About this transcript: This is a full AI-generated transcript of Doomberg: Energy, AI, and the Calls Nobody Else Made from AdvisorAnalyst, published August 12, 2026. The transcript contains 14,540 words with timestamps and was generated using Whisper AI.
"Welcome back, I'm Pierre Daly. This is Insight is Capital. Everyone has an opinion on energy right now. The war in Iran was supposed to send oil to $150 a barrel. It didn't. China's solar miracle was supposed to keep setting records, and it didn't. Mark Carney was supposed to be just another..."
[00:00:00] Speaker 1: Welcome back, I'm Pierre Daly. This is Insight is Capital. Everyone has an opinion on energy right now. The war in Iran was supposed to send oil to $150 a barrel. It didn't. China's solar miracle was supposed to keep setting records, and it didn't. Mark Carney was supposed to be just another climate politician with no appetite for pipelines. Things have turned out differently. The people who've gotten these calls right before anyone else weren't at a major bank. They aren't running a hedge fund with a Bloomberg terminal and a team of analysts. They are anonymous. They publish under the name of an extremely well-read green cartoon chicken, and they do it by doing something that sounds obvious but turns out to be incredibly rare. They read the propaganda on every side, they build mental models that hold together under pressure, and they follow the logic wherever it leads, even when it winds up somewhere uncomfortable. Today, that logic leads directly to a conversation every advisor should be having with their clients right now about natural gas, about artificial intelligence, about China, and about what happens when the entire U.S. sanctions regime gets called out as a bluff. Also, about what Canada does with the most important energy window it has had in a generation. Doomburg is the anonymous author behind one of the most widely read energy and markets publications on Substack with a following that spans commodity traders, portfolio managers, and technology investors across North America and beyond. Their work sits at the intersection of energy physics, geopolitics, and capital markets, and they have amassed a track record of having been right about things before the consensus is even willing to ask the question.
[00:01:48] Speaker 2: This is insight is capital. Join us in our fireside chats with some of the most fascinating people in finance to discuss their insights on life, markets, macro, investment strategy, and much more.
[00:02:03] Speaker 1: Doomburg, welcome. It is terrific to have you here.
[00:02:08] Doomburg: You know, Pierre, what can I say? What a fantastic introduction. It's always my pleasure, Pierre.
[00:02:12] Speaker 1: Before we get into what you think, I want to spend some real time on how you think, because the track record is genuinely unusual. You called the Iran war's oil price impact correctly when pretty much the entire market was modeling $150 a barrel. You called China's solar collapse months before installations fell almost 80% year over year. And you called Carney's energy pivot before it seemed remotely plausible to anyone watching Canadian politics. That's not luck across three separate complex calls. So walk us through the actual methodology. How do you consume information? How do you build and test the mental model? And how do you know when to trust it enough to publish?
[00:02:58] Doomburg: Yeah, it's a great question. Appreciate the opportunity and total coincidence, as I shared with you before we hit record, we're actually writing an entire book on that exact subject. So I appreciate the opportunity to, um, stress test some of the early chapters with you, which I, I literally just pulled myself away from the keyboard to, um, to record with you. So, so let me give you the headline. So broadly speaking, there are two types of native thinkers. There are people who think linearly and people who think laterally and, um, before diving in, I should say a few things up front. Um, in society is, it is popular to characterize the lateral thinking as smart when in fact, it's just, um, unusual in the sense that the vast majority of people are innate linear thinkers and a small number of people. Uh, I count myself among them are innate lateral thinkers and within the two populations, there's a normal distribution of intelligence. But when you have that sort of overlap in the Venn diagram of a clever lateral thinker, it's so different than what is normal that it appears, um, perhaps more unusual than it is. Um, so what is, um, linear thinking so linear thinking is the predominant thinking motif in society, um, absent a majority of linear thinkers running society, society would collapse. Um, and linear thinkers and lateral thinkers differ in the following and most important way, which is, um, linear thinkers. And, um, linear thinkers, when they brainstorm around an axiom, make sure that axiom is correct before they begin brainstorming and a lateral thinker has no emotional attachment to the correctness of an axiom at all before they'll play around with it, explore it and see where it leads you. If you assume that axiom is true, that is the biggest difference. There are other differences, which I'll get into, but that's it. Um, and so in a classic work setting where like most people are linear thinkers, nobody wants to waste time brainstorming around something that is obviously untrue. It can't be true.
[00:05:11] Speaker ?: Why?
[00:05:11] Doomburg: You know, I'm not wasting my time pondering that I've got to get home. I've got kids to pick up at the soccer game. I've got dinner to get going. I, you know, I've got a deadline to deliver for the boss where a lateral thinker loves doing that. Often does it too long to a fault. Um, and that's another difference, by the way, between linear and lateral thinkers, a linear thinker is really afraid of being wrong. And a lateral thinker embraces it because it's just the next input into the next iteration, the next brainstorm and iterating around untrue axioms or true axioms is a dopamine parade for lateral thinkers. And, um, so the best combination is to pair a great linear and a great lateral thinker so that the linear thinker can intervene when the insight is identified. And now it's time to go and implement that. You see, so, um, but we're lateral thinkers. Um, lateral thinking is in the description of what we do. And, um, and so each of the calls that you just described, um, and either we had them before or got to them quickly after the evidence indicated that we needed to pivot. Um, those are all born out of what you described as a mental model. What is a mental model? A mental model is an axiom true or not. And we don't care that both explains recent history and is useful to predict future. And once a mental model is what we call operative, we use it to make predictions until it stops working. And then we discard it because we don't care if it's wrong. And so I'll, I'll walk you through maybe the, the carny saga, cause I think that's probably one of our better calls and very familiar to your audience, I suppose. Um, so in December of 2024, you have to remember Trump was just elected and, um, Pierre, Pierre's son Trudeau, uh, Justin Trudeau was, um, prime minister and, um, he was wildly unpopular. And, um, the conservatives were running at like 94% on poly market to win the election. And, um, something weird was going on between Trump and Canada. And, uh, our interest in Canada, I should say is, is threefold. One, obviously Alberta, you know, British Columbia, um, we're energy specialists. And it's one of the biggest hydrocarbon endowments in the world. Um, two, we have, even though we're all Americans, we have strong family ties to Canada and a very interested in Canada's culture, its interactions with us. And then, um, third, of course, we're, we're quite familiar with British propaganda and Canadian propaganda is often a melting pot for experiments by the British. And so we stay closely attenuated to Canadian propaganda for the first two reasons. And so we, we, we noticed this strange behavior by Trump, you know, um, governor Trudeau, 51st state, all that nonsense. Uh, and then we also noticed that the Canadian media seem to be laying covering fire for Carney's ascent. And we've followed Canadian politics long enough. Um, I would surprise you with some of the knowledge that I have of, of Canadian, um, election results in history. But anyway, we know a pattern when we see it and boy, you know, the, the glowing fawning coverage on the CTV and the write-up in the Globe and Mail. Right. And, you know, this, this, this, this, this globalist delight, as we called him back then. So we got to thinking that boy, if they replaced Trudeau with Mark Carney, that would be much more formidable. First of all, you get rid of the unpopular incumbent and you have a fresh start. There's always a sort of wind in the sail to a new face. Um, but also, um, with the full power of the Canadian media behind him, he would be a much more formidable candidate. And then we were, we're observing Trump and Trump, um, takes a dig because he, you know, he pokes this fight about the trade wars, which creates this patriotic, uh, counter response in Canada. And look, there's nothing that triggers Canadian unity more like arrogant Americans. I understand the, the sort of suffering under the large, um, you know, cultural, um, behemoth that is the United States has always been a deep insecurity of the average Canadian. And so, you know, an orange man bad is like just uniquely great at pulling out the worst of that. And so when he takes a dig at, um, the other Pierre, whose last name I can never pronounce, who was the head of the conservative party back then. So he takes a dig at Pierre, I'll just call him Pierre. Um, and, um. And, um, a lot of peers in this conversation, but two, two really important ones. Yeah. So, so Trump takes a dig at Pierre because Pierre had to stand up to Trump, Canadian patriotism, you know, Trump really did a lot of damage to, for our right candidates around the world at that time. And, uh, and, uh, and then we see Carney coming. And then we connect the dots about Carney and his time at Brookfield asset management. And boy, doesn't Trump have a lot of real estate in New York. And so then we came to, uh, an axiom that we, um, we didn't believe necessarily to be true, but let's brainstorm around it. So the classic lateral thinking I've observed this news pattern and the axiom was Trump wants Carney to win. Okay. It's plausible. We brainstorm around