What drives these changes?

Well, there are a couple of big things.

First of all, you can't discount the fact that the Strait of Hormuz has been shut down for almost seven months now.

So we're just not getting the same flows of crude oil through the Strait of Hormuz that we did prior to the incursion last March.

So the consequences of that have been huge.

And there's a huge buildup of crude oil that's just not making it through the Strait of Hormuz.

Remember, that's about 20 percent of world demand every single day.

Would a temporary ban on exports... of any kind, whether it be diesel or just general petroleum, would that lower prices or would that cause a backlash for American petroleum companies where they'd have to raise prices?

Why is that?

So the biggest issue with diesel is, you know, one, we're entering into a period where we're gonna be using a lot of diesel fuel.

It's harvest season in Ohio and throughout the Midwest.

Uh, and those big tractors, they all run on diesel fuel.

In addition to that, in the Northeast, uh, it's heating oil season.

Heating oil is very similar to diesel fuel, so you're seeing, uh, an increased price as a consequence of just seasonal factors.

But in addition to that, again, we just have a lack of refining capacity.

What the hell does that mean?

Is that a function of what would happen to refinery rates? And is there any sort of reassurance the administration could theoretically give on the duration of a ban that would keep rates from coming too low?

No, unfortunately, the duration really does not matter.

What would happen is you would actually have our tanks start filling up almost immediately.

We simply don't have the storage in the Gulf Coast to store this much diesel that would get backed up because we're not exporting it.

So you have to remember that one barrel of oil, you produce gasoline, you produce diesel, you produce jet fuel.

You can't stop producing one of those.

So as a consequence, if you put an export in place, you simply don't have anywhere to store it.

If a ban or restrictions aren't going to bring prices down, at least in a meaningful way for a long enough period of time, what else will?

What's happened that's caused first these senators and now the president to call for this? And then we'll talk about the merits of of such a ban.

Well, look, we are in a political year, right? We're in an even-numbered year divisible by two, which means we're in a political year, and we're getting closer and closer to the election.

And what that means is that a lot of people are looking for solutions.

And diesel prices are, of course, at record highs, and gasoline prices are going up as well.

You know, the real culprit for this are ongoing wars in the Middle East and in Russia and Ukraine.

And we have about 10% of global refineries that are currently offline as a consequence.

And when you take a lot of oil off the market, about 20% of global oil is disrupted as a consequence of the Strait of Hormuz being closed.

And the signal it would send to our customers around the world, that we're not a reliable supplier, right?

Where does that stand right now?

So we're hopeful that, uh, we're gonna have language on that bill very soon, and we're hopeful that Senator Thune schedules it in the month of September.

It probably won't get done before the election, but we're hoping for a lame duck play, uh, to get this bill across the finish line finally.

Let me give you an example of why this is so important.

In this state, in this great state of Texas, natural gas prices have actually gone negative-

Mm

... of natural gas, which is going to be the energy that is going to power the future for data centers in particular.

It's going to be natural gas that powers those data centers, and we have plenty of it here.

Mm-hmm

... put into place.

There are other things they could do.

Uh, there are changes that they could make to the renewable fuels standard right now that are providing a higher price at the pump that, uh, we, we don't need to sustain right now given the, the kind of challenges that we have.

But, uh, we would be concerned about an export ban, primarily because there is a mismatch between the kind of production that we have in the United States.

This, uh, WTI that we produce here in the United States isn't necessarily refined here in the United States.

Mm.

I think that this should have been the first thing on the agenda this Congress.

Mm

... put into place.

There are other things they could do.

Uh, there are changes that they could make to the renewable fuels standard right now that are providing a higher price at the pump that, uh, we, we don't need to sustain right now given the, the kind of challenges that we have.

But, uh, we would be concerned about an export ban, primarily because there is a mismatch between the kind of production that we have in the United States.

This, uh, WTI that we produce here in the United States isn't necessarily refined here in the United States.

Should they?

... which is how this program is developed.

