CA to Borrow $$ for Climate

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Labour Wins Landslide Victory in U.K. Snap Elections

Highlights of the Podcast

00:00 – Intro

01:36 – Labour Wins Landslide Victory in U.K. Snap Elections

03:59 – Iran to Purchase 10 Billion Cubic Meters of Turkmen Natural Gas Annually

05:04 – Has The Extreme Bear Market in Natural Gas Come to an End?

08:03 – Lawmakers Vote to Ask Californians Permission to Borrow $20 Billion for Climate, Schools

11:33 – Markets Update

14:27 – Energy traders are snapping up refineries away from Big Oil

21:16 – Outro

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

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Daily Energy News Beat. Stand up here on this gorgeous. Monday, July 8th, 2024. Here are today’s top headlines. First up labor wins landslide victory in UK snap elections. Next up, I ran to purchase 10,000,000,000 cubic feet of Turkmenistan natural gas annually. Holy smokes. That’s a big one there. Next up has the extreme bear market in natural gas come to an end? While we know those natural gas bulls would love to hear that. Finally, in the news segment, lawmakers vote to ask Californians permission to borrow 20 billion for climate and the school. As if it can’t get any worse over there. Stu, then toss to me. I will quickly cover what happened in the oil and gas markets over that long July 4th weekend. Rig counts came in surprising jump, which is actually great. Then we’ll cover energy traders snapping up refineries away from big oil. And finally Exxon has arbitration panel Neil’s nears formation. I will cover all that and a bag of chips. Guys, we hope you had a great July 4th. We are refreshed and ready to go. As always, I am Michael Tanner, joined by Stuart Turley. Where do you want to begin? [00:01:35][80.7]

Stuart Turley: [00:01:36] Say, let’s start with our buddies over there in the UK. If you’re in the UK. Run. Labor wins landslide victory in the UK. Snap elections. This I really feel sorry for the UK folks. This was the conservatives worst defeat in the party’s 190 year history. Tory leader Rishi Sunak resigned as prime minister Friday morning after his party won only 121 seats in the 650 seats out of the House of Commons. I’m sorry I heard your anger, Michael. I don’t want to spend much time on this. It’s worth reading this article, but I feel sorry for the and the Brits. Their country is going to hell in a handbasket. Even worse than the United States. This man is a World Economic Forum fan, and he thinks that all of the green energy needs to be magnified. That’s all I got to say on this. This is absolutely unbelievable what kind of a human this individual is. [00:02:34][58.4]

Michael Tanner: [00:02:35] I think the, you know, as it as, as this regards to energy. I think one thing that we’ve talked about at nauseum on this show, and we’ve covered a few times, is the fact that there’s all of these, you know, you’ve got shell, you’ve got BP, all of them are considering listing on the New York Stock Exchange and U.S. run stock exchanges. I think this election, what this means is that you’re going to see that take full force. Now, I think by the end of 2025, I think you’ll see both shell and BP being listed and moving their headquarters to the United States in order to I mean, think about this to me, is that that was it, a profits tax was actually implemented by the UK? Well, that’s not going anywhere under this guy. [00:03:20][45.4]

Stuart Turley: [00:03:21] No, it’s being beefed up. And so not only are the Green New Deal and the energy policies and climate change being fully thrown in, he is now opening the borders and he is now saying he’s not. He’s canceling the closing of their borders and throwing out the illegal immigrants. So he is now totally going to bring down the UK as it relates to energy, the interconnects, everything else, the natural gas. I mean, this thing is a disaster. [00:03:55][34.1]

Michael Tanner: [00:03:56] Let’s move to another place. We don’t want to live. [00:03:58][1.8]

Stuart Turley: [00:03:59] Okay, let’s go to Iran. Iran to purchase 10,000,000,000m³ of Turkmen Turkmenistan natural gas. And this is amazing. You and I talked about this last month. And when we talk about Turkmenistan and is working on a pipeline to supply gas to Afghanistan, Pakistan and India, where natural gas demand is expected to rise significantly in the coming decades. Turkmenistan is really becoming a gas hub, and it is important because they can go across the Caspian Sea and then tap into the EU. So this is a play for natural gas, and I think it’s pretty smart. So anybody that’s not paying attention to Turkmenistan is going to watch it in the future. [00:04:44][44.8]

