FULL INTERVIEW: Alex Epstein on The Oil Market’s Biggest Geopolitical Threat

This is our full interview with Alex Epstein, recorded live on TBPN. We discuss how the Iran conflict and the threat to the Strait of Hormuz could send shockwaves through global oil markets, unpack why roughly 20% of the world’s oil flows through a single chokepoint with no real replacement routes, and debate what governments can actually do in a crisis from strategic petroleum reserves and Saudi spare capacity to scrapping the Jones Act and deepening energy ties with Canada to stabilize the global economy. TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to podcast platforms immediately after. Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has recently featured Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Sign up for TBPN’s daily newsletter at TBPN.com TBPN.com is made possible by: Ramp - https://Ramp.com AppLovin - https://axon.ai Cisco - https://www.cisco.com Cognition - https://cognition.ai Console - https://console.com CrowdStrike - https://crowdstrike.com ElevenLabs - https://elevenlabs.io Figma - https://figma.com Fin - https://fin.ai Gemini - https://gemini.google.com Graphite - https://graphite.com Gusto - https://gusto.com/tbpn Kalshi - https://kalshi.com Labelbox - https://labelbox.com Lambda - https://lambda.ai Linear - https://linear.app MongoDB - https://mongodb.com NYSE - https://nyse.com Okta - https://www.okta.com Phantom - https://phantom.com/cash Plaid - https://plaid.com Public - https://public.com Railway - https://railway.com Ramp - https://ramp.com Restream - https://restream.io Sentry - https://sentry.io Shopify - https://shopify.com Turbopuffer - https://turbopuffer.com Vanta - https://vanta.com Vibe - https://vibe.co Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00John Coogan?

  We have Alex Epstein, he's the author of Fossil Future, live in the TVPN UltraDum. Welcome to the show. Good to see you. Thank you so much for coming down on short notice.

• 0:09Jordi Hays?

  What are your texts been like the last 48 hours?

• 0:13John Coogan?

  This is over.

• 0:14Jordi Hays?

  Because you're, because John and I were thinking, who's our oil guy? We had one, we had one.

• 0:21Alex Epstein?

  Yeah, and I'm local too. Yeah, if I'm in town, it's great. I always like coming in person versus

• 0:26John Coogan?

  Thank you so much.

• 0:27Jordi Hays?

  So much.

• 0:27Alex Epstein?

  The other stuff, yeah.

• 0:28John Coogan?

  Appreciate it.

• 0:29Alex Epstein?

  So I got lots, I mean, there's so much in energy, but we can talk about this.

• 0:32John Coogan?

  I'm happy to just let you lead the conversation however you think it should go. What are, what's going on? What, how should we even be thinking about oil prices right now? The impact of the war in Iran? How do we, how should we be processing this news?

• 0:49Alex Epstein?

  Okay, so, we did this, so, there's a million things to comment on, so I'm gonna try to segment what I comment on, but we did get involved militarily in Iran, which I would just say, in my non-area of expertise, in general, that is a good idea. I think it's a better idea to have Congress involved, if you can get them involved, and I think it's a good idea to have a lot of expertise on international oil markets being brought to bear when you do this. And I think this administration does a lot of good stuff on energy, but I think it's pretty clear at this point that there was not maximum expertise brought in on this. And so the standard issue when you're talking-

• 1:29Jordi Hays?

  And like indicators there would be like the Strategic Petroleum Reserve hadn't been refilled.

• 1:34Alex Epstein?

  I mean, we can talk about that, so let's make sure to get back to that one, but the main thing is just, you know, rough numbers, you know, Strait of Hormuz, which Iran has control over, is 20% of the world's oil production is flowing through that every day. And so, whether you're looking backward or looking forward, there is no replacement whatsoever for opening that strait and keeping it open. And one of the things we've heard from different people is, oh, we have a lot of options on the table. Like, there's a lot of things that we can do. There are definite things that you can do, but none of them is 20 million, right? So it's just, I mean, that's, that's more than US oil production, just flowing through that one place. So, yeah, we can talk about the other things, but I think the first thing people need to

• 2:18Alex Epstein?

  recognize is if you do not get that thing open, then you have dramatically higher oil prices. And then the other thing to get is oil prices really matter.

• 2:28John Coogan?

  Straight from muse, dumb question, can't you just go around?

• 2:33Alex Epstein?

  I mean, you can, you can try to some extent, but there's a reason why 20 million a day are being routed through.

• 2:40John Coogan?

  Because it actually comes out of there as well, right?

• 2:42Alex Epstein?

