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00:00:00,500 --> 00:00:03,801
Christopher Lloyd is sitting in a truck
stop outside of Richmond,

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00:00:03,801 --> 00:00:06,882
Virginia doing math he already knows the
answer to.

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In twenty twenty four he bought a flatbed.

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00:00:09,462 --> 00:00:12,923
New, $187,000.

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00:00:12,923 --> 00:00:14,873
And that's not really a purchase.

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00:00:14,873 --> 00:00:19,344
That's a marriage. That's a note that you
carry whether the freight moves or not.

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00:00:19,344 --> 00:00:21,465
Then in February twenty eighth,

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00:00:21,465 --> 00:00:25,906
twenty twenty six, nine hundred strikes in
twelve hours,

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00:00:25,906 --> 00:00:29,687
Iran. And within weeks, the diesel that he
buys is.

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00:00:29,874 --> 00:00:34,785
The single biggest line item in his entire
business is up more than forty percent.

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So here's what Christopher Lloyd does.

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He stops washing his truck. A wash runs
about one hundred thirty dollars,

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00:00:41,847 --> 00:00:46,309
just gone from his pocket. He starts
calling brokers and pushing for extra
money

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00:00:46,309 --> 00:00:51,330
on every load, which is a conversation
nobody enjoys and most people lose.

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And he starts turning down runs to New
England because the fuel math

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on that lane doesn't really close anymore
either.

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He's not going out of business,

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but he's shrinking quietly, one decision
at a time.

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And nobody's coming to help him.

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There's no program, there's no line in a
supplemental appropriation with

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his name on it and a farm bill.

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Now I want you to keep him in the back of
your mind there for a second,

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because here's the part that should make
your teeth hurt.

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The reason his diesel is up forty percent
is a choke point called

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the Strait of Hormuz.

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And the reason it's only up forty percent
instead of a hundred and forty percent

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is that oil is still getting out.

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Six to ten million barrels a day,

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00:01:34,862 --> 00:01:39,934
every day, leaking through a corridor
along the Omani coast that

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00:01:39,934 --> 00:01:42,285
the United States Navy is escorting.

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Which sounds like good news. It's not good
news.

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Because that leak is exactly enough oil to
keep the global market from panicking.

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And a market that doesn't panic is.

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Is a market that doesn't force anything to
stop.

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Not Washington, not Tehran, nobody's phone
is ringing off the hook.

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00:02:01,157 --> 00:02:07,359
The pressure valve is open just wide
enough that the pot never actually boils.

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00:02:07,359 --> 00:02:13,842
As of August 23rd, 2026, the analysts
looking at this are using a phrase that
should

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00:02:13,842 --> 00:02:17,203
stop you dead. They say the war could run,

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00:02:17,203 --> 00:02:20,324
quote, deep into 2027,

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00:02:20,324 --> 00:02:22,185
not could end.

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00:02:22,961 --> 00:02:26,422
Could run deep into twenty twenty seven.

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So Christopher Lloyd isn't absorbing a
shock.

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A shock ends. A shock you survive by
cutting the trock wash for four months

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00:02:35,084 --> 00:02:37,665
and then you're back. He's absorbing a
condition,

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00:02:37,665 --> 00:02:43,586
a new baseline, years of it. And the thing
you need to hear before anything else

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00:02:43,586 --> 00:02:47,587
in this episode, nobody decided to do that
to him.

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00:02:47,587 --> 00:02:50,421
That's the horror of it. Nobody sat in a
room and

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And voted to grind down a flatbed truck
operator in Virginia.

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00:02:54,807 --> 00:02:59,041
It's just what happens when the war
becomes comfortable enough to keep.

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00:03:19,466 --> 00:03:22,736
Welcome to the Overlap. Our show deals
with labor politics,

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00:03:22,736 --> 00:03:25,404
systems of power, all kinds of fun stuff.

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00:03:25,404 --> 00:03:26,404
I'm Will.

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00:03:26,874 --> 00:03:31,134
And I'm Joshua. And I'll and I want to
start with the word that's doing

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all the work in this story because once
you hear it,

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it's kind of impossible to unhear.

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Managed.

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Manage disruption specifically,

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Exactly.

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right?

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00:03:39,912 --> 00:03:44,415
Manage disruption. And that's the three
dollar big brain term.

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00:03:44,415 --> 00:03:48,278
That's what the energy analysts are
calling the Strait of Hormuz right now.

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Not blockade, not crisis,

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00:03:51,341 --> 00:03:56,745
managed disruption. It's like a project
timeline.

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Like there's a Gantt chart somewhere with
Iran war on row twelve and

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00:04:02,010 --> 00:04:03,811
a green status dot next to it.

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00:04:04,311 --> 00:04:06,986
It probably is, Joshua, and that's the
part that gets me.

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00:04:06,986 --> 00:04:10,123
Somewhere there is a slide with that term
as its title.

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00:04:10,623 --> 00:04:12,422
There's absolutely a PowerPoint slide.

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00:04:12,422 --> 00:04:15,026
It has a map on it and the map has an
arrow.

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00:04:15,526 --> 00:04:16,986
So it's the week of August 24th,

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00:04:16,986 --> 00:04:21,368
2026. Welcome to the week. Happy birthday
to my brother out there.

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~ almost six months into this undeclared
war.

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And the reason we're doing this now this
week is that the story just changed,

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but the headlines didn't. Which is the
most dangerous way a story like this

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00:04:33,191 --> 00:04:35,662
can change. Back in February and March,

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00:04:35,662 --> 00:04:37,122
this was the biggest thing in the world.

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00:04:37,122 --> 00:04:39,273
You had strikes, assassination,

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00:04:39,273 --> 00:04:42,473
Iran's supreme leader dead, mines in the
strait,

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00:04:42,473 --> 00:04:44,284
tankers burning, wall-to-wall coverage.

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00:04:44,998 --> 00:04:50,405
Twenty four seven and now it's Super El
Nino and it's the little oil ticker

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00:04:50,405 --> 00:04:51,736
in the corner of the business segment.

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The war didn't end, it got absorbed.

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00:04:55,623 --> 00:04:59,885
It always gets absorbed. And so let's be
precise about why,

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00:04:59,885 --> 00:05:02,867
because it's not that people got bored.

85
00:05:02,867 --> 00:05:06,709
People got bored because the price stopped
moving.

86
00:05:06,709 --> 00:05:10,571
Gas is really high right now. $4 and up.

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00:05:10,571 --> 00:05:13,833
And it's been $4 and up for months.

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00:05:13,833 --> 00:05:18,676
Diesel is over five. That's real money and
real pain.

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00:05:18,676 --> 00:05:21,718
But it's not nineteen seventy-three.

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00:05:21,718 --> 00:05:23,359
It's not lines around the block.

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It's not

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00:05:23,995 --> 00:05:26,697
Even odd even license plate days.

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00:05:26,697 --> 00:05:29,699
It's not a shortage you can actually see
with your eyes.

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00:05:29,699 --> 00:05:34,172
It's just expensive. And it's going to be
forever.

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00:05:34,672 --> 00:05:36,761
Does that make us the frog in the
proverbial pot?

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00:05:37,261 --> 00:05:39,879
Well, which by the way is scientifically
false,

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00:05:39,879 --> 00:05:41,143
frogs actually jump out.

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00:05:42,037 --> 00:05:44,364
Every time. Wouldn't be a lot of frogs
around if they didn't.

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But

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00:05:45,054 --> 00:05:47,816
yes, it's a it's rhetorically perfect,

101
00:05:47,816 --> 00:05:49,268
so let's go ahead and keep it.

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00:05:49,268 --> 00:05:51,510
So the point stands there's no moment,

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00:05:51,510 --> 00:05:55,444
there's no day where it gets bad enough
that the system has to respond.

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It's a a gentle slope, not really like a
cliff.

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And I I want to just name the thing
underneath that because this is where this

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00:06:02,768 --> 00:06:04,249
is actually what makes me angry.

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00:06:04,249 --> 00:06:06,240
And I don't get angry like I used to,

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00:06:06,240 --> 00:06:07,369
it takes a little bit more now.

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But the crazy thing is a ward that hurts
everyone a little

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bit forever is politically cheaper than a
ward that hurts a few people massively

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00:06:17,255 --> 00:06:19,726
for a week. That's really the equation.

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That's the actual equation. Diffuse pain
spread thin across three hundred

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and forty million people is survivable for
the people making the decision.

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Concentrated pain is not. It's like the
same kind of ~ reasoning that went into

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00:06:32,353 --> 00:06:35,075
the the cars that used to explode when you
hit them from when they

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00:06:35,075 --> 00:06:37,877
got rear ended and they their gasoline
tanks would might explode.

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~ the company has to decide, you know,

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is it is it more painful to let a few
people die or more painful to replace

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all the cars and all the gas tanks?

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But here the incentive is not
conspiratorial.

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~ I think it's just how the machine,

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00:06:50,978 --> 00:06:52,349
the modern day machine, functions.

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00:06:52,349 --> 00:06:54,511
The incentive runs toward diffusion,

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00:06:54,511 --> 00:06:55,511
toward the leak.

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00:06:55,696 --> 00:06:57,532
Towards six to ten million barrels a day,

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squeaking through a mon so that nothing
ever gets bad enough to force

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a real reckoning.

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And here's why we're going to spend the
first part of our show

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00:07:05,668 --> 00:07:08,930
in nineteen eighty seven instead of last
Tuesday.

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00:07:08,930 --> 00:07:14,814
Because this exact arrangement American
warships escorting tankers through

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00:07:14,814 --> 00:07:19,617
a a ~ mined choke point in somebody else's
optional

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00:07:19,617 --> 00:07:23,039
war indefinitely with no declared
endpoint,

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that's already happened. Reagan did it.

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It had a name.

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No relation.

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No no relation. And the shape of it,

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the logic of it, the way it substituted a
naval workaround for a political solution,

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00:07:38,385 --> 00:07:40,990
it's kind of the same shape. Not similar,

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00:07:40,990 --> 00:07:42,513
like a facsimile.

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00:07:43,013 --> 00:07:45,386
And the other thing that already happened
is the domestic half of this,

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00:07:45,386 --> 00:07:47,980
right? The truckers like you're talking
about back in nineteen seventy three.

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00:07:47,980 --> 00:07:52,085
That's not a metaphor either. That's an
organization that still exists

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00:07:52,085 --> 00:07:54,438
and a guy who's on the record right now
drawing the line himself.

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So that's the episode, nineteen
eighty-seven,

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00:07:56,990 --> 00:07:59,171
nineteen seventy-three on one side,

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00:07:59,171 --> 00:08:05,256
and then Heg Seth's and ultimately Trump's
two hundred billion dollar optional

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00:08:05,256 --> 00:08:12,062
war and ask that Chevron's biggest quarter
in company history on the other.

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00:08:12,062 --> 00:08:14,614
And the Christopher Lloyd guy we talked
about,

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00:08:14,614 --> 00:08:19,508
$130 truck wash, is just kind of sitting
right in the middle of it,

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00:08:19,508 --> 00:08:23,481
where the average person actually already
always sits.

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00:08:23,981 --> 00:08:25,388
Right. Where the little guy always sits.

