 Okay, we're back. We're live. I'm Jay Fidel. This is Think Tech Hawaii. This is Energy in America, which we do every two weeks with Lou Plurici, who is the CEO of E-PRINC Energy Policy Research Foundation in Washington, D.C., and we have him here on the phone with VMIX Call. So Lou, say hi to the people. Hi. I'm very jealous of everyone. I was just out there about two weeks ago. I saw you then. And in fact, we discussed it. Our son came out of China for a holiday during the Lunar holidays, and he's not going to be able to go back to China. That's okay. Actually, right now, you should be happy as his dad. He's trying to do his job remotely. Yeah. Well, let's talk about energy right now in the ying and yang. I use that term of all that's going on. What is happening in energy globally and in the economy and in energy security that we should be concerned about or that we should feel good about? Yeah. So what I wanted to do was, even though we have all this turmoil above the elections, turmoil in global markets, the outlook for the U.S., in which the primary criteria for energy security has historically been the health of our petroleum sector, our reliance on foreign supplies, our ability to have a degree of independence and diversity in our energy mix, that those particular characteristics of the U.S. energy complex are looking exceedingly good right now. Now, I think some folks in the environmental community may think it looks too good. So what I thought we'd do is just look at where we stand today as we're getting ready to go into these debates in the election season, and then talk about at least one of the candidate's plans of what to do about that. And that would be former mayor of New York City, Bloomberg. So with that, why don't we take a look at some of the pictures here and give us a very good graphical presentation. So once again, pardon, title of this, yes, title of this, geopolitical events raise prices little, but epidemics greater them. We talked a little bit about this last week, I want to show you this chart. And I think it shows the wholesale price for three fuels that the drivers and users of fuels in the Hawaiian Islands are familiar with, gasoline, a distillate and jet fuel. Right. Now, the interesting thing is these are the price per gallon, a wholesale price, as you will know in the Hawaiian Islands by the time you add taxes and excise requirements and different blending requirements, whatever they may be, the price will be much higher than this. Right. So if you look at this first picture here, I think the interesting thing about this is, so maybe we can bring this picture back up. Yes. So take a look at three events. I think it's very interesting. Look at the yellow line, which is distillate or diesel fuel. Right. On September 14th, it was attacked on Saudi production. The wholesale price of distillate rose rather remarkably, you know, 20, 30 percent, but it retreated right away. Then it increased again in, you know, early in the year when Custom Soleimani, the sort of field marshal of the Revolutionary Guard, was taken out by U.S. forces and it popped a little bit, but then began to retreat. And then you have this enormous drop that begins to take place from the coronavirus. So now is a good time to go out and fill up your tank. Prices are very cheap. Okay. So that is one picture at least what's happening. And I think what you should take away from that slide is the enormous resilience of the world oil market, largely because of the massive amount of oil and gas production from the United States. Now, I think you can also take away from that slide the fact that people saw the coronavirus as having a serious effect on the economy. And I think they probably concluded that because it would have an effect on the economy, it was not immediately resolvable that world trade and economies of the great nations would decline. And therefore, the demand would decline. Actually, and the real problem is China is now a major demand center. Actually, the real lesson to me out of the coronavirus is we can no longer pretend that China is just out there by itself and we can ignore them or we don't have to come to some resolution. They are a big piece of the world economy. They are a big piece of world oil and gas demand. And you can see those numbers. And that decline in jet fuel also is associated with decline in tourist visits to Japan and Hawaii and any destinations. There was an enormously interesting story today in the Washington Post showing what this has done to tourism. How many, we have over 100 million Chinese tourists now, not just traveling around Asia. They're going around the world. They have money and they are now locked up. They're not going anywhere. Yeah. So let me ask you a question about that last slide then. I know, well, you're into predictions. You're into prognostications. And we know that the coronavirus is not going away all that quick. What happens to that chart in a month or two or three? Actually, I think the market runs on expectations. And some of these supplies will go into storage. And I think we'll have, I'm basically an optimistic person by my personality. And I believe- I can vouch for that. Within the next few months, we're going to see some real