Big Digital Energy

0:00 Hey everybody welcome back to BDE. Sorry we've been on a little break. I think we're having issues around digital wildcatters where I literally may have a job right now which sucks and has been

0:15 cutting into this. Plus Mark we're in the world are you dude. I'm out in the Scottsdale area and missed all the epic snow and Houston and the Gulf Coast so you know every day is high 30s in the

0:29 morning to mid 60s in the afternoon and your car stays clean out here. Nice. Hey we're so blessed and I'll be a little overdramatic with it. We're so blessed. Have Andrew Chan join us today

0:46 because we're gonna go check bro out a lot on this given what's going on. Andrew thanks for joining us dude Thank you for having me Chuck I'm. you are having a good hair day I don't know if I am

0:59 having a good hair day. I think you are. I'm hoping for the best. You know, gotta get a little fixed up. Can we get off this topic?

1:10 Fair enough. Fair enough. All right, Andrew, kind of level set us. What's the, you know, most of our audience are energy type folks, so they're watching AI, but I'm not sure they're extremely

1:23 well versed. What is this deep seek thing? Can you kind of level set us and start the ball rolling there? Yeah, absolutely. So coming from a venture capital side approaching this from there,

1:37 effectively what you're seeing with deep seek is that the Chinese government-funded startup has achieved very similar, if not better performance, than open AI with what they claim is a very

1:51 insignificant investment amount Obviously, that's up for debate as to how much. Chinese government could even legally disclose that they'd invested in the startup, especially around export controls

2:03 with chips. But what this has led to a reflection on is that if competitors are easily able to pop up to open AI, maybe this giant CAPEX investment that we were targeting to build data centers, to

2:16 build energy infrastructure is something that we need to reconsider and think about the AI problem more from a research side than from a scale and economies of scale approach. And I think that's

2:30 interesting on a lot of fronts. I think we should probably start maybe on the energy-specific impact here. Chuck and I were talking about this a little bit before the show. But I'll also sort of

2:42 chuck in what your high-level thoughts and reactions are to where energy production asks to change if it is a lot cheaper and a lot less power intensive to produce high-quality models. Yeah, I mean,

2:52 I think what Mark and I've been talking about on BDE, a bunch. And Mark, come over the top of me whenever you want, is just at least before deep six, it was literally electric usage. I think if

3:09 you look at Goldman Sachs's report, they're up three X by 2045. Elon Musk says, take whatever estimate you've seen, multiply it times five, and that's not even close to where it'll be in 2045 I

3:25 think McKinsey's up two X, PGE was up 18 X

3:30 or something, but you just had the level setting for energy and AI and data centers was just massive amount

3:41 was needed. And you've seen nukes be reactivated. You've got a whole natural gas story there to happen And so this is a bit of a digestion of holy shit. Maybe we don't need that. I think calling

3:59 deep, seek deep sex was a bit Freudian. So if you look at certainly the NASDAQ's getting hit this morning, I think Nvidia's down high teens, but the first derivative of that is what you were

4:13 talking about Chuck, it's constellation at least so far in the trading day, trough that I saw was down almost 21 and we know the constellation's been front and center on the power to data centers,

4:26 particularly with the high profile news of the restarted three mile island one. So, we'll see if this thing has legs from rethinking the power fundamental standpoint. I'll just throw in another

4:41 forecast. Orcats got kind of an 85 gig peak demand going to 150 by 2030. A lot of that, depending upon the segments in the forecast that are related to the huge. data center build out that we're

4:58 already seeing break ground in Texas. So Andrew, I guess the question I would have for you that I don't have an appreciation for is, I mean, how real is this in terms of, did China really just

5:13 top chat GPT with six million bucks and some old computers? What's the sensitivity there? You know, so it is funny, coming from like the science background, check, I don't know if you talked

5:26 about this. I used to work at NASA JPL before being in VC. And like, so we were coding on like chat GPT to back then interfacing with some of those platforms. Realistically, like there's no world

5:39 where China did this with six million bucks. Like that's

5:44 obviously why. Now, they can't say that, right? Because we have giant export controls around NVIDIA processors on go into China

