 Okay, we're back where live. I'm Jay Fidel. This is Energy in America here on ThinkTek every other Wednesday with Lou Fuiarisi who joins us from Washington, D.C., although that home does not look exactly like Washington. We'll assume he has a little corner of Washington, looks just like that. Exactly. You're looking great, but welcome to the show. I'm happy to be here, Jay. So Energy in America today, we should talk about the Apple data. Apple, that's a company that you know and love with the phones and all the software, and they have data. Apple knows everything you do. They know when you go to bed, when you go to the bathroom, they know everything about you. And now we have access to the data, so we can aggregate it and see what it means about Energy in America. But let me ask you something though, Lou. Why is Apple accumulating data about Energy? What has it got to do with Apple? Apple is collecting data on activity, and you're going to see in a minute, whether you're going to a restaurant where you're passing through some of the data from TSA through an airport, whether you're making reservations online, whether you're walking or driving your car. If you're operating that thing and tapping the system, they're recording. You know, this goes back, when I saw you wanted to do this, this goes back to about three years ago, maybe five. It was discovered that there was a file on every iPhone that was not made public. I mean, that nobody knew about, that Apple was creating this file. And this file was a list of locations where the GPS showed that you were visiting. And it went on and on and on. It was like every five or 10 minutes your location would be in this file. And somebody went to Apple and they said, why? Why are you collecting my location and not showing it to me? Not even telling me this file existed on my phone. And you know what Apple said? You know what Apple said, Lou? You know what Apple said? Nothing. Apple didn't answer the question. Well, you can't stop the GPS tracker. You can just go there. Then your Google Maps doesn't work very well. So that's very easy to stop the tracking. So I thought before we get started, I'd just like to point out that two big issues. One is that global flights are currently about 66 to 76 percent below what it was a year ago. And it could, you know, it's possible that we'll start seeing, we'll look at those, see some pick up. But I think the more interesting thing is, according to Johns Hopkins COVID data, we have all this extensive data, over the seven days from July 21st, 13 states now account, just 13 states now account for about 73 percent of confirmed new coronavirus cases. And these states represent about 44 percent of U.S. gasoline demand. You're going to see a little bit. So let's just see what's going on in little comparison between us and some of our folks in other countries. So the first one I want to show everyone is the consumption and mobility. What are the restaurants by country telling us? And if you look at the top circle on this thing, you can see percentage change year on year. And this is seeded diners from online phone and walk-in reservations by country, right? So the top red, dark red, and green lines represent what's going on in Germany and Ireland. And I think what's interesting about this is that they're almost back to where they were on February 18th, 2020. It's fascinating to me. So it shows you that if you can get this thing under control, you can get some recovery in this business. Now, for the U.S. and Canada, which are the two, the sort of lighter red and the blue lines below that, you can see we are getting some recovery, but we're still down a good 40 to 50 percent below where we were on February 18th, 2020. And so this is coming right out of the real-time data. You know, this is July 18th. That's not that long. That's like four days ago. We've never had access for data so fast, so quick. It's like, you know, it's happening in front of us. This is all from Apple? This is Apple data, yes. So they're using the GPS and determining whether somebody is in a restaurant? Yeah, they know where you are, of course. Now, I use Android myself. Yeah, okay. We don't need to collect everybody to find out what's going on. Okay, but I'm just telling you that doesn't include Android. It doesn't include Android, but Apple includes a pretty robust sample. Okay, because we're just trying to get percentage shifts. So now here's the next slide, which is quite, to me, very interesting. They are Apple requests by mode. So by mode means you're looking for how to drive from point A to B, or you're walking, or you're taking transit, right, you're taking transit and you're making requests. And what's interesting to me about this is if you look at the Apple requests by mode, and you go back early in the year, you can see that the walking transit and driving, of course, the transit fell dramatically, because people don't want to be packed in a bus or a subway call. This is a big problem in New York City. They have this massively expensive subway system, and nobody's using it. And you can see here, which is very interesting, is that walking and driving has as recovered dramatically going back from January 13th, 2020. And then if you look at the map requests by mode for Canada, which is a little better shape than us, you get a remarkable recovery for walking and driving, but transit still is lagging dramatically. And we're going to have to figure out what we do about mass transit, because these big cities, largely from the blue states, have these big massive transit systems, and we don't really have a plan on how we're going to dig ourselves out of this hole. And I think there's going to be a lot of unhappy bond holders and other folks out there. Now if we go to the next