12/9/24 Energy Insights with Chad Hathaway: December Oil and Gas Update

The Moneywise Radio Show and Podcast Monday, December 9th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management instagram: MoneywiseWealthManagement Guest: Chad Hathaway, FOunder/CEO of Hathaway LLC. website: www.hathawayllc.com/

• 0:00Speaker 00

  From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.

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  Now, let's start the Money Wise Show.

• 0:42Speaker 03

  Welcome to the Money Wise Show. We are live from the padded radio room off Stockdale Highway on ESPN's Bakersfield, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into this show 24 hours a day at 661-396-1000. I'm Sharad Waite, and sitting here with me is...

• 1:04Speaker 02

  Emily Waite.

• 1:05Speaker 03

  Hey, Em.

• 1:06Speaker 02

  Hey.

• 1:06Speaker 03

  And of course, our producer extraordinaire, Stephen Nicholas.

• 1:14Speaker 03

  Really excited for today's show. We are, of course, live, for those listening on ESPN Radio, for those listening on our podcast, welcome to the show. Please participate at any time, again, 24/7. We love getting your comments and questions. In fact, a great way to start out the program is to go right to those questions, which we have a couple that came over the weekend. So let's hear it, Em.

• 1:34Speaker 02

  Okay. Here we go. Bitcoin hit 100K but dropped just as fast. Is it politics and/or regulations that make this happen so quickly? I've never seen anything so up and down.

• 1:48Speaker 03

  Yeah, I love this question because cryptocurrency is such a hot topic right now. It's a very vocal asset investment that is out there, and it's getting more and more attention. And I want to explain, there's a couple of reasons why it's getting so much attention.

• 2:05Speaker 02

  When you say vocal asset, what does that mean?

• 2:08Speaker 03

  Meaning the attention.

• 2:09Speaker 02

  It's getting a lot of attention.

• 2:10Speaker 03

  Yeah.

• 2:13Speaker 03

  I want to say disproportionately loud this one type of investment is compared to other investments.

• 2:21Speaker 02

  Got it.

• 2:21Speaker 03

  And let me explain. So the crypto world right now, one of the reasons why it's getting so much attention is because of what our listener said. It's at 100,000. And you can look at a chart of Bitcoin, for example, or talking about just Bitcoin in this case, and you can think, wow, look at this opportunity that some people had in a fairly short amount of time, let's say 10 years, a fairly short amount of time to just to make an enormous amount of money if they got in during that time. And you hear and hear about in pop culture of other people who've also made a bunch of money or sitting on a bunch of money that they can make once they cash in on their crypto investments.

• 3:04Speaker 03

  So that obviously is one of the main reasons why it's gotten so much attention is because there's the perception that there are people out there that are just holding an enormous amount of either money right now that they have that they've been investing in for a while, or they've got just a few crypto coin or tokens that they are banking on.

• 3:27Speaker 02

  Cashing in.

• 3:28Speaker 03

  Cashing in and making a bunch of money. So now the volatility that our listener talks about is also another reason why people would be interested because anytime you have volatility, especially when you have an asset or an investment like this that is going for so much value, immediately there's some people that will think, oh, that means there's money opportunity, there's a way to make money. And we have a situation within just the last couple of years where investment banks, investment, let's say, financial institutions like banks, like Goldman Sachs and Black

• 4:12Speaker 03

  Rock and some of these large financial institutions are offering cryptocurrency on their platform as one of the other of the thousands or hundreds of thousands potentially in other investments.

• 4:27Speaker 02

  Does it like legitimize the?

• 4:30Speaker 03

  So that legitimizes the Bitcoin. Yeah. But it's really, at the heart of it, you need to remember a couple of things about not just Bitcoin and cryptocurrency, but take a step back and look at any asset class that has gone up and had a bubble in the past. And look at some of the characteristics as to why did that happen? Why was there, take for example, the dot com bubble that started to inflate in the late 90s, ended in the early 2000s. This is obviously is this huge increase in attraction into investments that were being sold on these same companies that I just talked about. They're the same

• 5:13Speaker 03

  trading markets that were available at that time, were also selling companies and stock in companies that really had no value. There was, there was an idea of whatever.com. You know, pets.com is the one that always, you know, we kind of pick on because it was a company that really just had this idea of selling, you know, pet supplies online. And of course, that's a billion dollar idea because online was new. And well, of course, if people are going to want to buy their pet supplies online and not go into the brick and mortar. So it had this kernel of truth to it. But at the end of the day, the company didn't own any real estate. They didn't have the inventory. They didn't have revenues, you know, actual

• 5:58Speaker 03

  revenues from selling stuff. Instead, what they had is money coming in to buy their, the company shares on the expectation that it someday would be this new way that everybody's going to buy their pet supplies. So the, the issue here with cryptocurrency is that the value of the cryptocurrency itself is only right now worth what somebody else would be willing to pay for it. Not because that other person thinks that there is some intrinsic value, but because they think they can buy it and then to sell to some other person that is going to have some other perceived intrinsic value about it also, not because it has some underlying actual revenues, it doesn't produce income, it doesn't

• 6:43Speaker 02

  Right.

• 6:44Speaker 03

  do anything. It's really just an idea. And therein lies why this is just like it appears to be what we see in all the other historic bubbles that we've experienced in the past, going back to the, of course, the famous tulip mania that happened in in the Dutch tulip mania that happened in the mid 1600s, early 1600s, where essentially you had this huge bubble. This is the textbook example of an asset bubble, where people thought all of a sudden these tulips.

• 7:20Speaker 02

  This is a well-known?

• 7:21Speaker 03

  Well-known, very well-known example of the tulip bulbs, bulbs, you know, supposed to be this next big export across the globe and the Dutch ended up, citizens ended up, oh yeah, well, this is it. You know, of course I'm going to pay a billion, not billion, but thousands of dollars for a tulip bulb, because my neighbor is also paying a thousand dollars for a tulip bulb, but they sold, you know, they're making money, not because of the actual value of the bulb, but because of this sort of unique aspect.

