Trump’s Energy Crisis Causes Food Shortages, Skyrocketing Prices, and Global Suffering. What’s Next?

0:00Hi everybody, Jay Leno here. You know when Yamaha asked me what car to feature for the 500th car giveaway? There's only one car. The Rolls Royce. And not any Rolls Royce. The Rolls Royce Spectre. The most powerful Rolls Royce ever built. And here's the special part. The one they're giving away was built exactly like mine. It's a car I chose in my own garage. And now one lucky guest will drive home in the very same car that I have. So play at Yamaha for your chance to win on November 30th. Because somebody has gone home on Yamaha's 500th car you win details at yamaha.com must be tournament to enter please gamble responsibly morning daddy thank you very much for doing this we have searched far and wide for people who

0:39understand energy energy markets um the energy business, and you came highly recommended. So I'm grateful that you're doing this. Where would you say we are globally with energy right now? Just give us the overview, if you would. Yep. Well, to put kind of a big perspective on things, because people have been kind of living in a delusional world, I believe, in energy over the past 20-25 years the world gets 90 percent of its war of its energy from hydrocarbons oil natural gas and coal it's 90 still still if china europe the u.s the last 10 is nuclear and a little bit of solar and wind and everyone talks about electrification of the world and putting solar panels up on your roof and all of that that's you know going to be the energy transition as it's been marketed um that that is kind of a marketing pitch there there has been

1:34additional uh solar wind uh energy generation capacity put in place over the last 25 years but that's been additional to that core undercoring 90% of hydrocarbons, oil, gas. So 90% of energy in the world comes from oil, coal, and gas. 50 years ago and today in 2026. Same percentage? Roughly, yeah. And the other 10% is nuclear and then what we refer to as renewables. Solar and wind, yep. Wow. So solar and wind are not even 10%. No, they're 5%, 5% globally. So 5%, 6%. And it depends on the country, but on a global scale, 5% or 6%. And you go back 10 years ago, it was around 5% or 6%. Wait a second. We've spent trillions of dollars on this and received endless lectures about it, and we're still only at 5%.

2:26Yeah, and in 20 years time, it'll still be 5% or 6%. So the whole thing was a lie then, is what you're saying. There's a reality to it. Additional capacity has been added, but global demand for energy is growing with global population. And the only energy source that's been able to keep up with that demand for energy globally has been hydrocarbons. And the three hydrocarbons are oil, a third of the world's energy, coal, a third of the world's energy, roughly, and natural gas, a third of the world's energy. And that realization is kind of, I have this idea, people say, oh, are we living in a simulation and whatnot? People have no connection with base reality. And the base reality is that we are we living in a simulation and whatnot? People have no connection with base reality.

3:05And the base reality is that we are still living in a hydrocarbon world. We have been living in a hydrocarbon world. It's enabled amazing civilization developments over the last 100, 150 years. But people are disconnected from that reality. And they think, if you ask anyone, you know, how does China get its electricity? People will say, oh, isn't it solar? They have the best solar industry and they have wind turbines and all that. No, 60% of China's energy comes from coal. 80% of India's energy comes from coal. 80% of India? Yeah, yeah. And they're growing rapidly and it's all coal. And so this whole area is in the Dow. And I can understand, even people that work in the oil and gas industry,

3:43everyone wants to be environmentally conscious. People live in the real world, you know, even people who work in the oil and gas industry everyone wants to be environmentally conscious people live in the real world you know even people who work in the oil and gas and coal industry so no one wants to pollute but we also live in a world where you need energy to operate everything it's and not just energy you need plastics that go into everything uh you need petrochemicals that enable modern civilization and And this is a very new thing. The oil industry started here in Pennsylvania in 1859. So we're 150 years into the mass scale hydrocarbon world. And this world that we live in is enabled by and is paid for. Modern civilization sits on top of

4:23hydrocarbons, 90%. And you get people, especially in Europe, which kind of annoys me, I'm from Ireland, I was born in Ireland, you get people complaining, why is energy so expensive? And even senior policy level and political leaders, and they have no base level understanding of the reality of, this is where we get it. They think it's, we just put more solar panels. That's their answer to everything, which is fine. You put up solar panels and that's great. You know, as a additive, nice thing to have. But 90% of the world's energy comes from oil, natural gas, and coal. And it has 50 years ago, it has today, and it will 50 years from today. Well, that is, so when you say that we are living in a kind of simulation,

5:07the simulation you're describing is one in which people don't know that. Correct. People have disconnected from where their energy comes from that enables everything, where their food comes from. Everyone talks about the fertilizer crisis because of the hormones shutdown this year. Fertilizer, 80% of the world's food that's grown everywhere across the entire world comes from natural gas. Natural gas, remember it's 30% of the oil, 30% nat gas, 30% roughly is coal. That 30% of nat gas, that makes urea and ammonia and all of the fertilizers. And if those fertilizers didn't exist, it's basically ammonia and urea or nat gas in a bag uses fertilizer. If that didn't exist, we would have, say the world's population is 8 billion.

5:52We could only support maybe 2 billion if we didn't have nat gas. So not only is it the energy system. Wait, what? Yeah. If you turn off nat gas production, natural gas production, it's very closely, very similar to the oil industry. It's one third of the world's energy. That produces nitrogen in the form of urea and ammonia. It is the essential fertilizer for growing crops globally, all crops. And with the hormones situation this year, because you had a nat gas production comes out of Qatar. You had a disruption in fertilizer production because natural gas is what produces fertilizer. That's going to result in next year, 2027, usually there's a lag because crop cycles or seasons. That lag is going to be one of the kind of the more laggy effects

6:41of the Middle Eastern situation with Iran this year. But so it's not only energy, it's also food. And there's this, the simulation that most people in the world are living in, especially in Western civilization, is that they have gotten, or just are not aware of the fact that hydrocarbons are nine out of 10 portions of the energy that they consume. And for food, all of the food, pretty much most of the food that you eat today, and it doesn't matter what kind of food. You might say, oh, well, I eat vegetables. Well, that's also fertilizer goes into that as well. There's fertilizer used in every crop. And all of the world's food is dependent on natural gas. And so we can go back to, you know,

7:20why is natural gas used as a fertilizer? It was a discovery in Europe in the 1910s. It was the Haber-Bosch discovery. It used to be back in the 1800s. This is why how all knew this situation is. Back in the 1800s, if you wanted to put nitrogen into a crop, nitrogen is one of the essential nutrients for growing any kind of crop, pretty much. And you used to have to rotate crops it's a very slow process you put down tubers and it was a very you had to do cycle by cycle every few crop cycles you had to plant a nitrogen fixing uh to get nitrogen from the air and pull it into the soil otherwise you would exhaust the soil you would exhaust the soil within a season or two and your yields would drop down and And this discovery around 1910,

8:05you could take natural gas, which is a hydrocarbon, and when I say hydrocarbon, these molecules contain hydrogen and carbon from amoeba millions of years ago, or animals millions of years ago, buried underground, basically with pressure and heat over millions of years, it turns into crude oil or natural gas or coal, one of these hydrocarbon fuels. And around 191010 it was discovered how to use uh natural gas um and you take the nitrogen from the air use the hydrogen that comes from the hydrocarbon of natural gas and you can make um a fertilizer which basically you can put the nitrogen into the ground with powders and things like that as a fertilizer. And it increased crop yields by five or 600% over time. Five or 600%. So everyone goes, why did the population

8:54grow? Because cheap energy and cheap food because of natural gas. Those two reasons. That's why we live in this world today. And it doesn't annoy me, but it disturbs me when people are disconnected from that base reality. Base reality is 90% of the world's energy today and 50 years from now and 50 years in the past and a similar proportion of food comes from that hydrocarbon ecosystem. Most people don't like thinking about life insurance. It's one of those topics you tend to kind of put off. But if you're married, you've got kids, you've got people who depend on you, you probably should think about what would happen if you weren't around. And that's why we've partnered with Ethos. They've made getting life insurance super easy. You can do

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10:16So you're saying if we were to shut down natural gas production globally, six billion people would starve to death? Pretty much. Yeah. And I was in New York yesterday. New York has banned drilling for nat gas. New York State sits on top of a field, a nat gas field that runs right through West Virginia, Pennsylvania, the Marcellus and Utica, the names of the hydrocarbon basins. New York City has, if you look at, go to Manhattan, New York, you'll see these the Marcellus and Utica, the names of the hydrocarbon basins. New York City has, if you go to Manhattan, New York, you see these big power stations, four big power stations on the east side of Manhattan. Those run on natural gas. And so all of the electricity, and there's a big one in Queens and a few others,

11:02but those big power stations in Manhattan, they run on natural gas. New York State has banned natural gas, drilling for natural gas. They sit on top of a huge amount of natural gas. They've banned it. They've also banned the pipelines to deliver natural gas, new pipelines. So they're cutting off their face to spy or cutting off their nose to spite themselves in that they're denying the fact that the reality is all of the electricity in Manhattan or New York City comes from that gas, but then they ban sourcing that fuel and they ban the piping of that fuel to the source of what turns on the lights. I mean, that is absurd. That whole, you know, it's a distortion of what environmentalism is. Environmentalism

11:36should be, you have a sustainable environment where you don't create negative consequences and pollution into it, but you also have to be aware of, you need energy just to live in modern civilization and you need energy for food. You need natural gas for food. And it's enabled the food supply for people living in the West. Luxury civilization is dependent on it. And not just luxury civilization, also the developing world, China and India, are similarly dependent. There's no one sneaking away getting a trick of secretly building the solar panels and wind turbines that they're getting away with some magic. There is no magic. It is oil, natural gas, and coal. It's interesting that the two wars in progress

12:21threaten the world's natural gas supply, a lot of it. Yeah, 20% is out of Qatar, threaten the world's natural gas supply. A lot of it. Yeah. 20% is out of Qatar, of the world's LNG, liquefied natural gas. Right. Which is the process by which the gas becomes liquid so it can be transported by ship. Correct. You just cool it down into a liquid. It's the same fuel. It's just in a different form. Yeah. And what's interesting about, you know, in the U.S., natural gas, the U.S. is a producer in a quarter of the world's natural gas. The US, I just looked at it this morning, nat gas is around $2.50. If you look at Asia. By what unit? Per mm BTU, it's like the gallon equivalent of natural gas, but $2.50.

13:00And in Europe, it's $31, the same unit. And in Asia, it's $31, the same unit. And in Asia, it's around $31. And it's basically that energy blindness of Europe. Asia has got a separate issue in that they don't use nat gas as much as Europe does. But the reason they say the discrepancy between the U.S. being a major energy producer, and it has become so over the last 15 years. Before that, the U.S. was struggling up until 2005, 2009. But that disconnect between those who are truly energy blind, I mean, I was kind of mentioning Manhattan being energy ignorant, if you will, of what real based reality energy is. Europe is even doubly so. They're paying 10 times more for their electricity than the US is. And it's primarily

13:4510 times? Yeah. And you get these situations where I'm from Ireland and I was reading, you know, legacy press over the last few months and people are confused about why is our, they say in Ireland and similarly in all of Western Europe, why is our electricity so expensive? And I'm kind of shocked of the fact that people kind of go, well, you're paying 10 times the price of natural gas compared to the US. And the reason being is that Europe has, they shut down a huge portion of their energy system for ideological reasons, not for base reality reasons. They've turned it down, turned it off because they kind of, in an energy sense, they kind of hate themselves. And it down, turned it off because they kind of, in an energy sense,

14:27they kind of hate themselves. And it's like self-flagellation of, let's shut down all the coal plants. Let's shut down all the nuclear plants. Let's try and move off nat gas and replace it with solar and wind, which I'm not knocking solar and wind, they're good. But, and then they turn around and go, why has our electricity gone up by, you know, 200% this year or 100% this year? And there's a kind of a disconnect there. And it's amazing that just the level of lack of knowledge of basic energy economics. And this is because of political pressure from green parties in europe like where did this come from this idea that you have to destroy your own civilization there there has been a lot of ideological capture there there has been a different movement i mean

15:17there's the environmental movement kind of started in the u.s back in the 60s um can i just stop you there and just to be clear? Our environment is disgusting. This country is much dirtier. Europe is much, much dirtier than it was 30 years ago. I mean, I visit a lot, I know. And so there's no actual concern for the environment, for like trees and cleanliness and keeping graffiti off your buildings and cleaning up your streets. Like it is dirtier and the U.S. is way dirtier. We've had unconstrained development. So like none of this helps the environment. Just, I just want to be clear about terms, like no matter what they tell you. Yeah. Yeah. The original environmental kind of the modern environmental movement started in the 1960s

15:56in California. Yeah, I remember. California had a real smog problem and you had, and legitimately had an environmental issue. I lived in Los Angeles at the time. And this is before the EPA existed as a concept or as an organization. And in the 1960s, California had an issue and they created the CARB, C-A-R-B, California Area Resource Board. And they clamped down on the amount of sulfur and other pollutants that were really in oil back then. And they also removed lead from gasoline. Lead had been added to gasoline from the 1920s. It's a neurotoxin, lead is obviously, but it improves the octane of gasoline. But California was leading for legitimate environmental reasons. This is all a very good reason to kind of start an environmental movement.