5:55 probably has done some kind of sneaky things in order to bypass those export controls. And so they'll claim that it's some ridiculously low number. It's not going to be that low. But the real

6:07 question is, obviously, China was very behind on this, right? This has all happened in the last couple of years. And with an amount of CapEx investment that's not so large that it was noticeable,

6:20 they were able to get to a point where they're beating open AI head-to-head And I think part of that you can blame on open AI is ceasing research as much and trying to commercialize. You can look at

6:31 their balance sheet. I'd seen their last fundraising round through an SPV and their burn is ridiculous, right? They're just pumping money. And so, eventually at some point, if they're going to

6:41 keep having capital, they have to actually generate revenue instead of being a research and development shop. That's why I think that's partially to blame. It's like Chinese government can backstop

6:51 whatever they need to. But The bigger implications just that, broadly speaking, I think that these foundational models are raised to the bottom. You're seeing that play out live. You've got four

7:02 or five big players more popping up every day and then you just end up competing strictly on energy cost and see how low you can go to charge for an API effectively. So let me let me ask one more

7:15 question and then I'll turn it over to Mark and this is selfish because we're sitting here at Digital Wildcatters We're building rag models for energy applications and our our kind of thesis has

7:27 always been these language models or large land foundation language models are all really smart they've gotten cheap enough we can use them as a brain but at the end of the day you got to have the

7:40 data set in energy and specific vertical expertise to be able to make a usable app that's kind of our thesis I mean 6 million bucks to train a language model. Does this make rag obsolete? What are

7:57 your thoughts there? I mean, if it was actually 6 million bucks, right? And actually, just close, I'm also an investor in digital wildcatters. So I may have some bias here. Oh, yeah. And I

8:08 think everybody knows I am.

8:12 My belief is that these foundational models, you're effectively looking at, you have to input so much data that it will always be the average of the data you put in I say that in consulting calls,

8:23 I say it all the time, that your average LM is just some dude on Reddit, kind of ship posting and hoping for the best. And so your accuracy is not that good. Differentiation in this space really

8:35 comes in two ways. It's either proprietary data, some sort of knowledge that you can fine-tune a model around, really give it expertise. That's what I think DLU does a great job of having, or

8:46 monopolistic distribution effectively, where you categorize and sort of. take over an entire category and then you own that segment and can stop anybody else from coming in. Hopefully that's what

8:58 they're doing in the oil and gas energy sector too. So it's two for one there, right? But there's no real pure level based technological defensibility. It's either the data or the distribution.

9:10 And Mark, where do you wanna take this? These would be potentially even rolling it in to the Trump administration Yeah, we can start with the most related item and part of me thinks that the

9:26 deep-seek timing is beyond coincidental on the heels of just a few days of the big Stargate presser with SoftBank Oracle and OpenAI talking about 500 billion. The first, I think allegedly the

9:46 world's largest supercomputer being underway in Abilene, Texas, of all places. And then there was another separate announcement last week on a big five gigawatt data center project that is planned

10:01 for Hood County, Texas, outside of the Dallas, Fort Worth area by sailfish, big real estate play. But what was notable there was the notion that at least in the first 600 megawatts, which is I

10:17 believe going to be online in 2026, really has a lot

10:25 of priority focus on behind the meter guess for our generation, which I think inherently just has to be the case, just given the stack of

10:36 power choices that you have to be able to drive

10:41 those mega data center type of operations And so, you know, really segueing into

10:50 the Trump announcements related. I guess we could start with natural gas. And, you know, there was an executive order that effectively hit play on Biden's LNG pause, you know, for one. And,

11:04 you know, at the same time, probably not as relevant or as correlated, the attempt at least through executive action to undo the 625 million acre offshore drilling ban in the federal OCS. We'll

11:20 see some of that, you know, onshore with BLM and what does that mean for really the future of gas-fired generation? And I think that's the most directly related to what we've been talking about

11:32 with respect to data centers and AI. So, Andrew, was that an FU from China for the announcement with SoftBank and Oracle and TAT-GPT? I think it might be more related to Trump's action in general

11:49 to. aligned with tech interests. The giant oracle announcement, I mean, you probably saw this, right? They haven't raised any of that money. They've raised like that commitment's a fraction of

12:00 the actual 500 billion. So there's a lot of money left to raise there. And so OpenAI, maybe China's reacting to that, trying to shoot them in the foot and say, look, haven't raised this money.

