Where are they in

all of this? I mean these sorts of strategies take time.

If you think back to Tsar Nicholas II in the early 1900s, he picked a fight with Japan, thought he was going to win it, ended up getting his butt kicked by Japan.

Teddy Roosevelt gets a Nobel Peace Prize for negotiating the peace between Japan.

The Tsardom of Russia at the time in Japan.

It takes 12 years for the Russian Revolution to take Tsar Nicholas II out of office.

So the things that we're talking about I think are absolutely there, and I think this is the slow-motion force that is coming for Putin eventually.

I'm really wondering if 25 years from now we won't look back and be like, man, remember when Canada just did a lot of business with us? We kind of screwed the pooch on that one.

Where are they in

all of this? I mean these sorts of strategies take time.

If you think back to Tsar Nicholas II in the early 1900s, he picked a fight with Japan, thought he was going to win it, ended up getting his butt kicked by Japan.

Teddy Roosevelt gets a Nobel Peace Prize for negotiating the peace between Japan.

The Tsardom of Russia at the time in Japan.

It takes 12 years for the Russian Revolution to take Tsar Nicholas II out of office.

So the things that we're talking about I think are absolutely there, and I think this is the slow-motion force that is coming for Putin eventually.

I'm really wondering if 25 years from now we won't look back and be like, man, remember when Canada just did a lot of business with us? We kind of screwed the pooch on that one.

So it becomes the same demand, right?

Yes, but that requires the government to do something that is by definition non-market oriented and not capitalist and is about state support of an industry.

And I do think the problem is big enough to your point and that the government has incentivized the growing these particular crops and has incentivized this myopic focus on exports.

One of the functions I think of government is that when something is too big for the market or is too big for the small and medium sized business, is to help that's the reason we had rural electrification because if you had just left it up to the electric companies they wouldn't have put electricity in rural areas it didn't pay so the government came in and said okay this is too big for the market we think it is a national good that the you know that the rural area should be electrified so we will help balance the market so that it does so and something the united states has really struggled at doing since this globalization trade-off that we were talking about earlier with china is supporting the industries.

And it's not just farmers, but farmers are our front and center here are supporting those industries that got decimated by those trade and policy decisions because we just assume that the market is going to take care of people.

The market didn't take care of the coal miners in West Virginia.

The markets didn't take care of the furniture makers in North Carolina.

We're using all this, and we're going to continue.

How is that traveling in, in your eyes?

There is no reindustrialization initiative.

Uh, it would make a lot more sense if there was.

If the If the Trump administration and even the Biden administration had thought about reindustrialization, pursued it with the same zeal that it pursues tariffs, we might be in a different world, but that has not been the case.

You have these pockets of reindustrialization.

Rare earths is probably the place where US domestic policy has been the most serious, and even there I don't take it so seriously.

I don't think we've actually done the things that would be necessary, uh, to produce or build that kind of capacity in the United States in any sort of, um, short-term time horizon.

What, what do you make of this position and the, the, you know, perhaps to, to hark on what Trav said, the constraints that are going to be pushed from either side on countries like Australia?

Yep.

Um, but...

And I, I also just wish that, uh, you know, we could focus as much on other parts of infrastructure as we are on data centers because as wonderful as AI is, and I love AI, I'm using it myself.

It has, I don't wanna say changed my life, but it has made me extremely much more efficient in my work and allowed me to supercharge my, you know, professional efforts in ways I couldn't have imagined even twelve months ago.

Uh, but you know what would be even better? Uh, better education, better roads and highways, high-speed trains.

We are still like-- we're still physical beings.

We still need to eat things.

Yeah.

What's your thoughts? What is the, what are the timelines here for this, for the strait?

Yeah.

I mean, it's, it's hard to break this apart, and I am honestly shocked that we are into August and we're still talking about the closure of the Strait of Hormuz.

And I, I think I already talked, you know, on a previous episode about how, you know, I thought oil was gonna sprike, uh, spike initially, and it didn't, and trying to come back down to Earth, um, a little bit.

