Big Digital Energy

0:00 Hey, BDE, welcome everybody. We're fortunate today to have our guest, Avery Plank. Avery, thanks for joining us. Absolutely. Colin is out on a call as we speak with the IRS, contesting the

0:14 fact that prostate exams should be tax deductible. We'll let you know how that goes. But anyway, Avery, you're here on a big day. One, you're here, that's cool Number two, Mark Meyer has

0:31 launched BDE Sidetrack. Lay it on, it's Mark, what's that? Just launched on collide, first entry to a blog that's really going to take things in focus for BDE.

0:45 And really just explore a little bit deeper about how we think about certain issues. This first one is on what I've titled, drill baby drill versus dig baby dig talking about. the relative

0:59 positions on energy policy, at least as manifest in the platforms. Where does sidetrack come from?

1:08 My early analyst days, the late great Mike Fraser, who was the founder of the securities group at Simmons Company and famous for tagging nicknames. I tend to be a little bit of a non-linear thinker

1:16 if it's not already obvious And so

1:27 in those sales and trading discussions as a research analyst, trying to connect multiple somewhat nuanced thoughts together seemed to be a bit tangential. I tend to like to think of it as non-linear

1:41 thinking. It's kind of a complex world. And so that's the name. There's no scheduled frequency, but it'll be a regular

1:52 post And so we'll talk about that. things that are of interest to us, and how we think about them, and hopefully get

2:01 some deeper analysis out there in terms of the things that we touch on on regular BDE. So Collide again is Digital Wildcatters Knowledge Share app, sign up at

2:15 collideio, logging in there on the desktops the best way to use the app. You got the Collide GPT there, the video search engine, the forum where you can talk. And that's where Mark posted. I

2:27 think we've got 20, 000 job listings on it. We've also got the app that has I think 75, 80 of that functionality, 100 functionalities come into the, to the app soon. So that's cool. And by the

2:42 way, I actually read it. I thought it was really good. Everybody should read that And it's policy, not politics. Yeah, in the context of 2024 election, there's a political restriction on on

2:56 colitis or should be yes. I enjoy having my girlfriend I would like to keep her. I was I was compelled to get it out sooner as opposed to later when I saw Tejana Brown tweeted something over the

3:12 weekend and I'm paraphrasing something about, you know, please let's not return to drill baby drill. Yeah, and our observations around that slogan and kind of what's reality for the upstream

3:26 industry, particularly in the US, after what we've been through for the last, well, since 2014,

3:34 because it kind of points out that, well, John Arnold too, right over a week ago, also was made the same point that, you know, is this really where upstream guys should be putting their money

3:45 into drill baby drill policy? And you know, it was interesting about John's point, because I kind of tagged back on it was he said. Okay, you have better legislation more easily able to drill.

4:01 You'll just drill more, more production, drop your price and destroy your economics. I think it was way more investor driven. Investors wanted production growth and that's what led to drill baby

4:14 drill versus the law. I think even if you free up the rules and regulations and all without investors saying go, go, go I'm not sure we see the flood production, like John maybe is implying. Yeah,

4:28 when I covered the group, best majority of my career covering the NP sector, the sector on a total basis routinely outspent discretionary cash flow to the tune of 15 to 20 or more, a lot more, so

4:46 we're

4:48 not anywhere near that now and I don't think we're going back But the point really is, is that.

4:54 a political or government exhortation in the US. to drill more flies completely in the face of the framework that MP management teams and boards, both private and publicly traded, are operating

5:09 under where they're meeting the demand of their primary stakeholders, which are their owner shareholders.

5:18 We might move the portfolio puzzle pieces around a little bit if there's more federal access, but on balance, there's, you know, we're not going to see this step change, not saying that, at

5:31 least within our orbit, we believe

5:40 that drill baby drill is

5:43 a literal command to return to the exalted from all on high. To what, to what quip master and legendary XTO founder Bob Simpson used to characterize the behavior of his because we're profligate.

5:53 competitors as growing for sport. Yeah, no, I think that's right and this was funny. So when I texted Avery and said, Hey, will you come join us? 'Cause Kirk and Colin are both out. Avery was

6:07 like, Yes, but I want to talk about one thingand that's Trump's infrastructure. Knock us out. So I am an infrastructure guy. So Chuck, you know, so I'm on the pipeline and

6:20 the side of the business have been for a long time.

6:23 I think there's been this misnomer, this misunderstanding that when Republicans are in, they just make things super easy.

6:33 That has not been

6:35 the case on the infrastructure side. The headlines make it that way, right? You had Keystone XL get pushed through with Trump

6:48 and

6:51 then immediately killed with Biden. So you see the big headlines Herk has been incredibly better under and. I say better, then quicker to get things through under Obama and under Biden than Trump.

