energyjn

    6:02AM Mar 25, 2022

    Speakers:

    Razib Khan

    Josiah Neely

    Keywords:

    oil

    people

    nuclear

    natural gas

    big

    united states

    energy

    electric vehicles

    talk

    electricity

    country

    solar

    fracking

    nuclear plants

    price

    electric cars

    power

    source

    hydro

    fossil fuels

    This podcast is brought to you by the Albany Public Library main branch and the generosity of listeners like you. What is a podcast? God daddy, these people talk as much as you do! Razib Khan's Unsupervised Learning.

    Hey, everybody. Welcome to another episode of the Unsupervised Learning podcast. Today I'm here with my friend, Josiah Neely of the R street Institute, where he is a senior fellow, and one of the primary topics that Josiah talks about his energy. So that's what we're going to talk about today. But Josiah, if there's any other affiliations or things you want to tell the listener, jump right in right here?

    No, I think that's good. Thank you very much for having me Razib.

    Yeah, it's been, it's been too long. Some of my listeners know that I've had Josiah on various podcasts that I have been on with him. And also, I have been on his podcast, Urbane Cowboys several times, and probably, you know, we'll be on several more times with Doug McCullough, his charming co host, often his silent co host, let's keep it real. But, um, anyway, so today, you know, it's a big topic, we're talking about energy, you know, where we get energy, how we get it, like how we're gonna get it. So we have a situation in the United States where I feel like we talk and think about energy, when it's a problem, when the gas prices go, really up, up up, you know, or, you know, you know, some sort of shock happens in a local area. So last year, in Austin, Texas, where I'm recording, we're Josiah also lives, we had a massive problem with the power grid, which is a separate grid from the rest of the United States here in Texas. And there was a crash, and, you know, my, my location didn't have power for three days, you know, different people in Austin had different experiences, but it was bad, it was bad. And all across Texas, it was bad. So we don't think about power until we don't have power. And so I want to, I want to talk about it a little bit more while we do have power here, we're obviously recording with energy coming in. So I'm gonna just give a quick outline of like, my understanding, and then I want to just to dig in, look, clarify extend, correct. You know, so you know, obviously, electricity, there's gasoline. You know, obviously, airplanes do not run on electric electricity. There are no electric airplanes yet. And so you know, we do have like, different types of energy. These are hydrocarbons, you know, fossil fuels. Gasoline is somewhat separate than electricity. When it comes to electricity, there's different streams that are coming in. At any given location, I'm from the Pacific Northwest, a lot of our electricity is hydro. It's hydroelectric power. There's other parts of the country where they have coal plants, nuclear plants, I'm assuming, you know, natural gas, oil is also an issue. So they're these inputs that are converted into electricity, that are released, you know, through the grid, and it gives us light. And you know, everyone has probably seen a GE commercial at some point in their lifetime. So this kind of is a complex engineering economic process. When it comes to oil, specifically, over the last generation, there has been concern about various issues, often related to something called Peak Oil, which is not a thing anymore because of fracking. And I want Josiah to get into that, but in the decade between, basically between 9/11, and about 2010, there was a lot of argument and discussion and debate about peak oil, which was just going to be the peak extraction of oil, specifically out of the ground, and how that was gonna cause a major issue, it was gonna be the exhaustion of the Saudi oil fields, eventually, you know, it was on the horizon in the century or something like that. And, you know, you can always get oil in various ways, like shale, oil, Canada, but, you know, the cost was prohibitive. And, you know, that was gonna have a huge impact on our society. And so I've been talking about energy, and I do want to talk about energy, but oil is also an input into fertilizer and fertilizer is how we grow our food. So there are some major downstream consequences of all that stuff. That changed in the teens after 2010 due to new technology, and this is kind of like the Julian Simon economistic you know, prediction that there's always gonna be innovation, everything's gonna, you know, turn out okay, and it kind of turned out, okay. But, you know, we still have a global oil market and prices still go up and down the barrel of oil, like, I'm a subscriber to The Wall Street Journal, and like, you know, a lot of the time a lot of the front page is devoted to just energy prices and the oil market, because that's such a big deal. You know, there's other types of energy You know, France gets most of its electricity at this point from nuclear. But then there are other nations that obviously don't get any from nuclear. So Josiah, can you just talk about, you know, in more detail what I alluded to here, and like some misimpressions, I might have had, and just like explain how, you know, we have the electricity prices that we have that we have the gas prices that we have the various underlying parameters, you know, the random ones, the cultural financial ones, and then of course, the engineering ones.

