9/28/26 Don't Panic Over the Headlines + The Truth About Diesel Prices

The Moneywise Radio Show and Podcast Monday, September 28th 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 https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ Guest: Chad Hathaway, CEO/Founder of Hathaway LLC. website: https://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 & Hathaway LLC. are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management

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  Live from the basement inside the historic Woolworths Building in downtown Bakersfield.

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  Call or text in at 661-396-1000.

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

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  Now, let's start the MoneyWise Show. Welcome to the MoneyWise Show. We're live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on News Talk 96.1 and 1230 AM KERN, streaming live at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. Today, we are your hosts. I'm Sammy Abiyawi with

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  Frank Lee.

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  Frank, welcome to the show.

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  Sammy, happy Monday.

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  Happy Monday to you too. It was not going to be happy for Stephen there.

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  Oh, for a second.

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  11th hour. Thank you, Stephen. That's what all you do, Stephen, all the work.

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  Teamwork, baby.

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  Yeah, I saw those hands being thrown up. It's like, uh oh.

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  Yeah, that was just a reaction to that. Another loss again over the weekend for the Dolphins.

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  Hey, we were close. All right, we were close.

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  Yeah.

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  This was the best game we played this year.

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  You know, I love you, Stephen.

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  Almost beat the Chiefs.

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  You've been close for the last 20 years.

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  Hey, we were, we played a four quarter game. We just lost very

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  Hopefully next week you'll do better.

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  Yeah.

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  Small wins, small wins. One of our employees this morning in our Monday morning motivation talked about the small things that we can do. So small, small things, small habits, small habits, Stephen.

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  That's what makes him a hardcore fan.

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  Exactly.

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  Yeah, yeah.

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  It only costs that or mean that much more when we finally get there.

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  Yeah, exactly.

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  I mean, I have so much respect for you, Stephen, so much. I mean, Frank, what's going on in the market?

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  Oh, all right, let's, let's dive into it. So a little bit of red across the sea there, as you can see, stocks falling the start of the week due to some treasury yields rise again. But again, we have about a little less than an hour till the market close. Dow Jones down about 58 basis points, S and P 500 down about 65, NASDAQ 74, and Russell 2K 41 basis points. So a little bit of a downward moves for, to start the week, but you know, we still got a lot going on for the rest of the week. So let's, let's see how it turns out.

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  Yeah, a lot of going on, but also this is, this is, this is, I mean, jiving with some of the questions we're getting from listeners. And the first one, now I want to dive into is really going towards what you just talked about. Every time I turn on the news, they're talking about the economy, interest rates on the stock market possibly taking a turn, a downturn. I'm about three years from retirement and it's making me really nervous. So my question is, which I'm sure you guys get this a lot, but should I be moving some of my 401K into safer options? Or just stay the course?

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  Yeah, this is a great question.

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  Very good question.

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  And no doubt for a lot of those individuals getting ready to retire, three years, two years, one year out. When you're paying closer to attention to the news, stock markets, you're seeing a lot of this rise and fall. It does, you know, get your spidey senses tingling and you're like, oh man, should I, should I do something about it? And for the most part, if you're in a 401K right now, currently, and you haven't really done your own DIY sort of fixed allocations, meaning that you were just put into a target date fund, what we call a target date fund,

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  then it should be allocating it on its own. Reason being is specifically for, for this, right? If you're a few years out until retirement, you don't really want to see your account fluctuating 10, 20, 30%. So in a nutshell, by the time you're closer to retirement, your, your portfolio should be in a balanced portfolio. So it should be, majority half should be in stocks, the other half should be in bonds. But again, to, to this listener's question, I, I think when we're looking at it in those short time spans, one year, two years, three years, it makes sense that, you know, to be nervous with all this news going on,

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  stock market being all time highs and then talks of downturn, yields on the rise. So there's definitely talk of concern, but you have to sort of ask yourself, what is the underlying goal for this money, for, for the funds that you have? You know, if you're relying on this money to last, you have to sort of think of it in long-term perspective, 10, 15, 20 years from now. And every time I talk to prospects and clients who get nervous about the markets, I bring up a study about diversification and time being on your side.

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  If we're looking at one to three year rolling years, the, the volatility of you being in a all-stock portfolio can rise, can be as high as 52% and as low as negative 32%. So that's, that's a big swing and that gets people nervous, but that's, that's if you're a hundred percent in stocks. On the bond side, if you're a hundred percent bonds, and people think that, oh, because you're in bonds, you're safe. Technically, that's not the case because as you see with rising yields, that can actually potentially create losses

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  if you're trying to sell off some of the old bonds to get into the newer ones, the yield and maturity and all that. So in a rolling year, the, the chances of, or the swings in just a hundred percent bonds can be as high as 30s and then as low as negative 13. So again, there, you can lose in a bond market. In a 60-40 portfolio, that, that window sort of does narrow, but again, the idea is if you're wanting this money to last, key word, last, you have to think when you retire, you know, how much, how much longer do I have of, of life in me? And typically it's 20, 25 years.

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  Well, if you have that much time to you, you have to think in the sense, okay, again, I have to make this money last. I have to invest it appropriately to where if I'm withdrawing money from it, I have to keep up with, with

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  I have enough

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  Yes.

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  To, to, to get to my goal.

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  Exactly.

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  Longevity as well as just the lifestyle.

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  Yes, because

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  I have a, can I just give a better answer than yours?

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  Yeah.

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  Call, call Frank Lee. Sit down with Frank Lee. Call MoneyWise and ask for Frank Lee.

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  There you go, there you go.

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  Frank Lee will hook you up with an advice, run all your scenarios within his systems that he has, and he'll tell you exactly what's, what, what should be taking place.

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  Sammy's like, stop giving all the free advice.