• 7:52Speaker 02

  Hype.

• 7:52Speaker 03

  Yeah, hype that is there. And of course, when that bubble busts, it's, you know, who's left? It's like a game of hot potato, of who's left holding that bag are the ones that get burned and

• 8:04Speaker 02

  Is this an issue of less regulation? In these scenarios?

• 8:10Speaker 03

  Yeah, you mean an issue of like, it should have been regulated better?

• 8:14Speaker 02

  Like, is, is this fundamental idea attached to a, some type of currency or value operating 24/7 without any regulation? Does that question make sense?

• 8:29Speaker 03

  Hmm, yeah, it's, it doesn't, this is not

• 8:34Speaker 02

  It's not a regulatory issue.

• 8:35Speaker 03

  It is, there is, there are regulatory risks involved in this because it is not regulated as, it's, it's regulated in a different way than other investments. It's a, it's, you know, for example, it's, this is an asset class that would be considered an alternative or a commodity, but it's really not a commodity because there's no actual

• 8:57Speaker 02

  I see, yeah.

• 8:57Speaker 03

  commodity. It's really just an idea. There's technology that's really interesting, but that technology, it doesn't have

• 9:05Speaker 03

  Bitcoin, for example, doesn't have a market hold on the technology. The blockchain technology is more universal and other tokens are using it.

• 9:17Speaker 02

  That's like, it is global, but decentralized.

• 9:20Speaker 03

  It's, yes, yes. Now, that's the nice thing about it. It's a decentralized ledger that can...

• 9:27Speaker 02

  But doesn't that contribute to the price swings?

• 9:29Speaker 03

  Yes, yes. Yeah, it does. But what you're saying is people are trying to find value to Bitcoin. And sometimes they're finding it in the technology. Like, okay, well, it's the Bitcoin technology, and that's why people are buying into it. Yeah, and that could drive up the price or drive down the price, whatever.

• 9:49Speaker 02

  I see.

• 9:50Speaker 03

  But at the bottom, the bottom line, though, is about crypto, is that it's incredibly risky because of where it is. It's, even though it's been around, let's say, for over 10 years, it's still is the, it's that asset class. It's that particular investment that still has those inherent risks.

• 10:10Speaker 02

  Fundamental.

• 10:11Speaker 03

  Fundamental inherent risks that have been part of other bubbles.

• 10:14Speaker 02

  I see.

• 10:14Speaker 03

  And so you just, you just want to be cautious. And you have regulatory risk, political risk. Those are all things that, you know, we just...

• 10:23Speaker 02

  Cool.

• 10:23Speaker 03

  Yeah. Another question.

• 10:25Speaker 02

  Hopefully, we answered that one. Okay, here's another one from Gregory. "Good morning, money-wise. If someone thinks they'll pay less in taxes next year, what should they do now to bring in more income before the year ends?"

• 10:37Speaker 03

  Great. So, we're getting towards the end of the year. We are going to have on tomorrow, Tom Maxwell is on the show, right? Yes. Yes, sir. This is great, great time. We love having CPAs on the show. Tom Maxwell is with Maxwell and Anton Giovanni, a local CPA firm, business owner, have him on the show in the past. So, tune in tomorrow. And this is exactly what Tom's going to be coming to the show prepared with, because I don't want to give tax advice, I'm not a CPA. But there are things that you can do as an individual as we're getting up to, close to the end of the year. For example, consider you're maximizing any access that you have to your retirement, especially your retirement accounts, especially your employer-sponsored retirement account.

• 11:21Speaker 03

  You've only got now less than two weeks, or about... Just over two weeks, I guess, of being able to increase the amount of money that's going to be withheld from your paycheck that could go into your 401k or your 403B.

• 11:36Speaker 02

  Or your traditional IRA.

• 11:37Speaker 03

  Or your traditional IRA, max that out. That's the lowest hanging fruit that we see. But there's a little more complicated aspect to this because of the potential tax law changes that could be coming ahead with the new Trump administration.

• 11:51Speaker 02

  Okay.

• 11:51Speaker 03

  There's a lot of nervousness that if Trump didn't win, Kamala would have done away with some of these tax cuts that were implemented under the first Trump presidency, which would see an increase or elimination of some of the tax benefits that we had before. Whereas now, many are expecting at least a status quo, if not a more favorable tax environment under President Trump.

• 12:22Speaker 02

  Okay.

• 12:23Speaker 03

  Again, we'll have Tom Maxwell on tomorrow, so tune in tomorrow for that show. But don't forget, if you are contributing to your retirement accounts, you want to max those out before, actually you have until April 15th of next year, but not with your 401k. You would have that with your IRA, but with your employer-sponsored accounts, you've got what's being pulled out of your paycheck. So if you've got the opportunity to put more into that and get the benefit of that tax deduction this year, great.

• 12:52Speaker 02

  Do it.

• 12:53Speaker 03

  Then do it. It's better sooner than later. Great questions.

• 12:58Speaker 02

  Yes, those were the two we got.

• 12:59Speaker 03

  Perfect. We're going to take our first break of the day. We come back, I'm excited to get to our headlines. So much to talk about today. I'm Sharad Waite here with Emily, and we're Money Wise. We'll be right back.

• 13:08Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned local wealth management firm with 60-plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 13:27Speaker 03

  Thanks for tuning in. Welcome back. We're the Money Wise Show. I'm Sharad Waite here with Emily Waite.

• 13:32Speaker 02

  Hey.

• 13:33Speaker 03

  Joined with our guest right now, Chad Hathaway. Welcome to the show, Chad.

• 13:36Speaker 04

  Hey, good to be here.

• 13:37Speaker 02

  Welcome back.

• 13:38Speaker 03

  Back to the show. It's fun. It's always Emily we land on the show.

• 13:42Speaker 02

  I like it. I like it.

• 13:44Speaker 03

  And let's just, let's just keep talking what we were just talking about, Chad, because we love having you on. You are the, in my opinion, the best, most knowledgeable expert in town when it comes to energy production. And Pecosville's lucky to have you. You're a great advocate.