    Sure. So I think it's helpful when thinking about energy to kind of break it down into a couple of segments. And I think a big division, big natural division is between oil and everything else, right? Because oil is a little different from most of the other main sources of energy that we have. We do not in the United States use oil to produce electricity. Almost none except for maybe some few places like Puerto Rico or whatever. So we're using other - so electricity, we're, you know, we're using coal, we're using natural gas, we use nuclear, hydro, renewable some, but we don't use oil. And the flip side of that, is that, what do we use oil for? Well, we use it for airplanes, obviously. We use it for vehicles. Right. So that's the main thing that people think about, we use it for some other stuff, too, which you alluded to. But the main thing is, for vehicles and airplanes, it's the vast majority that right, that's the energy source, we do have there are electric vehicles out there, there are natural gas fueled vehicles, there's other stuff like that. But but the overwhelming majority of our cars and trucks, and even buses and airplanes certainly is coming from, from oil products, right? So so they don't really. So what does that mean? What that means? One thing is, oil is not really at the current time competing against other fuel types, other energy sources in the way that you could, you could speak of renewable energy versus natural gas, or coal versus nuclear, right? Those fuel sources, in a sense, are in competition with each other in the electric system, for you know, like, what you want to generate your power from. Oil is not like that. Maybe in the future, as you have more and more electric vehicles, maybe that will start to be the case on the automotive side of things. Although I believe a electric powered plane is probably physically impossible. Which is why like people will have other you know, when people try and like, how are we going to do planes without fossil fuels, they have other ideas, but just the energy density there, I don't think you can make that work. But so for the most part, for the cars, at least for right now, it's also not competing with these other fuel sources. Another big difference between oil and other types of energy, which you alluded to is with oil, you basically have a global market, right? Which means if you look, there's a... if you want to know what the price of oil is, I was looking today, it was just over $100 a barrel, you can look for, like, the Brent crude oil price, and it gives you a single price is basically for the entire - for the entire world. Right? All the oil, you know, kinda with there's some nuances, but for the most part, regardless of who is buying the oil, regardless of who is making the oil, you there's a single global price. That's obviously not true for your other energy sources. Particularly, you know, we think of like oil and natural gas as going together. And that's certainly true in the sense that they're, you know, they have some similar characteristics are often produced together. But natural gas is not a world market. The price of natural gas that you - that we have in the United States is I mean, it might be a third to a fifth of what the price of natural gas would be in Europe, or in Asia. And the reason for that is basically that it's a lot easier to transport oil than it is transport natural gas, we want to transport natural gas. You have to... if you want to transporit it like, through a pipeline or whatever, that's one thing. But in particular, if you want to transport it over like a body of water ocean,

    typically have to turn it from a gas into a liquid, and then back at like, at the end of the process back into a gas. That's very difficult, costly, time consuming, and potentially dangerous process. So because of that, you know, the natural gas markets are regionalised. And then other, you know, whether it's hydro electric, other things, those really the price is really going to vary depending on what sort of resources you have in the Pacific Northwest, they have a lot of hydro, you don't have as much hydro in, you know, here in Texas. Why is that? Is that? Because like we just decided we didn't like hydro? No, it's because you got a lot of you have a lot more natural water resources that you can use to dam up and generate electricity from. So that I think that's a big part of it. I think people probably when they talk about energy, I think most of the time, they're thinking of gas and gas prices, because that's something that they deal with every day and think about that that really has an outsize impact, but it is, it is a little complicated and diverse. In terms of like, what the implications of some of the stuff were. So I feel like I've talked for a little while. I hope I answered some of your questions.

    Yeah, no, that's great. Um, so question, you said renewable. Can you talk about what renewable means when you say something? I mean, look, I have an idea what I think it means I think most people do too. But I mean, like, nuclear is not technically arenewable. Right? Like, what is renewable?

    Right. Yeah. Yeah. So I mean, I think people generally a, there might be slight variations in you know, like, what counts is renewable. What doesn't count as renewable. In terms of in terms of electricity, if you're typically when people talk about renewable energy, they basically mean wind and solar, right. And there are other things that potentially could fall into that category. But for the United States, at least right now. Wind and solar are really the only the, you know, those are the energy sources that could be classified as renewable, that get used to generate electricity at any at any scale. If you consider hydro to be a renewable resource, okay, yeah, you could - yeah hydro also. But usually people break out hydro, and just use renewable as a category to to encompass wind, and solar. And I think the key the key distinction that wind and solar have, that is not shared by you know, your traditional thermal generators, fossil fuels, or nuclear, or particularly even hydro - one, one thing is you do have very low marginal costs of, you have zero fuel costs, basically. So for natural gas, or for nuclear, if you want to run and generate, you got to get fuel, right? For wind and solar, the fuel when it's there, it's kind of free, you know, the sunlight hitting or the wind is blowing. But the flip side of that is, these are what are called variable resources, or intermittent resources, which just reflects the fact as we know that it's not always windy, in a given location. And of course, it is night, sometimes. So these are not... So these are, these are resources that vary in their generation, a lot from hour to hour, usually in a predictable way, but not always 100% predictable. And that has - those have some special app, those attributes, create some special differences in terms of like, how you want to utilize those resources, what's going to make economic sense to use them, and so on so forth.

    Yeah, I mean, so I think, um, one thing when it comes to wind and solar, in particular is I think of them when I think of them. I think of battery technology. There's just no way that those work without battery technology, and they work better with more efficient battery technology. What is, you know, what is the truth there?