  Yeah, there's just, I mean, all of these things are very, very optimized. One of the thing about just understanding the energy industry is like, things are just very optimized in terms of where the infrastructure is. You're doing all of these things. So it's, there are other, and we'll talk about this. I mean, there are certain pipelines, you can pipe more oil through, there are alternate routes, but we're talking even the millions a day, maybe. Most of our other options are sort of in the one to two million barrels a day. And just so people know, barrels, 42 gallons, so you're talking about almost 100 million gallons a day for the stuff. But, yeah, so, so you don't have a lot of great options. And I think that's, that's very important for, I'm going to give some options, but the number one option is keep that thing open. And there are basically two ways to do that.

• 3:23Alex Epstein?

  One is you just win the war, if you want to call it that a lot more quickly. Like if you get some form of surrender and you have friendly people controlling it, then guess what? It can open. That's one thing. And so I'm not an expert on how to do that, but schematically, doing that is very effective. The other thing, which is a little bit-

• 3:43Jordi Hays?

  But game, game theory for Iran is they actually benefit from global markets being in turmoil because it gives them some leverage over, over any type of negotiation.

• 3:58Alex Epstein?

  This is the biggest damage that they can do. I mean, clearly, we've seen they're not gonna do, you're not gonna send missiles to Israel and get rid of Israel, let alone do anything to the US. But they have this incredible control of the, one of the centers of the world economy. And they have a bunch of stuff going on there. So let's talk about that. So option one is you get a surrender, and they don't use all of their options. But then let's talk about their options. So they have mines in this thing. So they can blow up mines. They have missiles. Maybe the worst thing they have, and this is a change in recent years. And you've had Palmer on here and Ethan on here. Like, the drone thing is just a total game changer. Because you can have a small vehicle, you can launch one of these, you know, shah heads out of the back of a truck. They can go really far.

• 4:43Alex Epstein?

  And that's a lot harder to deal with than a fixed installation.

• 4:46Jordi Hays?

  Yeah, they have something like 500 miles of range on a typical.

• 4:50Alex Epstein?

  Yeah, depending on, yeah, right.

• 4:52John Coogan?

  The truck drives up to a beach, drone launches as soon as it finds that cargo tanker that has a bunch of oil on it, and hits it.

• 4:58Alex Epstein?

  Yeah, and then, and then there's the, you're worried about that.

• 5:01John Coogan?

  Sure.

• 5:02Alex Epstein?

  As, as you're going through. So you have to think about, those are the kinds of threats you face. So how do you deal with that? I mean, basically, you need the US to lead some sort of convoy where people have sufficient security and economic assurances that'll go through. So what's involved in that? Well, one thing is, if possible, you want to get allies involved. And it's even possible you get unconventional allies like China, who has, well, they depend on this. Now, they have a bunch of, unlike us, you want to go back to SPR. They've been filling up their reserves. So they have more reserves relative to their imports than we do relative to ours. If you think about ours, we have about 400 in the SPR, and we can release about 4 million a day. So we don't have as much, but, but still,

• 5:47Alex Epstein?

  they really care about this, and a protracted thing is bad. So, but for sure, Japan, South Korea, India. So one thing is just at a high level, if you're doing this convoy, can we get these countries that are aligned economically? Maybe China, but definitely these others. Can we get them involved? Because then, it's in addition, they have military presence there. That's in addition. additional threat to Iran if they attack one of their ships. So but that's a macro thing is just can you do this alone or can you do it with allies? I think ideally you would do it with allies. Then there's a question of what you do about these these various things. And I think the biggest, I mean, the other macro thing you can do is just in some way credibly threaten Iran. And say, hey, if you and I can't give the details of how to do it.

• 6:30Alex Epstein?

  But if you attack us, if you attack in the Strait of Hormuz, it's going to be very, very bad for you. So just at a high level, can you make that threat? So they understand this is going to be very, very now, you know, wiped out a couple of layers of leadership. So they might be taking these things seriously. After that, I think the biggest thing from what I've heard from military experts is just these drones. Like, what do you do about these drones? How do you give any kinds of assurances? And as far as I can tell, we don't have any one perfect solution, but you can do a certain amount of stuff from the air. You can do a certain amount of stuff from the ground, although it's very, very expensive. And then most cost effective where you can do it is you can take out certain stockpiles and facilities. With the proviso that these things are decentralized.

• 7:14Alex Epstein?

  And of course, I have no specific knowledge about where they are.

• 7:17John Coogan?

  But in theory, if there's the suicide drone, the Shahed, that's there's a factory and you take out that factory.

• 7:22Alex Epstein?

  Yeah.

• 7:23John Coogan?

  You have reduced that.

• 7:24Alex Epstein?

  Right. So that's going to be it. And you know, I know you guys had on Ethan Thornton, who I'm friends with. And, you know, he talks about this a lot is just this cost asymmetry issue. Is you just want to be doing things, even if you're way wealthier. You do not want to be spending $3 million to take out $30,000.

• 7:39John Coogan?

  Which might be what happening with a Patriot missile battery.

• 7:42Alex Epstein?

