1/6/26 Black Gold & Broken Systems: Lessons from Venezuela to California

The Moneywise Radio Show and Podcast Tuesday, January 6th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Chad Hathaway, President/CEO of Hathaway LLC. website: https://www.hathawayllc.com/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Chad Hathaway and their company are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management].

• 0:00Speaker 00

  From the second floor of the historic Woolworths Building in downtown Bakersfield, here is Money Wise. Call or text into the show 661-396-1000.

• 0:10Speaker 01

  I need a dollar, dollar, dollar, that's what I need. Hey, hey. Well, I need a dollar, dollar, dollar, that's what I need. Hey, hey. Said I need a dollar, dollar, dollar, that's what I need. And if I share with you my story, would you share your dollar with me?

• 0:30Speaker 02

  Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.

• 0:39Speaker 00

  Here is Money Wise.

• 0:41Speaker 03

  And welcome to the Money Wise Show. We are live from the second floor of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on KGO Money Talk, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. We're your hosts. I'm Sharad Waite and

• 1:08Speaker 04

  Frank Lee.

• 1:09Speaker 03

  Hey Frank, good to have you here.

• 1:11Speaker 04

  Good to be back on this Tuesday.

• 1:14Speaker 03

  This is maybe your first show of the year.

• 1:18Speaker 04

  Yeah, yeah, it is. Yeah, start 2026. Way to go.

• 1:21Speaker 03

  Yeah, we made it. We made it safely through 2025. And now here we are in the new year. We had some really great listener questions yesterday. I think we got through them all, but over the, over this time period since yesterday, we've gotten a couple more questions. So I'd like us to start that way. Do you have it there Frank?

• 1:42Speaker 04

  Yeah, I got it up. So we can start with the questions. So here's the first one. Good morning, guys. I heard the show's back and was glad to hear you guys are back on air. My brothers and I bought some land years back when they were cheap, and we've discussed selling since the prices are way higher. My question is, what's the biggest mistake you've seen Kern County owners make when selling land?

• 2:05Speaker 03

  I really like this question. I'd like to get your opinion on this too, Frank. I've got some thoughts that we've been advising, you know, doing financial advice here in Bakersfield Kern County for, you know, almost 25 years. So we've had a lot of experience in seeing people.

• 2:28Speaker 03

  Do some good things and do some not so good things with their land. And I want to specify that we're talking, I'm assuming that the listener is talking specifically about raw land, unimproved land, not your, not a commercial property, not a residential home, not an investment, you know, business or property, but actual just raw land. And I think that's what's interesting about this question, what I want to answer is just, you know, in our anecdotal experience over the years and advising, giving financial advice, there are a few things that popped right up to the, to the front, in my mind at least. And there are some similarities to what mistakes people make when they're selling their own home, too. These are, these

• 3:13Speaker 03

  are our normal sort of either logical fallacies that we run into, or just issues that we run into when we're doing a transaction that we don't normally do that regularly. One of the things is essentially, and this comes down to almost anything that you're selling, is, is, is pricing it inappropriately. You're not, it's difficult sometimes as the owner of a property to price it because you've got these, your own biases and your own sort of filter, whether it's sweat equity, or maybe there's some emotional attachment to the, to the parcel. But oftentimes I've seen some owners come in and they're looking

• 3:56Speaker 03

  on Zillow, or, you know, they're looking at other comparable, what they think are comparable lands, and they're not taking into account some of the other factors like zoning, or access, or water rights, or just the topography, or how the frontage is. So wrong comps is something that can oftentimes influence bad pricing. And that is a real benefit to working with a professional that has experience in selling just land. And I have seen that happen, too. I've seen where some people are using, you know, Jimmy, the guy who sold them their house, also

• 4:37Speaker 03

  So is going to sell them their land and Jimmy may not have any experience in in selling actual property. The benefit of having of the right agent is that that person knows and understands deals that involve acreage. They understand county planning. They know developers. So they've got sort of like a different background than what most residential agents would have. The other sort of only other thing I could think of here is is is just the emotional attachment. Owners often, especially if it's like a family property, or there's some, you know, personal connection to it,

• 5:22Speaker 03

  then that can get in the way of the negotiation and and in the deal. Whereas land buyers are generally very mathematical. They're they're generally like cold. And they are not buying it for generally for emotional reasons. They're buying it for business purposes. They're buying it to get their money back at some point. And so when you when you're listing land, you you you want to make sure that you've done your due diligence, that you're not ignoring any title issues, that you understand it's been surveyed, you're not hiding any problems. It's been documented,

• 6:03Speaker 03

  whether you know it's a in a flood zone, for example, or if there's access or no access. You know, the these are, you know, these are things that that when you're selling land, you just want to be upfront with, have all your your your your cards lined up. And, you know, make sure that all the due diligence is done because that's when if you want to have a broad market or broader market to buyers that buy that kind of stuff, they're simply looking at it. This is a business deal. It's math to them. I don't anything to add there, Frank?