• 14:04Speaker 04

  Thank you.

• 14:05Speaker 00

  Make it in blush.

• 14:06Speaker 03

  Well, and you are also an environmentalist.

• 14:09Speaker 04

  I am.

• 14:11Speaker 03

  I know you care about the environment.

• 14:12Speaker 04

  I do.

• 14:13Speaker 03

  I know you care about the natural world and making it a cleaner, better place for our kids and grandkids. And that's, that's, primarily what we end up talking about is that intersection between those two worlds that are just fighting with each other. You know, left and right. So that's why, that's why we have you on.

• 14:33Speaker 04

  I think, I mean, I don't think, I know a lot of people in our industry are and believe that. And I think it's very disheartening to them when they are made feel, made to feel like they are not.

• 14:44Speaker 03

  Right.

• 14:44Speaker 04

  And that's something that, I know we go to great lengths, not only by regulation, just by what we do to, to make sure that we are good stewards of where we're at. And because of our interactions we have with landowners and with people around us. And it just, to me, is very disheartening when that label, it's extreme side of things that always get in the mix on both sides.

• 15:05Speaker 03

  Yeah. And California being so left-leaning and the political leadership has been left-leaning for decades. That's especially true here where oil, oil energy producers are getting, not getting a fair say in how we can move forward into the future. We've talked about like the clean energy. Ideas that are in place are going to need these producers' knowledge if we're going to, you know, carbon capture, for example, we're going to do some of these things. Last, I think it was last week, Shannon Grove announced the law up in Sacramento to

• 15:48Speaker 03

  require the same environmental standards from the oil producers overseas as we are here.

• 15:55Speaker 02

  Right.

• 15:56Speaker 03

  I immediately thought, well, this is, this is an impossible piece of legislation. How, you know, how are we, how are we going to legislate, you know, Saudi Arabia's oil production? But I really liked the attention that it brings to the fact of how much oil and gas that we are importing from these countries that are terrible for the environment.

• 16:17Speaker 04

  She's done that multiple times. This isn't the first bill that she's introduced that tried to bring light to some of the foreign sources.

• 16:25Speaker 02

  And that's the intention, right? She's, she's trying to bring light to it.

• 16:27Speaker 04

  And it's always, I know she always gets these dirty looks from the people on the other side.

• 16:32Speaker 03

  Yeah, yeah, they're like, what are you doing?

• 16:33Speaker 04

  Yeah, like, how dare you? But like, you know, we can't do this because they understand the reality.

• 16:39Speaker 03

  Right.

• 16:40Speaker 04

  And the reality is, is that we absolutely have to have it.

• 16:41Speaker 03

  Yeah.

• 16:42Speaker 04

  You know, I, and, and just how it's such, so ingrained in our daily lives and everything that we do. We are a petroleum society. We will be a petroleum society for a long, long time. And, you know, I think the real thing, I sent you a clip from that New York Landman.

• 16:58Speaker 03

  Yeah.

• 16:59Speaker 04

  It's kind of funny. It's nice to see some light being shed and some popularity being shed to what we do, even though it's Hollywood and it's not necessarily the, always a whole true story, but it's nice and it feels good because we're such a, you know, in that quote I sent you, that, that clip I sent you is funny is, he says, hey, I'm really worried about not finding a solution for oil and gas. Because if, once we, if we do not, we are all in a world of trouble.

• 17:25Speaker 03

  Right. Yeah. All of a sudden you see your medicines evaporate, your tires, your clothes.

• 17:31Speaker 04

  Your paint, your walls, your building, everything you have in your life. It depends on all we are, until we can admit that and accept that. As a society.

• 17:40Speaker 03

  Yeah.

• 17:42Speaker 04

  As a whole, as a majority opinion, I think we're going to be in trouble.

• 17:45Speaker 03

  Instead of what you're getting from, let's say, the, the far left or the environmentalist, which is, we gotta just cut off all carbon fuel, all people and companies that are related and touching carbon fuel. We just gotta distance ourself and cut it off.

• 18:00Speaker 04

  When you say fuel, they're saying oil.

• 18:02Speaker 03

  Yeah.

• 18:03Speaker 04

  I mean, there's, there's a, there's a, a strong push to eliminate domestic production in California. Huge push. And that's been, I mean, the direct result of that has been a significant decline in production in California, and that's no oil production here in California. That's like saying, well, no oil production in the world and what that would do to the world. It's just not possible.

• 18:22Speaker 03

  It's not possible to happen in California unless, even if we were willing, would we be even able to import everything that we need?

• 18:29Speaker 04

  We could not. No, we could not. We could, I mean, so they talk about gasoline storage. We talk about all the things we need to do. We would virtually a hundred percent depend on a hundred percent imported products for everything. Imagine how that would impact our supply chain. What we would do, our refining capacity has already dwindled because of regulatory pressure. And, you know, we've seen refineries shut down the last several years. We've gone from, you know, over thirty to now nine in the state of California. It's, it's been a, a regulatory decimation of, of, of our industry. And at the, you know, unfortunately, at the, um, falls on the heels of, of that working man, the working woman every day out there trying to make a living, who has to pay the highest transportation fuel costs, who has to pay, you know, the highest electricity costs in the nation.

• 19:13Speaker 04

  Those are all because of implementations of, um, alternative energy type supplements and subsidies and things like that, that, that are making our grid unstable as they sit now. I mean, I, as the owner of a lot of land in Kern County, I've seen dozens and dozens and dozens, and we work with large scale solar companies that are trying to get projects approved. It, it, our, our system is overloaded right now.

• 19:33Speaker 03

  With solar. It seems, it seems like there's way too much solar.

• 19:36Speaker 04

  And then you apply battery dynamics, which we, we, I, you know, I, I don't, this is a subject that gets really touching to me because I'm very passionate about, uh, what's good and what's not. And you look at the, the, the band still that is, is dependent on stable energy, which is natural gas powered generation, electricity. And it's a daily occurrence. You have the duck bill curb of solar and you have the unreliability of wind and you have all these things that make our grid unstable and make our power extremely expensive and that's hurting Californians. And I think people are starting to realize that. It took a long time that they're starting to realize that and I think that's important.

