Doomberg: Energy, AI, and the Calls Nobody Else Made

Welcome back, I'm Pier Daily. This is Insight Is Capital. Everyone has an opinion on energy right now. The war in Iran was supposed to send oil to $150 a barrel. It didn't. China's solar miracle was supposed to keep setting records. And it didn't. Mark Carney was supposed to be just another climate politician with no appetite for pipelines. Things have turned out differently. The people who have gotten these calls right before anyone else weren't at a major bank. They aren't running a hedge fund with a Bloomberg terminal and a team of analysts. They are anonymous. They publish under the name of an extremely well-read green cartoon chicken. And they do it by doing something that sounds obvious, but turns out to be incredibly rare. They read the propaganda on every side. They build mental models that hold together under pressure. And they follow the logic wherever it leads, even when it winds up somewhere uncomfortable. Today, that logic leads directly to a conversation every advisor should be having with their clients right now about natural gas, about artificial intelligence, about China, and about what happens when the entire US sanctions regime gets called out as a bluff. Also about what Canada does with the most important energy window it has had in a generation. Bloomberg is the anonymous author behind one of the most widely read energy and markets publications on substack with a following that spans commodity traders, portfolio managers, and technology investors across North America and beyond. Their work sits at the intersection of energy physics, geopolitics, and capital markets, and they have a mast-a-track record of having been right about things before the consensus is even willing to ask the question. This is Insight as Capital. Join us in our fireside chats with some of the most fascinating people in finance to discuss their insights on life, markets, macro, investment strategy, and much more. Bloomberg, welcome. It is terrific to have you here. You know, terrible. Can I say what a fantastic introduction. I'm always my pleasure, Pierre. Before we get into what you think, I want to spend some real time on how you think, because the track record is genuinely unusual. You called the Iran Wars oil price impact correctly, when pretty much the entire market was modeling $150 a barrel. You called China's solar collapse months before installations fell almost 80% year over year, and you called Karni's energy pivot before it seemed remotely plausible to anyone watching Canadian politics. That's not luck across three separate complex calls. So walk us through the actual methodology. How do you consume information? How do you build and test a mental model? And how do you know when to trust it enough to publish? Yeah, it's a great question. Appreciate the opportunity and total coincidence as I shared with you before we hit record. We're actually writing an entire book on that exact subject. So I appreciate the opportunity to stress test some of the early chapters with you, which I literally just pulled myself away from the keyboard to record with you. So let me give you that headline. So broadly speaking, there are two types of native thinkers. There are people who think linearly and people who think laterally. And before diving in, I should say a few things up front in society is it is popular to characterize lateral thinking as smart. When in fact, it's just unusual in the sense that the vast majority of people are innate linear thinkers and a small number of people, I count myself among them, are innate lateral thinkers. And within the two populations, there's a normal distribution of intelligence. But when you have that sort of overlap in the vent diagram of a clever lateral thinker, it's so different than what is normal that it appears, perhaps more unusual than it is. So what is linear thinking? So linear thinking is the predominant thinking motif in society, absent a majority of linear thinkers writing society, society would collapse. And linear thinkers and lateral thinkers differ in the following and most important way, which is linear thinkers, when they brainstorm around an axiom, make sure that axiom is correct before they begin brainstorming. And a lateral thinker has no emotional attachment to the correctness of an axiom at all before they'll play around with it, explore it, and see where it leads you if you assume that axiom is true. That is the biggest difference. There are other differences, which I'll get into. But that's it. And so in a classic work setting where most people are linear thinkers, nobody wants to waste time brainstorming around something that is obviously untrue, can't be true. I'm not wasting my time pondering that. I've got to get home. I've got kids to pick up at the soccer game. I've got dinner to get going. I've got a deadline to deliver for the boss, where a lateral thinker loves doing that. Often does it too long to a fault. That's another difference, by the way, between linear and lateral thinkers. A linear thinker is really afraid of being wrong. And a lateral thinker embraces it because it's just the next input into the next iteration, the next brainstorming. Interrating around untrue axioms or true axioms is a dopamine parade for lateral thinkers. And so the best combination is to pair a great linear and a great lateral thinker so that the linear thinker can intervene when the insight is identified. And now it's time to go and implement that, you see. But we're lateral thinkers. Lateral thinking is in the description of what we do. And so each of the calls that you just described, and either we had them before, got to them quickly after the evidence indicated that we needed to pivot, those are all born out of what you described as a mental model. What does a mental model? A mental model is an axiom, true or not, and we don't care. That both explains recent history in his useful to predict future. And once a mental model is what we call operative, we use it to make predictions until it stops working and then we discard it because we don't care if it's wrong. And so I'll walk you through maybe the the carny saga because I think that's probably one of our better calls and very familiar to your audience, I suppose. So in December of 2024, you have to remember Trump was just elected. And Pierre, Pierre son Trudeau, Justin Trudeau was Prime Minister and he was wildly unpopular. And the conservators were running at like 94% on Paulie Market to win the election. And something weird was going on between Trump and Canada. And the Irish is in Canada, I should say, is threefold. One, obviously Alberta, you know, British Columbia, more energy specialist. And it's one of the biggest hydrocarbon endowments in the world. Two, we have even the rural Americans, we have strong family ties to Canada and very interested in Canada's culture, its interactions with the US. And then third, of course, we're quite familiar with British propaganda and Canadian propaganda is often a melting pot for experiments by the British. And so we stay closely attenuated to Canadian propaganda for the first two reasons. And so we we notice the strange behavior by Trump, you know, Governor Trudeau, 51st date, all that nonsense. And then we also notice that the Canadian media seem to be laying covering fire for Carnies ascent. And we've followed Canadian politics long enough. I would surprise you with some of the knowledge that I have of Canadian election results in history. But anyway, we know a pattern when we see it. And boy, you know, the glowing, fonding coverage on the CKV and the right up in the Globe and Mail. And you know, this, this, this globalist delight, as we called him back then. So we got to think in that boy, if they replaced Trudeau with Mark Carney, that would be much more formidable. First of all, you get rid of the unpopular incumbent and you have a fresh start. There's always a sort of wind in the sail to a new face. But also with the full power of the Canadian media behind him, he would be a much more formidable candidate. And then we were we're observing Trump and Trump takes a dig because he, you know, he pokes this fight about the trade wars, which creates this patriotic counter-response in Canada. And look, there's nothing that triggers Canadian unity more like arrogant Americans. I understand the sort of suffering under the large, you know, cultural behemoth that is the United States has always been a deep insecurity of the average Canadian. And so you know, and Orange Man bad is like just uniquely great at pulling out the worst of that. And so when he takes a dig at the other Pierre, who was last day, Mark Carney never pronounced, who was the head of the conservative party back then. So he takes a dig at Pierre. I'll just call him Pierre. And a lot of peers in this conversation, but two two really important ones. Yeah. So so Trump takes a dig at Pierre because Pierre had to stand up to Trump, Canadian patriotism. and Trump really did a lot of damage to far right candidates around the world at that time. And then we see Carney coming in and then we connect the dots about Carney in his time at Proof of the Last. Man, this meant that boy doesn't Trump have a lot of real estate in New York. And so then we came to an axiom that we didn't believe necessarily to be true, but let's brainstorm around it. So the classic lateral thinking of observe this