Michael Tanner: [00:04:44] Yeah. I mean we we’ve seen these large natural gas contracts and LNG contracts being signed all over the world. Now this is the latest in the string. You know, it’s smart if you’re Iran, you know going in to securing a massive supply of natural gas can’t hurt you bad. [00:04:59][15.1]

Stuart Turley: [00:05:00] No no. And Toby Keith, he ain’t got a good Toby Keith song with it. All right. Let’s go to the next one before you get your arm up there. I can see that for our podcast listeners. I got to get that and get that arm out of there. All right. It has the extreme bear market in it and natural gas come to an end. No. In the in the in the in the latest edition, the numbers, we’ll take a look at some of the most interesting figures. And let’s take a look. 40% rebound in Tesla shares. He’s concerned about Tesla. I’m pretty sure it’s going to make it. Guys when you sit back and take a look at Tesla’s rally then you take a look at the natural gas. This is this article is from Oilprice.com. And it’s got a little bit of a multi flavor items in it. Natural gas storage plus five year average storage surplus to the five year has declined for a seventh consecutive week, falling to 528 BCF at the end of June. The average value of natural gas consumption from the power plants at 45.3 BCF per day at the end of June, a whopping 14% higher than the same period ago the previous year. [00:06:07][66.8]

Michael Tanner: [00:06:07] Yeah, I think obviously as we move into summer, we’re going to see prices move up a little bit. I mean, we’ll we’ll cover where natural gas prices are sitting at now. But we’ve we’ve seen a rebound over the last six months relative to where prices should have been. I mean, that’s the funny part is prices should be higher in the winter because we’re drawing from storage. But as this article is pointing out, storage is drawing down. We’re at the our our five year average inventories has declined, as Stu mentioned, for seven straight weeks. So the real question is are we going to start now seeing a reversal in kind of the cyclical trend of natural gas prices fall in the summer, rise during the winter. Well they may rise now because one we’re going to need a lot more AC being used and driving. Now, I did see a report out of one of our favorite, one of my favorite Twitter guys. I say that with a grain of salt. He’s not one of my favorite Twitter followers, but Patrick Dan, he’s the GasBuddy guy shill for the liberal energy Twitter. It doesn’t matter. He’s got great energy scoop. He said that he saw disappointing demand or disappointing consumption numbers over the July 4th weekend, which is generally a a big gasoline consumption. So there’s a lot of interesting noise jumping back and forth. You know, I mean, I mean, natural gas prices have fallen a little bit. We’re now back down into the low twos again. We saw last week I was off for this show. But the US you know, the courts pausing the LNG ban is also not necessarily bullish for U.S. natural gas prices. And the fact that now there’s a place where natural gas can go. And if it’s going to leave the United States because of the arbitrage between what you can sell it for here and what you can sell it for overseas. Yeah, the be could be I think there’s a lot of trying to understand what goes on in the natural gas market is impossible. Anybody that tells you they know where natural gas prices are going to go is lying to you, even if it’s me. So just be wary of all that. [00:08:02][114.4]

Stuart Turley: [00:08:02] Yes. Well, hey, let’s go on to the next story here. Lawmakers vote to ask Californians permission to borrow 20 billion for climate schools. [00:08:12][9.7]

Michael Tanner: [00:08:13] Well, at least they’re asking. [00:08:14][0.8]

Stuart Turley: [00:08:15] Yeah, but you know what? When they had 100 billion, whatever the number is that they’ve got for their electric train and they’ve got just a few miles of it made, and they keep asking for more and more billions. And then they have $2 billion for a toilet. California does not know how to manage money. Lawmakers voted to place a pair of $10 billion bonds on the November ballot. If approved, the money would pay for the building of new schools and help communities prepare for the impact of climate change. Holy smokes. All right, let’s read this next paragraph. California was swimming in money just two a few years ago, as budget surplus totaled well over 100 billion through the pandemic, but the state had to slash spending to cover deficits of more than 78 billion over the last two years as revenues declined amidst rising inflation and economic slowdown. Because everybody’s leaving the state, Michael. [00:09:18][63.4]

Michael Tanner: [00:09:19] Yeah, well, I mean, here I’m all for spending money on education. What’s funny is how do most states like New Mexico and Texas, how do they fund their schools oil. [00:09:29][10.3]

Stuart Turley: [00:09:29] Oil. [00:09:29][0.0]

