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Arvind Sanger

lines on the record: 46
first: 2024-05-17
most recent: 2024-05-17
sittings or episodes: 1
sources: podcast

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“Thank you, Clip. Thank you for the interview. I really enjoyed the conversation. And for investors who want to learn more, they can visit our website at geospherecap.com. We are a hedge fund, so we can only take qualified investors. But on GeerswareCap.com, we do have links to some of the other kind of pieces we've been involved with in terms of podcasts and publications for people who want to look at that. But if they need to and are interested in learning more about Geosphere and investing with Geosphere, they should reach out to IR at GeosphereCap.com or Evan at GeosphereCap.com, but we are not allowed to advertise and we don't advertise. We just, if somebody is interested, they'd still have to be qualified. Thank you.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Any new breakthrough produces energy like this, it'll take a couple of years, but being early on seeing that is going to be important.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Would be a very important element of that surprise. And the other more pie in the sky, but much more fundamental, in my opinion, long term, is something like nuclear fusion, which I talked about earlier. Something like that would be. So I think those would be the two biggest. From a finding copper, there are some technologies that might help us do a better job at finding and refining copper. But I don't see those as breakthrough. Maybe we'll find a lot more than we found recently and we'll be able to meet the challenges, but it's still going to take a while. On oil and gas, I don't see anything, but I didn't see shale. So take my word for what it's worth. I was clueless about shale in 2007, so I may be clueless about the next technology coming along. But when it does hopefully, you know, remember, shale didn't happen on day one. It took from 2010 when we started shale oil drilling till 2014 when we had the O Chucks moment where oil prices fell apart. So it's not like...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“I mean, there's always risk. I mean, I couldn't have answered this question with any intelligent answer back in 2007, eight in terms of shale. I had no idea that was coming. So when I think about it, there are always going to be surprises. And I think the reality is that battery technology is a chemistry problem. It is not Moore's law problem, right? It's more akin to Murphy's law than Moore's law in terms of fixing some of these challenges with the supply chains. But if there is any breakthrough in a new type of sodium battery or molten salt battery, there have been many discussions, sulfur batteries, something that allows for much cheaper storage of power from wind and solar. And that makes them much more competitive with natural gas, with coal, with other sources.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“It's the number one consumer of copper. It's the number one consumer of aluminum. So there's a lot of things in which we have to watch what's going on with China just to see it's not completely blowing up. And then the U.S. recession, US demand, Europe has been in a doldrum for a couple of years. Is that coming back? So the macroeconomic factors. And then on the supply side, we look at all the supply data points on oil, on gas, on uranium, whether the Kazakhs are going to continue to disappoint. So each one has its own little subsector that we watch. So it's not one big data point. But there are some important ones.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“And looking at China, we're trying to see their housing market. It was the mother of all bubbles. That mother of all bubbles has blown up where people own five, six houses, and that was a form of investment. And there's so many empty houses and there's so much oversupply that housing starts have fallen by 30 to 40 percent for three years in a row. Our 2008-2009 looked like a pip squeak compared to what is going on in China right now. That's a major headwind for all metals. China's built a lot of steel capacity for this. They're exporting that steel, but everybody is not putting up tariffs. So they're going to have to shut down that steel capacity because nobody wants to shut down their own steel industry. So, you know, watching China data to see when things stabilize, China is still the second largest economy in the world. It's the second largest consumer of oil. It's the number one consumer of steel, iron ore, seaborne iron ore. It's the number one consumer of coal, even though it self-”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, I think the data points come at us every week, every month, every year, and then with the creator. But, you know, the one interesting data point that's been coming at us recently, in addition to the data centers, is the move away from electric cars to hybrids. It's a very interesting point that even in China, which has been a very fast adopter of electric cars, you're now seeing more hybrid growth than you're seeing what we call BEV battery electric vehicles, pure electric, and Elon Musk was complaining about it, but the reality is that consumers prefer the fuel efficiency of a hybrid, but the range anxiety removal of also of a hybrid, right? So that's why I think that, again, from oil demands for those who were writing the epitaph of oil demand, that's a very interesting data point that is coming to fore. The other interesting data point is China has been a major headwind on metals demand.