Anas Alhajji on U.S. Presidential Influence on Oil Prices, Energy Market Geopolitics, and Nuclear Energy's Future

How much influence do U.S. presidents really have on oil prices? Our latest episode promises an eye-opening discussion with Dr. Anas Alhajji, an esteemed expert in the energy sector, who unpacks this and other critical topics. Dr. Alhajji sheds light on the often-misunderstood relationship between Middle Eastern politics and oil, and how Western media narratives miss crucial local stories with global ramifications. We also explore the strategic significance of the Strategic Petroleum Reserve (SPR) in the lead-up to elections.

Get ready to reimagine the energy landscape as we delve into the evolving role of natural gas and LNG. Dr. Alhajji critiques current climate policies and the unrealistic assumptions baked into energy transition models. He highlights the need for a cautious and nuanced approach to energy forecasts, particularly in light of factors like electric vehicle adoption and China's economic shifts. You'll gain a deeper understanding of why businesses, rather than short-term political policies, are the true drivers of long-term energy trends.

Our conversation takes a futuristic turn as we assess the potential of nuclear energy to meet the world's growing energy demands amidst climate change challenges. Dr. Alhajji discusses the pivotal role of nuclear energy in the Arab world and its geopolitical implications. We also confront the complexities of energy market data and the inflationary impacts of AI advancements. Tune in for a balanced, insightful, and at times humorous episode, complete with an amusing anecdote about weather forecasting with a chicken, as we reflect on the significance of reliable information sources and offer a cautious outlook on the future of global energy markets.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

 Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.

Foodies unite…with HowUdish!

It’s social media with a secret sauce: FOOD! The world’s first network for food enthusiasts. HowUdish connects foodies across the world!

Share kitchen tips and recipe hacks. Discover hidden gem food joints and street food. Find foodies like you, connect, chat and organize meet-ups!

HowUdish makes it simple to connect through food anywhere in the world.

So, how do YOU dish? Download HowUdish on the Apple App Store today: Support the show

Transcript

Speaker 1: 0:08

My name is Michael Guyatt, publisher of the Lead Lag Report. Joining me for the rough hour is Dr Anas Al-Hajib, who I always enjoy talking to. Dr Anas, I know a lot of people on Twitter know about you, but a lot of people may not be familiar with your background. So introduce yourself. Who are you, what have you done throughout your career and what are you doing currently?

Speaker 2: 0:27

Sure, my background basically started with academia. I was teaching at several universities, then I moved to the private sector. I worked for NGP Energy Capital Management, which was the premier private equity in oil and gas, probably around the world, not only in North America and I stayed there for several years. Then I left in 2016. I wear several hats since then and I'm still wearing most of them, and one of them basically is being the kind of an advisory role on the first and only energy focused media platform in Arabic, and it was just tremendous success for the last three years.

Speaker 1: 1:24

So it's interesting that you're strictly saying it's in Arabic, because obviously when we talk about a US audience, right, they think about the Middle East, they think about OPEC, but you're targeting more that end of things, the Middle East, and knowing that part of the world, I am curious to hear your perspective on how Middle Eastern politics, and how oil in particular, gets shaped by whoever is president Trump or Biden.

Speaker 2: 1:54

Sure, just before I do that, I just want to clarify one important thing that the Western media, when they cover events and oil in the Middle East, they cover it within their own lens and within their priorities and therefore what people get out of their people who are in Dubai or in other places is probably less than 1% of what they should hear. This is one of the market cases for Attaqa. Basically is that there is a lot of information that traders, investors and others want to know about, but the Western media is not interested. For example, we broke out the stories about the power outages in Egypt, about Egypt basically being or was an LNG exporter and it's becoming an LNG importer and what is the impact of that. We broke those stories because the Western media was not interested. When you talk about power shortages power shortages in Kuwait, power outages in Kuwait what is the impact of that? What is the impact of that on oil exports? What is the impact of that on LNG imports, etc. So the Western media is really not that interested in the local stories. That has an international impact and we cover that.

Speaker 2: 3:11

But to go back to the elections, people have this general view that Trump is bullish for oil. When we say bullish, bullish for what? If you are talking about prices? No, in fact, let's be clear about it. If you look at various presidents and their relationship with the oil industry and their impact on the oil industry, president trump would be one of the worst in us history. President trump want oil prices to be low. President trump wants wants low gasoline prices. So, yes, he can give you permits if you want to, but why are you going to invest when prices are low?

