Odd Lots - Daniel Yergin on What Happened to the Energy Transition

Episode Date: October 24, 2025

A few years ago, governments and corporations were brimming with optimism about the prospect of getting to net-zero in the efforts against climate change. Today, you hear a lot less about that. And while there's renewables getting added to the mix all the time, one energy source that's really booming is natural gas. And coal is booming too. So what happened? And is there any prospect of the world getting back on track? On this episode, we speak with acclaimed energy historian Daniel Yergin, current Vice Chairman of S&P Global. He's also, of course, the author of the Pulitzer Prize-winning book The Prize, as well as, more recently, The New Map. We talk about all of the factors that changed the energy picture in recent years and the energy priorities of nations right now. Read more:Russia’s Crude Shipments Climb Close to a Post-Invasion HighTrump to Buy 1 Million Barrels to Help Refill Oil Reserve Only http://Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Bloomberg Audio Studios, Podcasts Radio News. Hello and welcome to another episode of the Odd Thoughts podcast. I'm Tracy Allaway. And I'm Joe Wazenthal. Joe, you know what's weird. Tell me. Tell me what's weird. There's a lot that's weird, actually.

But we seem to be living in this extremely high-tech world where you can get a chat bot to write you an essay or create a video. I don't do that, by the way. Sure. Sure, sure, Joe. You could buy a robot dog to play. to play with, all that stuff. And yet, we still seem to be struggling somewhat to provide cheap and affordable and abundant energy to power all these things. And in fact, because all this new technology guzzles so much energy, data centers use so much power,

it feels like energy is becoming even more strategically important in many ways. It definitely feels like we're in an age of sort of people remembering the deep constraints that energy, imposes, whether it's data center, all kinds of things. Energy is not a solved problem by any strides. Although I would say that in my limited sort of reading of the history of energy, it's never a solved problem. I know. At the moment we find we're in a period of energy surplus, we quickly find something to do with that energy. And once again, we are in a period of constraint. But it does feel like we're in some sort of period of constraint right now. When Keynes was doing his whole abundance theory, did he mention energy at all? What did he say? Well, I'm just going to assume

that Keynes promised us all abundant energy as well as everything else. And it's not here. So we're all upset. Okay. So even though we've had all these breakthroughs in alternative energy technologies, you know, things like solar and wind, we're still using more coal, more oil than ever. And in fact, there's sort of some old school energy behaviors going on with China stockpiling massive amounts of oil. Yeah. As you said, coal is booming. China stockpiling oil. Electricity prices. in the U.S. on the rise, maybe perhaps due to some of this AI data center demand, it feels like I would say pre-COVID at least, I don't know if people got a little bit naive or optimistic or Goldilocks, but there was this view is, it's only a matter of time before

energy is solved because we're going to have all this wind and solar, it's going to be cheap, it's going to be clean. We see all these cost curves coming down with like batteries and wind and so forth. It's only a matter of time before we don't need the dirty stuff. And right now it doesn't feel like we're anywhere close to that. And I'm sort of curious what happened. Yeah. Well, everyone talked about the energy transition, but so far it's not really a transition.

It's like a compliment to existing sources. Anyway, we could keep talking, but why not go to our guest who is truly, truly the perfect guest. We're going to be speaking with someone I wanted to speak with on the podcast for a very long time. Dan Yergan, he is, of course, the author of the Pulitzer Prize winning the prize, the epic quest for oil, money, and power. He's also vice chairman of S&P Global. and he also has a new book out called The New Map, Energy Climate, and the Clash of Nations. So a lot to talk about. Dan, thank you so much for coming on all thoughts. It's great to be on with you all.

So does it feel like energy insecurity is still with us in many forms? Yes, it goes through cycles. You know, you mentioned COVID. I think during COVID, demand went down, prices went down, and people kind of forgot about energy. And there was a sense in 2021, the International Energy Agency did this. scenario about getting to basically a renewable world by 2050. But now we're in 2025, going into 26. Energy demand is going up, wind and solar, but also coal, oil, and natural gas. And this share of hydrocarbons and energy has gone from about 81% to about 80.5% roughly. So it's going to take a while to get down to zero. Take a while. You mentioned energy transition. I think it's time to do some rethinking about the energy transition.

