{"id":617,"date":"2022-09-18T14:37:32","date_gmt":"2022-09-18T21:37:32","guid":{"rendered":"https:\/\/smartermarkets.media\/?p=617"},"modified":"2024-10-16T22:37:07","modified_gmt":"2024-10-17T05:37:07","slug":"winter-is-coming","status":"publish","type":"post","link":"https:\/\/www.smartermarkets.media\/winter-is-coming\/","title":{"rendered":"Winter Is Coming"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"617\" class=\"elementor elementor-617\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-08ce3ba e-flex e-con-boxed e-con e-parent\" data-id=\"08ce3ba\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-eee292b elementor-grid-1 elementor-grid-tablet-2 elementor-grid-mobile-1 elementor-widget elementor-widget-loop-grid\" data-id=\"eee292b\" data-element_type=\"widget\" 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.elementor-element.elementor-element-146ac4a{--display:flex;--flex-direction:column;--container-widget-width:100%;--container-widget-height:initial;--container-widget-flex-grow:0;--container-widget-align-self:initial;--flex-wrap-mobile:wrap;border-style:dotted;--border-style:dotted;border-width:0px 0px 1px 0px;--border-top-width:0px;--border-right-width:0px;--border-bottom-width:1px;--border-left-width:0px;border-color:var( --e-global-color-0dd84a5 );--border-color:var( --e-global-color-0dd84a5 );--margin-top:0rem;--margin-bottom:2rem;--margin-left:0rem;--margin-right:0rem;--padding-top:0rem;--padding-bottom:2rem;--padding-left:0rem;--padding-right:0rem;}.elementor-4220 .elementor-element.elementor-element-0a79101 > .elementor-widget-container{margin:0rem 0rem 1rem 0rem;}.elementor-4220 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.elementor-element.elementor-element-1a63b80 > .elementor-widget-container{margin:0px 0px 0px 8px;padding:4px 8px 4px 8px;border-style:solid;border-width:1px 1px 1px 1px;border-color:#EEEEEE;border-radius:2px 2px 2px 2px;}.elementor-4220 .elementor-element.elementor-element-1a63b80.elementor-element{--align-self:flex-start;}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items:not(.elementor-inline-items) .elementor-icon-list-item:not(:last-child){padding-bottom:calc(16px\/2);}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items:not(.elementor-inline-items) .elementor-icon-list-item:not(:first-child){margin-top:calc(16px\/2);}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items.elementor-inline-items .elementor-icon-list-item{margin-right:calc(16px\/2);margin-left:calc(16px\/2);}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items.elementor-inline-items{margin-right:calc(-16px\/2);margin-left:calc(-16px\/2);}body.rtl .elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items.elementor-inline-items .elementor-icon-list-item:after{left:calc(-16px\/2);}body:not(.rtl) .elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items.elementor-inline-items .elementor-icon-list-item:after{right:calc(-16px\/2);}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-item:not(:last-child):after{content:\"\";border-color:#999999;}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items:not(.elementor-inline-items) .elementor-icon-list-item:not(:last-child):after{border-top-style:solid;border-top-width:1px;}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-icon-list-items.elementor-inline-items .elementor-icon-list-item:not(:last-child):after{border-left-style:solid;}.elementor-4220 .elementor-element.elementor-element-84a4e0d .elementor-inline-items .elementor-icon-list-item:not(:last-child):after{border-left-width:1px;}.elementor-4220 .elementor-element.elementor-element-6115381{--divider-border-style:solid;--divider-color:var( --e-global-color-0dd84a5 );--divider-border-width:1px;}.elementor-4220 .elementor-element.elementor-element-6115381 .elementor-divider-separator{width:40px;}.elementor-4220 .elementor-element.elementor-element-6115381 .elementor-divider{padding-block-start:16px;padding-block-end:16px;}<\/style>\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-611 post-611 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-energy tag-energy-crisis tag-energy-security tag-lng tag-natural-gas pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-1-samantha-dart\/\">\n\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-616\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e01-samantha-dart.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 1\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-1-samantha-dart\/\">Samantha Dart, Head of Natural Gas Research, Goldman Sachs<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>September 3, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-1-samantha-dart\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"611\" class=\"elementor elementor-611\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6df3dea elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6df3dea\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f523506\" data-id=\"f523506\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-3b81a5e elementor-widget elementor-widget-html\" data-id=\"3b81a5e\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 1 | Samantha Dart, Head of Natural Gas Research, Goldman Sachs\" allowtransparency=\"true\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?from=embed&i=frbde-12b3e30-pb&share=1&download=1&fonts=Arial&skin=1&font-color=auto&rtl=0&logo_link=none&btn-skin=c73a3a&size=150\" width=\"100%\" height=\"150\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-3f1715b episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3f1715b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e721b79\" data-id=\"e721b79\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-0c67543 elementor-widget elementor-widget-text-editor\" data-id=\"0c67543\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>We kick off our new series, Winter is Coming, with Samantha Dart, Head of Natural Gas Research at Goldman Sachs. SmarterMarkets\u2122 host David Greely sits down with Samantha to discuss the outlook for natural gas and LNG this winter in the face of all that has happened \u2013 and is happening \u2013 in Europe.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f79b43f elementor-widget elementor-widget-text-editor\" data-id=\"f79b43f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM85_SamanthaDart_TranscriptFinal_20220907.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript \u2192<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5577aec elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"5577aec\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-34228cd elementor-widget elementor-widget-text-editor\" data-id=\"34228cd\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-44c6667 elementor-widget elementor-widget-text-editor\" data-id=\"44c6667\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-612 post-612 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-energy tag-energy-crisis tag-geopolitics tag-lng pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-2-daniel-yergin\/\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-615\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e02-daniel-yergin.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 2\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-2-daniel-yergin\/\">Daniel Yergin, Vice Chairman, S&#038;P Global<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>September 10, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-2-daniel-yergin\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"612\" class=\"elementor elementor-612\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-0ca6131 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"0ca6131\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-8d4b86d\" data-id=\"8d4b86d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-14a3b96 elementor-widget elementor-widget-html\" data-id=\"14a3b96\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 2 | Daniel Yergin, Vice Chairman, S&P Global\" allowtransparency=\"true\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?from=embed&i=5ndai-12bcd86-pb&share=1&download=1&fonts=Arial&skin=1&font-color=auto&rtl=0&logo_link=none&btn-skin=c73a3a&size=150\" width=\"100%\" height=\"150\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-e71dc19 episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"e71dc19\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0603e26\" data-id=\"0603e26\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6734577 elementor-widget elementor-widget-text-editor\" data-id=\"6734577\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>In this episode, host David Greely welcomes energy icon and Vice Chairman of S&amp;P Global, Daniel Yergin, to discuss EU energy crisis warnings and calls for immediate solutions spread across global headlines.<\/p><p>Covering everything from his predictions in The New Map: Energy, Climate and the Clash of Nations to S&amp;P\u2019s recent Future of Copper Report \u2014 Greely and Yergin pack a half hour with insights on Europe\u2019s energy crisis and its impact on our road to decarbonization, and what\u2019s next now that Winter is Coming.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6d29157 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6d29157\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4529643 elementor-widget elementor-widget-text-editor\" data-id=\"4529643\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-192beda elementor-widget elementor-widget-text-editor\" data-id=\"192beda\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-01206f1 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"01206f1\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-82ec8ba\" data-id=\"82ec8ba\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-3b64be8 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3b64be8\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-49203e9\" data-id=\"49203e9\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-59d65fc elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"59d65fc\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a46ab40 elementor-widget elementor-widget-heading\" data-id=\"a46ab40\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2c41927 elementor-widget elementor-widget-text-editor\" data-id=\"2c41927\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM86_DanielYergin_TranscriptFinal_20220913.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-88d5baf elementor-widget elementor-widget-accordion\" data-id=\"88d5baf\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1431\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-1431\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Can you explain why we\u2019re in an energy war in Europe?  How does this change how we should think about the energy markets this upcoming winter?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1431\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-1431\"><p>DY: This energy crisis did not start on February 24 when Russia invaded Ukraine; it really started roughly a year ago, in September of 2021, when the markets began to tighten because of preemptive underinvestment in conventional energy sources. It was an economic development rather than a geopolitical one. Although Russia had begun pulling back on supplies, normally, prices would go up, and we put more gas in, but strangely enough, Russia didn\u2019t do it, and that contributed to higher prices. So maybe this was a warm-up for what was going to come with February 24 to put the Europeans in a more difficult position, which was one of Putin\u2019s miscalculations. He thought that Europe\u2019s heavy dependence on Russian energy would mean that they wouldn\u2019t protest but just wave through Ukraine, just like the annexation of Crimea had been accepted.<\/p><p>DY: Now Putin is doing something that the Soviet Union said they would never do. They would never use energy as a weapon and were a reliable supplier. Putin is now using it as a weapon, and he laid out his strategy in June at the St. Petersburg International Economic Forum. He said explicitly that high prices would bring Europe to economic hardship, which would cause social tension and problems, which might bring populous parties to power and change the elites in Europe, undermining the coalition that supports Ukraine. And that is exactly what he is trying to do. And It looks like he has this one victory under his cap, which is Italy, where Mario Draghi, who went to Kyiv on a train to commit Italy\u2019s support to Ukraine, is being pushed out of power by one of the far-right parties, which withdrew from the coalition. So now you have the situation where Europe is reeling from prices that people never imagined that they would see.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1432\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-1432\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">I imagine that\u2019s going to be with us for some time and probably will get worse. Thinking about the energy markets, how is this different from normal thinking about the fundamentals? When thinking about it, as Russia has unleashed energy as a weapon or changed its strategy in that way?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1432\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-1432\"><p>In a way, it reminds me of the energy crisis of the 1970s, when you had the collision between a global energy crisis and the global geopolitical crisis. This isn\u2019t just about markets anymore. It\u2019s about the whole system under stress because Putin is using gas as a weapon. It puts pressure on big companies and on smaller companies, not just in England, but people and families closing down their bakeries and shops because they can\u2019t afford it. Plants and fertilizers shutting down because energy is too expensive. This may not be so well perceived in the United States or other parts of the world, but Europe is in a very difficult situation. It\u2019s highly likely that Europe will be in a recession by the fourth quarter.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1433\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-1433\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">The collapse of the Soviet Union was connected with the collapse in oil prices in the 1980s. How does, what is happening in Russia,  connect to that long history? Do you think we\u2019ll look back in  10 years and see this as a turning point that changes the energy markets for decades to come?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1433\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-1433\"><p>I think it will change; the world after the crisis in the 70s was different than the world before. The world after this crisis is going to be different. If we go back 30 years, the collapse of the Soviet Union brought down barriers for the first time after the Bolshevik Revolution. As a result, you had an integrated global market. People didn\u2019t know until February that the US was importing half a million barrels a day of Russian oil for its east coast refineries to help them run more efficiently and produce more products. There always was politics, but it was also about efficiency. You had global markets and energy, oil, gas, and coal flowing from Russia, an investment in technology flowing into Russia, and the development of a global gas market.<\/p>\n<p>And we have the big four LNG exporters: Qatar, Australia, the United States, and Russia. The barriers have gone up again because Europe has said we\u2019re not going to import Russian energy anymore, and I think unless there\u2019s a major change in Russia, there\u2019s no going back from that. But they haven\u2019t really prepared themselves for that, and so it can be very difficult for them to do. It\u2019s just changes and flows; India never imported Russian oil. Now I think it\u2019s either the largest or second-largest importer of Russian oil because they get it at a discount. So what we have is a restructuring of the global markets. It\u2019s only the beginning, and there\u2019s no more single market and investment flows around the world anymore, now it\u2019s going to be a fragmented market. Generally speaking, we\u2019re heading into this kind of new era of fragmented and divisive globalization.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1434\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-1434\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">The latest of your many bestselling books on the commodity and energy markets is \u201cThe New Map, Energy Climate, and The Clash of Nations.\u201d How much of what we\u2019re seeing now, are the things that you were thinking about while writing the book, and what might require a new chapter?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1434\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-1434\"><p>Certainly a new chapter, because obviously the world changes, but the last sentence at the bottom of Page 78 said Ukraine was the issue that was going to blow up between Russia and the West, and it happened. I didn\u2019t necessarily envision that it would happen this way, but you could just see that this was a tinderbox, and it was a focus because it reflected on the fact that Putin did not accept the outcome of the cold war. He did not accept the outcome that Ukraine was a separate country and gas was so intertwined with it. One of the primary reasons why Russia was building Nord Stream 1 and Nord Stream 2 was so they don\u2019t have to send gas through Ukraine, through which most of their gas historically had gone to Europe. I wrote in the book a lot about how this relationship between Putin and Xi has developed between Russia and China.<\/p><p>And at the book, I had a scene describing being at the St. Petersburg conference in 2019 and watching when Putin\u2019s guest was Xi and Putin began the conversation by apologizing, he said, President Xi, we kept you up until 4 o\u2019clock your time, with talking, and Xi said, we never have enough time to talk, and then I thought, what do they talk about? One of the main things they talk about is that they don\u2019t like the international global economic and political order that, in their view, the US dominates. They don\u2019t see it as a multilateral system; we see now that Russia\u2019s basically headed to become economically dependent on China. The other thing that I wrote about, which is unfolding right now, was explaining why we\u2019re seeing this movement from the WTO consensus in which China, and the United States, were all in this together and all benefiting from globalization and that China would be a responsible stakeholder and all those terms, but now we have a great power competition. And in the book, I explain how this came about, why, and where I think the next crisis could be.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1435\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-1435\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">What is your take on what policymakers may be thinking in the West? Because so far, the response to the shortfall in Russian gas has largely been left to market forces with market prices. When you speak with many policymakers, do you think they realize the seriousness of this situation?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1435\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-1435\"><p>Let me divide this into two parts: the Europeans and the US. The European consumers are surely worried about this because they\u2019re living with it, and those consumers are also the voters; there is a big very concern about a social disorder that can ensue. And they\u2019re struggling to figure out how you manage this. And now, the focus has been to get as much gas to the winter&#8217;s storage as possible, which has contributed to the higher prices. But now the question is how do we cap the prices, do we subsidize, do we send money to consumers, how do we handle this, and that\u2019s what they\u2019re struggling with. You\u2019re going to hear a lot about price caps of one kind or another, the US proposal for price caps on Russian oil, the European proposals for price caps on natural gas, or windfall profits.<\/p><div>So you\u2019re going to see a lot of market intervention. It\u2019s driven by the reality that its way outside of any of the scenarios they were working with, and a lot of the interventions may cause further distortions in the market; it\u2019s the unknown. The price caps can screw up the price signals for consumers and investors. In the US, there is a big turnaround. We had a Biden administration that came in and only focused on climate, then they turned around and saying to domestic oil producers if they could increase production for a short time, at least while we need it, and also rediscovering the fact that the world runs 82% of world energy is hydrocarbons<\/div><div>\u00a0<\/div><p>And of course, the other response you\u2019ve had in the US is the so-called Inflation Reduction Act, which doesn\u2019t seem to have much to do with inflation, except maybe it\u2019ll drive up the cost of minerals, but a lot to do with the Industrial Policy Act 2022, which is a pretty massive intervention in the energy markets and in the effort to change will cost a lot, and will probably end up costing a lot more because it always is.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1436\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-1436\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">Can Europe and the US win this energy war, and at what price? What do you think?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1436\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-1436\"><p>I think it\u2019s a dicey situation because Putin, from his point of view, has to win his war, and breaking the coalition, creating confusion and disarray, is a central objective of it. He\u2019s going to throw everything into it. I think, at the end of the day, the Europeans are going to hang together because they look at the Ukraine war as a war in Europe, and there\u2019s lots of apprehension about what if Putin succeeds here, what\u2019s next? So Russia can\u2019t be allowed to win. And that\u2019s why it\u2019s very hard for people to see what the way out is here, and of course, what\u2019s making it more complicated is that one side has nuclear weapons, and the other side, NATO has nuclear weapons too, and this has caused terror. And then you have this nuclear power plant in Ukraine that was taken over by Russians, which they treat like war booty, and this comes with grave danger and higher responsibility.<\/p><p>If something bad happens at the nuclear power plant, the west really needs to say that basically, Putin uses nuclear weapons, but in a different form. I think getting through the next few months will be critical element, and there is a new player in the global energy market now, and it\u2019s called the US Federal Reserve and the other Central Banks, and you have already seen that the cost of bringing down the prices may result in stagnation or recession. And the prices are very volatile, and things could change tomorrow. Prices would come down further if there\u2019s an Iran nuclear deal, and more Iranian oil prices would go up if China got out of COVID restrictions and went back to old oil consumption levels. And for the federal reserves, a form of price management would be relentlessly raising interest rates.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1437\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-1437\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">Do you think Europe needs to be on some sort of energy war footing, or what would that look like?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1437\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-1437\"><p>The Germans have certainly been talking about, and not only the Germans, but the imminence of some kind of rationing, and I think Germany has been preparing for it. Preparing for the decisions about who gets gas, who should be the priority among industries? Because you don\u2019t want to short-change the industry and then have unemployment. I think that would qualify as a war footing. Intervention in the market price caps that\u2019s like a war footing. Some have compared this intervention by the US government to the war footing intervention of World War II. For Europe now, this is the question of economic life and death, and it\u2019s also about political survival for current European leaders. For the European politicians who are currently holding office, they don\u2019t want to have the Mario Drughi scenario.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1438\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-1438\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">What is your outlook for energy in Europe this winter? What do you think are the best and worst-case scenarios within reason that are in play?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1438\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-1438\"><p>The best scenario is that Europe gets the gas storage full and will be running ahead of schedule. At the moment, they are around 85% as we\u2019re speaking today, and if it\u2019s a mild winter, that would be the best outcome. The worst outcome is a social breakdown, and governments can\u2019t stand the pressure. A recession turns into something worse than a recession. Putin thought the war would be over in three days and his officers, when invading Ukraine on their way to Kyiv, brought their dress uniforms for the ceremonial parade, didn\u2019t turn out that way. World War 1 was supposed to be a short war but turned into trench warfare. So we don\u2019t know how things will go, and there is the additional danger that Russia is a nuclear power. Putin has already talked four or five times about using nuclear weapons. He seems now to back away from that because he doesn\u2019t know what the repercussions would be. And certainly, there are even worse case scenarios, but I prefer not to go there. I prefer to go with gas storage filled and warm winter.<\/p><p>From the energy point of view, relieving the pressure on Europe, not a recession, but an economic slowdown, and see where it takes and the people&#8217;s behavioral responses. We also do see price responses. For example, gasoline demand in the US now is maybe 6% to 8% less than it was this time last year. So we shouldn\u2019t forget that every price is a little piece of information that tells people what to do. Higher gasoline prices hit teachers, nurses, and people driving to work, but now gasoline prices are down, and that is partially because people have found ways to reduce consumption. So I think prices itself is an important factor here, and they always say that the solution for high prices are high prices because they bring low prices.<\/p><p>There is also a larger question about investment. Two questions. One is that preemptive under-investment is a real problem because energy, oil, and gas demand will continue to grow. You can\u2019t tell emerging markets that they can\u2019t have energy and one of the things I wrote about in \u201cThe New Map\u201d book, is about the merchants of this new north-south divide are the developing countries saying, hey, you can\u2019t tell us that we can\u2019t use natural gas instead of having people burn wood in indoor cooking, you won\u2019t finance that. And by the way, you do want to finance more natural gas terminals. Another thing I\u2019ve been working on is about a world of big shovel mining.<\/p><p>At S&amp;P Global, we have just concluded this big study on copper, and it\u2019s very interesting. We look closely at the Biden 2050 goals and the EU 2050 goals. What does that mean, technology by technology and sub-technology by sub-technology, and how much copper would you need? We picked on copper because copper is the metal of electrification. We saw that you get this energy transition demand on top of existing demand, and guess what there\u2019s not enough supply. Supply would have to double to meet the demand embodied in these goals by 2035. Look at Chili, they have a new president, and they are aiming to tax copper production and restrict mining, put limitations on it, and make permits harder. So why does Chili matter? Because Chili is the source of 25% of the world\u2019s copper. Chili and Peru together are 38% of the world\u2019s copper, and 42% is smelted in China.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1439\" class=\"elementor-tab-title\" data-tab=\"9\" role=\"button\" aria-controls=\"elementor-tab-content-1439\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">Is energy security becoming metal security?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1439\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"9\" role=\"region\" aria-labelledby=\"elementor-tab-title-1439\"><p>Absolutely! Over the last couple of decades, the amount of copper produced in the United States has declined by half, and now try getting a permit. The IEA says the international energy agency says it\u2019s 16 years on average from discovering a resource to the first production, and what they left out is the other 15 years of litigation as it works its way through the courts in the United States.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-14310\" class=\"elementor-tab-title\" data-tab=\"10\" role=\"button\" aria-controls=\"elementor-tab-content-14310\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">So now that we have this energy war in Europe, creating a severe shortage of our current energy supply and a lack of investment and shortfall in metals will likely create a shortage in what we need to transition to a low carbon energy supply. What do you think about all this, and what it means for the future in terms of an energy transition?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-14310\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"10\" role=\"region\" aria-labelledby=\"elementor-tab-title-14310\"><p>Well, people are not anticipating that you\u2019re going to see a lot of inflation in the cost of the materials that are required for the energy transition, and it may get more expensive. Now people may look at solar panels and wind turbines and see the incredibly dramatic drop in cost; solar down 90% and wind costs going even more down. So now people are just extrapolating that those costs will continue to fall. But, in truth, if everybody rushes to the same side of the boat at the same time, it will not be a smooth sailing anymore. And I think that this question of where you\u2019re going to get the materials from, for instance, half the world\u2019s cobalt comes from the Democratic Republic of the Congo. And you can go down the list and this just issues with permits to mine around the world.<\/p><p>Then South Africa, same issues with permits. It\u2019s gets harder to do this, and then still you need so much more. In the copper study we mention a new supply, greater efficiency in mining and recycling are all those necessary elements. But at the same time, if we talk about, recycling, iron steel, for instance, can be recycled, but these other things, you have to gather all the stuff on a scale. It was really interesting looking at copper because, factually, copper is not on the critical minerals list of the US government, which is really odd. You need it for electrification. The assumption that just you can do all this really quickly, that everybody can have an electric car and offshore wind.<\/p><p>I know that electric car takes at least two and a half times more copper than a conventional car, and maybe with innovation, they can reduce it. When California declared that all cars sold in the state have to be electric by 2035. Let\u2019s multiply every one of those, whatever the amount of copper, let\u2019s multiply it by 2.5. Did they figure that in the legislation? Probably not. Copper is a good example because you just see where the supplies come from and then, of course, there\u2019s a famous phrase called the obsolescent bargain. Let\u2019s say David Greely Inc. makes an investment in a developing country. You have a festive dinner and signed all he papers and everybody agrees on it. And so it goes, and he price goes up and down in the market. Then a new government comes in and they have no vested interest in the deal and so they tell you that they made too good of a deal to get you to invest your money here. Let\u2019s change it because you\u2019ve already invested, and so the bargain becomes obsolescent. And suddenly the cost goes up. As sure as the sun rises, that\u2019s exactly what is going to happen with these minerals and resources as they will become more important for the energy transition. Most people are not thinking about it in the context of how economic history unfolds.