Bloomberg, Opec, Frank Aerodyn discussed on Bloomberg Best

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Have to bring Morgan energy more leadership to you know just to have just to execute type of thing you know you know we always put that person on as a front to go out there and just leave The Giants are one in four College football northwestern beat Rutgers 21 7 UConn won their first 21 15 over Yale with a Bloomberg sports update on Frank aerodyn Broadcasting live from the Bloomberg interactive brokers studio in New York Bloomberg 11 To Washington D.C. Bloomberg 99 one To Boston Bloomberg one O 6 one This entrances go Bloomberg 9 60 to the country Syria's XM channel one 19 and around the globe the Bloomberg business act and Bloomberg radio dot com This is Bloomberg best I'm at Baxter And I'm Denise Pellegrini and we've been hearing from different parts of the country about inflationary pressures including rising demand for restaurants and other fun things Plus labor is shortages and rising fuel prices Yeah Denise and Bloomberg's David Weston had a chance to hear from one of the most well-known voices on energy about what's happening in those markets And yeah you're talking about Daniel Jurgen oil historian and vice chairman at IHS market And he says crude oil really could go up a lot from here Well I think it's certainly could go to $90 It's what's happened is that in addition to everything else that's happening people around the world particularly in Europe and in China are switching from some natural gas to switching to oil and so suddenly you've had this upward pressure on oil demand that wasn't in the forecast a month ago because you know people didn't see this energy crisis coming a month ago How hard it is with a power plant to convert from natural gas to oil Most of them can not do that but dual fire capacity is something that's built into some plants that have been there usually there for years And I don't think anybody particularly expected that they would be switching back to oil but the price of natural gas if it's landing in Europe today is LNG's equivalent of $200 a barrel So oil is by comparison is certainly cheaper On the crude front alone we've seen that vitamin C and sometimes react once encouraging OPEC plus to increase production And now there's talk at least about the petroleum reserve national petroleum reserve although as I understand it they suggested and walked it back Are there things that the bottom administration could do to take some of the sting out of the crude prices I think what they'll do is what they did in August they'll go back to OPEC plus and OPEC countries and say can you put some more oil into the market because obviously anybody who's been around Washington for as long as Joe Biden knows that high gasoline prices are not good for incumbents And so I think we're going to be hearing more from the administration They don't have a lot of tools because this is unlike other crises in this is not starting with oil This is starting with natural gas LNG supplies being very tight coal being incredibly tight and the wind not flowing in the North Sea which is of produces a special part of Northern Europe's electricity And then of course you have China that I mean in a sense it's really started when China went into over drive is the workshop of the world during COVID and its demand really went up And it ran into its coal ceiling and it's pulled up natural gas prices And that's what's radiated out to the entire world And China is now rationing electricity effectively So Dan you point out a lot of the starts with natural gas So let's go to natural gas Could we have the kind of price spike in the United States that they're seeing over in Europe I don't think so I mean natural gas prices have about doubled They're doubled for two reasons here One is inventories are low and people are looking to the winter And two because coal supplies are so tight actually you have fuel switching from coal to people using natural gas to generate electricity So that's what's really caused the doubling And we have a lot of gas in this country but we don't have quite enough pipelines to move it around Is that something that the volume of social media to take a look at There's some irony that's right because the Biden system wants to cut back on fossil fuels And right now we need more of them for the time being Well I think there's going to be a big rethink and certainly rethinking Europe about the timing I looked at natural gas production domestically in Europe It's down 20% So there's going to be a question of timing in terms of cutting back on conventional supplies when you don't really have the capacity there to replace it And by the way with electricity you need reliable supplies and when your wind can go wind electricity can drop by 50 or 60% you need an alternative which is natural gas So it will be striking or at least interesting to see the degree to which the administration looks again at the domestic energy supply situation And realizing that what's happened with the U.S. means self sufficient in oil self sufficient natural gas gives us a lot of flexibility that other countries don't have And Dan one of the things we've seen over the last couple of weeks is some talking in Europe of the need to perhaps ration We might actually have some curtailing of some of the power for heating over the winter Is there a danger of that happening in the United States No I don't think in the United States but I don't think that's the case Unless we have a bad really bad winter then this shortage of coal and then the gas but I don't think so And the whole question now is it all comes down to whether or if we have the markets are anticipating cold winter was called last year That's one reason inventories are down If it's cold we're going to have more problems And we'll see it more in prices If we don't have a code winter then this will ease up But the speeds into inflation And along with this supply chain disruptions affects the kind of reconstruct economic recovery we've seen Expect China to slow down We've just lowered our forecast for U.S. growth this year from 5.7 to 5.4% And I suspect it will go lower as these problems persist Daniel you're getting the oil historian and vice chair at IHS market with Bloomberg's David Weston.

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