16:45And it started in California, and it did really clean up the air in California. They removed, they got ultra-low sulfur diesel. They brought, everyone had to put in catalytic converters. And those catalytic converters, they didn't, you know, lead in gasoline did reduce IQ levels back in the, when it was in the 1920s to 1960s or 80s. And the lead wasn't removed because of that reason. That's kind of the dirty little secret of the business is that it was removed because if lead damages the catalysts in the catalytic converter. So anyway, California did clean up its air in the 1960s and it was a cutting edge. There were the leading edge of that movement. And then EPA was established and they became a federal kind of environmental movement.

17:30But what happened was that movement kind of was then captured by political agendas and social agendas and ideologies that were independent of environmental reasons. It became more of control, of controlling how people think and behave. And so, environmentalism is a good thing and was a good thing. And it had a good origin story and had a good impact in the 1960s and 70s, starting with California. But then over the past 50 years, it's been captured by political movements that have wanted to have a kind of a controlling effect on society. And some of the things, you know, and you can see it morph into over time. Back in the 90s, in the aughts, the 2000s, you had a big movement against fracking.

18:14Remember, you had that Matt Damon movie. Someone turned on the faucet and flames came out of the faucet because of nat gas. And that doesn't happen. I'm sorry. That was propaganda, that movie and the myth. But that was kind of when the fracking industry started, a portion of the US oil and gas industry started. And it was kind of a novel new technology. It is, by the way, the core reason US has become energy independent over the last 20 years has become because of fracking and horizontal drilling. But anyway, if you fast forward it there was the anti-fracking lobby and so all these kind of ideologies trying to stop different pieces of technology now it's the added anti-data uh the uh data center lobby so it basically

18:56there's there's a there's a stop oil uh group like what i i look at that group and i think you know uh that's a death cult, a social death cult. Because you remove, you stop oil, we all die. We stop natural gas, we all die. And it's not just we in the West, everyone. India and China, that's where we get all our food from fertilizer. So all of these different movements have been about an element of control because there's a kind of a feel good, like who is anti-environmental? No one, even people working in the oil and gas industry, they love the environment. They're just normal people like you and I. And, but it's been a capture of that environmental movement has been captured by, you know, the carbon capture,

19:38you know, the net zero growths in Europe and in the UK. All these countries have destroyed their economy under the auspices of taking care of the environment, ignoring base reality of energy production and where all that energy really comes from. And ultimately, it's been about, it's been, the environmental movement has been captured by control. People who want to control how you live, how much energy you buy, what your carbon credits are today, what your, you know, your welfare check from the government, to make you dependent on the government because then they can control you. And even in New York, I was talking to a friend of mine there yesterday in Manhattan, and they get a $100 check from the government

20:16because their electricity bill was too high. And I thought, hang on a second, excuse me, you got a what? And so every taxpayer, I guess, in New York got a $100 check. And meanwhile, they're banning pipelines that are bringing that fuel to New York. They're banning natural gas production, which is the fuel that's burned in those power stations. And natural gas is a very clean fuel. And by making you dependent on the government, by controlling or trying to shut down energy production, it makes you even more dependent on the government. And Europe has been far more ideologically captured. And the reason for that is, of course, the centralization of power in Brussels and the EU. People don't know who they're voting for in Europe anymore. They're voting for the blob in Europe. And if you ask your average person in

21:05Ireland or France or Spain who their MEP is, their member of the European Parliament, they have no idea. They might know their local member of their local national parliament, but the blob in Brussels, they can get away with a lot of these kind of control, especially of how people consume and use energy. And the net result is they pay 10 times more for energy in Europe than they do in the U.S. So the bureaucracy of our banking system makes running a small business a lot harder than it should be. When entrepreneurs need capital, traditional banks drag them through weeks of red tape and paperwork. It's highly frustrating if you've done it. Working with Cardiff is totally different. Cardiff is America's favorite small business lender because it's built specifically for independent business owners who move at a very fast pace.

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24:57they don't have houses, they don't have children. Everything becomes expensive. Oil, gas, coal. And you don't necessarily see the energy being produced. That's kind of the reason background noise of living of life becomes that everything is a little bit more expensive and the real reason is that energy in europe has been has been deliberately made more expensive than it needs to be and um it there's it one part of it is control. Another part is you've got a kind of social agendas that have pushed energy blindness because people don't want you to know that 90% of your oil and gas or 90% of your energy comes from oil, gas and coal. They want you to think it's solar and wind because you can kind of see those things, you know, spinning.

26:02And so it makes people feel like something's been done, but there's nothing been done. So explain what you can't see. So let's start here. Ten years ago, Europe, let's just say Western Europe, the countries Americans vacation in, got its energy from where? Where did the energy come from? From Germany, Spain, Belgium, France, UK. A third came from oil, and that oil came from, oil is a global market. So it's always been a global market. And that comes from Russia, the Middle East, Western Africa. So oil kind of comes from a little bit, I mean, it comes a little bit from everywhere, oil. That's of european uh energy 10 years ago five years ago even today 30 is oil global uh then they've got yeah natural gas um europe used to

26:54buy a lot of its natural gas from russia they famously built the north stream pipeline across the baltics uh these two big pipelines one never became became active, Nord Stream 2. One was destroyed in unusual circumstances, I'll put it that way, five months into the Russia-Ukraine situation. The US government took it out. It made Europe dependent on the US exporting natural gas. So it basically, you know, there's a theory, you know, one theory behind a potential, you know, situation where, you know, there's a theory, you know, one theory behind a potential, you know, situation where, you know, that was a very difficult operation for someone to knock out an undersea pipeline. Did Ukraine really do that five months after the war started? You

27:36know, I don't know if they have the skills to do something like that. So I wouldn't say it was the US just for argument's sake. And not Ukraine. Well, just for the record, we were told at Fox news and the whole world was told that Russia took out its own pipeline because Russia is so evil that having run out of people to hurt, they decided to hurt themselves. They told us that that was on the front page of the New York times. I was encouraged to repeat that lie. I didn't, but yeah. Wow. I mean, that just shows you... How stupid they think people are? I don't know if it's stupidity. I think it's more of narrative setting. If you kind of set a kind of a dystopian view of information that everything is absurd, everything becomes,

28:30like you don't believe anything. Like there's no, it's almost like they know you're going to laugh at that Putin would destroy his own pipeline. But then it kind of makes people who read that think, well, why do I believe anything? You know, it's kind of like a, it sets people into the mush of believing, being more malleable to... Right, they're turning the population into nihilists because nihilists are easier to control. Yeah, but say it was the US government. Just let's put it out there. And it did make Europe much more dependent on the US. And it goes back to also, you know, Trump, we were talking this morning at breakfast, is a very, has a very, he operates in a very, people say he's transactional.

29:16He's not, you know, in terms of he's not strategically, I think he's strategic also, but he's very transactional, like a business. Yeah, he's not ideological. Yeah, and then, but he's also very, he's very transactional, like a business. Yeah, he's not ideological. Yeah, and then, but he's also very, he's a very personal, he takes things personally. And as he, you know, he's a normal human being. And so he got, he became president, you know, inspired by Seth Meyers mocking him back in 2011 at the Correspondence dinner. When Trump won, the first time he was president, you had Angela Merkel and all the European leaders openly laughed at him. They mocked him. And when he told them he chastised them, there was a famous NATO meeting where they were mocking, laughing at him. He was warning them,

29:58do not be dependent on Russia for nat gas. And then also at the same time, push Russia, you know, threatenussia with uh you know weapons on russia's border via nato and other uh structures and um they mocked him openly mocked him and laughed at him so i think that uh europe um you know they you know was it the u.s had knocked out nordstrom i mean U.S. benefited hugely from that situation. It also was a little bit of revenge of Trump on those European leaders, Merkel and that, that mocked him and laughed at him when he warned them about them being overly dependent on Russia. So how much more LNG does Europe buy from the U.S. from what about 10 years ago? It's a huge amount more. It's doubled at least.

30:46Really? Yes, yeah, it's very much. And the US, and it's growing every day, and Europe is becoming a hugely energy dependent vassal of the US. I mean, the US did make a decision back in 2005. It didn't make a decision, it happened in 2005 starting, that the US oil and gas industry was transformed by two things. You had fracking, which basically you pump water at high speed or high pressure underwater and fracks. It basically became a new production method back in 2005, roughly at scale. And then you had horizontal drilling where you can drill down at your speed. It sounds old school now, but now you can turn the drill bit and steer it sideways for three or four miles. And you can produce a huge amount more oil and gas that way

31:32than you could before that. And the US oil and gas production had been declining since the early 1970s to 2005, which fracking and horizontal drilling, it transformed the oil and gas industry. And the US now produces roughly a quarter of the world's oil and a quarter of the world's natural gas. That's up from under 10%. So it's doubled over the past 15 years. And it didn't happen because there was no government policy that really enabled this. This is the oil and gas industry realizing this new technology transformed the space. And fracking was banned. You go to France, I think, brands fracking. I mean, and fracking, it was a new technology 20 years ago in 2005. It transformed, as I said, the US oil and gas industry.

32:13Now, and it was like one well in 100 back in 2005 was fracked. Now it's all, all wells. That is the default method of production of oil and gas in the US is you frack and you drill sideways. That's, you know, you have a fracking crew and it's a hugely interesting technology, you know, that development. But it's transformed the U.S. into a global superpower. And that also then has kind of changed the U.S.'s view on foreign adventures and going up against foreign oil producers. You know that because the US had been in decline since the early 1970s as an oil producer. And now we're net exporting oil and making Europe dependent on gas. If the US shuts off, you know, the US released an SPO back in earlier this year.

33:02And you know who benefited most from that SPO release? Not the US, Europe. They import 90% of their oil. And so all those SPO, all those SPO crude oil releases, they went into European refineries and Europe went, thank you, sir, to Trump, you know, to the US administration. So Europe is hugely dependent on the US for energy. And because of that, I mean, oil has steered every war over the past 150 years, has been at the core of and enabling, just like it's enabled civilization with food and oil and natural gas. It's also enabled the political sphere and geopolitics. And Europe is now kind of dependent hugely now on the US. And they made that decision. They made that choice. They banned energy production pretty

33:51much in the North Sea. I mean, they'll say, oh, they technically didn't ban it, but they made it such that you can't drill in the North Sea. I mean, the difference between Europe and the US is very striking energy. In the US, if you buy a piece of land, you buy the land under this table. In the US, as a private individual, you own that land the whole way down to the core of the earth. All the minerals, anything's in there, gold, oil, whatever, you own it. Everywhere in the world, outside of the US, in Europe, the government owns it. You own the surface down to a few feet. The dirt. The dirt, that surface there, everything below that is owned by the government. And are you going to risk your private capital to drill?

34:31The oil industry is not risk-free. There's a lot of dry holes that are drilled, and there's a huge amount of capital risk and capital required to do that business. You're not going to drill it when the government's going to take it all. Why would I do that business. You're not going to drill it when the government's going to take it all. Why would I do that? I'm going to, you know, so that's why the US also has a hugely booming oil and gas industry. The government just stepped back. There are environmental controls and you can sue an oil and gas company if they pollute your water. It doesn't happen, but as in they don't pollute water tables like the environmentalist groups say, you know, can happen.

35:05But the US just, the government stepped back, and in a lot of parts of the US, it didn't happen in all of the US, it didn't, but the government stepped back and the oil industry and nat gas industry flourished and let them do the thing. And look at the situation. Oil is, I filled up my tank here yesterday in Maine. It was 3.85 a gallon. In Denmark, in Europe, it's $12 a gallon. I mean, these guys are- For gasoline? Yeah. Yeah. And Denmark is obviously kind of a high price point in Europe. But roughly in Europe, it's three or four times gasoline. That's so weird because, I mean, there's in the region, in Scandinavia, famously off Norway, there's massive energy reserves. Yeah. Norway is based in terms of energy economics as more so.