• 6:38Speaker 04

  Well, other than the the emotional aspect of that you touched on, it seems like there's also a lot of. Different nuances that go in to selling land than uh selling a a piece of property like a house or or uh uh commercial property uh. Things that you normally don't encounter and would need that professional uh advice or opinion on to to really navigate you through those uh those those waters. Um I I'm I'm one that's not really familiar with the land piece, so this is pretty informational when it comes to that. Uh but I I guess I would sort of question it in a sense of like, what's the purpose of selling the land?

• 7:23Speaker 04

  Like, are you wanting to use that money to settle some debt, to refinance? Or are you needing additional income? So I don't know if that could sort of, you know, uh curtail into other types of opportunities for them. Cause I know specifically in our realm of practice, we are uh looking at ten thirty ones uh exchanges like that. It's like, okay, well, this this can help you uh uh move from this property into certain DSTs if you want and you need that uh that annual income uh without having to pay those capital gain or the the taxes on those cap gains.

• 8:05Speaker 04

  So it's it's I I'm I'm wondering if that's also similar in this uh land sale uh aspect um as well. But it's it's it's good to know that you do have to look at it from a different lens and different perspective than just a, you know, regular uh commercial sale.

• 8:24Speaker 03

  Yeah, yeah, cause really it's just, you know, return on investment is gonna generally gonna be the most important thing. So, you know, marketing it, your the land for the highest and best use, you know, rather than just saying it's a vacant lot, when actually maybe you could split it up, you know, maybe it could be used for ag or storage or solar or whatever, but you you know, you you you were able to market it for beyond just, you know, a vacant lot. And if you don't have any experience, you're gonna look at it, oh, I guess it's just a vacant lot. I'll just, you know, list it for sale by owner or you. Hire somebody that can list it for you and really get some advice. I'm glad you brought that up also Frank. I hope you would assume that the person knows what they're going to be doing with that asset after it sells. And so maybe there's some tax implications.

• 9:09Speaker 03

  We had Karen Clemens on yesterday talking about 1031s. That's an option sometimes people don't think about. Or they think, well, yeah, he's going to go do another property, but I want to wait. It was like, okay, hold on.

• 9:20Speaker 03

  There's some timing and some things that you want to do that's weighted to go about this. I've got another question. You got that there Frank?

• 9:28Speaker 04

  So second question we have here is, do you offer financial review services of divorce separation agreements? Oh, this is a new one for me.

• 9:36Speaker 03

  Yes, and we have, again, for better or for worse, have some experience in advising people that are going through a divorce or have gone through a divorce. And I think that it's highly recommended that you talk to your financial advisor if that's the case. Because there are some things that a financial advisor can help give perspective on. I mean, obviously, financial advisors, us, we are not attorneys. We don't replace your attorney. We don't replace the mediator. But what we can do is translate the financial consequences of the legal language. And end of what is potentially going to be decided. Because there can be some huge financial implications to what you are settling.

• 10:17Speaker 03

  Attorneys, sometimes it's not always their highest priority is making sure that your financial plan is taken care of. They're going to be looking out for you in all things related to the legalities of it. But getting some financial advice from an advisor is, I think, is really important. We've got many of them here money wise. A lot of us have a lot of that experience in dealing with those. To give you an idea of some of the things that can help and why you may want to consult an advisor if you're going through a divorce is because, for one, you might need some help in projecting what the long-term outcomes are. Take, for example, retirement projections.

• 10:57Speaker 03

  That might be based off of the proposed divisions of each other's retirement accounts. And what that is going To mean long term or short term analyzing certain pension elections like survivor benefits. And and then different stress tests like what if scenarios that could happen if one spouse remarries? Or if there's a job loss, also evaluating the income and support structures. So like determining whether spousal support is affordable and sustainable. You know, for for that, for the person comparing potential lump sum buy buyouts. Versus some form of ongoing payment.

• 11:40Speaker 03

  And that is, you know, you obviously you and I know about present value calculations. But having somebody that you can walk that through with can be really helpful. And then, of course, advising just on budgeting systems so that the agreement matches real living costs. There's there's several other sort of benefits that I think that advisors can can can help in a divorce. Divorces are never are generally not really happy eventful times. And so they can because of the heightened emotional state that the person can be going through. Having somebody there that can help you think clearly instead of emotionally.

• 12:24Speaker 03

  Can can help avoid a grab of potentially the wrong assets. And so, you know, I'm obviously a proponent of our of our industry. And what we could do and how we can help those situations.

• 12:38Speaker 04

  Yeah, I mean, you're definitely right on that. Once when you're going through something like that, you're not of sound mind. You're you're running off of a lot of these emotion based decisions. And so having some a professional guide you through it can make. Make better sense and help you through that your financial plan. One other thing I've learned too, and this is something that's, you know, as an advisor can help is. You know, when it comes to social security benefits, that can also have an implication on on your plan as well.

• 13:11Speaker 03

  Yeah.

• 13:12Speaker 04

  For for divorce spouses, it's like. Okay, let's say for the spouse who if you had children and you stepped away from work and you know, you were really reliant on your your spouse's income, what is social security benefits look like for you? You know, like, how long have you guys been married? Are you going to be able to receive some of that benefit for them? So a lot of little nuances, again, as an advisor that can help you go through this if when when you're going through this type of of situation?