it. Um, the evidence is kind of piling up. You'll note that after Carney replaced, um, Trudeau, the governor talk went away at least for an extended period of time. Okay. So then that's like a pretty good operating mental model. That's explaining the news. It predicts things. Why would Trump want Carney to win? Well, in parallel, you have Trump's American energy dominance, and you have this focus on the Western hemisphere. And boy, it's pretty easy to just draw a map around Canada, the way Trump wanted to, and rename it North American energy dominance. And so we thought, huh, Mark Carney will unstick Alberta just as an axiom to brainstorm around. Seems like a crazy idea. And when we brainstormed around that, we had this insight. Of course it has to be Mark Carney because Richard Nixon could only open up China. The hardcore anti-communist is the only one that can fly to China. If a died in the world liberal went, you would be crucified. They would be destroyed. And so, you know, if the conservatives have won that election, Prime Minister Pierre would be in no position to unstick Alberta. There would be riots in the street. But you need somebody with the background and resume and pedigree and smoothness like Carney to go to Beijing and open up China. And so that was the ultimate mental model that led us to publish. Well, we laid the groundwork for it in December of 24 in a piece called Alberta Clipper. And then we really laid it out in April before the election in a piece called The Fixes In. And I've been on your show talking about that. Yeah, we talked about that. Yeah. That's probably the greatest mental model we've ever published. I mean, we really, there's a full paragraph in there where we laid out exactly what would happen. And to a T it all has. But that's a perfect example of starting with things that you think have to be false. Who cares if it's false? It's interesting. It's fun. Let's ponder it. That leads to another one. You know, Carney will unstick Alberta. And then, ah, that makes sense. And you run with it. Now, we'll eventually have to ditch that mental model. We might have to because we used it to make a further prediction that Ed Miliband would be prime minister in Britain. But that hasn't panned out. And so now that model is on its last legs. But when we see a headline like not only are we going to get this million barrel a day pipeline to Vancouver, we're also going to maybe build one from west to east and get, get you connected up to the St. Lawrence. And, um, ah, all right. So this all is still, at least as it pertains to Canada, that mental model is still operative. And so that's a bit of a long answer, but, um, lateral thinkers happy to brainstorm around BS. It's fun. Um, could do it all day. But when you find that aha moment, then you need that linear partner to pop in and say, okay, we're going to run with this. This we're going to publish this. We're going to go with that. Um, and we've had many mental models. Um, and, uh, we just published one on how China absorbed, you know, the, the blow of the Iran war, which I'm sure we'll talk about, but that that's lateral thinking. And the only other things I would say about lateral thinking is, um, lateral thinkers are very comfortable with the concept of zero and infinity. These are philosophical constructs, but they're great edge cases to ponder. Um, edge cases, a lateral thinker will dwell on them, figure out why they're an edge case. A linear thinker will average them because they need to get to that right answer quickly. Give me the mean. We'll, we'll take out the edge case and, and I'll get that slope and we'll go with that. Um, and, um, and being wrong. That's the other thing I say, you know, um, I could care less if I'm wrong. Great. But what does that mean for the next iteration? The next mental model? I'd like to be right. The more we get right, um, the more money we make. Um, and I like money, but, um, broadly we have a pyramid then. So there's things we'll brainstorm and then there's, um, things we'll think are working. Then there's things we'd say on podcast. And then there's things we'd write and you get thinner and thinner as you go up. And so we've had a lot of mental models that would never see a podcast. A lot of things we've talked about on podcasts that we'd never write, but we 100% believe everything we write when we press send. So first of all, um, it is not uncommon for especially linear thinkers, um, to get angry when they read stuff they disagree with. And this is mostly a modern phenomenon. Um, and it derives from the algorithm driven confirmation bias that makes up so much of what people consume. And to be confronted with that, which you don't agree with the first instinct in that sort of fight or flight is to not read it or to fight it. Um, I don't get angry at things. I, I disagree with. I quite enjoy inviting them into my life and understanding whether I need to change something about what I've said or written or think. Um, hopefully most times can find the flaw in the argument and, and convince myself that my mental models are still operative. Yeah.
[00:15:47] Speaker 1: It's that curiosity, right? It's the curiosity factor. How did you come? How did you come to that conclusion? Right.
[00:15:53] Doomburg: It's the lateral thinking. Like, okay, that's an axiom. Let me go see. Like, um, so I don't get angry when I read people, even when people write nasty things about Bloomberg. Um, and they do strange. We try to be polite. Um, and so the other thing I would say though, Pierre is like, if you're going to try to make a living on the internet, don't go looking for people saying bad things about you. Cause you will find it. Yeah. Um, absolutely. It's just, it's just the way it is. I mean, half of them aren't even human. You know, they're just bots and whatever. Um, so there's that, um, people like to be entertained. Right. Um, and so you could just write that book in five sentences. Um, but what, how fun would that be? Right. Um, a lot of Bloomberg articles start with a story. I mean, that's no big secret. The classic way to sell newsletters is hook story offer, you know, gets you very interested. And then your, our offer is, you know, pay us and you can read the rest. Um, you should have seen this room of hate mail when, when, when we went behind the paywall, you know, like supposed to, supposed to do this for free for the rest of our lives. Um, and, and, and so, you know, what, for example, like a classic stream of hate mail we got when we went behind the paywall is our price. Our price is too high. This is crazy because, oh, well, you can charge this on Substack and make a good living. And if we put, um, any weight at all trolling and hate beyond just curiosity to convince ourselves that there's nothing about our thinking that we need to change. We wouldn't be in business today. That's for sure. Um, we have some brand promises. So, um, what are the brand promises? One most importantly, um, we believe what we are saying the moment we press send. That is a very carefully worded promise. Um, second is we will express our opinions politely. It doesn't mean that we won't, you know, torture a few people here and there for fun, but we try to do it in with some rhetorical flair and a bit of humor and, um, no nastiness, no swearing, you know, um, no vulgarity. Um, when we're wrong, we were happy to confess it, uh, mostly because that's an iteration in another round of literal, you know, lateral brainstorming. Um, and, um, look, we're being authentic and, and we would, we, we don't publish everything we believe, but we would never publish something we don't believe just for clicks. And so we, we have this expression, which is look, I mean, every subscriber is precious, but none particularly. So what a blessing, what a gift from God. I'm very grateful for the loyal readers we have. And look, I'd like to grow. Um, I, I wouldn't turn away more, but I'm not going to sell my soul for more to the extent that our subscribers appreciate the provocative nature of our thinking. We will be provocative without being polarizing. It's one of our three brand pillars. And, um, that's great. It's wonderful. And to the extent that we've angered somebody and they hit unsubscribe, you know, well, you know, thanks for your prior business. People are under no obligation to read us. They're certainly under no obligation to pay us. Yeah. And so, you know, I mean, we have a hundred percent full refund, no questions asked guarantee. Um, we, we treat customer service the way we try to treat everything else, which is, Hey, you know, if it's not worth it to you, here's all of your money back. And so, you know, this anger, it's just part of, it's an ugly part of social media. You can't be a content creator without being on social media. There's less of it on sub stack than there is on Twitter for sure. One of the reasons we left Twitter. Um, and then this is also why we closed our comments to paying subscribers, because if you're going to troll us, well, I mean, if you're going to pay us 400 bucks a year for the privilege and who am I, you know, I was mentored by an uncle. Um, you know, may he rest in peace. Uh, unfortunately I was unable to attend his funeral because of COVID, um, who gave me a really wonderful piece of advice. Um, you know, and everybody has their story of the mentor that said something that stuck with them. But, you know, I was an ambitious young man and I had some skill and had accomplished a few things in life. And I was just at the beginning of my career. And when you're young and poor and ambitious, um, you know, you, you have a lot of energy and you take some risks and so on. And then he pulled me aside, um, after I graduated college and before I started, um, my PhD. And he said, you know, um, getting success is, is never the hardest part. It's hard. The hardest part is managing success and do a lot of thinking around, um, when you catch the car, what are you going to do? Because a lot of people fail when they catch the car, they feel empty. They've accomplished it. They've, you know, um, they want more of the disease of more of this article, strange victory. Um, where we talked about how could Tom Brady of all people get caught up in the same Beckman-Fried scandal? You know, like how much more do you need in life? I mean, he's a centi-millionaire billionaire married to a supermodel multiple times Superbowl winner. And he gets caught up in this fraud, you know, like, how could that be? And that's because you're always sort of chasing that next accomplishment and the satisfaction.