news pattern. And the axiom was Trump wants Carney to win. Okay, it's plausible. We brainstorm around it. The evidence is kind of piling up. You'll note that after Carney replaced Trudeau, the governor talked one way at least for an extended period of time. Okay. So then that's like a pretty good operating meant the model that's explaining the news. It predicts things. Why would Trump want Carney to win? Well, in parallel, you have Trump's American energy dominance. And you have this focus on the Western hemisphere. And boy, it's pretty easy to just draw a map around Canada the way Trump wanted to and rename it North American energy dominance. And so we thought, huh, Mark Carney will unstick Alberta. Just as an axiom to brainstorm around. Seems like a crazy idea. And when we brainstormed around that, we had this insight. Of course, it has to be Mark Carney. Because Richard Nixon could only open up China. The hardcore anti-communist is the only one that can fly to China. If a bite in the world liberal went, he would be crucified. They would be destroyed. And so, you know, if the conservatives had won that election, Prime Minister Pierre would be in no position to unstick Alberta. There would be riots in the street. But you need somebody with the background and resume and pedigree and smoothness like Carney to go to Beijing and open up China. And so that was the ultimate meant the model that led us to publish, well, we laid the groundwork for it in December of 24 in a piece called Alberta Clipper. And then we really laid it out in April before the election in a piece called The Fixes In. And I've been on your show talking about-- Yeah, we talked about that. Yeah. That's probably the greatest mental model we've ever published. I mean, we really-- there's a full paragraph in there where we laid out exactly what would happen into a T. It all has. But that's a perfect example of starting with things that you think have to be false. Who cares if it's false, it's interesting, it's fun, that's ponderate. That leads to another one. You know, Carney will unstick Alberta. And then, ah, that makes sense. And you run with it. Now, we'll eventually have to ditch that meant the model. We might have to because we used it to make a further prediction that Ed Miliband would be Prime Minister in Britain. But that hasn't panned out. And so now that model is on its last legs. But when we see a headline like not only are we going to get this million barrel a day pipeline to Vancouver, we're also going to maybe build one from West to East and get you connected up to the St. Lawrence. And, ah, all right. So this all is still-- at least there's a pertains to Canada that mental model is still operative. And so I sort of a long answer. But lateral thinkers, happy to brainstorm around BS, it's fun. Could do it all day. But when you find that aha moment, then you need that linear partner to pop in and say, OK, we're going to run with this. This we're going to publish this. We're going to go with that. And with that, many mental models. And we just published one on how China absorbed the blow of the Iran War, which I'm sure we'll talk about. But that's lateral thinking. The only other things I would say about lateral thinking is lateral thinkers are very comfortable with the concept of zero and infinity. These are philosophical constructs. But they're great edge cases to ponder. Edge cases, a lateral thinker will dwell on them, figure out why they're an edge case. A linear thinker will average them because they need to get to that right answer quickly. Give me the mean. We'll take out the edge case and I'll get that slope. And we'll go with that. And being wrong, that's the other thing I say. I could care less if I'm wrong. Great. What does that mean for the next iteration? The next mental model? I'd like to be right. The more we get right, the more money we make. And I like money. But broadly, we have a pyramid then. So there's things we'll brainstorm. And then there's things we'll think are working. Then there's things we'd say on podcast. And then there's things we'd like. And you get thinner and thinner as you go up. And so we've had a lot of mental models that would never see a podcast. A lot of things we've talked about on podcast that we never write. But we 100% believe everything we write when we present. So first of all, it is not uncommon for especially linear thinkers to get angry when they read stuff they disagree with. And this is mostly a modern phenomenon. And it derives from the algorithm driven confirmation bias that makes up so much of what people consume. And to be confronted with that, which you don't agree with, the first instinct in that sort of fight or flight is to not read it or to fight it. I don't get angry at things I disagree with. I quite enjoy inviting them into my life and understanding whether I need to change something about what I've said or written or think. Or hopefully, most times, can find the flaw in the argument. And convince myself that my mental models are still operative. - Yeah, it's that curiosity, right? It's the curiosity factor that when you've - How did you come to that conclusion? - Right, it's the lateral thinking, okay, that's an axiomlet, niggle-c. Like, so I don't get angry when I read people, even when people write nasty things about Jim Berg and they do strange, we try to be polite. And so the other thing I would say though, here is like, if you're gonna try to make a living on the internet, don't go looking for people saying bad things about you 'cause you will find it. - Yeah. - Absolutely. - It's just the way it is. I mean, half of them are even human. You know, they're just bots or whatever. So there's that, people like to be entertained. And so you could just write that book in five sentences. But how fun would that be, right? A lot of Dumburg articles start with a story. I mean, it's no big secret. The classic way to sell newsletters is hook story offer, you know, gets you very interested. And then our offer is, you know, pay us and you could read the rest. You should have seen this dream of hate mail when we went beyond the paywall, you know? Like supposed to do this for free for the rest of our lives. And so, you know, for example, like a classic stream of hate mail we got when we went beyond the paywall is our price. Our price is too high. This is crazy because, oh, well, you can charge this on Substack and make a good living. And if we put any way at all, trolling and hate beyond just curiosity to convince ourselves that there's nothing about our thinking that we need to change, we wouldn't be in business today. That's for sure. We have some brand promises. So what are the brand promises? One, most importantly, we believe what we are saying the moment we press send. That is a very carefully worded promise. Second is we will express our opinions politely. It doesn't mean that we won't, you know, torch a few people here and there for fun, but we try to do it with some rhetorical flair and a bit of humor and no nastiness, no swearing, you know, no vulgarity. When we're wrong, we're happy to confess it, mostly because that's an iteration in another round of lateral brain storming. And we're being authentic and we would, we don't publish everything we believe, but we would never publish something we don't believe just for clicks. And so we have this expression, which is, look, I mean, every subscriber is precious, but none particularly so. What a blessing, what a gift from God. I'm very grateful for the loyal readers we have. And look, I'd like to grow. I wouldn't turn away more, but I'm not going to sell my soul for more to the extent that our subscribers appreciate the provocative nature of our thinking. We will be provocative without being polarizing. It's one of our three brand killers. And that's great. It's wonderful. And to the extent that we've angered somebody and they hit unsubscribe. And you know, well, you know, thanks for your prior business. People are under no obligation to read us. They're certainly under no obligation to pay us. Yeah. And so, you know, I mean, we have a 100% full refund. No questions asked, guarantee. We treat customer service the way we try to treat everything else, which is, hey, you know, if it's not worth it to you, here's all of your money back. And so, you know, this anger, it's just part of, it's an ugly part of social media. Can't be a content creator without being on social media. There's less of it on substack than there is on Twitter, for sure, one of the reasons we left Twitter. And then this is also why we closed our comments to paying subscribers because if you're gonna troll us, well, I mean, if you're gonna pay us $400 a year for the privilege in who am I, you know? I was mentored by an uncle, you know, may he rest in peace. Unfortunately, I was unable to attend as if you know because of COVID, who gave me a really wonderful piece of advice, you know? And everybody has their story of the mentor that said something that stuck with them, but, no, I was an ambitious young man and I had some skill and I had accomplished a few things in life and I was just the beginning of my life. career and when you're young and poor and ambitious, you have a lot of energy and you take some risks and so on. And he pulled me aside after I graduated college and before I started my PhD and he said, you know, getting success is never the hardest part. It's hard. The hardest