picture, which shows COVID-19 and the demand shock, we look at all the petroleum products together. And for starters, residual fuel oil. This is the heavier fuel oil that it's used in bunkers or on ships and stuff. Sometimes in Africa, in parts of Asia, it's used in power plant systems. But the big components of the US system is distillate, which is diesel fuel, right? And then gasoline. And you can see, yes, there's some recovery here, but the big rebound is in gasoline. And gasoline is still, you can see, it's still not up to where it was at 10 million barrels a day, but it's probably close to nine now. So that's pretty good news for... Well, let me offer a thought and see what you think. People, at least in Honolulu, they're driving. They're out there. I'm not sure where they're going, but they're driving. And maybe it's a way to get out of the house. You feel cooped up. So I've, I know a guy that went to the North Shore, it's a long ride, just to get him and his wife out of the house. And then when they got out to the North Shore, they turned around and came back. There was nothing else involved. But I think people are driving, and that's why gasoline, and most cars are gasoline, that's why gasoline is being used. But in mass transit, it may not be the same case with buses. So think about the, let's say, the Biden administration, which is going to want to do a lot on infrastructure. I was thinking about this. They're very interested in trains and mass transit. I think it's going to take a while for them to figure out, how do we get people back into these things? How do we get them to be comfortable with traveling now? I think we'll get back there eventually. The history tells us, we will. The progress on the vaccines looks very, very good right now. I think people are very up about that. I cannot explain why the stock market hasn't, you know, why the stock market isn't down 30 or 40%. I have no real answer to it. That's not going to do with the government supporting it. Yeah, it has a lot to do with that. But I agree with you. I cannot understand it either, and I think one of these days, our, what do you call it, skepticism about that will be realized, and it'll go down way down. But it's interesting, if you look at this data here, for example, we figured out that OpenTable, they compile data based on reservations per day, and then they put that data into indices. So if we go to, you know, if we, you know, you think about that, it's very important because all these rest, they're doing these chain restaurants, they're trying to figure out, you know, when can I, can I get back into business? You know, what kind, I mean, I think we're still, if you look at this, yeah, it's better, but we're going to have massive bankruptcies of restaurants in the US. Well, it's hard to control it. You know, it's hard to make the balance between the public health side, you know, and the economic side. I mean, for example, in those charts you were showing us about, you know, when the restaurants are open and people going to the restaurants, that doesn't show the incubation period. So you could have everybody in a restaurant and be happy that the restaurants are doing business. And two weeks later, crash. And all of a sudden, you know, right now there are 22 states where it's spiking. I think I may be wrong about that. I think it's more than 22 states. So, you know, bottom line is that, you know, if you could do something and have an immediate reaction, if you could close things down or pause or what have you, and know within a few days what the effect of that would be, then you'd have better control over this, but you don't have a very good model. I agree. I would say 13 states now account for 73% to confirm new coronavirus cases. And they could, these states correspond actually to a larger population shares than cases nationwide, right? And the seven, but the seven day average change in new cases exceeds the U.S. National Act. I would say that even though the growth rate in new coronavirus cases is now, you know, it's sort of, it's now declining, right? So it's growing, but the growth rate, but what we call the log of this is beginning to go. But it's still growing. It's still growing. It's still growing. Yeah, we've had a bit of a remission here in Hawaii, but it's only a small percentage down. And you could say that it's declining, but not by much. And it's going up. The absolute number of cases in Hawaii is ridiculously small by any metric. Okay. I don't know what your, I don't want to be on the wrong side of that. I got you. I got you. I understand that. But for some people, this is the problem I've always had with this is that I think it was really important for the government to say, you know, this is really bad. This coronavirus is really bad. And we're going to have to figure a way to protect the most vulnerable, but we're also going to have to figure a way to keep as much of the economy going as we can. Because let's look at that. Let's look at that. I think it's very important to look at that. And we've been edging in on it from the side, but it seems to me that it's all a matter of public confidence. We've talked about that, right? And if you had people there at the restaurants consistently and confident that restaurant would work, if you had tourists coming in, you know, and confident that they wouldn't run into a problem here and they wouldn't, you know, either get arrested for failing to follow the protocols or that they wouldn't get sick, then, you know, that would be a statement of confidence. Once you have that, then you can open the spigots. We don't have that, Lou. Why couldn't the state of Hawaii issue guidelines to do that and require testing? The state of Hawaii has all the control. They're able to block people