🔴 We've NEVER Seen Anything Like This: The Oil Is OUT | Shubham Garg

Added: 2026-05-25

[00:00:00]owning hard assets is going to be the next, you know, AI, whatever you want to call it. Uh, even the AI has gone into owning hard assets with the data centers. Uh, and I saw the other day that a that an AI company bought up a natural gas producer um here just a couple days ago. So, you're seeing everybody realize the same thing that the world runs on energy uh no matter how you want to slice and dice it. Um, and I think that's that's very exciting.

[00:00:25]Um I think not just as an as an investor but as a producer and I think for the sake of humanity the >> capital. My name is Danny. It is May 21st 2026 and my guest today is Shubam Gar returning on the show. Shubam it's a pleasure having you on my friend.

[00:00:45]>> Yeah you bet. It's a pleasure. Yeah. day 83 here going on of this uh conflict that uh you know people figured we've done in 24 hours and uh supposedly has been signed multiple times. So uh looking forward to share some more here and have a good discussion.

[00:00:58]>> Yeah, I mean you're one of my favorite oil experts to listen to and to read and to read u to read from. So uh let's just dive into the nitty-gritty. Before we do so, however, uh guys, be sure to hit the like and subscribe if you haven't already. Let's get this uh video juiced in the algorithm to get this message out to as many people as possible. We're going to be talking about a lot of important events and things happening in the oil market and energy markets that are relevant to pretty much every human being on Earth if they use energy. So, um let's just uh start with looking at the price of oil today. Kubam, as you can see, the last couple of months since the start of the war, we've just been rangebound and it looks like it's been consolidating. Uh we're just a little south of $100 right now, but we were over $100 earlier today. And you know, this thing is largely driven by news. Um today, um to kind of provide some color, they announced that there was a a final draft in a ceasefire agreement. Um and I'm presuming that's why things are selling off now with regards to oil. But you just sent me another thing from uh saying that the Iranian sources are saying that there is no final draft agreement. So uh walk us through what we what we're seeing here in the oil market. It's up and down, up and down.

[00:02:16]It's all over the place.

[00:02:18]>> Yeah, you bet. No, very interesting times. Uh just just before here you made the comment that, you know, if if they use energy, but but literally everybody uses energy. Uh you know, one kind of another. doesn't have to be oil, but you know, coal, natural gas, solar, wind, you know, biomass, whatever.

[00:02:32]>> Uh it's it's literally what has driven life to where it is today. And and it's going to continue to >> drive additional growth, economy, etc. Um there's some interesting graphs uh that are coming out that that sort of the US average uh consumer has stalled out at about 22 barrels per year of consumption. no matter how many EVs, hybrids, electrification, blah blah, whatever we do. Uh that that's sort of where we're stuck because people just keep consuming more and they're willing to spend that x amount of dollars uh sort of per year on on sort of fueling their their lifestyle and and needs and convenience, right? Not not everybody wants to drive motorcycles and ride bikes and everything. You know, people want to consume that. That's why people make money. Uh but, you know, it's been interesting. It's it's actually been uh very solid to be here. Uh I think earlier we were talking about um sort of $150 oil, $200 oil, what what's going to happen? Uh you know, the world economy is going to collapse, etc. And and none of that's happened. It's actually been very much a slowmoving train wreck. Uh at at the expense of the non oil investor, I'll say, uh or or the oil consumer. Uh it's been relatively flat in that 95 to$110 range. Uh you know, been been very happy. As you know, we uh produce our own oil as well. Alo been been getting exceptional pricing on this. Um especially with with not just WTI but sort of a bid on every grade of oil, heavy oil, light oil products. Uh everything's trading pretty good and you have seen demand destruction, right?

[00:03:59]Let's let's not kid ourselves. Even at $100 oil, people do on on the edges uh have demand destruction but but not as much as 140 or 150. So the effective job owning of the market um has been quite successful. You know, we we said this last time. Uh we've said this before in in 2016 to 2020. Trump is a really good job owner. He he is absolutely incredibly effective um at using whatever tools whether it's Twitter, but then but then the paper markets behind the Twitter um to sort of keep that oil price within a reasonable range. Uh obviously he couldn't, you know, keep it at 60 as as certain people were claiming that he's God Almighty himself. Um but but being been being relatively effective and and we're happy here every day that goes by is another week basically that the world will need to be in a million million and a half two million barrel over supply for for it to get back to that same inventory number.

[00:04:51]And um you know we're we're pretty pleased with that. We're on day 83 84 now. Um you know inventories keep draining. Over a billion barrels have been lost already. uh multiple more will be lost here as as this um continues.

[00:05:06]You've seen some rigs added in in the US shale basins. Nothing from sort of the bigger boys. Yes, Diamondback added a couple rigs, but but not like oh we're going to add, you know, 20% production growth all of a sudden. The the geology just isn't there. Um, and this is something we've been talking about for a while that that the world for for the structural oil bull market to actually happen, the world needs to believe that the perian cannot add a million barrels per day in in that one-year time frame at $100 oil. And and so to see that play out over time, to see some of the banks uh change their tune on things. Uh we saw the BLM sale yesterday, Devon paying over $300,000 an acre uh for for unrilled acreage there um in the Perian.

[00:05:48]you're you're really starting to see things just sort of slow move towards the structural bull cycle and that's great and and what you'll see on the other end of this is of course supply will take some time to come online whenever this final draft final final final draft does get signed um not only will supply take some time to come online but you will see demand rise to to meet that so if if we see price go down to 90 85 80 you will see that incremental buyer step in whether it's Singapore whether it's Japan whether it's South Korea whether it's the US SPR itself um sort of step in take over that barrel and be willing to pay that right the the difference between 65 and 80 is more or less meaningless to these governments and consumers the difference between 80 and 150 is unbearable not not just for the personal consumer but because people start rioting you have not just energy shortage but food shortage and that's the last thing governments want they they they don't want any of that they don't want people rioting they don't want people you know disapp unhappy I should say and um so I think we're we're just day by day monitoring the market uh us producing oil at the same time making some good cash flows out of this uh at the same time you know there's some really strong investments that come out during these kinds of time frames uh you see usually the big boys move and and then some of the small midcaps start to get some dollars and then as as things go from there um you know there there is there is arbitragees in the market we were discussing this um here before the podcast started is that a lot of the people are still lazy fair.