Speaker 2: 3:52

If you look at and I'm not saying this, I'm trying to be apolitical here If you look at the period since Biden came into office, we got very high prices, very high oil prices. Oil production reached the highest level ever. Natural gas production reached the highest level ever. Lng exports reached the highest level ever. So what do you need better than that? Of course, I'm not suggesting that you need to elect a president based on that, but the idea here is, if President Trump comes back to the White House, it's really not that good for the oil industry. That's what the bottom line is administrations.

Speaker 1: 4:49

The energy sector, just stock market-wise, tends to do better versus when you have a Democrat in office, probably because, to your point of that perception right. Do you think that there's something about the energy market that might make that different going forward the next four years, if Trump does win the presidency? Not?

Speaker 2: 5:04

really because if you go back and look what happened, investors, especially in shale, lost a lot of money. I mean lost billions and billions of dollars during the Trump presidency. They did not make much money at all. I mean those who invested in 13 and 14, they literally lost billions of dollars during Trump. But we got to remember the following you are not constantly under threat, you are not being attacked, you are not being bad mouthed, you are not getting a very bad reputation.

Speaker 2: 5:36

And here, to think about it from kind of a leadership point of view and academic point of view, kind of a leadership point of view, an academic point of view the oil industry. One of the problems of the oil industry is that it got relaxed for a long time under various Republican administrations. And the fact is the oil industry should be on its toes all the time to survive, because most losses that happened happened because they really kind of went to sleep, because they thought they are safe and being under threat all the time is good for the industry, good for the society, good for everyone, because they really should pay attention to various things that make the industry better at doing business. Better at doing business. And one more point basically that's coming up is related to the use of the strategic petroleum reserves.

Speaker 2: 6:32

President Biden was filling up the SPR with about 3 million barrels a month and they plan to purchase 6 million barrels for August and September and then they cancel that. They cancel that Now. They are free to withdraw just before the elections, to withdraw oil from the SPR in August and September if they want to. Our view was they will withdraw oil from the SPR if oil prices I'm talking about WTI here is around $90. I'm talking about WTI here is around $90. But when it comes to politics and it comes to the current events as they are, I think they are so desperate they might even use the SPR, even at lower prices. Let's be clear here that any president, whether Republican or Democrat, they will use the SPR before the elections and we have enough history basically basically to prove that point. So it's not only a Biden thing.

Speaker 1: 7:31

It's funny how those in power want to stay in power.

Speaker 2: 7:34

Absolutely.

Speaker 1: 7:35

And doing things that they probably shouldn't. I haven't looked at the numbers recently, but how far away is the SPR to being replenished prior to?

Speaker 2: 7:43

Oh, very far away, very far away. We are around 370 million barrels right now. We used to be about 610. So we are very far away. But really I mean, the fact is and there is an old video from like 2022 explaining all those points that I would like to mention quickly here that we don't need 600 million. And those who are talking about Biden drained the SBR no, that's absolutely not correct 350,. Basically we went to about 345, that's the lowest. Even at that, we can handle any crisis. This is not a big deal.

Speaker 2: 8:19

And we got to remember that even President Trump wanted to sell half of the SBR, which is more than what the Biden administration sold, and there was an agreement between several Republicans and Democrats that we don't need that much SBR, especially sweet crude. And the reason why? Because when President Bush, george W Bush, built the SBR to 700, at that time we did not have shale. Shale came in after 2010. And now shale added between 8 to 9 million barrels a day. So why?

Speaker 2: 8:58

I need to store oil in the Strategic Petroleum Reserve and I have the oil under my feet, so there is no reason to keep the 600. I can survive with 300 and mostly it will be sour, which is what we import from overseas and what is or what will be affected by the hurricanes in the Gulf of Mexico, because that's an emergency I need to use oil for. But it's all sour, it's not sweet, so I don't need that much sweet crude to use, and if I really want sweet crude, it should not be in Texas, by the way, it should be somewhere in the Northeast, because they are importing the sweet crude from Nigeria and other places. Which is one of the sad stories in the United States is that the United States is the largest producer of oil, yet the Northeast imports oil. The US is the largest LNG exporter, yet the Northeast imports LNG from other countries.

