Will Trump's Tariffs Spike Gas Prices?

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[7] This is the Energy Show with REI Energy.

[8] Energize your investments and maximize your tax deductions.

[9] Here's Mike Maselli.

[10] My name is Mike Maselli and this is the Energy Show with REI Energy where we're energizing your investments and maximizing your tax deductions.

[11] Today we're going to be talking about Trump's energy policies begin and you're going to discover how Trump's energy policies beginning with tariffs are impacting you.

[12] My guest today is Robert Rapier.

[13] Robert is a chemical engineer for over 25 years.

[14] He's also an author of Power Plays Energy Options in the Age of Peak Oil.

[15] Great to have you on the show again, Robert.

[16] Well, Robert, it's great to have you back on the show.

[17] Yeah, thanks for having me on.

[18] Man, I think the last time we talked, the world was a lot different, right?

[19] It's moving a lot faster now.

[20] Right, right.

[21] So I wanted to kind of dive into what's going on with the Trump administration.

[22] And I know they do a lot of talking about how Trump can increase oil production and yet lower gas prices.

[23] I wanted to kind of get your thoughts on that, how that works.

[24] Yeah, I think those are kind of mutually exclusive goals.

[25] I mean, I think oil producers like oil prices where they are, maybe a little bit higher.

[26] You know, that's where they make money.

[27] For gas prices to come down, oil prices have to come down.

[28] So I don't think oil producers generally want to see that.

[29] So I don't know how you manage that.

[30] I don't know how you manage.

[31] I think the promise at one point was to get gas prices below $2 a gallon.

[32] Oil producers aren't going to make any money at that level.

[33] So I just don't know how you satisfy those competing priorities.

[34] Yeah, I think a lot of people don't really understand, you know, when you're drilling these.

[35] Most of our oil today in the United States comes from horizontal type wells.

[36] And usually those wells are 20 ,000 feet deep and they cost somewhere between nine to $13 million a piece.

[37] And I know when the industry first started out, you know, a lot of companies were just dumping money in it right and left.

[38] And in the end, a lot of them did not make any money.

[39] And today I think companies are more disciplined and, you know, we need these higher prices in order to.

[40] Und ich denke, dass wir sie unter 100 Euro machen können, das ist ein guter Preis, wo jeder kann.

[41] Was ist Ihre Meinung?

[42] Und ein Weg zu machen würde, wenn du was du für cheaper machen kannst.

[43] Aber die Lehre curve über den letzten 15 Jahren in Shale, ich denke, hat die meisten der Lehre aus.

[44] Und ich sehe...

[45] You know, huge cost savings going forward on being able to drill and produce these wells.

[46] So that makes it a lot more difficult.

[47] I mean, in the early years, there was a lot to learn and there were cost savings.

[48] The breakeven price went down.

[49] I don't think the breakeven price is going to dramatically drop from here.

[50] And that's really what you would have to have happen for the oil producers to make good money and for gas prices to go down.

[51] Yeah.

[52] And, you know, as far as the.

[53] The lifting cost on a lot of these wells, you know, obviously when you hydraulically fracture them, you're putting a lot of water and sand in the well in order to frack them.

[54] And I know the lifting cost is higher in the early years.

[55] What do you see as far as lifting costs as these types of wells mature?

[56] Well, the wells have already been drilled.

[57] I mean, I've seen places like Shell report, you know, quite low costs.

[58] I mean, once the well's been drilled, I think you probably know this number better than me, but I think, you know, Shell has said we can make money at $20 on the wells we've already drilled, but they're not going to be out drilling new wells at $20.

[59] So that's the rub.

[60] Yeah.

[61] And, you know, I think a lot of the big...

[62] Shell fields have been already found, like West Texas and stuff.

[63] So you're in more of a development, even though we're making some tremendous discoveries out there.

[64] And we're in a new play up in Oklahoma that seems to be really working well.

[65] So a lot of our operators are going back and revisiting a lot of these tighter sand formations, and they're using horizontal drilling.

[66] You know, some of them work, some of them don't.

[67] I mean, not every shell well, obviously, is commercial, as you know.