12:12 And we did this so cheap. Why would you ever give them that money? You're throwing money away if you're doing that. But realistically, I think China's response here. Trump is doing a lot of tech

12:22 ecosystem friendly things, right? He's trying to, you know, reassure a lot of things to the US energy production, especially as one of those items manufacturing. And so China sees that alignment

12:34 basically says we're going to actually compete and arms race you out. I think that's what you're actually seeing play out live more than any specific one-to-one correlations. China trying to

12:46 disenfranchise Trump in his early actions broadly. 'Cause one of the things I thought, you had the inauguration and you had Bezos, Zuckerberg, Musk, what's his face from Apple, all sitting back

13:02 there. And the perception or the narrative from the opponents of the president has been, isn't this so bad that tech is sitting there cow-towing to Trump? I actually took it as Trump sitting there

13:16 going to the world saying, hey, EU, you cannot find Zuckerberg30 billion anymore, 'cause it's an American company and we're gonna fight for America. So I kind of took it this way. And so the

13:32 response from China to say, hey, screw you, we're having a battle about technology, that seems to me to be more the fit for maybe what's going on, but again, I could be wrong. Yeah, I mean, I

13:50 think it goes both ways too, right? Where like one thing I saw is every venture capitalist and their mother was trying to find an excuse to go out to Washington, DC this last week. But I just

14:01 thought that was funny 'cause these are people who've never played in politics, never donated, never really made that effort. And they're trying to just see opportunity for profit, right? Like

14:10 that's most of the spineless VCs are just gonna try to profit one way or another. And so I think there's like probably some balance in that where Trump is certainly protecting a lot of US entities.

14:22 I think the TikTok ban will end up getting sold in some capacity. It's basically when Elon is talking about this on X, right? Like if X can't operate in China, TikTok shouldn't be able to operate

14:36 in the US. And that's sort of the policy that it seems we're going to on tech broadly. And that's net positive for America. But bringing this back a little bit. you know, specifically on the AI

14:49 side. I'm curious where your guys' heads are at on what this means for actual like implementation of these projects now and how that changes with the DPC announcements, like where people are

15:00 actually going to flow money, what's actually breaking ground and what it'll keep getting built and what won't. Don't rush out and answer Mark. Well, I think on the margin and just maybe I'm

15:11 influenced by seeing how the

15:14 related stocks are reacting this morning, which is probably just feeding on the meat for the algos, but

15:23 more of a trade than fundamentals. We haven't obviously sorted out the fundamentals yet, but I think one thing on the margin is that it's maybe net beneficial to off-grid Bitcoin mining, for

15:36 example. And when you're talking about more modular type of applications from a compute standpoint.

15:47 You know, can you be more nimble without incurring or facing the sunk cost risk, which I think is the big implication of what we're seeing with these

15:58 mega announcements, Stargate, the sailfish one, Fremont Island restart, et cetera.

16:06 So maybe

16:09 the segment of the market that is, you know, looking for opportunity to grab power and get up and running faster and you overlay the kind of

16:25 the deregulation outlook, you know, I think it certainly favors that smaller kind of middle segment of the market. So the one thing I'll throw in here, because, you know, I say this all the time

16:38 on the podcast,

16:41 I hate when people say this time it's different. different, you know, history of cycles and all. And so if we're going to use our analogy as the shale revolution, I still think the shale

16:55 revolution was primarily investor-led. I mean, you had a story, new technology, horizontal drilling, modern fracking that led to an alpha story that led to a lot of money flow in. And that's why

17:11 we doubled oil production and natural gas production has gone through the roof. It was investor-led. I mean, the incentives there were for even dollar per acreage in these growth-type metrics. And

17:25 so going forward, I think it's great to have Trump out there saying drill baby drill that, you know, the deal with Trump is you know what he means. I mean, we can all parse his words and stuff,