[00:07:17]They have no clue about oil price. They don't they don't understand oil supply demand. But beyond that, they don't even know which companies to invest in. So what you end up seeing is these um sort of skewed riskreward uh scenarios that pop up in certain equity names, in certain leveraged equity names, in different kinds of options. Um you know, not not saying guys should be rushing out and you know, buying the most torqued up name possible. Uh but I do think that as this becomes more and more and more the norm, you're going to be able to identify certain um dislocations in the market and uh we just watch the show go on, right? No, nobody really really knows what's happening. Uh I think what we can say for certain at this point is that uh both sides don't don't have a clue here, you know, who actually is is in the driver's seat.

[00:08:04]They both are in the driver's seat. Um the Iranian regime's been out for 47 years. Um and and Donald Trump's got the biggest ego ever. So So you've got two parties here, none of whom want to lose.

[00:08:15]Um and I think that's going to be very exciting here going into um sort of now dragging into the summer driving season and then of course into the US midterm election season. So some some pretty interesting things happening here. Um but I think the the sort of the the whole glass ceiling or whatever you want to call it is is broken that oh we can just you know keep oil down forever no matter what happens in the world.

[00:08:37]nothing ever happens in the world. You know, we're just fear-mongering, etc. Oil's at $100 and and it's been there for the last 60 days and it's only going higher if if this doesn't solve itself because we have a physical barrel supply loss day after day after day.

[00:08:53]>> Well, let me add some color as well.

[00:08:54]Yes, oil's been at $100 around $100 now for 60 plus days, but it's only at the behest of these US strategic petroleum reserve releases. is from your own ex account or at white tundra SG and it looks like from what you're saying here 20 months worth of builds have been drained in just 7 weeks. You can see it here in the chart this huge dip in the strategic petroleum reserve. So yes, oil is at $100 or just a little under $100 at the time of this recording. But if it wasn't for these SPR releases, I mean this would be a lot higher, too. I mean, how much longer can they keep this thing going?

[00:09:36]>> Yeah. First of all, I see you haven't liked this post, so that's a strike one.

[00:09:39]But >> there you go. Beyond that, you know what? I'll repost it, too.

[00:09:44]>> Yeah. Yeah. Yeah. Um, but beyond that, I think, you know, it's it's not just the SPR. It's it's the US strategic uh strategic reserve, which as you can see in this graph, is already down over 200 million barrels when we started uh this conflict from from that 2020 time frame.

[00:09:59]And you know, I've seen this commentary on Twitter that, oh, it was congressionally mandated by Obama and and and Biden said this and and said that it doesn't matter. The reality is it should never have been drained. Uh yes, yes, you know, you need it in times of emergency and conflicts, but then you refill it, right, at at a pace that's fast enough that matters. not the piddley half a million barrels a week that was going on um over the last few years and especially not at that pace when prices were already low and when you were potentially going to enter in this this kind of conflict. So, so grave, you know, planning error here.

[00:10:37]Really, really big error uh that's been made and and and so again, it's not just the US SPR, it's the Japanese uh crude inventories, it's the global crude inventories, it's the product inventories, it's the oil and water, it's the Chinese SPR, and then demand destruction, right? You you've got all these sort of buffers, if you will, that were sitting in the system. And and I come back to sort of a big point here is the world in 2022 blew through a lot of these buffers and and nobody really realized it. They were like, "Oh, well, you know, the whole Russia thing was like a fear, uncertainty, and and the oil bowls are just stupid and this and that." It's like, "Okay, fine." But you gave up your insurance policies. You blew through 200 some million of SPR.

[00:11:20]The US drilled uncompleted count got absolutely blown uh down. Bacan Eagleford um as well as a Perian almost a year's worth of drilled uncompleted wells were completed in the last six years that were sort of your spare buffer there.

[00:11:35]That's gone. So I think you know the the oil bowls were were sort of setting up for this next event to occur. Uh we didn't know it was going to be this you know this major or this severe but we were warning okay we we blew through the SPR. We're not keeping as much gasoline storage at the pumps anymore because interest rates are higher, which means gasoline owners or or gas pump owners don't want to keep inventory because they're paying to keep that inventory.

[00:12:03]It's it's costing them money to borrow against the bank, you know, have have inventory, etc. And it was just like, oh la, whatever. It doesn't matter. And here we are now. if if we had another 300 million barrels in the SPR, that's a you know 40 to 50 week availability of of a million barrels a day more or less um that's available to the market that's just not there anymore. So you know it's it's really interesting to see all of this come to fruition um where it is. I think the US SPR has another 15 to 20 weeks. Uh, I remind viewers that the last two weeks were consecutively the biggest draw ever on on the SPR on a weekly basis. I believe 8.6 million two weeks ago and then 9.9 last week. Uh, at this rate we have about 15 to 20 weeks um, you know, until you're hitting basically tank bottom zero. Um, you know, which is fine. These are the reasons the SPR has been made, right?

[00:12:58]Literally strategic petroleum reserve for inventory uh, when it needs to be.