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Because the world is not doing that luckily, but that one will be golden because it's the only new one coming on in the next few years and they're going to, I think, be very well positioned. But the reality is that this is a key commodity without which steel, you make steel two major ways. You make steel in an electric arc furnace where you use electric arc with cheaper electricity and use scrap steel. And we have a lot of scrap steel because we are developed economy for a long time. We have a lot of scrap. In a developing economy where you have small infrastructure build and you're building out much more, you don't have enough scrap steel to be able to provide enough steel for your growth. So you go for the blast furnace route. And that's what we are seeing in India, Southeast Asia, and probably in the future in Africa. So that's why I like Metco.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Highest quality, if you might call it that calorific value coal. And that is found in rare places. It's found in parts of the US, some of the coal mines. It's found in Australia. It's found in Mongolia. And very few other places do you find smatterings of that high quality coal. And the largest producer of met coal in the world, PHP, has been running down its production of western metallurgical coal, the second highest produced, largest producer tech out of Canada is selling its met coal mine to it's getting out to get more green. It's selling its met coal mines to Clencore. And the third large Western producer, Anglo-American, is also running down its met coal mines. So yes, Mongolia has grown its met coal production, but the US and Australia, the rest of it is not growing. So there is one new coal mine coming on in Alabama, which I visited a few weeks ago and was very interested to see that.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“So, you know, coal comes when you drink coal from the ground. You don't know before you take what type of coal you'll get. So you have the calorifa value and the ash content and the sulfur content of all different coals from different coal mines differ. And the lowest grade coal is used in power plants. And you have the very low grade coal. Then you have high ash content coal that comes from Indonesia, India, other places. That is also used for power generation. And then you have the highest grade coal, which is called metallurgical or coking coal. And that is put in a coke furnace to produce coke. And that coke is then put in a blast furnace along with iron ore. And that coke provides the heat and the sealing properties and to be able to take that iron ore and melt it and produce steel slag. So that metallurgical coal is the highest.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Don't go down the nuclear path or the offshore drilling suddenly dries up. These are areas that I find great opportunities. But again, I'm not putting my eggs on. India's not going to suddenly say, oh, you know, let's go back to living in huts. We don't need that infrastructure. That's not going to happen. Nuclear, you do have a risk. In the rest of it, you don't have that risk.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“An area that I love for the fact that there is no supply growth in uranium, I like the fact that it's going to take four, five, six years to develop new uranium mines if the demand is there. So, you know, again, we talked about this at the beginning about cyclical industries. I want to understand what the demand is doing and how quickly can supply screw it up. And when I see sectors where supply can't screw it up and metallurgical coal is an area where India is going to need more steel, Southeast Asia is going to need more steel. And we can't do our green stuff without steel. And most of these developing markets don't have a large amount of scrap steel to run electric arc furnaces like we can. So they have to use iron ore and metcoal. And yet coal is a four-letter word. Nobody's investing. And so we think of metallurgical coal as another area. That's interesting. So these are some of the areas where I see supply either not happening or going to take a long time to happen. And demand has a good trajectory where I don't see how we suddenly stop using steel or we...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'm not putting all my eggs in one basket. I love uranium, but I have a portion there. I love offshore-related companies. So, you know, everything from a supply boat company to offshore drillers to one company that does kind of offshore construction support services, equipment and services. I like the idea that this is a sector where if there's majors that are spending money, that's where most of the opportunities that they're seeing for meaningful difference. And there is no new supply coming on. I have high conviction that the supply side is structurally constrained because nobody's going to build new assets. So I love areas where I can stop worrying about supply and cyclical industries. You almost never get that. Here I can almost stop worrying about supply and I just have to worry about the demand. And the demand, as long as it's even moderately growing, things are going to be in great shape. And so that's.