America's Energy Emergency? Oil, Gas, and the New Administration
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See if you qualify at oracle.com slash wallstreet, oracle.com slash wallstreet. This is Barron's Live. Each week, we bring you live conversations from our newsrooms about what's moving the market right now. On this podcast, we take you inside those conversations, the stories, the ideas, and the stocks to watch so you can invest smarter. Now, let's dial in.

Hello, everyone, and welcome to Barron's Live, our weekly webcast and podcast. I'm Ben Levison, Deputy Editor at Barron's. Thanks for joining us today for a look at the energy market, including the world of oil, natural gas, and renewables. My guests today are Barron's Senior Energy Writer, Laura Sanicola, and Tom Kloza, Senior Oil Analyst at Opus.

We'll talk about the 2025 outlook for the energy markets, the impact of President Donald Trump, and China's deep seek, which is roiling the markets today. Welcome, Laura and Tom, and thanks to all of you for dialing in to Barron's Live today. Thanks, Ben. Happy to be here.

So, Laura and Tom, we plan to start with a discussion of Trump's policies today. But it seems like with the news of Deep Seek, which I'm still trying to wrap my head around, it's upended everything. It's upended the stock market. NVIDIA is down more than 10%. And it's also upending the energy markets. Tom, can you talk to me about what you see happening?

Sure. I mean, you have to recognize that the energy markets are intertwined to financial situation. And when you have these big moves, and certainly today qualifies as a big move, you get collateral damage in energy. I mean, there's nothing fundamental that should suggest that natural gas prices would be down more than 10% today or that we'd be at new lows for crude oil.

But it's very, very difficult in a market where there's a lot of margin calls being rendered for money to go in pursuit of some of these futures. So I would warn right now that it's like one of those days that Kipling would write about in the poem, "If," where you have to keep your head about you while all those rest of the folks around you are losing theirs. And that's certainly happening today.

And Laura, any thoughts on your end? Absolutely. So, you know, what we're seeing get hit hardest here are utilities, especially electric utilities and nuclear focused utilities. And that's because this deep sea news leaves

an outstanding question of how much electricity is going to be required if data centers do not need as much computing power in the future. And Laura, just to interrupt you for a second, that's the thing with DeepSeek. It's doing kind of the open AI kind of thing, but using a lot less power and energy to do it. So if you don't need to have all those NVIDIA high-end chips running in a data center, you don't need all that electricity. Am I right?

Yes, technically, yes. But there's still a lot we don't understand. We don't understand the extent to which the CCP is subsidizing deep seek in China. There's a lot that we don't understand about whether other companies will be able to replicate this. And, you know, there's a bull case and a bear case to be made here. The bear, the bull case.

suggest that this could lead to even more of a renaissance of AI adoption and use with less computing power and then more complex models being built more efficiently. The bear case kind of states, okay, well, this is the end of the line here

for AI, you know, you take a company like Constellation, a huge part of its market cap is based on it signing above market deals with data centers. So if it can no longer do that, because, you know, it's proven that similar language models can be run more efficiently, well, you have a growth problem because

I don't think these data center deals are going to be canceled, but it's the growth that matters a lot for these companies. So if you're expecting 50 new data centers to be built in the future, and now there's only going to be 40 or 30, for example, that matters a lot for these utility stocks.

Yeah. And as we talk, I see that I'm just going to give an update on the prices of crude oil down 2.6 percent. That's WTI. It's trading around 72, 70. And natural gas is the one that's getting hit hard. That's down about 7.7 percent. It's pretty wild. All right. So we're going to keep this.

It's sort of it's going to linger over our entire conversation here because we really don't know. It's one of these, I guess we would call it, it's a known unknown at this point, as opposed to an unknown unknown maybe last week.

But let's go ahead and turn to what we originally were going to talk about, and that is the Trump administration and its stance on energy. I wanted to start with that declaration of an energy emergency. And Tom, where you sit looking at the oil and gas markets, are we really in an energy emergency?

I don't think so. Usually an energy emergency means that there's the threat of diminished prosperity within the business. And actually, we're starting 2025 off on pretty good footing. Now, we've had a major move down to where we're looking at the lowest prices for crude in a couple of months right now. But that was to be expected. There was really a rush to

in some of the ETFs that manage commodities. And a lot of money got pumped into the market in that first full week of January. And now what we're hearing from the Trump administration is a mix of bluster and policy. And sometimes, you know, we saw this weekend where the problems in Colombia were going to lead to a 25% increase

assessment or a tariff, and that disappeared very, very quickly. So, you know, it's definitely an atmosphere where the circus is coming to town, but I think it's going to be a prosperous circus in energy going forward. Okay. So, Laura, where is the emergency if there is one at all?