Speaker 1: 9:54

Let's talk about LNG for a moment, because a lot of the focus is much more on oil in traditional media and I know you want to focus on more than just what the traditional media puts out there. Any thoughts on liquid natural gas as far as how it's trending and any sort of volatility that could be coming?

Speaker 2: 10:10

We do publish, by the way, a weekly report on natural gas and LNG and then we publish a very comprehensive report on Europe and LNG and its import from Russia. So for those who are interested, basically they will find a wealth of information in our report and we usually get information way before the media. So we are really bullish Outside the United States. We are bullish on natural gas and, in general, we are bullish on LNG. In fact, we are a big fan of LNG. I think the story of gasoline and LNG is way bigger than oil in the future. People say, well, natural gas is the bridge to the future. No, it's no longer a bridge. If you look at all the evidence from around the world, it is the future. If you look, in fact, at just what we've seen in the last couple of months major gas discoveries around the world it is the future. If you look, in fact, at just what we've seen in the last couple of months major gas discoveries around the world everyone is looking for gas, of course. One of the reasons why because it is the cleanest fuel anyway. At the same time, now gas is becoming as global as oil, because I can transport that in the form of LNG, and technology has improved substantially in recent years where I can use those floating ships. And with floating ships, this is kind of an amazing business model because, like now in Kuwait, for example, the temperature, by the way, it was 123 degrees just three days ago, 123 in Kuwait the consumption of power basically led to power shortages in Kuwait. So what they do is they rent those ships and they regasify. They receive the LNG, regasify the gas, put it in pipelines and take it to power stations. Well, at the end of the summer they don't need it. Well, that ship can go to South America after that, because that's when they have the summer and they need that. So this development of technology basically makes natural gas a global commodity, and what we see here is we have a retreat from climate goals, as we see around the world. On the other side, we have climate policy failure and, by default, when you have a climate policy failure, you have to rely on another source of energy, and that source is going to be mostly natural gas, but it is going to be coal too.

Speaker 2: 12:47

So the idea and this will bring us to another topic those who are talking about peak oil, peak natural gas, peak coal, they are missing the point, and one of the points they are missing is that most of the decline we see today, even in China, is really about economic growth. It's not about electric vehicles. It is the low economic growth in China that is leading to lower oil demand. By the way, this is the subject of today's Daily Energy Report, and we have a very long report on this, too, coming up this week. The whole idea here is that everything you see about peak oil has some wrong assumptions, and, whether you talk about PP, they are expecting oil to peak in 2025. Chinese oil companies they expect oil demand in China to peak before 2030.

Speaker 2: 13:42

Well, here is the problem. One of the problems is when they model the impact of electric vehicles. They model only the direct impact, which means that you are buying an electric vehicle instead of a gasoline vehicle and they say, well, I just lost a gasoline vehicle and they calculate the impact of it. Well, to make that electric vehicle, you need a lot of oil, and you need more oil than the gas vehicle for a simple reason the batteries are extremely heavy and to compensate for the weight, manufacturers are using some composite materials that are made from better chemicals instead of metals and other heavy materials in the ice vehicle, and that's where the consumption of LPG and NAFTA increases substantially, and that's not being counted. That's why you see people talking about oh, there is strong demand for oil from bitter chemicals, absolutely, but because of EVs. They are missing that point. Evs, they are missing that point. They are missing the point that, even if you look at China, for example, about 15 to 20 percent of those who are buying EVs today are replacement for older EVs, but they are still counting them as a cost to the oil demand and that's absolutely a mistake. So there are many problems here.

Speaker 2: 15:09

That's why we, for example here's another one they assume that anything that the governments want to do and it's on the books will happen and it will succeed 100%, which is nonsense, because we know for the last 100 years. We have thousands and thousands of books and articles. And others talk about government policy failure. Why, when it comes to climate change, the assumption is always 100% success. Look at Germany. Look at the failure in Germany. We have serious problems. Look at the retreat we are seeing around the world right now from climate goals. Why? Because of the failure of government policies. Yet they assume it is a success, 100% success. Why they do that.