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“That produces 40% of the world's uranium that comes from Kazakhstan is kind of, you know, there's a lot of political risk involved with that. There are other smaller development companies in Canada and US. And so we look at a basket of all of these, and these have all benefited from this in addition to Sprott. And so I'm not recommending any one name because these are all small, illiquid names, but I'm just pointing out that in uranium other than chemical, which is a large cap liquid company, you have to take deep to understand what are the other options. And none of those options are particularly large or liquid, but each one has some characteristics of minds that are under development. Or most of them are development stories not currently producing because a big two producers right now are chemical and Kazarampra and there are not many other public options available.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“I think that investors are getting exposure through either, like you said, Sprague, but Sprap used to trade parity or slightly above, now it trades at 5 to 10, 11% premium. There's another one, yellow cake listed in London, which trades out at 10 to 15% premium. So those have kind of lost their luster a little bit. And what people are now finding is more interest in buying some of the miners, especially some of the development miners. So one of the ones in Paladin in Australia has a mine in Namibia that had been shut down for seven or eight years. The company had gone through bankruptcy. It was producing earlier seven, eight years ago. And now it's restarting and it's just restarted and they just put out a release that they've started to first production has just gone through the process through the mill. And that's been a great performer, but there are other companies, Chemical is a big one in Canada that produces uranium because Adam Prom, which is the one that...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“And the Russians are now in charge, and so mine is no longer supplying. It's probably going to be redirected to supply to China, wherever, it's going to create challenges for the West. So there are challenges around the world in nuclear supply, in uranium supply. We want green energy, but we have to find more friendly sources, and that's a big challenge.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Process supply. And I think that the big challenge for everybody is how do we wean ourselves off the Russian supply? And it's a dirty little secret that Washington doesn't want to touch it with a barge pole, but there are moves afoot now to give some time till 28 for Western development of processing capability and more mind capability to reduce, find routes from Kazakhstan via a different route than through Russia. There are challenges, but we're trying to, I think the government or the politicians are trying to give time to adapt that. But that remains a risk. I mean, I'll give you one example. 5% of world's uranium supply comes from a tiny little country in West Africa called Niger, N-I-G-E-Riger, as is pronounced, and they just kicked out the French. They're telling the US to remove its base, and the Russians are taking over.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think there's a lot of political challenges. 40% of the world's uranium comes from Kazakhstan. Much of that transits through Russia. Russia processes about 25 after you produce the uranium, you take it to a processing facility where it's processed so that it can be then converted into a material that can be then used to build the rods that go into nuclear reactors. So there are multiple stages. About 25% of the West's processed uranium is in Russia. And so we're trying to reduce our reliance on Russian oil. Russian gas, Russian, the metals we just came out with that roll a couple of weeks ago that they can't supply their metals into Gomex or into LME. And so the one remaining area where Russia is still supplying the West is a significant portion of our uranium, you know.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Of course, there's going to be all this old solar modules to dispose of, all these old wind turbines to dispose of. There is no, we just stand in the sun and the energy comes to us. There is no pure green. So each one has its own side effects, if you will. And nuclear has its own, but I think those are very manageable and nuclear remains a green energy source. And I believe with these small modular reactors, we have a real room for it. The holy grail, to be clear, people talk about it and I've done some work looking at it is nuclear fusion. Nuclear fusion, there's no waste and it's perennial energy, but people keep talking about nuclear fusion as yet we haven't yet solved the technical problems. But if you ever got it, which could be by 2035, 2040, then all...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“The first thing I should say is if we are interested in green energy, the lowest generation of CO2 per unit of power produced, lower than wind, lower than solar, is nuclear. And yes, we have a nuclear waste that we have to deal with, but the nuclear waste is a small amount. I mean, it's not that large, but that's two big concerns about nuclear. One is the waste, what will we do with it? And the second is the safety if you have a meltdown. So these SMRs are actually there's technologies where it would make them safe in terms of much safer in terms of not having the meltdown kind of risk. And the nuclear waste is something that we'll have to come up with a solution, but bearing it deep underground or putting it into space or in the bottom of an ocean, there are many solutions, but there is no Pareto efficient frontier where we can go to green technologies and there's going to be all these batteries to dispose of after these electric cars have run.