Well, good. That's what I was going to ask you about. So when people talk about the energy transition, this fantasy or, you know, maybe fantasy is a little bit scenario. Scenario. Scenario. Of, okay, we're going to get to net zero, et cetera. Is this just a matter of the timeline has been pushed back or is there a fundamental flaw with the premise? I think certainly the timeline has been pushed back. The notion by 2050, the closer we get to 2050, the farther way it seems the goal of net zero by 2050's error. And what Tracy said before, energy transition has been energy addition. And what happened? What happened is I think the reality came back in that we live in a world that rests on an energy foundation and that you just can't overnight take a $15 trillion world economy and change it from one thing to a another. Are there any scenarios you could see where, I guess, new technologies like AI, the data

centers that are getting built, encourage new players to come in and provide capital for energy? So, you know, Google building their own gas plants or whatever. Well, exactly. What we have now is the tech world meeting the energy world. And these two worlds have very different cultures. Tech world, things go happen pretty fast. Energy, you know, and your software engineer come out with new software in the energy world. an engineer takes seven years to build something. And these cultures have come together. And I think one of the reasons that we've seen kind of this,

call it the easy or simple notions that a transition pushed out is what you've mentioned, it's going to take a lot more electricity. And some of that will come from wind and solar. But what's come back into the picture is natural gas, is an electric generation. If you wanted to go out and buy a gas turbine today, you could get it delivered in 2030. If we go back to 2022, I was talking to one of the big companies in the feet. And the guy said that year, all over the world, exactly one gas turbine was sold. And it wasn't one of ours.

So he said our market share that year was zero. Now they're all sold out. Is there an increase in capacity? We talked about this recently, and this has come up, the shortage of gas turbines. Is the scarcity being addressed? Or is there still this phenomenon where no one really wants to do the initial upfront investment in a, say, factory that makes the gas turbines? because there's still uncertainty about, say, 2032 or 233.

When I talk to the companies, those who are around in about two, two and a half decades ago, remember there was a huge rush turbines and then it all collapsed. And they're worried about that. That was coincidentally or incidentally, that boom was also at a time of massive tech investment at the late 90s. It was another period of the sort of marriage of tech and energy at the time. Absolutely, that's right. And so I think they are expanding capacity.

but they're not doing it helter-skelter. Also, like so many other companies, there's a shortage of the talent that you need. I mean, these are not simple things to build. One of the reasons we wanted to talk to you is because you do such a fantastic job of connecting the oil space with capital markets. And I have always maintained that oil

is very much a capital market story. Can you talk about the difference between how capital is sourced for something like oil or gas versus clean energy and whether attitudes towards the two have changed at all? Well, I mean, it was quite different with clean energy, and a lot of it, you know, had tax credits and ability to sell tax credits and things like that. And a lot of the

oil and gas development may be funded by financial institutions, but a lot of it is funded by the companies themselves. What is it, like, we see these lines on charts that show the collapsing price of solar production or the collapsing price of wind production or the improvements in battery technology. All true. All true. And yet, there is still so much public money that goes into these areas, and there's so many tax credits and subsidies, et cetera, to kind of accelerate them along. Why is it that you have these lines going down, and yet they don't undercut traditional sources in the way that maybe the tech mindset would expect? Well, first remember, the renewables, wind and solar really were not competing

with oil until you started to have electric cars coming onto the scene. But, you know, it was interesting. I was talking to a company that's developing a big battery project in Europe. I probably shouldn't say which country. And they're very excited about it. It's really big. They said, oh, by the way, they couldn't do it on their own. They had to go to the government and get incentive, subsidies, whatever, or a partnership with it. So the costs are still up there.

And I think we're seeing a testing now for wind and solar. Everybody's rushing right now to get steel into the ground so they can get the tax credits, which will expire in not very long time. So the testing will be, how competitive will they be? And I think we'll still see wind and solar, and particularly solar, being put in, but it won't be enough. And what they concern right now is about the reliability of the electric power system. And you see prognostications about this area that stretches from Illinois, you know, as far as New Jersey, that by the end of this decade, which is not so far away now, will be looking at very tight markets with really great pressure on it. And I'll tell you the kind of regulators, the people looking at it are starting to get pretty alarmed.

