Will Things Devolve Far Enough to Trigger The Great Taking?
Summary
Energy Crisis: Extensive discussion of collapsing PADD 5 jet fuel and diesel inventories and national lows, risking “tank bottoms” by Labor Day and broad logistics disruptions.
Diesel Shortage: Core risk to trucking, aviation, and agriculture; debate between allowing market pricing versus price controls and the potential for rationing or de facto lockdown effects.
Middle East Tensions: Ongoing U.S.–Iran hostilities and potential Strait closure; even a quick reopening implies months to reach ~80% capacity, with tanker fouling increasing fuel costs and necessitating dry-docking.
Oil Supply Shock: Competition with Asia for constrained molecules, limited pipelines, and stressed distribution heighten the probability of severe shortages and high prices.
Energy Supercycle: Chronic underinvestment in traditional energy could be exacerbated by disruptions, supporting a multi-year bull cycle in hydrocarbons.
Inflation Risk: Printing money into a commodity shock likely intensifies inflation; market euphoria and upcoming IPOs may mask near-term energy risks.
Sub-Industry Impacts: Refining & Marketing, Storage & Transportation, and E&P are most exposed to shortages, restart delays, and potential pricing power.
Company Focus: Few individual stock pitches; analysts at major banks are warning, but the conversation centers on systemic energy dynamics over specific tickers.
Transcript
Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. People still have to drive to the grocery store for the most part. So, I mean, this would be just absolutely devastating across the country if we get to where you just don't have the the molecules to be able to transport. Hello everyone. and a very special welcome to this episode of Finance You. I am your host Chris Martinson and today I'm back with Paul Ker of Kiker Wealth Management and we have so much to talk about. Welcome Paul. >> Welcome or welcome. Good to see you Chris. I was thinking about all the stuff we have to talk about. >> Uh I'm looking at my thing. Yeah, it's it's it's June 3rd when we're recording this and oh my goodness. Um we're going to start here Paul. The whole idea ceasefire, the ceasefire was never really very CC, a little bit more fiery than CC the whole time that the US and Iran have been shooting back and forth. By the way, I have it on very good authority from people in the region that there this has been constant and ongoing the whole time and far more muscular and energetic than advertised. We're not hearing about it here in the United States. Even my Twitter feed, my ex feed is now almost completely devoid of this stuff. It's getting harder to find, but it's still ongoing and and it's it's pretty big deal. But we had to talk about this. Labor Day. I believe that's September 7th this year for um anybody who's not US uh and doesn't even know what a Labor Day is. Um and here's why I want to talk about Labor Day. Just this morning, June 3rd, uh Trump breaking. He says Iran has agreed to abandon its nuclear weapons program. End quote. I I don't believe that. I I think most people say, "Okay, it's just Trump saying something." He said a lot of things that turned out not to be true. So, right now, I'm discounting stuff Trump's saying about 99 and a half percent. Um, and but then he also added that the Iran blockade could be lifted by Labor Day. It's like, what? That's three months from now. Paul, we got to talk about this. If if if we have to go through three more months, we're going to hit what they call tank bottoms and it's going to be the largest economic global catastrophe and financial catastrophe of our lifetimes. >> Yeah. I mean, it it's mindboggling to me that the that the the market is so caught up on the headlines, you know, consistent daily, right? I mean, the more people talk sometimes the the more blabber comes out. I mean, he's just constantly saying this, but nothing is is coming to a resolution. So, I'm just blown away by the market's reaction and the lack of price and oil. There has to be a heavy hand out there or the market's just fully convinced that he's telling the truth or the computers are. >> Yeah. Let's talk about this conversation around, well, when do we actually hit when does this sort of exert itself? When do we get to this tank bottom we keep talking about? And that actually varies by region. Different countries are on different trajectories, but also within the United States. different trajectories. So, I'm going to get a little bit sort of energy technical here for people really quickly. Um, there are these things called pads in the United States, PA ADS. Um, these are defense districts and and and what there are, there's five pads in the US. And each pad is sort of its own autonomous unitish, right? They have their own refining capacity. They have their own inventory buffers and all of this. And we're going to talk about pad five. So, that's principally California, but includes Washington, Oregon, Nevada, Arizona, and Alaska. And when we look at pad 5, for whatever sets of reasons, bless their infinite wisdom, uh the leaders of those westish coast territories there, Washington, Oregon, especially California, have been doing everything they can over the past 20, 25 years, Paul, to to ruin refining capability and also not allowing drilling in their regions so that they are now caught fundamentally pad 5 now is not part of the US anymore. They compete with Asia for tankers of substance. That's that's pad 5, right? So California has to import its stuff mostly from from elsewhere. On that front here, we're looking at the pad 5 middle distillate inventory. So that's two things. It's jet fuel in the blue line and it's diesel. They call it distillate, but it's that's diesel fuel. Diesel is how we move everything. Jet fuel is the only thing that flies jets. So this these are very important things to track. And as you can see, normally they vacasillate here. Um, left axis, right axis. Jet fuel is normally hanging out between, say, 9 million barrels in storage, 10 million, 9 to 10. It's bouncing around. That blue line hit about 10 million barrels just before the war started and is now down to 3.5 million barrels. >> Goodness gracious. >> This is more than a 50% plunge since the war started in jet fuels. It's getting very close to critical. I don't understand why people aren't panicking out there right now, at least officially or even at the residential level. Red, we're looking at diesel fuel again bouncing typically between say 11 million and 14 million barrels in storage. And here we can see in red, it's all the way down to 6 million barrels. So at least a 50% plunge at this rate, three more months by Labor Day, these things are 100% gone. So guess what? This rate can't continue. So either they're going to have to import a lot more from somewhere but where they're in competition with all of Asia for very very limited substances. We're going to have to somehow find a way to transport it there from other pads in the United States. So that's typically it's tanker truck maybe train but we don't have pipelines even. So this it's tricky how you do this. Um but this is a really big deal. And by the way, are we is there a lot left over in the rest of the country of these distillates to get over there? Well, the answer is our distillate inventories nationally are now as low as they've been since 2003 when our country was barely half as big economically speaking. Um so we don't have a lot extra to shift over there. And and so this is an absolutely unbelievable