part is managing success and do a lot of thinking around when you catch the car, what are you going to do? Because a lot of people fail when they catch the car. They feel empty, they've accomplished it. They've, you know, they want more of the disease of war, this article's strange victory where we talked about how could Tom Brady of all people get caught up in the same Beckman-Freeze scandal? You know, like, how much more do you need in life? I mean, he's a sentient millionaire, billionaire married to a supermodel, multiple times, superbowl winner and he gets caught up in this fraud. You know, like, how could that be? And that's because you're always sort of chasing that next accomplishment and the satisfaction of the thing is that that people have to realize that that if indeed you're wrong about something, you were always the first to call yourself out. You've never had a problem. I don't think you've ever had a problem with saying how was, you know, we were wrong or I was wrong. That's a thousand. And by the way, I actually, one of our real brand values, I think, is having a higher than normal hit rate on long tail outcomes. So we're going to be wrong most of the time. But if you get a 1% chance call rate 10% of the time, that's an order of magnitude better than that is a lot of alpha to be extracted from that, right? And so like that Mark Ernie call, he wasn't even a contract you can bet on when we made it and laid it out. And so like sure did we get at Millabin wrong in Britain, yeah, mostly, but they're still going to unstick the North Sea for all the same reasons even with the own little fake separatism movement in Scotland, like Alberta's. So the pattern is there, we just got the person wrong. But okay, we got the person wrong big deal. You know, we even called it a long shot call, we wrote about it. But like, yeah, like so if you're 25% right on a 1% call, that's that's very good. But you're still going to be wrong most of the time. And so we're not trying to be right all of the time. We're not even necessarily trying to be right most of the time. We're trying to be right at a much higher hit rate for long shot stuff. And also to explain things and to be funny and to entertain a lot of people only pay for so many things, finance and community or two of them and that's the lanes we're playing in. But community is a big deal. You know, like for, I'll give you a small insight baseball since you know, it's just me and you talking. You know, Bloomberg is a way community in the sense that your loyal subscribers, the people that, you know, in this business, if you have somebody who's renewed, that's like the premium subscriber of them all because not only do they like you, not only have they paid you, but they've recommitted to you. And so when somebody unsubscribes early, it's not as big a deal. But when I see somebody, you know, please give me a refund and you go in and you see they paid us four times. Like, love, I'm genuinely interested as to why you left, you know, most of the time it's an affordability issue and we just give them a cop and then when they can afford, they come back, which is great. Sometimes we've said something that makes them angry and I'm curious as to what it is that could cause somebody who's been around that long to finally leave, you know, wow. Yeah. Like a rage on subscribe. Like, I'm not going to pay for this. Wow. Wow. Like that's the thing. You'd be surprised. But anyway, and I have a few of those. But the inside baseball is one of the things we spend a lot of time on that may not be evident to the reader is the captions to the pictures that we include in our piece. Why? There's a there's an awful lot of inside jokes in those captions. And we know when we consume other people's products that to be in on the inside joke is the ultimate stickiness, right? It's the ultimate. I get that. It may be laugh like, you know, this is why comedy shows that you've seen and they are coming back to all episodes and things that you have to have watched them to get that. You don't want to do too much of that because you always want to welcome in new people as well. But like we put a lot of time into the captions. We put a ton of time into the titles. And frankly, you know, we learn this from Jim Grant, who grants interest rate observer. I mean, the captions in his artwork in those letters are brilliant, you know, that I saw one a couple of additions ago, which is so funny. There's a guy talking to what looks like his wife who's trying on address. And he says, all right, all right. You look like a trillion bucks, right? There's just like such an inside joke, such a classic Jim Grant bow tie laugh out loud while he's on CNBC moment. This is why people pay what they pay to read. Granchess rate observer for the decades that they've done it us among them because that's really funny. It's endearing. I like Jim Grant. I know him, you know, if I text him, he replies. And another classic Jim Grant moment, he was on the meteor cuffinesses podcast. And I'm always trying to catch Jim when he's on somebody's podcast. And you know, the meteor was kind of buttered up a little bit as one does. And because gold was starting to ramp and you know, people started to care about interest rates again. And you know, it's been so long, Jim, you know, like you've been out in the woods for so long, it's been decades and to be fair. I mean, he has been making this call for decades and his instinctive answer without hesitation in full care to us. It's my turn, damn it. And it was just like so funny. So inherently funny. If you know, Jim at all, that dry sense of humor. And so, you know, to the extent that that's wonderful and funny and entertaining, we try to do that in our captions. You know, there's an enormous amount of work that goes into each of these people asking sometimes. You know, like what is your favorite? It's like the next one. You know, I get it. I don't want to publish it in there that couldn't be my favorite. We know intellectually that's not possible. But like I'm, I was very excited by the piece we published this morning and I'm excited to write the Nate Mac Rebuttal, which won't mention him for the next one. And then off we go, what a life. You know, I love also, you know, the fact that that you're that you'll go beyond, you know, you'll go beyond Western borders to find, you know, what, what is the other side saying? I mean, we're so, we're so cloistered in our own, you know, Western hemisphere media. And we don't, we often might not think about how politically tilted our own media is or how proper, you know, propaganda, how propagandized news accounts are because they fit into a, you know, a box of, you know, a bias. And you know, in your, you wrote a piece, sources and methods, you wrote about deliberately source surfacing. So I'm pivoting a little bit here now because I want it to get into some of the, some of the actual pieces that you've written in. And I do want to circle back to Canada again. But you deliberately, you talk about how you deliberately surfaced pro-Iranian accounts in the first days of this year's Iran conflict. And cross referencing that with what you were seeing there against satellite imagery and Western reporting in the Washington Post, eventually confirmed damage to 228 US military structures that the Pentagon hadn't publicly acknowledged yet. And how do you actually grade a source like that, like that you fundamentally distrust? What has to be present in that source for that information from an adversarial outlet to move your thinking? So great question. And, and we did not set this up. So you must really be a super fan. But lateral thinking is actually, as it stands now, at least the second chapter. The first chapter of the book is tentatively titled "Why Most Analysis Fails." And it deals with this exact issue, which is insufficiently wide aperture of inbound information and a systematic method to grade it, a dynamic systematic method to grade it. And a great, great challenge in any sort of culture is a preemptive, overweighting of local sources of information. And everybody lies, right? So like everybody lies all the time. And part of this chapter goes into the types of lies so that you can recognize them. There's lies of omission. There's lies of commission. There's pultering. You know, we say something literally true that's irrelevant. And so we knew when the Iran War broke out that on this would be really important. Us, I mean, talk about the intersection of finance, geopolitics and energy, a hot war in the Middle East. And we knew there'd be a lot of eyeballs on Bloomberg amongst others and how we covered it wouldn't matter. And we also made a couple of commitments early, which is we will not indulge in hyperbole just for clicks. If we graded our performance in the European energy crisis in 21, we probably did a bit too much of that. And the second thing we committed to is we will let the markets tell us what's going on. More so than we did back then, the markets, the commodity markets, which is something we could come back to, are actually pretty efficient and pretty instructive as the source of information. And so we knew that we needed, you know, We developed this methodology for by trying to study the war in Ukraine, which of course is another war that impacts energy markets That you really needed to read all sides to get closer to the truth And this is back to this British