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-14311\" class=\"elementor-tab-title\" data-tab=\"11\" role=\"button\" aria-controls=\"elementor-tab-content-14311\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">There seems to be a consensus that we can pull off the energy transition and it\u2019ll cost somewhere around 2% of GDP over the next 20\/30 years.  You pointed out,  solar wind prices have come down, but if you start running out of the cobalt and the copper and all the other materials you need, those prices are gonna shoot right back up. How do you think policy makers may be thinking about it?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-14311\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"11\" role=\"region\" aria-labelledby=\"elementor-tab-title-14311\"><p>That\u2019s a very good point! It would be interesting to see, for instance, take your 2% and then do another scenario in which the prices of those inputs go up to 4% a year. What if your 2% does become 5%? How will this work? It\u2019s a massive achievement that solar costs have come down so much. And thank you, China, because China produces 80% of the solar panels, and they brought those costs down. And you\u2019re also going to run into the globalization issues. One reason costs have come down is because you had globalization, you had the efficiency. You could get the cheapest solar panel from China, and not really worrying about production elsewhere. Now, sorry but no. No, we don\u2019t want to be so dependent on China.<\/p><p>China has its own calculations as well. There\u2019s a price for security, and we don\u2019t know what that price is going to be. It may be higher than people think. So I think one needs a little more modesty about the assuredness about how an energy transition will unfold. One of the things I did in the New Map, is to look back historically at all energy transitions we had. The energy transitions we are going to have now should not be talked about like any energy transition we had before. Because oil overtook coal as the world\u2019s number one resource in the 1960s, now today, the world uses three times as much coal. Let\u2019s say we have plan A and B. We\u2019re going to chuck A and then just have B. That\u2019s never been done in 28 years. In today\u2019s about an 88 trillion world economy, and could be 150 trillion world economy by 2050, is 82% dependent on hydrocarbons. I think you need to be at least a little modest about getting that done. The real world tends to be a little more complicated than scenarios or PowerPoints.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-613 post-613 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-popular-episodes category-winter-is-coming tag-energy tag-energy-crisis tag-energy-policy tag-lng tag-policy tag-risk pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-3-doomberg\/\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-614\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e03-doomberg.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 3\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-3-doomberg\/\">Doomberg, Publishers of the \u201cDoomberg\u201d Substack<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>September 17, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-3-doomberg\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"613\" class=\"elementor elementor-613\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-0844321 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"0844321\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-07d1d43\" data-id=\"07d1d43\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-0e17ad0 elementor-widget elementor-widget-html\" data-id=\"0e17ad0\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 3 | Doomberg, Publishers of the \u201dDoomberg\u201d Substack\" allowtransparency=\"true\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?from=embed&i=fq68w-12c6969-pb&share=1&download=1&fonts=Arial&skin=1&font-color=auto&rtl=0&logo_link=none&btn-skin=c73a3a&size=150\" width=\"100%\" height=\"150\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-80b0934 episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"80b0934\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b55c274\" data-id=\"b55c274\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-9953479 elementor-widget elementor-widget-text-editor\" data-id=\"9953479\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>In this episode, host David Greely welcomes energy and #fintwit icon, Doomberg, for an in-depth discussion on the European energy crisis covering the team\u2019s take on the winter ahead in Europe and policy\u2019s role in the path forward.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-80aa225 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"80aa225\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0ca2848 elementor-widget elementor-widget-text-editor\" data-id=\"0ca2848\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3ee3b45 elementor-widget elementor-widget-text-editor\" data-id=\"3ee3b45\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6f39fed elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6f39fed\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-49bcb2d\" data-id=\"49bcb2d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-9ae5352 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"9ae5352\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-86c8b48\" data-id=\"86c8b48\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-5cda70c elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"5cda70c\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-18dfff2 elementor-widget elementor-widget-heading\" data-id=\"18dfff2\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9df14b5 elementor-widget elementor-widget-text-editor\" data-id=\"9df14b5\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM87_Doomberg_TranscriptFinal_20220920.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f742ed2 elementor-widget elementor-widget-accordion\" data-id=\"f742ed2\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2591\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-2591\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You and your colleagues have chosen to keep your identities private. Can you just give us a quick introduction for our listeners, maybe share a little about your background and tell us why keeping your identities private is important to you?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2591\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-2591\"><p>Doomberg: As you\u2019ve mentioned, yes, we are anonymous. I\u2019m the head writer for a small team that runs the Doomberg Substack. In our real lives, we are consultants, and former industry executives in the commodity sector. I am a scientist by training and spent a couple of decades leading worldwide teams of researchers working on tough problems in the energy sector. My editor-in-chief, for example, has a very strong finance background, so we were consultants and doing quite well together as a team. After leaving the industry, we have probably 50 years of industry experience combined on the team, and then COVID hit and put a big dent into our business. We lost something like 80% of our business virtually overnight, and you have to decide what you\u2019re going to do.<\/p><p>Doomberg: We got a fantastic piece of advice from a famous hedge fund manager who suggested that we should look into helping people who create content and sell it on Wall Street. Look into helping such people run their businesses better. He recognized our understanding of the finance world from the industry perspective and our abilities as business leaders and strategists, and we embarked upon that journey. And it was a fantastic 12 to 18 months after we decided to open up that vertical in our consulting business, and it was much more fun than our prior work, which had focused on C-suites and family office types, and we had a lot of success. One of our best clients suggested that we just start our own. His advice was you will follow all of your advice, unlike me, and build something from scratch.<\/p><p>Doomberg: I\u2019ll lend you a hand, and it was the beginning of truly the work of our lives. It\u2019s been an unbelievable 18 months, and we\u2019ve grown the brand. We\u2019ve improved the product and made it our full-time job. We\u2019ve put our consulting business on hold. We\u2019ve kept only our favorite clients. We\u2019re turning away business, and doing Doomberg for a living, so why stay anonymous? I could tell you why we started anonymously. Building a brand behind a person from scratch is difficult if you have no social media presence. And one of our rules in marketing is that you can\u2019t be remembered if you don\u2019t stand out, and we sort of designed the green chicken one day. We were playing around with names. We did some preliminary AB testing. It scored amazingly well, and we just went with it.<\/p><p>Doomberg: Now, why stay anonymous? We have observed that when popular Twitter accounts or big anonymous social media accounts reveal themselves, sort of the error is let out of the balloon; the mystique, the intrigue is gone. So Doomberg has grown so big and so fast that we just can\u2019t have a reveal ourselves. It\u2019s not some big secret. There are lots of people on the street who know who we are. Substack knows who we are; Stripe knows who we are. Our painters know who we are and that we\u2019re doing Doomberg ice. It\u2019s just part of the brand now, and the last part I would make is that I\u2019m the head writer and the person who appears on podcasts, but we truly are a very tight-knit team. And it wouldn\u2019t make sense to rebrand around a person at this point. So we\u2019re just going to stay as the green chicken. It\u2019s a fun character, and that\u2019s the background.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2592\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-2592\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You\u2019ve been a strong critic of Western policymakers regarding some of their decisions in Europe. I was curious from your perspective as a scientist and an energy market expert, what do you think Western policymakers have been getting wrong about the energy markets, and why do you think that is?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2592\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-2592\"><p>Doomberg: I would say the way we analyze the world is we begin with a very basic but critically important question, is the world currently experiencing an abundance of primary energy or a shortage of it? Unless you make an intelligent assessment of the answer to that question, it\u2019s very difficult to analyze the markets for the past two decades. The Western world and the group of leaders within it have been bathing in excess of primary energy driven predominantly by the boom in shale oil and gas production in the US. When you are swimming in excess of primary energy, it is easy to think that the energy commodities are yesterday\u2019s industries that can be considered and treated like any other fungible commodity, and don\u2019t matter all that much.<\/p><p>Doomberg: It\u2019s only when you enter into an unexpected period of a primary energy shortage the laws of physics take over and dictate the policy choices for our leaders, and a confluence of many events occurred in the past couple of years that pivoted the world from an era of excess to an era of chronic shortage. The three main ones are the ESG movement and the desire to defund fossil fuels when we do not have bridging technologies other than nuclear, which environmentalists also oppose. We do not have bridging technologies to get us from where we were to where we want to be with regard to carbon emissions. Yet, we still sort of saw it away at the legs of our stool by chopping away at the acceptability of funding fossil fuel development projects, that\u2019s one. But to be fair to the environmentalists, it\u2019s also true that the shale booming incinerated a lot of investor capital, which was all driven by access to cheap debt and abundant money.<\/p><p>Doomberg: And that investor capital was burned, and then the precipitating event of the shutdown of the economy in response to the pandemic was the catalyst that marked the pivot point from the era of abundance to the era of shortage. So when those three things converged in March of 2020, you saw a wave of bankruptcies, particularly in the shell patch and the companies that emerged from<br \/>court-supervised reorganizations have a cash-oriented mindset. They aren\u2019t investing, and now we have what we have, which is chronic shortages of primary energy. And one of the themes that we\u2019ve been pushing in a phrase we\u2019ve become known for is energy is life, and energy commodities in times of shortages are extraordinarily elastic. What is the price elasticity of demand for life, and who can pay it? The clearing price for life is far above what most people can afford. And that\u2019s what we\u2019re experiencing right now. The genesis of the crisis was born in Europe. It has spread globally. The economy cannot survive in a way that we\u2019re accustomed to if Europe collapses. We believe we are at a significant turning point and a historical one that is unfolding in real-time before us.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2593\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-2593\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: The one thing that you and Emmanuel Macron might agree on is that it\u2019s the end of the era of abundance?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2593\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-2593\"><p>Doomberg: Well, that\u2019s by choice too, though, in some ways, right? It doesn\u2019t need to be this way, which is why we\u2019ve been so critical.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2594\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-2594\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: From my understanding, you believe that Putin has the leverage, and is that right? Does that goes back to this notion of elasticity?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2594\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-2594\"><p>Doomberg: So Putin certainly has the leverage for the economic part of this hybrid war. We believe and have written, and we\u2019re writing as far back as a year ago, that by handing our energy cards to Putin, we should not be surprised when he decides to play them. We just put out a piece about it. And we had a fake quote that we put in. We usually open our pieces with a good quote, and this piece is called &#8211; Europe on tilt. The fake quote we used was in times of war, hand all the leverage to your enemy, then complain loudly when they use it. We handed Putin the keys to Europe\u2019s energy future. We believe that he understood the leverage that he had and is now using against Europe. When Putin decided, which I think was incorrect, to cross the border into Ukraine and initiate a kinetic war in the heart of Eastern Europe.<\/p><p>Doomberg: I think that was a total blunder, to be very clear. Some have accused us on Twitter of being sort of relatively pro-Putin in our analysis. We don\u2019t think it is unpatriotic to point out the reality on the playing field and to suggest alternatives that we believe would help achieve our geopolitical objectives. That\u2019s what we\u2019ve always tried to do. The cards that Putin has &#8211; were given to him by the west. He\u2019s playing them now, and some would say, and I would concur, that completely shutting off the gas from Nordstream one is potentially a sign of weakness and desperation on his part, but it will certainly hurt Europe in the near future term. What it does for Putin in the mid to long term is a different question whatsoever. But I do believe he has the leverage. He is using it, and we\u2019re on the cusp of a dire situation in Europe. We\u2019re in the middle of one, given the headlines of the past week, which have been unbelievable.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2595\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-2595\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Do you think it was foreseeable future, and even now, how are you tracking the volume of oil and gas sales that Russia\u2019s lost? Because they\u2019re still making sales, they\u2019re able to keep those revenues up. Where are those remaining volumes going, do you think?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2595\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-2595\"><p>Doomberg: Drawing on our direct and real-world experience in commodities, it differentiates our analysis on the support and topic we believe. Anybody who has ever operated ran a business in the commodity sector. I don\u2019t mean as they worked at a think tank and study charts or taught at a university and read theory, but you\u2019ve run a business with a P&amp;L. You understand something very quickly; the first thing is you make all your money in very short periods of time. And discount cash flow models make, they\u2019re almost meaningless for large commodity investments because you make all your money in very narrow windows, and then you do your best to tread water in between. And why is that? You make all your money when there\u2019s a shortage.<\/p><p>Doomberg: The analogy we\u2019ve used was predictable. We wrote a piece on June 1 called \u201cCrazy Bills,\u201d where we outlined what was wrong with the sanctions and what should be done to correct them, and here\u2019s all you need to know. Putin exports 10 million barrels of oil a day. If we successfully shut in 5 million of those barrels and cut it in half, the price of oil would be way more than double, and Putin would make more revenue on the 5 million barrels still finding their way to the market. As perverse as it sounds, we should be encouraging Putin to flood the market, and we should be flooding the market because you cannot win a commodity war by trying to stop somebody else\u2019s volume from reaching the market. When your objective is to reduce the value of your opponent\u2019s commodity, you can only win a commodity war by flooding the market with the commodity. Oil went to minus $37 a barrel on relatively minor excess and a lack of storage at the peak of the COVID crisis. It swung violently to $125 a barrel on shortages, as small as half a million barrels a day.<\/p><p>Doomberg: If we were smart about this and we had people in government who took the time to get some experience in the industry preferably, but at a minimum, treat them as your allies and get them in into a room and have an open and honest discussion about what should be happening. We would\u2019ve understood this; the sanctions have hurt the west way more than they\u2019ve hurt Russia, and the pain is still to come. This is knowable, utterly well known. There are very few people with deep industry experience who have the freedom to write a blog like Doomberg. We have no overlords. We can write what we want to write. Our subscribers pay our bills. We have no ads and take no sponsorships so that we can have a hundred percent editorial freedom. This is so widely known in the industry that it is remarkable that this was the policy choice that we have made.<\/p><p>Doomberg: Now, having made that mistake, how do you correct it? Step A, you decide tomorrow to admit this was a mistake. Step B, hold a press conference surrounded by industry executives from the oil and gas. And say we were wrong, we\u2019re going to do everything in our power to pump as much energy into the market to pivot the world back to the point of energy surplus, which will crush prices and defund Russia\u2019s military expenditures. This is the only path forward. All other paths chosen right now do nothing but increase the price of primary energy, which feeds Putin\u2019s greedy war machine.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2596\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-2596\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You make an important point about the volume price relationship. When the Soviet Union fell, one of the big drivers of that during its collapse was the collapse in oil and gas prices in the mid to late 80s. So we\u2019ve seen this play out historically; its low prices undermine his government, not high prices. What do you do to restrict the volume if you\u2019re trying to raise the price? In a large sense, we\u2019ve helped enforce a better monopoly on some of the oil and gas in the world right now by restricting those volumes because we haven\u2019t cut them all off, and we haven\u2019t flooded the market either.<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2596\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-2596\"><p>Doomberg: It\u2019s one thing to sanction, a small country that produces 200,000 barrels of oil per day for export that\u2019s doable, but we\u2019re talking about literally the largest exporter of energy in the world. As we said in the piece, I believe it wasn\u2019t crazy pills. We don\u2019t want to take Russia\u2019s. We shouldn\u2019t want to take Russia\u2019s energy off the global market because it would collapse the entire modern economy,<br \/>including ours. There would be riots. There would be social unrest. There would be revolutions. The world cannot live without Putin\u2019s energy at full stop. Axiom number one, in the analysis, if your objective is to minimize Putin\u2019s revenue, the only handle you have is production volume, your production volume, and beg and pray that he doesn\u2019t unilaterally cut the world off of his energy, just to make a point, which is what he is doing to Western Europe today.<\/p><p>Doomberg: We had no cards, and we\u2019re still acting as though we have all the leverage; this is utterly crazy, G7 proposal on capping the price of Russian oil has to be the most insane thing we\u2019ve ever seen &#8211; the hubris in their delusion. The G7 leaders think they can dictate to 4 billion people what they will pay for property that does not belong to the G7. It\u2019s quite absurd, pushed forward by Janet Yellen, who is a product of cushy jobs at universities and a small stint at a think tank, but who has only otherwise lived in the halls of the federal reserve, it\u2019s literal insanity, and it baffles the mind. This morning we have the president of the European Union out saying that in two weeks, to flatten the curve, we are going to do mandatory cutbacks of energy to flatten the curve because we just want to shave off the peaks. She has no idea what she\u2019s talking about, and it\u2019s okay to point out that the emperor has no clothes because that train will hit us either way. You may at least try to point out the flaws and the fallacies of the pronunciations of our political leaders. I mean, it\u2019s crazy, but it is what it is. You know, it\u2019s the world we find ourselves in.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2597\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-2597\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: When discussing policy, a lot of the policymakers seem to think in terms of euros and dollars while energy markets think in volumes; for instance, how many cubic meters of gas do we get?  How many megawatt hours of power, how many barrels of oil? What are your thoughts on it? Do you think shifting and maybe getting people on the policy side to look at that volume perspective could lead to a better policy outcome?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2597\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-2597\"><p>Doomberg: Energy. In contrast, the ultimate currency, and the currencies we\u2019re familiar with, the Euro, the Dollar, and the Yen; they are just sort of overlaying our energy transactions in the hopes of making them more efficient. That\u2019s the way you need to think about the world. And this is especially true during a time of energy shortage. Everyone is saying the dollar is getting stronger against certain currencies. What are those currencies, so the way we measure the dollar strength today is through this index called the DXY, but if you look at the DXY, 83% of that index is composed of the Euro, the Yen, and the British Pound, all three of those regions are chronically short energy today.<\/p><p>Doomberg: And that\u2019s why their currencies are de-basing for the exact front running of the phenomenon that we know government leaders will do, which is to try to print Fiat in a desperate effort to secure molecules, but of course, you can\u2019t print molecules, and so the Russian Ruble, of course, has strengthened quite radically because Putin has all the cards. Now, the US dollar is doing quite fine against these currencies because the US is a net energy exporter. And so while energy and your position as an importer or an exporter, don\u2019t explain all of the variances of your currency movement. It certainly explains a fair bit of it, and in times of chronic shortages, I would bet that your energy position might explain 80% of the variance of your currency movements, which is what we\u2019re seeing today.<\/p><p>Doomberg: The Yen is collapsing as we speak, which is a sort of another bomb waiting to go off in Asia. So yes, you cannot print molecules! When you\u2019re at a period of shortage and gone far enough into the season and plus Putin\u2019s recent decision on Nordstream 1, it basically assures that Europe is entering the winter with insufficient molecules. So now the only question becomes what is the most economically efficient\/socially acceptable way to ration the insufficient remaining molecules that they have. In our piece on Europe that we called the dead of winter, we rolled Doomberg\u2019s law of antilogic, and in that law, we assume that the current slit of Western leaders will make the very worst possible decision at every opportunity. We advise our clients to assume as much in their modeling.<\/p><p>Doomberg: We have predicted price caps. We predicted stimulus, and we predicted protectionism. Still, a week later, as though things are accelerating at such a pace, not just price caps internally. Still, we had the president of the European Union today saying that she\u2019s considering putting a price cap on global LNG as though she has some magic wand to dictate to the world the price of something everyone knows she desperately needs. It\u2019s like Rome has fallen and the Roman Senate still thinks it\u2019s a global superpower. It\u2019s high time for Europe to get very serious about the important business of rationing in a way that minimizes damage to the most vulnerable in their society. So, for example, take Germany, they\u2019ve rolled out a \u20ac65 billion stimulus to be paid for by windfall profits taxes on the very energy producers that they\u2019re reliant upon in order to get the incremental volumes, to get them through the winter.<\/p><p>Doomberg: This will simultaneously increase the price, decrease supply, and backfire in the most spectacular way possible, thereby proving our theory of antilogic. We\u2019re seeing the same thing in the UK. Look, this is not easy, and we take no pleasure in being right. We would much prefer to be on this podcast today, apologizing for being alarmist, but it\u2019s just I don\u2019t see a path out. It\u2019s going to be amazing to watch this play out in the next few weeks and months.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2598\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-2598\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: The US is now the world's largest LNG exporter, and US energy production, as you said, is a big part of why our currencies rise relative to those of Europe and Japan. Where is Canada in all this? If we\u2019re on an energy board, doesn\u2019t Canada have a larger role to play in this?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2598\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-2598\"><p>Doomberg: In our writing, we have been especially critical of Justin Trudeau, who we think is perhaps the most dangerous and simultaneously least capable leader on offer in the Western world today. Canada could be an energy superpower right now, and Justin is just another example of somebody who was born on third base and thought he hit a triple and the son of a former prime minister who was sort of ascended to the throne, a charismatic guy, handsome man but intellectually incapable of leading his way out of a paper bag and so Canadian energy is trapped, Alberta\u2019s Oil is finding its way to the US market. But the Keystone pipeline was canceled on the US side by Biden shares as much blame for that as anybody, but Putin\u2019s nonsense about exporting hydrogen to Germany instead of just building the required liquefied natural gas export terminals. Natural gas in Western Canada is probably half the price of what natural gas is in the US, which is 1\/10 the of the price that it was in Europe last week, to bank on Justin Trudeau\u2019s regime to make an intelligent decision in the energy sector.<\/p><p>Doomberg: I put it this way. If you ask me to select who to be led by the current slate of European leaders or just Trudeau, I would reluctantly choose Europe. So I think we could just take Canada off the board until we see a regime change in Canada, which doesn\u2019t seem to be on offer anytime soon.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2599\" class=\"elementor-tab-title\" data-tab=\"9\" role=\"button\" aria-controls=\"elementor-tab-content-2599\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What\u2019s your outlook for this winner both in Europe and the knock-on effects potentially for the US market? What do you see as the best case and the worst-case scenario?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2599\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"9\" role=\"region\" aria-labelledby=\"elementor-tab-title-2599\"><p>Doomberg: So the best case is, in the next few weeks, the Western world plugs its nose and cuts the best deal it can get for peace with Putin. I know that\u2019s probably a controversial thing to say, but as it pertains to resolving the energy crisis, that is the best case. That piece suddenly breaks out, or maybe Putin gets overthrown or pick your favorite path function, but hostilities end and taps open and molecules flow, and the world narrowly averts, what could have been a generational crisis. We hope for that outcome to be very clear, nothing would please us more than this crisis, passing with minimal hardship, born by those who can least afford to bear it. That\u2019s the best case. The worst case is a rapid and hyperinflationary dissolution of Europe. There are scenarios where the pinball machine goes full tilt, which is why we wrote the last piece, Europe on tilt.<\/p><p>Doomberg: The worst-case scenario is that Putin follows through and keeps Northstream 1 down, but he has another valve he can turn: the pipeline through Ukraine if he completely cuts off Europe. And in fact one of Putin\u2019s spokespeople said that any country proposing a price cap on Russian oil would get no gas, no oil, no finished products, no fertilizer, nothing. And if he follows through on that threat, at a time of maximum weakness for Europe, it could be a catastrophe. We see nothing in the current responses emanating out of European capitals that gives us hope that sensible policies will be chosen and one of the things we have predicted. And we fear a tilt of European politics already in Italy. You\u2019re seeing the leading far-right candidate saying that we\u2019re on our knees and we need to sue for peace.<\/p><p>Doomberg: We\u2019re seeing demonstrations in the Czech Republic, Germany. There is a major risk to the ruling elite in Europe that if they continue to get this as wrong as they have, they will lose the authority to lead. We don\u2019t think they will go down without a fight. There\u2019s lots of scenarios you\u2019re which is incredibly difficult to model. Still, if they enter the winter with us, there is a chronic shortage of molecules, as we anticipate they might. In their efforts to rationalize those molecules efficiently, they bundle it and make things worse, which all evidence would indicate they will. There are scenarios in play that get very ugly, very quickly.