April 15, 2025 • 30 mins
Every time there is tension between the US and China, there are stories about China threatening to withhold exports of rare earth metals, which are supposedly crucial for all kinds of advanced technologies. In this episode, recorded in Bloomberg's London studio, Bloomberg Opinion columnist Javier Blas helps us clear up some misconceptions about them. For one thing, rare earths aren't actually that rare. Furthermore, the amount of global trade of these minerals is fairly minuscule. The US only imports $170 million worth in a year. And then beyond that, the most common usage of them is in vacuum cleaners. Still, their economics are interesting and they do have some important applications. In addition, we talk about what the trade war means for the domestic US energy agenda, and the Trump administration's desire to expand total output.
Read more:
Chinese Rare Earth Shipments Held Up as Trade War Upends Exports
Javier Blas: $50-a-Barrel Oil Is a Problem for US Trade Deficit
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:21):
I'm Jill Wisenthal and I'm Tracy Alloway.
Speaker 4 (00:23):
Tracy, we're in London.
Speaker 3 (00:25):
Yes, how do you like it?
Speaker 4 (00:26):
I love it so far. I'm having a great time.
Speaker 5 (00:28):
You know what, I've realized I always make the mistake.
So I lived in London for a long time. I
went to university here, I met my husband here, and
I stayed here for like over a decade. But I
realized whenever I go back, I always make the mistake
of doing it on that one glorious spring day where
the temperature is like seventy five fahrenheit, like twenty one
celsias and everything's blooming in central London and it's sunny
(00:52):
and it's beautiful, and I think, wait, why did I leave?
Speaker 4 (00:55):
But then the next day it's great.
Speaker 5 (00:57):
Yeah, okay, there is that, But I really I need
to come back in like January when it's dark at
three or four pm and remind myself that there are
in fact some downsides of living here.
Speaker 3 (01:07):
But it is very nice to be back for a visits.
Speaker 2 (01:09):
This is actually my first time being in the city,
right because I haven't really stated this part of the
city before.
Speaker 4 (01:15):
It's really nice, all the history and everything.
Speaker 2 (01:17):
Despite being here, we have no choice but to continue
covering various repercussions, fallouts, updates, ongoing developments in the trade
war or whatever we're calling it, the tariff whatever.
Speaker 5 (01:32):
You would rather be thinking of actual war history and
going to the Imperial War Museum or something like that.
Speaker 2 (01:37):
On my one free day here, I did the boomer
thing and I went to the Imperial War Museum, and
I saw a lot of things that I've only read
about referenced in books anyway, all kinds of dimensions in
the trade tensions and everything. But one thing that's going
on is big impact on commodity markets. We've seen the
price of oil plunge as recession fears get priced in.
(01:58):
And there was this headline in the New Times about
China halting export of rare earth metals as a retaliation,
and I just have to say, I've been reading about
China halting exports of rare earth metals and retaliation for
my entire life. It never seems to matter, It never
really seems to be a thing, but it always is
a really scary headline.
Speaker 6 (02:19):
But I've never.
Speaker 2 (02:20):
Actually, nothing, as far as I ever call, ever gets
shut down or grinds to from these supposed export restrictions.
Speaker 5 (02:27):
This is one of the greatest branding exercises of all time.
It's because it has the word rare in the title.
Everyone can really easily apparently make the case that these
are rare and you really need to snap them up
get the exposure before China starts limiting exports and we
all have to pay through the nose for these things.
Speaker 3 (02:44):
But yeah, it's never happened. And the rare as I.
Speaker 5 (02:47):
Don't know if we've ever discussed on this show, but
certainly other people have discussed it at various points in time.
The rare actually isn't that rare.
Speaker 3 (02:54):
It turns out there's a lot of them out there.
Speaker 5 (02:56):
It's just no one really likes getting them out of
the ground that much.
Speaker 2 (03:00):
So since we're here in London, we can never talk
to him enough about commodity things, and because their commodity
thing is going on, I'm thrilled to be in person
with our colleague Bloomberg Opinion scribe Javier Blass and knows
everything about all things commodities. Javier, can you just rent
for a couple of minutes about reverts. I'm not even
(03:21):
gonna ask you a question.
Speaker 4 (03:22):
You just go on a.
Speaker 2 (03:23):
Rant about headlines about China limiting earth experts.
Speaker 7 (03:27):
Where deal go go, Joe Tracy, thank you for having me.
You have been listening to these headlines and getting very
scary out.
Speaker 6 (03:35):
There's gonna be a shortage.
Speaker 7 (03:37):
Of Red ad All for a loan period of my
professional life, which is beginning to be more than twenty
five years, and it's a song gray Head. To prove it,
I have to deal with editors will come to me
and say, rival publication is saying xyzat Red Earth Metals panic.
Speaker 4 (03:57):
No, it's great for clicks, So I get why editors.
Speaker 7 (03:59):
Like it, and then my editors will say, should we'll
be writing something about it? And my default answer has
been no. There is not going to be a shortage,
and if there is a shortage, the consequences are not
going to be nearly as material as people think that
they're going to be. So a couple of numbers, Okay,
The United States imported last year in twenty twenty four,
(04:21):
according to US government data, a grand total of give
Me the Theme Music one hundred and seventy million dollars
of metals, not a billion million, one hundred and seventy million.
I'm pretty sure that the United States imported more olive
oil from Spain.
Speaker 3 (04:41):
I like that olive oil is your baseline. That's that's
very value.
Speaker 6 (04:45):
And how much is that?
Speaker 7 (04:46):
As the second number we are going here, how much
is one hundred and seventy million? You compare that to
total trade between the United States and China that is
zero point zero three percent, So it's not a lot.
Speaker 6 (05:01):
And the United States school phase say at.
Speaker 7 (05:06):
Ten times increase in the price of rare earth metals
and I still will have no impact whatsoever on the
kind of the American economy or the global economy. And
then what really drives me mad is that you are
writing about rare earth metals. Look, they are important, and
they obviously for some very niche applications you really need
(05:27):
rare earth metals, but prices could go higher and those
applications will just pay the price. But typically writer like myself,
you want to sex up a bit of the story.
You will say rare earth metals critical for the weapons industry,
for missiles and high take applications. Do you know where
(05:47):
every one of us have some rare earth metals at home,
they are used in super permanent magnets and therefore on
that absolutely critical instrument of economic warfare, which is called
the vacuum cleaner, there.
Speaker 5 (06:04):
Is I will say, I sympathize with editors not wanting
headlines about vacuum cleaners versus you know, military equipment and
all of those important strategic there.
Speaker 7 (06:13):
But you see, mind the story, the price of rare
earth metals may increase and making vacuum cleaners a bit
more expensive.
Speaker 6 (06:24):
Okay, I don't know you're gonna click.
Speaker 5 (06:26):
Yeah, Okay, not to get all Judy Bloom on everyone,
but rare earth they're not as rare as the name
would imply.
Speaker 3 (06:34):
But walk us through where they actually come from.
Speaker 7 (06:37):
A lot of them come from China. About eighty eighty
five percent of the world's rare earth metals come from China.
