Title: Josh Young: Oil Is Heading for a Massive Shortage — And MUCH Higher Prices Show: VRIC Media (Vancouver Resource Investment Conference) Guest: Josh Young (Founder & CIO, Bison Interests; author, Bison Insights) Host: Daryl Thomas Date: 2026-SEP-09 URL: https://youtu.be/1puWiba8UiY Length: 43:52 Note: Interview — host lines prefixed ">>" kept (they are the questions Josh answers). Fillers (um/uh/"you know" as interjection/contentless "sort of"/"I mean"/"right?") and stutters/false-starts removed; wording, numbers and names otherwise verbatim. Every (mm:ss) line preserved. ASR name corrections applied: "Bison Interest" -> Bison Interests; "straighter hummus"/"straight of Hormuz" -> Strait of Hormuz; "Scott Bass"/"Scott Bent" -> Scott Bessent; "Shabas" -> Chavez; "Simon Bolavar" -> Simon Bolivar; "Fujira"/"Fuji" -> Fujairah; "job owning" -> jawboning; "Dar" -> Daryl. "PSE" is left as spoken in the transcript (the small-cap producer ETF; rendered as PSCE in the analysis table). "KICO" is left as spoken — Young himself is unsure ("I can't remember if it was Exxon or KICO") and no ticker is inferred from it. The Irving refinery location is left as spoken — Young says he is unsure of it himself.
00:00 Oil producers are replacing only about 10% of the reserves they are producing. Meanwhile, years of underinvestment [music] have hollowed out the energy sector. And my next guest believes today's oil prices still aren't high enough to reverse it. We've seen this movie before [music] in mining. Low prices destroy investment.
00:18 Supply tightens and eventually [music] the commodity has to respond. So is oil entering the same kind of structural bull market we've seen unfold in [music] gold, silver, and other critical resources? Let's tune in to find out. [music] >> Hello everyone. Welcome to the Vancouver Resource Investment [music] Conference.
00:38 How you all doing today? [music] Hello everyone. Welcome back to VRIC Media, your most trusted voice in metals and mining. I'm your host, Daryl Thomas, and today we have the pleasure of interviewing Josh Young of Bison Interests and Bison Insights. He writes frequently on Bison Insights and gives his audience a lot of perspective on the oil markets.
01:06 What else do you do, Josh? >> Yeah, sure. We were talking about this a little off camera. So my day job is running an investment fund and this isn't a solicitation for it, but it struck me that maybe I should spend one minute explaining what I actually do and what doing well doing what I do means and what doing poorly means.
01:27 especially because there's so few people — maybe there are more mining funds — but there are very very few oil and gas public equity funds and even fewer that focus on small cap publicly traded oil and gas companies. And so the idea is we launched the firm 11 years ago when there were a bunch of — there actually used to be a lot of firms that do what we do and they were closing.
01:48 And so it struck us that starting a firm when it was going from 150 firms focused on oil and gas public equities let's say 15 years ago to now there's probably fewer than five and it's hard for us to actually find any others that are focused on small caps in the space. And so the theory was to try to find stocks that would outperform that were undervalued but also had growth catalysts or their wells would be better or whatever.
02:18 And then also to try to get the exposure to oil versus gas, upstream versus midstream etc., to try to outperform versus ETFs, whether it's XOP, the large cap oil and gas producer ETF here in the US, or PSE, the small cap producer ETF, or even XLE, the large cap, the largest, which is mostly just Exxon and Chevron.
02:40 And so we launched it 11 years ago, and we're doing really well. The small cap ETF is down close to 60% from when we launched in May of 2015. So maybe dumb to choose the sector small cap oil and gas stocks, and even the large cap ETF I think is up 20% or something since we launched and we're up like 200 something%.
03:02 Again this isn't to raise money. The idea is just to try to explain why should someone — we've chatted a number of different times — why should someone care what we think or what anyone thinks, and I think the actual skin in the game where we're putting real money to work in equities that reflect our macro views and then the performance of those views I think actually matters a lot and I feel like that part of the discourse is missing in a lot of people's sharing opinions or analysis or whatever in the oil
03:32 and mining macro space. >> Yeah. It's pretty interesting whenever you're in a resource bull market. I remember 15 years ago, price of oil was high. I could see why there were more companies analyzing these stocks. And then when you go through the bear market, some of those companies don't survive, right? And so I can see why there's fewer companies, especially in that particular sector.