35:59I'm glad they exist in that environment, but they're not part of the EU. They never joined the EU because they knew they would have to join into that blob of no energy production and self-hatred in terms of energy production. And so Norway is in Europe, but it's not part of the EU. They deliberately stayed out there in the European economic area. So it's kind of like a junior version of the EU. And because they realized that the blob in Brussels, they have no idea about how energy works. They're so disconnected and they're blind to it. And so Norway is a very good example of, they produce a lot of oil and gas. So Europe has a lot of energy resources there. They just don't use it. And it's hurt them.

36:42And that's why they have no economic growth. And, you know, a lot of the reasons why buying everything, houses, electricity, they have no money because they've made their energy, they've taxed the health. I mean, that difference between 385 here in Maine and $12 in Denmark is tax. It's not because the oil is, it's the same thing. It's the exact same molecules in Denmark as Maine. It's just that they tax the hell out of it there. And it's, it has destroyed their, is destroying their economy. Energy is the fundamental bedrock of everything. Owning a home has always been the core of the American dream. It's the asset that families work their lives to build, place of stability, security, and actual wealth.

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39:3550% off labs, 20% off supplements. Join Blokes. Get your edge back. Tucker. So the idea was that you, yeah, because because i mean it's priced on the international market so you know denmark's buying oil at the same whatever the brand crude prices or whatever however you're marking it the same price everyone's buying it for correct pretty much yeah the difference is just tax yep so you tax things in order to discourage their use that's why cigarettes are 20 a pack yeah and and you know so i noticed recently I was reading something that in Australia they tax cigarettes or something ridiculous like $20, $30 a pack. The amount of illegal untaxed cigarettes now in Australia is like, it's 80% or some ridiculously high.

40:14And they lecture you like you're a bad person. Yeah. And, I mean, tax has an impact. We were talking about it earlier that, you know, I grew up in 1980s Ireland. Ireland unemployment at the time was 22%. Yeah, it was bad. We joined when it was it was a legitimate thing we joined the eu and it was the eu that did it for a good reason when ireland was in the 70s in the 70s we joined 1973 ireland had a protectionist environment back then we made shoes and weird stuff there was no economic reason for ireland to do that so we joined the eu and we had three percent unemployment in 1973 by 1985 or late 80s it was around 22 23 percent so went up 20 percent because we had to drop all the tariffs all these companies went bankrupt but what had the what

40:57ireland could have gone socialist ireland would never really go that kind of like weird socialism but what ireland did was and it was one of the most uh great uh government decisions I think in history for a western European uh economy is that Ireland the income tax rate was 65 percent or something ridiculous corporate tax rate was 40 percent or something very high Ireland just it was so desperate we were going to go bankrupt this is in the middle 80s um Ireland just said let's uh cut tax to zero or as close to zero as possible corporate tax zero i just we're that we're that desperate anyway we're going to default next year let's see what happens and true to remember the laffer curve with reagan you know

41:36where you cut taxes growth uh takes off uh ireland cut its corporate tax rate to zero and income tax cut hugely as well. And we had 23% unemployment. What happened the next year? Boom. And it's boom for the last 50 years since or 40 years since. It was basically proof that tax has a real impact. And there was no lag. It didn't even take 10 years, 5 years, 8 years. It was the next year as soon as Ireland made that pivot to become a low-tax environment, economic growth took off and hasn't looked back since. I mean, there were a few issues over time with the housing crisis. You know, everyone had that the great 2008, but it was a proof point of tax, you know, creates incentives. I mean, it's...

42:26So the reason you tax hydrocarbons is to get people to use them less, use less of them. But that hasn't worked. No, it hasn't. Not at all. You know, the interesting thing is that if you go back over time, global population is now 8 billion roughly, give or take. 8-3. If you go back over time, 50 years ago, you're generations back. I mean, say 50 years is a generation roughly, say, just for argument's sake. Today, the world, every person per capita in the world consumes four barrels of oil today, 2006. 50 years ago, it was four barrels of oil. 50 years before that, it was four barrels of oil. So doing the tax situation, all it does is- Is that true? It's four barrels of oil. So doing the tax situation, all it does is- Is that true?

43:05It's four barrels of oil per capita. That's across the entire world. China, India, it's four barrels of oil per person. And you've got a- And that's never changed? No, not at all. It hasn't changed in the last hundred years. And the oil industry is not that old. It's four barrels of oil. That's amazing. And what's interesting is that the US, in the US, the US consumes, the US is a very unusual place in that there's a lot of space here compared to Europe. Europe, Europe is a very dense place. You've got, the U.S. consumes around 20 barrels of oil per person. So remember the global average is four. The U.S. per person per year. The U.S. is 20. So the U.S. is quite up there. But the U.S., you've got a spread out population,

43:43a lot of commuting, driving to and from school and offices and whatnot. I mean, everyone thinks of the US as being New York City. No, everyone lives distant from their place of work. So the US consumes 20 barrels of oil per year per person. Europe consumes 10, half, because it's a more dense place, they don't drive as much. And China is around four. So to give you a sense of just over four, but the world's average is around four barrels per person per year. And so because Europe is more dense, remember they consume 10 barrels per person per year versus the US, you can build a lot more trains in Europe. The whole, you know, everyone thinks trains in Europe and bicycles are more popular because they're just greener.

44:29No, it's because you get a lot of population living closer together. Europe is a very, very dense place. The US is not. I mean, you have dense spots of the US, but in general, u.s is much more spread out and um we're going to denmark denmark is one of the most densely populated places in the world or that portion of europe and so there you can tax people put a lot of tax on gasoline because they're it's usually it's it's a more easily thing easy thing to tax um and then also politicians lie about it they just say hey it's the oil easy thing to tax. And then also politicians lie about it. They just say, hey, it's the oil companies making that money. No, eight of that $12 is going to the government.

45:07Four goes to the industry that gets it out of the ground, that refines it, that produces it, that has to transport it. Eight of the 12 is going to the government. And so most people in Europe, they're disconnected from the energy market. I don't want to kind of harp on Europe, but they are the most extreme signs of that energy blindness, that just complete unawareness of... Well, let's just take the UK, for example. So the UK had a pretty robust oil and gas industry based in the North Sea. That's where the Brent... Yeah, starting back in the 1970s's where the Brent oil field was there, which is now defunct, I think. But they're not extracting from the North Sea. Is that because there's no energy left there?

45:47No, there is oil there. I mean, look at Norway. Norway is still producing. What happened in the UK... Also from the North Sea. It's roughly the same oil fields and not gas fields. And what happened in the UK was that you did have oil fields, when you drill them, they do decline. They're a non-renewable resource. So they do decline. So you've got to constantly go to exploration and production. You've got to go and drill and explore. And you take some risk because you can drill a dry hole. So there's a lot of capital to be risked there. But in order to encourage people to risk that capital, say oil today, say roughly $100 a barrel, to produce that oil is $60, $70 a barrel in the US. It depends on where you're producing and if it's onshore, offshore,

46:34different environments, but say it's $60 a barrel. And so, you know, just before the Hormuz situation, oil was 50. So, you know, there are periods of time where you can lose money for years as an oil producer. And so to risk capital to go and produce energy, you have to have some sort of profit incentive to do that. The UK in the 1980s, 1990s and up to today removed all that incentive. They basically, they're a country where you drill a hole in the ground, even offshore, as long as you're in the UK, that money goes to the Crown. It goes to the British government. And so there's no incentive. I'm not going to drill in the North Sea when there's these, you know, they call them windfall taxes and whatnot.

47:14No one's going to risk money in that environment to drill up, build a rig offshore and, rig offshore and helicopter everyone out there every few weeks. And you might drill a dry hole. The Norwegians understand how it kind of works and they've kind of created a more profit incentive for part of that oil and gasoline industry to take that risk. But the US has kind of proven, they're like the Ireland. Ireland proved that the Laffer curve, low taxes, economic boom, it just works. The US proves the fact of stand out of the way, give private individuals the rights to the profits if they risk capital. And look what happens. The US becomes one of the largest energy producers in the world. Sorry, not one of,

47:58it is the largest now energy producer in the world for oil and nat gas. And just by stepping back and just let these guys do what they're going to do, they are regulated, there's controls around in terms of environmental, but the UK regulated, removed the profit incentive, no oil production or nat gas, it just dwindled to almost nothing. The Brent crude, you know, the Brent crude is kind of the price people quote on television, $110 a barrel. And there's the WTI crude index, which is West Texas intermediate. And the Brent crude, that field stopped producing a long time ago, 20 years ago. And so now they changed the underlying way that pricing works, such that U.S. crude goes transatlantic and sets the price for Brent.

48:44So Brent crude is actually now set by West Texas Intermediate, set by the U.S. crude oil market. And so even with that, Brent crude as a price, people say, oh, it's the international benchmark, which historically it has been. But it's now set by the US. The US barrels that move across the Atlantic, just like the US natural gas moves across the Atlantic, we set here in the US the price of oil in Europe and by extension the world. And because the US, the government stepped a little bit back, gave people the authority to just take the profit risk on production and it worked. It was a very simple thing and the proof is here we are. And no, it was not all the US, parts of the US, Washington, New York State,

49:30then here up here in New England, Maine and so on, banned nat gas production, just like Europe did. It was a very, and even California, the two coasts, California and New England in the US have got the same energy blindness as Europe, the EU writ large, in that, as I said, all the electricity for the Northeast. I was coming here, driving my car this morning, I passed four propane tankers driving past me on the road. The electricity here is either oil or, sorry, it's nat gas or coal. And so the people, the regulations here and in California have crushed the energy industry in parts of the US and similar to what has happened in Europe. And as I said, it goes back to a combination of ideology and,

50:21I don't want to say ignorance, because ignorance would imply that the information is not available out there and how energy is produced. It's more ideology than anything else. In late October, AI bot hackers launched millions of cyber attacks across the world and governments worldwide suddenly took down their websites to protect them. So think about that. That means government can't keep its own systems running. That makes you wonder about your own bank account. How is that safe from the next cyber attack? So if it wasn't clear before October, it should be clear now you need some of your wealth outside of the system. And for thousands of years, there has been a consistent solution to that. Metals, gold and silver,

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52:33And here's the special part. The one they're giving away was built exactly like mine. It's a car I chose in my own garage. And now one lucky guest will drive home in the very same car that I have. So play at Yamaha for your chance to win on November 30th. Because somebody has gone home and Yamaha has 500th car. You win? Details at Yamaha.com. Must be tournament to enter. Please gamble responsibly. It's the impulse towards self-harm. To see leaders intentionally punish the people they lead is a dark thing to watch. And that's what you're watching, I think. I mean, to take the cloudiest part of the United States and clear-cut forests in order to build solar panels in the cloudiest place in the United States tells you the point of this is like not to help people at all.

53:13I think that energy policy globally, especially in the West, it is definitely not designed to help people at all. That is no part of the consideration. It actually, it's designed, how can we get, because the political class know that energy is essential to modern life and so it's a method of control if we control how people consume and produce energy we can control a lot more of their lives than otherwise and it's um so yeah it's it's more the energy policy is more ideological it's not to help people if they're helping people an energy policy would be to step back to reduce government involvement in energy policy and allow to operate more freely another good example is sanctions oh my god it's sanctions over the past on energy sanctions on oil so europe

54:12you couldn't even this is so crazy europe Europe, just before, just during the invasion, Russian invasion of Ukraine, Europe put these sanctions on Russian oil, crude oil exports, and they set the price at $60 per barrel versus Russian exports. And that's, they put those, it didn't change hardly one bit what Russia produced in terms of crude oil. It was basically self-harm on Europe. They set the price at $60, the price went to $70, and Europe basically starved of themselves of crude oil. I mean, you couldn't believe how badly Europe has used things like sanctions and energy policy. They have done almost everything you could possibly do wrong like sanctions and energy policy it they have done almost everything

54:59you could possibly do wrong um in terms of energy policy and all those sanctions and the u.s is not uh has fallen into the sanctions trap also imposing sanctions on uh venezuela iran on their oil production and russia and so what has happened those three three countries, Russia, Iran, Venezuela, the US and Europe put oil sanctions, trying to restrict by economics how much oil those countries could export. Those countries, it didn't restrict one barrel of exports. You know who bought all that oil? China. They bought 2 million barrels a day from Venezuela, 2 million barrels a day of sanctioned crude from Iran, 2 million barrels a day of sanctioned crude from Russia. And they bought it all at a $10 to $20 per barrel discount because

55:44Europe and the US transferred that money. So all you did was lower energy costs for China? Yeah. And it enabled China. China has been gorging on the sanctioned oil from those three countries for the last five or six years. So, I mean, again, back to your point that you can't ascribe decisions like that to ignorance because the information is available. It's demonstrable. It's obvious. I mean, just look at Russian, Venezuelan, Iranian oil output. And you're like, well, where's the oil going? It's being bought at a discount by our main geopolitical rival, China. Yep. So you can't say that they don't know that that's happening. So you have to, at a certain point, if it continues to happen, assume it happening is the point of the exercise.