It's a question of digging them out of the ground
and then processing. The big difficult part is processing, because
it's very polluting, and it's a reason why all the
processing has moved from everywhere else in the planet into China,
(06:59):
because on one wanted to deal with how nasty the
process is. And here is also the other question you
want to do rare earth metals processing, in particular outside China,
when you need is much higher prices. If anything, the
problem today with rare earth metals and if we want
to develop an industry of rare earth metals outside China,
(07:22):
is that prices are too low. We need much higher prices,
and then everyone will do rare earth metals. The other
thing that will happen is that if the price goes
to a level that incentivized everyone taking a bit of care, well,
a lot of engineers on the vacuum cleaning industry will
find ways to do it without rare earth metals. And
(07:42):
also people will actually collect the vacuum cleaners and recycle
the magnets for other use.
Speaker 5 (07:48):
But if rare earths are there's such a small component
of something like a vacuum cleaner, I imagine the prices
would have to go up absolutely astronomically for that even
to be a consideration for a company making.
Speaker 7 (08:00):
And most of the time the prices don't go nearly
as high. Prices are beginning to rise again now, but
prices stay relatively low compared to where historically prices have been,
and we have had the latest headlines are about rare
earth metals and esport restrictions. We have some similar headlines
(08:22):
for other category of metals that we call critical minerals
and other fantastic exercise of labeling. I mean, like you
want to sell something called critical minerals and we have.
You know, people were really concerned because China was imposing
some esport restrictions on tuxten, tellurian, bismuth, molybdenon and Indian.
(08:44):
This sounds to me like high school chemistry. And you
will think, oh my god, what is happening with the
price of all of this. I mean, this was not
announced yesterday, This was announced a couple of months ago.
And prices move, and yes, the price of say Indian
moved to three one hundred and forty five dollars par kilogram,
And you will say, well, is that a lot is Look, yeah,
(09:05):
it's twenty percent increase run where we were at the
end of last year. But about ten years ago, that
is cost today three hundred and forty five was worth
eight hundred dollars parkilogram. And did you notice ten years
ago that it was a crisis on the Indian market
and everyone was a bit worried about it because I didn't.
Speaker 4 (09:27):
I didn't know.
Speaker 2 (09:28):
You know, we're still going to give this a provocative headline,
even though you know that people listen to the episode
and reveal that there is.
Speaker 3 (09:35):
Why why everyone's talking about the rare earth.
Speaker 2 (09:38):
Of the truth about the Earth. You know, we'll still
make it exciting.
Speaker 6 (09:42):
You know. What I want to.
Speaker 7 (09:43):
Say also is, look, yes, it's a serious issue, and yes,
I mean depending by eighty percent of a single country
is never a good idea. But there is an element
of panic that every time. And look, a lot of
this panic comes from the halmpful of minors and processes
(10:04):
or rare earth metals outside China. And you ass a
consultant on the rare earth metals industry. Is this something
that we shall be caring about? Well, the answer is
going to be yeah, hell yes.
Speaker 5 (10:16):
So Marth, by the way, says he has access to
rare earth minerals, he's invested in some companies, So we're fine.
Speaker 2 (10:21):
That fits so perfectly with this entire thing. You did
an amazing video the other day. I really I think
(10:43):
it was true art. Actually, whether we're talking about rare
earth metals or quote critical minerals unquote, what are the
economics of getting them in Greenland.
Speaker 7 (10:56):
Okay, let me just put my polar outfaid. And so
now there are not natural resources in Greenland period, unless
we are use mining eyes. Yes, there are some small
concentrations of.
Speaker 6 (11:12):
Rare earths in the south.
Speaker 7 (11:14):
There is a bit of uranium here and there, there
is this and that, but the concentrations are very low,
and the course of mining in Greenland is prohibitively expensive,
and you are not going to develop anything of even
medium sized mining operations in Greenland.
Speaker 6 (11:35):
I think that here is the exaggeration.
Speaker 7 (11:38):
But you have better chance of finding some minerals on
there on my back garden in West London that you
have in Greenland. Now I fear in that I'm going
to become the fifty five state.
Speaker 3 (11:51):
That's fine.
Speaker 5 (11:52):
Joe's embraced his middle aged man destiny of becoming a
military historian expert.
Speaker 3 (11:57):
So there's that.
Speaker 5 (11:57):
That's why he's at the Imperial War Museum. So no shame,
no shame. But since we're talking strategy approaches and maybe
acquiring Greenland could be one of them, the thing I
don't understand is if we agree that rare earth's rare
minerals are of some strategic importance, for the US, and
there are something you would want access to. But on
the other hand, we actually have plenty of them. It's
(12:19):
just we don't necessarily historically want to get them out
of the ground. Would the better approach not have been
to just build massive inventories of these things? Just get
them on the cheap from China. Let China tear up
its countryside, and we could buy those things from China,
and then once supply starts running out, or if relations
really start to deteriorate, then we could start our own industry.
Speaker 3 (12:43):
Or is that is that difficult? What's the startup process
like for something like that?
Speaker 7 (12:47):
No, and that's what some companies, I mean, governments have
not done their stockpiling, but some companies have done their
stockpiling themselves. They are Japanese high tech companies that they
are running more than a year worth of their demand
for rare earth as a stockpile. And again, this in
certain ways makes sense because if you think about Japan,
a country that probably imports fifty to seventy five million
(13:09):
dollars a year of rare earth metals, importing a stockpiling,
say a year or a couple of years worth of
the staff is not that expensive. I mean for Japanese companies,
this is going to be like completely random error under
huge balance sheet. So we have seen a bit of
a stockpiling and companies that they really require some particular
(13:30):
rare earth metals for a very particular application. They will
have done it, and then government what they can do
is say, look, this is critical. We're going to support
our domestic industry. The United States has rare earth accumulations.
There is a mind called mountain pass. We can't develop that.
The government can get into the business and developing that.
The price is going to be that we need higher prices.
(13:52):
So you're going to have to protect either you effectively.
I mean, here is the irony. The best way to
develop an industry the United States and develop the local
mining supply or red earth will be to impose so
on huge tariffs on red earth from China, so the
Chinese don't don't dump into the market.
Speaker 6 (14:14):
I mean this seism.
Speaker 2 (14:16):
I mean, this might be the vision more or less
across a range of industries, which is sort of like
take a wrecking ball to a lot of you know,
elite things. There are comfortable jobs in government and finance
and media et cetera and send, you know, free up
that workforce to mine Malidna.
Speaker 3 (14:36):
We're all going to be working in the mines.
Speaker 4 (14:37):
I mean, this is kind of the vision.
Speaker 2 (14:40):
All right, let's talk about something that may actually be
real and substantive.
Speaker 4 (14:45):
Now that you've convinced me not to worry too much.
Speaker 2 (14:48):
And also like if it wherever a crisis, government could
just come door to door and demand your vacuum cleaner,
right like for the missiles and whatever like in the end,
if they're like, all right, we're going to confiscate your
vacuum cleaner.
Speaker 7 (14:59):
If it's really how you call the man the broom.
So with the government comes knocks at your door, you
return your fancy dice on vacuum cleaner and they give
you a broom.
