The West Went Green. The East Went Gold.

In this episode of the Gold Exchange, Doomberg joins the podcast to break down the real forces shaping global energy, geopolitics, and gold. We explore why energy drives nearly every major conflict, what the war in Ukraine truly represents, how AI is reshaping electricity demand, and why gold is quietly becoming the world’s neutral reserve asset again.

From U.S. energy dominance and Europe’s grid failures to China’s long-term strategy and the future of nuclear, this conversation cuts through headlines and hype to expose what actually matters for investors navigating the next global shift.

Follow Monetary Metals on X: @Monetary_Metals

Doomberg

Transcript

Monetary Metals:

Welcome back to the Gold Exchange podcast. My name is Ben Nadelstein of Monetary Metals. I am joined by everyone’s favorite green chicken, Doomburg, head writer of the Doomburg Substack, which is wildly popular on Substack, one of the top finance substacks in the world.

If you’re not reading it, I’m really not sure what you’re doing. But Doomberg joins us today to talk all things oil, geopolitics, and more. Doomberg, welcome back to the show.

Doomberg:

Hey, great to be back with you, Ben. Looking forward to it.

Monetary Metals:

All right, let’s start with a 50,000-foot overview. A lot of our viewers are obviously interested in gold, geopolitics, finance. Where are we today? Are we now in a multipolar world where US hegemony is over? Is the US actually becoming even more dominant? Where do we stand in a 50,000-foot overview?

Doomberg:

At a 50,000-foot overview, and it’s interesting that you asked that question because we’re literally just putting the finishing touches on November’s Zoom Zoom for our pro-tier, and it’s titled World War III: How We Got here and where we’re going. We believe that NATO has suffered military defeat in Ukraine and that the United States has suffered an economic defeat at the hands of China in the economic war. Both of these are phases of World War III.

The heart of that presentation is a prediction that the next phase is going to be aggressive US moves across Central and South America. Everywhere we look, as we demonstrated in this presentation, we see signs of the hand of the US agitating for either regime change, outright conflict, and then also on the flip side, support for regimes that are aligned to the United States.

We believe that this is the next front of World War III. And what will result from that is a classic sphere of influence world, where Russia and China and India have a broad swath of the planet representing the the global south. And then what’s left of the rump of Western Europe, Canada, Mexico, and Central and South America form the US sphere of influence.

The big question is, after this next phase of World War III are what happens to Africa and in which direction does the Middle East go? I know that’s a lot for one answer, but that’s the heart of the presentation. I was literally just finishing before I popped on with you.

Monetary Metals:

And a question here on the Middle Eastern play. Obviously, a lot of the Middle Eastern countries are We’ve seen as neutral ground. They’re somewhat allied with the US and the West. They’re somewhat allied with China and the East. They’re friendly with everyone. They’re just happy to make money, maybe happy to be the settlement for trade.

Why do you think we have not seen a place like Dubai, for example, be the area where countries like Russia and India trade their net balances out in gold? It seems like maybe a perfect spot to do that. Where do you see the Middle East currently, and where do you see it potentially going if this World War III scenario that you’re describing does happen to play out?

Doomberg:

I think you’ve characterized it correctly. As part of this talk, I punch some numbers and round numbers just from memory. The Middle East produces 80 exijoules of hydrocarbons and only consumes 40, to rough numbers. And that means they’re indispensable for the rest of the world. The US obviously is still pushing very hard. Mbs is visiting the White House here soon. We expect significant deals to be cut at the same time. Mbs has a very good relationship with Xi Jinping and also with Modi, and the Europeans desperately need the Middle East, in particular Qatar, alongside their dependency on the US.

Because of our somewhat controversial, but we believe, totally correct view of how the 12-day war between Iran and Israel came to an end, I think physics would say that we’re in for a period of relative neutrality and peace in the Middle East, let’s hope, because it’s in nobody’s interest. It’s not It’s not in China’s interest. It’s not in the US’s interest right now. It’s not in the European’s interest. It’s not in the Israeli’s interest or a wider confrontation to break out in the Middle East. We could be wrong. Physics is a great producer of edge, but it’s not always 100 %.

