6/5/25 From Pennies to Petroleum: Chad Hathaway on What’s Really Costing You

The Moneywise Radio Show and Podcast Thursday, June 5th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Manageme instagram: MoneywiseWealthManagement Guest: Chad Hathaway, CEO/President of Hathaway LLC & Founder of Nineteen13 websites: www.hathawayllc.com/ www.nineteen13.com/

• 0:00Speaker 00

  From the Garret Ellis padded radio room off Stockdale Highway, here is Money Wise.

• 0:06Speaker 01

  Call or text into the show 24/7 at 396-1000.

• 0:39Speaker 00

  Here is Money Wise.

• 0:40Speaker 01

  Money, money, money, money.

• 0:42Speaker 00

  I love starting the show with that laugh there. Welcome to the Money Wise Show. We are live from the Garret Ellis padded radio room off Stockdale Highway, ESPN 1230, AM 101.1, FM, always streaming at MoneyWiseGuys.com or your favorite streaming app or service. Technologia, you can go anywhere you want and get those shows. So you guys are what make the show great though, so please jump in. 661-396-1000, you can call the show, text in a question or thought, or join the conversation. Today, we are your hosts. I'm Chris Pelster.

• 1:20Speaker 01

  Seth Perry, good afternoon, folks.

• 1:22Speaker 00

  So we are ready for a great show. We are back to having guests. We've had a couple of shows together. We kind of mix around the office. We have a couple of shows together, me and Seth, with no guests. Good to get some more topics and more conversations in. We had some great questions. The last few times, it's led to great, I think, educational topics. And today, we're joined by a friend of the Money Wise Show, Mr. Chad Hathaway. We're going to have our energy segment. We're going to be talking about all things oil, energy, California, gas prices. Man, there's a lot to talk about, so we'll get down to somebody in the biz. And then also, he's going to talk about something new in his life.

• 2:03Speaker 00

  And all I'm going to say is it has something to do with the number 1913.

• 2:08Speaker 02

  That's a hook.

• 2:10Speaker 00

  So it's the hook. And you've got to stick around to find out what 1913 is about, so stick around. But before we go into any other topics or a great comment that already has come in from a listener, we are going to go over the markets a little bit. So the, the stock market has experienced slight declines, not major, major moves, but the S and P 500 is down about half a percent. Dow Jones Industrial, the dumb Dow, we've always called it is about two tenths of a percent decrease. And the old NASDAQ is off by almost eight tenths of a percent. So just under 1% there for the NASDAQ, remember, which is tech heavy. So markets have, have calmed down a little bit. There was a run there for a while that

• 2:55Speaker 00

  was kind of record setting, coming out of some of the lows we saw last quarter. So, you know, man, if you're getting close to, are people getting close to looking at their statements or it's the end of June, January, March, April, May, June. So still a few more weeks. So we've made a major recovery here in the second quarter. And I think it was right at the first, end of the first quarter where the market started to slide. You know, gave up a lot of the gains that we had the first couple of months of the year, pulled back very heavily. We made that up. We, we slightly went above some of those numbers that we saw or were bouncing right around those. Market calmed down again today. Any, any headlines that you saw that, you know, I mean, when I say headlines, the, the markets

• 3:37Speaker 00

  and the economy is so robust and there's so many complexities, but sometimes they'll talk a little bit about maybe what some of the headlines that is pushing on the market, whether up or down. What did you see?

• 3:50Speaker 02

  Well, there's beef going on. I know that between Mr. Elon Musk and President Trump. I haven't followed it super close, but I know that's actually has a big effect on the market. Tesla.

• 4:01Speaker 00

  Let's get ready to rumble.

• 4:06Speaker 00

  Are you saying they're actually doing this to lead up to like a charity UFC fight? Like, and then the, the money will go towards the, the debt?

• 4:16Speaker 02

  Who do you think would win?

• 4:18Speaker 00

  Well, I don't know. Is it like a Jake Paul fight?

• 4:20Speaker 02

  I don't know. Trump's.

• 4:22Speaker 00

  Cause guess who wins Jake Paul fights?

• 4:24Speaker 02

  I don't know.

• 4:25Speaker 00

  Jake Paul.

• 4:27Speaker 00

  I'll pay you two million dollars, let me beat you up.

• 4:33Speaker 00

  With gloves and there's gonna be rules.

• 4:35Speaker 02

  Bill Gates, Elon Musk.

• 4:38Speaker 00

  I, you know what, I've seen a video of Bill Gates back in the day. He was getting, he was getting interviewed and he wanted to show off his skills and he stood up literally in the middle of the interview and he jumped over a chair to show the lady how athletic he was.

• 4:55Speaker 00

  If you, if you haven't seen it, it's worth a little bit of your time. Go, go search Bill Gates jumps over a chair and it's like a 2020 thing and he's probably in his twenties and it is just a hilarious video, but he's pretty, pretty athletic. Some of you may not have known that, so.

• 5:11Speaker 02

  Last rabbit trail, who's the owner of the Clippers? Is it Ballmer?

• 5:14Speaker 00

  Oh yeah, Steve.

• 5:16Speaker 02

  You've seen the.

• 5:17Speaker 00

  When they're on stage.

• 5:19Speaker 02

  Developers, developers, developers.

• 5:21Speaker 00

  And he's all sweating.

• 5:23Speaker 02

  Pouring sweat.

• 5:23Speaker 00

  Pouring sweat, yeah.

• 5:25Speaker 02

  Yep.

• 5:25Speaker 00

  But I mean, back then that was, that was high intensity, it was high level leadership pushing Microsoft forward.

• 5:32Speaker 02

  Yeah.

• 5:32Speaker 00

  And into the future.

• 5:33Speaker 02

  If you're bored, man, it's, it's, it's such a cool story to go and listen to these guys, you know, and how they literally get started in their garages. And, and they were the ones that pushed the PC, the personal computer and all, everybody pushed back. No, no, you know, families are never going to want a, a personal computer. It's for business only. There it is.

• 5:56Speaker 00

  There you go.

• 5:57Speaker 02

  There it is.

