Biden Bans Offshore Drilling….Kinda

Highlights of the Podcast

00:00 – Intro

01:21 – Biden Blocks Over 625M Acres From Offshore Drilling To Stifle Trump’s Energy Agenda

06:50 – Biden Gives Calif. Special EPA Waivers To Impose Stricter Emissions On Lawn Gear, More

14:00 – Markets Update

16:46 -Dallas Fed Energy Survey

24:10 – Outro

Follow Stuart On LinkedIn and Twitter

Follow Michael On LinkedIn and Twitter

ENB Top News

Energy Dashboard

ENB Podcast

ENB Substack

ENB Trading Desk

---

– Get in Contact With The Show –

---

Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

---

Michael Tanner: [00:00:10] What’s going on, everybody? Welcome in to the Tuesday, January 7th, 2025, edition of the Daily Energy News. Beat Stand Up. Here are today’s top headlines. First up, politics. Biden bans new offshore oil and gas drilling in most US coastal waters. Stu and I talked about this possibility on yesterday’s show. And no less than 12 hours later, it comes to fruition. We’ll cover it. Next up on his way out as well. Biden gives oil slick news some special EPA waivers to impose stricter emissions on launch gear and more. This, guys, is absolutely unbelievable. I will then quickly jump over and cover what happened in the oil and gas markets today. A strong and kind of you know, the overall depression of prices did a really interesting price action. I will cover that. And then we’ll end with one of my favorite quarterly articles, the latest Dallas Fed Energy survey. Always get some great quotes. And this one made me scratch my head a little bit. So we will dive into all that and a bag of chips. Guy Stu is out on assignment today, so I am here rocking a solo show. Go ahead and kick this off. All right. Politics. [00:01:21][70.7]