That's a good question. And just before I address that, some facts here. Gasoline prices here in the States are hovering around 313 per gallon, well below historic peaks, really in line with averages. And major drillers,

They're not ramping up production because prices don't support it. Crude prices of around $72 to $76 a barrel, that's above break-even prices for producers that are largely in the 50s. But there's still a ton of spare capacity from OPEC+.

So I would argue if there is an energy emergency, it's not an oil and gas. It's really more about politics. But if there...

And there was a case to be made that there was an emergency in 2022 when Western nations sanctioned Russian energy, but then Russia sold energy to India and China and the markets rebalanced. You know, if there is an emergency, it's the need to bolster the grid and permit new infrastructure

related to utilities because despite the news today, electricity demand is set to rise for the first time in decades meaningfully, and that's going to require permitting to occur much more quickly than it currently is happening.

And that, I believe, a lot of what Trump's executive orders are trying to do at this point is deal with some of those things. I know that he reversed a Biden-era moratorium on approvals of new liquefied natural gas export projects. Tom, can you explain what's going on and what impact that has?

Sure. You know, that was largely a ceremonial move by the Biden administration, but it was one that underscored the sort of adversarial relationship they have with energy producers. So it did not go over well. It didn't really inhibit any of the LNG exports moving out. And, you know, that's pretty bright future for that going forward.

If only because today, with today's drop, the Henry Hub, the natural gas prices are largely between $3 and $4. And the numbers when you go into the Japan-Korea market or you go into the European Union, you're talking about prices that are about $14 per million BTU. So there is a really, really wonderful market that's voting for the LNG.

Now, the one thing I would say if there's an emergency or, you know, an energy emergency, the place where it's happening is Russia.

Because a lot will hinge upon what happens with Russia. If the president does stake his reputation and succeed in getting some sort of a detente or some sort of an end to the Russia-Ukraine war, that could have dramatic consequences, much more than deep seek over the price of energy, because Russia has been impeded.

in their ability to move crude. They've been impeded in their ability to move natural gas. And many of the metrics that call for a lot of LNG exports are tied to that Russian problem. And by the way, before Biden left on January 10th,

the measures that were passed by the State Department to restrict Russian crude and the transit of Russian crude, the banking relationships and so forth, of everything that was done during the Biden administration, I would say that those moves, which are very, very difficult to reverse and would require Congress, those moves set it up and really color some

serious impediments for Russian movement of natural gas and Russian movement of crude oil and products interesting okay um well we're going to come back to Russia Ukraine and oil prices but let's go on to um Laura what about Trump's executive order pausing the disbursement of funds under the inflation reduction Act what's happening there

Right. So Trump's order freezes new funds from the IRA for 90 days while federal agencies review them. And notably, this doesn't impact already dispersed funds, which the Biden administration said 84% of the funds are

in the IRA have already been dispersed, but it does create major uncertainty for projects such as EV charging networks and residential solar. And you can sort of see that reflected in the stock since the election with the anticipation this would happen. EV go, plug power, you know, we're talking about companies that were already not turning a profit and we're relying pretty heavily on subsidies.

Wind and solar developers also rely on IRA funding to scale operations. I think it's fair to expect some litigation when you look at companies that have received a conditional loan agreement, but perhaps haven't spent 5% of that already. And I know this from just reporting on some of these companies and these project expansions.

This is not something executives were prepared to discuss on the record a few months ago. And I doubt that will change until there's continued until there's more clarity rather on what these conditional loan agreements mean in the Trump administration. So is renewable energy dead under Trump?

No, I wouldn't say it's on dead. It's dead, but it's certainly on life support in some areas. Offshore wind, which is not a major part of the wind market in the U.S., you know, those projects are frozen. And residential solar, which was already battered by higher interest rates, now faces subsidy cuts.