• 5:58Speaker 00

  That's, that's become a little joke around the office and maybe you've seen some of the memes, but good stuff. So with that being said, some of the beef being talked about Tesla shares have, have been under pressure a little bit, just, just some of the public outcry is just taken away from focus on this stock. A lot of that is just maybe, you know, somebody trimming off some of their Tesla exposure because concerned that some of this is going to spill into lack of production or not meeting deadlines and some of the different things that stock owners would hope that the CEO of a company is focusing on and it could probably seem to be like, maybe he's been a little distracted as of. Late, but anyway, so yeah, Tesla's down. I think Tesla was down over 2% or something.

• 6:41Speaker 02

  This is all the news, man. I've been looking up here. We have the CNBC monitor and it's, it's all about the, the beef and the words exchanged and we'll have to, we'll have to update that for you.

• 6:50Speaker 00

  But the actual more, more, more likely type of information that pushed the markets around a little bit today or pulled them back a little bit is the jobs report.

• 6:57Speaker 02

  Job report, yeah.

• 6:58Speaker 00

  So investors are very cautious ahead of Friday's US jobs report. So it hasn't come out yet. It's coming out tomorrow. So I'm sure Justin or whoever else is leading the show or the charge tomorrow, we'll, we'll talk about that a little bit. But that is definitely what could influence the Federal Reserve's decision as far as what they're going to do with interest rates. And so that's kind of what everybody is waiting to, to see. Mortgage rates declined, but burly.

• 7:23Speaker 02

  Burly.

• 7:24Speaker 00

  Burly. I mean, it was like, was it 0.5% or not even that?

• 7:28Speaker 02

  Not even that. I know they're cutting rates over in Europe, uh, down to around 2% to slow down their inflation.

• 7:36Speaker 00

  So even though it was very minimal, it is the first time in five weeks that the rates have actually fallen down. So the 30-year fixed mortgage rate averaging right now is about 6.85%. Might be providing some relief for home buyers. I don't know. When you say it's barely pulled back at all, I don't know what kind of relief this article is, is, is thinking that, that that would make. Uh, it's still pretty, pretty high rates. And from what I understand, real estate has not necessarily seen a significant dip in value, maybe in certain pockets, which that's what we've always said here on the radio show.

• 8:11Speaker 00

  Real estate topics are so specific to certain areas. Um, so obviously the most important things, like when we have real estate professionals or whatever come on the show, it's, it's, if you're here in Bakersfield, that's where it's most important. And it's wherever you live. Uh, what's most important because there might be some pockets in the United States where real estate is really pulling back. It helps when interest rates are still up at 6.8% for a 30-year fixed.

• 8:35Speaker 02

  Yeah. Bitcoin took a kick in the knees today, down about 3%, um, but still, uh, Still up about eight percent for the year. So pennies are going away. That's news.

• 8:46Speaker 00

  Yeah.

• 8:47Speaker 02

  It's kind of old news now, but they're getting rid of pennies.

• 8:48Speaker 00

  We've actually, we've talked about this for probably a decade. They've been talking about it.

• 8:53Speaker 02

  Mm hmm.

• 8:53Speaker 00

  At least like pretty seriously because you think even 10 years ago, I mean, what was a penny? But there are certain pockets and charities and nonprofit charities and different things that like literally pennies going away like changes their entire financial reality. Which you wouldn't think, but it would be an interesting topic, maybe to dive a little bit more into. Like who's, who's the losers of no, no more pennies in the economy?

• 9:19Speaker 02

  Then are they going to have to round all their transactions? I guess they keep them pennies, but when you go to actually pay something out or money gets wired, they're gonna, well, I guess it's just physical pennies.

• 9:29Speaker 00

  Well, I wonder if that means from, from now on, everything is in denominations of point zero five.

• 9:35Speaker 02

  Food and stuff would have to be probably.

• 9:38Speaker 00

  Right. I don't know.

• 9:39Speaker 02

  Yeah.

• 9:40Speaker 00

  But then you have taxes that are percentages. I mean, who knows? I guess, I guess you do. I guess that's what you do is you just round everything up.

• 9:47Speaker 02

  I think we should go back to bartering system.

• 9:49Speaker 00

  Yeah.

• 9:50Speaker 02

  Couple of goats for.

• 9:52Speaker 00

  Yeah.

• 9:52Speaker 02

  You know what I mean?

• 9:53Speaker 00

  Yeah, totally. That makes sense. Um, yeah, but the other big item that's still on everybody's mind is trade tensions. Uh, markets remain very sensitive to ongoing trade negotiations. Um, and the most recent tariffs did cause a little bit of this volatility. Um, as, as you know, the markets kind of try to digest, what is this going to do for which companies? And, you know, there's so much that goes into it and I tell people, um, there's no doubt that, that all this is unnerving, but I tell people like sometimes even myself as a professional in this industry. Like, um, you're trying to like hear this news about tariffs and all this and you're trying to make sense and maybe even think, should I, should I change something with my investments or whatever?

• 10:38Speaker 00

  And it's, it's like, I would love to say that I'm so smart and every time news comes out, I mean, I know exactly what you're supposed to do. But in reality. When you have a well diversified portfolio, when you have a plan in place, I believe that these companies that are worth millions and billions of dollars are going to do the better job of figuring out how to navigate tax changes, how to navigate tariff talks, how to navigate rising inflation, falling stagflation, whatever the concern is that you have, or whatever's being made a big deal in the news, I have a feeling that these companies are going to navigate through them much better than I would be able to kind of figure out here

• 11:18Speaker 00

  in my advising office here in Bakersfield, California. And then there's funds and there's different strategies that you implement, you diversify, you take out some of the risk, and that's where you can kind of like regardless of what the headlines are doing, regardless of what's going on, you can have confidence in your strategy and your plan, and then you're not getting pushed around and made to enjoy your retirement based on the news every day that you might watch for probably too long. And that's what breaks my heart is I got these people that retire and they work so hard to finally have all this extra time and it's being spent sitting in front of a TV, listening to different professionals that are basically in the business of either making you feel like you're missing out, or making you feel like you

• 12:02Speaker 00

  better do something or else the sky is falling, and it's the fear and greed buttons that they're hitting.

• 12:06Speaker 02

  And those fear and greed buttons are tied to our brains, was tied to dopamine. You're dead right, man. They're doing it for ratings, they're doing it to hook you. And the more you get, oh my gosh, what's coming?