    Yeah, so I think one. I think one thing that it's important to keep in mind is when we're thinking about these technologies, not to view them in isolation, right? So certainly, you know, if you were to try to say, Okay, we're just going to have a - we're going to get 100% of our electricity from a single source. Then without batteries, yeah, that would be a serious problem you couldn't do that was solar, you couldn't do that with wind, but the electric grid doesn't work that way you have like, it's kind of like a symphony of different energy sources at different times. So, batteries, I think, are very important. They certainly, uh, you know, increase the value of these intermittent renewable energy resources, and they have other advantages as well. But even without batteries, you know, there's really not a, like, the the amount of batteries on the system right now is fairly de minimis. And you are already seeing a, you know, significant penetration of renewables in the range of 10 to 20%. of overall generation in some, in some states, and on particular days, it can be even a majority. And so that's, that's certainly possible, you can do that. And you know, the way that you do that is that you have, there are other fuels that are that are complimentary, particularly hydro and natural gas, that it's easy for them to like, go up and down to match whatever the generation is, from your intermittent resources. So, so, batteries, yes, important, but you can still have a lot of renewables, even without them. That's, that's, that would be my take.

    I got it. Um, and so, you know, I talked to almost a year ago, now, maybe I talked to my friend Ramez Naam. He does, like consulting in the, in the solar space. And I've been kind of surprised. You know, when, when we were kids, just I feel like solar was the energy of the future. And now it's just kind of a normal energy sources with ups and downs. Like it's just pretty competitive, and a lot of ways like, Have you been? Have you been surprised by how competitive it's gotten? I mean, what's your take on that?

    Yeah. So I mean, I would say, if you look at the history of energy, there... there's a lot of surprises, right. So you mentioned fracking, that was a big surprise, revolutionize natural gas. We we've also seen, you know, big falls in the price of wind and solar energy over the last decade or so. That's not totally a surprise. But that, you know, certainly a big, a big picture. Um, you know, solar, I think. If people are just like kind of abstracting away, to try and think about, like, the potential of these different energy sources, there's, there's, there's so much energy that hits the surface of the earth in the form of solar radiation, that if, you know, it's, we could easily if we were able to harness it in an economic way, provide all of our power resources from that. Right? So I think for that reason, yeah. When you talk about like solar being the energy of the future, I think that kind of appeals to a lot of people. And then the question is, okay, well, can you get the technology and the economics, right, where it makes sense to do that, rather than using other stuff. And there? I think solar is kind of it's starting to come into its own a little bit. It's actually I would say, been a little bit of a laggard compared to wind. You know, which was just cheaper. But I also think that solar is probably like, it's also maybe more visible because it's the one energy source that people can generate on an individual level, right? You can have solar panels on your roof, you probably if you walk around your neighborhood, you might see a couple houses or buildings that have solar panels that's very salient, whereas you're not going to see people with a little coal plant or a little nuclear reactor or a little windmill, right, probably generating power that way. So I think that probably that might even give people a little bit of a, you know, cause them to overestimate a little bit how much solar we're actually using. Because, of course, you know, while rooftop solar, you know, is perfectly fine, most of our power is still coming from these, you know, large utility scale generators, which are not like on someone's home, but it's just like out in the desert or off off somewhere generating a bunch of power.

    Yeah, I mean that that makes sense. And let's remember that, you know, life on Earth is solar powered. So, you know,

    Right. Yes, yes. Well, even even, you know, in a sense, you could say that, that even the fossil fuels are kind of, you know, stored up solar power over many, many, you know, millennia or whatever.

    Yeah, yeah. So, it all it all goes back to the sun, we're an open system and the sun is, is putting the inputs in. And so I guess, you know, you mentioned fracking. You know, I, this is something that's kind of come on my radar, again, probably because I subscribed to The Wall Street Journal, I don't know, just the whole fracking revolution over the last decade, you know, the United States, you know, we could be energy, pretty much energy independent if we wanted to now in theory. So fracking, my understanding is, it's like, you know, okay, like, it made a lot more oil accessible in areas where the, you know, parts of Texas, in, you know, upper midwest, upper upper midwest, like North Dakota, more economically efficient. And it was also driven to some extent, by a financing boom, where, you know, people give out loans to these companies to extract oil. And it's one of those systems just like Canadian, it's one of those frameworks, just like Canadian shale oil, when the oil when the Brent crude hits a certain price, fracking becomes economically efficient, right. Can you can you get into that a little?

    Yeah, yeah. So any, any? Well, A has a price, you know, the cost of producing oil and gas from that well, is a certain amount, right. And so if you, if the price of oil on the market is above that price, then you can produce and make money. If it's below that price, then either you produce and lose money, or more likely, you're just not going to produce that - produce from that well. And that is certainly true for fracked, wells, as well as for other types of wells. So yeah, I think I think somewhere in the circle, I think somewhere in the 60 to 80 dolar.

    I remember 80$ as like a...

    A barrel, excuse me, yeah, 60 to 80$ probably, you know, depending on where you are in the United States, also it matters. That's that's typically what you're what you're looking for, for, you know, for a fracted well, I would say, when you know, like now we're now we're above that. We've been above that. Oil prices are up a little bit. But it's it periodically, we have been above that. There's also been periods where we've been below that. So you know, that's, that that's also kind of the nature of the things with the you know, if you're, if you're going to be drilling a well, you need to like, try and forecast. Okay, well, what's the oil price is going to be, you know, over the course of the next decade, right? Knowing that it might go up or down.

