tunnel permit by tribal nations an environmental group. This goes under the, the Michigan line five begins at Lake Superior, Wisconsin. Where Canadian crude and NGLs flow off Enbridge mainline system. From there, the line cuts across Michigan, supplying propane to the upper peninsula and feedstock refineries in Detroit and ending in San Area, Ontario. That makes Michigan both customers a corridor while Canada has a double stake, both a producer and shipping oil east to consumer spending on Sierra’s refinerys. [00:11:48][62.0]
Michael Tanner: [00:11:49] I mean, this goes back to when we, we started this show like five, 10 years ago, five, seven years ago Stu, because we, you know, what were the two big topics we were talking about line five and the Dakota access pipeline, you’ve heard a peep about the Dakota axis pipeline and now line five, it’s like a blast from the past again, you just run this through downtown Dearborn. That’s all I want. Just not migrated around this Indian reservation and have it go right through the government building there in Dearborn, that’s my solution. [00:12:18][28.7]
Stuart Turley: [00:12:18] This is Warren Buffett. He’s calling, he’s got a solution. Hello, Warren. Yes, no, okay. So you’re just gonna put these all on rail? Okay, great. We’re just going to go ahead and kill the pipeline. We’re going to kill the Keystone pipeline. We’re gonna go ahead and kill this pipeline. And then you have more to put on rails. Okay, Great. Thanks, Mr. Buffett, there you go. Problem solved. [00:12:37][18.3]
Michael Tanner: [00:12:37] And that’s the craziest part is this, they’re now going, this crude’s gonna flow. So people, they think that they’ve stopped this crude from flowing. No, no, no. What you’ve done now is you’ve put it in what is less environmentally safe methods, more costly methods, which will eventually hurt in the long run. I mean, it’s unbelievable what’s going on. Again, my vote is screw the rail. I think we just roll this right through downtown Dearborn, right down Main Street. All right. [00:13:06][29.3]
Stuart Turley: [00:13:07] I think, I think so. I think it’s gonna be big fun. Hey, off to you, dude. [00:13:10][3.0]
Michael Tanner: [00:13:10] All right, well, let’s let’s jump over before we get demonetized on YouTube. Let’s jump over and and quickly cover what’s going on in the markets before we do that. Guys, let us pay the bills. Thank you for checking us out. World’s greatest website on energy newsbeat.com. Stu and the team do a tremendous job making sure that websites up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business, go ahead and hit the links in the description below for all of the articles and to subscribe to our Guys, please subscribe to our sub stack It’s the best way to support the show and also stay up to speed on everything energy news We we at least release something every day. We don’t email you every day We email you about two or three times a week But every day we post great stuff there whether it’s snippets from the podcast whether it is a longer form story by Stu Which kind of ties in stuff where it’s a little bit of research by me from the from the oil and gas space guys Sub stack is a great great place to support this show Please subscribe there if you also want to consider subscribing for a paid subscription we would welcome that. It helps us to keep this show going. We’d also like to say shout out friends of the show, Reese Energy Consulting guys. We love Reese Energy consulting. If you at all, you know, if you’re lying, if your Enbridge and you’re dealing with this line five stuff, Reese energy consulting and help you. They are the midstream experts. They know everything again, from permitting to legal to all the way down to project analysis, red team analysis, everything you can think of first purchase. If you’re an upstream company and you’re getting shafted by your first purchaser, they can come in and help and negotiate better rates guys, reeseenergyconsulting.com. We love them guys. They have literally a millennium of experience, literally a thousand years of experience on their team. We highly recommend checking them out, reaseenergyconsulting.com And finally, guys… It’s that time of year again, it’s where you’re realizing, oh wait, I have a large tax burden and my tax burden is gonna have to go to fund line five’s challenge by the tribal nations. So don’t have your money go to any lawsuits by the Tribal Nations blocking oil pipelines. Invest in the industry itself, guys. It’s a great way to diversify your income because you’re probably all wrapped up in just your stocks, just your 401k. You’ve probably got very little diversification. You probably, you know, you probably maybe have a house. Diversifying your portfolio is a great way to grow your wealth. It also, and if you haven’t known