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00:08:25,888 --> 00:08:30,493
So 1987, the Persian Gulf. Context first,

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00:08:30,493 --> 00:08:37,060
because it matters. Iran and Iraq have
been at war since about nineteen eighty.

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00:08:37,060 --> 00:08:41,715
Saddam Hussein started it, and by the
mid-80s,

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00:08:41,715 --> 00:08:44,247
that war has spilled into the water.

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00:08:44,247 --> 00:08:48,312
Both sides attacking tankers, trying to
strangle each other's oil exports.

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00:08:48,714 --> 00:08:49,714
They

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00:08:48,864 --> 00:08:50,264
call it the Tanker War, right?

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00:08:50,264 --> 00:08:52,455
And it it's exactly as ugly as it sounds.

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00:08:52,455 --> 00:08:54,466
It's merchant ships, civilian crews,

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00:08:54,466 --> 00:08:57,386
and they're all just blowing up and
exploding and burning.

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00:08:57,386 --> 00:09:02,908
Kuwait's shipping is getting hit because
Kuwait is bankrolling Iraq.

163
00:09:02,908 --> 00:09:07,629
So Kuwait goes to Washington with a very
clever request.

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00:09:07,629 --> 00:09:12,771
They basically say, Look, why don't you
put your flag on our tankers?

165
00:09:13,271 --> 00:09:15,656
reflagging. I used to do that in Sid
Meyer's Pirates.

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00:09:16,156 --> 00:09:18,938
Reflagging. You take a Kuwaiti tanker,

167
00:09:18,938 --> 00:09:21,510
you run the good old red, white,

168
00:09:21,510 --> 00:09:23,862
and blue American flag up the mast,

169
00:09:23,862 --> 00:09:29,567
you paper over the ownership, and now
legally it's a US flagged vessel,

170
00:09:29,567 --> 00:09:33,030
and a US flagged vessel gets a US Navy
escort.

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00:09:33,030 --> 00:09:36,813
That is the entirety of Operation Ernest
Will.

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00:09:36,813 --> 00:09:38,554
And it is, look,

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No relation.

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00:09:39,715 --> 00:09:43,048
it is genuinely clever. It's also

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00:09:43,273 --> 00:09:46,624
Completely legal fiction wearing a mask.

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00:09:46,624 --> 00:09:49,635
Nothing about that ship changed except the
paperwork.

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00:09:49,635 --> 00:09:52,026
Same steel, same oil, same owners.

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00:09:52,026 --> 00:09:57,088
But the paperwork is what lets the United
States Navy start escorting convoys

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00:09:57,088 --> 00:10:01,380
through a war zone without anyone having
to say the word war.

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00:10:01,880 --> 00:10:05,467
Which is the tell. Every time you see an
elaborate legal workaround,

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00:10:05,467 --> 00:10:07,811
ask yourself, what is it a substitute for?

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00:10:07,811 --> 00:10:11,439
It's really always a substitute for
somebody a decision that somebody didn't
want

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00:10:11,439 --> 00:10:12,439
to make out loud.

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00:10:12,640 --> 00:10:16,322
That's exactly right. And here's how well
the workaround worked.

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00:10:16,322 --> 00:10:19,243
First convoy, july nineteen eighty seven,

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00:10:19,243 --> 00:10:26,006
the super tanker Bridgeton, Iranian jets
come out and take a look at the ship.

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00:10:26,006 --> 00:10:28,067
Just approach, just a message,

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00:10:28,067 --> 00:10:30,528
and then the Bridgeton hits a mine.

189
00:10:30,528 --> 00:10:35,251
In a channel the US Navy had escorted the
boat into,

190
00:10:35,251 --> 00:10:38,392
Iran had mined the route.

191
00:10:38,392 --> 00:10:41,694
And the detail that lives in

192
00:10:42,026 --> 00:10:47,428
In all our heads rent free, the Bridgeton
was the biggest ship in that convoy.

193
00:10:47,428 --> 00:10:52,389
And after it was holed, the Navy warships
tucked in behind it,

194
00:10:52,389 --> 00:10:56,571
because it was the only vessel in the
group with enough hull

195
00:10:56,991 --> 00:11:02,283
to survive another mine. The escorts hid
behind the thing that they were actually

196
00:11:02,283 --> 00:11:03,283
escorting.

197
00:11:03,263 --> 00:11:04,869
Okay, that's almost too perfect to
metaphor.

198
00:11:04,869 --> 00:11:06,896
I mean that's a whole foreign policy in
one image.

199
00:11:07,396 --> 00:11:11,693
It is the whole foreign policy and in
general our foreign policy about

200
00:11:11,693 --> 00:11:15,008
the Middle East in one simple sweep of a
pen.

201
00:11:15,008 --> 00:11:19,476
The protection racket where the protector
gets in the backseat.

202
00:11:19,976 --> 00:11:22,617
There's a piece of this I want to add
because it complicates the villain,

203
00:11:22,617 --> 00:11:25,208
and I think that matters. On the Iranian
side,

204
00:11:25,208 --> 00:11:28,920
during that period, the Revolutionary
Guard Naval Command had worked up a plan

205
00:11:29,320 --> 00:11:31,881
for a small boat swarm attack on that
convoy.

206
00:11:31,881 --> 00:11:34,822
~ you know, fast boats, close quarters,

207
00:11:34,822 --> 00:11:36,236
the thing they're actually good at.

208
00:11:36,236 --> 00:11:40,385
And it went up the chain to Khamani and
Ruhalla Khomeini and he vetoed it.

209
00:11:41,183 --> 00:11:42,183
He said no.

210
00:11:42,706 --> 00:11:46,367
He said no. And I don't tell that story to
make him sympathetic.

211
00:11:46,367 --> 00:11:47,367
He's not sympathetic.

212
00:11:47,824 --> 00:11:50,866
I tell it because it shows both sides were
doing the same calculation.

213
00:11:50,866 --> 00:11:54,769
Iran wanted to bleed the convoys without
triggering an actual American war.

214
00:11:54,769 --> 00:11:57,831
The US wanted to escort the convoys
without declaring one.

215
00:11:57,831 --> 00:12:00,212
Both parties were managing the disruption.

216
00:12:00,212 --> 00:12:02,654
And you can trace where that logic goes.

217
00:12:01,237 --> 00:12:03,594
And you can of course.

218
00:12:02,654 --> 00:12:03,735
December

219
00:12:03,735 --> 00:12:08,998
6, 1987, a Singapore Singapore flag tanker
called the Norman Atlantic gets

220
00:12:08,998 --> 00:12:12,101
set on fire by an Iranian warship in Omani
waters,

221
00:12:12,101 --> 00:12:14,112
right by the strait. Not a swarm,

222
00:12:14,112 --> 00:12:15,983
not an escalation to war, just one ship,

223
00:12:15,983 --> 00:12:17,044
one fire.

224
00:12:17,404 --> 00:12:18,555
Calibrated response.

225
00:12:19,055 --> 00:12:21,842
Calibrated, that's the word, and that's
the word we'll come back to

226
00:12:21,842 --> 00:12:26,414
in about ten minutes, wearing a brand new
twenty twenty six suit.

227
00:12:26,914 --> 00:12:28,426
Sure is. Looking sharp.

228
00:12:28,926 --> 00:12:31,167
So now the domestic side of this,

229
00:12:31,167 --> 00:12:34,608
because Americans experience these things
at a pump,

230
00:12:34,608 --> 00:12:36,769
right? Not in a strait, not on a boat,

231
00:12:36,769 --> 00:12:40,111
not with ~ a a warhead, not with mine.

232
00:12:40,111 --> 00:12:43,672
So go back further, nineteen
seventy-three,

233
00:12:43,672 --> 00:12:47,774
the Arab oil embargo, fuel shortages,

234
00:12:47,774 --> 00:12:49,815
price spikes, ~ the whole thing.

235
00:12:49,815 --> 00:12:55,327
And in nineteen seventy-three is the year
the owner operator independent drivers

236
00:12:55,327 --> 00:12:56,928
association gets founded.

237
00:12:57,588 --> 00:12:59,258
I don't even want to try to pronounce
this.

238
00:12:59,258 --> 00:13:03,339
It's the OOIDA. O Ida?

239
00:13:03,339 --> 00:13:06,720
Sure. Formed that year speci

240
00:13:05,502 --> 00:13:06,795
Suddenly I'm hungry for potatoes.

241
00:13:08,421 --> 00:13:10,421
Yeah, it sounds a lot like Orida.

242
00:13:10,421 --> 00:13:15,982
But it formed that year specifically
because of what fuel prices were doing

243
00:13:15,982 --> 00:13:18,863
to independent truckers, just like guys
with CDLs.

244
00:13:18,863 --> 00:13:22,304
And and that's kind of the structural trap
of this,

245
00:13:22,304 --> 00:13:25,325
because it hasn't changed in 53 years.

246
00:13:25,325 --> 00:13:27,045
Owner operators.

247
00:13:27,946 --> 00:13:33,068
They pay for the fuel. And the shipper
pays a fixed rate

248
00:13:33,969 --> 00:13:37,811
for that trucker to drive it. And then
that rate was negotiated before

249
00:13:37,811 --> 00:13:39,651
the fuel price actually moved.

250
00:13:39,651 --> 00:13:44,954
So then when diesel doubled, the shipper's
cost doesn't change at all.

251
00:13:44,954 --> 00:13:49,756
The driver has to eat a hundred percent of
it because it's contractualized.

252
00:13:49,756 --> 00:13:51,857
Every single penny of that deal.

253
00:13:52,357 --> 00:13:54,412
And so they have no option to but to shut
it down.

254
00:13:54,912 --> 00:13:58,383
And they did. In nineteen seventy three
into nineteen seventy four,

255
00:13:58,383 --> 00:14:03,866
the truckers blockaded highways and they
parked their their rigs across
interstates.

256
00:14:03,866 --> 00:14:06,247
And they do it again in nineteen seventy
nine.

257
00:14:06,247 --> 00:14:10,129
And what finally cracks isn't isn't the
goodwill,

258
00:14:10,129 --> 00:14:12,890
right? It's the Interstate Commerce
Commission,

259
00:14:12,890 --> 00:14:16,871
who is a federal regulator mandating fuel
surcharges,

260
00:14:16,871 --> 00:14:20,563
making the pass through a rule instead of
a favor.

261
00:14:21,063 --> 00:14:23,085
And this is where Todd Spencer comes in,

262
00:14:23,085 --> 00:14:26,868
who runs O Ida today,

263
00:14:26,868 --> 00:14:28,850
right now in 2026.

264
00:14:27,218 --> 00:14:28,275
Yeah.

265
00:14:29,550 --> 00:14:32,273
And what he's saying this year is that
drivers on the road today do

266
00:14:32,273 --> 00:14:36,376
not have those protections. The formal
mandated surcharge protections that came

267
00:14:36,376 --> 00:14:39,499
out of 74 and 79, those are gone.

268
00:14:39,499 --> 00:14:43,102
Deregulation happened. The ICC itself
doesn't exist anymore.

269
00:14:43,102 --> 00:14:45,784
So the surcharge is now just a
negotiation.

270
00:14:45,784 --> 00:14:49,067
Every time with a broker who has 40 other
trucks to call.

