DAGEN:  OIL TAKING A DIVE, CRUDE
DAGEN:  OIL TAKING A DIVE, CRUDE
PRICES FALLING YESTERDAY AFTER
PRICES FALLING YESTERDAY AFTER
MEXICO THREATENED TO DERAIL A
MEXICO THREATENED TO DERAIL A
DEAL AMONG OPEC PLUS COUNTRIES
DEAL AMONG OPEC PLUS COUNTRIES
TO TEMPORARILY CUT ROUGHLY
TO TEMPORARILY CUT ROUGHLY
10 MILLION BARRELS OF OIL PER
10 MILLION BARRELS OF OIL PER
DAY IN PRODUCTION.
DAY IN PRODUCTION.
THERE ARE ALSO CONCERNS THAT
THERE ARE ALSO CONCERNS THAT
PRODUCTION CUTS WON’T BE ENOUGH
PRODUCTION CUTS WON’T BE ENOUGH
TO EASE THE OIL GLUT AS THE
TO EASE THE OIL GLUT AS THE
GLOBAL DEMAND IS EXPECTED TO
GLOBAL DEMAND IS EXPECTED TO
DROP ABOUT 30% JUST THIS MONTH
DROP ABOUT 30% JUST THIS MONTH
AMID THE COVID-19 CORONAVIRUS
AMID THE COVID-19 CORONAVIRUS
CRISIS.
CRISIS.
G-20 ENERGY MINISTERS MEETING
G-20 ENERGY MINISTERS MEETING
LATER TODAY TO DISCUSS FURTHER
LATER TODAY TO DISCUSS FURTHER
CUTS.
CUTS.
JOINING US NOW, LIPOW ASSOCIATES
JOINING US NOW, LIPOW ASSOCIATES
PRESIDENT, ANDY LIPOW.
PRESIDENT, ANDY LIPOW.
ANDY.
ANDY.
>>  GOOD MORNING, DAGEN.
>>  GOOD MORNING, DAGEN.
DAGEN:  TALK ABOUT THE REACTION
DAGEN:  TALK ABOUT THE REACTION
IN THE OIL MARKETS AS OIL PRICES
IN THE OIL MARKETS AS OIL PRICES
DROP THIS PRODUCTION CUT NOT
DROP THIS PRODUCTION CUT NOT
ENOUGH, WHAT DO YOU MAKE OF IT?
ENOUGH, WHAT DO YOU MAKE OF IT?
DO YOU SEE MORE CUTS DOWN THE
DO YOU SEE MORE CUTS DOWN THE
ROAD AND THE ROLE OF MEXICO IN
ROAD AND THE ROLE OF MEXICO IN
ALL THIS.
ALL THIS.
>>  WELL, I THINK THE MARKET
>>  WELL, I THINK THE MARKET
YESTERDAY WAS QUITE SKEPTICAL
YESTERDAY WAS QUITE SKEPTICAL
WHEN THEY STARTED SEEING SOME OF
WHEN THEY STARTED SEEING SOME OF
THE DETAILS OUT OF THE OPEC
THE DETAILS OUT OF THE OPEC
AGREEMENT.
AGREEMENT.
WE SAW A SWING OF 20% ON OIL
WE SAW A SWING OF 20% ON OIL
PRICES AND ONE OF THE REASONS IS
PRICES AND ONE OF THE REASONS IS
THIS 10 10 MILLION-BARREL A DAY
THIS 10 10 MILLION-BARREL A DAY
ALSO DEPENDS ON AN ADDITIONAL
ALSO DEPENDS ON AN ADDITIONAL
5 MILLION A DAY PRODUCTION CUT
5 MILLION A DAY PRODUCTION CUT
FROM THE U.S., CANADA, BRAZIL,
FROM THE U.S., CANADA, BRAZIL,
NORWAY AND COUNTRIES OUTSIDE OF
NORWAY AND COUNTRIES OUTSIDE OF
OPEC WHO HAVE ALREADY SAID
OPEC WHO HAVE ALREADY SAID
THEY’RE GOING TO DEPEND ON
THEY’RE GOING TO DEPEND ON
MARKET CONDITIONS FOR A
MARKET CONDITIONS FOR A
REDUCTION IN THE AMOUNT OF OIL
REDUCTION IN THE AMOUNT OF OIL
SUPPLIES.
SUPPLIES.
MEANWHILE, WE JUST SAW OVERNIGHT
MEANWHILE, WE JUST SAW OVERNIGHT
THAT MEXICO IS REALLY NOT
THAT MEXICO IS REALLY NOT
INTERESTED IN CUTTING 23% OF
INTERESTED IN CUTTING 23% OF
THEIR OIL PRODUCTION WHICH
THEIR OIL PRODUCTION WHICH
EQUATES TO 400,000 BARRELS A
EQUATES TO 400,000 BARRELS A
DAY, THEY’RE MORE INCLINED TO DO
DAY, THEY’RE MORE INCLINED TO DO
100,000 BARRELS A DAY.
