$250 Oil Next: Why No One Is Prepared For The Biggest Event Of Our Time | Josh Young

Yeah, I think if this does not resolve soon, we should see all-time high oil prices,

and that would be on an inflation-adjusted basis if you're talking potentially 200 plus.

What happens to the U.S. economy once oil hits $250?

The reality with these sorts of hats is prices see.

It's Friday and March the 6th, and stocks are tumbling as oil skyrockets overnight

on fears that the Iran conflict is now going to be prolonged, and it won't be a quick,

easy in and out. So what's going to happen now to markets? Well, oil just spiked from $77

last night to now above $86 today, and the Dow is down about 900 points on market open this morning.

What's next for stocks? What's next for oil? What's next for the global economies? Well,

our next gas, Josh Young, CIO of bison interests, things that oil is going much, much higher

to unprecedented levels never before seen. So what does that mean for all of us who need gas

at the pump? What does that mean for the economy? What does that mean for markets?

Well, we get a lot more volatility if the Iran war does not end anytime soon. Josh has been

correct in calling for oil to go up, but now he's making it an even more dramatic and bold call

that I've never even heard before on my own show. Stay tuned. This is going to be a very exciting

episode. Josh, welcome back to the show. Good to see you. Thanks for having me. Let's just

start by talking about what happened last night. Yeah, so what really happened was the U.S.

and Israel started bombing Iran and killing the Iranian leaders. And in response,

among other things, Iran and their IRGC have mostly blocked, severely limited the flows of oil

and other shipping through the straight-of-arms. And so what we're seeing from a price perspective

is that every day that this continues, the oil price is ratcheting up five to some days

right now. It's 8 percent, but ratcheting up about 5 percent a day. And I think people keep

betting on there being some sort of quick fix and various U.S. government and other officials and

economists and so on are calling for various quick solutions, but there isn't a quick solution here

other than sort of political victory or concession that reopens the straight.

The way that the oil market has been behaving the last week has been somewhat erratic. The

straight-of-formose has been closed since basically over the weekend. The first strike on Iran

was last Friday night, as you know. And the straight-of-formose has been officially closed,

some reports say, except of Chinese ships, but basically officially closed since last week.

Why did oil take a few days to react? It's a great question. It's sort of weird. Partly,

I think it's producer hedging where the sort of muscle response for producers is to turn around

in short oil in response to the price going up to lock in the prices that they receive on their

production. They were taught this lesson in June of last year and October of the year before and

so on where there were these brief oil price spikes on the concern about the straight-of-formose

getting shut. Weirdly, because of this, it's actually taken almost a week of it being shut just

to get prices back to the level where prices were at when people were concerned about it. So

part of its producer hedging, part of its in expectation that Trump would, they call it Taco,

essentially, give up and sort of flip perspectives or change something in order to resume oil flows.

And I think it was some combination of those two that was keeping prices down.

I think perhaps, Josh, and this is just my theory is that in the early days of the conflict,

which was Friday, Saturday, Sunday, basically over the last weekend, markets may be unsure

as to the length of this particular conflict. So how long it may last? And yesterday, Trump's

comments may have consolidated some expectations here. So this is according to CNBC.

Maul means all over the news, but I'm just being CNBC here. Trump says, no deal with Iran to end

war without unconditional surrender. As you recall, the Iranian Foreign Minister said that he's ready

for troops to land in Iran. He said President Trump said, after that, in the selection of a great

and acceptable leaders we and many of our wonderful and very brave allies and partners will work tirelessly,

tirelessly to bring Iran from back to the brink of destruction, make it economically bigger,

better and stronger than ever before. And he warned that potentially US military strike,

only an unconditional surrender is acceptable at this point. Trump also hinted earlier in the week

that this will take a couple of weeks and then more American casualties are expected. Meanwhile,

stocks are down and the Dow is down about 900 points today, perhaps on this news, perhaps on this

announcement, but your interpretation of Trump's comments and how long the war may last.