271
00:14:49,567 --> 00:14:50,567
Which

272
00:14:49,717 --> 00:14:53,571
means Christopher Lloyd in Richmond in
twenty twenty six is in

273
00:14:53,571 --> 00:14:59,076
a weaker legal position on fuel costs than
a trucker in nineteen eighty one.

274
00:14:59,576 --> 00:15:02,279
exactly what that means. The lesson was
learned,

275
00:15:02,279 --> 00:15:04,552
written into a rule, and then the rule was
repealed.

276
00:15:04,552 --> 00:15:08,197
And now it's being relearned by individual
guys one at a time out

277
00:15:08,197 --> 00:15:09,197
of their own pockets.

278
00:15:09,567 --> 00:15:12,269
Whew, if that is not an American pattern,

279
00:15:12,269 --> 00:15:13,710
I don't I don't really know what is.

280
00:15:13,710 --> 00:15:20,277
We we win something collectively and then
it gets dismantled privately

281
00:15:20,557 --> 00:15:22,439
and then we all act surprised.

282
00:15:22,939 --> 00:15:25,502
And Spencer makes one more point that I
think most people miss.

283
00:15:25,502 --> 00:15:29,316
He says the fuel cost doesn't stop at the
truck and goes into the food.

284
00:15:29,316 --> 00:15:31,219
Every tomato, every gallon of milk,

285
00:15:31,219 --> 00:15:35,103
every case of anything moved by a truck or
burning diesel that costs forty percent

286
00:15:35,103 --> 00:15:37,207
more. That cost doesn't just disappear,

287
00:15:37,207 --> 00:15:40,119
it doesn't evaporate. It gets handed up
the chain until somebody

288
00:15:40,119 --> 00:15:43,183
re it reaches somebody who can't stand it
or can't hand it any further along.

289
00:15:43,683 --> 00:15:47,240
Which is you, which is me, which is all of
you listening

290
00:15:46,896 --> 00:15:47,896
Right.

291
00:15:47,240 --> 00:15:51,959
out there, at the register wondering why
groceries went up again.

292
00:15:51,959 --> 00:15:55,106
Groceries such a antique word.

293
00:15:55,606 --> 00:15:58,339
And never once connecting it to a straight
you can't find it on a map.

294
00:15:58,839 --> 00:16:02,531
So let's let's close the loop from
nineteen eighty-seven to now with

295
00:16:02,691 --> 00:16:05,603
one more marker because there is a step in
between,

296
00:16:05,603 --> 00:16:07,774
and and it's kind of important to the
overall story.

297
00:16:07,774 --> 00:16:13,957
2011 and 2012, the United States escalates
sanctions on Iran's energy sector,

298
00:16:13,957 --> 00:16:20,801
like really hard. And Iran responds by
threatening the Strait of Hormuz very
openly.

299
00:16:20,801 --> 00:16:23,703
So that was the cycle. We squeeze the oil
revenue,

300
00:16:23,703 --> 00:16:25,384
they threaten the choke point.

301
00:16:25,770 --> 00:16:28,461
We deploy naval assets, everybody backs
off,

302
00:16:28,461 --> 00:16:31,223
nothing's resolved, and then you just
repeat that in a decade.

303
00:16:31,223 --> 00:16:34,924
The Congressional Research Service has
documented that loop,

304
00:16:34,924 --> 00:16:37,866
and it's in literature, it's ~ a known,

305
00:16:37,866 --> 00:16:39,857
studied, named pattern.

306
00:16:40,357 --> 00:16:42,121
So when it happens again in twenty twenty
six,

307
00:16:42,121 --> 00:16:43,904
nobody gets to claim to be surprised.

308
00:16:44,404 --> 00:16:46,815
And nobody really is surprised,

309
00:16:46,815 --> 00:16:48,856
except that this war was optional.

310
00:16:48,856 --> 00:16:50,487
Like we didn't have to do this.

311
00:16:50,487 --> 00:16:56,470
So I I do want to be careful here because
we have seen this before can slide into

312
00:16:56,470 --> 00:17:00,132
so it doesn't matter. And it matters more
now because

313
00:17:00,132 --> 00:17:04,884
the difference between nineteen
eighty-seven and twenty twenty-six isn't
the shape.

314
00:17:04,884 --> 00:17:06,906
The shape is the same. We've already
established that,

315
00:17:06,906 --> 00:17:09,557
right? Choke point, escort, workaround,

316
00:17:09,557 --> 00:17:11,458
no resolution. The difference

317
00:17:11,798 --> 00:17:16,687
is the scale of the money moving through
it and who actually ends up holding

318
00:17:16,687 --> 00:17:19,572
the bag when it does. In nineteen eighty
seven,

319
00:17:19,572 --> 00:17:25,012
the bag was mostly held by a naval budget
and some insurance underwriters in London.

320
00:17:25,512 --> 00:17:26,512
And now?

321
00:17:26,521 --> 00:17:27,521
Yeah,

322
00:17:26,861 --> 00:17:31,075
now it's a two hundred billion dollars
supplemental request,

323
00:17:31,075 --> 00:17:36,779
a s a strategic reserve at its lowest
point since nineteen eighty two,

324
00:17:36,779 --> 00:17:41,953
and a major oil posting the largest
quarterly profit in

325
00:17:41,953 --> 00:17:45,406
its entire history while calling it
discipline.

326
00:17:45,906 --> 00:17:46,906
Let's go there.

327
00:17:47,104 --> 00:17:48,845
February twenty-eighth, twenty twenty six,

328
00:17:48,845 --> 00:17:54,699
you can start the clock. US and Israeli
forces launched near nine hundred strikes

329
00:17:54,699 --> 00:17:59,493
on Iran in twelve hours. That's nine
hundred in half of a day.

330
00:17:59,493 --> 00:18:04,056
And they kill Ali Khomeini, who was the
supreme leader of Iran and and

331
00:18:04,056 --> 00:18:07,858
a dozen of officials that were actually
with him at the time.

332
00:18:07,858 --> 00:18:13,102
They also killed about a hundred and
seventy people when a missile

333
00:18:13,102 --> 00:18:15,894
hit a girls' school near Bandar Abbas.

334
00:18:16,394 --> 00:18:17,596
A hundred and seventy.

335
00:18:18,096 --> 00:18:23,137
Now we know from you know the movie in the
nineteen nineties,

336
00:18:23,137 --> 00:18:25,208
which I just happened to see on a
restaurant,

337
00:18:25,208 --> 00:18:29,429
~ a few good men, that a hundred

338
00:18:29,429 --> 00:18:35,571
and seventy people gets written up to you
know just the price of war.

339
00:18:35,571 --> 00:18:40,542
We're in war and then and people die and
there's gonna be casualties on both sides,

340
00:18:40,542 --> 00:18:44,533
kind of a thing. ~ but I don't want to
just gloss over the

341
00:18:44,687 --> 00:18:50,070
These individual people, because it was
170 completely innocent school children

342
00:18:50,070 --> 00:18:53,231
at a school. So near Bandar Abbas,

343
00:18:53,231 --> 00:18:57,443
which is the Iranian port city right along
the Strait of Hormuz.

344
00:18:57,443 --> 00:19:01,005
I think that saying that number out loud
and remembering it,

345
00:19:01,005 --> 00:19:05,668
because it's important. In six months,

346
00:19:05,668 --> 00:19:08,709
coverage of this war there we're in,

347
00:19:08,709 --> 00:19:09,870
this optional war.

348
00:19:10,252 --> 00:19:13,109
That number has been said out loud a a
couple of times.

349
00:19:13,109 --> 00:19:17,539
And I think it should be said kind of
every single time because these were just

350
00:19:17,660 --> 00:19:18,660
little girls.

351
00:19:18,861 --> 00:19:20,382
And even if we can't handle the truth,

352
00:19:20,382 --> 00:19:24,864
it should be said every time. And I'll say
the thing I always say and always mean,

353
00:19:24,864 --> 00:19:28,366
I don't know how to hold that alongside a
discussion of quarterly earnings.

354
00:19:28,366 --> 00:19:32,214
I genuinely don't. But we have to because
they're in the same causal chain.

355
00:19:32,214 --> 00:19:34,369
I mean the school and the earnings are all
on the same wire.

356
00:19:34,869 --> 00:19:41,411
It's kind of gross actually how how often
we have to talk about lives with dollars.

357
00:19:41,411 --> 00:19:48,363
~ but the straight the the Iran basically
installed mines

358
00:19:48,363 --> 00:19:53,914
all along it, closes it, and the man
running that operation is an IRGC naval
officer

359
00:19:54,474 --> 00:19:59,256
named Ali Reza Tangsiri. He oversaw the
blockade and the mining

360
00:19:59,796 --> 00:20:03,267
and then Israel assassinates him during
the campaign.

361
00:20:03,767 --> 00:20:05,561
Which does what exactly to the mines?

362
00:20:06,061 --> 00:20:08,923
Nothing. Because see mines, once they're
placed,

363
00:20:08,923 --> 00:20:10,685
don't really have a chain of command.

364
00:20:10,685 --> 00:20:15,209
That's the thing about the this whole like
naval decapitation strategy.

365
00:20:15,209 --> 00:20:20,944
You can kill the the leader of that naval
blockade and the admiral,

366
00:20:20,944 --> 00:20:23,716
but the bomb doesn't really give a shit.

367
00:20:24,216 --> 00:20:25,216
Right.

368
00:20:25,012 --> 00:20:28,035
And the US sets up its own blockade going
the other way,

369
00:20:28,035 --> 00:20:33,362
and Trump's claim is that the blockade
costs Iran five hundred million dollars

370
00:20:33,422 --> 00:20:38,808
a day. And the Defense Department's own
estimate was more modest,

371
00:20:38,808 --> 00:20:45,226
about four point eight billion in lost
Iranian oil revenue as of may first.

372
00:20:45,726 --> 00:20:48,894
Which doing the math on that is nowhere
near five hundred million a day.

373
00:20:49,544 --> 00:20:54,477
Not even close. five hundred million in a
day for roughly sixty days from March

374
00:20:54,477 --> 00:20:57,768
to may first would be about thirty billion
dollars.

375
00:20:57,768 --> 00:21:00,751
The Pentagon says four point eight.

376
00:21:00,751 --> 00:21:04,954
So the president's number is off by a
factor of six,

377
00:21:04,954 --> 00:21:10,978
like multiplied. It's really, really weak
when he says things like this out loud.

378
00:21:10,978 --> 00:21:13,570
And I want to flag that not as kind of
like a gotcha,

379
00:21:13,570 --> 00:21:16,992
right? But as a data point about how this
war is being described.

380
00:21:17,528 --> 00:21:19,410
to the people that are actually paying for
it.

381
00:21:19,910 --> 00:21:21,271
Here's where I want to plant my flag,

382
00:21:21,271 --> 00:21:23,203
and this is just my read, it's not a
hedge.

383
00:21:23,203 --> 00:21:26,025
The Oman corridor is not a failure of the
blockade,

384
00:21:26,025 --> 00:21:27,406
it's actually the design of it.

385
00:21:27,406 --> 00:21:31,230
So six to ten million barrels a day are
leaking out of Hormuz through

386
00:21:31,230 --> 00:21:32,971
a corridor the US Navy protects.