Uh, but I, I think it's a, I mean, it's definitely a little, a little, um, over the top, but there is a kernel of truth to that statement because what I do think is true that two, three years from now, the Strait of Hormuz will be much less important to the global economy than it is today.

And I say that because you already see a massive amount of pipeline building to get around the Strait of Hormuz beginning.

That'll take twelve months, twenty-four months.

Mm.

What's your thoughts? What are the timelines here for the Strait?

Yeah.

I mean, it's hard to break this apart.

And I am honestly shocked that we are into August and we're still talking about the closure of the Strait of Hormuz.

And I think I already talked on a previous episode about how I thought oil was going to spike initially and it didn't and trying to come back down to earth.

a little bit.

But I think it's definitely a little over the top, but there is a kernel of truth to that statement because what I do think is true that two, three years from now, the Strait of Hormuz will be much less important to the global economy than it is today.

Do you have any insights on Scheinbaum's relationship? And when I say relationship, I don't necessarily mean that just in good terms, just the impact of cartels in Mexico on her leadership and what's actually happening in Mexico right now?

Mm-hmm

... basins in general.

And as you go through the shift over the next five, seven years, I don't think it's gonna be in one direction.

I think you have to brace for volatility.

We'll have periods of uptrends.

We'll have periods of downtrends when it comes to energy prices, but I think the long-term view is pretty clear.

We're gonna have more sources of energy, and it's gonna be cheaper in general, and the competition between nations and companies are gonna be those that can get access to the cheapest energy.

How do you see that changing the game over the next three, five, 10 years?

I guess the question is, what is it going to take to get the Strait of Hormuz reopened?

Well, you know, I've been contemplative about this the last two or three weeks or so because the first project I ever did as an intern at Stratfor, the first company I ever worked for, I was an intern red teaming an Israeli-U.S. attack on Iran.

And I was focused exactly on the Strait of Hormuz.

And one of the things that we concluded was that there was no way that that attack was going to happen because if you close the Strait of Hormuz oil prices down, start to levitate and the thing that's remarkable is if you if you could go back in time and tell intern jacob 15 years ago hey the strait of hormuz is going to be closed and brent crew is going to be at 90 a barrel and the s&p is going to be making new record highs he would have been absolutely flabbergasted because he would have thought it was mad max fury road and we're like killing each other for petrol and going to the diesel station and everything else But you can't argue with the facts.

Like even all these oil analysts that I trust that are literally lighting themselves on fire on social media, the market is telling you sort of what it's priced at.

So my answer to that question before, Sean, would have been when markets get too high and when the global economy comes to a halt, That is the point at which this trade will reopen.

But I think I, among other analysts, just underestimated how less important oil is relative to the global economy than it used to be in the 1970s, underestimated the amount of reserves that were out there, underestimated the ability of oil markets to cover themselves.

is looking for the cartels to be put on wanted posters and dragged through the streets for the damage from a drug trade perspective.

You weren't able to like literally everybody was

in the like in the living room listening to it, like every single stage of media evolution since the printing press.

It's been like, oh, my God, the ideas are running wild and it's so much more.

So I'm not dismissing what you're saying because it's like it's in your face now in a more meaningful way.

But like every single stepwise change in media means it's in your face in a more meaningful way.

When we went from nothing to books, when we went from books to newspapers, we went from newspapers to radio, you go radio to TV, you can find people at every single stage here talking about how, oh gosh, the new media is changing things.

And this is what is creating like all of these different narratives because everybody always thinks the world is ending.

What's changed? What are you seeing? What's top of mind?

I guess the question is, what is it going to take to get the Strait of Hormuz reopened?

Well...

You know, I've been contemplative about this the last two or three weeks or so because the first project I ever did as an intern at Stratfor, the first company I ever worked for, I was an intern red teaming an Israeli-U.S. attack on Iran.

And I was focused exactly on the Strait of Hormuz.

And one of the things that we concluded was that there was no way that that attack was going to happen because if you close the Strait of Hormuz, oil prices start to levitate.