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  I'm just, I'm just, I'm just saying, and we have another listener question too, but I'm, and this one is more direct, in fact. But truly, what I read here is if this person is doing what you call the DIY type of allocation or strategies, hey, and you, you're retiring, retiring in three years, my advice is always to, hey, if, if you're in oil field or if you're a mechanic or if you're a doctor, guess what? You're not a financial advisor. I'm sorry. There's, there's certain expertise that financial advisors have, there's certain licensing. So I always, always would recommend

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  Yeah.

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  Sitting down with a financial advisor. And of course, I'm pitching you today because you're right here. But financial advising in general, it's like you've got

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  With anything else though, I mean, if you were sick, you're not just going to Google it. I mean, some people do, but

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  Yeah, you're not going to medicate yourself.

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  You go to the experts.

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  Yeah, you've got to go to an expert. And this is, I'm three years away from retirement, definitely it's worth, and guess what? It's free. Like that first initial meeting with Frank Lee is free. It almost rhymes.

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  Oh yeah, there you go.

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  Right, Stephen? I'm serious, like seriously, you've got, like we've got, I highly encourage people to seek advice from somebody who's, who's got that experience, who's got that license.

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  It's the same thing. We're, we're going to talk about oil. Do you want me to call Lewis?

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  Yeah.

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  We're going to bring in Chad Hathaway here in a minute.

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  Exactly, exactly. If you're going to talk about banking, guess what? Oh, you've got me. You've got me, Stephen.

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  That's right.

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  We got the expert.

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  But we're going to be talking oil with Chad Hathaway.

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  That's right.

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  We're going to go to the experts when it comes to things like that.

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  That's correct. That is correct.

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  Thank you. Thank you for

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  Speaking of devil.

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  Yeah, devil just walked in. Chad Hathaway is in the house. We have one more question before we go on a break and introduce Chad for the next segment. So can I, can I go through this real quick, Frank?

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  Let's do it. Let's do it.

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  Looking to find what to do with inheritance. Parents were on hospice and I'm putting their house on the market. Approximately inheritance will be equity from the sale of the house and gold, silver, platinum coins. Is that something you guys, you guys assist with? Yes.

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  Yes.

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  We do.

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  Yeah.

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  Frank Lee again.

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  We have, we have a lot of great advisors in the house. You know, I think every, each and every one of us can, can offer great advice and opinions on what we can do. But yes, if, if you're looking for someone to help you with the inheritance and what you need to do with money and, you know, talk about those goals, then we can definitely help with that. So give, give us a call.

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  Give us a call. And I think this, if we have the number to you, we can call this listener back and just engage with them and schedule them in for again, it's free. That first initial meeting is, is free. You get free advice. They do an in-depth analysis of what's going on in your life, your estate and what have you. Give you, give you great, great advice. And then it's up to you to take it, not take it, leave it, whatever. But highly, highly recommend talking to a professional financial advisor. Great. We'll take our first break. When we come back, we've got Chad Hathaway in the house. We'll be right back.

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  Welcome back to the Money Wise Show. I'm Sammy Abia. We're here with Frank Lee. We're joined now by Chad Hathaway, President and CEO of Hathaway LLC. Chad, welcome to the show. It was a pleasure to have you, man.

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  It's great to be back.

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  I have so many things I want to talk to you about today, but I've got you. I received your little cheat sheets here.

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  Yes.

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  And the first one is the price of diesel.

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  It's not a problem.

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  Well, let me tell you about my own experience. I saw that you were coming in today talking about this. So I went to Costco to fill up my truck. $7.79 to fill up.

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  Hey, we, I was telling you earlier, we buy a lot of diesel too. It sucks. It's expensive. And you know, that's why I thought, well, hey, you know, let's talk about that a little bit today. So I broke down the why is diesel so expensive, especially here in California? And let's start with the California diesel excise tax. So right now, we're assuming on an $8 per gallon price of diesel. 48 cents of that is diesel excise tax from California, specifically. 24 cents of that is the federal diesel excise tax. That's federal. So we're almost to a dollar now. California has a 13% diesel sales tax roughly at probably about

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  85 to 90 cents a gallon, depending on the base, wherever you're at. And you've got local district taxes, which is roughly 10 to 20 cents. This is a big one that is California specific, the low carbon fuel standard. That is 10 to 25 cents per gallon tax. Cap and invest, that's another specific to carb California. That's 25 to 35 cents a gallon as well. California fuel specs, that's the low sulfur fuel, fuel gasoline mix, the ones that our refineries have to be special or wherever we get it from has to be able to make that special mix. This is roughly between five and 15 cents a gallon. Now, when we have to import fuel, which we do, we import quite a bit of refined fuel here in California. That adds about between

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  10 and 30 cents per gallon for tax. Or actually not tax, cost. It's a cost because we're bringing in by boat. There's actually more, more shipping costs associated with it. Now refinery constraints, this is more of a market thing. Current California refining margins are, you know, they're pressed, they're looked at pretty heavily. But there could be a profit margin in there between, you know, 50 cents and $1.50. And that really depends. That's in a bad supply squeeze, but when there isn't a supply squeeze, those margins are really tight. And a lot of times refiners just sell diesel for, for a margin, just a small margin to get rid of the product. And then national diesel costs, that's price of oil, you know, price of oil that is built into that, the base price for oil. So there's a lot of things

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  built up into that price of diesel per gallon, but a lot of that is taxes.

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  So I drive a diesel truck. In addition to all of this thing that you just said.

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  So do I.

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  I add DEF.

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  DEF too. Oh yeah. We don't, we have DEF as another thing that, well, you know, that's now nationwide. So, but that started here.

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  Yeah. So I add DEF on the top of that and that little, I mean, it lasts a long period of time. I don't know how many gallons it takes, but that's an additional cost that we have to put in.