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“COP28 last December, US, Europe, and Japan announced that they're going to triple their nuclear capacity by 2040 to meet the green energy targets. Nobody talked about where's uranium going to come from, so it's going to require a lot of exploration for uranium. So, you know, these are things that we look at and we look at all the energy sources, whether it's thermal coal or it's metallurgical coal for making steel, which is needed for energy transition, or it's copper without which many of these transition technologies don't happen, or it is going to be anything related to nuclear. And I think that all of those great opportunities, and again, we think of energy as a continuum that doesn't stop just at oil and gas. And that's where I think a lot of people just limit themselves to that. We think of this energy transition as having all these interconnectedness, and therefore that creates opportunities.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“That people have estimated for energy transition over the next 20 years is more copper than we found in human history. And yet if you look at copper grades, they are falling. And then if we want a green baseload power source, the only green baseload power source is nuclear. And people are talking about building small modular reactors, which will be quicker, cheaper. Initial ones will take six, seven years. But once we get them building, then we can build them in factories, bring them on site, and put them together much quicker. And SMRs is not a revolutionary new technology. There are hundreds of small botcher reactors on nuclear submarines, on some aircraft carriers that already exist. Those are small modular reactors, and they've never had a nuclear meltdown in a submarine or a aircraft carrier. So, you know, using that technology. So again, that'll take a while, but nuclear, China is building out a big way, India in a slightly smaller way, but I think the West is starting to recognize that, in fact, that”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, so I have a chart that I use, which is borrowed from a McKinsey report, which talks about which metals are needed across the entire energy transition. And if you start with wind towers and you look at solar and you look at hydrogen plants and you look at biofuels and you look at all of the number one metals needed across all of them is steel. So steel is an intermediate material for steel. We need metallurgical coal, which again is a four-letter word, but India, if it needs more energy, that's going to require more metallurgical coal and there's not enough drilling happening. I mean, enough exploration happening for metallurgical coal, but the second most important metal, which is needed in everything electrification, if you need to carry electricity from point A to point B in your car, inside from a wind project, or from a solar panels requires a lot of copper or batteries of any sort, copper. And again, the amount of copper...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. What we've been looking at in India is that steel demand is starting to grow at double digits, so the infrastructure buildout is happening. If you look at what happened in China 20 years ago, beginning of the 2000s, you start to see steel demand is growing at double digits, cement demand is growing at high single digits. And along with that, energy”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Then energy demand is going to be one of the main constraints. I think more and more people are recognizing that energy demand could be one of the biggest constraints. So yes, let me add that NVIDIA and others are trying to improve chip efficiency for power consumption. About 40% of our data center's demand goes for cooling air conditioners. They're trying to come up with new ways to cool and whatever. These estimates that I just told you of IEAs are assuming efficiencies take place. So it's a constant battle. The actual demand is much higher, but with efficiencies, the energy demand hopefully only grows by 25% a year and not more than that.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Demand was growing at 1.5 to 2%. And suddenly we have these new sources which are driving three and a half percent. That may seem night block much, but at the margin it's a lot. And so I think that data centers and our insatiable need for everything digital, we want virtual headsets, we want AI, we want general AI, a Google search versus going to generative AI chat GPT to do the same search. Google search is one-nine to one tenth as much data intensive compute power intensive as using and now today a few of us have discovered generative AI and we do it without thinking and more people are going to adopt it and more users are going to come up and it's just going to, so far the demand estimates that people have made have proved to be too low. Let's see if these demand estimates prove to be too high. I doubt it. I think there's a lot coming in AI. And if all the dreams come to be true.