Speaker 2: 15:58

This is very important for everyone to know that when it comes to the IEA for example, the International Energy Agency or OPEC or any others these are international organizations with paying members. So if Germany comes in with a plan and institute regulations and laws and submit that to the IEA and say, here is what I want to do, and I work for the IEA and I'm looking at the German plans as an expert and say there is no way this can materialize, this is just a dream, these are wishes, this is crazy, it's not going to happen. Well, guess what? Because they are paying member, I cannot even criticize the plan, I cannot even modify it, I cannot even put a footnote. I have to take it as is and model it within my model, as if this is the truth. And therefore the IEA is going crazy with this forecast of peak oil, peak this, peak this, peak this, simply because they are taking the policies as is and saying, okay, here is what I have and this is going to happen. And simply because they are paying members, I cannot say anything. If I say something, most likely I'll be fired or be punished. That applies to all the international organizations and therefore we have to be very careful taking information from them.

Speaker 2: 17:19

Related to this and please allow me just one more point and that does not mean the outlooks by the oil majors are also correct. We have PP basically predicting oil demand to peak in 2025, and we have ExxonMobil and others. All of them have outlooks. We have to be very careful with this, for the simple reason that those companies create several scenarios, then a committee will meet and pick up the scenario they want to invest based on, and that remains top secret. That's really the secret sauce of the company and they will never share that with anyone else. Now they look at various scenarios and then they will choose which scenario to make public and it's not the one that we'll invest on, and therefore we have to be very careful dealing with that too. That's why the information we have is really bad. The outlooks, the divergence among them, the differences, are huge. If you look at demand forecasts, even for this year, opec has the demand growing at 2.2 million barrels a day. The IEA is less than a million, and you can see the problems in those forecasts and their impact.

Speaker 1: 18:32

I like that point about the retreat from climate change and I'll share that post. You put up on X around that before. Presumably that's only going to get accelerated under a Trump presidency, so whoever is in office will dictate the deceleration of that energy transition now comes to the oil majors and oil companies.

Speaker 2: 18:59

These are very old companies I mean, you're talking about some of them like 130 years old. They don't like changes every four years and they are not going to go. Remember when gasoline prices increased substantially in 2022 and the Biden administration met with the refiners and told them oh, we are going to relax some regulations so you can produce more? But the companies did not like it because these flip-flop policies are not good for investment, not good for the future of the business. So they like really steady step. They don't like changes.

Speaker 2: 19:35

So the first thing is, even if Trump changes things, we are not going to see major changes in the behavior of oil companies, because they know this is only four years and I'm looking at the next 30 years, I'm looking at the next 50 years. So the oil companies may not respond. I mean, there will be people who will take advantage of it anyway, but we are not going to see that much change. The other issue we have to be careful with is that the failure of the green policies is going to happen, with Trump or without. Yeah, we can take the idea of the acceleration, but the failure is happening anyway.

Speaker 2: 20:15

If you look at GM, you look at Ford, you look at others, you look at the decline in growth in sales in electric vehicles, you look at the problems we have with offshore wind, et cetera. So the issues are there, whether Trump is there or not. What we are going to save basically is just the money that's being wasted. If you look at the programs that have been advocated by the Biden administration, especially on offshore wind, probably we can save that. So there will be some savings, there will be some changes, but not much, simply because companies do not like those changes every four years.

Speaker 1: 20:59

I wonder what you think would be more consequential to the energy market policy or companies and when I say companies I'm talking about tech companies. So there was a comment from somebody I'm going to show it on the screen from Oliver said I wish I could join. I'm going to watch it later. Critical topic Microsoft taking ownership positions in multiple energy companies in Scandinavia. Now you've been seeing at the periphery, I think, some more of these headlines around big tech companies that are basically trying to secure their own energy because of the demands from the AI side. Any thoughts on that sort of shaping the landscape of the energy sector?