Michael Tanner: [00:09:30] Gas taxes. So maybe if you access some of the natural resources that California has, which they do have a lot of reserves, it’s just extremely onerous from a regulation standpoint to go actually get those resources. Maybe you wouldn’t have to raise a $10 billion bond because you’d have a little bit of cash coming in from your oil. [00:09:47][16.8]

Stuart Turley: [00:09:47] They could finance a bunch of their stupid left wing nut job policies if they use their own oil and gas. That’s in California. [00:09:54][7.2]

Michael Tanner: [00:09:55] Absolutely. They have budget surpluses. [00:09:57][1.9]

Stuart Turley: [00:09:58] And they’d have more budget surplus to graft and steal. I don’t get. [00:10:02][3.6]

Michael Tanner: [00:10:02] It. Yeah. I mean, you got to think about this. I mean, that $10 million bond is going to end up costing $19 billion to pay off. And you’re gonna have about. Annual payments of about $650 million, which is only going to drive you. More into deficit spending. So. And they want Newsome now to take over for Biden. Oh, great. That’s what we need. More. Well, more debt on the US budget. [00:10:24][22.5]

Stuart Turley: [00:10:25] Oh my goodness. That man needs to be nowhere near the white House. He and his as it is and is Pelosi is. Aren’t she somehow related to him? It’s pathetic. [00:10:36][10.9]

Michael Tanner: [00:10:37] We just need to stick her in. She’s about to retire and get a job at one of some hedge fund in New York. Because she’s, like, one of the best traders in America. [00:10:44][7.3]

Stuart Turley: [00:10:45] I’m going to want to keep us on the show, Michael. And I hope you can appreciate the fact that I’m just going to shut my mouth. [00:10:50][5.7]

Michael Tanner: [00:10:51] This is big for you. This is big for you. All right. Let’s go ahead and move into oil and gas prices and a couple other things. Guys, before we do that, we got to pay the bills. As always, the news and analysis that you just heard is brought to you by the world’s greatest website, Energy News. Beat.com The best place for all your energy and oil and gas news. Check out the description below for all the links to the articles timestamps. You can also hit us up the Energy News Beat substack.com where you can get a sneak peek. We call it Tomorrow’s News. Today we record these shows the afternoon prior to the release, so if you want a head start on what the show is going to look like, go ahead and check us out on Substack. You can also hit us up dashboard.Energy News beat.com. As always the energy News beat.com. [00:11:32][41.7]

Michael Tanner: [00:11:33] I think we will. I mean it’s it’s coming rich over the past couple weeks. Last couple days we saw a pretty steady increase since July. The second S&P 500 on Friday or excuse me on Wednesday Friday markets were actually open for a half day on Friday. I was up about half a percentage point. Nasdaq was up a full percentage point. But over the past four days we’ve seen about yikes, 6% increase in both indexes. So overall economy doing fairly well. We saw two and ten year yield stumble on Friday by about a 1.7 percentage points for the two year. The ten year yield down 1.49 percentage points. Dollar index down a quarter of a percentage point. Bitcoin not having a great couple days. It’s down below 60 $57,000. That’s down 1.9 percentage points mainly off the back of. They think there’s going to be a lot of Bitcoin flooding the market due to the fact that some some scandal someone stole a bunch of bitcoin a couple of years ago. They finally recovered it all and they’re going to release it back onto the market. As always guys supply and demand rues the day. Crude oil has dropped a little bit and did drop a little bit on Friday. We were all the way up at the beginning of Friday’s trading session, all the way up to 80 or 50. Slowly drop down. Settle price 8316 is room record this on the seventh on the after noon. And so you know we did see looks. Markets do look to open a little bit higher 8344 is the projected open here as we record this natural gas. As we covered a little bit down to $2.33 as a slow wind down. Again, mainly due to the fact that we’ve seeing inventories, the met inventory tightening a little bit. But you know, it just goes back to what we talk about. Where will natural gas prices go? I have no idea. And anybody who tells you they know where natural gas prices are going is lying to you. We did see rig count drop on Saturday. We saw rig counts pop, actually, by four 585 rigs. That’s still down 95 rigs from last year. The interesting part is there was no oil rigs at. But there was four gas rigs, which is just beyond I mean, these these natural gas drillers, man, they just can’t get enough of it. They’re just going to keep spending money and keep drilling. [00:13:43][129.9]

Stuart Turley: [00:13:44] Until they hurt our process. They heard our podcast that the LNG ban was off, so they needed to get out there and drill ahead of it. [00:13:52][8.1]