[00:21:01] Speaker 1: The thing is that, that people have to realize that, that if indeed you were wrong about something, you were always the first to call yourself out. You, you've, you've never had a problem. I don't think you've ever had a problem with saying how it was, you know, we were wrong or I was wrong.
[00:21:13] Doomburg: Who bats a thousand? And by the way, are actually one of our real brand values, I think, is having a higher than normal hit rate on long tail outcomes. So we're going to be wrong most of the time. But if you get a 1% chance call right 10% of the time, that's an order of magnitude better than that is a lot of alpha to be extracted from that. Right. And so like that Mark Kearney call, he wasn't even a contract you can bet on when we made it and laid it out. Um, and so like, sure, did we get Ed Miliband wrong in Britain? Yeah, mostly, but they're still going to unstick the North sea for all the same reasons, even with the own little fake separatist movement in Scotland, like Albertus. Um, so the pattern is there. We just got the person wrong. Um, but okay. We got the person wrong. Big deal. You know, we even had called it a long shot call when we wrote about it. Um, but like, yeah, like, so if you're 25% right on a 1% call, that's, that's very good, but you're still going to be wrong most of the time. And so we're not trying to be right all of the time. We're not even necessarily trying to be right. Most of the time we're trying to be right at a much higher hit rate for long shot stuff. And also to explain things and to be funny and to entertain. Look, people only pay for so many things, um, uh, finance and community or two of them. And that's the lanes we're playing in. Um, but community is a big deal, you know, like for, I'll give you a small inside baseball since, you know, it's just me and you talking. Um, you know, Doomburg is, is a way community in a sense that your loyal subscribers, the people that, you know, in this business, if you have somebody who's renewed, that's like the premium subscriber of them all, because not only do they like you, not only have they paid you, but they've recommitted to you. And so when somebody unsubscribes early, it's not as big a deal. But when I see somebody, you know, please give me a refund and you go in and you see, they've paid us four times. Like, well, I'm genuinely interested as to why you left. You know, most of the time it's an affordability issue and we just give them a comp. And then when they can afford, they come back, which is great. Sometimes we've said something that makes them angry. And I'm curious as to what it is that could cause somebody who's been around that long to finally leave. You know, wow. Yeah. Like a, like a rage unsubscribed. Like, oh, I'm not going to pay for this. Right. Yeah. Well, wow. Like that's the thing. Um, you'd be surprised, but anyway, and I have a few of those. Um, but the, the inside baseball is, um, one of the things we spend a lot of time on that may not be evident to the reader is the captions to the pictures that we include in our piece. Why? There's a, there's an awful lot of inside jokes in those captions. And, uh, we know when we consume other people's products that to be in on the inside joke is the ultimate stickiness, right? It's the ultimate. I get that. It made me laugh. Like, um, you know, this is why comedy shows that you've seen and they harken back to old episodes and things like you have to have watched them to get that. You don't want to do too much of that because you always want to welcome in new people as well. But like, we put a lot of time into the captions. Um, we put a ton of time into the titles. And frankly, you know, we, we learned this from, um, Jim Grant, Grant's interest rate observer. I mean, the captions in his artwork in those letters are brilliant. You know, um, that I saw one, a couple of, um, additions ago, which is so funny. There's a, it's a guy talking to what looks like his wife who's trying on a dress. And he says, all right, all right. You look like a trillion bucks, right? It's just like such an inside joke, such a classic Jim Grant bow tie, laugh out loud while he's on CNBC moment. This is why people pay what they pay to read. Grant's just great observer for the decades that they've done it. Us among them. Because that's really funny. Um, it's endearing. I like Jim Grant. I know him, you know, if I text him, he's like, he replies. And, um, another classic Jim Grant moment. He was on Dimitri Kofinas' podcast. And I'm always trying to catch Jim when he's on somebody's podcast. And, you know, Dimitri was kind of buttering him up a little bit as one does. And, um, cause gold was starting to ramp and, you know, people started to care about interest rates again. And, you know, it's been so long, Jim, you know, like you've been out in the woods for so long. It's been decades. And to be fair, I mean, he has been making this call for decades. And his instinctive answer without hesitation, um, in full character was it's my turn. Damn it. And it was just like, so funny. So inherently funny if you know, Jim at all, um, that dry sense of humor. And so, you know, to the extent that that's wonderful and funny and entertaining, we try to do that in our captions. Um, you know, there's an enormous amount of work that goes into each of these people asking sometimes, you know, like, what is your favorite? It's like the next one, you know, like I, I don't want to publish anything that couldn't be my favorite. Um, we know intellectually that's not possible, but like, I'm, I was very excited by the piece we published this morning. And I'm excited to write the Nate Mack rebuttal, which won't mention him, um, for the next one. Um, and then off we go. What a life.
[00:26:21] Speaker 1: You know, I, I love also, you know, the fact that, that you're, that you'll go beyond, you know, you'll go beyond Western borders. Um, to, to find, you know, what, what does the other side say? I mean, we're so, we're so cloistered in our own, you know, Western hemisphere media and we don't, we often might not think about how politically tilted our own media is or how proper, you know, propaganda, how propagandized news accounts are, um, because they fit into a, you know, a box of con, you know, a bias. Um, and you know, in your, you, you wrote a piece, sources and methods, um, you wrote about deliberately source, uh, surfacing it. So I'm pivoting a little bit here now, cause I w I wanted to get into some of the, some of the actual, um, pieces that you've written. And we, I do want to circle back to Canada again. Um, but you, you deliberately, you talk about how you deliberately surfaced pro-Iranian accounts in the first days of this year's Iran conflict. And cross-referencing that with what you were seeing there against satellite imagery and Western reporting. And the Washington post eventually confirmed damage to 228 U S military structures that the Pentagon hadn't publicly acknowledged yet. And how do you actually grade a source like that, like that you fundamentally distrust? What, what has to be present in that source for that information from an adversarial outlet to move your thinking?
[00:27:58] Doomburg: Um, so great question. And, and, and we did not set this up. Um, so you must really be a super fan, but, um, lateral thinking is actually as it stands now, at least the second chapter. The first chapter of the book is, is tentatively titled why most analysis fails. And it deals with this exact issue, which is, um, insufficiently wide aperture of inbound information. And a systematic method to grade it, um, a dynamic systematic method to grade it. Um, and, um, a great, great challenge in any sort of culture is a preemptive overweighting of local sources of information. Um, and, um, everybody lies, right? So like everybody lies all the time. And part of this chapter, it goes into the types of lies so that you can recognize them. There's lies of omission. There's lies of commission. There's poltering, you know, where you say something literally true, that's irrelevant. Um, and so we knew when the Iran war broke out that, um, this would be really important. Us, I mean, talk about the intersection of finance, geopolitics, and energy, a hot war in the Middle East. Um, and we knew there'd be a lot of eyeballs on Doomburg amongst others and how we covered it would matter. And we also made a couple of commitments early, which is, um, we will not indulge in hyperbole just for clicks. Um, we had, if we, if we graded our performance in the European energy crisis, um, 21, we probably did a bit too much of that. And the second thing we committed to is, um, we will let the, the markets tell us what's going on more so than we did back then. The markets, the commodity markets, which is something we could come back to, um, are actually pretty efficient and pretty instructive as a source of information. Um, and, um, and so we knew that we needed, you know, separately, we had developed this methodology for, uh, by trying to study the war in Ukraine, which of course is another war that impacts energy markets. Um, that you really needed to read all sides to get closer to the truth. And this is back to this British propaganda nonsense. I mean, there was no worse propaganda in the world than propaganda from Britain about Russia. I mean, there just isn't, um, anytime we write about Russia and, um, we don't have the necessary full scale, unprovoked invasion. We get a bunch of angry emails and they're almost all people from Britain. Um, it was fine. It's just a data point. Um, and so, um, we, we decided, okay, you know, we have this algorithm algorithms want to feed you. So let's do a whole experiment where we just buy a completely new iPad, untouched by Doonbergh, get a new email, get a new name, get a new Apple ID. Um, and then spend the first hour is literally the first night of the war. Um, you know, the next day, Jeff Bezos was kind enough to hand deliver a new iPad. And, uh, and we trained this, the only thing on that iPad to this day, I'm looking at it. The only thing on the iPad is the Twitter app, the X app, I guess. Um, and we spent an hour training the algorithm that we were pro Iranian. Boy, it didn't take long to pick up on our cues. And so now we have our legacy Doonbergh account with all of its biases and history. The algorithm knows us. It knows when I want a pizza, um, and this other algorithm, and you would just put them side by side and refresh the for you tab. Um, and you were watching the parallel universe theory of physics unfold, you know, before our eyes. And, and so then we have this grading mechanism, very simple. Um, if you were interesting and you say something useful, you get on our list. And we only, after a while, we only really use lists. Um, once you have a, a foundation of a list who they recommend becomes the new way you find people. So you get on the list by being interesting and useful. You stay on the list by resisting the temptation to produce or reproduce fake stuff. Obviously AI deep fakes, you know, things like that. And so over time you get a list of a dozen or so authentic, mostly polite. Some of them use language that, you know, we wouldn't put under our masthead. Um, but still useful, still interesting. And the ultimate grade is where they correct. Right. So like four or five, six days later, what they said, Oh, look at this satellite image I found on Chinese social media, which was filled with satellite images. Most of it real in hindsight that shows that Iran knocked out a fad missile interceptor in Jordan.