6:60 Trump had more than twice as long between when something got

7:06 put to the FERC, to when it got approved. And part of that is just Trump just never got people in to the FERC and the newer version of FERC and I'm being the newest commissioners under Biden have

7:19 actually done a really good job of getting back to just getting things done. They've even come back and said, our job is not to do greenhouse gas. It's to actually look at projects, see if they

7:30 work moving forward. So I always get a little suspicious with some of my colleagues who are like, I can't wait for Trump, it's gonna make things so easy. I'm like, nah, that's not necessarily

7:42 the case. It was interesting. I moderated a fireside chat with Mary Madeline James Carville for the Lytham Watkins Energy Conference. And this can be a pro-Trump statement. It can also be an

7:57 anti-Trump statement. One of the points Mary Madeline made is that back in 2016, no one expected Trump to win. Right. And so traditionally what happens is each side's think tanks are vetting

8:14 people. The year coming into an election. And so if you look at the Heritage Foundation, all those type folks, nobody was vetting appointees for Trump 'cause they didn't think he was gonna win.

8:27 So he'd gotten to office and he couldn't install people. And so you're saying that about the FERC makes a lot of sense.

8:37 The pro, so the anti-Trump message in that, which, 'cause everybody says, Oh, Trump's gonna do all these bad things. And I said, Well, name Winnie Didham in four years. The one legitimate

8:49 argument to that is, this time he's gonna hit the ground running, he's gonna have his people in. There will be some of that, right? I mean, the good thing is, I shouldn't say good, but right,

8:59 so the FERC is bipartisan. You can't have more than three. It's five members that are commissioners, can't have more than three from any one party.

9:07 You've seen, they've done a much better job in the last two years of actually sticking to their task. I think one thing that it will be interesting to see, right, is you have had some of the Trump

9:22 supporters, specifically the probably 2025 folks, right, saying that they want to get rid of FERC, get rid of the

9:30 FCC and just get that totally off the table, plus as a minuses, as a long time small government guy. I would love to see that, but I also realize that you have to have somebody looking at these

9:43 projects, right? So that's just an issue. Yeah, I mean, it almost kind of rolls back into the, to the Chevron deference decision at the Supreme Court, as well as, you know, it kind of rolls

9:56 back into, ultimately, does the commerce clause just trump everything? Every issue out there, ie. the feds get the way in on it. Yeah, I mean, right. So that's another misnomer, right? So

10:08 all the troop pipelines are all interstate commerce issues, right? It's the gas pipelines that are FERC. So those are two different groups And obviously, LNG facilities are under FERC. So I think

10:22 you'll see some issues there. I think the other thing that will be interesting to see is,

10:28 are we gonna have just some sort of massive step change and how these things get approved? No, I mean, that's been my big thing to my, any friends of mine in the pipeline business, I'm like,

10:39 this isn't gonna get massively easier. It doesn't change anything like the energy transfer issues that you're seeing all the legal issues they're having in Louisiana just, you know. That's a, you

10:50 know, you need an attorney in here to talk about why Louisiana law is vastly different than Texas law, that's a whole nother side bar. But so, you know, the intrastate pipelines will still have

11:00 their issues, but, you know, MVPs of the world and some of those projects will, they're not gonna get any easier than they were. If anything, it might get harder if he holds up putting people in

11:14 positions again That'll be interesting to watch. But a big part of the inertia was those commissioner seats being vacant. That was a big part. Absolutely, they were too too for

11:29 a long time and wasn't it? You didn't have a quorum. You didn't have a quorum. Yeah, yeah. And then, 'cause we reported on

11:37 this on

11:41 BDE, Biden came in, appointed the third, They changed the rules and the big fear was that was game-changing, shutting down the rules, and at least the headlines have been, it's been really bad,

11:53 but you're saying as a practical matter, it was better. So his original, trying to admit it, Glick was the original sort of head of FERC. Right. He was just as slow as what was under Trump.

12:06 They brought him Phillips, who was the new commissioner or head of FERC, really front of the time now, and moved things much, much quicker. And now they have even newer commissioners in that they

12:18 just had hearing, was it last week, I think? And they were really interesting to me, if you listen to what they said about, it said, look, our job is not to be the CO2 watchdog, it's to make

12:32 sure the lights stay on, make sure that power energy gets to the people, which was a really interesting, and that was from both sides, by the way, which I thought was, that was, to me, a big

12:43 step change. Even from the Democrats. Well, 'cause when Biden appointed Phillips and they went three, two, I think. Yes. They changed the rulemaking so that emissions had to be considered. And

12:56 it was the first rule change in 21 years. And that was at least used to shut down Mountain Valley. So there was a fear that what you just said was not gonna be the case. So it's actually good to

13:12 hear 'cause of all the things that follow in this world, FERC's not one of them. Yeah, and there's really not, if you wanna follow FERC, there are people to follow, don't follow FERC themselves.