[00:13:02]The US has come out with this macho man mentality. We're going to save the world because we have the inventories. We got 40 boats coming to pick it up. And that's great. That that's marketing and capitalism 101 at its finest. So, you know, keep keep going, keep draining these inventories. Uh keep keep taking the buffers out of the system. And then on the other end of this, you have not just drained inventories, not just a declining US perian, you know, geology that's been going on for many years, but you have a world that will say, "hm, I should store a few more barrels of oil here in my strategic reserve and and I should have a few more gasoline buffers here, blah blah blah." And and so you get this double pull here. Um, you know, which will lead to higher for longer environment. um you know 65 70 is is just not going to be the norm. 85 90 yes could be the norm. But I think if the world really wants to set itself up for for a strong supply response one two three four years down the road we're going to need 90$110 oil to really incentivize producers to go uh you know into these things. I had another chart on my Twitter about the global oil and gas capex um through through Wood McKenzie that was posted and that shows you the delta loss in investment that's happened. You know, it's like oh well we didn't need this investment because the price oil is still 65 or oh the world has enough oil you know why are you guys keep talking about this? It's because the the pools that have come online between 2014 and let's say 2024 2025 have come from this investment that was done in ' 06 07 08 09 those US Gulf of America offshore fields that were um uh uh uh discovered the North Sea Norwegian fields that were discovered the Kazakhstani onshore fields that were discovered those were discovered during this time frame when this when this capex was put in and now we haven't done that. So we can't just go and say, "Oh, oil's $100. Let's go bring on that million barrel a day onshore field. It doesn't exist. You haven't found it yet." So that that I think is the big gap here is it's going to take a high enough oil price for a long enough time for the producer to say, "Okay, I'm going to spend 5% of my capex on exploration and wildcatting." Okay. Once we do that, some of this again is in remote areas with no roads, no electricity. So it takes time. Okay, you go, you do that wildcanning, you have a success rate of 20%. You find the pool, now you have a development plan for the pool, then you do the FID on the pool, final uh final investment decision, and then the pool comes online, you know, a couple of years later. So you're looking at this sort of higher for longer cycle and price doesn't solve it. whether the price is 110 or 140, it it doesn't solve the fact that this is the real world.

[00:15:56]You can't just go and press fast forward and oh, all of a sudden there's a 500 km road build to this remote region, you know, in Alaska or in offshore Brazil or whatever it may be. Um, so you know, that's that's I think where where investors should be looking at the forward strip pricing. Uh again, it's not always accurate, but you look at the forward pricing, how how is the spot versus strip price changing? And and does that incentivize producers to say, "Yeah, okay, I'm I'm willing to go out there, you know, spend a few bucks on this and and sort of bring future supply um online."

[00:16:31]>> Shamm, how much longer until consumers and and everyday people start to see prices rise as a result of these higher energy costs? cuz I mean prices have risen but it's really not that much yet.

[00:16:45]Do you anticipate them really showing up in the coming weeks or months ahead?

[00:16:51]When when do shortages actually start appearing here?

[00:16:55]>> Yeah, you're so you're you're actually seeing shortages sort of already here.

[00:16:58]Uh it it may not be in gasoline and diesel. uh it may not be in North America but but in parts of the world right like like India um has already gone out and said hey we need to consume especially LPG the cooking gas um there's a shortage of ura for fertilizers different kinds of sulfers uh engine oil changes are going to go up way way a lot right now because that that specific lube oil that's needed for for certain kinds of trades of engine oil um is under a shortage it it does take time there is inventory of products right across the system, whether it's at the um auto manufacturer, whether it's at the engine oil shop, the ones that were being shipped already. Then there's some sitting at at the finished products, uh factories, etc., uh refineries, but but that's being drained as we go and that's resulting in okay, we need to curtail by 20%, we need to curtail by 40%. And and it's just going to continue rising. I I bring back this concept of a slowmoving, you know, train wreck. This is not going to be all of a sudden, oh, we ran out of gasoline across America in one day. Like, that's not how it's going to happen. It's going to be slow and steady pricing increases.

[00:18:04]Um, you know, one of the things that I do want to mention is coming into the crisis, um, energy energy cost as a percentage of total PCE, personal consumption, uh, personal consumer expenditures was about 3%. in in the 2010 to 2014 time frame when oil price was $100 a barrel it was about 6%. So the world has been getting cheap energy for a little bit here like they they've been enjoying cheap natural gas, cheap electricity, relatively cheap gasoline and diesel and and I think the consumer has some ability to do some substitution here where it's like okay um if I fill up let's say 20 gallons right and I pay an extra dollar a gallon uh that's 100 sorry that's a $20 difference in in that fuel bill right that's one or two coffees a week. That that's like one margarita a week. It's nothing. So consumers will start to make changes in in other parts of their life to substitute for this. The the consumption has gone completely out of hand.

[00:19:09]>> Uh I was actually reading your uh YouTube comments from our last >> uh podcast and there was like oh well America is not wasting gas. You know that that's not true. We actually are using gasoline. And I'm like >> yeah okay fair enough. But how many people are driving around in V8 Yukons, you know, all the way across town for no reason, right? So that's what I truly meant. Not not that oil was just being, you know, blown away and burnt. It's it's that the US consumer, the North American consumer, you could argue the Chinese and the Indian consumer now has just got used to like bigger, you know, availability of energy. you know, we're going to go on road trips, we're going to run electricity, whatever, the water taps running, like the old adage of shut the lights off when you leave. It wasn't really a thing because there was just cheap energy available, right? It didn't really matter. So, and it still doesn't matter. So, um I think you're yeah, you're going to see sort of it it come into certain parts of the economy, but I think what what everybody can can sort of agree with is that we've hit the breaking point already. like we're at a place here where oil is going to be higher for longer here uh you know for a significant period of time. Um you don't need the whole economy to completely collapse you know off a cliff for us to say that we're in this and a lot of people still you know still don't care.