Speaker 5 (15:09):
The government will prim i Dyson out of my hands
saying that.
Speaker 2 (15:14):
Right now, let's talk about a commodity that really actually
has real significance. Part of We've mentioned this a couple
of times on the show. Secretary of the Treasury Scott
Bessant Head in the run up to the election or
post election, talked about his three to three three plan
three get the budget deficit down to three percent, grow GDP,
by three percent and increase three million more barrels of
(15:36):
US oil per year. It seems like we're going in
the opposite direction of that.
Speaker 7 (15:41):
Yeah, at current prices, certainly we are likely to see
lower American oil production than Haiger. I mean, Secretary Basset
was quite clever on the way that he expressed. He
talked about growing three million borrows a day of energy. No,
he didn't say specifically oil. I mean when you talk
about barrels, you think that he's talking about oil, but
(16:01):
he means barrel equivalent. So you could put anything there.
At the moment, the administration is already including natural gas
and that three I have been hearing some officials in
the administration saying, look, energy is energy. So we are
growing electricity, we are growing uranium, we are growing cold.
You put it on a basis of oil equivalent and
(16:23):
there you get. I would not be surprised if we
are also growing more California and olive oil and we
are adding it into the barrel. But look West Texas Intermediate,
the US oil bench match is trading close to sixty
dollars a barrel. You are there borderline where is economical
for shale on average for shale companies to drill new wells.
(16:44):
So we still start to see a significant slowdown in
the growth rate of the US oil industry. And if
prices to continue at this level or lower, that is,
low down, soon will be turning into a contraction and
we will see lower American oil production.
Speaker 5 (17:00):
Yeah. I mean, even if we think the administration was
talking about energy units rather than just oil per se,
it does seem clear that there are a lot of
people in the energy patch itself which seem to have
had a different idea, right, they thought the administration was
going to be very, very friendly to the shale industry
and instead Joe and I have mentioned this a few
(17:22):
times before, but we've seen anecdotally, you know, some statements
from the Dallas FEDS Energy Survey where people are going like,
this is not what we signed up for at fifty
dollars per pare or oil prices. This is not only
bad for increased investment in the industry, but could potentially
be a sort of existential threat.
Speaker 7 (17:43):
So absolutely, I mean increased right. The Secretary of Energy
is an oil person. He founded and ran his own
oil company service company called Liverty Energy, and a lot
of people in the industry saw that. Know, to quote
an executive I spoke recently in Kuston, he thought of
(18:06):
the industry, thought that Chris Ray was our guy, was
one of ours, one of us. And this executive said, like,
what we have came to realize is that he's not
one of us.
Speaker 6 (18:17):
He is Trump's guy. And that is a big difference.
Speaker 7 (18:21):
And yes, the comments in this anonymous Dallas Fed survey
were quite shocking. And you're talking private to executives in
the oil industry. I almost have to pinch myself at times.
It's like, hold on a second, is Biden still on
the White House? Because you guys seems to really dislike everything.
Speaker 5 (18:43):
Replace Trump with the word Biden and it would make sense.
Speaker 7 (18:46):
It's like, when I was reading that series of comments
from the Dallas Fed, I joke at that you have
been sleeping for six months and wake up you will
sink that the Democrats are still running the White House
and Congress and exter. I mean, this was a dream
for the oil industry. It is a Republican at the
White House. The Secretary of the Treasury is a Wallace
(19:09):
Street heads fund manager, and the Secretary of Energy is
the founder of an oil company.
Speaker 6 (19:16):
And here we are everyone in the oil part.
Speaker 7 (19:19):
Perhaps because of this, he is absolutely mad with the administration.
Speaker 4 (19:40):
I have a really dumb question, and I'm gonna ask
you real question. What do we call it the oil patch?
Speaker 3 (19:46):
I don't know?
Speaker 4 (19:47):
Oh sorry, I didn't mean the somebody?
Speaker 6 (19:49):
No, this is Can I use Google?
Speaker 2 (19:51):
Oh sorry, we can cut this? Can we keep this
in some can we keep this in?
Speaker 5 (19:57):
Yeah?
Speaker 3 (19:59):
I don't know why I have a poetic license.
Speaker 4 (20:02):
Wow, I thought for sure.
Speaker 3 (20:03):
Okay, oil patch it kind of speaking of gardening.
Speaker 5 (20:06):
It kind of sounds like, you know, you're growing vegetables
on your oil patch, except things on.
Speaker 7 (20:11):
The oil pot, like the pipe that you used to
drill is called Octe oil County tubula good. Oh yeah,
I have no idea why oil county, but it is
oil pats oil County is you know, it's it's the
oil place.
Speaker 4 (20:29):
And I have a real question the oil place. What
the oil place?
Speaker 3 (20:33):
I'm going to start. We're all going to go down
to the oil place.
Speaker 4 (20:37):
Are talking the oil place?
Speaker 1 (20:38):
Okay?
Speaker 2 (20:38):
I have a real question. The substantive one, which is
one of these sort of like booming export industries for
the US, was a natural gas and the sort of
LNG terminals, and I think Biden put a pause on
them and that pauses. I don't know if it's been lifted,
but it will be lifted almost certainly construction of new.
Speaker 4 (20:57):
Ones with the trade war.
Speaker 2 (20:58):
Have the economics of LNG export change at all with
the decline and oil prices like cause anything, Have any
dials moved.
Speaker 6 (21:05):
On that front?
Speaker 7 (21:06):
Not yet, And potentially yes, because one big buyer of
American lergy was China, and China has not bought any
LNG from America in a long while. And also if
oil productions start to decline, when you drill for oil,
you usually get a mix of hydro out of the ground.
Speaker 6 (21:24):
You will get oil, you will get gets.
Speaker 4 (21:26):
So if you like I fewer wells, yeah, so.
Speaker 7 (21:28):
You have fewer oil wells, you're gonna have fewer or
gas wells. So the input cause of gas is gonna
go higher, and you may have a bit of lack
of demand on the other side from China. So far
all is good because the European Union and the UK
still need a lot of natural gas from the United States.
(21:49):
The big expansion of Catar is still about twelve to
eighteen months away, and Russia is fighting with Ukraine and
it's not exporting what they used to do in a
years time.
Speaker 6 (22:02):
That could be a big deal.
Speaker 7 (22:03):
The other, to me, very important topic in trade and
oil is that oil used to be almost the largest
component of the American trade deficit in goods.
Speaker 6 (22:14):
Yeah, you go to two.
Speaker 7 (22:15):
Thousand and eight, the US trade deficit was around running
around eight hundred billion dollars a year. Of that nearly
four hundred billion US oil. Today we are on a
surplus for oil.
Speaker 3 (22:28):
How times have changed?
Speaker 5 (22:29):
I have one more question just on oil specifically, but
one of the hallmarks of the Trump administration is they
tend to promise everything to all people, and arguably that's
been a big component of their success. And I think
when it comes to energy policy specifically, one of the
promises was we're going to be good for the energy industry,
for oil specifically, and at the same time, we're going
(22:50):
to be good for inflation. We're going to bring down prices.