• 20:12Speaker 03

  Yeah, again, we're joined by Chad Hathaway. He is our energy expert here. California, just a couple of years ago, reached a point where it was having small periods of time in the summer, in the peak of summer, where it was producing more from clean energy than from anything else.

• 20:30Speaker 04

  During the day.

• 20:31Speaker 03

  During the day, right? And again, it came back to, because we had this huge push for residential solar, large industrial solar projects. And now there's really, I think what you're saying and what I'm observing is now we're facing the same problem with any renewable, which is there's no renewable that is consistent as gas, as these gas.

• 20:57Speaker 04

  As gas power. The most dependent form of electricity is nuclear.

• 21:01Speaker 03

  Yeah.

• 21:01Speaker 04

  You cannot beat the environmental history of nuclear. You cannot beat the stability of nuclear. Nuclear is, and that's one thing about the incoming energy secretary has the background in nuclear, which is important for that job as well. It's a huge part of the job. It's not just conventional fuel production and stuff like that, which I talked a little bit about earlier, how, I don't know how much of an impact they'll actually be able to make in the conventional fuels or the oil and gas sector. But nuclear is a huge opportunity for stability and power for us. And we have one plant left in California that was just extended a license because we know it's 9% of the power in California, that if that went away, we'd have even more unstable power in California, which would be even worse than where we're at now.

• 21:45Speaker 03

  And we're talking about the Diablo.

• 21:46Speaker 04

  Diablo Canyon.

• 21:47Speaker 03

  PG&E plant, which that's a great example of how our state was, our state has this pie in the sky dream of unlimited clean energy.

• 21:59Speaker 03

  And putting forward these programs to get us there, but cutting off something like that, our last nuclear plant, five, 10 years too early.

• 22:11Speaker 04

  Yeah, I mean, and then the likelihood of a new one coming in is, is, is very slim. You've got a lot of money going into nuclear investments now. I think you've seen, you know, Bill Gates has put a ton of money into it. We've got huge power demands coming from AI data centers that are going to be, you know, they expect to grow our electricity demand in this country, I think by like 10 to 15%, which is a lot.

• 22:34Speaker 03

  Yeah.

• 22:34Speaker 04

  A lot of power. I know personally on our side, our, you know, electricity is 77% of my operating costs.

• 22:40Speaker 03

  Holy cow.

• 22:43Speaker 04

  We look at the price of power and we've, we've invested in, we've got two, two large scale solar projects coming in that don't make sense. They'll barely cover, luckily enough, we have a partner that we can work with where we can buy, I don't want to be in the solar business or the power generation business. I'm an oil producer and that's what I do. So what we've done is we went out and found outside partners and just signed power purchase agreements so we can lock that in, but these are for 20 year periods. Then all of a sudden the system, as it degrades over time, has to be replaced. So I'm looking at these things like, man, this is a 20 year deal and it can save me a lot of money in between now and then, but what's the real long-term solution here?

• 23:18Speaker 03

  Yeah.

• 23:18Speaker 04

  And it's stable grid power at a reasonable price. And we don't see that in the future of California. So we're even looking at now off-grid solutions like power generation on our own side, natural gas power generation with large-scale generators that, you know, makes sense for us to take off the grid. Now, I don't know where we'll get with that. My goal is the end of 25 to fully understand that, but I have a huge power load and, and I know a lot of, a lot of bigger producers have their own cogeneration plants and supply their own power and have for decades and decades and decades. And they use the steam as a secondary product for heat and for steam. But we're not, you know, steaming producer. We don't use steam a lot in our operations. So we're looking at what's it like just for us to generate our own power. And you'd be surprised about the amount of people and reliable

• 24:02Speaker 04

  companies that do this. And I just saw a report that I didn't get to read before I came today. It talks about the dependability of self-generation power. Cause I've got places, I've got properties that, you know, we own a lot of the power lines, secondary lines behind our meter points, which is where we get the power from utility. We have one meter point with PG&E that has lost power 36 times in the last two years.

• 24:24Speaker 04

  Thirty-six times.

• 24:26Speaker 03

  And I'm guessing you lose power in your business. It's every minute. It's money out the door.

• 24:30Speaker 04

  We're done.

• 24:31Speaker 03

  You're not producing. You can't produce.

• 24:33Speaker 04

  Not producing, not supplying water in places where we supply water. Now, we're a regular participant in demand programs. So like when the power, I guess I'm a little bit more in touch with the power grid and its instability in California than most people because I'm on a voluntary program where I get a discount. I get a big rebate every year because I have the ability where they have the ability, not me, to push a button and turn off my power on my biggest load properties.

• 24:58Speaker 03

  Right.

• 24:58Speaker 04

  And you get a two-minute warning and all of a sudden, boop, the button gets pushed and the property goes down. And I got people scrambling like, like we're on call.

• 25:08Speaker 03

  Oh, my gosh.

• 25:09Speaker 04

  At a fire station. And luckily, everything's automated now and...

• 25:13Speaker 03

  And California hasn't had any brownouts or blackouts in a couple of years now.

• 25:17Speaker 04

  No, because of the lot of these demand reduction programs.

• 25:19Speaker 03

  Yeah.

• 25:20Speaker 04

  But that's costing business and that's costing wear and tear and for short-term savings on power. There's a huge segment of the large load people like myself in California that are on these programs that have prevented residential users from blackouts.

• 25:35Speaker 03

  Yeah.

• 25:36Speaker 04

  And that's been a big advent over the last several years because utilities have had to become creative. Because if you look at the ISO daily, you know, and what's going on with power, especially in extended high heat periods and stuff like that.

• 25:46Speaker 03

  Yeah.

• 25:47Speaker 04

  You really would be up a creek without a paddle if it wasn't for demand users like, like us. And other big companies too, they can't afford to do that.

