 Welcome to Stan Energyman here. Stan Osterman coming to you live and direct from Kailua, Hawaii, where it's an absolutely gorgeous day, probably about 83, 84 degrees, nice cool breeze. And if you need a vacation for months, no, come on over. Looking pretty good over here. Before we get started today, because it has been a very, obviously very busy, busy week since last week with everything going on in Europe and in Ukraine. But before we get started on that, I do need to make a pitch for Renew Rebuild Hawaii has a webinar going on this Friday, the 4th of March. It starts at 10.30 Hawaii time and goes to noon. And they're gonna be talking about putting together a space mission or space missions or space industry in the state of Hawaii and what that could mean for our economy. So if you're interested in that kind of topic, check out the Renew Rebuild Hawaii website and sign up for that webinar. Today, we have back with us, one of my favorite, favorite guests, Dan Goen. And it's gonna be kind of, I don't know what, I wanna say eye-opening for most people because I think we've been distracted by so many different things between coronavirus and just inflation happening and everything going on in the U.S. But there is a lot going on in the world that unfortunately, I don't think we've been paying attention to or very good attention to for the last few years. And so Dan's gonna talk about it and I'm gonna probably bring up some questions for him about what's going on with the price of oil and is this just a transitory blurb on the price of oil and things that go back to normal after Ukraine's over and things like that. We're gonna talk about that today. So we're back on the macro energy scale today and the implications, I don't wanna be a spoiler but the implications are much bigger than just inflation. So Dan, Dan Goen, welcome back to the show and I appreciate you being on because I know you've had a really busy weekend and you're looking at a whole lot of stuff but welcome back. Well, thanks, Dan, you and I talked quite a bit and you actually asked a lot of good questions from me and that makes me dig and that helps out everybody else whenever we all dig and we've got a lot better information. So everybody that's watching this YouTube, this is, well, if it isn't initially painful if you've slept on this one for a night, it probably will become a little bit more painful. We can get slide number one, please. Okay, and I'm just making a pitch for the company and we'll switch quickly switched over to slide number two, please. Oh, slide number two, the previous one. Great, oh, okay. Okay, we're missing one there. Oh, there it is. Okay, so what that is, that's a graphical depiction of all the pipelines from Russia going into Europe. The green ones are for the natural gas, the red ones are for oil. The Russians provide approximately 40% of the gas that flows into Europe. As far as the oil, they provide anywhere between four to five million barrels per day of oil going into Europe. Just as a note, last week, the Russians turned off gas going into Ukraine. The invasion was Thursday. This weekend, already two of the pipelines in Ukraine have already been destroyed. Currently, it looks like Russia is in the process of starting to slowly close off all the other supplies of energy going into Europe. Dan, let me interject there. We had some other data that we don't have a slide for, but just for the sake of discussion, NATO is already pretty dependent on Russia for oil. Even the US has a dependency on Russia for oil. But just to give you an idea, Northern Macedonia is 100% dependent on Russia. Finland is 94% dependent. Bulgaria is 77%. Slovakia, 70%. Germany, 49%. Italy, 46%. Poland, 40%. And France, 24% dependent on Russia for natural gas. And there's their energy. The only one in that list is not a NATO member, is Finland. Every single other country there is a NATO member. Yeah, and I'm gonna add another one to your list there. That's not, I know what side you're looking at. For example, Turkey. And I'm gonna say Turkey is 100% and here's why. So the countries that provide natural gas into Turkey are Russia, Azerbaijan, and Iran. The gas company in Iran is Gasprom. The gas company in Azerbaijan is Gasprom. Gasprom is the state oil and gas company owned by the Russian government, right? So effectively Russia controls 100% of the natural gas going into Turkey. So next one, please. Okay, so now there's a couple of the commodities we're gonna talk about that are not less, but there's quite a good thing here. So between Russia and Ukraine, between those two countries, that's 80% of the world's sunflower oil, 30% of the world's wheat production. If you throw in China with them, that's over 50% of the world's exports of wheat, 20% of the world's corn. There's another aspect to this too, and everybody needs to realize this, that one out of every five bags of fertilizer come out of Russia. So on January 10th and 13th, that was the date that the Russians sent that list of demands to the United Nations and were turned down on the 13th. January 19th, the president of Iran, Ibrahim Rasini, made his first speech in front of the Dumas, asking for a permanent Russian military presence in Iran. And January 23rd, the following