Crowdstrike Global Tech Outage Wrecks Industries

Ford scraps plans for $1.8-billion Oakville EV assembly plant, will retool to make gasoline pickups

 

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Monday, July 22nd, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, of course, we start with CrowdStrike. Global tech outage wreaks havoc on the United States. Absolutely unbelievable story. We’ll dive into all of the fallout from what’s going on with CrowdStrike. Next up, Ford scraps plans for $1.8 billion Oakville EV assembly plant will retool to make gasoline pickups. Shocker! If you’re a fan of the podcast, this comes as absolutely no surprise to you. Next up, why wind power is useless. A great article here, a great opinion piece by our friends over at Real Clear energy.org. Next up. Slovak Prime Minister blasts Ukrainian Lukoil sanctions as oil flows stop at then finally attack on modern farming will devastate nature and nutrition. Stupid. Internationally, I will quickly cover what happened in the oil and gas markets. We actually saw oil prices drop and rig counts up. So an interesting, interesting swing there and then finishing with oxy exploring selling a stake of its recent Crown Quest acquisition to Eco Petroleum. Some interesting notes around there. We will cover all that and a bag of chips, guys. As always, I am Michael Tanner, joined by Stuart Turley. Where do you want to begin? [00:01:33][78.7]

Stuart Turley: [00:01:33] Hey, let’s start with a political discussion since you’re all political. Ready? Here we here, let’s hear a moment of silence for Joe Biden as he ends his thing. Okay. Hey. Good luck. Go retire and enjoy your library. I bet he negotiated a library. What do you. [00:01:50][16.8]

Michael Tanner: [00:01:50] Think? He negotiated something. What did I read somewhere on Twitter that they they they cracked open the blackmail book that everyone’s got a little blackmail book in over at Langley. And they thought, well, we’re just going to pull this one, dusted off the shelf and see what we can find. [00:02:03][13.4]

Stuart Turley: [00:02:04] Who knows? Hey, let’s start with some really widespread global tech outage wreaks havoc. Holy smokes, Batman! Miss producer, if you could bring up two, two. We’re going to flash through these two here, okay? Due to a worldwide outage, we can only accept cash until further notice. This was a graphic that I put in the second graphic. If we could bring this up. CrowdStrike outage was the largest outage we have ever seen in a world. Technology. Airlines were knocked down, transportation was knocked down, the supply lines were knocked down. Elon knocked all not lock all of it out of it. Michael Love air, Love Field Southwest Airlines was the only one flying. [00:02:51][47.1]

Michael Tanner: [00:02:52] Yeah. And well what the interesting part is. So what actually happened here guys. So CrowdStrike is a cybersecurity company that is it’s a third party service that most all that a majority of large software vendors use. Microsoft being one of their big customers, a and a parent, you know, and Stu will tell you otherwise. But in a parent software update glitch got, you know, accidentally rolled into their latest latest deployment causing everything above. I think Microsoft Windows version 3.2 and above get knocked offline. The funny part about why Southwest Airlines was one of the few airlines that getting it didn’t get knocked off line is due to the fact that they’re using antiquated Microsoft version 3.1. So there’s something to be said about not necessarily upgrading to the latest and greatest tech. It’s also funny, I saw the memes flying around how, you know, every industry besides oil and gas was taken offline because IT directors in oil and gas are are too lazy to upgrade their infrastructure. So there’s something there is something to be said about having extremely low power or not necessarily using the latest stuff. You know, I think it’s really interesting. George Kurtz, he’s the CEO of CrowdStrike, really a masterclass in terrible PR. I mean, this follows up on the CenterPoint CEO masterclass that we saw two weeks ago on how not to respond to a disaster. You know, he’s taking pictures. You know that CenterPoint CEO, he’s taking pictures in front of a 70 degree thermometer when he’s got 2 million customers out of business. This George Kurtz guy, really pretty bad PR first quote out of his mouth is our customers remain fully protected. Nobody cares if your flight is grounded. Nobody. Actually, no. You know, people as sad as this sounds, people aren’t necessarily worried about security. They’re worried about convenience. And when this type of stuff gets in the way of convenience, you see how vulnerable people are. I mean, it’s pretty crazy. And I think it touches on something that you’ve been saying for a while, Stu, is how integrated all of this stuff really is and how vulnerable we are to some sort of I mean, this was a, you know, if you believe it, this was a mistake. This was one line of code that got pushed through software update that somebody did on a Friday afternoon. What happens if something bigger comes? What happens if someone like I ran decides to take the grid down? I mean, it’s pretty scary. [00:05:07][135.4]