• 12:15Speaker 00

  If you tune in and they said, hey, as long as you have a diversified portfolio and a good plan, don't worry about it, you're going to turn off the news.

• 12:21Speaker 02

  Yeah.

• 12:22Speaker 00

  And they're not making you, money wise, they're not making you a better investor, they're not making you enjoy your retirement more. I'm not saying that these topics cannot be discussed, or I don't talk about them with my clients, but we always try to go back to how we're going to navigate through that and what's going to give us the most chance for success.

• 12:37Speaker 02

  I agree. The businesses will adjust. It's all going to be a wash eventually, most likely.

• 12:41Speaker 00

  There you go. Well, we still don't see our wonderful guest. Hopefully he's on his way. So here's what we're going to do. When we get back, we're going to jump into a topic.

• 12:50Speaker 02

  We've got a question, too.

• 12:51Speaker 00

  Oh, yeah. Let's jump into our question first as soon as we get back from this break. Stick around.

• 12:55Speaker 01

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

• 13:07Speaker 00

  Welcome back. This is the Moneyway Show. I'm your host, Chris Pelster, joined with Seth Perry. Uh, our oil energy man is cruising in as he comes in. And so before he jumps on and joins us, he's going to get situated. We'll, we'll cover this client question.

• 13:26Speaker 02

  Here it comes.

• 13:26Speaker 00

  I think it's a good one. Go for it.

• 13:27Speaker 02

  Here it comes. My wife and I both lived in Los Angeles and are approaching retirement. She was a teacher with CalSTRS for 27 years. Good job. And I had a state job. I've heard something called the government pension offset that might reduce her spousal benefits from my social security. Can you explain?

• 13:44Speaker 00

  Well, I hope you're sitting, yeah. And I've, I've never heard of it before. He'd never heard of it before.

• 13:48Speaker 02

  Yeah.

• 13:49Speaker 00

  So there you go. There's good news. It got eliminated.

• 13:54Speaker 02

  Mm hmm.

• 13:55Speaker 00

  Plain and simple. So there used to be what was called a windfall provision or a windfall elimination provision. Um, and the GPO is the same thing. They both got taken away. So if there was anything that was, there might be a couple of railroad pensions and stuff that are still impacted to an extent, but those are few and far between because you can think of when the people that were working and getting pensions from the railroad companies, um, it's becoming less and less of an issue. But anyways, if, if you had any kind of spousal benefit or a benefit that was impacted because of, um, CalSTRS, CalPERS, which I don't think CalPERS was impacted because, um, CalPERS, a lot of, which is just two different pension programs through the state.

• 14:38Speaker 00

  Um, a lot of times it's teachers and then what would be considered classified employees through school districts and stuff. They still put money into social security. So the reason the issue happens is CalSTRS, which is teachers, put into, uh, CalSTRS and they do not put money into social security while they're employed. And so it ends up impacting their benefit by this offset that went away. So yes, you should review it. Uh, go back and get your estimates. I would love to say call social security and you're going to get a bunch of help. Um, but it's hit and miss with, with what information you get and it's hard to, Uh, go through the hoops to actually get some, some help anymore, unfortunately, but good news is if there was going to be a cut to your benefit.

• 15:22Speaker 00

  The thing I tell people is that as of recently, I think the total amount that any one person could lose of their social security benefit. If they had a social security benefit, I think it was lower than that. I think it was only around 500.

• 15:34Speaker 03

  500.

• 15:35Speaker 00

  So like, I mean, if you had a $700 benefit because you only barely put into social security and this and that, it seemed extreme. Cause you're losing 500 bucks of your 700 bucks. I've explained it to people. It's kind of a complicated calculation and how it works. But long story short, the most anybody would lose, lose from their benefits, depending on how long they paid in was about 500 bucks. And now that he's even gone away. So a lot of people.

• 15:59Speaker 03

  Hopefully it doesn't come back.

• 16:00Speaker 00

  Yeah. A lot of people ended up getting a little bit of a boost right now. So take advantage of it. Call and find out what you need to do to turn it on. If you're not getting it all.

• 16:09Speaker 00

  I think a lot of people actually just started getting it. It just started.

• 16:14Speaker 03

  Yeah.

• 16:14Speaker 00

  Yeah. You didn't have to do anything.

• 16:15Speaker 03

  Yeah. You got a little retro, I think for, was it for last year?

• 16:17Speaker 00

  Until, yeah, when it got passed up until they, they got kicked in there. So.

• 16:21Speaker 03

  You're going to start with the hook again?

• 16:23Speaker 00

  Oh yeah.

• 16:24Speaker 03

  The numbers?

• 16:24Speaker 00

  We were thrown out, we were thrown out 1913, just telling listeners that they need to stick around to find out what that is. So. You ready to rock and roll?

• 16:32Speaker 03

  I'm here. Yeah. I'm ready to roll. I walked in the door like hot on fire.

• 16:36Speaker 00

  Yeah. You, oh yeah?

• 16:37Speaker 03

  Yeah.

• 16:37Speaker 00

  About which?

• 16:38Speaker 03

  I'm rolling in hot.

• 16:39Speaker 00

  Coming in right on.

• 16:40Speaker 03

  No, I'm good.

• 16:40Speaker 04

  There, there is some water in there for you, big boy.

• 16:43Speaker 03

  What'd you say?

• 16:43Speaker 04

  There is some water in there for you.

• 16:44Speaker 00

  He knew, he knew you were going to be on a hustle. He knew you're taking care of things.

• 16:48Speaker 03

  I'll, I'll spray this water all over you, boy. Beautiful boy.

• 16:53Speaker 00

  Well, there you go. So we're so glad to have you in here. We'd love to, uh, we, we had the Sturgill plan.

• 16:59Speaker 03

  That's good. Um, yeah. Good guy.

• 17:02Speaker 00

  Yeah. So, uh, give us a little update. What's going on in the oil world? What's, what's, what's your world look like?