  This, this, this, yeah, that's the kind of thing that happens. So you need, you need a combination of those kinds of things. And then the other thing, so that's all the security stuff. So you get the allies involved. You take these actions specifically against drones. I think the, what was I going to say about the, the other thing you can do, I'm just make sure.

• 8:00John Coogan?

  They're still just.

• 8:01Jordi Hays?

  Well, like the other big.

• 8:02Alex Epstein?

  Oh, the insurance.

• 8:03Jordi Hays?

  Okay, insurance.

• 8:04Alex Epstein?

  Yeah, the insurance. So, and this, this has been floated by the president and it's a reasonable idea. But my understanding is the insurance vehicle we have, the development corporation, does not have enough funding. So you might need to go to Congress. But basically you want to be able to say, hey. You it's we're going to lead this as the United States. We're going to lead it with allies. If Iran does anything, it's big trouble for them and we can counter their specific attacks. And if something goes wrong, you're insured. You're trying to create that confidence to get enough people going through. And then you get a certain amount of stability and then you start to get closer to your 20 million barrels a day. Either that, or you just defeat them really quickly or both.

• 8:41Jordi Hays?

  So, so the other factor is just the loss of production disruption to production, plants shutting down, plants being damages damaged. How does that factor in? Do, do those, do those, do refineries get brought back? And I'm talking about an allied allied country.

• 9:01Alex Epstein?

  You mean just the, the trend over time or what?

• 9:03Jordi Hays?

  Yeah, generally, I mean, just seeing, seeing the videos coming out. You've seen places, I think, like Qatar, Kuwait, places like, yeah, basically just saying like, yeah, we're going to pause production because we don't even have a place to store this. And or they're suffering damages and it doesn't make sense to keep, you know, refineries online.

• 9:23Alex Epstein?

  This is all, but this is all just downstream of do you have the root open?

• 9:27Jordi Hays?

  Yeah, got it.

• 9:28Alex Epstein?

  Like if you have the root open, it solves everything. If you don't, the way to think of the other things. So we do have some other interesting options. We have to think of them as these are temporary stop gaps. None, like if anyone says, I mean, you hear some crazy things. People are like, oh, Venezuela. And we talked about this last time Venezuela is less than a million. It's just, I mean, it's beyond crazy. It's just impossible. We, it's not like Venezuela has the ability to just increase their oil production by any significant amount in the near future. I mean, we're talking about companies considering going in harm's way to get some incremental boost. So Venezuela is essentially useless.

• 10:01Jordi Hays?

  So, so best case scenario in the next year, Venezuela goes from under a million to 2 million?

• 10:06Alex Epstein?

  No, I mean, 2 million would be, I mean, if we made it our entire goal in life, I don't know. But, but why would you for that?

• 10:13Jordi Hays?

  Venezuela was at like 3 million, like.

• 10:15Alex Epstein?

  Yeah, yeah, some, yeah, some years ago. Yeah, yeah, right. But, but there's so many.

• 10:19Jordi Hays?

  But there's a lot there. It's not gonna happen.

• 10:22Alex Epstein?

  It's just, yeah, so Venezuela, I would not even, that's just in the category of, it's not even a bad idea. It's just not an idea. There's nothing, there's nothing, there's nothing there.

• 10:31Jordi Hays?

  No, no, that's right.

• 10:31Alex Epstein?

  So the bad, the bad ideas, by the way, are the worst idea imaginable is ban oil exports from the United States, which I have heard floated in, in conversation.

• 10:41Jordi Hays?

  Seems somewhat reasonable. I want the oil.

• 10:43Alex Epstein?

  Yeah, of course, because we have oil, so we don't want to sell, so. I mean, so many different things, but one obvious one, not obvious one, but it's obvious if you know how these things work is the refiners in the US do not match up well to the oil produced in the United States. The refineries in the United States are based on heavier crude, like crude is rated in terms of weight and sourness.

• 11:04John Coogan?

  Okay.

• 11:04Alex Epstein?

  And so our refineries are mostly for heavier crude. It's actually one reason why Venezuela has some appeal. Canada has a lot of appeal.

• 11:11John Coogan?

  Because they have heavier crude.

• 11:12Alex Epstein?

  Yeah, and we're going to talk about Canada.

• 11:13John Coogan?

  And we're good at refining it.

• 11:14Alex Epstein?

  We're good at refining it.

• 11:15John Coogan?

  But we produce a lighter crude.

• 11:16Alex Epstein?

  Yes, because the shale revolution was just this dramatic shift.

• 11:19John Coogan?

  Yeah.

• 11:20Alex Epstein?

  Very quickly in oil production. So our refineries are not primarily equipped. That's why when we ended the crude export oil ban, I forget, it was 2014 or something like that, it was just this huge unlock.

• 11:29John Coogan?

  So.

• 11:30Alex Epstein?

  Because it allows the global market, it allows us to produce for a global market.