Yeah, I mean, I think we've seen sort of a prelude to this with what happened with Yemen and the

Houthis and what they were able to do to the Red Sea. And even with the US bombing quite aggressively

and before that Saudi Arabia bombing the Houthis for years using all kinds of US military equipment

and munitions and so on, the Houthis were able to severely restrict flows through the Red Sea

for much of the last two years. And they only stopped when they got material, it looks like

financial and other concessions from the US and others. So apparently we do negotiate with terrorists,

we just wait until it's really, really painful before we do it. And so I think when you see what

happened with this much, much smaller group that was much less well prepared and much less well

equipped, but with similar, let's say values and similar sort of philosophy to the IRGC and a lot

of alignment, frankly, their allies, it is possible that this could actually go on for quite some

time way beyond that time frame that Trump is communicating. And you know, I think people are

starting to appreciate that. I agree with you. I think that expectation initially is that this

would be a very quick thing. And I think one of the things that Trump, the Trump administration

may have been expecting was a some sort of popular revolt in Iran that would kick out the regime.

And while the regime in Iran is very unpopular, there's still, I don't know, maybe it's 30% of

the population that are very sort of religiously fervent and very aligned, even if they don't like

the regime, they're aligned with it. And so it might not be that simple, unfortunately. And it's

possible that like Trump was saying yesterday that it may actually, or I guess it sounds like

the Iranian Foreign Minister was saying it may not be possible to dislodge the Iranian regime

without troops on the ground, which Trump has promised not to have happened.

So let's just put this into perspective. Can we assume that earlier in the week,

maybe the oil markets, and to a certain extent, the stock markets, which up until today were up,

did not anticipate this war to last more than a few days. It was conflict to end within a week,

thereby, where therefore the extreme hormones would not be closed for longer than a few days.

And now things have changed somewhat. Now the markets are pricing in a prolonged conflict,

what the straight of hormones could be closed for extended period of time. Is that what's

happening right now, Josh? Yeah, I think so, although I would just say I think this has sort of been,

I think for the folks that have been paying attention to this, I think it shouldn't be surprising

that this would have taken more time. And it feels a little, I've been saying this a little

publicly, it feels like the COVID situation, the two weeks to stop the spread, which was under

the first Trump administration, where there were sort of these misleading public statements to try

to quell financial markets and so on. And I think it's better just to be honest with people,

and when you're when you mislead in this way and try to talk things down, you have the potential

for things to backfire pretty significantly. So I think this was actually somewhat predictable.

I don't think it was likely that we were going to kick out the regime within a few days,

or that this was going to get resolved within a few days. And now we're seeing that, and I actually

think we're still, I think at current prices, people talk about these prices as if they're big,

but they're still sleeping on it. And actually, this is great, you pulled up the chart,

looking back to Russia's invasion of Ukraine. And it actually followed a very similar pattern,

right, where oil went up, and then actually down, fully retraced on Russia's invasion,

right, like you're looking at July. But if you go back to, I think it was late February, early

March, where actually Russia came in, it was fully retraced, and then you saw prices go up

by $40, and that was a tiny fraction of the physical oil market impact versus what we're seeing

right now. So again, these things, this is the right-tail risk for oil, that for my whole career

has been the thing that you keep one eye out for, and I have two hats in the background,

ones that make oil a hundred dollar again hat, and ones that 250 WTI hat, I think it's more for

the 250 than it is for the 100 in terms of the risk to the upside. So we're looking at 250,

that's what we're looking at. I think if this does not resolve soon, we should see all time

high oil prices, and that would be on an inflation-adjusted basis. If you zoomed out even more,

you'd see in 2008, we got to about $147 a barrel, and if you inflation-adjust that, you're talking

potentially 200 plus. Historically, cyclicals at the tops of cycles go to their all time highs,

and so again, is this a forecast? I don't know exactly where it's going to go, but if this doesn't

get resolved soon, we could easily see prices go at all time highs. Before we continue with the video,

let me tell you about gold's performance relative to the rest of the markets. Now, gold's up about