countries stopped the export of fertilizer to the world. Those four countries are Russia, China, Turkey, and Egypt. All those countries on exactly the same day stopped exporting fertilizer onto the world market. The Russians also produce 45.6% of the world's palladium, 15.1% of the world's platinum. They own the second and third largest gold mines in the world. We've already talked about oil and gas. They provide all the nickel that the Europeans used to make stainless steel. It's about 5.3% of the world's stainless steel, coal, copper, silver. The Russians were at all the coal that goes into Korea and all the coal that goes into Japan. Oh, correct me if I'm wrong, but didn't we talk about Russia actually increasing their holdings in gold and decreasing their holdings in dollars? Yeah, yeah, I sent you out some graphics from the Russian finance ministry, almost 30% of the Russian rubles backed by gold. No dollar, no gold. No rubles backed by gold. No dollars, they de-dollarize their economy. And why they de-dollarize, we're gonna find out here in a minute why they de-dollarize. Okay. We can go to the next slide, please. Next next slide here, this is taken from the Mercantile, the comics, and that's just all the commodities that are denominated in dollars. Up there in the right-hand corner where DAX, you see there it says the 30 year, 20 year, it was a five year, two year notes, those of those bonds, U.S. government securities, what they actually use to trade all those commodities, and that's from crude oil to pork bellies to soybeans, right, it paid for in dollars. The reason why I'm pointing this out is we're gonna find out how important this is here pretty soon. Yeah, we know that that slide's a little complicated to see on a screen, on a computer screen, but we know that folks are gonna be watching this on YouTube and be able to stop and freeze it and blow it up and look at it, but that's some really important data to be looking at right now. Yeah, go to the next slide, please. Okay. What this has to do with currency reserves, so currency swap. So the Central Bank of Turkey and the Central Bank of the United Arab Emirates have a currency swap, and that's a Turkish lira for U.E. Durhams. The following, and basically how this works is where the two central banks get together or banks in those two countries, and they basically trade VPN information and they put together a agreement to basically swap each other's currencies. In the last six months, the following countries have put together currency swaps. There's currency swaps between Argentina and Russia, between Brazil and Russia. There's a three-way currency swap between Venezuela, Russia and China. There's currency swaps between Saudi Arabia and Russia, and there's currency swaps between India and Russia, and all that's happened in the last six months. Argentina and Brazil, that's happened in the last two months. And could you give us an idea of how much that activity has displaced trading in American currency, the reserve currency? We're gonna talk about in the next slide. Okay. We can go to the next slide, please. And to remind everybody, we talk about these currency exchanges and the reserve currency of the world, which is basically the U.S. dollar right now, because it all ties back to oil and purchasing oil, where the oil reserves are, where it's traded from, and how many economies depend on it. And that's why this stuff is so important, and it is all energy related. The point is that last slide is there is no dollars in it. That's the key. Was not, does these countries swap on their own currency? So, well, that there basically is, that's the question that went about Taiwan. That one right there, what's going on there is, remember, we talked about the Palladium. Palladium is used in CPU and computer chips. What's in Taiwan is a company called TSMC, that's Taiwan Semiconductor Manufacturing Corporation, that is 90% of world's chip manufacturing capacity. Vladimir Putin is in the position to hand to China, 45.6% of the world's chip manufacturing capacity, disease and pain. The Chinese have always coveted chip manufacturing. Now, understand that when it comes to this capacity, that the Chinese don't even have to invade Taiwan. All they have to do is they could destroy or capture TSMC, the Taiwan Semiconductor Manufacturing Facility. And since this is all, this chip manufacturing is in a very specialized factory, it has to be hermetically sealed, no dust or so forth. So just by simply taking that building out, the Chinese could capture at least half the world's chip manufacturing capacity. Not only that, but force chip manufacturers to force them to do their manufacturing inside of China, for simply because they won't have access to the Palladium for making those computer chips in the last slide. And if you hadn't been watching the news, the trouble with auto production in the US has been lack of chips. So that's why this all ties back to the US economy. Yeah, as a matter of fact, here in Indianapolis I could take pictures the areas surrounding me. We've got a huge lots full of hundreds of cars. These are cars that the only thing missing are chips to complete the cars all around Indianapolis. So I'm right in the middle, but I'm a witness to all of