[00:32:56] Speaker ?: Okay.
[00:32:57] Doomburg: That's interesting. That's devastating. That says a lot. If that's true, it says Iran has ballistic missile capabilities with precision targeting. Um, and boy, if you're taking out a fad missile system, you think like of all the things that would be protected by interceptor missiles, the launcher of said missiles, um, you know, would, would be a good place to start with your protection strategy. Um, and so all of that's interesting. And boy, like that would be huge. And that, that would be a big deal. And then like, of course it's denied by CENTCOM because everybody lies. And then five days later, we see the story in Korea about local opposition to the U S military removing thad systems from Korea and bringing them to the middle East. And well, that's pretty interesting. That's a dot to connect and insight as you might say. And then we did a little digging around the history of the thad missile installation in Korea. And we find out that boy, that was a hugely political row with China when it was being contemplated and ultimately installed in the Korean government made all of these sacrifices to get those weapons. And so, you know, you see these missiles being moved. And then a few days after that, as you mentioned, you know, the Washington post comes out with, um, with this article that basically confesses that, um, Iran had been wildly successful in targeting the eyes and ears of the U S military. In the Middle East. And then you find out that, um, from the New York times, I think that the Navy base in Bahrain was destroyed and people had to be moved out of it and rushed to hotels and evacuated. And a bunch of them ended up in the U S Northeast with no place to go. And you're thinking to yourself, well, that's like wildly different than what the nice man on TV, Pete Hegseth has been saying at his daily press conferences. And, and so the accounts that flag that to us early suddenly get on a list of people that, um, okay, this is interesting. This is useful. This is in a way much more useful than truths. The, the, the, the Trump's truth social account, for example, um, which itself is useful for a variety of reasons, but the literal truth of the post is rarely, rarely one of them. Um, and so that was a methodology that ultimately will turn into a chapter in the book, which is look, um, we read what Ukraine is saying about Russia. We, we, we, we read what Russia says about Ukraine. Um, one of the things I listened to in my morning walk was an interview by TASS, the Russian news agency of Sergey Lavrov, the famous Russian, uh, foreign secretary who almost nobody listening to this will know. Um, what he's saying to his news agency is pretty important. We think in an input into, uh, into our analysis, do we believe it? Not necessarily, but what he's saying is itself a form of metadata that needs to be considered. Um, and so this is, um, very, unfortunately not very common. It used to be pretty common. It used to be that, um, Tucker Carlson going to interview Vladimir Putin wasn't scandalous at all. It was what, it was what reporters did. Um, and so we've gotten to this point where, you know, just doing that, as we wrote in this piece, I think, uh, they might've been in sources and methods where we talked about the European Union. And it's like, you're not even allowed to quote Russia today in an article. Um, that's illegal now. Yeah.
[00:36:29] Speaker 1: That, that, that was, uh, that was one of the most surprising things actually that you wrote about was the fact that, that, that, that, you know, you could be.
[00:36:38] Doomburg: You'd run afoul of sanctions if you copied and pasted a paragraph of a RT article into our sub stack. Well, let's talk about that. So, um, even if I think the article is nonsense and I'm, I'm posting it to, to rebuke it. Um, technically because of a decision of the European court of justice. Um, because if I copy and paste a paragraph from Russia today in full embedded in an essay to comment on it and publish it, sub stack would violate. And by extension timber would violate, at least in theory, European sanctions on Russia because that is forbidden. And we have readers in Europe and some of those readers pay us. And so, you know, um, that's a, that's a dangerous development. You can think that Putin is the worst person in the world. You could think that Russia today is nothing more than puff propaganda. And you should think that it's stupid and a waste of our time to read it. And it's abhorrent that we should quote it or make reference to it, let alone agree with it. Um, but to make it illegal to, it is, it's boy, that's a slippery slope. If there ever was one. That, that, that was an astonishing revelation. Could you, could you imagine a more Orwellian construct? Then, um, you can't even reproduce to criticize. Uh, like, wow. All right. I mean, that's really forbidden. Talk about, um, the Streisand effect.
[00:38:20] Speaker 1: Across everything that you've published recently, there's a thesis that I don't think has been stated plainly enough in one place. And I know, you know, one of your, one of your idioms is, is, uh, energy is life. And I think that, that sort of lays the groundwork for, for where I want to go in this conversation. Um, the real story isn't that natural gas is cheap and in demand. Uh, I think everybody will definitely agree that it's cheap. Um, it's the demand question, right? And the real story, however, is that all hydrocarbons, gas, oil, natural gas liquids, uh, coal are converging towards price parity on an energy content basis. And the direction, what you've, what you've written, the direction that that arbitrage closes is lower than consensus, not higher. Um, we saw China just prove that in real time during the Iran conflict most recently by swinging three to four million barrels a day of crude demand without flinching. Um, using coal to liquids, uh, EVs and petrochemical switching that it has spent decades over building. I think that's one of the stories that you've, you've spent a lot of time on, which is that, you know, China has been, um, stockpiling, uh, as though it's going to war. And, um, oil ended hovering in a range, uh, in the, in the current period, of course, I'm talking about oil ended up hovering in a range more in the 80 to $90. A region instead of the 150, that was the consensus call when the Iran war, um, uh, ensued. And is that the right way to read what you've been building?