propaganda nonsense And there is no worse propaganda in the world than propaganda from Britain about Russia And there's just isn't anytime we write about Russia and We don't have the necessary full scale on provoked invasion We get a bunch of angry emails and there are almost all people from Britain Which is fine. It's just a data point And so we decided okay, you know we have this algorithm our rhythms want to feed you Let's do a whole experiment where we just Buy a completely new iPad untouched by Duneberg get a new email get a new name get a new Apple ID And then spend the first hours the first night of the war You know the next day Jeff Bezos was kind enough to hand deliver a new iPad and And we trained this the only thing on that iPad to this day. I'm looking at it the only thing on the iPad is the Twitter app the X app I guess And we spent an hour training the algorithm that we were pro-Auraniac Boy it didn't take long to pick up on our cues and so now we have our legacy Duneberg account with all of its biases and history The algorithm knows us it knows what I want to pizza And this other algorithm and you would just put them side by side and refresh the for you tab and You were watching the parallel universe theory of physics unfold, you know before our eyes and And so then we have this grading mechanism very simple If you were interesting and you say something useful you get on our list and We only after a while we only really use lists Once you have a Foundation of a list who they recommend becomes the new way you find people So you get on the list by being interesting and useful you stay on the list By resisting the temptation to produce or reproduce fake stuff Obviously AI deep fakes, you know things like that and so over time You get a list of a dozen or so authentic Mostly polite some of them use language that you know We wouldn't put under our master But still useful still interesting and the ultimate grade is were they correct right so like four or five six days later What they said oh look at this Salah image I found on Chinese social media, which was filled with satellite images most of it real in hindsight That shows that Iran knocked out a fat miscellent receptor in Jordan Okay, that's interesting. That's devastating. That says a lot of that's true. It says Iran has ballistic missile capabilities with precision targeting and Boy, if you're taking out a fat missile system we think like of all the things that would be protected by interceptor missiles the Launcher of said missiles, you know, would be a good place to start with your protection strategy And so now that's interesting and boy like that would be huge and that that would be a big deal and then like Of course it's denied by sent com because everybody lies and then five days later We see this story in Korea about local opposition to the US military removing fat systems from Korea And bring them to the Middle East and well, that's pretty interesting That's a dot to connect an insight as you might say and then we did a little digging around the history of the fat Missile installation in Korean we find out that boy that was a hugely political ROW with China when it was being contemplated and ultimately installed in the Korean government made all of these sacrifices to get those weapons And so you know, you see these missiles being moved and then a few days after that as you mentioned, you know the Washington Post comes out with With this article that basically confesses that Iran had been wildly successful in targeting the eyes and ears of the US military In the Middle East then you find out that From the New York Times, I think that the Navy base in Bahrain was destroyed and People had to be moved out of it and rushed to hotels and evacuated and a bunch of them ended up in the US Northeast with no place to go and You think it to yourself. Well, that's like wildly different than what the nice man on TV Pete Hegseth has been saying it is daily press conferences and And so the accounts that flag that to us early suddenly get on a list of people that Okay, this is interesting. This is useful. This is in a way Much more useful than truths that the Trump's truth social account for example Which itself is useful for a variety of reasons, but the literal truth of the post is rarely Rarely one of them And so there was a methodology that ultimately will turn into a chapter in the book which is look We read What Ukraine is saying about Russia? We we read what Russia says about Ukraine One of the things I listened to in my morning walk was an interview by TAS the Russian news agency of Sergei Lavrov the famous Russian Foreign Secretary who almost nobody listening to this will know What he's saying to his news agency is pretty important. We think in an input into Into our analysis do we believe it not necessarily but what he's saying is itself a form of metadata that needs to be considered And so this is very Unfortunately not very common. It used to be pretty common. It used to be that Tucker Carlson going to interview Vladimir Putin wasn't skin to listen all it was what This was what reporters did And so we've gotten to this point where You know just doing that as we wrote in this piece. I think I think my dependent sources and methods what we talked about The European Union and it's like you're not even allowed to quote Russia today in an article That's illegal now. Yeah, that that that was That was one of the most surprising things actually that you wrote about was the fact that that that you know you could be You'd run a foul of sanctions if you copied and pasted a paragraph of a RT article Into our substack well, let's talk about that. So Even if I think the article is nonsense and I'm posting it to to Rebuke it Technically because of a decision of the European Court of Justice If I Copy and paste a paragraph from Russia today in full Embedded in essay to comment on it and Publish it substack would violate and by extension Dumber would violate at least in theory European sanctions on Russia because that is forbidden and we have readers in Europe and Some of those readers pay us and so You know that's a that's a dangerous development You can think that Putin is the worst person in the world you could think that Russia today is a nothing more than puff propaganda And you should think that it's stupid and a waste of our time to read it and it's abhorrent that we should quote it or make reference to it let alone agree with it But they make it illegal It's it's boy That's a slippery slope if there ever was one that that was an astonishing revelation Could you could you imagine a more or wellian construct? then You can't even reproduce to criticize Like wow all right. I mean that's really forbidden talk about The Streisand effect across everything that you've published Recently there's a thesis that I don't think has been Stated plainly enough in one place and I know you know one of your one of your idioms is is energy is life and I think that that sort of lays the groundwork for Where I want to go in this conversation The real story isn't that natural gas is cheap and in demand I think everybody will definitely agree that it's cheap It's the demand question, right and the real story However is that all hydrocarbons gas oil natural gas liquids Cole are converging towards Price parity on an energy content basis and The direction what you've what you've written the direction that that arbitrage closes is lower than consensus not higher We saw China just proved that in real time during the Iran conflict most recently by swinging Three to four million barrels a day of crude demand without flinching using coal to liquids EVs and petrochemical switching that it has spent decades over building I think that's one of the stories that you've you've spent a lot of time on which is that you know China has been stockpiling as though it's going to war and oil ended hovering in a range In the in the current period of course I'm talking about oil ended up hovering in a range more in the 80 to 90 dollar region instead of the 150, that was the consensus call when the Iran war ensued. And is that the right way to read what you've been building? - Yeah, look, I would say, like full disclosure, we too thought oil would go to 150, if you get that fact set, but we were quick to pivot when the prices didn't fall through on that back to the whole, we will follow what the market says much more closely this time. Okay, this is really important, and something that runs through the theme of dozens of our articles and many of our premium tier presentations, you know, our doom zooms as we call them. What is our hydrocarbon for? Hydrocarbon exists to be burned to create heat, so that work can be extracted. Forget about petrochemicals, for now, they're a relatively small component, you know, maybe they get transformed into something durable that we drink water out of. But by and large, the primary utility of hydrocarbons to the human endeavor is that they are a source of energy that can be readily extracted and used to do work. You know, fundamentally energy is life. Your standard of living is defined by how much energy you get to waste, because you can't impose a order without wasting heat. And everybody, everywhere wants a higher standard of living is like a bedrock mental model of Doomberg's analysis. And so a lot of things flow from that mental model, but one of them is, you know, work is work. Nobody