You're not going to have to pay, you know, these
exorbitant dollar amounts at the pump. Is there any way,
you know, let's assume that the tariffs start working, maybe
growth expectations start to pick up. Is there any way
that the Trump administration can end up fulfilling its various
policies when it comes to energy. To everyone involved, here,
(23:14):
is there a way where eventually, maybe maybe they you know,
make up with the oil industry, the shelle industry, and
maybe somehow they I don't know, encourage energy from other
sources and inflation still, you know, comes down.
Speaker 3 (23:28):
What's the best case scenario here?
Speaker 7 (23:30):
I think the best case of scenario you're putting me
here on this spot. But if I think it probably
something like let's call it, I mean, let's call it
the Goldilocks, the middle ground. What you know, the oil
patch will laugh and a main stream will be happy. Say,
seventy five dollars a barrel. Okay, seventy five dollars a
(23:52):
barrel is not breaking the budget of any middle class
family or working class family when it comes to gasoline
in the United the States, and seventy five dollars a barrel,
the American oil industry is making money, no problem whatsoever.
Whoever is complaining at seventy five probably it doesn't have
a very very good business case. The main problem is
(24:12):
to make it everything more at seventy five and just
for the sake of the argument, let's say that the
magic number is seventy five. You cannot get that running
unless you get OPEC on board, and they keep restraining
production and losing market share because seventy five dollars a
barrels means that the consumers are happy and they continue
to consume, but also that the ushail industry continues to grow,
(24:36):
and at some points someone needs to produce less. So
you can even if that magic number existed, and I
think that seventy five probably is about right, you need
OPEK to play ball and accept that they're gonna lose
market share forever and ever, and I don't think that
they're on that business.
Speaker 2 (24:55):
So last question for me, but how has Trump maybe
tariffs and is provocative action starts literally or virtually every
country in the world. How is it interacting with OPEK specifically?
Speaker 7 (25:09):
I think that for on one side, the turn administration
is putting quite a lot of diplomatic pressure on open
countries to increase production, and we saw Saudi Arabia increasing production.
Speaker 6 (25:18):
Secretary of Energy is in.
Speaker 7 (25:20):
Saudi Arabia right now and it's discussing mostly nuclear affairs
about the Southeast one American technology for nuclear Sibylian or
least civilian quote unquote nuclear technology. So there are a
lot of things that the Saudiast made, one from the
United States and the United States one the Southeast to
increase production to put prices down, but used by large.
(25:44):
If I can't summarize what is the feeling of my
open sources right now, I think it's very similar to
what you know, the bankers and traders that you guys
are talking every day probably as saying it's.
Speaker 6 (25:55):
Like what or hard it's going on here? Because no
one really knows.
Speaker 7 (26:00):
I mean, how do you plan you are an old
pet country and you're trying to decide oil production policy
for the next three months. How do you plan that
where you don't really know what tomorrow morning or maybe
tonight brings.
Speaker 5 (26:15):
Yeah, and even if we assume that this, you know,
this was it, nothing else was going to change. Now
that uncertainty premium is in the market, and regardless of
what Trump actually changes from now on, we know.
Speaker 3 (26:27):
That it looks like global growth is going to slow, right,
So you're.
Speaker 5 (26:30):
Asking opek to basically boost production into a slowing global economy.
Speaker 7 (26:35):
I mean we that is to me, that was because
every other asset class was dealing effectively with one shock,
and that was a demand shock.
Speaker 6 (26:45):
Everyone was just like assuming, okay, we are going to
slow down.
Speaker 7 (26:48):
Oil was dealing simultaneously with a demand shock and what I.
Speaker 6 (26:52):
Will call a supply surprise.
Speaker 7 (26:55):
I'm not gonna I mean, the increasing OPEC production is
not yet enough call it that shock, but let's call
it that supply surprise that can very quickly became a shock.
So you know, that is why oil prices went down
so much, and that's also why oil equity is really
absolutely tank aave blast.
Speaker 4 (27:15):
Always great at catching up with you, so great to
do it.
Speaker 2 (27:18):
Finally here in your home court appreciation on his home patch,
on his home patch, thankk.
Speaker 6 (27:24):
You for having me.
Speaker 7 (27:24):
And I'm gonna be googling now oil patch.
Speaker 2 (27:26):
Okay, that was fun. I can't believe I got to
stumph on a energy related question.
Speaker 3 (27:43):
Yeah, okay, fair enough.
Speaker 5 (27:45):
But I strongly suspect that's just like a literary term
that someone came up with and it sounds kind of nice.
Speaker 3 (27:51):
It sounds kind of down home.
Speaker 5 (27:54):
Down and people went with it. But I do think
there's so much. There's so much going on.
Speaker 2 (27:59):
Can I say, yeah, you as only importing one hundred
and seventy million dollars worth of that is a very
good stat By the way, everyone should stay listening. Hopefully
they're listening. Odd lots listeners can now repeat this at
part like that is one of those good stats that
like odd lots listeners can repeat it parties.
Speaker 5 (28:15):
It's a good party trivia for au thoughts listeners, assuming
that they're actually getting invited to parties with the chat
like that they.
Speaker 4 (28:21):
Are there, did you know you know?
Speaker 3 (28:23):
Actually, so we all.
Speaker 4 (28:25):
Know that they're not rare?
Speaker 6 (28:25):
Like that part we do.
Speaker 2 (28:26):
At this point, I did not quite realize how small
the scale of.
Speaker 5 (28:30):
The important If a guy came up to me at
a party and said, did you know in fact that
rare earths were not in fact that rare? I would
be what's that you know that meme of the guy
like whispering into a girl's ear?
Speaker 3 (28:43):
What if that would be my face? Like? Whatever?
Speaker 4 (28:45):
What if you followed that up with the vacuum cleaner's part?
Speaker 5 (28:47):
Though, yeah, that's mildly more interesting.
Speaker 4 (28:49):
I'm saying there's a little something there.
Speaker 5 (28:51):
Although then I would be like, why are you talking
to me about vacuum cleaners? Do you think this is
something that I'm especially interested in a well anyway.
Speaker 3 (28:59):
Lots to talk about.
Speaker 5 (29:00):
I'm sure we will continue our spate of basically daily
episodes at this point, but should we leave it there
for now?
Speaker 4 (29:06):
Let's leave it there.
Speaker 5 (29:07):
This has been another episode of the Audlots podcast. I'm
Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (29:12):
And I'm Jill Wisenthal. You can follow me at the Stalwart.
Follow our guest Javier Bloss, He's at Javier Bloss. Follow
our producers Carmen Rodriguez at Carman Arma Dash, Ol Bennett
at Dashbod and Kelbrooks at Kelbrooks. And thank you to
our producer Moses Ondam, who's here with us in studio
in London. For more odd Lodge content, go to Bloomberg
dot com slash odd Lots, where we have all of
(29:34):
our episodes and a daily newsletter that you should subscribe to.
And you could shout about all of these topics twenty
four to seven in our discord Discord dot gg slash
od Loots.