• 25:55Speaker 03

  Gosh, there's so much here to talk about, including President Trump's nominee for Energy Secretary. We're going to take a break. I want to talk about this nominee and what this might mean for energy here in Kern County. We're Money Wise. Don't go anywhere. We'll be right back.

• 26:09Speaker 00

  Need to get your financial fix on the go? If so, subscribe to the Money Wise Podcast and catch up on all past shows whenever.

• 26:23Speaker 03

  Thanks for tuning in. We're the Money Wise Show. I'm Sharad Waite here with Emily Waite, joined by Chad Hathaway, friend of the show, longtime guest, talking about oil and gas. There is a new nominee, President Trump's nominee for Energy Secretary is Chris Wright, CEO of Liberty Energy. Chad, what do you know about this guy?

• 26:48Speaker 02

  Yeah, and what do you find most compelling about his perspective on energy and climate?

• 26:53Speaker 04

  Well, where do you want me to start?

• 26:54Speaker 03

  Yeah.

• 26:55Speaker 02

  Wherever you'd like.

• 26:56Speaker 03

  Start with who he is.

• 26:57Speaker 04

  Well, let's start with Chris, MIT guy, very intelligent guy. He's from Colorado. That's where I ran into him the most was Intercom and a few other events that we go to. I had an office in downtown Denver for a long time, and Denver is a small energy community. It seems big. It was kind of the hub for the Rockies, and that was where my service company was based out of. But he built an incredible company called Liberty Energy, which is the second-largest hydraulic fracturing companies in the United States. And just a great guy. He adopted early on, and for your background, he was kind of a more humanistic type guy. Like, he believed that the production and the use of fossil

• 27:37Speaker 04

  fuels far outweighed the risks. So I believe that Chris, and that was a huge, I'm a big fan of Alex Epstein, who wrote the first book, The Moral Case for Fossil Fuels, and he wrote the second book as well, who has that same belief doctrine, and correlates with quality of life, correlates with life expectancies. So he's always believed that, yes, the environment is something important, that pollution is something we should be reducing, not the consumption of fossil fuels. So that's where Chris differs from most. I think he's been a skeptic of climate change. I think climate change has been something that where he sees that climate change also has benefits, because you have to be able

• 28:19Speaker 04

  to say there's pros and there's cons to everything, and I think that's always the

• 28:23Speaker 02

  Interesting.

• 28:23Speaker 04

  way I like to look at things. What are the pros and what are the cons? And what is it like in a world that's hotter versus what is it like in a world that's colder? And so those are things that I think, from a belief standpoint, that I believe in, but I'm not sure. I think his impact on our industry was substantial because he was a really outspoken CEO. And he was a guy you could really relate to, who was incredibly intelligent. And so you always want incredibly intelligent people, non-political types in these type of positions. He has a background in nuclear. Has been on a board of a company that purports smaller nuclear reactor type technology. He's big in that.

• 29:03Speaker 04

  He's a guy that I believe will make good change. He don't, he won't have, I mean, look, we, I had a little segment before that we kind of glossed over, but the whole drill baby drill thing and the whole, we're going to unleash American energy has already been done. There's not a lot, I think the things that the Trump administration can do, it may be open up futuristic opportunities, but we're already producing a record that we're the highest producing oil company, producing country in the world right now.

• 29:33Speaker 03

  Yeah.

• 29:34Speaker 04

  And so oil companies aren't just going to go out and drill like crazy when the price doesn't support it. It's an economic game. So I think where Chris will have his biggest impact will be in the regulatory environment on federal lands, which is where he can, he can't do much in California.

• 29:52Speaker 03

  Because we don't have a lot of federal land that has oil.

• 29:55Speaker 04

  I'm a federal producer and I'm actually on some of my stuff, but yeah, it's federal production represents about 20% of California's production.

• 30:01Speaker 03

  And there's not, there's not a lot of areas in California where we could open it up to be able to have more production.

• 30:07Speaker 04

  Where, no, I don't think that's going to happen. But what I do think can happen on, what we've faced is a stalling of permitting on federal lands, which federal lands should have complete autonomy over the state of California. And there's like this unfinalized, nonofficial, I would say not up to date memorandum of understanding between the state of California and the federal government. Because when you, when I operate on a federal lease, I have to follow virtually the same or even significantly higher regulatory standards on federal land than I do. On private lands that are managed by a state. Now, it's been footflop. Now it's more difficult than a state.

• 30:44Speaker 04

  But so I should be able to go. I would hope that I should be able to go. And if I want to drill or do things on federal land that I will be given or hopefully given some kind of autonomy to do that. Like no lease sales have occurred in California. These aren't new places. These are places that federal government that hasn't happened regularly for over a decade because multiple, multiple times has been because of, you know, lawsuits by radical environmental groups. I say radical because the CBD is radical. And I say that because the groups that are suing us, their sole purpose is to sue and shut it down.

• 31:15Speaker 03

  Yeah, yeah. Not to solve the problem.

• 31:17Speaker 04

  Not to solve the problem, but just to sue and shut it down. So I think that you'll see a lot of that. Now, I also see trillions of dollars going into alternative energy sources. Now, let's not forget.

• 31:28Speaker 03

  From the new energy secretary?

• 31:30Speaker 04

  No, no, I'm sorry. So into other sources. So it's going to be interesting whether correlations exist between the regulation of fossil fuel related production and generation versus what, where those outside influences are coming from. I think the Department of Energy can kind of cut into that a little bit from technology, investment, stuff like that. You know, Secretary Granholm, which is the current energy secretary who has literally no energy background, in my opinion, at all. She was a Berkeley student who studied a little bit there, but nothing in a, in a practical measure. And Chris is very practical.

• 32:03Speaker 03

  He has real world experience.

• 32:04Speaker 04

  Real world experience, yeah.

• 32:05Speaker 03

  This, this new incoming energy secretary also, he's a fracker. We'll call him a fracker, but drank like the fluid.

• 32:12Speaker 04

  He drank flak and fluid, yeah.