really cares where the energy came from behind the light switch, what they really care about is that the light comes on when they flick it. And so one of the things that we have developed as an axiominterly in that the model is that corrected for energy content and logistics in the long run, all hydrocarbons should sell for the same price. They don't, they often deviate wildly. But when they do deviate wildly, you now have an infructural anchor to point to and say, this is the trend from here. So let me give you some real numbers. One of the big challenges in implementing this mental model is the fact that hydrocarbons sell in different units, different currencies, different measures of energy. So an oil is priced in dollars per barrel. And natural gas is priced in dollars per million BTU. And headline coal is priced in dollars per ton, but really, you know, at the industry level amongst sophisticated players, they actually trade it on a BTU-contid basis, you know, like if a rail car of coal has higher BTU value, it'll fetch a premium compared to, you know, dirty or thermal coal. So what are some rules of thumb just to use one example? A barrel of West Texas intermediate has around 5.6 million BTU using it. Well, that means if you want to price natural gas in barrels of oil, you just multiply the gas price by 5.6. That's a pretty useful rule of thumb. I'm sure that's not enough significant figures for the purists who are listening, but for most people, 5.6 is a good swag, maybe 5.8 if it's Brent. So if natural gas is, I don't know, two bucks a million BTU and then we hop, that's the equivalent from a work perspective of, you know, $11 a barrel oil. Is there a big wide market for $11 a barrel oil? You bet. Is natural gas a little harder to use to move around shore so you have to put in some logistics costs. And oil has always traded for a premium relatively speaking to natural gas for that reason. Just like coal is the easiest to handle logistically. It's a lump. It's a lump. You can leave it outside. And so when you look across the board, you see these types of pear trades then. So landed LNG and Brent crude kind of do the same thing. At least at the margin they get burned to produce electricity. A lot of oil is burned to produce electricity a lot more than people realize. And so if you plot 5.4 and 8 times landed LNG against Brent, they tend to trade in lockstep. And when they deviate something is interesting is happening, right? And so if you look at the US today, that mental model plus co-production. So now when you drill in the Permian, you get crude oil natural gas that goes in natural gas and you got to take them all. Right. You have these wide price dispersions, right? And so today in the US natural gas is the absolute cheapest. The NGLs are a little higher on a dollar per million B2U basis. And then crude oil is the most expensive for now. One of the reasons crude oil has always been more expensive is because there's a cartel in the middle of it trying to keep the price artificially high. But the other reason to be fair, that oil is price that a premium is because society's engines exist to burn oil predominantly. So if you look at the quantity of diesel engines, gasoline engines and jet fuel engines in society, they roughly match the molecular distribution of a barrel of oil and that's no coincidence. We want to use the entire barrel. Oil was the primary hydrocarbon for decades. Certainly was the primary hydrocarbon when the norms of modern day engine manufacturing were implemented. How many gasoline engines do we need versus how many diesel engines do we need? And it matches, right? Because when you're dealing in the volumes of oil that the world consumes every day, even a minor impurity, piles up quickly. And so we have optimized the engines and society to burn a barrel of oil. That doesn't mean we can't slowly switch them. And it doesn't mean that having wildly cheap natural gas and NGLs compared to oil doesn't motivate that switching. And over time, you flexibilize your engines. In fact, there are big heavy trucks that can burn natural gas or diesel and they often switch between the two in China and that is a form of arbitrage. And so this molecular arbitrage of the hydrocarbon complex is one of the overarching mental models that is very operative. It's good at predicting. Yes, nobody wants to take the diesel engine out. But if you could, you would add $2 and then it'd be two natural gas. - Yeah, that's, I mean, it just, it feels like in that respect, China has been far more concerned about its adaptability than we are here. We just, in North America, we just seem to take all of that for granted. - Very logical reason for that, which is covered this in our July, Doom Zoom called Fire Horse China Through the Lens of Energy. When you do an analysis of China and its energy strategy and they are strategic about it, don't kid yourself, they are heavily reliant on coal. They are barely reliant at all on natural gas. And even the gas, the import comes from mostly friendly countries. Chircamina Stan is not going to go to war with China. But their biggest weakness is oil. Okay. What do you want to do? So one of the things China did was they enabled the Shell Revolution. That's an odd thing to say. Well, the way they enabled the Shell Revolution was they absorbed all the NGLs, the US consent them. They built the engines, they built the factories, they built the petrochemical facilities to take LPG and ethane on huge scales. Why? Why not? It's cheap and also it enables more crude production. And so if you're short crude, that's enabled the Shell Revolution. They're very interested in the world being flooded with crude oil and the price of oil going down. Okay, that's interesting. What's the other very interesting thing about China when you do a next level deeper? Let's look at their grit. Well, their grit is entirely domestic with a tiny little wedge of natural gas dependency. But again, Turkmenistan, Uzbekistan and Russia aren't going to war with China. And yes, they participate in LNG, but it's pretty small and they swing trade and they do that just for profit. So it's coal, hydro, wind, solar, nuclear. All in the border, all under their control, their grid is self-sufficient. Okay, suddenly the world is moving towards an electrified everything movement. Is that a coincidence? China would like that because they dominate all the technologies needed to do the electrified everything movement, wind and solar and batteries, electric vehicles. So their weakness is crude oil. Let's convince the rest of the world that crude oil is bad. While they buy it up, hand over fist, store it to the 2.5 billion barrels. Yeah, yeah, yeah, yeah. I mean, China is playing a sophisticated game of chess. That's energy. Yeah, that was kind of, I mean, the propaganda of wind of solar, the propaganda of solar coming out of China was that, they were going to lead the world in solar development and wind development as well. And that was something you pointed out last year, which was that ahead of the market, sort of realizing it was that China was actually cutting its investment in solar, while it was saying we're going to have to do that. And so here's another mental model of ours, which is a very simple way to look at grids. And again, grid experts will object to some minor nuance, but for the rest of us, let's indulge in a bit of generalization. An operator for grid cares about meeting supply and demand exactly. And what's really valuable to a grid operator is what's known as despatchable electricity. It can come on and go off relatively quickly, smoothly, on command, doesn't break things when it does it. And in the overlap of the Venn diagram of fuels capable of providing base load power, steady 24/7 type power, not intermittent like wind and solar, and despatchable natural gas and hydro are the two winners, coal and nuclear. They're kind of like big battleships and they don't like to be turned on a dime. And so they're really great for base load, a great foundation for your grid. But for that part of your grid that has to flex into and out of nights and days and all that kind of stuff, you know, your despatchable part of your grid really matters. And China's grid is dominated by coal. Like 55% of electricity comes from coal. It has huge hydro powers, like five times bigger than the US. So that is a great source, you know, entoundment hydro power, not run-of-the-river. If you have a big dam, the water behind that dam is a great battery. You can spool up and spool down and match the plan demand while your coal plants just keep running all day, dirt cheap 24/7. Okay. So I said two things, hydro and natural gas. Those are the despatchable subsets of base load power. The more you put wind and solar on a grid, that's intermittent. The sun shines, it doesn't. It rains for a week. The wind blows hard. The wind goes dead and the dead of winter just when you need it. All these problems that are well known that are, you know, popular critiques of the green energy transition. As a general rule, I was a mental model when intermittency swaps despatchability, things begin to break. It's very simple, um, heuristics. So all we do then with that mental model, that's pretty predictive. It explains things and it explains California. Um, and it explains, you know, Germany. Um, okay, let's look at China. So you just go to the the fiscal review of world energy and you