• 11:33John Coogan?

  So you can't, you can't look at American oil production as a monolith.

• 11:36Alex Epstein?

  Yeah, it's not, it's not fungible.

• 11:37John Coogan?

  We import heavy crude and export light crude. Is that roughly correct?

• 11:41Alex Epstein?

  Yeah, that's roughly correct.

• 11:42John Coogan?

  On a net effect?

• 11:43Alex Epstein?

  Yeah, so that's one thing is it's just insane to do that. But in general, think about it. What is the value of higher prices? Is it stimulates production? We're going to talk about all these different ways where we want to unlock oil.

• 11:53John Coogan?

  Yep.

• 11:54Alex Epstein?

  So you want to tell American oil producers, hey, we're going to actually totally screw you over. It's actually going to be worse for you maybe than it was before.

• 12:00John Coogan?

  You're going to produce less.

• 12:01Alex Epstein?

  Because you don't even have a market.

• 12:01John Coogan?

  Yeah.

• 12:02Alex Epstein?

  So you're going to strand all this oil. So that's, that's terrible. There's also this financial manipulation idea, which has been floated, which I think is terrible, of, hey, let's manipulate the financial markets, basically in a way that we're, you're selling futures short on a certain time period and then you're buying them. What you're trying to do is lower the near-term price.

• 12:18John Coogan?

  Oh, like Fed, like Fed policy, basically.

• 12:20Alex Epstein?

  Or Treasury, yeah.

• 12:21Jordi Hays?

  Yeah, very American way to, yeah, so this is.

• 12:25John Coogan?

  A lot of people that like that.

• 12:26Alex Epstein?

  The only solutions involve unlocking oil in one way or another. You do not want to screw up the markets.

• 12:32John Coogan?

  Okay.

• 12:33Alex Epstein?

  So that people are less inclined to unlock oil, nor do you want to screw up the markets to destroy information. So again, the main unlock is reopen that straight. There's no way around that. But then we can talk about other things. So one category is what you call spare or emergency capacity.

• 12:50John Coogan?

  Okay.

• 12:50Alex Epstein?

  And this is, there's some uncertainty here, but it-

• 12:53John Coogan?

  Quickly, this is separate from the strategic reserve?

• 12:56Alex Epstein?

  Yeah, yeah. So, well, emergency capacity is the strategic reserve.

• 12:58John Coogan?

  Oh, it is?

• 12:59Alex Epstein?

  So spare means you could be, you could pretty easily be producing more per day, but you're not because you're not happy with the price. And this is mainly Saudi Arabia is considered Exhibit A in terms of amount of this. Now, there's debate among experts about how much they have.

• 13:14John Coogan?

  Yeah.

• 13:15Alex Epstein?

  But, you know, some people estimate they have one, two, three million barrels a day of spare capacity. They could ramp up on some kind of-

• 13:20John Coogan?

  And do they know how much capacity they have and they're just not sharing it? Or does no one know?

• 13:25Jordi Hays?

  I mean, that's always been the story. That's been the story of the Gulf, right? They're not gonna, if they just flooded the market with every single barrel that they could possibly produce, they would be getting a worse, a much worse price.

• 13:36Alex Epstein?

  Yeah, and there's this cartel arrangement that does, I mean, in a sense, everyone has this on different time scales. You think about US shale producers.

• 13:43John Coogan?

  Sure.

• 13:44Alex Epstein?

  If prices were sustained at a hundred dollars, guess what? There's a whole bunch of shale deposits that they could produce at seventy-five dollars a barrel and make a fortune on that they're not gonna do-

• 13:53John Coogan?

  Got it.

• 13:53Alex Epstein?

  -four weeks ago when it was around sixty dollars a barrel. But, but in terms of, the thing about the Saudi oil is it's produced at a much lower cost.

• 14:00John Coogan?

  Okay.

• 14:01Alex Epstein?

  So this is them saying, hey, we have some of this on the table. And then the question is, you need to be able to produce it, and then you need to be able to transport it. So you have estimates around maybe you could get one to two million barrels a day.

• 14:13John Coogan?

  Yeah.

• 14:13Alex Epstein?

  So that's one of them.

• 14:14John Coogan?

  Mm-hmm.

• 14:15Alex Epstein?

  In terms of emergency, if you look around the world, you don't have a lot of immediate spare capacity besides that. So we have what's called emergency capacity or strategic petroleum reserve. You know, it's, Jordy mentioned that we didn't fill up our strategic petroleum reserve. I think this is unequivocally a mistake. I mean, if you look at, the whole thing of the strategic petroleum reserve is you want it for when you need it, and the best possible time to fill it up is when prices are low.

• 14:40John Coogan?

  And is that physically a place with a bunch of barrels that we-

• 14:43Alex Epstein?

  There's a bunch of different parts-

• 14:45John Coogan?