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-25910\" class=\"elementor-tab-title\" data-tab=\"10\" role=\"button\" aria-controls=\"elementor-tab-content-25910\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What are you following to keep on top of how this is playing out? Are we heading to the best case or the worst case? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-25910\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"10\" role=\"region\" aria-labelledby=\"elementor-tab-title-25910\"><p>Doomberg: It\u2019s a great question. So I guess the best way to answer it is to tell you what our Bloomberg terminal launch pad fires up with every morning when we make it to the office. We look at the price of natural gas in the US, Europe, and Asia; often unspoken about in this crisis is the impact that elevated natural gas prices in Europe is having on Asia. The LNG contract price, JKM is $55 per million BTU today compared to $60 in Europe. So is Europe still paying more for the incremental carrier of LNG? We look at the coal price. So one of the charts that we make that we\u2019ve not published yet, but we\u2019re going to share it with our pro tier subscribers in a presentation later this month; we have developed a way to correct for the units of trade of all of these different energies\/commodities so that you can just read across in a very simple way to see on a sort of dollar per million BTU basis, which helps you understand whether oil more expensive than coal, or is coal more expensive than natural gas.<\/p><p>Doomberg: One of the interesting phenomena that we see right now in the chart is the price of coal which is higher than the price of oil, which is interesting because, in theory, oil has far more utility. You can do many things with a barrel of oil. With coal, you can just burn it to make steam, to make electricity. And now that we see that coal is more expensive than oil is a fascinating little nugget of insight into the global economy. We look at the major currencies the Japanese Yen, the Euro, the Canadian Dollar, the Australian Dollar, and then obviously electricity prices in Europe as well, year forward prices. We look at the shape of curves; for example, the natural gas curve or Dutch TTF is pricing extraordinarily elevated prices out till 2024 that just a year ago would\u2019ve been unthinkable. We are now priced into the curve out two years, $40, $50 per million BTU, natural gas, no economy can survive that.<\/p><p>Doomberg: We would look for increased flows. You can track the flows through Nordstream. We look at the molecules, the price of molecules, the currencies, and of course, you always keep an eye on gold and Bitcoin, sort of as reads for market mania or lack of it.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-25911\" class=\"elementor-tab-title\" data-tab=\"11\" role=\"button\" aria-controls=\"elementor-tab-content-25911\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: As we look with a lot more government action interference in markets in Europe and you had mentioned like looking at Dutch TTF prices, natural gas prices in Europe, are you worried that those prices are going to stop being representative of the underlying supply-demand situation and more representative of the political risk and interference in markets?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-25911\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"11\" role=\"region\" aria-labelledby=\"elementor-tab-title-25911\"><p>Doomberg: So there are a lot of thumbs on the scale right now, and a lot of it is sort of whispered about, and you don\u2019t want to sound too conspiratorial because, okay, what other prices on your Bloomberg don\u2019t you believe. We, of course, were accused of putting too much emphasis on the relative strength of the Russian Ruble because the constant refrain on Twitter was what can you do with a Ruble? It\u2019s only because he has capital controls in place, and our counter to that there are 4 billion people still transacting with Russia and the number you see on the screen is real. We just take the mortgage back securities market, of course, the fed interfered in that market, but it doesn\u2019t mean that when I went to the bank and got a mortgage, that I got a different price, because, well, this\u2019s just correct for what the fed is doing. Prices is just a price, the numbers on the screen are real.<\/p><p>Doomberg: If the governments can intervene in the natural gas or oil markets and bring the price down, more power to them. And, of course, this is what OPEC is designed to do in the other way like OPEC exists to manipulate the price of oil. Prices are manipulated, and governments interfere, but the price on the screen is the price somebody\u2019s paying, and it\u2019s a clearing price somewhere. We just tend to believe it\u2019s to give into the temptation of only believing the prices that fit with your narrative means you won\u2019t capture the narrative shifts when they happen.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-25912\" class=\"elementor-tab-title\" data-tab=\"12\" role=\"button\" aria-controls=\"elementor-tab-content-25912\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How are you thinking about the potential paths forward coming out of this winter? What it means for the future of energy over the next 5, 10 years, the foreseeable future?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-25912\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"12\" role=\"region\" aria-labelledby=\"elementor-tab-title-25912\"><p>Doomberg: We have characterized the winter of 2022\/23 as the greatest geopolitical event to resolve in the next few months. I would confess that we are surprised by the speed at which resolution is being imposed by the markets here; markets, of course, are forward indicating, so we shouldn\u2019t have been so surprised. We view the resolution of this event in the same way that a physicist might view a singularity. In a singularity, the laws of physics breakdown, which means it is fruitless to try to predict what happens on the other side of that singularity because it\u2019s unknowable. The big bang theory is predicated on such a singularity, and famous physicists like to say it doesn\u2019t matter what happened before the big bang because it was a singularity, and we think there\u2019s an economic singularity on the horizon.<\/p><p>Doomberg: The range of potential outcomes is so chaotic that it is fruitless to try to model it. We spend most of our time reading real-time data to see where things are going in the near term because, like the weather, you can predict 3, 4, or 5 days ahead; a week ahead is a bit sketchy. And after two weeks, just forget about it. We think we\u2019re in the same type of scenario right now with Europe; you could imagine things like an overthrow of the German government, as crazy as that might sound. You could imagine things as crazy as mass starvation in Western countries because of a cold snap, like pray for a warm winter. And if your strategy is to pray, you\u2019ve lost, no offense to the religious amongst your listeners, but it\u2019s truly a singularity.<\/p><p>Doomberg: I don\u2019t know that you can look past this December and speak with any kind of authority about what\u2019s going to happen? What will things look like in the spring or winter or two years after that? Other than to say, perhaps, we will learn our lesson and reacquaint ourselves with physics over platitudes, but it\u2019s not clear to me that whoever replaces this crop of leaders would be any better. I don\u2019t think you could see through a singularity with any intelligence. And so it\u2019s best just to admit that you can\u2019t and observe the short term with keen interest.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-795 post-795 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-carbon-markets tag-carbon-price tag-decarbonization tag-energy-crisis pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-4-mark-lewis\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-796\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/smarter-markets-img-s14e04-mark-lewis.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 4\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter Is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-4-mark-lewis\/\">Mark Lewis, Head of Climate Research, Andurand Capital<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>September 24, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-4-mark-lewis\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"795\" class=\"elementor elementor-795\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-d96c7fd elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"d96c7fd\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-6cb032f\" data-id=\"6cb032f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-9e4f320 elementor-widget elementor-widget-html\" data-id=\"9e4f320\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 4 | Mark Lewis, Head of Climate Research, Andurand Capital\" allowtransparency=\"true\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?from=embed&i=uxggw-12cf21f-pb&share=1&download=1&fonts=Arial&skin=1&font-color=auto&rtl=0&logo_link=none&btn-skin=c73a3a&size=150\" width=\"100%\" height=\"150\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-1be02d5 episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"1be02d5\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a5e233f\" data-id=\"a5e233f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2f0314d elementor-widget elementor-widget-text-editor\" data-id=\"2f0314d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>This week, we welcome Mark Lewis back into the SmarterMarkets\u2122 studio. Host David Greely sits down with Mark to discuss the energy crisis in Europe and what it means for the European carbon market.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9935052 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"9935052\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-eeca1dc elementor-widget elementor-widget-text-editor\" data-id=\"eeca1dc\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-df1f4e3 elementor-widget elementor-widget-text-editor\" data-id=\"df1f4e3\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4f7dfd58 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4f7dfd58\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5ef644de\" data-id=\"5ef644de\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-16ed30eb episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"16ed30eb\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-569f8be1\" data-id=\"569f8be1\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-5d0e477e elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"5d0e477e\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a66e531 elementor-widget elementor-widget-heading\" data-id=\"a66e531\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1681f03c elementor-widget elementor-widget-text-editor\" data-id=\"1681f03c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM88_MarkLewis_TranscriptFinal_202200927.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7e975481 elementor-widget elementor-widget-accordion\" data-id=\"7e975481\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2121\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-2121\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What is your perspective on what\u2019s happening in both the European energy and the carbon markets right now? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2121\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-2121\"><p><strong>ML:<\/strong> It has been a rollercoaster ride for the last 12 months. If we go back to August 2021, we were all talking about what would happen with the Nordstream 2 pipeline. It began to look as if there were going to be problems with the approval of Nordstream 2 by the new German government in September. Sure enough, in October, because of the escalation in the rhetoric between Russia and the West, the German government declined to approve the Nordstream 2 pipeline, which led to a step change in gas prices going into the winter.<\/p><p><strong>ML:<\/strong> Last year, we were in the disadvantageous position of having very low gas stocks going into winter. So that\u2019s where we were this year ago, prices much lower. To give you an order of magnitude this time, last year, we would\u2019ve had the gas contract for the one year ahead priced at \u20ac50 to \u20ac60, which already was a very high price by historical standards. If you go back two years, European prices were \u20ac15 per megawatt hour which would be around $4, $5 per BTU. We\u2019ve gone from \u20ac15 per megawatt-hour to absolutely astronomical prices this August with the new year ahead contract for \u20ac250 to \u20ac260; it went down now at \u20ac180, but still, this is too high price for the power.<\/p><p><strong>ML:<\/strong> It\u2019s been the same story. We\u2019ve gone from \u20ac60 megawatt-hour for the year ahead contract to an incredible \u20ac1,000 per megawatt hour. Last month we came back down to \u20ac500, but again, that is still spectacularly high. On average, two years ago, \u20ac50 a megawatt hour was a standard number, and carbon had been going up for structural reasons of its own because of the climate policy and the tightening of the cap. So there was a more normal narrative around the carbon price, but of course, it\u2019s been exacerbated, and it\u2019s been having to deal with the backwash from these very high power prices and gas market. So it\u2019s been a more volatile ride for carbon. So that\u2019s the background.<\/p><p><strong>ML:<\/strong> If you think about why this has happened and what\u2019s happened, then clearly, Russia\u2019s invasion of Ukraine, the war of aggression on Ukraine, has led to the weaponization of gas by Putin and the Russian government. That has been driving power prices and, to some extent, carbon prices. Carbon has its logic and its narrative. There is a link between gas prices and power prices. For the last 12 months, gas prices have been at the margin in Europe. In other words, they\u2019ve been the fuel setting the marginal price for electricity.<\/p><p><strong>ML:<\/strong> As the cost of gas has gone up, the price of gas has gone up too. The price of electricity has gone up as well, and of course, when Putin invaded Ukraine in February, we were still coming out of winter with low stocks because we\u2019d gone into winter with low stocks. We were fortunate that we had a mild winter because if it had been a hard winter, we might well have run to zero storage gas levels, but we came out with at least some gas in the tank. Then following the invasion of Ukraine and the need very quickly to adjust Europe\u2019s energy policy, to find a way to get off all energy imports from Russia. For the last seven months, the European Union has been gradually refining and accelerating its plans for the energy transition. The main priority over the summer was to stock up on storage levels ahead of the winter because that is crucial.<\/p><p><strong>ML:<\/strong> You\u2019ve also had this saga of Russia, sequentially cutting more and more of the flows into Europe, for example, through the Yamal-Europe pipeline, which runs through Poland. It\u2019s already cut some of the supplies coming through Ukraine. And most recently, with this rather absurd saga over the turbines for Nordstream 1, flows coming directly to Germany are now at zero. I don\u2019t think anybody expects them to restart whatever the Kremlin says. In European circles, the calculation for the winter ahead the remaining flows that are currently coming through Ukraine, which are about 36 million cubic meters per day, will also fall to zero, and that\u2019s why it\u2019s been imperative to bring storage levels back up.<\/p><p><strong>ML:<\/strong> With the news that we are already ahead of target in Germany and Europe for the storage levels ahead of winter, that\u2019s received positively. So that\u2019s why gas prices over the last two or three weeks have started to come back down a bit, but be under no illusion this winter is going to be very tough. Although that\u2019s the immediate priority getting through this winter the next winter is already in many people\u2019s thoughts. We benefited from the flows from Russia over the whole of the first half of the year that filling up our storage tanks for this coming winter, but that will not apply next year. We will not have Russian flows to help us through the first six months of next year and the summer of next year. So filling up storage levels for next winter, i.e., winter 2023\/24 is already starting to worry people.<\/p><p><strong>ML:<\/strong> What we\u2019re looking at here in Europe now is a protracted period of very high gas prices, probably through to 2025, by which time, number one, there will have been demand substitution in Europe and more energy efficiency measures taken and more deployment of renewable energy technologies. Then on the supply side, Europe will have ramped up its import capacity for LNG, and the United States, and other jurisdictions with LNG to export will have ramped up their exports. But over the next 18 months, as those import and export capacity constraints are still in place, we will have to live with very high gas prices for the foreseeable future. And that means high electricity prices as well.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2122\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-2122\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What levers do you see policymakers have available to pull this winner? Which ones do you think they\u2019re going to start pulling on first?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2122\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-2122\"><p><strong>ML:<\/strong> Crucial question and energy professionals, those of us who follow energy markets very closely, we have been seeing these very high prices on screens for many months now, but consumers and end users haven\u2019t even seen the full brunt of them yet. I think in the UK and Germany, it\u2019s in October when you will see a sharp rise in prices for residential households. This is a major political crisis on top of major energy, economic, and financial crisis. Residential tariffs are more tightly controlled than business tariffs, which are free market and so on. So free market for residential customers for the most part across Europe.<\/p><p><strong>ML:<\/strong> But government likes to control the sequencing of those price increases. Now, one example of an order of magnitude is the new UK government, which just came into office last week with the new Prime Minister Liz Truss; within two days of coming into office, Liz Truss said we will freeze energy bills for residential consumers at a price of \u00a32,500. And to put that into context, up until January of this year, UK residential consumers were only paying \u00a3900 for their gas and power bills, and to put it into further context, if the government had not stepped to freeze that tariffs, the price would\u2019ve gone up to \u00a33,600 and in January would go up further to \u00a35,000. So the government had to step in because it faced wholesale social disintegration and disturbances.<\/p><p><strong>ML:<\/strong> The cost of this is that taxpayers will ultimately have to pay for this is \u00a3130 billion. That\u2019s more than the UK government stepped in for to deal with the impact of the pandemic. It\u2019s certainly the largest-ever intervention by a British government in the energy market, and it\u2019s an indication of the real panic amongst governments across Europe about the scale of social disintegration that this could cause if they hadn\u2019t stepped in. So, one of the levers they can pull is direct intervention, freezing prices, and finding a way of paying for it. This is where it gets interesting because the UK government has decided to put it on the taxpayer. Ultimately there will not be windfall taxes in the UK on energy producers.<\/p><p><strong>ML:<\/strong> Whereas in Europe, and we will get more details on this tomorrow when the president of the European Commission, Ursula von der Leyen, sets out the plans. We know there will be a so-called solidarity tax on fossil fuel producers and upstream fossil fuel producers. So oil, gas, and coal companies will have to contribute to help pay for the price freezes that will almost certainly come across the whole of the EU. Different countries will do it at different levels. And for different periods of time, the UK has frozen UK energy bills for residential consumers for two years. That\u2019s why the bill is so high, \u00a3130 billion, so there will be taxes on at least some of the industries and companies in Europe to help pay for this. Still, the reality is the economic and financial cost of this is necessary because if the governments were not willing to step in, I think you\u2019d be looking at a very disturbing political context across Europe here.<\/p><p><strong>ML:<\/strong> So I think there\u2019s a recognition we have a war on our doorstep. This is the biggest military conflict on European soil since the Second World War; it\u2019s an exceptional situation. We need to support Ukraine, and as a result, we need to maintain the sanctions in place. We need to take some pain because, ultimately, that\u2019s a price worth paying for a freer Europe and resisting the threat of aggression on our doorstep. So that\u2019s the political logic, and one can totally understand that it has to be the right call. But overall it\u2019s going to lead to a mixture of higher taxes ultimately and whether it be the companies that are making windfall profits at the moment, or ultimately on general taxpayers as income tax rates. One way or another, this debt will have to be paid off at some point.<\/p><p><strong>ML:<\/strong> So that\u2019s how European governments are looking at the financing. In terms of some of the other policy levers, what\u2019s crucial, of course, is reducing demand. We talked earlier about the need to bring in more LNG on the supply side, but a very important policy response is also required on the demand side. Just to put something into context, that \u00a3130 billion that the British government is going to spend to freeze bills at \u00a32,500 for two years. Imagine what you could have done over the last 10 years if you\u2019d invested \u00a3130 billion in energy efficiency measures. This is when you have a crisis like this, bringing home how shortsighted energy policy is in most countries. We are not investing the way we need to either for climate change or the energy security of supply.<\/p><p><strong>ML:<\/strong> One silver lining from this whole desperate situation in Ukraine is that the dawning realization on many policymakers in Europe that investing to align our economies with the imperative of reducing emissions and net zero by the middle of this century goes hand in hand with providing security of energy supply over the long term. I don\u2019t think that\u2019s been obvious to many people; a lot of people have made the argument that we\u2019re not investing enough on the supply side. Well, it may be true, but we should be investing in renewable energy resources, which benefit from being environmentally friendly, providing local jobs, and providing an energy security supply. Energy efficiency is going to be the unsung hero in all of this.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2123\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-2123\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Getting into some of what this means for the carbon market is one to clarify with you quickly, the \u00a3130 billion bill is for capping it over two years. And then the \u00a32,500 cap is that for an individual\u2019s monthly bill?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2123\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-2123\"><p><strong>ML:<\/strong> That would be for an annual bill. So those numbers that I gave, it\u2019s always the annualized number for a given quarter, which is why it was \u00a3970 at the beginning of the year. That was the annualized rate for that quarter. But because, normally, energy prices are not moving the way they\u2019ve been moving over the last year, and that\u2019s why people were getting terrified, as we were going from \u00a3900 to \u00a31,970 at the beginning of April, and then should have been \u00a33,600 from the 1st October, but the government said we cap it at \u00a32,500, and then it would\u2019ve been \u00a35,500 by January and no government can live with the social consequences of staggering of that.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2124\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-2124\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What actions are policymakers considering in the carbon market in the UETS as part of their response? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2124\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-2124\"><p><strong>ML:<\/strong> Absolutely; there are a number of actions being considered. To quickly recap, the European Union\u2019s policy-making trifecta, that is the European Commission, the European Council, which are the member state governments, and the European Parliament are now entering the final crucial period to finalize the revision to the European carbon market. That will take it to 2030, which means aligning it with the ultimate net zero targets by 2030. Now the commission laid out its plans, its original proposal in July of last year, the parliament and council arrived at their respective negotiating positions for this forthcoming trial between the three parties in June, and then, and the council is slightly tougher in what they want to see in the final shape that the EUETS reform takes vis-\u00e0-vis the original proposal from the commission. <br \/>ML: But then, with these sky-high prices that we\u2019ve seen in the intervening convening period in July and particularly in August, policymakers have come back from their summer break thinking what we are going to do about the whole energy crisis now. This is interesting because, as we emphasize at the beginning, the rise in energy prices in Europe is overwhelmingly a gas story. Gas prices have gone up for people who use gas, but electricity prices have gone up because of the gas that we use in the market. In fact, if you look at the constituent elements in the increase in the wholesale power price across Europe, over the last 12 months, 90% of that increase is because of the increase in gas prices. Carbon is only 5% to 10% of the increase in power prices.<\/p><p><strong>ML:<\/strong> But the big difference between carbon and gas, of course, is that carbon is a variable that is within the control of policymakers, whereas gas prices, unfortunately, are not, or at least not in the short term. Even though the carbon prices only respond to the increase in carbon over the last 12 months is responsible for between 5% and 10% of the rise in wholesale power prices. That\u2019s for good reasons because we have seen a number of energy-intensive industries in Europe, shuttering facilities over the summer; I\u2019m thinking of the aluminum industry, the zinc melting industry, the fertilizer industry, even the steel industry, these very energy-intensive industries, more than anything else they\u2019ve been hit by high gas and power prices. There is a lot of focus now from European policymakers on what they can do to keep prices in the European carbon market more under control, at least as we get through this winter.<\/p><p><strong>ML:<\/strong> The carbon element is in there, and the industry also lobbies Brussels, knowing that they can make more headway complaining about carbon prices than they can about power or gas prices. The long and the short of it, good news first, there will not be any change to the fundamental points proposed by the European Commission. The cap will fall to the level, at least to the level that the commission proposed last year; we will see a 61% cut in the cap by 2030 compared with the level of emissions in 2005. That\u2019s a dramatic tightening of the cap, compared with the 43% reduction versus 2005 levels that the previous legislation had. So there\u2019s a very significant tightening of emissions. To put it into better context for your listeners, tightening the cap means that over the 10-year period from 2021 to 2030, industrial companies in the European Union will have to make further carbon savings of about 1.5 billion tons of CO2.<\/p><p><strong>ML:<\/strong> That\u2019s equivalent to about one and a half years, almost one year\u2019s emissions. Effectively that\u2019s a very significant tightening of the cap, and that\u2019s why we\u2019ve had carbon prices going to record levels over the last 12 months. That\u2019s the good news. They weren\u2019t tampering with that fundamental point because if they did that, they would be undermining the sanctity of the legally binding target of net zero by 2050. So they don\u2019t want to do that. However, what they can do and what I am convinced they will do is confront load some of the supply that would ordinarily come to market in the second half of the current trading period; that is to say, between 2026 and 2030, they confront load some of that supply bring it to the market. Now, sell more, and inject more volume into the market today to bring prices down so political heat is taken out of the discussion in the short term.<\/p><p><strong>ML:<\/strong> And there is political heat. There is always political heat, particularly from the countries, the member states of the European Union that have a lot of coal fire generation in their power mix because they\u2019re the ones that are disproportionately impacted by high carbon prices, obviously because the carbon intensity of the coal in their power generation mix. So Poland has been saying for the last two months we should just have a flat price for the foreseeable future of \u20ac30 a ton. Now that has been rejected out of hand by the European Commission. I don\u2019t think there would be many if any, other member states that would be in favor of that. Still, it\u2019s nonetheless an indication of the political heat that is out there on this issue, and as a result, you\u2019ve had a couple of very senior experienced policymakers.<\/p><p><strong>ML:<\/strong> You\u2019ve had Peter Liese in the European Parliament, a member of parliament charged with leading the reform of the EUETS through the parliament. He\u2019s a very significant figure. He\u2019s going to be negotiating on behalf of the parliament in these discussions with the commission and the Council, who has said, we need to bring more supply to the market sooner rather than later and then in the second half of the current period from 2026 to 2030 supply will be tighter. So all you are doing in front loading, the supply like that is making it tighter at the back, but again, it\u2019s an indication of how urgent the problem is today that they will say, we\u2019re worried about that later, for now, the absolute priority is to bring prices down in the near term.<\/p><p><strong>ML:<\/strong> Peter Liese is retired from the Brussels bureaucracy, but another well-known figure in European carbon circles is Jos Delbeke. He was the Senior Civil Servant at the European Commission in charge of Climate Change, and he is the architect of the EUETS. And now, he is a professor at a university, and he is retired from the commission, but he made a public statement two weeks ago that any, anywhere above \u20ac70 a ton in the current climate is politically dangerous, and it would be expedient to see prices below \u20ac70. Right now, we\u2019re trading \u20ac69-\u20ac70 today. So, I think prices probably have further to fall through the winter, both because you will have pressure to front-load some of the volumes and the impact on industrial demand. Unfortunately, I think we\u2019re likely to see further temporary shutdowns of some parts of European industry in response to these very high energy prices.