13:22 So, yeah. You've had some of them. You have FERC off. Yeah, exactly, that's a good way to put it. All right, Mark, what happened in Venezuela? Oh, an election yesterday, presidential

13:32 election. Much anticipated, should you put that in air quotes? It's all in air quotes. Okay, got it And so, um, I guess overnight.

13:45 some of the news showed exit polling and other observers suggesting that Maduro's opposition

13:56 or his opponent at Mundo Gonzalez, who is a 74-year-old former diplomat,

14:04 he was actually running in front of the opposition leader who has been banned from participating as a candidate, last named Machado, and so

14:22 the exit polling and observations were suggesting that Gonzalez was garnering as much as 65 of the vote, and Maduro was as low as mid-teens, but this morning or late yesterday,

14:38 Maduro essentially came out and declared himself the winner.

14:45 You know, where's Venezuela been in the last 25 years since Chavez came to power in 1999? As recently as 1992, Venezuela was the third richest country in the Western Hemisphere.

14:60 When Chavez came to power in 1999, the country produced 32 million barrels a day. Today, for various reasons, it's down to 800, 000 barrels a day. Now, I've seen some things while, you know,

15:14 if we get some loosening of sanctions, if we get more clarity on participation by

15:22 former international partners, there's a couple hundred thousand barrels a day that no one really knows. And most importantly, over this last 25 years, and it has accelerated in the later years of

15:38 Maduro's regime, you've had 7 million people leave the country. including emptying their jails and sending them here. I know Trump says that and there are some questions as to whether that is truly

15:52 happening, but there are a lot of respected resources saying, yes, they've dumped their mental institutions and their criminals. Yeah, and so, you know, in the old world of

16:08 murky geopolitics and geopolitical risk in events driving that

16:17 there used to be a risk premium that would show up immediately in crude. It's actually down. I wouldn't say it hasn't done much. Well, a couple of percent of the format in that. And what do y'all

16:26 two just hit on the importance of Venezuelan crude? 'Cause I don't think a lot of people realize it's the heavier stuff that our refineries need. Well, the whole redesign or the retrofit the US.

16:40 Gulf Coast refining system. back in the early to mid 2000s, billion spent to handle heavy sour. And that's essentially what Ben Crude is. Now, the shale miracle flipped all that on its head, but

16:59 yeah, it was a

17:03 primary source of what Gulf Coast refiners thought the future of, in the world thought the future of a feedstock was going to be. So, yeah, I mean, it's, it's hard to replace here, right? I

17:17 mean, there's very few large basins that have it. I mean, a couple of offshore basins, right? Mars crude is, it's about as close as you can get, and it's still way off. So, you know, it's

17:30 going to be, and then you've got TMX taking heavy Canadian West. So,

17:38 friends of mine and the refining business And it's really great. More problems for us though, but we'll see, but. You know, there was a, there was actually a call in the middle of COVID where

17:53 the Department of Energy reached out to some people and said, Hey, if we got to go spend a lot of dollars, what do we do? And Jake actually proposed on a call, let's retrofit all of the Gulf

18:07 Coast refineries to run off the light-sweet crude from US. shale, and he got told to go jump in a lake. But anyway, it's fascinating when you think of refineries that you can't just run a barrel

18:20 of oil through it. It's

18:25 got to be a certain mix and certain outcomes and efficiencies, et cetera, required. Yeah, I mean, that's what you hit on. You can run it. It's just not gonna give you what you want, right?

18:36 You're not gonna make any money Yeah, it's

18:39 pretty lower than octane gasoline in your Ferrari. I think one thing that may be left undone on the bucket list of places to visit is Venezuela. My wife was born in expat there a long time ago

18:53 before the

18:56 nationalization waves and then ultimately been close but not have not been able to visit. So I have one real quick on the one thing So I work for a company that's in the has building, who is getting

19:11 bought by excellent or Chevron excuse me. We'll see. Yeah, I will see. So if you're Chevron or Hess and you see this, does this give you a little more heartburn? Because there's always in the

19:21 back of their mind that Venezuela just takes over that part of the world. Because by the way, if you go to look at a map in Venezuela, gone is not on there. That's Venezuela. Right. Yeah That's

19:32 in the

19:35 Isquibo River, so it's the Isquibo province. We've talked about

19:40 that when there were. starting to be troop movements on the border. And, you know, does this kind of wash rents repeat of

19:54 Maduro's elections, air quotes? Does this push the

20:00 friction higher and the reaction to that? I mean, Maduro's firmly in control of the military, which has, I guess, been part of the problem in terms of being able to have a real life free and fair

20:15 elections. I saw, you know, footage and pictures from some of the polling locations and

20:22 there was a lot of firearms being brandished by uniformed guys. So

20:30 Millet, Argentina's populist president was hypercritical, he was one of the first to suggest it was illegitimate, and we'll see where the wedge between Venezuela or Maduro's detractors

20:50 internationally goes, but I don't think it heads in a good direction from here. We got a lot to talk to, so let's take this as the exit question on this issue and be brief on it. Obviously, not

21:08 good for continued oil production in Venezuela, obviously the Yana issue

21:14 rears its ugly head.