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  You know, one thing that's interesting. So if you actually take the time and Google or do, and use chat GPT or Claude or whatever your AI favorite tool is, ask for the defining evidence that DEF actually makes an improvement to air quality. Ask about it. There's, there's been some serious legal considerations in the past to actually file a lawsuit regarding DEF because we don't, what DEF is, is more like a detergent based thing that goes to a fuel additive, which does that mean that stuff that was supposed to go up there goes down in the water table? What is, what happens to it? And I, I've tried to do quite a bit of research on DEF and I haven't really found what's the, you know, I look at as a cost benefit analysis. Like what's the cost benefit to society? And there's, there's not a ton of data out there that shows that it's overwhelmingly just making a huge impact, but it is impacting our pocketbooks.

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  Yeah.

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  So, and the way our engines operate, the amount of like a pre-DEF engine versus a DEF engine, the computerization that's needed to do that and the mixing and because if you have big truck fleet, like we have, I don't have a big fleet, but I have two to three large trucks and those trucks often are down because of computer issues regarding to DEF or so on and so forth. And that really, if you ask a truck driving fleet manager, a fleet owner, he would tell you the same thing. It creates a lot of problems and it didn't used to exist before we had this mandate.

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  So why is the diesel price important for me as a consumer? It affects my tomato prices. It affects my lettuce prices. It affects everything that I go to.

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  Construction costs, your every, everything that gets moved.

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  And you're a business owner. You use diesel not just to drive around, but also for your big trucks, but also to drill.

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  Yeah, to drill. That's right. It's a, it's a big function of drilling costs too as well. Yeah. I mean, I put, that was kind of one of the things I want to talk about today is like, you know, yeah, the activity in Kern County has picked up substantially. There's no doubt about it. There's a lot more rigs running now than what there were before we had the legislation that was passed that came into action last January. But when you're, when you're, when you're a big company, you know, say the difference between running four rigs or running 10 rigs is going to be based on your cost to drill a well. And I look at my company, which is a small company, but we do drill and we are active to develop and we look at that. So when we look at pricing now compared to what it was, you know, there's a lot of things too that are, that are, the market really, you know, doesn't have anything to do with it. Some of it's political, some of it's not. But our costs to drill have gone

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  up substantially. The number one thing is casing and steel pipe, as much as 130%. There's a, as you probably know, there's tariffs and there's tariffs on imported steel. We got, majority of our steel was from China, Ukraine, South Africa, Eastern Bloc countries, you name it. We had Vietnam was a huge supplier of, of casing. And now those, those imports are impacted by tariffs, which double the price of casing, plus some. So that automatically adds a lot. When casing is a substantial part of your cost for a drilling program, sometimes as much as 10, 20%. And you double those costs that, you know, if you're drilling a program of more than one well, which you don't, you usually drill more than one well,

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  that adds up. And at the end of the well, when we looked at drilling right now, we're budgeting for it right now. Hey, we look at after five wells, we could have drilled a whole new additional well with the cost differences between what it was five years ago, six years ago than what it is now. So we see that contracting costs in California gone up quite a bit, 60%. You know, we see that across the board.

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  So define that for the listeners.

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  Yeah. So when you drill a well, there's as many as like 30 to 40 different contractors that are involved in that process. So when people say, well, it's just a drilling rig and a bunch of guys, that is absolutely the furthest thing from the truth. There's the cementing guys, there's the trucking companies that actually supply hauling, the haul materials to the well. There's guys that, that, that supply the, build the locations. You know, you've got people that provide the trash trailers. You've got people that provide the mud and mud services and the solids control contractor. You have the electronics company, the guy that services the communication systems on the rig. You know, there's so many different contractors of all the directional drilling companies, the casing tongue companies that actually come in and they, they actually have the, the big wrenches, tongs that actually

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  power the, the casing. There's, there's countless contractors, the mechanics, this third party welding companies that specialize in welding on wellheads. All these people are all different various contractors and all their costs have gone up substantially. So therefore they have to pass along to you. And so I think that's something that has increased substantially over the last five years. Diesel is a big part of that. And so I can go on for a long time about all those different services, but they've gone up quite a bit. And then fuel being, you know, one of the types of rigs we like to use is called an automatic drilling rig. It burns about 1,200 gallons a day of diesel. Well, 1,200 gallons a day of diesel at $3.50 versus seven or eight dollars a gallon is, is a world of difference. You know, it's almost 3X what it costs. So when we're building 1,200, burning 1,200

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  gallons of diesel a day, that adds up quickly on a six to seven day well. Seven, multiply that times seven days. That's a lot of, that's a lot of money. And that alone, you know, is a 50 something thousand dollar impact per, on our seven day well curve. So you think about that. And that's just the rig itself. Now the rig itself, then you have generator, separate generators onsite, you have solids control equipment that's onsite, which is on, there's, I can go on and on for days, the additional diesel costs that come with that, that also are impacted by the high price of diesel. So it hits us in the pocketbook too. And we don't own refineries either. So we're not making the money on that refined product. So you can't really blame the, the oil producer. You know, a couple of me can,

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  well, only one of them, but I won't say their names because they own refineries, but we don't own refineries and that, we don't make those margins. So we, we just have to pay the price along with everybody else. So.

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  It used to take you a certain amount of years to recoup a lot of these investments, given the investment you put in versus the price of barrel, right?

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  Absolutely.

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  And now it looks like it's just way out there between what you invest versus the return. And how long does it, does that take?

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  It just, it takes, that's a good point. So most of this, what we look at is like, for example, our average curve on what we do is like 20 months. If we can get our, our money back in 20 months at a decent price per barrel, we're, we're okay with that. That's really good. Like in real estate, you don't see that at all. You don't see that kind of return that quickly at all in real estate. But, but our risk is substantially higher.

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  Yeah.

• 20:51Speaker 04

  So that's the other thing.

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  The risk of not hitting oil or the risk of just oil prices or both?