Michael Tanner: [00:13:52] Yeah, the difference is those natural gas players don’t get paid on the arbitrage. They get paid on the spot, not the spot price. They get paid on the regional contract that they’re a part of. So if your. [00:14:04][11.9]

Stuart Turley: [00:14:05] It was a joke. [00:14:05][0.4]

Michael Tanner: [00:14:06] On prices and you’re drilling, hey, I’m not drilling natural gas well, so I don’t have to worry about it. But super interesting there. We finally did see a kick up in rigs, but you know, maybe not enough to to see what’s happening. I think a lot of people are waiting until what happens with the November election before they decide what their go forward, you know, year rig plans are going to be next one we got to cover. Here’s to energy. Traders are snapping up refineries away from big oil. Super interesting stew. So I’ll be I’ll read a little bit from the article here. But basically what’s going on is that you are seeing trading houses, the Glencore, the gears of the world. They are now swooping in and buying refineries that were generally owned by big oil. So it’s one of the areas and I’m now reading straight from the article. It’s one of the areas where trading houses long, who long have coveted the refining and distribution assets that helped drive oil majors mega trading earnings, are investing huge returns they’ve made over the past couple of years from into these refineries. Owning these assets offers a chance to have more options when making trades, a greater exposure to the physical and paper market. And. Better insight into fuel supplies. These sites are coming up for sale as big oil faces shareholder pressures one to trim portfolios and focus on assets with better returns. Which is interesting because you’re making these mega trading houses. Are these these refineries are helping big oil trading companies like you. You know, Exxon has excuse me. You know, BP is a big trading center. Shell has a big trading center. They’ve driven returns there. But the other thing is they’re also offloading some of their most emissions heavy assets. You can imagine a refinery, for better or worse, does have some of the worst scope one emissions. You know, Bloomberg reported last month that trading giant Vitol bid for assets. And we covered this for the U.S. refiner Citgo Petroleum Corporation, which was interesting. And that followed a two year deal spree in which it invested in Italian refiner SA, SCA and fuel stations in Turkey. In South Africa. We’ve also seen Glencore. That was part of a conspiracy theory that purchased Shell’s Bukom refinery in Singapore. And Trafigura is an exclusive talks to buy France’s Foster refinery. Here’s a quote from Liz Martin, an adviser at Energex Partners, a former BP trader. Recent sales have largely gone to private equity, but increasingly traders are coming up, are coming in to investment refineries. As I mentioned, this is gaining a foothold in these refineries, gives traders more options when deciding whether or not to send certain oil grades to their own refineries elsewhere, such as the open market, depending on what makes more moolah. Another quote Kurt Chapman he’s a board member of Trader Lament and former head of crude oil at Care energy Group. Traders see an opportunity to end up with a plan that can run a slew of different crudes. This article goes on to say another benefit of having backstop for cargoes is let traders be bolder in physical windows that ultimately set regional benchmark prices. Plus, it gives more than more reason to take paper positions to hedge their physical exposure, allowing them to be bigger players in futures and our swaps and futures markets. Last quote I will go with here is from Kurt Chapman. Again, if you’re a if you have an outlet for Midland WTI in Europe because you’ve taken on a refining asset, then you have a direct physical influence on the pricing mechanism, he says. Refineries, quote, give you insight into what the underlying is doing and allows you to potentially leverage that in the paper markets to enhance your trading. These trading houses have made blockbuster profits over the past few years, and they’re using those profits to dive into refiners. It’s a super interesting mindset you’ve got going, and it goes to show you how one person’s emissions is another person’s profit. And this goes back to some of the stuff I’ve always talked about, which is the entire idea of carbon offset emissions. You know, I’m sure Shell’s going to get a nice big emissions. You know, they’re going to get some sort of credit for selling this emissions asset, but it’s just going to somebody else who’s taking on that liability. So like with like the shell game that we’ve always talked about, no pun intended to shell there. But the idea that oh we’re going to emissions are going away over here. They’re not on our books but they’re going to somebody else’s books. You notice they’re not American companies. You notice these are all non American companies that are offloading and taking. You know, obviously some of these refineries aren’t necessarily based states. But Citgo is so super fascinating. Private equity owned refineries are coming to a town near you. Finally, I think the other interesting thing that we need to talk about is Hess arbitration or Exxon. Hess arbitration panel nears formation, sources say. I actually saw this on a LinkedIn post via one of my favorite people, Bennett Williams. We covered this deal extensively on the Deal Spotlight podcast. But that final member for that, Exxon versus Chevron and the battle for Guyana, has been chosen for the three person arbitration panel. This and I’m reading now straight from the article, the panel’s formation would be a milestone in the long delayed process that has cast uncertainty over the mega merger, with both Chevron and Hess would hope to have closed by the first half of 2024. You know, the on May 9th. Hess CEO John has said he expect the final arbitration would be appointed by May 17th. Will swing and a miss there. That was according to proxy advisor Institutional Shareholder Services. We did see Exxon CEO Darren Woods said that he expected the dispute would slip into 2020, but he doesn’t have a stake in the game except for the fact that they are running Guyana. So they’re going to go ahead and hopefully get that figured up again. You know, for those of you unfamiliar, Chevron buys Hess, Exxon and swoops in from the top shelf and says, no, no, no, you can’t do that. We actually have the right of first refusal on Guyana, and we’re not given a chance to bid on it. It all comes down to a clause which basically says change of ownership. And, you know, Exxon says they believe they have a first. Right. Or as usual, Chevron. It has say that due to the fact of the corporate merger and that it’s not an asset sale, that this doesn’t apply there. So but super interesting. I’d highly recommend we’ll actually link to that. The spotlight episode in the show. Notes. If you want to listen to more of that. But yeah, super interesting stew. No one’s going to know what’s going to happen here to 2025, except for all these lawyers are going to get really rich. [00:20:21][375.3]