plot the generation of electricity for wind and solar combined against the generation of electricity from natural gas and hydro combined. And when they cross, things are going to break. And we flag that last year in a presentation, you know, we used it as, uh, as bait for a promotion called cocktail party trivia, winning the renewables debate with friends and family. We laid out that mental model. We had one of the slides was a grid of fuel source measured against criteria. Base load, yes, no dispatchable, yes, no intermittent, yes, no carbon-free, yes, no, you know, um, all those attributes that you might care about. And we pointed out that the lemma, you know, if you're going to match intermittent, so you need dispatchability and the two sources of dispatchability that matter or natural gas and hydro. And then even even this mental model goes one further, well, what about batteries? Batteries is always the, uh, but, you know, the hand in the back of the room. Um, batteries are in fact dispatchable. They're instantly dispatchable. They're not base load. Right. They need to be recharged. And so the amount of batteries you would need to properly back up a grid, and we showed this in the China presentation. Right now, um, all of the batteries installed in China. And by the way, China accounts for half of all of the BES systems installed in the world. Right. Is enough to back up their grid for 30 seconds. Um, you could check, you could check my numbers. Uh, 30 seconds. Wow. But more realistically, um, the installed capacity of wind and solar could charge those batteries from empty in about 18 minutes. So the amount of batteries you would need, let's just know the way to look at it, you know, like, the amount of batteries you would need to install that mostly do nothing. Talk about like a poor asset utilization, right? Um, is unfathomable to people. Maybe they could do it a much better solution. So take us one step further to show you how our lateral thinking approach works. Okay. What is the one thing that would turn this all on its head? Well, you may call more dispatchable. Okay. Let's do some digging. Is, is there a technology that would make call more dispatchable? And there is a brain cycle and super critical CO2 and all this experimental stuff that we've heard about over the years and suddenly you'd do some digging. And yeah, China's playing with that. Okay. Let's put that on our intraddle radar for we will be wrong with state of more correctly. That mental model about dispatchability and, um, intermitsy will need to be discarded if China cracks making call more dispatchable in an economic way. Great. Not only is there a mental model currently working, we know when it'll be wrong. And we'll discard it then, which is wonderful. So like if China cracks dispatchability for call, wind and solar make all the sense of the world for China, we'd be the first to say it. Doesn't mean it makes sense for America. Doesn't mean it makes sense for Canada that gets no sun. But for China, sure, especially considering that they're really worried about energy independence and resiliency. Correctly, by the way. It's, it's, it's really hard. You know, it's really hard not to start to imagine that, you know, this Iran conflict, the thought that I can't shake is the idea that that China is the real target. Of course. And, and, you know, like if you, if you cripple, you know, if you cripple the supply chain coming out of the Middle East, that goes to, you know, Asia, North Asia, all over, you know, whether it's Korea, Japan, China, but mainly, mainly China. And you've talked about, you know, Japan's backup supply of energy, backup supply of oil and, and, you know, how potentially vulnerable it is to that and Taiwan. But China seems to be, to me, like, you know, I recall during the first Trump administration that China was the, you know, the hallmark issue that he was constantly railing about. And, and then in the second term, it continued, but not, not in the same way. But it seems like this Iran conflict was actually, you know, the, the first order of, of the Iran conflict is, oh, it's the Middle East, it's Iran, it's our mortal enemy. They're, you know, they're building out their nuclear weapons and power capabilities and we need to stop them. But the second order, effect of, you know, occupying choking up the straight of Hormuz, is that the energy doesn't make it to China. The oil, right? And, and so you brought up the point that, that, you know, China has, it's friendly trading partners in, in the stands and, you know, I, I, I, it's still just, I, that, that, you know, if the intended target is China, it's to, it's to force China to use up, first of all, its stockpiles, but, you know, the, the White House and the Pentagon know, have been, you know, very, very carefully, you know, that they've been strategically building up these stockpiles. If you can get China to use up its, its reserves of, of everything that it has been stockpiling, then, then you can, you know, it's, it's pressure, right? It's, it's real pressure. So, you know, the, that seems to be the big game that's going on. I think it's a foolish game and one that the West is guaranteed to lose, absent. But it's, it's, it's, it's, sorry, and I don't mean to interrupt you, but it's, it's, it seems to be the same, it seems to be happening also in the, on the AI front, right? You, you know, when you look at what this pressure is, is actually spurring, it's, it's China to become even more competitive. Well, we wrote this in a piece called treatment resistance. Yeah. Where the, where the analogy is, you know, the old saying, you know, that which, which does it kill, you only makes you stronger. If you want a vivid example of this that touches on too many people, unfortunately, is, if you want to get a badass cancer, partially treat it, because the cancer that comes back is stronger and angry. And it's the same with strong countries. St. James never work against strong countries. That, it's like partially treating a cancer. So this is a theme of our work. You know, we haven't, we've been calling how crazy these Sanctus against Russia are and have been since April of 2022. And I think that we have been definitively proven correct on that. Anybody's still hanging onto that. These just works at the, you know, the European Commission. And but Russell's, that's about it. So in treatment resistant, we talked about, you know, in the AI space, in the LNG space, this one was about Russian LNG. What happens, you know, so you get to say, we're going to sanction Russia's LNG even though they need it. They're literally taking 100% of all delivers from Yamal for the first half of this year. So they're going to forbid, you know, Mitsubishi heavy industries from selling much needed turbines for the next LNG project, you know, Russia's planning. Well, what this Russia should do? It builds its own. And it has its own. It will have its own. And suddenly you have, you know, MHI's moat, God. And it's the same thing with China. You read our stuff. We've been writing that China is going to overwhelm semiconductor production for years. We've seen it before. I was an industry when they overwhelmed solar. I remember seeing the first BYD card in Auto Show and Shanghai. It was a Frankenstein mobile. It looked exactly like a Toyota Corolla carbon copy. And under the hood was parts of everybody else's technology, the best bits. And everybody was laughing at it. And I wasn't laughing because I know what that means. What that means is BYD now is bigger than Ford. And so I mean, literally. And so China, what happens? We've been warning and we've been writing about this and, you know, angry trolls show up. And then the headline comes this week. China set the mass-produced DEV machines. A XML drops 10%. Of course, they're going to mass-produced DEV machines. Why? We forbid them from having them. But they're not EUV machines yet. Bloomberg. Okay. Right? Sure. Give it time. They'll get there. And when they do, I mean. It's in PCSML. The last I checked China was half their revenue. Yeah, that's not a stock call. But you know, when China, China enters profits leave, that's kind of way worse. And so by banning China from buying equipment and buying the best chips, they're forcing China to make them domestically. And when they crack it and they will, they have brilliant scientists. You know, I try to tell this to people. Have you never been to China? It's been a while since I've been, but even over the years where I used to go regularly, I mean, it's profound. So like China has a university. Not to get like two for down the rabbit hole. I remember when the European, I was sorry, when the, when the Russia, the war in Russia first broke out. And a certain very popular entertaining content creator came out with a call that all of Russia's oil production is going to get shut in because of slumber days of the world are leaving and they need this Western technology. I called it at the time on a Twitter spaces when I was still on Twitter that this was a Western techno arrogance to the extreme. If you don't think that Russia, China, and India collectively don't have enough engineers to keep a well running, I mean, you're an idiot. And so China has a, China has a university that's literally called China Petroleum Universe. That's all they do. It has 15,000 students in it. We produce 600 a year in the US and half of them come from China. They're