• 32:14Speaker 03

  To show that.

• 32:15Speaker 02

  To show it was environmentally safe?

• 32:17Speaker 04

  Yeah.

• 32:18Speaker 02

  Wow.

• 32:18Speaker 04

  Yeah, he did that.

• 32:19Speaker 03

  That's pretty cool, you know?

• 32:21Speaker 04

  It was really cool, actually.

• 32:22Speaker 03

  Would you do that?

• 32:23Speaker 04

  I don't frack anything, but I, I drink my produced water in a couple of places.

• 32:27Speaker 03

  Well, that's a different thing. You've got that dialed in, you know, that's a similar misconception.

• 32:32Speaker 04

  I, yeah, I don't know if I would drink it all day long. But I wouldn't drink a lot of water on my farm either, that's for sure. I would just go up to the irrigation line and drink out of it either.

• 32:42Speaker 03

  Yeah, exactly.

• 32:42Speaker 04

  Actually, I'd probably be safer drinking the well water than I would the, the irrigation water.

• 32:47Speaker 03

  What, what, what would you say if you could wave a magic wand? Then for, I guess we're talking on a federal level that somebody could do that you would hope they would do to help our future.

• 32:57Speaker 02

  Yeah. How do you balance environmental concerns with energy needs?

• 33:00Speaker 04

  Well, I think the question, what would I do? I would, I would look at the whole general focus of the DOE and say, what are we investing in? What is our, our investment? Cause there's a lot of things that our government invests in that have horrible results that don't, I mean, if you're a true scientist like Chris is, you know, a guy that has an incredible background in that and who's taken that and made a lot of that practical in the real world. I would say, what are we putting our money into? And does it make sense or does it not make sense? Like, and I think he's a type of guy that, hey, if this makes sense, whatever type of energy form it is, and it has a track record or has a chance, then let's invest in that.

• 33:40Speaker 03

  Yeah. Like nuclear, right?

• 33:41Speaker 04

  Nuclear, things that make sense. I think the practicality that he will bring to the job is, is, is going to be phenomenal. I mean, that, does it, does it make sense or does it not make sense? We can't throw, you know, good money after bad. I mean, we've seen that fall apart on ESG investing all over the world right now. There's bankruptcies and major misinvestments, things in Europe you're seeing come unfold. I mean, it's, it's really the ESG thing is kind of going, doing the downward turn. And that's a lot of that you see in the market. You see how ESG related funds and stocks have just tanked because they see this new administration coming in. They see a lot of this money being cut off. I don't think you can realistically cut off something that doesn't make sense, that makes sense. I think if it makes sense, there'll be more investment in it. I think if it doesn't make sense, then there won't be.

• 34:27Speaker 03

  That's right. That, that was always the

• 34:28Speaker 02

  A lot of logic in that.

• 34:29Speaker 03

  That was the inherent flaw with ESGs. We're talking about environmentally sustainable governance funds, which is, you know, hopefully, like you said, there's been, you know, it's calmed down versus where it was just a few years ago where there was this hyper focus on pension funds, not investing into companies that had anything to do with tobacco or alcohol or oil and gas in some cases, or carbon fuels. And it's really a mix of A wrong, a mix, a mistake to combine your investment world with whatever sort of religious or political philosophy that you have.

• 35:09Speaker 04

  Well, you look down at any kind of report, like, you know, it's funny, I was going through, I was doing some research on one of my investment accounts today and you look down and every one of them has an ESG score.

• 35:19Speaker 03

  Oh, oh, yeah, on your report that you're looking at.

• 35:22Speaker 04

  I'm like, well, you know, how is Visa so environmentally special? But they, it's like my farm, I have a, I'm, I'm a sustainable wine grape grower. What does that mean?

• 35:33Speaker 03

  Yeah.

• 35:34Speaker 04

  I have owl boxes, you know, and I can fill out a survey every year and I can pay my $1,500 and I'm a sustainable wine grape grower. So the wineries will take my wine now.

• 35:44Speaker 03

  Right, right.

• 35:45Speaker 04

  And that's what, that's what I'm doing. I'm checking the box.

• 35:47Speaker 03

  Right.

• 35:48Speaker 04

  But it's a whole added layer of expenses and time and effort.

• 35:51Speaker 03

  It's a waste.

• 35:52Speaker 04

  What does it really mean?

• 35:53Speaker 03

  Yeah.

• 35:53Speaker 04

  You know, I mean.

• 35:55Speaker 02

  What is it really, what is the result of that? What's the impact?

• 35:58Speaker 04

  It, it, it allows me to sell my grapes.

• 36:01Speaker 03

  Right.

• 36:02Speaker 04

  Because I can't sell them otherwise.

• 36:03Speaker 03

  Right.

• 36:04Speaker 04

  To, because every winery in California is now, has to take grapes from a sustainable wine, not everyone, but majority of the ones I would sell to have to do that, but it's, it's a waste, a waste of time. I, I was already doing these things before and I guess the best part of it, which I already do, which probably a lot of people don't. So I think the benefit of it is they have been looking at my operations, say, what am I, is, what am I doing? Is it, is it sustainable? I say sustainable from an economic standpoint, too.

• 36:32Speaker 02

  Sure.

• 36:32Speaker 04

  Like, am I doing things that don't make sense? And I think people that don't run, like if you're purely a farmer and you've done that farming your whole life, or maybe you don't have the same mentality that I do, I'm a process guy. I'm always looking for improvement. I'm always looking at where's the waste? Like, like my wife comes in the office and I have a, like, tracking overtime now, like, mapping this overtime, mapping that overtime, trying to find ways to become more efficient. Like, should these guys be on this shift thing? I'm, I'm that type of guy and I'm always looking at that in the farm, like, what's the best solution here? So I think that's one good thing that it does, that probably asks a lot of people who don't have that background, those type of tough questions.

• 37:06Speaker 03

  Yeah.

• 37:07Speaker 04

  And it's to a small extent, but. ESG when it comes to business, I don't have no idea what that could cost. I mean, it's just a small imprint on on my little farming operation, but.

