 Welcome to Stand Energy Man here on Think Tech, Hawaii. Dan Osterman coming to you live and direct from Kailua on the island of Waoui, on the island chain of Hawaii, state of Hawaii. Wow. It's been a busy, busy year this year with energy, but it's also been a very, very complicated year. And if you got a chance to check out that title, we're gambling with oil, you're probably scratching your head and going, how do I put those pieces together? The last few months I've been talking a lot about how the energy world is tied to our economic realities in our world. And one of the absolute laws in economics is supply and demand, the law of supply and demand. Now, if you're a person into science and those kinds of things, you understand that when you have a law, it means it always holds true. In science, we have theories and we put posturalized thought together and say, I have a theory, I've gathered a whole bunch of data and if this happens and this happens, then therefore this will happen. That theory doesn't become law until it actually happens all the time, 100% without failure. So when the economists use the terms of supply and demand, they really mean it's a law. It happens without fail. But just like everything else in the world, things can be manipulated, things can be worked with, things can be changed, altered, little deception, little bit of lies here and there, whatever, and it can distort how you get a result even when you're dealing with a law. So how does oil and gambling tie together? And it gets back to the fact that most of the economics in today's world, a big proportion of them have to do with risk. And if you know anything about gambling, it's all about risk and managing risk and taking chances and having a certain amount of information and understanding what it is and being willing to take a chance and bet either bluff like in poker or increase your bet or whatever and see if you can win. So in the big world, if you've taken some of my last few shows to heart, you understand that energy and money are so tied together with the US reserve currency or the world reserve currency being the US dollar that countries as they develop their foreign policy and put things into place, how they deal with other countries, it's all about managing risk. If you're a military guy, you understand the strategic level of war is all about measuring risk and deciding when to take a chance and deciding whether you believe what data you're getting before you take risk. So the oil world and the rest of the economic world that we're facing today, if you haven't been living under a rock for the last couple of months, understand that our world is heading into a really, really unusual place. I would go so far as to say that I don't think we've faced the potential for economic disaster of the scale since the 1920s. And that was a pretty monstrous depression right before World War II. And I say that because we have been, we have had a history of people gambling with the economics of energy and detaching themselves from the reality that energy is so crucial in our society today, we don't actually connect it to and we take a lot more risk than we probably should. So I've been looking at a periodical online called oilprice.com and they have some really good articles and I got turned on to this site by Mr. Dan Gohan, who's one of my regular guests. And one of the interesting things that caught my eye was a topic called demand destruction is delaying an oil supply crisis. And I went, demand destruction, oil supply crisis, this whole supply and demand thing came back into focus and I went, but how does it, I just don't understand where the demand destruction is coming in. So, I mean, I can see that we're all worried about Russia holding back exports of oil and driving the price by limiting oil exports and keeping demand high, but this demand destruction didn't connect until I started really reading an article and thinking about it. The demand destruction is not in Russia, it's not in the US, it's in China. It's in places where the Chinese government has locked down cities to the tunes of millions of people and their economies and their world is basically stopped. And when you have a society that's stopped, you have demand for energy that is stopped. You have demand for food that is stopped. You have serious, serious social implications. And then you tie the two together, China is leveraging this on their own population because of COVID outbreaks and they're locking down their communities, locking down big cities and some communities outside of big cities. How does that really impact this whole thing, especially vis-a-vis Russia? And you say, well, Russia is also drawing back on their production. So Russia is cutting back on supply of oil to the world sort of. They're actually storing a bunch, we think. And when they sell it, they'll be selling it at a premium price because they're keeping the supply low. And that would normally be a disaster if China was full up and running because China would buy all the oil that Germany or that Russia could produce. But China's not buying it. So the world is in a weird state where we have countries cooperating and betting and gambling with oil. Another thing they're gambling on, if you've been watching Stand Energy Manor for the last couple of months, is that that oil is almost always tied to the US dollar. Almost all the transactions worldwide for commodities is treated with the US dollar. But what has happened insidiously over the last couple of years is that some countries have been slowly pulling their economy out of the need for dollars. And we talked about that last week with Dan going on Russia with almost 20, over 20% of their currency reserves in pure gold, where the US is not on a gold standard anymore and a new banking system has been set up between Russia and China where Russia is now demanding payment in rubles, which nobody owns a whole bunch of rubles. Everybody, every country around the world has a reserve of dollars. But Russia and China and Iran and a couple other countries and a growing number of countries are starting to look at trading in Chinese Yuan or in gold or setting up their banking system to run where they don't need to have dollars. The