• 17:07Speaker 03

  It's just a whole bunch of chaos right now, Chris. Um, uh, it's been chaos for a long time in California, but, um, the markets are kind of like you guys have been talking about. All kinds of outside influences, but the, you know, price of oil is right around $62 a barrel. So, um, I've been on the show for like eight years now. Nine years now and it's it's down about six bucks a barrel from the last time I was here about a month and a half ago. There's outside pressure from OPEC, OPEC plus, which is the OPEC is the Organization of Petroleum Exporting Countries, which many of your listeners know about, that control about thirty plus million barrels a day of oil in the in the world supply. And they're gonna hike output. For the last several years, they've been

• 17:47Speaker 03

  curbing output and they're they pledged to hike output over the next several months. What we're seeing on the supply and demand side, or the storage side, the actual, you know, we're seeing year-over-year lows. So, we're not seeing a huge surplus of oil right now in the country, which you would normally would indicate a downward pressure on prices, like we're seeing now. But we don't. We've we're kind of a year-over-year, a lot lower than we were this time last year. So, we've got a good, good, far as the fundamentals are concerned, we're in a good place. You know, California, just locally, I can, you know, kind of going off the script a little bit, we've had some major situations occur

• 18:29Speaker 03

  on the local purchasing side. We've got the potential loss of, not potential, the real loss of the Phillips sixty-six refinery coming next year. And then we have the the potential, but more than likely, loss of the Valero Benicio refinery, which represents about twenty percent of the California refining market. I think that's huge to California. People don't, are probably not so aware of what that means. When you lose twenty percent of your your refining capacity, that's a huge amount. We can't, we are definitely limited at our ports to import, not only just crude, but also import refined products. So, a lot of our our terminals and places weren't set up to bring in refined product to make

• 19:13Speaker 03

  up some of that losses. So, there's a lot of talk about some really high spikes in gas prices. And also, we have a special blend of fuel in California. That is only for California, so that makes it very difficult to for refine and then.

• 19:27Speaker 00

  Is that just for the summer blend that I was reading about, or is that all year round?

• 19:31Speaker 03

  Yeah, no, there's two blends. There's the summer blend and there's the other time of year blend. But yeah, they have a, it's a, it's a low carbon fuel standard that we have here, which is not that way, pretty much in most places in the country. West Coast, very, very similar. The same rules apply, I think, in Washington State, I think in Oregon as well, but it's a special blend. It's not something that, that refiners outside of California are used to doing. So it adds price, it adds, it adds cost to the refining process. Plus, as you know, we have the strictest air pollution, air restrictions in the world in California. So the typical refiner, like I've got a friend who's a refiner, 10, 15 years ago is probably spending,

• 20:14Speaker 03

  on average, you know, maybe 1% or 2% of their, their, their ongoing fees for, for compliance. Now that's the highest 20%. And I know a local refiner here that told me that 19 years ago, he was paying $400,000 a year for compliance. Last year was 19 million.

• 20:29Speaker 00

  Wow.

• 20:30Speaker 03

  So the compliance side, to say, you know, kind of, and this is, you know, not specific, but it's gotten substantially more difficult. And CARB, which is the agency that oversees that, you're seeing a lot of actual democratic pushback right now, which is kind of nice. I haven't seen that in a long time. A lot of people are saying, hey, what are we going to do? Asking the tough questions. And I think that, that that's a little bit late to the game. They're doing a little bit too late, but we'll see what happens. But next year, we could be facing some major headwinds in the, in the retail market as far as gasoline and diesel are concerned.

• 21:04Speaker 00

  So I think I've asked you kind of questions like this before. From my ignorant standpoint, I've, I hear about two refineries closing and it seems, I mean, I don't want to say catastrophic, but it just seems like, how can California that uses and consumes as much energy and oil as we do, how can we like have two refineries shut down and this not be like a really, really bad thing? Is there, is there a board that is, is helping? Newsom or something or an energy group that's saying, hey, the refineries are going away, but our clean production is going up or renewable and they're like somehow saying that this is going to be okay or is just

• 21:42Speaker 03

  No, no, the CEC, which is California Energy Commission would be the is the agency that Newsom is directed to say, go out and fix this. And so Valero, for example, I think he was shipped back to Texas to try to go to Valero and said, actually, I think the state even offered to buy the refinery, from what I understand. This is all third party, but I got pretty good sources. And they said that, well, that's great. We'd love to sell it to you. And the state said, well, we'd like you to operate it. And they said, you know, pretty much pound sand.

• 22:10Speaker 00

  Yeah.

• 22:10Speaker 03

  Yeah.

• 22:12Speaker 03

  You know, there's a lot of talk about actually when they were passing, you know, Newsom came out and this is actually as recent as last fall, when, you know, big oil was the big culprit and price gouging was going on, even though multiple, multiple reports over the years have never proved any price gouging. Now the refineries are forced to keep on in stock like 14 days with the gasoline. I mean, that's like saying, you know, to any business, you have to keep all this inventory and it's mandatory. You can't, you can never get rid of it. You build it and let it sit there. So that was an additional cost that they had to incur this year because of legislation. There's just been a lot of really hostile stuff. But yeah, there's a trade association that represents us, Independence, and there's a bigger trade association that Independence represents the bigger producers. But think

• 22:55Speaker 03

  about it, you've got, you know, Era is no more. It was a merger with CRC. You've got Berry's left, Sentinel Peaks left, Shell is gone, ExxonMobil is gone.

• 23:06Speaker 00

  Is Chevron Kern River, you know, heard rumors?

• 23:09Speaker 03

  You know, no, but it's kind of an important field to them. Chevron has a huge retail presence in California. So, but they, Chevron to me is such a long-term forward-looking company that whatever decision they made, they probably made it three years ago.

• 23:26Speaker 00

  Yeah.

• 23:26Speaker 03

  You don't even know it right now. But, but no, I haven't heard any rumors. I mean, I heard one, but it was a private equity thing, but I don't think that's even possible.

• 23:34Speaker 00

  Gotcha.

• 23:34Speaker 03

  You know, so the, the, the reality is, is we're going to be facing some major headwinds in the state. And there used to be 30 refineries in California. That was 15, 20 years ago. Now we're going to be down to seven. So one refinery, another thing that happens, you take, you lose one refinery, one refinery goes down, and you've already lost 20% capacity, that's can also cause some major price spikes. So which I think it's, you know, politically, I think this is really shaping up to be a bloodbath. Um, because, you know, we consume 1.9 million barrels of oil in California. We import 70% of it from, Iraq is our biggest supplier of crude, and Iraq has the absolute worst air quality, um, record in the world. It frustrates me so much.