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2125\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-2125\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: This idea of front loading and it\u2019s going to be tighter and longer makes me think about a lot of the investments that are going to have to occur to decarbonize a lot of the European economy, and I remember last time you were talking about how finally carbon prices in Europe had gotten to a level that they were motivating changes in emissions behavior. So we had gone from a time when they were too low to have an impact to one where it was like they\u2019re doing what they were meant to do, which is to get people to change behavior. Now it seems like with gas and power prices gone into the stratosphere, the carbon price isn\u2019t driving short-term behavior. The coal burning in Europe is kind of the prime example. How do you see carbon prices in terms of motivating this behavioral change? Is that going to happen anytime soon? Or is the back of the curve staying high enough to impact investment decisions?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2125\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-2125\"><p><strong>ML:<\/strong> These are crucial questions. If you look at the power sector, we have had, for a long time, for at least 9 &#8211; 12 months, carbon prices that are too low to encourage gas fire generation to run ahead of coal fire generation. On a short-run perspective, in the power sector, the carbon price is doing nothing to reduce emissions, which is another reason there is political pressure. I mentioned Jos Delbeke a few moments ago; Jos has made the point publicly. Even though carbon prices have been highest levels in August, we got up to \u20ac99 a ton, but even at \u20ac99 a ton, gas is so much more expensive than coal that you would\u2019ve needed a carbon price.<\/p><p><strong>ML:<\/strong> In August, in particular, when gas prices were at their peak, you would\u2019ve needed a carbon price of \u20ac900 a ton on the front month and front year contracts to incentivize gas-fired power plants to run ahead of coal. Now, of course, in those circumstances, very difficult to persuade anybody that the carbon price is serving any purpose when coal is running flat out and is much more profitable than gas. For the past 12 months, the carbon price has been doing nothing, and for the foreseeable future, if you looked at the gas, the forward curve for gas, and the forward curve for coal, it won\u2019t have changed that much.<\/p><p><strong>ML:<\/strong> It\u2019s not until you get to the middle of 2025, so three years from now on the forward curves, that gas is in the money compared with coal because it takes that long for the gas price on the forward curve to come down to a level where today\u2019s carbon price or the forward carbon price in 2025 is consistent with fuel switching in the power sector. So to all in terms and purposes, the carbon price, the carbon market is broken at the moment in terms of encouraging fuel switching from coal to gas on the industrial side. And this is where it gets interesting. I made the argument last time I was on the show with you that we\u2019d reached a point where the carbon price was in the 90s, and there seemed to be momentum in February before Russia\u2019s invasion of Ukraine for carbon prices to go through a \u20ac100 and reach a level \u20ac121 &#8211; \u20ac130 that would\u2019ve been a level consistent with green hydrogen being more competitive than gray hydrogen.<\/p><p><strong>ML:<\/strong> So there\u2019s a very strong long-term argument there. The structural decarbonization angle, as I used to call it, whereby the carbon price was reaching a level that would lead to structural decarbonization of European industry. Now what\u2019s happened again, a silver lining in terms of high gas prices, is that green hydrogen becomes competitive with gray hydrogen without the need for any carbon price at all. Just to put some numbers on this, the cost of production of green hydrogen, using wind or solar and electrolysis to generate hydrogen, so there are no emissions associated with the hydrogen. The cost of production of that in Europe today is around \u20ac6, so $6 we\u2019re parity between the Euro and the Dollar; \u20ac6, $6 per kilogram, and for gray hydrogen now the cost of production, which would ordinarily be when you have normal gas prices, it would be around \u20ac1.5 per kilogram.<\/p><p><strong>ML:<\/strong> Today, it\u2019s more like \u20ac7, \u20ac8, \u20ac9 per kilogram. So green hydrogen is cheaper to produce today than gray hydrogen, given where natural gas prices are. If you look at the forward curve, you\u2019d be looking at 2526 before you need a carbon price to incentivize green hydrogen versus gray hydrogen. But by 2526, the cost of producing green hydrogen will have fallen. The problem today in Europe is that we don\u2019t have green production capacity at scale; if we did, you\u2019d be running and producing all your hydrogen from electrolysis. Unfortunately, we haven\u2019t built out the infrastructure yet, but the incentive is very clearly there now. So I think that\u2019s, to my point about the silver lining, the one silver lining from this dreadful situation, this dreadful war of aggression in Ukraine being waged by Russia, is that it forces everybody to focus on the need to accelerate the energy transition. And that means more renewable energy. It means more imports of LNG from sources other than Russia. And it means building out the green hydrogen infrastructure.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2126\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-2126\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: So when you think about your outlook for EU carbon prices this winter and beyond. How are you adding it all up? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2126\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-2126\"><p><strong>ML:<\/strong> In my view, I have touched on the key pricing parameters here. The power sector accounts for about 50% of all emissions in the EUETS. Power emissions will be very high, much higher than last year because of the coal running and flat out. One thing we haven\u2019t mentioned has been the very poor availability of France\u2019s nuclear generation fleet over this year, even predating the summer. So on the power side, it\u2019s hard to see gas prices falling to a level before the end of this winter, at least where almost any carbon price would incentivize gas to run ahead of cost.<\/p><p><strong>ML:<\/strong> There are a couple of issues going on in the French nuclear sector that are worth pausing on a minute because this is very important for the carbon pricing outlook and the power pricing outlook. So France\u2019s nuclear fleet has 56 reactors in total, 31 of which are currently offline, partly because some of them found earlier this year to have corrosion problems and so are having to be fixed for that problem. That\u2019s a very serious problem, and it needs fixing. Then you\u2019ve had the catch-up effect from COVID. A number of nuclear power plants that should have had their outages for maintenance did not have those maintenance outages during the COVID period for obvious reasons. So they\u2019ve been having delayed maintenance outages. Finally, because of the very hot summer we\u2019ve had in Europe, high temperatures, a number of plants have not been able to operate and certainly not operate at the usual level of availability because there are problems with the water availability, particularly nuclear power plants that are on rivers have not been able to use river water if it\u2019s above a certain temperature. Often that has been the case.<\/p><p><strong>ML:<\/strong> River levels have been low, and that\u2019s been a problem as well, even for the coal generators, getting the coal in Germany, down the river Rhine because the river level has not been high enough for some of these very big, heavy barges to get down the river Rhine. So there have been all kinds of factors over the summer, which led to this super spike in power prices in August. Now going into the winter, EDF, the French national nuclear company national electricity generator, has said it will bring back 12 of its nuclear reactors this month, another 7 in October, and another 4 in November. So by the time, we get to the end of this year, hopefully, of those 31 reactors that are currently offline, we should have 2021 of those reactors back online, which will go a long way to helping with the power crisis in France and Europe more generally.<\/p><p><strong>ML:<\/strong> But of course, that will have a depressive impact on emissions because to the extent that France has had so much of its nuclear capacity offline, they\u2019ve relied on imports of electricity from other countries, not least Germany, and Germany, therefore has been running its coal plants. So even higher levels than it would be based on the economics of gas versus coal and the price signal from the carbon price simply to be able to export to France. So that will take at least some of the pressure off. So although you won\u2019t see any relief from the carbon price in emissions, in the power sector between colon and gas, you will see some relief from a large segment of those French nukes coming back offline. But generally speaking, emissions in the power sector will be strong.<\/p><p><strong>ML:<\/strong> On the industry side, unfortunately, a much trickier situation. We\u2019ve got a number of industries already shutting down production, and I think there will be more going into the winter. So we\u2019re going to have lower emissions from the industry right through the winter. I think that you can take that pretty much as a given, unfortunately. And then, on top of that, if you net those two off on fundamentals, I would say emissions probably end up still being slightly higher than last year or flat at best. Whereas six months ago, I would\u2019ve assumed emissions would be much stronger this year than last year. On top of that, you\u2019ve then got the political pressure. I mentioned pushing for front-loading of allowances. So when you put all of that together, there\u2019s already been an extraordinarily sharp or steep declining carbon price over the last month. August is a funny month in the European carbon market because of the European holidays.<\/p><p><strong>ML:<\/strong> They cut the supply of allowances from auctions to 50% of the normal supply level, and so you always see carbon prices have a bit of a rally during August. This August, we got to a new all-time high of \u20ac99 a ton which was \u20ac20 higher than at the end of July, simply from cutting the auction volumes. And then we\u2019ve come back down to \u20ac70 a ton today. When you put all of that together, I think we\u2019re probably going down closer to \u20ac60. If you think of what happened in the immediate aftermath of the Russian invasion of Ukraine, we got down to \u20ac55 from \u20ac92, which happened in the blink of an eye in a week back in February and early March.<\/p><p><strong>ML:<\/strong> And this has been quite sharp, as I say, from \u20ac99 to \u20ac70 already; I would expect prices to fall further heading into the winter and I think around the \u20ac60, maybe even the \u20ac55 level that\u2019s where you\u2019ll start seeing fundamental support coming back into this market. If you\u2019re taking a long-term view on this market and the industrial companies will take a long-term view on this market, then you have to start worrying about the fact that in the second half of this decade, supply is going to be lower. So I think there comes a point where you will see fundamental demand reassert itself in this market below that kind of \u20ac60, \u20ac55 level. One of the things to point out is the German government hasn\u2019t legislated for this yet, but it has indicated it would like to see across the whole of the EU or in Germany, at least, legislate for a minimum carbon price for German emitters in the EUETS of \u20ac60 a ton, which again is why psychologically that\u2019s an important level for the market.<\/p><p><strong>ML:<\/strong> So putting it all together, I\u2019m bearish heading into the winter, and I think around the \u20ac60 level is where it starts to get interesting again, but that doesn\u2019t mean it can\u2019t go a little lower \u20ac55 was the lowest in early March and that\u2019s the level that the market will have in mind.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2127\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-2127\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: There\u2019s the potential scenario of these industrials that are going through a very difficult economic and business environment. Is there a chance that they would end up selling some of the credits they have allocated to them to raise money in this environment that might put a little bit extra downward pressure relative to that \u20ac60? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2127\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-2127\"><p><strong>ML:<\/strong> It won\u2019t be on the scale of previous recessions, but we are probably heading into a recession in Europe. The German economy minister made noises to that effect today, earlier this afternoon. But I remember back in 2008, when the global financial crisis was starting to accelerate in October 2008, we saw a real wave of very significant selling of the free allocations that that industry had received. The three reasons why that\u2019s less likely to happen at the same scale, although there will be selling pressure at the margin. The first one is as compared with 2008; we now have a very clear long-term target here. We know the cap will fall to zero within the EUETS by 2040 to achieve the overall EU target of net zero by 2050. <br \/>ML: So that comes back to my point that the industry knows the second half of this decade is going to be a lot tougher, so they won\u2019t want to sell too many. There\u2019s a real trade-off between how much I can raise cash today to see me through the winter versus yes, but it\u2019ll be a false economy if I have to buy those allowances back in three or four years\u2019 time at \u20ac120, \u20ac130. So, that calculation will be in play. Secondly, because of the rule change within the legal change within the EUETS, the clawback mechanism, if you sell free allowances, is much tougher than it was back in 2008. In 2008, you could sell up to 50% of your allocation of free allowances without suffering any clawback in subsequent years.<\/p><p><strong>ML:<\/strong> Now you can only sell 1-5% to up to 15%. If you sell 20% of your free allocation in a given year, there will certainly be industrial facilities across Europe that will be producing this calendar year and probably next calendar year as well at capacity levels of only 80% or less relative to their free allocation, but if they sell more than 15% of their free allocation, then they will be allocated corresponding the fewer allowances in the following year. So they have to be careful about that as well. So behaviorally, that was a smart change to the law, but a necessary one because taxpayers are helping European companies with the free allocation. It\u2019s a form of subsidy. It\u2019s a necessary form of subsidy so long as other countries outside Europe do not face similarly high carbon prices, but still it\u2019s a subsidy. So I think there will be some industrial selling at the margin, but not significant amounts.<\/p><p><strong>ML:<\/strong> The single most important feature here is going to be the market\u2019s expectation of intervention on the part of the authorities in the form of front loading and the sale of UAS, either from future auction volumes or from a couple of the funds that have been set up. So there are two funds, the innovation so-called innovation fund, and the so-called modernization fund. These are funds that were set up at the beginning of the current trading period in 2021; they have several hundred million allowances in them that were taken out of the overall cap for an entire 10-year period, and normally, they are auctioned off all freely allocated in equal installments over the 10 years, and obviously what they probably will do is take some of that and front load it. The other element they\u2019ve indicated they will look at is taking a limited number of allowances from the stability reserve itself and putting those into the market.<\/p><p><strong>ML:<\/strong> I think that\u2019s what\u2019s going to weigh on a market sentiment most greatly. In May, the European Commission came up with raising \u20ac20 billion from the sale of allowances. Some allowances are currently held in the market stability reserve, but that would\u2019ve been done over a four-year period. There are now certain moves to accelerate that to potentially one or two years, and if you front load that kind of volume, it would be to raise \u20ac20 billion at current prices, you would need about \u20ac300 million tons. If you do all that in one year, that\u2019s a significant increase in the volume of allowances being auctioned. So I think the market will get nervous about that.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-2128\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-2128\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How do you think about the effect this winter and its policy responses may have on European carbon markets for years to come? Regarding the discussions and development around Article 6, with the voluntary and compliance markets, how do you think about the long term for carbon? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-2128\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-2128\"><p><strong>ML:<\/strong> Two thoughts on that. The first one, to the Doomberg point and the redefining of the energy space in Europe and indeed globally, because Russia is in a sense excluding itself from the global energy market, or at least from a very large part of the global energy market in terms of Europe, the United States and sort of Western aligned countries. So there are real global ramifications to that, but as far as Europe is concerned, I think the key point that will come out is that we have a winter ahead and it will be very difficult. In fact, two winters ahead. It will be very difficult, but if we can see through that, the prize at the end of it is very great because the prize is an accelerated energy transition away from fossil fuels to a cleaner energy system and a secure energy system in terms of security of supply.<\/p><p><strong>ML:<\/strong> There is going to be a redefining. Obviously, it won\u2019t be as simple as that. There are going to be some, some very sharp corrections that need to happen across some places, and it\u2019s not going to be pleasant. We shouldn\u2019t be under any illusion there, but the ultimate prize is worth the sacrifice in the short term. I think that\u2019s the key point. How do we see the European compliance market playing out with the expansion of voluntary carbon markets, and in particular, what\u2019s the impact of Article 6 on all of this? I\u2019ll begin with the voluntary market and how it might impact compliance markets after that.<\/p><p><strong>ML:<\/strong> Because I think there will be a very strong link between the two. I think within three years; we won\u2019t any longer be talking about a voluntary carbon market as such, or at least not in the terms that we have traditionally talked about voluntary market. I say that for this reason, under the Paris agreement and Article 6, Paragraphs 6.2 and 6.4, you are going to have incentives for private sector players to establish emissions reductions projects in jurisdictions that will then give those private sector companies the right to take emissions reductions credits from those countries, with this all-important stamp of a corresponding adjustment, which means those credits now have been accounted for under a global emissions accounting system that is consistent with achieving the Paris Agreement and so what you\u2019re getting in effect is a scientific seal of approval to the extent that the Paris agreement itself rests on the science as developed by the IPCC.<\/p><p><strong>ML:<\/strong> And that will be worth a lot more, I believe, in the future to any corporate than a voluntary credit that does not have a corresponding adjustment attached to it. I think you can see the reputational advantages of having offsetting your carbon footprint with a credit that has a corresponding adjustment and therefore is effectively helping countries to align with the Paris agreement versus a credit that does not have that. So there\u2019s a reputational argument, but equally important, I believe, and perhaps you have to think a bit more imaginatively about this, but I genuinely think this is likely to happen. Probably takes 5, maybe 10 years, but there\u2019s an option value to any credit, which has a corresponding adjustment going forward as well because of what you have, and this is why I said the terminology is going to have to change. We won\u2019t be discussing the voluntary market in the same way in the future. If you have an emissions reduction credit with a corresponding adjustment attached &#8211; what you have effectively is a quasi-compliance credit. Because if you think about the EUETS cap is going to fall to zero already by 2040. What that mean? It means that European industry will not be able to emit a single ton of CO2 beyond 2040. Now, 2040 is still a long way away, and nobody is freaking out about that too much. But I would imagine that by the time we get to 2026\/27 and certainly 2030 industry is probably going to be saying, hang on a minute, can we fully decarbonize by 2040, or shouldn\u2019t we be able to use offset credits that come with a seal of approval that ensures that they are consistent with the Paris agreement.<\/p><p><strong>ML:<\/strong> So if the EU were to say, after 2030, a certain number of emissions reductions credits that come with a corresponding adjustment could be used within the EUETS. I think that would be very advantageous for everybody. Number one, there would be no dilution to the purity of the EU own climate targets, because this would be consistent with the whole point of a corresponding adjustment is that you\u2019re not double counting. So if the EU uses it, somebody else, whether it be Brazil, Mexico, whichever country, whichever jurisdiction that credit came from, has to reduce its own emissions on top of the value of that corresponding adjustment to reach its. So it\u2019s entirely consistent with the Paris agreement, which was not the case with Kyoto, that was very different, and that\u2019s why Europe stopped the importing of CDM credits CRs. There wasn\u2019t this equivalence, and there wasn\u2019t this capturing of all emissions under the same accounting system that we will have through Article 6. So I think it opens up enormously productive and suggestive possibilities for the future. That compliance jurisdictions that have very tough emissions targets, may well come to consider using Article 6 credits with a corresponding adjustment for compliance purposes, So I think they\u2019re going to be very valuable in the future.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-1122 post-1122 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-commodity-markets tag-energy-crisis tag-energy-policy tag-energy-transition pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-5-tracy-shuchart\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-1123\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM-89_Tracy-Shuchart_1920-X-1080.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 5\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-5-tracy-shuchart\/\">Tracy Shuchart, Partner at Intelligence Quarterly and @chigrl on Twitter<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>October 1, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-5-tracy-shuchart\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1122\" class=\"elementor elementor-1122\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-42fe236 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"42fe236\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5374582c\" data-id=\"5374582c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1151cc81 elementor-widget elementor-widget-html\" data-id=\"1151cc81\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 5 | Tracy Shuchart, Partner at Intelligence Quarterly and @chigrl on Twitter\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=5yd76-12d7f8f-pb&from=pb6admin&share=1&download=1&rtl=0&fonts=Arial&skin=1&font-color=auto&logo_link=none&btn-skin=c73a3a\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4f426e6f episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4f426e6f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-7f6c53\" data-id=\"7f6c53\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-32b628fc elementor-widget elementor-widget-text-editor\" data-id=\"32b628fc\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>We welcome Tracy Shuchart, Partner at Intelligence Quarterly and @chigrl on Twitter, into the SmarterMarkets\u2122 studio. Host David Greely sits down with Tracy to discuss the broader impact of the European energy crisis across the commodities and financial markets.\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-44cfc607 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"44cfc607\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-18ce285c elementor-widget elementor-widget-text-editor\" data-id=\"18ce285c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-347b1e0d elementor-widget elementor-widget-text-editor\" data-id=\"347b1e0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-5d94020 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5d94020\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-572e6584\" data-id=\"572e6584\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-39157969 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"39157969\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2cdca793 elementor-widget elementor-widget-heading\" data-id=\"2cdca793\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3384a164 elementor-widget elementor-widget-text-editor\" data-id=\"3384a164\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM89_TracyShuchart_TranscriptFinal_20221003.pdf\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-58f17a81 elementor-widget elementor-widget-accordion\" data-id=\"58f17a81\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1491\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-1491\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: All commodity markets are connected, and the ripples from what\u2019s now happening in European energy markets are likely soon be felt across the broader commodity and financial markets. How other commodities are currently being affected by what\u2019s happening in Europe?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1491\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-1491\"><p><strong>TS:<\/strong> We were singing secondary and tertiary effects across the entire commodity sector. Last year before the Ukraine invasion even, we saw energy prices already spiking in Europe, and people kind of forget that this started well before the Ukraine invasion. Last September, we saw spiking energy prices in the UK first, which threatened small meat firms. By October, natural gas prices got so high that started affecting fertilizer companies that were intern forced to curb production, which then caused problems in the meat packing industry because they rely on the CO2 from the fertilizer companies. And then, if we move to last fall in the EU, we saw the fertilizer industry being hit there too. We also saw iron, copper, nickel, aluminum, zinc smelters, and stainless steel mills forced to either shutter entirely or curb production because those metals are very energy intensive.<\/p><p><strong>TS:<\/strong> We saw aluminum probably the hardest hit throughout the year, and Europe produces about 11% of global production. So since the fourth quarter of 2021, eight European countries have seen aluminum closures. We\u2019ve had five aluminum plants in France, Romania, Slovakia, Slovenia, and Germany leading to reduced production. While we\u2019ve had three in Spain, Netherlands, and Montenegro shut entirely, 50% of European aluminum smelting capacity is currently offline. So obviously, that\u2019s going to lead ultimately to higher aluminum prices, higher metal prices all around because we\u2019re facing kind of these structural supply deficits, and moving forward, we know that these countries are going to pull back on their green plants. So if we look at things like EVs that require massive amounts of aluminum, 250 kilograms per vehicle on average, solar panels, the new generation solar panels require twice the amount of aluminum that the older generation did, and obviously, turbines also require a ton of metal, ton of aluminum, a ton of steel and so this is going just to make all of these products more expensive and if metals are more expensive, manufacturing is more expensive, products more expensive. We\u2019re going to see ripple effects across all of these sectors.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1492\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-1492\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: The short and long-term impacts of this on the energy transition is we need the metals like aluminum to make the solar panels and make the things we need for the energy transition, but we also need a lot of energy to make those metals. As someone managing money, how do you think about that timing in terms of managing risk and trading profitably when there are things we can foresee might be the next thing to happen?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1492\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-1492\"><p><strong>TS:<\/strong> It always takes a lot longer for things to play out than you initially think they do. Especially when you\u2019re looking at big macro ideas, they take a long time, and our three major themes have been energy, metals, and agriculture. If you start with the energy sector, you know that the energy is pretty much at the heart of everything. Obviously, that started with the energy sector after the bottom fell out of the market in 2020, oil went negative, and the whole world shut down, but even before that happened, we were already seeing some supply problems in the energy sector that just derailed it for six months or so.<\/p><p><strong>TS:<\/strong> Energy makes everything run. I knew that this would eventually affect things that were very energy intensive, like metals and particularly in the agriculture industry, which also is very energy intensive. Not only do they require fertilizer, which requires a lot of gas, but getting their farms running requires a lot of diesel, kerosene, and different fuels of that nature. Energy is at the heart of everything; then it\u2019s kind of seeing how long it is going to take to hit these other markets, so that\u2019s kind of the timing issue. It\u2019s not always easy to get right, but I think that\u2019s what we\u2019re seeing right now.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1493\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-1493\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You\u2019ve brought up food a few times, it sounds like last year with the initial energy problems in the UK that had impacts on meat producers and meat packers and with Nat Gas such a big component of fertilizer production. How concerned are you with what we\u2019ll see happen in food markets next year?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1493\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-1493\"><p><strong>TS:<\/strong> We saw a fertilizer kind of spike this summer, and I have pulled back since then, but those markets are starting to jump again because of all the production that\u2019s being taken offline in the EU. We\u2019re already experiencing some shortages in the US, and we\u2019re not even at planting season yet. So looking at those markets, I think that\u2019s going to play an even larger role in H1 of 2023 as we go into planting season. Energy input costs are going to be higher. Obviously, we\u2019ve seen energy pull way back, but still $80, $85 that\u2019s very high for the norm.