same time they're divesting their selves of dollars and trade treasury bonds. And what that does when they dump those bonds on the market is that devalues our currency more. So you can see where this is turning into the kind of foreign policies that countries make can have a fixed year's down the road and it can be very disastrous. So one of the questions that we have that we had come in actually is how did the US and the EU end up in the serious game with Russia where they may not be using our currency or the EU's currency anymore and they're controlling the market on oil because everybody's, there are a lot of people especially in Europe are buying Russian oil. Even the United States up until recently was buying Russian oil to the point where the world is technically dependent on Russian oil. And if you're dependent on Russian oil supply and demand kicks in price goes higher. So here's what happened. The United States and the EU have been very trusting of China and very trusting of Russia and they've shared technology and they've negotiated nice business contracts and business dealings so that we can open our, we can give them money to manufacture things for us especially in China and they'll open their markets to US goods all those nice trade deals that we have. Unfortunately, when you don't pay attention close attention to all those deals when somebody pulls a rug out from under those deals you can find yourself in a really serious problem. For example, one of these demand destruction issues is that Russia is no longer pumping natural gas into Poland and Bulgaria. That's a big deal. It's just now getting to the end of wintertime spring is starting to come aboard but that kind of thing can shut down not only their household heating and cooking but their whole economy. So Russia in not just invading Ukraine but in working their own policies and their own economic policies and their own currency designs in their own banking system have basically been going on rapidly for probably 10 years and nobody has noticed the change. Maybe we weren't paying attention. Maybe we're paying attention and we just didn't care. We thought we were too big to fail just like all the big banks in early 2000s too big to fail until you have a bubble and the bubble bursts. Internationally, we're really close to having a US dollar bubble burst and we need to start paying attention and do whatever we can which may be kind of painful for us all economically dealing with the inflation that we have and interest rates are gonna have to go up. It's gonna mean we tighten our belt, we do with less and we try and get ourselves back on track that because we haven't been paying attention, that's what we get. Another article that came out was folks that keep track of oil production in the US say that US oil production has been falling off steadily and that's been tracked usually it's tracked several months, it lags about several months like the data we have right now is from February of 2022 but even though that's old data, old data economically it tends to be very accurate data and a very accurate predictor of future. And what it shows us is that America's oil reserves and natural gas reserves are tapering off not because of any green new deal not because we're all going with battery cars and stuff it's because we're not producing oil and the fact that we shut down some of our oil pipelines and we limited exploration and production out of other oil fields it will take us years to get back on track to even be able to take care of our own requirements in our country without importing from other countries. So that data has shown up, it's in articles here and you can see it. Kind of related back to what's going on with the international currency China calls out the US dollar dominance as it buys Russian coal with yuan. The Chinese state media is using the situation as an opportunity to claim that the status of the US dollar is at risk. When I used to be in the military there was a paramount saying that we always, always followed. You never enter a fight without the advantage. The US has let itself decline on the world stage policy-wise, militarily, et cetera to where other countries think that we can't defend ourselves economically or militarily. And that perception becomes their reality. It may not be true, I have great confidence in the US military but if they think that we can't hold them at bay then they may try something real bold. And when you hear Vladimir Putin saying he might put his nuclear forces on high alert or he may use nuclear weapons in Ukraine that's a bold step taken because he feels he has an advantage over the Western world. And he feels that way because of the economics that he and China and those other countries I talked about have been leveraging over the last few years and the fact that he controls a big chunk of the energy that the world needs and he can always hold those leverage as leverage. So we have to get back in our game folks and the current policy of our government is not getting us there. Another story that was brought up in the oilprice.com was our China and Russia teaming up to challenge the US space dominance. And I thought that was a kind of an interesting story to ask or a question to ask right now at this point in time. And then I realized that yeah China and Russia have taken so much technology especially China has taken so much technology from the US literally taken it stolen it. They've invited companies over to China with cheap labor and easy regulations so that they could get into our computer systems and get into our personnel and pay them off and stuff to start getting some of the technology that US companies have worked hard for and spent a lot of money developing and we were literally giving those away. And right now nobody owns space. It's internationally agreed that there is no country that owns space. But space is becoming a very contested area thus standing up the US space force last year or last two years ago. It's important. China and Russia have been literally just playing fast and loose with space. China launched a rocket to go to their space station about a year ago. One of the booster stages came back to Earth and that reentry hadn't been coordinated with