• 24:19Speaker 03

  It's so frustrating. And I think people are starting to realize that. Um, I even saw a quote from a LA Democrat saying, you know, we have the cleanest oil in the world here, why don't we produce? I'm like, no kidding, we were talking about this years ago, you know, but, but I, I think, uh, the, the party in power in California right now is going to face some significant headwinds over the next year, as these refineries start to slow down. So USC did a study on this, actually, the Marshall School of Business, um, did a study on, on what these costs could be, so I'm not just making this up, this, you know, uh, they, they estimated the cost could be between 7.35 and 8.43 per gallon by the end of 2026. Um, up from the statewide average of 4.82 right now, which 42 is still way above, you know, we have the highest gas prices already in the country here.

• 25:04Speaker 03

  It's already ridiculously expensive, a lot of that's, uh, taxes, the people that, it's ironic when you, you blame big oil, but the state's actually making more money off the gallon of gas than anybody else, it's, it's, it's, it's crazy, I mean, it's like a dollar fifty something is, is paid in all fees and taxes and low carbon standards and, and greenhouse gas mitigation, all these things that money's taken and it's funneled to different places and, and put in, in holes, but this is a scary situation that's hitting us. Phillips 66, uh, also a year ago, uh, shut down a refinery over in the Santa Maria area, um, and that was a huge hit. Uh, they also converted another refinery, uh, before that to biodiesel, so there's been

• 25:48Speaker 03

  a lot of that going on. Um, we only have one pipeline really going north, um, from here, it's reaching low level capacity, San Pablo Bay Pipeline. We've got two pipelines going south, um, and they're, um,

• 26:03Speaker 03

  Actually going to be impacted because we're going to, I think at some point when we lose that Benicia refinery, there's not the need to go north. So there's a lot of interesting things happening locally too. We're seeing our pricing get hit. So typically we used to be based, we used to have a barrel posting in California called Kern River and we had Buena Vista. Those were our two benchmark postings for California. They went away a year ago. Now we're getting, we're getting paid for our barrel based on Brent prices minus about four to five dollars a barrel. So it's a hit, I mean huge because, because the amount of oil being produced in Kern County has dwindled down to such a small amount that it's more economical for them to buy, you know, a million barrels on a tanker, from a tanker and offload it and not have to deal with anything.

• 26:45Speaker 00

  Right. Well, and that's one of the things you mentioned, I think in some of your notes was where now that puts us as Californians and the country for that matter, but it puts us at great risk, meaning if there's any issues with transport, if there's any issues with, with bringing the stuff here and the majority of it's all coming from that direction now. I mean, what do we do if something happens to that flow of, of oil coming to us?

• 27:06Speaker 02

  I think it makes us vulnerable as a country too.

• 27:08Speaker 03

  It does.

• 27:09Speaker 02

  We're so dependent on foreign nations and if a war were to break out or something, it's scary. We don't have the capacity to just turn on a switch.

• 27:15Speaker 03

  And it's not just because it affects California. We provide fuel to, there's not one single, there is, there is one single refinery in Nevada and I've been there and it's shut down right now and it, I don't even think can make gasoline. So all of Nevada is relying on our, our refined products. Arizona is also relying on us as well. And there's places like Utah that can't necessarily make up those gaps or adds more expense to Nevada. I mean, the governor of Nevada has openly expressed this is an issue and chastised the state of California for, for their actions in the past. So this is, impacts a lot of people, not just Californians. And it does, it is a national security issue, especially given the amount of military presence that we have on the west coast, especially given

• 27:57Speaker 03

  our, our ports and their capacities. Now, if you shut down a major port because of an oil spill, because you're, you've increased your, your inflow of tanker traffic substantially and, and something happens, imagine something happening in the, in Long Beach Harbor, Port of Los Angeles. San Francisco. I mean, you're only increasing your chances of that happening by adding more boats in the water and bringing them in.

• 28:19Speaker 00

  Right.

• 28:20Speaker 03

  The other thing that's interesting too is the demand isn't dropping for our product. I don't care how much alternative energy you put in the ground, the demand's not dropping. We're not seeing a demand reduction that that was supposed to come. It didn't come. And even with worldwide investment, you look at worldwide investment in renewables, Daniel Yergin, he's a famous energy scholar. Actually, just look back at the year in twenty twenty three, twenty twenty two, twenty twenty three and realize that, you know, we we've invested a hundred, I think it was a hundred and seventy three trillion dollars as a as a world in in renewable. And it only ended up reducing the actual consumption of of petroleum by like point five percent. So you do the math on that. I think it was three trillion last year that we invested in in in alternative sources.

• 29:06Speaker 03

  And and you know, it was about the same amount. So say twenty years from now, you know, I mean, do the math, point five. What are we gonna, I mean, we're talking, uh, what is the, what's the next increment up from trillion? Zillion?

• 29:19Speaker 00

  Yeah, probably.

• 29:20Speaker 02

  Zillion?

• 29:21Speaker 03

  Is it bajillion or zillion or what?

• 29:22Speaker 00

  No, I don't even know. But you know what?

• 29:25Speaker 03

  Billion, I'm sorry, a hundred and seventy three billion. I was so off.

• 29:27Speaker 00

  So we're going, oh, yeah, so we're going to trillion.

• 29:29Speaker 03

  Yeah, we're going to trillions.

• 29:30Speaker 00

  Which is still, if you, if, you know, the talks about the difference between a million and a tril- a billion and a trillion. I mean, astronomical. And I I remember when we were on the radio, like to begin with, you didn't throw billion out a whole lot.

• 29:44Speaker 03

  No.

• 29:44Speaker 00

  And now it's like, oh, this bill's gonna be three or four billion.

• 29:49Speaker 02

  This guy is worth.

• 29:50Speaker 00

  Rounding in the billions. Okay.

• 29:51Speaker 02

  Was worth this many billion.

• 29:52Speaker 00

  Yeah.

• 29:53Speaker 03

  Yeah, it's it's scary. But it's, you know, it eventually you hope things will turn themselves around by.

• 30:01Speaker 02

  Common sense?

• 30:01Speaker 03

  Well, yeah, there's a pendulum, right? You you you pray and hope in the pendulum that it will swing back their direction. And and I think there will be, there is some opportunity in Kern County. I do think there will be momentum to allow us to drill again, you know, and allow us to do the things we haven't been able to do. I mean, you're a long time ago. You know what's going on in this industry. It's a, it's definitely a boomer bust industry.