But we really like solar manufacturing at Energy Insider. First Solar has been a beneficiary of existing tariffs on imports and also certain tax credits that we expect are going to survive the Trump administration because they have bipartisan support. And I'm thinking

specifically about the 45X domestic manufacturing credits, which major banks like JP Morgan think are going to remain intact. This allows for solar and other utility scale solar companies to sell their tax credits to any other Fortune 200 company that wants to offset their own tax liability in exchange for

cold, hard capital that can be used to build these projects. And it's been a real game changer in this space. So, you know, obviously growth will slow until we have clarity on some of these tax credits, but they require congressional approval to rescind. So I think that's more of a wait and see here. Okay. And what about nuclear? Until today, I would have said it's going to be a big winner.

Yeah, I mean, nuclear is poised to benefit. You know, it's included in Trump's definition of American energy and his executive orders, which is more than you can say about solar energy, for example. So it's not in Trump's crosshairs. And we've liked

companies like Constellation in the past. Of course, now there is market uncertainty. Today's sell-off reflects those very real fears that AI-related electricity demand might not grow as expected. But

I still think nuclear is a resilient long-term bet because it's producing carbon neutral electricity. And I still think that we're going to see near-term demand rise. I guess you could say I'm going to make the bull case here. I don't think we've scratched the surface of what AI will be able to do in the future. And so we can do it more efficiently now. It doesn't mean we...

won't be needing to do more of it in the future. That's my guess about how, you know, Vistra and Constellation could respond in the future. But for now, yeah, it's hard to ignore how these stocks are getting battered today. So I know that for some of these stocks, they've gained so much that even if they even with the size of the drops today, if you had bought them even a few months ago, you probably still have a profit on them.

Oh, absolutely. I think even with today's drop, you know, over the past 18 months, like Vistra is still up 260 percent or something wild. And that makes it hard, you know, at Barron's to talk about what companies to suggest, because there have been major run ups and you're making this case that demand is not going to stop. Now, will today's news mean there will be less demand for electricity again?

or less demand from data centers, I think the jury's still out because we don't have the details on how DeepSeq has been developed. Right. And if it turns out that it doesn't reduce that demand, this could actually turn out to be a great buying opportunity. It's something I know we're going to be wrestling with over the coming weeks. Exactly.

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I want to turn to tariffs now. You know, we saw this, you know, a little spat over the weekend that you mentioned, Tom, with Colombia, where I don't think the tariffs are actually, the 25% tariffs were actually imposed. But, you know, there's still this threat hanging over all these countries. And Trump has also threatened tariffs on Mexico and Canada. Tom, what do you think that would entail and what would the impact be on oil?

Well, that's the great unknown. I mean, the tariff talk, and particularly with Canada, you know, through the years where the Strategic Petroleum Reserve was established,

surrounded by controversy. You know, many of the people who thought it was a little bit of a white elephant or a modern day anachronism would say, hey, we import about four million barrels a day of our crude oil from Canada. And there was about a million barrels a day of Mexican, but now it's about 700. By the way, Colombia would have completed the trifecta on sour

heavy crude. We would have essentially been targeting three of the largest producers of a crude oil that, you know, if you compare it to, let's say, food, instead of very, very light carbohydrates, it's got some protein and body to it, and it can make the more expensive products, which these days are diesel and jet fuel oil.

So it is the great unknown. If we see it on Canadian crude oil this weekend, February 1st, where they're actually starting to price March crude there, we could have quite a tilt higher in prices in the mid-continent because there's no question that

that U.S. refiners in the Midwest, Great Plains and Rocky Mountains are very dependent on Canadian heavy crude. Canadian heavy crude producers are stranded sellers, but the U.S. refiners are stranded buyers and they're screaming about it. And so for my parents in Colorado, this could end up being an issue.

I think it could be an issue for most of the country, actually. If we see a 25% levy, you're going to see prices moving up in sort of middle America and rural America. Canadian crude trades for about $14 under WTI futures.

There's those that think that if we put a 25 percent tariff, it'll start trading at 28 or 30 dollars under. And there's people that believe, no, they're only going to be able to cut another five dollars and the market's going to have to gravitate to a higher U.S. number.

It probably has the ability to really create some havoc with the spreads in crude where people will buy WTI versus Brent and figure one is going to outperform the other. And you mentioned jet fuel. I mean, is it possible that jet fuel goes up and that becomes a problem for airlines and they're going to have to raise ticket prices or eat the higher costs?