  It's like the Fort Knox of oil?

• 14:46Alex Epstein?

  Well, there's multiple different places, but, but you can think of it-

• 14:49John Coogan?

  But we basically cache the physical oil in America or somewhere we own it. Or can access it.

• 14:55Alex Epstein?

  Yeah, yes.

• 14:55John Coogan?

  And it's sitting there going unused until we're.

• 14:58Alex Epstein?

  Yeah, now there's issues of Biden. Biden definitely misused it, so they they used it to basically have lower gasoline prices during midterm elections.

• 15:08John Coogan?

  Okay.

• 15:08Alex Epstein?

  Even though parenthetically, their entire policy goal was get rid of fossil fuels, which means you want the price to go up so people can't afford it.

• 15:14John Coogan?

  Yeah.

• 15:14Alex Epstein?

  It's a very cynical kind of move.

• 15:16John Coogan?

  Got it.

• 15:16Alex Epstein?

  They did it in a way that degraded the facilities. So let's say we're at about 4 million barrels a day. We can get out of that thing. We have 400 million in there. We should have over 700 million. We could have easily filled it up. I mean, it was a perfect time when you're talking about $50 a barrel oil, $60 a barrel oil.

• 15:32John Coogan?

  Yeah.

• 15:32Alex Epstein?

  Now, it's.

• 15:32John Coogan?

  And can I do the basic arithmetic of 4 million a day, 400 million in the reserve, 100 days of oil? But that's not actually, if we're talking about like relieving price pressure, you could you could trickle it out over a year and have 120 or 1/4 of the effect.

• 15:50Alex Epstein?

  But just think about 100 million dollars a day, 100 million barrels a day is roughly the global market.

• 15:54John Coogan?

  Okay, okay.

• 15:55Alex Epstein?

  So 4 million is just, that's its maximum.

• 15:57John Coogan?

  Throughput.

• 15:58Alex Epstein?

  Capacity.

• 15:59John Coogan?

  Got it.

• 15:59Alex Epstein?

  It's kind of an analogy to batteries.

• 16:00John Coogan?

  Sure.

• 16:00Alex Epstein?

  We're talking about batteries. So there's a certain amount, like with a battery, if you hear there's a 4 gig, there's a 1 gigawatt battery installation. That means that's the, it usually means there's 1 gigawatt for 4 hours.

• 16:11John Coogan?

  Sure.

• 16:11Alex Epstein?

  But if you wanted to do half a gigawatt, then you could do 8 hours.

• 16:14John Coogan?

  Yeah.

• 16:14Alex Epstein?

  Right?

• 16:14John Coogan?

  Yeah.

• 16:15Alex Epstein?

  It's the same deal with this.

• 16:16John Coogan?

  Okay.

• 16:16Alex Epstein?

  But keep in mind, this is not 100 days of US oil demand. And by the way, for the refinery reasons, we can't just supply it all with RSPR. It's just the maximum output is, but you know, 4 million barrels a day is something we're talking, that's 1/5 of what's flowing through the Strait of Hormuz. So if, yeah, it's it's a thing. But but yeah, you can think of, yeah, maybe we'd be willing to do 1 to 2 million barrels a day from ours. Now, interestingly, the International Energy Agency, we are part of the International Energy Agency Reserve Program. So we have about 400, but they have about 1.4 400 million, they have 1.4 billion. So we have allies around the world.

• 16:53John Coogan?

  Okay.

• 16:53Alex Epstein?

  That can also release this oil. So maybe we could get 1 to 2 million from them. Now, last, at least last I checked the news, they hadn't agreed to do this because they don't think it's an emergency.

• 17:02John Coogan?

  Sure.

• 17:03Alex Epstein?

  But that's what it's there for.

• 17:04John Coogan?

  Yeah.

• 17:04Alex Epstein?

  So notice the pattern is.

• 17:05Jordi Hays?

  What point would they think it's an emergency?

• 17:08Alex Epstein?

  I don't know. I mean, and we, you know, we can put pressure on them. I think, I think some of these determinations have to be made in conjunction with the military determinations. You can't make them in isolation. Because if you think about what's the military objective? How close are we to that? Or how close are we at least to opening this up via high-security and financially-backed convoys? Then you can think about the timetable here. If you think about, well, the Strait of Hormuz is going to be closed for five years, let's just get used to being poor.

• 17:38John Coogan?

  Black bill.

• 17:40Alex Epstein?

  No, I mean, this is, people don't get oil. Like, oil is, there's a reason why I focus a lot of my life on oil. There is nothing more, there's no material in the world of energy that is more valuable than oil. Because oil is just so unique in terms of it has this very high energy density and portability. And there's nothing like, I mean, nuclear has-

• 18:01John Coogan?

  What about plutonium?

• 18:02Alex Epstein?

  Yeah, yeah. It doesn't have the same portability.