• 30:21Speaker 00

  Yep.

• 30:21Speaker 03

  But this is. Been a 100% regulatory.

• 30:25Speaker 00

  Yeah.

• 30:25Speaker 03

  Uh inflicted crisis here and and there doesn't take a whole lot to turn that around.

• 30:32Speaker 00

  Yeah.

• 30:32Speaker 03

  And so we have a lot of all the tools in place here to to flip the switch on and to get back to work again. Uh now we've lost quite a few vendors over the years. Um I think the building used to work in is for sale.

• 30:43Speaker 00

  I know.

• 30:44Speaker 03

  Yeah, it's a beautiful building.

• 30:45Speaker 00

  Crazy.

• 30:45Speaker 03

  Um but but it's basically a um something to where we can get back to where we were. Um it's not gonna happen overnight, but we have the reserves here and uh I think there are there are things in the working right now that will enable us to do that.

• 31:00Speaker 00

  So, little bit of uh again, my ignorance, maybe thinking a little bit conspiracy theory. You can tell me what you think about this. So if, cause what I think about is all the tax revenue that's lost. But all the tax revenue goes to local governments, right?

• 31:19Speaker 03

  Well.

• 31:19Speaker 00

  Not all of it, but but the but the lion's share of it.

• 31:23Speaker 03

  Yeah.

• 31:23Speaker 00

  The the regulatory things that you're talking about go to who knows where.

• 31:28Speaker 03

  Well, so here's here's it it's the tax thing is, trust me, it's complicated, cause there's so much goes in the general fund of the county and so much the general fund is swept to go to state. Um I'm not the expert on that. I just I just know what I pay in assessments and taxes every year. Um and what how I mine is based on a a price of oil. So every January, the county looks at the price of oil and then they look at your your your production. And your reserves and they say, okay, this is your basically your assessment for each parcel. We like a stack of 50 papers and for every parcel we have and we pay it twice a year. Um the state of California does assessments and so what's happened with the state of California is for they they assess me per barrel of oil I produce.

• 32:10Speaker 03

  And per MCF of gas I produce. Well, in the last 10 years, those assessments have increased almost 400%.

• 32:19Speaker 03

  Four hundred percent.

• 32:19Speaker 02

  Yeah.

• 32:20Speaker 03

  And so we're, we're, we're like, what are we getting for our four hundred percent? Not, not any permits.

• 32:25Speaker 02

  Yep.

• 32:26Speaker 03

  You know, not anything like that. And in the same course of time, the industry has abandoned more wells in the last five to seven years than they have in the last twenty.

• 32:35Speaker 02

  Yeah.

• 32:35Speaker 03

  It's remarkable how the industry has, when asked to step up, they step up and do what they have to do. But these assessments are supposed to, a portion of those are supposed to go towards abandoning wells that, or say, or if the state is taking over. So you probably saw a project down here on, right off of California Avenue and, and off of Trucks and Extension, you know, they were abandoning a bunch of wells down there that, you know, the company had put some oil in the water line and the state came in and seized them and took them over.

• 33:02Speaker 02

  Oh, yeah, I remember that.

• 33:02Speaker 03

  So I did an audit on that. So I said, okay, I'm gonna see, because I'm watching this from a distance and I'm an independent producer and I do all my, we have our own rigs and our own stuff. I know pretty much every aspect of the, the, the supply chain and how much it costs to do this and that. So we audited. It was like twenty-five wells and, and one small facility. State spent, spent almost twenty million dollars on that. That same well, the average well cost was four hundred and eighty-seven thousand dollars each to abandon. I can abandon the same well in that same field for fifty-two thousand dollars, on average.

• 33:33Speaker 02

  Yeah.

• 33:34Speaker 03

  So you, and I'm looking at these bills and they spent like seven hundred thousand for traffic controls. Some of these were parking lots. I'm looking at stupid things like, there's this company that doesn't even have a door front in California, has a door in Nevada. I mean, so, lo, long story short, I'm looking at our assessments that have gone up four hundred percent and, and looking at what we got for it. And so I hand that over to a politician and say, why don't you go ask the person in charge what's going on? They look at it and their jaw drops and they can't believe it. I said, well, just look back at everything that's been done by the state.

• 34:04Speaker 02

  Yeah.

• 34:04Speaker 03

  And when it comes to abandoning the cost. So hopefully people start.

• 34:07Speaker 02

  You're making a difference, man. I, I appreciate how much you do. I, I try to follow you online a little bit, like on LinkedIn, and your stories are very relevant.

• 34:14Speaker 03

  Well, thank you.

• 34:14Speaker 02

  And you're making a difference.

• 34:16Speaker 03

  Well, it, it, it's, it's sickening when you see the waste that occurs with our money. And I'm a taxpayer. I can say, I'm like anybody else. When you take my money and you waste it, it pisses me off.

• 34:28Speaker 02

  Preach.

• 34:28Speaker 03

  And it's still, I was like ten guys under a tent and no, you know, everybody says, well, good for those guys. I'm like, yeah, you know, no.

• 34:36Speaker 02

  Yeah.

• 34:37Speaker 03

  You know, yeah. I just, that whole thing really upset me, but when I started looking into what the government was doing with our money, it was disgusting.

• 34:45Speaker 00

  So we did have a comment come in about this topic. It says, I've worked in the fields out here for decades and I've seen a lot of ups and downs, but it feels like we're getting, uh, things are getting shakier lately. Do you think we're in for more serious fuel shortages or even worse? I think you've, you've kind of been dialing that in. And, uh, like you said, the frustrating thing is there's lots of things that, uh, affect oil and the price of oil and all this and that. But when it feels like it's so much more just regulation based that's causing all these issues, that's, that's a man-made choice. Uh, you know, government, uh, you know, regulatory issues. And when that's the one that's driving so many of these unfortunate realities, uh, in that industry, it's just really a big, big, uh, big heartbreak.