100,000 BARRELS A DAY.
IT’S REALLY DIFFICULT TO SEE HOW
IT’S REALLY DIFFICULT TO SEE HOW
YOU GET OPEC AND OPEC PLUS ALL
YOU GET OPEC AND OPEC PLUS ALL
AGREEING TO THIS MASSIVE
AGREEING TO THIS MASSIVE
PRODUCTION CUT AND THEN THE NEXT
PRODUCTION CUT AND THEN THE NEXT
THING THE MARKET THINKS ABOUT IS
THING THE MARKET THINKS ABOUT IS
WHAT KIND OF CHEATING IS GOING
WHAT KIND OF CHEATING IS GOING
TO GO ON OR NONCOMPLIANCE IF
TO GO ON OR NONCOMPLIANCE IF
EVERYONE AGREES TO A HEADLINE
EVERYONE AGREES TO A HEADLINE
NUMBER BUT DOESN’T COMPLY.
NUMBER BUT DOESN’T COMPLY.
DAGEN:  BRIAN BRENBERG, JUMP IN.
DAGEN:  BRIAN BRENBERG, JUMP IN.
>>  SURE, YEAH.
>>  SURE, YEAH.
A BIGGER CUT WOULD BE MORE
A BIGGER CUT WOULD BE MORE
HELPFUL IN TERMS OF STABILIZING
HELPFUL IN TERMS OF STABILIZING
PRICES, SAY 20 MILLION BARRELS A
PRICES, SAY 20 MILLION BARRELS A
DAY.
DAY.
BUT THE BIGGER CUT YOU GET
BUT THE BIGGER CUT YOU GET
PROMISED, THE MORE LIKELY IT IS
PROMISED, THE MORE LIKELY IT IS
THAT MEMBER COUNTRIES OR
THAT MEMBER COUNTRIES OR
NONMEMBER COUNTRIES WON’T COMPLY
NONMEMBER COUNTRIES WON’T COMPLY
AND MEXICO’S A GOOD EXAMPLE.
AND MEXICO’S A GOOD EXAMPLE.
THEY’RE NOT INTERESTED IN
THEY’RE NOT INTERESTED IN
CUTTING SUPPLY RIGHT NOW.
CUTTING SUPPLY RIGHT NOW.
SO IS THIS REALLY THE BEST WE
SO IS THIS REALLY THE BEST WE
CAN HOPE FOR, GIVEN THAT
CAN HOPE FOR, GIVEN THAT
POSSIBILITY, THAT YOU JUST GET
POSSIBILITY, THAT YOU JUST GET
RAMPANT CHEATING, RAMPANT
RAMPANT CHEATING, RAMPANT
NONCOMPLIANCE?
NONCOMPLIANCE?
>> I THINK IT IS, BECAUSE WHAT
>> I THINK IT IS, BECAUSE WHAT
YOU SEE IS EVERYONE IS WAITING
YOU SEE IS EVERYONE IS WAITING
FOR THE OTHER GUY TO CUT OIL
FOR THE OTHER GUY TO CUT OIL
PRODUCTION AND AS OIL PRICES
PRODUCTION AND AS OIL PRICES
RISE, EVEN ASSUMING WE GOT A
RISE, EVEN ASSUMING WE GOT A
HEADLINE OF A 20 MILLION-BARREL
HEADLINE OF A 20 MILLION-BARREL
A DAY CUT, IF WTI PRICES WENT TO
A DAY CUT, IF WTI PRICES WENT TO
25 OR $30 A BARREL WHAT YOU FIND
25 OR $30 A BARREL WHAT YOU FIND
IS THE DOMESTIC PRODUCERS ON A
IS THE DOMESTIC PRODUCERS ON A
CASH OPERATING BASIS ARE NOT
CASH OPERATING BASIS ARE NOT
INTERESTED IN CUTTING PRODUCTION
INTERESTED IN CUTTING PRODUCTION
BECAUSE AT LEAST THEY HAVE CASH
BECAUSE AT LEAST THEY HAVE CASH
COMING IN THE DOOR.
COMING IN THE DOOR.
DAGEN:  JUST WANT TO POINT OUT
DAGEN:  JUST WANT TO POINT OUT
THE NATIONAL AVERAGE FOR
THE NATIONAL AVERAGE FOR
UNLEADED GASOLINE IS BELOW TWO
UNLEADED GASOLINE IS BELOW TWO
BUCKS A GALLON, $1.88.
BUCKS A GALLON, $1.88.
WE CAN’T TAKE ADVANTAGE OF IT.
WE CAN’T TAKE ADVANTAGE OF IT.