progress on the coronavirus and slowly but surely demand will recover. I don't think it's going to spike back up. It's going to be a long, slow slog. We've been through this before as we discussed last week. So, but I think the lesson- what I wanted to sort of transmit from that picture is we are really- the world is amply supplied. We have enormous capacity. And oil and gas, whether we like it or not, is an integral to the world's economy. Still remains integral. It's not so easy to get rid of it overnight, which we'll talk a bit about on the Bloomberg initiative. Now if we go to the next picture, let's take a look at gas, natural gas. This is particularly- you can see here, these two slides show you the yellow- the yellow picture is kind of an estimate of the price of natural gas in a place called Henry Hub. It's- it is a real place, but it's also a general market location or market determinant for the price of natural gas plus $3, which is roughly the shipping- the shipping cost to- so it's about 115% of the price of natural gas in the US plus what it costs to move it to Asia, right? So you can see that's below $5, but remarkably the spot price in Asia, the JKM, the Japan Korean and you know Korean market price for LNG is down below $4. You cannot make money selling natural gas from the United States at this price, but you know it's a kind of distressed market. So right now Asia is able to take advantage of very, very low prices for natural gas. Part of this, of course, is once again the cratering of industrial demand in China. So what's the prediction on that one? Is it the same thing? We'll- I think we'll recover, but we're also oversupplied with LNG and it's going to take several years for the overhang in LNG to get worked out, but long-term I'm very optimistic that we're going to see lots of natural gas, much of it replacing coal throughout the Asia-Pacific region. Okay, now the next one is very interesting. It shows the US hydrocarbon platform continues to deliver. Now this is really US crude oil. You know if you live through the 1970s or 80s, this is such a remarkable change and I wanted to show it again. I know we've talked about this several times because even in the midst of all this turmoil, I wanted your viewers to see look even through the very beginning of 2020 now, hitting 2020, US crude oil production continues to grow. In fact, we are now a net exporter. You take all the product again and all the crude we take in and all the crude we produce and what we export, you divide those two. The US is a net exporter to the world market. Then let's go to the next one here. The same picture is taking place for natural gas. There's an old saw in the businesses that many folks in the environmental community love natural gas when it's expensive and short supply. They don't like it so much now that it's plentiful and low cost. But once again, you can see this massive increase in natural gas production in the US. Largely through advanced technologies, we are now a net exporter of natural gas to the world market. You look at how short a period of time, from 2008 to 2009, it's just remarkable. We are a major force in the world gas market. If you go to the next one, you can see here that it's a little hard to tell, but if you look at this black line, it shows you the net. The minus number means we are a net exporter to the world market. The pipeline exports are going entirely to Mexico, maybe a little bit to Canada. The green is the LNG. This is worth about a trillion dollars. Against this background of wealth creation and energy security comes a huge debate. What do we do about this in terms of climate and energy? I thought what we do is talk a little bit about what Bloomberg is going to be proposing. It will be very interesting to see if that comes out in the debate tonight. But you can see here in the last picture where the challenges are. So Bloomberg is a pretty smart guy. He knows a lot about what's going on in the world, but he realizes that the Green New Deal is a political non-starter. As you know, the Green New Deal was a proposal by certain members of the Democratic Caucus to eliminate oil and gas within the next few years, eight to nine years, to halt all hydraulic fracturing, the technology of horizontal drilling, the movement of high pressure of water and fluids to open up the rock below the surface of the earth to extract this oil and gas. This is what has made the U.S. so successful and so energy secure. So I think the struggle is, okay, you want to produce less of this, but how are you going to convince enough people in the United States that this is a good idea? So Bloomberg first credit recognizes that the Green New Deal is a very bad idea. You cannot alter this trillion-dollar opportunity for North America in a very short period of time, but he is trying to find a way to move towards 100% clean energy by 2050, and he wants to cut emissions by 20% at the end of his second term. That's impressive. The guy's 78 years old. He's already talking about two terms. Life begins at 78. What can I do? 75 is the new fool. He will shut down all remaining 251 U.S. coal plants. Biden said, well, I'll just teach them to be coders, at least. I don't think these guys are interested in becoming