Michael Tanner: [00:01:21] Biden bans new offshore oil and gas drilling in most U.S. coastal waters. Super interesting. I’m going to read a little bit from the article here. President Biden has begun taking executive action in his final days to protect more than 625 million acres of American ocean from offshore drilling. The White House announced early Monday as if they had listened to our show that we recorded Sunday afternoons that, we’ve got to get out ahead of these guys there in front of us here. The move to ban new offshore oil and gas drilling in most U.S. coastal waters includes the entire East Coast, eastern Gulf of Mexico, the Pacific, off the coast of Washington, Oregon, California and additional portions of the North Bering Sea and Alaska, where future oil and gas leasing could not take place. Here’s a quote from President Biden himself. My decision reflects what coastal communities, businesses and beachgoers have known for a long time that drilling off these coasts would cause irreversible damage to places we hold dear and is unnecessary to meet our nation’s energy needs. I, to be honest, slightly half of that quote I don’t disagree with mainly when he says unnecessary to meet our energy needs, but I’ll get back to. I’ll give him a pass there. This next quote is where we go off the rails as the climate crisis continues to threaten our communities. It’s we’re threatened, folks. Remember, you got a gun to your head. It’s just as bad as the climate crisis continues to threaten communities across the country and we are transitioning to a clean energy economy. I don’t know what transition he’s talking about, but clearly he you know, something’s going on in his mind there. Now is the time to predict these costs for our children and grandchildren. You know, when he means grandchildren, he means the grandbaby that he’s denying is really is great. If you want to know more about that, look that up. But I’m throwing this off line here. I’m busy today, folks. But this is a you know, obviously, this is a complete as the title says, it’s completely political in the fact that, you know, he’s got to throw some red meat to his constituents to, you know, secure up his legacy so that when he goes and builds his $4 billion presidential library, he can say he stood up to the big bad oil companies. He fix climate change. He banned drilling on 625 acres of offshore land that we had no oil. And that’s the funny part. So if you dive in specifically to where he actually didn’t, you know, he’d be banned this drilling. Let’s go back. Where did he ban it from? Will he. So he banned it on the East Coast. Okay. So like North Carolina, Virginia, all that jazz, eastern Gulf of Mexico, the Pacific off the coast of Washington, Oregon, California and additional portions of the North Bering Sea, which you couldn’t drill for oil and gas anyway. So where exactly is all the offshore activity? Well, if you look at a map, what’s funny is the majority of the U.S. offshore production is central and western Gulf of Mexico, which remains unaffected by the ban. So, as always, it’s a look at me now. Look what I’m doing. I’m protecting the environment, but I’m not really protecting anything that would be drilled any time soon. I don’t know anybody clamoring to go drill some very deep offshore Atlantic wells. No one wants to do that. No one’s clamoring to go drill next offshore Oregon. No one’s really clamoring to go drill a winter. Well, up in the North Bering Sea Strait, you know, you might end up on on the Deadliest Catch because you catch you catch something a little, you catch something more than just fish. What’s what’s interesting, though, is that he and Biden has actually gone ahead and okayed some lease sales in a three year span, basically. And in 23, he approved sales in 25 this year, 27 and 2029. It is the minimum that they could legally offer. And, you know, basically the reason why he did that is because under a 2022 climate law, the government must offer at least 60 million acres of offshore oil and gas leases in any one year period before it can offer offshore. Shore wind leases. So a little give here, a little red meat there. A little red meat there. And don’t forget that President Biden was the one that okayed the Willow project, which really put his. Quote unquote, climate legacy at risk. So he again threw out a little red meat to his constituency. It’s again, it’s politics, politics, politics. Much like real estate. Location, location, location. This move is all about politics. He says a lot but doesn’t actually do anything. If that isn’t the theme of President Biden’s administration, I don’t know what. It’s not doing much. Just kind of they’re talking some words that don’t really make sense. Pretty unbelievable. But he does go ahead and do this. You did hear first from the Swami, a.k.a. Stuart Turley here on this show the day before. So, folks, that’s why you tune into the show. It’s clearly not for the jokes. It’s for our hard hitting analysis on this stuff. But, you know, I think the interesting part is no one is really sure how President Trump can undo this. And part of the reason why I think Biden did this and he picked where he did pick is so that Trump just says it’s okay, we wouldn’t drill there anyway. I’m good. You know, I don’t you know, you don’t you don’t see the president of Chevron standing up and saying, wait, we were about to go drill a deep offshore Atlantic. Well, you know, all you’ve got is the CEO of the American Petroleum Institute who’s got to do this because he’s an oil and gas lobbyist. Say American voters send us a clear message in support of domestic energy. Well, and yet the current administration is using its final days in office to cement a record of doing everything that is possible. Scripted. I mean, he’s true. It is true. Now, again, look under the hood a little bit. Nothing’s really going on. But Mike Summers presidency over that EPA doing what he gets paid to do. So, you know, he’s got a cat. Got to show something for cash in that nice paycheck he’s getting. [00:06:49][328.0]