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I mean, today data centers plus crypto mining, which is, you know, I guess you could call it kind of a data center. It's all computers in a location doing mining for cryptocurrencies. If you take those combined, I think they're about 2% of world electricity demand today. There are IEA International Energy Agency and others have estimated that'll double to 4% of world's energy demand by 2026 and again doubled from there by 2030 to 8% of world's electricity demand. So it's quadrupling the rest of the electricity demand is not growing naive. On top of that, throw electrification of cars, it really does put an unprecedented demand for electricity. Electricity demand historically around the world. You know, in 2019, the International Agency estimated that energy demand with electrification was going to grow at 1.9%. If you look back the prior decade, global electricity,”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Taking place that, oh, I found a new Permian, I found a new, whatever. So that's why I believe that between the not wanting to invest in new long-term projects and shield running out of massive new fines, we are in a supply constrained cycle. And unless something comes along that shocks us meaningfully, I think this cycle is going to be one where demand continues to grow slowly and supply remains constrained for both ESG and in the case of shale kind of geological factors if I may call it that.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Saying I have a 10 year or 12 year or 15 year inventory remaining at my current pace of my life, my current fields. And it's not like I have more to find. And if I keep drilling these acres, I'll run out of drilling in 12, 15 years. Once a company gets below 10 years of remaining inventory, its multiple goes down. So I can increase my cash flow, but I can reduce more. I will drill my remaining acreage faster, but then I'll have less number of years of drilling inventory left, which means my multiple goes up for higher cash flow short term, but my multiple comes down for shorter kind of reserve life. So night ride running into this problem that shale is running out of new fields to find. I can keep drilling on my existing acreage. I've got thousands of acres. I can keep drilling. But beyond that, there is no new discovery.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I don't believe that this cycle is going to see the same supplier response that prior cycles saw. I gave you the example of offshore rigs. We've seen it even in a much lower cost of barrier to entry offshore supply boats, which is a very niche market. But nobody wants to invest in a new 20-year asset. So on the oil supply side, the easiest place to invest with a quick payback was shale. And that would still be happening. Yes, there have been discipline for a while. But if they were to break discipline right now, here's the problem that they're running into. No tree ever grows to the sky, and neither does any oil-producing region, right? So we've had the West Texas where some of the earliest oil exploration in the U.S. happened. We've been through two major cycles. This is a third major cycle. And the shale tree has grown much further than any of us foresaw five, six, seven, eight, ten years ago. It has gone much further. But what we are now seeing is that companies are”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Like you mentioned, they have the much larger install China's economy is not growing as fast. China is probably growing demand for energy at 2-3% a year. So that's definitely turned the corner. It's not the engine anymore. India is more important going forward. Southeast Asia, Middle East, Africa are more important. But from a supply standpoint, suddenly turn it on its head. In the 2000s, China was our demand source and everybody was looking where the supply was going to come from. If you go to green energy, China is a supply source. Are we ready for that? Do we want that? And I think that's part of the energy transition part that is also becoming very important.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“China, Iran may be one block, and the Western world, Japan, Australia, Europe, US are a raid on either side. And so everybody's thinking about the strategic location of my energy resources. And China has taken an early lead such that today 70% plus of the world solar modules come from China. Over 70% of the lithium processing that is required for electric cars. So China sells more than half the world's electric cars, but it also sells us a lot of the materials to make the batteries, the lithium and other items. And so it has a chokehold, if you will, on a lot of the green technologies. So one of the big challenges today is do we want to go from where the US and Europe, US certainly is surplus conventional fossil fuel energy. U.S. is deficient in buying batteries from China. Europe is getting flooded with electric cars from China because they have the cheapest electric cars in the world.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“China was the biggest driver of energy incremental demand growth in the 2000s the entire decade from 2000 to 2020. If I looked at it, China was probably about 40% of world oil demand growth. I don't know if it was all source of energy. It may have been close to that for all sources of energy. China is doing a very rapid buildout of nuclear capacity. They're doing a much faster buildout of, as you mentioned, electrification of cars. Because if China has a weak point strategically, it's that they are deficient in oil and gas and they get oil through the Middle East straight of Hormuz, which if there's ever a conflict for the US, it's very easy for us to choke off their supply. Natural gas comes from Australia, from Middle East, from US. And again, there are ways to control that. So they're trying to, coal, they have surplus resources off. So there's a new element that's entered, which we don't talk about, which is the strategic dynamic going on right now in the world where Russia...