387
00:21:32,971 --> 00:21:36,995
That's not seepage, it's not a gap
somebody hasn't gotten around to closing.

388
00:21:36,995 --> 00:21:40,338
It's a deliberate volume. Somebody picked
that number.

389
00:21:40,338 --> 00:21:43,751
And the reason somebody picked that number
is because it holds oil under

390
00:21:43,751 --> 00:21:44,751
a specific price.

391
00:21:45,400 --> 00:21:46,681
The analysts are explicit about this.

392
00:21:46,681 --> 00:21:51,375
The current posture is sustainable through
the midterms if crude stays under ninety

393
00:21:51,375 --> 00:21:52,636
to a hundred dollars a barrel.

394
00:21:52,636 --> 00:21:56,959
That's the threshold. That's the actual
war aim as it functions today,

395
00:21:56,959 --> 00:21:58,320
whatever it was in J in February.

396
00:21:58,820 --> 00:22:02,007
Not regime change, not denuclearization,

397
00:22:02,007 --> 00:22:03,030
a price ban.

398
00:22:03,530 --> 00:22:06,406
And the policy objective is a number on
the screen in Chicago.

399
00:22:06,406 --> 00:22:09,241
And once you see that, everything else
lines up.

400
00:22:09,241 --> 00:22:12,057
Why there's no negotiation, why there's no
off ramp?

401
00:22:12,057 --> 00:22:13,057
Why nobody's in a hurry.

402
00:22:13,549 --> 00:22:19,901
And Don Alamiryu at Alpine Macro is is the
one saying the quiet part,

403
00:22:19,901 --> 00:22:25,162
right? That the corridor eases market
pressure and removes the urgency

404
00:22:25,162 --> 00:22:29,463
to end the war. Those are two halves of
the same sentence.

405
00:22:29,463 --> 00:22:34,885
The thing that makes it bearable is the
thing that makes it permanent.

406
00:22:34,885 --> 00:22:41,757
Dave Wex ~ looking at the same flow and
getting the same picture deep into twenty

407
00:22:41,757 --> 00:22:42,757
twenty seven.

408
00:22:42,897 --> 00:22:44,631
And there's an escalation hook in there
too,

409
00:22:44,631 --> 00:22:46,205
which is the midterms themselves.

410
00:22:46,205 --> 00:22:49,534
Because the price band is stable right up
until somebody dec decides

411
00:22:49,534 --> 00:22:51,779
a war looks better on a ballot than a
stalemate does.

412
00:22:52,279 --> 00:22:56,650
Which is the least comfortable sentence
either of us will actually say today.

413
00:22:56,650 --> 00:22:59,811
Let's talk about the money. Three buckets.

414
00:22:59,811 --> 00:23:03,592
Pentagon, reserve, profits.

415
00:23:03,592 --> 00:23:06,833
Bucket one, Pete Hegseth,

416
00:23:06,833 --> 00:23:11,715
the Secretary of War, which is what we
apparently call it now.

417
00:23:11,715 --> 00:23:14,696
They rename the department. That's
incredibly real.

418
00:23:14,696 --> 00:23:18,557
Asks for at least two hundred billion
dollars.

419
00:23:19,072 --> 00:23:21,493
In supplemental funding for this war.

420
00:23:21,493 --> 00:23:25,134
That's not a war, that is a war until it's
not,

421
00:23:25,134 --> 00:23:30,166
unless it's a war. I I'm really lost on
these things,

422
00:23:30,166 --> 00:23:36,279
but on top of a $1.5 trillion budget
request

423
00:23:36,279 --> 00:23:41,220
for the fiscal year 2027. And when asked
whether the number could go up,

424
00:23:41,220 --> 00:23:46,382
his answer, and I quote, was it takes
money to kill bad guys.

425
00:23:46,882 --> 00:23:47,882
Take

426
00:23:48,006 --> 00:23:53,720
That is the quote from the man requesting
two hundred billion dollars for

427
00:23:53,720 --> 00:23:58,234
a war that we can't call a war because
Congress has never authorized a war.

428
00:23:58,734 --> 00:24:01,535
And I want to sit on that idea of never
authorized for one second because

429
00:24:01,535 --> 00:24:04,236
I did the law school thing, and this is
the part where the law school thing

430
00:24:04,236 --> 00:24:08,638
is actually useful. ~ there is no
authorization for use of military force
against

431
00:24:08,638 --> 00:24:11,740
Iran. None. Zero. Zilch,

432
00:24:11,740 --> 00:24:15,151
nada. Not a new one, not a plausible
stretch of an old one.

433
00:24:15,151 --> 00:24:19,023
The strikes on February twenty eighth were
a pure executive action.

434
00:24:19,023 --> 00:24:21,344
The blockade is an executive action.

435
00:24:21,344 --> 00:24:23,625
The escort corridor is an executive
action.

436
00:24:23,625 --> 00:24:26,146
And Congress has noticed twice.

437
00:24:26,862 --> 00:24:29,511
The House passed war powers resolutions in
June and July.

438
00:24:29,511 --> 00:24:31,668
June was two hundred fifteen to two
hundred eight.

439
00:24:31,668 --> 00:24:33,866
July twenty third was two hundred fourteen
to two hundred eight.

440
00:24:34,590 --> 00:24:39,324
Both times with Republicans crossing the
the the aisle.

441
00:24:39,324 --> 00:24:43,537
Four of them in July, second time for
several of them,

442
00:24:43,537 --> 00:24:47,430
Thomas Massey among them because you know
he doesn't have to run

443
00:24:47,530 --> 00:24:48,651
an el another election.

444
00:24:49,457 --> 00:24:53,142
Right, messy. here's the detail that tells
you what's actually driving this

445
00:24:53,142 --> 00:24:57,307
politically. The defectors cited gas
prices and fertilizer prices.

446
00:24:57,307 --> 00:25:01,832
Not the little girls' school in Iran where
a hundred and seventy were dead.

447
00:25:01,832 --> 00:25:03,655
Not the constitutional question,

448
00:25:03,655 --> 00:25:05,457
but fuel and fertilizer.

449
00:25:06,393 --> 00:25:07,934
Fertilizer for anybody wondering,

450
00:25:07,934 --> 00:25:11,767
because nitrogen fertilizer is made from
natural gas.

451
00:25:11,767 --> 00:25:16,742
So an energy shock is a food production
shock about nine months later.

452
00:25:16,742 --> 00:25:21,666
It's like a it's like the baby fertili
fertilizer shock is is

453
00:25:21,666 --> 00:25:25,198
the oil shock baby nine months later.

454
00:25:23,859 --> 00:25:26,540
Right. You know what the farmers were
doing nine months ago.

455
00:25:27,060 --> 00:25:29,592
Right. And and you can ask any farmer in
Kentucky,

456
00:25:29,592 --> 00:25:32,124
and they know that because they deal with
that.

457
00:25:32,124 --> 00:25:34,166
That is their specialty, that is their
career.

458
00:25:35,077 --> 00:25:36,328
Right. And these war resolutions,

459
00:25:36,328 --> 00:25:37,900
these are a concurrent resolution,

460
00:25:37,900 --> 00:25:39,511
which I have to be honest about this.

461
00:25:39,511 --> 00:25:41,973
A concurrent resolution doesn't go to the
president and doesn't have

462
00:25:41,973 --> 00:25:44,906
the force of the law. It's Congress
clearing its throat,

463
00:25:44,906 --> 00:25:48,029
loudly, on the record, with names named,

464
00:25:48,029 --> 00:25:51,322
but it has value. It doesn't turn off a
single ship,

465
00:25:51,322 --> 00:25:52,322
but it has some value.

466
00:25:52,783 --> 00:25:56,366
Then bucket two, the Strategic Petroleum
Reserve.

467
00:25:56,366 --> 00:25:59,839
As of august nineteenth, the SPR,

468
00:25:59,839 --> 00:26:01,130
as we're going to call it from now on,

469
00:26:01,130 --> 00:26:04,713
is at its lowest level since nineteen
eighty two.

470
00:26:04,713 --> 00:26:10,918
Like nineteen eighty two. The lowest it's
been in my entire lifetime

471
00:26:11,118 --> 00:26:16,562
is right now. It's headed for something
like two hundred forty three million
barrels

472
00:26:16,983 --> 00:26:22,207
after a hundred and seventy two million
barrel release to blunt the fuel
disruption.

473
00:26:22,707 --> 00:26:25,889
And it was already spread pretty thin
before the war started because

474
00:26:25,929 --> 00:26:28,411
in two twenty twenty two and twenty twenty
three,

475
00:26:28,411 --> 00:26:33,184
the Biden administration sold close to two
hundred million barrels of

476
00:26:33,184 --> 00:26:35,315
it during the Ukraine price spike.

477
00:26:35,315 --> 00:26:38,157
And it never got fully refilled.

478
00:26:38,157 --> 00:26:43,100
There's a a government accountability
office report from june twenty ninth

479
00:26:43,100 --> 00:26:45,982
of this year on the state of the SPR,

480
00:26:45,982 --> 00:26:51,966
including the physical condition of the
caverns that we actually hold this oil in.

481
00:26:52,686 --> 00:26:56,963
So bizarre. 'Cause when we think of Fort
Knox holding a strategic reserve of gold,

482
00:26:56,963 --> 00:26:58,917
we imagine we walk in there's just this
room,

483
00:26:58,917 --> 00:27:00,680
you know, big bank vault full of gold.

484
00:27:00,680 --> 00:27:04,025
Apparently there are caverns just full of
oil.

485
00:27:04,025 --> 00:27:06,118
But they also need repair.

486
00:27:04,830 --> 00:27:06,131
You know where a lot of those caverns are?

487
00:27:06,730 --> 00:27:08,594
Yeah, do you know where a lot of those
caverns are,

488
00:27:08,594 --> 00:27:11,326
I I've been told? In

489
00:27:09,994 --> 00:27:10,994
Tell

490
00:27:10,242 --> 00:27:11,242
us.

491
00:27:11,326 --> 00:27:13,278
the salt domes around Avery Island,

492
00:27:13,278 --> 00:27:15,801
where a lot of those, like once the salt
was mined out of there,

493
00:27:15,801 --> 00:27:16,801
they were

494
00:27:17,458 --> 00:27:19,569
I've heard that before.

495
00:27:19,452 --> 00:27:20,452
Okay.

496
00:27:21,351 --> 00:27:24,032
I ~ skeptical cat is skeptical.

497
00:27:24,032 --> 00:27:25,602
I would have to do some more research on
that.

498
00:27:25,602 --> 00:27:27,314
But I have heard that specific thing.

499
00:27:27,314 --> 00:27:31,977
Like ~ my father worked down there at one
point on some pumps.

500
00:27:31,977 --> 00:27:37,591
And ~ he was was he went down into the
domes.

501
00:27:37,591 --> 00:27:41,073
And I mean, we've seen people die from
these dome collapses and things down when

502
00:27:41,073 --> 00:27:43,765
we lived in Louisiana and and hear still
about it on the news.

503
00:27:43,765 --> 00:27:46,397
But he never mentioned anything like

504
00:27:46,705 --> 00:27:50,559
giant rooms full of oil. But I I mean it
could be in

505
00:27:48,776 --> 00:27:50,521
Hmm. Fair enough.