17:39 but drill baby drill is broader than just drill more wells. It's build power lines, it's build infrastructure, it's build LNG export plants. It's kind of all of the above. So I think it's great

17:52 to have a regulatory environment where that stuff can happen. I still think it's going to be throttled one way or another by the investors. And at the end of the day, I think you're right. They're

18:04 asking those questions of just, you know, hey, how much power are we truly going to need? I don't want to get over my skis And so, you know, a

18:16 complete validation of that, you know, how incentives have changed and what the investor community signals were versus what they are now. Shameless plug for your podcast with Dick Stoneburner. You

18:31 know, he described an era in which they were being heavily incentivized and directed to outspend cash flow and basically grow it. of maximum operational rates. And a lot of that was in the early

18:48 days was driven by the fact you needed to stay out of lease expirations. Completely changed now, post 2014, certainly post 2020, where all these private actors are listening to their investors

19:03 primarily, and what do we want? We want managed growth, we want more free cash flow, we want less profit get spending, and those are the companies that have been most rewarded in their valuations.

19:21 But there was a time, not too long ago, I think it was the as late as 2017-2018, where you had some Permian PurePlays that were trading at low teens EBITDA multiples. Now that all kind of reset

19:35 and recalibrated, but it was a bit unique in that the bigger type curves, faster production growth in the Permian, if you were a pure player, not encumbered by other things in your portfolio that

19:48 I didn't have to think about. I was awarding these premiums to that, but those have all kind of normalized as well. So it is going to be investor driven. So the notion that, quote unquote, the

20:02 industry has been held back primarily by politics and regulation over the past 10 years where it's diminished in its representation, the SP, for example, is largely a function of show me after a

20:19 decade of essentially zero returns on capital chasing that growth. We all knew where this was going to end, but in the moment, the incentives from investors and boards and management teams

20:31 responding to that were consistent with what their primary drivers and motivations are. And that is what investment community wants. So to tie a bow on this, Andrew, I'll put you on the spot.

20:45 We're what 72 hours into deep-seek announcement.

20:51 If the future of the tech world was AI is hot, it's the next big thing. And it was reaching euphoria of the internetcom bubble and that's a 10. And one is AI investment's gonna grow. Along with

21:11 GDP growth, if that's a

21:16 one, where were we before the deep-seek

21:23 announcement and where are we today after all, man. And I think a lot of investors are still kind of reeling here. So let's caveat that. But I'd say we were solidly at eight to nine where it felt

21:36 like at least the people who were in AI were all in for AI. Now, it feels like we're dialing that back down to maybe a four, but no one is trying to discount some of the consumer applications, B2B

21:49 applications. There might be a lot of sunk costs in the foundational models, and there might be a lot less defensibility, and then it's just strict enterprise software, right? The one thing I'll

22:00 also mention, not to open up a new can of worms here, Mark brings up Bitcoin. Can we talk about first couple of weeks of Trump presidency, what that's doing on the Bitcoin and crypto cycle, too?

22:12 We're going to come to that. Let me, Mark, I want you to answer the same question, tenascombubble1 is grow with GDP. Where were we before deep seek? Where are we after? And then we'll come back

22:27 and talk Bitcoin. Oh, I definitely feel like before we were at eight to nine, and maybe that's, you know, I reserve the right to adjust my scoring for after after watching how things trade today.

22:44 But, you know, I'd probably put it at least at a five. Yeah, well, y'all are betth wrong.

22:51 He does this all the time, by the way, Andrew. It's a trap, it's strictly a trap, I should know. So, y'all are right if we're talking perception and in the moment and stuff. We're still where

22:59 we are with

23:06 every technology thing We always overestimate the short-term potential for a new technology and way underestimate the long-term changes that that technology will bring, the potential there. We're

23:21 still in the same ship. The euphoria wasn't warranted before deep-seak, but long-term AI is still the bomb. Now, Andrew, pick up your Bitcoin point. Yeah, I don't know if I agree with you on

23:37 that check, I think this was the revelation. It's my fucking chair, dude. I'm gonna take the fluff on these poles going forward. Yeah, no, no.

