of course there's more to the energy markets than just oil let's talk natural gas this is what i
like to call the checkbook map because everybody on here who can pay their power bill has a dot
this is the most important critical city in human history this is marshalltown iowa
this is where i'm from this is bismarck north dakota if you ever find yourself in bismarck
and you're looking for a good meal you'll need to go to fargo and this is not a rave
there's nobody who lives in western north dakota it's like four dudes and a bunch of cows
but it's lit up because of a problem with transport now oil is a liquid you can put it into
a bucket you can put it into a rail car or a barge or a tanker truck it's easy to move relatively
speaking but you can't do that with natural gas it disperses it has to be contained and pressurized
you need a pressurized system to gather it and transport it and use it and it has to be
used at more or less the same pace that it comes in at because storage is hard
part of the problem that texas is having right now is when we had an interruption
in the production flow that almost immediately translated into a problem for power generation
because we really can't store this stuff so in north dakota like in all the shale projects until
the infrastructure can catch up you have to flare it you can see the flares from space now that
means in the united states and only in the united states natural gas is in effect a waste product
and probably half the natural gas that is sold into the system is sold in below market prices
what can't you do with a bottomless supply of this stuff well you can burn it for power it's
about half of the american power load right now but you can also rejigger your chemicals industry
and we've done that to a big degree so vastly over complicated graphic for anyone who's not
in the sector but bottom left is crude oil you refine that into naphtha and then process that
into thousands of daughter products we use every day the bottom right is natural gas you crack it
to get ethylene and then the same general process to get the daughter products now normally you
would only use natural gas to make this relatively narrow product set the methanol and the butadiene
groups because they can only be made with natural gas and normally there's a five to one price
difference between natural gas and oil because natural gas is hard to store and move that's not
how it is in the united states here the price deferential typically is closer to two to one
well that means that we have rejiggered our entire chemical sector to use natural gas wherever
possible and we now use it for everything from fungicides to styrofoam to nylon to plastics to
to diapers to shatter proof glass you name it it is our primary input so the next time there's a
global energy crisis and of course there's going to be another one at some point probably sooner
rather than later not only can the united states hide its oil market off from the global chaos
we don't even use the same input stream for most of the products that we use every day
okay so remember this map so if you can't get oil and if natural gas is likely to become
problematic use something you need to consider is lng but you know that doesn't really work
either here are the countries that are the largest importers of lng in the world you'll
notice that over half of them are in potential danger zones most notably japan korea and china
so oil is not going to be a reliable commodity that can be traded internationally and neither is
natural gas so the question is what can you use to plug the gap in the world that we're moving into
well there's the possibility of solar because you know it doesn't move but it doesn't exist
everywhere either this just shows simple solar radiation places that are in red have a great
solar profile they're perfect orange it probably still makes environmental sense but the economic
case is probably a wash and by the time you get to green you will actually generate more you'll
consume more energy and generate more carbon and putting up the solar program then you'll ever get
back in terms of the power that you get on the back end it's just a it's not just a wash it's
a loss and then if you are above or below those dotted lines your seasonal variation is so extreme
that you can never take your conventional energy production off in the first place
so in the places where it works it works well but there aren't many of them so this is solar
here's the same kind of data set for for wind the red is where it makes both environmental and
economic sense the green is where it makes no sense whatsoever so let's combine these
the blue is wind the green is solar and the dark green is both you'll notice that there
aren't a lot of places where we have overlap and there really aren't a lot of places where
one or the other really works well there also aren't a lot that are anywhere near
cities so you're talking about thousands of miles of power distribution lines that are
required but we're not done because you're not going to put a solar farm on top of agricultural
land because the agricultural land needs the sun you're not going to put wind turbines
above 10 000 feet because the air density is so much lower that the turbines won't turn
you factor all that out and this is what's left there's just not much to work with
now if you're not in one of these zones it's not like solar and wind can't happen i'll help at all
but instead it's that the in most areas green tech does not yet exist at an at a
level that will really let you improve your emissions appreciably and if you're putting
solar panels up in a place like germany and new york you're just not very good at math
so if you can't use solar and if you can't use wind if you can't use oil
and you can't use natural gas you've got to switch to something that's more local
and for almost every country in the world that is coal and not the good coal because anthracite
coal that's internationally traded that's going to get interrupted just like everything else