it. Okay, so the last page there. So what that is, that was taken on August 6th of 2020. So Russia and China just a dollar removed for financial reasons. So since 2015, Russia and China have been reducing their dependence on using the dollar for trade. What they've put together is something called the Shanghai Corporation Organization, the CSO. China has a system that does the same thing, the SWIFT system, that's what we transmit dollars using the SWIFT banking system between banks here in the West. Well, the Chinese have developed a system called SYPS. The Russians have a similar system. It's called the system for transfer of financial messages so it's SPFS. And what those two have basically agreed to do is take those two systems and merge them together. And that culmination, that the decision to make that happen happened at that meeting with President Ibrahim Rissini, the president of Iran, basically when Russia decided to do the 20-year deal with the Iranians and move permanent military assets into Iran. Hey, Dan, what is that article from? What publication is that from again? I know you sent it to me, but I don't have it on my computer. It's called Crest.co. Okay. Crest.co is what I sent it from. And I guess that's some publication there in the Middle East that we're talking about. I've been trying to get some clarification on that system. So today, this afternoon, I was talking to some futures traders that are in Qatar. And what they're telling me, well, first of all, the three founding members of the system, they've got accounts in the system and that's Russia, Iran and China. And understand this is initially, they started using this system for trading energy, mainly oil and natural gas contracts. They've since then added a number of countries to this new system. The countries that they've added to the system are Kazakhstan, Azerbaijan, Turkey, Pakistan, India, Kuwait, Saudi Arabia and Oman. So these countries have already started using this new banking system for trading oil and gas futures. And with that list of materials that Russia exports like the palladium and the weed and those commodities are probably start trading those commodities on this new system also. Now, going back to your crane, and I'm gonna talk about the oil here in a minute, right? And the ramifications for everybody. And this is kind of a note. So I was talking to some of my, some players in Africa this weekend. And what they told me is about every Russian millet mercenary in Africa is pretty much packed their bags and they're headed for your crane. To understand this, well, to understand Russia begin, Russia is basically an oil company with an army bolted to it and a weapons lab. Russia uses conflicts to basically try out new military hardware and prove them into product improvement. And they use those conflicts for weapons sales. So sometime here in the future, more likely the Russian army will move out of your crane. The mercenaries will move in and it'll turn into a low burning conflict like Syria and Russia just pours in money, food and ordinance. And it's been a low conflict over the last 10 years and that's probably what it's gonna continue to be. I know here in the West, we'd love for it to go away really quickly but that's probably not gonna happen. Now, the trading system that these guys have put together, this new CIPS system, it's denominated in Yon, so that's the reserve currency they use in this system. According to my calculations, the unholy trinity, the trinity is Russia, I don't know if it's China, right? According to my calculations, they have jammed up at least 38.2 million barrels of oil per day. If the United States is to maintain control of the world's economy, we need to replace at least 29 million barrels of oil production per day as soon as possible. If that means tapping into the US strategic oil reserves isn't gonna do spit. 660 million barrels divide by 29 million or yeah, no, it isn't gonna survive a year. The World Bank, somebody asked the World Bank to see what it would take if we could replace the natural gas that Russia is supplying into Europe. And according to the World Bank, it'll take at least five years for us to build out enough infrastructure to replace the gas that Russia is pumping into Europe right now. So if I'm gonna make a military guess, the Taiwan equation is gonna be settled by China and if China's gonna settle that, they're gonna do it in the next 12 months. And the reason why is because our new chip manufacturing capacity won't be online until next year. So there's a 12-month window for China. And remember what I said, the Chinese don't have to invade, take out Taiwan, all they need to do is take a building out. Yeah. They can change the Taiwan until they capitulate, especially if they control 38% of the world's oil. So as we look at the big picture, we have a demand for oil and natural gas in Europe and the US that is gonna be shut off with the sanctions we're pressing on Russia. So the US is gonna have to produce more oil just to meet its own requirements because we buy it from Russia and we haven't shut off the purchasing of oil from Russia, but that's literally the only lever we have left and sanction mode to slow them down. Europe is totally dependent on natural gas