[00:20:28]They they still aren't aware and that's fine. You know this these things will happen slowly. Um it will lead to better energy education. It will lead to better policy. Um, and I think you'll just see a more resilient world, uh, you know, that that understands oil and gas and and how critical it is to us, uh, sort of day by day by day. So, uh, you know, last podcast we said 30 to 60 days until we start to see the breaking point. I I think we're at the breaking point and and the breaking point is not $200 a barrel. The the breaking point is demand destruction is is continued draw down of inventories globally at at a record pace. Uh, and and sort of no undo button. it it's not going to be like oh in 60 days if this thing solves itself we've built a billion barrels of inventory that that's not going to happen. We're we're once again working through our buffers of the world and that's going to result in higher for longer cycle which is is just the way it is.

[00:21:22]Shubam, uh, taking it to the investor standpoint now, do oil and energy investors, do they need, uh, $100 over $100 a barrel oil for the thesis, the oil thesis in the oil sectors to be appetizing enough to invest in?

[00:21:43]>> Yeah, I've got I've got kind of two points here. um you know the the oil investors uh have enjoyed a good 6 to 12 months.

[00:21:52]Okay, even even coming in before the the February 28th whatever uh stock stocks had done relatively well even even in a $60 oil environment uh there was some pretty strong strong conviction that something was going to happen.

[00:22:05]>> Um especially after last summer's uh a 12-day war incident that occurred and so you know the the early gain has sort of been done. there was already huge gain that was made in 2020 to 2022, right?

[00:22:19]Certain names like Imperial Oil, for example, um have just been rising non-stop since 2020. They they never went below their 2022 lows really. Um so, you know, it's it's already been a good win here. And I think what the new investor wants to see uh or what current investors want to see for for additional deployment is is not the current spot price. It's it's it's the longevity and the reliability of of this pricing uh mechanism which which currently we don't know right like with with the amount of paper market nonsense the amount of job owning happening um the uncleararity around when this conflict's actually going to end you know I think I think there there isn't that reliability right now people still believe oh yeah it's going to end tomorrow and and oil is going to fall to 60 bucks and then it's going to stay there forever and and that's the thesis that needs to change for the investor to come in and $150 oil is not going to solve that. It's it's going to be a persistent higher oil price environment without a supply response and without significant demand destruction, right? That that's what it's going to take. Um, and I think we're we're literally living that right now. And all it's going to take is time.

[00:23:29]It's it's not going to be price, it's going to be time for people to understand this more, for this to be more in the news, for us to hit lower levels u of inventories in other parts of the world. for us not to see supply response and this like oh perian you know million barrels a day growth all of a sudden has occurred uh that not to happen um you know which which just simply takes time so that's I think number one the second point I want to make is is one that I'll repeat from before uh which is you can find dislocations right there there is dislocations in this market this is by no means an efficient market going on right now uh you know certain companies produce oil but they also have European natural fast. Certain companies have oil in Australia that's trading at above Brent pricing. Certain companies have North Sea oil. Um certain ones have bigger reserves in the ground that they're able to expand oil. Um for example, the oil sands in Canada, certain heavy oil producers, um the some of the Gulf of America producers for example do have reserves and ability to increase production. And let's say if this sustains for another 6 to 12 months, they can bring on more barrels.

[00:24:38]Uh and I'm not talking about the high decline a perian place like that. That's not a high inventory place to be. Uh I'm talking about other conventional and sort of oil sands type of projects and and and so that's that's going to be really important for the investor to understand is okay which company actually is going to benefit if oil price stays at $100 for the next five years. how can I invest uh invest in that today and then 12 to 24 months down the road I've completely outperformed the market you know not not just S&P but perform sort of the general XLE market um if you will so you know really advise investors to get started read corporate presentations read financial uh reporting read some of the conference call transcripts and and try and find your arbitrage here and your edge right this is what we did at white tundra in 2020 this is what we did in 2021 this is what we did in 2022 and and at the end of the day, everybody's got their own strategy. Doesn't mean your strategy is going to work all the time, but but rather than just buying stuff, you know, based on online uh videos and and and writeups. Uh spend some time trying trying to find arbitragees and you'll be very surprised at the different kinds of arbit arbitragees that are to be found.

[00:25:48]Um, you know, I I can think about five companies right now that I'm tracking very closely uh to find that sort of not not quite entry point, but more so that okay, as as this conflict drags on, I'm just going to keep tracking those companies and and can make some big bets there. Um, you know, whether it's equity, whether it's call options, uh, just depends on sort of what what's out there. U, but there is a lot of mispriced uh things out there right now.

[00:26:12]Um and and sort of what's interesting to me is there's not that many companies left, right? In in 2022, we've seen massive consolidation since then in the Perian, in the Bacan, in the Eagleford, in the Canadian basins. Um you you don't have the same healthy junior oil market that was there in 2008, 2012, um even like 2016, 2018, uh 2002, 2004, obviously. and and so there there's only so many names that are sort of out there and and are set to get sort of all the capital flows, right? And and and that to me is very interesting because um things can rerate very quickly, especially when you look at names that have sort of large um insider holdings that have big institutional funds that have that have invested and and that their free float is actually a lot lower. So, um I'm I'm excited to see capital flow in, man. It's it's been it's been a minute. It's it's been a long time. People are jaded. People got PTSD. People don't believe. They they've been beat up by Trump and his tweets. Uh and the reality is that's exactly the environment that creates opportunity. Um you know, that's that's what creates opportunity.

[00:27:18]So it's interesting because you rewind back pre Iran war in in March and uh OIH and XLE and all these in Chevron and uh you know Shell and all these big all these ETFs and major names in the oil space were all going up while oil was just kind of hovering sideways. It's around $60. Now, kind of a similar thing is occurring as well. Like oil's hovering around $100 and all, you know, in the aggregate, a lot of these oil companies are continuing to move up.

[00:27:55]So, it seems like the market is pricing in higher oil prices down the line.