• 18:05John Coogan?

  We're gonna be rich. We're gonna have energy too cheap to meter in five years. I talked to a lot of nuclear founders.

• 18:09Alex Epstein?

  Well, look, I love nuclear as much as anyone. They don't, they don't even have a portability solution, though, for the near future unless you're talking about aircraft carrier, an icebreaker, or something like that. So I'm just saying, the world runs on mobility. And oil is ideal for mobility. So-

• 18:23John Coogan?

  Oh, portability in the sense of like, using nuclear to actually power trade and commerce and moving ships around?

• 18:28Alex Epstein?

  Yeah, yeah, I mean-

• 18:29John Coogan?

  Even if you can power the grid, you will be poor because you will not be able to trade.

• 18:33Alex Epstein?

  Yeah, trade is really important.

• 18:35John Coogan?

  Trade is really important.

• 18:36Alex Epstein?

  Trade is, trade, and well, and also it's within the country, too. We don't have the nuclear trucks to move things around.

• 18:41John Coogan?

  Sure, sure.

• 18:42Alex Epstein?

  Yes, obviously, you want super-cheap electricity, and you want super-cheap transport fuel. And for, and, and we want to see if we can electrify some of this stuff.

• 18:50John Coogan?

  Yeah.

• 18:51Alex Epstein?

  If you can do it cost-effectively.

• 18:52John Coogan?

  Yeah, there's some people working on like, electric bulldozers, for example. It's very hard, and I don't know-

• 18:57Alex Epstein?

  And, and by the way, guess what? You need a lot of oil to even get that whole supply chain started, because you need the mine.

• 19:02John Coogan?

  Yep.

• 19:02Alex Epstein?

  So, anyway, bottom line, yes. I meant that thing about we can all be poor, very seriously. Very seriously. So we have, if you look at the spare capacity, I think that's all of them. So we have the I, the rest of the IEA, we have ours, and then to my knowledge, we have Saudi slash UAE, them using spare capacity and them piping it where they can. So maybe combined, we're talking about 6 million a day, if you use all of those. I mean, somebody could imagine 10 million a day. And all of these have time, particularly the emergency reserve things, these all- Like the, at least the Saudi one is you're sort of, you have a deposit, a big deposit here. It's just you have a small reserve. So you can't do this forever.

• 19:41John Coogan?

  Sure.

• 19:42Alex Epstein?

  And of course, there's a risk of if you deplete the SPR more. What if you really, really?

• 19:47John Coogan?

  Need it.

• 19:47Alex Epstein?

  Need it in the future. And then there's a bunch of nearer term stuff that you can do. And some of which I like just because it could be done anyway. So number one to piss a whole bunch of people off is let's stop using this Jones Act. Do you know what this Jones Act thing is?

• 20:00John Coogan?

  I've heard of it, but explain.

• 20:01Alex Epstein?

  So the Jones Act is a set of restrictions that say that you can only transport things among ports in the United States if you have, everything is basically American. So it's owned by an American, it's run, I don't know, all the, it is all this.

• 20:16Jordi Hays?

  Yeah, it's basically American ship, American crew.

• 20:18John Coogan?

  Yes.

• 20:18Alex Epstein?

  Yes. So it's, it's, it leads to all these crazy, crazy things. Like we end up importing things from, like instead of importing it from one part of the country to another, you end up importing it from some really far away place. It leads to that kind of thing. But in this case, in particular, this, this, as Californians, we should all recognize this. We don't have oil being piped into California.

• 20:40John Coogan?

  Yeah.

• 20:40Alex Epstein?

  So we want very efficient maritime transportation. And if you suspend the Jones Act, then you can get more efficient transportation, which means we can at least have lower prices here and we can have less of a price shock. But in general, I want people to get used to having no Jones Act because I want there to be no Jones Act.

• 20:57John Coogan?

  Sure, sure.

• 20:58Alex Epstein?

  So that's, that's a good thing to do. My favorite idea here is.

• 21:02Jordi Hays?

  And, and the, the, I imagine there's a bunch of powerful lobbies that will fight and counsel for the Jones Act because there's.

• 21:10Alex Epstein?

  Correct.

• 21:10Jordi Hays?

  Entire industry built around.

• 21:12Alex Epstein?

  Yeah, there's the idea that we can only have a good shipbuilding industry. I don't know what people think is happening with our shipping, like our shipbuilding industry is not going as well as other people's.

• 21:22Jordi Hays?

  It didn't exactly work.

• 21:24Alex Epstein?

  Yeah, I mean, it worked to protect certain people's.

• 21:27Jordi Hays?

  I'm just saying, if you look at American shipbuilding, it's, it certainly hasn't.

• 21:30Alex Epstein?

  Yes.

• 21:31Jordi Hays?

  Allowed us to be competitive on, on a global stage.

• 21:34John Coogan?