• 37:16Speaker 03

  And it's it's like, really, it's just window dressing for investors in many cases. It's not. It's not really fixing an issue or, you know, making the world more sustainable. It's like you said, that's the real issue. It's like, yeah, what's Visa doing?

• 37:32Speaker 04

  I just remember taking pictures of my owl boxes.

• 37:35Speaker 03

  Yeah.

• 37:36Speaker 04

  I had these things out from day one because I can't stand the gophers and, you know, I mean, they just they eat up everything. And so it's like, you know, the owls are great at get removing the gophers. I'm like, well, I wanted owls at the beginning and I I loved when I used to live out there and on the farm. I used to listen to the owls at night. I think this is the coolest thing in the world. These things are just awesome animals.

• 37:55Speaker 03

  This is the scary part for consumers, especially especially in California where the mandate is 2045, I believe, for us to be carbon neutral.

• 38:02Speaker 04

  No more internal combustion engines.

• 38:05Speaker 03

  By 2045.

• 38:06Speaker 04

  Yeah.

• 38:06Speaker 03

  But, you know, there's a larger sort of overall state mandate.

• 38:10Speaker 04

  You're right. You're right. Yeah.

• 38:11Speaker 03

  And and here's a listener question. We'll get your opinion on this. It says, what is California's new gas law? And is California getting rid of gas stoves? My neighbor just told me a few weeks ago that they're being banned. Thank you. So natural gas stoves, yeah, that starting this year, new buildings are under the title 25 or title 24, the new construction code in California where you can't have gas stoves. It's all electric, you know, electric stoves are required.

• 38:39Speaker 03

  You know, this is an example of that's clearly going because gas is still.

• 38:42Speaker 04

  Yeah.

• 38:43Speaker 03

  Cheaper in some ways, in many ways.

• 38:46Speaker 04

  And more efficient.

• 38:47Speaker 03

  More efficient in some ways. But it may be an example. And what's your what's your opinion of, you know, California's gas?

• 38:58Speaker 04

  You know, I don't think I haven't seen the data on what the actual emissions are from them. I know. I know. I mean, I'm a California natural gas producer up north. I know that the utilities are wanting to get out of the transmission business. They don't want to deal with handling it because of the it's mainly because of the exposure that comes to them. When a pipeline ruptures or something like that happens, that's a huge part of it.

• 39:18Speaker 03

  Yeah.

• 39:19Speaker 04

  But. Natural gas, um, I don't know. My concern with this is how is it going to impact the small business world? Um, there's a lot of things that I can't do, um, electricity that I can do with gas. Like the heat, the heat beat regulation, like the far as the ability for me to regulate heat up and down.

• 39:35Speaker 03

  Right.

• 39:36Speaker 04

  Rapidly versus maintaining a constant load, trying to bring it back and up and down. See, that's a good thing about natural gas is it has, it's not like on or off.

• 39:44Speaker 03

  Right.

• 39:44Speaker 04

  And then you can do limited with electricity, but for the most part, if I want to ramp heat up, I can ramp it up instantaneously. It's like turning a knob, right?

• 39:52Speaker 03

  It's just like a water heater. Like if you've had electric water heater versus a gas water heater.

• 39:56Speaker 04

  Yeah.

• 39:56Speaker 03

  Yeah, very different.

• 39:57Speaker 04

  Exactly. Very, very different.

• 39:59Speaker 03

  Yeah.

• 39:59Speaker 04

  I think more efficient, um, in the long run. I don't know the emission footprint that actually it has, or I don't, I haven't seen any studies. I just don't know, um, how much it's really going to help.

• 40:10Speaker 03

  Well, there, there, let's talk about that a little bit because when, when, uh, you sent that clip from that land man.

• 40:15Speaker 04

  Yeah.

• 40:15Speaker 03

  I was like, well, he said a couple of things that I'm like, oh.

• 40:18Speaker 02

  This is Billy Bob Thornton, right?

• 40:19Speaker 03

  Yeah. Sling Blade.

• 40:20Speaker 02

  I've heard it's good.

• 40:22Speaker 03

  Yeah.

• 40:22Speaker 04

  It's really good. Yeah. Great show.

• 40:23Speaker 03

  Uh, it looks great. And I love that finally we have some part of Hollywood that's not just giving, you know, this, this far woke side story, you know, there's, there's other, there's like, there's real lives involved and real practical work that's happening instead of just this, you know.

• 40:40Speaker 02

  Representation of a certain, a large sector of our country.

• 40:44Speaker 03

  Yeah. But, but in there is this, I've heard this debate before, well, yeah, you can't buy an electric car or the windmills that say, for example, because the carbon footprint that goes into making the batteries or making the windmills, you don't recoup it or it's so far out that, you know, it's not, at the end of the day, it's not, um, in energy efficient. And I haven't seen that. I haven't seen that, you know, in, in these technologies, these newer technologies, but I know it's a, it's a, it's a feeling that people have.

• 41:13Speaker 04

  I don't, I don't necessarily get jumping into the carbon footprint stuff as much. Um, that's not really, um, I'm more the, uh, efficiency guy, right? I mean, to me it's like, what's more efficient in the long run? Cause it's really hard to. Over time to really see the life cycle of that, we haven't had enough data, I think, gathered on a long-term EVs, especially when talking about EVs or when talking about, go back to the Landman show where they're talking about windmills and stuff like that. Do we have a long enough data set to really actually, because it's not, it's not wide-scale, right? Alternated energy is relatively new in our life. Yes, it's been around for years, but we don't have the amount of diversity in it that we do now.

• 41:54Speaker 03

  Yeah.

• 41:55Speaker 04

  Because you have, you have low quality, you have high quality, you have medium quality, you know, solar is that way. It's, it's different, depends where it's at, you know, what, what part of the state it is, you know, what the weather trends are. These are all things that we don't have a huge data set on to really look back at and see what their overall performance is. So I think with oil and gas, you can take a direct, that direct calorie of energy, and you can compare it to everything else. But each one of those kilowatts is generated from that windmill or that area of solar panels. It's different. It's different based on the amount of, the density of the, the density of the sun that exists in that area over a given period of time.