right now. The only good news is it's coming spring and pretty soon summer, so maybe the requirement will drop off a little bit. But also we have this, like you call it, the unholy trinity of Iran, Russia and China building their own currency reserve currency trading for oil, natural gas and other commodities, other critical commodities. And right now the real power that the United States has had historically since World War II has been the reserve currency. The US dollar can be used, I've been to Guatemala and gone to the little Chick-fil-A place there, of course it's not called Chick-fil-A, and whipped out American dollars and they took the dollars and they gave me back their currency as change. You can do that with US dollars. You can't do that with every currency, but it looks like the Chinese, the Russians and the Iranians are working on replacing the American dollar. Yeah. Well, that last page I showed you, that was from August 6th of 2020 over a year ago. They've been planning this for a long time. We import right around four million barrels of oil a day from Russia. If the Russians and the rest of those players on that group, they could turn around and say, yeah, we only sell our oil on that exchange and it's dominated in Yon, we're gonna be hurting because looking at our latest consumption numbers, we burned 22 million barrels of oil a day and we produce about 12, that means we're importing 10 and somewhere magically 10 million barrels of oil a day will have to come out of somewhere just to supply our own economy. Not us trying to deal with Europe. So what would you say the impact has been when President Biden shut down the pipelines and the oil leases on federal land to shut down oil production in the US based gain natural gas production? What impact has that one single move had in this whole European debacle that we're going through right now in Ukraine? Well, the pipeline was painful because I understand that was already motion and when he counseled that, if even if today we wanted to put all that back in place, it'll be two years before those guys can fire up arc welders again, right? That's just what it takes to line up those huge construction projects to do that. When it comes to the oil drilling when he killed all those leases and those drillers went in a bankruptcy and scrapped a thousand rigs, we got to build a thousand rigs and we have supply shortages right now. There's a supply shortage for fracking sand. We don't have enough fracking sand to go out there and fracking. And even if we are able to ramp up from the 600 rigs we have now up to 1600 and we can get our oil production up to 13 million barrels of oil a day, we're still short nine. And when you're talking to, for example, the Canadians, the Canadians were working on a second oil sands project, that's all been mothballed, you know? And Mexico, their cantrel is in terminal decline. We already talked about what's going on up in Alaska. You know, just because they're building that LNG pipeline up in Alaska, that means Purdue Bay is in terminal decline. That's the only reason you would do that. So we got some real problems here. So as we restricted our own production of oil a year and a half ago or a year ago, we automatically kicked off a, basically a supply shortage and a demand surplus. Therefore we have prices going up on the gas and oil markets, period. Like it's not a transitory thing. We're gonna have that going because once we turn off the Keystone Pipeline and we turn off all those leases, it's like driving a big aircraft carrier. You can't just turn it and expect it to make an immediate turn. It takes months and months and months to get that equipment back on site, get the workers all signed up, get the equipment all orchestrated, get the resources you need lined up. It takes months to just get the thing back in production and years to actually see the return on investment where oil's coming out the other end. It's hard if people understand these systems are so huge, they have their own inertia. It's like the Titanic, you can't turn it on a dime. It's like you pointed out Stan, a lot of us have too. Even if we found a new Saudi Arabia today, you won't see that oil for five to 10 years just because of what you have to put in place to put it online, to put all the production online. So this is gonna be painful for all of us. Very painful. I wish I didn't have to tell that to the public, but I, yeah. Well, I go back to my mantra. We need to do critical analysis before we make big decisions and making a big decision like shutting down a pipeline and shutting down oil leases and turning the spigot off here and stopping production there and shutting down our economy because of a virus that's probably just slightly worse than the flu. Those kind of poorly calculated decisions by our government has caused some significant problems and tonight, we're gonna have a state of the state. I'm sure the president will say how rosy the whole world is and how great a job he's done. And quite frankly, I can't think of a single president in my lifetime that screwed up our country and the world economy as badly as Joe Biden. So I'm gonna make that political statement right now. I'm just totally beside myself with how insane things are