    Yeah, so I mean, that's actually a good question. When I when I - I read a bunch of books about oil in the late you know, when aughts whatever, um, and if listeners, I mean, I think a lot of listeners will have read The Prize, which, you know, that's in the 20th century, it's a big deal as well, you know, geopolitics, oil, you know, one of the things that the oil markets is they seem like really, really volatile over the last, like, 50 years or so. And so, like, I'm actually looking at Brent crude and like, as we're like, recording right now, it's almost, it's on the order of 120. As of, you know, okay. So on. I don't know, this was like, it was way lower, like a year ago, like, it was like, 60. Okay, so it was like half and then through most between, like 2015, about 2015. And, you know, up until, like, you know, 2021, it's in the $60 range. And then there was like a plateau up until like, right at the end of 2014. And going earlier, I guess, like... lets do all yours.... It was it was a it was like overall, it was 120. I mean, so there are some people I mean, mostly, you know, let's socialists like more like left wing people, they think that there's funny business going on here. Like what's going on with it is kind of strange, don't you think? Like, you know, goes through volatility, then there's like these long stable periods where it's like 120$. And then there's a long stable period where it's 70$. And it's like, what's up with that? Like, was there like, some massive oil wells? Were open somewhere? I mean...

    Yeah, yeah. So if you go back, if we're talking about historically, Actually up until the late 60s and early 70s. Uh, you know, the, the, it's, it's a little strange, but the global price of oil was kind of the kind of pseudo set by the Texas Railroad Commission. Right. So the Texas Railroad Commission, despite the name is the Texas regulatory body that regulates oil and gas production in the state. And they had production quotas for Texas for how much oil and gas different people could produce. And at that time, Texas alone was producing enough oil and had enough wiggle room in turn, like it could produce really cheaply. And so for that reason, the Texas Railroad Commission kind of had a lot of control over the global price, because if the price started to go higher, they could increase production quotas. And then if it was going lower than they wanted, they could decrease production quotas. And in that way, they were able to keep the price, you know, within a band of what they wanted, that with the rise of oil, more oil production elsewhere and other things, they lost that power position. And they stopped doing the production quote is I think in like 1969, something like that, since the end, so since then, you have seen more volatility. OPEC, is supposed to use a OPEC is basically a cartel of oil producing states, which is supposed to serve a similar a similar purpose, like they also are supposed to, you know, do things on on production. They have had, I think, if you look at this, the big spikes historically, usually, there's some sort of, sort of geopolitical event involved. So you'll see a big spike in 1990-91. Say, actually, it's probably not a big spike compared to later ones, but there will be a spike there. And that is because of the Gulf War, Saddam Hussein's invasion of Kuwait, and then that whole thing that created a lot of uncertainty around that. After I think there's another big run up, after 9/11, and the invasion of Iraq in the mid 2000s, when there's a when there's a global economic downturn, as there was in 2008, or in 2020, you see another big drop in oil prices. So there are like macro economic or geopolitical factors that I think explained a lot of that the most recent big upswing, you know, I think is clearly associated, a part of it, I think, is, you know, people coming out of the pandemic, but then also, the situation in Russia and Ukraine, is creating a lot of concern because Russia is a big oil producer, and their questions and, you know, with disruptions because of the war and sanctions and things like that, which I think kind of helps to explain some of those big moves.

    Yeah, let me just just to get us that. I mean, I'm actually a little surprised about a couple of these. I'm looking up oil production by country. Like, we'll do like barrels per day. I'm getting number one United States. I know that that's true now, because of you know, that some of the technologies we're talking about side we're basically like, what like 15 billion barrels per day, Saudi Arabia's that? 12 billion barrels per day okay? That's not a surprise Russia 11 billion. I'm not surprised by that. Now, here's number number four surprising me, China 5 billion. So there's something going on there. Canada not surprised almost 5 billion. Iraq, 4 billion Iran, 4 billion UAE, 4 billion Brazil, 3 billion number 10 is Kuwait at 3 billion and then you got a bunch of others Venezuela just for listeners is at like 2 billion so it's a small producer, but you know, not not that much People I've heard I've also heard Venezuelan oil is pretty high quality, it's in the New World, easier to get to the United States, right?

    Yeah, yeah. And you know, some of these, I think, you also have you a little bit need to adjust by, like, the size of the country or whatever. So like China, that's, you know, China may produce more oil than Venezuela. But of course, like China's just like a really, really huge country. So it's going to be a smaller deal for their economy than it would be for Venezuela as well.

    Yeah. I mean, like Saudi Arabia is almost at the United States level, and its population is like, what 40 million or something. So that's why it's, you know, it is in the situation that it is. But you know, the point is, oil is produced all over the world. And here in the United States, we've had a massive, massive ramp ramp up due to the fracking technology. So I do have one question that I've thought about, and I want to explore this as my understanding is the 1960s are environmentalists movements? And so the West and the East Coast of the United States and by Western east coast, I mean, literally, the Atlantic and Pacific, obviously, not the, not the Gulf. Those areas, they do have oil offshore, but they're not explored or drilled because of environmental, you know, like, local concerns. So, I mean, is the United States really not exploiting a lot of its resources? I mean, that's kind of what I hear sometimes.