Stuart Turley: [00:05:08] The there’s the CrowdStrike. Is a World Economic Forum global partner. Then they also a World Economic Forum also said earlier this year we will take the grid down. They said that so this is my conspiracy theory. And then that’s why Elon Musk responds with you’re out. You’re out of anything at X, you’re at. And he and by the way, X is still running. You’re you’re out of Tesla. You’re out of everything that has to do with it. So I wonder if CrowdStrike is going to survive after this Michael. [00:05:41][33.5]

Michael Tanner: [00:05:42] Oh, I mean they will survive because it’s it’s they’ll survive. And even the fact is that they’ve built up there are thousands of other products that are deployed right now that are that are working fine. If you notice Macintosh, the operating system that Apple was using, wasn’t down. Google Cloud Services didn’t go down. So it was it was specific to Microsoft enterprise services and specifically people running versions. Now, you know, kind of the latest and greatest. But yeah, I mean they’ll definitely take a hit. Don’t get me wrong. But never I never underestimate someone’s ability to fail upward. [00:06:13][30.7]

Stuart Turley: [00:06:13] I believe Obama said that. Never underestimate the ability of Joe Biden to if something was that the quote sorry, let’s go to the next story. Michael Ford scrapped plans for 1.8 billion in Oakville EV assembly plant. It will retool and make gasoline pickups. Ford motor announced it’s pivoting away from its initial production plans to build out electric vehicles at oh, Real in Ontario. Michael, this is critical because Ontario invested in subsidies to Ford for electric car jobs to the tune of I believe was 377,000 per job that they invested in. And now they’re doing a bait and switch on this. This is huge. [00:07:02][49.5]

Michael Tanner: [00:07:03] Well, it is, and I think, you know, something that that you’re you know, we’ve touched on this numerous times, but the EVs are falling out of favor with, you know, not just here in the United States, but around the world. I mean, again, this is in Canada if, if and now obviously Ford, it’s an American company. So there’s, there’s, there’s, there’s kind of the competing interest there. But on the side of whether or not EVs are going to become a thing, we’ve been saying this now for years. If you either going to, you know, why will Tesla win? Probably not because of the electric nature of their car, but probably because of their full self-driving and the fact that they actually make a superior car. That’s the different Tesla is is a new way to design a car from the software in the way it looks, in the ways it feels. The EV. [00:07:46][42.3]

Stuart Turley: [00:07:46] Part. [00:07:46][0.0]

Michael Tanner: [00:07:47] Of Tesla isn’t that novel, and probably, in my opinion, is not the reason Tesla is going to win this quote unquote new market, or why it’s valued so much higher than all these others. We know that a lot of what EV is being valued around is this robotaxi idea with it’s been pushed out a little bit till the end of August. So I think a lot of this I think all of these companies Ford, you know, Stellantis, all these companies, obviously they wanted in on the EV tax credit, but I think they miscalculated why Tesla was so successful and why they were getting a huge bump and why Tesla, in my opinion, will be successful is for things other than the fact that their vehicles happened to be electric. I wouldn’t be shocked if they came out with a hydrogen car at some point. Oh, I wouldn’t either. [00:08:31][44.3]

Stuart Turley: [00:08:31] I wouldn’t buy it. The Hindenburg is nothing to be driving around. [00:08:35][3.2]

Michael Tanner: [00:08:35] I don’t want to drive around a nuclear bomb. [00:08:37][1.7]

Stuart Turley: [00:08:37] New. Hey, let’s go to the next one here. Why is wind power useless? According to the Sierra Club, when power electricity is economically viable without government assistance. Wow. I think that they’re going to have a job. Whoever this is. Is I our guy? The wig? Or we need to put them in to the Biden administration or the next one’s press secretary. What do you think the government subsidizes? Wind power. Some of the savings up front. Others are hidden tax rules created by a law to change the bargaining balance between providers of electrical electric utilities. The biggest hidden subsidy is tax equity financing, a masterpiece of accounting. Obscure ism. Yeah, it falls on the heels, Michael, of a big the big one up in the vineyard. A wind farm just totally blew up. And it sent all of the blades up on the beach. And the microplastics and the plastics were just horrific. And the death industry, where are the ecological warriors out there when this kind of stuff happens? [00:09:48][70.8]