506
00:27:50,559 --> 00:27:53,442
different ones. But we do know that they
need repair regardless.

507
00:27:53,442 --> 00:27:54,442
Both of them.

508
00:27:54,332 --> 00:27:56,643
Right. Which sounds like something in
Louisiana.

509
00:27:56,643 --> 00:27:58,125
So so we

510
00:27:57,432 --> 00:27:58,432
Yeah, right.

511
00:27:58,125 --> 00:28:02,009
went we went into an oil war here with the
emergency oil supply half empty

512
00:28:02,470 --> 00:28:03,911
and the tanks needing maintenance.

513
00:28:04,675 --> 00:28:07,429
That's right. Not not just maintenance.

514
00:28:07,429 --> 00:28:11,955
Then we drained another hundred and
seventy two million barrels of it

515
00:28:11,955 --> 00:28:16,191
out to hold this price band between ninety
and a hundred dollars a barrel.

516
00:28:16,691 --> 00:28:19,314
Something tells me that's not what they
intended by these originally.

517
00:28:19,314 --> 00:28:23,518
But it but it worked, right? I mean it it
kept it down into the rate where it's

518
00:28:23,518 --> 00:28:25,531
not reaching crisis thresholds.

519
00:28:25,531 --> 00:28:27,113
But you only get that shot once.

520
00:28:27,113 --> 00:28:28,544
That that shot's been fired now.

521
00:28:29,044 --> 00:28:31,285
Yes. You only do get to do it once.

522
00:28:31,285 --> 00:28:33,705
That's the whole nature of a reserve,

523
00:28:33,705 --> 00:28:35,756
right? Like it's a one shot pony,

524
00:28:35,756 --> 00:28:40,757
one trick pony. We're firing our one shot
to maintain a stalemate that analysts

525
00:28:40,757 --> 00:28:43,058
say runs deep into twenty twenty seven,

526
00:28:43,058 --> 00:28:46,959
which means when something actually goes
wrong,

527
00:28:46,959 --> 00:28:50,950
a real closure, a hurricane hitting the
Gulf refineries,

528
00:28:50,950 --> 00:28:56,131
literally anything, there's no reserve in
the cupboard to reach for.

529
00:28:56,131 --> 00:28:57,131
There's no closure.

530
00:28:56,873 --> 00:28:59,475
you know, dusty can of green beans or a
weird,

531
00:28:59,475 --> 00:29:04,450
you know, can of Campbell soup ~ back in
the in the wings waiting for you

532
00:29:04,450 --> 00:29:05,741
to put a little bit of water in it.

533
00:29:05,741 --> 00:29:08,302
An energy secretary, Chris Wright,

534
00:29:08,302 --> 00:29:10,764
is the man holding both ends of this.

535
00:29:10,764 --> 00:29:15,549
The drawdown and the refill that has to
happen at whatever price

536
00:29:15,549 --> 00:29:19,051
the market gives him, which will not be a
good price as we've established.

537
00:29:19,051 --> 00:29:24,096
You sell low, you buy high structurally
when you're the government in a crisis.

538
00:29:24,596 --> 00:29:26,151
Look at bucket three where the money went.

539
00:29:26,651 --> 00:29:30,154
Yes, Chevron, second quarter of twenty
twenty six,

540
00:29:30,154 --> 00:29:34,338
twelve point one billion dollars in
profit.

541
00:29:34,338 --> 00:29:40,514
Largest quarterly profit in the history of
Chevron up nine point

542
00:29:40,514 --> 00:29:46,350
six billion year over year. That's a nine
point six billion dollar jump

543
00:29:47,051 --> 00:29:50,764
in one quarter against the exact same
quarter last year.

544
00:29:51,264 --> 00:29:56,588
And her first while CEO Mike Worth
attributes it to stay with me now,

545
00:29:56,588 --> 00:30:01,621
kids, disciplined investment. That's
right,

546
00:29:58,309 --> 00:30:01,807
Disciplined investment. Not the war,

547
00:30:01,621 --> 00:30:02,621
not the war.

548
00:30:01,807 --> 00:30:03,191
not

549
00:30:03,191 --> 00:30:05,456
the straight, not the missing barrels,

550
00:30:05,456 --> 00:30:06,709
discipline.

551
00:30:07,209 --> 00:30:10,161
And I want to take that seriously for one
beat because I think it's dismissing

552
00:30:10,161 --> 00:30:11,723
dismissing it entirely is a mistake.

553
00:30:11,723 --> 00:30:14,164
Chevron did make capital decisions.

554
00:30:14,164 --> 00:30:16,907
There is a real management story in there
somewhere.

555
00:30:16,907 --> 00:30:23,172
Fine. But a $9.6 billion year-over-year
swing in 90 days

556
00:30:23,212 --> 00:30:27,075
is not discipline. That is not a thing
operational excellence achieves.

557
00:30:27,075 --> 00:30:30,758
That's a price move. Everyone in the room
knows it's a price move,

558
00:30:30,758 --> 00:30:32,099
and the reason he says discipline.

559
00:30:32,637 --> 00:30:34,240
Is not because he expects you to believe
it,

560
00:30:34,240 --> 00:30:36,635
it's because he needs a sentence in the
transcript that isn't,

561
00:30:36,635 --> 00:30:39,542
we made ten billion dollars because a
choke point closed.

562
00:30:40,042 --> 00:30:42,959
Because that sentence has a tax attached
to it.

563
00:30:43,459 --> 00:30:45,120
That's and it says have a tax attached to
it,

564
00:30:45,120 --> 00:30:46,783
and that's the whole reason for the
euphemism.

565
00:30:46,783 --> 00:30:49,486
It's legal positioning dressed as modesty.

566
00:30:49,986 --> 00:30:55,398
Exxon and Chevron together twenty six
point five billion in the second quarter

567
00:30:55,398 --> 00:31:00,490
of this year in profits. And Wood
Mackenzie Energy Research Shop,

568
00:31:00,490 --> 00:31:04,611
not an activist group, like an actual
energy research place,

569
00:31:04,611 --> 00:31:10,813
projects a global oil and gas windfall for
twenty twenty six of four hundred

570
00:31:10,813 --> 00:31:12,804
and ninety five billion dollars.

571
00:31:13,304 --> 00:31:16,860
four hundred and ninety five billion,

572
00:31:16,860 --> 00:31:20,888
that is nearly half of a trillion
unanticipated,

573
00:31:20,888 --> 00:31:21,910
their word.

574
00:31:22,410 --> 00:31:26,332
Hm. Well, and they know that next year
they'll have some well hopefully

575
00:31:26,332 --> 00:31:29,799
if we can get things back to normal to
somewhat we well next year we'll have some

576
00:31:29,799 --> 00:31:32,882
reserves to top off. ~ but to your point,

577
00:31:32,882 --> 00:31:34,795
unanticipated is doing a lot of work
there.

578
00:31:34,795 --> 00:31:37,298
Nobody planned the war to make that money
and nobody needed to.

579
00:31:37,954 --> 00:31:44,267
Right. And this is where I wanna kinda
head off the conspiracy version of all
this,

580
00:31:44,267 --> 00:31:48,219
because the conspiracy version is both
wrong and less damning.

581
00:31:48,219 --> 00:31:51,401
Nobody at Chevron drew up the target list.

582
00:31:51,401 --> 00:31:54,022
That's not how this works. And you don't
need it to be.

583
00:31:54,022 --> 00:31:58,584
You just need a system where the same
event that costs a Richmond trucker

584
00:31:58,584 --> 00:32:05,268
his margin hands an oil major ten extra
billion dollars automatically.

585
00:32:05,874 --> 00:32:07,832
No decision required by anyone.

586
00:32:07,832 --> 00:32:10,683
It's not a plot, it's a payout structure,

587
00:32:10,683 --> 00:32:11,698
it's just plumbing.

588
00:32:12,198 --> 00:32:15,001
And the response in Congress is windfall
profits taxes.

589
00:32:15,001 --> 00:32:17,614
White House and Kana have one.

590
00:32:17,614 --> 00:32:21,068
~ Sheldon White House's office put out the
summary in March,

591
00:32:21,068 --> 00:32:26,294
and it explicitly builds the case on
precedent on ExxonMobil's ~ seventy seven
point

592
00:32:26,294 --> 00:32:30,038
eight billion dollar profit in twenty
twenty two during Ukraine,

593
00:32:30,038 --> 00:32:33,552
which was two hundred and forty nine
percent of what they made in twenty twenty
one.

594
00:32:34,052 --> 00:32:37,207
Brad Sherman has another bill and there
are a couple floating out there.

595
00:32:37,959 --> 00:32:39,110
And will those bills pass?

596
00:32:39,610 --> 00:32:40,610
No.

597
00:32:40,615 --> 00:32:44,599
No, they will not pass. And they won't
pass for the same reason

598
00:32:44,599 --> 00:32:49,743
the war powers resolutions are cons
concurrent resolutions instead of binding
law.

599
00:32:49,743 --> 00:32:55,608
The votes exist to sort of let the
objection be known.

600
00:32:55,608 --> 00:32:58,910
They do not exist to change these
outcomes.

601
00:32:58,910 --> 00:33:02,433
That's a distinction worth learning to
figure out because once

602
00:33:02,433 --> 00:33:04,455
you can actually figure that part out,

603
00:33:04,455 --> 00:33:05,536
you'll see it everywhere.

604
00:33:06,036 --> 00:33:07,729
Well everyone take a bio break if you need
it.

605
00:33:07,729 --> 00:33:10,411
When we come back, the people actually
paying for all of this.

606
00:33:10,911 --> 00:33:12,362
I want to go back to the truck stop.

607
00:33:12,362 --> 00:33:15,173
Christopher Lloyd, Richmond, Virginia,

608
00:33:15,173 --> 00:33:18,085
owner operator, which means he owns the
truck.

609
00:33:18,085 --> 00:33:20,436
He finds the freight, he buys the fuel,

610
00:33:20,436 --> 00:33:22,187
he does the maintenance, he does the
books,

611
00:33:22,187 --> 00:33:24,129
he does the compliance paperwork,

612
00:33:24,129 --> 00:33:30,212
and he drives. All of it. He is a company
of one with $187,000 capital asset

613
00:33:30,212 --> 00:33:32,743
and no HR department. Probably for the
best.

614
00:33:32,743 --> 00:33:35,705
~ and I want to be careful about how I
talk about him because there's a

615
00:33:35,705 --> 00:33:37,916
way of doing it that turns a person into a
prop.

616
00:33:38,638 --> 00:33:40,649
A sad photo, the face of the crisis.

617
00:33:40,649 --> 00:33:44,552
The Native American on the side of the
road with the trash being thrown at his
feet.

618
00:33:44,552 --> 00:33:47,014
Look, I hate that. This guy's not a
symbol,

619
00:33:47,014 --> 00:33:48,395
he's a guy with a truck and a note.

620
00:33:48,895 --> 00:33:50,266
So let's just look at what he actually
did,

621
00:33:50,266 --> 00:33:53,208
decision by decision, because his choices
are the most articulate thing

622
00:33:53,208 --> 00:33:56,300
in this episode. He tightened his fuel
strategy.