[00:40:10] Doomburg: Yeah, look, I would say like full disclosure, we too thought oil would go to 150 if you get that fact set, but we were quick to pivot when the prices didn't follow through on that back to the whole, we will follow what the market says much more closely this time. Um, okay. This is really important. Um, and something that runs through the theme of dozens of our articles and many of our premium tier presentations, you know, our doom zooms, as we call them. Um, what is a hydrocarbon for? Hydrocarbon exists to be burned to create heat so that work can be extracted. Um, forget about petrochemicals for now. They're a relatively small component. You know, maybe they get transformed into something durable that we drink water out of. Um, but by and large, the primary utility of hydrocarbons to the human endeavor is that they are a source of energy that can be readily extracted and used to do work. You know, fundamentally energy is life. Um, your standard of living is defined by how much energy you get to waste. Because you can't impose order without wasting heat. And, um, everybody everywhere wants a higher standard of living is like a bedrock mental model of Doomberg's analysis. Um, and so a lot of things flow from that mental model, but, um, one of them is, you know, work is work. Nobody really cares where the energy came from behind the light switch. What they really care about is that the light comes on when they flick it. Yeah. And, um, and so one of the things that we have developed as an axiom internally, a mental model is that, um, corrected for energy content and logistics. Um, in the long run, all hydrocarbons should sell for the same price. They don't, they often deviate wildly, but when they do deviate wildly, you now have an intellectual anchor to point to and say, this is the trend from here. So let me give you some real numbers. Um, one of the big challenges in implementing this mental model is the fact that hydrocarbons sell in different units, different currencies, different measures of energy. So, um, an oil is priced in dollars per barrel and natural gas is priced in dollars per million BTU. And headline coal is priced, you know, in dollars per ton, but really, you know, at the industry level among sophisticated players, they actually traded on a BTU content basis. You know, like if a rail car of coal has higher BTU value, it'll fetch a premium compared to, you know, dirtier thermal coal. Um, so what are some rules of thumb just to use one example? Um, a barrel of West Texas intermediate has around 5.6 million BTUs in it. And natural gas is priced in dollars per million BTU. Well, that means if you want to price natural gas in barrels of oil, you just multiply the gas price by 5.6. That's a pretty useful rule of thumb. I'm sure that's not enough significant figures for the purists who are listening, but for most people, 5.6 is a good swag. Maybe 5.8 if it's Brent. Um, so if natural gas is, I don't know, two bucks a million BTU and Henry hub, that's the equivalent from a work perspective of, um, you know, $11 a barrel oil. Is there a big, wide market for $11 a barrel oil? You bet. Is natural gas a little harder to use to move around? Sure. So you have to put in some logistics costs. And oil has always traded for a premium, relatively speaking to natural gas. For that reason, just like coal is the easiest to handle logistically. It's a lump of, it's a lump or you can leave it outside. Um, and so when you look across the board, you see these types of pair trades then. So landed LNG and Brent crude kind of do the same thing, at least at the margin, they get burned to produce electricity. A lot of oil is burned to produce electricity a lot more than people realize. Um, and so if you plot 5.8 times landed LNG against Brent, they tend to trade in lockstep. And when they deviate, something is, is interesting is happening.
[00:44:55] Speaker ?: Right.
[00:44:55] Doomburg: Um, and so if you look at the U S today, that mental model plus co-production. So now when you drill in the Permian, you get crude oil, natural gas, liquids, and natural gas, and you gotta take them all. Right. You have these wide price, price dispersions. Right. And so today in the U S natural gas is the absolute cheapest. The NGLs are a little higher on a dollar per million BTU basis. And then crude oil is the most expensive, um, for now. Um, one of the reasons crude oil has always been more expensive. Is because there's a cartel in the middle of it trying to keep the price artificially high. But the other reason to be fair, um, that oil is, um, is priced at a premium is because society's engines exist to burn oil predominantly. So if you look at the quantity of diesel engines, gasoline engines, and jet fuel engines in society, they roughly match the molecular distribution of a barrel of oil. And that's no coincidence. Um, we want to use the entire barrel. Oil was the primary hydrocarbon for decades. Certainly was the primary hydrocarbon when the norms of modern day engine manufacturing were implemented. How many gasoline engines do we need versus how many diesel engines do we need? Um, and that matches, right? Because you know, when you, when you're dealing in the volumes of oil that the world consumes every day, even a minor impurity piles up quickly. Um, and so we have optimized the engines in society to burn a barrel of oil. That doesn't mean we can't slowly switch them. And it doesn't mean that having wildly cheap natural gas and NGLs compared to oil doesn't motivate that switching. And over time you flexibilize your engines. In fact, there are big, heavy trucks that can burn natural gas or diesel. And they often switch between the two in China. And that is a form of arbitrage. And so this molecular arbitrage of the hydrocarbon complex is, is one of the overarching mental models that is very operative. It's good at predicting. Um, yes, nobody wants to take the diesel engine out, but if you could, you would add $2 and then it'd be to natural gas.
[00:47:16] Speaker 1: Um, yeah, that's, I mean, I, I, it just, I, it feels like, like in that respect, you know, China has been far more concerned about its adaptability than, than we are here. We just, you know, in North America, we just seem to take all of that for granted.
[00:47:39] Doomburg: Very logical reason for that. We just covered this in our, um, July doom zoom called, um, fire horse China through the lens of energy. Um, when you do an analysis of, of China and its energy strategy, and they are strategic about it. Don't kid yourself. Um, they are heavily reliant on coal. Um, they are barely reliant at all on natural gas. And even the gas, the import comes from mostly friendly countries. Turkmenistan is not going to go to war with China. Um, and, um, but their, their biggest weakness is oil. Okay. What, what do you, what do you want to do? So one of the things China did was they enabled the shell revolution. That's an odd thing to say. Well, the way they enabled the share revolution was they absorbed all the NGLs. The U S could send them. They built the engines. They built the factories. They built the petrochemical facilities to take LPG and ethane on huge scales. Why? Why not? It's cheap. And also it enables more crude production. And so if you're short crude, that's enabled the shell revolution. They're very interested in the world being flooded with crude oil and the price of all going down.
[00:48:49] Speaker ?: Okay.
[00:48:49] Doomburg: That's interesting. What's the other very interesting thing about China when you do a next level deeper? Let's look at their grid. Well, their grid is entirely domestic with a tiny little wedge of natural gas dependency. But again, Turkmenistan, Uzbekistan, and Russia aren't going to war with China. And yes, they participate in LNG, but it's pretty small and they swing trade and they do that just for profit. So it's coal, hydro, wind, solar, nuclear, all in the border, all under their control. Their grid is self-sufficient. Okay. Suddenly the world is moving towards an electrify everything movement. Is that a coincidence? China would like that because they dominate all the technologies needed to do the electrify everything movement.
[00:49:33] Speaker ?: Right.
[00:49:33] Doomburg: Wind and solar and batteries, electric vehicles. So their weakness is crude oil. Let's convince the rest of the world that crude oil is bad while they buy it up, hand over fist, store it to the tune of 1.5 billion barrels, yada, yada, yada. I mean, China is playing a sophisticated game of chess. Yeah.
[00:49:52] Speaker 1: That was kind of, I mean, the propaganda of wind, of solar, the propaganda of, of solar coming out of China was that, you know, they were going to lead the world in, in solar development and wind development, uh, as well. And, and, um, you know, that was something you pointed out last year, which was that, um, uh, you know, ahead of the market sort of realizing it was that, you know, China was actually cutting its investment in solar while it was saying, you know, we're going to do that. Yeah.
[00:50:22] Doomburg: And so here's another mental model of ours, which is a very simple way to look at grids. Um, and again, grid experts will object to some minor nuance, but for the rest of us, let's, uh, indulge in a bit of, uh, generalization. Um, an operator of a grid cares about meeting supply and demand exactly. And, um, what's really valuable to a grid operator is, is what's known as dispatchable electricity. Um, it can come on and go off relatively quickly, smoothly on command. Doesn't break things when it does it. And, um, you know, in the overlap of the Venn diagram of fuels capable of providing base load power, steady 24 seven type power, not intermittent like wind and solar and dispatchable, um, natural gas and hydro are the two winners, coal and nuclear. They're kind of like big battleships and, and they don't like to be turned on a dime. And so they're really great for base load, a great foundation for your grid. But for that part of your grid that has to flex into and out of nights and days and all that kind of stuff, you know, your dispatchable part of your grid really matters. And China's grid is dominated by coal, like 55% of electricity comes from coal. It has huge hydropower. It's like five times bigger than the US. So that is a great source, you know, impoundment hydropower, not run of the river. If you have a big dam, the water behind that dam is a great battery. You can spool up and spool down and match supply and demand while your coal plants just keep running all day, dirt cheap 24 seven. Okay. So I said two things, hydro and natural gas. Those are the dispatchable subsets of base load power. The more you put wind and solar on a grid that's intermittent, the sun shines, it doesn't, it rains for a week. The wind blows hard. The wind goes dead in the dead of winter, just when you need it. All of these problems that are well known that are, you know, popular critiques of the green energy transition. As a general rule, as a mental model, when intermittency swamps dispatchability, things begin to break. It's very simple heuristic. So all we do then with that mental model, well, that's pretty predictive. It explains things and it explains California and it explains, you know, Germany. Okay, let's look at China. So you just go to the statistical review of world energy and you plot the generation of electricity from wind and solar combined against the generation of electricity from natural gas and hydro combined. And when they cross things are going to break. And we flagged that last year in a presentation. You know, we used it as a, as bait for a promotion called cocktail party trivia, winning the renewables debate with friends and family. We, we laid out that mental model. We had a, one of the slides was a grid of fuel source measured against criteria. Baseload.
[00:53:26] Speaker ?: Yes.
[00:53:26] Doomburg: No dispatchable.