At this point, are there other avenues for the global oil trade to potentially bypass the strait entirely?

entirely?Well, the most important, uh, place is really that Strait of El Mandab, which is the southern way that, uh, oil is flowing through the Saudi east-west pipeline south, uh, through the Red Sea.

But there are concerns there as well, as the Houthis potentially, uh, go into that area and start, uh, threatening Saudi tankers out of that strait.

The other place for it to go is essentially through the north end of the Red Sea, through the Suez Canal, but there are logistical concerns there.

You can't, uh, f- put the very large, uh, vessels through the s- the, uh, Suez Canal.

So it should be a big concern to all lawmakers about where this is headed.

Fortunately, we are buttressed by the fact that the United States is now the largest producer of both oil and natural gas in the world, and that continued supply has really been the insurance policy for the world given the circum- circumstance that we've had for the last five months in the strait.

What is your message to Americans who see these oil companies making near-record profits because of a war that, at the moment, is not near an end as far as we know?

Which means they're paying them?

It's essentially you're only getting-- you should be getting about two point five million barrels out of the strait of El Mandab, and if you can't get that through, you're gonna con- continue to see continued high prices.

I'll tell you, there is another route, though.

They could go north through the Red Sea to the, to the Suez Canal.

Here's the problem with that.

You can't get the very large ships through the, uh, Suez Canal because the draft is so deep that you can't get it through the Suez.

The consequence of that is you essentially have to offload the oil from-- at the beginning of the strait, pump it through a pipeline, and then reload it at the other end of the strait.

What have they found? What are they doing?

Is this time any different?

I certainly hope so.

Uh, and I give the president a lot of credit for focusing on American production.

We're now producing more oil and natural gas than we ever have in the history of this country.

And by the way, the more, more oil and gas than any country has ever produced-

Mm.

But in addition to that, I think we need to really focus on advancing Western Hemisphere energy.

That means, yes, ensuring that we have the resources that we need here in the United States, in places like Alaska and North Dakota, and of course, the prolific Permian Basin and the Gulf of America.

Uh, what level does that get to where you start saying, "Okay, we have a, we have a real problem here with the strategic petroleum reserve," not just reserves in general?

Well, we're raising alarm bells right now.

Uh, we're at about a h- 350 million barrels left in the strategic petroleum reserve.

You have to have about 20% of that left, uh, for it to be operational for our system to operate.

So we're getting to levels where we're starting to be concerned.

I will say, though, you're starting to see production increase, not just in the United States, but in other places as well.

We're seeing some green shoots, uh, in the, in the oil patch.

Short of that, I think one of the biggest questions, uh, anybody who's followed this has had is, all right, why isn't, why aren't oil futures soaring right now? Why are they kind of lingering around $100 below for the last couple of weeks as well? Um, what, what, what is your sense of that? It, it doesn't seem to make a lot of sense given the fact we're in the midst of the biggest oil shock in recorded history.

Now that Valero's, um, refinery is closing, what is California gonna be like this summer? They've lost another refinery, and I don't think anyone wants to build a refinery in California anytime soon.

You know, Hugh, this is an absolute disaster for California consumers.

Uh, the truth of the matter is, is that the United States only imports about eight percent of the oil that we use from the Middle East.

But in California, it's thirty percent, so they're highly dependent on Middle Eastern oil, uh, for their supply to those refineries that continue to operate in the state.

In the last three years, they've already lost three refineries, with the Valero Refinery going offline, uh, sometime at the end of April.

And why are those refineries going out of business? It's not because they, uh, there's not the demand for gasoline or jet fuel in the state of California.

It's because of a regulatory environment in California that is making it impossible for those refineries to make any money.

Where are we on that?

So Mike, uh, this news from United, do you think this sets a trend for the other US airlines, American, Delta, Frontier, et cetera?

Well, jet fuel is particularly under pressure right now because of the Strait of Hormuz being closed.

It's a major artery point of course for all of these fuels from gasoline to diesel to, uh, natural gas of course, but jet fuel is particularly vulnerable in this region because there are significant, uh, growth in the jet fuel market in Southeast Asia.