23:48 No, so on the Bitcoin front, I mean, this is like, I made some good money trading Trump coin, I don't know about you guys, but the - Eggs for the heads up, I didn't even know it was happening.

24:02 Dude, you gotta hit up unusual whales on X, come on.

24:08 But no, so you're seeing already, I mean, not just like Trump launching coins, but the government's endorsement of crypto broadly and the deregulation around trading crypto, the ETFs, that is

24:22 all, and I'm not very deep in that space, but you're starting to see that come in really quick in the early days of the presidency as a priority to deregulate the asset class and legitimize it in a

24:35 lot of ways, that's where if I think about like. places where energy spend will end up. Bitcoin infrastructure, power cost is by far the biggest production driver on

24:47 Bitcoin. That's where I think the big impact will be necessarily that people are kind of overlooking right now with AI. And one other thing I think to your point and to what we were talking about

24:59 that I think is really important. And we talked a little bit about it a week and a half ago, two weeks ago we had Lisa Huff on and she was talking to Bitcoin. But in terms of AI and in terms of

25:11 Bitcoin, huge national security issues on this. I mean, we cannot let the Chinese take over the

25:23 Bitcoin mining industry just because who knows what would happen there AI data centers have got to be in America. And so

25:31 I agree with you. It's energy cost driven, but we have to make sure the energy costs are such. so that all that stuff can do it here. 'Cause last time I went through a pandemic, I couldn't get

25:44 any toilet paper and that really sucked. God help us if we can't get any AI next time and the ramifications there. I did hear something about in the pronouncements or the outburst, if you will,

25:59 that something related to a tariff on Bitcoin that's not mined in the US, how does that work? Yeah. Yeah I don't know how you'd be able to validate that. We were joking, does that come in on a

26:13 bulk carrier, a tanker, how does that

26:18 quote unquote get imported? Yeah, I don't know how you'd be able to track that. I mean, the entire idea of Bitcoins you can treat it without too much friction and a hypothetical world where I'd

26:30 use things like that in the past. I do want to hit one thing back on the, on the

26:39 I guess the oil side chuck related to the foray of announcements in the last week and things people are thinking about and maybe misunderstanding and it's been out there well before any of this kind

26:56 of headline stuff and everybody's talking about it, you know, in the dust up we've got with Canada for example, you know, we have talking heads out there talking about we don't need Canadian oil

27:12 and I think an understanding out of Roy Johnston's been a bit vocal on this here in the last few days. The fundamental is the US. particularly the Gulf Coast are fighting complexes designed to run

27:27 from a complexity standpoint to run heavier grades or sour grades and so we do need those sources of heavier grades to

27:41 optimize and to the benefit of the ultimate American consumer of refined product, we do need to be able to optimize against that set of assets that produce the product. So

27:55 I'm a little surprised, I'm a little surprised there hasn't been a bit more front and center discussion of Venezuela. Duneberg talked about it in their latest piece, but we'll get to

28:06 that in a minute Basically, the heavier crude is Venezuela, it's Canadian, oil sands. Mine. And

28:14 then Saudi Arabia, 'cause the shale revolution in the United States is light, sweet crude. So we don't, we used to have a bunch of the heavy sour crude, but it's in effect been kicked offline

28:26 economically, right? Yeah, and TI is getting lighter Yeah, so

28:35 one other thing just real quick. on energy stuff while we're here. I think the lifting of the export ban on LNG is really important. I do think national security wise, we need to be able to tell

28:52 our allies, you can count on the United States to provide you LNG. I think that's really important. I also found it very interesting that when Speaker Johnson sat down with Biden, he literally

29:04 denied doing that And he said, I didn't do that, I didn't sign that. And it's like, No, here you go. Here's the executive order. So I'm a representative from Louisiana. And I know I've had

29:17 more than one phone call from interested constituents on the gas and LNG side. So, yeah, you did.