[00:53:27] Speaker ?: Yes.
[00:53:27] Doomburg: No intermittent. Yes. No carbon free. Yes. No, you know, all those attributes that you might care about. And we pointed out that dilemma, you know, if you're going to match intermittency, you need dispatchability and the two sources of dispatchability that matter are natural gas and hydro. And then even, even this method model goes one further. Well, what about batteries? Batteries is always the, uh, but you know, the hand in the back of the room. Um, batteries are in fact dispatchable. They're instantly dispatchable. They're not base load. Right. They need to be recharged. And so the amount of betters you would need to properly back up a grid. And we showed this in the China presentation right now. Um, all of the batteries installed in China. And by the way, China accounts for half of all of the BESS systems installed in the world. Right. Is enough to back up their grid for 30 seconds. Um, you could check, you could check my numbers. 30 seconds. Wow. But more realistically, um, the installed capacity of wind and solar could charge those batteries from empty in about 18 minutes. So the amount of batteries you would need, that's just another way to look at it. You know, like the amount of batteries you would need to install that mostly do nothing. Talk about like a poor asset utilization. Right. Um, is unfathomable to people. Maybe they could do it. A much better solution. So take us one step further to show you how our lateral thinking approach works. Okay. What is the one thing that would turn this all on its head? Well, you may call more dispatchable. Okay. Let's do some digging is, is there a technology that would make coal more dispatchable. And there is a freight and cycle and super critical CO2 and all this experimental stuff that we've heard about over the years. And suddenly you do some digging and yeah, China's playing with that. Okay. Let's put that on our internal radar for, we will be wrong with, stated more correctly, that mental model about dispatchability and, um, intermittency will need to be discarded. If China cracks, making coal more dispatchable in an economic way. Great. Not only is our metal model currently working, we know when it'll be wrong. And we'll discard it then, which is wonderful. Um, so like if China cracks dispatchability for coal, wind and solar make all the sense in the world for China. We'd be the first to say it doesn't mean it makes sense for America. It doesn't mean it makes sense for Canada that gets no sun. Um, but for China, sure, especially considering that they're really worried about energy independence and resiliency correctly.
[00:56:09] Speaker 1: By the way, it's, it's, it's really hard. I, I, you know, it's really hard not to start to imagine that, you know, this Iran conflict. Um, the, the thought that I can't shake is the idea that, that China is the real target. Of course. And, and, you know, like if you, if you cripple, you know, if you cripple the supply chain coming out of the Middle East, that goes to, you know, Asia, North Asia, all over, uh, you know, whether it's Korea, Japan, China, but mainly, mainly China. Um, and you, you, you've talked about, you know, Japan's, uh, backup supply of energy, backup supply of, of oil and, and, uh, you know, how potentially vulnerable it is to that and Taiwan. Um, but China seems to be, to me like, you know, I recall during the first Trump administration that China was the, you know, the hallmark, um, issue that he was constantly railing about. And, and then in the second term, uh, it continued, but not, not in the same way, but it seems like this Iran conflict was actually, you know, the, the first order of, of the Iran conflict is, oh, it's the Middle East. It's Iran.
[00:57:29] Speaker ?: It's Iran.
[00:57:29] Speaker 1: It's our mortal enemy. Uh, they're, you know, they're building out their nuclear weapons and, and power capabilities and we need to stop them. But the second order effect of, you know, occupying, choking up the Strait of Hormuz is that the energy doesn't make it to China. The oil. Yeah. Right. And, and, and so, you know, you brought up the point that, that, you know, China has its, its friendly trading partners in, in, in the stands. And, you know, I, I, I, I, it's still just, I, that the, you know, if the intended target is China, it's to, it's to force China to use up, first of all, its stockpiles that, you know, the, the White House and the Pentagon know, um, uh, have been, you know, very, very carefully, uh, you know, that they've been strategically building up these stockpiles. Um, if you can get China to use up its, its reserves of, of everything that it has been stockpiling, then, then you can, you know, it's, it's pressure, right? It's, it's real pressure. So, you know, the, it, the, the, that seems to be the big game that's going on.
[00:58:41] Doomburg: I think it's a foolish game and one that the West is guaranteed to lose absent.
[00:58:47] Speaker 1: Well, and it's, it's, it's, it's, sorry. And I don't mean to interrupt you, but it's, it's, it seems to be the same. It seems to be happening also in the, on the AI front, right? You, you, you know, when, when you look at, at what this pressure is, is actually spurring, it's, it's China to become even more competitive.
[00:59:04] Doomburg: Well, we wrote this in a piece called treatment resistance. Yeah. Where the, um, where the analogy is, you know, the old saying, you know, that which, which doesn't kill you only makes you stronger. Um, if you want a vivid example of this that touches on too many people, unfortunately is, um, if you want to get a bad-ass cancer partially treated. Because the cancer that comes back is, um, stronger and angry. Um, and it's the same with strong country sanctions never work against strong countries. Um, that it's like partially treating a cancer. So this is a theme of our work. You know, we, we've been calling how crazy these sanctions against Russia are and have been since April of 2022. And I think that we've been definitively proven correct on that. Um, anybody's still hanging onto that thesis works at the, you know, the European commission in Brussels. That's about it. Um, so in treatment resistant, we talked about, um, you know, in the AI space, in the LNG space, this one was about Russian LNG. Um, what happens, you know, so the EU gets to say, we're going to sanction Russia's LNG, even though they need it. They're literally taking a hundred percent of all deliveries from Yamal for the first half of this year. Um, so they're going to forbid, you know, Mitsubishi heavy industries from selling much needed turbines for the next LNG project. Um, you know, Russia's planning. Well, what does Russia do? It builds its own and it has its own. It will have its own. And suddenly you have, you know, MHI's moat gone. And it's the same thing with China. Usually you read our stuff. We've been writing that China is going to overwhelm semiconductor production for years. We've seen it before. I was an industry when they overwhelmed solar. I remember seeing the first BYD car at an auto show in Shanghai. It was a, it was a Frankenstein mobile. It looked exactly like a Toyota Corolla carbon copy. And it under the hood was parts of everybody else's technology. The best bits that everybody was laughing at it. And I wasn't laughing because I know what that means. What that means is BYD now is bigger than Ford. Um, and so, I mean, literally. Yeah. Um, and so China, what happens? We've been warning and we've been writing about this and, you know, angry trolls show up. And then, then the headline comes this week. China set the mass produced DEV machines. They have ASML drops 10%. Um, of course they're going to mass produce DEV machines. Why? We forbid them from having them. But they're not EUV machines yet. Doomburg. Okay. Right. Sure. Give it time. Um, they'll get there. And when they do, I mean, rest in peace, ASML. Last I checked, China was half their revenue. Um, yeah, I'm not, that's not a stock call. Um, but you know, when China, China enters profits leave, that's kind of way worse. Um, and so by banning China from buying equipment and buying the best chips, they're forcing China to make them domestically. And when they crack it and they will, they have brilliant scientists. You know, I try to tell this to people, if you've never been to China, it's been a while since I've been, but even over the years where I used to go regularly, I mean, it's profound. So like China has a university. Not to get like too far down the rabbit hole. I remember when the European energy was sorry. When the, when the Russia, the war in Russia first broke out and a certain very popular, entertaining content creator came out with a call that, uh, all of Russia's oil production is going to get shut in because the slumber days of the world are leaving. And they need this Western technology. I called it at the time. Uh, on a Twitter spaces when I was still on Twitter, that this was a Western techno arrogance. To the extreme. Um, if you don't think that Russia, China and India collectively don't have enough engineers to keep a well running. I mean, you're an idiot. And so China has a, China has a university. It's literally called China petroleum universe. That's all they do. It has 15,000 students in it. We, we produce 600 a year in the U S and half of them come from China. They're just studying at the university of Texas on a visa. They have 15,000 people studying petroleum at the one school that has petroleum in the name. Lord knows how many are studying at other schools. And by the way, you don't think they are in possession of every single piece of IP at Schlumberger? Of course they are. And some of this thought that they're just never going to catch up, that there's any moat that a dedicated Chinese attempt to undo, um, can resist is, I think it's a very, very bad mental model to look at the world that way. A much better mental model is to assume that if you forced them to, they will. Um, and the best way to compete with China is to focus on being as best you can trade with them openly and let the chips fall where they may. Look, the U S has a lot going for it. It's the world's largest, any producer. It's the world's largest oil and gas producer. It's, it's a, it's got an outstanding set of universities and a great, you know, uh, entrepreneurial ecosystem in Boston and San Francisco and in the, in North, in North Carolina. And, and so like, why don't you just play to your strengths and go and compete and, and, and try to win that way. You have the U S dollar. You, you have, you know, what are we doing trying to stop other people from developing? But here we are, you know, world war three, let's stunt China. Um, it's not going to work and that they will, they will crack dispatchability for coal, for example. Cause they have to. Yeah.