Well, I'd like to see the lower ticket prices when jet fuel prices drop like that in the last few years. But, you know, jet fuel is the one product internationally that you can ascribe significant growth to. You know, much of the growth is in Asia, but some of the growth is in North and South America. And it's a relatively easy product to manufacture because it doesn't have the sulfur restrictions that you see for gasoline products.

and on-road diesel. So I don't think we're looking at a huge increase. We've gone through the roughest point. When you're talking about temperatures of below zero and freezing in much of the country, when utilities get cut off on natural gas, because there's limited natural gas downstream from places like Henry Hubb,

When they get cut off, they like to burn some kerosene or some jet fuel or some diesel fuel. So we've come through that in the last month and we've probably seen the highs for jet fuel for quite a while, I would imagine. OK. And Laura, are there companies that in stocks that could benefit if tariffs are imposed on Canadian oil?

You know, it's really hard to think of a company that would benefit. I don't have one off the top of my head. What about big losers?

Well, big losers would be the U.S. refiners, right? Not just the ones that operate in the middle of the country, but any big refiner that's set up to operate on discounted heavy crude oil. And that's a lot of them, right? That's Valero Energy. That's Phillips 66. That's Marathon. One of the reasons that these companies are

absolute powerhouses is because they're so complex, they're able to refine heavy sour Canadian crude, Mexican crude, which other refineries around the world, you know, many of them are not able to. So they get the crude at a discounted price. And that's why

domestic refiners don't process U.S. shale crude, which is light and sweet and commands a higher price internationally. So it would hurt these complex refiners who are really more heavily dependent on this heavy Canadian crude, increase their costs, and as Tom mentioned, potentially fuel prices for

consumers, which is why the oil lobby, the API, is asking Trump for a carve out, which Trump has not signaled he's particularly keen on. He's very aware of the importance of Canadian crude for Canadian producers and U.S. refiners. But, you know, it'll be interesting to see what Canada has to do in order to appeal to Trump and make him consider dropping this tariff threat.

Interesting. It just keeps getting more interesting, doesn't it? Absolutely. Okay. So I want to turn back, Tom, to Trump and Putin and Russia and Ukraine. You know, we had this last week, I think it was last week, he made these comments about wanting OPEC to lower oil prices and that this would end the war in Ukraine.

What do you think he's getting at there? And would OPEC even comply? Well, I do think that it would be additional pressure on Vladimir Putin

if the price of oil dropped because they're so dependent on oil revenues for much of their military budget I suppose they're actually getting hit on two fronts uh overnight or over the weekend pardon there were more drone attacks from Ukraine on Russian refineries and that was something that was looked down upon in the Biden administration because you know they were pretty much consumed

with the necessity to keep gasoline prices in check, whether that involved Ukraine or not. So, yeah, I do think it would create pressure. I think he's put himself in a position where he really needs to get some results from Russia, whether it includes some sort of deal to cede some real estate to Ukraine or not. You need those Russian molecules. You need those Russian molecules of gasoline, right?

You need those Russian molecules of natural gas and you need those Russian molecules of diesel. One of the reasons we saw diesel go absolutely bonkers in 2022 was the perception that we were going to be missing Russia's contribution. And that didn't happen because of the shadow fleet. But as I mentioned before, the shadow fleet got a lot of damage on January 10th from a parting shot from the Biden administration.

Would OPEC, I mean, is there a way that OPEC could lower prices? And would they even think about that? Well, they have the wherewithal to lower prices pretty easily. It's more difficult to fortify prices. They've got about five and a half million barrels a day of additional oil production in their pockets. And there's probably a loss of patience among countries like the United Arab Emirates and even the Saudis.

Now, the market will work to their advantage when we get into July and August, when we'll be consuming maybe about 104 million barrels a day. But in the meantime, they have some problems. The one thing that works for the Russians right now, and it works for really all producers, is people don't realize how seasonal oil prices are.

And from early winter to, let's say, mid-April or May, there is a tendency for oil prices for the benchmarks to go up by 30% or more. And for gasoline prices aided and abetted by the formula change that happens in about 60 days, for them to go up by about 25% or 30% as well. Mm-hmm.

So if we simply follow the typical trajectory of most years, with the exception of 2020, you know, the COVID year, we're going to be looking at higher energy prices, at least for crude oil and for gasoline in April for certain. And after that, that's when OPEC would like to put some more oil on the market effective April 1st. But we currently believe that they will stick

with the cuts that they employed first in 23 and again last year. We think they're going to have to stick with those cuts for the rest of the year. And where do you think oil prices end up at the end of the year?