• 13:49Speaker 03

  So Good stuff, Frank. We're gonna do this, take a first break of the day. We come back, we're gonna be joined by Chad Hathaway. I've been so excited for this interview, especially from the the events over the weekend with Venezuela. Chad was like the first person that came to my mind. I was like, I can't wait to hear what Chad thinks of all of this. So we're gonna get to Chad Hathaway from Hathaway LLC right when we come back after the break. Don't go anywhere.

• 14:15Speaker 03

  Welcome back to the Money Wise Show. We're your hosts today. I'm Sharad Waite, along with Frank Lee. We are joined now by our regular guest Chad Hathaway. He is owner founder of Hathaway LLC and Bakersfield's Oil Man. Hey Chad, welcome back.

• 14:30Speaker 05

  Hey guys, how are you?

• 14:31Speaker 03

  I'm doing really well. First off the bat, share if you can your your thoughts on what were your first thoughts when you heard the news was just a few days ago about Maduro and Venezuela, coming from a perspective of a of an oil producer?

• 14:51Speaker 05

  Well, I mean, growing up, you know, when you grew up in the oil patch, you know, your family's in the oil patch and your friends and a lot of people that I knew growing up actually were parents worked in Venezuela. They cycle and it's still a lot of guys I know that are retired now did shifts or down there and help participate in the growth of Venezuela's oil production. And then, you know, were abruptly, you know, yeah, got out of there when they nationalized it. So it's to me was somewhat, I mean, I had a very good background. In fact, I knew somebody actually got stuck down there for a long A period of time, a friend of mine's dad, we were actually freshmen in high school. I would never forget that. They're like, you know, they couldn't get their dad back. It's the government had come in and nationalized one of their assets and

• 15:37Speaker 05

  it was really military. Let's say again, it was a really bad deal. So to me, it was kind of like, oh, you know what? This is kind of exciting that maybe we'll be able to get a chance to go back down there. I mean, it's such an incredible resource. I mean, incredible place. Um, it's just been squandered for so long.

• 15:50Speaker 03

  Yeah, yeah, it it it it's a shame. I mean, I think most people know now by now, especially since this happened, that it's the world's largest proven source of of oil. I guess there's some controversy in there. I'm curious what your opinion is because since it's been basically under dictatorship since Chavez, it's questionable about how much of those 300 billion barrels are actually proven. Um, either way, I mean, it's a big player, but.

• 16:23Speaker 05

  It's different. You know, this is a very, I mean, they've been producing oil in Venezuela since the 1920s. So there's a good understanding of of what uh of what exists in Venezuela. Um, it's it's very heavy, heavy crude, very similar to what we operate in Kern County. I think what's really exciting about this is if if the reserves are even half of what they're saying, you know, it's still triples the size of a trip would be triple what the United States has in total reserves. So um, and then off of that, they've got, you know, some of the largest reserves of natural gas. Now, when I say that, most of their natural gas production is associated with oil production. So that just means that the more oil they produce, the more gas they're going to make. So

• 17:06Speaker 05

  it's very, uh, I think there's very good data for um for Venezuela. I mean, one, one thing that I think is very telling is that Chevron, after all these years and so much being taken from them and so much back and forth, um, and uncertainty and instability has managed to stay in Venezuela, which tells you.

• 17:29Speaker 05

  You know, hey, you know, they're a company that can pull up and just balance out if they think things get a little too crazy. And, uh, you know, back going back to, uh, um, to the fifties, you know, the, they were, Venezuela was the largest exporter, was the world's largest exporter of oil. And most of those exporters were Exxon, Chevron, and at the time Gulf and Texco. Um, and they had an agreement with the government where it was a fifty fifty profit sharing deal. And, and that was, you know, turned out to, to be really good for the people of Venezuela. Um, they had the highest GDP, um, in, in Latin America. Um, they had living standards that were comparable to parts of Southern Europe.

• 18:12Speaker 05

  Um, their, their revenues continued to expand and coincide a lot with production as it rose. So the country was directly tied to, to oil. Their inflation was incredibly low at the time, generally, the, the boulevard, their, their, their currency was strong and stable. And then after that happened, after really the decline and then, you know, initial, initial benefit of like any nationalization retaking is that they're going to have a good, you know, it's a brief period of success. But after nationalization happened, you know, the, the political politicians became in control of the oil company. Now, this isn't to say that nationalization of oil companies don't make sense and can't be successful. I mean, Norway, Saudi Arabia. Yeah. There's a lot of. Qatar.

• 18:57Speaker 05

  Yep. It's all, uh, you have lots of places where nationalized oil companies, Kuwait, you know, um, where they very well, if they're managed correctly, um, and, and, and, and not, uh, uh, not overburdened. So. Yeah. But when lies that, you know, obviously, you know, the subsidies started rolling out, the political programs, uh, were drawing dramatically from, from Petrobras. And, and that really kind of killed the business. Their production fell from like three point five million barrels a day in the nineties to, to, you know, less than one million barrels a day. And the country entered a period of incredible inflation. I mean, there's times in Venezuela where you can't even buy toilet paper. Right.