thing that we're talking about right now or not talking about right now. It's astonishing that this isn't above the fold number one um subject of conversation especially in the pad 5 district. They ought to be screaming about this right now. They're not. >> They should. Now I if if my math is correct on the first that was a 70% decline and 57% on the second. What the war's been going on three months. Mhm. >> And and we have less left than what has already been used up. So what's what's plan B, right? I mean, where else can it come from? Um maybe the Federal Reserve can print some up. No, this has been the thing. Jeff Cur's been saying this all over the news, like you can't print molecules, and we're treating it as if it's just another thing. and we get through these things by propping up the stock market and writing narrative friendly headlines and all the media and stuff like that. I don't know that we have Paul I don't know that we have people in power right now who are capable of managing this because I don't think they understand actually what the issues are. I don't think they I don't think they understand anything. For Trump to say well maybe we'll just open it by Labor Day cavalerely means he has not been informed. He is ignorant about this dynamic. He he clearly if you knew about this and understood it, which you should at the presidential level obviously. Yeah. And at a minimum, his energy secretary, Chris Wright, >> who used to be CEO of a fracking company, understands this. They ought to be talking about this realistically, so there's only two options. They aren't talking about it for whatever sets of complicated, you know, interpersonal reasons and egos and things like that. Or two, they know perfectly well about it and they're lying to us about how bad this is going to be. Mhm. >> So, what do you like? Ignorance or or or >> lying? >> Or deception? Yeah. It's either deception or ignorance, right? >> But I mean, when you're looking at data like that, especially with his experience coming from the fracking industry, it's going to be hard to deceive him if he has a chance to Pratt, you said, um, >> Chris Wright. >> Chris Wright to if he has a chance to talk to Trump about that unless there's an intermediary that's deceiving Trump from that standpoint. I mean, it's just math. Mhm. >> So, you know, all I can think about is if we're in that position and I'm a ran, right, to put myself in their shoes, I want to stretch this out as long as possible because because you're in a position to deliver maximum pain, you know, in in in this area to the American citizens and really to the world. That's incredible. >> Yeah. All Iran has to do is look at this chart and understand it, which I'm highly confident they have and do, and you go, "Oh, well, let's just we'll just wait." Right now, for everybody listening to this, if you live in the Pad 5 region, you should be tracking this very, very carefully because my prediction, Paul, and this is when I make predictions, let me be clear about this, everybody. It's not like I have a magic eight ball and I shake it and it tells me what's going to happen. I don't have any crystal ball. When I make a prediction, it's like I say, if I take something and I drop it, it's going to fall. That's a prediction. It's based on experience and watching the trajectory of things, right? Like if a ball is hit towards the left infield, it's going to the left infield, right? It's this is just saying that the way my country has behaved over the past few crises, right, has been to wait until the crisis unfolds and then you have these bureaucrats ride in and seize control and tell you this little restaurant has to be closed. Walmart can stay open, that mom and pop store has to close down. You're essential, you're not essential, that's all CO stuff, right? And it was just they made it up on the fly and it was highly damaging because these often these career bureaucrats Paul to cast a wide net. >> Most of them don't have any real job experience. Right. Right. >> So there will be people in California making triage distillate decisions. You get some diesel but not you. And well these political corrected people get it not these. And they'll do that and it's going to be complete disaster because none of these people have like 30 years in logistics and understand trucking intimately and they know what has to go where when. That's the prediction. They're going to try and manage it through a crisis and the result will be chaos if we go that route. No, absolutely not. And and what's mindboggling, you've talked about this several times since this uh o over the past couple of months, is the fact that let the prices go up in the short run. So, we've got a deceleration, right? You're utilizing the brakes on the car and you can slow that down without a sudden impact so that the economy can adjust, lower that demand and stretch this time period out. But I mean, I don't know anybody that's changing anything in their behavior at this point outside of those like I mean, I waited till the last minute to purchase the tickets for our for our fishing trip this summer just just to have some insight to make sure I could get back. But the average individual is fully trusting that what Trump's saying that, oh, prices are going to be down. I don't need to worry about it. Let's go. Right? instead of naturally slowing that down, which the added benefit for the individuals that do slow their purchases down that can, right, or make a little bit of decisions can keep their savings beefed up and be in their own stronger financial position. So, I mean, this is like absolutely wasting away our emergency funds with as with as a country with no backup. I mean, it's one thing if if it's a credit crisis, right, and they just print enough money to fill in for the deflation, but you can't print molecules like Jeff Cury was saying. I mean, he's been very vocal here here recently. I mean, there there is no plan B, right? Unless they just lock everybody down again. And so much for the people that said, "I won't be locked down again because if you can't get fuel to be able to to go somewhere, then you're just going to be locked down." But the question is, what about transporting food, right? I mean, getting there, people still have to drive to the grocery store for the most part. Cities may be a little bit different, but not all our population lives in the city. So, I mean, this would be just absolutely devastating across the country if we get to where you just don't have the the molecules to be able to transport. >> The obvious way to do this, obviously, you let prices rise, right? And that that has its own invisible magic, right? This is called capitalism. The true invisible hand of the market, right? So diesel goes up like $2 more dollars a gallon. Say just making a number up. Well, then you know sort of the marginal use for that uh people make decisions, right? Like you know I get to say well you know I would kind of like to get this thing shipped to my house but it's now the shipping's really expensive and you know what I just won't buy that right or whatever that they'll I'll make my decisions. you'll make your decisions and by the way that's the best outcome ow us because people are going to rationally make the highest best use decision for for that you know for those molecules right the alternative is you try and basically do nixonian price controls right we're going to like no we're just going to set the price for this thing and that's option B and I could see this and here's how that plays out Trump