Speaker 5 (29:43):
And if you enjoy odd Lots, if you like it
when we talk about the oil patch on Haavier's Home Patch,
then please leave us a positive review on your favorite
podcast platform and remember, if you are a Bloomberg subscriber,
you can listen to all of our episodes absolutely ad free.
Speaker 3 (29:58):
All you need to do.
Speaker 5 (29:59):
Is find the in Berg channel on Apple Podcast and
follow the instructions there.
Speaker 3 (30:03):
Thanks for listening.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:21):
I'm Jill Wisenthal and I'm Tracy Alloway.
Speaker 4 (00:23):
Tracy, we're in London.
Speaker 3 (00:25):
Yes, how do you like it?
Speaker 4 (00:26):
I love it so far. I'm having a great time.
Speaker 5 (00:28):
You know what, I've realized I always make the mistake.
So I lived in London for a long time. I
went to university here, I met my husband here, and
I stayed here for like over a decade. But I
realized whenever I go back, I always make the mistake
of doing it on that one glorious spring day where
the temperature is like seventy five fahrenheit, like twenty one
celsias and everything's blooming in central London and it's sunny
(00:52):
and it's beautiful, and I think, wait, why did I leave?
Speaker 4 (00:55):
But then the next day it's great.
Speaker 5 (00:57):
Yeah, okay, there is that, But I really I need
to come back in like January when it's dark at
three or four pm and remind myself that there are
in fact some downsides of living here.
Speaker 3 (01:07):
But it is very nice to be back for a visits.
Speaker 2 (01:09):
This is actually my first time being in the city,
right because I haven't really stated this part of the
city before.
Speaker 4 (01:15):
It's really nice, all the history and everything.
Speaker 2 (01:17):
Despite being here, we have no choice but to continue
covering various repercussions, fallouts, updates, ongoing developments in the trade
war or whatever we're calling it, the tariff whatever.
Speaker 5 (01:32):
You would rather be thinking of actual war history and
going to the Imperial War Museum or something like that.
Speaker 2 (01:37):
On my one free day here, I did the boomer
thing and I went to the Imperial War Museum, and
I saw a lot of things that I've only read
about referenced in books anyway, all kinds of dimensions in
the trade tensions and everything. But one thing that's going
on is big impact on commodity markets. We've seen the
price of oil plunge as recession fears get priced in.
(01:58):
And there was this headline in the New Times about
China halting export of rare earth metals as a retaliation,
and I just have to say, I've been reading about
China halting exports of rare earth metals and retaliation for
my entire life. It never seems to matter, It never
really seems to be a thing, but it always is
a really scary headline.
Speaker 6 (02:19):
But I've never.
Speaker 2 (02:20):
Actually, nothing, as far as I ever call, ever gets
shut down or grinds to from these supposed export restrictions.
Speaker 5 (02:27):
This is one of the greatest branding exercises of all time.
It's because it has the word rare in the title.
Everyone can really easily apparently make the case that these
are rare and you really need to snap them up
get the exposure before China starts limiting exports and we
all have to pay through the nose for these things.
Speaker 3 (02:44):
But yeah, it's never happened. And the rare as I.
Speaker 5 (02:47):
Don't know if we've ever discussed on this show, but
certainly other people have discussed it at various points in time.
The rare actually isn't that rare.
Speaker 3 (02:54):
It turns out there's a lot of them out there.
Speaker 5 (02:56):
It's just no one really likes getting them out of
the ground that much.
Speaker 2 (03:00):
So since we're here in London, we can never talk
to him enough about commodity things, and because their commodity
thing is going on, I'm thrilled to be in person
with our colleague Bloomberg Opinion scribe Javier Blass and knows
everything about all things commodities. Javier, can you just rent
for a couple of minutes about reverts. I'm not even
(03:21):
gonna ask you a question.
Speaker 4 (03:22):
You just go on a.
Speaker 2 (03:23):
Rant about headlines about China limiting earth experts.
Speaker 7 (03:27):
Where deal go go, Joe Tracy, thank you for having me.
You have been listening to these headlines and getting very
scary out.
Speaker 6 (03:35):
There's gonna be a shortage.
Speaker 7 (03:37):
Of Red ad All for a loan period of my
professional life, which is beginning to be more than twenty
five years, and it's a song gray Head. To prove it,
I have to deal with editors will come to me
and say, rival publication is saying xyzat Red Earth Metals panic.
Speaker 4 (03:57):
No, it's great for clicks, So I get why editors.
Speaker 7 (03:59):
Like it, and then my editors will say, should we'll
be writing something about it? And my default answer has
been no. There is not going to be a shortage,
and if there is a shortage, the consequences are not
going to be nearly as material as people think that
they're going to be. So a couple of numbers, Okay,
The United States imported last year in twenty twenty four,
(04:21):
according to US government data, a grand total of give
Me the Theme Music one hundred and seventy million dollars
of metals, not a billion million, one hundred and seventy million.
I'm pretty sure that the United States imported more olive
oil from Spain.
Speaker 3 (04:41):
I like that olive oil is your baseline. That's that's
very value.
Speaker 6 (04:45):
And how much is that?
Speaker 7 (04:46):
As the second number we are going here, how much
is one hundred and seventy million? You compare that to
total trade between the United States and China that is
zero point zero three percent, So it's not a lot.
Speaker 6 (05:01):
And the United States school phase say at.
Speaker 7 (05:06):
Ten times increase in the price of rare earth metals
and I still will have no impact whatsoever on the
kind of the American economy or the global economy. And
then what really drives me mad is that you are
writing about rare earth metals. Look, they are important, and
they obviously for some very niche applications you really need
(05:27):
rare earth metals, but prices could go higher and those
applications will just pay the price. But typically writer like myself,
you want to sex up a bit of the story.
You will say rare earth metals critical for the weapons industry,
for missiles and high take applications. Do you know where
(05:47):
every one of us have some rare earth metals at home,
they are used in super permanent magnets and therefore on
that absolutely critical instrument of economic warfare, which is called
the vacuum cleaner, there.
Speaker 5 (06:04):
Is I will say, I sympathize with editors not wanting
headlines about vacuum cleaners versus you know, military equipment and
all of those important strategic there.
Speaker 7 (06:13):
But you see, mind the story, the price of rare
earth metals may increase and making vacuum cleaners a bit
more expensive.
Speaker 6 (06:24):
Okay, I don't know you're gonna click.
Speaker 5 (06:26):
Yeah, Okay, not to get all Judy Bloom on everyone,
but rare earth they're not as rare as the name
would imply.
Speaker 3 (06:34):
But walk us through where they actually come from.
Speaker 7 (06:37):
A lot of them come from China. About eighty eighty
five percent of the world's rare earth metals come from China.
It's a question of digging them out of the ground
and then processing. The big difficult part is processing, because
it's very polluting, and it's a reason why all the
processing has moved from everywhere else in the planet into China,
(06:59):
because on one wanted to deal with how nasty the
process is. And here is also the other question you
want to do rare earth metals processing, in particular outside China,
when you need is much higher prices. If anything, the
problem today with rare earth metals and if we want
to develop an industry of rare earth metals outside China,
(07:22):
is that prices are too low. We need much higher prices,
and then everyone will do rare earth metals. The other
thing that will happen is that if the price goes
to a level that incentivized everyone taking a bit of care, well,
a lot of engineers on the vacuum cleaning industry will
find ways to do it without rare earth metals. And
(07:42):
also people will actually collect the vacuum cleaners and recycle
the magnets for other use.