56:25Like this is an effort to help China over the West. Like, how is it not that? I think that it showed the limits of control of the blob, if you will, the deep state, the blob, the bureaucracy. They think they can control energy markets writ large globally. They cannot. And so that was kind of a showed where that controllability. But they kept doing it. Because these are not quick-moving entities. The EU, I mean, they make a decision and it goes in place and it stays there for five, ten years. And they're very slow-moving bureaucracies. And the oil and gas industry showed the limits of the stupidity, if you will, of those decisions. And I think they thought that they could somehow control the oil industry.

57:22And we say industry, just oil production globally. They can't and they shouldn't. I mean, my God, if they did, we would all be in trouble. If those sanctions and things like that worked, we'd be paying... If they stopped Iranian production, Russian production, Venezuelan production, it would hurt us all. But China has been sitting there quietly, buying up this $20 per barrel discounted crude from those three sanctioned countries, saying nothing, secretly saying, thank you very much, EU and US for these sanctions. They've been so great. China has been building a strategic stockpile of oil. And China's, say, the world is 100 million barrels per day of crude oil. China consumes 16 million barrels.

58:09They import 12 of that. So they're a huge oil importer. They don't produce that much oil. They've been building up their stockpiles ahead of Taiwan 2027. I mean, it's a publicly acknowledged invasion plan of Taiwan or control plan of Taiwan for next year. At least that was the plan two years ago and three years ago. And as part of that, they needed to bolster their inventory of crude oil ahead of that 2027 invasion of Taiwan. And they've been using sanctioned barrels from those three countries to fill their stockpiles. And China went from almost very little strategic storage four or five years ago to now they have 1.5 billion barrels of oil in storage, underground salt caverns. And to put that in perspective, the US SPR has 300 million, roughly. China has 1.5

58:57billion. So it's got it five times. And that storage that China's built up has happened, all of it, pretty much with sanctioned oil, cheaply created by the US sanctions and European sanctions on Russia, Iran and Venezuela. China's gorged in that oil to build up their SPR ahead of a Taiwan 2027 invasion. And so sanctions aren't necessarily to build up their SPR ahead of a Taiwan 2027 invasion. And so sanctions aren't necessarily economically irrational. They also have side effects that you basically are doing an economic transfer and enabling China to build up strategic reserves. And strategically, it creates all these side effects that China now is sitting on. They still need to store more, I think, than they have,

59:41but they've been enabled to build a huge reserve ahead of a potential planned, you know, alleged plan for 2027. So, the sanctions... Why, I mean, if you wouldn't mind stating the obvious, why would China want to stockpile energy before moving on taiwan because all of their ships you know everyone has this myth about china being solar and electricity and whatnot and they do produce a lot china gets electricity sixty percent of their energy comes from coal twenty percent soil and the balance is natural gas twenty percent natural gas and then they have solar and wind even china are under are under 10% and nuclear, under 10%. So they're in the same 90% hydrocarbon world. But that 20% oil is for all of their ships are diesel.

1:00:28I mean, they do have nuclear powered vessels, but all of their ships are diesel, all of their military equipment are diesel or some are gasoline, and they're importing 12 million barrels a day, if they didn't have a strategic reserve, they would be done within 20 days, 30 days of if they were blockaded. If you blockaded Malacca in Singapore or Hormuz, it's already blockaded, but if you blockaded those, if China was trying to invade Taiwan, they wouldn't have the oil for their ships within three or four weeks. And so that was why they've built up a stockpile that they need that oil to power their navy and their military equipment. And they do have electrical equipment and vehicles, but not the hardcore navy military equipment

1:01:12that they need for an invasion. What percentage of China's electricity is produced by coal? It's around, I think it's up in the 70s, 70%. Most of it. Overwhelming. Yeah. Why coal? It's cheap. It's cheap. That's actually a very good question to ask about why and any of this, like why oil, why coal? The first thing is cheap. Why does India use 80% of its electricity from coal? It's cheap. Coal is the cheapest way to produce electricity. And not just anywhere, it's in the US. The US produces, one third of the US energy consumption is coal. And coal has got a bad rap. And I'm going to be not careful here, but coal you know, coal back in the 60s and 70s, back when the smog issue was around and the coal industry did really transform.

1:02:04And yes, there's this whole thing of marketing word of clean coal. But basically when you burn coal, the most dangerous thing, the most immediately dangerous thing is sulfur going into the atmosphere and it falls, it turns into sulfuric acid, acid rain, and this lead comes out of the coal also. But what the coal industry did, not just in the US, but globally, has put scrubbers on all of their, the towers where they burn coal. And those scrubbers can remove pretty much most or all of the pollutants that come out of coal. The only downside is it's very expensive to put those scrubbers on and whatnot, but coal gets a bad rap, but it's cheap. It is so cheap. Why is it so cheap? Because it's so abundant?

1:02:52It's abundant. It's similar to, yeah, it's abundant and it's an easy material to handle. You know, it doesn't require, natural gas is a challenging material to handle because you have to, if you want to ship it overseas, you've got to compress it into a liquid or cool it down to a liquid. That's a very expensive process. Incredibly. That's why one of the reasons why Europe is $30 gas, gas, natural gas, we have $3 natural gas. The big difference is that, well, European, you're banned natural gas production. And so they don't produce any, but they're, they've decided to be dependent on others. and, um, but natural gas is, uh, is a situation where you've got, it's very hard to transport. The most ideal fuel of all is oil

1:03:39because it's a liquid, it's dense. It's enabled so many different techniques. It's one of the most ideal energy sources is crude oil and it's the refined products of crude oil, diesel, gasoline, all the other things, plastics. It's in everything. But yeah, going back to your original question, coal is cheap. That's why it's the base load. It's one third of the world's energy is coal, one third oil, one third natural gas. And that other 10%, this year, last year, 50 years ago, has been all the others. Nuclear is very expensive just because of all the regulations around it. Solar and wind, they're not... The economics of solar and wind are dependent on location. The oil and gas industry, these are

1:04:29sharp guys and women who are... They'll make a dollar if they can. And so, if you look at the biggest build-out of solar in the US is Texas, in oil country. And because people are realizing, okay, there's a good, it's sunny in Texas a lot during most of the year. And solar panels are cheap from China. I mean, we're basically, we don't want to become too dependent on China for those solar panels. But you're basically kind of technically importing coal because that energy to produce those solar panels was built by China gets 70% of electricity from coal. And so those solar panels are really disguised coal. And China basically is willing to do that for now in terms of building solar panels. No one else really at scale in the world builds solar panels or any other uh all these quote-unquote environmentally friendly uh uh energy sources

1:05:25what about wind turbines wind turbines i mean that's it's the very very it's tiny in terms of the global energy it's tiny it's like a few percent and it's very difficult to scale and uh you've got issues with it's too can be too windy not enough wind or or it can be and it's very difficult to scale and uh you've got issues with it's too windy not enough wind or or it can be uh it's a very unreliable energy source it i'm not knocking them because it they are useful in some parts of the world at some times of the day it's some you know they're they're an additional energy source it's a good thing to have, but it's not a baseload. We can run our society off that energy source. You know, that for all good and bad,

1:06:06you know, intense, it's hydrocarbons. We depend and need hydrocarbon production. And maybe with AI, we come up with, you know, fusion or some new technology over the next 50 years or 40 years. But right now, there's no alternative. And we should just appreciate that and just be okay with that, make peace with that. How many countries have deep coal reserves for the big countries? I mean, how much coal is there in the world? There's a lot. A lot more. Like, we're not going to run out in the next 50, 100 years. A lot of Australia produces a lot of coal. Yep. Or has a lot of coal. Has a lot of coal, yep. China itself produces a lot of coal. The US produces a lot of coal in Appalachia. Wyoming.

1:07:00Wyoming, yeah. It's less than it has been because you know what destroyed the coal industry? Everyone thinks, you know, Mike Bloomberg walks around, you know, he is who he is, the ex-mayor of New York. Stalinist midget. Well, no, he's been called that. I'm not endorsing the title, but yeah, he has been called. He banned straws in New York, let's put it that way. He's one of those guys. But he railed against coal, the coal industry in the US. And he claims or one of his, he says that he helped destroy the coal industry. The coal industry, coal production mining in the US was destroyed by fracking and natural gas, cheap natural gas. It was undercut. It wasn't coal wasn't destroyed by burning coal wasn't destroyed by environmentalists. It was undercut by the gas industry in the US

1:07:50that discovered fracking and horizontal drilling, drilling these wells sideways. That was amazing technology development back in the early 2000s. And fracking as well. You're pumping these wells with water and cracking the rock a couple of miles down. That's what killed the coal industry in the US. The environmental regulations were more on putting scrubbers. Because gas became cheaper than coal. Not gas became cheaper. And it's one of those interesting things. People in the US say gas. And as an oil guy, energy guy, always make sure gasoline is the stuff you put in the car. Nat gas is the... So when people, if you say gas to an energy person, they always think you're talking about nat gas. But it's a, yeah, gas, natural gas. And no one ever talks about it.

1:08:36It's like a hidden fuel because it's in pipes. one ever pumps it you kind of it just gets goes to the power station it's one third of the u.s electricity of energy not even electricity energy is from nat gas and it's the it just hums along behind the scenes no one ever complains earlier on this year it was ten dollars per mmbtu because it was a cold snap up here, sorry, down in Texas. And it's now $3 per MMBTU. But no one complained when it was $10. It's a third of the US energy supply was $10. Now it's $3. And it's because, you know, diesel gets a lot of the attention this year. But it's, not gas, it's probably, you know, everyone talks about energy independence. It's probably the fuel that can most make the US trulys truly energy dependent because oil production you know one of the

1:09:24problems trump's had this year was he dumped all the oil crude oil from the spr that went to europe pretty much which for good or bad because it goes into the international bucket or basin of oil the oil market is very global because you can ship it around. Natural gas is not as well connected. It's very expensive to ship it. You have to cool it down and compress it. And so, but if you want the US to be truly energy independent, nat gas is that fuel. And basically, and that has not been unlocked in the US. Look at the whole Northeast. There's a huge amount of nat gas under there. There's also, in terms of potential there's pipelines that are blocked that people are not allowing that those two things are just

1:10:04uncracking the nat gas production uncracking that gas production in the u.s will that is truly will make the u.s such that um it will not just disconnect the u.s from physical energy it will also price disconnect because remember europe is 31 is $31 in that gas. The US is $3. So if the US can become energy independent, as well as price independent of the rest of the world, and the only field to do that is really nat gas. Oil is always going to be linked to the world. Coal pretty much is going to be linked to the world. But nat gas, because it's so difficult to ship, it's kind of, for good or bad, it's trapped in the US. There are some exports, but it's very expensive. So that is the fuel for true energy independence is nat gas.

1:10:48As I said, no one talks about it because it's under, it's in pipes, it goes into the power station. People in Manhattan ban it and they don't realize, hang on, that's the reason the light works. What? They're banning the fuel that makes the light work. And so it's an interesting fuel in that regard. And it's production is growing at a rapid rate in the US. Even at $3, it's so cheap, NatGas. Cheap NatGas killed the coal industry. That did. Not so cheap, NatGas. Cheap NatGas killed the coal industry. That did, not Mike Bloomberg. NatGas killed the coal industry. And NatGas can actually continue to transform. We've got energy demand growth over the next five or 10 years because the US now is learning that,

1:11:32just like Ireland learned when you cut taxes, if you increase energy production in a country and make it cheap energy, your economy grows. And it doesn't matter, it just happens. It's like people, because the cost of doing everything becomes cheaper. So whether it be a data center or it becomes a factory making something, you know, China's making something because they've got cheap energy. They use coal, but they're cheap energy. The US, if we increase net gas production, that's how you get manufacturing back to the U.S., at least to a certain extent. There's some manufacturing that's been lost, you know, pretty much forever, unfortunately, or at least for the foreseeable future. But you can at least stop the drain of manufacturing out of the U.S. with cheap energy.