from entering the island. No, no, no. In fact, there's a federal lawsuit on the question, but the Commerce Clause allows people to travel between the islands. Why? But when they get to Honolulu, they have to go into quarantine. They have to go to quarantine. And, you know, it's a question I've been asking from the beginning of this, how do you enforce that? A few days ago, they did a lot of arrests and, you know, as if to respond to that question. But still, the tourists come for a five-day vacation because that's what tourists come for, or maybe a 10-day vacation and then it's supposed to spend 14 days in quarantine. Those numbers don't work. They're not going to do it. Right. They're not going to do it. So you need a system, which I think you need a system with contact tracing and testing. Yes, we're on the same page. If we can get people tested before they get on the plane, get them tested when they arrive. That's what the governor was supposed to be doing in order to get around this Commerce Clause thing, pretesting them, but it hasn't started yet. So who is suing the restaurant owners in Hawaii or the hotel owners or who's suing? The ACLU is involved in that. And probably it's also the hotel owners who have a lot of cloud on this. They are the single biggest industry in the state. Well, I do think that, okay, we have one last slide here. Then we can talk about where we go from here on some of the stuff. So you can see this last picture here, COVID-19 and the demand shock. Gasoline is coming back. And it may be hard to understand that little purple spike that's down. But actually, if you look at it very careful, we're down about a million barrels a day now. We were down as much as four and a half million barrels a day. But the spike is, there's a little edge there. You can see at the minus 1,000, times 1,000, which is a million barrels a day. It's still a big loss in gasoline production from our historic rates. But I would say we're probably just, unless we begin to shut down extensively, unless the shutdown really spreads, we're probably going to see recovery of gasoline production, which means driving and automobiles, trucks, diesel fuel also. The diesel fuel never suffered that much, actually, because people were getting Amazon and Panera and everybody to deliver stops. And so I think the economy, as and when the economy gets better, energy markets will do better. There's no question about that. And the whole thing will be returned to normalcy. The problem is making a national plan, and for that matter, state plans, that will raise public confidence to the point where they'll start returning to their ordinary conduct. Now, you mentioned earlier that there's a certain amount of optimism about vaccines. And I've been studying that from both sides of it, and I'm not all that optimistic. I think people who, even Fauci says, well, we'll get something soon. I'm not sure that's so, because it's a very ordinary virus, and it works in ways we don't understand, and it has characteristics and behaviors we don't yet understand. It has relationships with other antigens we don't understand. So I think it's really special, and it's not going to happen right away. We still don't have, for example, an AIDS vaccine, and that's been how many years? No, but AIDS is largely a controllable disease now, at least. I wouldn't mind therapeutics here, but we don't have that either. Therapeutics are getting much better. The remstivir is showing a progress. Some of the steroids are showing progress. In fact, I would argue two things are happening. I mean, these doctors are pretty good. They're figuring out ways to treat it. One of the interesting, there was a story this morning that the death rate once infected is, if we account for everybody who's infected, those that are asymptomatic and that the death rate is somewhere between 0.3 and 1%, which by the way is a big number. That's a big number. That's some, you know, could be one out of a thousand, and some people think it could even be higher than that. Two or three out of a thousand. But if you look at the last I saw was it was north of 140,000 deaths already, and it was running at a thousand a day. That's a lot of people dying. Yeah, but it's a big country. It's a big country, right? We have 86. I mean, I'm not suggesting it's a good outcome. It's not a good outcome. 8,600 people on average die every day in the US. And I think the, if you look at the total deaths, 144,000, say, about half of those can be attributed to New York, New Jersey, Massachusetts, Connecticut, and I think Illinois. Oh, they're all Democrat states anyway. And no, yeah, who cares? I don't think that's the case. Let's send some troops in immediately. Well, I do think, look, if you look at the data now, I would say I was told this morning by someone who's very good at this is that the odds of a, of course, we don't know how the public's going to react to all this looting and Black Lives Matter, where there's going to be a backlash. But I think there is a probably a 65 to 70% chance that Biden will win, right? And in talking to people in that camp, people are thinking, well, we're going to go do all this green stuff right away. Now, Biden is actually an old line politician. He's going to be worried about two things. One, recovery for the economy and two, COVID-19. That's what they're going to spend their time on. Which was the sequence again? COVID-19 and the economy. I don't know what level. And I suspect that the other thing Biden will be doing is traveling a lot to kind of shore up and rebuild some American alliances. This is what I suspect is going to happen now. Well, when you shoot through that, I would do that. Yeah. And we can talk about that whether I'm right or not. And I think, I mean, but I do think that