21:18 What do we actually do about this? Because at the end of the day, we lessen sanctions in exchange for a free election. That didn't work. What do we do? And is there anything that actually can be

21:31 done? I have no idea. Just a pipeline guy. I mean, what am I? Yeah, it's like, yeah. And I mean, because the thing I always hate about sanctions is it hurts people. You know, I mean, you

21:43 can arguably make a case that sanctions worked in South Africa, but it was a heavy price for a lot of people and the people you were trying to help with the embargoes. And so it's,

21:57 you're a pipeline guy, I'm a podcaster, so I have no idea. I mean, you've got significant US interests in Guyana, in the Guyana Basin and certainly the staybrook block. And

22:14 I think we'll continue

22:19 to try this diplomatic containment, but given how far Venezuela has spiraled and how prominent this is,

22:33 it's near neighbors are going to be more vocal. Right I hope it doesn't. to come to this, but

22:44 in the face of all this evidence that the opposition was

22:48 favored. Most Venezuelans are kind of tired of the last 25 years. It's a whole generation. You know, those things typically ended in a not nonviolent way. That's right. The girlfriend made the

23:01 point this morning that there was an uneasy detente between the business leaders and Maduro.

23:10 Does this break that? You know, because if internal pressure could come, it's coming from the business interests within Venezuela. So it's right to be seen. All right, so you know what's funny

23:24 is I think if we look at the remaining run of show, it's kind of like the greatest folly hits of renewable energy That was an intentional. Yes, so, Mark, you out of Fireway, Avery, you out of

23:40 Fireway, who level sets us on those acts? Well, we had a, we had an overturned semi on the I-15, which connects about the only

23:53 artery that connects Los Angeles with Las Vegas carrying estimated 75, 000 pounds of lithium batteries, which then caught fire and shut down the freeway for several hours. In fact, people were

24:09 complaining on I-40 because they were getting diverted and then causing traffic backups on I-40. Thermal runaway is the, I saw that as the term. That was a great, it was a great question. Yeah,

24:21 and I actually saw it in some commentary. I don't know if you guys have seen the video where the man gets on the elevator with an e-bike battery, a door's glass and an immediately. combust. And

24:36 then the next shot is people waiting on the floor, wherever the elevator is stopping and the doors open. And it's pretty gruesome after that. It's like out a Terminator. I mean, you know, well,

24:50 they determined in the in the I-15 shutdown that

24:58 by trying to give an estimate of how long it was going to take to move the hazardous material out of the way and get the fire under control that they ultimately decided that it just needed to burn

25:06 itself out, right? At least that's what I saw. And so these are the kind of high profile things, headline grabbing things that give you a little more pause as you think of, you know, having a

25:22 complete overhaul of the nation's transportation infrastructure to support a lot more batteries, essentially, moving up and down highways, etc.

25:36 I forget about all the other,

25:39 when I saw all these issues. This particular one, I thought it was interesting because it's on I-15. It's not known for ample water, right? So it's already this dry region. So just the idea of

25:54 having to get all these trucks out there to try to cool. And you can't put these out. You're just cooling them down so that they don't cause more damage, right? The amount of water, and then

26:04 where does that water go? And what is in that water, right? This is not a typical house fire, right? This is toxic metal in water that's probably getting, I don't even want to know now, you

26:16 know, and there's a lot of people who will say that, you know, that part of California gets what they wanted, but you know, whatever, I'm not going to say that, but - Insert our mid-landow dust.

26:25 Yeah, exactly, right,

26:27 but yeah, so, you know, it's an interesting conundrum that, you know, not only are you having these horrible out of all fires, but even putting them out becomes a. just a total nightmare. And

26:41 it's interesting.

26:44 Somebody other day was mentioning about getting them on the Catalina Express, the ferry that goes to Catalina. Our friend Mike Umbra. Yeah, Mike Umbra was saying that now if you do, they say if

26:53 you have an e-bike, you have to take the lithium battery off and hold it on your person so that if you catch as far as you throw it in the ocean. 'Cause I have a way to put it out. Yeah. Really?