Michael Tanner: [00:06:50] But let’s go ahead and jump over to oil slick, our favorite, governor, Gavin Newsom. Biden gives California’s special EPA waivers to impose stricter emissions on long gear and more. This is not a joke here, folks. Biden has issued EPA waivers so that California can impose higher emission standards for lawnmowers, leaf blowers, refrigerated trucks and offshore vehicles. He’s spending the last of his days banning offshore drilling in certain in areas where we won’t drill. Okay, fine. Win some, you lose some, throw some red meat. Now he’s going after your lawnmower and leaf blower if you live in California, I mean, it’s unbelievable. So here’s some quotes from the Politico report. The moves are some of President Biden’s last attempt to safeguard California’s progressive climate policies from President elect Donald Trump In a little over two weeks before he takes office. As Trump promises to dismantle the state’s regulations. It’ll be interesting to see if he can do that. The EPA or the Environmental Protection Agency approval of the waivers which grant California the authority to set stricter than federal emissions regulations that are set under the Clean Air Act, give the states nation leading rules. I don’t know if you want to be leading in making sure people can’t use lawnmowers, but we’ll leave it at that. What are they going to do in Beverly Hills? And they start mowing their own lawn. Bill Maher’s going to mow his own lawn. Now, he won’t be doing that, trust me. He will be hiring somebody who has a lawn mower that probably won’t meet the emission standard, but he’ll do for keeps, so he’ll be all for it. This gives the state’s nation leading rules an extra layer of protection from Trump and his allies. House Speaker Mike Johnson has pledged Friday the Republican led House will prioritize ending electric vehicle policies and other Democratic led climate efforts. It pretty is unbelievable. They’re also going after eggs and pork. They want you to. Not only do they not want you to have an out of control lawn. They actually want you to starve, too. So, you know, at least I would at least if I’m going to starve to death, I would at least like my lawn to look like I’m in an apartment. So I’d like at least the apartment lawn to look good. You know, I wonder if if you’re a landlord in California, can you use this to jack up rents? I think that’s pretty unbelievable. You also have to realize, guys, there are concerns that the tight and this is the best part. There are concerns that the tighter regulations on trucks could lead to truckers avoiding California entirely, leaving fewer trucks to pick up cargo at California’s Long Beach and Los Angeles ports. That would be horrible. You’re telling me everybody in Los Angeles could not get their Tom Thumb? You know what? What does that really fancy airline, that really fancy a Kroger where they sell $25 juice plants? You won’t be able to get your $25 juice blends on time because unfortunately, Newsom put restrictions on the refrigerated truck, which means they won’t go into your state. So you might just have to do a quick water fast for a month while they figure this out, or at least a few weeks so they can go ahead and get this reversed. I mean, it’s pretty unbelievable. Again, it goes to show you he’s using his last few days to throw red meat. Red meat, red meat. The first article we talked about was, I think, purely just some red meat to show that he’s doing it. This I think, you know, depending on how quickly it can get reversed, this could actually have some consequences to people in California. I mean, it’s already extremely expensive to live there. And again, I don’t know why anybody lives there if you don’t live. I told you this all the time, having lived in California for a year. I did it, folks. Right before Covid. I actually lived there from 2019 to 2020. Just got out before Covid hit. Okay. Yes. I mean, literally, I moved back to Colorado, not the bastion of freedom that it used to be, but move back to Colorado. And as I was moving into my apartment, March of 2020 was early. March was like, I can’t find cleaning supplies. This is unbelievable. You know, I really living in a bubble back then but just made it out. It is expensive to live there, and if you don’t live within two miles of the beach, what are you doing in California? I mean, seriously, if you don’t live within two miles of the beach or walking distance from the beach, what are you doing? Are you brain dead? I mean, it’s not a great place to live if you don’t live within two miles of the beach because then you’re just living in you could be living in Kansas, but with high taxes, everybody there sucks. And, you know, there’s a few people we like. I’ve got some some extended family that live outside of the people that I know there that don’t. Son Everyone else pretty much sucks there. And you’re just living in this place. I mean, the only good thing about California is the weather. I’m telling you, the weather’s spectacular. If you could, you know the only reason you’d live there. One is for the beach to weather spigot outside. There’s nothing. It’s a death spot of a place in America. So I’m sure our stats in California will go up crazy. But it doesn’t matter because they’re all about to starve to death. So we don’t even need the listeners there any. Unbelievable. You’re going to boycott California because of the regulation and the trucks? It’s spectacular. But unfortunately, the lawns are going to go downhill for all you lawn lovers out there. I’m sorry. All those pictures that you will see will now be transported somewhere else. But it’s pretty unbelievable. [00:11:41][291.2]