Speaker 5 (07:48):
But if rare earths are there's such a small component
of something like a vacuum cleaner, I imagine the prices
would have to go up absolutely astronomically for that even
to be a consideration for a company making.
Speaker 7 (08:00):
And most of the time the prices don't go nearly
as high. Prices are beginning to rise again now, but
prices stay relatively low compared to where historically prices have been,
and we have had the latest headlines are about rare
earth metals and esport restrictions. We have some similar headlines
(08:22):
for other category of metals that we call critical minerals
and other fantastic exercise of labeling. I mean, like you
want to sell something called critical minerals and we have.
You know, people were really concerned because China was imposing
some esport restrictions on tuxten, tellurian, bismuth, molybdenon and Indian.
(08:44):
This sounds to me like high school chemistry. And you
will think, oh my god, what is happening with the
price of all of this. I mean, this was not
announced yesterday, This was announced a couple of months ago.
And prices move, and yes, the price of say Indian
moved to three one hundred and forty five dollars par kilogram,
And you will say, well, is that a lot is Look, yeah,
(09:05):
it's twenty percent increase run where we were at the
end of last year. But about ten years ago, that
is cost today three hundred and forty five was worth
eight hundred dollars parkilogram. And did you notice ten years
ago that it was a crisis on the Indian market
and everyone was a bit worried about it because I didn't.
Speaker 4 (09:27):
I didn't know.
Speaker 2 (09:28):
You know, we're still going to give this a provocative headline,
even though you know that people listen to the episode
and reveal that there is.
Speaker 3 (09:35):
Why why everyone's talking about the rare earth.
Speaker 2 (09:38):
Of the truth about the Earth. You know, we'll still
make it exciting.
Speaker 6 (09:42):
You know. What I want to.
Speaker 7 (09:43):
Say also is, look, yes, it's a serious issue, and yes,
I mean depending by eighty percent of a single country
is never a good idea. But there is an element
of panic that every time. And look, a lot of
this panic comes from the halmpful of minors and processes
(10:04):
or rare earth metals outside China. And you ass a
consultant on the rare earth metals industry. Is this something
that we shall be caring about? Well, the answer is
going to be yeah, hell yes.
Speaker 5 (10:16):
So Marth, by the way, says he has access to
rare earth minerals, he's invested in some companies, So we're fine.
Speaker 2 (10:21):
That fits so perfectly with this entire thing. You did
an amazing video the other day. I really I think
(10:43):
it was true art. Actually, whether we're talking about rare
earth metals or quote critical minerals unquote, what are the
economics of getting them in Greenland.
Speaker 7 (10:56):
Okay, let me just put my polar outfaid. And so
now there are not natural resources in Greenland period, unless
we are use mining eyes. Yes, there are some small
concentrations of.
Speaker 6 (11:12):
Rare earths in the south.
Speaker 7 (11:14):
There is a bit of uranium here and there, there
is this and that, but the concentrations are very low,
and the course of mining in Greenland is prohibitively expensive,
and you are not going to develop anything of even
medium sized mining operations in Greenland.
Speaker 6 (11:35):
I think that here is the exaggeration.
Speaker 7 (11:38):
But you have better chance of finding some minerals on
there on my back garden in West London that you
have in Greenland. Now I fear in that I'm going
to become the fifty five state.
Speaker 3 (11:51):
That's fine.
Speaker 5 (11:52):
Joe's embraced his middle aged man destiny of becoming a
military historian expert.
Speaker 3 (11:57):
So there's that.
Speaker 5 (11:57):
That's why he's at the Imperial War Museum. So no shame,
no shame. But since we're talking strategy approaches and maybe
acquiring Greenland could be one of them, the thing I
don't understand is if we agree that rare earth's rare
minerals are of some strategic importance, for the US, and
there are something you would want access to. But on
the other hand, we actually have plenty of them. It's
(12:19):
just we don't necessarily historically want to get them out
of the ground. Would the better approach not have been
to just build massive inventories of these things? Just get
them on the cheap from China. Let China tear up
its countryside, and we could buy those things from China,
and then once supply starts running out, or if relations
really start to deteriorate, then we could start our own industry.
Speaker 3 (12:43):
Or is that is that difficult? What's the startup process
like for something like that?
Speaker 7 (12:47):
No, and that's what some companies, I mean, governments have
not done their stockpiling, but some companies have done their
stockpiling themselves. They are Japanese high tech companies that they
are running more than a year worth of their demand
for rare earth as a stockpile. And again, this in
certain ways makes sense because if you think about Japan,
a country that probably imports fifty to seventy five million
(13:09):
dollars a year of rare earth metals, importing a stockpiling,
say a year or a couple of years worth of
the staff is not that expensive. I mean for Japanese companies,
this is going to be like completely random error under
huge balance sheet. So we have seen a bit of
a stockpiling and companies that they really require some particular
(13:30):
rare earth metals for a very particular application. They will
have done it, and then government what they can do
is say, look, this is critical. We're going to support
our domestic industry. The United States has rare earth accumulations.
There is a mind called mountain pass. We can't develop that.
The government can get into the business and developing that.
The price is going to be that we need higher prices.
(13:52):
So you're going to have to protect either you effectively.
I mean, here is the irony. The best way to
develop an industry the United States and develop the local
mining supply or red earth will be to impose so
on huge tariffs on red earth from China, so the
Chinese don't don't dump into the market.
Speaker 6 (14:14):
I mean this seism.
Speaker 2 (14:16):
I mean, this might be the vision more or less
across a range of industries, which is sort of like
take a wrecking ball to a lot of you know,
elite things. There are comfortable jobs in government and finance
and media et cetera and send, you know, free up
that workforce to mine Malidna.
Speaker 3 (14:36):
We're all going to be working in the mines.
Speaker 4 (14:37):
I mean, this is kind of the vision.
Speaker 2 (14:40):
All right, let's talk about something that may actually be
real and substantive.
Speaker 4 (14:45):
Now that you've convinced me not to worry too much.
Speaker 2 (14:48):
And also like if it wherever a crisis, government could
just come door to door and demand your vacuum cleaner,
right like for the missiles and whatever like in the end,
if they're like, all right, we're going to confiscate your
vacuum cleaner.
Speaker 7 (14:59):
If it's really how you call the man the broom.
So with the government comes knocks at your door, you
return your fancy dice on vacuum cleaner and they give
you a broom.
Speaker 5 (15:09):
The government will prim i Dyson out of my hands
saying that.
Speaker 2 (15:14):
Right now, let's talk about a commodity that really actually
has real significance. Part of We've mentioned this a couple
of times on the show. Secretary of the Treasury Scott
Bessant Head in the run up to the election or
post election, talked about his three to three three plan
three get the budget deficit down to three percent, grow GDP,
by three percent and increase three million more barrels of
(15:36):
US oil per year. It seems like we're going in
the opposite direction of that.