declares that diesel is now $3 a gallon is pre-war problem you can't get any right >> right >> there it is diesel 3 right on on the sign at the at the station also out of out of stock, right? That's what you get under that scenario. And that's terrible because then there's no rationalization of the decision set. You're just out of stock. Everybody's out of stock. The highest best use for that, right, >> is out of stock for that stuff. Like, oh, the farmer can't get it to harvest their crops is a very bad decision that gets made when you go down that other path. I think we're Trump's inclinations to me seem to he he wants to push us down that path. Remember, he's the guy who put us in lockdown first time. >> Yeah. >> Right. >> He sure did. >> This feels like another lockdown coming, right? And so he obviously has tendencies. It's okay to lock people down if we have to, right? So that that's a maybe he's changed. Maybe the leopard's changing spots, but I'm this guy, you know, I'm going to believe you the first time if I can. >> Yeah. You know, >> I mean, the reality is, I mean, you have to take that into consideration if you're logically honest about everything that took place. The lockdowns did occur under him and a massive amount of printing occurred under him, >> but what good is the printing going to do if you have an inflationary spike because of the lack of molecules that's not going to be saved overnight? >> Make it more expensive, >> you know, and and and >> drives inflation. >> I hate to say this, but, you know, there's another incentive. Just trying to look at the incentives. You got these big IPOs that are coming out in the next, you know, 30 to 60 days. If if the markets were to be 15 or 20% lower because they were actually paying attention to what's taking place or they were allowed to pay attention, then these IPOs are not going to be at these record valuations. There's just going to be less capital that's out there. So even Wall Street has an incentive to keep this party going until the last minute and play chicken with reality, right? And I mean, it's one thing I mean, it's one thing to say if you got credit destruction and the banking systems collapsing like it was in 2008, I don't agree with the fact that they printed money, but printing money can fill that void, right? It stops that that deflationary impulse. But what's it going to do, you know, and if you're filling in a hole, right? Then there's not as much inflationary pressure. We can see in hindsight we're back to the point now you print a bunch of money now inflation starts going along like crazy. But you can't do that in something that that's being used up that fast that was already just in time inventory. So you know if we reach these tank bottoms and stop I mean that's going to be how long is that impact going to roll through Chris? I mean that's going to roll through for months through the economy if not years. Years >> and we're already underinvested in Garren Roenwag's most recent report. I haven't gotten through the whole thing, but it's phenomenal. Um, just talking about the reality that we're underinvested in that category anyway and we're headed into a cycle and at some point we'll get overinvested and over supply potentially, but we're not there now. So, this is just going to exacerbate a uh super cycle assuming that a super cycle that could be unfolding assuming that we're the straits are open before Labor Day, right? But if we're not and if you're Iran and you want to deliver as much pain as possible, then do everything you can to keep the keep the straight shut down >> and and let this impact the world. So all every analyst out there, we're talking the Goldman Sachs, the JP Morgan Commodity Desk, we're talking all of the big analysts at like HFI Research, everything. Anyway, they they look at it and everybody has to take a little bit of a guess, but the range, the consensus range is like, look, even if this straight opens right now, like rainbows and unicorns, hugs all around, we're sorry, you know, both sides and it opens, it'll be 6 months before we get to 80% recovered normal function, right? And by the way, I don't know if you did you did you check out Barnacle Gate yet? >> No, I have not. >> Oh, this is this is kind of a fun thing. So nature always has a curveball for us, you know, and and nature is a complex system. So she throws us like fun stuff every so often. So it turns out that when tankers are moving, their holes can stay relatively clean, but when they get parked in a warm bathtub like the Gulf, they get fouling. You get jellyfish, barnacles, slime, all starts to attach. There's so much attached right now that they say that it could be anywhere from 50 to 80% higher fuel cost to get these things where they're going. >> Wow. >> And then they're going to have to get dry docked and scraped cuz they've just been parked for way too long. These ships aren't meant to they have anti-ouling on the bottom. But I'm you know I I looked at one of the terms of service on these antifouling companies. They say, "By the way, you can't have this thing parked at a dock for more than like x days cuz that stationary environment allows all these little marine organisms to say, "Hey, I like this home." and get attached. So anyway, so you got the barnacles going on. So, so just to un bollocks that, >> all these hundreds, if not thousand plus ships there, they all have to go and they all got to get serviced and and the the crews are going to have to like get a little time off and all kinds of stuff. And then even then you have to go back in and start resuming what you can with the other tankers that are out in the world in container ships. And then you have to try and get the refineries that are damaged days, weeks, months, years depending on the damage. Fine. And then you have to restart the oil fields. And when all of that is done 6 months later, we find we're still 80% there. Well, 80% of the former 25 million barrels per day flows out of the Gulf is still a 5 million barrel per day deficit. That's huge. >> Which which is five times larger than the deficit that brought us the 2008 part price spike. Okay. >> So anyway, point is like even if it's today, but if it's not till Labor Day, now we're talking 2027, right? >> Yeah. >> So two things have sort of softened the blow here so far. Um, one, there's been this crazy futures price thingy where we've seen what I would call shenanigans in the somebody somebody's playing around with the markets. Okay, fine. Um, but the second thing is we've been releasing inventories under the precept, I guess, that, you know, we have these cushions. We're going to use this. We're going to cushion the shock, but this thing's going to be over soon, right? Turns out wasn't soon. So, let's By the way, this still most shocking chart. People should very much be paying attention to this. But here, this comes from Eric Nuttle at ninepoint partners and we're looking at the big three all as one thing. Crude plus gasoline plus distlate. Just those three, smash them into one spot because that's what we really care about. And here we can see in 2026 at the last read, Paul, this is 10 years of data. We are now about poking through the bottom of the lowest reading we've had in 10 years um in terms of those three things. But this I've outlined in yellow what the next three months would look like. And if we just take this trajectory we're on and we point out what happens over the next three months. This is where we end up by Labor Day. We've never been down here this low before. As I mentioned