• 19:39Speaker 05

  So then with all that, just like, you know, I talk about in our industry all the time with you don't invest in maintenance and, you know, exploration and your, your infrastructure, everything kind of falls, falls apart. So, um, you know, it's going to be exciting to see what happens to me. I mean, from an energy security standpoint, if you're an energy guy, really cares about, you know, worldwide energy security. And this could be potentially great for the world, um, and great for the consumer, um, but just depends, you know.

• 20:06Speaker 03

  Yeah, it, it, it's interesting that there's a connection to, to Kern County because it's, it's heavy crude and it's also sour, right? Which means it's got a lot of sulfur in it.

• 20:18Speaker 05

  Mm hmm.

• 20:18Speaker 03

  Uh, high sulfur and, and that's what we're good at here, right? That's what we're good at getting, getting out here.

• 20:26Speaker 05

  Ironically, it's identical to Santa Maria, which is cat called the cat canyon field. So Santa Maria produces almost identical barrel to like the renko, the heavy oil that is produced and not all Venezuela has light oil. It has medium grade oil, but the big bulk of reserves is, is in that they call their renko belt. Um, you know, and there, there's, there's a lot of it that requires heat and what they call diluent, which is a, you have to bring in lighter barrels to get the heavy barrels to break up. Um, but it's very similar to Santa Maria, like what we produce in Santa Maria, uh, and San, Northern San Barbara County, California, almost identical type of crude, high sulfur, uh, and all that.

• 21:10Speaker 03

  Yeah, it's fascinating. Again, we're joined by Chad Hathaway, owner and founder of Hathaway LLC, Bakersfield's Oil Man. Chad, this, the, the news is saying that this could be a long time before this starts to have an impact on the global supply. Is that just because of years of no maintenance, of years of lack of investment?

• 21:32Speaker 05

  Yes, it'll be incre- I mean, I don't know from the exact standpoint of Chevron, what they, you know, they're obviously a company that can expand rapidly, but they don't do that. They're very calculating, they're very, you know, they've even said publicly, you know, our plans have not changed in Venezuela, like the statements they've made have been pretty clear, like, we're, we're a long-term player in Venezuela, dedicated to the long-term success, and they don't plan to add any extra capital to market. I don't think anybody really knows what's, I mean, first of all, you have to have political certainty, not just in Venezuela, but you have to have political certainty, certainty in the United States. So there's two different things there that really are required. You know, you can have a stable

• 22:15Speaker 05

  government in Venezuela, that's fine, but i- if a country that's a United States company doesn't have political certainty in the United States, then I think there's a little bit of a, it's a double-edged sword there. So I don't see it happening overnight. I, I think this all gonna be step after step after step after step. But if, like, say the next administration comes in and says, you know, we're gonna take a back, we're gonna take a backseat to Venezuela, we're gonna let them do whatever they want, do what they want to do, and we're just gonna not, you know, have anything to do with it, and the country could go back right into what it was before, a state of decline. So, you know, it's just, it's gonna take so much time. Plus, the physical infrastructure, like you mentioned, they're in a jungle-type

• 22:57Speaker 05

  climate, heavy rain, all kinds of corrosion and deterioration, you know, stuff that just hasn't been touched in forever. And most of their talent left, too. I mean, they had a lot of talent that went down to be part of that, that all left. And so they don't have any, you know, any talent like they used to have before either.

• 23:18Speaker 03

  Yeah, Chevron, being the, I think it's the only US oil company that's still there that didn't bail. And are those mostly, do you know, are they mostly Americans that are working in that? Or how does Chevron survive through all this?

• 23:37Speaker 03

  Survive down there.

• 23:39Speaker 05

  Great question. I think that they've, you know, they've been in conflict with the government. You know, they've, a lot of these companies have tried to win in international court. You know, they're trying to get back what is taken from an international court and, and not knowing, I haven't followed those things, but I mean, you could try to squeeze all the blood you want from a turn up, but you're only going to get so much.

• 24:03Speaker 03

  Yeah.

• 24:03Speaker 05

  So I think Chevron pretty much had the philosophy that, you know, in the, in the long run, that we're best off just staying here and trying to work it out and taking our licks and playing the long game to the, um, to the politics here. And that's really what I think they've been able to do. But I do think, you know, head of this, uh, the company, the petroleum development company or national oil company of, of Venezuela really doesn't have, I think a lot of their talent was trained, a lot of them left. There used to, there was a big influence of, of engineers that, um, I know hit the Houston area that had influence.

• 24:46Speaker 05

  And so the two areas I think that had the biggest influence and, and, and impact were California guys, you know, Chevron and the major players that were in California. Cause we are the heavy oil capital, you know, of the nation here, um, in, in California. And I think Houston had a big impact, but I think majority of that was people going down there because most of the people I knew were in the services side. Um, the, the technicians that handled like boilers, steam generators, you know, the fabrication folks, you know, the high level engineering and, and design stuff, the stuff that really requires, um, you know, experience to what's going on in the modern market, experience to what's going on, um, um, here in the United States.

• 25:29Speaker 05

  So not a lot of self sufficiency there, I guess, to answer your question in a long winded way.