[01:04:53] Speaker 1: I think, I mean, it just seems to me like, like, you know, we've, we've had historically a very long, long string of failed foreign policies. And those foreign policies have led to a disproportionately long run of unintended consequences. Um, it just seems to me like it would be more, if you, if you really had the intention of slowing down China, it would be more productive to render them complacent than, than, than sort of embolden them into. What do you care at what speed kind of goes?
[01:05:27] Doomburg: I mean, like, again, this is like foolish and naive, but like, if I'm the leader of America, I start with the wellbeing of American citizens. If I'm Mark Kearney, how's Toronto doing? Yeah. But never everything has been the opposite. Like, right. You know, look at the Keir Starmer cares more about Ukraine than he does about the price of natural gas in Britain. I can tell you that. And I, the average Britain doesn't care. The average, the average British person doesn't care. And look, it's, it's like, oh my God, don't you, don't you hate dictators? I mean, sure. Um, so this is a whole other or it's mess. Yeah. I want to, I want to trigger some trolls. Um, I think like, why would you do that? Right? We're like, yeah, a very cynical about, um, about us politics, politics in general, us politics in particular. Um, there's no such thing as Republican or Democrat at, at the federal level, just to be clear that. They all play for the same team. They just have different colored jerseys. Um, and I think Trump, there's still a hardcore group of people for whom Trump can do no wrong. Some of them subscribe to us and I preemptively apologize for saying it, but you know, the guy ran on no new wars ending forever wars. Um, and the first thing he does is go to war in Iran. I mean, what are we doing? Um, and look, it's a quagmire and nobody is like happy about it. We had to come out with that call early that, you know, this is a strategic defeat for the U S quite obvious. By the way, we talk about trolls. Um, you know, the, we wrote a piece all the way back in October of 2024. It's called October surprise, which pointed out that Iran had demonstrated impressive missile targeting capabilities in a salvo of missiles exchange with Israel. And boy, shouldn't we take a beat and think about what that means? And we pointed out that Israel is a small country. It has six power plants and 60 desalination plants. Everybody knows where those are. And if Iran can pick targets and hit them and circumvent the much vaunted air defense system of Israel, isn't that kind of sort of a form of mutually assured destruction? Yes. They don't have a nuclear weapon yet, and maybe they're trying to get one, but they kind of do if they can make your country unlivable. And man, the heat we got for writing that, um, I just stopped participating in the comments after a while. Um, because it's just insane. Like the anger, how dare you, you know, the, we have to destroy the mullahs. Um, and, and so, you know, okay. But like they can punch back literally the piece we published this morning, like on the belief that opponents never punched back. So back to Iran, suddenly when the war starts this one. So first the 12 day war was another proof of this. It was the U S and the Israeli side that demanded the ceasefire back then begged for the ceasefire. And, um, the big, you know, destruction of the, of the Iranian nuclear capabilities. We knew that was phony when we saw it. Cause we had this mental model of Iran's targeting capabilities. So then when the war broke out again, we're like, okay. First thing we thinking as we're building, you know, our, uh, our pro Iranian Twitter feed is like, what has changed about us or Iranian capabilities that makes our current mental model of mutually asserted destruction invalid? Cause something must've, there's just no way we would do this. We, you know, my, my editor keeps reminding me, we, as you, there's just no way that Trump, that Trump would do this. If it's the same fact set as the 12 day war in June of 25 or the missile salvo of October 1st, 2024. And so we were actively looking like what has changed has China cracked dispatchability for coal. They had, they had nothing had changed. And so in the first days of the war, Iran systematically blew up U S bases and U S radars with precision, scary precision. And there was like no trick. There was no, here's the secret room where all the smart people are that no quote the truth. No, it was the exact same relative capabilities on both sides. The U S is highly vulnerable. And Iran, unlike Putin, um, was willing to go there. They went full, full throttle.
[01:09:43] Speaker ?: All right.
[01:09:44] Doomburg: You're going to bomb us. We're going to bomb Bahrain. We're going to bomb Qatar. They put, they dropped the missile down the middle of two LNG trains out of 14 and LNG. And they just happened to be two of the trains Exxon owned. That shows you the level of precision that Iran had. And that was obvious. That was available to people in the first days of the war. Nothing has changed from the 12 day war. We lost that one. What's going on with this one? What is different? Nothing's different. And so now here we are. Six months later. MOU ceasefire. Nothing's changed. Iran still has an enormous amount of high caliber missiles with great precision. The U S is running dangerously low on air interceptors. That was just, again, another aside, like people control us all they want. We get a doom zoom presentation in November or October, maybe December of 25 called a mental model. Six axioms that explain the world as it exists for now. Like, and one part. Well, yeah, that's, that's like an important part of the title. Right. And one of those six axioms was the U S is dangerously short air defense missus. We, how did we come to that mental model? Well, we've been watching the war in Ukraine. Zelensky is on Twitter every other day, begging for Patriots. The U S has moved Patriots from all over the world into Ukraine. Russia keeps firing dozens of missiles. Patriots keep getting fired up. Sometimes they intercept them. Sometimes they don't. But every fired Patriot is one less than the arsenal. You can go and see how quickly does Lockheed or Raytheon make these missiles. Okay. How much did, did the U S start with an inventory? Because congressional disclosures, you can go find that. Wow. We're short. The U S is short. These missiles, here we are now in 2026. Zelensky's in Washington for Lindsey Graham's funeral. And like, you know, I don't mean begging derogatively. Like I would be too. If I was him, he was pressing Trump for an allocation of 300 Patriot missiles to get through the winter. And Trump kind of sort of said, we don't have them. And like, if you have that mental model. Now there's a, there's a whole series of people who watch Fox news. Who believe that the U S military is, is the strongest, biggest, baddest in the world. And maybe it is. And that it is inexhaustible. It has the infinite supply of everything. Just snap your fingers in the weapons drop. That's just not how the world works. And in fact, a piece we haven't written, but I'll say it on a podcast. Cause I doubt we'll ever write it. Is this a huge scandal brewing? Like what is 1.5 trillion buying us? So I saw something. I have yet to verify it. Cause I, I know that I probably won't be allowed to write the piece. So we won't write it. That Iran's military budget is like 8 billion a year. How's this possible? So the, the, the scandal is look what they built for 8 billion a year. And look what we built for 1 trillion a year. Um, and look unless and until now what would change that mental model?
[01:12:41] Speaker ?: Um, wow.
[01:12:41] Doomburg: We invented a laser that can take out hypersonic missiles. All right. That's a game changer. How much energy goes into the laser and where we're going to get it. Right. Okay. That's all great. Well, that's a game changer.
[01:12:53] Speaker ?: All right.
[01:12:53] Doomburg: The fact that the U S no longer has a sufficient inventory of air defense missiles. And, and can fight a war of attrition. That's, that's a game changer. Great. Maybe that's, you know, frankly, one of the things we were looking for in the early days of the February 28th. Reignition of the war with Iran. We're watching videos out of Israel. Looking for lasers.
[01:13:16] Speaker ?: Yeah.
[01:13:16] Doomburg: No, it was inside. Show me, show me the lasers. Um, you know, about Austin powers movie.
[01:13:22] Speaker ?: Right.
[01:13:23] Doomburg: And, and, and so, but there weren't any lasers. And so, you know, for now we're hard pressed to see. And I can go, if you push me, I would be kind of bullish oil. Cause the prospect of, of a retreat against this is, is not forthcoming. It's not in Trump's personality. Um, and so I, I don't see Iran giving up control of this trade ever.
[01:13:48] Speaker 1: Well, yeah, they almost like it, it appears that, you know, they're actually practicing more detente than.
[01:13:56] Doomburg: Then they have the sword of blowing up everybody's oil and gas facilities in Saudi Arabia. And there's 12 more trains to destroy.