  The shipbuilders would say we're early, but I take your point.

• 21:37Jordi Hays?

  Early, but you've seen, but I'm just saying like, you know, how many decades of declines?

• 21:42Alex Epstein?

  Yeah, okay, well.

• 21:43Jordi Hays?

  You need.

• 21:43Alex Epstein?

  I, I think.

• 21:44Jordi Hays?

  John's like, we're still early.

• 21:46John Coogan?

  It's like, it's like a smiling curve, like churn. It goes down and then goes back up.

• 21:50Alex Epstein?

  So.

• 21:51John Coogan?

  That's, that's the bulk case.

• 21:52Alex Epstein?

  That's, that's the, uh, all right. Well, it's, it's definitely not going to help us. So they kind of, here's the most interesting thing, which I, is a pet issue of mine because we're, we're like this administration, I should say, does a lot of good stuff on energy. I say that I, you know, I'm in a fortunate position where I get a lot of people ask for advice and stuff like that. I feel like one of my jobs is to tell people things they're not doing. A lot of things they'll just do right on their own. But, but Canada is not one of those things right now. We are just absolutely sleeping on Canada as an opportunity. So Canada has no people and infinite resources and is really friendly.

• 22:28John Coogan?

  Yeah.

• 22:28Alex Epstein?

  So you did, they have these oil sands. You know what these things are?

• 22:31John Coogan?

  No, explain.

• 22:31Alex Epstein?

  So they're just like these deposits of oil. It's like nature basically committed an oil spill. Is the way to think of it. Okay. So there's all these oil sands. For years, they were not very useful.

• 22:41John Coogan?

  They weren't viable because it's not just you drill down, black gold comes up. It's like buried in the sands need to be refined.

• 22:47Alex Epstein?

  There are different kinds of things. You can mine it out directly, or you can do what's called in situ, which is you heat it up underground.

• 22:53John Coogan?

  Oh, and it liquefies.

• 22:54Alex Epstein?

  In any case, we, they have just this unbelievable oil seep. They have way more oil deposits than we do, way more oil reserves. But they have on the order of a third of the production. And in part because they have absolutely terrible policies, which are their fault. But in part, we have had terrible policies, including getting rid of the Keystone XL pipeline and this kind of thing. So, but if you just think of Canada, it's just, we should be so, they have water. I mean, they get no people. One tenth the population, infinite raw materials. They got everything. They got timber. They got his natural gas. They got oil, like, and we're talking about Venezuela. They're a friendly country, right? They got smart people there. They're, they haven't been driven out of the country because they're afraid of getting killed by Chavez or Maduro or whatever.

• 23:38Alex Epstein?

  So this is an opportunity to say, hey, Canada, let's work, let's have a task force. You guys are at a low in terms of, we don't have pipelines. But we can do rail, at least we can do rail, maybe trucks, but at least rail. Rail transports from Canada are really low right now. So let's have an initiative where maybe you bring a couple hundred thousand, depending on your expectations. Maybe we can add a couple hundred thousand barrels a day. So that's one that excites me because I want to be like the US, Canada superpower thing is this huge opportunity that we're sleeping on because of the idea of, oh, we should only be doing it in quote, America. But this is just by the unbelievable, I think they have the best uranium in the world.

• 24:17John Coogan?

  Yeah.

• 24:18Alex Epstein?

  It's a.

• 24:19John Coogan?

  Maple syrup's up there.

• 24:20Alex Epstein?

  Yeah, I don't have a Canadian personality, but I love that place.

• 24:23John Coogan?

  No strategically, it makes a ton of sense.

• 24:25Alex Epstein?

  And they're very friendly.

• 24:26John Coogan?

  Yes.

• 24:26Alex Epstein?

  They're very friendly.

• 24:27John Coogan?

  Maybe we should be friendlier.

• 24:28Alex Epstein?

  Yes, you know, no, we should, and we have trade agreements coming up.

• 24:31John Coogan?

  Yes, yes.

• 24:32Alex Epstein?

  The other thing is we have some, you know, we can increase capacity here, as I mentioned, depending on prices going up.

• 24:39John Coogan?

  Yeah.

• 24:39Alex Epstein?

  So there's that, but that might be a couple hundred thousand dollars barrels a day. But so high level, open the Strait of Hormuz, that's the only thing that really works. Then you can talk about Saudi, Mideast spare capacity, our emergency capacity and IEA emergency capacity, and then below that you have Canada Jones Act and US.

• 24:59John Coogan?

  That's great.

• 24:59Alex Epstein?

  Production.

• 25:00John Coogan?

  That's a really, really thorough list. Thank you. I appreciate that. Anything else, Jordy?

• 25:04Jordi Hays?

  What are you, what are you going to be paying attention to most closely?

• 25:08John Coogan?

  Do you watch the price chart? Is that important to you?