• 25:35Speaker 03

  Yeah, it's, it, you know, in preparing for today's show is just reading some of the history of other Petro states and what, you know, some, you mentioned Norway, for example, but some countries have done really well with, I guess, nationalizing their oil and gas production and others have just like. Done terrible. It seems as though that the one of the major factors is whether or not they're running it as a business or whether they're running it as like a government piggy bank. And that's what Venezuela was doing. They were subsidizing everything and pulling everything, you know, all the assets from that, not reinvesting it, the money properly.

• 26:15Speaker 03

  Mexi, I'm curious if you, I think you have some opinions on Pemex, Mexico's monopoly down there. It seems as though they've done a lot of the same mistakes that Venezuela has done. I know there were some efforts to kind of change that. But do you have any opinion on Pemex and how Mexico is handling that?

• 26:38Speaker 05

  You know, Mexico is a different story. I mean, Mexico is, had a very sticky relationship with American companies for a long time. Yeah, a couple of years ago, they opened up Mexico to, to foreign investment. And I believe that round went pretty good. I'm not really sure how the results have done. Most of those were like expiration leases and stuff like that throughout Mexico. You know, we do have a lot better relationship with Mexico than we do with Venezuela. Even at cross border stuff, we sell Mexico, believe it or not, they're one of our biggest purchasers of natural gas. Mexico, because Mexico doesn't have the gas production to sustain it. We used to have a lot of trading crude between

• 27:23Speaker 05

  Mexico and the United States. So a little bit different relationship there, but the company as a whole, as you're stating, like, has been dwindled, has been, you know, one thing that Pemex has more than any other company in the world is more debt. They have the highest debt level of any company in the world. And they're extremely hedged. I mean, extremely dependent on derivatives. The, the production in Mexico has declined substantially. They've had a lot of big project failures down in Mexico over the last several years. And so that's another thing too, that really hurts Mexico. There's a vast difference in reserves between Mexico and Venezuela too. So, you know, it's

• 28:04Speaker 05

  A little bit different story, but we do a lot more business in Mexico energy wise and and then that than than what people think, but just from an ability to go in and do business like from the upstream side across the border. It's it's not that great. I mean, at all. I know people, I know people in Texas that do service work in Mexico and it's it's always a struggle to get your money, you know.

• 28:29Speaker 03

  Oh geez.

• 28:31Speaker 05

  It's money in advance, more or less, if you can.

• 28:33Speaker 03

  Oh, wow.

• 28:35Speaker 05

  Sometimes it's struggle to get your equipment back.

• 28:37Speaker 03

  Oh geez. So you're not heading Hathaway LLC isn't heading down to Mexico anytime soon. Oh, we have a message here from a listener. It says, great input and my favorite guest on your show is Hathaway. Thank you, guys. Was wondering if this is something that has been ongoing and how will it shake up the world's supply? We kind of talked about this a little bit, but maybe you can give us a little bit more insight on like, what does this mean for the global supply of oil?

• 29:07Speaker 05

  Well, I mean, this could be, I guess, if you go back to my like my first point about Venezuela's reserves. Um, you know, we're a country with, you know, if you say, if you say what Venezuela has, uh, if we agree with what they have is is is a fact, you know, they have, you know, six, eight times the amount of reserves we have. We're the number one producer of oil in the world, uh, United States and the number one producer of natural gas. Uh, because we know how to exploit our reserves. If you apply that same metric to a Venezuela, you know, they could be an rampco. They could be a gigantic company that produces a tremendous amount of oil that, you know, obviously the economics have to support it, but they have the potential and we have the refining capacity or a lot of the refining capacity.

• 29:52Speaker 05

  Most of it's on the Gulf Coast to process these types of barrels. And that's what we used to do. I don't know how bad that's been changed over because most of the new production that's online in the United States is lighter crude, but it's a huge, it's a huge opportunity for the world. Um, from a long-term supply standpoint, it's just, it cannot be ignored.

• 30:15Speaker 05

  Um, it's like one of those things like people you see in your life like, man, that guy or that gal could be so incredible. If they just did this and they just did that. You know, and that's what you look at, think of when you look at Venezuela. It's just a man that everything is there to be. Uh, absolutely a worldwide power at a Ramco or a even a fraction of, I mean, just like Ramco is like 12.5 million dollars a day. And we're like 13.3.

• 30:40Speaker 03

  Wow.

• 30:41Speaker 05

  They could be a six or a seven, they'd be number three in the world.

• 30:46Speaker 03

  I did a little quick math, you know, roughly it's estimated there's 300 uh billion barrels of oil in Venezuela. And if they were, they peaked in their production at, at close to four million a day or 3.8 million a day. This was maybe in the nineties or early 2000s. And if they were at that peak production of 3.8 million a day, it's 214 years of oil. Just from Venezuela.

• 31:25Speaker 03

  I mean, that's like stupid math and it's also like not necessarily accurate because there's problems and there's likely would ramp up. So it could be, could be even more, or there could be issues where they can't get to it. I don't know.