    Yeah, I think that's, I mean, there's, we're definitely not exploiting everything that we could. So yeah, there are our offshore oil resources that don't get exploited. Particularly as you go west, there is a lot of there's a lot of federally owned land and state owned land. And depending on, you know, the administration in different periods of time, a lot of that is either allowed for development or not allowed for development. You even with regard to like, you know, you we talked about fracking, there are some states that don't allow fracking, right. New York, I believe, does not allow fracking within the state, even though they have a lot of resources there. So yeah, it's absolutely true. That, you know, there there are resources that could be economically produced, that for environmental or other reasons. Parts of the United States, the United States has decided that we don't, we don't want to, we don't want to do that. Right. And that could change, but you'd bet that is the situation as it stands. Yeah.

    Yeah. Okay. I mean, that's good to know. I mean, just just want to confirm that. So, you know, you have some countries that are obviously doing maximal exploitation. And then you have United States that has, you know, kind of submit some stuff, that it's not exploding, right. So you mentioned electric cars, like, you know, I just looked at up and like, we're, like, less than 1%. Still, even if it's really visible, but um, you know, people anticipate that within the next 10 years, a substantial proportion of cars will be electric. And, you know, like, I don't know, Peter Turchin, Yukon, you know, the historical, you know, theorist, and you know, erstwhile ecologist has talked about how that's gonna cause a problem, in particular, for Petro states, basically, like Saudi Arabia. Because the demand for gasoline will drop gasoline is such a huge, huge proportion of oil demand. I've always wondered if this is true, because I just wonder if perhaps people will, you know, put that oil to other uses, like, you know, cheaper fertilizer and more fertilizer - I don't know. I mean, what do you think about that? Just, I mean, what's your thoughts about? Because if electric cars if we do get a powered up grid system, in large parts of the world on the margin, it's going to start to become non trivial? Right.

    Yeah. So I, I do think that there, there is an issue, I think of timescale. Because, once that, you know, so there's a there's an economist of Vaclav Smil, who has written a lot about energy transitions in the past and the future. And energy transitions typically happen very slowly, like on the on the order of 50 to 100 years. Part of the reason for that is so if you think about now, right now, almost all cars on the road, our internal combustion engine, you know, they're gasoline powered vehicles, even if most new cars that people were buying, you know, people started to buy electric It would still take, you know, decades for the cars that people had already bought that were on the road to cycle off, right? Because you're not just gonna even if even if all the new cars are electric, you know, you're not just gonna go out tomorrow and get rid of your, you know, 2016 you know, Toyota in order to do that. So that's, that's gonna take a while to cycle through buildings, particularly those that are using gas heating. That's, that would take a while to cycle through, uh, you know, same thing, similar thing with some variations for power plants or whatever. So I do think and then, the other thing is, uh, you know, even probably, I suspect that the uptake for electric vehicles in the United States is going to be quicker than it is in some other countries, some other parts of the world. We know that. Actually, there are a number of places in the world, like in India, or other parts of the world where we expect a lot of people that have not traditionally used cars to start using them as they get richer. And this is actually been I think, one thing that people have been thinking about is like, okay, you know, can we get to the point where those, you know, those nuclear like people, as they get richer in these countries and want to you want to have cars, that they're going to want to use electric vehicles versus entire internal combustion engine? Vehicles, I think that kind of remains to be seen whether they'll do that. So it will have, you know, long term, yes, of course, if people stop using oil for vehicles, that's going to have a big effect on the demand for oil. And some of that you could try and like recouped by using oil for other things. But I think that like the the overall size of the market is such that that would have a huge, huge impact. But I do think it's probably, you know, we're probably talking about more of a century long process than than a decade long process, if that makes sense.

    Alright, so I mean, so what you're saying, okay, so you have like a global market, you have oil production and consumption, and you're saying it's gonna, it's going to transition gradually. But my like, you know, you know, the predictions for electric cars are pretty bullish. I mean, don't you think I mean, so I guess, basically, we'll see it visit my, okay, from what you've said there, there's not going to be in the macro economic sense, it's not going to be an enormous shock in the next generation. But in terms of what say, people in the United States feel, it seems like it will be kind of different insofar as cars are just such a visible part of our lives. And it seems like a substantial proportion of the cars will be not like, the random Tesla here. And they're like, Okay, like, I'm in Austin, where you're in Austin, we can probably go on a street corner in a busy area and see at least one Tesla per day, right. But, like, within 10 years, I'm assuming that if I went to like a less busy street, I would see, you know, a bunch of electric cars, like within a day, you know, and so it's gonna be it's gonna feel much more different than it will be at a macro economic sense, kind of the impression that I'm getting.

    Yeah, it'll probably, yeah, certainly, you'll start to see them more and more. And you'll probably they'll probably start to be, you'll see more infrastructure, you know, charging stations, you start to see this now, even if you go to a shopping mall or supermarket, there may be like, special places to park for electric vehicles. Yeah, I would see, you know, I do think that, yeah, that'll be that'll be more and more common. There are some states, I think in California, they've said that by 2035, somewhere in that range, they want all new cars to be electric vehicle. So the state something like that, so I don't know. You know, that's, that's a goal. Or like a requirement. It is off in the future could happen could not happen. Certainly, it'll become it'll become a more common over time. But I do think it will happen, you know, there probably will be Yeah, I think you're right that in terms of people's perceptions, you know, people kind of oftentimes won't notice something and then all at once, it'll seem like it's it's everywhere. So I expect that probably will be true for people's perceptions. But the actual numbers I expect to happen, what much more gradually, at least over the coming decades, that would be my guess. And the absolute I should say, all of this is based on like, current law and trends and likely law and trends. You know, if we get like a, like, if we have President AOC, and they do like a new green New Deal, or whatever ban bans cars, you know, like, obviously, that's a different story. That could be very sudden, but, but I don't I don't anticipate that happening.