• 25:10Alex Epstein?

  Well, it's important. I mean, I'm, it's weird. I work with, I run like a kind of a network of energy executives, but I'm focused on the policy side of things. So I'm often laughably out of touch. I mean, I know in general within $10 usually what it is.

• 25:27John Coogan?

  Yeah.

• 25:27Alex Epstein?

  But I, as a policy, I don't, I don't invest in energy.

• 25:30John Coogan?

  You're looking at longer term, five, 10 year plans.

• 25:33Alex Epstein?

  Like I'm deliberately avoiding exposure to the commercial part of it.

• 25:36John Coogan?

  Of course, of course. Yeah, you want to be independent.

• 25:38Alex Epstein?

  Yeah, I want to be independent. So, yeah, I'm not, but. At the moment, yes, I am looking, I am looking at the prices.

• 25:44John Coogan?

  Okay.

• 25:45Alex Epstein?

  But I don't do predictions, but I'm just saying, I think there's a service right now in just laying out the options for people, because even in the government, I mean, you know, not everyone has a lot of expertise in oil, and this is the kind of thing where, yeah, it's kind of why I think you texted me this morning, I mean, sometimes you need to know, sometimes you need to know about oil today, and sometimes you don't, but when you need to know, you need to, you really need to know.

• 26:07John Coogan?

  Yeah, well, it seems like whether you're in the business community, or just, you know, humanitarian, everyone should be rooting for a swift and peaceful resolution.

• 26:17Jordi Hays?

  Yeah, do you have any insight, this might be totally out of your wheelhouse, but insight into how, how people running businesses that are most impacted by fluctuations in oil prices, like, are they, were they, have they been actively hedging over the last couple of weeks, are they doing, like, how do you run your business when your input costs can go up dramatically, potentially at a much higher rate than you can adjust your own prices?

• 26:44Alex Epstein?

  I mean, just in general, these guys are sophisticated, I think, within the bounds of doing it, I don't think you can hedge indefinitely for this big a price, kind of differential, like somebody is going to say, I mean, but it's also, you think about, there's on the consumer side, but on the production side is even more dramatic, if you just look at the margins of these guys, I mean, the oil industry is just, just fascinating, I just remember anecdotally, when I came out with my first major book, The Moral Case for Fossil Fuels, in 2014, even I could see speaking engagements correlated to these prices, because you had a big price crash around them, and then you think, wow, like...

• 27:23Jordi Hays?

  We don't need, we don't need Alex.

• 27:25Alex Epstein?

  Yeah, it might be nice to keep the troops motivated, but, you know, I'd probably rather be employed, but it's, it's a hard, it's a hard business, and one of these things is you just, the people who survive have a very strong constitution, and they can manage the risk... Very, very, uh, well, I was talking with a bunch of these, these guys and actually people we know in common and like some of the better ones, some of the two of the young superstars in, in the industry, they're just saying like, like we love the chaos because we can just, no, we can handle it. Like when the prices go down. Sure. Cause that, that's, you think about what they've been dealing with over the last year. They've increased production, prices have gone down and, and you look at this,

• 28:09Alex Epstein?

  this administration is very focused, I would say too much focused on having prices go low. Like this is, this is one of the variables here is although the administration, I don't think was fully, was not fully prepared for this situation. In general, they are maniacal about prices going low. Like Trump in his mind has a very strong focus on $50 a barrel, which I think he feels like that's always the perfect price for oil. Sure. And the people in the oil industry say, wait a second, like we had inflation of everything else. Why does our one product have to stay at $50? And that's part of the appeal of Venezuela, rightly or wrongly, because it's not going to make a big difference soon. But like, how do we keep oil prices? Low. Low. But that's, that's hard to be in that industry as a consumer, as, as a producer,

• 28:53Alex Epstein?

  rather, and it's hard as a consumer. So they have financial instruments, but the main thing is you just, you need to, you need to just have the flexibility in your business, in your business model. And it's, it's, oil is again, it's the most valuable material in the world of energy, which is why everyone uses it, but it's also why it's so inelastic and you have these price fluctuations. So you just need to come to terms with that or somebody needs to figure out something better. But it's, it's really hard. And of course, policy wise, we can have better policy to make it more stable, but it's still that thing where it's so valuable that guess what? You get a little extra demand, a little less supply, price goes up a lot. It's, it's, it's different than other things which you can substitute for much more rapidly.

• 29:37Alex Epstein?

  You're out of a job when we build the Dyson sphere. Oh man, I got, I'm, I'm working on this AI thought leader thing we talked about last time. So, uh, I got, I got plenty to do. We'll cross that bridge when we come through. I got plenty to do with my time. Thank you.

• 29:51Jordi Hays?

  As long as we need energy, you'll, you'll be doing just fine.

• 29:54Alex Epstein?

  All right, guys. Thank you so much for coming on the show.