<\/p><p><strong>TS:<\/strong> I think we\u2019ll see higher energy prices for longer. We\u2019re going to see input costs for agriculture starting to storm. That will also affect supply problems, because countries like Canada and the Netherlands want to cut back on fertilizer usage, whether or not that puts some farmers out of business, which then takes more food supply off the market. The Netherlands is the number two global exporter in the world of food, and they\u2019re looking at many farmers that could be hurt by this and go out of business. I think we barely scratch the surface. Food prices have escalated up 13% this year. Probably even higher. So, I think that\u2019s going to be higher for longer, and I think we probably haven\u2019t even started to scratch the surface of that yet.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1494\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-1494\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: US had this strengthening of the dollar; this very strong dollar has been masking a lot of the impact of rising commodity prices on US consumers. For instance, look at the prices of gasoline at the pump; they\u2019re down even though things like gas prices are still up a bit, but nowhere near what the rest of the world experiences. How big a deal is it that we have this strengthening dollar at a time of rising commodity prices? How does it affect how you\u2019re thinking about how this particular commodity price surge is going to play out?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1494\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-1494\"><p><strong>TS:<\/strong> There\u2019s often a prevailing notion that commodity prices are directly inversely correlated to the dollar, so people are looking for icommodity prices to go down f the dollar goes up. Certainly, there are cases that happen, and there are points in time that happen, but if you look over a long enough period, this is not the case for the most part, especially when looking at supply-side problems. Over the last two years, energy, grain prices, and industrial metals have been rising alongside the USD. So when we have these structural supply deficits in all of these markets with inelastic demand, other than shutting down the entire global economy as we did. We will continue to see rising commodity prices in the face of a rising dollar.<\/p><p><strong>TS:<\/strong> It\u2019s going to be a problem for the US, but it will be an even bigger problem for emerging markets. I think we\u2019re going to see a lot more food protectionism and energy protectionism start coming into play, just as recently as India put a 25% export tax on their rice. Earlier this year, they even stopped exports altogether for the time being. I think we will see these kinds of actions coming up more and more globally.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1495\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-1495\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What do you equity managers or investment managers need to understand about what\u2019s happening in the commodity markets right now?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1495\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-1495\"><p><strong>TS:<\/strong> I think I have to go back to the point that pretty much everything revolves around energy. It literally runs the global economy. I think it\u2019s particularly important for anybody to watch this sector as it affects the cost of everything else. For most businesses, energy is one of the highest input costs from small to large businesses. This factors into their bottom line and affects how they conduct business. Earlier, we talked about the ripple effects of high natural gas prices affecting smelters that in turn affects manufacturing, which in turn affects global supply chains, which in turn affects all aspects of business, from transportation to food processing to utilities to consumer discretionary to healthcare, even to the tech industry. Expanding on this supply chain problem was right after the pandemic, we saw how supply chains could be interrupted and how they could affect businesses.<\/p><p><strong>TS:<\/strong> And even many businesses and industries continue to operate with these disruptions today. If we take, for example, the oil industry, we\u2019re still having problems sourcing steel pipe and things of that nature. And that\u2019s not the only business that\u2019s still having problem kind of sourcing materials. So if we look at that and take that as a whole and know that all of these things affect whatever business you\u2019re looking at and investing in, then you have to consider how the commodity sector factors into how they do business. I think the energy sector might be biased, but I think the energy sector should be of particular interest to anyone investing globally in any equity market.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1496\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-1496\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What do you think policymakers need to better understand in this environment?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1496\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-1496\"><p><strong>TS:<\/strong> We have to realize that the source of the problem, and the energy crisis spike over the last year or so, is poor policy decisions that started a decade ago and, in some cases, two decades ago, and this has all just finally come to fruition because we had the right elements in place to spark it off. It was going to happen regardless of COVID and the Ukraine invasion &#8211; all these happening is just further exacerbated problems, but as far as policymakers need to look up, they need to understand that energy transition just doesn\u2019t happen overnight and the technology is just not there yet.<\/p><p><strong>TS:<\/strong> You can\u2019t base energy policy on hope. You\u2019re talking about the livelihood of billions of people, and I think their big mistake was wanting to switch off fossil fuels right away and switch to wind and solar power. But wind and solar are intermittent power sources, and the battery tech is just not there yet. We still need fossil fuels as our base load power, and if you don\u2019t want, this is where natural gas is perfect for the transition fuel because it\u2019s much cleaner than oil or coal. I\u2019ve been talking about this for years, but they continue demonizing the industry. On the flip side, we have the option of nuclear power, which is super clean, and the most energy dense, right?<\/p><p><strong>TS: <\/strong>You need a tiny amount of uranium to create enough energy, but the west has largely shied away from that. We haven\u2019t done anything in the last two decades. There haven\u2019t been a lot of upgrades; there haven\u2019t been a lot of builds in the west. We have seen some in Africa and Asia, but we haven\u2019t in the west because we had Chernobyl and Fukushima. The west got freaked out and marked it as dangerous. And then we had the environmental groups talking about the radioactive waste, and we\u2019re all going to die. I think there was just not a lot of education out there. Ever since those accidents happened, there have been fantastic strides in nuclear energy.<\/p><p><strong>TS:<\/strong> It\u2019s very different now; it\u2019s not the same plant that it was 20, 30 years ago. I think that\u2019s sort of the media\u2019s and the government\u2019s fault for how they portrayed this without educating people. And now they\u2019re forced to go back to the drawing table on nuclear. We\u2019ve seen the UK wants to start eight new nuclear reactors; we see Germany deciding on and off whether to keep these last three nuclear plants. There is more interest. In the US, we just had California, for example, which wanted to shut its last nuclear plant, but now they want to keep it open for another 10 years. So we\u2019re seeing some warming up to it.<\/p><p><strong>TS:<\/strong> So I think that\u2019s good as far as policymakers are looking; let\u2019s give them a little pat on the back. It is good that we see policymakers change their view on this kind of energy, and that\u2019s the developed market side. If we look at the emerging market side, I think the west needs to stop interfering. For example, last week, we had Simon Zarchary in Africa speaking about not investing in natural gas long-term. For developing markets, this is just really unrealistic. Cheap, abundant natural gas is a great transition fuel; although it\u2019s not so cheap at the moment, if they were to drill locally, it would be cheap. We have to realize that over 600 million people, 43% of Africa\u2019s population lack access to electricity.<\/p><p><strong>TS: <\/strong>Most of them are in Sub-Saharan Africa, which has a lot of resources they could tap into. Many African countries have in trying to argue against the west and say this is unfair that you\u2019re trying to put us in a position, and we\u2019re just not at the same level as a DM market. I think policymakers should continue to try to get investments for their oil and gas industry to bring them out of poverty. And the west, if they want to help them, should stay out of their way a little bit and not get so involved in energy policy.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1497\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-1497\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Investments in supply-side infrastructure, whether opening up gas and oil fields or building nuclear plants, economically make sense to invest if you plan on using it for a long time, approximately 10 to 50 years. Now we\u2019re in this worst of all possible worlds in Europe where energy is unreliable and incredibly expensive, and they have to switch on all these coal-burning plants, which is the last type of fossil fuel you\u2019d want to use from a climate perspective. How do you get policymakers on more of an investor mindset?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1497\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-1497\"><p><strong>TS:<\/strong> Every four to eight years, you change administrations in the US. I think you should hire people with more experience than we currently have because all these energy decisions that people are making are really from people not that qualified to make those sorts of policy decisions. They are all politically motivated policies because a bunch of bureaucrats got together and decided we\u2019re going to have this climate Paris accord, but nobody is well versed enough to say how we will get here? Everybody wants clean energy and clean air, but how are we going to get there? Governments need to have a bigger conversation with those who have more experience, not just bureaucratic think tanks.<\/p><p><strong>TS:<\/strong> And the scary thing is it\u2019s being so demonized, they are having a hard time finding labor in those markets; those fields are dying. If you go to college these days, nobody wants to major in the oil or mining industry because it\u2019s dirty. It\u2019s got bad connotations, so the labor pool is also dying. We need more engineers in those fields and get them together; this is not going to fix itself by itself. As you can see, it\u2019s self-destructing before our eyes. So we need a whole redress of the situation, hopefully, sooner than later.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1498\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-1498\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You have almost a quarter of a million followers on Twitter where you post a Chigrl. Why did you start posting on Twitter and what do you see as the benefits and challenges of that level of social media presence and engagement?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1498\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-1498\"><p><strong>TS:<\/strong> Well, I had just moved to Chicago. I didn\u2019t know anybody, and I had just started in the industry at CBOT, had a grunt job, and thought it would be a good way because I had a friend that was like, you should go one. There\u2019s a lot of financial people on there, and I was like, okay, and so I kind of just went on to shy, Chigrl cause I wanted to be anonymous. I didn\u2019t have my name on there for years, and so that\u2019s how I just really started. I started talking to financial people, and my circle grew. I remember when I got like a hundred people following me, I couldn\u2019t believe a hundred people wanted to hear what I had to say.<\/p><p><strong>TS:<\/strong> And it grew organically. Social media can be beneficial for beneficial for everybody. But at the same time it can be very toxic. Financial Twitter, it\u2019s a really good place where you can meet people, there\u2019s a lot of good to be found there. There\u2019s a lot of good advice. There\u2019s a lot of ton of good information. There are a lot of people that you can learn from. For instance, I specialize in commodity markets. I don\u2019t know that much about a bond market, so I can follow a bunch of bond people and learn all about bonds. I can follow a bunch of people who specializing in healthcare. I can find out about all the healthcare companies, anybody can do that. So that\u2019s where I think that it\u2019s beneficial because you can learn a lot from everybody else. You just have to sidestep the toxic people. There are always wil be those who would want to start fights and the best engagement with those people is no engagement.<\/p><p><strong>TS:<\/strong> You get views from all different companies, all different kinds of traders, there\u2019s a ton of information out there just if you\u2019re new to Twitter, just wade through it, it\u2019s worth it in the end.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1499\" class=\"elementor-tab-title\" data-tab=\"9\" role=\"button\" aria-controls=\"elementor-tab-content-1499\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Was there a certain event that occurred that you were discussing a lot on Twitter that  all of a sudden everyone started noticing that people are  listening to your  thoughts? Or was it more gradual over time?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1499\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"9\" role=\"region\" aria-labelledby=\"elementor-tab-title-1499\"><p><strong>TS:<\/strong> I think it was more gradual over time. It took a long time to get to like 50,000 or something, and then it kind of just grew from there. I\u2019ve been on Twitter since like 2009. I started in the industry a little bit before then that\u2019s a lot of dedication on.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-14910\" class=\"elementor-tab-title\" data-tab=\"10\" role=\"button\" aria-controls=\"elementor-tab-content-14910\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Beyond this winter out over the next few years, how do you see the outlook in the commodity space?  Where are you looking for opportunities?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-14910\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"10\" role=\"region\" aria-labelledby=\"elementor-tab-title-14910\"><p><strong>TS:<\/strong> I think the sector is just starting to see the explosion of problems. The problems that have been created are not going to be fixe any time soon. I think this is going to be a strong sector for the rest of decade. It took us long to get into this mess and it\u2019s going to take us twice as long to get out of the mess. On a shorter term, I\u2019m kind of looking at agriculture in 2023, and I think metals will hit probably half of 2023 into 2024. As soon as some of this energy sector calms down a little bit, metals will be the next freak out. I think this sector\u2019s strong and there are plenty of opportunities to be had out the current situation even though the situation is not great.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-14911\" class=\"elementor-tab-title\" data-tab=\"11\" role=\"button\" aria-controls=\"elementor-tab-content-14911\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Why do you see metals after agriculture? What the sequence of events you\u2019re thinking is about?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-14911\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"11\" role=\"region\" aria-labelledby=\"elementor-tab-title-14911\"><p><strong>TS:<\/strong> It\u2019s going to take at least a year for Europe to figure out its energy flow. After they do that, that\u2019s going to exacerbate the metal problem even more. Because right now their focus is on how do we get close here. How do we get LNG here. How do we get oil and gas if we embargo Russia in December. They say they need two to three years to build LNG space, but that\u2019s going to take a lot longer than they think. Anyway, their primary focus right now is on how to get energy flows to them to replace the flows that are not Russia related or that are Russia related.<\/p><p><strong>TS:<\/strong> I think the metals are going to take a little bit more for that when they shift their policy back around to focusing on EVs and getting their manufacturing back up. Because right now their manufacturing shutting down. They are getting their energy house in order flow-wise. The metals going to be the next problem because they\u2019re going to have, because of the green policy goals. So that\u2019s why I think that\u2019s going to take a little bit longer. I think you\u2019re going to find huge opportunities in agriculture. I think the next surge you\u2019re going to see is in 2023 where we\u2019ll have spring and summer planting and there is not going to have enough fertilizer. All three sectors are going to play a huge role over this next decade.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-14912\" class=\"elementor-tab-title\" data-tab=\"12\" role=\"button\" aria-controls=\"elementor-tab-content-14912\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Any near-term catalysts you\u2019re looking at that\u2019s going to tell you how bad this gets? Or whether we might skate through in the short term?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-14912\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"12\" role=\"region\" aria-labelledby=\"elementor-tab-title-14912\"><p><strong>TS:<\/strong> I\u2019m focusing on energy flows right now because I think that\u2019s the most important thing that we need to look at. Germany just came out and announce they have enough gas, at 90%, but that\u2019ll last us through winter, which I\u2019ve been saying all summer it\u2019s all about flows. So right now, we should be focusing on global energy flows no matter what. I think Russian barrels are going to stay on the market more so than anybody thinks. That\u2019s just what is going to happen because other countries are going to take advantage of that discount regardless. I would be focusing on how that energy flow space is revolving if you to use as a gauge on how quickly we can get out of this mess.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-1214 post-1214 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-commodities-trading tag-lng tag-trading pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-6-bill-perkins\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-1215\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-89_Bill-Perkins_1920-X-1080.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 6\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-6-bill-perkins\/\">Bill Perkins, Partner &#038; Head Trader, Skylar Capital<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>October 8, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-6-bill-perkins\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1214\" class=\"elementor elementor-1214\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-3df585e0 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3df585e0\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-32b4a41a\" data-id=\"32b4a41a\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1ba47c1e elementor-widget elementor-widget-html\" data-id=\"1ba47c1e\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 6 | Bill Perkins, Partner & Head Trader, Skylar Capital\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=g2irm-12e1a47-pb&from=pb6admin&share=1&download=1&rtl=0&fonts=Arial&skin=1&font-color=auto&logo_link=none&btn-skin=c73a3a\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7fb1dad9 episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7fb1dad9\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-451e066c\" data-id=\"451e066c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6ae19d37 elementor-widget elementor-widget-text-editor\" data-id=\"6ae19d37\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>This week, we welcome Bill Perkins into the SmarterMarkets\u2122 studio. Bill is the Founder, Managing Partner, and Head Trader for Skylar Capital. SmarterMarkets\u2122 host David Greely sits down with Bill to discuss his trader\u2019s perspective on the natural gas, power, and carbon markets in Europe.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-fbc7811 elementor-widget elementor-widget-text-editor\" data-id=\"fbc7811\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM90_BillPerkins_TranscriptFinal_20221010.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript \u2192<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1257a898 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"1257a898\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3d273a68 elementor-widget elementor-widget-text-editor\" data-id=\"3d273a68\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7bbbe227 elementor-widget elementor-widget-text-editor\" data-id=\"7bbbe227\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-348576cb episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"348576cb\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5bb01a3c\" data-id=\"5bb01a3c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-5157bb57 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5157bb57\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-131d8c38\" data-id=\"131d8c38\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-278ffd0b elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"278ffd0b\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4fbfa834 elementor-widget elementor-widget-heading\" data-id=\"4fbfa834\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-58a0cf2a elementor-widget elementor-widget-text-editor\" data-id=\"58a0cf2a\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/09\/SM83_DavidGornall_TranscriptFinal_20220907.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-75846b5f elementor-widget elementor-widget-accordion\" data-id=\"75846b5f\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1971\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-1971\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG:  What do you see as the big trading opportunity in European energy right now?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1971\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-1971\"><p><strong>BP:<\/strong> Things are changing every day in Europe right now, but I generally see that we have a situation where the amount of storage is not enough based on the demanding amount of gas they use. So you have a lot of scenarios where you can either get to containment, and prices fall apart, but still not have enough gas to get you through the winter. We used to have that domestically before storage grew maybe 15 or 20 years ago. Then you have all these other factors with the energy transition: Russia cut off the gas because of war, ship LNG, and policymakers getting involved with subsidizing demand via price caps, nuclear issues, and weather issues. There are just a lot of things that digest in the short-term and long-term. Long term, it\u2019s going to take a while for this market to become less volatile. So I see lots of opportunities here just being the insurance agent. That\u2019s what traders are; we ensure against prices going up, and we ensure against prices going down based on how we see the world.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1972\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-1972\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG:  How do you assess the inventory situation in Europe right now, given what they\u2019re likely to face this winter?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1972\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-1972\"><p><strong>BP:<\/strong> Just like any other winter, they can fill to the brim, and they can still run out of gas &#8211; this is what normal situations would look like. But here we have the Russians flowing 1\/6 of what they normally flow that\u2019s being met by LNG; high prices cure high prices, but will Russia cut off more gas flowing through Ukraine? Has demand destruction been significant to get us to the winter, or will winter be very warm, and then we\u2019re being flooded with gas? Or will it be cold, and we run out of gas? There are a lot of scenarios that keep playing out. Right now, we\u2019re kind of in a situation where high prices cure high prices, the demand destruction is significant, and the rest of the world is saying we don\u2019t want the LNG at this price, at least a significant portion of it.<\/p><p><strong>BP:<\/strong> So we have to reckon the amount of LNG flowing to Northwest Europe and Western Europe, which looks crazy when you look at it on a map, but winter is coming, and the infrastructure isn\u2019t such that flowing LNG ships can necessarily place flowing gas in a cold weather scenario. So you have a shutoff through Ukraine, and it\u2019s priced high; you are kind of bearish, but maybe the expected value could be fair or high. People are trying to figure this out, and when you start having policymakers get involved, you begin to lose a free market. I\u2019m very good at trading markets, but I am not good at trading Putin; I\u2019m not a good trader trading Putin. These various schemes that they have induce demand, these price caps.<\/p><p><strong>BP:<\/strong> Are you subsidizing demand when you\u2019re running out of gas? This makes no sense. I often say had they made the price a complete pass through, the crisis would be over in a day. And then some retort about what happens to the people who can\u2019t afford it? I say, here\u2019s what you do instead of just blindly paying the bill, give everybody the amount that would be an increase and call it a pass through. Are they going to spend the extra thousand dollars on energy or will they conserve and spend it on the nightclub? I think many people go to the nightclub rather than spending on a high electricity bill. They\u2019re not putting forth schemes to conserve or produce demand destruction; they&#8217;re just absolutely subsidizing demand, which is crazy.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1973\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-1973\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You say it\u2019s the best trading opportunity in 20 years. When you look at what\u2019s happening in Europe, are there similarities or things that remind you of  this particular time in the US? You spent much of your early trading career with John Arnold at Centaurus, and you traded very profitably through a number of pretty turbulent periods in the US natural gas market.<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1973\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-1973\"><p><strong>BP:<\/strong> No invasions, but you had growing demand and a lack of infrastructure, and no matter what you thought about the energy transition, energy transitions aren\u2019t smooth; they\u2019re lumpy. Infrastructure doesn\u2019t come on perfectly and match demand. You have this storage situation where they\u2019re not building more; no matter how much you fill storage, you always have a risk of running out. In the early days, we were putting down all these gas-fired power plants and growing our demand sided equation and flows but not increasing the storage, which storage is your shock absorber. That\u2019s your shock absorber for volatility, and so I saw a landscape where we\u2019re going to have a lot of volatility depending on what was going on, what was the weather, what happened in global events.<\/p><p><strong>BP:<\/strong> Nobody wants to trade the boring, 3%, 6%, and 10% Vol product. We were trading the 80% vault product, and back then, I thought &#8211; 40 Vol is cheap, or 60 Vol is cheap, and now it\u2019s double. We have scenarios where things will be moving around significantly. Since there are not that many insurance agents in Europe, not that many people want to put their risk capital and be risk warehouse shops there, the premium or the edge we get paid is significant. When there are 30 insurance agents, the insurance margins are pretty thin. There are not that many of us that want to put our capital at risk in that market.<\/p><p><strong>BP:<\/strong> The world went crazy with equities. It&#8217;s just you went to raise money looking for your discretionary long-short commodity trading, and they were like, do you trade equities? Are you long equities? Are you long equities? Can we buy the equities? That\u2019s all you heard. And you had this massive run-up from the fed printing, and I guess it was the right thing to do because they were printing money all the time, but that\u2019s changed. They could lose 50% of their portfolio and still want to be in equities before they jump into a commodity long short. And people are starting to pay attention to commodities, but we\u2019re always an afterthought.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1974\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-1974\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: But commodities are too risky?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1974\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-1974\"><p><strong>BP:<\/strong> Yeah, they are too risky. It\u2019s a strange world, but I guess that\u2019s what\u2019s marketed the most to these risk allocators of the world, the pension funds, the family offices, et cetera.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1975\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-1975\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You\u2019ve got a very strong orientation in your trading style to looking at market fundamentals and then using options strategies to trade. With your London office, are you going to trade natural gas power in carbon?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1975\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-1975\"><p><strong>BP:<\/strong> We hired Nathan Lorentz, he is from the LNG days, and he\u2019s opening up the office, and I\u2019ve already been trading small significant as a percentage of our portfolio, but we wanted somebody full-time with the time differential, so I\u2019m not up at 1:30 am trying to figure out what\u2019s going on. We\u2019ll be building out that risk book and the desk as time goes on. When I was in high school playing football, I remember the coach used to say: \u201cRun where they at! Perkins run where they at!\u201d You have to go where they are, and so many people are not in Europe, they\u2019re bailing out, they\u2019re blown up, they\u2019re not allocating risk, and that\u2019s where you want to be. That\u2019s where you want to be in that market. You want to put all your fundamental analysis, your programs, your research, and that data you\u2019re buying over there. I think you\u2019ll have a very positive expected value position in Europe.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1976\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-1976\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What\u2019s the range of outcomes that you think are reasonably in play in Europe in some of these markets? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1976\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-1976\"><p><strong>BP:<\/strong> We clearly have the run-out of gas scenario. That\u2019s interesting because the EU isn\u2019t the United States because they\u2019re kind of loosely together. What I mean, do you have certain states go that would go about it like we\u2019re not going to ship the gas, no transit fees, or we\u2019re not shipping you power? The European Union has stressed itself, and those are secondary effects of scarcity. There is also a lack of proper planning, years of the policy of we don\u2019t drill, we don\u2019t put in infrastructure, we rely on Russia for our natural gas, and that\u2019s coming home to roots. You have scenarios where there has been demand destruction. They have sent out a signal; the market is set, here take the LNG, China says, we\u2019ll burn all the coal in the world &#8211; we don\u2019t care, take back your LNG. You could have a normal to mild winter, and just be flooded with gas in storage at the end of March. So I think both tails are on the table. They\u2019re completely on the table right now, and I would say that the no-shutting-off Ukrainian flows scenario with normal weather is actually bearish.<\/p><p><strong>BP:<\/strong> You have a lot of demand destruction and flows. You\u2019ve sent a price signal, and high prices cure high prices. The problem in Europe is that the person using the gas and paying for the gas is often not the same person. In industry and commercial, you will pay for it if you use it. They\u2019re shutting down aluminum plants and smelters all the way through, and you just have enough demand destruction. There are 92 LNG ships on their way to Europe right now. There are 260 ships on the water. If they\u2019re all going to Western Europe, and it doesn\u2019t look like they want to stop. The storage is 90-91% full in Northwest Europe is what we defined as Northwest Europe. It\u2019s on its way!<\/p><p><strong>BP:<\/strong> Once you get to 92%, you start to have injection issues, you can\u2019t stuff it at the ground at the same rate, and it starts to drop off precipitously, and so you\u2019re seeing that cash was trading \u20ac30 back on futures and you could see it in the front spread, which was a premium and now it\u2019s \u20ac15 back, call it five bucks back, I mean, it is \u20ac30 back printing today, and I see that scenario getting worse as long as the weather is normal. So you have everything on the table here, weather normal down the fairway, slightly bearish, but the volatility is so high, but as time evolves, that will start to get more solidified one way or the other.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1977\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-1977\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How do you get that type of scenario and probabilistic thinking across to people?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1977\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-1977\"><p><strong>BP:<\/strong> That\u2019s an education question. It\u2019s really hard. I guess people respond to visual cues, so maybe show them the distribution of events, like what happens and some prices you estimate going on. That\u2019s how we look at it, so here\u2019s the world as we see it now. This is the S&amp;D; this is the demand destruction, run me the last 30 winners through scenarios and show me in how many outcomes we\u2019re running out of gas, et cetera. I think every trading shop does that this is no fancy witchcraft here, and then you could start saying that what if Russian flows of this run the weather scenario? What if Russian flows of that? What if LNG flows of this, and you run that deck, and then you have the distribution of what we see and what\u2019s possible, but you don\u2019t want to see a 30% chance of running out of gas; you never want to see that. You don\u2019t even want to see 10% or 5%, so that\u2019s what\u2019s pretty scary.<\/p><p><strong>BP:<\/strong> And that\u2019s what you can see in somebody\u2019s cards you pull up or these scenarios. In my view, policymakers want to get elected, and look good, so they say they\u2019re the bears of good and sometimes false news or, often false news.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1978\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-1978\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You saw opportunities based on structural developments in the European market, but of course, now this year, the market\u2019s been dominated by this constantly shifting battlefield in Ukraine, Russia\u2019s use of energy as a weapon to create a second front in that war. So how are you managing risks around the fact that, as you said, you could be a great gas trader but not a great Putin trader. How do you manage risk in this environment? <\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1978\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-1978\"><p><strong>BP:<\/strong> Right now, we\u2019re much smaller than we normally would be, and that\u2019s just a function of all margins. I guess everybody\u2019s smaller, but the other thing is that we\u2019re waiting for very extreme, high favorite scenarios and tighter spreads. One of the things that recently we were looking at is that the winter might be crazy, and there\u2019s always going to be this like kind of war premium and Putin premium, but there\u2019s a significant chance that they can run out of storage. They can\u2019t inject as much gas as they\u2019d like to carry to prepare for the winter, although they\u2019re going to send that price signal out. A month ago, I knew we should be short the front and long the back, even though the market is backward dated, this market should be contango because there\u2019s this x probability of getting to a hundred percent full.<\/p><p><strong>BP:<\/strong> Things happen, and it changes to even 95%. So we started running numbers and saying, what\u2019s the odds that we get to 90% full by today? Right, what are the odds we get to 95% full? What are the odds we get to a 100%, October the 15th &#8211; 95% is a really dire situation with the amount of flows you\u2019re flowing right now. In a normal weather scenario, is there enough space, is there enough demand plus injection demand to handle that, and there were just too many scenarios that were like there\u2019s going to have to be some discount. Then there were all kinds of discussions about what could they do floating storage and then there was a debate on how do you store if all the slots are already taken to re-gas in the winter?<\/p><p><strong>BP:<\/strong> You don\u2019t have firm re-gas rights in the winter. So you can\u2019t just sit there with a $100 million cargo hoping to get a $20 spread. I don\u2019t know the exact answer, but I felt that enough of the distribution was that this thing backwardated or flat or even down a dollar is too tight, so we stay kind of tight within season. It\u2019s one of the ways you could kind of trade, trade around containment and running out. On a longer-term basis, that\u2019s tougher; the further you go out, your accuracy decreases with time. When you go from, let\u2019s say to the summer, we call that three trade lifetimes away because each season is a trader lifetime. After all, you can die in any season.<\/p><p><strong>BP:<\/strong> We look in the range of the extremes what\u2019s going to happen, what\u2019s going to happen with demand destruction, are these distributions reasonable? Can we put on a trade that expresses that we can survive being very wrong because the name of the game is to stay in the game. The market will provide you with outsized returns. You just need to stay alive. Even if you get cut in half, you\u2019ll have a chance to really come back and thrive as long as you stay in the game.<\/p><p><strong>BP:<\/strong> Just don\u2019t get knocked out. You could get knocked down bloody, you can do a nine count, they can cut your eye, but make sure you\u2019re able to go back in a ring, and you\u2019ll eventually win.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-1979\" class=\"elementor-tab-title\" data-tab=\"9\" role=\"button\" aria-controls=\"elementor-tab-content-1979\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: The other big risk is what European policymakers are going to do. Finally, those prices are flowing through; they\u2019re hitting the residential consumers, the small shops, and the bakeries are shutting down. You\u2019ve got a situation where policymakers feel a need to react and do something.  How do you manage risk in that environment, especially when they\u2019re likely to change the game's rules? Cap prices,  change of benchmarks, and saying we need something LNG-related, not TTF related, even though it still might be for pipeline consumers. When the rules of the game are potentially in play, how do you think about that?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-1979\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"9\" role=\"region\" aria-labelledby=\"elementor-tab-title-1979\"><p><strong>BP:<\/strong> I generally view them to be who they are, and their primary concern is not solving the problem; it\u2019s solving the problem of how I stay in office? How do I look good? How do I get reelected? It\u2019s simple; energy is a pass-through. It is over. You will get 30% conservation out of the RC sector you\u2019re worried about. They\u2019re just not paying that much, and then, their concern is about people\u2019s high bills, that they\u2019re angry, and that they will not get reelected.<\/p><p><strong>BP:<\/strong> So that\u2019s how they\u2019re always going to behave. So whether it\u2019s like we\u2019re going to move the index over here, it\u2019s never solving the demand problem. It\u2019s not solving the LNG problem, it is just hiding it. It may push it further down the road and make it worse further down the road, but it\u2019s never really actually solving the problem. Here\u2019s something where you can solve the problem and get reelected. Just say, let\u2019s say your bill was $100, and now it\u2019s going to be $1,000 and you don\u2019t want them to see the increase, so usually what they do is they just cap it, and they pay the bill for them, so you have no demand destruction.<\/p><p><strong>BP:<\/strong> Give them $900, but just tell them the price is the price. So the consumer, they\u2019re not paying anything extra, but they have $900 to make a choice, spend it on energy or conserve energy and go out and party. The price is a pass-through so there\u2019s no harm to the consumer, but then what\u2019s going to really happen is that these guys are not going to like take the $900 and ship it back to Juniper, which is now a government-controlled entity. They\u2019re going to take that, turn down their thermostats, winterize their houses, and you\u2019re going to see conservation that on a scale you\u2019ve never seen before in the RC amount, and you\u2019re going to solve the problem crisis over immediately.<\/p><p><strong>BP:<\/strong> It\u2019d be empowering the consumer so that would be a policy shift where they are doing the socialist thing, but we\u2019re doing it the smart way. We\u2019re distributing it to the end user and letting them decide whether you\u2019re not; you\u2019re not subsidizing demand in that way. You\u2019re actually destroying demand in that way, but I haven\u2019t heard that once out of anybody, out of any policymaker. They\u2019re politicians; they\u2019re not economists, they\u2019re not commodity traders. They don\u2019t necessarily do that, and their focus is on getting reelected and staying in power.<\/p><p><strong>BP:<\/strong> I\u2019m just proposing a way that they can actually be superheroes. It\u2019s just like I got $900 and I got to keep $200 more to spend. it\u2019s also an economic boost. It\u2019s a direct ejection.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-19710\" class=\"elementor-tab-title\" data-tab=\"10\" role=\"button\" aria-controls=\"elementor-tab-content-19710\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: In addition to being a highly successful energy trader, you\u2019re also a highly successful poker player. Which were you first, were you a poker player first, the stakes might have been lower, or were you a trader first?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-19710\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"10\" role=\"region\" aria-labelledby=\"elementor-tab-title-19710\"><p><strong>BP:<\/strong> Definitely a trader first. I wouldn\u2019t call myself highly successful. I\u2019ve been successful in tournaments, but cash games, I\u2019ve gotten beaten up early enough and I\u2019ve gone through the school of hard arts learning poker, but when I was like a clerk, I got introduced to playing no limit at holding them and all the traders, they have this natural inclination to risk, they like to gamble as entertainment. When you\u2019re always a house, sometimes you just want to get lucky, and socialize, and that\u2019s kind of the mentality of the floor, at least when I was coming up.<\/p><p><strong>BP:<\/strong> There\u2019s certain people focus on the downside. They\u2019re just risk averse, and there are people who are always at missing the opportunity costs, and I think that\u2019s more traders. They\u2019re always like, what could have been, what could I make, they\u2019re not thinking about the downside. I think that\u2019s the bent of traders and so they like action.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-19711\" class=\"elementor-tab-title\" data-tab=\"11\" role=\"button\" aria-controls=\"elementor-tab-content-19711\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG:  What do you take from poker playing that you apply to the trading? Or trading that you apply to how you think about playing poker? What do you take from each that makes you better at the other?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-19711\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"11\" role=\"region\" aria-labelledby=\"elementor-tab-title-19711\"><p><strong>BP:<\/strong> I think what they both do in different ways is trading and poker let you know about yourself. You go in the market, it doesn\u2019t care, it doesn\u2019t have a vendetta against you. You play poker and they don\u2019t have any vendetta, they\u2019re going to come away. It\u2019s really how you react to every scenario. For instance, there\u2019s winning traders and and losing traders. it\u2019s really how much did study, how did they react to each scenario. So you really learn about yourself when trading . Yound the same is true with poker. When you find your leaks in your poker game, for example, you over bluff or you under bluff or you call too much or those things you find like there\u2019s something personal to you and your personality, the way you are maybe, in your childhood that wired you to be this way. You need to unwire and fix this thing in order to get better at poker.<\/p><p><strong>BP:<\/strong> And I think the same is with trading. Like if you\u2019re the type of guy that gets upset when you lose and get irrational or you hold onto a trade too long, when you should be getting out because whatever you become attached or whatever; there\u2019s all kinds of trading leaks that are out there. I\u2019m not a trading psychologist, but I am very well aware of when things go right or I\u2019ve done things wrong, it\u2019s me; it\u2019s not the market. Bad things happen in the market. That\u2019s a guarantee. Like the trading guarantee something is going to go wrong. You\u2019re going to have this perfect thesis and boom, polar vortex in your face. It\u2019s bullish as all get out, and the market goes into infinity, and Freeport LNG blows up, and there\u2019s a ton of gas on the market, and boom, we vaporized 2-3$. These things are just going to happen. You don\u2019t know when they\u2019re gonna happen. That\u2019s the bargain of life. That\u2019s the bargain of trading and what really matters is how do you react to it.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-19712\" class=\"elementor-tab-title\" data-tab=\"12\" role=\"button\" aria-controls=\"elementor-tab-content-19712\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: For other less experienced energy traders in the European market this year, what advice would you offer them for how to navigate what\u2019s going to be coming at them over the next 3, 6, 12 months?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-19712\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"12\" role=\"region\" aria-labelledby=\"elementor-tab-title-19712\"><p><strong>BP:<\/strong> I guess one of the things I would say is that even when bad things that are happened when you\u2019re making your thesis that volatility that got you is also what\u2019s going to pay you. This is part of the game. Do not get too upset. If you\u2019re in that game that is what\u2019s going to pay you this volatility, this structure has set up. We\u2019re all complaining about margins are crazy, and I can\u2019t trade that much. This is because it is, don\u2019t worry. There is lot of juice and you\u2019re needed. Many people, look at the trading as useless. And I say, we\u2019re needed, we\u2019re risk warehousers. So you\u2019re needed, hang in there, keep your wits about you, and be rational. They should use the word &#8211; risk warehousers. We take the risk that you don\u2019t want.<\/p><p><strong>BP:<\/strong> We\u2019re really glorified insurance agents. If you\u2019re a fundamental trader, we\u2019re glorified insurance agents, producers come out and they\u2019re say, we want to sell a gajillion contract so we can make the widget and where do we buy this thing you; it looks bullish here. I\u2019m going to buy it, and then it\u2019s like we\u2019re worried about running out of gas. We go to buy it, and we\u2019re like you actually could run out of gas. Where would I sell this thing? That\u2019s what we do. We\u2019ve just glorified insurance agents.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-1256 post-1256 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-energy tag-energy-policy tag-energy-transition tag-lng tag-lng-shipping pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-7-susan-sakmar\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-1257\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-91_Susan-Sakmar_1920-X-1080.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 7\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-7-susan-sakmar\/\">Susan Sakmar, Visiting Professor, Univ. of Houston and Author of \u201cEnergy for the 21st Century\u201d\ufffc<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>October 15, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-7-susan-sakmar\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1256\" class=\"elementor elementor-1256\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6ad16497 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6ad16497\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3c65f8f5\" data-id=\"3c65f8f5\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-251eeec1 elementor-widget elementor-widget-html\" data-id=\"251eeec1\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 7 | Susan Sakmar, Visiting Professor, Univ. of Houston and Author of \u201cEnergy for the 21st Century\u201d\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=ykk3k-12eaee7-pb&from=pb6admin&share=1&download=1&rtl=0&fonts=Arial&skin=1&font-color=auto&logo_link=none&btn-skin=c73a3a\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-55c60dd6 episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"55c60dd6\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1568c73b\" data-id=\"1568c73b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6f2b0cc elementor-widget elementor-widget-text-editor\" data-id=\"6f2b0cc\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>We welcome Susan Sakmar back into the SmarterMarkets\u2122 studio. Susan is Visiting Professor at the University of Houston Law Center and author of <em>Energy for the 21st Century: Opportunities and Challenges for Liquefied Natural Gas (LNG)<\/em>. SmarterMarkets\u2122 host David Greely sits down with Susan to discuss how the European energy crisis is transforming the LNG industry.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3f1329f3 elementor-widget elementor-widget-text-editor\" data-id=\"3f1329f3\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM91_SusanSakmar_TranscriptFinal_20221021.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript \u2192<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-34f60b6b elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"34f60b6b\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-263f819 elementor-widget elementor-widget-text-editor\" data-id=\"263f819\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-393d13c3 elementor-widget elementor-widget-text-editor\" data-id=\"393d13c3\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-1417 post-1417 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-energy tag-energy-crisis tag-energy-markets tag-energy-policy tag-flex-lng tag-lng tag-lng-shipping pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-8-oystein-kalleklev\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-1433\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-92_Oystein-Kalleklev_1920-X-1080.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 8\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-8-oystein-kalleklev\/\">Oystein Kalleklev, CEO at Flex LNG and Executive Chairman at Avance Gas<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>October 22, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-8-oystein-kalleklev\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1417\" class=\"elementor elementor-1417\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-3d1ea09d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3d1ea09d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2dd9273f\" data-id=\"2dd9273f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-38e53b51 elementor-widget elementor-widget-html\" data-id=\"38e53b51\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 8 | Oystein Kalleklev, CEO at Flex LNG and Executive Chairman at Avance Gas\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=ccqsf-12f4326-pb&from=pb6admin&share=1&download=1&rtl=0&fonts=Arial&skin=1&font-color=auto&logo_link=none&btn-skin=c73a3a\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7062688c episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7062688c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1594d076\" data-id=\"1594d076\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-3e826097 elementor-widget elementor-widget-text-editor\" data-id=\"3e826097\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>We welcome back into the SmarterMarkets\u2122 studio Oystein Kalleklev, CEO at Flex LNG and Executive Chairman at Avance Gas. Oystein sits down with SmarterMarkets\u2122 host David Greely to share his unique perspective on the European energy crisis and what it means for the LNG industry.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-771caa0b elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"771caa0b\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7272ac18 elementor-widget elementor-widget-text-editor\" data-id=\"7272ac18\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4f6997c2 elementor-widget elementor-widget-text-editor\" data-id=\"4f6997c2\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-35bf5552 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"35bf5552\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5b2d25c\" data-id=\"5b2d25c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-5cbc455f episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5cbc455f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-329272f3\" data-id=\"329272f3\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-7b88d540 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"7b88d540\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2569175a elementor-widget elementor-widget-heading\" data-id=\"2569175a\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5807d176 elementor-widget elementor-widget-text-editor\" data-id=\"5807d176\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM92_OysteinKalleklev_TranscriptFinal_20221028.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-15b03642 elementor-widget elementor-widget-accordion\" data-id=\"15b03642\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3631\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-3631\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: There is a staggering shortage of ships with shipping rates near $500,000 a day. There\u2019s a shortage of floating reification terminals to bring LNG into the natural gas pipeline, and I\u2019ve seen rates near $200,000 a day. Can you put these numbers into context?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3631\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-3631\"><p><strong>OK:<\/strong> We started discussing the European energy crisis a year ago. So that was a long way ahead of the invasion of Ukraine in late February. So the energy crisis started building in the late summer of 2021 in Europe. We saw that the inventories hadn\u2019t been built up, and at that time, the Asians were also busy buying LNG and resulting in the LNG prices spiking up, and the Russians hadn\u2019t built up those storage levels in Europe, and now we understand the reason why they didn\u2019t do it. In November, the gas market ended up in a crisis a couple of months before the invasion.<\/p><p><strong>OK:<\/strong> Once you had the invasion, things went ballistic. Despite all these problems, Europe\u2019s been very fortunate because we have had a lack of gas in Europe or globally, but with the shutdowns in China, they have been pulling back. Imports are down more than 20%. So if somebody told you that Europe would gobble up all the LNG cargo and China would slow down 20%, you would think that the shipping market would be terrible, and we saw something very similar in 2019. In 2019, we had a very healthy volume in the LNG market. It grew 35 million tons, and Europe bought 33 of that 35 million tons, and that dragged down the shipping market in 2019 because you had shorter selling distances, and China\u2019s economy cooled down in 2019, given the trade war with Trump.<\/p><p><strong>OK:<\/strong> This year, we have seen something similar, volume growth has been a lot less, and the Chinese demand has forted much more than we have ever seen, resulting in the LNG shipping market being tangible in Q1. The first time we\u2019ve seen the indexes, the freight indexes being negative. So people didn\u2019t pay you. The rates were less than zero or adjusted for fuel consumption, but the risk premium in the market increased once the Ukraine war happened. People didn\u2019t want to be short-chips. So freight ways started to go up after February 24, and they went up a lot until another event happened, which was the Freeport explosion. At that time, gas prices in the US were becoming very expensive, $10 a million MMBtu &#8211; sounds cheap in Europe, but in the US, it\u2019s quite expensive.<\/p><p><strong>OK:<\/strong> People were asking about export limitations, and once that explosion happened in Freeport, US gas prices fell 20% overnight. This also made the shipping market weak because Freeport is a big export terminal &#8211; 15 million tons, that\u2019s 15 to 18 cargos a month. So suddenly, you have a lot of ships coming open in the market and dragged down the shipping market, and then with Freeport seeming to be starting to ship some cargos again, at least partially, that\u2019s blown up the spot market again. You mentioned $200,000 per day, but it\u2019s more like $400,000. It\u2019s the strongest freight market ever, but when you look at the product side, the prices have decreased significantly. For JKM, for example, their focus now is on the TTF.<\/p><p><strong>OK:<\/strong> So TTF, it\u2019s so volatile, so it\u2019s hard to peg the number, but let\u2019s call it $45. So that\u2019s down from a hundred at the peak. However, with this cargo flow into Europe, you have congestion issues. There\u2019s not enough re-gas capacity in Europe. So having a slot at the re-gas terminal today is valued as much as the terminal. The cargo is $45 per million BTU, but you have to discount the LNG at around $20 &#8211; $25 to get capacity at the re-gas terminal. That\u2019s crazy! In addition, we have an intramonth contango of $2 to $3. So if I can sell my cargo next month, I will make more money. Today we have around 35 ships idling and floating storage, which is also tying up a lot of shipping capacity, and that\u2019s why the shipping market\u2019s been just like the LNG market incredibly volatile.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3632\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-3632\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How are you at the Flex LNG navigating this set of market conditions? What\u2019s a typical day is like right now?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3632\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-3632\"><p><strong>OK:<\/strong> Our principal shareholder, John Fredriksen, who\u2019s probably the most successful shipping investor ever. Shipping is incredibly difficult to invest in because of the volatility. So if you do something wrong, it\u2019s easy to get bankrupt, but he\u2019s been doing this for more than 60 years now, and he founded Golar LNG in 2000. He sold Golar in 2014 and then bought into Flex and all kinds of investment pieces to buy many new ships because there\u2019s been a big revolution on the shipping side. Until 15 years ago, all the new buildings were steam turbines. So, anybody who has some history knows that a steam turbine is not very efficient, but the ships were built with steam turbine engines, and there are still 200 of them in the market.<\/p><p><strong>OK:<\/strong> And then we eventually ended up with these legends, first medium speed, and no slow speed. So Otis, when we made the investments mostly in 2017\/18, there\u2019s on new ships, they are 60% more efficient than the steam turbine ships, and that\u2019s a lot of money, you\u2019re saving 60%. So we bought the ships when prices were low, basically $180 &#8211; $185 million per ship. The price of a ship today is $250 million. So there\u2019s undoubtedly been inflation also on the shipping side because shipping is tight. Then when we took delivery of the ships starting in 2018, 2019, and 2021, we took our last ships for delivery. We thought that we would play the spot market here until we find a good shipping market, and then we will start fixing the ships on attractive long-term charters. So until 14th April last year, we had 13 ships and turfed in spot ships.<\/p><p><strong>OK:<\/strong> So everything was the spot, and that meant that you have to be on top of the market because of the volatility and because you could quickly lose a lot of money. Even though COVID in 2020, we managed to navigate and make money, and starting April 14, we started fixing our ships on long-term charters. We did the first five with Cheniere, a big US export, and then in June this year, we fixed our last three ships, one ship for ten years and two for each for seven years with our super major. So it\u2019s a lot less volatile than it used to be. We have one ship on index linked to the spot market, but the remaining twelve ships are typically fixed on 3 to 10-year charters with the big players. So volatility in all income has gone down quite a lot right now, maybe sadly, because it would be fantastic to have more spot exposure in this market.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3633\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-3633\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How\u2019s the policy environment affecting your business? Are you noting a change in how the industry\u2019s being viewed by policymakers and the broader public?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3633\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-3633\"><p><strong>OK:<\/strong> Five years ago, a lot of people were very bullish on energy because you basically should substitute coal with natural gas, and you can reduce your CO2 emissions by 50% -60 %. But a hundred years ago, the US started replacing coal with natural gas because of the pollution, not the CO2 emissions. When you burn coal, you have all the smog, ash, and soot, which is destroying cities. And then, later on, we had the same development in Europe, not driven by CO2 but by cleaning up the local air pollution, which was a huge problem. Every year 10 million people die prematurely because of bad air pollution. Coal is a big problem today as well because most people dying today from air pollution are people living in China and India, and they are the big coal consumers.