00:00You know, Saudi Arabia, from its most recent monthly data, is only producing 6.3 million
00:06barrels a day right now. This is effectively a three-alarm fire in the oil space. Saudi Arabia
00:14is generally sort of an anchor supplier for the global oil market. And the fact that they're
00:19basically having trouble getting their oil to market because of the current issue with the
00:25pipeline or the Strait of Hormuz being closed really highlights how much of a challenge
00:31we remain in the oil market. And as you noted, the product prices, diesel and gasoline, are
00:40really telling the story. So we've got U.S. diesel over $6 a gallon right now, U.S. gasoline
00:46over $4 a gallon. And we're going to see continued tightness until we get better flows out of
00:54the Middle East region. Rob, if I'm a historic, if I've been a buyer of energy coming out of that
01:00part of the world, I have to diversify it, it seems like. I have to get away from that because
01:05I can't see a scenario where we go back where that is a reliable source of energy. Are we
01:12getting to that point yet? Well, it's going to take years, Paul. The reality is, sure,
01:20you can diversify away from a specific region if you want to, but this is a very capital-intensive
01:28industry. You have to think in years and decades to bring projects to fruition. And so we're going
01:36to see a reordering in our view of the global energy landscape. That's going to be more pipelines,
01:43more supplies in regions outside of the Gulf. It's also going to mean things like electrification,
01:51moving away from oil and gas where possible. We're really seeing some big upticks in EV numbers
01:59in places like China. And I think that's part of their strategy. But these are big, slow-moving
02:05ships. It'll take a long time to make ourselves more resilient and less subject to what's going
02:12on in that region. Okay. You mentioned how in China, they're really shifting towards EVs,
02:16but that's kind of accelerating process that's been in place there. Here in the US, we are very much
02:20all in on these big SUVs that cost more and that carry higher profit margins. Are we seeing any demand
02:27destruction with oil prices where they are right now? Or is this just me and John Tucker complaining
02:33about our higher gas prices? Well, the interesting thing about oil and oil products, diesel, gasoline,
02:42is that in the short run, they're relatively inelastic. You don't have many options. You know,
02:48maybe you can cut out a trip or two. You can try to be economic about how you approach it.
02:56But
02:56you're a price taker. Over the long run, you can substitute your vehicle. You can make some changes
03:03to behavior. You can train more, things like that. But I think for now, you know, we haven't seen
03:10very significant demand destruction across the globe. At the end of the day, the economy is run
03:17and powered by oil to some extent. And so, you know, if you have demand destruction, that means lower
03:25economic output. So far, the economy has hummed along through all of this. And so consumers are
03:30just taking the price and bearing it for now. I think longer term, you will see folks start to
03:36adjust, perhaps even here in the U.S. We're a relatively rich country, but $4 gas, $6 diesel
03:43could start to hurt some pocketbooks. Okay, so it sounds like John and I will be complaining for a
03:48while, Paul. Yes, I think so. I think what we're wondering, Rob, go ahead, John. It's what we do.
03:52It's what we do. That's how we roll here. Rob, I think what we're all learning here is
03:58none of the neighbors of Iran in the Mideast, whether it's Saudi Arabia, Oman, Kauai, I mean,
04:04nobody really has any control over Iran, any influence at all, because all of these countries
04:10are getting hurt badly. That's right. You know, there's a reason that former presidents have been
04:18reticent to take action against Iran. This was sort of the worst case scenario. There was always
04:24a sense that the Strait of Hormuz could be vulnerable. And, you know, we're seeing that
04:30play out in real time right now. Hopefully there's going to be a solution where cooler heads prevail
04:36and, you know, we get better flow of molecules out of the region. But there's not an obvious exit ramp
04:41at this point. Quick question before we let you go, Rob. We know that fuel supplies have been
04:46disrupted in Russia as well, because Ukrainian strikes have gotten in the way of refining capacity
04:51there. President Trump said he had warned Ukraine to stop targeting Russian refineries.
04:56You think that will lead to anything? Is that meaningful?
05:02Well, the global oil market, energy markets are very tight right now. The fact that there are also
05:09challenges in Russia is just one more piece of the puzzle. And, you know, we've experienced numerous
05:19geopolitical energy shocks over the last decade or so now. The first one really kicking off when Russia
05:26invaded Ukraine and earlier this year when U.S. started a conflict with Iran. And so, you know, I mean,
05:34you can...
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