In the long term, it’s 100%, but sometimes countries don’t act in their best interests, and you get chaotic situations. But we see the focus of US hegemonies shifting to the Western hemisphere, also the Arctic as well, which we could have discussed. This requires culminating trade deals with Mexico and Canada.

We know with interest that all the hallmarks of a classic color revolution seem to be underway in Mexico, and Mexico has not yet signed a trade deal with the US, perhaps waiting for the Supreme Court decision. And so lots of moving parts, lots of complicated analysis, lots of potential for chaos. But if you pushed us, we would say the Middle East threads the needle. It’s in everybody’s interest that they do, and all the action is in the Western hemisphere.

Monetary Metals:

I want to ask you about some things that maybe to someone like me or our audience seem completely irrational. For example, Trump saying he wants to take over Canada and make it the 51st state. He’s saying he has an interest in just buying Greenland outright. Are these just crazy machinations of someone who’s basically starting to lose it? Or are these actually somewhat of 4D chess, with there actually being some political motivations or geo-political motivations behind the scenes.

Doomberg:

We like to say that Trump is everything all his supporters and his critics say he is. He’s an enigma. I saw a great tweet on Twitter. I wish I could attribute it because I’ve quoted it several times, which is in 300 years, Trump will be a mythical figure that nobody believed actually existed because he is that far out of the norm for good and for bad. Greenland is a totally serious objective, one that he has held for a better part of a decade that I think is utterly in the US strategic interest is way more likely to happen in some form or another than many analysts would give credence to.

We believe Canada and the 51st State Talk was all about maneuvering behind the scenes to get Mark Kearney in, but we’ve written several pieces on this one of our better predictions back in December, where we called that Kearney would not only replace Trudeau, but would stand a very good chance of winning the election back before you could even bet on him on Polymarket. And Pierre Polymer was trading at 93 %, likely to win the next election. And so I think the whole objective was to unstick Alberta’s energy.

I think Carney is running into greater political challenges on his left than perhaps the architects of this entire affair would have anticipated. But we’ll see major votes coming, I think, in Canada this week. I saw some news around tightness around the budget and perhaps another election.

And so I don’t think Trump actually thinks that Canada should be the 54th state, but he does think Alberta’s energy should be unstuck. And when Trump thinks about American energy dominance, I think he thinks about North American energy dominance.

When he talks about the war against the cartels in Mexico and Colombia and all these other places, that’s just a cloak for resources that could be developed by Western supermajors that are currently being interfered with by the cartels.

I mean, the Mexican oil and gas situation is replete with corruption and cartel influence literally just tapping pipelines and stealing oil and gas, gasoline. And so obviously, the potential war in Venezuela is all about oil, and the Bay of Malay is all about oil. And so when we go up and down the Western hemisphere, there’s plenty to do on the home front. And so there’s nothing about the Donbas, for example, that is in America’s core strategic interest, but Venezuela certainly is.

Monetary Metals:

And when you talk about these different areas that produce oil, whether it’s Venezuela or places in Mexico, is that how we should be analyzing these different geopolitical events through the idea of, Hey, there’s some strategic energy play happening here?

And if so, why doesn’t the US do something domestically to help with their energy market rather than trying to entangle themselves with a war in Venezuela or trying to figure out the cartels in Mexico? Why doesn’t the US focus on its domestic energy supply rather than having to entangle itself with a foreign or Central American or South American oil supplies there?

Doomberg:

Sure. At a high level, one of the great issues of our time is how few geopolitical and economics analysts start with energy because it explains so much of the variants of what we see in a far superior way to almost any other variable. I think it explains Doomberg’s success because we obviously start with energy. We have an energy hammer, and everything looks like a nail to us.

But the answer to your specific question is, why not both? I mean, the history is that the US does both. It would be naive to think that the The accelerating development of Vaca Merta in Argentina is unrelated to the bailout of Milei, and that the election results where Milei did shockingly good is unrelated to a newfound ability to count votes by American leaders.

We’ll see in Chile, another Trump-like character looks set to win the runoff election in Chile. Cuba is on our radar. There’s significant oil and gas deposits in Northern Cuba, offshore. It would make sense. Why wouldn’t there be? There’s so much oil and gas in the Gulf of America, in and around it, that would be no surprise. When you look at the Western hemisphere as a US sphere of influence, two countries stand out.