80 percent over the past 12 months, while the S&P 500, for example, is up only about 16 percent

in the same period. Now, that's not a small gap. That's a huge difference. So if your retirement

account is concentrated in equities, or any one particular asset class, well, that difference

directly impacts your long-term trajectory, because when gold dramatically outperforms during

volatile equities markets, it often signals capital rotation, not noise. Right now, that rotation

is visible. Major banks are already outlining gold scenarios in the $6,000 to $6,300 range,

and this isn't about abandoning stocks. It's about whether your IRA or 401K has exposure to the

asset that's actually gaining momentum right now, or if you're fully dependent on equities,

or any one particular asset going higher. Today's sponsor Priority Gold created a free,

precious metals playbook explaining exactly how physical gold was silver can be added to your

IRA or 401K tax and penalty free. They handle the rule over paperwork, and with qualifying purchases

they're offering up to $10,000 in free silver. To get your precious metals playbook,

call 866 407 6456 now, or tax David DAVID to 249999. Scan the QR code here, or use the link

in the description down below. Can you just explain to us for some of us who may not be oil traders

and experts in global supply chains as to why the straight-up hormone was closing would necessitate

$200 a barrel, and obviously that means much, much higher gas prices at the pump for all of us.

So if you look back at COVID, for example, actually oil prices collapsed, and to a certain extent

some futures went negative for a very short amount of time. Now obviously the conditions are

completely different, but for the laymen, the result is the same, which is a supply chain disruption.

And so what is fundamentally different about the straight-up hormone was closing, and supply chains

being disrupted from oil tankers being stalled in 2020. Both are supply chain disruptions, but

what is the difference? Yeah, so the big thing for oil during COVID wasn't the supply chain

disruption. It was that governments forced people to stay at home for extended periods of time,

which killed oil demand and temporarily pushed oil demand down by close to, I think at its peak,

close to 20 million barrels a day, which is amazing that actually you had had most oil consumption

sort of still continuing even with people essentially walked in their homes by government

edX and Canada, US, various other Western countries, China intermittently. So this is almost

sort of a mirror of that, where it's not like there's a 20% demand boost, but there's a 20% supply

cut essentially, where about 20% of oil exports come out from the straight-up hormones,

and then a meaningful amount of liquefied natural gas exports come out from there, as well as various

other chemicals and chemical precursors and so on. So it's a similar proportionate effect,

and so in the same way as you saw oil go negative from that sort of demand shock,

proportionally similar, I think you could see prices go similar the other direction from from

this supply shock. Can the US draw on a strategic petroleum reserve to alleviate some short-term

pressure on the oil price? This is from the EIA, and as of December 2025, it's reported that the

SPR has over 400,000 barrels in reserve. Is that enough, do you think? Yeah, it's 400 million.

Yeah, so the problem is you can only draw a million. You can only draw, I think it's something like

a million, maybe two million barrels a day out of that, but it's quite difficult to draw a lot

out. Frankly, we should have been drawing on this as soon as we, as soon as bombs dropped,

if we started drawing on it ahead of time, that would have been a, you know, we sent, we sent

aircraft carriers, I guess that wasn't enough of a signal, but if we had pulled on this before

invading, then it would have been a signal. I think this not being drawn on yet is a sign,

or at least not being announced, to have been drawn on, is a sign of sort of unpreparedness or

unseriousness by the Trump administration regarding this operation in Iran. We should certainly

be drawing on it, and it's not because the U.S. is under supply. The U.S. is actually fine. We're a

net exporter of oil. All of this is actually good. The shock is not good, but higher oil prices

are net beneficial for, you know, just like for Saudi Arabia, higher oil prices are good for

their economy. Higher oil prices, U.S. is also a net exporter, and oil is very capital intensive,

and very labor intensive. Higher prices over time are good. But, you know, this is a shock,

and this is what the SPR, it was literally built for a disruption in the Strait of Hormuz.

If you look at when it started, it was around the Iranian Revolution in 1979 because of the

physical disruption. It's literally for this, and it's very sad that it was drawn on for, you know,

to suppress prices ahead of elections and for funding for various things like our politicians

literally robbed the future right now. They robbed us of our ability to not have this shock

because of their budget constraints and ridiculous partisan politics. So we were robbed.

It should be released now, and it was built for this, and it's at half size because Biden drew

it down in 2022. It was not necessary then, and it was certainly not necessary to bleed it off

over the last couple of decades in order to, you know, have slightly lower budget deficits.

