00:00Well, we got into Group 3 base oils. Do you know about that?
00:03Yeah, please, help me here. Is that like...
00:06No, it's very striking. Last week, this is quite a big deal, actually.
00:09Last week, Walmart and Costco warned that they didn't have enough base oils to put on their shelves.
00:15You know, the stuff you put in your engine was running out.
00:19And the reason for that is basically we're heavily dependent on base oil from Hormuz.
00:24So it's a very interesting end-of-the-chain story.
00:26And this is not, you know, some deli down the road.
00:29This is Walmart, Costco, Toyota, Exxon, then warned they don't have enough motor oil.
00:34It's a physical shortage here in the U.S. right now.
00:37And I thought that was pretty fascinating.
00:38Are there physical shortages in the Pacific Rim as well?
00:41Francisco Blanche was in saying by far and away, the Pacific Rim, Indo-Pacific is affected.
00:47Yes, absolutely. But I think compared to where we were when this started, we immediately looked at Australia.
00:52And it's interesting that Australian inventories are actually higher now than they were when we started this crisis.
00:58So there is crisis management being successfully employed.
01:02And I think you can see that around the world.
01:03I've just been in Mexico.
01:04All the planes are flying.
01:06The place is basically booming and going into the World Cup.
01:08And the joke that I had in my research this weekend is that the malls are all buzzing.
01:12And these are high-end malls.
01:14They're all buzzing with kids buying Mexican World Cup tops, you know, because the Mexicans always have the best strips.
01:20The other name for that is Asian petrochemicals.
01:23So, you know, there is a petrochemical major issue that's about to emerge through the chain as well.
01:28You've shut down, you know, 40% of Asian petrochemical capacity.
01:32So, straight up for Moose, I mean, I'm speaking for most of our listeners and viewers here.
01:36We couldn't find that on a map before.
01:38Now we all know about it.
01:40Is it ever going to go back to where it was in January?
01:44No, no.
01:45But, you know, what's happening today is a couple of tankers have passed.
01:48So you're going to see, you know, the oil industry will work out a way to smuggle.
01:52You can be sure of that.
01:53And I think that the U.S. announcement that they would allow Russian oil sales tells you that there's going
02:00to be, you know, that kind of a move where they probably you, you, you turn and start turning a
02:05blind eye to the Iranians moving stuff.
02:07And that would come out of the China meetings.
02:09The other huge thing, by the way, which is huge, is after China, Trump, you obviously saw China, Putin.
02:16You know, that's a big deal in oil, believe me.
02:19So if we're 20% of our oil and gas comes out of that part of the world, do they
02:24just build more pipelines?
02:26But pipelines are also susceptible to stuff.
02:29I mean, what do we do in the straight-and-room moves?
02:31You've got to open that thing up, don't you?
02:32Well, I think we've characterized this as an incredible time where it's OFACs versus UACVACs.
02:37So it's the U.S. potential, you know, the U.S. Treasury's global power against drones.
02:42And drones have totally changed the shipping, you know, entire future.
02:47It's just changed.
02:48Pipelines, you have 250,000 miles of pipelines in North America.
02:51You have 40,000 in the Middle East.
02:53So pipelines are totally a solution.
02:56And it's just that, you know, tankers never had a problem previously, and so you didn't worry about it.
03:00And actually, it's the hooties that showed.
03:02You know, that's what was so scary to me when the straits shut down is, by the way, we haven't
03:05opened the Suez Canal properly, and it's been three years.
03:08Is that right?
03:08Oh, yeah.
03:09I forgot about that.
03:09No, no, no.
03:09The Suez Canal throughput volumes are 50% of where they were before the hooties showed up.
03:15I got a different question, but let me get to it then right now.
03:18Now, what's your gallon of gas guess out a year?
03:22I mean, are we getting used to $5 a gallon?
03:24You know, Midwest Radio always want me on when the gas price goes crazy, so I go on those shows,
03:29and I told them the other day, you're going to $6.
03:30I don't think there's any doubt about $6 a gallon here this summer because we're just going into summer.
03:35Now, you'll get big data from the DOE today.
03:38Last night, the API data had one huge number in it, which was 10 million draw in the SPR.
03:43So you're running the SPR at over, obviously, over a million in a week, a day.
03:47You know what I mean?
03:49So you're going to run into a question with 390 million barrels in the SPR.
03:54You're going to run into a question now.
03:55Do you just keep allowing that to come into the market?