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  Majority of it is, is you're getting hit oil, but the economics or what's going to make an impact. So you don't know if that wall is going to come in, it's just, you know, slated impact or a production rate you estimated, or, or it's going to be much lower, or it could be much higher. And so that all factors into when you make these decisions. You also think, well, if I wait five, six months.

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  Yeah. What is it going to be?

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  Maybe it'll be better.

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  We'll take our first break. When we come back, Chad is still with us. So we'll be right back.

• 21:34Speaker 00

  Welcome back to the Money Wise Show. I'm Sammy Abia with Frank Lee. We're joined here with Chad Hathaway. Chad, welcome back to the show and welcome back after the break. We were talking about the cost of drilling and you went through a list of things, including the prices of diesel. You know, just in your case, you said you burn about 1,200 gallons?

• 21:58Speaker 04

  Just the rig alone burns 1,200 gallons a day. You know, our service rig alone burns 300, 200, 300 gallons a day, a smaller rig that just does a routine servicing.

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  So that's, that's, that's a lot of diesel, meaning that's a lot of costs, additional costs that you were not paying for five years ago.

• 22:16Speaker 04

  No, I mean, not even a year ago. It wasn't this high. Yeah.

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  And the other thing too, we started talking about off air is, is the trades that are involved. And Frank said, hey, I did not know that there's so many trades involved in this. And you went through a list. And each of these trades is essential to the drilling activity.

• 22:36Speaker 04

  Yeah, there's just so many different parts and pieces of drilling a well. Every, I mean, I think we listed like 40, there was over 40 different people directly involved with the drilling of a well. And we used to throw around an employment number of like 70 something people per rig that was running. But you realize that the maintenance needs that are supportive of these, all these various pieces of equipment, you know, I just, I could sit here for an hour talking about all the different little unique things you've probably never heard of. Like one of the solids control, you know, like we have mud that we use to drill wells with. Well, if that mud isn't clean, there's a specialty company that does the cleaning of that mud. They clean it up and put it back in the mud tanks.

• 23:17Speaker 04

  Well, there's a mud company that manages the mud. And then there's a mud logger, it's a mobile geologist or geology company that if you're drilling a well that requires mud logging. That geologist sets his trailer up on site, ties into a, you know, portable generator, and then he sits there and monitors the well, catching the samples as they come across. There's a guy that sells the screens, I'm sorry, that sells the generators and rents the generators out. There's a company called Penstingers and most of them, they're one of them, that many of them that rents the trailers out and the trailers and the water buffaloes that go with the trailers. And then two or three or four trailers that are on site that people live in while we're drilling that well. There's just so many different things, you know, the pipe that we have, well, it's got various types of connections and fittings and tools and parts to go with it. There's companies that sell those parts.

• 24:01Speaker 04

  There'd be whatever the trinkets that are at. There's people that clean the casing, there's a different company that comes out. There's crane companies that come out and move the rig. There's the construction companies that move the dirt. You know what I'm saying? It can go on forever here.

• 24:13Speaker 00

  And it's very interesting to me to know all of this because when I was a banker, I banked a lot of these field services. And to me, they were lesser risk than drilling activity itself. I mean, to a point, right?

• 24:25Speaker 04

  Well, when you're an EMP, when you're an oil company, yeah, you're bearing the risk for all those people. When you're an oil company like me, when you put a rig in and all those people on location, your job is

• 24:33Speaker 00

  You're carrying that.

• 24:34Speaker 04

  Your, your job is to control those costs, to control them all within a, what we call an AFR, an account for expense, to make sure that they don't go outside of those costs. And that, and then before that, the months and months before that, when you're going through narrowing it down, bidding things out, trying to add risk, trying to add bill contingencies, you still have to make sure that ties to your economics.

• 24:54Speaker 00

  Yeah.

• 24:55Speaker 04

  And that well has to produce a certain amount of oil in order to make a return on investment. And that's the biggest risk we have is it's not necessarily hitting oil. We're pretty, pretty good at hitting oil. It's just what are the economics around that? And then you're in a climate that is really has a high level of regulatory uncertainty. So you don't know if you drill the well, then four or five years later, then all of a sudden somebody's going to come in and change something.

• 25:18Speaker 00

  Correct.

• 25:19Speaker 04

  Where the price of oil is going to go down, you know, tank it, you know, luckily enough, where we have a derivative package where we can buy insurance or hedges for, for those times. But a lot of people can't.

• 25:30Speaker 00

  Correct.

• 25:30Speaker 04

  And so, yeah, we've got a lot of risk.

• 25:33Speaker 00

  With all these trades, these are specialty jobs, good paying jobs. And some of the things that were, you told us off air that

• 25:42Speaker 00

  besides just the costs, you know, that's increasing prices of diesel, you're having difficulties maybe finding some of these trades because a lot of these people maybe left the state because we had a moratorium on drilling.

• 25:56Speaker 04

  All the people, the companies had left and shut down. Like, you know, we had a, a pretty robust drilling company called Golden State Drilling that was around for, I don't know how many decades.

• 26:06Speaker 00

  I'm very familiar with it. Yeah.

• 26:07Speaker 04

  Yeah. I mean, they had a lot of rigs that were running in this area were run by Golden, they're Golden State rigs, good shallow rigs, good for especially the west side applications. And they're gone. You know, you've got cementing, we only have really two cementing companies.

• 26:22Speaker 00

  Correct. The, the number of employees they had is probably above 300.

• 26:26Speaker 04

  It was, yeah. It was.

• 26:28Speaker 00

  So that's 300 jobs, just or the company closed?

• 26:30Speaker 04

  You have two people drilling now. You have Ensign and you have Kenai. And those are the two companies that are actually have active drilling rigs. Kenai, I know as of this morning, had eight running in California, I believe. And then Ensign, I don't want to say they're six or nine or whatever, but I think we're up to 12 or 13 rigs. I mean, I may be up by one or two, but you know, whatever. I mean, I'm close.