Well, I think it's a front end loaded year. And I do think we'll get back to the 80s for WTI and Brent. That's probably looks like an outlandish thing to say on a day where it looks like we might flirt with $70. But again, I think it'll be front end loaded. We'll see the highest prices in the first 100 or 125 days of the year.

And then we kind of level out because we will have a strong summer and, you know, very extensive growth in some of the emerging countries. I think the problem for OPEC and the problem for energy really comes in the last 100 days of the year.

There's a strong tradition of prices receding in a real significant ebb tide. You could look at nothing more than the October 7th Hamas-Israeli war. Everyone thought that was going to lead to $90 and $100 a barrel crude. But falling within that seasonal template, we saw prices continue to ease, particularly for gasoline.

And so, Tom or Laura, in that kind of backdrop you've described, are there companies that are going to be able to do well?

I think the integrated majors will probably be able to weather oversupply of crude oil pretty well. Exxon and Chevron both have their hands in many pots, be it petrochemicals, refining, transportation, production. They have projects...

abroad in Guyana. They have projects domestically. They both have CapEx in renewables that reflects a commitment that they don't think that will go away given the new administration. But I also think the LNG space offers growth. Notwithstanding today's price movement, Charnier, any company that's part of that space

supply chain of getting natural gas out of the ground, transporting it to a coast and then liquefying it and putting it on a ship. You know, we've been pretty bullish about most areas of the supply chain. In fact, we've been trying to figure out marginally which part of the supply chain is better for the average retail investor in our in our own studies. So

Interesting. Yeah, I mean, it complicates things, right? And I know one of our readers, and maybe this is the best time to ask this question, one of our listeners, this is from Lee, asked about Exxon.

And was wondering if you think Exxon will have a significantly higher stock price in five years than now. You know, he's been asking Barron's live guests this question and nobody has said yes. It's a deeply unpopular stock on the staff. And I'd like to get your thoughts. Yeah.

Yeah, well, I don't know if this will disappoint you or not, because I'm about to answer, I'm not sure again. But it doesn't mean I think it's a bad stock for investors. And I chatted about this with some of my colleagues earlier who were covering Exxon's investor day. You know, the stock yields 3.5%. The company's on track to keep buying back 20 billion in shares a year, which is about 4% of its market cap.

And it's trading at a historical discount. So absent a price spike by war, it's probably not going to see the major upswings that tech companies and NVIDIA and what have you experienced. But as you mentioned, energy demand's not going away. It's got sizable natural gas operations.

So I do imagine that, you know, you could see upside to Exxon and the company says it can increase its earnings at a compound annual rate of 10% for the next six years. So, you know, I wouldn't,

I'm not an equities analyst, but I wouldn't advise against holding it is what I'll say to that. And what's funny is, Lee, this is one that I'm fascinated by. And I'm hoping to dig in more because it does feel like it's being underestimated right now. I always find it fascinating when nobody likes a stock or when Laura is the most optimistic person we have.

So we'll have to see where we go with that. Yeah, it's tough in an oversupplied market as well to say, okay, well, this diversified energy company will really outperform. But as I mentioned, there's a lot of things lending themselves well to Exxon. Okay, great. Well, Tom, I think you probably answered this, but just one more time, just let's group it all together.

Gas prices, heating oil for homes, heating with natural gas, all this, you know, the things coming from the Trump administration, the things happening internationally. Do you think we're going to be spending more for them at the end of the year than we are now? I don't think so. I think we will be spending more for gasoline in the spring, as we usually want to do. But by the end of this year, I think we'll probably be dealing with the lowest gasoline prices for the public.

since at some point in 2021. You have to ignore 2020 and hope that we don't have another pandemic. But I think the pressures that are gonna be brought to bear are mostly downward pressures at the big macro level, particularly for gasoline. Now, one thing that people can put some hope on is we've probably seen the end of some of the attrition on gasoline demand in the United States.

I mean, were we to have really emphasized electric vehicles more like the Biden or the Harris administration would have, we probably would see, you know, gasoline demand was 9.3 million barrels a day in the peak years of 2016 to 19. It's probably about 8.8 now.