1:12:13I mean, you'll get, people will build things here with just cheap energy. So, yeah's not gas. It kind of gasifies some of its coal. Hi, everybody. Jay Leno here. You know, when Yamabai asked me what car to feature for the 500th car giveaway, there's only one car, the Rolls-Royce. And not any Rolls-Royce, the Rolls-Royce Spectre, the most powerful Rolls-Royce ever built. And here's the special part. The one they're giving away was built exactly like mine. It's a car I chose in my own garage, and now one lucky guest will drive home in the very same car that I have. So play at Yamaha for your chance to win on November 30th because somebody has gone home on Yamaha's 500th car. You win? Details at Yamaha.com.

1:12:51Must be tournament to enter. Please gamble responsibly. Yeah, there was a big thing of it this year. You know when... What is? Can you explain that? Yeah, actually, it's an interesting thing because, again, these are oil, gas, coal are hydrocarbons. So you can turn coal into crude oil. You can turn coal into nat gas. You basically have to heat it and put it under pressure. And those hydrocarbons, and even oil refineries do this as well. They transform the hydrogen carbon atoms into a different hydrogen carbon atom. And so coal is hydrocarbon in solid form. Nat gas is kind of the most pure form methane, another form of hydrocarbon. And so an oil is the same. And so you can change by heat and pressure,

1:13:30just simple, it's a relatively simple chemical reaction, coal into nat gas, coal into gasoline. The problem is, it was made famous in the 1930s in Germany. That's where it was. Fischer-Tropsch was the technology. Germany had no oil at the time, or a tiny amount. And oil basically defined World War II, Japan going down to Indonesia. But they had coal. And so what they tried to do is, it is a very expensive process. It costs $200 a barrel to do that process, to turn coal into crude oil, into gasoline. So it's very expensive, $200 a barrel. And so you can technically do it. And it's called the Fischer-Tropsch process. And Germany did it out of desperation. South Africa did it. Everyone says, okay, China does this now.

1:14:14They're not economic idiots. They're not going to do a process that costs $200 a barrel. So they have it available, but they don't do it at scale because it's a very expensive process. And you don't necessarily do it with coal. You can convert other parts of the energy space into gasoline. So coal gasification or turning coal to liquids, as people call it in the industry, you can do it, but it's a very expensive process. China is basically a very basic in terms of oil consumption. They import crude oil. They're just like any other place. They boil it, which is basically what an oil refinery does. You boil it and it separates into naphtha gasoline, diesel, heating oil, jet fuel, down to asphalt.

1:14:58And they do the old school. I mean, it's a very, the oil industry is very basic. You basically boil this crude and the different crudes, you know, Venezuela's got heavy oil. It's basically like tar, three-clay. You've got some very light oil out of West Texas. All this is very light. It produces a lot of gasoline very easily in a refinery. You don't have to boil it that much kind of thing. And Canada produces a lot of heavy oil. So crude oil is a lot of gasoline very easily in a refinery you don't have to boil it that much kind of thing and canada produces a lot of heavy oil so crude oil is a there's people define it by weight is it light or heavy crude oil but it's um china basically just buys uh oil and refines it they

1:15:30don't get into the coal to liquids is a very expensive you kind of only do it in desperation i think that one of the reasons they do it at a small scale very small scale is that they do it in desperation. I think that one of the reasons they do it at a small scale, very small scale, is that they do it just to, in case they are cut off from oil from the Middle East in a war situation, that they would at least have some oil. Because remember, they import 12 million barrels per day of their 16. So why did they curtail, almost shut down their oil imports when the war in Iran started. That's, you know, that's the biggest question in the energy space this year, or oil space, because it didn't matter which analyst you talk to, or which oil company you talk to,

1:16:14or which people, you know, people in government that should supposedly have deeper knowledge, you know, from various means. How did China and why did they do that? I'm glad to hear you say that because I asked a lot of people, including in the US government, what is this? And some apparently hadn't even thought about it. I thought it was one of the weirdest things I'd ever seen. And there's no consensus on why? It is a very unusual thing. I mean, basically China, they consume 12 million, import 12 million barrels per day. They dropped it at one stage to six. And then people said, okay, that's a lot. They halved their oil imports. And you can't just do that. But they did. And so people said,

1:16:53well, where did they get that extra 6 million barrels from? Because they cut their imports. And remember, they were getting 2 million from Venezuela of the 6, 2 million from Iran, gone, 2 million from Russia, kind of restricted with the sanctions and that. But anyway, they cut their imports by 6 million barrels per day. And one is they have that big strategic 2027 Taiwan. And people outside of China have no idea how much oil is in there. People estimate, because you can count the barrels and tankers going to China from the Middle East. People estimate it's one and a half billion barrels. Remember, the US SPR is five times less, 300 million. So people, they definitely dipped into that strategic reserve.

1:17:35Because they had to save their own economy. You know, they need to transport their manufacturing economy. They have to transport diesel trucks and cars. And so they dipped into that strategic reserve and which kind of set back their Taiwan 2027 strategy a year or two, maybe longer, because they were building that up ahead of 2027. So they dipped into that strategic reserve. Then everyone says, OK, they did coal to liquids. They did, I'm very skeptical of these other reasons. Coal to liquids, they did. They told everyone to drive electric cars. No, even in China, you can't tell people, drive your, you know, the BYD today, you know, they don't use Tesla as much over there. But you can't tell people to drive an electric car.

1:18:19You can't force that kind of behavior. But people put this out there as a reason. I think the main thing they did was they dipped into their own reserves. And no one knows how much they did. People say, oh, they maybe only reduced it by one million. You know, of the six, they ate in just a little bit and they were relying more on, they cut their petrochemical productions i mean a huge portion of oil and gas globally goes into petrochemicals making plastics and uh and making fertilizer also but uh making plastics and there are people saying oh they diverted crude oil from petrochemicals plastics into gasoline and again technically you can kind of do that very expensive, awkward process to do.

1:18:59You can't just turn on a dime like that. I think what they do, it's the most simple answer. They dipped into their reserves that they were using. They'd built up from all the sanctioned oil from those three countries that they'd gorged on for the prior five years ahead of Taiwan 2027. They dipped into that and they dipped into that big time. They had no choice because they can't survive. Their economy is kind of fragile. They've got a housing crisis, pretty much slow moving housing crisis, but it's going through their economy. They've got a debt crisis. They've got a huge, their GDP is huge if you add in all of their debt levels, like government debt, personal debt. So they had to kind of save their economy.

1:19:41And they have a record of doing this. They did this in the financial crisis, 2008. They pumped a huge amount of money into their domestic manufacturing economy in an emergency way, immediately following 2008. So they basically dipped into that strategic reserve in a big way. And people say, oh, they didn't. No one really knows. I don't know. No one really knows. If I were at an intelligence organization, I would try and determine how much oil. I'm sure there are people that know that. Well, I've heard that. That's exactly what I have heard. But it doesn't explain why. Why did they do that? One, to save their economy. They need, because the oil is a critical part of their... No, no, no, no. Why did they do that one to save their economy they need because the oil is a critical part of

1:20:20their no no no why did they have their imports why did they cut their imports in half and well there were one there was a blockade and they couldn't get the oil they physically couldn't get the oil out of the persian gulf and so that was one thing. There were, back in March of this year, exports from the Middle East were zero from the, through the streets. Oh, I remember. But they couldn't increase it from Russia. No, they couldn't. Or West Africa. No. I mean, you can technically do it, but you have to, the ships have to go the whole way around Africa and it becomes, and you have to get the tankers and it becomes a logistical nightmare. And China is trying to build pipelines to Russia. Very, that's a very long distance. And China is trying to build pipelines to Russia.

1:21:00That's a very long distance. And the oil and gas industry, and long distance in oil and gas means expensive. And it's also a very cold, harsh environment. Look, you've got to heat the pipes or put diluents in there to enable it to flow. So one was technically, China couldn't get access to the crude oil at that time. And that is now just China. A lot of Southeast Asia and Asia in general, India. One is that. Two, they really did want to save their economy by just releasing crude oil from their own stockpiles into the world, into the domestic refining space. The other one is that they didn't want high oil prices. I mean, oil looked at one stage like it was going to go straight to three hundred dollars a mile i remember and so they um it does the oil

1:21:46industry operates in a margin that they basically didn't want them to contribute to that two three hundred dollar price spike and so uh they decided they just decided their relatively centralized government not to import. And it just made a decision. And they had a stockpile that they could use. And they had these other marginal things like the electric cars. I don't believe those are at scale a big reason. And they just dipped into that stockpile. And then there's also the economic thing of China has been buying that $20 sanctioned oil at a discount for the past five years. When oil went over $100, they've historically they stopped their imports and so every time it goes over 100 even right now we're at you know 105 or

1:22:24110 china's imports over the past two weeks have dropped off a cliff to almost again and so they're economically rational i mean everyone thinks of them as being communist or whatever they're they are they know the value of a dollar or yuan or whatever. And so, but they basically stop buying. They buy below 70 and they stop buying above 100. And it's true. It's a simple thing. And they stop buying. Once we got above 100 back in Feb, March, they stopped buying. And so they don't want to buy expensive oil. These are naturally, that culture in China is a naturally trader instinct and they stopped. And so I think it was just a combination of they dipped into their reserves, how their imports dropped.

1:23:04They dipped into their stockpile. It set them back in terms of their Taiwan invasion plan. So, you know, people think that, you know, Trump was playing 5D or 8D or whatever the D is, chess. It did have the side effect of knocking them back. And also Venezuela knocked them back in terms of China was buying almost 2 million barrels a day of Venezuelan oil. Venezuela, everyone forgets, but that was only this year. It was back in January of this year. January 4th. There you go. It seems so long ago, but that was basically a, you know, Don Roe doctrine knocked China out of the Western Hemisphere, but also knocked 2 million barrels a day of sanctioned, discounted oil that China was getting. Where's Venezuela oil going now?

1:23:44The U.S. All of it? Yeah. I mean, I'm not saying it's good or bad. It's just that's what reality is and it's going there. And, you know, China had invested a huge amount of, billions of dollars into Venezuela. China had also invested billions of dollars into Iran. They built this Hormuz bypassing pipeline called JASK, J-A-S-K, that went around the Strait of Hormuz. It's never been used. It was about to be completed by this year. But China basically has been, the whole Belt and Road Initiative, they've been applying that to the oil and gas industry and you know uh russia i think is kind of still independent of that influence of china i mean china russia will sell their oil to anyone but they haven't been

1:24:30kind of captured by that belt and road initiative economics iran was captured by it by chinese that belt and road initiative venezuela was captured by it um by Chinese, that Belt and Road Initiative. Venezuela was captured by it. And China doesn't care about Venezuela's politics or people or they care about the economics. They don't care about Iranian politics, religion, Israel, that whole situation. They don't care. They basically, can you get me cheap oil below $70 a barrel? How do I get that oil? And if you could ask the EU to put more sanctions to discount it even further, please, that would be a bonus because all that money is not going to Europe. It's just going straight into the pockets of Beijing.

1:25:10To restate your point, which seems provable, Western sanctions against outlaw countries help China's economy. Directly. And it is, there's, sanctions against outlaw countries help China's economy? Directly. And China would love for more European sanctions than US sanctions. Western sanctions, which Western politicians brag about continuously, Western populations feel good about, I think. It makes them, it feels good. It's a feel good policy. All help China's economy. Directly, yes. And it's quantifiable. $10, $20 a barrel. And the Chinese would love nothing more than the EU to flagellate themselves even further. More sanctions. Put a $20 cap on Russian oil. Hi, everybody. Jay Leno here. You know, when Yamabai asked me

1:25:56what car to feature for the 500th car giveaway, there's only one car. The Rolls-Royce. And not any Rolls-Royce, the Rolls-Royce Spectre, the most powerful Rolls-Royce ever built. And here's the special part. The one they're giving away was built exactly like mine. It's a car I chose in my own garage, and now one lucky guest will drive home in the very same car that I have. So play at Yamaha for your chance to win on November 30th, because somebody has gone home in Yamaha has 500th car. You win? Details at Yamaha.com. Must be tournament to enter. Please gamble responsibly. The main reason I want to have this conversation, of course, was the war, which has heightened the world's awareness of how important energy is

1:26:31and how hard it is to have a civilization without it. And this war and both wars, the war against Russia and the war against Iran have both reminded us of that. So what effect have those wars had on global energy? I mean, obviously it's because of it being the regions that they are in. It's had effect on crude oil and natural gas. So coal, you can just put that aside. So that's, again, a third of the world's energy. That's not involved in this whole situation. Put that aside. So it's oil and natural gas. And the world or the energy market kind of war-gamed out the shutting of the Strait of Hormuz for a long time. And it kind of did happen a little bit in the 1980s. You had the tanker wars. Yes.