So that is probably the, the main pinch point that we're gonna see both in the United States and throughout the world.

Obviously, you can't predict and, you know, but what did you think of his answer?

Look, I think this is all a question of supply and demand.

When you have a significant portion of oil and these refined products blocked in the Strait of Hormuz right now, you're not gonna see relief at the pump or significant relief at the pump.

We gotta get the strait back open.

What was your biggest takeaway from the meeting with all these top government officials, and are you confident that the administration has a plan to tackle this energy crisis, especially if the war keeps dragging on for who knows how long?

Well, what we were asking for was exactly what the vice president said, that their top priority is to get the Strait of Hormuz open as quickly as possible.

And our focus, of course, was also on the president's agenda.

The president has focused on energy independence, and they put policies in place to advance American energy independence at this time.

So our focus, uh, has been on the agenda to advance oil and gas and energy dominance in this country, and their focus has to be on getting the strait open.

That's the only way that we're gonna provide relief to consumers over time.

What's your message to them?

Well, we certainly hope that it is temporary.

What does it mean for change in the American oil and gas industry? Was there conversation in that room today about the American producers' ability to go above and beyond these already record numbers? Can we truly become fully energy independent?

That was one of the topics of conversation that we had today.

The vice president in particular emphasized, I think appropriately, the importance of us not being dependent on the Strait of Hormuz during times of energy crisis.

We need this country and we need other countries all over the globe.

to be focused on energy independence for themselves, because during times of energy crisis like this, we don't want to be held hostage by the Strait of Hormuz and Iranian regime, which is why it was so important for the president to take this action, because if you think energy supplies are tight today, imagine if Iran had a nuclear weapon.

So what the president did absolutely was the right thing to do, but we need to work with our allies and with American producers now to continue to produce, to supply a very tight market.

Here's the good news.

What do we do about that?

Uh, is he right?

Well, I think this is the nightmare scenario that we've been concerned about for three decades, that their Straits of Hormuz would get shut down as a consequence of a major issue within the straits.

That's 18 million barrels of oil every single day that are not coming to market.

There's another six million barrels that are actually being shut in right now.

The top priority for this administration after they take care of the issue in Iran is to get the straits back open.

This isn't just affecting American consumers, but consumers all over the globe.

What's the response of your c-industry to that, that your tankers need to show some guts and go with the Navy through the Strait of Hormuz?

Well, there's two things here.

What do you make of it?

it?Yeah, so really, Br- uh, uh, Griff, this is a really important week, not just for the President of the United States, but for the American energy industry.

There are two big things happening in Washington DC that, uh, really could change the course of everything that we're doing right now as a country.

First, the reconciliation bill is likely to make it through the United States Congress this week.

That is a very, very big deal.

You mentioned it, of course, it's tax cuts for the American people, but it's also reform of our energy industry as well.

I'll give you an example.

How do you see it?

We first asked Mike what day one under Trump administration will look like for the energy sector.

Well, we've laid out an API five point policy roadmap.

You can find it at API.org of the things that we're asking this president and this Congress to do during the first six months of the administration.

But there are some things that they can get done early in the administration, really on day one.

So one of those things is lifting the LNG export pause.

We're excited that we have a new president that's focused on that, and he's committed to lifting it on day one.

So that's one thing we think that they can get done very quickly.

How does green energy work with traditional energy? I'm not sure what the preferred term is for oil and gas, but how does green energy work with oil and gas and traditional energy

What's day one for you guys under a President Trump administration?

Well, we've laid out an API five-point policy roadmap.

You can find it at api.org of the things that we're asking this president and this Congress to do during the first six months of the administration.

But there are some things that they can get done early in the administration, really on day one.

So one of those things is lifting the LNG export pause.

We're excited that we have a new president that's focused on that, and he's committed to lifting it on day one.

So that's one thing we think that they can get done very quickly.

How does green energy work with traditional energy? I'm not sure what the preferred term is for oil and gas, but how does green energy work with oil and gas and traditional