• 26:49Speaker 00

  Yeah. And, and we, I mean, the state now is allowing us to drill again to give us permits. In Kern County.

• 26:56Speaker 04

  Yeah, in Kern County.

• 26:57Speaker 00

  Right? But, but still to your point, I think we've talked about this in the past is, hey, we have the permits and we want to drill, but the economics have to make sense still.

• 27:06Speaker 04

  Yeah. I mean, price of oil has always been the biggest one we talk about, but right, you know, and I think this is, we're on a pathway to more healthier industry because usually this builds entrepreneurial interest and people decide, hey, I want to do that. I want to start, I can do this. But you can't just start a cementing company overnight, you know? That's not like a, you know, you can't get in the logging business overnight, you know? There's a lot of these are very specialty tools that require bigger corporations. One thing that would really change California more than anything, and I can say this without a doubt, they banned fracking, which is ridiculous because fracking on the western side of Kern County is nowhere near a single drop of freshwater at all. And so it makes no sense. Like you hear the fracking argument being used against the data centers now. That's, it's ironic how they just wrench, wash and repeat the same environmental arguments.

• 27:49Speaker 00

  So, so, so that's a big F word, fracking, right? So I want to, can you define that for us and the listeners?

• 27:56Speaker 04

  Well, fracking is the hydraulic pumping of fluids at a high rate to break apart tight rock down at depths way below water, freshwater. In California, we have a lot of strict rules regarding it. They put a moratorium on it. They won't issue fracking permits, but we have billions and billions of barrels in Bell Ridge right now. They're just locked up. If they could be fracked, we'd see a huge insurgence of well. That's where a lot of those Golden State rigs, state rigs were running is out there in Bell Ridge. And so when they effectively stop fracking for no environmental reason, and I, trust me, if there was one of them, I don't frack anything I own.

• 28:34Speaker 04

  It didn't impact me one bit. I have zero loss, whatever. But this is the most absurd thing I've ever seen. Have you ever been to West Bell Ridge? Have you ever been out to Bell Ridge? Have you been to Highway 33?

• 28:45Speaker 00

  Long time ago and I used to work for Taft National Bank.

• 28:48Speaker 04

  There you go. Well, I mean, did you see a lot of like stuff growing around you or there's no fresh water there? There's no fresh water.

• 28:55Speaker 00

  Been to restaurant, remember that you used to serve a split pea soup back out there on?

• 29:00Speaker 04

  McKittrick? Yes. McKittrick Hotel. Yeah. No, it, you have literally oil, I mean, that's more like Simmerick area, but West Bell Ridge is north of there. If you go on 33 and, you know, that's the thing is these places, there's no, in this oil field, there's been an operation for a hundred years. I mean, there's absolutely zero impact, but it's really impacting the amount of oil that is coming into California because we can't, they can't frack it. It's absurd. And so that's one thing that would be really helpful to Kern County is if we could get some quarter, some, some kind of reasonable lifting of the frac ban that has been, and I don't even think it's been by law. It's more of a de facto, we're just not going to issue fracking permits.

• 29:39Speaker 00

  So, so the, the, the body that manages oil is just saying, hey, no fracking?

• 29:45Speaker 04

  It's a go, it's direct directive from the governor and the assembly and the, and the state, I mean, the majority, you know, which is the, the party that's running Sacramento, but I don't remember, no politics here, but I, I, my politics are oil and natural gas. That's, that's, are you my friend? Okay. Then I, then I like you. But if you're not, then what, what am I going to say? Oh, you're, you're right.

• 30:08Speaker 00

  To an extent, I'm, I'm like you because I look at the economic impact of whatever activity or ban we're going to have. Because when I hear that companies closed and went away, that's good paying jobs that went away. So the trickling down of the economic impact is real. These are people that were getting paid high paying jobs.

• 30:28Speaker 04

  I agree.

• 30:28Speaker 00

  Six figures without going to college.

• 30:30Speaker 04

  Absolutely.

• 30:31Speaker 00

  Again, and, and, and these are people that were buying houses.

• 30:34Speaker 04

  And there are a lot of people that were going to college that were supporting those jobs.

• 30:36Speaker 00

  Correct.

• 30:37Speaker 04

  Engineers, a lot of very, very high paid.

• 30:39Speaker 00

  High paying jobs. We used to have, Chevron used to have a large group of people working here locally, high paying jobs of engineers, geologists and what have you.

• 30:50Speaker 04

  You know where they all work now?

• 30:51Speaker 00

  Texas, right?

• 30:52Speaker 04

  No? Well, the ones that are left work out at Kern River, actually out at the oil field in the office buildings there. They're not in community media anymore. They've shut all that down. So they're not there anymore. But yeah, they're all working out in Kern River now.

• 31:06Speaker 00

  Yeah.

• 31:06Speaker 04

  Well, who's left? Those who are left are at Kern River. Yeah. And the rest, you said, are Texas or wherever they.

• 31:12Speaker 00

  Yeah, Wyoming or whatever they need, they need to move, to move to. Yeah. There's a question here from a listener. Do you see relief coming at all when it comes to fuel costs?

• 31:23Speaker 04

  Yeah, this is unsustainable. This is like, no, I mean, to me, it's, I mean, at some point.

• 31:32Speaker 04

  Something's gonna have to end. I don't know, you know, a lot of this is obviously we have, there's a lot of different reasons too, like, you know, the diesel, all the, gosh, I don't know what to call it, the, when you, not terrorists, but when you impose sanctions on, Russia is, was like 12 or 15% of the world's diesel supply. And so they've been sanctioned and shut down, and these refineries have also been bombed. You know, that's been a big part of it. Hermos and what's going on in the Middle East is a huge part of it, you know, when you have the price of oil so high, that's a huge part of it. California, we have very, a substantial amount of taxes.