• 35:30Speaker 03

  It's crazy. We got, we got both sides of the, you know, everything's kind of hitting. I think California here right now, I mean, I, it's ironic. We actually invest, I'm a huge consumer of power. And so we invest, uh, or partner with people that invest in solar because it's, we don't have a lot of alternatives to generate power and there's not a lot of incentives for self-generation and stuff like that. So solar's worked out and we've had one, uh, inked contract and we have another inked contract that was brought to us like hastily, um, because you know, the, the federal, um, tax credit for solar is coming, uh, to rest probably more than likely in this bill that's being passed. If it doesn't, that's, that, that's not going to be a real hammer to the solar industry. But we see a lot of ironically out federal actions now that will impact a lot of local

• 36:14Speaker 03

  businesses too, on the solar side, because you lose that federal income tax credit or the, the 40, I don't know what it is percentage wise, but it's a big hit. It'll make an impact. So.

• 36:23Speaker 00

  Yeah. Well, let's, uh, let's go to a quick break. When we come back, we are going to finally follow up with the 1913 discussion. So I know people are waiting. We were talking earlier about them talking about getting rid of the penny, which we've been talking about on this radio show for about 20 years. Cause literally there's a long time ago, they could have done it, but somebody did message in and say they should get rid of all change. I guess this person's going big, just going to the, the March of Dimes, uh, organization might, might be a little bit upset about that. Cause again, we've talked about some things that there are full organizations that, uh, literally their whole thing is, is raising money with coins. And there's probably businesses that go around and take pennies out of fountains.

• 37:01Speaker 03

  What are you going to give for your thoughts?

• 37:03Speaker 00

  Yeah.

• 37:03Speaker 03

  You can't give a penny.

• 37:04Speaker 00

  There you go.

• 37:05Speaker 03

  The penny fountain business.

• 37:06Speaker 00

  Yeah. Yeah. So stick around. We may talk a little more energy, but we're definitely going to find out what 1913 is all about.

• 37:15Speaker 00

  Welcome back to the Money Wise Show. Thanks for making it what it is. You can jump in, you can join in, 661-396-1000. You can call and chat with Stephen over there. He's looking a little lonely. And if you don't want to call, have your voice shared, or whatever, you just send us a text and we can cover your question or your comment. We appreciate them. So again, we are joined by Chad Hathaway, trying to make a difference here with California energy situations and some of the concerns that many of us have as far as the future of prices of energy and gas prices is obviously in the headlines. And we talked a little bit about carbon capture, which maybe not a lot of people know completely what that is. So why don't you talk just at a high level what that is and then...

• 37:56Speaker 03

  Yeah, so it's a project where we're basically trying to take either extract from emissions input or inject carbon, CO2, and other airborne contaminants, pollutants, inject them down in the ground into a reservoir. Carbon capture is basically what it's called. And just as of this week, it went two or three days ago, the Department of Energy canceled, I think, 24 projects that were slated to receive funding from the government. One was up north called the Sutter Project, which was tied to a natural gas power plant. It was like a $270 million deal. And there's one tied to a cement plant. But the Department of Energy is starting

• 38:36Speaker 03

  to substantially reduce a lot of these pet projects and sweetheart projects that can't show merit. They can't show an ROI.

• 38:46Speaker 00

  Gotcha.

• 38:47Speaker 03

  Because really, really what we're doing, what should be doing here, you know, there's certain things government should be doing. There's certain things that private industry should be doing. But when it comes to energy, it's got to make sense. And if it doesn't make sense, it's not going to be sustainable.

• 38:58Speaker 00

  Right. Even if the intentions of it are good, or even if, you know, that, you know, yeah, I mean, it's like, there's so many things that you could point in the right direction and say, this is going to be good for the environment. But if it's like, it doesn't pencil, or doesn't make sense.

• 39:10Speaker 03

  Yeah. I mean, nuclear is such a great option that we don't even really explore. And where people are so afraid of it. And now you can see like the metas of the world and other big data folks looking to get into nuclear because they know they're going to power. We got a future crisis, not crisis... We've got a future challenge because we're going to have substantial growth in energy demand, electricity demand for just data centers alone.

• 39:30Speaker 02

  The more AI, yeah.

• 39:31Speaker 03

  I mean, there's a huge demand that is coming and already here. And we'll limit, I believe it'll come to a point where they'll be limited and it'll be basically held back and the ones that have the power have the ability to do it, won't be.

• 39:45Speaker 00

  So Seth's been here, how long now, six months?

• 39:48Speaker 02

  Yep.

• 39:48Speaker 00

  So his use of ChatGPT alone is probably, it's probably increased energy consumption in California. It's like.

• 39:58Speaker 02

  It knows me pretty well.

• 39:59Speaker 03

  I'm the same way.

• 40:00Speaker 02

  Me and chat know each other pretty well.

• 40:02Speaker 00

  He's like, I think, I think I'm developing too close of a relationship.

• 40:06Speaker 02

  Look, I can research online for fifteen or twenty minutes, or I can just hit up chat. It can do the research for me in seconds, Chris.

• 40:11Speaker 00

  But when you have pet names for each other, Seth, it gets a little weird.

• 40:15Speaker 02

  We do.

• 40:15Speaker 03

  I talk to mine, actually.

• 40:17Speaker 02

  Thank you.

• 40:18Speaker 03

  On a regular basis.

• 40:19Speaker 02

  See, Chris?

• 40:19Speaker 03

  And at Christmas time at Santa, you know, but I literally, my friends call me Chad GPT.

• 40:26Speaker 00

  Chad GPT, yeah. You know, I, we've talked about it a lot, that it's so scary and people are like AI and this and that. And I get it, there's some things that who knows what in the world, there's some, gonna be some things change over the next few years. But it's like, for me, the reason why I love ChatGPT is because I didn't get it at first either really completely, but it's like, it used to take twenty minutes to go through seven different articles.

• 40:48Speaker 03

  Yeah.

• 40:49Speaker 00

  And, and like, oh, just was annoying because you're, you're like, you never get quite the answer you're wanting. And it can really narrow down exactly what you're kind of wanting to get. And, and it takes ten seconds.

• 41:00Speaker 03

  We, we use it in our business now more than ever, I was on a, we have a facial recognition software that's tied into a camera system that can cross log people, cars, company vehicles, license plates, you name it, you can even build it into identify weapons, if there's a fire, whatever. Now we're looking at deploying those in the field and these are basic cameras. It's not like, the cameras aren't anything special. Yeah, but with AI, I have the ability to capture like a leak or a spill or a fire.