anybody. It actually fell to Earth luckily in their own territory and didn't hit anybody but it wasn't communicated that it was coming back in at a place they hadn't planned so the international community knew nothing about it and when you're dealing with places like China and Russia secrecy is great. They just don't tell anybody and they view with the issue if it becomes a problem and China and Russia are challenging the US in space. They're challenging it with their own technology that we helped develop and gave them or let them steal from us. And the last thing we can afford to do is have other countries literally dominate space. If you don't think it's important I can tell you that the GPS satellites that we have around the world don't just help us navigate. It's not just so airlines can travel with less crew members they don't need to navigate on airplanes anymore. GPS can keep tracking and keeps the airplanes within literally feet of where they're supposed to be but the timing signals for all the banking transactions in the world come off those GPS satellites. The accuracy in US military weapons to a great degree comes from GPS. We can't afford to lose dominance in space yet we let those other countries basically start taking it. The last part was is China going to try and control the global electric vehicle supply chain? And there's another economic role it comes into play. I don't think it's a law but it's a rule and that is first to market will gain control of the market or has the advantage in gaining control. China for years has been buying up all what we call the rare earths all of the rare earth minerals that they need for electric vehicles, batteries, things like that all kind of technology including nuclear technology for that matter and they've been doing it right out in the open nobody's challenged it the US hasn't gone to the other countries that they've offered deals to and said hey if China will do it for this much and we'll take better care of you now we just kind of let those things go because after all China's our friend now they're real nice and everything so we'll just let China take over literally that market well now as we demand electric vehicles and hydrogen fuel cell vehicles become the way in transportation all of a sudden we have less access to all the raw materials we need to dominate in those areas thus making us dependent again on a foreign country China and specifically for things that we need in electric vehicles so we need to understand that the scale of oil and fossil fuels is huge for electricity and for transportation and by letting China go and buy up all the rare earth mines and stuff around the world in different countries and control them and with Russia controlling a bunch of the oil the United States is losing a lot in terms of prestige in terms of their admiration among other countries and quite literally just in terms of our own economy we're letting it slip away and we can't afford to do that we have to be paying attention so I've kind of looked through some of my stuff and when I started doing my show here I started in 2015 in the end of July and one of the first guests that I have on was a professor from the Midwest called Nate Hagan and he introduced me to a term called energy blindness and at first I was kind of intrigued by that and I was pretty much focused on hydrogen as everything hydrogen for the grid hydrogen for transportation I was hydrogen hydrogen hydrogen but when he said people are energy blind I thought hmm as he explained it I realized he was right on the money energy is not just oil it's not just natural gas I mean it's not electricity energy is everything energy literally you as a human being your dog is an animal the plants around you without energy they don't exist they don't function at all try to go for a month without food you'll be on a great diet you'll probably lose weight but you'll probably also be dead your body needs energy we need energy in the industrial world energy has grown to be so important and we've been asleep at the wheel we haven't been thinking about energy and the cost and the value of energy and I came across an interesting quote by a gentleman named Oscar Wilde he says nowadays people know the price of everything and the value of nothing so as we had this discussion the US kind of falling behind the rest of the world I think that's because of exactly what Oscar Wilde said we know how much it costs for a gallon of gas but do you value your freedom do you value your family do you value life itself do you value being able to have the security in your own home we have forgotten the value of the things that this country was founded on and I think it's important that everybody wake up start taking a personal interest in what's going on around them don't take things for granted don't listen to a bunch of rhetoric don't listen to the screaming BBs that talk about the earth is dying the world is going to collapse and you've got to have this law or that law and so and so is a fascist and so and so is a racist and start doing your homework and start taking personal responsibility for stuff we live in the greatest country on this planet and it will be the greatest until we let it die and right now I see us letting it die and it shouldn't die so anyway we're getting really close to the end of this show and the reason I have the slide up behind me for a background is it's a sunset and that's because this is my last show for Think Tech Hawaii I'm still doing some other things on the outside and maybe back on the air from time to time but this is my last show for Think Tech it's been real fun I'd like to thank everybody here at Think Tech for putting up with me and having a great input getting this show on the road every week for the last almost seven years it's been fun it's been a great learning experience for a lot of people and I hope that everybody will start taking a personal interest in energy at the molecular level at the gas pump and on their grid and start taking to heart some of the things we talked about in Stand Energy Man and start making a personal effort to do what's right for this planet to do what's right for our country so thanks 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