Speaker 7 (15:41):
Yeah, at current prices, certainly we are likely to see
lower American oil production than Haiger. I mean, Secretary Basset
was quite clever on the way that he expressed. He
talked about growing three million borrows a day of energy. No,
he didn't say specifically oil. I mean when you talk
about barrels, you think that he's talking about oil, but
(16:01):
he means barrel equivalent. So you could put anything there.
At the moment, the administration is already including natural gas
and that three I have been hearing some officials in
the administration saying, look, energy is energy. So we are
growing electricity, we are growing uranium, we are growing cold.
You put it on a basis of oil equivalent and
(16:23):
there you get. I would not be surprised if we
are also growing more California and olive oil and we
are adding it into the barrel. But look West Texas Intermediate,
the US oil bench match is trading close to sixty
dollars a barrel. You are there borderline where is economical
for shale on average for shale companies to drill new wells.
(16:44):
So we still start to see a significant slowdown in
the growth rate of the US oil industry. And if
prices to continue at this level or lower, that is,
low down, soon will be turning into a contraction and
we will see lower American oil production.
Speaker 5 (17:00):
Yeah. I mean, even if we think the administration was
talking about energy units rather than just oil per se,
it does seem clear that there are a lot of
people in the energy patch itself which seem to have
had a different idea, right, they thought the administration was
going to be very, very friendly to the shale industry
and instead Joe and I have mentioned this a few
(17:22):
times before, but we've seen anecdotally, you know, some statements
from the Dallas FEDS Energy Survey where people are going like,
this is not what we signed up for at fifty
dollars per pare or oil prices. This is not only
bad for increased investment in the industry, but could potentially
be a sort of existential threat.
Speaker 7 (17:43):
So absolutely, I mean increased right. The Secretary of Energy
is an oil person. He founded and ran his own
oil company service company called Liverty Energy, and a lot
of people in the industry saw that. Know, to quote
an executive I spoke recently in Kuston, he thought of
(18:06):
the industry, thought that Chris Ray was our guy, was
one of ours, one of us. And this executive said, like,
what we have came to realize is that he's not
one of us.
Speaker 6 (18:17):
He is Trump's guy. And that is a big difference.
Speaker 7 (18:21):
And yes, the comments in this anonymous Dallas Fed survey
were quite shocking. And you're talking private to executives in
the oil industry. I almost have to pinch myself at times.
It's like, hold on a second, is Biden still on
the White House? Because you guys seems to really dislike everything.
Speaker 5 (18:43):
Replace Trump with the word Biden and it would make sense.
Speaker 7 (18:46):
It's like, when I was reading that series of comments
from the Dallas Fed, I joke at that you have
been sleeping for six months and wake up you will
sink that the Democrats are still running the White House
and Congress and exter. I mean, this was a dream
for the oil industry. It is a Republican at the
White House. The Secretary of the Treasury is a Wallace
(19:09):
Street heads fund manager, and the Secretary of Energy is
the founder of an oil company.
Speaker 6 (19:16):
And here we are everyone in the oil part.
Speaker 7 (19:19):
Perhaps because of this, he is absolutely mad with the administration.
Speaker 4 (19:40):
I have a really dumb question, and I'm gonna ask
you real question. What do we call it the oil patch?
Speaker 3 (19:46):
I don't know?
Speaker 4 (19:47):
Oh sorry, I didn't mean the somebody?
Speaker 6 (19:49):
No, this is Can I use Google?
Speaker 2 (19:51):
Oh sorry, we can cut this? Can we keep this
in some can we keep this in?
Speaker 5 (19:57):
Yeah?
Speaker 3 (19:59):
I don't know why I have a poetic license.
Speaker 4 (20:02):
Wow, I thought for sure.
Speaker 3 (20:03):
Okay, oil patch it kind of speaking of gardening.
Speaker 5 (20:06):
It kind of sounds like, you know, you're growing vegetables
on your oil patch, except things on.
Speaker 7 (20:11):
The oil pot, like the pipe that you used to
drill is called Octe oil County tubula good. Oh yeah,
I have no idea why oil county, but it is
oil pats oil County is you know, it's it's the
oil place.
Speaker 4 (20:29):
And I have a real question the oil place. What
the oil place?
Speaker 3 (20:33):
I'm going to start. We're all going to go down
to the oil place.
Speaker 4 (20:37):
Are talking the oil place?
Speaker 1 (20:38):
Okay?
Speaker 2 (20:38):
I have a real question. The substantive one, which is
one of these sort of like booming export industries for
the US, was a natural gas and the sort of
LNG terminals, and I think Biden put a pause on
them and that pauses. I don't know if it's been lifted,
but it will be lifted almost certainly construction of new.
Speaker 4 (20:57):
Ones with the trade war.
Speaker 2 (20:58):
Have the economics of LNG export change at all with
the decline and oil prices like cause anything, Have any
dials moved.
Speaker 6 (21:05):
On that front?
Speaker 7 (21:06):
Not yet, And potentially yes, because one big buyer of
American lergy was China, and China has not bought any
LNG from America in a long while. And also if
oil productions start to decline, when you drill for oil,
you usually get a mix of hydro out of the ground.
Speaker 6 (21:24):
You will get oil, you will get gets.
Speaker 4 (21:26):
So if you like I fewer wells, yeah, so.
Speaker 7 (21:28):
You have fewer oil wells, you're gonna have fewer or
gas wells. So the input cause of gas is gonna
go higher, and you may have a bit of lack
of demand on the other side from China. So far
all is good because the European Union and the UK
still need a lot of natural gas from the United States.
(21:49):
The big expansion of Catar is still about twelve to
eighteen months away, and Russia is fighting with Ukraine and
it's not exporting what they used to do in a
years time.
Speaker 6 (22:02):
That could be a big deal.
Speaker 7 (22:03):
The other, to me, very important topic in trade and
oil is that oil used to be almost the largest
component of the American trade deficit in goods.
Speaker 6 (22:14):
Yeah, you go to two.
Speaker 7 (22:15):
Thousand and eight, the US trade deficit was around running
around eight hundred billion dollars a year. Of that nearly
four hundred billion US oil. Today we are on a
surplus for oil.
Speaker 3 (22:28):
How times have changed?
Speaker 5 (22:29):
I have one more question just on oil specifically, but
one of the hallmarks of the Trump administration is they
tend to promise everything to all people, and arguably that's
been a big component of their success. And I think
when it comes to energy policy specifically, one of the
promises was we're going to be good for the energy industry,
for oil specifically, and at the same time, we're going
(22:50):
to be good for inflation. We're going to bring down prices.
You're not going to have to pay, you know, these
exorbitant dollar amounts at the pump. Is there any way,
you know, let's assume that the tariffs start working, maybe
growth expectations start to pick up. Is there any way
that the Trump administration can end up fulfilling its various
policies when it comes to energy. To everyone involved, here,
(23:14):
is there a way where eventually, maybe maybe they you know,
make up with the oil industry, the shelle industry, and
maybe somehow they I don't know, encourage energy from other
sources and inflation still, you know, comes down.