• 31:38Speaker 05

  I think the thing to think about is, is if you, you have a, a dormant lethargic, uh corrupt. Um, industry that over the last, you know, 30, 40 years that has done nothing. United States was at 6 million barrels a day, 5 million barrels a day before the shale revolution happened. Now look, we're number one in the world. Um, that none of this has been going on in Venezuela. Nobody's been active down there. No new technology has been implemented. None of this has happened in the last 30 years, if not longer. So I, I could say this, uh, uh, there's tons of opportunity from efficiency standpoint, uh, that exists down there. And when you hear about proven barrels, that's.

• 32:24Speaker 05

  One thing, there's also probable and possible barrels. Those are three different, there's three different reserve categories in oil. There's proven which you know can be economically produced now. There's probable, which has a certain eighty percent or higher probability of being able to produce, and then possible, which is a lower level than than probable. So you have these three different levels. We're just talking about proven here. Proven is we know it's there, we know we can get it out, and we know we can get it out economically. And so that's something like my reserves change every year based on economics. But I don't even count probable and impossible reserves in what I have.

• 33:04Speaker 05

  Because our business, the way it works is if you're not actively developing, you're not actively exploiting, you're not actively applying new technologies to your fields, you'll never know. You'll never know what was really there because look at us as a country, for example. You know, we were at five million something barrels a day, and now we're at thirteen three. Everybody said this, Hubert had this theory, we're gonna run out of oil, it's peak oil.

• 33:27Speaker 03

  Peak oil, yeah.

• 33:30Speaker 05

  What happened to that? It went away, it got blown out of the water. And so if this was, if Venezuela had a healthy, uh, you know, capital invested market, oil market like ours or industrial like ours, there's no telling what it could be.

• 33:46Speaker 03

  Yeah, how, how, how would you compare the lack of investment in oil and gas in Venezuela to the lack of investment that's been happening in California? You know, since, you know, since before Brown, since before Newsom and Brown, but really just sort of that crackdown that's been happening in California. Is there any similarities there?

• 34:10Speaker 05

  Yeah, I just think from a little different standpoint, though, the only difference is that, that, um, you know, one, we, we still own it, people own it, companies own it, not the government. Um, two, we're still being required to maintain itself, the health and safety of our operations to the public. You know, uh, you know, three, I think that the other big thing is, is that, um, you know. Where most of us here are not, we're not publicly traded, we're not being influx by massive amounts of capital from different states. Like, you know, if you go to Texas or you go to any other base in the US, there's a ton of capital coming in. It doesn't necessarily, you know, determine they need a return, right?

• 34:52Speaker 05

  They don't have to have, you know, they look at this globally and have different reasons. But like, for example, like drilling well is one place, it may not make economic sense for a company, but they're publicly traded. So their value is propped up by that. California, I would say that our infrastructure here is very solid. I would say our infrastructure here is in great shape. I would just say that, that, that, like, if you go there, if I get, take my hat off that in the upstream side, the producer side, and I put it on as a, as a refiner, look, I mean, those guys have had more regulations thrown at them in the last 20 years. And I think any other industry in any other state in the, in the rest of the country.

• 35:35Speaker 05

  And their, their cost to operate because of all the additional layers of, of cap and trade, of, of emissions, and all the things they've had to do, unionization, all the different things, you know. And most places would say, yeah, you, you cut back on your infrastructure, but that's not allowed to be done in California. You can't have an accident, you can't have an issue, otherwise you'll, you'll be in even worse trouble than what you are now. So I, I don't, I don't think there's, there could be some similarities, but I really don't think it's the same thing.

• 36:12Speaker 03

  Yeah, good, I'm glad, I'm glad to hear that, you know, because it's, it just seems like it's been really dire in California for years. Now Kern County is gonna have some freedom here. And so that leads to the next question is how, you have some predictions. And I, I know we're talking about oil and gas, we're not talking about transportation fuels.

• 36:39Speaker 03

  But we're in a world of hurt, it seems. There's, there's more than one academic researcher that is predicting eight dollars or more a gallon of gas this year, sometime this year, by the end of this year. And that doesn't seem far fetched to me. In fact, I'm guessing that Governor Newsom has heard the same, gotten the same message, which is why maybe there's been a change of tone. But can you explain where we might see transportation fuels here in California?

• 37:11Speaker 05

  Yeah, so I mean, one of my predictions, I have eight predictions for next year for 2026 is that we'll hit eight dollars a gallon. That's not, not just mine. There's, there's, like you said, there's Mitch Kei from USC, Nate Davis, even Berkeley has come out. I can't think of the people's name at Berkeley or Davis, but they've all come out. And I think there's another professor at Stanford.

• 37:31Speaker 03

  Yep.