Michael Tanner: [00:11:42] Let’s jump over into oil and gas finances, guys. But before we do that, let’s quickly pay the bills here. As always, thank you for checking us out here on the world’s greatest website. www.energy news beat.com. All the news and analysis that you hear is brought to you by that website. Stu in the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit that description below for all the links, the timestamps links to the articles, and also check us out on substack. The energy news beats.substack.com. The best way to support the show If you are so inclined to support us, give us a follow on substack. Go ahead and sign up for a paid subscription. We released our first paid article specifically talking about the Jones Act. I have a I have just finished two white papers that we will be releasing specifically on the critical minerals market. I’m I was part of a project a few years ago covering the critical minerals market, specifically the infamous Colorado School of Mines mineral model, which basically says how much minerals are we going to need to achieve all of these regulations and these energy transition plans that are out there? So we’ll be releasing that white paper this week and in the following week will be there’s another white paper that I wrote as really an add on to that to say, okay, given the results of this mine’s mineral model, let’s look at this from an economic standpoint and apply what what is kind of what is known as a capital asset pricing model. And to get an idea if where if you’re looking to allocate money in the mineral space where might be an interesting place to put it and does this model given all its inputs, show us an interesting spot on some minerals and where investment may go? As always, we don’t give investment advice, but please, if you’re interested in those long form stories, please, please, please subscribe to our substack for the paid version and you will get full access to that as also guys, you can follow us on YouTube and hit us up. If you do follow us on iTunes or Spotify, please go ahead and give us a five star review. If you listen to us on Spotify, go ahead and comment on the show. I’d love to see you guys comments. We get a lot on YouTube, but we don’t. I want to start seeing them on Spotify. So go ahead and comment. If you do listen on Spotify, we’d love to see those. And if you do comment on the Spotify show, we will answer your question live here on the show. I don’t matter, you know, unless it’s a bad question that I won’t answer. Well, we’ll just make fun of you. So be careful. Be careful. We might do something. [00:14:00][138.2]

Michael Tanner: [00:14:00] Let’s jump over your guys, throw over the markets real quick here. S&P 500 was up about a half a percentage point today. Nasdaq about double that at one percentage points out two and ten year yields basically flat. Bitcoin ripped today above 100, above 100,000 up to are up over 100. 2000 has settled now trading just about a little over 101 99 crude oil after being up all the way over basically up to $75 has slid now, 73, 34. That’s about a 3/10 drop. A Brant oil was all the way up to above. $78 have settled now a 7620 as we record this at about 8 p.m. here on Monday night, natural gas spiked about, gosh, about three quarters of a percentage point, all the way up to $3.69. Mainly what’s going on is what was I going to say? You know, if you if you’re living if you’re in Dallas, like me, the word on the street is we’re about to get a foot of snow. I highly doubt that if we get a foot of snow here in Dallas, people would legitimately lose their mind. I’m not quite sure what happened. The one thing I know about this, I grew up in Colorado my whole life. Snow We get snow all the time and you just deal with you’ve got the snow trucks, you’ve got snowplows, you’ve got mad chloride, you’ve got. So you have all these. Ways to deal with snow and people understand how to drive in snow here. Holy smokes, I’ve been part of two snowstorms. We got a quarter inch of snow. Everybody lost their mind. The city shut down. They got no idea how to handle snow here. You don’t have a snow plow. You got no salt. You just let everything freeze in ice. And then just a free for all for a week. It’s pretty unbelievable. It’s actually the best time to go out and drive because nobody’s on the road. You can just cruise around. The other thing you got to worry about is people in Texas don’t understand that four wheel drive does not mean four wheel stop. You’ve got to be vigilant on that brake, folks, because it’s because your four wheel drive doesn’t mean you’re going to stop on time. Some quick highlights for the day. U.S. manufactured good new orders actually did fall in November, which which partly offset some of the positive demand side pull that we’re seeing mainly from these higher energy prices. I actually think this storm got itself a name. I think someone was telling me what the name of the storm is. I forget what it’s Ali Blair. I think it’s Hurricane Bayers or something. It’s you know, it’s bad when it’s got a name or at least they’re claiming it’s a name. You know, it’s it’s pretty interesting. We did see the dollar index up today, which slightly off off saw that. We also did see Saudi Aramco, the world’s top oil company and top oil exporter, raised its official selling price to Asian buyers for February, which actually the first time they did that in three months. Sudan, while we did see that, lifted a nearly long, nearly yearlong force majeure on all the transport of its crude oil from its neighboring South Sudan to a port in the Red Sea after there’s been some security concerns lifted. So there is a little bit more oil coming back to the markets. But all in all, you know, price is still hanging around that 72, 75 mark. [00:16:45][164.5]