before, this is going to be have this is a big this is one big number for the nation, but it's going to be a very different thing. Pad one, two, three, four, five are all going to experience this differently. But this is true crisis territory. And that's that's if it opens by September, which by the way, we'd have to open it today to even remotely have this line be different than it is. So, we're we're we're we're entering the largest energy shock ever. And I Paul, I can't find anybody at the national level, either in media or politics, talking about it this way. We should be talking about this is that this is the most serious crisis our country has faced. >> Mhm. >> In anybody's lifetime. >> Yeah. >> And all we're get shrug gas prices will go down when the straight reopens. Like wildly unsophisticated, naive. >> Well, and the worst part is the average person just doesn't know, Chris. The average person just doesn't know. And if we go back to those doctors during COVID that relied upon the advice that was coming down from them that had been trustworthy for the most part for a long period of time, the average person is just assuming there's no way that they're going to lie to me. There's no way that they're going to deceive me. So they're not worried about anything right now. I mean, and especially with the euphoria in the markets, the fear of missing out is just this big shiny object that's pulling people's attention in that direction and they have no clue the risk that's coming. And what's amazing to me is it's rare on Wall Street that that all of your analysts are in agreement with with most issues, right? I mean, they may agree, but they've got different price targets. I'm not talking about price targets in commodities, but everywhere I look, anybody that's an analyst or a specialist in the industry is screaming into the void right now that that we've got major issues coming, right? like like this is this is problems arising and you're doing such a phenomenal job of warning people about it but there's a complete disconnect out there right now. Look, forewarned is fore armed and and maybe not everybody wants to hear this stuff. I understand the optimism bias. I I don't try to be pessimistic or anything. I consider myself a realistic optimist. I'm very optimistic if you look at how I invest and where I put my time and all that. I have great hope for the future, but I'm realistic about this. And and this is clearly obviously one of the most obvious things I've seen in my entire career of pointing out obvious stuff that we are just absolutely blindfolded driving towards a brick wall on this energy story as a nation. So that's completely obvious, but but I get it. So for the average person, you know, Paul, we don't have a good education system here that explains any of this stuff. You know, you can learn all about critical race theory, but probably not a lot about pad district oil storage, right? You know, in our school system, you're not really going to learn about where prosperity comes from, where energy is the master resource. And as it becomes more expensive, you're just going to have less and less of an ability to live beyond your means. And then combine that with simple economics, our country has been living beyond its means. Our trade deficit, which is us buying more than we produce, if it were an economy, would be the 19th largest economy in the world, just our trade deficit. That's how far beyond our means we're living. And so what we're talking about here is what happens if you have to suddenly adjust and live within your means. Right now, the powers that be are not going to tolerate that. and what they've done. And again, this isn't a prediction in in in a in a truly forecasting, you know, amazing, you know, sightseer kind of way. This is this is me just saying every single time since 1987 when the United States experienced a hiccup, the response was to print more money, >> right? >> Without fail, >> every single time. >> So, the prediction, it's going to happen the next time, too. But what good is printing money going to do into a into a commodities price spike when you've already got the embers of inflation that are that are starting to pop up flames? I mean, they you know, you went from open flames and then we had a little bit of a a pullback and smoking, but those uh cinders uh are still burning at that pile and this is just gasoline on top of that with extra fuel. I mean, that's that's going to lead to horrible inflation if they print money into an energy shock. >> Yeah. So, for everybody who would like to maybe talk to Paul and his team, and you really do, uh, please go to peakfinancialinvesting.com, fill out a very simple form and click submit, and then within 48 business hours, somebody from Paul's team will get a hold of you and begin the process where you can set up three calls. And the first call is just to get to know you. Call, let's have some some uh back and forth. The second call is a planning call just to sort of look at uh what your plan is, what your circumstances are very specifically for you, where you are, what you have, what your hopes and dreams are, all of that. And then if it progresses from there, you would go to a recommendation call where Paul will say, "Hey, here's what I recommend." If after all of that, it feels like a good idea for everybody to work together, great. Maybe you work together. If not, no obligation. And Paul, everybody who goes through it tells me it's one of the best things they've done. Maybe they don't always hear exactly what they wanted, >> right? >> But they're relieved to finally hear what they they kind of suspected was the actual truth anyway. >> Yeah. Yeah. And and look, we're we're going to give you the reality with empathy of what your situation is, right? I mean, that's that's just the reality. It's our job to show people where they are, the risks to their their decision so that they can make the decision. Like I got a client that I worked with, so this is 12 years ago. They had a 50% probability of success at three and a half% inflation and 20 at five and a half. And I'm like, look, if I was you, there's no way I would retire under these circumstances. And they're like, hey, we're speculators. We're going to do it. Well, because of the higher inflation, I said, okay, if you do, here's the things you're going to have to make adaptations for in the future to make sure you don't run out of money. Had a review with them here recently. They're still at that 50% probability of success. Everything's kind of worked out online. you know, the longer they go, the greater the chance of a possible outcome pro uh of a positive outcome. But they've made a few adaptations that I had put in place because of the higher inflation, and they actually thank me for it because we warned them. They're having to make some tough decisions, but they they were grateful for it because they knew that that was a possibility and they made the decision understanding what, you know, um adaptations they'd have to make and how that would limit their lifestyle. That's really the only thing that we can do for people is help them understand their circumstance, give them the information so they can make prudent and wise decisions. >> Excellent. Well, thank you for doing that and uh thank you everybody for listening to this episode. again, peakfinancialininvesting.com to get that process started if that's something you want to do. And I'm pretty sure it is. Um, it's excellent and it's time with that. Paul, uh, we'll see you next time. >> See you soon, Chris.