And that's why you see a lot of discussion and focus on, can we get permitting reform so you can actually get something built? Can you just, what is the source of alarm? Is it about the generation of electrons or is it about the transmission and with the grid capacity to balance and take in all these things? Well, it's both. And certainly the transmission is a very key part of it. But what we have been doing is been retiring coal plants. We thought, you know, we weren't going to have any more gas in electric generation, but that's coming back. And now you see a kind of slowdown and closing these coal plants. And also we see an election coming up in New Jersey where electricity prices are an issue.

And suddenly this whole issue, I was looking at our numbers. And electricity prices have been going up at twice the rate of inflation in the United States. Why can't clean energy seem to exist without subsidies, given that electricity prices are going up, and we all agree that energy is strategically important? Why can't it, you know, fund itself? Well, it has to, you know, ultimately it has to be that. But, you know, obviously there's a lot of debate about what happened in this big, beautiful bill where they, you know, basically are cutting back and then eliminating the subsidies. And at least this administration says, well, wait, these were put in 32. years ago for infinite industries and now the prices come down, why are we doing it? So I think these

industries are going to have to stand on their own right now. Would they be economical in their current form? I think, you know, it depends on the circumstances and where they're built and whether they have access to transmission. Because, of course, you can have solar, but then you need, you need to connected to the grid and grid connection becomes a very important issue. That's the expensive thing. That's why with my solar panels on my farm, I mooch off of the entire. Connecticut system grid. How is your solar panels working? They're fantastic. Our energy bills are like maybe $20 a month. Sometimes we get paid. So you put electricity back in the system. You didn't get any tax credits. Well, the house had it when we bought it. But I'm just very happy with the low

electricity bill and not having to shoulder the costs of the grid. Yeah, and somebody else will take care of it. That's right. Somebody else's problem. I want to talk a little bit more about the return of natural gas. or LNG, what do you think the prospects are for the U.S. as an LNG export powerhouse? Can it continue to grow at the pace that has been growing, especially given some of the bottlenecks and constraints? Yeah, well, obviously, you need pipes to get gas to the Gulf Coast or to hidewater in order to ship the gas, and that ability to build pipes is really difficult or has been difficult. It's going to get easier now, unless you're in Texas where you could build them anyway.

But it's an amazing story. A decade ago, the U.S. was not exporting any LNG. In fact, and now it's the world's largest exporter of LNG. And our own numbers say that the next half decade or so, global capacity will increase by over 50%. Half of that increase will be in the United States. You know, and people don't think about it this way. But we're not for U.S. LNG, Putin might well have succeeded

using the energy weapon, cutting off gas to Europe, and shattered the coalition supporting Ukraine. And what prevented him from doing that was USLNG, which he hadn't counted on. In the book, you mentioned the new map. I have this story about where I had this interaction with Putin in 2013. And it was at the St. Petersburg International Economic Forum, which was his version of Davos, was before he annexed Crimea. and he was up there on the platform with Chancellor Merkel, and you could see the ice between them, and they said to me, oh, you get to ask the first question.

So I thought I was just asking the question. Yeah, exactly, no pressure. The normal question about, you know, what are you going to do? Your budget is over-dependent on oil and gas. By accident, I mentioned shale, and he started shouting out me in front of all these people and said, shale is barbaric, it's terrible, it'll poison people. He went on and on like that. And I can tell you, it was very unpleasant being shouted out by Vladimir Putin.

in front of 3,000 people. But it's a good story. Yeah, but it's a good story. You know, exactly. At the time, I didn't think it was a good story. At the time, I wanted to get out of there. But afterwards, I thought he was actually pre-sient. He saw that shale gas in the form of then LNG would augment U.S. influence in the world,

which it certainly has. And it would compete with his jewel, his crown jewel, gas problem, which has also happened because now Russian gas is being pushed out of Europe. So I think, you know, people don't connect, speak of connecting the dots that the shale gas revolution there tied into the ability to support Ukraine in this war that's now gone on almost as long as World War I. It sounds like you're saying Aubrey McClendon was a great hero for the West and democracy and all of this stuff. Well, I'd say a great entrepreneur. Okay. When it comes to old school energy sources, whether it's oil or gas.