29:27 I mean, there's always the question of if he remembers doing it or not, but we won't need to get into that. Yeah Scary stuff, all right. Before we go to kind of the final item, is there anything

29:44 that we want to see from the administration, energy or tech oriented that's maybe not in the discussion? And I'll even kick this one off. The one thing I want to see that I think is going to become

29:60 an issue is I think we need to get rid of the Jones Act or certainly exempt energy from the Jones Act, calling Robo over at the Heritage Foundation is going to come out with a piece where he's going

30:17 to tell us about how Hawaii, Puerto Rico and even Massachusetts, all the energy they're buying from other people other than the United States because we don't have a Jones compliant ship to move LNG

30:31 around So that's kind of my one thing that I think needs to happen that we're not talking about yet, but we will be. Andrew, give us one, make it tech or energy. Oh, man.

30:43 You know, I think more than anything, what I would like to

30:50 give a lot of podcasts

30:54 about to say is I would really love to see us officially defund the EPA in an official way. I don't know. You can't necessarily do that through executive action, per se, but just a lot of

31:09 inefficiencies. And that's why I'm hoping we'll come through with Elon and the doge. But a lot of government inefficiencies, a lot of policies that lead to things like the wildfires out in

31:20 California. All of that needs to be a lot better controlled from a state level. And that's not happening right now. Mark, Mark, give us your take on one thing and then roll into our friend Scott

31:35 Sheffield So I'm going to draft a little bit on. what Andrew said. And I think it has to do with really the, the criticality of regulation as it relates to the speed and flexibility with which you

31:54 can put in my favorite draft choice, gas fire generation, around all

32:05 of this, not only for making sure we can satisfy the demand and the near-to-intermediate term of all the incremental power demand growth that's coming from data centers and AI, but also just for the

32:16 ultimate reliability of the grid from a generation standpoint. And so, been looking a little bit into things like, you know, how do non-attainment zone emissions regs affect the siding of some of

32:34 this power generation? know Barre County is dealing with it. Um, pretty acutely and Urcott is, um, pushing pretty hard to get some flexibility around that because there is obviously growth in

32:47 that area. I didn't realize, you know, how much fiber had grown up, for example, around the San Antonio area, but I guess it makes sense because of the, the defense presence in San Antonio and

32:59 ATT being there, but taking it back to the sailfish example that I,

33:06 that I alluded to earlier, there's a reason, a big reason, I think, although it didn't explicitly stated it. So if the front end of sailfish's power build is going to be behind the meter net,

33:20 net gas fire generation hood is hood county is one of the Metroplex counties through the proximal counties that is outside of non-attainment zone regs at the federal level. Not sure what the Local

33:37 and state layers look like there's TCEQ stuff that comes into play, but I would agree with Andrew. I'm not sure I would characterize it as defund the EPA, but maybe more of a chevron deference type

33:55 of an approach or something I talked with a little bit with Arjun Murthy about over the weekend is lamenting the loss of Joe Manchin in the Senate, one of his parting pieces of legislation that made

34:10 it out of committee was that energy permitting reform act that we talked about and maybe under that umbrella, the streamlining and simplification of a lot of things, including EPA regs is on the

34:23 table and that would be a really positive

34:28 move to grease the skids on a lot of this stuff. Jump into Scott Sheffield.

34:35 Do you want to level set us what's happening there? So a little bit of background and context. So at the time of imminent close, at the time of FTC review of Pioneer's merger with Exxon, the FTC

34:54 is a condition of approving the merger issued a consent decree, which barred Scott Schofield from serving in any capacity, primarily on Exxon's board, but in any advisory capacity as well, as it

35:10 relates to its allegations

35:15 that originated from their review of texts and emails. And so, Texas monthly, forget the data on the article, it's fairly recent. So feature article on Scott Schofield, the ongoing saga, the

35:30 FTC referred. criminal allegations for review. Nothing's come of that. We haven't been treated to the evidence around

35:43 what the government's looking at as it relates to those texts and emails. And it really centers on, you know, the allegations that there was coordination and signaling led by Scott during the,

35:55 really the depths of the

36:02 COVID-motivated Smackdown to crude prices of the industry.