Will Things Devolve Far Enough to Trigger The Great Taking?
Summary
Transcript
Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. People still have to drive to the grocery store for the most part. So, I mean, this would be just absolutely devastating across the country if we get to where you just don't have the the molecules to be able to transport. Hello everyone. and a very special welcome to this episode of Finance You. I am your host Chris Martinson and today I'm back with Paul Ker of Kiker Wealth Management and we have so much to talk about. Welcome Paul. >> Welcome or welcome. Good to see you Chris. I was thinking about all the stuff we have to talk about. >> Uh I'm looking at my thing. Yeah, it's it's it's June 3rd when we're recording this and oh my goodness. Um we're going to start here Paul. The whole idea ceasefire, the ceasefire was never really very CC, a little bit more fiery than CC the whole time that the US and Iran have been shooting back and forth. By the way, I have it on very good authority from people in the region that there this has been constant and ongoing the whole time and far more muscular and energetic than advertised. We're not hearing about it here in the United States. Even my Twitter feed, my ex feed is now almost completely devoid of this stuff. It's getting harder to find, but it's still ongoing and and it's it's pretty big deal. But we had to talk about this. Labor Day. I believe that's September 7th this year for um anybody who's not US uh and doesn't even know what a Labor Day is. Um and here's why I want to talk about Labor Day. Just this morning, June 3rd, uh Trump breaking. He says Iran has agreed to abandon its nuclear weapons program. End quote. I I don't believe that. I I think most people say, "Okay, it's just Trump saying something." He said a lot of things that turned out not to be true. So, right now, I'm discounting stuff Trump's saying about 99 and a half percent. Um, and but then he also added that the Iran blockade could be lifted by Labor Day. It's like, what? That's three months from now. Paul, we got to talk about this. If if if we have to go through three more months, we're going to hit what they call tank bottoms and it's going to be the largest economic global catastrophe and financial catastrophe of our lifetimes. >> Yeah. I mean, it it's mindboggling to me that the that the the market is so caught up on the headlines, you know, consistent daily, right? I mean, the more people talk sometimes the the more blabber comes out. I mean, he's just constantly saying this, but nothing is is coming to a resolution. So, I'm just blown away by the market's reaction and the lack of price and oil. There has to be a heavy hand out there or the market's just fully convinced that he's telling the truth or the computers are. >> Yeah. Let's talk about this conversation around, well, when do we actually hit when does this sort of exert itself? When do we get to this tank bottom we keep talking about? And that actually varies by region. Different countries are on different trajectories, but also within the United States. different trajectories. So, I'm going to get a little bit sort of energy technical here for people really quickly. Um, there are these things called pads in the United States, PA ADS. Um, these are defense districts and and and what there are, there's five pads in the US. And each pad is sort of its own autonomous unitish, right? They have their own refining capacity. They have their own inventory buffers and all of this. And we're going to talk about pad five. So, that's principally California, but includes Washington, Oregon, Nevada, Arizona, and Alaska. And when we look at pad 5, for whatever sets of reasons, bless their infinite wisdom, uh the leaders of those westish coast territories there, Washington, Oregon, especially California, have been doing everything they can over the past 20, 25 years, Paul, to to ruin refining capability and also not allowing drilling in their regions so that they are now caught fundamentally pad 5 now is not part of the US anymore. They compete with Asia for tankers of substance. That's that's pad 5, right? So California has to import its stuff mostly from from elsewhere. On that front here, we're looking at the pad 5 middle distillate inventory. So that's two things. It's jet fuel in the blue line and it's diesel. They call it distillate, but it's that's diesel fuel. Diesel is how we move everything. Jet fuel is the only thing that flies jets. So this these are very important things to track. And as you can see, normally they vacasillate here. Um, left axis, right axis. Jet fuel is normally hanging out between, say, 9 million barrels in storage, 10 million, 9 to 10. It's bouncing around. That blue line hit about 10 million barrels just before the war started and is now down to 3.5 million barrels. >> Goodness gracious. >> This is more than a 50% plunge since the war started in jet fuels. It's getting very close to critical. I don't understand why people aren't panicking out there right now, at least officially or even at the residential level. Red, we're looking at diesel fuel again bouncing typically between say 11 million and 14 million barrels in storage. And here we can see in red, it's all the way down to 6 million barrels. So at least a 50% plunge at this rate, three more months by Labor Day, these things are 100% gone. So guess what? This rate can't continue. So either they're going to have to import a lot more from somewhere but where they're in competition with all of Asia for very very limited substances. We're going to have to somehow find a way to transport it there from other pads in the United States. So that's typically it's tanker truck maybe train but we don't have pipelines even. So this it's tricky how you do this. Um but this is a really big deal. And by the way, are we is there a lot left over in the rest of the country of these distillates to get over there? Well, the answer is our distillate inventories nationally are now as low as they've been since 2003 when our country was barely half as big economically speaking. Um so we don't have a lot extra to shift over there. And and so this is an absolutely unbelievable thing that we're talking about right now or not talking about right now. It's astonishing that this isn't above the fold number one um subject of conversation especially in the pad 5 district. They ought to be screaming about this right now. They're not. >> They should. Now I if if my math is correct on the first that was a 70% decline and 57% on the second. What the war's been going on three months. Mhm. >> And and we have less left than what has already been used up. So what's what's plan B, right? I mean, where else can it come from? Um maybe the Federal Reserve can print some up. No, this has been the thing. Jeff Cur's been saying this all over the news, like you can't print molecules, and we're treating it as if it's just another thing. and we get through these things by propping up the stock market and writing narrative friendly headlines and all the media and stuff like that. I don't know that we have Paul I don't know that we have people in power right now who are capable of managing this because I don't think