just studying at the University of Texas, out of visa. They have 15,000 people studying petroleum at the one school that has petroleum in the name who Lord knows how many years studying at other schools. And by the way, you don't think they are in possession of every single piece of IP at Schlumberjag? Of course they are. And some of this thought that they're just never going to catch up, that there's any moat that a dedicated Chinese attempt to undo can resist is, I think, it's a very, very bad mental model to look at the world that way. A much better mental model is to assume that if you force them to, they will. And the best way to compete with China is to focus on being as best you can trade with them openly and let the chips fall where they may look. The US is a lot going for it. It's the world's largest any producer. It's the world's largest oil and gas producer. It's got an outstanding set of universities and a great entrepreneurial ecosystem in Boston and San Francisco and North Carolina. And so why don't you just play to your strengths and go and compete and try to win that? Well, you have the US dollar. You have, what do we do in trying to stop other people from developing? But here we are, World War Three. Let's stunt China. It's not going to work. They will crack despatulately for coal, for example, because they have to. Yeah, I think, I mean, it just seems to me like, like, you know, we've had historically a very long, long string of failed foreign policies. And those foreign policies have led to a disproportionately long run of unintended consequences. It just seems to me like it would be more, if you really had the intention of slowing down China, it would be more productive to render them complacent than then then then then say embolden them into what do you care at what's being kind of goes? I mean, like, again, this is like bullish and naive. But like if I'm the leader of America, I start with the well-being of American citizens. If I'm Mark Carney, how's Toronto doing? Yeah, I've been there. Everything has been the opposite. Like, right. Look at the pure starmer cares more about Ukraine than he does about the price of natural gas in Britain. You can tell you that and the average Britain doesn't care. The average British person doesn't care. And look, it's like, oh my god, don't you hate dictators. I mean, sure. So this is a whole other courtedness. Yeah, I want to trigger some in-retreles. I think, like, why would you do that? Right? Yeah. A very cynical about US politics. In general, US politics in particular. There's no such thing as Republican or Democrat at the federal level just to be clear that they all play for the same team. They just have different color jerseys. And I think Trump, there's still a hardcore group of people for whom Trump can do no wrong. Some of them subscribe to us and I had preemptively apologized for saying it, but the guy ran on no new wars, ending forever wars. And the first thing he does is go to war in Iran. I mean, what are we doing? And look, it's a quagmire. And nobody is happy about it. We had to come up with that call early that, you know, it's a strategic defeat for the US squad. Obviously, by the way, we're talking about trolls. We've wrote a piece all the way back in October of 2024 called October Surprise, which pointed out that Iran had demonstrated impressive missile targeting capabilities in a salvo of missiles exchange with Israel. And boy, shouldn't we take a beat and think about what that means? And we pointed out that Israel is a small country. It has six power plants and 60 salination plants. Everybody knows where those are. And if Iran can pick targets and hit them and circumvent the much-founted air defense system of Israel. Isn't that kind of sort of a form of mutually assured destruction? Yes, they don't have a nuclear weapon yet. And maybe they're trying to get one, but they kind of do if they can make your country unlivable. And man, the heat we got for writing that. I just stopped participating in the comments after a while because it's just insane, like the anger. How dare you? You know, we have to destroy the mullahs. And so, you know, okay, but like they can punch back literally the piece we published this morning. And so, the war started on the belief that a bonus never punched back. So back to Iran suddenly when the war starts, this one. So first, the 12-day war was another proof of this. It was the US and the Israeli side that demanded the ceasefire back then, begged for the ceasefire. And the big, you know, destruction of the Iranian nuclear capabilities, we knew that was phony when we saw it because we had this mental model of Iran's targeting capabilities. So then when the war broke out again, like, okay, the first thing we're thinking as we're building, you know, our pro-Iranian to-ear feet is like, what has changed about US-Iranian capabilities that makes our current mental model of usually a certain destruction invalid? Because something must have just no way we would do this. We, you know, my editor keeps reminding me, we as you, there's just no way that Trump would do this if it's the same fact said as the 12-day war in June of 25, or the missile salvo of October 1, 2024. And so we were actively looking like what has changed has China cracked to spatubility for coal. But they had nothing, nothing had changed. And so in the first days of the war, Iran systematically blew up US bases and US radars with precision, scary precision. And there was like no trick. There was no, here's the secret room where all the smart people are that no quote the truth. No, it was the exact same relative capabilities on both sides. The US is highly vulnerable. And Iran, unlike Putin, was willing to go there. They went full throttle. All right. You're going to bomb us. We're going to bomb Bahrain. We're going to bomb Qatar. They put, they dropped the missile down the middle of two LNG trains out of 14 in LNG. And they just happened to be two of the trains ex-owned. That shows you the level of precision that Iran had. And that was all right. obvious that was available to people in the first days of the war. Nothing has changed from the 12-day war. We lost that one. What's going on with this one? What is different? Nothing's different. And so now here we are. Six months later, MOU cease fire. Nothing's changed. Iran still has an enormous amount of high caliber missiles with great precision. The US is running dangerously low on air interceptors. I was just again another aside like people control us all they want. We get a doomsom presentation in November or October, maybe December 25, called mental models. Six axioms have explained the world as it exists for now. And one part. Well, yeah, that's like an important part of the title, right? And one of those six axioms was the US's dangerously short-haired defenseless. How did we come to that mental model while we've been watching the war in Ukraine? Zelensky's on Twitter every other day begging for patriots. The US has moved patriots from all over the world into Ukraine. Russia keeps firing dozens of missiles. Patriots keep getting fired up. Sometimes they intercept them. Sometimes they don't. But every fired patriot is one less than the arsenal. You can go and see how quickly it does lock heat or anything on make these missiles. Okay. How much did the US start with an inventory because congressional disclosures? You can go find that. Wow, we're short. The US is short. These missiles here we are now in 2026. Zelensky's in Washington for Lindsey Graham's funeral. And like, you know, I don't mean begging derogatory. Like I would be too if I was him. He was pressing Trump for an allocation of 300 patriot missiles to get through the winter. And Trump kind of sort of said, "We don't have them." And like, if you have that mental model, now there's a whole series of people who watch Fox News who believe that the US military is the strongest, biggest, baddest in the world and maybe it is and that it is inexhaustible. It has an infinite supply of everything. Just snap your fingers in the weapon shop. That's just not how the world works. In fact, a piece we haven't written, but I'll say it on a podcast because I doubt we'll ever write it. Is this a huge scandal brewing? Like what is 1.5 trillion by us? So I saw something I have yet to verify it because I know that I probably won't be allowed to write the piece so we won't write it. That Iran's military budget is like 8 billion a year. How is this possible? So the scandal is look what they built for 8 billion a year and look what we built for 1 trillion a year. And look, unless and until now what would change that mental model? Wow, we invented a laser that can take out hypersonic missiles. All right, that's a game changer. How much energy goes into the laser and where we're going to get it? Right? Okay, that's all great. Well, that's a game changer. All right, the fact that the US no longer has a sufficient inventory of air defense missiles and and can fight a war of attrition, that's that's a game changer. Great. Maybe that's, you know, frankly, one of the things we're looking for in the early days of the February 28th re-ignition of the war with Iran were watching videos out of Israel looking for lasers. Yeah, no, it was inside show me the lasers of, you know, but Austin Powers movie, right? And so but there weren't any lasers and so, you know, for now, we're hard pressed