Michael Tanner: [00:16:46] Let’s dive in here, guys. I love me. The Dallas Fed Energy Survey, they released this four times a year, one in each quarter. On January 2nd. They released their fourth quarter, 2024, which is really a look forward to 2025. And there was some super interesting stuff. We’ll read some of the highlights here. You know, from an activity standpoint, the oil and gas sector increased slightly in that fourth quarter. The they call it the business activity index, which is the survey’s kind of broadest measure of kind of conditions in the oil and gas business increased from originally in the Q3, it was -5.90 disgusting to 6.0 in the fourth quarter, which is pretty unbelievable. The company Outlook index actually slipped positive in the fourth quarter, increasing by 19 total points from a -12.1 A to a robust 7.1. So there is some optimism now among firms. The uncertainty index declined by 26 points to 22.4. A lot of then again, has to do with the administration. The oil production index remained slightly positive, but did decline from 7.9 in the third 12:45 point one for the fourth quarter. And that’s what I think is is super interesting here. There’s a bunch of different price forecast. The funny part is you got most people expecting. So for you, we can throw this chart up here. What do you expect? Oil and WTI crude oil prices to be at the end of 2025. You can kind of see the distribution there. Most people, about 35% of executives have it somewhere between 70 and $75. And then there’s kind of mainly a split between either above or below that, which I find kind of interesting. You only have about 7% of people below 65. About 5% of people are above 85. I don’t know if you got a vote on this one. If so, he would have skew that one hard. Hard to the right average was 7113. The low forecast was 53, the high was 100 even. And the price during the survey was actually 70, 66. Super interesting. There you can see the skew here on natural gas prices will go and throw this one up. What do you expect the Henry Hub natural gas price to be at the end of 2025 So somewhere between a three and 350 range? Pretty simple. This is I do find a lot of these special questions super interesting. Mainly, what are your expectations for your firm’s capital spending in 2025 versus 2026? You could look slightly increase was over. About 45% of all M.P. companies said they’re going to slightly increase or remit or, you know, and basically if you add significantly increase and or remain closed, you’re basically talking about 80% of people said they’re either going to keep it the same or raised, which I think is is awesome. But what’s funny is when you scroll down and you get to the special comment and this is what I love the comment. So basically they take comments from people and you go down to the oil and gas support service companies. You’ve got we expect a slowdown in 2025 with muted growth compared to the other three years. Reason for the slowdown includes consolidation of empty, flat or reduced capital budgets and the lack of electrical infrastructure growth. I love this because there’s this quote I always I love this from from, you know, people who have large businesses that sell products and they say, listen to your customers, but don’t listen to your customers. And what does that mean? Listening to your customers, you go out and say, hey, customer, what do you like in my product? What should we do more? And they tell, you got to do this, this, this and this. Or you can listen to your customer by watching how they spend money at your firm they may say they want. But when you actually look at the data and how they use your product, they actually want be. I think this this highlights that exactly. Executives we’re going to spend more money in 2025 yet the service companies, the guys who are out there signing the contract a lot of these large companies signed year long deals have supported their have basically finalized their capital budgets and signed contracts with these said service companies, service companies. So we think capital spending is going to be down, but we don’t see the activity come into our bottom line, which, again, watch what people do, not what they say. So I always love comparing what these big operators say versus what the service companies say, because service companies will tell you much more about where capital spending is than other than what these M.P. companies will say. I do think there’s interesting another quote here from the AMP