03:57And it's material, so there's a lot of inventory data coming.
04:01Alexa, should I ask about the Wawa or the Caspian Sea?
04:04Which one?
04:04Oh, I vote Wawa.
04:06Wawa?
04:06Okay, it's a gallon of gas.
04:08You're telling me John Tucker at the Wawa is going to be $6 a gallon.
04:13Well, of course, that's nationwide average.
04:14So that would be like $8,000, $9,000 in California.
04:17Yeah, so I'm talking nationwide average, $6.000.
04:19In Berlin?
04:19I looked at Berlin the other day.
04:20They're going to go to $11 or $12 a gallon?
04:22Yeah, they will.
04:23Oh, yeah, no, I don't have any doubts about that.
04:24And what's happening is that because the refiners are really pushing hard to make jet fuel,
04:28so the fascinating thing here is our jet fuel inventories are at record high.
04:32Absolutely fascinating.
04:33Because they're straining to do that, they're going to make less gasoline into driving season.
04:37And the other thing you've got to watch, I was talking about base oil, is Alki, which
04:41gives you octane, is short in California, so they can't make their grade.
04:44They can't make the fancy stuff.
04:46No, they can't get the stuff.
04:47Okay, you know, Paul and I play Risk, folks.
04:49When we're done with the show, Paul comes off at 12 noon, and we're usually playing a
04:52board game of Risk.
04:53I would guess 105 of 100 Americans don't know where the Caspian Sea is.
04:59I would say right now it's fascinating, that transport, that dynamic.
05:03You're encyclopedic on something like Baku to this pipeline or that.
05:10Tell us, give me a 40-second, one-minute critique here of how we should look at the Caspian Sea.
05:17Well, I think the difference between playing a board game and going to the Caspian, I've
05:20been to Tangis, where the huge Chevron project is a million barrel a day, giant reef that was
05:25discovered from space by the Soviets.
05:28It's so huge.
05:29The tide there is eight miles daily.
05:32That's how flat and how far the water moves and how difficult it is to develop oil there.
05:38But generally speaking, yeah, the Caspian has a unique position as well, because Kazakhstan
05:43is sat right between Russia, China, and the U.S. with Chevron there, and now Ukraine and
05:49the drones.
05:50So it's a fascinating and huge potential.
05:53Yeah.
05:53I mean, there's a lot of non-OPEC oil that's going to be developed here, no doubt.
05:57Oh, excuse me.
05:58I'm so wound up, I forgot my mic.
06:00I'm thinking about John Tucker and six bucks a gallon.
06:04So to Paul's question about the Hormuz, is what's really going to happen here is all
06:08this non-OPEC is going to come on?
06:11Oh, no question.
06:11Yeah, over time.
06:12I mean, you know, one country I'm very interested right now is Argentina, going to grow massively.
06:17Brazil has huge incremental sales to China of oil, and of course, Venezuela hopefully
06:23will boom.
06:24You know, Venezuela can easily supply oil.
06:25Can you imagine this, Paul?
06:26Like, the Hormuz doesn't matter.
06:28Yeah.
06:28I'm not there yet.
06:29I mean, Paul, you're an energy guy, supply, demand, you get that.
06:33If I'm a politician, I can't allow $6 a gas.
06:37That can't happen.
06:38No, that's right.
06:39And that's going to be very interesting.
06:40And so my note on Sunday was called watching the frog boil without blinking.
06:45And that, I think, is the outlet.
06:47I think that's what will trigger a crisis response is actually going to be the U.S. gasoline
06:51price when it comes down to it.
06:52You've got the NASDAQ at a record high.
06:54Everything seems fine.
06:55The Knicks are on a great, you know, the Knicks have got a great crumb back.
06:58The world is not just simply not ending in the United States.
07:01And I think that's affecting the president's sense of the crisis.
07:05But, you know, as oil analysts, we've almost, you know, gone quiet because we were screaming
07:09so much six weeks ago.
07:10It's continued to progress on exactly the screaming path.
07:15And you'll see it in the DOE data today.
07:17You know, big draws.
07:19Eventually, you'll get to a point where the U.S. has to compete with international export
07:23sales.
07:23So the export sales are going to start fighting our domestic on price.
07:27And that's going to make U.S. domestic prices go vertical, especially as we don't really
07:32know where operational limits are.
07:34So there's a point in inventory where you can't run the system.
07:37And we're going to hit that.
07:38And that's when prices go nuts and we haven't hit it yet.
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