36:08 And, you know, my reaction one, if you really look at what was going on, then there was an industry of which Scott was a leader that, you know, had a lot of scar tissue from previous air pockets

36:25 and down cycles that were quite damaging to the industry,

36:30 really focused on You know, the Texas Railroad Commission has long had the right to pro-rate production in the state of Texas. And where OPEC learned it? You know, and I saw some commentary and I

36:46 don't remember the vintage of the Goldman Sachs conference, where his comments on, on activity and spending and production growth in a very public forum, obviously, to an investor conference,

37:02 where somehow construed as a

37:07 tacit violation of signaling and price

37:13 collusion on price, which seems to me to be a bit of a stretch. And, you know, I started thinking more broadly and more deeply about the history of what Pioneer and other companies led over the

37:27 last really 15 years in the Shell Revolution. You know, we wouldn't have another 5 million barrels a day available that comes out of the Permian and another 7 to 8 million barrels a day out of the

37:41 US. And I think it responded to your post reply to the tweet I sent out this weekend on the Texas monthly article, which really posed a question of whether, you know, or why as I think Scott

37:60 alludes to in his interview for the article is that he's essentially been treated as a pariah by the industry because of this, as he calls it, and as I think they treated as a smear campaign based

38:16 upon this apparent coordination with, you know, starting with the OPEC gathering that former mayor Bill White actually convened in Houston back during that time. So yeah. I think my whole take on

38:34 kind of agreeing with you on this is, if a US producer could truly

38:44 work with the rest of the world to raise prices, we wouldn't have seen minus37 oil, if you could actually do that. Number one, and number two, I think you make the best point, we basically

38:56 doubled oil production in the United States, and we have one of the longest inflation adjusted periods of low oil prices that fueled Amazon and all these vans running everywhere, and all the

39:10 economic growth it led to. My point to Commissioner Kahn would lean a con would just be, I'd rather you just say thank you, or pick up a post, you know, I mean, if you want Well, hey, Andrew,

39:26 I don't go ahead. So one other data point mentioned this as well.

39:33 US. average gasoline prices

39:37 in 2004 on an inflation-adjusted basis are almost exactly what American consumers paid in 2024,

39:48 and a large part of that was the wedge of growth that was a

39:56 function of the shale revolution in

40:02 the US. Most of non-OPEC growth out of

40:07 the last 10 to 15 years has been dominated by that wedge of production growth. Totally. So, Andrew, jump in on that if you want, and also feel free to talk about Lena Khan in the tech world,

40:21 because she hadn't been popular there either. No. Well, so I was going to ask you guys just because I don't have as much familiarity with this and the smear campaign. How many of these

40:31 conversations do you think just are the normal for the industry to and just what happens behind closed doors anyways, right? Because there's always a fair bit that, you know,

40:41 everyone's going to have some sort of, not like violating any regulations or anything like that, but there are conversations that happen behind closed doors in every industry. You pushed a really

40:52 hot button with me. I think context is hugely important to all those private conversations You have an infinite number of investor conferences and investor interactions where CEOs and sometimes board

41:06 members are speaking with of spectrum the across sessions panel are There. one on one investors industries where taken

41:17 to

41:19 the extreme out of context you could probably manufacture

41:27 as I said before. a reach of a tacit signaling argument that would be technically a violation of either the spirit or the letter of those

41:38 prohibited activities. I'll bring it to a specific, more recent example, and that is the US banks who have since fled, and very rapidly, the net zero alliances, G fans, and the net zero

41:54 alliance itself. There was a lot of talk out of European banks, even though if you go to G fans website, it's all kind of positive mission to accelerate transition related investments and new

42:09 technologies. There were a lot of pronouncements by banks that were explicitly either eliminating or eliminating their willingness or offering to finance and lend to oil and gas companies.

42:26 And, you know, I'm not an attorney. But if that's not restraint of trade that is a violation of US regulations and laws, I don't know what is. So if we wanna open this can of worms and get into

42:42 the private communications between industry leaders, then we're gonna have just really a nightmare of litigation. I don't think this administration is going to ignite that or accelerate that, and

42:58 I'm hopeful that the DOJ and the FTC under the new administration recognize that. And as Chuck said, the proof is in the historical results of what the oil and gas industry has done.

43:21 You do have companies already on record for 2025 saying, like Chevron's saying, we're going to spend a billion dollars less. capital than we did in 2024.