This is what Scott Besson had to say on the 4th of March, he made an announcement. The crude

markets are very well supplied. There are hundreds of millions of barrels on the water

away from the Gulf. But more importantly, we have a series of announcements that we're going to be

making. And this kind of contradicts was actually being reported. JP Morgan said in a climb

note that around 329 oil vessels are stuck currently in the Gulf. Iran has refrained from targeting

most critical infrastructure, energy infrastructure while keeping shipping risk extremely elevated.

So a lot of, you know, a lot of information here. The fact that Besson is hinting at a lot of

oil outside of Iran. Can we just call it, oh, sorry, outside of, yeah, Iranian waters. Can we

just comment on that? What does he mean by that? Yeah, so there is oil on the water. A lot of it

unfortunately now is trapped in the Persian Gulf prior to hitting the Strait of Ramu. So a lot

of it's trapped, but the oil that's not trapped is inflating storage and probably getting drawn

down right now. We're seeing refineries actually having insufficient oil in Asia already

and seeing wildly high refining margins for jet fuel and fuel oil right now, which is indicative

of a situation different from what he's describing. And so that's indicative to me that those

that floating storage that was there is in some places fully depleted and in other places getting

depleted rapidly. There's a narrative that was going on, which I think is helpful in sort of my

call for much higher prices that is worth talking about, I think, for a minute, which is we went into

the year with the IEA and EIA and a bunch of investment banks calling for a superglut. But when

you look at the data, the longer you go, so it's very hard to get good, accurate, day-to-day data and

oil. It's really unfortunate. The guys that provide it, they revise it over and over and over again,

so you can't really rely on these sort of satellite data providers or whatever in my experience.

But over a few months, you start to get clarity on what was happening, let's say two or three months

ago. And so we're starting to get clarity on what was going on at the start of the year. And the

forecast was 4 million barrels a day of oversupply, which is what Bessons were referring to. The EIA

put out something like that. The IEA had that and again, a bunch of investment banks had that.

There wasn't a superglut. We were actually seeing global inventories going into decline. And the

data that Bloomberg, that Goldman, that various others are showing is that inventories coming into

this actually declined from the start of 2026 through the end of February. So again, we were in

decline ahead of this conflict, which is a greater than 4 million barrel a day difference versus

their forecast. So they're still operating on bad data and bad analysis. And it's sort of like

garbage and garbage out where they had a political motivation to show that, to trying to talk down

gas prices and oil prices ahead of this. And they're just using bad data. I think it's very unfortunate.

But it's worth understanding that because the narrative is that and it was just wrong and the

data is getting better and better for November, December, January. And you can see an inflection

where inventories started to fall materially in January. I have a chart on that in my presentation

that I sent you. And it's from Goldman and Bloomberg showed the exact same chart. And it's based

on like eight different data providers. And so it's really noteworthy. You can see the drawdown

in inventories, both in floating storage and in general storage for OECD in January. So I think

it's a really important, it's just a big disconnect in understanding versus reality.

High gas prices at the pump would not be good for US midterms coming up later this year. And

this is why Besson is making a sure instance to the American people that we have a series of

announcements that we're going to be making basically hinting at potentially price control. What

measures can the government take to bring down prices where at least stabilize prices?

Well, they could cut taxes. That's always no one ever talks about that. But you know,

crazy, right? Like 20% of the gas price actually right now higher than 20% of the gas price here in

the US, probably 50% of the gas price up in Canada higher than 50% in Europe is taxes. So when they

complain about this stuff, they can just cut those taxes. The other thing they could do is send checks,

right? Just like send gas cars to everyone, which actually I think maybe one of the things they do.

And that would actually work. And it could actually win them the midterms, even with all this.

And the reality is that their deficit spending is so extreme. Is it better to have your money wasted

on fake daycares in Minnesota? Or is it better to have your money sent back to you in the form

of a gas card so you can get to work? I mean, I think there's a lot of sort of political

preparedness for this to navigate it. You're very familiar with how

oil producers and developers actually function. You know, just give us a sense of how easy it would be,

where difficult it would be to change the rate of production overnight. In other words,

could best send basically tell American oil producers to ramp up production, escalate that dramatically

in the next couple of weeks. Yeah, I mean, they could implement like a war powers act or something.