NOBODY’S DRIVING ANYWHERE EXCEPT
NOBODY’S DRIVING ANYWHERE EXCEPT
MAKEMAYBE TO THE GROCERY STORE O
MAKEMAYBE TO THE GROCERY STORE O
WALMART.
WALMART.
JON, DO YOU HAVE A QUESTION FOR
JON, DO YOU HAVE A QUESTION FOR
ANDY?
ANDY?
>> YEAH, IT RELATES TO WHAT YOU
>> YEAH, IT RELATES TO WHAT YOU
JUST SAID, DAGEN.
JUST SAID, DAGEN.
WE’RE TALKING ABOUT THE BENEFITS
WE’RE TALKING ABOUT THE BENEFITS
OF A PRODUCTION CUT, YES THAT
OF A PRODUCTION CUT, YES THAT
WILL HELP TEXAS AND NORTH
WILL HELP TEXAS AND NORTH
DAKOTA, THOSE STATES ARE IN REAL
DAKOTA, THOSE STATES ARE IN REAL
SERIOUS TROUBLE WITH WHAT’S
SERIOUS TROUBLE WITH WHAT’S
GOING ON WITH THE ENERGY SECTOR.
GOING ON WITH THE ENERGY SECTOR.
BUT YOU KNOW, IN A GASOLINE
BUT YOU KNOW, IN A GASOLINE
PRICE CUT IS A TAX CUT FOR
PRICE CUT IS A TAX CUT FOR
AMERICANS, HOME HEATING, CUTS
AMERICANS, HOME HEATING, CUTS
THE PRICE OF HOME HEATING OIL,
THE PRICE OF HOME HEATING OIL,
ALSO CUTS THE PRICE OF GASOLINE.
ALSO CUTS THE PRICE OF GASOLINE.
SO WHY ARE WE CHEERING FOR
SO WHY ARE WE CHEERING FOR
PRODUCTION CUTS WHEN AMERICANS
PRODUCTION CUTS WHEN AMERICANS
COULD BENEFIT FROM A LOWER
COULD BENEFIT FROM A LOWER
PRICE?
PRICE?
>> WELL, I THINK YOU REACH A
>> WELL, I THINK YOU REACH A
POINT WHERE, YES, IT’S
POINT WHERE, YES, IT’S
DEFINITELY TRUE THAT THE U.S.
DEFINITELY TRUE THAT THE U.S.
CONSUMER’S BENEFITING FOR A
CONSUMER’S BENEFITING FOR A
LOWER PRICE BUT THE FLIP SIDE OF
LOWER PRICE BUT THE FLIP SIDE OF
THE ARGUMENT IS THAT THE OIL
THE ARGUMENT IS THAT THE OIL
INDUSTRY, THE ENERGY INDUSTRY IS
INDUSTRY, THE ENERGY INDUSTRY IS
PROVIDING A SIGNIFICANT AMOUNT
PROVIDING A SIGNIFICANT AMOUNT
OF JOBS ACROSS THE NATION, NOT
OF JOBS ACROSS THE NATION, NOT
ONLY FOR THE OIL PRODUCERS, BUT
ONLY FOR THE OIL PRODUCERS, BUT
FOR THE SERVICE INDUSTRIES THAT
FOR THE SERVICE INDUSTRIES THAT
ARE SUPPORTING THEM AS WELL AS I
ARE SUPPORTING THEM AS WELL AS I
THINK ABOUT ALL THE RESTAURANTS,
THINK ABOUT ALL THE RESTAURANTS,
ALL THE RETAIL SALES THAT HAPPEN
ALL THE RETAIL SALES THAT HAPPEN
IN NORTH DAKOTA, TEXAS,
IN NORTH DAKOTA, TEXAS,
CALIFORNIA OR EVEN ALASKA.
CALIFORNIA OR EVEN ALASKA.
SO THERE IS A BIG INDUSTRY AND A
SO THERE IS A BIG INDUSTRY AND A
JOBS ISSUE REGARDING OIL PRICES.
JOBS ISSUE REGARDING OIL PRICES.
BUT IT IS TRUE THAT THE AMERICAN
BUT IT IS TRUE THAT THE AMERICAN
ECONOMY AND FOR THAT MATTER THE
ECONOMY AND FOR THAT MATTER THE
WORLD RUNS ON AFFORDABLE OR
WORLD RUNS ON AFFORDABLE OR
CHEAP ENERGY PRICES.
CHEAP ENERGY PRICES.
DAGEN:  ANDY, GOOD TO SEE YOU.
DAGEN:  ANDY, GOOD TO SEE YOU.
THANK YOU SO MUCH.
THANK YOU SO MUCH.
YOU HAVE A GREAT WEEKEND.
YOU HAVE A GREAT WEEKEND.
THANK YOU FOR BEING HERE, TAKING
THANK YOU FOR BEING HERE, TAKING
THE TIME.
THE TIME.
STAY HEALTHY.