[00:28:00]Doesn't that seem like that's going to be the case here? I mean, I'm looking at the oil OIH chart. I'll pull it up here to look at. And over the last year, you as I believe you mentioned how oil investors have benefited a lot over the last year, but it's more than doubled over the last year and it's continued to move up on higher. This is when >> um you know this is here is when the war started >> right here. And you can see we've continued to move on higher. We had a little bit of a correction by the, you know, buy the rumor, sell the news type of thing. But, uh, since then, we've continued to grind on higher um, with OIH. You see it with all these other vehicles as well, all these other in oil instruments as well. So, is this telling you that is this a key indicator that oil is most likely to continue moving higher if money is investing into these uh, names?

[00:28:55]>> Yeah. No, for sure. You know, this is a very interesting chart because you can see how we had the big ramp into the beginning parts of 2026 with oil price at its lowest in in multiple years, you know. So, so that early part of 2026 you're showing there, prices were actually down $5 a barrel on on WTI during this time frame. So, >> um it's very interesting because we were tracking this, we were especially tracking Exon Mobile that that had gone up like 20% or something in a month um in that time frame, which is crazy. Uh yeah, you can see that that from from 117 to like 140 or some had gone up and and every single day it was going up 1% and we're like oh some something's going to happen here like this is not normal >> uh trading behavior and um you know I won't I won't get too much more into that but but you can see that graph clearly uh had gone up before the conflict started and and I think there's a couple points here uh one is money flows into the bigger names right so you got the OIH you got the the XLE etc. are built off of the bigger names and and so money will flow into them to begin with because those are the names people know.

[00:30:00]They know Weatherford, they know Schlumbumber, they know Exxon, they know Chevron, they see it all over the place.

[00:30:05]And beyond that, once once that individual or the family office or or whoever it may be starts actually looking into this these things a bit deeper, they start to find additional arbitragees and and they start to find additional skewed riskreward opportunities. that capital starts to flow downward in into some of the more mispriced names and then bam, the whole the whole industry sort of ramps up. Uh it was interesting actually yesterday.

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[00:31:44]>> I think it was yesterday morning, there's a Czech Republic family office that bought a uh US shale producer called Upcurve Energy. And and you're thinking, okay, h like h how did that happen? Why is a Czech Republic family office with no current ENTP holdings um in the US is coming in to buy this? And you see, you know, there's there sort of discussions were probably already being had and then bam, they they made that decision to uh sort of bite and and sort of get things across the line. So, it's not just public markets, it it's also private markets like this uh which are seeing sort of dislocations in pricing uh and and valuations. So, so that's point number one. Um and the point number two I'll make is um that we don't necessarily need to see oil go up. like these companies have in general been very mispriced for for a decade plus now. So even if prices hold here, you're going to continue to see dollars come into these names, continue to justify the current price, let alone where prices could be. So so if we say, okay, current spot is 97, current 12 months trip is 86, these companies are pricing in 70 $75 oil. So, so you will continue to see that come back to that closer to reality. Um, people that have been following me for many years know I run this sort of uh uh eight times free cash flow model. A company should trade at eight times its free cash flow based on strip pricing. So, for the forward 12-month curve, take that calculate the free cash flow which is after capital spending. So, so we want to value the decline high decline producers properly uh multiplied by eight. Simple as that.

[00:33:24]and and we're currently somewhere probably in the four, five, six range of that. So, as you see that continue to rise, um you know, we'll we'll see more dollars come in despite oil price not going up. And if it continues to go up, I don't think you'll see like immediate massive ramp up. Again, you'll see that slow play in over time where that investor sees their their their oil equity go up 1% a day for 90% of the trading days that month, right? So, that's what they're going to see. not like, oh, all of a sudden Exxon is up, you know, 20% in one day. That that's just not going to happen. So, um, watch watch for that. Uh, it leads to people having FOMO because they they just cannot find an entry point. It just continues to climb every single day. Um, the same thing happened in January of 2022. You can go back and look at, for example, Crescent Point. Um, January of 2022, the exact same thing happened. Uh, it went up 20 or 22 trading days in a row, 1 to 2% a day. Uh the options absolutely printed money. Um the equity printed money. Uh it's since been bought out by White Cap, so I don't know if the charts available, but >> um you know, that's that's kind of my my few points there on on your um on your question there is is this is going to be a slow and steady game. Money is going to keep pouring in, you know, sort of day after day. Canadian ETFs, uh upstream ENP ETFs have seen some of the biggest inflows over the last four months ever. Um, you know, this is courtesy of Jeremy McCrae who had put out this um this chart here and and you're just going to continue to so see people sort of slow play into these names. Um, so you know, find a good seat at the cinema, sit down, have your popcorn ready, and you just uh watch watch the show happen, right? You can't you can't watch a movie in five minutes.

[00:35:07]You're you're at the theater. It's going to take two hours to watch the movie.

[00:35:10]You might as well enjoy it. Have a soda and a and a popcorn to go with it and and just, you know, hang on.

[00:35:17]Well, we're also looking at uh higher higher rates on the 10-year yield and 30-year yield. And you know, there's all sorts of talk that Worsh wants to cut rates. But what if he doesn't? What if he actually increases rates because last time Pal will cut rates, the short-term end of the yield curve did not keep pace with the long-term end. The long term kept going up and the short term, I mean, they cut they cut the short term, but long-term did not replace. So if you're looking at higher inflation, if you're looking at higher interest rates, how do these um how do these oil companies fair? What's the relationship between interest rates and um oil in this case?

[00:35:59]>> Yeah, you know, this is an interesting question. Um I I think we saw the impact of interest rates in 2022. uh we we saw it really impact the sort of construction industry, the the amount of diesel demand um and and also inventory. A lot of consumers and shops etc blew out their inventory because they weren't willing to keep stuff overstocked um you know if they were paying five or 6% a year for it versus 1 or 2% a year for it. So you definitely saw the impact happen there. Um you know we we are in different times here though. Yes, there's going to be interest rate impacts on the economy. Um, interest rates have already been, you know, relatively high. It's not like, oh, we're sitting at 0.5, you know, here.