• 42:36Speaker 03

  Yeah.

• 42:37Speaker 04

  So with oil, it's a straight calorie of incredible energy, all in one little pack. Natural gas, same thing. But what that energy is being generated from a windmill or from a solar panel is not the exact same.

• 42:50Speaker 02

  It's very...

• 42:51Speaker 04

  Tachypne versus somewhere else. Um, you, it doesn't, it's not all the same. West Texas versus Oklahoma. These things are all going to be different over their life cycles. So to be able to attribute a carbon footprint to something, I just don't...

• 43:08Speaker 03

  I guess the, the idea is like, you kind of said this with the new incoming energy secretary, which is he is not against, he's, he understands that climate change is an issue, but it's, he's more about, you know, attacking the pollution rather than, you know, the product. And the, the, the carbon footprint is essentially that, that's the, that's the cost, that's a societal cost that somebody has to pay. You know, we have premature deaths, we have flooding. Forest fires, things like this, that in part are contributed because of the amount of carbon that's being put in, the footprint from the carbon that we're putting into the atmosphere. You know, does a private company pay for that? Does the private consumer pay for that?

• 43:52Speaker 03

  Does the government pay for that? Or does nobody pay for it? And we just let these costs continue to go up? And we see our homeowners insurance, for example, continue to go up.

• 44:01Speaker 04

  Well, can I offer a counterargument to that?

• 44:02Speaker 03

  Yeah.

• 44:03Speaker 04

  So let's look at all the pros and cons, the pros that come from the consumption of fossil fuels and the generation of carbon emissions. Think about those things. The quality of life, the fabric of our communities, the life expectancy of people in this country through the use and burning of fossil fuels. It's skyrocketed. The inability to live in places you could not normally ever live, and to survive there and thrive there, all because of fossil fuels. Electricity generation and things like that we talked about that are supposedly offsetting these carbon footprints, like we talked about earlier, are hard to measure. Fossil fuels has been doing that for 100 years in our country.

• 44:38Speaker 03

  Yeah, and that's why we have to keep that. Like, you have to keep carbon fuels because there's no other alternative right now, and so we have to keep those things going. California's got it so wrong because they're just trying to cut it all off, but...

• 44:53Speaker 02

  Where's the balance?

• 44:55Speaker 03

  Yeah.

• 44:55Speaker 02

  For, in your mind, Chad?

• 44:56Speaker 04

  Oh, the balance of...

• 44:58Speaker 02

  Between environmental concerns and economic concerns.

• 45:01Speaker 04

  Um, gosh, M.

• 45:05Speaker 03

  Yeah.

• 45:06Speaker 04

  Hmm, where is the balance? The balance, I guess, is when people, like an example, our California, I believe California's extremely out of balance.

• 45:17Speaker 03

  Yes.

• 45:17Speaker 04

  I think California has the wrong energy mix, has the wrong energy policy, and I think we're out of balance to the, I would say, the bad energy policy side.

• 45:28Speaker 03

  Yeah.

• 45:28Speaker 04

  I call it bad energy policy. I'd say in balance are states like Texas. Texas has an incredible, I mean, ERCOT has plenty of problems, you know, they've had plenty of issues, but they have a great energy mix because they, but they deliver some of the cheapest power in the country to their people. I think the right balance of...

• 45:48Speaker 04

  Doesn't need to be picked. Energy picks winners and losers based on its price and its overall impact. Coal has been decimated in this country. And what has brought down more emissions in this country than anything else, guess what it is? Guess what form of energy has reduced emissions in this country more than anything else in the last 20 years?

• 46:09Speaker 03

  Natural gas?

• 46:10Speaker 04

  Natural gas.

• 46:10Speaker 03

  Yeah, because it's gotten rid of coal.

• 46:12Speaker 04

  It's gotten rid of coal.

• 46:13Speaker 03

  Yeah.

• 46:13Speaker 04

  And so, but I think getting rid of coal is a good thing? No. I think getting rid of coal emissions would be a great thing. But everything we do in California, remember, is being offset by somewhere else in the world.

• 46:26Speaker 03

  Yeah.

• 46:26Speaker 04

  So you have to think about that. Like, we can make all these short-term decisions, and we could be the first ones out there and bankrupt ourselves.

• 46:31Speaker 02

  We're all connected.

• 46:32Speaker 03

  I know, which we didn't even get to Newsom's idea of Trump cuts the EV credit, that California will just go ahead and keep on paying it. It's like, why would Californians subsidize the rest of the countries, you know, green initiatives?

• 46:47Speaker 04

  And you know what the funny thing is? Have you heard what Elon Musk says about that? Fine, cut it.

• 46:51Speaker 03

  Yeah, I know.

• 46:52Speaker 04

  We'll survive.

• 46:52Speaker 03

  That's why he wants it to go away.

• 46:54Speaker 04

  He wants it to go away.

• 46:55Speaker 03

  He definitely wants it to go away. Tesla would benefit, for sure, by that. The free market system has to be the, and will be, in my opinion, what will lead us out through this, through the problems.

• 47:08Speaker 04

  Amen to that.

• 47:09Speaker 03

  Through these problems, right?

• 47:10Speaker 04

  Amen to that.

• 47:11Speaker 03

  Ultimately, like you were saying, it's, you know, it's how much money is this energy going to cost us?

• 47:15Speaker 04

  Yeah.

• 47:15Speaker 03

  Man, we went right through that break. Thanks so much.

• 47:17Speaker 02

  Chad, you're so smart.

• 47:19Speaker 04

  Thank you.

• 47:19Speaker 03

  Remember.

• 47:20Speaker 04

  No, I'm not.

• 47:20Speaker 02

  Glad to have you here.

• 47:21Speaker 03

  Be smart, be safe, and be money wise.

• 47:22Speaker 04

  See you, guys.