Brics, Brazil, the leading country of BRICS, that seems an unsustainable situation. In Cuba, a communist outlet a couple of hundred miles from Florida. And those things, once an armada of US Navy arise, seem like metastable situations that might resolve in a different way.

And so, Guyana is ExxonMobil, predominantly. Chevron now through its purchase of the Hess. Venezuela is predominantly Chevron. Chevron Iran’s knee deep in Fakramurta as well. So it’s not just domestic oil and gas resources, it’s domestic oil and gas companies. And when you look at the history of the 20th century, What is British Petroleum doing in Azerbaijan?

And suddenly, because the Brits and the Russians are having a bit of a tuffle over Ukraine and Russia’s mad at them, all of the Israeli refineries in Ukraine were blown up. These dots are worth It’s interesting, right? And so the mainstream media, the legacy media, never really does that. And I think it’s left to alternative media outlets like us to spec a little bit, think laterally about the problems. But yeah, energy explains virtually everything because energy is life. All humans everywhere want a higher standard of living, and hydrocarbons are a key input into global standards of living.

And when you analyze China, we’re publishing a piece tomorrow, China Through the Lens of Self-Sufficiency is the social preview for the piece called Closed We’re talking about how China’s investing enormous sums of money to turn coal into oil, and also this whole new thorium reactor play, and how that fits into the national security lens of China.

Well, one thing that Western stock markets do very poorly is they do a poor job of discounting national security risk. And I think that flows into the lack of analysis of energy as a key variable. But it’s so important and explains so much. As a mental model, it just works so often that even if you don’t believe it, it’s still worth using because it doesn’t matter if it’s right. It only matters if it works.

Monetary Metals:

All right, let’s use that mental model for the war in Ukraine. Obviously, Russia and Ukraine are both big powerhouses, whether it’s for a wheat Ukraine or oil through Russia.

Has that mental model helped you understand something about the war in Ukraine, whether maybe it’ll end soon, maybe why it started, or the effects that it’s had on the economy? Has that oil or energy mental model helped you analyze this differently than other analysts?

Doomberg:

Yeah, look, Russia’s energy superpower, a net exporter of hydrocarbons, sits on enormous reserves of uranium and coal and rare earths and huge natural gas deposits in the Arctic, up in Siberia. Ukraine is stuck between Europe and Russia. We believe a better mental model to explain what’s going on in Ukraine is to go back to the 2010 election in Ukraine. There are basically two candidates. One was pro-Russian, one was pro-Europe. Which direction Ukraine would go, of course, was one of the big geopolitical tussles of the time, a precursor to World War III, we believe.

And if you just look at that election result, which you can find on Wikipedia, and it’s not Russian propaganda, it’s literally government statistics from Ukraine. The four disputed regions voted anywhere from 70 to 90 plus % for the pro-Russian candidate. And the vast majority of people who live in those regions, the Donbas, and Kursan, and Saperoja, these people speak Russian. They’re culturally Russian. They consider themselves Russian. They were grouped in with Ukraine by Stalin.

And What you’re basically seeing is a civil war in Ukraine that the West has decided to get involved with. Once the Ukrainian counteroffensive of 2023 was defeated by Russia, once that counteroffensive failed, it was very clear that this had converted to a grinding war of attrition, and Russia was always going to be in that war.

It produces vastly more energy. Trying to target Russian refineries, for example, only hurts the global consumer. Russia produces more than it needs domestically, and it’ll just stop exports, certainly before it’ll starve its military. Russia is vastly underestimated in the West. I’m shocked by this Western techno-arrogance. It is not a gas station masquerading as a country. It is an incredibly sophisticated culture which has a strong manufacturing base, excellent energy resources, and a long history of marching from West to East when people invade or when conflict breaks out in this case. That war is over. Ukraine has not yet been defeated, but there’s only one direction of travel.

Things are starting to break down in Kyiv. I’m not sure how closely you follow the war, but some strange things happening in Kyiv right now, consistent with the last throws of Wars are very hard to lose. It’s one of the reasons why you shouldn’t get into them. We’re going to see some pretty stressful few weeks and months in Ukraine. In a way, it is an energy war because Russia has an enormous amount of energy, and it could just use it to make bombs, and tanks, and missiles, and explosives.