coders. I think at least Bloomberg's smart enough to say, well, I'm going to work with community leaders and officials to assure that we have transition plants in place. He's vague about that. He is planning to curtail the drive for new natural gas plants. Now, the problem with that is a lot of new renewable power is only possible if they have natural gas as a backup. And I think it's very interesting that such a technology guru like Bloomberg, he doesn't discuss nuclear power at all. He says it will add all fuels or subsidies for fossil fuels, but that's kind of a perplexing statement for me because fossil fuels generate anywhere from five to 10 billion, sometimes more direct revenue to the federal government. While fossil fuels today continue to make money for the government, and most renewable fuels cost the government money. And then he's going to substantially increase research and development to about $25 billion a year, which is about four times the current level. So it's going to be very interesting to see what happens in the democratic debate, how well this is embraced, whether he gets attacked because he's not doing enough. And should he become the candidate, how he deals in the general election with these initiatives when we have all this other, with many people in the U.S. would consider good news about our energy security and the growth of our oil and gas production base? Well, let's assume he sticks on that program. Let's assume he gets the nomination. Let's assume he wins. Is it doable? Is it doable politically? Is it doable socially? Is it doable technologically? So first, let's think about the American system is not a parliamentary system. The founding fathers set us up so that they were worried about bad things happening more than they were worried about good things happening. So it's hard to get things done. I do not believe under any potential makeup of the U.S. Senate, even when controlled by the Democrats, that such radical reduction in U.S. natural gas production, or even halting all leases or new leases on public lands, all that's a much easier thing to do for a president because he controls that without the Congress. He will have to get money from the Congress. And quadrupling spending to $25 billion is going to be very difficult. And I thought it's very interesting about Bloomberg is, in nowhere in his initiative is he discussing a carbon tax or some kind of adjustment for the cost of burning fuels which generate carbon dioxide. So I thought that was very, very interesting. So he is all sort of reading the political winds. I think that shutting down the remaining 251 plants, some many of those are going to close anyway because of cheap natural gas. Right. No big risk on that position. But you know, it sounds to me like some of the points of his program here, as to be discussed in an hour's time, are intended to avoid political footfalls, are intended to avoid nasty slings and arrows from the various people on the stage here. And I think he's going to do better with this than AOC would do with the New Green Deal. Oh, yeah, absolutely. And maybe the answer is some sort of compromise at the end. But Mike, my question to you, Lou, is what other slings and arrows they will throw at him in an hour's time? Oh, it's going to be, an hour isn't even enough to get at, really. They will, first they will attack him because he's a billionaire. He comes from money interest. He doesn't understand about the ordinary person. I mean, there's a story that he used to have a portable air conditioner brought out to his SUV in a hot days in New York to cool it down before he got into it. They'd hook up one of those, you know, those window air conditioners you see in the small apartment and stuff. They would put it in the back window of the SUV, just run a big cable from outside. It's great to be great. Just get hot in the summer in New York. Okay, so they're going to criticize him for his wealth. And then he's got a political problem. He's got a political, he needs to win Pennsylvania. Okay, you can do some things with coal. You can't win Pennsylvania on a ticket of shutting down all the coal plants. You're going to have trouble with Tennessee now. Yeah, in the South, Texas, Oklahoma, you don't expect to win those dates. Pennsylvania, North Dakota, those are pretty important to make, you know, Virginia, maybe he's okay. West Virginia, though. He's not going to win it anyway. Curtailing natural gas. I think he's going to have a lot of problems with that. There's a lot of people that have good stories on the benefits of natural gas. And yeah, there are things we need to do. We need to deal with fugitive methane emissions and flaring. So I think there might be a compromise there as well. And then finally, I do not think he's going to be able to ramp up quadruple spending on clean energy. In fact, I don't even know how you'd spend that much money. We're spending plenty now. I mean, I'm wondering if he's really proposing to states like Pennsylvania and other states that are invested in coal and all that, a jobs program, a research program that brings people out of coal and into developing clean energy. I mean, if you had, what is it, $25 billion, you could think of something. I know, for