Michael Tanner: [00:09:49] Well, it it it’s it puts them in a, in a mind twist because on one hand, yes, they, you know, wind they were shoving wind down our throats is the next greatest thing until you realize the, the horrendous nature of what happens when things goes, goes wrong. So it’s like everything there are, there are upsides and downsides. People have been saying, well, what happened? What what about the Macondo spill? Yeah. Okay. Yes. Well, obviously we don’t want oil spills. The difference is the amount of power we can get out of one oil well is tremendously more than we can get out of one windmill. So the question is, what risk would you rather associate with? I think that’s the part that people don’t realize. There’s risk with everything you do. There’s risk when you walk outside and jaywalk across the street. But guess what? You do it anyway because you’ve evaluated the risk relative to doing anything else. So this idea that we have zero risk in everything we do, I think is stupid, but the fact that the the minimal minuscule amount of increase of, of of energy that we get from a wind farm relative to the risk of, you know, you know, as much as I hate the whales, the whales, all the, all the, the seafood, and, you know, I think of it in terms of seafood, not sea life, because I’m all about trying to eat the stuff. But, you know, all of the, the ecosystem that surrounds these areas. And the fact is they’re just horrible to look at that outweighs, in my opinion, the minuscule increase of quote unquote energy within these numbers. [00:11:12][83.3]

Stuart Turley: [00:11:12] Michael, they break it out very well. A $1 billion wind farm would have a nameplate capacity of 400MW. The nameplate capacity is the maximum output when there’s sufficient wind. But since wind isn’t always blowing, the average power would be typically 38% of the 400MW or 152MW. This accounts for 1,000,337 megawatt hours per year. To meet the 12% interest rate goal, the electricity would have to sell for the high price of $115 per megawatt hour to meet an 8% goal, the case of a guaranteed long term contract, the company would need about $75 per megawatt hour. Michael to compare against the natural gas, their $20 per megawatt hour. That is the significant difference. And that’s even with subsidies. [00:12:14][61.5]

Michael Tanner: [00:12:15] Yeah, legit subsidies. Not tax incentives, not tax incentives. Legitimate subsidies. Right. [00:12:21][6.4]

Stuart Turley: [00:12:22] Exactly. So the this article breaks it out pretty good. And for 95 megawatt per hour, the U.S. is wasting about $41 billion every year on subsidies for wind power, which is around $300 per household annually. Yeah. [00:12:38][16.6]

Michael Tanner: [00:12:38] Crazy. All right, what’s next? Let’s go. Let’s move to Ukraine, our favorite country. [00:12:42][3.2]

Stuart Turley: [00:12:42] Oh, my gosh, you gotta love Slovakia. Prime minister blasts Ukraine. Lukoil sanctions is oil stomps. Slovakia will be not held hostage to Ukraine. Russia relations is Prime Minister Robert Fico told a Ukrainian counterpart on a call. Let’s see here it means a license implies for let’s see, where is it, where is it? Slovakia Slav. And that will receive 40% less oil for processing than is needed, said the government, which hit Slovak Slovak market and also lead to a stop of diesel supplies. Which is why it’s critical because the EU is. This is a Russian owned refinery and they’re seizing it. Oops. Now it’s not getting any oil. [00:13:29][47.1]

Michael Tanner: [00:13:30] Yeah. I mean, and this is the problem with a lot of this geopolitical stuff that’s going on right now. And why talking about the grid and having yourself hostage to one supply of energy. This is why you can’t only have your flows coming from one, one entity. Because when something goes wrong, well, you’re up a creek without a paddle. [00:13:51][21.0]

Stuart Turley: [00:13:52] Oh, yeah. All right, let’s go to the last one here. Speaking of World Economic Forum, attacks on modern farming will devastate nature and nutrition. The World Economic Forum says faces a new crisis. One third of anthro progeny greenhouse gas emissions come from food production. I’m just going to call total who are on this? And the reason that I say who ha is because with no farmers means no food, and they are absolutely creating these things. It’s part of the Green New Deal, the green new laws against this tractor’s trucks, the number one biggest market for oil and gas is farming because of all the diesel that they use. I mean tractors, trucks, farmers, livestock and MIT carbon dioxide equivalent of $40 per 100,000. And this is stupid. Plants love CO2, cattle emissions and other methane is. This is really stupid. I don’t know why they’re picking a fight with farmers. [00:14:56][64.6]

Michael Tanner: [00:14:57] Yeah, well, it’s for for for reasons we don’t need to get into on this podcast. We know that it is. And they’re doing it under the guise of ESG. They know that that’s how they’re able to do a lot of stuff nowadays is under the. Rules of ESG. [00:15:11][14.3]

Stuart Turley: [00:15:12] I think it’s in your policy, Michael. The whales. If it’s really about the environment, they pick and choose what environment they want to do. [00:15:20][8.2]