27:03 Yeah And I'm like, has this happened enough that they're like, there's the best way to do this. We're gonna need you to take this and just throw it in the ocean. And just we're just gonna keep

27:11 heading out. Well, and again, I don't want this to come off as anti-lithium and all that 'cause God, I'd be lost without this thing. Yeah, let's not talk about that, yeah. But the whole deal

27:24 is, let's have an honest discussion about this when we talk about environmental impacts. It needs to be in the calculus One stat I will throw up that I throw out. that I just calculated, so it's a

27:38 lot of what would be wrong. But you said 75, 000 pounds of lithium battery. That stores the same amount of energy as 250 barrels of oil. That's the difference 'cause it's about a barrel of oil

27:54 weighs 300 pounds equals 200, 000, 20, 000 pounds of lithium in terms of just theoretical 100 energy storage, kilojoules, or whatever you calculated in. But I'm not gonna argue that when I

28:12 watched the gerbil turn, the whole time chucked. Smoked, okay. Yeah, but it's kind

28:19 of crazy. The other thing that was interesting is we had a piece from Nantucket, where basically they had wind power, Incident, things are starting to wash up on shore.

28:36 Yeah, that one was an interesting

28:41 one. What an unfortunate coincidence that our Nantucket resident staff BDE member is,

28:50 where is he? I don't think we can say. I don't think we can say. He is not here. But he's not here. I think the bigger problem is that none of us came up with a horrible limerick for this, you

29:02 know, but anyway. It once was a wind turbine from Nantucket. Yeah, maybe in a tripe. But that's uh that's right. The uh and so so the it seems that the beach closure for a single turbine failure

29:17 have closures have persisted or did persist for much longer than you know some foam some fiberglass and other things falling into the ocean and washing up on shore. Well there's There's a oil that

29:32 they're having to clean up from the turbine. I think they're finding that the fiberglass is starting to degrade quicker than they thought, right? So they're having to do a lot more clean up.

29:43 But yeah, it's, you know, offshore wind is

29:51 it's an interesting proposal. And it's you're seeing how when it goes wrong, it goes just as wrong as. Yeah. Yeah. And that's this, you know, we've seen it We certainly seen it over the last 40

30:04 plus years with nuclear power. You know, you still the the political opposition is is always colored by discussions of Chernobyl and three, three mile island. So you have these single incidents

30:18 and now where everything travels so quickly with photos and video and just our kind of political climate globally and certainly here in the US, you know, these things are Certainly progress setbacks.

30:36 Oh, yeah. Because you just devolve into this gridlock of really serious policy making and certainly consideration of what works and what doesn't.

30:51 So it'll be interesting to see how quickly this all fades and

30:57 when and if the next. I haven't kept up. Are they going back into the rest of the turbines and having to do,

31:06 the news that I've seen has only been on the cleanup and I'm like, okay, but there's a lot of other turbines out there. Like, are you making sure that this won't happen again? Is this a single

31:16 failure incident? But, you know. I'll be directionally right with this. I believe tax credits kick in at year 10 to refurbish blades andor replace blades. and the jury's out on whether you've

31:35 actually hit economic payback at that point. At 10 years. At 10 years, you know? And so that's part of the issue 'cause ultimately we're just gonna have a pile of these blades sitting around in

31:49 junk piles. I mean, we'll figure out something to do. So is there an asset retirement obligation for windmills in offshore, like there are offshore? Well, yes, I don't know, I'm curious. I'm

31:59 gonna have to look into that. What's my ARO? Yeah, it has a much higher NPV because of the shorter life. Yeah, absolutely. I mean, if you're talking about incentivizing maintenance replacement

32:12 complete system overhaul in a decade or even 15 years, you've got real obligations that I think need to be accounted for. Well, I mean, just saying, right. So they

32:29 just, what was this? Two months ago, they came out with new -

32:34 Bonding issues for offshore guys, right? So depending on your credit rating, whether or not you have to put it, you know, so the bonds increase for offshore oil and gas produce, that's, that,

32:45 that happened. My question is, okay, did that happen for offshore wind guys? Because some of these guys, you never even heard of who they are. And, and the idea is, right, they're going to

32:55 build something up and then flip it to a big utility, right? Because a lot of utilities don't want to take the, the risk of building They're fine with, okay, once you sell a 25 year PPA to, you

33:07 know, Massachusetts, they'll, they'll, they'll grab it, but they, they don't want, they don't want to construct it. So who takes that on? I'm going to have to mark that down. I'll look at

33:16 that. What's interesting too is out in the Gulf of Mexico, EMP guys, chain of title is responsible for all of it, right? It is. Yeah, for, for the upstream guys, it always goes back to who

33:28 took the police, ultimately. Yeah And so everybody can get. It hit all along the way. I wonder if they're doing that with wind farms as well. Which is why they've come out with these new rules