623
00:33:56,300 --> 00:33:58,221
That sounds like nothing. It's not
nothing.

624
00:33:58,221 --> 00:34:01,183
That means planning routes around where
deep diesel is cheapest.

625
00:34:01,183 --> 00:34:03,545
It means adding miles to save cents,

626
00:34:03,545 --> 00:34:06,447
which means more hours behind the wheel
for the same money.

627
00:34:06,447 --> 00:34:08,398
It means running the truck efficiently,

628
00:34:08,398 --> 00:34:09,869
slower, easier on the throttle.

629
00:34:09,869 --> 00:34:13,112
It means his day got longer and his
driving got more tedious to preserve

630
00:34:13,112 --> 00:34:14,993
a margin that used to just exist.

631
00:34:14,993 --> 00:34:17,745
Then he stopped washing the truck.

632
00:34:18,245 --> 00:34:19,308
Hundred and thirty bucks a pot.

633
00:34:19,808 --> 00:34:24,089
Yeah. So the we'll stop on the truck wash
because when I read that,

634
00:34:24,089 --> 00:34:26,923
I I I thought, okay, I mean that's that's
small,

635
00:34:26,923 --> 00:34:28,844
right? Like when it comes to actual
profits,

636
00:34:28,844 --> 00:34:34,228
that's a rounding error. And then i it
started it kind of s stuck with

637
00:34:34,228 --> 00:34:35,899
me and I started thinking about that.

638
00:34:35,899 --> 00:34:36,899
Like

639
00:34:37,300 --> 00:34:38,300
You know?

640
00:34:38,169 --> 00:34:39,169
It's not about the dirt.

641
00:34:39,498 --> 00:34:42,569
Right. A clean truck is a business asset,

642
00:34:42,569 --> 00:34:47,782
right? Like it's how you look i pulling up
into a shipper's truckyard

643
00:34:47,782 --> 00:34:52,104
and whether the broker thinks you're a
professional or a guy who's just kind

644
00:34:52,104 --> 00:34:56,906
of surviving, you know, o out there on
your own in this dirty,

645
00:34:56,906 --> 00:34:57,906
dirty world.

646
00:34:58,186 --> 00:35:02,848
Appearance is credibility in a business
where everybody's kind of a stranger

647
00:35:02,848 --> 00:35:06,090
to each other and reputation moves by
phone call.

648
00:35:06,090 --> 00:35:09,832
So cutting the truck wash isn't really
frugality.

649
00:35:09,832 --> 00:35:15,175
It's like mortgag mortgaging your
credibility to make this month's gas bill,

650
00:35:15,175 --> 00:35:17,716
you know, credit card payment or whatever.

651
00:35:17,716 --> 00:35:22,659
It's the exact kind of trade you make when
you're drowning because you're going

652
00:35:22,659 --> 00:35:27,131
under slowly. You sell the future to buy
the right now.

653
00:35:27,631 --> 00:35:31,024
Right, like you stop dry cleaning your
your shirts or suits for

654
00:35:31,024 --> 00:35:32,375
a white collar worker, you know.

655
00:35:32,375 --> 00:35:35,348
~ basically ~ tightening the straps,

656
00:35:35,348 --> 00:35:36,369
right? Tightening your belt loop,

657
00:35:36,369 --> 00:35:38,801
as they say. And the third thing,

658
00:35:38,801 --> 00:35:41,704
~ Mr. Lloyd is pushing brokers for extra
pay on loads.

659
00:35:41,704 --> 00:35:43,595
Now, this is where it really starts to
affect your career.

660
00:35:43,595 --> 00:35:45,707
Remember what we said in the first act?

661
00:35:45,707 --> 00:35:48,350
There's no mandated fuel surcharge
anymore.

662
00:35:48,350 --> 00:35:52,453
The ICC rule that came out of the 74 and
79 shutdowns,

663
00:35:52,453 --> 00:35:53,854
that world is gone.

664
00:35:54,735 --> 00:35:57,039
So this isn't some form that he fills out
to get reimbursed.

665
00:35:57,039 --> 00:35:59,644
This is him on the phone asking a broker
for more money,

666
00:35:59,644 --> 00:36:03,350
one load at a time, knowing the broker has
a list of other trucks he's gonna call.

667
00:36:03,850 --> 00:36:05,908
And the broker knows he knows.

668
00:36:06,408 --> 00:36:07,693
Right, and that's the whole negotiation.

669
00:36:07,693 --> 00:36:10,786
I mean, it happens in about four seconds
and it's decided before it starts.

670
00:36:11,400 --> 00:36:14,832
And the fourth thing is the one that
actually maps the damage.

671
00:36:14,832 --> 00:36:18,053
He's rejecting loads from New England.

672
00:36:18,053 --> 00:36:20,534
Think about what that means
geographically,

673
00:36:20,534 --> 00:36:25,296
right? He's in Richmond. The Northeast
Corridor is his natural market.

674
00:36:25,296 --> 00:36:28,798
Boston, Providence, Hartford. That's where
the freight is.

675
00:36:28,798 --> 00:36:34,780
That's where the density is. And the fuel
math is it just no longer closes

676
00:36:34,780 --> 00:36:38,002
on those lanes. Partly because New England
is expensive to run in.

677
00:36:38,686 --> 00:36:41,442
Partly because of what he'd have to eat on
the backhaul.

678
00:36:41,942 --> 00:36:47,087
So his map shrank. A guy with a national
capable asset is now running

679
00:36:47,087 --> 00:36:52,453
a regional business because of a straight
seven thousand miles away from him.

680
00:36:52,953 --> 00:36:56,616
And nobody recorded that. There's no
statistic that captures Christopher
Lloyd's

681
00:36:56,616 --> 00:36:58,108
addressable market got smaller.

682
00:36:58,108 --> 00:37:00,950
It'll show up eventually as a rate
increase in Boston,

683
00:37:00,950 --> 00:37:03,372
and somebody will write a story about
Boston grocery prices,

684
00:37:03,372 --> 00:37:05,134
but it'll never connect back to Mr.

685
00:37:05,134 --> 00:37:06,134
Lloyd.

686
00:37:06,019 --> 00:37:07,019
Yeah, definitely never.

687
00:37:07,518 --> 00:37:09,780
So Todd Spencer is the one trying to make
the connection.

688
00:37:09,780 --> 00:37:14,344
He runs Uida. Forgive us if that's ~ Mr.

689
00:37:14,344 --> 00:37:15,344
Spencer

690
00:37:14,369 --> 00:37:16,031
I it makes me laugh every time I see it.

691
00:37:14,674 --> 00:37:15,865
if we're s we're butchering that.

692
00:37:15,865 --> 00:37:17,646
~

693
00:37:17,967 --> 00:37:21,339
the association founded in 1973 for
exactly this by drivers who

694
00:37:21,339 --> 00:37:23,191
got flattened by exactly this situation.

695
00:37:23,191 --> 00:37:26,774
And what Spencer's out there saying in
2026 is two things.

696
00:37:26,774 --> 00:37:29,296
One, fuel costs don't stay in trucking.

697
00:37:29,296 --> 00:37:31,378
They ride the freight into this the food
supply.

698
00:37:31,378 --> 00:37:34,400
The diesel price is a grocery price with a
delay on it.

699
00:37:34,400 --> 00:37:36,522
And two, the harder thing.

700
00:37:36,734 --> 00:37:39,747
Today's drivers don't have the protections
their predecessors bled for.

701
00:37:39,747 --> 00:37:41,780
The shutdowns in seventy three,

702
00:37:41,780 --> 00:37:45,243
seventy four, seventy-nine. Guys parked
their trucks,

703
00:37:45,243 --> 00:37:48,887
which for an owner operator means
voluntarily earning zero dollars for as
long

704
00:37:48,887 --> 00:37:53,432
as it takes with a note due. And they won
a mandated surcharge.

705
00:37:53,432 --> 00:37:56,045
It was real, and then it was deregulated
away,

706
00:37:56,045 --> 00:37:58,458
and now Christopher Lloyd is doing it one
phone call at a time.

707
00:37:58,958 --> 00:38:01,109
Yeah, I I I want to be honest about this
too,

708
00:38:01,109 --> 00:38:06,460
because I grew up poor and I have a reflex
I I don't fully trust.

709
00:38:06,460 --> 00:38:10,861
My reflex is is organize. Get the drivers
together,

710
00:38:10,861 --> 00:38:15,302
shut down the I-95, you know, force the
surcharge back.

711
00:38:15,302 --> 00:38:17,002
Because it worked before, right?

712
00:38:17,002 --> 00:38:20,313
I mean it's documented. It worked in
nineteen seventy four and it worked

713
00:38:20,313 --> 00:38:23,641
in nineteen seventy nine. But it worked in
nineteen seventy four

714
00:38:23,641 --> 00:38:27,285
in an industry where a federal regulator
existed to make the rules.

715
00:38:28,087 --> 00:38:32,079
And it doesn't now. And the freight market
is fragmented in a way that

716
00:38:32,079 --> 00:38:33,941
it it wasn't really fragmented then.

717
00:38:33,941 --> 00:38:38,174
And half of the drivers on the road are on
a lease purchase deal where their truck

718
00:38:38,174 --> 00:38:43,327
belongs to the carrier. And shutting down
just means losing their their truck.

719
00:38:43,327 --> 00:38:48,241
So an honest version is the tactic that
worked has had all

720
00:38:48,241 --> 00:38:51,255
of the preconditions removed.
Deliberately.

721
00:38:51,255 --> 00:38:55,316
I mean over forty years. So I'm not gonna
stand here and tell a guy

722
00:38:55,316 --> 00:38:56,897
in Richmond to park his truck.

723
00:38:57,207 --> 00:38:59,519
When I know exactly what the note on it
costs.

724
00:39:00,019 --> 00:39:01,680
And I think that's the right kind of
honesty.

725
00:39:01,680 --> 00:39:06,163
I mean, I guess you what you're telling
our our listeners here is that there's

726
00:39:06,163 --> 00:39:10,205
no more federal regulators, so this is
really the result of deregulation

727
00:39:10,245 --> 00:39:12,816
in its purest form. This is what everybody
wants,

728
00:39:12,816 --> 00:39:16,228
but this is what happens. You deregulate
and there's nobody around to make it
right.

729
00:39:16,228 --> 00:39:19,480
~ but I want to add a third name from this
story because he's on the other side

730
00:39:19,480 --> 00:39:21,671
of the water, and I don't want us to only
count Americans.

731
00:39:21,671 --> 00:39:26,714
We have Ali Reza Tangziri, the IRGC naval
commander.

732
00:39:27,362 --> 00:39:29,826
He's the man who ran the mining and the
blockade of the strait.

733
00:39:29,826 --> 00:39:31,108
He's not a sympathetic figure.

734
00:39:31,108 --> 00:39:34,434
He made choices that burn ships and put
civilian crews in the water.

735
00:39:34,434 --> 00:39:36,197
And Israel killed him.

736
00:39:36,746 --> 00:39:37,746
During the campaign

737
00:39:38,054 --> 00:39:40,868
during the campaign and the mines are
still there.

738
00:39:40,868 --> 00:39:45,916
So you read these stories about top
leaders being assassinated or or killed,

739
00:39:45,916 --> 00:39:47,859
the mines aren't going anywhere.