so when you get this new administration in, we're still going to have a pretty, pretty difficult time for the national economy going to have to have, even if it's Trump, but I mean, I think it was Biden. And so I don't think you're going to see a massive set of new taxes. I don't think you're going to see, I think you're going to see a lot of stuff on justice reform or racial justice. I think these are the things, but yeah, we will probably rejoin the Paris climate accord. That's a pretty easy thing to do. But we're trying to make peace with China. Well, but having a war with China is really not advised. I don't think we're going to have a war with China, but I think what we might have is a build out of a stronger, you know, what we have now, build on what we've got now, but in a more traditional alliance structure with India, with the Southeast Asian countries and Japan. And that does not need to be a military exercise. It just needs to be a kind of like minded democracy saying to China, look, okay, we get it. Nobody wants to stop China's growth. We don't want to stop your, you know, the progress of the people in China, but we have to have a rules based system. I totally agree. It's okay to make a deal about Hong Kong. And then because someone says something bad about President Xi, we get to change the deal. Or, and we're going to have a lot more attention on human rights, the Uyghurs, the Tibetans. So I think the Chinese are maybe excited about getting rid of Trump, maybe somewhat disappointed. Well, I don't think, I don't think they're, for that reason, I don't think they're going to try to tamper with our election. Yeah, it doesn't work in their interest at all to tamper with our election. But, but you know, I think what one thing that comes out of what you were saying, Lou, is that, is that, you know, I'm thinking of Hamilton, the play. One of the things that Alexander Hamilton brought to the country at the inception was that international trade and finance was the way to be a world leader was the way to have a good economy. And we have to get back to that isolationism, you know, is just the wrong direction. And learning from him and learning from our experience in the past, we have to reopen these these channels, the trade channels, we have to trade freely now, we have to reinstate our trade arrangements. And that includes oil and gas, doesn't it? Yeah, so I agree that, you know, the, and actually China is very important for the future of US gas, future LNG, Asia Pacific region is very, you know, we, we've not, you know, in Asia, very often these emerging economies of a heavy reliance on coal, they view gas as a rich man's fuel. And so this, I believe that, you know, there was a lot of concern, I think in the energy sector, well, Biden wins, he's going to stop all fracking. He's already made a public statement, he's not going to do that. So I was like, well, he's going to ban exports. I don't think that's the case. I don't think he's going to ban export exports. And now energy exports are now a very important instrument of US alliance policy. Now let me go further on China, you know that recently the Yangtze River overflowed because they're having floods there. The Yangtze River was a huge delivery system for coal from the west to the east. And now they have issues about delivering the coal. So I think they're going to be ever so happy to get American gas. It's going to be very interesting. I agree. And so I think the interesting thing about, you know, I have, well, you know, the thing about these politicians is you never want to fall in love with any of them. Okay. They're always going to disappoint you. But well, we do want our institutions to kind of make it through each group of presidents, more or less intact. Well, getting through this one is going to be hard because you may not step down. But, but let me, let me, let me go into question. Let me just say something. That is, I hear that all the time. That is a ridiculous idea. Okay. It's just ridiculous. Trump does not have a Praetorian Guard. It would be very easy. I only take about four Marine guards to perp walk them out of the White House. I don't really think most of the great institutions continue to follow the Constitution. So I just don't know where people get that. I'm with you. I'm with you. But when they talk in the Rose Garden and Wallace asks him, are you going to abide by the election? And he says, no, I'll let you know about that. I really get scared. I mean, the rule of law is not, is not really in his, his orbit. He doesn't follow the rule of law. And we'll see. You and I will have a conversation, I promise, right around that time. But, but let me, let me go to the question of how you rebuild the economy. And I think it's clear part of it is a big part of it is oil and gas, a big part of it is energy in general. Because, you know, what do they say, right? A community with robust energy supply with cheap energy supply has got a better economy. It follows this night from day. And so we have to get back to that. And we have to, you know, do a little out of time, but we have to, we have to match whatever possible development there is. The big question is, how do you open the businesses? Where do you start? Where do you incentivize entrepreneurs and owners? Many of whom are going bankrupt right now. How do you bring them back up? Well, you know, I think we're going to have a lot of liquidity in the economy. We're going to have to, you know, here's a very interesting case, right? But I think Biden has a big plan for building out the infrastructure. And one of the things that Trump administration recently did is they issued a new rule to reform the National Environmental Policy Act. And NEPA is a government statute which requires you to essentially