Speaker 3 (23:28):
What's the best case scenario here?
Speaker 7 (23:30):
I think the best case of scenario you're putting me
here on this spot. But if I think it probably
something like let's call it, I mean, let's call it
the Goldilocks, the middle ground. What you know, the oil
patch will laugh and a main stream will be happy. Say,
seventy five dollars a barrel. Okay, seventy five dollars a
(23:52):
barrel is not breaking the budget of any middle class
family or working class family when it comes to gasoline
in the United the States, and seventy five dollars a barrel,
the American oil industry is making money, no problem whatsoever.
Whoever is complaining at seventy five probably it doesn't have
a very very good business case. The main problem is
(24:12):
to make it everything more at seventy five and just
for the sake of the argument, let's say that the
magic number is seventy five. You cannot get that running
unless you get OPEC on board, and they keep restraining
production and losing market share because seventy five dollars a
barrels means that the consumers are happy and they continue
to consume, but also that the ushail industry continues to grow,
(24:36):
and at some points someone needs to produce less. So
you can even if that magic number existed, and I
think that seventy five probably is about right, you need
OPEK to play ball and accept that they're gonna lose
market share forever and ever, and I don't think that
they're on that business.
Speaker 2 (24:55):
So last question for me, but how has Trump maybe
tariffs and is provocative action starts literally or virtually every
country in the world. How is it interacting with OPEK specifically?
Speaker 7 (25:09):
I think that for on one side, the turn administration
is putting quite a lot of diplomatic pressure on open
countries to increase production, and we saw Saudi Arabia increasing production.
Speaker 6 (25:18):
Secretary of Energy is in.
Speaker 7 (25:20):
Saudi Arabia right now and it's discussing mostly nuclear affairs
about the Southeast one American technology for nuclear Sibylian or
least civilian quote unquote nuclear technology. So there are a
lot of things that the Saudiast made, one from the
United States and the United States one the Southeast to
increase production to put prices down, but used by large.
(25:44):
If I can't summarize what is the feeling of my
open sources right now, I think it's very similar to
what you know, the bankers and traders that you guys
are talking every day probably as saying it's.
Speaker 6 (25:55):
Like what or hard it's going on here? Because no
one really knows.
Speaker 7 (26:00):
I mean, how do you plan you are an old
pet country and you're trying to decide oil production policy
for the next three months. How do you plan that
where you don't really know what tomorrow morning or maybe
tonight brings.
Speaker 5 (26:15):
Yeah, and even if we assume that this, you know,
this was it, nothing else was going to change. Now
that uncertainty premium is in the market, and regardless of
what Trump actually changes from now on, we know.
Speaker 3 (26:27):
That it looks like global growth is going to slow, right,
So you're.
Speaker 5 (26:30):
Asking opek to basically boost production into a slowing global economy.
Speaker 7 (26:35):
I mean we that is to me, that was because
every other asset class was dealing effectively with one shock,
and that was a demand shock.
Speaker 6 (26:45):
Everyone was just like assuming, okay, we are going to
slow down.
Speaker 7 (26:48):
Oil was dealing simultaneously with a demand shock and what I.
Speaker 6 (26:52):
Will call a supply surprise.
Speaker 7 (26:55):
I'm not gonna I mean, the increasing OPEC production is
not yet enough call it that shock, but let's call
it that supply surprise that can very quickly became a shock.
So you know, that is why oil prices went down
so much, and that's also why oil equity is really
absolutely tank aave blast.
Speaker 4 (27:15):
Always great at catching up with you, so great to
do it.
Speaker 2 (27:18):
Finally here in your home court appreciation on his home patch,
on his home patch, thankk.
Speaker 6 (27:24):
You for having me.
Speaker 7 (27:24):
And I'm gonna be googling now oil patch.
Speaker 2 (27:26):
Okay, that was fun. I can't believe I got to
stumph on a energy related question.
Speaker 3 (27:43):
Yeah, okay, fair enough.
Speaker 5 (27:45):
But I strongly suspect that's just like a literary term
that someone came up with and it sounds kind of nice.
Speaker 3 (27:51):
It sounds kind of down home.
Speaker 5 (27:54):
Down and people went with it. But I do think
there's so much. There's so much going on.
Speaker 2 (27:59):
Can I say, yeah, you as only importing one hundred
and seventy million dollars worth of that is a very
good stat By the way, everyone should stay listening. Hopefully
they're listening. Odd lots listeners can now repeat this at
part like that is one of those good stats that
like odd lots listeners can repeat it parties.
Speaker 5 (28:15):
It's a good party trivia for au thoughts listeners, assuming
that they're actually getting invited to parties with the chat
like that they.
Speaker 4 (28:21):
Are there, did you know you know?
Speaker 3 (28:23):
Actually, so we all.
Speaker 4 (28:25):
Know that they're not rare?
Speaker 6 (28:25):
Like that part we do.
Speaker 2 (28:26):
At this point, I did not quite realize how small
the scale of.
Speaker 5 (28:30):
The important If a guy came up to me at
a party and said, did you know in fact that
rare earths were not in fact that rare? I would
be what's that you know that meme of the guy
like whispering into a girl's ear?
Speaker 3 (28:43):
What if that would be my face? Like? Whatever?
Speaker 4 (28:45):
What if you followed that up with the vacuum cleaner's part?
Speaker 5 (28:47):
Though, yeah, that's mildly more interesting.
Speaker 4 (28:49):
I'm saying there's a little something there.
Speaker 5 (28:51):
Although then I would be like, why are you talking
to me about vacuum cleaners? Do you think this is
something that I'm especially interested in a well anyway.
Speaker 3 (28:59):
Lots to talk about.
Speaker 5 (29:00):
I'm sure we will continue our spate of basically daily
episodes at this point, but should we leave it there
for now?
Speaker 4 (29:06):
Let's leave it there.
Speaker 5 (29:07):
This has been another episode of the Audlots podcast. I'm
Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (29:12):
And I'm Jill Wisenthal. You can follow me at the Stalwart.
Follow our guest Javier Bloss, He's at Javier Bloss. Follow
our producers Carmen Rodriguez at Carman Arma Dash, Ol Bennett
at Dashbod and Kelbrooks at Kelbrooks. And thank you to
our producer Moses Ondam, who's here with us in studio
in London. For more odd Lodge content, go to Bloomberg
dot com slash odd Lots, where we have all of
(29:34):
our episodes and a daily newsletter that you should subscribe to.
And you could shout about all of these topics twenty
four to seven in our discord Discord dot gg slash
od Loots.
Speaker 5 (29:43):
And if you enjoy odd Lots, if you like it
when we talk about the oil patch on Haavier's Home Patch,
then please leave us a positive review on your favorite
podcast platform and remember, if you are a Bloomberg subscriber,
you can listen to all of our episodes absolutely ad free.
Speaker 3 (29:58):
All you need to do.
Speaker 5 (29:59):
Is find the in Berg channel on Apple Podcast and
follow the instructions there.
Speaker 3 (30:03):
Thanks for listening.
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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