740
00:39:47,859 --> 00:39:50,243
The corridor still has to be swept and
escorted.

741
00:39:50,243 --> 00:39:53,367
Not one single barrel moved differently
because that man died.

742
00:39:53,867 --> 00:39:56,970
That's the thing about this decapitation
as a strategy.

743
00:39:56,970 --> 00:40:02,455
It is satisfying and it's measurable and
you can put it on a slide.

744
00:40:02,455 --> 00:40:06,599
Target is neutralized and the and the the
bomb in the water does not know.

745
00:40:07,099 --> 00:40:08,529
And I say his name for one reason.

746
00:40:08,529 --> 00:40:13,051
Because the 170 people near Bandar Abbas
who don't have names in the reporting,

747
00:40:13,051 --> 00:40:16,062
I can read. Tangziri does because he was
important.

748
00:40:16,062 --> 00:40:19,993
The kids at the school were not important
according to the global global metric,

749
00:40:19,993 --> 00:40:21,544
right? Nobody's looking for more news on
that.

750
00:40:21,544 --> 00:40:25,005
So they become a number. And that number
is 170.

751
00:40:25,005 --> 00:40:26,515
But that's not a rhetorical flourish.

752
00:40:26,515 --> 00:40:27,956
That's just what the record looks like.

753
00:40:27,956 --> 00:40:29,566
And it's worth noticing that the record,

754
00:40:29,566 --> 00:40:30,947
what the record chooses to keep.

755
00:40:31,568 --> 00:40:32,568
It

756
00:40:31,708 --> 00:40:35,131
is. And connected back because it does
connect,

757
00:40:35,131 --> 00:40:40,284
Christopher Lloyd's truck wash and a
hundred and seventy people near Bandar
Abbas

758
00:40:40,765 --> 00:40:44,497
are not the same thing. And I I'm not
going to pretend that they are,

759
00:40:44,497 --> 00:40:50,632
but they are the same category of thing in
a system that exploits in this way.

760
00:40:50,632 --> 00:40:55,595
The costs don't really appear on the on
the bill,

761
00:40:55,595 --> 00:40:59,058
on the ledger that anybody actually reads.

762
00:40:59,750 --> 00:41:01,662
The ledger everybody reads says,

763
00:41:01,662 --> 00:41:03,599
~ well, twelve point one billion,

764
00:41:03,599 --> 00:41:06,125
largest quarter in company history.

765
00:41:06,125 --> 00:41:08,300
It's disciplined investment.

766
00:41:08,800 --> 00:41:12,043
So here's the through line, and I want to
state it as plainly as I can.

767
00:41:12,043 --> 00:41:14,525
Choke points don't get resolved,

768
00:41:14,525 --> 00:41:18,448
they get managed. And they get managed at
whatever level of pain

769
00:41:18,448 --> 00:41:21,090
the domestic political system can absorb
without breaking.

770
00:41:21,090 --> 00:41:23,412
That's it. That's the pattern.

771
00:41:23,412 --> 00:41:27,316
1987 Reagan puts American flags on Kuwaiti
tankers,

772
00:41:27,316 --> 00:41:30,298
sends the Navy in to escort them through
mined water,

773
00:41:30,298 --> 00:41:33,081
a workaround layered onto somebody else's
war,

774
00:41:33,081 --> 00:41:36,443
designed to keep the oil moving without
anyone having to decide anything.

775
00:41:37,406 --> 00:41:42,270
2026, the Navy escorts a corridor along
Oman that leaks six to ten million barrels

776
00:41:42,270 --> 00:41:45,391
a day. Same architecture, different flags.

777
00:41:45,891 --> 00:41:48,624
And what I've come to, and it took me a
while because it's

778
00:41:48,824 --> 00:41:50,365
a little bit counterintuitive,

779
00:41:50,365 --> 00:41:53,448
the workaround is worse than the crisis
would have been.

780
00:41:53,448 --> 00:41:56,281
Like if Hormoes had actually closed,

781
00:41:56,281 --> 00:42:00,415
like fully closed, zero barrels of oil at
two hundred dollars a barrel,

782
00:42:00,415 --> 00:42:02,577
this war would have been over in a week.

783
00:42:02,577 --> 00:42:07,201
Not because anyone would somehow develop a
conscience sitting at the

784
00:42:07,201 --> 00:42:08,843
top of their that executive order,

785
00:42:08,843 --> 00:42:10,625
because the pain

786
00:42:11,191 --> 00:42:15,784
would be concentrated and immediate and
completely unignorable,

787
00:42:15,784 --> 00:42:18,545
and phones in Washington would melt.

788
00:42:18,545 --> 00:42:21,747
Crisis creates urgency,

789
00:42:21,747 --> 00:42:24,388
and urgency creates resolution.

790
00:42:24,388 --> 00:42:29,531
The leak prevents the crisis. And by
preventing the crisis,

791
00:42:29,531 --> 00:42:31,332
it's preventing the resolution.

792
00:42:31,332 --> 00:42:35,795
So we get years of four dollar gas and
five dollar diesel instead of

793
00:42:35,795 --> 00:42:39,807
six weeks of eight dollar gas and then ~
you know a deal gets struck.

794
00:42:40,307 --> 00:42:43,268
The overflow valve that saves you is also
the one that traps you.

795
00:42:43,768 --> 00:42:45,779
That's right. And nobody chose that,

796
00:42:45,779 --> 00:42:48,401
except one guy with an executive order.

797
00:42:48,401 --> 00:42:50,562
And I I'll keep coming back to that.

798
00:42:50,562 --> 00:42:54,475
There is no villain who designed the
outcome.

799
00:42:54,475 --> 00:42:58,207
There's a villain who made the decision to
begin,

800
00:42:58,207 --> 00:43:02,500
but it's an emergent property of a system
where diffuse pain

801
00:43:02,500 --> 00:43:06,803
is politically survivable and concentrated
pain is just not.

802
00:43:07,303 --> 00:43:09,644
And that's the part I want everyone to
hold on to because it's

803
00:43:09,644 --> 00:43:11,774
the part that's hardest to be angry at
properly.

804
00:43:11,774 --> 00:43:15,695
We can get angry at Pete Hagsath saying it
takes money to kill bad guys.

805
00:43:15,695 --> 00:43:19,826
About a $200 billion request for a war
that the Congress never authorized.

806
00:43:19,826 --> 00:43:21,207
That's easy anger, and it's earned.

807
00:43:21,207 --> 00:43:23,317
You can be angry at Mike Worth,

808
00:43:23,317 --> 00:43:27,038
calling a $9.6 billion profit swing
disciplined investment.

809
00:43:27,038 --> 00:43:32,160
Also earned, also easy. But the thing
actually doing the damage isn't a person.

810
00:43:32,160 --> 00:43:35,981
It's an arrangement in which every
individual actor is behaving rationally
within

811
00:43:35,981 --> 00:43:36,981
their incentives.

812
00:43:37,331 --> 00:43:42,295
And the aggregate result is a war that
runs deep into 2027 because ending

813
00:43:42,295 --> 00:43:43,880
it is an urgent to anybody who could do
it.

814
00:43:44,380 --> 00:43:46,795
Second through line, and it kind of stacks
right on top of that.

815
00:43:46,795 --> 00:43:52,085
The windfall. Every time a choke point war
happens.

816
00:43:52,585 --> 00:43:57,679
A very small number of companies get very
rich automatically without doing

817
00:43:57,679 --> 00:44:00,961
a damn thing different. Twenty twenty two
Ukraine,

818
00:44:00,961 --> 00:44:06,035
Exxon Mobil books seventy-seven point
eight billion dollars,

819
00:44:06,035 --> 00:44:09,738
two hundred and forty-nine percent of the
prior year.

820
00:44:09,738 --> 00:44:13,841
Twenty twenty six Iran, Exxon and Chevron
together.

821
00:44:13,841 --> 00:44:17,114
Twenty-six and a half billion in a single
quarter.

822
00:44:17,114 --> 00:44:18,445
That's just three months.

823
00:44:18,945 --> 00:44:24,054
And Wood Mackenzie says four hundred and
ninety five billion globally across this

824
00:44:24,054 --> 00:44:30,295
year. Meanwhile, the same event cost
Christopher Lloyd his New England lanes.

825
00:44:30,795 --> 00:44:33,487
And there's a symmetry there that I find
genuinely obscene.

826
00:44:33,487 --> 00:44:35,569
And I use that word selectively.

827
00:44:35,569 --> 00:44:39,453
The oil companies get a windfall they did
not anticipate and did not earn.

828
00:44:39,453 --> 00:44:43,536
The truckers get a shortfall they did not
anticipate and did not earn.

829
00:44:43,536 --> 00:44:47,700
Same event, same mechanism, opposite
signs.

830
00:44:47,700 --> 00:44:49,762
And there's no channel between them.

831
00:44:49,762 --> 00:44:52,925
Not one. The money doesn't flow from the
winners to the losers

832
00:44:52,925 --> 00:44:56,758
of the identical event, and the bills that
would build that channel are gonna

833
00:44:56,758 --> 00:44:57,758
die in committee.

834
00:44:57,909 --> 00:45:01,069
Third one, and this is kind of the
cornerstone of all of it.

835
00:45:01,069 --> 00:45:07,571
None of this was authorized. Nine hundred
strikes in twelve hours ahead

836
00:45:07,571 --> 00:45:11,952
of state killed a naval blockade one
hundred seventy two million barrels

837
00:45:12,192 --> 00:45:18,054
out of the Strategic Reserve, two hundred
billion dollars in an IOU,

838
00:45:18,054 --> 00:45:22,675
I guess, and one hundred and seventy
people dead in a school in Iran,

839
00:45:22,675 --> 00:45:24,316
and Congress dead.

840
00:45:24,770 --> 00:45:25,770
has

841
00:45:25,120 --> 00:45:28,223
still never voted to start any of it.

842
00:45:28,223 --> 00:45:33,847
What Congress did was vote twice to say
that Congress would prefer

843
00:45:33,847 --> 00:45:34,847
if this would stop.

844
00:45:35,058 --> 00:45:36,713
two hundred and fifteen to two hundred and
eight,

845
00:45:36,713 --> 00:45:38,899
two hundred and fourteen to two hundred
eight,

846
00:45:38,899 --> 00:45:40,514
non binding resolution.

847
00:45:41,014 --> 00:45:45,266
And the bill for the thing they didn't
authorize is enormous and mostly
invisible.

848
00:45:45,266 --> 00:45:49,308
Linda Bilms, the Harvard economist who did
the real accounting

849
00:45:49,308 --> 00:45:52,981
on Iraq and Afghanistan, numbers everyone
eventually admitted were right,

850
00:45:52,981 --> 00:45:59,895
puts the direct cost at something north of
$71.8 billion within the first 60 days,

851
00:45:59,895 --> 00:46:06,300
excluding fuel. So I had over $40 billion
in public fuel costs on top of that.

852
00:46:06,300 --> 00:46:08,321
And then the part that nobody budgets.

853
00:46:09,127 --> 00:46:13,526
veteran's care and interest. Film's entire
career is showing that those

854
00:46:13,526 --> 00:46:15,009
two lines are where the real money is,

855
00:46:15,009 --> 00:46:16,512
and they arrived decades later,

856
00:46:16,512 --> 00:46:18,707
long after the vote that nobody took.