they understand actually what the issues are. I don't think they I don't think they understand anything. For Trump to say well maybe we'll just open it by Labor Day cavalerely means he has not been informed. He is ignorant about this dynamic. He he clearly if you knew about this and understood it, which you should at the presidential level obviously. Yeah. And at a minimum, his energy secretary, Chris Wright, >> who used to be CEO of a fracking company, understands this. They ought to be talking about this realistically, so there's only two options. They aren't talking about it for whatever sets of complicated, you know, interpersonal reasons and egos and things like that. Or two, they know perfectly well about it and they're lying to us about how bad this is going to be. Mhm. >> So, what do you like? Ignorance or or or >> lying? >> Or deception? Yeah. It's either deception or ignorance, right? >> But I mean, when you're looking at data like that, especially with his experience coming from the fracking industry, it's going to be hard to deceive him if he has a chance to Pratt, you said, um, >> Chris Wright. >> Chris Wright to if he has a chance to talk to Trump about that unless there's an intermediary that's deceiving Trump from that standpoint. I mean, it's just math. Mhm. >> So, you know, all I can think about is if we're in that position and I'm a ran, right, to put myself in their shoes, I want to stretch this out as long as possible because because you're in a position to deliver maximum pain, you know, in in in this area to the American citizens and really to the world. That's incredible. >> Yeah. All Iran has to do is look at this chart and understand it, which I'm highly confident they have and do, and you go, "Oh, well, let's just we'll just wait." Right now, for everybody listening to this, if you live in the Pad 5 region, you should be tracking this very, very carefully because my prediction, Paul, and this is when I make predictions, let me be clear about this, everybody. It's not like I have a magic eight ball and I shake it and it tells me what's going to happen. I don't have any crystal ball. When I make a prediction, it's like I say, if I take something and I drop it, it's going to fall. That's a prediction. It's based on experience and watching the trajectory of things, right? Like if a ball is hit towards the left infield, it's going to the left infield, right? It's this is just saying that the way my country has behaved over the past few crises, right, has been to wait until the crisis unfolds and then you have these bureaucrats ride in and seize control and tell you this little restaurant has to be closed. Walmart can stay open, that mom and pop store has to close down. You're essential, you're not essential, that's all CO stuff, right? And it was just they made it up on the fly and it was highly damaging because these often these career bureaucrats Paul to cast a wide net. >> Most of them don't have any real job experience. Right. Right. >> So there will be people in California making triage distillate decisions. You get some diesel but not you. And well these political corrected people get it not these. And they'll do that and it's going to be complete disaster because none of these people have like 30 years in logistics and understand trucking intimately and they know what has to go where when. That's the prediction. They're going to try and manage it through a crisis and the result will be chaos if we go that route. No, absolutely not. And and what's mindboggling, you've talked about this several times since this uh o over the past couple of months, is the fact that let the prices go up in the short run. So, we've got a deceleration, right? You're utilizing the brakes on the car and you can slow that down without a sudden impact so that the economy can adjust, lower that demand and stretch this time period out. But I mean, I don't know anybody that's changing anything in their behavior at this point outside of those like I mean, I waited till the last minute to purchase the tickets for our for our fishing trip this summer just just to have some insight to make sure I could get back. But the average individual is fully trusting that what Trump's saying that, oh, prices are going to be down. I don't need to worry about it. Let's go. Right? instead of naturally slowing that down, which the added benefit for the individuals that do slow their purchases down that can, right, or make a little bit of decisions can keep their savings beefed up and be in their own stronger financial position. So, I mean, this is like absolutely wasting away our emergency funds with as with as a country with no backup. I mean, it's one thing if if it's a credit crisis, right, and they just print enough money to fill in for the deflation, but you can't print molecules like Jeff Cury was saying. I mean, he's been very vocal here here recently. I mean, there there is no plan B, right? Unless they just lock everybody down again. And so much for the people that said, "I won't be locked down again because if you can't get fuel to be able to to go somewhere, then you're just going to be locked down." But the question is, what about transporting food, right? I mean, getting there, people still have to drive to the grocery store for the most part. Cities may be a little bit different, but not all our population lives in the city. So, I mean, this would be just absolutely devastating across the country if we get to where you just don't have the the molecules to be able to transport. >> The obvious way to do this, obviously, you let prices rise, right? And that that has its own invisible magic, right? This is called capitalism. The true invisible hand of the market, right? So diesel goes up like $2 more dollars a gallon. Say just making a number up. Well, then you know sort of the marginal use for that uh people make decisions, right? Like you know I get to say well you know I would kind of like to get this thing shipped to my house but it's now the shipping's really expensive and you know what I just won't buy that right or whatever that they'll I'll make my decisions. you'll make your decisions and by the way that's the best outcome ow us because people are going to rationally make the highest best use decision for for that you know for those molecules right the alternative is you try and basically do nixonian price controls right we're going to like no we're just going to set the price for this thing and that's option B and I could see this and here's how that plays out Trump declares that diesel is now $3 a gallon is pre-war problem you can't get any right >> right >> there it is diesel 3 right on on the sign at the at the station also out of out of stock, right? That's what you get under that scenario. And that's terrible because then there's no rationalization of the decision set. You're just out of stock. Everybody's out of stock. The highest best use for that, right, >> is out of stock for that stuff. Like, oh, the farmer can't get it to harvest their crops is a very bad decision that gets made when you go down that other path. I think we're Trump's inclinations to me seem to he he wants to push us down that path. Remember, he's the guy who put us in