[68] But, you know, so you have to drill a lot of wells, and some of them don't produce as good as you anticipated.

[69] But, you know, I agree with you.

[70] I don't see where prices can come down that much, you know, and still be able to be the number one producer of oil in the world.

[71] Right.

[72] And that's a lot of the, you know, the people who are expecting drill baby drill to really result in a surge of oil production, I think they're going to be disappointed.

[73] I've said before, the oil industry marches to the beat of its own drum, and that drum is oil prices.

[74] And if they look out and they forecast higher oil prices, they're going to drill and invest more.

[75] But there's going to be at some point that it just, and it looks like we may be reaching that point now where production is starting to flatten out.

[76] Over the past six or eight months, production gains haven't been as they have been over the past 10 years.

[77] The first time Trump was in office, the first three years he was in office, I think oil production went up about 3 million barrels a day.

[78] COVID hit and it took production down, but then during Biden's term, oil production surged back and we set records the last two years in a row.

[79] I'm not so sure that we'll set a record in 2025.

[80] It's going to be close, but if we do set a record, it won't be a huge record.

[81] really looking like production is flattening out here, and that's just a function of geology.

[82] I know you wrote a piece on Alaska.

[83] What are your thoughts there?

[84] I mean, is there a tremendous amount of production up there yet to be produced?

[85] There might be.

[86] I mean, I think oil producers always want to have more areas to be able to explore, and so that may help.

[87] But it comes down to cost, too.

[88] If the cost of production up there is higher, that's going to be lower priority than investing in current fields.

[89] So it may require a higher oil price.

[90] I don't think we're going to do a lot more production in Alaska at low gas prices.

[91] But I think taking areas that were put off limits and allowing exploration in those areas, I think oil producers are always going to want to see that.

[92] They want to have more areas to be able to look around in.

[93] But I don't know what the potential is up there.

[94] Well, I know from just what I've read as far as the willow field that they're talking about putting online, but my understanding is that field is only going to produce about 130 ,000 barrels of oil a day.

[95] I mean, we use over 20 million barrels a day here in the United States.

[96] I mean, while it does move the needle, it's not going to move it a lot, I think.

[97] Right.

[98] Now, you know, you can also see as far as...

[99] You know, when Trump was talking to Europe, you know, he wants them to buy more LNG.

[100] And, you know, as far as that, so I know we've, you know, Biden and his administration, they put these LNG plants on hold.

[101] Do you think American LNG will be able to, you know, will we be able to sell that again to Europe?

[102] Ja, so I think that is one thing that I totally agreed with Trump on.

[103] I think the pause was a bad idea because, you know, what's happening is we're displacing coal all over the world.

[104] So if LNG can shut down a coal -fired power plant somewhere, that is a net good thing for the environment.

[105] And if it's not happening, if you say, you know, we're going to stop exporting as much LNG.

[106] And China just keeps pumping out CO2 from their coal -fired power plants.

[107] That's not a good thing.

[108] And I think the reasoning, I think Biden thought, well, if I stop this, then they're going to shut down the coal plants and they're going to build more solar plants and wind plants.

[109] But solar and wind are not replacing coal -fired power plants.

[110] Nuclear is and natural gas is.

[111] And so, yes, I think natural gas production, which.

[112] kind of flattened out last year as well.

[113] I think there's some more potential there.

[114] I think we could boost LNG exports a bit more.

[115] So yeah, that's a move that I agreed with.

[116] You know, the Paris Climate Agreement is another one.

[117] We're in the Paris Climate Agreement, and I agree, we are handcuffing ourselves when the real problem here is soaring emissions in the Asia -Pacific region from coal.

[118] Um, you know, if you look at our emissions, our carbon emissions have been pretty steady for the last 50 years, and they've actually declined over the last 15.

[119] But global carbon emissions continue to soar.

[120] And the reason they're soaring is because of China and India and Indonesia and Vietnam and those countries who are building coal -fired power plants.

[121] And so by being in the Paris Accord and giving them a pass.

[122] We really handicapped ourselves, and we're not going to get really much benefit out of it.

[123] What we need is for China to start shutting down coal -fired power plants.