to see and I'm going to go, if you push me, I would be kind of bullish oil because the prospect of a retreat against this is not forthcoming. It's not in Trump's personality. And so I don't see Iran giving up control of the straight. Ever? Well, yeah, they almost like it appears that, you know, they're actually practicing more detente than they have the sort of blowing up everybody's oil and gas facilities in Saudi Arabia. And there's 12 more trains of the story. But it almost feels as though, you know, they're not doing it because they don't actually want to, you know, like but but who wants to use a nuke? Yeah. And so, you know, it just seems like this this war of choice has, you know, it's just going to just ask to look at it with it. It is again, with the risk of triggering some people. We've been saying it early. I was quite depressed when the worst worst started. Look on energy Trump in the beginning. It's making a lot of right moods. I mean, Chris Wright is an energy secretary, Doug Bergamon in the interior, nuclear renaissance, pipeline renaissance, permitting renaissance. Like, you know, this is literally the Dumburgananjee policy for America. How would you not be excited? And see it all undone, you know, this this war is a catastrophe. It's it's it's so yeah. Yeah. I mean, it's it's it's definitely, you know, it's definitely a headscratcher. You know, I another headscratcher is is the, you know, when you when you look at, you know, the amount of investment that's going into and still we're still talking about energy here, but the amount of investment that is going into data centers and and and then behind that the the the utilities, the electricity electrification that's required in order to make those data centers run. And and you know, when you look at at the you you talked about project Kilby, for example, which is headlined by Chevron, Microsoft, G or Nova, 2.7 gigawatts behind the meter, you know, a billion cubic feet of gas a day. But, you know, the investment case there is is astounding. But you pointed out that, you know, rather than rather than giving a conclusion on that on that writing, you pointed out that, you know, the real question is if a project with that lineup in that location can't clear permitting, what does that say? What does that tell us about the gap between what the AI build out that that everybody's talking about? What does that say about what it requires and what the, you know, current regulatory environment can actually deliver like that that that seems to be, you know, like that there isn't a clear path to it, right? I mean, never mind the choke point of energy itself, where does the electricity come from if it's from natural gas, nuclear, hydro, this on, you know, base load, uninterruptible power supply? Are we going to be even able to get there legislatively? Like are the, you know, is permitting going to happen? So this is like a podcast in itself. Yeah, I know. But so one of the other six axioms from that presentation, the human endeavor is infinite compute. You notice the word infinite in there, you know, matter of thinkers like infinity and zero, because it's just a comfortable thing to brainstorm around. And so what does that axiom mean? It means the human endeavor is infinite compute. The curse, well, the envision, you know, when humans transcend biology, the singularities near all that jazz, that's a pretty good mental model that books published in the mid 2000s. It's, it's, it has a remarkable track record of being operative. And so we've, we've adopted it. And so what does that mental model for tell it says anything that gets on the barrier to infinite compute will be wiped away? Climate change gone. Anti-nuclear protesting gone. Permanent. God. Okay. The other part of lateral thinking is how would we be wrong? And how do we detect it? And hence the article on the project you mentioned, which is boy, if it can't work here, then is our mental model operative, at least as it pertains to the US. Because if you can't build 2.7 gigawatt behind the meter in the permeant with negatively priced natural gas backed by Chevron, General Electric, and Microsoft, I mean, good luck to you in other places, theoretically, especially given the fact that the Texas railroad commission is the most, you know, business-friendly permitting agency there is. And, you know, I know it's probably not just them and there's other people involved. Fork, whoever. But that's the type of sort of lateral thinking concept the human endeavor is infinite compute. Is it because they fired everybody? No, no, they want to do it. There's other issues. They're water and, you know, there's no process. Yeah. There's a lot again. There's a permitting. Alluded to in the piece. Is it in China's interest that this could build? No. So how much of this sort of foreign-funded NGO type protests are truly organic and authentic? And there's some issues, and I'm not here to belittle those or minimize them. Water table issues, you know, line of sight issues. All the challenges with wind turbines and, you know, but for sure there is an entire category of professional agitators and litigators whose main job it is to stunt the development of primary energy. And suddenly they're interested in stunting the development of one of the use cases of primary energy, which is the most important military technology of our time, which is artificial intelligence. And in a happy coincidence, China's building data centers as fast as they can, empowering it with coal. And I can assure you that such protests would not be allowed to manifest. in China. So it just makes one wonder. But anyway, back to the foundation of the question, if the human endeavor is infinite compute, then permitting resistance, protesting resistance, Chinese funded NGO movements will all have to be wiped away. And as long as they're being wiped away, the mental model is operative. And once it fails, you have to question it. So that's the barrier itself gets pushed off, gets removed. Well, it falls. But the human endeavor is something blocking the human endeavor is going to trigger every antibody that humans can master. Right. And so again, it doesn't have to be true. It might even sound ridiculous. When is he talking to him? Yeah. The human endeavor is infinite compute. We'll care if it works, it's useful. If it doesn't work, we discard it. It works. That mental model works, man. Like that's the undercurrent for everything, right? Sure. Seems like it. Yeah. Wow. I mean, I think like, you know, this goes far beyond just the simple supply demand issue for electricity. You know, like we're in, we're in this time where suddenly, you know, utilities are exciting again. And, and, you know, nuclear is exciting again. And, but it's not obvious, it's bullish for utilities just to give you a bit of a warning because again, it's not quite, you know, if a that be utilities are short gas turbines, utilities are short natural gas, utilities face constraints on price increases. And that can be quite the vice to holders of the equity cap of, you know, the equity stack of utility cap table. So you do have to think beyond just the sort of first and second dimensions sometimes in these circumstances now. What is interesting and bullish or anything that can remove the constraint, right? And so, this is why, you know, gas turbines and any machine that can convert cheap natural gas into electricity is going to be wildly useful and overpriced right now. But not necessarily true that burgeoning demand for electricity is good for operators of grids. It's very good, yeah. I, you know, it, it just seems, but, you know, you got to wonder if the pressure is going to be, if they're going to be able to absorb the pressure, right? Well, they'll have to if the human endeavor is infinite compute. Yeah. Yeah. I mean, when you put it that way, it's not at landish when you, when you consider, you know, the motivation, yeah. Well, look, that mental model, name another mental model that captures an exponential growth chart on a log scale. Like, it's a double exponential, the growth of compute. If you plot it, both power and total compute and the decaying energy penalty per, per, computation, like these are, these look exponential when you take the log of them. Like, that's a pretty powerful mental model that curves well published. And I would argue who cares if he's quote, right works. Keep using it. And I think that's a pretty important thing for advisors too, right? I mean, if you're going to embrace the fiduciary of somebody else's savings, if it's work and go with it, try to understand it for sure. People feel comforted by understanding. I mean, it puts it out there without any limit. When people say, you know, don't underestimate that, that drive that humankind has to grow to succeed. A powerful mental model is a source of enormous alpha. Being right can often cost you money. So, like, being right and wrong on timing is the old saying, right? In this industry, a mental model is not being right. A mental model is operative. It makes predictions that come true. There's a difference. It's really important. Psychological, philosophical difference between being right and making accurate predictions. Thank you immensely for your time. Love having you and we especially love your thought provoking editorial. Well, I really appreciate it and I always enjoyed my time with you and like I said, I'm happy to come back. [Music]