• 32:11Speaker 04

  And we remember this from before this run up in prices. We were always really high, much higher than anybody else on gasoline and diesel. So California, I would plan on, no matter what the price of diesel is anywhere else in the country, or the world, you'll be paying more than anybody else.

• 32:27Speaker 00

  Yeah, at least a dollar some.

• 32:29Speaker 04

  At least a dollar fifty more, at least. And then the other thing that-

• 32:33Speaker 00

  I feel like California, we're self inflicted wounds. We have, we have the capacity, we have this way, and I, I know, we don't want to talk about politics, but it's almost self, it is self inflicted. We have the capacity to produce more oil, drill for more oil, and we're not. We even kicked out two refineries out of here because of our policies.

• 32:50Speaker 04

  Well, you just, yeah, they decided to leave. It's been a lot more than that because we're down to seven. We were at twenty something, like that's twenty years ago. But, but here's another thing that I don't understand is like, for example, retail, nobody, anybody can chart, like, I guess it's just supply or supply and demand rule, but you could kind of own a gas station and you could just be on this corner and all you have to do is drive up to, down the street. Right there, it's eight dollars and right there, it's seven fifty. Right there, it's six ninety-nine and that's seven twenty-five. I mean,

• 33:19Speaker 00

  We had a listener question last week about that.

• 33:21Speaker 04

  Those guys could do whatever they want, man. And then a refinery, if they make a penny a gallon, man, they're gonna go to prison. I mean, that's really what it's, what it's like. I'm like, man, these guys on the corners, man, I mean, they're ninety percent of our small business owners, so I don't want to knock them, but you know, they're,

• 33:35Speaker 00

  Yeah.

• 33:35Speaker 04

  Where's the government oversight there? That's what I'm wanting to know, like, why?

• 33:39Speaker 00

  There is none. So as a gas station owner, you have the ability to set your price.

• 33:44Speaker 04

  Yeah.

• 33:44Speaker 00

  A lot of the time, if you're a smart gas station owner, you don't want to set the price too high, and we talked about this last week, because you want to drive the traffic inside the store. That's where the margins are at. Because the margin for, for a gas station owner is not outside on the fuel. I mean, you get five, maybe if you're a good operator, you can get up to maybe sixty, sixty-five cents a gallon. But truly, you want people to come in and pick their gas and go get a, you know, pack of gum. That pack of gum carries about forty-five to fifty-five percent profit margins. That's, that's, that's the smart operator.

• 34:17Speaker 04

  Yeah, yeah.

• 34:17Speaker 00

  But to your point, a lot of people don't see that.

• 34:20Speaker 04

  Yeah.

• 34:21Speaker 00

  You know, and the mom and pops, they're competing in, in a very, very tough environment. So they want to put, they want to gain those profits on outside as well as inside. And a lot of the times, they lose the traffic.

• 34:33Speaker 03

  Yeah. You do see a lot of that trend in these different types of gas stations. They're, they're making it more convenient to go inside. You know, it's like they have the little restaurants in the side. They have all these drinks, snacks and everything, so.

• 34:49Speaker 00

  Yeah, that's a, that's, to me, that's another hour of show.

• 34:52Speaker 04

  I, I guess my, my, my point being there is who has more of a direct impact on the consumer? Me, the oil producer, two, the refinery, or three, the retail guy?

• 35:05Speaker 00

  Uh, I, I think the number two and number three for me, not you.

• 35:10Speaker 04

  Not, not me.

• 35:11Speaker 00

  Not you.

• 35:11Speaker 04

  But, but does the refiner?

• 35:14Speaker 00

  Well, to your point, you said you can't as a refiner, correct?

• 35:16Speaker 04

  I'm not a refiner, but a refiner sells at a wholesale.

• 35:18Speaker 00

  Yes. Yeah. So I think the retail and the jobbers. So there is a, there is a person between, between the refinery and the, the, the C store owner.

• 35:28Speaker 04

  Yes.

• 35:29Speaker 00

  The jobbers make a lot of money, in my opinion.

• 35:32Speaker 04

  Hmm. We don't see that big of a difference between the jobbers. Like, for example, like if we, you've got Silvas, you've, I don't want to say any, gosh darn it, can't say any names. There's at least six of them here in town that I know very well.

• 35:44Speaker 00

  Yeah.

• 35:45Speaker 04

  And if you price them all out, and there's even one in Taft that's really hungry, you get pretty damn close on pricing. I mean, a jobber's a trucker moving, you know, a truckload of material. It doesn't break out that bad. The disparity at the retail level is bad.

• 36:02Speaker 00

  Yes, and now the brand.

• 36:03Speaker 04

  Get GasBuddy too. If you want to get, you want to look at, just get GasBuddy, the app, and just look around town.

• 36:09Speaker 00

  Yeah.

• 36:09Speaker 04

  And see the difference. I mean, it's a dollar fifty difference in town alone.

• 36:13Speaker 00

  It's, it's, it's, it's the Chevrons, the Shells. So there's tiers, right? Like in gas stations.

• 36:18Speaker 04

  Chevron doesn't own those. They, they have their labels on it because that person bought a franchise.

• 36:24Speaker 00

  Correct.

• 36:24Speaker 04

  Chevron has nothing to do with whether that guy or that gal charges for gas. Nothing.

• 36:30Speaker 00

  No.

• 36:31Speaker 04

  Not. One thing, they sell them gas at wholesale with their brand. It's like me selling, if I'm in the, I don't know, I can't say I'm in the money business, but say I sell like Coca-Cola or I'm selling a brand, and then the guy can mark it up or do whatever. That's their brand. They just sell the brand. The retail cost is on the retailer.

• 36:51Speaker 00

  I, I-

• 36:52Speaker 04

  It impacts the consumer more than anybody else. I guarantee it.