Stuart Turley: [00:20:21] So yeah, you know, carbon sequestration and carbon credits is just a scam. [00:20:27][5.8]

Michael Tanner: [00:20:28] You heard it here first two things. Carbon credits are a scam. Shocker. [00:20:31][3.1]

Stuart Turley: [00:20:32] Well, I’ll tell you what. If you have a farm, let’s go through some numbers here real quick. Let’s say that you have a farm, and a farm generates 80 tons with cattle. They have 32 tons, is produced by tractors and all that kind of stuff. But yet you have 150 acres of pasture. It would remove 500 tons. So if you have a head, a herd, and you have 150 acres, you could actually remove 388 pounds of curb tons of carbon just by having the pasture. So everybody is calculating this crap wrong. [00:21:09][37.4]

Michael Tanner: [00:21:10] Yeah. I mean. [00:21:10][0.6]

Stuart Turley: [00:21:11] Just ask. [00:21:11][0.3]

Michael Tanner: [00:21:11] Me. And maybe that’s why Bill gates is buying up all this farmland. [00:21:13][2.2]

Stuart Turley: [00:21:14] Oh, he’s buying it for other reasons. [00:21:15][1.0]

Michael Tanner: [00:21:15] I’m sure he is. What should people be worried about this week, stu? [00:21:18][2.5]

Stuart Turley: [00:21:18] Hey, let’s keep watching what’s going on with the Biden administration and the saga there. Holy smokes, Batman, you can’t buy this kind of entertainment. [00:21:27][8.3]

Michael Tanner: [00:21:27] No, you absolutely can’t. It’s going to be super interesting. At some point. Something’s going to happen. Happened. He’s been very defiant in his running. And you know, I think, you know, a lot of people in the oil and gas business are are thinking about this because again covered this Trump wins. There’s a high likelihood oil prices go down dramatically as he unleashes the American oil industry, which is great. Then prices fall. So I think it’s his target. Will be very interesting to see what happens now guys. [00:21:52][24.4]

Stuart Turley: [00:21:52] Rather, I would rather unleash the great American oil and gas. Natural gas. Get rid. Do you know how much money we could save by getting rid of the Department of Education? We could save money by getting rid of the regulatory overhead that we’ve got right now. Everybody could use a lot. [00:22:11][19.3]

Michael Tanner: [00:22:12] Of money to be saved. [00:22:12][0.5]

Stuart Turley: [00:22:13] A lot of money to be saved. So anyway, we’re going to have a great week now. [00:22:17][4.1]

Michael Tanner: [00:22:17] It’s going to be a great week, guys. Lots of great stuff coming up. But we’re going to go ahead and let you get out of here. Get back to work. We appreciate you guys checking us out here on the world’s greatest podcast energy Newsbeat podcast for Stuart Turley I’m Michael Tanner. We’ll see you tomorrow folks. [00:22:17][0.0][1298.4]

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