Ukraine is being fed by an energy-starved Europe, which is being fed by an energy-rich US, but the energy The rich US is far, far, far away, and its supply chains depend on China, whereas Russia and China are friends, and Russia is right there. And so not only is it a bigger country with a higher five times the population or whatever the number is, it’s also just an energy superpower, and and it has China backstopping it.

Monetary Metals:

What do you think about this idea that the US energy, which could, of course, bail out the US, the European who basically abandoned their nuclear reactors, abandoned energy independence, The US said, Hey, we’ll bail you out with our cheap energy.

Has that, in a way, also solidified, A, US dominance in the energy market, but B, the fact that the Europeans maybe should get their own energy independence? Has the war in Russia and the war in Ukraine, has that shifted the mindset of the European saying, Hey, maybe we should bring back nuclear reactors rather than shutting them down.

Doomberg:

Not that I can see. I read an entire exposé about the German industry and whether it would ever recover in the financial times, several thousand for as long, and the word energy didn’t even make an appearance. It’s stunning. And by the way, the US is not providing cheap energy to Europe.

It’s providing expensive energy to Europe, and US energy manufacturers are profiting from it, and European heavy industry is being decimated by it. So you traded four or $5 per million BTU, relatively cheap, abundant, consistent supply via pipeline from Russia for $11 per million BTU land at LNG. That’s double the price.

I mean, natural gas at Henry Hub today in the US is four bucks, and in a Permian Basin, it’s free, basically. Twelve months trip is maybe $2 a million BTU. That’s the equivalent price of $12 a barrel oil. Infinite supply, ready to be burned, ready to power data centers, ready to be used for heating. And there’s a huge advantage. The hundreds and hundreds of co-generation facilities in the US, because US is still a very serious manufacturer for all the talk of hollowing out our base for China. You burn You get gas, you get heat, you get electricity.

That’s a great foundation for a heavy industry. And so to the extent that an American manufacturing rebirth is on the agenda, it’s only made possible because the US is an energy gigapower, produces by far the world’s highest volume of natural gas, produces the highest volume of oil. It has huge coal reserves.

It’s got 90 operating nuclear reactors, and it has not yet contaminated too much of its electricity grids with intermittent renewables, although in some parts of the country it certainly has, and we’re starting to see the effects of that. But by and large, it’s an excellent foundation from which to work, especially when you rope in the 10 million barrels a day of incremental potential supply in the Southern part of the Western hemisphere.

Monetary Metals:

I want you to help me because when I hear someone like a President Trump say, Hey, we need to bring gas prices down, obviously, they’re talking about increasing the amount of energy, whether they’re importing it or just making it domestically.

But on the other side, obviously, if gas is super cheap, no one wants to go out there and buy the heavy equipment and invest their capital to actually put CapEx into getting this energy out of the ground. So square that circle for me. Sure. Is this a paradox?

Doomberg:

No. We’ve long flagged that Trump’s ascension to a second term was bearish for oil and gas producers in the short term. As a general rule, this is how it works. The oil and gas companies get to build stuff during Republican administrations, and then they get to make money during Democratic administrations. And so the trade is, hey, we’ll give you 40 year lease in some federal land.

We’ll speed the approval of your pipeline and all of the midstream and assets that you need to set up that perpetuity. And then when, Gavin Newsman comes in and turns the tap off and prices go higher, you make a lot of money. That’s the trade. And that’s what we’re seeing right now.

And again, it’s a mental model that works quite well. We’ve been flagging it for a long time. We wrote about it before the election. We cautioned on it. This is one of the reasons why we’re bearish on the price of oil right now, by the way. One of the many reasons, not the least of which is just way too much of it in the world, and there’s way too much natural gas. But you The long term real price of all commodities is lower.

But every once in a while, we see a super spike because the demand for those molecules is highly inelastic. And when you see a super spike, you make gobs of money, and then you tread water during the collapse in price that inevitably follows, and then the long gestation period of all the new supply that has come online. So you’re going to see gas pipelines, oil pipelines. You might even see a gas pipeline reach California at some point during this administration.