I like your term old school. Is there any low-hanging fruit left in terms of making the technologies more efficient? I remember maybe like almost 10 years ago now, there was a big standardization push and all these, you know, drills that used to have custom parts started to standardize them and that actually brought down prices quite a bit or helped ease some of the pressure at a time when oil prices were quite low. Is there anything like that on the horizon? Well, I think you're right. I mean, Shale, the development, the Shale revolution is to kind of continue your memory, it really became a manufacturing process. It was a very repetitive manufacturing process. And, you know, no one back then, when days of, you mentioned Aubrey McClendon, who's one of the pioneers, could have possibly envisioned the U.S. being the world's largest oil producer, largest natural gas producer. I think right now, you know, about maybe 10% of the oil is recovered from shale. So one thing, companies are can we increase that output? Can we increase it be more efficient? But there is the sense now, which even had a year ago, that maybe Shale has peaked out, peaked out at a very high number, but peaked out, and people I start to see are starting to talk about what's known as exploration,

going out and finding new oil sources in parts of the world where nobody really looked for them. Does it make you nervous to use the word peak in an oil conversation? Now that you mention it, it does. What should I say? Plateau. How's Plateau? Yeah, there we go. Yeah, peak oil. I remember when people were talking about peak oil back in, you know, decade and a half ago, and that the world was going to run out of oil. I remember, I said, I better go back and look at the prize. I went back and said, oh, the world has actually run out of

oil five times. And every time it's what you pointed before, it's new technologies and new geographies that change the game. Tell us a little bit more about some of those times where, so I guess probably the 70s, when else have there been fears of people running out? World War I turned out to be a war that really sort of elevated oil because it started with people on horses and cavalry. It ended up with tanks and airplanes and trucks and all that. And there was this great fear after World War I that the U.S. had, what was it, nine years

worth supply left. And so what happened is the American company started. started to go out and they went out to the Middle East and, of course, found lots of oil. So that was a period. Then after World War II, there was that concern because oil had been so important. There had been an oil war within the larger war. And then, of course, the 70s. But it even happened in the 19th century that, you know, people start ringing the bell saying, you know, it's all over and technology keeps expanding the frontier.

So speaking of oil supplies and stockpiles, one of the big stories in energy markets has been China buying a enormous amounts of oil and stockpiling them for reasons that we don't know for certain. How important has that dynamic been to, you know, a fairly resilient oil price. Crude has come down a little bit, but it's still, you know, around $60 a barrel, I think. And why are they doing it in your opinion? Well, that is always the question of why the Chinese stockpiling. I've been working on minerals too and looking at the stockpile minerals too. It's what they do.

Is it because they think there may be a conflict? or is there a problem? Are they worried about the South China Sea, which I write about in the new map? And they know that during World War II, the U.S. cut off the oil line to Japan. And so they want to be sure they have supplies. Or is it just because it's cheap and they're expecting it to go up? We don't know. I'll be there in a couple months and I'll ask them again.

I'm not sure I'll get an answer. But they're doing it. But the role of China has changed because for two decades, the growth in oil demand worldwide. Half of it was in China. And now the view, I won't use the word peak. I'll use the word plateau. Okay.

That demand in China is plateauing at a high level. But they're importing 75% of their oil, and they don't want to continue to do that. That's why they've been pushing. One of the reasons they've been pushing electric cars. The other reason is because I see it as a way to an export market. So you don't have the growth engine of China. And so, you know, there's a fair amount of debilitary. today at what rate oil demand will grow, but is it how much will it grow?

Will it be a million barrels a day, a million and a half barrels a day? And that is a subject within oil circles of a great deal of vigorous debate. We obviously don't know what Xi Jinping's strategic plans are, potential military plans in the future. But for all of the EV adoption in China, which has, of course, been huge, military conflict, whatever the source, there still be an incredibly oil intensive process. Yes, I think exactly. I mean, that's right. You're not going to have battleships, you know, solar power battleships.

Not many times soon. Yeah, yeah, yeah. I mean, you do mention, I mean, what is, we know some things that are in Xi Jinping's mind because he said it. And he does talk about the dominated the new industrial supply chains, which means EVs, which means solar panels, which means wind. and of increasingly critical importance, batteries, which is another issue that's going to actually is percolating up about here we have regulations against batteries that come from foreign entities of concern. And you say, what's a foreign entity of concern?