lockdown first time. >> Yeah. >> Right. >> He sure did. >> This feels like another lockdown coming, right? And so he obviously has tendencies. It's okay to lock people down if we have to, right? So that that's a maybe he's changed. Maybe the leopard's changing spots, but I'm this guy, you know, I'm going to believe you the first time if I can. >> Yeah. You know, >> I mean, the reality is, I mean, you have to take that into consideration if you're logically honest about everything that took place. The lockdowns did occur under him and a massive amount of printing occurred under him, >> but what good is the printing going to do if you have an inflationary spike because of the lack of molecules that's not going to be saved overnight? >> Make it more expensive, >> you know, and and and >> drives inflation. >> I hate to say this, but, you know, there's another incentive. Just trying to look at the incentives. You got these big IPOs that are coming out in the next, you know, 30 to 60 days. If if the markets were to be 15 or 20% lower because they were actually paying attention to what's taking place or they were allowed to pay attention, then these IPOs are not going to be at these record valuations. There's just going to be less capital that's out there. So even Wall Street has an incentive to keep this party going until the last minute and play chicken with reality, right? And I mean, it's one thing I mean, it's one thing to say if you got credit destruction and the banking systems collapsing like it was in 2008, I don't agree with the fact that they printed money, but printing money can fill that void, right? It stops that that deflationary impulse. But what's it going to do, you know, and if you're filling in a hole, right? Then there's not as much inflationary pressure. We can see in hindsight we're back to the point now you print a bunch of money now inflation starts going along like crazy. But you can't do that in something that that's being used up that fast that was already just in time inventory. So you know if we reach these tank bottoms and stop I mean that's going to be how long is that impact going to roll through Chris? I mean that's going to roll through for months through the economy if not years. Years >> and we're already underinvested in Garren Roenwag's most recent report. I haven't gotten through the whole thing, but it's phenomenal. Um, just talking about the reality that we're underinvested in that category anyway and we're headed into a cycle and at some point we'll get overinvested and over supply potentially, but we're not there now. So, this is just going to exacerbate a uh super cycle assuming that a super cycle that could be unfolding assuming that we're the straits are open before Labor Day, right? But if we're not and if you're Iran and you want to deliver as much pain as possible, then do everything you can to keep the keep the straight shut down >> and and let this impact the world. So all every analyst out there, we're talking the Goldman Sachs, the JP Morgan Commodity Desk, we're talking all of the big analysts at like HFI Research, everything. Anyway, they they look at it and everybody has to take a little bit of a guess, but the range, the consensus range is like, look, even if this straight opens right now, like rainbows and unicorns, hugs all around, we're sorry, you know, both sides and it opens, it'll be 6 months before we get to 80% recovered normal function, right? And by the way, I don't know if you did you did you check out Barnacle Gate yet? >> No, I have not. >> Oh, this is this is kind of a fun thing. So nature always has a curveball for us, you know, and and nature is a complex system. So she throws us like fun stuff every so often. So it turns out that when tankers are moving, their holes can stay relatively clean, but when they get parked in a warm bathtub like the Gulf, they get fouling. You get jellyfish, barnacles, slime, all starts to attach. There's so much attached right now that they say that it could be anywhere from 50 to 80% higher fuel cost to get these things where they're going. >> Wow. >> And then they're going to have to get dry docked and scraped cuz they've just been parked for way too long. These ships aren't meant to they have anti-ouling on the bottom. But I'm you know I I looked at one of the terms of service on these antifouling companies. They say, "By the way, you can't have this thing parked at a dock for more than like x days cuz that stationary environment allows all these little marine organisms to say, "Hey, I like this home." and get attached. So anyway, so you got the barnacles going on. So, so just to un bollocks that, >> all these hundreds, if not thousand plus ships there, they all have to go and they all got to get serviced and and the the crews are going to have to like get a little time off and all kinds of stuff. And then even then you have to go back in and start resuming what you can with the other tankers that are out in the world in container ships. And then you have to try and get the refineries that are damaged days, weeks, months, years depending on the damage. Fine. And then you have to restart the oil fields. And when all of that is done 6 months later, we find we're still 80% there. Well, 80% of the former 25 million barrels per day flows out of the Gulf is still a 5 million barrel per day deficit. That's huge. >> Which which is five times larger than the deficit that brought us the 2008 part price spike. Okay. >> So anyway, point is like even if it's today, but if it's not till Labor Day, now we're talking 2027, right? >> Yeah. >> So two things have sort of softened the blow here so far. Um, one, there's been this crazy futures price thingy where we've seen what I would call shenanigans in the somebody somebody's playing around with the markets. Okay, fine. Um, but the second thing is we've been releasing inventories under the precept, I guess, that, you know, we have these cushions. We're going to use this. We're going to cushion the shock, but this thing's going to be over soon, right? Turns out wasn't soon. So, let's By the way, this still most shocking chart. People should very much be paying attention to this. But here, this comes from Eric Nuttle at ninepoint partners and we're looking at the big three all as one thing. Crude plus gasoline plus distlate. Just those three, smash them into one spot because that's what we really care about. And here we can see in 2026 at the last read, Paul, this is 10 years of data. We are now about poking through the bottom of the lowest reading we've had in 10 years um in terms of those three things. But this I've outlined in yellow what the next three months would look like. And if we just take this trajectory we're on and we point out what happens over the next three months. This is where we end up by Labor Day. We've never been down here this low before. As I mentioned before, this is going to be have this is a big this is one big number for the nation, but it's going to be a very different thing. Pad one, two, three, four, five are all going to experience this differently. But this is true crisis territory. And that's that's if it opens by September, which by the way, we'd have to open it today to even remotely