04:01 So I want to start off with just your thoughts on the price of oil. I'm going to go ahead and share a chart because I was looking at this earlier — the US crude oil chart and we have a spike. We had the talking point for many months now, the temporary war that got started and oil spikes to close to $120, comes down significantly and I remember we were talking in July oil was around 65 to 70 bucks and then it's rebounded to $91 and some change. And so curious your
04:42 thoughts on the price of oil right now. >> Yeah, I think it's helpful to look at a chart like this and if we zoomed it out even more, it's even more volatile and crazy. And so I think the long run perspective which I shared when we last spoke in July is that there's been underinvestment partly because of the price volatility that we're looking at right here and then partly because of the divestment from the space of not just funds closing but also allocators — foundations, endowments, ultra
05:15 high net worth, billionaires, whatever — pulling money out of the space. That's led to underinvestment from a longer term perspective, which means that oil prices probably over — let's say this is a six-year chart — the next six years for oil should probably show an average price that's a lot higher than the last six years.
05:36 And let's say the next 10 years should probably look even more bullish than the last 10 years. And again, it was a pretty rough, a terrible 12 years for oil and gas stocks, but particularly — we launched in 2015, we launched in May of 2015. Oil stocks went down every month for seven months.
05:55 We're like, what are we doing? And [gasps] so it's been an interesting spot. So short answer is that no one knows what will happen to the price of oil tomorrow, next week, next month. People have very, very low success rates in figuring that out. But we can answer I think with more certainty over longer time frames. And it does seem likely — again the spot price for oil is 91.
06:20 But the forward curve is still, depending on how far out you go, in the 70s or even 60s. And these prices are way too low to incentivize enough investment even to keep oil production flat. And so I think you need a lot higher prices. And you need more certainty, too, where if you look at that chart just one more time and you see just how much volatility we saw just this year, that's not — Someone was asking me today, earlier today, hey Josh, why are you still bullish? What's it going to take for companies to drill? Oil's been on average over let's
06:53 say 75 for 90 days or something this year. But the problem is it wasn't 90 consecutive days. It was like 20 days and then 10 days and then whatever. And so that's not what producers need to go make multi-million or multi-hundred million dollar investment decisions or for the global scale projects tens of billions of dollar type investment decisions.
07:17 So you really need to see much higher prices and you need to see more bullishness, which is actually frankly what I'm looking for to exit and return capital — is consensus bullishness, people bullish about a year, two years, three years out, which you'll see reflected in the forward curve going into contango instead of backwardation. And so we're just not seeing it and that's meaning that investment is still being restricted and we're at something like a 10% replacement rate between reserves that are being produced versus reserves that
07:49 are being discovered. And that's essentially burning the furniture. So that's not a sustainable price. That's not a sustainable activity level. And even if you thought that oil demand would decline over time, which is contrary to our experience since people have used crude oil commercially for the last 160 years, every year other than COVID, 2008, and then maybe one or two times in the 160, 170 years that we've used petroleum commercially, every year it's gone up.
08:19 Demand has gone up by at least 1% a year. And for the last 40 plus years, it's been 1% plus a year. So even if it was in decline though and that trend broke, you'd still need higher prices to induce sufficient investment to be able to not actually have a shortage. And again, it's very counterintuitive, but if you think about the global depletion rate of let's say 7 to maybe 10%, depending on how you count it and where you look and whatever, that's a lot of oil that needs to get replaced every year.
08:49 And the first barrel that you use, the first well you drill to replace it, maybe it does break even at 20 or 30 or 40 like some people claim, but the last barrel that you're adding to replace — just again to stay flat — that's costing you 70 or 80 or $90, you're losing money on it at the current forward curve.