And it tends to be, I mean, parentheses China in the energy discussion. Could you ever envision a time where rare earths are more important strategically than oil? No, but I can tell you that they're really. really important. And I would say in the last six months, there has been, if you are here in Washington, a crisis mentality about them. Because I think that was a shock when, you know, Trump was rolling out all of his tariffs and the country that they were going to be most aimed at, which was China. Suddenly China said, well, you know, two can play this game. And then that is, of course, in recent days, as once again come up, the Chinese, whether for strategic reasons, but again, new supply chains,

you know, they produce, processed 90% of the rare earths, and they know it. And when you hear an automobile maker saying, you know, we have a week and a half supply, you realize how urgent it is. And so, you know, it's really come up. And it's trying to grapple with it. It's not something you can solve overnight because it takes a long time to open a mine, put up a processing thing. And the Chinese have put not only controls on rare earth. They put controls on the, machinery and equipment for processing wearers, and they put controls on the people who have the know-how that they may not be able to have passports anymore. Let's talk about U.S. energy policy. It seems a little unfocused to me. Or we might say variable. Okay, go on. Like, how would you

characterize it? Or like, when you say, let's say it's variable. How would you characterize like what's going on? I think there was... The way U.S. energy security or energy Under Biden, of course, it was all about basically renewables, climate change, the goal that have no gas, natural gas or coal and electric generation by 2035, half the new cars in America were to be electric by 2030. That was then, this is now, when it's just pretty much in the opposite direction. Can the U.S., you know, I think Trump would like powerful, dominant U.S. energy industry. He uses that word. Yeah. Is that realistic? Can he get there? I mean, there's wanting to expand drilling, but with the price of oil, actually, it's below 50, below 60 now. It's 5875 today for, like,

can these things hang together? Can we have prices at these levels and booming domestic oil industry? No, I think that's one reason we get into not the peaking, but the plateauing for that reason. And, you know, you look at the survey from the Dallas Federal Reserve that came out. And, you know, below 60, people don't, you know, they just pull back and they, husband, capital. And, you know, it certainly seemed that it was possible that we would see oil prices below 60 in the latter part of the year. And maybe it's come earlier than people might have expected. And very much affected by the trade war between the U.S. and China, among other things. But the U.S. is the dominant player right now.

and energy, you know, the new trade deal you're supposed to have with the U.S., they're supposed to buy more natural gas from us and so forth. And they have, they set up something called the National Energy Dominance Council, which is, you know, kind of the view of the U.S. in this position. But it is tough to both want to have a very vibrant domestic industry and have low prices at the same time. I know you just mentioned that Europe is still going to be getting U.S. oil, but, Do you foresee a more, I guess, autarkic energy future for the world? Because it does feel like, at least with manufacturing goods and some strategically important goods, people are stockpiling and people are focused on building out their own capacity. Is that going to be the case in energy, or will it be that energy is just so geographically specific and expertise oriented that not everyone can do it? So we've already seen a partitioning of the global oil market in terms of Russian oil,

not going to its natural market, Europe, but going to China, which was a market before, and India, which was not a market before. We see that in natural gas. So I think, call it economic nationalism or economic sovereignty. I think that in a sense that's what all the tariff policies are about. I think Europe is in a very difficult position because, they would like to continue to pursue net zero, as it's called, emissions by 2050. But now they have this other problem, which is called being competitive or rather not being competitive and losing industry.

And on the other hand, they're now supposed to spend not one and a half percent, but five percent of GDP on defense. So I think Europe is in a very tough position. And I know you speak to a lot of experts in the energy industry, but what's your sense of the mood on the ground? among, I guess, oil and gas workers specifically. Because on the one hand, Trump has been a friend of oil and gas and has said that he wants oil and gas to be dominant. But on the other hand, a lot of the policies that he's actually put in place, you see people in like the Dallas Fed survey complaining about them and the mood seems to be kind of bad.