<\/p><p><strong>OK:<\/strong> We have had a policy in Europe that has been populistic, short-term, and narrow tinkling. The policy was about the action that we are going from coal to wind and solar. But wind and solar are intermittent, and we will not have nuclear-based energy either. So then, what kind of energy system will you create then? You can\u2019t build a lot of batteries for big energy systems. They just sidestepped natural gas and went directly for intermittent renewables, creating many problems. Dunkelflaute is a word that has become common now, it is a German world where it\u2019s not that much wind, and there\u2019s not that much sun, and we had problems last year when the wind conditions in the UK were very low as well.<\/p><p><strong>OK:<\/strong> People realize now with the war in Ukraine, you need gas. The lack of gas is creating a lot of problems. So now Europe is rushing to LNG as the substitute. Even Germany, the biggest gas consumer in Europe, is currently building out 5-6 floating terminals to import LNG; people are building import terminals in Italy, France, and the Netherlands. But the problem is that even though we are building all these import terminals in Europe, we are not buying more LNG. The strategy is to make import terminals and buy LNG in the spot market, driving up prices and resulting in countries like India, Pakistan, and Bangladesh not being able to source it anymore.<\/p><p><strong>OK:<\/strong> When you are sourcing from the spot market, you\u2019re not underpinning new suppliers of LNG because nobody is building LNG export terminals on speculation. These are multi-billion dollars investments. The only way to build them is to have long-term contracts, 10, 15, maybe 20 years. But Europe is reluctant to do that because of the incoherent energy policies. If we try to solve this problem right now, buying in a spot market, but I\u2019m not going to sign up for a 20-year LNG off-day contract because, in 2042, I need to be 100% renewable. So that is creating problems, and so we haven\u2019t solved anything. We will solve some bottlenecks on the re-gas capacity side, but we are not solving the problem, which is the gas supply.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3634\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-3634\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: There\u2019s been a huge policymaker focus on getting European natural gas storage filled before winter. But to make it through this winter without painful shortages, we\u2019ll need a steady supply of gas. Is there a sufficient reliable LNG flow scheduled for even this winter?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3634\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-3634\"><p><strong>OK:<\/strong> No. Europe has now been able to know fill-up storage at 90%. That has happened because Russia has been flowing gas until recently, and Europe has been buying up all the LNG; more than 70% of the US cargo went to Europe. In comparison, last year, it was like 20-25%. Usually, 70-80% of US cargo are going to Asia, and now 70-80% is going to Europe. China has stopped importing because of they\u2019re the COVID lockdowns. Those COVID lockdowns are not going to last forever. Once they\u2019re opening up, and they\u2019re opening up gradually, China is going to import more of the cargo. In Europe, we are 90% storage capacity; we are going to draw down this very quickly, and once you\u2019re getting close to 30%, people will start panicking, and we\u2019ve been lucky with the weather in October.<\/p><p><strong>OK:<\/strong> The prognosis is that we will not be as lucky in November and December. We have managed to get to 90% by also destroying a lot of demand in the industrial base because prices have been too high; next year will be more challenging because you cannot rely on as much flow from Russia and also sourcing as much LNG as Europe has been doing this year, next year might be more challenging because the Chinese might be back buying more volumes as well. There\u2019s not a lot of new LNG coming to the market next year. So the supply of new LNG to the market will be permuted both 2023\/24\/25 onwards; you will see more pick up, especially from Qatar and other players, but that LNG has been contracted to other people and not to Europe because Europe is not signing up and not taking agreements. Germany has signed up one LNG contract this year, which was also pretty small.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3635\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-3635\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: European pull on LNG, which is helpful for Europe, but it\u2019s coming at the expense of other countries and consumers who are being priced out of the market. How much you\u2019re seeing this impact? Many of your ships are on a longer-term charter, but are you seeing a big change in shipping routes related to all this?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3635\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-3635\"><p><strong>OK:<\/strong> Yes, we do see that. We see a lot more cargo flowing into Europe, which has benefited crew rotation. Many Asian countries still have limitations on getting people off and off on the ship&#8217;s specs. China has been impossible for more than two years now. So, at least, the ships sailing to Europe make a crew rotation much easier. We also see a lot more ships idling, either idling in floating storage or the ships are just idling in, which you would think is incredible when freight rates are $400,000; why aren\u2019t people renting out the ship? Collecting a lot of freight instead of idling the ship, but the reason is the value of the cargo is so substantial that even if you could make a lot of money, what if you don\u2019t get your ship back in time?<\/p><p><strong>OK:<\/strong> You are losing out on the cargo economics, which is much more. So yes, we see it is affecting the routes, and the ton-mile has dragged on a lot this year. So if you looked at the ton mileage sailing distances, you would think that the freight market would be terrible this year. But the thing that has adjusted for it is the ton time, so the time\u2019s gone up, speed\u2019s gone down, and that means that it takes more time to load and discharge a cargo than usual because of the congestion issues and the floating storage.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3636\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-3636\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: You have to keep LNG at this incredibly cold temperature, or it starts boiling off. Like how practical is it to have LNG sitting offshore in these tankers? Is there a sufficient or significant loss of cargo?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3636\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-3636\"><p><strong>OK:<\/strong> That\u2019s right, you need to keep it at -162 Centigrade, which is -260 Fahrenheit, and then to keep it at atmospheric pressure, you need to vent out the boil of gas, and the boil depends on the ship. Newer ships are a lot better insulation. So if you have an old steam turbine, the boil rate is typically 0.2%. So every day, 0.2% of the cargo is lost in evaporation. So you need to take that pressure out of the tank; otherwise, it builds up. But you\u2019re not venting it; you\u2019re burning it, so you are using it as fuel. So it\u2019s very handy to have fuel on the cargo tanks. Newer ships today will have a boil-off rate of around 0.05 to 0.85%.<\/p><p><strong>OK:<\/strong> So the boil has been reduced 50% to 80%, and some of them also have a relic system, so you can take the boil off that\u2019s coming off the tank and re-liquefy it and put it back to the tank. Of course, it consumes some power, but that\u2019s feasible. We have a partial leak system on four ships and a full relic on three of them, making it a bit handier to store them. But as you said, it\u2019s not like crude oil, where you can sit for a long time. So floating storage tends to be shorter, typically one or two months. It\u2019s very rarely you see ships idling with cargo for more than two months. You need to flare the boil off in the funnel because you don\u2019t want to vent it, so you then are just flaring it, which is wasteful, or you need to use power to reliquify it. So that is an economic hurdle of having longer storage time.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3637\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-3637\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What are your thoughts on the longer-term effects of this crisis, specifically on the nature of the LNG business? Do you see it as having a long-term impact on the nature of the LNG trade outside of Europe as the structure and terms of contracts change in response to the crisis?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3637\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-3637\"><p><strong>OK:<\/strong> That\u2019s a good question. Talking about the LNG spot market that developed in another crisis, which happened 11 years ago, which was Fukushima, there was no spot market for LNG until Fukushima hit Japan. Then certainly, with all the nukes storm, they had a shortage, creating the LNG spot market. It was a bit different today because it was a portfolio player rebalancing the supply and pushing more LNG into Japan. So 11 years later, there is another crisis, the war in Ukraine, that is changing the spot market of LNG where Europe is coming in. The people in Brussels think very short term; that\u2019s the problem. Where I reside is one of the biggest gas exporters in the world. The oil companies had long-term contracts linked to oil at a discount with Europe.<\/p><p><strong>OK:<\/strong> So typically, the Asians are buying today; there\u2019s not an LNG crisis in Japan, China, or South Korea because all the supply is linked to oil with a discount of 20-25%. In Europe today, we pay close to $200 per barrel of oil equivalent; in Asia, they are paying $70. So we had these contracts in Europe as well, and then the European Commission said this is on the competition, and they forced a breakup of existing contracts because they wanted to have a spot price on all the contracts. Europe saved a lot of money for ten years on this because the spot price was much lower than what the oil price index would have made, especially during COVID in 2020, the price of LNG in Europe or TTF gas was breaking below $1 per million BTU, which is equivalent to $6 per barrel of oil. This year has gone up to more than $100.<\/p><p><strong>OK:<\/strong> And now they are saying they want to have price caps and renegotiate contracts. This is not a way to have a policy and a kind of predictability for the actors in the industry to invest. If policies are changing, depending on market developments all the time, how are you going to invest if you\u2019re going to invest in an LNG export plan today, you need to have a horizon of 25 years. You probably need to set aside five years to develop, finance, and get the project going, and then you need at least 20 years to sell cargo for this economics to work, but then if you have these policy changes all the time, how are you going cope with it? That\u2019s the problem in Europe; you have to be a bit more longer term, but then if you\u2019re saying that everything\u2019s going to be carbon neutral in 2050. I understand that utilities are not signing up on new contracts, and then there will not be more supply.<\/p><p><strong>OK:<\/strong> So, who is going to sign up on those contracts? Are we leaving it only to Shell, BP, and Exxon? They are taking the risk that Europe will rely on buying the spot&#8217;s market cargo, which could very well be, but you are not incentivizing many new projects by doing it this way. Now, given the situation, Europe should be going to the US and signing up 20 million tons, signing up 20 million tons from Qatar, maybe 10 million tons from some of the African exporters, and doing even more because the Russian flows that we are replacing are huge.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3638\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-3638\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Do you see other countries outside of Europe, for instance, in Asia and South America taking advantage and signing longer-term contracts to ensure some supply reliability even if Europe\u2019s shortsighted?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3638\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-3638\"><p><strong>OK:<\/strong> Yeah, even with LNG imposed down 20% plus in China this year, last 18 months of the 100 million tons of new SPAs, China has done 50% of it. So they are certainly signing up a lot of new contacts, and they have been doing well on that. They signed up a lot of contracts after the trade war with the US, and they have been reselling those cargoes into Europe because the beauty of the US cargo is there is full destination flexibility. So Chinese who buy those at Henry Hub plus $3, even if Henry Hub is $8, $11 full price, can sell those cargoes into Europe at $30, $40, whatever the price is. So they\u2019re making a fortune on it, but they are thinking 20-25 years; they\u2019re not focused on thinking today all the time.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-3639\" class=\"elementor-tab-title\" data-tab=\"9\" role=\"button\" aria-controls=\"elementor-tab-content-3639\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Do you see private players are also trying to secure LNG at a lower fixed price and take advantage of the optionality? And so later, they can resell it because it is expected that the price will spike in the future?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-3639\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"9\" role=\"region\" aria-labelledby=\"elementor-tab-title-3639\"><p><strong>OK:<\/strong> Yes, Shell, Exxon and Chevron, and some of the trading houses like Trafigura and Ganvor are doing it because they see that the European buyers need gas, but they are not willing to sign up for these long contracts. So they are buying a portfolio of contracts, and then this is a bit more like the oil place; Germany is not signing up 5 million barrels of oil from some countries. It\u2019s market participants doing it. So I\u2019m not saying that the government should intervene to do it, but the problem is their policies and the signals to the market actors are resulting in them not signing up on something because they don\u2019t know whether there will be a mark the 10 years\u2019 time, so kind of the problem for the government or the policymakers in Europe is more lot of ambiguity and uncertainty they are creating.<\/p><p><strong>OK:<\/strong> They are pushing the bill to somebody else. But then, for instance, if you are developing a gas field head in Norway and, usually, almost everything has gone to pipe to Europe because it\u2019s very close to the only LNG export plant in Norway. It\u2019s very far in the north, where the pipeline would be very long. Let\u2019s say you are investing in new projects today. Would you rather build the LNG plant instead of a pipeline? Probably yes, because you don\u2019t know if the price goes up, and Europe wants to cap the price. So it&#8217;s going to be good for me because I am in the LNG business. Rather than building pipelines, they build LNG plants; it\u2019s not really the right policy if you have a gas field shore to the market &#8211; the pipeline is the most efficient, but European politicians could very well undermine that by talking about these price caps.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-36310\" class=\"elementor-tab-title\" data-tab=\"10\" role=\"button\" aria-controls=\"elementor-tab-content-36310\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Is the investment in LNG infrastructure responding? Is this policy ambiguity stifling too much? What are your plans for growing your own fleet?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-36310\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"10\" role=\"region\" aria-labelledby=\"elementor-tab-title-36310\"><p><strong>OK:<\/strong> This new billing price has gone from $180 to $250, and the order book is more than 40% of the fleet, and then that should worry any shipping investors, including myself. There are a couple of reasons for this. For one thing, there are a lot of new projects Qatar has today our nameplate capacity of export of 77 million tons per year. In the first stage, they\u2019re not going to increase it by 33 million tons and then maybe add 16 tons on top of that. So Qatar is probably going to order a hundred ships altogether. Then you have some new projects in the US especially Venture Global LNG and Genia, which are pushing forward new projects. So there are a lot of new projects. Of course, it\u2019s not enough. Europe can\u2019t replace all Russian gas just with renewables.<\/p><p><strong>OK:<\/strong> They need to replace most of it with gas. But now, in Europe, we replace it with spot LNG and a lot of coal which is the opposite of what we were planning, so we need a lot of new ships for new projects. We have seen a lot of investment on the shipping side, but mostly all of those ships are built towards our new contract, so not on speculation. The problem is that if you\u2019re doing this multibillion-dollar project, you need to have contract coverage for 70 &#8211; 90% of the volumes; otherwise, it\u2019s too risky to give it the green light. And when you have the player that should be signing up the most contracts &#8211; Europe, and they are not doing it, that makes you reliant on the super majors and the traders signing up. Europe should probably be signing up $50 &#8211; $80 million tons of LNG, and so far, they haven\u2019t done that. And that\u2019s what is holding back investment. With this kind of huge challenge, you have to replace pipeline gas from Russia with LNG and get rid of coal in Europe; then, investments should be bigger.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-36311\" class=\"elementor-tab-title\" data-tab=\"11\" role=\"button\" aria-controls=\"elementor-tab-content-36311\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Looking beyond this winter and out over the next 5, 10, and 15 years as the CEO of an LNG company, what do you need to do your part in providing reliable, affordable energy to Europe and the world?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-36311\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"11\" role=\"region\" aria-labelledby=\"elementor-tab-title-36311\"><p><strong>OK:<\/strong> For all businesses to transport LNG to the market, which is willing to pay the highest price. Of course, we are not instructing our ships where to go. Every fixture in LNG is a time charter. So the guy renting the ship will instruct where to load the cargo and where to discharge, and this is up to market forces, which it should be. What we are delivering is the most efficient LNG ships. So ships built between 2008 and 2021 are the most efficient with the most modern diesel engines. That resulted in an efficiency increase of 60% compared to the older ships. So, that is all part of the value change, and we have built all our ships on speculation; we haven\u2019t built them to contracts. In our considerations, we thought, these are good ships, and prices are good, let\u2019s invest $2.5 billion in these ships, and let\u2019s see if we can fix them out.<\/p><p><strong>OK:<\/strong> It usually takes three years to build an LNG ship. Now, the lead time is more like four and a half years. I listened to one of your podcasts recently, which was with Jeff Currie in Goldman Sachs, which I\u2019ve talked to in the past, and he has a very good point because we have this inflation; yesterday, USCPI numbers were still above 8%. So inflation is high, and as today as back in the 70s, it is driven a lot by energy. People thought the energy was irrelevant; it was a small part of GDP. Energy companies in the SNP index went from 15% of the market down to 3%. So a kind of energy was this dinosaur, an old industry that nobody taught much about.<\/p><p><strong>OK:<\/strong> Now, with energy prices coming up, we see how important energy is and having the reliability of supply and affordability. When inflation came down by Paul Walkers, Jeff questioned whether it was Paul Walker who did it or if it was the CapEx boom in the oil industry after oil prices took off after the OPEC crisis in the 70s. We are at exactly the same point today; we have high inflation because of high energy prices, especially in Europe when it comes to gas, and how will we drive down inflation? It\u2019s a CapEx boom in LNG! So that\u2019s what you have to create. I don\u2019t think people in Europe are willing to start doing shale. They are unwilling to take out more gas from the running and gas fields because house owners don\u2019t like it.<\/p><p><strong>OK:<\/strong> If you don\u2019t want to use that gas resource, you need LNG. So you need a CapEx boom in LNG, much bigger than we are seeing today. We are seeing quite rapid growth on the LNG upstream part. I mentioned there are a lot of ships for construction, but it\u2019s not big enough because the challenge we are facing is much bigger than people realize. We\u2019re trying not to patch it up with some gas subsidy caps, but this is a much bigger problem. We have to start thinking 10, 15, or 20 years, and then we need more LNG, but also the LNG industry also needs to begin to decarbonize. CO2 emissions by replacing coal with natural gas by 50-60%, but there\u2019s a big problem, and it\u2019s the methane emissions; they will need to be reduced to close to zero.<\/p><p><strong>OK:<\/strong> People say it\u2019s difficult, but it\u2019s possible; Equino has reduced methane to virtually nothing in their value change. I think you should have a price on methane as well, so getting methane emissions down and then also on the upstream part, how you electrify it to bring down emissions. Every upstream project today has to start thinking about CO2 capture. So you are capturing the CO2 during that process. And then we also need to start thinking about CO2 capture when burning natural gas because if you manage to do that, you have basically made CH4, which is methane, into hydrogen. So you have been able then to create hydrogen much easier than burning hydrogen because that\u2019s a complex and inefficient process. Overall, I think we are happy to invest in that story. But right now, with the LNG new billing prices at $250 and all the ambiguity about policy, we are sitting on the fence like many other people in the industry.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div data-elementor-type=\"loop-item\" data-elementor-id=\"4220\" class=\"elementor elementor-4220 e-loop-item e-loop-item-1566 post-1566 post type-post status-publish format-standard has-post-thumbnail hentry category-episode category-winter-is-coming tag-commodity-markets tag-energy-crisis tag-energy-markets tag-energy-policy tag-environmental-policy tag-investing tag-lng pmpro-has-access\" data-elementor-post-type=\"elementor_library\" data-custom-edit-handle=\"1\">\n\t\t\t<div class=\"elementor-element elementor-element-146ac4a e-flex e-con-boxed e-con e-parent\" data-id=\"146ac4a\" data-element_type=\"container\" id=\"episodes-loop\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-0a79101 elementor-hidden-mobile elementor-widget elementor-widget-theme-post-featured-image elementor-widget-image\" data-id=\"0a79101\" data-element_type=\"widget\" data-widget_type=\"theme-post-featured-image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-9-greg-sharenow\/\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-1280x720.png\" class=\"attachment-large_sixteen_nine size-large_sixteen_nine wp-image-1568\" alt=\"\" srcset=\"https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-1280x720.png 1280w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-768x432.png 768w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-1536x864.png 1536w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-320x180.png 320w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-640x360.png 640w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080-960x540.png 960w, https:\/\/www.smartermarkets.media\/wp-content\/uploads\/2022\/10\/SM-93_Greg-Sharenow_1920-X-1080.png 1920w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-eef7d75 e-flex e-con-boxed e-con e-child\" data-id=\"eef7d75\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-27d2a0d elementor-widget__width-auto episode-number elementor-widget elementor-widget-text-editor\" data-id=\"27d2a0d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tEpisode 9\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1a63b80 elementor-widget__width-auto series-name elementor-widget elementor-widget-text-editor\" data-id=\"1a63b80\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color bb-elementor-custom-size\">\t\t\t\tWinter is Coming\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dac9a15 elementor-widget elementor-widget-theme-post-title elementor-page-title elementor-widget-heading\" data-id=\"dac9a15\" data-element_type=\"widget\" data-widget_type=\"theme-post-title.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\"><a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-9-greg-sharenow\/\">Greg Sharenow, Managing Director and Portfolio Manager for Commodities and Real Assets, PIMCO<\/a><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-84a4e0d elementor-align-left elementor-widget elementor-widget-post-info\" data-id=\"84a4e0d\" data-element_type=\"widget\" data-widget_type=\"post-info.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-inline-items elementor-icon-list-items elementor-post-info\">\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-12c436a elementor-inline-item\" itemprop=\"datePublished\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-date\">\n\t\t\t\t\t\t\t\t\t\t<time>October 29, 2022<\/time>\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t<li class=\"elementor-icon-list-item elementor-repeater-item-5ac02e0 elementor-inline-item\">\n\t\t\t\t\t\t<a href=\"https:\/\/www.smartermarkets.media\/winter-is-coming-episode-9-greg-sharenow\/\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text elementor-post-info__item elementor-post-info__item--type-custom\">\n\t\t\t\t\t\t\t\t\t\tEpisode Details \u2192\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t<\/li>\n\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6115381 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"6115381\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e85e782 elementor-widget elementor-widget-theme-post-content\" data-id=\"e85e782\" data-element_type=\"widget\" data-widget_type=\"theme-post-content.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1566\" class=\"elementor elementor-1566\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-739b8e7c elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"739b8e7c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-21f17c24\" data-id=\"21f17c24\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-70838a85 elementor-widget elementor-widget-html\" data-id=\"70838a85\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<iframe title=\"Winter is Coming Episode 9 | Greg Sharenow, Managing Director and Portfolio Manager for Commodities and Real Assets, PIMCO\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=qw7yw-12fcde3-pb&from=pb6admin&share=1&download=1&rtl=0&fonts=Arial&skin=1&font-color=auto&logo_link=none&btn-skin=c73a3a\"><\/iframe>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2c5e4eb9 episode-info elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2c5e4eb9\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-33177628\" data-id=\"33177628\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-3addda28 elementor-widget elementor-widget-text-editor\" data-id=\"3addda28\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>This week, we welcome Greg Sharenow into the SmarterMarkets\u2122 studio. Greg is the Managing Director and Portfolio Manager for Commodities and Real Assets at PIMCO. SmarterMarkets\u2122 host David Greely sits down with Greg to discuss the European energy crisis, commodity markets, inflation, and what it all means for investors.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5a3ebfe6 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"5a3ebfe6\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4abdb5dc elementor-widget elementor-widget-text-editor\" data-id=\"4abdb5dc\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"bb-theme-elementor-wrap bb-elementor-custom-color\">\t\t\t\t<p>Hosted By<\/p>\t\t\t\t<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6330757f elementor-widget elementor-widget-text-editor\" data-id=\"6330757f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\tDavid Greely\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4b022026 episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4b022026\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-6e16b282\" data-id=\"6e16b282\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-348e439c episode-qa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"348e439c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-inner-column elementor-element elementor-element-553bf603\" data-id=\"553bf603\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-481e2ee6 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"481e2ee6\" data-element_type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4117179f elementor-widget elementor-widget-heading\" data-id=\"4117179f\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Episode Q&A<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-36ea70d3 elementor-widget elementor-widget-text-editor\" data-id=\"36ea70d3\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The following Q&amp;A is created using slightly edited excerpts from the episode transcript, optimized for readability. <a href=\"http:\/\/smartermarkets.media\/wp-content\/uploads\/2022\/11\/SM93_GregSharenow_TranscriptFinal_20221104.pdf\" target=\"_blank\" rel=\"noopener\">Download full transcript<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2d399ee1 elementor-widget elementor-widget-accordion\" data-id=\"2d399ee1\" data-element_type=\"widget\" data-widget_type=\"accordion.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion\">\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7581\" class=\"elementor-tab-title\" data-tab=\"1\" role=\"button\" aria-controls=\"elementor-tab-content-7581\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How are you thinking about and weighing the actions of the FED versus OPEC plus when sizing up your outlook for the energy markets this winter and next year? How does China fit into this also?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7581\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"1\" role=\"region\" aria-labelledby=\"elementor-tab-title-7581\"><p>GS: I think it\u2019s the FED versus OPEC that has been a very challenging dynamic when you\u2019re formulating a view because it is hard to look at the actions of the FED and not notice that this will lead to a slowdown of economic activity. You\u2019re already seeing it in some of the data that\u2019s regarding housing, and you would expect to see the actions of higher Central Bank rates, not just in the US but globally, having a negative impact on real spending capability ultimately over time. Ironically, higher rates also increase the cost of capital to the energy space, reducing potential investment.<\/p><p>GS: So there is a bullish aspect to the FED policy that will be more impactful over a longer term horizon than a short term because investors now have more places to put their money. To places where they\u2019re earning some risk-adjusted return. After many years of interest rates being so close to zero, which was made to facilitate more money going to more places and is now working in the other direction. I think that points to one of the challenges we\u2019re facing right now, that this cycle that we\u2019ve been in higher commodity prices hasn\u2019t been a demand-side cycle. If you look at the last super cycle, the emerging market growth rate, particularly centered in China, really strained global supplies; demand for many of these commodities isn\u2019t much different than where they were in 2019, and if anything, they\u2019re not on the trend where they would\u2019ve been, but we\u2019re seeing extreme tightness and very strong markets in part because of the constraints on the supply side.