Certainly, some refined products pipelines are going to reach California because they’re shutting down their refineries. Silly. But we’ll see. This is where we thought Carny would unstick Alberta’s energy because he’s like Nixon going to China. He can face down the climate zealots in Canada and get some big, important projects over the line, blaming Orange Man bad for the need to do it. That was all on the board, pretty transparent for anyone who follows Canadian politics at the level that we do.

And so, yeah, I mean, oil prices are bearish. Now, gas might be catching a bid here because of AI, and that actually is even more bearish for oil because of coproduction dynamics that we can talk about.

But the trade is going to be, you’re going to get long term access to resources that were off limits under Biden, and you’re going to build immortal assets that will print cash in the future. And every once in a while, there will be a crisis, and you’ll print a lot of cash.

Monetary Metals:

And what do you think about this idea that people are a little bit worried that these immortal assets maybe won’t be immortal? You’ll have a Gavin Newsom come in and say, Yeah, actually, we hate nuclear, so no point in building nuclear reactors.

Do you think that the energy creators, whether it’s nuclear or oil, gas, hydro, solar, whatever it is, do you think that they have enough trust in the administration and the fact that the policies will be sticky to actually invest in saying, Hey, we’re going to build a nuclear reactor, and we know it’s going to be here for the next 40 years?

Doomberg:

Oh, 80 years. Yeah, no, I I think there’s pretty good trust in that. Look, the human endeavor is a constant unrelenting struggle against the forces of entropy. You need primary energy to waste heat in order to impose a order on your local environment. And so the easiest bet in the world is that total global energy consumption will go up and to the right. If you look at the statistical review of world energy, all energy sources are additives.

Even Gavin Newsom is not going to shut down a newly constructed nuclear power plant. In fact, we don’t think Gavin Newsom has any principles at all. He just be available for sale to the highest bidder. The energy companies aren’t afraid to write checks for such purposes and pretend like they’re being opposed by the government when in reality, the fix is in behind the scenes.

It’s such a powerful force that it’s just foolish to bet against it. Just literally just go to the Statistical Review of World Energy, which is free. It provides an outstanding spreadsheet every June. It’s It’s like Christmas Day when they publish that spreadsheet for us because we can update the old one.

Just plot from 1965 to today, the exajoules of primary energy consumed by humanity. You will find an R² of 0. 99 up into the right.

Monetary Metals:

I want I’m going to help me now ranking these different ways of creating energy. Obviously, in some ways, a lot of people are agnostic. Maybe they’re afraid of nuclear, maybe they like hydro, and they maybe like solar panels. But just help us be realistic. What do you actually see in terms of the energy breakdown? Are we going to have, wow, these solar panels are so cheap from China, we’re all going to be using solar? Is hydro the next big thing? Is thermonuclear? Tell us what in terms of actual reality, not hype and not media bias, is actually coming down the line in terms of energy?

Doomberg:

I’ll just rank the fuels by their pros and cons, if you would like. We’re pretty realistic about it. So natural gas is the ideal fuel because it is capable of both being a baseload source of power and is readily dispatched. Dispatchable in the sense that it can respond quickly to changes in supply and demand on the grid.

That is very useful for grid operators because you need to exactly match supply and demand for a grid to be stable. A stable grid is a foundation for a developed world economy. Second to natural gas, I guess, would be nuclear. Nuclear is baseload, but not very good at dispatchable, but it has the advantage of it runs at 90 plus % capacity factor, and they are immortal.

A well-maintained nuclear power plant could basically run forever. The fuel is cheap. The technology is safe, steady, predictable, baseload power, supplemented by dispatchable natural gas. That’s the ideal grid. When you talk about natural gas, by the way, one point I should have said before I switched to nuclear, is it’s so clean burning that you could use it for cooking in your kitchen, and you don’t have to worry that much about ventilation.

Which brings us to coal. You wouldn’t take your barbecue from the outside to your kitchen to grill some chicken and meat. You can think of the coals in your barbecue as very similar to the coal that is burned in a power plant. Coal is baseload, but not very good at dispatchable, so it’s in the same category as nuclear, but it has a huge advantage in that it burns very dirty. Soot, metals, all the impurities that come from, that are mixed in with coal when it’s mined and not taken out during the relatively modest purification processes that occur when coal is mined and refined and sent to power plants.