instead you're talking about tournaments coal soft coal brown coal lignite coal germany is probably
the best case example here in their war on fossil fuels they have invested almost two trillion euro
in various distribution and generation programs and collectively they only generate about six
percent seven percent of their electricity needs and so they've had to backstop what used to be a
very stable system with local coal production specifically lignite so german emissions have
gone up as part of their green program and power prices are now five and six times what they were
not what i'd call a success let me just give you a few things to think about
uh to round out uh the presentation and give you an idea of where the world is going to be going
first of all trade under biden's likely to be much worse than it was under trump he basically has the
same foreign policy when it comes to economic issues he's just doing it with a smile instead
of a scowl we are going to see a two trillion dollar stimulus program pass in the first quarter
this year and we're probably going to have a second one that's a little bit smaller in the
second quarter of this year this will give biden most likely the credit for what's going to be a
booming economy in the second half of the year but it also means that the needle can be moved on a
lot of projects normally when a president says you know buy american i'm kind of yawn and move on to
you know i've heard this every four years for my entire adult life but this time it might really be
different because if the united states is moving into economic recovery because of mass vaccination
and the rest of the world is not the next world is going to be facing more and more shutdowns
and you back up by american with two trillion dollars of spending you can really deliberately
seriously and quickly change manufacturing norms which is great because relations with the chinese
are in collapse a couple of things that the trump administration did on its way out the
door was it rolled on a couple of grenades it said that any american bureaucrat or official can go
to taiwan at any time and be there as a formal representative of the united states that's like
that far away from formal recognition of taiwan as an independent country in addition trump is called
what's going on in the far western province of xiang a genocide because you know it is
biden reaffirmed both of those positions in his first day on the job then he sent two aircraft
carrier battle groups to do exercises in the south china sea within sight of some of these islands
that the chinese claim as their own just kind of thumb in their nose at beijing's policy
he also reaffirmed donald trump's tariff and sanctions including those against we-way
and the chinese equivalent of chevron texaco were very close from having financial section
sanctions on the entire chinese energy sector you add on what's going on in iran if i was china i
would be very very concerned about my ability to keep the lights on a couple other things to keep
in mind the paris accords yes the united states has rejoined them but it's not an accord i've ever
really been seriously concerned about from the point of energy security or the future
of this or that industry keep in mind that for as part of the accords every individual country
was able to decide what their emissions baseline was what their goal was and what the how to
measure progress and what their own penalty would be if they fail to achieve that progress
this is not a deal that was negotiated by governments this was a deal that was negotiated by
ngos it has no enforcement capability whatsoever and no coherence in terms of what countries are
required or not required to do so joining it is a nice bumper sticker but it really doesn't
move the needle on anything what will move the needle is grid storage because that is really the
only technology right now that exists that might actually change our energy sector or our footprint
biden's policies on federal lands may theoretically over the long term more
than a decade reduce u.s petroleum production by 10 percent that's all that's present on
federal lands this is mostly a state prerogative where not even congress can intervene and so the
question is whether various utilities around the country will choose to go green themselves as the
economics of solar and wind improve you're going to see it in more and more places i'd say texas
is at the center of what's going to be a new green revolution just because it makes sense
there but if you can't store it if you can't store the power you will never get past about 20 percent
switch over so the question is whether we can get large-scale grid batteries in place in any sort
of reasonable time frame and i would argue that the technology we have right now is not up to
that challenge because despite all the build-outs we've seen particularly in california california's
the safest come furthest because they've got all the mandates california now has one
minute of electricity storage you need an hour before you can seriously consider making a
meaningful dent in surge demand that happens roughly from 6 to 9 pm when solar is useless
you really need three hours if you want to get up to 50 carbon free and you're gonna need something
like three days if you want to go fully carbon free los angeles is the metro region in the united
states that has the most aggressive energy storage plans they hope to get to one hour by 2045.
folks we need a material science breakthrough before we can move the needle appreciably on
america's energy mix and electrification doesn't take us there because if you electrify everything
you need five times as much electricity and the idea that you can do that while carving fossil
fuels out of the fuel mix is just ridiculous okay that's everything from me if you're looking for a
little light reading here are the three books that are out i'm working on the fourth one right now
uh you can sign up for my twitter feed or my newsletter there both are obviously free
uh and i am understanding that we are now going to grill me mercilessly so
you