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“We're trying to change what has taken a century to develop, and we're imagining we can do it in five years. And I say that's a pipe dream. So sensible, it's going to require a lot of things that have to be put in place. And I think the one thing I would say is we need to think about it patiently and recognize that it's a very complex energy system that has been built over decades. And we can't just put government incentives and suddenly everything will get replaced.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“And we're trying for new battery technology, solid state, and others. It's not going to be the same battery that you use in an electric car that would be used for because electric cars need quick in and out. These ones need slower, in and out from a power storage standpoint for power generation. But the other thing we don't talk about is that if we move to electrification from distributed energy, right, you fill up your car at a gas station. If you move to distributor to centralized energy coming from the grid, you need to upgrade the grid significantly because you're going to have all these nodes of people who are plugging into the data centers are already causing problems. And now if I have a bunch of Teslas and other electric cars going to charge, the grid is going to not be able to handle the load. And so we're going to need to upgrade the electric grid. We're going to need to invest in more transmission. We're going to need to invest in more local substations. So it's a complicated.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Oil demand growth, and it's mainly transportation and it's plastics and everything associated with that, that's going to grow for a long time. Natural gas is the natural transition fuel from coal. And we are the Saudi Arabia of natural gas, unfortunately, right now the government, the Biden administration has banned approval of new projects for natural gas exports, LNG exports, but Qatar and others are developing it. And if I'm a poor country in Asia or in Africa, If I want to reduce my dependence on coal, I need cheap natural gas. And so one of the best ways we can help is do that, is to encourage more natural gas usage because it's much less CO2 producing than coal is. So I think that within the fossil fuels, there's a transition. And then the question is, wind and solar, how do we get battery technology so that we can use them on the clock and they are price competitive right now?”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, look, fossil fuels are the cheapest source of baseload power, which is power that you can turn on 24 by 7 without having to rely on any external weather-related factors. Nuclear is also part of baseload, and so is hydro, but hydro rain doesn't fall the same every year. Nuclear takes a long time to build nuclear power plants. So coal and natural gas as energy sources and oil is more for transportation, although it is used in diesel gen sets as backups even for data centers. But those are the demand for even electric cars. Today, China, 25% of the new cars sold in China electric cars. And yet, China's oil consumption is still growing at 3% per year. In the US, we have 5%, 6% cars, sold electric cars. Our oil demand is still growing. So the idea that oil demand is going to end anytime soon.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“To do all this data centers and generative AI. So then the sensible energy transition is how do we think about minimizing the effect of all the energy usage? Do we need to think about carbon capture? Do we need to think about other ways to manage? Because just banishing investment in fossil fuels is to me makes no sense because all it does is makes the poorest gravitate towards politicians who will remove this restriction on them getting cheap energy.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Fraction of what we use in the developed world. And right now, the biggest driver of demand in the Western world, we're not reducing our energy consumption. We want them to use green energy, but the biggest driver of demand right now in the world for energy demand incrementally is going to be data centers or AI and data centers for all digital, but digital centers for AI, generative AI, that's going to double, triple quadruple demand between now and the end of the decade from these data centers. And plus, we have crypto mining. These are all ritual indulgences, if I may call it that. And so a sensible energy transition has to recognize that we are not able to curtail our energy usage. And there is no way that data centers are only working when the wind blows or the sunshines, right? So they're going to require 24 by 7 energy, which I jokingly say is the surest way to make fossil fuels great again is to”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Me, a sensible energy transition looks at all energy sources and tries to figure out what is realistic, how can we plan for that? And let me talk about the dumb energy transition to contrast with the sensible energy transition. The dumb energy transition is that if we stop investing in fossil fuels, we will save the environment. The reality is by stopping investing in fossil fuels, you're not impacting demand. You're impacting supply. Frankly, that is the surest way to guarantee higher prices and the people who can least afford that high price, the poorest are the ones that are going to gravitate towards policies and politicians who will then remove these restrictions and get that the cheap energy that they want. And so therefore, I think that the sensible energy transition is recognizing that there are billions of people around the world who have very limited energy usage.