[01:14:04] Speaker 1: But, but it's, it almost feels as though, you know, they're not doing it because they don't actually want to, you know, like, but, but.
[01:14:11] Doomburg: Who wants to use a nuke?
[01:14:12] Speaker 1: Yeah. And, and so, you know, it just seems like this, this war of choice has, you know, it's, it's just gonna. Disaster.
[01:14:20] Doomburg: Look, it is, it is, again, at the risk of triggering some people. We've been saying it early. I was quite depressed when the war, war, war started. Look on energy. Trump in the beginning, it's making a lot of right moves. I mean, Chris Wright as energy secretary, Doug Bergman in the interior, um, nuclear renaissance, pipeline renaissance, permitting renaissance. Like, you know, this is literally the Doomburg energy policy for America. How, how could you not be excited and see it all undone? You know, this, this war is a catastrophe. Um, it's, it's, it's so yeah.
[01:14:57] Speaker 1: Yeah. I mean, it's, it's definitely, you know, it's, it's definitely a head scratcher. You know, I, I, I, another head scratcher is, is the, you know, when you, when you look at, you know, the amount of investment that's going into, uh, and still, we're still talking about energy here, but the amount of investment that is going into data centers. And, um, and, and then behind that, the, the, the utilities, the electricity, the electrification that's required in order to make those data centers run. Um, and, and, and, you know, when you look at, at the, you, you talked about project Kilby, for example, uh, which is headlined by Chevron, Microsoft, GE, Vernova, 2.7 gigawatts behind the meter. Uh, you know, a billion cubic feet of gas a day. Um, but you know, the investment case there is, is astounding. Um, but you, you pointed out that, you know, rather than, rather than giving a conclusion on that, on that writing, you, you pointed out that, you know, the real question is if a project with that lineup. In that location, can't clear permitting, what does that say, what does that tell us about the gap between what the AI build out that, that everybody's talking about? Uh, what does that say about what it requires and what the, you know, current regulatory environment can actually deliver? Like that, that, that seems to be, you know, like that there isn't a, a clear path to it, right? I mean, nevermind the, the choke point of energy itself, where does the electricity come from? If it's from natural gas, nuclear, hydro, this on, you know, base load, uninterruptible power supply, um, are we gonna be even able to get there legislatively? Like are, are, are the, you know, is permitting gonna happen? So this is like a podcast in itself. Um, yeah, I know.
[01:17:01] Doomburg: Um, but so one of the other six axioms from that presentation. The human endeavor is infinite compute. And you notice the word infinite in there, you know, lateral thinkers like infinity and zero because it's, it's just a comfortable thing to brainstorm around. And so what does that axiom mean? It means the human endeavor is infinite compute. They're curse. Well, the envision, you know, when humans transcend biology, the singularity is near all that jazz. That's a pretty good mental model. Mental model. That book is published in the mid two thousands. It's, it's, it has a remarkable track record of being operative. And so we've, we've adopted it. And so what does that mental model foretell? It says anything that gets on the barrier to infinite compute will be wiped away. Climate change gone. Anti-nuclear, um, protesting gone. Um, permitting gone. Okay. Okay. The other part of lateral thinking is how would we be wrong and how do we detect it? And hence the article on the project you mentioned, which is boy, if it can't work here, then is our mental model operative, at least as it pertains to the U S. Um, because if you can't build 2.7 gigawatt behind the meter in the Permian with negatively priced natural gas backed by Chevron, General Electric and Microsoft. I mean, good luck to you in other places, theoretically, especially given the fact that the Texas railroad commission is the most. You know, business friendly permitting agency there is, you know, I know it's probably not just them and there's other people involved for whoever. Um, but that's the type of sort of lateral thinking concept. The human endeavor is infinite compute. Is it because they fired everybody? Um, no, no, they, they want to do it. There's other issues. They're in water and you know, um, there's, there's protests. Yeah. There's a lot again, as we alluded to in the piece, is it in China's interest that this gets built? No. So how much of this sort of foreign funded NGO type protests are truly organic and authentic? And there's some issues and I'm not, not here to belittle those or minimize them. Water table issues, you know, line of sight issues, all the challenges with wind turbines and, you know, um, but for sure there is an entire category. Of professional agitators and litigators whose main job it is to stunt the development of primary energy. And suddenly they're interested in stunning the development of one of the use cases of primary energy, which is the most important military technology of our time, which is artificial intelligence. And then in a happy coincidence, China's building data centers as fast as they can, empowering it with coal. And I can assure you that such protests would not be allowed to manifest in China. Yeah. So it just makes one wonder. But anyway, back to the, back to the, uh, foundation of the question. If the human endeavor is infinite compute, then permitting resistance, protesting resistance, Chinese funded NGO movements will all have to be wiped away. And as long as they're being wiped away, the mental model is operative. And once it fails, you have to question it.
[01:20:22] Speaker 1: So that's the, the, the barrier itself gets pushed off, gets removed.
[01:20:28] Doomburg: Well, if the human endeavor is something blocking the human endeavor is going to trigger every antibody that humans can muster. Right. And so, um, again, it doesn't have to be true. It may even sound ridiculous. What is he talking about? The human endeavor is infinite compute. We don't care if it works. It's useful. If it doesn't work, we discard it. Um, it works. That mental model works, man. Like that's the undercurrent. Yeah. For everything. Right.
[01:21:02] Speaker 1: Sure.
[01:21:03] Speaker ?: Seems like it.
[01:21:04] Speaker 1: Yeah. Wow. I mean, I, I think like, you know, this goes far beyond just the simple supply demand issue for electricity. You know, like we're in a, we're in this time where suddenly, you know, utilities are exciting again. And, and, you know, nuclear is exciting again. And, and.
[01:21:21] Doomburg: But it's not obvious it's bullish for. Yeah. Yeah. Just, just to give you a bit of a warning, because again, it's not quite, you know, if a, then B, um, utilities are short gas turbines. Utilities are short natural gas. Utilities face constraints on price increases. And that can be quite the vice to holders of the equity cap of, uh, you know, the equity stack of a, of a utility cap table. So you do have to think beyond just the sort of first and second dimension sometimes, um, in these circumstances. You do have to think beyond what is interesting and bullish or anything that can remove the constraint. Right. And so this is why, you know, gas turbines and any machine that can convert cheap natural gas into electricity is going to be wildly useful and overpriced right now. But not necessarily true that, um, burgeoning demand for electricity is good for operators of grids.
[01:22:27] Speaker 1: Very good. Yeah. I, you know, it, it, it just seems, but you know, you gotta wonder if the pressure is going to be, if they're going to be able to absorb the pressure. Right. Well, they'll have to, if the human endeavor is infinite compute. Yeah. Yeah. I mean, when you put it that way, it's not outlandish when you, when you consider, you know, the motivation.
[01:22:49] Doomburg: Well, look that mental model name, another mental model that captures, um, an exponential growth chart on a log scale. Like it's a double exponential, the growth of compute. Um, if you plot it, both power and total compute and the decaying energy penalty per, per computation, like these are, these look exponential when you take the log of them. Like that's a pretty powerful mental model that occurs while published. And I would argue who cares if he's quote, right. Works. Keep using it. And I think that's a pretty important thing for advisors too.
[01:23:25] Speaker ?: Right.
[01:23:25] Doomburg: I mean, if you're going to embrace the fiduciary of somebody else's savings. Um, if it's work and go with it, you know, try to understand it for sure. People, people feel comforted by understanding.
[01:23:41] Speaker 1: I mean, it puts it out there without any limit. When people say, you know, don't underestimate that, that drive that humankind has to grow, to, to succeed.
[01:23:51] Doomburg: A powerful mental model is, is a source of enormous alpha. Uh, being right can often cost you money. So, right. Like being right and wrong on timing is the old saying, right. In this industry. Um, a mental model is not being right. A mental model is operative. It makes predictions that come true. There's a difference. That is really important. Psychological philosophical difference between being right. And making accurate predictions.
[01:24:20] Speaker 1: Thank you immensely for, for your time. We love having you. And we especially love. Your thought provoking editorial. Well, I really appreciate it.
[01:24:30] Doomburg: And I always enjoyed my time with you. time with you and like I said I'm happy to come back.
[01:25:02] Speaker ?: you