I think the problem is that the Trump administration has been just like the Biden administration,

they've been extremely hostile to the oil industry. And so trying to force an industry that you've

been essentially trying to put out a business through different ways, you know, each of them have

had sort of their unique approach, but trying to force an industry that you've been hostile towards

to produce more. It just yields an atlas shrugged type reaction. It doesn't. You can't, if you try

to force it, it doesn't really work. If you incentivize it financially, it can work similar to,

again, the question on gas prices, if you think gas prices are too high and your government official

great, lower the taxes, lower the federal taxes, lower the state taxes, drop the regulations,

and voila, you'll have lower gas prices. Similar idea, if you want more oil production, it would be

very hard, right? You could get more oil production. But from what I've seen, there's almost no

additional rigs that have come on this week. Producers are hedging, and they're not adding rigs,

and they're talking about it on their conference calls. They're worried that Trump goes and pulls

the rug on them, and they don't want to risk their shareholders and their investors and their

lenders money just to lose it for some sort of political gain. So I think it'd be very difficult,

but also just mechanically, we're at about 22 million barrels a day of oil and liquids production,

and if we put another 500 rigs back to work, which would be a huge staffing project and huge

capital, but let's say that they stopped beating on the oil industry, and they treated it like the

critical minerals sector where there was a floor price that was set, and there were financial incentives

that were provided by the government. I'm averse to all of this, but hey, if they just stopped

punishing the entire sector, it could help. If they did all of that, it could take six months

to get another, let's say, two million barrels a day, which is not, it's like a tenth of what they

need. So for American audiences watching this, we should be aware of the fact that the U.S.

currently is probably the world's largest oil producer, and the question is, why does this

impact American markets then? Yeah, so it's going to, I mean, it'll be bad for financial markets,

because a lot of the U.S. financial market is just proportionally high-tech and other companies

at high valuations that represent a relatively small portion of the U.S. gross domestic product,

and then energy stocks, energy, which is about 10% of the GDP, was only three and a half percent

of the overall stock market. So there could be a stock market readjustment, which would be very

negative to people's perceptions of their net worth, and then their expectation should be that,

you know, gas prices will probably rise a lot from here. If you haven't already, in the U.S.

and elsewhere, it probably makes sense to go fill up your gas tank, because it's probably going to

be more expensive next week than it is this week. So I think those are sort of the two big things,

and then there is potentially a flow through of inflation from higher gas and diesel prices

to other parts of the economy. I think going back to the question, why would gas prices in North

America be affected if the U.S. is the largest producer in the world, and that the street of

Hormuz is on the other side of the world? Don't we have enough inventory and stock to weather this

storm and do American vehicles, consumers, use gas from locally sourced production versus

OPEC source production? In other words, how much of our gas at the pump actually comes from overseas

versus from U.S. oil and gas producers? I have to check on the specifics on that, but one

example that comes to mind right away is California, where they've been shutting off refineries,

and importing foreign oil, and then now, because they've shut down production so much, now they're

actually importing foreign gasoline and diesel. And also importing, I think they're taking gas

and diesel from Texas over to, I think it was the Bahamas, and then shipping it back to California.

So yes, it's partially because of imports and exports and partially, it's just a global commodity,

and so you could try to control it, but if you tried to set prices, set the maximum prices,

Nixon tried to do that in a similar crisis in the 1970s, and then Carter also, and it just yielded,

you saw gas lines and shortages and so on. So price controls and price fixing are not a solution

to physical shortages. Are we going to see a repeat of the 1973 oil crisis, speaking of

the impetus to which the strategic petroleum reserve was created? I wasn't alive back then,

but we've read about it, and we've seen it, the older audiences may have experienced it first

hand. There were literal lines at every major gas station across the US. There was a shortage of oil,

as Iran shut down, basically put an oil embargo on any countries that supported Israel during

the Yom Kippur War of 1973, and I don't, correct me for wrong, but I don't believe Americans

and Canadians have experienced an oil shortage of that kind of magnitude since the 70s.