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Very green from a CO2 standpoint, nuclear and coal, and both are going to have challenges. One on the supply side while the demand remains stable, supply is shrinking, and the other is going to take a long time to turn supply on.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Makes the cycles pretty extended in terms of the energy business. And on mining is not that different. What made energy cycles shorter and we had very many cycles in the 2010s. A four letter word. It's terrible according to every CO2 output person. But the reality is the emerging market, 65% of the power generation or more of India and China comes from coal and other poorer countries in Africa, South Asia, Southeast Asia. And that coal demand still remains the cheapest form of energy and nobody's investing in new coal capacity except maybe the National Oil Company in India and maybe the Chinese. And so therefore that's going to be a tight supply market, even if we want it to go away. But the reality is cheap energy for the poorest people in the world is still something that they aspire to and therefore that's going to remain. And then there's uranium and we want green energy and uranium and nuclear as a new green source. And again, there's a long cycle for investing in that. So energy is very often narrowly looked at as oil and gas, but there are other sources of energy, one of which is terrible from a CO2 standpoint. And one of which is...”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I would say that what makes cyclical industry cyclical is that both supply and demand tend to have some cyclical aspects. But I think demand cyclicality is more economically not very different than the rest of the economy. Supply is what really makes the cyclicality long-lasting or deep. And it is a question of how long it takes for supply to respond. And typically what happens in most cyclical industries is that demand is going up. Everybody gets excited. Supply comes on and supply comes on and supply kind of peaks just at the time when demand is starting to come off because everybody counting out the demand story growing to the sky. And then you get a double whammy of falling demand or not much rising demand and all this oversupply which takes a long time to work off. So the cyclicality on the demand is more modest. The cyclicality on the supply takes a longer time to come on and takes a lot longer time to come off. So that's”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Quite as go as the China bull market era, but it was still very solid. But what changed is, certainly on the energy side, is shale oil. And shale oil created too much supply with no capital discipline. And China itself also, because it was a much more debt-fueled rally, wasn't quite as materials heavy and the mining companies overinvested. During the 2010s, you had negative returns if you invested in mining stocks or if you invested in energy stocks. Unlike the 2000s, 2000s, you had no returns in Nasdaq from 2000 to 2008 and you had great returns in energy and metals and mining. And then you had the second cycle where it was the exact opposite. You had great returns in Nasdaq and S&P was reasonably good. And you had negative returns in energy and metal to mining. So those were two major cycles that I saw as an investor. Every cycle is different, but there are echoes of previous cycles in every cycle. And this cycle that we see emerging is clearly the dominant theme is.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Got good for a while, and then they rolled over. And then what really I was lucky in my timing, what really happened in the 2000s is the emergence of China. And at the emergence of China happened at the same time as we started worrying about peak oil. So what you had is a confluence of very strong demand growth from emerging markets led by China, which was kind of the first major cycle that we had since the 70s where you had a sustained cycle for several years. At the same time, we were worrying about running out of energy. And I got into metals investing kind of a couple of years after starting an energy investment portfolio. And there were similar drivers, China emerging markets, where the drivers of this boom. So that was a great cycle that unfortunately ended more or less with the global financial crisis in 2008. Then the decade of the 2010s hit. And in the decade of the 2010s, what you had is a cycle that, you know, after the global financial crisis, demand recovered. Demand wasn't.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT
“Well, I could go back a long time, but my career spans over 30 years of analyzing and then investing for the last 22 years or so, investing in the energy space. So energy and I guess mining, but energy is a broader longer time horizon. And I would say that energy, when I got into the business in the 86, 87 time period, oil had crashed to $10 a barrel. There was too much supply. And for most of my career, the energy companies responded have money, will spend. So it was like money in, money out. How fast can we grow? And it was always trying to fight an uphill battle in many parts of. Certainly in America, but in many parts of the world going out for exploration risk and everything else. And then when I got to the investment side in, you know, so there were many cycles from when I got into the business. I missed the entire 70s I wasn't in the business. I was too young. But in the late 80s and 90s, there were mini-cycles.”
2024-05-17 · We Study Billionaires · TIP631: The Bullish Energy Cycle w/ Arvind Sanger · IDENTIFIED FROM THE TRANSCRIPT