Speaker 2: 21:38

Again, we go back to this idea that companies look at the next 30 years and 50 years and therefore their plans basically would outlive the politicians' plans. So that's a fact. So over the long term, companies basically dictate those strains anyway and policies have an impact, but most of the time what we see they are disruptive more than they are pro-business, and they are disrupting business. And if you look at countries, for example, like you look at the UK and look at India in particular, what we see is we see those flip-flop policies and contradicting policies and companies basically will shy away from investing period. The UK decided OK, I'm going to be energy independent, I am going to allow companies to invest in the North Sea, but at the same time I want to maintain the windfall profit tax. But companies just run away. Even if you allow it, it doesn't matter. And then when the new government came in and said we are going to ban any development of oil and gas in certain areas, it really did not matter because companies already left. But in the long term, companies dictate those trends. To go back to the AI issue, the impact is really severe and people have not caught the idea yet because all this climate change issue. All those policies that are intended to replace coal, oil and gas are going to fail miserably because of AI. And, of course, another issue is the autonomous vehicles, too, because that consumes massive amount of energy too. And what happened to those trends? If you look at the AI and the autonomous vehicles, those trends basically are going to consume so much energy that all the solar and wind and renewable energy we are building are barely enough to cover the growth. Wind and renewable energy we are building are barely enough to cover the growth. But look, climate change profits those profits of climate change. They really wanted to replace coal, oil and gas with renewable energy. Now this is not going to happen and therefore all those outlooks, especially from the IEA and the companies around the IEA those outlooks basically are all of them a complete nonsense right now, and the demand for oil and coal and gas is going to be way higher. So if you are looking for an investment in the next few years, this is really worth to look at, because the failure of the green policies by default is going to increase the demand for oil, gas and coal. That is the problem. This increase is going to happen all of a sudden. It's not like we are going to see it over several years just going little by little. All of a sudden we are going to see a jump. All we need is economic growth and that's it On the economic growth front here I would like to point out another point that I've been repeating all over, so I apologize for those who listen to this several times now, but I know that people need to hear this In the media.

Speaker 2: 24:54

In the media now you see a lot of stories about oh, spain, dependence on renewable energy is 80% or 60%, and all the electricity this morning was in the UK was from wind, et cetera, and basically renewable energy is gaining ground. Of course, there are all kinds of lies coming from the media and notice that when it comes to renewable energy, they always focus on capacity. They don't talk about generation. When they talk about EV sales, all of a sudden, when they talk about ICE vehicles and the quarterly reports of auto companies, they mention the numbers and the percentages, but when they cover the EV section, they focus only on percentages. They don't focus on the numbers. So they tell you look, growth of this is 150%, but come on, for the whole quarter they sold just 900 trucks. They don't report the 900. They tell you the 150%. So there is this bias in the media toward climate change policies or in support of climate change policies, solar and wind. But what people should realize is the following In periods of recessions and slow economic growth, the share of renewables naturally increases.

Speaker 2: 26:14

This is not a trend.

Speaker 2: 26:16

This is literally correlated to economic growth.

Speaker 2: 26:19

And now what we see is all those on the left are building their models and their view is based on what we've seen in the last two years. Look Europe. If the country was not in a recession, it was in slow economic growth. And what happened here is the sun shines every day, whether you have economic growth or a recession, it doesn't matter. Wind is going to blow whether you have economic growth or you have a recession.

Speaker 2: 26:49

So the only thing that managers, utility managers, can control is literally coal and gas, and therefore, when you have a recession and demand for energy declines, they reduce the amount of coal and gas and, as a result, the share of renewable increases. This has nothing to do with government policy. This has nothing to do with anything related to climate change. This is just pure management on the part of utilities in periods of recession and slow economic growth. Now you turn to high economic growth. Give me 3% or 4% economic growth. Now you turn to high economic growth. Give me three or four percent economic growth in Europe. How are you going to cover the energy demand in this case? The sun is going to rise the same thing every day. Wind is going to blow the same thing every day. The only way to meet this growth is coal and natural gas. So all those conclusions we've been hearing about in the last two years are completely off and they are contributing to this idea of peak oil or peak gas or peak coal.

Speaker 1: 27:57

From everything I've seen, it seems like the only real very long-term answer to exploding demand for electricity is nuclear or to exploding demand for electricity as nuclear and I've heard you talk about uranium in this. But I am curious if that results in sort of the Venn diagram crossing in terms of the climate change activists, the green energy transition and then the reality of the demands of AI. I mean, if nuclear fits both of those diagrams.