So how close are we to that situation? So again, getting back to your prior question to answer

this one, it's not like there's a physical shortage, at least in most of North America,

there are some questions for California, but it's not like there's going to be a physical shortage,

I would expect a price difference. And so the reason that we had gas lines in the 1970s,

especially in the early 70s, because there wasn't actually a physical shortage,

the big supply disruption, actually, for oil was 1979, and the Iranian revolution,

which again is much, I think this is much more similar to the 1979 crisis where you had oil

production collapse in Iran than it was to the 1973 crisis where you had oil flows,

stop going to America, they go other places and then get brought to America.

The gas lines were much more a factor of price controls than they were an attempt at price

controls and price fixing than they were actual physical shortages. And right now,

the US is a net exporter of oil and hydrocarbons, so the US and Canada should not have

gas lines. I would be very worried in Europe, I'd be worried in East Asia, but in the US and

Canada, we should not experience that. And if we do, it'll be a reflection of broken government

policies, it won't be a reflection of there being an actual physical shortage, it'll be because of

bad policy. What happens to the US economy once oil hits $250, or even 220, like you said earlier,

I think you have a hand in the background, by the way, that says 250 WTI. So I don't know if that's

something that most people want to see, but let's suppose it goes there, or at least in that direction.

What happens then? Yeah, so the thought on the hat, so again, if you just look at the all-time

high price for oil on an inflation-adjusted basis, it looks like in 2008, and so my expectation is

that the cyclical high for oil would be in excess of that because that's generally what happens in

cycles, as you end up with a new all-time high price. The reality with these sorts of hats is

prices seem ridiculous until they exceed them by a lot. And so it's sort of like, it's a reference

to the 10,000 Dow hat from way back in the day, which got substantially exceeded. Everyone thought

it was ridiculous until it got blown through. So I actually don't think it's that big of a deal.

Like, when you look at the household percentage of consumption of oil and oil products is actually

quite low. And I think again, it will be very negative for financial markets because there's been

this distortion where energy stocks are such a low percentage relative to their contributing portion

of the GDP. And so as energy stocks make more money, you're going to need them to go up a ton,

and at the same time, you're probably going to need some of the companies that are hurt by higher

energy inputs to fall. And then some discretionary spend may come down and then some speculative

investment activity and high tech and various other spots may come down. But in aggregate,

I actually don't think it should be too negative. I think you'll see a massive drilling boom.

You'll see huge employment related to that. You may see housing booms in various places where

they're positively benefited by the supply chain. Again, there's a shock component to this where

the immediacy of it does have a negative impact on the economy. But then there's the sort of

longer run impact of higher prices. And so I think we will see higher prices. And I think it'll

end up being beneficial. But the shock certainly will be painful. Could we expect the Federal Reserve

to ease on monetary easing, meaning slow the pace of rate cuts, which would impact negatively,

negatively impact financial markets in the sense that investors were expecting a certain number

of cuts. And now they're not getting that. Yeah. And again, all of this is on the in the scenario

that the straight stays closed for a while and so on. If there's some big political change,

then basically all this all would be a very different scenario. But yeah, in this context,

it'll be very interesting to see what the Fed does. It's possible the Fed continues on their

trajectory of rate cuts. And then that we see that we see financial stimulus to try to adjust

for the shock. And I actually don't think that would be the wrong approach. I know people expect

the Fed to react violently to these sorts of changes. And I think historically, violent changes

by the Fed. And I'm gearing off of Milton Friedman who talked about this repeatedly in the 1970s.

And in the 80s about the mistakes in the 1970s, that the Federal Reserve and that monetary policy

should be stable. It should be responsive, but moderately responsive over time. And shouldn't be

panicking in both directions, which leads to catastrophic inflation, unemployment, and unnecessary

government intervention into the economy. And I think he's right. I think when you look at what

actually worked to impact inflation and to impact economic growth, I think the central bank being

panicky, I think really doesn't help. And if anything, I think you're right in the sense that

this would be quite negative as a shock. And that the right response might not be to say,

hey, there's temporary inflation. Let's go kill it. It would be, hey, there's all this pain

from this this energy shock. Let's go make sure there's enough financing available in the economy

so that other businesses that are not energy related are able to maintain financing the people

able to buy houses. And then I actually think you might actually see direct stimulus where we send

$10,000 checks or whenever. And again, there would be an inflation component to that. But also,

it would be similar to the sort of COVID era where you have this shock and this direct stimulus

helps people sort of navigate the shock. I don't know what they'll do, but I wouldn't be surprised

if they did that. Well, Josh, I want to point to the audience a slide from your slide deck here.