[00:36:44]We're we're still at a pretty healthy range, especially when you look at it over the last 10 or 12 years, let's say, um, or even 20 years. Uh, you know, we're we're at relatively higher range uh, for interest rates. And I think you've got sort of too much government intervention going on beyond uh, interest rates. You've got the different kinds of uh buyback on the bills. You've got the the obviously the Twitter mafia running amach. You've got the insider potentially trading going on. Um you know, depending on whatever your own view is, you've got people that are having knowledge that are using that to their benefit. Um and and you've just got other government intervention already happening trying to keep oil prices low. Um at at the same time the world just wants to keep consuming not just America but the entire eastern um part of the world is now in the scurve.

[00:37:34]You've got not just India but Philippines, Vietnam, uh some could argue Singapore, Thailand, um Bangladesh like like these are not tiny countries.

[00:37:43]These are hundreds of millions of people in these countries that are going from a bicycle to a motorbike. That's a literally infinite increase in oil consumption when when you go from that to that. And um you know these people aren't willing to spend 60 years and five generations trying to get to the standard of living that we have. They they want that fast. They're willing to use leverage. They're they're willing to borrow money. They're willing to do whatever it takes to have that fridge, to have that barbecue, to have that car.

[00:38:11]Um and and so you have a world where potentially oil prices could be higher.

[00:38:18]You will have record consumption at higher interest rates and it just like continues to just go up and to the right. Um North America no longer is is sort of in the driver's seat. Yes, it is in the driver's seat because we produce our own oil. We have, you know, huge amounts of infrastructure already. We have huge reserves already. um we're we're able to overpay the developing world, if you will, but it's not like, oh, if we pay 10% more, you know, we're we're good here. The developing world is also willing to now spend a bit more on energy and sort of push both um uh consumptions higher here. And so, you know, we'll we'll sort of see what happens. I I think I think the world's just going to keep consuming and and if you see the price of oil start to drop, people will just buy more and and and whether that's a North American family that that wants to go on a road trip, whether that's a Chinese uh family that wants to go to Hong Kong or, you know, whatever or or whether it's somebody that wants to build a new apartment building uh in Egypt, whatever it may be, somebody's going to go and buy that marginal barrel. And and you know, I think that's that's the real interesting thing going on here. Um, you saw this happen between 2001 and 2008, okay? We we never saw $20 oil again, right? Not not for any type of sustained period.

[00:39:39]Uh, even with a global lockdown, we didn't see $20 oil for any sustained period of time. And that's what it was in 1999, 2000, right at at the beginning of that cycle. So, we went from that cycle to a new regime of $60 to $100 oil. Now, we're going to head o, again, it's not going to happen overnight, but over the next few years, we're going to head into a new regime of like, let's say, $85 to $140 oil, let's just say, right? I'm just throwing out a number here. It it could be 100 to 160 depending on how far inflation goes. And I think, you know, the the baseline of that is people will give up other things to have energy. That's that's just the reality of it. the cheaper that we've made something, the more addicted people get to it, the more reliant people get on it and and we're at a place where everybody is addicted to molecules. Um, you know, every kind of molecule, we'll say. Um, so they'll they'll give up, you know, other things in their life. Um, I I kind of want to remind people, right, like like gasoline and diesel are not are not that big of an expense, you know, but there there's all this hype and and and sort of this pompousness going on. It's like how much gas do you really buy in in a in a year, right? Like like $2,000, right? $3,000. If that goes up by 20%, that's six that's 600 bucks, right?

[00:40:59]That's $50 extra in rent per month. It's nothing compared to the other kinds of money that people keep spending nonstop.

[00:41:07]Um and and I think, you know, it's it's important. It's important because um oil producers need to be incentivized to add supply and that's it. I think we we as a world need to understand that. Uh the more we shy away from that reality, the bigger the shocks are going to be. Um you know, as as they keep coming. And again, I'm not asking for $150 oil, right? I'm I'm also not happy with $75 oil. We need 90 to $120 oil for 12 months for that to incentivize that producer to say, "Okay, yeah, I'm I'm willing to invest in future supply. Uh I'm I'm willing to ignore all the all the other BS going on. uh you know whether it's climate change, whether it's the uh policies around removal of of of e um uh uh uh engine vehicles, this and that, right? All of that is just just pandering and BS. And I think the oil producer now needs a higher price to justify that. Uh because they're no longer going to do it for 10% or or 20 or 30% IRS. They want a higher pricing to justify the political backlash. They want a higher pricing to justify the social backlash. uh the potential changes in policy, the fact that um you know every person has been talking down oil for the last 10 years, um they want to be justified for that, you know, to properly justify that decision. And also their investors have gotten used to dividends and buybacks.

[00:42:33]So, so if they're going to go back and say, "Oh, actually we're going to grow now." Yeah, they're they're going to need to show that to the investor right away. Um and that doesn't happen at $75 oil, right? that that happens at 90 $110 oil. Um, which which the world just will need to get comfortable with. You know, if if we want a healthy oil market in five years or in 10 years, you can you can push it down. You can destroy the paper market and get oil down to $60, right? If you really want it, you could you could force people into lockdowns and get it back to $60 and in five years, you're just going to have a bigger shock. There's no way around this.

[00:43:12]Well, uh, I want to also show the audience another one of, uh, the posts you've got on your ex account. As you can see, I've already liked it. So, uh, >> right on. Right on.

[00:43:22]>> Yeah.

[00:43:22]>> Yeah. I've learned. Well, um, also uh, check this out. This is 2020.

[00:43:29]And, um, you know, you've got a mosaic of different energy sources. oil in black, uh, coal in brown, green is natural gas, and you've got hydroelect electric, wind, solar, geomass. But, I mean, the big kahunas are hydrocarbons.

[00:43:45]I mean, there's no question about it.

[00:43:47]You look at 2020, this is when we shut down the entire world. And look at that small little blip in consumption.