09:07 So you need much higher prices to induce more activity just to avoid a likely multi-year shortage of oil. And shortages of oil get reconciled through demand destruction which is much much higher prices. So anyway that's how I see it longer term and that's why this shorter term volatility, it's very hard to navigate and truly no one knows — even the president of United States doesn't know.
09:33 He tried in the last week, month, whatever, reportedly to end the war with Iran and not end the war and no one — even he apparently from his statements and his staff statements — they don't know when this thing is going to end. So I think betting on it is foolish, but I think betting on this medium to longer term trend and knowing the math around it seems like a pretty good bet to me, and making these sorts of bets has been a very positive return contributor over the last 11 and a half years.
10:00 >> Yeah. It seems like the one thing that they know for sure is that prices are going higher and they are continuing to release from the SPR and to my knowledge that salt domes will collapse if they go underneath a certain amount of oil. Is that correct? >> People have made different claims on that.
10:23 People used to think it was 350 million barrels and then they've reduced those numbers as the amount in them has declined. So as I understand it, it's actually possible if you withdraw the oil carefully to use almost the entirety of the capacity. But from what I've heard and read and the experts I've consulted with on some of these specifics around the reservoirs and the engineers that help manage them or at least have managed similar sorts of projects —
10:53 there's actually — so it's not the withdrawal issue that people cite. Again, I think mostly those are just wrong and people are just trying to — there's this weird comfort that people try to seek within investing. And I think understanding that there's always risk and accepting it is helpful because it's just a more healthy approach towards deploying dollars at risk.
11:18 And so I think people really have trouble getting comfortable investing in risky scenarios. But I think that the floor, the narrative you shared, is actually more driven by people's psychological need for there to be a floor in the SPR rather than actual need, because they can put brine in if they did it carefully, which they're not doing, but if they did it carefully, they wouldn't necessarily destroy it.
11:37 What I understand is that there's bacteria and there's other spoilage that's happened to some of these caverns because it's not one big spot. It's a whole bunch of underground salt dome cavern type things underground and there's some variation on them, but it looks like some of that oil is contaminated.
12:00 And so I don't know what the limit is. And I've seen a lot of different estimates. What I know is that almost every estimate that everyone's given that's been high up until recently has been wrong because we've withdrawn even more oil than that. So I think that's helpful information but I think if you asked me a year ago I would have said the same thing, which is just that it's not just like people say hey what's the floor for oil and I don't know — the floor we saw was -40 or something during COVID which is very very deeply unsettling but it's
12:28 not about the floor, it's about what do you think the average price is going to be and can you go buy stocks and companies that won't go bankrupt for the most part if that happens. >> Yeah. It seems like the suppression of the oil price through releasing from the SPR, it seems like it's not as effective as it was early in the conflict because we had the big spike and then you begin to see many nations with these drawdowns on their oil reserves and then now you see the price starting to
13:00 creep back up and then even diesel hit an all-time high here recently. And so do you think that these kind of methods of interventions and price controls are going to be more ineffective moving forward? >> Yeah, I think it's like the story of the boy who cried wolf except Trump has now declared victory and/or peace and/or that the Strait of Hormuz is open dozens of times.
13:32 There's different counters for this that I've seen in different methodologies, but certainly dozens of times. And so whether it's pure jawboning or strategic petroleum reserve releases or releasing numbers that have to get revised because they're inaccurate or not releasing numbers because you disclose that there's a discrepancy between the front office and back office at the EIA or various other problems.
13:56 I think the general effectiveness of these things diminish. But there's also another problem, which is when you fight a war, you're fighting against an opponent. And the idea that you can engage in the degree of wolf crying or propaganda or whatever you'd want to call it without your opponent noticing is I think a little naive and foolish.