• 41:29Speaker 02

  Are you using AI in any other ways, like just to boost production or look for law, where you can cut losses?

• 41:35Speaker 03

  You know, uh. It's so funny because ninety, we gather so much data in our, in our industry and I bet ninety percent of it goes nowhere.

• 41:42Speaker 00

  Yep.

• 41:43Speaker 03

  And so now we're, there is a lot more analytics going into, um, into what we do, production tracking anomalies. Like way we build and design a wellbore, I guess far as the production string is concerned, the pump performance and that kind of stuff. There's a lot of old traditional software influence, but there's just these little tweaks and things. And what I see happening with AI, there's just a tweak here, a tweak there and like, you know, what you talked about how it simplified this part of your life and it makes things a lot easier. That's exactly how it's being applied to what we do.

• 42:13Speaker 00

  Yeah, and we've talked about it before on the show, not to go on too much of this, this tangent. We'll, we'll cover this one thing real quick and then I want to talk, have plenty of time to talk about nineteen thirteen or at least introduce it. But the thing about chat GPT is, is, uh, people say, well, how do I invest in it or how do I get an AI company? And there are AI companies that you can invest in, but I tell people the whole point of like, when we talk about a diversified portfolio and holding a good mix of stocks. Those companies are all going to start using this technology and it's going to improve their processes. It's, they're going to do a better job of finding who their target clients are, customers are. They're going to try to, you know, increase profitability, like let those companies figure out the technology.

• 42:52Speaker 00

  You don't even have to, you just hold the diversified portfolio and you get to participate in what's going to take place over the next five to 10 years in our economy. And there could be some things that you hate about it, but at the same time, it doesn't mean you can't make money off of it.

• 43:05Speaker 03

  Absolutely.

• 43:05Speaker 00

  And some things might even personally make your life a little bit better. And some people are like, I don't want to understand anything about this new technology. Great. At least hold a good mix of stocks that those companies are going to be implementing it. So it's kind of cool hearing you talk about how you've already implemented some of that, um, in your business. So let's talk about nineteen thirteen.

• 43:22Speaker 03

  Thirteen.

• 43:22Speaker 00

  Drum roll, drum roll, what is it?

• 43:24Speaker 03

  It's, uh, okay, so it's a collective and I don't know, let me just, let me just bring this up to a high level. So, uh, myself and three other, um, business guys here in town decided that we have the greatest, basically the best junior college in the country. And we have the best facilities, we have an incredible history. And now in the world of, of, of what they call name, energy and likeness, which players can receive compensation for a quid pro quo contractual relationship with the, with the collective. Now have the ability to to pay players. Now, at the JC level, that doesn't mean buying Bentley's or Mercedes Benz's for these guys. That means if you simply have the ability at the JC level to say, bring in a player and help pay for room

• 44:08Speaker 03

  and board or help pay for whatever. That puts us at the most, in the most competitive position can be possible in the country at that level.

• 44:16Speaker 00

  Right.

• 44:17Speaker 03

  Our sole goal here is to give BC coaches the tools they need to be the best in the country. Because we know that a successful athletic program basically brings so much attention back to the school and to the community. And we want to see the stadium is full again. We want to see national championships again. We want to see it in all sports. And so we built this collective to benefit Bakersfield College solely for Bakersfield College. Our website is www nineteen, they don't say that anymore, www. It's nineteen.

• 44:47Speaker 00

  World Wide Web shortened to www.

• 44:50Speaker 03

  It's nineteen, the word nineteen one three dot com. That's the year BC was founded. We, we really.

• 44:58Speaker 02

  Do you have, do you have BC ties? Did you play sports?

• 45:00Speaker 03

  I played at BC, I played football as a kicker.

• 45:02Speaker 02

  Very cool.

• 45:03Speaker 03

  And I went on to Fresno State. But yeah, BC is a big part of my life. I coached there for a couple of years and I really thought my experience at BC was incredible. I had a, I had a great experience there.

• 45:14Speaker 00

  Yeah, and there is a lot of history there. I, I played actually a couple of years after high school and so I didn't even finish the season, but I still just, just to be a part of the team and the history. It was right with, right after Greider, I think maybe his last year coached ninety-nine, two thousand. Forget when he left. Because I think Chudy was still defensive coordinator at that time. But anyways, it was, it was neat. I mean, it's, it's small junior college, but there's a lot of history and, and being part of that program was really cool. And I told you that there was a couple of out of state guys that were here that like, I mean, they have no family here, they have no connections to Bakersfield, like, and back then it was illegal to give them a box of food.

• 45:51Speaker 03

  Yeah.

• 45:51Speaker 00

  You know, and it's like, it was almost like ridiculous. So the pendulum and the NL type, NIL talk, especially some of the bigger divisions and stuff has been out of control, but it's cool that if we can get some support for this, get a little bit of money into the program. For some of those players, we can bring some good people here.

• 46:06Speaker 03

  Well, it was well built. We partnered with the same media company that manages Florida State's collective. We have another consultant firm that represents us that handles Penn State's, NC State's, University of Utah, and represents all the 328, which is basically the conference for California. But we're the first one in the country, the only one in the country.

• 46:28Speaker 02

  So Chad, how do our listeners get plugged in, man? How can they help support this cause?

• 46:32Speaker 03

  The best thing they could do is just go to our website. Everything is funneled to that. You know, our goal is to have, you know, an army of people that are willing to just contribute 25 bucks a month, you know, or 50 bucks a month. Because that, to me, in my mind, is sustainable. You can continue to grow that and build that up, not just continue to go to big supporters and sponsors, but also partner with people corporately and build a big enough social media presence to where we can create value for the people that we partner with.

• 46:58Speaker 00

  There you go. Hey Chad, thanks for what you're doing for energy production in the state of California, honestly, because it's so Greek to me. I've never even spent too much time out there in the field. So thanks for what you're doing. And if you can, get behind Bakersfield College's football program, 1913.com. Check it out and learn more about it.

• 47:16Speaker 03

  It's for all sports.

• 47:17Speaker 00

  Yeah. There you go. Oh, all sports. Awesome. Cool.

• 47:20Speaker 03

  Thank you.

• 47:20Speaker 00

  All right. Have a great day. Be smart, be safe, be money wise.

• 47:37Speaker 05

  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.