Speaker 2: 29:02

A couple of things here. The first one is energy demand, and I'm talking about energy in total. Energy demand worldwide is exploding and will continue to explode for years to come. How are we going to meet that? We cannot just build our way by having all those low density, low energy density wind and solar and, if you look even at batteries. Let me give you an example about what happened in California last month. This is one Sunday I think it was the third Sunday of last month it was a perfect day in California and if you look at the sources, the solar was dominating during the day. Again, this is a perfect day and the the share of gas was only 11% and the moment the Sun set, the share of gas went up to 36%. Now they already have batteries, so they stored energy in batteries and they used batteries throughout the night. By 4 am, all the batteries were completely empty and that was a normal day. So imagine if temperature reaches 110 in California or we have a major power outage for three, four days. Batteries are gone. That's it. They serve for several hours and they are gone. So there are no batteries and solar. There is no solar at night. We already have the data. So how they are going to get the energy. Of course it's going to be natural gas and they are going to import a lot of electricity from other states at very high prices.

Speaker 2: 30:40

So the story of California basically tells you the whole story why we need nuclear. And you know they reneged on closing the last nuclear plant they have. Simply because of that, the whole world basically needs nuclear. Technology has improved substantially. It's now more efficient, it's smaller, it's safe. It's now more efficient, it's smaller, it's safe.

Speaker 2: 31:01

And if you look around the world right now, there are countries that benefit more from nuclear than others. And, ironically, if you look at countries like Saudi Arabia today, they benefit more from nuclear than any other country in the world, simply because nuclear will enable them to export oil and gas more oil and gas and make their position in energy more dominant than ever. And there are four countries in the Arab world that need nuclear energy as soon as possible, before a major crisis. That include I mentioned Saudi Arabia. That include Egypt, algeria and Morocco. You have population growth, urbanization growth and Egypt already suffering from major power shortages and the government in fact being changed just recently.

Speaker 2: 31:50

Because of that, we have eight countries in the Middle East that are suffering from, not in the Arab world, because once you talk about the Middle East, we have to add Iran and others too. All of them are suffering from power shortages. So we already have power shortages. And how to deal with that? The only way? Renewables are not going to do it, but nuclear is going to solve the problem. So we do need nuclear in many countries around the world, and as soon as possible. Here in the United States, in some states we do need new nuclear plants. Otherwise, I mean in Texas, every day, every day we look at the temperatures we are above 100. We are scared to death from a power outage.

Speaker 1: 32:37

I do not envy you being in Texas with that kind of heat. I want to share the screen. Going back to your point about India, you put out this post on the 14th. If Trump returns to the White House in 2025, he will make it easier for India to import oil and gas from Russia, but in my view, he will go against investing in Russian LNG. Let's talk about the geopolitical landscape in terms of how, again under a Trump administration, how energy can be used to affect certain changes from a geopolitical front.

Speaker 2: 33:10

Sure. For those, of course, who are interested in more details, if they go through the timeline on Twitter, you will see a very long article on this and then you will see a space on this too. India got the green light from the Biden administration to import oil from Russia, and they are importing a lot of oil about 2 million barrels a day that comes from Russia and they have serious problems because some banks, especially the banks that are dependent on the remittances of the Indian diaspora around the world and they have branches around the world they are afraid to deal with Russia or make payments on behalf of their customers, because if the sanctions are applied, then they might stop their operations around the world and then the Indian diaspora cannot return money to India. So this is one issue that needs to be resolved. The other issue is you have Indian oil companies that are owned by the government. They are scared too because they have accounts and their stocks are listed on some exchanges, et cetera, and they have bank accounts around the world and they are scared too if the sanctions, even by mistake, being implemented, then they will suffer those local ones and others. Basically, they can work it out. So this is not a big deal, but with the Biden sorry to go back to the Biden administration the Biden administration, of course, supported what they call the price cap, but they keep talking about the success of the price cap.

Speaker 2: 34:49

It's a total failure. It never worked and it will never work. But Secretary Blinken basically gave the green light to India when he was in New Delhi for the G20 meeting and he said something along the line oh, india is not importing any oil above 60. At that time, india was importing it at 72. But everyone understood that that was a green line regardless. So with Trump, right now, trump basically likes Moody and Moody basically likes Trump. At the same time, we have this historic relationship between Putin and Trump and the idea here is Trump wants low prices, so he will help Russia basically produce more and at the same time, he will encourage India to buy more and the Indians basically tell him look, it is my problems. One, two, three, four, five, and I think Trump can solve at least three, four of them, especially those related to sanctioning certain tankers, the issue of the price gap, the issue of payments banks basically having serious problems transferring payments. I think Trump can work on all of those and solve those problems. So India will not violate the sanctions.