Yeah, well, I think it's both. I mean, I remember CEO of one oil company saying he was actually, to a surprise, was invited to, I don't know if he was joking or not to the Biden. White House, but he said he had to go in through the basement door. And now, of course, they're very, you know, accepted and, you know, and part of the dialogue. You know, I think it's a mixed message. They're glad to see a reduction in all these new regulations that had been imposed and kind of just the general hostility to an important U.S. industry. But on the other hand, they, at low prices, you've seen, you know, layoffs in the industry. You see people putting down drilling rigs. You know,

But this prices, I think, if they persist, we'll see more of a negative impact. So the U.S. is producing massive amounts of oil and gas. How does this sort of change the geography or the energy industry? Well, it really has changed it dramatically. It was really brought home in 2019 when the Iranians attacked the most important infrastructure in the entire world oil industry in Saudi Arabia. And the price went up for a day or two and then went down. And I think that's because of the existence of shableness.

and just that it kept growing and growing, and it gave a sense of security that wasn't there before. I totally forgot about that, but I think I was actually in the Middle East when that happened. Does OPEC matter anymore? Yes. Well, it's really OPEC plus that matters right now. And they took a lot of oil off the market, basically giving room market share to the U.S. They're now begun the process of taking back their market share, and that's partly what's reflected in price. One of the things that is a constant theme on the podcast, and it comes up in numerous industries,

whether we're talking about housing or lumber or anything else, is that, you know, periods of surplus or periods of slack, you end up paying for it at the end. You end up maybe paying for it five, ten years down the road, because you get this decline in production. The talent leaves the industry. The labor moves the industry. The parts rust, and you can't just like take them out of the warehouse, et cetera, and start drilling or whatever again. When you look at the declining price of oil today, are we going to pay for the? this at some point? Yeah, I think it's interesting because I, you know, I had to write this new epilogue for the new edition, 30th edition of the prize, and I was thinking about what are the lessons, and one of the lessons to me is among the hundreds of characters in the book,

there are only two who really matter. One is supply and one is demand, and they're always fluctuating between the two of them. And I could see that today. Let me give you an exam, because there's a natural decline that goes on in oil, which people are now saying in gas, maybe it's 5% a year. So in 2021, you had the International Energy Agency come out with a scenario for net zero by 2050 in terms of emissions, and all these steps to get there made it look rather easy because demand was down and price was down. They just came out with a new study saying the world needs $540 billion of investment every year between now and 2050 just to kind of stay where we are with oil. So it is that cycle that people forget there's a whole decline there. And I think

think if you have a period of slack, you pay for it down the road in terms of a tight market because investment leaves. And I think you made a really important point. People leave too. They say, I don't want to be in this industry. You did some episodes a couple years ago, like actually when oil was much higher, about one of the constraints would be, well, a bunch of, like the petroleum schools. They didn't have the same pipeline of engineering talent because in 2019 or whatever those years were. Who was going into majoring in petroleum engineering in this year? Exactly. And now it's actually looks like it's a more attractive industry. But it's also... There's competition from geothermal as well. If you want to go drilling some rocks somewhere, you don't have options.

Well, actually, we didn't talk about geothermal, but in fact, there is now the notion, can you apply shale technology drilling to geo-thermal? Are you optimistic about that? I don't go through optimism or pessimism, I'd just say. But it's promising. Let's see how it plays out. I want to talk more about Europe. You mentioned the industrial economy is getting clobberm. I mean, Germany, let's just talk about just Germany. Maybe they were able to substitute LNG imported from the U.S., from some of its Russian sources, but the price is up. And industrial production in Germany has been terrible. Do you think at some point European leaders will sort of cry uncle or cave on the net zero ambition?

Because it feels like the politics of that have been running on fumes for a few years now. Well, you know, it's interesting because, of course, it's so entrenched that it's hard for them. I mean, you could say, okay, we're for net zero, but maybe not by 2050. But Europe continues to, you know, it's not just energy costs. It's this incredible weight and burden of regulations that are designed without any connection to the markets. I was talking to one company on Sunday, and they said they just closed one facility plant in Europe. They had another one that was 80% built that they decided not to go ahead with. Talking to another company that's also closing.

I mean, they impose these policies with no connection to the marketplace or to technology, saying 70% of jet fuel has to be so-called sustainable aviation fuel. Well, it's less than 1% now. And so it's just if you say it, it's going to happen. So I think maybe in Germany we're starting to see some of that easing up. But I think that those economic realities are weighing down with them. And if they don't step back, and as I say, it's not just climate policy. but it's this whole regulatory straitjacket that tells people go invest in the United States.