1:27:18When Iraq and Iran were fighting. And there were, I think it was a huge number of tankers that were knocked out in that war. The US was escorting tankers in and out of the whole choking of hormones. The oil market immediately in Feb 28 assumed it was going to be a week or two. And you can tell how... 26 this year. Of this year, of 2026. And it was because you can tell there's the forward curve, which is the price of oil as you go out into the future. So you could tell that the market in the front of the curve was very high, but it was backwardated, they call it, but very low, only a few months forward. And so even the oil market itself, and the oil market is hyper geopolitically aware and very reactionary.

1:28:12It's kind of like almost prediction markets existed, but it's oil markets do use futures and options to do the same thing as prediction markets do. And so the oil market was saying- Are they pretty accurate? Sorry to interrupt. You think those markets are pretty accurate in their predictions? They're accurate in the very short term. They're very short term. term aware. So the first thing I do when I wake up in the morning is I look at the price of WTI. I can tell if Iran has been hit. I just looked this morning and it was like down at 78 cents. You don't look at Brent, you look at West Texas. Yeah, yeah. Brent is, there's an issue of manipulation there. Well, I've noticed. But it's WTI, I look at WTI.

1:28:46So just for people watching this, if you've made it this far in the interview and you're interested in understanding energy markets, WTI is the one. West Texas. Yeah, yeah, West Texas Intermediate. And West Texas Midland Crude is also what now sets the price for Brent Crude. Yeah. So it actually, Brent is a derivative of West Texas Crude. So it's kind of, there was a window of 15 years where Brent took over because this is before fracking, you know, before that 2005 revolution and US crude production was declining and Brent took over for about 15 years between 2005, 2020. But now that has flipped back to WTI crude in the US. That's the global benchmark. And so, yeah. So I look at WTI every morning,

1:29:30first thing I look at, and you can tell how geopolitically changed the world is overnight by just looking at that one thing. I can tell if there's a war or whatever. And just by looking at that one thing, I look at other things. Well, that's the first thing I look at, the price of crude. And back in February, we went from $60 WTI up to, you know, we got up into the hundreds and very quickly. But the curve, the forward curve, you can trade crude oil out into the months ahead for delivery futures curves months ahead. That price was going down to like $80, $70. So the front was 120. You go out three or four months, it was back down to 80. So the market was predicting this thing is going to be quick.

1:30:12The oil market was predicting this thing's going to be quick. The oil market was predicting. And which I think, you know, Trump went into this also thinking it was going to be quick. And the US intelligence agencies and the blob, the deep state, everyone thought that this was going to be really quick because we were just coming off Maduro in early January in Venezuela. There was kind of a, everyone thought this would be a hit and one and done would be out within two weeks. Just eliminate a few politicians of the top layer, which I think was strategically a terrible thing to do. Yeah. But basically, the oil market very quickly rallied. And then once it wasn't over in two weeks, because Iran went to that mosaic structure where they basically distribute control of their military throughout the entire country, the IRGC and BESIJ do.

1:30:59And so it went to that, in other words, you can't slice off the onion layer by layer at the top, it just doesn't work. And Iran has developed this method of working for the last 30, 40 years since the late 1970s. And that's when Iran started retaliating with drones. That's when the oil market went, okay, this is going to be a more protracted thing. They started hitting golf. Golf production facilities. They hit Qatar's natural gas LNG plant, which is still out and will be out for the next three to five years. Qatar's main source of revenue is that LNG plant. And they knocked half of its production out. And Qatar produces 20% of the world's LNG. So, you know, that gas will go to Europe, natural gas, and will go to Asia.

1:31:48That's gone now for three to five years. Again, who benefits from this? The US nat gas industry, you know, Nord Stream, Qatar. You know, if you were to be conspiratorial about it, you could just knock out all of Qatar and then the US would benefit even more. So it's kind of an interesting kind of secondary effect that this situation has kind of been very positive to all the US economy because the US is a huge nat gas and oil producer. But anyway, so you had a This situation in Hormuz has kind of been very positive to the U.S. economy because the U.S. is a huge nat gas and oil producer. But anyway, so the oil market initially priced in a quick win. And then Iran started attacking all the production facilities,

1:32:24in particular refineries in the Persian Gulf. And these refineries produced a lot of diesel. And that was kind of the second effect was the diesel price spiking crude oil. The spread between diesel and crude or gasoline and crude is called the crack spread. That blew out to diesel to crude used to be, diesel used to be $10 refining margin above crude. It went to a hundred and it stayed there since. That's crazy. And that's because of reduced refining capacity? They knocked out 2 million barrels per day of Persian Gulf refining capacity. But why would it have not the same effect on jet fuel, gasoline, heating oil, the rest? It's just that the world the U.S. produces is a lot more gasoline dependent than diesel.

1:33:07And so it just was the way of the world's supply and demand system for gasoline and diesel. It had that impact much more than significantly just because Asia consumes more diesel. Europe consumes more diesel. It was basically a, it seems kind of like a kind of convoluted thing, but basically the world had more gasoline capacity in refineries than it did have for diesel. So diesel was more tight as a global situation than gasoline. How hard is it to switch a refinery's proportion of gasoline to diesel to all the other refined products? Extremely difficult. Oh, really? Yeah, you can switch two or three percent from diesel molecules that come out of a, you put crude oil in, you can move a slight two or three percent

1:33:58of the barrel into, from diesel into gasoline or vice versa. So it's a very, very difficult thing to switch. Oh, wow. And so, yeah, so, but everyone talks about diesel, but gasoline margins went from $10, $15 to $60. So gasoline did also rally a lot, that refining margin. And so diesel went to $100 spread over crude. So you've got a crude at $100, diesel is $200 a barrel. Gasoline, crude at $100, you get gasoline at $160 a barrel. So it did cause a rally in gasoline also. It was just that diesel was much more tighter as a reaction. And then that was combined with, and I know people knock Trump for blaming Ukraine and Russia. Ukraine did start hitting all these Russian refineries, and that did start coincidentally with the first half of this year

1:34:47when the hormones situation. So that knocked another 2 million barrels per day of refining capacity out of Europe. And the world, as I said, is 100 million barrels per day of refining capacity out of Europe. And the world, as I said, is 100 million barrels per day of production. You knock 4 million barrels per day of refining capacity out. It does have an impact. And it basically caused diesel prices to spike. Why would Ukraine do that? Because the CIA helped them. Well, obviously, I mean, thank you for pointing that out, right? It's not, Ukraine's not an independent actor. Ukraine, everything Ukraine hits pretty much in Russia is approved and signed off. Well, that's factually true what you said, and thank you for saying it.

1:35:24Why would the U.S. intel community want to reduce Russia's refining capacity when it affects the price of diesel fuel and gasoline in the United States? I think that even though they're very sophisticated entities, the CIA and other entities in the US government, sometimes I don't think they think about the effect. They're energy blind to a certain extent as well. I didn't think that they thought it would have, they thought it would just like sanctions on Russia. They thought that if we just target Russian refineries, we can kind of damage Russia and it wouldn't affect global markets. I think they themselves. Are you serious? They thought that they could just target, pinpoint target these Russian refineries.

1:36:07And oil refineries are easy to target. They're big pieces of equipment. Yeah. And they thought, they're exposed too. And they did want let's... They're exposed, too. And they did want to create a little bit of pressure on Russia, Putin to come to the table this year. Trump wants out of Ukraine and Russia, that whole situation. He wants out of it, as everyone should want out of it. It's not a... That war should never have started, but everyone wants out, except for a certain few vested interests. You know, Europe again, here we go talking negatively about europe but it's uh uh the cia or whoever was providing the targeting information um they didn't think about the impact on diesel now they realize that of course and um because they thought i was just two million

1:36:49barrels per day of refining capacity out of 100. It can't have that much of an impact. It did. It immediately did. And so, you know, the call about blowback, this blowback was in the energy market. And so it was a mistake. The CIA should never have targeted those refineries. They did. But they provided all the targeting because they do want to pressure Putin to come to the table. They want to pressure Zelensky by Elon Musk flipping on and off the Starlink button every other day that seems to be doing now. And these are kind of the two pressure points that they're applying. They're applying, you know, they're trying to destroy Russian revenue with refineries and Zelensky's defense with the Starlink turning it on and off every few days to try and force these

1:37:28guys to come together and at least have some sort of a ceasefire. And that was kind of the original thought process behind it. I think they were surprised by how much diesel prices rallied. It's a really interesting explanation. And it happened at the same time as hormones. If they did this when hormones was not happening, diesel would not have spiked as much. How much oil and natural gas is making its way out of the Gulf now. So now it depends on day to day. You've got, you have a pipeline. It was a pipeline that the Saudis built. It's called the East-West Pipeline. Yes. Back in the 1980s because of the original tanker war, Iran-Iraq tanker war back in the 1980s. And it was- Can you explain where it goes?

1:38:07It goes from all of the oil and gas and pretty much oil. Let's talk about crude oil. In Saudi, it's produced on the edge of the Persian Gulf. So and pretty much oil, let's talk about crude oil, in Saudi is produced on the edge of the Persian Gulf, so on the east side of Saudi Arabia. But Saudi Arabia is a big piece of land that goes the whole way, all desert, there's no greenery there whatsoever, all the way over to the Red Sea. And the Red Sea is, you know, they've got issues there with the Houthis and whatnot over the past few months. But basically, all of the oil production is trapped in the Persian Gulf, but the Red Sea is kind of one place they can get it out, outside of the Hormuz. So during the 1980s, they built this pipeline as kind of a backup plan.

1:38:44And it was a 7 million barrel per day capacity pipeline. Again, scale, the world produces 100 million barrels per day. The Saudis produce 10 of that 100. So they're not as big as these two. The U.S. produces 25. But of the 10 the Saudis produce, they could get seven of this out through this pipeline. But they didn't used to do this because this pipeline was usually run at 2 to 3 million barrels per day of the Saudi 10. And so they kind of use it as a backup plan. Why? Is it cheaper to ship it through the Gulf? Yeah. And you've got to pump it across all these pumping stations. And also, if you're a buyer from China or Asia, from Saudi, for them to send a tanker the whole way into the Red Sea and past Yemen, and it's a very much more dangerous area.

1:39:30It's more confined. And so it was just cheaper for the tankers. Pipeline shipping is cheap also, but if you were to buy the oil from the Red Sea at the end of the East-West pipeline, it was a dollar per barrel. Nowadays, it doesn't seem like that much, but it was a dollar a barrel more expensive. It was cheaper to buy it from the Persian Gulf for China. And so Saudi used to produce oil. All those Gulf producers are trapped inside the Persian Gulf. It's kind of the same oil basin, that whole region. And even, you know, people talk about Tehran. Even Tehran, Tehran is almost the other edge of Iran to where their oil is produced. Their oil is also produced at the edge of the Karg Island and all the other places.

1:40:15It's also down by the coast. It's the same reservoir, obviously. It's pretty much, yeah, it's the same basin. It's different reservoirs. Some of them are connected. Like Kuwait and Iraq, their reservoirs are connected. But it's the same basin. It's the same, you know, as I said, you know, the same millions of years ago it was created at the same time. Low spot. And so basically, you know, the same millions of years ago. It was created at the same time. Low spot. And so basically, some of them are connected. But anyway, when the whole situation kicked off, the first surprise was the issue of refineries. Then it came into tankers because no one was in one was in the right mind send a tanker through

1:40:55the straits of hormuz when the active there's an act of war and iran is targeting tankers these are civilian tankers these are not military tankers right and iran was hitting them and uh would hit the occasional one and they're hitting them cheaply they don't send these 20 50 000 drones to hit them and uh so you had the spike in crude first. That was the first wave. Then you had the spike in refined products. Diesel was the most extreme one, but because you hit these refineries combined with the Russia hits and refineries, then you had the spike in tanker rates. And these tankers went from, you could hire a super tanker. Super tankers are 2 million barrels a day. Sorry, 2 million barrels capacity, a super tanker.