[00:43:54]This is when they shut down the entire world and all you saw was a blip there in consumption. Um so to kind of bolster up your point that you know oil is oil consump energy consumption in general is fairly robust.

[00:44:09]>> Um you know even if they do lock down the world like okay they bring oil down to 60 bucks a uh 60 $60 a barrel um yeah you're just going to see bigger problems down the line. I mean consumption isn't going to slow down.

[00:44:27]>> Yeah. I mean, you know, I'm I'm not preaching anything here that's going to be gamechanging. This this has been talked about day after day, day after day by highly prolific people and leaders, uh, you know, non-stop. Um, if you just pull up that graph here, I I want to point out a couple of things there. What what's interesting is you can see the step changes here. So, in in the regular years, you see increased growth, right? That's that's obvious.

[00:44:50]You can see the impact of the roaring 80s here that that 1982 time frame. You see that slow change and that increase in um consumption with deregulation more just more consumption consumerism happening. And then look at the step change between 2002 and 2010ish, you know, time frame. One would think that's bizarre because the price of oil went from $20 a barrel to $140 a barrel in in that time frame. 7x. And yet the slope of that line looks a bit higher, doesn't it? So, so what is that? That is the Chinese population boom and and saying we don't care. We're willing to pay for energy because if we have a 5x increase in energy price, we're actually getting a 100x increase in the amount of seeds we can plant in a day. We're getting 100x increase in the amount of goods we can transport in a day. We're getting a 500x increase in in the amount of, you know, loads that we can carry across a 100 miles, whatever it may be. People are willing to pay for energy because it's so damn cheap. And and so goes counterintuitive to what people are saying right now, right? Oh, higher interest rates, higher pricing is going to destroy demand. Demand has never been destroyed to begin with, no matter what the price. And and here you can see it's gone up despite the pricing increasing during that time frame. And what did we just talk about? We have now over a billion people almost two billion people entering that same boom that China had between 2000 and 2010 uh construction, agriculture, manufacturing, consumption, uh uh uh leisure, travel, moving to automobiles, etc. across Philippines, India, uh Vietnam, Bangladesh, uh India, Pakistan, you know, all over the place, you see people wanting to consume more and and that's the reality that we're entering here. We're we're entering that reality at the same time that we haven't invested in supply and and you know people go back and say well uh you know people been saying this for for many many years blah blah blah and yeah we have been and and people have made huge amounts of money in in the oil markets despite the oil price you know being relatively rangebound and now we're at a place where where it's not rangebound um and it's going higher. So I think I think we're living in very interesting times. Um, you can see solar and geo.

[00:47:04]Uh, yeah. And yeah, and even wind. I can't really see the wind there, but but you can see that coming up slowly. Um, there. And and it's all just additive.

[00:47:14]It's not substitutive. It's all additive. And people are just going to keep consuming th those solar panels and windmills aren't made, you know, from from unicorns. They're all made from real oil and gas uh and coal at the end of the day. So, I expect this to continue rising up and to the right. Um, you know, this is not a price graph.

[00:47:32]This is a consumption graph. And and and I think the main point I'm trying to make is we haven't invested in the right amounts of supply to bring all of this online, right? People will throw graphs at me. Oh, the the maximum solar installs ever have been done. And I'm like, great, we we need more of that, right? More solar, more wind, more coal, more natural gas, more oil is what the world is demanding of us. And if you want to remove coal from that, like you see how big that that chunk is.

[00:48:01]>> Oh yeah.

[00:48:02]>> You're going to have to put up a million bazillion times the amount of panels and everything else. And they can't be made from Chinese coal. They got to be made from other sources that are powering these massive factories, you know, making these panels and windmills and and everything else. Um so the world's got a pretty serious um you know, opportunity here. I'll say um I think we need to decarbonize anyway regardless um if we want to run this civilization another 500,000 years. Um but it's not going to happen tomorrow. And and and the producers is going to get paid while we get there. Um you know that that to me is the exciting part. And again I want to remind people that are listening again that you know I'm I'm not just an investor. We actually have invested in oil in oil companies. I'm now chairman of the board of heavy oil producer. We see this. We put our money where our mouth is because owning hard assets is going to be the next, you know, AI, whatever you want to call it. Uh, even the AI has gone into owning hard assets with the data centers. Uh, and I saw the other day that a that an AI company bought up a natural gas producer um, here just a couple days ago. So, you're seeing everybody realize the same thing that the world runs on energy uh, no matter how you want to slice and dice it. Um, and I think that's that's very exciting. Um I think not just as an as an investor but as a producer and I think for the sake of humanity the the world's growth has come beginning from fire which is burning wood you know which is a carbon source and and and it's gone to other more advanced forms.

[00:49:34]Uh but at the end of the day energy is still super cheap today in terms of everything that we spend money on and the world is fueled by it and that's how we're going to grow. We're going to provide higher quality of life for people. Uh, and if you can, you know, whether you're doing it as a investment, whether you're doing it as a producer, uh, whether you're doing it as as as an inflation hedge, right, on your own portfolio, should you own a portion of energy because it protects you against that extra $20 a week you're spending at the gas pump? Yeah, that that might not be the worst idea in the world, right?

[00:50:03]So, um, I think you're going to see a resurgence. Are we going to trade 40 times, you know, 2029 revenue like some of the tech names? No, never. Uh, but it doesn't matter because we're not trying to get there and there's going to be huge gains along the way um as we even get anywhere close to the um eight times free cash flow at $100 oil.

[00:50:22]>> Nice. Well, Shabb, it's always a pleasure talking to you, my friend.

[00:50:25]Anything else you want to talk about before we wrap up?