857
00:46:19,207 --> 00:46:21,400
So we're gonna be paying for February
twenty eighth,

858
00:46:21,400 --> 00:46:24,225
twenty twenty six into the twenty sixties.

859
00:46:24,725 --> 00:46:27,240
That's not hyperbole, that's just how the
amortization works.

860
00:46:28,048 --> 00:46:31,959
So put the three together and this is what
you get award nobody authorized,

861
00:46:31,959 --> 00:46:34,960
funded by money nobody appropriated in
advance,

862
00:46:34,960 --> 00:46:38,341
sustained by an oil leak that keeps it
comfortable,

863
00:46:38,341 --> 00:46:44,643
paid for by a trucker and a shopper at a
shop at a register in Ohio,

864
00:46:44,643 --> 00:46:47,523
and by the rest of us every time we fill
up our car,

865
00:46:47,523 --> 00:46:53,635
and profited from by only two companies
that describe the whole thing

866
00:46:53,635 --> 00:46:56,716
as discipline deep into twenty twenty
seven.

867
00:46:57,216 --> 00:46:58,516
Deep into twenty twenty seven.

868
00:46:59,016 --> 00:47:04,038
Alright, so here's what you should pay
attention to on the news or wherever

869
00:47:04,038 --> 00:47:06,269
you get your your sources from,

870
00:47:06,269 --> 00:47:11,511
w whether that be, you know, insert
sponsor here or not.

871
00:47:11,511 --> 00:47:15,033
Watch the barrels. Like specifically,

872
00:47:15,033 --> 00:47:20,475
watch what six to ten million barrels a
day through the Omanc corridor looks like.

873
00:47:20,475 --> 00:47:23,377
Because that number is the the real
policy.

874
00:47:23,377 --> 00:47:25,748
That's the the litmus test, the dial,

875
00:47:25,748 --> 00:47:26,748
if you will.

876
00:47:26,724 --> 00:47:28,325
If it goes up, the price falls,

877
00:47:28,325 --> 00:47:29,826
and the war gets more comfortable,

878
00:47:29,826 --> 00:47:32,909
and the war lasts longer. If it goes down,

879
00:47:32,909 --> 00:47:35,011
the price spikes and something breaks.

880
00:47:35,011 --> 00:47:39,594
That single figure tells you more about
how long this goes on than

881
00:47:39,655 --> 00:47:41,496
any statement out of the White House.

882
00:47:41,496 --> 00:47:43,858
And then watch the number ninety.

883
00:47:43,858 --> 00:47:46,500
ninety to one hundred dollars a barrel.

884
00:47:46,500 --> 00:47:52,825
That's the sweet spot that analysts say
has to hold for the current posture

885
00:47:52,825 --> 00:47:56,098
to survive the midterms. So when crude
crosses it

886
00:47:56,764 --> 00:47:58,273
A strategy will have to change,

887
00:47:58,273 --> 00:48:00,578
not the values, the strategy.

888
00:48:01,078 --> 00:48:02,969
And I'll just add here, watch the refill.

889
00:48:02,969 --> 00:48:07,900
Because the strategic petroleum reserve is
at its lowest since 1982.

890
00:48:07,900 --> 00:48:13,691
That's my whole life as well. And headed
toward 243 million barrels.

891
00:48:13,691 --> 00:48:17,192
And at some point, Chris Wright's
department has to start buying it back

892
00:48:17,572 --> 00:48:19,952
in a high market with a war on.

893
00:48:19,952 --> 00:48:23,483
Watch who gets those contracts and what
price the taxpayers pay

894
00:48:23,483 --> 00:48:28,025
per barrel to restock the thing we just
spent to hold gas under five bucks through

895
00:48:28,025 --> 00:48:29,025
an election.

896
00:48:29,035 --> 00:48:30,361
That's where the second theft happens,

897
00:48:30,361 --> 00:48:32,712
not in the drawdown, in the refill.

898
00:48:33,657 --> 00:48:34,657
Now,

899
00:48:34,588 --> 00:48:37,470
are you ready for the most absurd thing in
this entire story?

900
00:48:37,470 --> 00:48:40,873
It's not the two hundred billion.

901
00:48:40,873 --> 00:48:43,436
It's not the it takes money to kill bad
guys.

902
00:48:43,436 --> 00:48:48,620
Which is a sentence I still can't fully
believe that an like a human being that

903
00:48:48,620 --> 00:48:52,203
was appointed by someone that our country
elected out loud.

904
00:48:52,203 --> 00:48:58,789
It's this The thing keeping the war going
is that the oil is still flowing.

905
00:48:58,789 --> 00:49:00,190
The leak is

906
00:49:00,368 --> 00:49:03,793
Is this whole life support system behind
this Iranian war?

907
00:49:03,793 --> 00:49:06,737
If Hormuz would actually close,

908
00:49:06,737 --> 00:49:08,800
this would be done. It would be over.

909
00:49:08,800 --> 00:49:12,345
It's half open, so it's forever,

910
00:49:12,345 --> 00:49:16,641
which Trump specifically said he wanted to
stop forever wars.

911
00:49:17,141 --> 00:49:20,043
Hmm. Maybe maybe everybody else's Forever
Wars.

912
00:49:20,043 --> 00:49:23,996
Not his own. but we built an overflow
valve to relieve the pressure

913
00:49:23,996 --> 00:49:26,057
and the pressure was the only thing that
was ever gonna end it.

914
00:49:26,991 --> 00:49:30,049
That's it. That's basically the entire
episode in one line.

915
00:49:30,549 --> 00:49:31,670
Three things you can actually do,

916
00:49:31,670 --> 00:49:33,661
and none of them involve a phone call to
your senator.

917
00:49:33,661 --> 00:49:38,033
~ one, learn to read the EIA weekly
petroleum status report.

918
00:49:38,033 --> 00:49:39,974
Comes out every Wednesday morning.

919
00:49:39,974 --> 00:49:42,655
It's free, it's public. It contains the
SPR level,

920
00:49:42,655 --> 00:49:45,656
crude imports, and refinery utilization.

921
00:49:45,656 --> 00:49:51,840
20 minutes with it once, and you'll never
again need a cable news talking head

922
00:49:51,840 --> 00:49:53,580
to tell you whether an energy story is
real.

923
00:49:53,580 --> 00:49:56,662
You'll see the number before the narrative
gets built on top of it.

924
00:49:57,162 --> 00:49:58,162
Two,

925
00:49:57,662 --> 00:50:01,403
and this one's specifically for anybody
who owns a small business that burns fuel

926
00:50:01,403 --> 00:50:04,434
or ships anything, trucker, contractor,

927
00:50:04,434 --> 00:50:10,126
caterer, florist, anybody. Put a fuel
escalator in your contract,

928
00:50:10,126 --> 00:50:14,227
like write it in. Index it to the
Department of Energy's weekly

929
00:50:14,387 --> 00:50:18,968
on highway diesel average published every
Monday with a defined trigger

930
00:50:19,348 --> 00:50:23,659
and a defined pass through. Not a
conversation you have when the prices
spike,

931
00:50:23,659 --> 00:50:25,990
a clause you signed before they did.

932
00:50:26,490 --> 00:50:29,142
That's the nineteen seventy four rule,

933
00:50:29,142 --> 00:50:32,174
basically rebuilt privately one contract
at a time,

934
00:50:32,174 --> 00:50:35,807
because the federal version got
deregulated out of existence.

935
00:50:35,807 --> 00:50:39,559
We we know that. Christopher Lloyd is
negotiating for that on the phone,

936
00:50:39,559 --> 00:50:43,012
load by load, and losing because it's not
written down.

937
00:50:43,012 --> 00:50:45,304
It's not in the contract. It's not written
anywhere there.

938
00:50:45,304 --> 00:50:48,666
So write it down and put it in your
contracts.

939
00:50:48,666 --> 00:50:52,419
it doesn't cost anything. And yeah.

940
00:50:52,919 --> 00:50:53,983
That's the whole trick, I think,

941
00:50:53,442 --> 00:50:55,534
The three? Yeah,

942
00:50:53,983 --> 00:50:54,983
yeah?

943
00:50:55,534 --> 00:50:57,425
I think so. Third and finally,

944
00:50:57,425 --> 00:51:00,699
let's go find the actual text of the
supplemental appropriation when

945
00:51:00,699 --> 00:51:03,742
it moves and skip the transfer authority
sections.

946
00:51:03,742 --> 00:51:06,324
Not the headline number, the transfer
authority,

947
00:51:06,324 --> 00:51:09,307
the language that lets money move between
accounts after it's appropriated.

948
00:51:09,307 --> 00:51:13,401
That's where a war that Congress never
authorized gets funded by money that
Congress

949
00:51:13,401 --> 00:51:14,872
technically approved for something else.

950
00:51:14,872 --> 00:51:19,116
It's boring, it's buried, but it's the
whole magic trick.

951
00:51:19,616 --> 00:51:20,616
Congressional

952
00:51:20,077 --> 00:51:23,563
appropriations text is public and
searchable and nobody reads it,

953
00:51:23,563 --> 00:51:25,688
which is precisely why it works.

954
00:51:26,188 --> 00:51:27,378
Right, buried in the boredom.

955
00:51:27,967 --> 00:51:31,509
Ugh, tell me about it. Look, so that's it.

956
00:51:31,509 --> 00:51:34,401
you know you can find us on FOF dot
foundation.

957
00:51:34,401 --> 00:51:36,933
~ everything that we, you know,

958
00:51:36,933 --> 00:51:38,394
talked about today will be in the notes.

959
00:51:38,394 --> 00:51:40,336
the fortune piece from the twenty third,

960
00:51:40,336 --> 00:51:43,208
the GAO report, you know, war powers roll
call with the names,

961
00:51:43,208 --> 00:51:46,600
whatever. ~ make sure that you are telling
a friend,

962
00:51:46,600 --> 00:51:50,062
right, that about our podcast if you want
us to grow,

963
00:51:50,062 --> 00:51:51,733
or if you want to do us a favor,

964
00:51:51,733 --> 00:51:55,696
rate us five stars there on wherever
whatever app you're listening to this on,

965
00:51:55,696 --> 00:51:56,696
right?

966
00:51:56,426 --> 00:51:58,761
Right. And if you're driving while you
listen to this and you just watch

967
00:51:58,761 --> 00:52:02,480
the pump roll past ninety dollars for a
fill up and felt that little jolt

968
00:52:02,480 --> 00:52:03,480
of resignation.

969
00:52:03,742 --> 00:52:06,231
That's not resignation. That's a data
point.

970
00:52:06,231 --> 00:52:10,185
It's the only part of this whole machine
you actually get to see with your own
eyes.

971
00:52:10,685 --> 00:52:12,506
That's discipline managed refilling.

972
00:52:12,506 --> 00:52:13,714
Take care of

973
00:52:13,379 --> 00:52:14,379
Ugh.

974
00:52:13,714 --> 00:52:14,714
each other, everybody.

975
00:52:14,955 --> 00:52:17,159
See you next week. Bye.

976
00:52:16,730 --> 00:52:17,730
Bye.