1:41:31They call them in the oil industry VLCCs, very large crude carriers, but they're these buildings effectively carrying 2 million barrels of crude. And these things, you could hire them for $50,000 to $100,000 per day. That's the day rate they call it. Before in January, February of this year. Now it's 1.5 million barrels, 1.5 million dollars per day. Per day, from $100,000 per day to 1.5 million dollars per day. And the reason the tankers have gone up is that, first of all, you can't get insurance. You can technically get insurance, but the insurance rates have gone up. They just self-insure by raising their fees. Saudis, well, they self-insure by raising their fees. Saudis, well, they self-insure that

1:42:15a lot of the tankers that are doing this route, it's like a speed run of the streets of Hormuz. You hug the coast of Oman and you speed run and the only people doing that are the Saudis because they have their own tankers. So they're not paying other people to do this. And the Emiratis have their own tankers too. Yeah, the UAE have got their own tankers, Abu Dhabi. And so those guys are half of the tanker run. And basically they're at speed. When I say at speed, these are super tankers that are full of 2 million barrels of crude. They can't move at speed, but they're trying to. They move as fast as they technically possibly can into the Persian Gulf, grab the oil, load it and come back out.

1:42:50And usually before February, they would then continue on to China or continue on to Asia somewhere. And now they don't. They stop outside the Gulf of Oman. They light it. They load the crude onto another tanker, and they go back in again and do that loading. So those super tankers are now doing this speed run into the Persian Gulf. And the Persian Gulf produces 20 million barrels per day. The East-West pipeline that was built in the 1980s, they ramped that up from three to seven. So they got some oil coming out of that pipeline, extra oil. They got some oil out of this. There's another pipeline to Fujairah. So they got another million barrels per day out of that. So they cranked up all the alternative

1:43:32bypass pipelines. So that compensated a little bit for the straits of form it was being shot. And then the big one is they started doing these tanker runs, speed running in and out of the Gulf, and doing what's called ship-to-ship transfer, STS, outside the Gulf of Oman. I mean, what's that journey like? It's a few days. It's a highly risk. What are they paying these crews to do that? They're paying them. I think it was in the FT a few weeks ago. They're paying them for each run, which takes a few days. They're paying the captain, I think, 100, 200 grand per run. I mean, they're taking their lives under risk. Right now, today, Iran is hitting one to two tankers a day. Hitting. So they're hitting the engine room.

1:44:14A surprising thing, and there are some spills as a result of this. These are carrying crude oil. These tankers, one to two tankers a day. And that is the real thing that can't be sustained. I know Besant and Trump have got these economic sanctions and pain points. That's going to take too long. That operation, that financial operation, that goes back to the sanctions things. It doesn't really work. It causes immediate pain, those sanctions. They close down money transfers and try to sanction companies that deal with Iran. But that's not going to be, that's not a long-term sustainable. I want to say long-term. I'm talking about we need to resolve this within three to six months max before it gets, things are already bad.

1:44:55They need to start recovering because it's flowing through to food and fertilizers. But Iran is hitting one to two tankers a day right now today in November 2026. There are only 1,000 super tankers in the world. People getting killed in these attacks? Yes. And unfortunately, there are crews from India, Philippines. These are just civilians. These are not military people. These are civilian tankers in the world. People getting killed in these attacks? Yes. And unfortunately there are crews from India, Philippines. These are just civilians. These are not military people. These are civilian tankers. They're, you know, they're marine. I know you mentioned your father was in the Marines. Are they civilian Marines?

1:45:25These are just people just earning it, you know, working. Iran is treating them like military hardware. They're hitting them. And so that can't be sustained. And so one of the things to stop that, because Iran, you know, the U.S. reaction so far has been to do these mass kind of firework-style campaigns, dropping the murder of all bombs Trump is talking about, things like that. Iran is a very well-educated population, surprisingly. And they historically have been. They have a higher median IQ than we do. One of the most successful ethnic groups in the U.S. is Iranian. Obviously, the Persians, yeah. Yeah, they actually think they may be the number one. You know, everyone thinks it's like the Asian population.

1:46:04It's the Iranian Americans, Persian Americans. And so these guys are very, they're rational. Like they actually, there's a kind of a logic to what they're doing. They're also highly, you know, they've got a religious aspect to it. But I think that this, hitting one to two tankers a day, you annualize that, that's going to knock out the entire global fleet of tankers because they can be repaired. They're not completely knocked out of commission, but the repair takes three or four months. The US basically has to make every tanker hit matter. And so one way to do that is, Iran has 150 power generation stations. I mean, this is an energy war. You say to Iran, and you don't secretly do this, you tell Iran there's a direct price to pay.

1:46:46For every tanker you hit, we knock out two power stations. Start with Tehran, they've got five major ones, and just make it each incrementally painful to stop that tanker hitting situation. Because Iran is hitting civilian infrastructure, going through a, you know, on a civilian purpose, there's no military purpose for this. And the US should just make every hit painful, stop it, to stop that. Ahead of negotiations and everything, but to kind of right the world's economic situation in terms of energy, that has to stop. And that's one way to do it. Iran has 150 power stations. You continue to Iran to do that for another month or weeks or months. If you do it for another week, you hit seven tankers.

1:47:28We're going to hit 14 power stations. There should be some sort of, it's a tit for tat retaliatory strike. You don't tell them which power stations but you make it economically energy painful that's one thing the us could do and to try and stop those tanker hits because that's it's like triage you have that is the most important thing is to stop those tankers being hit on a daily daily basis now because it just can't be the as i said you can't do this for months it's you can do the economic war behind the scenes whatever but the tanker market the physical base tanker market can't wait six months it has to stop that has to stop today um and how many oil tankers super tankers are there in the world there are around 9 000 oil tankers in the world 1 000 of these

1:48:10super tankers the 2 million on the planet yeah i mean planet. Yeah. I mean, 2 million barrels is a big amount of crude. If the world is 100 million barrels per day of oil production, and not all of it is tankered. You know, some pipelines and... Yes. But 9,000 tankers in the world, 1,000 are supertankers. But if you hit one a day, annualize that, that's 400 or 500 a year. You know, there's a big chunk of the supertanker, that has to be stopped. And the other way is that you can stop the Iranian army, the IRGC. Iran has five refineries, just knock them out. Just like take the CIA, they know where they are. These are not hidden things or secret things. And just within 20 days, the Iranian economy, economy energy-wise the financial side is the best

1:48:54in strategy of this like the sanctions thing it's a very messy long term it creates all these weird side effects like China gorging on that free oil or discounted oil and you could just knock out their five refineries within uh and within 20 days that country seizes it stops operating as in they can't diesel trucks, gasoline cars, motorbikes, the entire economy, it physically can't operate. So the US has got options. All this talk about nuclear weapons, don't do that. It's not necessary. Iran is an extremely vulnerable, on an energy side, economy. And these things also are repairable. Like you don't want to destroy civilian infrastructure or dual-use infrastructure in Iran that's just to be negative and punish these people.

1:49:37You basically want to say, stop. Let's stop. Let's parlay. Let's take a breath here. You can't hit these tankers every day. We're not going to negotiate with you even as you do that. And then the third thing, I think going back to kind of the original scene of this war, I mean, Trump, the U.S. government killed the Ayatollah and his family back in late February, early March. And then when Onion Lair tried to wipe out another Lair, that kind of behavior, I don't think is not, that's, that is not conducive to getting a balanced negotiation. First of all, it's, I love, there should be, there should be, there should be, that kind of behavior is not conducive to getting a negotiated settlement. all, it's, it's, I love, there should be,

1:50:14that kind of behavior is not conducive to getting a negotiated settlement. No, it's not. Murdering their religious leader? No. And it is murder. I mean, it's insane. But here's the thing, Trump did it. Killing old people? Trump back in March said, you know, people were asking him the logic behind going to war and what I know, you talked to him beforehand. But he said, I got him before he got me. That's what he said at the Ayatollah just that's just a child talking that's absurd I'm sure but it doesn't even if it were that I'm sure there were people whispering in his ear that that was the truth for a fact that there were yeah and so there are all kinds of flatterers and whisperers and liars around him mostly in the Israeli lobby

1:50:49all telling him this lie that they're trying to kill you and you have to kill them as a sign of good faith the U.S. should have a policy revert back to kill you and you have to kill them first. As a sign of good faith, the U.S. should have a policy revert back to, it used to be a policy in the U.S. not to intentionally kill or assassinate foreign leaders. That was our policy up until we did this. I mean, we have assassinated, as you know, foreign heads of state, but we always lied about it and pretended we didn't. And I think, you know, there's some value in upholding the standard, even if you don't meet it. There you go. And didn't. And I think, you know, there's some value in upholding the standard

1:51:13even if you don't meet it. There you go. And it does matter because I think that every leader in Iran, and there are, you know, as I said, they've got that mosaic structure, but they, you can't negotiate with someone under that kind of threat. And it's not just, it wasn't just the leaders. It was during a peace negotiation that we did this. Yeah. As you know, it was a surprise attack. That was, I mean, that was just, it was a wrong, I mean, is it right or wrong to kill anyone? But just as a strategic negotiating kind of tactic, that was, that just doesn't work. You send in fake negotiators into a fake negotiation, and then you kill the elderly head of their religion and his family in the opening salvo.

1:51:54And then, by the way, in case they didn't get the point, you double tap a girl's school. Like, that's not the kind. And then you demand unconditional surrender, which our president did. Unconditional surrender, whatever that means. Yeah, I mean, you went all in and you failed. So what do you do now? I think there needs to be a restatement of U.s policy and trump could do one of his executive orders and whatnot just signed or whatever it says that u.s and no one endorsed even secondarily via the u.s like the cia or whatever should get it back into that business of killing politicians elect politicians even if we don't like the election or whatever you know for whatever reason stop that that is not good it's not good for ethically and morally but it's also a very basic military strategy you don't you

1:52:38know that was why you would never kill the generals you would need someone to parlay with and it destroys for a whole variety of reasons that should be a key component of this stage one stop the daily tanker wars two by saying you saying, you hit one, we're going to knock out two power stations. Let's see how long that's going to quickly stop. I mean, if it doesn't, Iran is making a rational decision to wipe out their own power grid. Okay. I mean, I think that you need to have some tit for tat escalation there because that needs to be stopped right now. That's triage. Two, you tell the Iranians, we are no longer going to endorse what we publicly do. We're not going to endorse, even on a secondary basis with other entities,

1:53:19you know, doing that. We're not going to support it, endorse it or promote it. Stop. We're not doing that anymore. The US doesn't do that. It should go back to that doctrine because you can't negotiate on that basis. And then once the situation is triaged, okay, then we can go back and talk about all these other issues. We have the Iran wanting this silly toll. We're not doing the toll. They want their money. You know who owes Iran more money? China. They've been buying all this discounted sanctioned crude over the last five years. They have $60 billion in yuan. I the the fact that the iranians were stupid enough to sell their oil for yuan but anyway they've got it locked up in china 60 billion dollars worth

1:54:00way more than the u.s has got locked up in nasa's for so who if so if iran wants to pay someone someone wants to pay around that toll china can pay the toll a dollar a barrel whatever it is take it out of china's money they're the guys guys that have been taking advantage of Iran over the last five, ten years. And so, but let's put it back on the table. If you want the toll, have it be a toll that's addressed by the GCC. Put the toll as GCC plus Iran, manage that toll. But that's something... The other countries on the Persian Gulf, in other words. Yeah, yeah, put them all on the toll and have an equal share of the... Plus Iraq. Yeah, yeah, a dollar a barrel and get them all sharing that toll.

1:54:37Yeah, okay, but no other party outside of the Persian Gulf is going to contribute that toll. So you've got the assets getting money from China first. They're your biggest debtor, if you will, Iran. The toll, make it a GCC toll, put that in place. We're not going to target your political infrastructure and even nefariously do it, really have it as a real thing, you know, where there's even secondary parties are not going to target that. And let's come to some sort of a situation, an agreement on the nuclear situation. Trump talks about bombing, you know, pickaxe mountain and all this nonsense. I mean, let's go back to, and it's probably discussed Trump, go back to the prior UN's inspection situation with Iran.

1:55:30Have Iran, treat Iran, by the way, as if it's a nuclear power. Because even if you take all that dust out, you think they aren't going to now try with every means possible to get one of those nukes from North Korea or five of those nukes or Pakistan. And in other words, treat them as if they are a nuclear power. Iran is a major power in the Middle East. Accept that as a reality. You can't crush it. You're not going to defeat it militarily. It's just too expensive. Let's come to an agreement where we treat them as if they're a nuclear power. Constrain it, if you will. Ideally, I mean, this is me personally. I hope they don't go back to the Ayatollah regime and all of that. I would prefer Iran.