Speaker 1: 36:41

So but given how immersed you are in this, how you yourself invest your own money right and position based on your analysis, are you outright playing ETFs, for example, that do futures on natural gas, on oil? Are you doing individual stocks, broad-based funds? How does natural gas invest?

Speaker 2: 37:05

When we talk about long-term, in particular long-term, I'm tilting toward natural gas and LNG. This is really big Long-term nuclear uranium this is very clear and not oil. I'm not talking about oil here, despite the fact that I expect oil prices to go higher, but I think there is more money in natural gas, lng and nuclear than others. In terms of oil, I've been focusing on Canadian oil for a long time and I'm still focusing on Canadian oil, regardless For shale companies. Shale companies basically because of all the recent mergers and acquisitions. We need to wait until things settle Because before we were really counting on those smaller, mid-sized companies, they've been doing amazingly well in various ways. They are the ones who have been there since day one. They have the experience We've got to remember shale did not come from Exxons and Chevrons. Shale came in from the small companies that became large later on. So they have the experience. So we got to see how those big companies are going to deal with shale and how they are going to perform financially. So there are still some smaller companies in shale are doing very well.

Speaker 2: 38:32

I do not believe that shale is going to peak forever. If we see any peak this year, it's a temporary peak. It's a function of several factors. I think the decline in rig counts and completion activities recent months are related to the mergers and acquisitions. Companies are busy basically finishing up the mergers and acquisitions and they don't have any appetite right now to make big decisions on drilling programs. So some of those companies the smaller companies basically are going to benefit from the fact that big companies now and the medium-sized companies that have been acquired are busy with these things, so they will benefit from that. At $80 oil, basically that's a really good price for shale. The fear is, if prices decline to $60 or lower, then shale is not going to be attractive in this case. But will that 60 last for a long time? I don't think so, but we will have to be careful.

Speaker 1: 39:42

I want to get your thoughts on how the longer-term dynamics for the energy market relate to inflation. Ai should be disinflationary, deflationary, as all tech is, but exploding electricity and energy man probably means that gets countered right From debt to have inflation, to cause the disinflation on the outputs. From the AI side of things, from the AI side of things, is there a world where that energy demand ends up, maybe surprising to the downside, where there's a disinflationary impact of AI overwhelms the inflationary impact of rising energy?

Speaker 2: 40:22

demand.

Speaker 2: 40:23

It's exactly the opposite. It's exactly the opposite. First of all, all those climate change policies. I mean, even when Trump wins, he cannot eliminate the impact or what already happened. There is a trend. He can reduce the speed of that trend, but he cannot stop it.

Speaker 2: 40:45

Those green policies or the energy transition is naturally inflationary, naturally inflationary. And the sad part is it is inflationary and we are not getting something new. We are just replacing the old and that old, basically, is still functional. So you can see that additional cost that we have. It's not like we reach the end of age for what we are replacing and therefore we need to replace it anyway. No, we are replacing things that are still functional and we are just getting rid of them. So it is inflationary by nature. So that's number one.

Speaker 2: 41:19

Number two AI is increasing demand for energy substantially and for energy projects. They don't come in in a linear form. You got to look at it as like a staircase, and one staircase is like five inches high and the other one is five feet high, and then it's 10 feet wide and the other one is one foot wide. So it does not come that way. Energy investment comes this way, like staircase, and the results of it comes like a staircase. It does not match the demand for AI and therefore we are going to end up. If you imagine AI as a line versus something like staircase, you can see those gaps, and those gaps are extremely inflationary talk about the, uh, the research.

Speaker 1: 42:15

I'm going to share it on screen here, uh, but with the daily energy report on substack, talk to us a little bit about the source of sources of information, because you mentioned now you're getting data from a lot of different places that traditional media is not focusing on. So what are those types of sources? How? How do you synthesize it? And, for those that are curious, what would they learn from what you put out?

Speaker 2: 42:37

The whole idea of the daily energy report basically was for two things. First of all, when we started the newsletter on Substack, many people complained it's too expensive and it wasn't really intended for individuals. I mean, it wasn't intended for companies anyway, especially that the material we provide is similar to any big consulting houses around the world. So we decided, okay, we need some kind of something that is reasonable, but it has still the materials. That does not exist anywhere. So that's the basic idea. But what made it better is the fact that data has deteriorated substantially data in the energy markets, especially in the oil market, since 2017. And it started because of shale. By the way, and if we have time, I don't know how much time we have, but I want to explain one idea.