And it says, US shale growth is slowing as declining Rick cans and response to lower prices,

where low prices and weakening well product productivity limit incremental supply. Now,

a couple of things here. First of all, if we take the Iran war situation out completely and assume

there was no conflict in the Middle East, at least around the Persian Gulf, can we still

factor in dwindling supply as a baseline scenario going forward, meaning higher prices from lower

shale production? Yeah. So if you look at the chart on the bottom right there, you can see the EIA

forecast pre Iran conflict. This was their forecast that we were going to go into declining oil supply

environment. So these are EIA numbers. Why is shale production declining?

So prices were too low. And so the way you can tell prices are too low is when the

rig count is falling and production goes from growing rapidly to declining. Well, it was boom bust,

right? So you end up with intermittent discoveries, which are motivated. The investment in the

exploration is motivated by high prices. So we've had very little exploration. We've had very

few discoveries, which I show elsewhere. And so when you have low exploration, low discoveries,

you burn through your low price inventory quite quickly. And once you're done with your low price

inventory, you go to your medium price inventory, and then you burn through that quickly. And eventually,

as you address higher and higher price inventory, you need much higher prices for the market to reset.

So this was already happening. And actually, it's very similar to the 1970s in the sense that

everyone blames OPEC for the 1973 oil crisis. OPEC was like the fall guy. Again, it was stupid.

They shouldn't have responded like they did. But that wasn't what drove oil prices so much higher.

It was price controls that had had oil prices too low. And there wasn't enough exploration. And so

you saw more rigs get added during the 70s. And there were years where there were substantially more

rigs running than the year before. But production fell instead of rising or it rose, but much less than

the rig count rose because they had depleted low cost inventory. So we've depleted it. It's taken

a long time to do this. But we've burned through some of our cheapest highest productivity.

And again, it sounds good, right? It's hand-wavy, but we've measured it on a well productivity

per foot. And we've been tracking this. It's been declining in the US for oil and for natural gas

for the last four to five years. It's starting to happen in Canada too. And so, and even some of the

places that people were pointing to as the potential big hope, you know, Guyana has limitations.

Maybe they'll get to a million barrels a day. Maybe a little more. Vacuum Huerta is actually seeing

well productivity issues as well, where some of the best rock may have already been developed. So,

anyway, so it's sort of it's a fundamental story as the backdrop here in addition to this geopolitical

shock. But Josh, now that we have oil at above $80, is that high enough to incentivize higher

output of shale producers? In other words, will markets now, after, ironically, after a war in

the Middle East reach equilibrium again? They should eventually. And I think you're going to see

high enough prices to force demand destruction. That's sort of where you get. When you get these

all-time high prices, you end up destroyed. I mean, oil consumption is very price-insensitive,

but you'll eventually get into that demand destruction pricing. We're not there yet, but we'll get

there for some products in Asia. But yes, we'll see more investment. The problem is that the front

month for oil is high and spiking, but the forward curve is not rising nearly as much. You need the

forward curve to be higher, so producers can lock in price to ensure return. And so we're not quite

there yet. I think we'll get there, but we're not there yet. Now, in the short term, investment

opportunities that you're eyeing right now as a result of recent price action.

Yeah, so my favorite on this overall is US and Canadian land drilling rigs, rig companies,

because they own a lot of them that are underutilized. They've been making money during the

downturn, which is unusual, because there was a lot of consolidation. And so they have the fleets

ready to go. They need higher prices, again, for the producers to call on them. When they get

called on, they'll have higher utilization. They'll have higher day rates. And some of these companies

were already trading at like 20% free cash flow yields, and at a 6th or a 5th or a 7th of a

replacement cost. Some of them are very financially levered too, so there's particular upside from them.