I do feel like even before Russia invaded Ukraine, there was a sense that I guess ESG in general was kind of failing. You know, inflation started to pick up. Zerpira phenomenon. Yeah. Well, inflation started to pick up and suddenly there was what I thought was an inevitable backlash against ESG and targets net zero and things like that. Do you think that ever comes back or how would you characterize, I guess, the helpfulness of ESG when it comes to building out clean energy? Well, I think it was clearly that all was a package together. I think now really the clean energy argument, the argument for solar now is less about that.

And it's about that you can do it quickly and lay it down quickly and get those electrons into the grid. So it's more about less about. So the economics are kind of working. economics rather than virtue. And ESG clearly is faded away. I can't see it coming back with the full force that it did because it has a built-in backlash, which we're seeing now. So I think it means that these things have to be more market driven. Does the boom in LNG exports from the U.S. raise prices for American households? That is, of course, a very critical question, and it was raised at the end of the Biden administration. did a study on that, you know, we being S&P and the Commoddy Insight team there, and concluded that we have a lot of natural gas so that it's not a threat in terms of prices. Natural gas is not

as constrained as oil. What about nuclear? We've gone this entire conversation without talking about nuclear, but nuclear, you know, could solve all these problems. Well, and it's also interesting, because that circles back to one of the points we talked about before, because you say, well, what's brought nuclear back? Partly, it's, you know, just tie. partly its need, but I think it's also the entry of the tech companies from being just consumers, you know, for software to really worrying about data centers. And you look at it, last time I looked, there's been $6 billion of venture capital infusion. Nobody ever used to do venture capital infusion. That was what the government did because it was 50 years away. And we had an event at

our CERA conference in Houston this year where we had Commonwealth Fusion, which came out of MIT, the head of the largest, the main utility in Virginia, and the governor of Virginia is saying, you know, we think we're going to have fusion here by 2032. So nuclear is definitely back. Small modular reactors are a hot topic. I think the first ones will be deployed around 2030. So you think they're actually going to happen? Because this seems like another technology that's always five or ten years away.

Well, I think it's going to happen, but I think the test will be then, can you bring down the cost? And is it a more flexible way to add nuclear? But it is, I think, it's really the tech companies who, I mean, there you had Amazon investing in one of the SMR companies with the notion that they will then buy successive reactors with the idea that each one, the cost will come down. Now, that will still be tested. It still has to go through a regulatory process at the Nuclear Regulatory Commission and all of that. But there's certainly, you have the sort of entrepreneurial Silicon Valley spirit now imbudent. into nuclear, which of course is not an overnight thing. But it is back on the agenda.

And I think history will go back and say in Germany, Chancellor Merkel's, one of her two biggest mistakes was shutting down the nuclear basically in a weekend. What was the other mistake? And that was 25% of her electricity. What was the other mistake? The other mistake was saying, you know, immigration, the door is open. This might be a dumb question. But, you know, if...

There's not such a thing. There's not such a thing. I better watch out now. Okay. But if Amazon or someone invests in a small nuclear reactor or some other type of energy plant, how are those agreements actually structured in terms of the off-take? Because I assume they get priority and then does whatever is left over get sent into the grid? Well, I guess it depends if it is a reactor that's owned by a utility or is it possible that these would be like merchant nuclear reactors.

You have seen examples already where some of the, I guess we need to call them big tech now, we call them hyperscalers. When did that happen? We just all started using that term. Yeah, I think it's about a year. Okay. I think for the first time you had to think what's a hyperscale is like an elephant, but is hypersal. But where they've signed where they will take the entire offtake of a nuclear power plant. So they are very, these companies are very concerned about power.

because it's so electricity-intensive. The other day, there was a story saying that the two data centers that Elon Musk is building in Memphis will use more electricity than all the households. So this is a big issue for regulators. Going back to the question you raised before about who pays for this, how do these costs get disaggregated? Right now, you mentioned electricity costs having gone up faster than inflation. Right now, can we draw a line between these prices? and the data center boom, or is this two things that happen to be happening? I've seen different views on how directly data centers right now are contributing.

I think it's part of it, but it's just the general increase of demand, including, you know, EVs, although not on the scale that had been envisioned. So all those things. And just having, I mean, we had gone for 25 years with flat demand in electricity in the United States. then it's and now it's just recently that it started to grow again. And so you have a whole generation of utilities who've grown up in flat demand and now figuring how do you get things built, how do you get into the regulatory process, and even when you get it approved and you end up in court because somebody challenges it.