It’s not cheap if you have all of the existing and quite capable pollution control technologies appended to your plant, it becomes expensive. Coal is the fuel of choice for China, for example, burns 55% of the world’s coal because it’s cheap and abundant supply, and they have far less concerns about pollution than, say, Western countries do. When you talk about hydroelectricity, you have to divide it into categories. Impoundment hydroelectric, the more common one where you have a dam and then there’s a reservoir behind it.

That’s an outstanding source of electricity, especially if the dam is already built and the damage to the environment that comes with it is already done. On a variable cost basis, hydro is great because it’s like natural gas, very dispatchable. This is why you see Quebec can handle more intermittent sources, which we’ll get to, because it has these giant hydroelectric dams with water behind them respond to the demands of the grid with matching supply and demand.

Run of the River Hydro is a little less attractive, although it is more attractive from an environmental perspective because you’re not really creating these big reservoirs. But Run of the River is more baseload but not very dispatchable. So you can’t attach a Run of the River Hydro with a bunch of wind and solar facilities. Geothermal, quite attractive. The current embodiment of geothermal plants are baseload with minimal or less dispatchability, but still quite good and clean and basically an infinite supply once the technology develops, and we’re keeping a close eye on it.

Then that brings us to wind and solar, which we would characterize as unnecessary parasites to an existing grid because they bring entropic characteristics that make the grids harder to operate because they’re intermittent.

They either show up all at once, or they don’t show up at all. Then when they don’t show up at all, you need to have dispatchable sources to take their place. When they show up all at once, you end up having too much electricity, which can be just as bad. To compensate for that, of course, then finally, there’s the whole concept of batteries.

Batteries are great for dispatchable, but they can’t be baseload because they need to be recharged, usually in about four hours, and it takes a while to recharge them. The combination of wind and solar and batteries is a fantasy grid that will never really manifest. That’s our high Level overview of all the fields. Probably a bit more than you were anticipating, but it’s something that we’ve given a lot of thought to.

Monetary Metals:

Thank you for that. How resilient is at least the US grid? Obviously, maybe the more diverse sources of energy we can have, maybe the better, but maybe that’s not true. Maybe if we were all just set on nuclear, it’d be better that way. How resilient is the US grid when you change the makeup of how that grid is receiving power?

Doomberg:

Yeah, it’s not very resilient at all. It’s on the verge of collapse in many regions. Now, there’s not a US grid. There’s several regional US grids, and they have their own idiosyncrasies. But anywhere where you have intermittent sources of electricity being greater than dispatchable once, things begin to break.

Because when intermittent sources go away and you don’t have enough dispatchability to compensate for them, then you see rolling blackouts. But there’s another challenge as well, which is wind and solar provide a form of electricity that’s known as Inverter-based resources.

In other words, they don’t have big, large spinning turbines that give an inertial insurance to the grid that allows grid operators to ride out small faults that then don’t cascade into complete grid collapses like we saw in Spain, which happened to have something like 60 plus % of its electricity at that time being sourced from solar.

The necessary investments to make the grid more resilient to wind and solar, generally aren’t being made because Because this is just apparently not well understood by regulators or it’s considered way too expensive. If they made those investments, the entire proposition of wind and solar being cheap would wash away.

Look, there are many slites of hand in the renewable energy space. One is that because the fuel is free, it must be cheap. The cost of the fuel is just one input into the cost of using the fuel to operate the grid. For proof of this, the cost of uranium at a nuclear power plant is practically nothing. Fractions of a penny per kilowatt hour, but nobody would say nuclear is free. Of course, it’s not free.

You have to operate the plant, you have to handle the whole life cycle of fuel, you have to pay the operators. I mean, fuel being free is a parameter, but it’s not the only parameter, and that’s one of the big slites of hand. The other sleight of hand is installed capacity versus capacity factors. A good commercial solar facility averages 20 to 25% capacity factor. In other words, it produces about 20 to 25% of its nameplate capacity integrated over time.

So if somebody quotes Watts, but not Watt-hours, you know that you’re being manipulated. And so a nuclear reactor is capable of running 90 plus % of the time. A two gigawatt nuclear reactor is far better across multiple dimensions than two gigawatts of solar, for example.

And so these lights of hand are used in the propaganda war. We try to highlight them every chance we get, but it’s just part of where we are today.