43:34 I think Conoco's on record is saying we're going to spend a half billion dollar less, half a billion dollars less. Well, that's being responsive and consistent with the signals and the incentives

43:44 that they're being provided

43:47 by their investors. And

43:50 that's as old as time. So if we're going to politicize that and start to criminalize things out of context, I think you're going to see a significant kind of risk aversion creep in to not only the

44:06 oil and gas industry, but American industry in general. It's that's a really, really hard, unhelpful precedent. And I don't have any more insight into what all the redacted and unreleased

44:26 evidence-based that that they're working with but

44:31 It's my guess is that there's an extreme

44:39 out-of-context type of interpretation that's at play here that I think is a very dangerous slippery slope to get on. Well, and the thing I don't like was most of what is being said as evidence of

44:54 collusion was a public policy debate that we needed to have at the time. I mean, COVID hits, oil demand went down 20. US companies

45:06 are shutting in production. Oil price is negative. Literally all these companies could go bankrupt and we could kill a very vital industry for the United States. And so I do think it was a fair

45:23 discussion of should we pro-rate, should we give floors these companies. And we did it for every industry. It wasn't just oil and gas. And so, you know, it was very much a public policy debate.

45:37 It was very

45:41 public that Scott was talking about this. It's not that he was hiding over here having a secret cabal type meeting, even though they're gonna try to pretend that he did, 'cause he's on some group

45:53 text with the Saudis So anyway, I kind of find that a big huge pile of BS. One, there is nothing funny about this story. It's pioneer employees, pioneer shareholders aren't gonna have

46:13 representation among Exxon, which is very unfortunate. The FTC, this is new territory for them saying, Hey you, can't serve on the board for us to approve It's supposed to be looking at

46:29 concentration of ownership and that's it. But the one thing that I will say that's amusing is when all of this was going on back in 2020 and we were talking about the railroad commission and should

46:46 they pro-rate

46:49 production to try to raise price I think it was Colin that said, Yeah, we need Bropac. Yeah,

46:58 I was frankly surprised they did. They didn't invoke pro-ration because - No, it would have been - Implications - I think I was against it, but I understood why we should potentially do it. I mean,

47:11 the other side of it is the implication is there are a lot of

47:17 Texas budgetary considerations that are pretty reliant on a healthy oil and gas industry in the form of royalties and severance taxes as well. That wasn't good for those revenue streams either. But

47:27 I

47:32 was surprised that the event was not extreme enough to motivate the railroad commission and go ahead and they hadn't used pro-ration since what?

47:44 70s. Yeah. Yeah. And it's been around for almost 100 years, so, but. Yeah, so anyway, the one last thing I'll say about this is, I mean, Lina Khan, we had an election. Y'all lost, it's

48:03 pretty chicken shit at the last minute, right out the door to finalize this order, 'cause I don't think what democracy was telling you is the people of America wanted business done this way. And

48:20 anyway, but Tech Bros are on board with this, 'cause she was over there killing MA in the tech world and.

48:29 Yeah we can't buy a company's and have liquidity events you don't Get Venture capital investment which has been I mean the VC community in the United States is why we have the most powerful economy on

48:40 the planet so we don't want to mess with that either well I hope Yeah go ahead sorry i Gotta Say I mean it's like they have to see them blocking a lot of hey the last five years sprite like that and

48:56 you can take that as you will at some of it's just lead to companies going out of business directly but even things like figma adobe like it's not like that's a monopoly in any capacity right and so

49:09 when there's some good policies like I was a big fan of getting rid of non -compete agreements just throw those out and it's a mixed bag with all of these government entities there's always a little

49:20 good and a lot of bad seems like we're running

49:25 Well, I'll say this, anybody that'll come on and say we ought to get rid of the EPA has a standing invite to join

49:34 BDE any week. So we'll just, you got a permanent chair anytime you want to. I appreciate that Chuck. It's been good hanging out with you guys. Cool. Yeah, thanks for coming on.

49:46 Cool. All right, everybody, if you like the show, share it with a friend, give us some comments. Remember, my ego is fragile, So don't say anything bad about me and we'll see you next week.