service companies lower demand for oil and gas is limiting drilling and completion expansion. Efficiency gains in extraction technology have improved production with no increase in activity. Maybe so it appears. Suddenly it appears supply and demand are on closed balance. What production is sufficient for market needs? So that’s the service side. Let’s look at some of these quotes from these EMC firms. Operating costs is a concern for the energy business and it could impact production levels. You don’t say, you know, people you know, I could have said that. We’re assuming the new administration will encourage more development of oil and gas projects. I just don’t buy that from the standpoint of if you weren’t drilling in 2020 to 2024, it wasn’t because Biden wasn’t lighting you is because you have bad projects. You heard it here first, folks. A lot of this stuff is also about the natural gas markets, uncertainty, commodity pricing. I love this quote. Uncertainty in commodity pricing futures affect our business model is firstly through putting pressures on mergers and acquisitions, which our company depends on for growth. And you got bad prospects again. Now I’m just saying that. Secondly, through monthly net revenue is controlled by from a strip pricing as our company does not hedge production value. Okay, dummy, maybe try hedging production volumes or if you don’t hedge production volumes if part of your thesis and I just having this conversation today, there are firms out there that won’t hedge because they look at a if you invest with us, you’re exposing your as an investor, you’re exposing your portfolio to the oil or gas price. And that’s why they don’t hedge. But then to whine about it, we don’t hedge our production. And so our biggest concern is front month strip pricing. So this uncertainty is killing us. Okay, dummy, if that’s what you signed up for, you should maybe be comfortable with the uncertainty. I mean, not just the severe. And then this quote goes on. A severe degree of the uncertainty in the commodity futures. Pricing makes capital planning difficult outside of M&A. The commodity price uncertainty is caused by different factors. This person’s got to be who to work for, who to work for. It’s got to be unbelievable. I love this next quote. We are seeking development drilling capital to extend our business as our current private equity fund, our needs, their capital return through distributions. AK We’ve got a bad job of trying to return capital to our private equity, so we need to go out and get a mars loan in order to actually start returning capital to any one of our investors. Yeah, I mean, because that’s exactly what you do if you can’t drill good wells, you know, of course you should go out and get a second lien loan to go drill more bad. I mean, that’s exactly what you should be doing. The quote goes on We all pay off debt in 2025 and start cash distributions to our investors in 2026. Yeah. And you know, they’re going to the quotes are going to be in 2026. Well we’ll start paying off debt in 2026 and we’ll start cash distributions at 2020 that are always kicking the can down the road. Mobius Again, this person’s got to be a Hutu to work for. Another quote here, higher interest rates discourage long term capital investments. That means your cash flow sucks because if you have good cash, please draw the cash flow back. Nope. We’ve got to go take out high interest loans. The fun stuff. The recession result is changing outlooks. The new admin will lift regulation, stop subsidizing green energy and seek LNG build outs to place more demand on natural gas. That was probably somebody Kim Rich, not to name names, but you never know. I don’t know of this last quote. We are more optimistic. I don’t know what that means. You’re more optimistic why prices are going to go maybe down. I mean, it’s just sunk. The narcissism in some of these quotes is unbelievable. But I love looking at the Dallas Fed Energy survey because it gives you an idea what’s happening on both sides of the equation. [00:24:09][443.4]

Michael Tanner: [00:24:10] There’s a lot more in there, guys, So I encourage you to go to energy News b.com and check out the full story. I’m about out of breath. Okay. So I’m going to go ahead and let you go. Thank you for checking us out. You’re on the world’s greatest podcast. Energy’s News Beat Standup for Stuart Turley, I’m Michael Tanner. We will see you tommorow folks. [00:24:10][0.0][1436.0]

---

– Get in Contact With The Show –

---