• 36:56Speaker 00

  That's correct. Now, now here's, here's where a retailer can affect the price, in my opinion, is the amount of gas they are buying. So if you're buying multiple truckloads, then you have a little bit of a say.

• 37:09Speaker 04

  Yep.

• 37:09Speaker 00

  In what you're buying. So you can reduce your cost, then you can pass that along to your final consumer.

• 37:16Speaker 04

  But why would you?

• 37:17Speaker 00

  Exactly.

• 37:18Speaker 04

  I mean, I can buy, I buy diesel by the truckload. If I bought it by the, you know, five thousand gallon jobber, smaller jobber, I guess you call it small jobber. I call it, truckload is, is nine thousand. Small ones, usually I think it's a fourteen hundred, three thousand. I don't know what the dang thing is, but it's a smaller truck, right? It's on the tandem trailer. The price difference is substantial. It's like fifteen to twenty cents a gallon. You can save a lot more on a bigger truck delivery, but you have to have a bigger tank and you have to do all that stuff too. But yeah, the, the retail, that's the thing I just get at, like, man, they don't have a union or anything, and they don't, where is that? How do these guys get away with this? You know, it's just-

• 37:53Speaker 00

  It's almost, it's almost feels like it's just an understanding between the corners.

• 38:00Speaker 04

  Yeah.

• 38:00Speaker 00

  Just like, and, and I said this on the show.

• 38:02Speaker 04

  Yeah.

• 38:03Speaker 00

  There are some corners, Chad, that are owned by the same people.

• 38:05Speaker 04

  I know. The digital deal, like, like, hey, hey Johnny, flip it up a couple of times. Hey, there's a party going on up here at Pomosa Raceway this weekend or whatever. It's just to crank it up twenty cents.

• 38:19Speaker 00

  Some corners, and, and guess what? The ones that kill me the most, or just get me, are the ones on the freeway when there's nothing around.

• 38:27Speaker 04

  Yeah.

• 38:27Speaker 00

  And all of a sudden, the price of gallons, like, like, I'm paying seven thousand seventy-nine cents at Costco. I drive out there and it's like nine dollars and fifty cents.

• 38:35Speaker 04

  Yeah.

• 38:36Speaker 00

  Ten dollars.

• 38:36Speaker 04

  It's like you're a hostage, man. Seriously.

• 38:40Speaker 00

  Because there's nothing around. You gotta stop and fill up and you've got to pay this price. And, and, and to your point, Chad, definitely, definitely they take advantage of it.

• 38:49Speaker 04

  But you never hear about that. You never hear about that. Like, hey, you know, really, the, the consumer is directly impacted by the retailer. Less than five percent or ten percent of these gases are actually owned by big companies.

• 39:02Speaker 00

  I agree.

• 39:02Speaker 04

  It's less than that. It's, it's a fact. And so it's like, well, but it, it could be willy nilly, whatever. If you want to, you know, I guess socialize the price of gasoline in California, or whatever the word is, or make it a fixed price commodity that can't go anything over a margin, it doesn't, it doesn't translate all the way down to the retailer, to the consumer. And nobody says a word about it.

• 39:25Speaker 03

  Is the wholesale price different based on the different types of the, the company, like Chevron, Shell, or is it just?

• 39:32Speaker 04

  I would imagine so. I, I haven't really gone into the, I don't know, you know, I, I, I did one night meet somebody at the gentleman, actually, who is responsible for Shell, and they, they branded it and they have a, a branding thing and they have a, they lock in their pricing amongst all their people. And then, like you said, the jobber covers the transportation or whatever. And it's more expensive, it is more expensive if you're out more in a rural area, far enough away from the, the main transportation centers. So there is some justification for higher costs if you are out in the middle of nowhere. But, but no, no, they all kind of have their own, like, I would say the big brand names, like the Shells, the Chevrons, they all have their own little pricing metrics with all their different, you know, subsidiaries.

• 40:15Speaker 00

  Chevron with Tecron, and then they hit you, they hit you up with seventy-five cents more.

• 40:19Speaker 04

  Yeah. It's a brand thing.

• 40:21Speaker 00

  Tecron, bro.

• 40:22Speaker 04

  All right, all right. Yeah. I'm gonna get, I'm gonna get, I'm gonna get beat up at the next gas station.

• 40:29Speaker 00

  We have, we have one more question here. Why do gas stations stop at 150? Are they putting limits on how much each customer can get?

• 40:37Speaker 03

  150 dollars?

• 40:39Speaker 04

  I think it's a risk thing, man.

• 40:41Speaker 00

  It is. I can answer that. It's, it's truly a risk on the car, the card itself. Okay. So, so if you're swiping the card and there's a lot of fraud going on with, with cards.

• 40:52Speaker 03

  Yeah, yeah.

• 40:52Speaker 00

  Okay. So if you, if you, let's say you, you're, you're allowed to put in the 250 and the 300, then the transaction come back fraudulent, then guess who's responsible for that? You lose that 300 bucks. But when you limit your, your sales to 150, then that's a different story. You, you basically are controlling your risk.

• 41:12Speaker 03

  I got up to 147 last time I filled up my truck.

• 41:16Speaker 00

  Yeah. Yeah. 150 is one day. It used to be 100.

• 41:20Speaker 03

  Wow.

• 41:21Speaker 00

  It used to be 100.

• 41:21Speaker 04

  It was like 99, yeah.

• 41:24Speaker 00

  Yeah. 150 now. And just because oil prices are up and.

• 41:27Speaker 04

  What about when diesel hits 10, what are they gonna do? Because those things only have three digits, right?

• 41:32Speaker 00

  I love you, Chad. We're talking a different conversation.

• 41:35Speaker 04

  Nine dollars and 95 cents, that's for seven eighths of a gallon. How's that gonna work?

• 41:40Speaker 00

  Like, who told me that in Europe, it's like in the teens?