[00:50:30]>> Uh, not not really, man. It's it's been a pleasure to be back on here. Uh, you know, we're we're now, like I said, about 12 weeks into this. Um, I think I think again I will repeat myself. The the the investors or or even just a general public that's listening here, you might say, "No, I don't believe in this. I I don't want to buy oil. I'm an ESG guy." That's fine. What what I would ask you to do is to become more knowledgeable. Not not just about what you know already, but but learn about global supply, learn about global demand, spend some time, you know, figuring out h how a refinery works. Um, figure out how long it takes for a project to come from A to Z by the time it produces oil, right? follow some of the things that I post on Twitter, global supply, demand, um, and just become more knowledgeable, right? That that that's really all I ask from these podcasts. Yeah, I could sit here and say oil is going 150 and, you know, you should have multi leverage in oil, blah, blah. That's not the point. It's the world is suffering from a lack of energy knowledge. The world is suffering from this lazy fair attitude of just everything is fine. We got infinite sources of everything. Um, you know, and that's just not right. If if you're going to spend time 30 minutes on Tik Tok or Instagram, you know, watching BS every day, uh spend five minutes a day, right, researching something about the oil industry. Um, you know, read a couple books. The the uh u you know, there's some really good books out there. There's some really good podcasts out there. There's some really good u sort of sphere of influence people that are speaking these days about oil. um just spend some time doing that and and I think you'll just become a better more more knowledgeable uh person in society which is what we need right as as the world transitions here into um more geopolitical risk more more uncertainty in the world um more sort of bipolar or tripolarism going on um I think it's important that we that we build societies that are knowledgeable that are strong that are resilient um that can hold their own in debates etc um you know that's that's all I ask and you know keep an eye out for the news. I think uh you you'll see a lot more oil focused sort of topics hit hit the national media um as time goes on. Uh yeah, beyond that, you know, there's there's no need to sit here in your basement saying, "Oh, everything's going to collapse and the world's going to end." Don't don't listen to those kinds of people. It it's going to be slow.

[00:52:45]It's going to be steady. You know, talk about things that you might need. Um keep an eye out for certain things. I I mentioned engine oil is is definitely one that's going to become more expensive here. Um, so you know, there there's a tidbit to maybe go and get your oil change done. I tried to book my truck in today and I'm getting June 11th uh in in uh in Calgary uh for an oil change on on the on the Ram. So, you know, not saying that's true everywhere.

[00:53:10]Um, but yeah, just just keep an eye out for things, right? Become more socially aware, have have good conversations, and, you know, keep keep living life.

[00:53:18]Nothing's going to really change. you might just have to, you know, stop stop having one uh like I said, one margarita a week and switch it into your gas pump and, you know, whatever else may be. And um yeah, I think I I truly appreciate people listening into these things because uh it's been very difficult for energy um you know, people to get to get a strong audience. Um a lot of people just get labeled as oil bowls and oh, they want you know, $500 oil and this and that and it's just not the case.

[00:53:45]It's we want energy knowledge. Um, and I think, you know, that's that's all I ask.

[00:53:50]>> Well, I'm going to tap you for some guest recommendations after we go offline. I'm curious to get more I do want to get more energy guys on the show. So, um, you know, once we go offline, I I want to get few people from your side. Um, but, uh, where can people find you, Shuban, if they want to see more of your work?

[00:54:08]>> Yeah, you bet. Uh, I'm at whitetundra.ca. Uh, that's where you've got, uh, my my personal um, sort of investments are in there. We've got a very active Twitter profile, x.comhwhitundrasg.

[00:54:20]I share global supply demand, um different kinds of inventory data, satellite tracking, um you know, different graphs on there basically once a day is is sort of my goal. I'm available by DMs there too. Um I also have a strong Twitter or sorry YouTube repository at Whitundra Investments. Uh the one particular uh well there's two actually particular videos I I I direct people to the January 2023 macro outlook. Uh it's about a six and a half almost seven hour long video. Uh a complete a toz, right? You don't have to watch it all at once. Spend 10 minutes a day, you know, for for whatever a month and a half uh and watch it. Uh the other one is is there's a production optimization piece, I believe. Um that's for some of the more technical oriented folks. I think you'll really enjoy that.

[00:55:04]Um it was one of my most most popular videos um there, you know, surprisingly because it is by far one of the most technical um there. And then yeah, I'm chairman of the board here at Prosper Energy. We are a heavy oil producer in Canada in in Saskatchewan. And we're putting our money where our mouth is by reactivating wells that have been down for 20 years. Um so, you know, finding that ARB, right? I mentioned it. I'm actually going to do it. I don't like talking about things that I'm not actively doing. Um so we found the arbitrage where it belonged. Um and and and so I've got our prospery.com as well. Uh we put out micro content on our LinkedIn uh where we share three-minute clips of me in the field talking about specific procedures, specific oil and gas field operations.

[00:55:48]Uh my background, I operated wells for four years. So, you know, people I think will really enjoy that sort of grassroots boots on the ground content.

[00:55:56]Um you know, if you're wanting to just be more involved in in learning about energy and and how things go. And uh yeah, thanks again for having me, Danny.

[00:56:03]It's it's it's been an absolute pleasure.

[00:56:05]>> For sure. Well, Shabbam, thank you so much for coming on, guys. If you enjoy this podcast, drop us a like and comment go Shabbam, go in the comments section.

[00:56:13]Also, subscribe so you don't miss an episode. And uh I mean, you heard what Shabbam said. This is important stuff.

[00:56:18]Let's hit the like button, subscribe to the channel, comment down below. Let's get this out to as many people as possible by trying to push it hard in the algorithm. So much appreciated for your time, everyone. Check us out on Substack as well, capitalcosm.substack.com.

[00:56:32]Get access to all my stuff early, adree, and uncensored. and check out the whole host of affiliates in the description box to help support the channel. You get uh you get a whole host of different products to look at. If you like one of them, um I do get a cut. So, you get a cool product and you help support the channel that way. So, with all that said, I appreciate your time. Talk to you later. Bye.