33:38 saying, okay, if you're chucky, ate soil and gas and you take out a lease, you're gonna need to put up a bond. I'm like Exxon, who's like, no, we're good for it. I got this. Yeah, yeah, no,

33:51 'cause onshore, onshore, particularly with private lands, we were able at some point in the PSA process say, uh-uh, you take it all, that's right. And it always got to the dumpy operator that

34:06 could declare bankruptcy. That's right. Offshore's never allowed to have it. No, no, boom ring's back. And it'd be interesting to see what happens to

34:17 the economics of suddenly you've got to post millions of dollars of bonds. I would imagine they've got to have something. I mean, if you're, but. All right, the fan base can write in and tell us

34:24 about that, or we can research it. We've got something to do. We've got to take it. In my analyst today, yeah work. Got something for AI to do. Last thing before we jump into the finger a week

34:34 shout out to our good friend Mark Mills who sent out a great tweet the no duh tweet, but read the tweet. Yeah. Oh, do you have it up? We have we may have arrived at a permanent point in no duh

34:50 land Renewable output is air quotes volatile who knew? Yeah, and so

34:59 There's Peace that he was referring to where it's in the economic times will post the link along with the tweet, but basically talking about the just the

35:17 safety net of natural gas and What's really stark in terms of recent performance between say wind and that gas if you look in the in the article

35:31 From the 1st of July to the 23rd

35:36 aggregate power generation from yours wind farms dropped by 78

35:42 from 57 - a little over 57 gigawatts to just under 13 gigawatts. And if you look at what stood in the gap - it's natural gas,

35:55 that boosted from just under 218 gigawatts to over 275 gigawatts.

36:07 And there was

36:11 a, I guess, a weather or climate situation where you've got just the inherent volatility and wind when it gets really hot in these high pressure systems, you don't have a lot of wind. So he's kind

36:26 of pointing out that there's no real weaning off of or transition away from more reliable, dispatchable power generation to support, you know, this, I think, somewhat naive notion that we're

36:44 gonna be able to completely change out an entire energy system that is wholly dependent upon or critically dependent upon things that are just naturally, naturally variable. Well, I mean, you

36:57 definitely,

36:59 regardless of, you know, what the dispatchable type of power is, right? It needs to be dispatchable. And I think that's the issue is that we just haven't gotten to a renewable system yet. They

37:12 can, you know, you can't turn the wind on, we can't turn the sun on, right? You know, everybody's saying, you know, that our batteries are gonna save us until they all catch on fire on I-15,

37:24 but, you know, until that's supposed to be the dispatch, right? but we haven't got there. Until then, unfortunately, I mean, we're all consuming a lot of power, more and more, right? So

37:38 it's like, I think the crux issue is at least as far as regulated utilities go, they get incentivized to grow the rate base, are either assets. Yes. And from a generation standpoint, you have

37:55 much newer, so much higher or much earlier in their depreciable life, so much higher value, which then gets spread over the rate payer base after they make their revenue and rate case to the public

38:09 utility commissions. At some point you bump up against, I think a consumer or rate payer tolerance level that you keep adding today without sufficient grid scale storage to back up the variability

38:24 of things like wind and solar You've got, I think, this somewhat skewed motivation incentive to go out and just build a bunch of additional

38:38 variable generation. Yeah, I mean, putting it in the rate basis, the name of the game, right? Yeah, you can put art, you can put art and furniture in your office building in the rate base.

38:48 That's right. Helicopters for executives. Not that I ever worked for one of those companies. You know, it

38:54 is natural gas. The ultimate answer of kind of the swing provider, the emergency dispatchable, you know, we'll see. We've got a tremendous amount of regulatory inertia to overcome in nuclear,

39:11 but what's, you know, what's the right mix? But in the meantime, we're

39:18 kind of showing the practical reality of this

39:23 revolutionary pace of adding

39:28 less reliable generation to the grid. And the fact that you need a lot of the system to catch up, the rest of the grid, namely storage. Will we get there? I think we will at some point to a

39:44 meaningful degree is just that politics are embedded in all of this. And there is no long-term in politics. So as these incidents and events that we've been talking about keep cropping up,

39:59 think you're gonna have

40:01 continued polarization on the

40:07 political spectrum. And that's no good for anyone in that we have never, at least in my lifetime, ever gotten to a coherent, sound, fundamental energy policy. No, no, that goes without saying.