Speaker 2: 43:38

The problem with shale is that shale wells produce a lot of gas and a lot of natural gas liquids, unlike the conventional oil. And because of definitions, the AIA got stuck because there are natural gas liquids that are not coming from gas wells. They are coming from oil wells and they don't know what to do with it. So they decided to add it to oil anyway. So that's how the data started deteriorating, and that's when people talk about this adjustment and we have an adjustment and the adjustment is too large and the data is bad and people did not understand what's going on. Well, we were the first one. We'd like to claim that we were the first one who did this in 2017, when we created the hashtag Crude Equality Matters. That was exactly about the adjustment of the EIA and we did propose solutions for that about the adjustment of the EIA, and we did propose solutions for that.

Speaker 2: 44:36

The EIA tried but failed until today. And the reason why? Because shale comes in with a lot of light products and a lot of gas and natural gas liquids. So now we have a lot of natural gas liquids in GLs of natural gas liquids NGLs and some smart people discovered that I don't need to make a major investment, basically to make money, and I don't need refineries. I can buy those natural gas liquids. I am in Houston, I can buy those natural gas liquids or certain type of them, and I can buy that Canadian crude coming through Keystone to Houston and literally blend them and come up with a new crude that I can export to the rest of the world. So what happened here is I already have NGLs that being classified as NGLs in the EIA data and it's being sold Now. It's being sold now it's demand, but those who demanded it took it, mix it with another crude and exported that officially as crude. So you can see how the data basically being counted twice and that created a big problem, because whatever was ng elves now is being exported as crude and that does not match the crude numbers. So we have some serious problems. Then COVID hit. The situation got really worse. Then Putin went to Ukraine, went to Ukraine. The situation became worse because we have one of the largest producers in the world with ghost ships that it's very hard to follow. So the situation got really bad after that.

Speaker 2: 46:23

And then we have an election year and this election year, basically in the United States, india and others, as you know, just like in previous years, they pay a lot of money for the media, for the advertisement and others. All of a sudden we have news stories that are not correct or biased or literally tilted to benefit a candidate and therefore we have bad data on one side, bad reporting on the other. That's where the value of the daily energy report is that we distill this information and we literally sometimes our comments are literally we send it to our clients and say ignore the news, this is fake news or this is kind of tilted toward this and the fact that this and that's what we do in many of the stories in the daily energy report. So in a sense, on personal level, we benefit from this but at the same time we feel sad that we reached this point in our society.

Speaker 1: 47:22

Maybe as we get close to the top of the hour here, Dr Rast, everybody, please make sure you check out that subset as well. Thoughts on where the world is headed into the end of the year and where it could be headed next year. I mean, I know nobody can predict the future, but you might have some sense of at least directionally up or down.

Speaker 2: 47:39

Sideways, literally sideways. We've been sideways since the beginning of the year. We are going to continue with sideways. Yes, we do have some bright spots in terms of oil demand, but we do have serious problems in China, we do have serious problems in India and one of the ironies is, by the end of the year some people might get surprised basically, that the best story in the oil market is coming out of Europe, out of all places in the world, not from China and India.

Speaker 2: 48:12

On LNG, the general sense is that people are bearish. We have oversupply. We don't think so. In all our reports we pointed out look, we have many issues still in the LNG industry and we are not bearish in any way. Even this year. The demand is huge. A heat wave, basically, will increase the demand for LNG substantially and we see this heat wave around the world right now. So the general story in the media being bearish on LNG, we don't believe it. In terms of oil, it's sideways. And one more point on coal. People have been predicting the peak demand for coal for years and we are going to hit another record in coal demand this year.

Speaker 1: 49:04

Everybody. Please make sure you follow Dr Nas Al-Hajjian next and check out his sub stack as well. I always learn a lot from listening to him. Hopefully you did as well. Appreciate those that watch this stream live and hopefully I will see you all on the next episode of Lead Lag Live. Get that air conditioning on, dr Adas. If the heat is like that, you've got to get cool.

Speaker 2: 49:25

Absolutely. My chicken tells me how the weather is going to look like, so I can watch my chicken and see how the day is going to go.

Speaker 1: 49:33

Appreciate everybody that was here, thank you.