Michael Tanner: [00:15:21] I guess we know where I stand on the whales. All I know is that the way they go about all this stuff is they is they is they brush over. They use this ESG term. Oh, we’re going to do to meet you here. Larry Fink this weekend was said, hey, we’re gonna have to force behaviors on video. While you’re not going to do it, we’re going to have to force behaviors. [00:15:39][17.7]

Stuart Turley: [00:15:40] Because they are going to force. Would they would you eat bugs if they forced you to eat them? No, no. [00:15:45][4.8]

Michael Tanner: [00:15:45] I mean, it depends if that’s all there is to eat, if they wipe out the crops like they want to do. Sure, I’ll. I’ll eat whatever I need to survive. I’m not going to jump the bugs to begin with. I’ll probably start with, you know, I’m probably you. I have to work me into that. But I’m probably not just going to jump straight to bugs. [00:16:00][15.4]

Stuart Turley: [00:16:01] No, not me either, man. No, I don’t get it. [00:16:03][2.3]

Michael Tanner: [00:16:04] Good, Joe. [00:16:04][0.4]

Stuart Turley: [00:16:05] But just watch it, because it’s it’s we’re seeing a lot of turmoil starting around in the UK. And what goes on in the UK happens and rolls over the US eventually. [00:16:14][10.0]

Michael Tanner: [00:16:15] Yeah. No it it it does. So all right we’ll go ahead and jump over into oil and gas finance side before we do that guys we got to pay the bills. As always the news and analysis that you just heard is brought to you by the world’s greatest website, Energy News Beat.com The best place for all your energy and oil and gas news. Doing the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit that description below for links to all of the articles, links to the timestamps, and check us out on Substack where you can get all of these articles. You know, we record this the afternoon prior to us two releasing in the morning, so if you want to stay up to speed and get those articles in your inbox as soon as they drop, go ahead and sign up for us on a Substack. The Energy News beat.substack.com to get tomorrow’s news today. [00:17:04][49.2]