right now. Well, just what I showed you just there in the week, it's like you crane your Russia and you throw China. China is definitely, and I showed you the evidence they're in the middle of this, right? There isn't any denying it. They planned this out for years. They waited for the perfect time to spring this plan and you talk about Lamar Putin, probably his health is figuring into this whole thing because he's done some speeches the last number of weeks and he's been very emotional about some of these speeches. So something's going on with him personally and the way it is, right? But it's going on. But the thing about it is just the weak thing, okay, we're gonna get riots in the Middle East because a lot of those countries are very dependent on the rise coming out of Ukraine and Russia and because of the trade sanctions, because of conflict that's offline. Now, the farmers around the world because when I add up those four countries to shut down fertilizer exports, that's really close to half the world's fertilizer, half. So that means that farmers aren't gonna be able to do plantings this year. This year's crop harvest are gonna be poor. We're going to see famine in 2023. It's not if, it's not a theory. It's not a conspiracy theory. That is a fact. We're gonna see a famine. Is the ammonia production based on the natural gas availability? Is that the main source? Okay. Yeah, remember we did the whole thing about the ammonia. Five percent of the world natural gas is consumed making ammonia. Yep. Yep. So it's really a sad state and just like the world has fragile ecosystems, right now the world's economy is a fragile system. And you can't just go making willy-nilly decisions that are politically correct in your own country, especially when your country is United States and turn around and have those decisions or those choices cause such huge ripples across the globe. And we have done multiple, I think, horrendously bad choices that are wreaking havoc around the globe today. And I just shudder to think what it's gonna mean for us in the not too distant future as a country. Yeah. It really troubles me. I apologize to everybody who listened to this YouTube. I wish this hadn't played out this way but it did. Yeah. For the perfect time to do the same thing. Yeah. They truly did. That was our weakness point. Something I haven't seen on the media much from any media is the fact that if you look at Ukraine's history that goes back to, you know, at least to World War II, they've always been the occupied land. You know, the Germans occupied and just destroyed them. They did a lot of the ethnic cleansing, the killing of Jews and stuff was done in Ukraine to the Ukrainian population. And so at the same time, when the Russians took over Ukraine from as a Soviet Union moved in, they killed millions of people with starvation and brutality as well. So Ukraine has been brutalized from the Russian side and the German side. And the sad part is that the resistance against Russia, a lot of those are neo-Nazis or they still go back to the, you know, when the Nazis were fighting Russia in World War II and so they have those roots and a lot of the people that America is supporting now, if you look back in their resume, they have some neo-Nazi stuff in them. And that's making the discussions really complicated when it's like, how much money should we give Ukraine and who should we give it to? There's another country out there that has a similar relationship and that's Poland. And Poland is in other ways countries, they've been sandwiched between the Germans and the Russians and the Polish people have been abused by both those countries. So I've known quite a number of Poles. I've been a Polon like a number of times and it's hard to understand it unless you've lived in one of those sandwiched countries and Poland's one of those sandwiched countries. And Ukraine sent a lot of the same history, a lot of the same painful history that goes back a very, very long time. Well, I know we hit the end of our time slot but I'm just gonna close it by saying, I've actually been behind the Iron Curtain in East Germany when it was still behind the Iron Curtain and it was highly depressing and it was a life-changing experience for me. I did in the military as an occupation troop in Berlin. I got to go into East Berlin and it was still damaged from World War II. People were living in buildings that were still half the building was bombed out because the government couldn't fix it. You know, this Europe has a whole different way of looking at what's going on in Ukraine right now than the US. And I feel like we have this self-centered view of the world that's gonna end up eating our lunch. So anyway, Dan, thanks for being on the show today. I wish it was a more cheery upbeat show but I think it's an important message that a lot of people need to be hearing and I thank you for helping present it and we'll have you back in soon. Yeah, thank you, Stan. The last two weeks have been pretty painful but thank you for letting me come on. Thank you. All right. And from Kalua, Hawaii and Think Tech, Hawaii. Aloha. See you next week. Stan Hoffman, signing off. Thank you so much for watching Think Tech, Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.