have this line be different than it is. So, we're we're we're we're entering the largest energy shock ever. And I Paul, I can't find anybody at the national level, either in media or politics, talking about it this way. We should be talking about this is that this is the most serious crisis our country has faced. >> Mhm. >> In anybody's lifetime. >> Yeah. >> And all we're get shrug gas prices will go down when the straight reopens. Like wildly unsophisticated, naive. >> Well, and the worst part is the average person just doesn't know, Chris. The average person just doesn't know. And if we go back to those doctors during COVID that relied upon the advice that was coming down from them that had been trustworthy for the most part for a long period of time, the average person is just assuming there's no way that they're going to lie to me. There's no way that they're going to deceive me. So they're not worried about anything right now. I mean, and especially with the euphoria in the markets, the fear of missing out is just this big shiny object that's pulling people's attention in that direction and they have no clue the risk that's coming. And what's amazing to me is it's rare on Wall Street that that all of your analysts are in agreement with with most issues, right? I mean, they may agree, but they've got different price targets. I'm not talking about price targets in commodities, but everywhere I look, anybody that's an analyst or a specialist in the industry is screaming into the void right now that that we've got major issues coming, right? like like this is this is problems arising and you're doing such a phenomenal job of warning people about it but there's a complete disconnect out there right now. Look, forewarned is fore armed and and maybe not everybody wants to hear this stuff. I understand the optimism bias. I I don't try to be pessimistic or anything. I consider myself a realistic optimist. I'm very optimistic if you look at how I invest and where I put my time and all that. I have great hope for the future, but I'm realistic about this. And and this is clearly obviously one of the most obvious things I've seen in my entire career of pointing out obvious stuff that we are just absolutely blindfolded driving towards a brick wall on this energy story as a nation. So that's completely obvious, but but I get it. So for the average person, you know, Paul, we don't have a good education system here that explains any of this stuff. You know, you can learn all about critical race theory, but probably not a lot about pad district oil storage, right? You know, in our school system, you're not really going to learn about where prosperity comes from, where energy is the master resource. And as it becomes more expensive, you're just going to have less and less of an ability to live beyond your means. And then combine that with simple economics, our country has been living beyond its means. Our trade deficit, which is us buying more than we produce, if it were an economy, would be the 19th largest economy in the world, just our trade deficit. That's how far beyond our means we're living. And so what we're talking about here is what happens if you have to suddenly adjust and live within your means. Right now, the powers that be are not going to tolerate that. and what they've done. And again, this isn't a prediction in in in a in a truly forecasting, you know, amazing, you know, sightseer kind of way. This is this is me just saying every single time since 1987 when the United States experienced a hiccup, the response was to print more money, >> right? >> Without fail, >> every single time. >> So, the prediction, it's going to happen the next time, too. But what good is printing money going to do into a into a commodities price spike when you've already got the embers of inflation that are that are starting to pop up flames? I mean, they you know, you went from open flames and then we had a little bit of a a pullback and smoking, but those uh cinders uh are still burning at that pile and this is just gasoline on top of that with extra fuel. I mean, that's that's going to lead to horrible inflation if they print money into an energy shock. >> Yeah. So, for everybody who would like to maybe talk to Paul and his team, and you really do, uh, please go to peakfinancialinvesting.com, fill out a very simple form and click submit, and then within 48 business hours, somebody from Paul's team will get a hold of you and begin the process where you can set up three calls. And the first call is just to get to know you. Call, let's have some some uh back and forth. The second call is a planning call just to sort of look at uh what your plan is, what your circumstances are very specifically for you, where you are, what you have, what your hopes and dreams are, all of that. And then if it progresses from there, you would go to a recommendation call where Paul will say, "Hey, here's what I recommend." If after all of that, it feels like a good idea for everybody to work together, great. Maybe you work together. If not, no obligation. And Paul, everybody who goes through it tells me it's one of the best things they've done. Maybe they don't always hear exactly what they wanted, >> right? >> But they're relieved to finally hear what they they kind of suspected was the actual truth anyway. >> Yeah. Yeah. And and look, we're we're going to give you the reality with empathy of what your situation is, right? I mean, that's that's just the reality. It's our job to show people where they are, the risks to their their decision so that they can make the decision. Like I got a client that I worked with, so this is 12 years ago. They had a 50% probability of success at three and a half% inflation and 20 at five and a half. And I'm like, look, if I was you, there's no way I would retire under these circumstances. And they're like, hey, we're speculators. We're going to do it. Well, because of the higher inflation, I said, okay, if you do, here's the things you're going to have to make adaptations for in the future to make sure you don't run out of money. Had a review with them here recently. They're still at that 50% probability of success. Everything's kind of worked out online. you know, the longer they go, the greater the chance of a possible outcome pro uh of a positive outcome. But they've made a few adaptations that I had put in place because of the higher inflation, and they actually thank me for it because we warned them. They're having to make some tough decisions, but they they were grateful for it because they knew that that was a possibility and they made the decision understanding what, you know, um adaptations they'd have to make and how that would limit their lifestyle. That's really the only thing that we can do for people is help them understand their circumstance, give them the information so they can make prudent and wise decisions. >> Excellent. Well, thank you for doing that and uh thank you everybody for listening to this episode. again, peakfinancialininvesting.com to get that process started if that's something you want to do. And I'm pretty sure it is. Um, it's excellent and it's time with that. Paul, uh, we'll see you next time. >> See you soon, Chris.