• 37:33Speaker 05

  That has all said that, you know, with the current refining situation we have in California. What's crazy is that we're going to have people actually refine. Now, we always had the argument of, of, of we shouldn't be, you know, take buying a lot from places have lower environmental restrictions than we do. Or I would say, yeah, I mean, that's a fair statement. We always say that, you know, but if you talk about importing gasoline from other places like India and China, you talk about lower environmental standards when it comes to emissions, it's not even, it's not a difference. So we just, we're, what they're, we're doing, what we're doing is essentially exporting our emissions. So

• 38:15Speaker 05

  whether or not, if you're truly an environmentalist and you really look at this, people can say, well, paying eight dollars a gallon here. Well, why are we paying eight dollars a gallon? One, because we destroyed our refining capacity, you know, two, we, we've destroyed our in-state production. So the supply is not robust and they have to import it from, you know, other places around the world at, at high costs and, and, and high burden. So yeah, I see eight dollars per gallon by the end of the year. I'm not alone in that. A lot of people are. And I'm, I'm just still shocked that, that we, we don't have like a massive. Revolution as it is because our correct gas prices are so much higher than anywhere else in the country right now.

• 38:53Speaker 03

  Yeah, it's like it's like Californians are just gotten used to it and they're unless you travel. You know, you're not aware of how much cheaper it is in other places, but I think I would see a revolution at eight dollars a gallon. And now, now you're going to get people that are just mad.

• 39:10Speaker 05

  I mean, I thought you see it at four fifty or five, you know, or even six, you see it six dollar gas all all over the place. You know, and you can go to Nevada and buy it for half that, you know, it's like saying, I mean. Well, I guess we're all kind of mesmerized over here, right? Well, what do you want me to my question is why? Why don't you think there's a revolution yet?

• 39:32Speaker 03

  Yeah, it's like, um, I don't know. It it it just must not be high enough. I I've talked about this with you on the show many times, this, you know, about if nothing's going to make politicians change their mind quicker than. Eight, $10 a gallon because you're just going to have it. It hits all both sides of the political spectrum. Because it's a it's a regressive tax for the poor. So you're going to see the left screaming their heads off. And then, of course, you're going to see the right screaming their heads off because. Free market capitalism has had their hands tied and, you know, a lot of these problems are self inflicted by poor regulation.

• 40:11Speaker 03

  So it just, you know, it's going to take the people getting really ticked off, I think, before something can happen. But then even then, it's going to take years to ramp up our refinery production. Do you think?

• 40:23Speaker 05

  Well, not just that, but you have to do a mask of de escalation of the the cap and trade stuff.

• 40:30Speaker 03

  Oh, gosh, yeah, right.

• 40:32Speaker 05

  Back you have to back that truck way up and and get rid of it because. And I I told you, I don't know if I told you the show, but I know what the refiner that I sell to, you know. In fact, I know the owner really well and and he was telling me like 20 years ago. Or 10 years, 15 years ago, their regulatory cost for like half a million dollars a year, which is still a lot of money. That's year alone, I think it was like 20 something million dollars. It's like you can't, you know, you get to a point where you're like, you can't, you know, one, your supply is depleting for crude. Um, and so you have to go out and find different sources and invest more in capital. Two, you're like, your regulatory costs so high, you have to invest in all these emission devices on top of pay all these fees for

• 41:15Speaker 05

  for cap and trade and, and, and three, and not only that, all the ancillary costs that come to you because your vendors and everybody else are having to pay those fees. You know, it's just, you know, at some point, you know, you think that not only with the highest gasoline and diesel transportation fuels in the country and the highest electricity prices in the country. You think, okay, maybe people in California would just say, hey, we got a problem here. And, um, they're not.

• 41:41Speaker 03

  It's crickets. Yeah. It, one of your predictions is a low carbon, low, low carbon programs will disappear like DEI and ESG. Uh, you, uh, here in California, you think that cap and trade could change?

• 41:54Speaker 05

  I tell you what, man, I think that's more on the corporate side. I think people are starting to see that. Like, and I say that on our, in our, our industry side, because if you look at our industry's record, we've had reduced emissions uh, substantially uh, uh, over the last, um, you know, 20 years. I mean, our, our companies have done incredibly good job of being more, more efficient, cleaner, having a less, uh, a lower carbon footprint than we ever had before. So I think the companies are going to start to look at that and say, hey, why are we really doing this? What are we really doing here? Um, now in California, I sure hope so. I sure hope that, that they, these type of, uh, programs are looked at and asked about what's the risk reward? What I'm not, what I'm, I guess, what's the return on this?

• 42:37Speaker 03

  Right.

• 42:38Speaker 05

  Back to our, not risk, but I guess you would do a risk reward in the whole thing, but what's our return on this? And what are we doing holistically? You know, I mean, that, is it really making a difference? Are we really doing the right thing here? Um, some of these things may make sense. Some of the, I mean, like everything else, everything should be audited. Everything should be looked at, but I sure hope it does, Sherrod, to be honest with you, for the sake of everybody in this state. Cause you know, not only do these same cap and trade programs affect, uh, transportation fuels, they also affect electricity prices.

• 43:08Speaker 03

  Yeah.

• 43:08Speaker 05

  So there's a huge force, you see, Bill, that's associated with, you know, a cap and trade, not cap and trade, but emissions related things.

• 43:18Speaker 03

  Yeah.

• 43:19Speaker 05

  Climate goals that are set by people in California. You know, everything is wildfire mitigation, right? I mean, there's a lot of money in your power bills as being attributed, or being, the reason why your power keeps going up is that, you know, your wildfire, there's a lot of wildfire mitigation and you and I both have, you know, spent a lot of time in the mountains, you know, knowing people have moved more to the mountains, but, you know, people, these utilities, you know, every, anytime a fire starts, they're getting a multi-billion dollar lawsuit against them.