take a hard look at any federal action, which has a major effect on the environment. But it can be argued, and I wrote an article about this years ago, that NEPA has been just has been, you know, corrupted in a sense that instead of taking a hard look at these projects, the people that don't like infrastructure, that don't like pipelines, they used it to attack the projects because not because the project is necessarily bad. Of course they think it's bad, but because they think the environmental study is inadequate and they get the courts to go along with that. Okay, you can argue that sometimes the studies are inadequate, but I can tell you that I worked in the Interior Department many years ago and they were going to do rehabilitation of grazing lands with some fancy. It was a $10 million project. We spent a hundred million writing the EIS. Now, this is a kind of ongoing war between different pro-development, non-development people and lots of other issues, but Biden is going to roll out a major infrastructure package. That's what he's got. That's what he wants to do. He thinks we need that because the capital formation is good for the economy and right, it's a stimulus in a way. Just like it was for Franklin Delano Roosevelt. It's the WPA all over again. He's going to go, when he starts to roll that out, he's going to have his, you know, his environmental constituents say, no, you can't have Niber before, but somebody in the White House is going to tell him, you know, Mr. President, these projects are going to get delayed for years. You need reform. You need to be able to build roads and airports and runways and with, you know, new train track, whatever it is, you need to get the authority to do that. And so in an odd twist, he may embrace the Trump reform, but for a different purpose. Well, Trump has reformed according to his view of the matter. And a lot of the Environmental Protection Act is already, you know, pulled down. And so the question goes back to, well, what's going to happen in putting it back up again? And the answer is this, you know, years ago, we had Jack Balkan on the show. He's the Dean of Constitutional Law at Yale. And I said, this was at a time when Bush was in office, W. Bush was in office. And I said to him, you know, how do you how do you get back to where it was when you liked it? You know, in this case, it was before Bush. And he said, you know, really get back because all of these things are bundled into the forward motion of history. So whatever Trump does, it has an effect after Trump leaves, however he leaves and whenever I agree, I agree. But actually, I think the data will not support that there's been a massive retrenchment environmental protection. It will just not support that conclusion. It was it will support that there have been some changes at the margin that some people don't look like. But all the major indices of criteria pollution, clean water, clean air, our law are remain intact and continue to improve. So what would you do? You get into office, and you know, we're in a crisis economically, you're like the WPA idea, you're like the infrastructure idea, you want to spend the money, keep people employed, you know, rebuild the country. What would you do? Well, the first thing I would do is, if we're going to spend money on infrastructure, I would least have a test that that infrastructure actually is a kind of capital formation that adds to the productivity and growth to the economy. And not a bunch of green pork, which I suspect we're going to see. We're going to see lots of green pork. And someone's going to eventually have to play the Roger Moore movie for nobody likes that movie. But no, but but you know, going back to the whole idea is that you would probably not want to get stuck on the Environmental Protection Act and on EIS bureaucracy. You would probably want to find a way to to build these projects without having them, you know, delayed or scuttled. And as president, you would you would find a way and I think Biden will find a way to. Yeah, it's not going to be easy. And I think he's probably smart enough to know that the number of things he can take on in the first year or two are small. And he should take on the right issues. And for the American people that's getting the economy to recover. And I believe to bring some stability to decision making for foreign policy. I think we covered two really important points here. One is the whole thing about trade, the Alexander Hamilton approach, you know, trade and finance and opening markets overseas for the United States, only good things in there. And the and the idea about building infrastructure and not letting bureaucracy stand in the way. I think that's all good too. And I think you and I, in the months to follow, should spend a little time figuring out what else, how else do you, you know, improve these markets? How else do you, you know, get around the lack of confidence and the lack of an economy problem? And we can talk about the medical, but Lord knows enough people are talking about the medical, you know, public health really has to move in first, but assuming the public health can achieve public confidence, hopefully soon, you and I should talk about how to rebuild the economy. I know, I think it's a good point. And I have some ideas on that. I noticed. Okay. Well, James, good to see you again. And I'm going to go to the, my beach home here and watch the waves. Lou, you look great. Wonderful. Whatever you're doing, it agrees with you. Lou Putirisi, the CEO, president of EPRINC, an energy policy research organization in Washington. And we meet every two weeks. And in two weeks from now, we'll be covering more things that are totally relevant to the recovery of our nation. Thank you so much, Lou. Aloha.