    Well, so I want to interrupt this conversation for a second, just appalling, apologize to the listeners that were triggered, whether you are on the left or the right, by the idea of President AOC, I'm sure that some people were just like, shocked, and like just emotionally perturbed, whether positively or negative by that, you know, polarizing thoughts. So just want to take a step step out for that, I actually have been looking at the electric car projections, which are, as you said, based on current trends, and they're a little bit a little bit more modest than I was thinking, but maybe not that much, is basically they're estimating that by 2035, which a little bit more than 13 years, 45% of new car sales will be electric. And using the current rate of churn that would make that about half of American cars on the road in 2050, would be electric and knock on wood. Hopefully, we'll still be around in 2015. But that is a while in the future.

    Yeah, that's right. And I assume I'm not looking at that data. But I assume that would also include like hybrid vehicles as well, like plugins, Yeah.

    Okay. You know, and, you know, I think what we're probably gonna see as the century proceeds as, if you live in New York City, if you live in a big urban area, and you're not taking road trips all the time, cross country road trips, I think electric car is going to be seem like a much better deal than if you live in a, you know, spread out rural area where, you know, chargers and whatnot, probably going to be like, something that you think about a lot more than having like a high density, fuel source. So I think one of the issues that you're talking about is fossil fuels, energy density, you alluded to, I haven't looked it up in a while, but like, the math is crazy, like fossil fuels are just like, incredibly powerful sources of energy. Right?

    Yeah. Yeah. So they have a lot of advantages. But one advantage that that we don't, that I think is relevant here that is kind of not baked in, is that we have a whole fueling infrastructure, which has been built up over the course of a century. And, you know, you mentioned like, you know, problems with like doing road trips with electric vehicles. I do... I mean, I actually was talking with someone a week ago, who had just made a trip in her Tesla, from Albuquerque to Austin. And she was able to do it, but she had to, like plan it out. It's like, okay, there's a charging station here, there's a charging station there. And you don't really have to do that. With a - if you have just like a gas powered vehicle, because you know, like, wherever you go, there's going to be gas station, right. And but there's nothing about, like any gas station, any place where there is a gas station, there could be an electric vehicle charging station, as you get a higher and higher penetration for electric vehicles, there's going to be more and more demand for that. And I think the infrastructure will be built out. And that will I think, a nullify one of the current advantages that you have for gas vehicles. Is that Yeah, you don't like you can kind of go anywhere. And you don't have to worry quite so much about like, well, am I going to be stranded somewhere? Because I can't refuel?

    Yeah, I mean, yeah. Yeah. I mean, basically, I do anticipate, though, you know, and actually the Netherlands? I mean, I think a lot of this can be density driven. I think one of them. Yeah, it's a lot of ways. Yeah. Is that we are just like, you know, people. I mean, I think a lot of Americans like even in the coastal urban areas. forget just how what a big low density country this is, and a lot of ways and trains and, you know, electric power, or electric car grids, you know, fueling grids, they're difficult to, to, like, have enough density. Um, I want to ask, actually, like, now we're talking about the future, the future of electricity, the future fuel, you know, if we were recording this podcast, you know, in 1950, you know, we would be talking about nuclear - nuclear in the future seems like nuclear has been the future for almost a century now. Not quite a century, obviously, like 2050 it will be a century right? But, you know, we just like a lot of arguments about nuclear Germany's shutting down its nuclear power plants due to geopolitical shocks. In the sources of electricity, people are just like, why aren't you? You know, France, they're at 80% Nuclear now, I think for their electricity generation. United States actually, like last I checked was like 20%, or something it was it was it was much higher than I actually thought. So the nuclear debate is pretty interesting. Because it is one of those where there's multiple different arguments that have different ideological Valence is so you know, there are a lot of left wing people, quote unquote, "environmentalists" that are anti nuclear this a holdover for the 19th, or the 20th century, there are some radical environmentalists and like, no, not earth first radical, but like, you know, they're really concerned about fossil fuels. And, you know, climate change, and all that stuff that are becoming pro nuclear, because, you know, the carbon footprint is zero. There's the generic, I think, like, populist concern, with, you know, contamination and nuclear power plant, like, you know, reactor failure or whatnot, you know, Chernobyl, Three Mile Island situation. And then I've heard some conservative or more like libertarian free market oriented people explain well, you know, it's just not really economically efficient, or effective as a power source. We have, you know, other cheaper power sources or the, you know, energy sources out there, than nuclear, although I think I hear a lot of these libertarian arguments, all of a sudden from environmentalists actually, that's a little interesting, but I mean, they're usually getting it from some, some other source, like, they don't normally deploy these arguments themselves. How are you? Like, what is your take on nuclear, I guess, which is very generic thing, but you know, I don't actually know never talked about this.