1:56:15They tried the civilian rebellion back in January. It's probably going to end up being a military hunter like Pakistan, controlled by the IRGC. They'll have the Ayatollah, you know, they've keeping that guy out of sight. You know, people speculate why the son of the Ayatollah, why they haven't, you know, he's been maimed or he can't speak or legitimately they're afraid for him, you know, being killed by the US or Israel. The US should remove itself from that game and say, we don't play that game. But basically, normalize the entire situation and triage the tanker situation, normalize Iran as a proxy nuclear power. I mean, it's sad to say, but it is what it is. And you can knock out the dust, but put some guardrails around it. Like Pakistan,

1:57:04the US controls Pakistan's nuclear, supposedly, nuclear weapons. And yeah, that would be it. Just those things. And you don't need to go on and do a large, you know, all this escalatory talk of we're going to bomb huge things and make it a big spectacle. No, these are small, incremental things that can be done. And Iran is looking for an out also. They don't want this situation to escalate. You know, I remember 10 years ago when Instagram kind of kicked off, they had the rich kids of Tehran. These were all like these rich kids driving Ferraris around Tehran. They're just normal people like you. I mean, I don't drive Ferrari, but they're normal people that have, you know, we should treat them

1:57:49with dignity and respect and realize that they want to escalate, de-escalate the situation as much as we do. And they're great at their media game throughout this whole war has been amazingly good. I mean, they're trying to, you know, they put out that 1000 page or whatever it was, number page document saying, here's the legitimate reasons why. They're a grievance document, if you will. And they said, you know, we don't have a, we don't have a, they're trying to spin the US word of, we don't have a problem with the people of America. We have a problem with the government. And I'm thinking, hang on a second, for 50 years or 47 years since they've death through America. So you only met the government.

1:58:28You didn't meet the people of America. In other words, Iran, they're not, you know, the innocent party in this whole escapade either. They've done some terrible, horrible, terrible things. And then they say, oh, but the Shah, what about the Shah before was maybe 2,000 people, 3,000 people. There's a great book I read recently, The Cauldron, it's called, and just talks about the Shah. Yeah, he was a dictator, pretty much a McKean figure. But he was US supported because the US just needs someone stable in that environment. But the IRGC killed 20,000, 30,000 people in January of this year. The Shad, over a 40-year period, tortured or killed 2,000 people. I mean, so no one is innocent in this whole situation.

1:59:19Let's stabilize it. For the energy market's perspective, there's a way out of this. It doesn't involve using nuclear weapons or doing these weird showy things. It revolves around accepting that they're a rational player they have legitimate concerns that uh you know we've kind of adopted the israeli style massad style kill all the politicians first no the u.s should just back away from that go back to 1980s style and yes there were some behind the scenes things happening but don't as a policy make it a crime it was never really a crime in the past but make it as close to a crime as possible to kill or assassinate a foreign leader or especially their family. I mean, that is just not a good...

2:00:01It's not a Western understanding of justice at all. The family didn't got me. I mean, okay, you know, George W. Bush used the same logic back in Iraq, when it were Iraq too. He said, why did he go after into Iraq and Iraq too, you know, they used the disguise of weapons of mass destruction a lot. But the one thing that sticks to me about that time is that George W. said, he tried to kill my daddy. And, you know, that... When in fact it was the Israeli government that plotted to kill George H.W. Bush, and that came out in Viktor Ostrovsky's memoir from Assad officer's memoir. I think that's a fact. So, you know, whatever, it's a complicated world, a lot of bad players in it, but stability has got

2:00:49to be the goal. Let me ask you though, do you think the United States and Israel can accept an ending to this war in which the current Iranian government or some version of it remains in control? There are no or certainly fewer American bases on the Gulf. Like America is not keeping the peace in the Gulf going forward. We can't even keep the strait open. Yeah. I don't think the loss of those bases is a bad thing. I think they basically did what the US should have done. Those military bases, they were exposed targets for years. They shouldn't exist in the modern drone warfare. So they kind of did the US a favor by shutting those bases down. The US should still, when I say everyone talks about the US walking

2:01:28away from the Middle East, the US is not going to walk away from the Middle East. The U.S. is not going to walk away from the Middle East. The U.S. still needs to be there and protect those countries because we need energy prices to remain low at its core level, but also just for general stability as the hegemon globally and to stop China becoming the hegemon, especially in the Middle East. So the U.S. is not going to walk away from the Middle East no matter what Iran wants or needs or thinks they're going to do. Those bases, whatever, they're sunk costs, they're written off. The US is going to have to come up with a more kind of even like Iranian-inspired mosaic mobile-based structure to defend the Middle East, the non-Iranian side.

2:02:08But the US and Israel have to accept that Iran is there. It can't be defeated. And Iran, good on them. They shouldn't be defeated. I mean, they can do whatever they want. As long as they don't assault, especially with nuclear weapons, the rest of the world, they can do whatever they want. They're an independent country. So the U.S. and Israel... But accepting what you just said, which seems demonstrable, I mean, the geography of Iran is ultimately its power, and the fact it's a cohesive country, basically, and an ancient civilization. But just even saying that out loud is so contrary to what we have been told for 40 years and what even policymakers are saying now. Like, you know, we can't accept this government. We can't

2:02:54accept Iran as a nation. I mean, they're going to have to, right? But do you think they can? I don't know. I don't think it's a matter of if they can, they have to. They have no choice. We have no choice but to accept Iran as it is. Sometimes, you know, it's like North Korea. Would the U.S. love to, you know, they have nuclear weapons in North Korea, Rocket Boy. And so would the U.S. love to destroy North Korea and would everyone around them, the Japanese and South Koreans? Yes, of course. But it just is what it is. And sometimes you take the draw and you walk away and just allow it to exist. It's sad, but that's just that's just there's a limit to your power because you're not god yeah and it's not that's not a bad thing no i agree everyone thinks

2:03:40that the u.s has to intervene everywhere no no you basically there's a payoff structure here where you don't sometimes it's not worth intervening it's just in you not in u.s interests and that in iran is a classic case of that north korea is in our case where you do as much as you need to but you stop when the payoff stops working and uh iran is what those situations were we need to get to walk away from the situation when i say walk away we're going to walk away with those bases okay tell iran they're gone i mean but we're going to have them still defend, highly defend the eastern side, or the western side of the Persian Gulf. But we still need to be there. The US still needs to be there and defend oil production

2:04:22and natural gas production. One, as a bulwark against China and what they're doing. But two, because it does affect global energy prices and all of our allies, as well as our selfish own needs. We need to defend that side. And even if you ignore, take Israel out of the equation, we still need to be in the Persian Gulf. We need to be in there. Even if Israel, Israel, I think, messes with the mind of the US military in terms of tactics, like the thing about assassinating leadership, the US shouldn't do that and shouldn't get into that. But the actual physical logistics of defending those countries, the U.S. still needs to be there, irrespective of Israel. If Israel didn't exist, the U.S. unfortunately still needs to be there.

2:05:00I don't think that's crazy at all. So my last question is about global food supply and prices. And you said at the outset that there's just a huge lag because the growing cycle between the constriction of certain inputs, fertilizers, and outputs, like you don't see the consequences right away. What are we going to see in the next couple of years? So one of the two, the big things that were knocked out this year, most fertilizer is nat gas in a bag. Natural gas is that one third of the world's oil production. Qatar was knocked out this year. Half of its production was a big nat gas producer. And because of that, the feeds, the thing that makes the fertilizer, nat gas, has gone up in price. As I said,

2:05:45it's only $2 in the, $3 in the US. It's $30 in Asia, the price of natural gas. What, I just, sorry again, sorry to interrupt you. What percentage of global food supply is directly traceable just to the nation of Qatar? 80%. Oh, sorry, no, it's a Qatar. Just Qatar, which is one of the biggest gas producers. It's one-fifth of the world's LNG. So it's a decent chunk. It's like of the world's food, it's a fifth of terms of LNG and ammonia production. It's just funny. So you've got a country of 400,000 people. It's just a tiny little country, one of the smallest countries. And is responsible indirectly, but kind of directly really for like a huge percentage of global food supply. Yes. And also not just nat gas, you have sulfur.

2:06:28You know, a lot of heavy crude oil produces a lot of sulfur and you have to remove that sulfur. And sulfur is pretty much free. You can buy the sulfur. Like, someone will give you away the sulfur. If you go up to Canada, they desulfurize those oil sands that they stick up. They have to desulfurize. So, they have mountains of this yellow brick sulfur. The problem with sulfur is that it's not the actual material itself. It's kind of free. They would love to give it to you. Go up to Canada and get it. But the challenge is the Persian Gulf, sulfur is used to make, most fertilizer is natural gas, goes into urea and ammonia and sulfur. And so sulfur is kind of free pretty much because it's a side byproduct

2:07:06of the oil and gas industry. But the problem is it's not produced in all places around the world. And a big source of sulfur is also the Middle East and getting sulfur out. So the fertilizer industry has been hit by natural gas out of Qatar being shut down and sulfur. And the problem with sulfur is that Canada has a huge amount of sulfur, but it takes a while for the supply chains to turn a huge industry to point to Canada because Canada has to rail it out and get it to fertilized production facilities. And so the net effect is that fertilized prices have gone up by three or four hundred percent this year. And it doesn't really have a big impact in developed economies. Like even places like not developed economies as much like Russia and Ukraine, they produce a lot of wheat.

2:07:54The US produces a huge amount of grain, these huge food exporters in the US. And especially to places like China, China imports a huge amount of Western food. So it doesn't really have as direct a big impact in the West, Western farming, but has a huge impact in places like India, poor countries. And for those people, the main variable on their crop yield is fertilizer, and that has just gone up by 300%. So that will impact a lot of countries next year when crop cycles come through next year. And I don't think it's, I mean, people always talk about famine and the most extreme case, there will be less food produced next year. It's not going to affect the West, like America, or it'll just become slightly more expensive food.

2:08:38But you will get, you know, a lot of the world is still living at the breadline, if you will. And that is going to have a real impact. So that's why stopping this now as quickly as possible and reverting to a more quote-unquote normal situation is not just urgent for energy prices. It is going to have an impact and that impact is going to be on, you know what's going to happen? No one will talk about it. It'll just happen under the radar. People will be hungrier and especially in poorer countries, places like India and places like Africa, and no one will really talk about it. And it'll just be into the background of the next year or two. But that's actually already unfortunately baked in. Well, you'll see people move.

2:09:19I mean, you saw, you know, in the 19th century, Finns moved to Sweden. Then also you saw the Irish move to the United States. For food reasons. Food. Yeah. And so you're going to see mass migration every time food prices reach a certain threshold, people move. Food. Yeah. And so you're going to see mass migration every time food prices reach a certain threshold, people move. Yeah. Yeah. You've got, it's, it goes back to this kind of the thing I began with is that, you know, everyone is so disconnected on where their energy, all of, like 90% of their energy, people have this misconception where it comes from, but also in terms of food, people also don't realize how it's not fragile. The oil industry and natural gas,

2:09:58everyone thinks they're fragile. They're very, they're not, they're very robust, just as proven by this year, the Persian Gulf. They're not a fragile space, but they do have a price, the market price sensitivity. The market, the global market for food. The global market for food and the global market for energy, they have impacts and some of those impacts are very, very bad for especially poorer countries. You know, it's and I hope that people can have a realization of that people in Europe, people in the US that have a, that rail against reality, they're railing against how food is produced, how energy is produced, should kind of have a, not a, you know, remember there was that, when J.D. Vance was complaining to Zelensky,

2:10:50I was like, you're not grateful. I think that the world as a whole is kind of not grateful for where its energy comes from and is not appreciated of us because it should be something that people should learn more about and lives and reality. You know, it's a very fundamental part of the world we live in, is oil and gas and coal and food. And we didn't leave that world. It still exists underpinning modern civilization. It's just that people have disconnected themselves and are living in this simulated world where it's all solar panels and wind turbines. That's not reality. That's like still 4% or 5% of the world's energy. And people need to kind of anchor themselves, however they do it, into understanding where their food and oil comes from.

2:11:45And sometimes they're forced to because of the situation in Persian Gulf this year. But it's kind of an interesting kind of blind spot, energy blindness. Morgan Downey, one of the great experts on the topic, author of Oil 101. Thank you very much. That was great. Thank you, Tucker. Hi, everybody. Jay Leno here. You know when Yamaha asked me what car to feature for the 500th car giveaway, there's only one car, the Rolls Royce. And not any Rolls Royce, the Rolls Royce Spectre, the most powerful Rolls Royce ever built. And here's the special part. The one they're giving away was built exactly like mine. It's a car I chose in my own garage, and now one lucky guest will drive home in the very same car that I have.

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