I think that the further attrition in the next couple of years is probably going to be arrested. And most of the growth is going to come in India, perhaps not China, but other emerging countries. And so it won't necessarily be the unwanted hydrocarbon, which is the way it's tended to be in the last couple of winters. And there's enough growth in jet fuel industry.

and diesel fuel and dual fuel needs that I don't think we'll need to host any telethons for U.S. refiners or integrated companies. Got it. And one more about LNG. We had this big IPO last week from Venture Global that, you know, it opened at a pretty lofty valuation, but I believe traded below its IPO price. Laura, what happened there?

Yeah, I was writing about that for most of last week, along with my colleagues. Investors were not impressed by the IPO. And if we had to venture a guess why, based on my reporting, it's to do with the fiscal

business model and the projection for spreads. So Venture Global is different from Chenier in that Chenier mostly has long term contracts with its customers ranging 20 years or 10 years, whereas Venture Global has more of an ability to capture the spread between international LNG prices, which are

significantly at a premium right now to domestic natural gas prices. And they have more of their contracts are short, near term. They even sold on the spot market. So they did really, really well in 2022. Russia invaded Ukraine. There was all this uncertainty. That premium just absolutely blew out. Europe was really reliant on Russian energy. So that premium really blew out.

But you look heading into 2032, you even just look at the futures contracts and the spreads are projected to narrow pretty significantly from where they are today. And that poses a problem for growth. It doesn't mean that Venture Global is not going to make money on the spread. It just means that they will probably make less and less money every year.

So that's not great for investors. It didn't help that the IPO got a 45% haircut a day before stocks started trading on the NYMEX. So all of this led us to prefer Chenier for investors.

for those reasons. But it's still a massive energy IPO and it'll be interesting to see how it plays out. And they have some really unique things going for them, the way they're able to very quickly construct export terminals and start

exporting LNG while their terminals are still under construction. That's a very interesting way of operating, but whether that's going to lead to long-term profit growth, investors are not that confident in that.

All right. Well, great. We have a very interested audience today. We have a lot of questions, some that I have to admit I don't even understand. Oh, dear. So I'm going to let you guys answer these and we'll work it through. I know I'm going to learn something. The first one is fairly straightforward. Nancy wants to know, do you see more upside opportunity in energy producers or in energy services companies?

I, I see some real upside in certain services companies. I mean, Halliburton reported already and and they reflected that there's going to be lower growth in North American spend. And so that's obviously concerning for both the North.

production side and the services side. However, we had a newsletter a couple of weeks ago on Baker Hughes and how it's outperformed despite the fact that rig counts are down some 25% since early 2023. And part of that is the services companies are the companies that are,

On one hand, they're drilling a hole for themselves, right? They've become more efficient, meaning that you need less rigs. But on the other hand, they have to sell the software to their customers. And Baker Hughes is really big in this space, selling AI and other AI derived software and other software to increase well efficiency and to service wells.

So you don't maybe need to drill as many, but you're trying to extend the life of them as much as possible. And they're involved heavily in that space. And they're also in the space of servicing and selling natural gas turbine technology. And as I've been talking about this whole call, anything that is

Exposed to natural gas, we're pretty positive on because long-term electricity demand in the U.S. and abroad is set to increase. So I do think that companies that are exposed to those LNG and natural gas trends like Baker Hughes could stand to benefit, even as domestically, we're probably going to be seeing oversupply in the near term of crude oil. Okay. Yeah.

Great. So let's go to the next question. This one is from Chuck. Chuck wants to know, are there any nuclear plants coming online in the next five years? He mentioned that there might be one in Georgia that has the most recent facilities online. Are others going to come online?

Yes. And I did some research before getting on this call. About 90 reactors, nuclear reactors are planned worldwide on top of the 65 that are already under construction. Most of those are in the Asia Pacific region and many of them are

replacing old plants that have been retired. So I wouldn't say so far there's meaningful new capacity generation set to come online. There's a lot of

talks going on behind the scenes and i think it's fair to say that by the end of the year we should expect there to be more um because of the benefits of of nuclear energy that i mentioned earlier it's it's carbon neutral uh and there's just still this great demand not just from uh data centers but uh you know as fleets electrify all over the world so uh yeah i i i'm

I'm fairly certain that that will be a trend that we'll continue to be talking about in the coming months. Okay. And now, Tom, this one's for you. And I admit this is one of the questions I was referring to. This is from Richard. He wants to know your overall outlook for renewable feedstock generation under the new administration. Can you explain, first of all, what that means and then give us your view?