this, oil and gas investing has great tax benefits. OK, so if you also want to lower your W-2 income from the standpoint of. Not paying it to Uncle Sam to support the tribal nations suing Enbridge, you can invest in oil and gas, lower your tax burden, and also you can get a little bit of a dividend because there’s nothing I hate worse than people say, Oh, well, I just, you know, I made this investment and it’s only a tax. It’s just for tax benefits. I don’t really make income. Why would you invest in something if you don’t get an income? So in our unprofessional opinion, oil and gasses is a great way to do all three diversify your income, get a bit of dividends and have great tax benefits, we have a great great website, investinoil.energynewsbeat.com, which can show you how and what to invest in. If you want, we have a great portfolio survey that basically says what you think oil is going to go. We also have a tax calculator so you can figure out what your tax burden is. And then depending on your answers, we will send you a bunch of information on how to do that. Some, some questions asked during due diligence, but also if you do qualify, we may or may not point you in the right direction. Investin oil.energy newsbeat. Com. [00:16:27][197.2]
Michael Tanner: [00:16:28] Stu, I mean, from a price oil perspective, Stu, we saw prices, you know, kind of soften on Friday. It was, you, know, it was a, it, it wasn’t, I don’t want to say it was a tough day in the markets, but really what we saw was, you know the demand side of the equation begin to scream a lot louder. Yes, we did see on Wednesday that the first interest rate cut this year happened. I mean it was all that was expected. I mean It was a you know that that quarter point drop to that, that four to four point four and a quarter guidance. I think things just, you know, that was obviously baked. It was baked into the equation. So I don’t think people were generally necessarily concerned. Here’s a great quote from our good friends at Reuters. Oil supplies continue to remain robust and OPEC is reducing its oil production cuts. We haven’t seen an impact on Russian crude exports from these sanctions. I think it’s going to be, I don, again, I don’t think that oil markets are gonna see a boost, mainly because this drop. Of interest rates is probably going to continue to weaken the dollar, which is just going to continue make oil more expensive to buy. So very, very interesting there, Stu. We did see rig counts actually climb for the third straight week, which was very interesting. Rig counts jumped by 3 up to 542, so we are about 8% lower than we were the same time last year. It was actually mainly directed by oil directed rigs, which rose by two natural gas saw a raise by one. We also did see frac count spread up for the third straight time as well, up five. So we saw five frac rigs get added, which is You know, rigs are great. Frac rigs are better. That means we’re actually turning wells online, which we love. So that was up five. That was really all I saw. You know we did see earlier in the week, Chord Energy swooped up some Williston Basin assets from XTO, aka ExxonMobil for about 550 million. There’s about, you know, 48,000 net acres at about an average 86% working interest and an 82% NRI, which is actually really interesting. There’s only about 92 mile locations, Which is really fascinating, it’s a- It’s a pretty, pretty low number of locations relative to that 550 a number. It’s again, I think it’s, you know, from cord’s perspective, I think what they’re trying to do is just continue to go after adjacent acreage. So I think the number screams a little bit big, but I do think there’s some economics of scale that they’ll be able to see. So very interesting there. Cord energy makes a move there. Stu, that’s about all I saw though. What is really time for my favorite part of the week? What’s scaring you this week? What should we be worried about? [00:18:49][141.4]
Stuart Turley: [00:18:49] Oh, we need to keep an eye on everything going on. Keep your head on a swivel and looking forward to it. We’re going to try for the fourth time to interview general Flynn, a schedule of Tuesday, I’m hoping that he’s not called into meetings, but he is a busy, busy man. We’ve got about five others that are already in the pipe and rolling on through. [00:19:08][18.8]
Michael Tanner: [00:19:08] Good. Well, trust me, nobody’s holding our breath, but we’ll be waiting anxiously awaiting on when that to happen guys. But appreciate you guys checking us out, starting your week with us. Great week ahead guys. Well, with that, we’re going to let you get out of here, get back to work. Appreciate everybody for Stuart Turley I’m Michael Tanner. We’ll see you on Wednesday. [00:19:08][0.0][1134.1]
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