Are we ever going to solve the energy problem? No, I think it will just, I mean, it will always be there as long as industrial society. It'll be one form or another. Maybe fusion, the dream of... Ah, fusion, yes. I used to play SimCity, and that was always the ultimate goal. You work up from the gas plant to nuclear and then to fusion. Fusion solves everything. But it's also striking to me what I've noticed, you know, having studied energy for, you know, some time, that you get a consensus about energy and it lasts about three years. And then something new comes along and just changes the view. Are there any past periods? We actually talked, we talked a little bit about the late 90s when there was the

gas boom then. Are there any other past periods that people should study right now that might help them form the current environment? Well, I think that what we have to remember, which to me is absolutely critical, is energy security, and that it gets forgotten. And for me, I have this story and the prize about Winston Churchill converting the Royal Navy from coal to oil before the First World War, which to me is that is what made oilist strategic commodity, that transition. Why did he do that? He did it because you gained speed, flexibility. You didn't need to have all these guys shoving coal on board, and you gain 30% extra cargo space.

That's the very start of the book, right? That's the opening an accident. Exactly. And I always thought that phrase. He said, safety in oil, but we could say an energy lies in variety and variety alone, that you don't want to be over-dependent on anything. You want variety, whether in terms of your suppliers, in terms of your sources. We're ever going to bring whale oil back? You know, I said there's not a single energy source that has not increased. Even wood has increased. The only one that hasn't increased is whale oil.

All right, Joe can dream, I guess. Dan Yergan, author of the, probably, I'm pretty sure, the best book on the oil market ever. Thank you so much for coming on All Lots. Thank you. It's great. Joe, that was so much fun. I'm so glad we finally got to do that. I can't believe it took us that long to talk to Dan, but that was great. I know. Well, fortuitous meeting in Washington, D.C., I got to say, his point about the sort of interconnection between energy and technology, definitely, it does seem to be a driving force, right? And as soon as you get new advancements in weaponry or transport or in this case, software, you do take. tend to get a sudden, like, rethinking of what your energy needs actually are or some sort of transition.

And then on the flip side, like, if you ever are in an era of energy surplus, you're going to find something to do with it, right? Like, you never just sit around and, like, here's a bunch of cheap energy. Let's not do anything with it. Although China is stockpiling successfully, right? Well, they are stockpiling. We don't know for what exactly. But yes, they haven't spent it yet.

They haven't spent it yet, although they're spending, I guess, in a sense, to acquire all the oil. It does feel to me, and it's not like this is that new, but there was a phase in probably the U.S. and Europe in the late 2010s, and maybe it extended through 2020. Magical thinking with respect to energy being solved. You know, that there is just like this clear path towards cheap, clean, abundant energy. And some sort of realities clearly smacked a lot of policymakers of the face. And I guess the question is, how locked into current plans are they? What has to give? It does feel like in Europe specifically, the constraints when it comes to industry, energy, climate security are pretty real. It seems to me like the big problem is the cyclicality of the

industry. Like you're constantly going through booms and bus. And as soon as you get a boom in oil production, it inevitably leads to a collapse in oil prices. And then you struggle to build out capacity for years and years, and then there's not enough oil, and then prices start to rise, and everyone goes back in again. If we could find some way to moderate that, I don't know how you would do it, but that might be a way forward. I feel like an underrated element of the Chinese economic story over the last, however many decades, has just been this sustained boom without major downturn, et cetera. And so then you don't get these like big periods of people leaving in industry or whatever that are really hard to escape out of. It's like, I sort of think the cure for

the boom bus cycle is just perpetual boom. Like, that's the answer. Just always be booming. Always be booming. I like that. But I also have to say China as a source of energy demand, you know, they're buying for stockpiles right now, but they're using so many electric vehicles that their gas consumption is actually going down gasoline. It's very impressive. All right. Shall we leave it there? Let's leave it there. This has been another episode of the OddLots podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Jill Wisenthall. You can follow me at The Stallwart. Follow our producers, Kerman Rodriguez, at Kermann, Dashol Bennett, at Dashbot, and Kale Brooks at Kail Brooks. For more Oddlots content, go to Bloomberg.com

slash oddlots. We have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord. Discord.g.g. slash oddlots. And if you enjoy Oddlots, if you like it when we talk about the future landscape of the industry, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes, absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.