[124] And they've already proven they don't have much interest in that.

[125] And they want to sell their rare earth minerals to the United States so we can build these ultra -expensive electric cars that not many people want.

[126] But in the end, I mean, China, whether they're building a new coal -powered fire...

[127] Power plant every week, right?

[128] One a week?

[129] They've been building a lot and their carbon emissions continue to grow.

[130] I've got a friend who's convinced that China is on the cusp of becoming the...

[131] Und ich sage Ihnen, mehr als 60 % der Energie Energie Energie ist Coal.

[132] Und ja, sie haben sich die Welt's größte Wind und Solar produziert, aber sie werden auch neue Coal -Fired Power Planten.

[133] So, das ist warum der Carbon Emissions weitergehen.

[134] Sie machen ein bisschen alles.

[135] Und was sie sollte wirklich machen, ist schauen, dass wir eine Natur -Gas planten hier oder können wir eine Nucle planten hier, statt der Coal?

[136] I can tell you we are absolutely powerless to stop the rise of carbon emissions as long as they're doing what they're doing.

[137] Well, I'm glad you brought that up because, you know, as far as these compact nuclear reactors, you know, I was at a presentation that the governor gave here in Texas and they were saying that now Texas A &M, all of their universities run off of these micro nuclear power plants and that they expect to build more of those here.

[138] So, do you think that'll take off, I mean, around the country?

[139] I hope so.

[140] You know, that's where I went to school, Texas A &M.

[141] Oh, okay.

[142] Well, then.

[143] That's my colors here.

[144] So, I would, yeah, I would love to see that.

[145] I think there's a lot of potential there.

[146] I mean, if you just look at the numbers, and I think a lot of people who have a knee jerk fear of nuclear power, they don't want to see any nuclear power.

[147] And you look at the numbers and you go, there's no other way we're going to get our carbon emissions down.

[148] Because they think, well, if we don't put nuclear in, we'll just do it with wind and solar.

[149] Wind and solar are not shutting down coal fired power plants.

[150] I mean, you could build a nuclear plant to replace a coal fired power plant.

[151] That's what we need to be doing.

[152] We need to convince people that it's safe though.

[153] I mean people have been burned by Chernobyl and Fukushima.

[154] We need to convince them and show them that fail safe designs are possible.

[155] And I've always said you'll never make a fail -proof design.

[156] Things always go wrong.

[157] But a fail -safe, and what is fail -safe?

[158] Fail -safe is like the fuse in your fuse box.

[159] It fails in a safe condition.

[160] Electricity stops flowing.

[161] So you need to have these nuclear power plants where you can show that when they shut down, they shut down in a safe state, and they're not going to melt down after shutdown.

[162] Yeah, I think they can first start off by changing the name of it, right?

[163] Because obviously people hear nuclear and they automatically freak out.

[164] Yeah, and I have this conversation with people all the time.

[165] And I say, you know that the banana you eat for breakfast is radioactive.

[166] Your spouse is radioactive.

[167] There is a very, very tiny increase in the chance you'll develop cancer if you sleep next to your spouse for your entire life.

[168] Because they're very, very slightly radioactive.

[169] Now, it's a minuscule increase.

[170] auf eine sehr, sehr low risk zu starte mit, aber es ist da.

[171] Und so, wir haben nuclear radiation all around uns, aber es ist auf eine sehr low level.

[172] Und, you know, unsere Bananas sind Radioactive.

[173] Wir sind Radioactive, aber es ist auf eine sehr, sehr low level.

[174] Und diese Nuclear -Planz, sie haben weniger Radioaktivität als ein Coal -Fire -Power -Plant.

[175] Ich meine, ein Coal -Fire -Power -Plant spews Radioaktivität aus dem Stack.

[176] Yeah, it's probably safer than holding your cell phone up to your ear or sitting on a lithium battery while you ride around the country.

[177] But yeah, I agree with you.

[178] Plus, it would extend the life of oil and gas, right?

[179] I mean, you can't use nuclear for lubricants and stuff like that.

[180] That's where oil and gas comes in.

[181] And same thing with wind and solar.