    Yeah. So I think, you know, every what, so what I would say, and I should have said this at the beginning, but every source of power, every energy source has positives and negatives, right. So there's some things that make it appealing. And there are some things that are challenges at least. And for nuclear, you know, the, I think some of the big appeals are one, it is a zero carbon source of energy, right? So you don't have to worry about climate change, it also doesn't have any of the other you know, traditional pollutants, like, ozone, you know, didn't produce ozone doesn't produce sulfur dioxide or any anything like that, and produce particulates that fossil fuels do, it is a very reliable source of energy. So you know, if you, if you were to ever look, you can look at charts of like, how much energy, you know, how much electricity was coming from different fuel sources at different times in like Texas, or some other state. And most of them, they kind of like, you know, they look like stock market graphs, or the graphs, like they're, you know, they kind of like bounce around. And the nuclear, it's almost always just like a straight line, because you fire up the nuclear plant, you're generating at, you know, maybe not, you know, 90% capacity, and it just stays very steady, right. So that's good. The, the, there's two big challenges for nuclear. One is, of course, the concern with, you know, meltdowns, radiation or whatever. And the other concern partially because of that, and then partially just because of the nature of the product, of the of the energy source, they are very capital intensive - you know, plants to produce, right. So you are when you're, when you build a nuclear plant, you're expecting it that it's got to pay out over 50 years. And if you are wrong about what electricity prices are going to be over the next 50 years, which is a hard thing to predict, then you could be in trouble. And so for that reason, you know, for because of those two reasons. I, you basically have not had any nuclear plants come online in the United States since the 1970s. And there have been a number that's not for trying there have been a number of attempts to do new nuclear plants. Some of them are still in process, some of them ended up being stopped midway through because of the cost overruns and other things. Nuclear is is a rare technology that has gotten more expensive over time. Normally, something when you first you know, like a computer. It starts out it's very, very expensive. And then over time, people figure out how to make it cheaper and cheaper and cheaper and better and better. And with nuclear, it's actually the opposite. You know, building nuclear plants now even within inflation tends to be more expensive than Building them in the 1950s. So for for that reason, I think some of the luster has gone out of nuclear power. I will say, Well, let me say two things. One is, I do think that, you know, what Germany did, and other places have just shut shutting down their already existing nuclear plants for, you know, not for economic reasons, but for other purported safety or environmentalist concerns, I do think that is a mistake. I think that they are kind of, you know, dealing with some of the consequences of that now becoming so dependent on Russian gas. I also think there, there are a lot of potentially innovate, you know, there's a lot of potential innovation out there in the nuclear space. People talk about thorium reactors, breeder reactors, micro reactors, so there's a lot of stuff, it's not a lot of it is maybe hampered by the current regulatory framework at the federal level, so that's a problem. And then, of course, with any new innovation, you know, it's got to pass the market test, right. So I certainly wouldn't count nuclear out, but it does have some challenges in those are the big two.

    Let me I'm just throw some stats out there, looking this up, just double check. 2020, I'm getting this from STATISTICA. So domestic electricity generation by country in France and 70%, nuclear 71%. And then like the list, I mean, I don't think this is like, you know, exhaustive, but it's heavily European actually. So Slovakia is a 53%, Ukraine is 51%, Hungary is a 48%, Bulgaria 40%, Belgium 39%, Slovenia 38%. And you have the Czech Republic 37, Armenia at 34, I didn't think about that it's a small country, Finland at 35 34%, Sweden still have 30%. Switzerland at 32%. And then, to get the first non european country I see on this list. It's South Korea at 30%. And then Russia as a 21%, the US at 20%, as I said, and then there's a huge drop off where China's at 4%. So this is a technology that's extremely concentrated in Europe, in these like your small to medium sized countries in particular. And it's just interesting, it hasn't spread at all.

    Yeah, well, so And part of that, of course, is, uh, you know, nuclear power, like being able to harness nuclear energy requires a certain level of development, technological sophistication in your economy or whatever that's going to be that would be hard, hard for some parts of the world to do. So that's, that's definitely, that's definitely a big part of it. And then you also have to factor in, I think one reason why nuclear power has was traditionally more advantageous for Europe is, as I, as I alluded to earlier, their gas, their natural gas prices, which is the main competitive fuel source are a lot higher than ours. Right. So obviously, if you're trying to, you know, pick between your alternatives, the lower cost, your alternative fuel source is, the well, the higher cost your alternative fuel source is, the more economic sense it's going to be to do nuclear, right. If that, if that makes sense.

    Yeah, yeah. Um, you know, it's interesting that you're saying that energy transitions tend to happen gradually. And over time. I guess. I mean, in general, that is true. Although, I mean, whale oil. That the end of whale oil was pretty quick, though, wasn't it? It was an energy buy

    But yeah, it took it took, I think 100 years for that for that transition.

    Interesting.

    Whale oil. Yeah.

    So electrification was gradual, is what you're saying?

    Mm hmm. Yeah. Right. Okay.

    That's interesting. Interesting, because, okay, I mean, I trust you, this is your field. I was just thinking about that. Because, you know, Peter Thiel, you know, about, like, not 15 quite, but like, you know, before between 2008-2010 You know, he was doing this huge thing about how there's no innovation and one of the arguments or one of the, you know, issues that he's really bringing up is there's been no transition and, you know, no innovation in energy in a major trans - you know, transformation in, like a century or something like that, you know, a nuclear was the last, you know, but I mean, to some extent this is just constrained by physics, right?