• 41:44Speaker 04

  Yeah, but it's liters.

• 41:46Speaker 00

  That's true.

• 41:47Speaker 04

  Yeah.

• 41:48Speaker 00

  That's true.

• 41:48Speaker 04

  But you're right, though. I mean, how do you add the second digit when you've been doing it at three? I guess we just assumed forever it's gonna be cheap.

• 41:53Speaker 00

  Yeah, it's, it's, it's, it's, well, I'm gonna go back to this. Hey, is, is relief coming? I hope so.

• 41:59Speaker 04

  Yeah.

• 41:59Speaker 00

  Because I am just tired of paying eight dollars.

• 42:02Speaker 04

  I am too.

• 42:03Speaker 03

  Yeah.

• 42:03Speaker 00

  And I don't just have a truck. You have multiple.

• 42:05Speaker 04

  I, I, I don't, I don't think it's healthy at all.

• 42:08Speaker 00

  No.

• 42:08Speaker 04

  It's not healthy one bit. And I mean, no, it's just, I, I'm just, I don't know where the, see, the question is where is the, where is it gonna break? At what point and what way? But then you also have, and you guys know this probably better than I do, but the underlying economy seems strong.

• 42:26Speaker 04

  Am I right or am I wrong?

• 42:27Speaker 00

  People are spending money. Spending is, is, is, is there.

• 42:30Speaker 04

  Yeah.

• 42:30Speaker 00

  Credit card usage is there.

• 42:32Speaker 04

  That's a, that's a kind of the excuse I, I get to try to divert people from this conversation really bad. At some point, this is gonna have to really, really start, and maybe it's the midterm. I don't know. Maybe there's something, but I don't know how that's gonna change the price of diesel. It won't.

• 42:45Speaker 00

  Yeah.

• 42:46Speaker 04

  It, it's, I don't know what, what's gonna happen here.

• 42:49Speaker 00

  Well, there's, there's, there's more to your, to your points, talking points today. And one that, that's interesting is, is the beneficial reuse of oil field water.

• 42:58Speaker 04

  Yes.

• 42:58Speaker 00

  Because when you pull oil out of the ground, there's water with it, Chad, correct? So educate us, please, on just that process. And then what do we do with that water? Is that good enough to?

• 43:06Speaker 04

  Majority, majority 95 plus percent of the water that's, that's produced in, in, in California is, is not beneficial reuse water. It's water that has to be injected back into the ground. Um, and cannot be used for beneficial reuse. It just, it doesn't qualify. But there are a handful of oil fields in Kern County that are, on the eastern side of Kern County, there are actually freshwater oil fields. So there's freshwater intermingled with the oil. So usually it's salty, briny water that can't be cleaned up. It was way too cost prohibitive to clean up. People have tried and tried for years. It just, it hasn't worked out. Um, but the stuff on the eastern side of the county is very fresh. And so what we've done over the years has gotten really, really good at extracting the oil from the water and separating it and then providing that to agriculture.

• 43:51Speaker 04

  It's been going on for over 40 years, almost 50 years.

• 43:54Speaker 00

  This is clean water.

• 43:55Speaker 04

  Clean water that just, the, the biggest contaminant is the oil and nobody wants to send that to a farmer anyways. So I think that the amount is, it's about 13 to 15 billion gallons or about 40 to 45,000 acre feet per year is provided to agriculture. And the beautiful thing about that is that water is a, it's a resilient water supply. It goes 24 hours a day, seven days a week, 365 days a year, regardless of snowpack, rainfall, state water project deliveries. The people that do receive this water hold it very sacred because it's a non-stop supply and it's, it's, it's really important. It also reduces groundwater pumping. That's the biggest thing we've seen, um, in our areas where we provide it. There's only four of us in California that do that. Hathaway is one of them.

• 44:38Speaker 04

  Chevron is one of them. CRC is one of them. And another company is one of them. And so we, we, we're the four people that do it. And we've been doing it for, I think, uh, Chevron's been doing it the longest. I think, uh, I am the second and CRC is the third. They just did a big project about 15 years ago, 10 years ago.

• 44:54Speaker 00

  Do farmers pay for this water?

• 44:56Speaker 04

  Yes, they do. Yes, they do.

• 44:58Speaker 00

  So you're selling water to, to, to the farmers and, and, and in the world of sigma, I'm gonna assume this is a good thing.

• 45:05Speaker 04

  It's considered new water in sigma. So it's not, it's not groundwater. It's new water. And the reason it's not groundwater, because any aquifer that has, contains oil is not an aquifer. It's de-designated as an aquifer by the United States government. And so it doesn't count. It's not the same aquifer as people are pulling water from. It's a different aquifer. So it's isolated and it's federally exempted. So it counts as new water for sigma. So the districts that do receive it and the individual large farming entities that do, it's a huge benefit. So overall, it's something that has been around for a long time. And I think it's something that, um, is, is a hidden gem that we have in our industry that people don't talk about very much.

• 45:45Speaker 00

  Yeah. Yeah. We always, we always talk about the negative stuff about oil, not, not this positive stuff. And this is one of them.

• 45:52Speaker 04

  It is very much so, yeah.

• 45:53Speaker 00

  I mean, I mean, having water and especially we've been having drought. Yes, we had some rainy years and stuff, but we still have a water problem in the state of California. This sounds like a solution to me.

• 46:04Speaker 04

  It's been one for a long time. Absolutely. Thanks for your time, guys. Appreciate it.

• 46:08Speaker 00

  Thank you. Thanks for coming in. Always a pleasure to have Chad. Uh, great show, great questions. Uh, who do we have tomorrow, Stephen?

• 46:15Speaker 01

  We have the return of Sherrod Wade. Until then, be smart.

• 46:21Speaker 00

  Be safe. Be money wise.

• 46:34Speaker 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.