Monetary Metals:

Now, I want to I can ask you a question that’s probably on a lot of viewers’ minds, which is we’ve heard all these AI companies, they need so much energy.

They’re going to demand so much electricity to power these new AIs, whether it’s ChatGPT or a thousand other things, that they’re going to actually not only have nuclear reactors right next to their sites, but they’re actually going to be drawing from the grid electricity, and that’s going to raise prices for consumers. Is that a myth or is that a reality that’s coming soon?

Doomberg:

It’s both. Our view written sometime last year, is that natural gas is the bridge fuel. Nuclear is an obvious long term solution. But also we wrote a piece called irreconcilable Differences, which predicted that it is inconceivable that existing grids could absorb this new demand.

The impact on price would be devastating to consumers and traditional industrial sectors. And so therefore it can’t happen. And we predicted that you would see off-grid dedicated power plants for data centers, perhaps connected to the grid for the occasional backup need or to occasionally dump excess power into the grid. But by and large, we envision pods, giant buildings, where natural gas goes in one side and data goes out the other. I think we’re going to see that in Western Canada.

We’re going to see that in the Permian. We’re going to see that in countries like Qatar, Malaysia. Why put natural gas on an LNG ship when you could just hook up your data center right there? And so that’s the trend. There’s bumps in the road. We’re seeing in parts of the Northeast where data set demand is colliding with lack of grid expansion and causing prices to skyrocket and consumers to revolt.

That is, we think, validation of our prediction. And in the long run, you can’t do it. The US is incapable of expanding its grid at that speed, transmission lines permitting opponents to such projects. Whereas if you’re in Texas and it doesn’t leave the state and you’re just going to build a data center and you’re going to hook up some gas turbines or maybe some a bloom energy, solid oxide fuel cells and just power your own stuff and not worry about the grid, then off you go.

And the fundamental disparity between data center operators and say, consumers are manufacturing companies, is data center operators are willing to pay more for their electricity than the alternative consumers are able to afford.

Monetary Metals:

What about this idea a strategic petroleum reserve. Obviously, Biden was shellacked for this idea that he was selling out the US’s energy independence.

Was that story just a random headline that is completely useless for investors? What should we think about this strategic petroleum reserve? Is it something that’s now being boosted? Should we completely forget about it? It’s completely irrelevant. Does this matter anymore?

Doomberg:

Well, it’s an interesting question. We have a nuanced view. Biden did to deplete the strategic petroleum reserve to fend off the price spikes of their erroneous attempts to sanction Russian energy volume, which Trump, unfortunately, is repeating, much to our chagrin. It largely worked, but he depleted about half of the strategic petroleum reserve.

Having said that, the strategic petroleum reserve was conceived and created and filled when the US was a net energy importer of consequence before before the Sherrill Revolution. The Sherrill Revolution has reduced the need for such a strategic petroleum reserve. Just to give you an example, the US has in storage today in private hands some 300 to 400 million barrels of natural gas liquids, which is if you squint roughly the same size as what’s in the crude oil strategic reserve today.

The US is swimming in hydrocarbons. It is a major producer, is a net exporter of hydrocarbons, a significant net exporter of hydrocarbons. It’s the largest gas producer in the world, the largest NGL producer in the world, the largest crude oil producer in the world. It has huge coal reserves, like I mentioned earlier. And so the need for a strategic petroleum reserve has diminished because the US could just stop exporting in a true emergency, which it would.

So if natural gas prices got away, it in the US because, say, AI demand was skyrocketing. The first thing Trump would do is stop LGF ports. So sorry, Europe. I know you bet the house on Qatar and US being there because you cut your cell off from Russian pipeline natural gas. But when consumers are facing $8, $9, $10 for moving BT natural gas prices in the US, you can bet your bottom dollar that LGA exports are going to be turned off.

Monetary Metals:

Is this some energy version of Triffin’s dilemma, which is that when we have all the energy independence and everyone else relies on us because, hey, it’s just more efficient economically to have someone else do the oil rather than us make our own nuclear facilities or maybe even politically, no one wants a nuclear reactor in our country, but we’ll get energy from somewhere else.