And the thing that's remarkable is if you could go back in time and tell intern Jacob 15 years ago that the Strait of Hormuz is going to be closed and Brent Cruz is going to be at 90 a barrel and the S&P is going to be making new record highs, he would have been absolutely flabbergasted because he would have thought it was Mad Max Fury Road and we're killing each other for petrol and going to the diesel station and everything else.

But you can't argue with the facts.

How would Mexico sell that? The US is looking for the cartels to be put on wanted posters and dragged through the streets for the damage from a drug trade perspective.

Oh.

And I was focused exactly on the Strait of Hormuz, and one of the things that we concluded was that there was no way that that attack was gonna happen because if you closed the Strait of Hormuz, oil prices, um, start to levitate.

And the thing that's remarkable is if you, if you could go back in time and tell intern Jacob fifteen years ago, "Hey, the Strait of Hormuz is gonna be closed, and Brent Crude is gonna be at ninety a barrel, and the S&P is gonna be making new record highs," he would have been absolutely flabbergasted because he would have thought it was Mad Max: Fury Road, and we're, like, killing each other for petrol and going to the diesel station and, and everything else.

But you can't argue with the, with the facts.

Like, even all these oil analysts that I trust that are literally lighting themselves on fire on social media, Brent, the, the market is telling you sort of what it's priced at.

Um, so my answer to that question before, Shawn, would have been when markets get too high and when the global economy comes to a halt, that is the point at which the strait will reopen.

Um, but I think, I think I, among other, um, analysts, just underestimated how less important oil is relative to the global economy than it used to be in the nineteen seventies, underestimated the amount of reserves that were out there, underestimated the ability of oil markets to cover themselves.

What's going on here on the ground in Mexico?

Who is the leadership now?

There's not a great answer to that question.

I think, ironically, the Trump administration has solidified the control of the IRGC and of the hardliners of the regime.

The supreme leader is dead.

His son, it seems like, is injured or is basically being used as a prop.

There's a leadership council with – I believe it's three people that is on the leadership council that seems to be on the same page.

And then the regime itself had time to prepare for this because of the protests in January.

So what are the lanes of choices here besides just walk away and say, wait those two years for an uprising to happen?

Okay.

I'm also...

I'm not a petroleum engineer, uh, but based on my experience with such matters, like usually you can figure out... engineers can figure out a way to make things so that the sky isn't falling.

So if somebody says, "Oh, this thing is gonna happen," like usually once the engineers get in there, they can try and make things go.

But let's, let's grant the argument for a second.

Let's say that in three weeks' time, there's no place for Iran to store its oil, and they have to shut in wells, and it's gonna bring their economy down.

I just wanna take listeners back to a little bit of history.

Who is the leadership now?

And that really created this ulterior sort of like remember in back to the future there was like an alternative 1985 it's sort of like an alternative war strategy in iran like if we did it once we can do it again um i who is the iranian leadership you mentioned that you mentioned that in one of your uh your gap points who who is the leadership now

There's not a great answer to that question.

I think, ironically, the Trump administration has solidified the control of the IRGC and of the hardliners of the regime.

The supreme leader is dead.

His son, it seems like, is injured or is basically being used as a prop.

There's a leadership council with – I believe it's three people that is on the leadership council that seems to be on the same page.

And then the regime itself had time to prepare for this because of the protests in January.

How much is that meeting happening now? related to what's going on in iran like you said china's heavily invested the middle east they obviously are behind the straight they're impacted by all this is is this one of the potential off-ramps so to speak

Yeah.

Like you don't, uh, go into college being like, "I'm gonna be an expert on supply chain." Um, oil...

Look, oil's important.

In some ways, it's the one that I'm least worried about.

Um, not least because you have countries with strategic reserves.

Uh, four to five million barrels per day are crossing that pipeline and getting out through Yanbu, at least for now.

If the Houthis get involved, and if the Red Sea is shut, okay, like we can, we can start sounding the alarm there.

What does that timeline look like for you?