[182] They don't really produce any other type of products.

[183] Except for electricity.

[184] And I see solar having its place.

[185] I'm not so sure wind's going to have its place in the future.

[186] But as far as oil and gas, it would extend the amount of reserves we have.

[187] And plus it would bring down electricity costs, right?

[188] Which is what Trump and them are trying to do.

[189] Yeah.

[190] I mean, 15 years ago or so, I wrote an article, The Future is Solar.

[191] And I believe that.

[192] I believe that eventually we're going to have solar.

[193] Panels on everybody's houses and there's going to be solar plants and so forth.

[194] But it's intermittent and you have to have backups.

[195] And, you know, a gas -fired power plant is a good backup and complement to solar fields.

[196] So, you know, I think we need to have a very diverse energy mix.

[197] Solar is going to be part of that.

[198] Nuclear needs to be a very important part of that if we're really committed to reducing carbon emissions.

[199] You know, the lowest hanging fruit out there, and I can't beat this drum enough.

[200] I show this graph every year in Forbes.

[201] I'll write an article where I show the world's carbon emissions in Europe, in America, and in Asia -Pacific.

[202] And Europe and America are flat, and Asia -Pacific is skyrocketing.

[203] And that is where the low -hanging fruit is.

[204] That's where we have to rein in carbon emissions.

[205] Yeah, because, I mean, you have, what, over a billion people in each one of those countries.

[206] And that's the real issue.

[207] And I've had people say, yeah, but their per capita emissions are lower than ours.

[208] And I say, well, it doesn't matter.

[209] It doesn't matter if you have low carbon emissions.

[210] All the atmosphere cares about is what it's seeing as far as overall carbon emissions.

[211] So if you've got half our per capita emissions and four times as many people, well, you're putting twice as much carbon in the air.

[212] Yeah.

[213] And, you know, as far as a lot of these...

[214] Ja, und ich glaube, wir müssen das, was wir tun, was wir können.

[215] But if you just look at the problem, the United States carbon emissions could fall to zero and carbon emissions would still be going up.

[216] That's the problem in a nutshell.

[217] We can't put that genie back in the bottle.

[218] And people will say, well, the U .S. has put more carbon up there than anybody else.

[219] I'll say that's true.

[220] What's true for now, but China is going to pass us within the next 10 years or so.

[221] What's happening now is, you know, the rise right now is being driven by Asia -Pacific.

[222] And we can't solve that in the United States without, you know, just figuring out how to get carbon -free power to China and get them to shut down those coal -fired power plants.

[223] Yeah, because, I mean, as you were saying, it's, you know, we're not going to be able to reduce ours much more here in the U .S. I mean, where the big strides are going to be made is convincing these other countries and they don't seem to have much interest in it.

[224] Well, and I don't think most people realize the United States has had the largest decline in carbon emissions of any country in the last 15 years.

[225] And the reason is fracked gas.

[226] We've seen coal -fired power decline tremendously in the US, and natural gas replace those power plants, and that has had a tremendous impact on our carbon emissions.

[227] We've had a serious decline, and if you could export that out to the rest of the world, we might see carbon emissions finally come under control.

[228] Getting back on natural gas, I mean, we have a tremendous amount of natural gas here in this country.

[229] In fact, in some areas that we develop in, in a lot of cases you have to pay the gas company to take the gas, because obviously you don't have the pipelines to get it out.

[230] So we need more pipelines in this country, and I believe that Trump and them are going to push that.

[231] But during the Biden administration, of course, they were wanting to rip all the pipelines up, or either dismantle them, not necessarily take them out of the ground.

[232] So we definitely need more pipelines as well.

[233] Yeah, and I've talked to people before that they really know concept of the extensive pipeline network under the country.

[234] So when you hear a new pipeline, they think, oh, you know, there's two or three big pipelines in the U .S. and now they want to add another.

[235] The pipeline network in the U .S. is like 50 times the length of the interstate highway system.

[236] And it crisscrosses everywhere.

[237] And people who try to stop pipelines, they say, well, we can't have a pipeline going across a sensitive area like the Ogallala Aquifer.

[238] You already do.