Does this become a Triffin’s dilemma where people are just saying, hey, listen, when it’s important for the US to be energy independent and gas prices are too high, sorry, the rest of the world, the energy is ours. It’s our energy. It’s your problem. Do you think that this energy, Triffin’s dilemma, is a useful heuristic?

Doomberg:

I think it’s yes, but not quite. I would view it more as you have countries that have leaders who understand energy and countries that don’t. We’ve come down to, it’s literally nothing more than a competency crisis, especially in Europe. Ursula von der Leyen does not understand physics.

Robert Hadeck, the former economics Minister of Germany, is just not very bright. Kirsten Stammer doesn’t understand the physics of energy. Ed Milband is an energy… I’ll be polite.

Ed Milband also doesn’t understand energy, whereas I think Trump intuitively does. Putin certainly does. I believe he used to trade commodities before he entered the KGB.

Xi Jinping certainly understands energy. Modi certainly understands energy. Mbs understands energy. And so you have to categorize these countries into get it and don’t get it. Look, I can give you some numbers.

The Statistical Review of World Energy separates out the European Union, which is a nice feature that I started doing last year. So you can just aggregate the 27 member states of the European Union. The European Union consumes 38 exajoules of hydrocarbons, and it only produces five. The US produces something like 20 more exajoules of hydrocarbon energy than it consumes domestically, which would you rather be?

It’s not any more complicated than that. When you make drilling for oil and gas and mining of coal, practically impossible on your continent, you have to import your needs from everywhere. When you import your needs, you become an energy vessel. That’s why Qatar can tell the European Union, and if they don’t get rid of this crazy carbon net zero rule, we’re just going to stop delivering you LNG and good luck keeping your houses warm in the winter.

Whereas Qatar is not going to run out of natural gas. The US is not going to run out of natural gas. It has the power to turn off the taps, and Europe simply doesn’t.

That’s not a consequence of any philosophical dilemma. It is a consequence of energy ignorance.

I would argue that if I got to debate Ursula von der Lange on the subject, it would not be a good day for her politically. I would never get that chance, of course. But if you take Secretary Chris Wright, the Energy Secretary of the United States, I was actually on a podcast with him. He’s very Well, schooled in the fundamental physics of energy. He was a serial unicorn maker in the energy market.

And he ran a natural gas, a shale gas services company and made billions of dollars for his investors. He knows what he’s talking about. He knows what he’s doing. You put Chris Wright in the same room with Kyta Callas, it wouldn’t be a fair fight. I honestly think it comes down to that. It’s not some greater conspiracy behind the It’s just literally a competency crisis. You have Brussels, which is a giant, bloated, bureaucratic machine. And bueracaricies only know how to grow. They don’t know how to actually govern. And Brussels has gotten out of control.

Monetary Metals:

If you were there in the EU, maybe you get to Brussels, they say, Hey, what’s this little chicken doing here? And you get the mic for five minutes.

What’s something you would want to tell the EU? Is there a certain policy prescription you could give them? Is it just get better people? What is something that they’re missing that you could inform them in your five-minute speech to say, Hey, let’s turn things around for the EU?

Doomberg:

Yeah, very simple. Take the L in Ukraine. Restart the energy relationship with Russia, if they’ll allow you. Make fracking legal. Turn on as many nuclear power plants that can still be salvaged in Germany, for example, the ones they haven’t blown up yet. Begin a full-fledged resuscitation of the North Sea oil and gas development in partnership with Norway and the United Kingdom, who are not members of the European Union, it should be said.

A Doomberg co founder and its editor-in-chief is very passionate about resuscitating brilliant literature from a century ago or older. So classicsreadaloud. Substack. Com is a Doomberg sister publication that we launched on September first. It’s growing quite well.

If you’re interested in short stories beautifully produced that are interesting that teach you something in a nice essay that wraps around it. Check that out as well. But for all the work that we talk about here, of course, you can just go to doomberg.com or just Google Doomberg and you’ll find us.

All of our articles for our regular subscribers. Then we also have a monthly premium tier where we do a 45 minute to an hour long presentation like the one I was referencing earlier, getting that ready to record probably tomorrow or the next day. Those are pretty fun as well. Listen, Ben, it has been great. I love the rapid fire the questions and looking forward to my next appearance.

Monetary Metals:

Doomberg, thanks so much for joining us.

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