• 43:49Speaker 03

  Yep.

• 43:49Speaker 05

  I mean, so people need to realize like, why we're doing this? Yeah, we should make it safer, but hey, we're also pushing limits of where people live and where people go to and what they do. So I think there's, there's opportunity there to maybe give these guys some cover, where next time a windstorm comes through and, and causes a fire, they don't get hammered, have to, you know, get, you know, go bankrupt. That's what PG's gone bankrupt multiple times because of.

• 44:15Speaker 03

  Right.

• 44:16Speaker 05

  Wildfire, right? So.

• 44:18Speaker 03

  Yeah.

• 44:21Speaker 03

  Well, great, Chad. This has been super informative. I really appreciate you taking the time to come on the show and talk about these things. Uh, thank you so much, my friend.

• 44:32Speaker 05

  Thank you, guys. Appreciate it.

• 44:33Speaker 03

  All right. We're going to take a quick break. We'll be right back.

• 44:35Speaker 01

  I've seen Jesus play with flames on a lake of fire. I was standing.

• 44:42Speaker 03

  Welcome back to Money Wise. We're your hosts today. I'm Jared Waite here with Frank Lee. Want to thank Chad again for coming on the show. I learned a ton. I always learned so much from Chad when he comes on, and this was really informative to just sort of get caught up from, you know, the, the mainstream media, more beyond just the mainstream media's take on Venezuela and its oil and that. So that was really, really interesting.

• 45:09Speaker 04

  I mean, we get we get a first point of view from someone in the oil industry, exactly the impacts of Venezuela and everything. Because, yeah, for someone like me, I don't really follow oil as much, but it's always good to hear and learn from from someone like Chad, who's very knowledgeable and can just provide that information. I just like, sat back and tried to consume as much as he could.

• 45:30Speaker 03

  Yeah, it's been we've had a and I say we I'll put you and me in the same generation, even though you're younger than me. But we've been we've lived in a time period of fairly stable energy costs. It's been a gradual increase. Everybody knows PG and E's rates. Everybody's aware of how much they're paying for their gasoline at the pump and what they used to pay compared to what they pay now. But we haven't had like a major shock, you know, like an embargo, like the oil embargo in the 70s, you know, where there was no gas and, you know, stations were shut down. And and certainly, like we've seen in other countries. But it doesn't mean that it won't happen. And there has

• 46:15Speaker 03

  oh, I'm very much for keeping the environment clean and and reducing as much carbon emissions as we possibly can. But I also reckon I'm also realist in recognizing that this is a major blind item in most families' budget is how much they're paying for gas and how much they're paying for energy and utilities. And all of that is tied to oil and gas. And so many of the products that we buy and that we use is tied to the price of oil and gas. And we need that to be we need that to be stable, and we need it to be secure. And as you so happens, it's also we're a big producer right here in our backyard. So I

• 46:57Speaker 03

  think we've got we've got a we've got a stake in it. Frank, I want to ask you about or talk about something now. We've got a minute. There was a the creator of the Stock Traders Almanac in 1972 has a quote, he said, if Santa Claus should fail to call, bears may come to Broad and Wall. Have you heard that before?

• 47:25Speaker 04

  No, I haven't. That's a first.

• 47:27Speaker 03

  Broad Wall, obviously, is Wall Street, you know, Santa Claus. This is referring to the Santa Claus rally, which I know Frank, you've, you've heard of that. For those of our listeners that have not heard of the Santa Claus rally, it's one of the more popular sort of seasonal guides that have popped up over the years. It refers essentially to the tendency that stocks have to rise the last five days of the, of the, of trading in the year, and then the first two days of the new year. So we finished this yesterday, on Monday, we finished the Santa Claus rally. And for the third year in a row, it was down just barely. Now, after, there's a, there's a little caveat here.

• 48:12Speaker 03

  The Dow was actually positive. The Dow ended up with those six day, that six day period of trading days being positive. However, the S and P 500 returned a just barely slightly negative, 0.1% negative. So what this means that is if there, so I guess technically it was not a Santa Claus rally for the S and P 500. That means that generally what has happened is that the, you don't have as high of a return in January in the stock market.

• 48:54Speaker 03

  And then generally you don't have as high of a return in, for the rest of the year. But I think the last three years have proven the problems with that prediction because we did really well the last three years in the stock market.

• 49:09Speaker 04

  Yeah, yeah. Who's to know? I mean, you hear about these types of, you know, anecdotal, like senses of like Santa Claus rally is going to predict a great year. And well, the last three years have proven otherwise. So it's, it's going to be interesting to see what the next year is going to come to.

• 49:26Speaker 03

  Yeah, yeah. Generally in January, if there's a Santa Claus rally, January ends up 1.4% and 10.4% that fought the year. But we'll see. We'll see what happens this year. Well, great show. Thank you for tuning in. I really appreciate it. Want to remind our listeners these three things: be smart, be safe, and always be money wise.

• 49:48Speaker 02

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