Michael Tanner: [00:17:05] So let’s go ahead and jump in here still. I mean, markets didn’t do great on Friday for a variety of reasons S&P 500 down about 7/10 of a percentage point Nasdaq down a full percentage point two. And ten year yields actually do jump a little bit which is good for the overall economy. We did see the dollar index up about about a 10th of a percentage point 2/10 of a percentage point. Maybe Bitcoin still $67,000. That was down about a quarter of a percentage point over the weekend. Crude oil drops about shaves off 3.2 percentage points. Currently sitting at 7860 will open somewhere around 7860. Now, I’m not sure what’s going to happen relative to what we saw over the weekend where it was, Israel taking out and striking an oil refinery over there in Yemen, causing some, some pretty, pretty crazy videos coming out of there. So some of the geopolitical that’s going on right now is can get a little bit crazy. We’ll make sure tomorrow as more information comes out on that to keep everybody up to speed. Brant oil I was only down about 1.5 percentage points, 80 to 99. Natural gas still down at that $2 at 12 cent mark. I mean really what we’re seeing is a few different things come out. I mean we did see obviously the Chinese economy, they did drop some economic data. They had slower than expected kind of economic growth, only sitting at 4.7% for the second quarter. And this is obviously not a good you know, China economic growth is a proxy for oil demand. We also obviously on Friday saw that the CrowdStrike IT disruption did did kind of hurt global oil traffic and some of the other stuff associated with that. So we saw a little bit of a drop there. You know we also did see there two large oil tankers. I mean, this isn’t good to hold. Two oil tankers in Singapore collided and they are on fire down there near Singapore in the world’s biggest refining port. Two crew members had to be airlifted to a hospital, others rescued via life rafts. You know, we did also see again this week we saw a bigger than expected decline in, in, in, in and in weekly stockpiles over there from Cushing. So super interesting. We did hear a quote out of Opec+ saying that it’s unlikely to recommend changing its output policy, including a plan to start unwinding one layer of oil supply cuts from October, according to three sources. Via our friends over at Reuters, BNP Paribas analyst Aldo Spanier wrote in a research note. Q3 balances are set to tighten due to OPEC restraint and seasonal demand increases before weakening in Q4 on additional supplies from OPEC plus. And you asked. So again, I think, you know, what do they say and U.S. will why while they think they think the Trump train is coming in November. And I think you’re going to see for whatever reason, you’re going to see, you know, oil production while it’s continued to increase over the Biden administration. I do think that’s a fallacy. We have seen oil production over the last four years rise relative to what was expected, but the rate of increase probably will go up as some of those regulations do get stripped. We go and throw up this rig count chart. We did see big counts drop on Friday, up two from week over week. They’re sitting at 586. Canada saw an increase of eight rigs. Internationally we only saw an increase of four. So all around a decent rig count increase. Against sitting there at the United States 586 this last one do I found super interesting. Colombia’s eco patrol Intox to buy $3.6 billion stake in Crown Rock, which is Crown Quest stake from Occidental. Super, super interesting. Here, I’m going to go ahead and read a little bit straight from the article here. Columbia’s Echo Patrol is in talks with U.S. oil producer Occidental Dubai to possibly buy a 30% stake in Crown Rock transaction that could be worth 3.6 billion, according to the North American, the North American company said on Friday. As we know, Equatorial is a Colombian state owned or majority state owned energy company. Also said that it was in talks with auction in a separate no Friday, but did not disclose the potential size or value, saying decisions were subject to analysis. Here’s the quote Occidental said in an SEC filing. Occidental and Echo Drum are engaged in discussion regarding the regarding a structure for Echo Petroleum’s potential acquisition of a 30% undivided interest in Crown Rock assets. This is kind of funny because when you do the math here, they bought Crown Rock for $12 billion and that includes cash and date. Okay. But whatever. Now they’re going to sell a 30% interest in Crown Rock for $3.6 billion. Well, if you take 30% times 12, you get 3.6 billion. So there’s no premium associated to this purchase. They’re just selling it at the same value that they transacted on, which in my opinion tells me, yeah, they don’t know if they got the cash to do this. All they realize in oh maybe or plan to sell other assets because remember, well, what did they come out and say. They reaffirmed in May their plan to sell 4.5 to $6 billion worth of assets within 18 months of closing the Crown Walk purchase, which should be completed here by Aug. Well, you didn’t have any other assets in your inventory to sell. So instead of finding assets in your inventory, you go out and have to just sell down your stake in Crown Rock, which again, may or may not be a bad idea. We saw some buying Xcel Energy and then subsequently selling a small, not a small non-core piece, and basically 20% of that deal over northern oil and gas. So the precedent actually has been set a little bit to kind of structured these deal that way. But I find it a little interesting that that oxy can’t figure out how to fund Crown Quest. So instead of going and selling stuff in their inventory, they got a sell off piece of what they bought. The real question is, is there does their inventory suck that bad? What? I mean, no, I’m serious. Why wouldn’t you? You can’t find enough. You can’t find enough assets to sell in your. You’re a $55 billion company. You can’t find, you know, $4 billion worth of assets or $6 billion of assets in your inventory to sell. That doesn’t that doesn’t bode well for you. You know, it’s very interesting. And I’d be I’d love to know what what their what they’re telling Warren Buffett because you know, he’s the big boy that really matters over there. I just find it super interesting. And you know, they’re also, you know, you read later on in the note equip patrol will also have an option to elect for the Rodeo Midland Basin joint venture to acquire the Crown Rock assets. So basically they can acquire another chunk of that ground rock deal, specifically the road the Rodeo Midland Basin JV, resulting in an indirect ownership by couple, drove an undivided 49% interest in the Crown Rockies. So they’re basically going to have to shave off half of the investment because they realize, oh, maybe we can’t actually afford or we don’t have the cash on hand to do this. So we have to fund this with debt. The whole idea of shaving off debt, I mean, it just it’s it’s very interesting. I’d love to get inside the minds of them. You know, we covered this on a deal spotlight a while back. Stu did not necessarily see this in the cards. So definitely coming out of left field. [00:23:59][413.6]

Stuart Turley: [00:23:59] Wow. [00:23:59][0.0]

Michael Tanner: [00:24:00] Yeah. So that’s really all I saw in kind of the finance side. Stu. What else what should people be worried about this week I mean well. [00:24:07][7.5]

Stuart Turley: [00:24:08] I think one I’d say keep cash on hand because if there is a play, if there’s a time and a place to get to somewhere safe and they don’t have any power and they can’t take credit cards, keep your gas tanks full and you charge your EV all the time, because you never know when you’re not going to be able to get around. [00:24:28][20.7]

Michael Tanner: [00:24:29] Yeah. No, absolutely. [00:24:29][0.5]

Stuart Turley: [00:24:30] I mean, natural disasters or CrowdStrike. [00:24:32][1.9]

Michael Tanner: [00:24:33] Be wary of CrowdStrike. All right guys. Well with that we’re going to let you get out of here. Get back to work. Start your week. We appreciate everybody checking us out here on this gorgeous Monday, July 22nd 2024 for Stuart Turley I’m Michael Tanner. We’ll see you tomorrow folks. [00:24:33][0.0][1437.4]

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