<\/p><p>GS: If the FED were to move rates much higher, reducing capital availability further to upstream investment and investment in the power sector, it could have a positive long-term impact. Regarding OPEC&#8217;s action, they had some concerns about short-term demand, and there is an interest in supporting prices long term. And if you\u2019re OPEC and you\u2019re producing at near max capacity, if you look at Saudi, they were producing 11 million barrels per day recently. From a consumer standpoint, if you believe we need to get that CapEx invested, that we have been shy to do up to now, but I don\u2019t think that\u2019s the only reason. Another part of their view was that if you think about driving your car and you have your pedal down to the metal, you will start getting vibrations.<\/p><p>GS: They\u2019ve never sustained that for two consecutive months. Sure, their surge capacity is still higher, but we haven\u2019t proven that they\u2019ve had meaningfully higher sustainable capacity. So seeing a reduction in output from OPEC also probably has a lot to do with creating flexibility in the system and reducing that vibration. Now the one other piece that has happened since then is also some guidepost from SPR, which has the same sort of guidelines as what you were saying that OPEC Plus was trying to do, which is creating price stability, which over the long term is arguably going to facilitate more investment if the SPR now can commit to forward buying oil around $70. OPEC is willing to adjust its output, at least for right now. Policies have changed a lot in OPEC over the last 20 years.<\/p><p>GS: Their response function today is not necessarily what the response function will be tomorrow, but as of right now, SPR, as well as OPEC, are working to put a floor under our backend oil prices. That leads us to have a constructive view on oil over the next 6 or 12 months or certainly that the market is discounting a lot of demand weakness that could come potentially from the FED tightening, particularly if the FED tightening leads to lower CapEx. Now about China, what\u2019s remarkable about these commodity markets, and in the last cycle up in commodities was very much led by China, and it used to be that if the US sneezes &#8211; the world caught a cold. The response function of global growth that changes in China&#8217;s growth is becoming like a three-month lag, and it is not just the US now; it is also China\u2019s impulse function.<\/p><p>GS: And that\u2019s even more true for commodities, given their large share of not only growth but also their large share of absolute demand, given how much they\u2019ve grown over the last 15-20 years. Almost all commodities are in a state of backwardation, consistent with low inventories and tight fundamentals where people are willing to pay a premium for prompt delivery. So we\u2019ve had incredibly tight commodity markets across the whole chain. You\u2019ve managed to have this, with China being a negative impulse. Next year, I would love to know what exactly China will grow; they will still grow at a slower rate than they have been and probably decelerating, but if they\u2019re growing. They started changing their COVID policies, which could be a positive catalyst. But up until they make that decision, there are headwinds to commodities, and that\u2019s the challenge for prices, and if not, I don\u2019t know where prices would\u2019ve been. It would\u2019ve been a lot higher and a lot more painful.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7582\" class=\"elementor-tab-title\" data-tab=\"2\" role=\"button\" aria-controls=\"elementor-tab-content-7582\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: We now have markets managed by policymakers from many different directions. You\u2019ve got the OPEC plus trying to keep prices elevated and arguably stable. You\u2019ve got the US using the SPR to try to keep prices low but maybe agreeing that they can\u2019t be too low. You\u2019ve got the FED trying to tame inflation and so on. There seem to be many more policy choices and credibility of policymakers that you must think about today relative to years ago. Do you feel that way?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7582\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"2\" role=\"region\" aria-labelledby=\"elementor-tab-title-7582\"><p>GS: For sure. We had the Twitter wars also for four years before, and we\u2019ve had COVID, so there have been many policy shifts and challenges. When you and I were working together, we were trying to get supply and demand down to a couple hundred thousand barrels daily. Now all the inputs could be half a million to a million barrels a day &#8211; easily! With China\u2019s demand, if they reaccelerate, that could be $more demand for 500,000 barrels per day next year. The uncertainty bands are wide, and I think that\u2019s part of what is also contributing to a lot of the constructive nature of the market because it challenges CapEx if you\u2019re sitting there looking at this environment. You\u2019re looking at policy uncertainty, demand uncertainty, and the policy being China\u2019s COVID as well as fiscal policy, which is a huge deal in Europe right now. And it has had a big outsize impact on the market, the political future of some European leaders, and the rising concerns leading to protests in the street.<\/p><p>GS: Like there\u2019s a lot of uncertainty. It makes one have to be more nimble, but it also makes the CapEx decisions to solve some of the supply-side challenges even more difficult because of all these uncertainties.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7583\" class=\"elementor-tab-title\" data-tab=\"3\" role=\"button\" aria-controls=\"elementor-tab-content-7583\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How do you think about some of the spillovers from the European energy markets into broader energy markets? What are the ripple effects across commodities right now?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7583\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"3\" role=\"region\" aria-labelledby=\"elementor-tab-title-7583\"><p>GS: Well, I can also widen that and say the ripple effects across the economies in the politics because Europe is the epicenter, but the echo has been global. And in the real wage contraction, you\u2019re seeing that is very sharp in Europe, in particular, but elsewhere, the European energy crisis has many impacts on other commodities; for example, high natural gas prices are leading to higher coal prices, higher power prices, which has the implications for creating higher coal prices elsewhere as well, which has the feed through to higher power prices. It has a substitution effect on oil. Now I\u2019m a little less alarmist than others on the outlook for winter in Europe. There\u2019s been a bit of migration to that view recently because cash prices in Europe are trading down from \u20ac350 per megawatt hour.<\/p><p>GS: This weekend, it traded for $50 or $60. That\u2019s a pretty big change now. The forward curves are still pricing a big premium. We all have the challenge of figuring out the demand response functions when we\u2019ve never seen prices in this neighborhood. And if you look in the past, you\u2019ve seen price spikes, and you kind of get a sense of how the demand responded on a short-term basis, but in almost all those cases, the forward curve was largely unmoved. It was viewed as a transient effect, and today it is the full forward curve at a huge premium to what anything would\u2019ve been expected historically. So I\u2019ve been a little less alarmist because we have so much excess consumption in our energy systems, and there are a lot of actions people can do to save.<\/p><p>GS: One of the ironic things we\u2019ve seen this year is how weak gasoline demand may have been in the United States. It\u2019s been much better in Europe, but it\u2019s been weakish in the United States. Part of that concerns when your real wages are contracting; you start looking at ways of saving energy. Now, if you\u2019re a European energy consumer, you cannot heat your whole home, but you can move back in with your parents, work from the office more, and let your firms pay your heating bills. Like there are a lot of actions, the awareness can lead to a material change. For instance, changing your thermostats by one or two degrees has a huge implication for energy consumption as well as, and curtailing peak power demand has a material impact on thermal generation because thermal is your marginal generation.<\/p><p>GS: What\u2019s going to happen in Europe, it\u2019ll have meaningful implications on the fiscal stress in Europe and their ability to manage through the needed subsidies that they\u2019re planning or the planned subsidies. Whether or not that\u2019s a good idea and if it\u2019s needed, as Europe consumers go, a lot will go in the global market. Suppose we end up getting the 15% consumption out of the consumers. In that case, that\u2019ll be a meaningfully lowered tax on industrial output and lower energy prices that you could expect in Europe, Asia, and elsewhere, big energy importers competing with Europe. Oil could have independent issues because of Russian sanctions and OPEC\u2019s decisions. There\u2019s a variety of things that can make that market different, but certainly, when it comes to gas and coal, it\u2019s Europe that controls and holds a lot of the outcomes cause we\u2019ve seen weaknesses in other places from the high prices that are causing real strains for Asian importers in some of the lower income countries. If Europe can figure out how to contain its demand, that will be very helpful in relieving some of the pressure elsewhere.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7584\" class=\"elementor-tab-title\" data-tab=\"4\" role=\"button\" aria-controls=\"elementor-tab-content-7584\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: Over the long term, it\u2019s about the investment in oil and gas and other energy production forms. How big a problem do you see in terms of under-investment? How have you experienced the reluctance to invest in the space as a portfolio manager where you\u2019re managing the portfolios for commodities and real assets at Pimco?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7584\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"4\" role=\"region\" aria-labelledby=\"elementor-tab-title-7584\"><p>GS: We spend a lot of time with the corporates trying to understand their decision functions, trying to get a handle on what dollars are going back in, and at one point, they were spending 120% of free cash flow and now spending 40% or 50%. You look at the changes in oil production relative to what you would\u2019ve expected at similar prices, and you look at changes in investment in terms of rigs; it\u2019s meaningfully lower, and if you look at the international energy agencies&#8217; investment outlook that was published a few months ago, they were also commenting that 50% of your increase in global energy expenditures this year is all cost. So when you look at an inflation-related company, they are more concerned about their cost and cost management because of how investors view and treat their equities when they increase CapEx and have higher costs associated with it. It\u2019s very negative.<\/p><p>GS: When you look at the oil and gas side, we\u2019re investing about 15% below where we were in 2018 and 2019, despite prices about 30% higher. On a real basis, it\u2019s like 25% below. Meaning companies are just being more disciplined now. I think it\u2019s a function of a few things. One, investors demand it after a very long period of subpar returns, and they want to be paid for the risk they\u2019re taking. The second part, think about anything long-term CapEx-related. You don\u2019t just have the demand uncertainty associated with the energy transition; you have liabilities that the environmental policies will change. What is your carbon exposure? What is your remediation exposure? Have you started expanding your time? The uncertainty bounds around these policies, and the demand outlook gets wider.<\/p><p>GS: And that\u2019s very challenging for companies to justify and operate in that environment, and that\u2019s why you see a lot of investments more likely to be green-lighted in renewable diesel, which with LCFS markets down here, it has to be challenged, but at least they can make a justification that in the long term it\u2019s aligned where the puck may be going. The problem\u2019s a long skate between now and then in the energy markets, and that\u2019s not just true in oil and gas exchange but also in power. And while in the long term, more growth in renewables and more growth in storage for renewable, associated renewables are the grid that will lead to lower prices. The problem is we\u2019ve done such damage to the base load generation that we\u2019ve added intermittent sources that aren\u2019t able to meet the full spectrum of our needs.<\/p><p>GS: I think we\u2019re going to end up in a situation where the next three to five years, there will be higher and more volatile energy prices because of the CapEx decisions and the challenges of making incremental CapEx improvements on base load capacity whether it\u2019s thermal related or even nuclear in many places. Even though nuclear is having a bit of a renaissance, it\u2019s still a two-track system where some are going in the opposite direction. It will be very challenging to meet the energy needs when the economy begins to grow again meaningfully.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7585\" class=\"elementor-tab-title\" data-tab=\"5\" role=\"button\" aria-controls=\"elementor-tab-content-7585\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: When people think about an LNG investment, the focus is on what if\u2019s; in 10 years, we\u2019re no longer allowed to use gas. Can this be converted into something that will generate returns g in 5-10 years? Is this widespread?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7585\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"5\" role=\"region\" aria-labelledby=\"elementor-tab-title-7585\"><p>GS: I think the policy uncertainty is what you\u2019re referencing there. If you look at clean diesel, for example, it relies on policy incentives, and if you look at some of the other investments, it\u2019s all about policy, and if the policy is going to change with different political wins, it does make the challenges harder. Certainly, consumers and governments are willing to look at the next 3-5 years and make that decision, but it\u2019s harder to make that decision over a 20-30 year period. Now we\u2019re moving into a peer with higher LNG FIDs going to be made. Even if it\u2019s the lesser of all the evils, it\u2019s one that markets are paying for. So I think you\u2019ll see more LNG projects, but when you start looking at other projects that would otherwise go, you can easily say that some of the challenges are real.<\/p><p>GS: My concern about LNG is that everyone might want to build an LNG import terminal, and many US builders want to be LNG export terminals. We have to accompany that with upstream. Now, if you\u2019re in East Africa, they are paired, and there are some other areas of the world where they\u2019re going to be paired, like in Qatar, but in places like the US, we have to be able to invest to keep up with the LNG export capacity that could come down the line and permit is a big portion of the challenges in doing so.<\/p><p>GS: I would expect that you\u2019ll see compression in the ERBS because the incentives are there, just like dollars will flow through the highest margin over time. It\u2019s not a grand philosophical statement of insight. Investors go for returns, LNG arbitrages are high, and we should invest in rectifying that.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7586\" class=\"elementor-tab-title\" data-tab=\"6\" role=\"button\" aria-controls=\"elementor-tab-content-7586\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: US inflation\u2019s the highest it\u2019s been in 40 years; the dollar's strength against other currencies means commodity prices are much more painful outside the US. The conventional 60-40 equity bond portfolio had its worst year in a century. How are investors responding to the situation? Is the attitude towards investments in commodities and real assets changing at this point?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7586\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"6\" role=\"region\" aria-labelledby=\"elementor-tab-title-7586\"><p>GS: Yes, but it\u2019s fairly nuanced. Suppose you look at the 60\/40 portfolio. In that case, there\u2019s a time with a large historical sample where the correlations between fixed income and equities aren&#8217;t negative. Usually, that environment tends to be associated with inflationary environments. You\u2019ve seen that in the past year, inflation has picked up, growth rates are coming down, and nominal rates are going up, creating a problematic time for investors. So owning inflation assets are more important than maybe other periods where growth is a dominant factor when inflation\u2019s dominant, inflation-related assets are in higher demand for portfolio diversification. So there are a lot of clients who are interested in hedging their inflation risk in their portfolios. The thing is that there are a lot of scars, particularly in the United States, from long periods of poor commodity returns and low inflation where it wasn\u2019t the best use of the dollar.<\/p><p>GS: Now the problem is when we have the regime shifts, and you have had the investment, and while <br \/>there\u2019s some regret from a lot of the US investor base who weren\u2019t actively engaged like they may have been 10 or 15 years ago. The challenge many are debating now is whether you can buy commodities today if the forward economic ALEC is lower? So there\u2019s a tug of war between those who can get over that hump and view it from a portfolio diversification standpoint versus those who think with a bad economic outlook. Do you want to own commodities in a dire situation? They\u2019re at a higher nominal price than they\u2019ve been, so they think they shouldn\u2019t be interested. It\u2019s a two-way conversation; the other part is for those who were invested because your 60-40 went down so much, and commodities are up; if you had a 3% allocation now, you might be at 4.5% or 5% today.<\/p><p>GS: Portfolio rebalancing, take the cash from here to finance other ills in your portfolio, but the interesting part is that the global investor, particularly in Asia, and Latin America, these are places that historically have had high leverage to EM growth and, as a result, would\u2019ve felt more insulated in an inflationary cycle, a commodity cycle than they have been this time. All of a sudden, they\u2019re finding themselves very subject to changes in inflation globally and changes in the US FED policy. They have found themself on the tail end of the inflation cycle and have become increasingly interested in hedging their inflation. I never had that EM virtual demand growth and never had the EM growth story, I mentioned before about China. You never had the growth, but you still got the commodity, inflation, because of the supply exchange.<\/p><p>GS: So while the US, what our perception is, the US investors are very much split, and some are reducing for various reasons or some have just missed it, and they\u2019re now concerned because of demand. The global investor has been much more interested than they have been in past cycles in part because of the nature of this, rise in prices has been much more on the supply rather than the virtuous economic boom EM-led cycle that we had before. So everyone has a different experience regarding how, or rather everyone has a shared understanding and has different wrong conclusions on how to manage it. There\u2019s no rock you can hide under that\u2019s big enough.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7587\" class=\"elementor-tab-title\" data-tab=\"7\" role=\"button\" aria-controls=\"elementor-tab-content-7587\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG:  Where do you see some of the bigger investment opportunities, commodities, and real assets over the medium term?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7587\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"7\" role=\"region\" aria-labelledby=\"elementor-tab-title-7587\"><p>GS: The part of the commodity complex with the best medium-term outlook is the oil space, partly because of the real limitations on the growth and production sides. When I look at other commodities such as agriculture, while the environment is very tight at the moment and we\u2019ve had two years of some fairly unfavorable weather conditions, ultimately, every year, this volatility on the supply side is meaningfully higher than the volatility on the demand side. So if you have good growing conditions, you can start seeing a rebuilding of stock. So it\u2019s hard to strongly believe these prices are sustainable in agriculture without knowing the weather. There have been higher inflationary pressures that will likely limit the ability to bring in additional marginal acreage.<\/p><p>GS: We\u2019ve seen some plateauing or definite slowing of the ability of places like Brazil to bring in additional acreage. There is inflationary potential in the AG space, but I would describe it more as we have much like power and gas and a much more brittle system. If you believe the climate is becoming less stable and more volatile, AG will have a higher likelihood of seeing price spikes than you would\u2019ve seen maybe 10 or 15 years ago if you think this is a fundamental structural change. We had a speaker from Nassau who talked to us about this, and what I concluded from that is you would expect higher average prices but higher volume than you would\u2019ve expected before.<\/p><p>GS: The starting point on the AG market, in the near term, is on the constructive side because of where inventories are and where the harvest has been, but at least the worst has been avoided in the US for corn and soya, but still it wasn\u2019t a great year. When I look at metals, a lot of it has to do with as China goes &#8211; the metals markets will go; we see some reductions in CapEx on the metal side as prices have come down, and they\u2019re doing it at higher price levels than you would have expected in the past, but again, related to inflationary pressures. However, still, China is the biggest mover. The energy transition has positives for the metal space, but it\u2019s hard to offset the size and scale of China&#8217;s growth to their implications for the metals markets.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7588\" class=\"elementor-tab-title\" data-tab=\"8\" role=\"button\" aria-controls=\"elementor-tab-content-7588\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: So the oil sector is the one you\u2019re favorable on in the medium term and probably on the upstream?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7588\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"8\" role=\"region\" aria-labelledby=\"elementor-tab-title-7588\"><p>GS: Yes, that will ultimately drive much of what happens in other commodities. For example, suppose the oil has the investment. In that case, the cost of investing in other upstream production, whether in metals or agriculture, becomes less challenging, and high fertilizer and ammonia prices result from what\u2019s happening in Europe. If that reverses, that certainly reduces some of the pressures in the system. But I do think oil is the one that has the greatest constraints. Certainly, natural gas has been very tight, but Russia&#8217;s ability to shock Europe has now gone; there were 400 million cubic meters a day, and now 40% into Northwest Europe. There\u2019s always zero, and that wouldn\u2019t be an easy adjustment, but in the oil market, their potential drop in exports alone can dramatically keep this market tight for a very long time. So we think oil health\u2019s a better outlook right now.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-7589\" class=\"elementor-tab-title\" data-tab=\"9\" role=\"button\" aria-controls=\"elementor-tab-content-7589\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: How do you think about energy transition and commodity landscape changes from an investing standpoint? What is your take on investing in traditional commodity sectors versus the commodity sectors that the world\u2019s increasingly committed to transitioning? Is that space even investible at this point?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-7589\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"9\" role=\"region\" aria-labelledby=\"elementor-tab-title-7589\"><p>GS: We\u2019re not going to see a phase-out or retirement of trading and investing opportunities in traditional energy because we have yet to prove that the world can move off of any. We\u2019ve seen lower shares over time for different commodities, but we&#8217;re always adding our wood, coal consumption, and so on because of the high demand in the global energy market. So I think we expect that in five years, the investment in space will still be very similar to today with additional opportunities. Carbon, for example, is an area of growing interest. Let&#8217;s talk about a market that has big policy-driven views. Europe going for a 50-55% reduction had a meaningful impact on the forward supply of European emissions allowances. US California policy is another market that is potentially going to change, given the new carbon neutrality goal by 2045.<\/p><p>GS: That was just brought into law, but these markets are going to be very interesting because one of how the globe is going to try to make that transition is through bringing in carbon prices, and carbon is almost like a way for the market try to solve the way hopefully forward, but some places will be more command and control, and some other places will be carbon taxed and assume that they know the right place to get the outcome they want, but it\u2019s going to be an area where you\u2019ll have greater opportunities for investing. Now, suppose I think more broadly across asset classes. In that case, it argues for a very flexible approach because you are going to have periods where different areas are going to have higher rates of return, and just being in the energy transition sector and not investing in the old-line energy markets could leave pretty big gaps in one\u2019s portfolio.<\/p><p>GS: Particularly if you\u2019re considering this area as part of your inflation hedging basket. It\u2019s not just a return center, but a return and inflation that needs to have what drives inflation. Core inflation has had its year and a half right now, where volatility is certainly picked up, but if you want to hedge and have your view about that as inflation related, you can\u2019t ignore old-line commodities. Oil and food in emerging markets and elsewhere are still the biggest contributors to the volatility of inflation. In terms of being investible, the capital markets are ignoring some of the challenges with the higher rates, reduced ability for the market IPO, and new technology sector\u2019s kind of the epicenter of some of those challenges; it\u2019s going to continue to grow, and there are opportunities in companies that will take advantage of some of the growth industries.<\/p><p>GS: The challenge I have is if I want to invest in a company that\u2019s going to build batteries; for example, for the grid, they\u2019re all going to target the same hour or two or three a day. So you always have to be very careful with how much you expect current margins to sustain. So I think knowing the history of the challenges and investing in solar globally, investing in wind, investing in some of these technologies is going to be important for investors to take those lessons and learn them because you don\u2019t want to put money behind an investment theme and you\u2019re relying on something very challenging.<\/p><p>GS: I commented before about renewable diesel; look at the LCFS market, we looked at a bunch of projects two years ago, and we got called to sell puts to hedgers because they all needed to have $125 or $120 to generate a good return for their investment and we\u2019re trading $65 or $70 now. It\u2019s challenging because of the growth in projects that we\u2019re looking at over $200; commodity markets are very volatile. I suggest having a very broad approach and a very flexible approach because you have to appreciate just how volatile they are.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<div class=\"elementor-accordion-item\">\n\t\t\t\t\t<div id=\"elementor-tab-title-75810\" class=\"elementor-tab-title\" data-tab=\"10\" role=\"button\" aria-controls=\"elementor-tab-content-75810\" aria-expanded=\"false\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon elementor-accordion-icon-right\" aria-hidden=\"true\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-closed\"><i class=\"fas fa-plus\"><\/i><\/span>\n\t\t\t\t\t\t\t\t<span class=\"elementor-accordion-icon-opened\"><i class=\"fas fa-long-arrow-alt-up\"><\/i><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"elementor-accordion-title\" tabindex=\"0\">DG: What is the most helpful in financing the transition into some of these newer forms of energy? Is it better risk management or education? What do you see from your end?<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div id=\"elementor-tab-content-75810\" class=\"elementor-tab-content elementor-clearfix\" data-tab=\"10\" role=\"region\" aria-labelledby=\"elementor-tab-title-75810\"><p>GS: Policy, certainty, and clarity would all be very helpful, but I am optimistic we\u2019ll get there. If you look at Europe and United States, the western world is struggling with that. China probably has slightly greater ease in imposing policy certainty, but even there, we\u2019ve seen changes in how they approach their heavy-emitting industries. The big challenge is to deal with that. I think the other challenge is to deal with a lot of the efforts in deglobalization and some of the challenges that a lot of countries don\u2019t want to rely on energy or mineral suppliers from other countries and view it as a zero-sum game. I think that also threatens to reduce the amount of money that will float to the upstream or energy supply. When I say upstream, I do not just mean oil and gas from that standpoint.<\/p><p>GS: The energy transition will require a massive amount of capital, and some of these hurdles are just a real challenge at the very least; one would say we can control policy a little bit better than we have and put some good policy in place. If you look at the political outcomes in Europe with people in the streets and the pressure of rising populism, you can see the imperative of doing so. I\u2019m afraid these events cause bad outcomes as a short-term and political imperative, which reduces the incentive and ability to invest. The other thing is hedging is hard as you go into less liquid commodities, and many banks face different tiering on their capital. So if you trade something that\u2019s highly ill liquid or something long-dated, they have to have higher capital charges and greater reserves against it, which is probably good for the overall financial stability of the system, but also makes hedging very challenging. So there\u2019s a bit of a dearth of capital dedicated to helping facilitate that. I think that\u2019s an opportunity for investors, but it\u2019s an obstacle to the growth of that CapEx.<\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<span class=\"e-load-more-spinner\">\n\t\t\t\t<i aria-hidden=\"true\" class=\"fas fa-spinner\"><\/i>\t\t\t<\/span>\n\t\t\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":626,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"pmpro_default_level":"","footnotes":""},"categories":[82],"tags":[],"class_list":["post-617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-series","pmpro-has-access"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.8.1 - 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