[239] You already have pipelines there.

[240] And if they were leaking and contaminating water, we wouldn't have any clean water in the country.

[241] Because pipelines crisscross every body of water we have in the country.

[242] Every major aquifer, there's probably pipelines going across it.

[243] And what I tell people...

[244] Think about this.

[245] Farmers farm above the Ogallala Aquifer, and they dump thousands of tons of herbicides and pesticides on the ground every year.

[246] There are cities built on top of it, and yet the Ogallala is not contaminated.

[247] What does that mean?

[248] It's hard to contaminate.

[249] I mean, you've got all this sand and all this stuff down to it.

[250] It filters all that out, so it's just not as easy.

[251] I think people have this.

[252] Das ist einfach nicht der Fall, wenn wir die Oberfläche von Oglala ausprobieren können.

[253] Das ist einfach nicht der Fall.

[254] Das ist auch nicht der Fall.

[255] Wenn wir die Oberfläche von Oglala ausprobieren können, ist das 10 ,000 ft. Und natürlich, die frisch -wateren Zonen nur um 2 ,400 ft. Und natürlich, wir müssen die Öl ausprobieren, mit Pipe, bevor wir weiter.

[256] and protect all the freshwater zones, but a lot of people really don't get that.

[257] And I think a lot of that had to do with the media back during the Marcella Shell when you had a lot of old wells that were leaking from the 1920s that never got plugged.

[258] Right.

[259] And again, I tell people that if it was easy for that oil to migrate into the water, it would have migrated.

[260] You know, a mile or more of rock between those areas of producing zone and the water.

[261] And the fractures don't extend that far.

[262] They extend, you know, maybe a few hundred feet, a few hundred yards.

[263] Maybe they don't get up into the zone.

[264] And, you know, or all the water in the country would be contaminated with oil because it would have naturally migrated into those areas already.

[265] So I wanted to kind of get your thoughts on these tariffs that Trump's going to be enacting this weekend.

[266] I mean, do you think that's going to have a major impact on oil prices?

[267] I don't think it'll have a major impact on oil prices.

[268] The tariffs scare me a little bit.

[269] I mean, I personally, I don't think tariffs are the way to go in the economy, and I think it's very risky.

[270] We get a lot of oil from Canada.

[271] We don't get so much from Mexico anymore.

[272] We used to.

[273] But we get oil from Canada.

[274] And if it's not exempted, yeah, I think we'll see some uplift in oil prices.

[275] But I just can't envision a scenario where this goes on for very long.

[276] I think it's more of a sort of posturing and trying to bring Canada and Mexico to the table to get a better deal.

[277] But, you know, tariffs, you know, if tariffs got implemented all over the place, it would drive up costs for Americans.

[278] And in the long run, yes, it probably brings some jobs back to America, but at the cost of everyone paying more for things.

[279] And I think people don't understand that.

[280] Yeah, and plus the tariffs, you know, as far as that, I think I heard this morning that they may exempt oil prices, oil from these tariffs.

[281] I mean, I think, like you said, it's more of a negotiating tool.

[282] with the countries, you know, as far as to obviously get what the administration wants out of them.

[283] And from that aspect of it, you know, maybe that's a good thing.

[284] I mean, obviously we do need to close our borders, and I think that's one of the main reasons that they were pushing this as far as to have more impact on closing the borders.

[285] Right.

[286] I mean, if they enact tariffs and you see gas prices start to go up, that'll put tremendous pressure on them to do something.

[287] You know, gas prices are one of those, you know, politically one of those third rails.

[288] You don't want to do things that purposely cause the price of gas to go up.

[289] And if the tariffs did that, I think you'd see somebody blink pretty quickly.

[290] Yeah.

[291] Well, it was great having you on the show today, Robert, and I'd love to have you back in the future.

[292] It's always nice talking to you.

[293] Absolutely.

[294] Anytime.

[295] It's going to be a very interesting year.

[296] It's already started out to be interesting.

[297] It's pretty exciting to watch, right?

[298] Yeah, for sure.

[299] Have a great day.

[300] Thank you very much.

[301] Thanks.

[302] We'll see you next time.

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