Well, I think it's probably a question about the agricultural backdrop and whether or not we'll continue to see very brisk markets for ethanol and brisk markets for soybean oil, which is kind of the magic bullet these days to create a renewable diesel, which is a drop in fuel, can be used just like regular diesel, but has that imprimatur of the blessing of being a renewable fuel.

And I know it's been pretty tough in the farm belt regions recently. Now, there was breaking news today that they announced

Supreme Court may look at whether or not they want to grant small refineries exemptions for using some of these renewable feedstocks and for generating some of these fuels. But I think that'll probably run its course and not be a big issue. And a lot of this is going to depend on whether or not we do have the excises on demand.

China and whether we have a trade war between the United States and China, where a lot of the agricultural producers in this country would be losers there. You know, we're not seeing tremendous profits for making some of the products that are being manufactured from renewable feedstock, renewable diesel. There's a couple of companies that actually had to file for chapter three.

11 bankruptcy because of a poor investment there and sustainable aviation fuel. You know, that's a fuel that the airlines use that probably costs anywhere from seven to eleven dollars a gallon right now. And it's it's getting more.

adopted because of regulations. So it's going to be interesting. I think clearly for those products, you know, before you talked about renewables and it was really about wind and solar, but the other renewables that are coming from agricultural molecules, there's some real questions on that as we go into the future.

All right. Well, now I'm going to ask you guys about pipelines. There are a ton of questions about them, including from Steven, who wants to know, are gas companies going to be allowed to build new oil or gas pipelines? Two questions also from, let's see,

Let's see, we have questions from Scott about the actual stocks. ETPA, that's Plains All American Enterprise Partners. Those stocks have been trending up. Do you think that continues? John wants to know about EPD. Belk wants some color on pipelines. So pipelines, what's going on? Are there going to be good news for pipelines?

Right now, the pipelines are getting caught up in the collateral damage of this morning's news. And that's largely because a lot of the pipelines, their growth story was built into we are going to deliver more gas molecules for electricity generation to serve AI data centers. And you are even seeing some deals made between

between, you know, midstream energy companies and tech companies themselves. They were part of the conversation with utilities and some of these big deals that we were seeing. So, you know, I know that some of them, Kinder Morgan, ET are down today. You know, I already explained my long-term bullish thesis, which you take it with a grain of salt, but I would say I'm a bear in many things. So the fact that I'm bullish on electricity demand long-term, maybe it means something.

In terms of whether new pipelines will be able to be built, I mean, the question is where, right? So there are states still have the ability and capacity to reject or require additional regulations for environmental reviews ahead of pipelines. That's why you don't see as many natural gas pipelines in the Northeast.

There may be renewed ability by President Trump to pressure certain states into allowing these projects to go ahead. But I will admit I'm not the leading expert on that. A lot of it's going to come down to economics. You're not going to see new pipelines where they don't make sense. We have had some new pipelines built or largely pipeline extensions built recently.

In the past few years, I'm thinking specifically of the TMX, which took Canadian crude and has brought it over to the West Coast. So West Coast refiners have the option of refining them and they can also get exported out to Asia and elsewhere.

So that's my take. I think we're still bullish on them, both the C-Corps and the MLPs for retail investors because they offer steady returns and there is the ability for many of them to be earning near a 10% return. But whether today's news really throws a wrench in the electricity demand projections and therefore natural gas demand long-term remains to be seen.

And just for Barron subscribers, Merrill Whitmer actually recommended Enterprise Partners EPD at the Barron's Roundtable. This was in the January 24th issue. Her pics are there. And so if you want to learn more about EPD, you can go read that.

And Energy Insider has also picked ET, Targa, again, more natural gas exposed pipelines just to throw in some of the newsletters that we've already written about the space. Great. All right. Well, I think we can leave it there.

A big thank you to both Laura and Tom for both of you being here on today's call. And of course, to all our listeners as well. If you want to know more about all things energy related, please subscribe to our newest newsletter, the Energy Insider newsletter. Lauren, we'll be back next Monday for our first call in February. We'll have a lot to catch up on then, including what's going on with DeepSeek and the havoc it's wreaking on the markets. We hope you'll join us and happy trading. Thanks, everyone.

Thank you.

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