example, Lou, that if they gave us you and me $25 billion, we could come up with something. I know that. Because definitely, you might have something left over. I think so. But I mean, he's got to have soften points, you know, to soften the hard angles here. What he can do that these other people can't do is he can tout his status as a businessman, as someone who understands how these things work. But, you know, Bloomberg, it's kind of interesting character. For example, he's a big believer in charter schools. But charter schools are a nuthma to a big wing of the Democratic Party. The teachers unions hate it, right? He's a huge fan of charter schools. His daughter runs a massive program on charter schools. And he has them backed off of that. So it's going to be very interesting to watch of that place up. I think he has a chance. I think he does have a chance. I think if we, if I were a Republican strategist, I would keep my eye on Bloomberg. He's a very dangerous candidate. I don't think that's true of Bernie, but you never know. Yeah, we live in strange times. And we live in strange times with energy too, because, you know, let me be simplistic and say that if trade slows down, if the economy slows down, if the coronavirus keeps everybody at home so they can't drive and go places and travel, right, and take cruise ships and the like, that's got to affect demand on a long-term basis. And maybe even more profound than we think. We have to hope that this plays out like mares and songs. That by summer, it becomes clear it's under control, that the economy starts, China starts to recover, that even though we don't get all the recovery for another year, expectations start to shift people's attitudes, travel picks up. I mean, I'm going to look around. There might be some real bargains on travel coming up. So. Okay. But wash your hands with a mask. Yeah. What about Trump? You know, here we are in this crisis. Here we are in, you know, in the conversation about renewable energy, in the conversation about climate change, the whole country, yes, the whole world is talking about all these things. But is he addressing this? And does it matter? Well, Trump has a very specific view on this. And of course, that you can change. But his view is that these climate agreements are multilateral agreements with other countries are kind of bogus strategy in which everyone else will cheat, will follow the rules and get screwed. So he doesn't like them. He doesn't like them. I mean, once said it was a Chinese hopes and things are Chinese hopes, but he has this view that a lot of aspects of the global agreement, if you like, or the all the characteristics of globalism and multilateral agreements have worked against the interests of the United States and specifically against the interest of the working class in the United States. And that is the very whether it's right or wrong. For example, I do not believe global trade has been the biggest problem with manufacturing. I think it's much more and to sort of blue collar jobs. I think it's much more related to automation, opioid crisis, failure of certain kinds of education. But those, I think the elites in our country did fail and have failed to address those problems. And Trump is what you get when that happens. I mean, he was the only one to talk about this. So in that sense, he's a probably smarter politician than you want to give him credit for. I agree with you totally. He's smarter than you give him credit for. And one of the very interesting things that he's threatened or maybe thrown as a trial balloon is the notion of cutting Social Security, Medicare, Medicaid, all all the safety net programs. And I really wonder how that would affect A, the economy and be so. So I maybe we should do the budget of one session, because when I looked through the budget, I didn't really see there were some cuts in certain aspects of entitlements, but Trump, unlike most Republican candidates, doesn't seem to be worried about the deficit. So he has wisely, at least until now, stayed away from the social programs, right? Maybe he's going after food stamps or something like that. But on the whole, he has not attacked Social Security or Medicare. So I need to go look more carefully at the budget and see what's going on. Well, it's because his political strategy has not been to do that. It's still unfolding. And you know, I mean, that you always say a plus a chance to pull the meme or was it pull the meme plus a chance is all the same. Exactly. The more the more changes, the more it's the same. But and also on these budgets, the president's budget never means anything. That's just like the opening shot to the Congress. Then Congress begins to change it on the ways they like it and then it's a long negotiation. Well, that's the joy of this show, isn't it, Lou? It's always changing. And you know whether the change you just looked at is the same as the one next time you talk. Exactly. I can hardly wait till our next show, two weeks hence. And I hope you'll hold down your travel for two weeks. And I'm not going anywhere. I'm looking forward in any event. Lou Pugliarisi of E-Prink joins us on Energy in America every two weeks on a given Wednesday. Thank you so much, Lou. Thank you, Jay.