40:22 Irrespective of sight of the other. No, absolutely. But I

40:27 think one thing you said, I mean, we were talking earlier about what's the energy mix. You know, people will show like in Texas, all the massive amount of green energy that we've added. But one

40:38 of the things to your point is when we show those, and we have, right, we've added all this solar, all this wind, how much storage have we added, how much, you know, so it's like, it's great

40:50 that you've added all this extra power, but if I can't use it, what's the point? Right? And I come back to, we can't even have an intellectually honest discussion about, hey, we're going to

41:05 have this generation that's renewable, it's better for the planet. Great. It's going to be less reliable. We're going to have to do things like turn your thermostat up to 85 degrees or 80 degrees

41:17 when it's a really, really hot day and it's not very sunny, you know, that's what I hate that we can't be thoughtful and Mark makes this point all the time and it's a really good one. By the way,

41:28 audience, we talked about having way more friction today. that we were going to be a lot edgier and all we're doing is agreeing with each other. But you always make the point that science rarely

41:38 enters into the discussion that engineering expertise on what actually can be done never pops up in the political - But when's the last time an engineer's run for office and been a politician, so

41:51 that maybe that's the problem. Yeah, I think I pointed out. And if they ever did, maybe they weren't good engineers. So maybe

41:57 one of the other. Take the PUC, for example, I pointed this out a couple of weeks ago, we talked about the commission's makeup. There's five commissioners, one of whom holds an engineering

42:09 degree and it's in chemical engineering. Yeah. You know, I think

42:19 the, just the basic practical implementation issues and obstacles that have to be addressed, analyzed, overcome in design and implementation. are at least in terms of the leadership of some of

42:36 these decision makers, the ultimate rule makers, needs to have more kind of technical and analytical depth at the table. Yes, there are staffs and administrative agencies and commissions that are

42:48 chock full of these people and you brought up the

42:53 notion of the FERC being balanced from a partisanship standpoint. If you go look on the PUCs, Texas PUCs, or

43:02 PUC, Texas, look at their

43:06 bios. They're all characterized as nonpartisan. Well, the governor appoints all of them. Yeah, the PUC

43:18 commissioners.

43:20 I think as people experience directly more pain of inconvenience or cost as we're going through these growing pains,

43:40 I think the more interested they will get in being much more informed from a voting standpoint. I don't. As well as, hopefully, as educated consumers. I mean, 'cause if you vote with your

43:46 pocketbook, potentially that would be great too. Yeah, I mean, I think, I think - Ignorance doesn't mean stupid, it's just you're not aware And until you get some spark or catalyst that said, I

44:02 really wanna be,

44:04 let's take the case of an election, on substantive policy where there are issues like this embedded in, I think, the ongoing energy policy debate that you need to understand at a deeper level

44:15 what's really going on and what the feasibility of all this stuff is.

44:21 Meanwhile, the rates that show up on your electricity bill keep creeping up for some reason. Yeah. Or you have extended outages because, you know, allegedly center point was saving money by not

44:36 doing distribution line maintenance.

44:40 So, I'm number one fan of

44:44 BDE Vlad. Vlad is a police officer in Richmond, Texas, who I see every morning when I get coffee. He gives me detailed notes on what he liked about the podcast, what he didn't like the podcast.

44:55 Avery to catch you up on Vlad's stuff Basically, he thinks Jake Corley's the worst co-host we've ever had, and they've gone back and forth. Wow. But this morning, when I was getting coffee, he

45:07 demanded that we bring back finger of the week. So Jacob is busy making a finger of the week video, which he's gonna cut in right here.

45:23 But since we're bringing it back, we need to bring it back in full force. So we've got two fingers of the week. I'm going to mark on the first finger of the week, Avery, you're doing the second

45:33 finger of the week. So Mark, the first finger of the week goes to the Dodgers. And I have no idea I'm a fair weather baseball fan, but I got five texts this weekend from friends, including you

45:46 that basically said screw the Dodgers. Well, yeah, the Dodgers were in town This weekend for a three game series. And of course, the, the ghost of 2017 and how the Dodgers were cheated out of

46:01 the world series by the Astros sign stealing came up, started off with a comment from Clayton Kershaw, who actually happens to be from Dallas, talking about seeing the, the ring statue in front of

46:19 Minute Maid Park.

46:21 for the 2017 championship, you know, he just doesn't like coming here because it just dredges up all of those unfortunate memories of basically how the championship was stolen. Never mind the fact

46:35 that they couldn't score any runs in Dodger Stadium. And if you go look at it at his playoff line, it's, let's just say it's not clutch over

46:47 the span of his career And so there's another kind of sub drama that's been running well before this weekend series with a relief pitcher named Joe Kelly, who got into a bit of a dust up with Correa.

47:06 Dust up being that he's got, this was a few years ago, several people, players, teammates between him and Correa. And he's walking away, giving kind of

47:18 the droopy lower lip pouting sign.