And then some of them, I just be careful, because some of them have a lot of operations in the

Middle East, and it's going to be, it's as yet to be determined what will happen to drilling

activity in the Persian Gulf area. And so maybe there will be more anticipating opening of the

strait and wanting to be able to supply more, or maybe there'll be less, because the fiscal

constraints risk of revolts, risk of unrest, and redeploying of capital to subsidies and welfare

to be able to keep these states solvent and keep them from violent revolution. So we'll see

my preference is just to have exposure to the companies with maximal exposure to North America

and other unaffected areas. So that's my favorite play here right now.

What about the large producers? Exxonmobile, spiked dramatically as well. And

you know, can you give us an insight there? Yeah, I mean, I feel like

what got you here, doesn't necessarily get you there. In the sense that, you know, they say when a

stock is down, you don't necessarily have to make your money back on that same stock.

Just because a stock is up, doesn't mean it will necessarily be the biggest winner.

There are big advantages to the integrators. They have refining operations too,

and they have an ability to maintain some upside exposure. They tend to hedge a lot less.

The problem with Exxon, IC and Chevron is they've been really getting into this oil trading

business. And historically, they go into the oil trading business and they lose billions of

dollars. And my expectation would be that they were using the oil trading business like they did

historically to net effectively hedge their oil production. And so they may have less of an

economic advantage than people are thinking. And they trade at very high valuations. The drilling

rate companies, for example, they're way less well understood, but they trade at much lower valuations.

It's a lot harder for people to put in the money. I mean, Exxon may go up anyway as people dump in

money into the XLEETF. But that doesn't mean that they're fundamentally going to be the winner.

And maybe in a year or two, as this all settles out, you'll have some drilling rig stocks of 10X.

And Exxon may have been up 30% or 50%. How does this all impact the S&P and the NASDAQ, which are,

especially the NASDAQ, but even the S&P 500 is very tech heavy. Our tech companies today,

the big tech companies, the Mag7 and this periphery companies, are they fundamentally

exposed to higher oil prices? In other words, how much are their operations depend on low gas

prices to stay afloat? I don't think it's a question of them being directly exposed as much as

I think a lot of their valuations and sort of the broader tech sector valuations have been driven

by this sort of passive circularity where their stock prices go up on speculation and expectation

of revenue growth. And so we've gotten into sort of a bubble for these tech stocks and

bubbles burst when there's forced reallocation of capital from one sector to from away from the

sort of speculative fervor sector. So it's less than I think that their operations will be

materially impacted. Although they may be secondarily as speculative money has pulled away from

venture back companies and other similar companies, which are been where they've been earning a lot

of their money is the AI stuff and the cloud stuff. It's all a lot of a lot of that's not real

businesses or sort of established fortune 500 companies that are buyers. They are, but a lot of

the incremental purchases and a lot of the growth has been from these newer venture back companies

that are going in consuming a lot of the data center capacity and consuming a lot of the other

services from from these Mag7 and other sort of big tech stocks. And so I think it could be like the

2000s where you saw tech sort of fall as oil rose and also just as the speculative bubble burst.

And then you saw a reallocation away from tech stocks where you didn't see recovery in some

of these big technology companies. They were fantastic. The Microsofts and Cisco's and so on

of the world, but you didn't see a recovery to their you know 1999 or 2000 levels for 15 or 20

years. So I think you could see that. I don't know for sure again. It depends on how long this last

is less that their businesses get destroyed and more just that you know the valuations fall

and some of the incremental sales they were generating from these speculative companies come off.

Josh very good. Thank you. We'll we'll end it here for now and and congratulations on a

series of very good calls that you've made on my show in particular since since we've had you

want a couple months ago. So let's see how this pans out. I mean war is catastrophic and tragic

for everybody involved, but it impacts more than just the people in the Middle East like we talked

about higher or higher oil prices impact all of us outside that region as well. So let's follow up

on that later. Josh, where can we follow your work in the meantime? Yeah. So bisoninterest.com

for my investment firm and I have a newsletter at bisoninsights.info where I share some specific stock

ideas, companies that I have exposure to personally. All right. We'll put the links down below. So

follow Josh there. Thanks again, Josh for coming back in the show. Appreciate it. Thank you.

Thank you for watching. Don't forget to like, subscribe.