    Yeah. Well, I guess, uh, I'm not sure what like the context is of what he would consider but certainly I to me, um, I think we have seen an innovation led transition with fracking, which is definitely displaced, you know, you you have seen a significant carbon emissions reductions in the United States over the last couple decades. And why is that? Is that because, you know, the Green Party took charge and instituted some strict requirements. No, that didn't happen. It's basically that because of fracking, there's been a big switchover from coal power generation to natural gas fired generation, with a little bit of with some renewables into but but but but mostly, it's been just like switching from coal to natural gas. So that and that, and that was, you know, led by the innovation, innovation of fracking. So, you know, I'm a, I'm a fan of Peter Thiel, if I'm open to getting the Thiel Bucks, if, if he ever wants to do that, but I'm not sure that I would totally agree with him, that there hasn't been like significant energy innovation in the last century.

    All right. So as as we're closing out this podcast, I guess, I want to just talk about what you see in the next decade, in terms of volatility, just general macroeconomic trends. You know, I know that you're not this is not financial advice show, obviously, that's not what you're making. But in terms of like your prediction, but, you know, there's been a huge talk in the United States about the geopolitical transformation that the fracking revolution has caused, you know, in terms of just the rebalancing of power. And the, I mean, when we were kids, you know, this was in the shadow of the 70s. OPEC was an enormous deal, even though, you know, the oil crisis was technically over, it was, it was recent enough that the power of the Gulf, the Gulf princes, was just like a huge deal. And actually, you know, this is kind of unrelated, but I'm just gonna bring this up the collapse of the oil economy, the collapse of the living standards of people in the gulf between 1980 and the year 2000. Like, some people have argued that, you know, there's massive fertility boom, in the 70s, and 80s, all of these huge families with a lot of young men. And then there was a massive collapse in their living standards, because, you know, when you correct for, you know, the value of the dollar, they were really, really well off in the 1970s with very little work, and didn't have, like, put in any effort. And so people were anticipating that for the future. And, you know, today, some of these countries, in particular, Saudi Arabia, which has a larger population, you know, it's not like, they're poor, poor, but, you know, unless you're like, you know, a member of the royal family, it's not, it's not necessarily that great. And so you have a situation where people saw like, massive decline in their real living standards, and they got angry, and, you know, they, some of them decided to, like, get into radicalism and a lot of Americans. Well, I mean, okay, this is conscious. I don't want to get the conspiracy theories. But, you know, most of the 911 bombers were Saudi nationals, you know, our great ally, Saudi Arabia. And you know, that nation has seen a massive decline in economic standards for a couple of generations now not you know, to immiseration or penury. But you know, they were, they're still people who remember the 1970s and how well everyone was living and, and whatnot. So, you know, these broad macroeconomic trends and energy are important to make their civilization go make some civilization run America now is a energy superpower. In a way, we could be more of an energy superpower, if we wanted to. What do you see for the next 10 years? I mean, I'm assuming you know, there's still gonna be oil coming out of Russia, out of Saudi Arabia, nuclear is gonna do its thing, solar. I don't know how much cheaper solar can get seems like most of the efficiencies are there now. But like, what do you see?

    Ah, yeah, I do think solar can get a can get cheaper. And we're gonna, you know, in for the electric domestic market. I suspect that in the United States, most of the new generation coming online will be solar, wind, or battery, some combination of those. In turn, you know, I I hesitate to talk about the future because, you know, I look at the past how much of what happened in the past, would I or did I predict, not that much lots of unusual stuff happens. One big thing that I would highlight is Europe, a Europe currently they get a lot of their energy, you know, from Russian natural gas. There is currently a big political movement to become less dependent on Russian natural gas. And to do that, I mean, they don't, this does not seem to be leading people to build a bunch more nuclear plants, although that might happen, the idea that they seem to want to do is they're going to try for like a big push for natural gas to get natural gas from the United States, and really expand the ability for like, liquefied natural gas transportation. So I expect there will be a big push to do that, in the coming years, that has the potential to really affect both the US and European natural gas markets, right. Both because, you know, they'd be getting the energy for from us. And then of course, if we're using more of a natural gas to export, that will make us a lot of money, but it will also affect our domestic prices. So that and it could help to create like a, something closer to a global market for natural gas than has existed before. So that's something you know, if I look for the next decade, some potential big change that might be it.

    Awesome. So yeah, it was it was great talking to you, and getting some insight, I hope listeners know a little bit more and have a better sense of what's going on beyond the sticker shock. at the, at the pump, which, you know, depending on when they listen, it's gonna be a big deal, or it's just gonna be something you don't think about, you know, so there's a lot of things that go a lot of inputs, a lot of trade offs, until you get up to that point. But, you know, that's what the modern economy is. And I think Joe's is like helped us get a little bit up to speed on on the various parameters. So just I thank you for your time. You can check out his stuff at R Street. Everyone should check out Urbane Cowboys. It's a podcast with Doug McCullough it's good listen, and thank you for listening to the unsupervised learning podcast everybody.

    Is this podcast for kids? This is my favorite podcast.