47:21 He's kind of public enemy number one to Astro's fans when they visit, then it made part. The peak of the, I think the back in your face was Saturday night when Breggman walked it off on the bottom

47:34 of the ninth with a home run off of arguably their top reliever Blake Tronin. So score one for the gig guys. Yeah, and I'll just add a little color here One, you know, you had the Red Sox get

47:52 sanctioned for

47:55 electronic science ceiling back in 2018.

47:59 Who did the Red Sox play in when the World Series against? It was the Dodgers who is now one of the superstar roster members of the Dodgers at Smoky Betz, who was on the Red Sox side in 2018 when

48:11 they - I guess you could say they stole the championship from the Dodgers.

48:17 And if you go back as far as the late '80s,

48:22 picture from Chicago White Sox, who's on record is commenting about the fact that Tony La Russa's White Sox team assigned pictures to sit in the manager's office and watch a video feed from the

48:34 Kamiskey part center field camera and flash a light next to the Gatorade sign. So this stuff has been going on for a while. And really the imbalance in the way Major League Baseball has treated this

48:51 is a podcast for another time. Well, and I'll go old school. Mike Piazza, tell me that guy didn't do steroids. Come on, doctors. All right, Avery. There's a second figure of the week.

49:06 Southwest Airlines, play it on us. So as a loyal Southwest Airlines fan and that says a lot about me, but so they've decided or caved to Elliot management, are going to go switch up from the get

49:22 on, you know, ABC boarding and they're going to have to pick a seat now, ahead of time, just like every other airline, supposedly, you know, that's, did some survey 80 of the people, that's

49:35 what they wanted. I really actually don't believe that, but sure, whatever, I think that's just caving. And they're going to supposedly add in some sort of business seating in the front, you

49:45 know,

49:47 not really happy. It'll be mainly, I will say this, what people forget about with Southwest, one of the greatest parts of taking Southwest is when I show up, I get there like five minutes before

50:00 another flight that I'm not on. I'm like, can I get on that one? They're like, sure, get on there. Just, they don't care. It's like, just get on a bus. Yeah, it's not luxury, but I'm not

50:10 flying, you know, to not going to take a Southwest fly to why they do them. But you know, so just they're just changing up the whole thing. Now, supposedly they're gonna keep they're gonna keep

50:20 the the bags fly free and all that crap, but now it's just another cheap airline. Yeah, and

50:30 the love of Southwest Airlines, 'cause I used to have it too, Herb Keller, the original CEO, was one, arguably the greatest marketer on the planet. Two, the thing I loved about him is multiple

50:46 times through the years, he would go work somebody else's job He would go be a baggage handler. He would work as a stewardess. He wouldn't fly the planes 'cause he couldn't do that. But truly, I

50:59 think was in touch and his whole thing was always, 'cause when he started it, they were gonna go out of business 'cause Braniff just cut the fairs. That's right. We're gonna run 'em out of

51:10 business. And he just did an ad that said, wasn't life better after we came along to compete with Braniff? Don't let us go out of business and people paid more for airline flights. just to keep

51:21 Southwest around. And so I get the love for Southwest, but I feel like they've kind of lost that. A little urban legend about Southwest in the early days. And I actually saw it when I was flying

51:36 in and out of Dallas when I lived up there at Love Field.

51:41 Why

51:43 was Gate One Love Field always the San Antonio departure?

51:48 No, 'cause Herb never moved from San Antonio and was commuting from San Antonio to Dallas every week. And so the closest gate was Gate One that was the San Antonio departure. I

52:01 love that. The other story I loved is when they came up with the new name of their frequent flyer program, the lawyers just screwed up and didn't run the search properly. And it turned out, and

52:13 I'll make these details up, but like a small trucking company somewhere the rights to that ensued. And at some point, someone tells Herb, we've been sued, blah, blah, and he goes, oh my God,

52:25 what happened? Did we do this, we screwed it up. He picks up the phone, he calls the owner of the trucking company, he says, hey, let's do this. Let's arm wrestle for the name. Wink, wink,

52:35 I'm gonna lose. And the

52:40 loser has to donate a million dollars charity to the winner, as well as, you know, the winner gets the name and all this And they wound up having this boxing ring, arm wrestling, herb smoking.

52:54 Over the top type of deal, I love it. Over the top type thing and Southwest lost. So they gave the million dollars to the charity. They changed the name, but the free publicity from that tripled

53:06 the membership. Oh, absolutely. From the fire program. So just genius, genius like that. And to show you what a good guy, the trucking company guy was, he matched the million dollars to the

53:17 charity No way. Just like, Hey man, you handled this cool. anyway. All righty. Appreciate everybody tuning in. Every standing invite to come back anytime. We really appreciate you joining us.

53:30 That was fun. If you liked the show, please subscribe, drop us comments. We try to get back with those and peace out.