14:20 And so if you decide that the price of oil is important, one of the things that would maybe be wise if you were fighting a war is not letting your opponent know that the price of oil is important. Because if you let them know through your many many statements that seem clearly designed to suppress the price of oil and you use the price of oil as a metric for victory or defeat, then even if your opponent can't defeat you conventionally, let's say through military means, if they understand that you have this other measurement of
14:53 victory, then they can just [laughter] make the price of oil go up. And so I think the IRGC maybe eventually figured this out, maybe. And so we've seen — it's almost been uncanny recently, let's say in the last month or so, where not only do IRGC leaders or politicians or their social media accounts talk about this, but then you've started to see missile attacks and drone attacks that coincide with these statements of victory or declarations of victory by the Trump administration. JD Vance yesterday, for
15:28 example, there was supposed to be — the rumor was that he was going to declare victory and a withdrawal of US forces from the Middle East. That was the soft — a number of different folks, they got pre-briefed and that was the message on what was going to happen.
15:46 30 minutes before he was supposed to speak, there were ballistic missiles. Apparently, it's the water ballistic missiles. I guess they go up and then they go into the water in the torpedoes or something. I'm not a military expert, but something like that. It was apparently very unusual for them to use these, that were fired at tankers and may have destroyed —
16:06 there's not confirmation in the public domain yet, but may have destroyed two tankers. And not only did these statements and planned statements yield a physical kinetic response from Iran, but also it changed the nature of it where previously the IRGC had mostly just been firing drones at tankers. And just firing a drone at a tanker is a huge deal and they could explode and catch fire and it could be a really big problem.
16:34 But the drones carry much much less ordinance and they're much more likely to, let's say, moderately damage a tanker or a cargo ship or whatever versus these ballistic missiles which are enormous. They're the size of small space rockets, let's say from 50 years ago or whatever, and they can completely destroy tankers.
16:58 So it's an escalation and this is very recent and they've mostly reportedly been fired at tankers only around these wolf crying moments by the Trump administration trying to jawbone down the price of oil. So again, it's a not great strategy if you really want someone to not do something to tell them that you care about that thing, especially if you're fighting for much much bigger stakes, right? It's a very weird thing for the US to care this much about the short-term stock market price or short-term price of oil versus
17:31 achieving strategic and military victory in a way that matters. However they decide it — we elected these guys. They have a mandate to do this if they view it necessary. So it seems like a very very weird and very foolish way to engage in it because it invites — if you're going to do it then they'll notice it and then they'll respond.
17:52 And so there is a risk that we end up with dramatic escalation, not militarily necessarily but purely related to oil and oil infrastructure. And so I think if anything from a pure short-term perspective there's actually — again there's always the risk that the US just unilaterally withdraws from the area. But even if the US does that, there's still a risk that we end up with a super spike of oil just from the IRGC wanting victory in this metric that the Trump administration has basically set for themselves and set for the American
18:25 public, which is a low oil price, a low gasoline price, a low diesel price. Like you said, diesel is already at a crazy high price. Gasoline's at a very high price, but the price of oil isn't yet. And so again, it's very foolish and short-sighted in my view. I'm not a military person, but I can observe the price of oil.
18:44 And my assessment is that the IRGC now wants the price to be very very high and they appear to be acting to accomplish that in response to this jawboning. >> So yeah, it'll be interesting [laughter] to see. I haven't really dove into this a whole lot, but I've been seeing these charts of the crack spreads between diesel and oil and I think diesel is actually pricing in higher oil prices based on that spread there and I think it's over $100 a barrel with that. Do you
19:20 know much about that that you could explain for us? >> I do. Yeah, I have a strong view on this. I've done a lot of work on it. I don't short stocks because of a bad experience that I had many years ago in trying to short stocks and a very early short squeeze and it was very very painful.
19:39 So I will occasionally buy put options which is essentially paying premium for insurance on a stock that pays out if it goes below a certain price before it expires. And so I own some puts on refiners which has not worked out so well — a very small position and a hedge of sorts — because refining margins have risen.
19:59 So what's happened mostly from what I can tell is that as the US war with Iran kicked off, the Russia Ukraine war changed its dynamic and Ukraine started to attack much more Russian oil infrastructure. I think it was related to a redirection of weapons from the US away from Ukraine towards the Middle East region. And I guess there was a quid pro quo where Ukraine wasn't attacking these things in exchange for getting more weapons from the US previously.
20:32 And when that changed — again, I don't know for sure, I've read some stuff about it, but this is just a hypothesis or a guess. So what isn't a guess is that Russian refiners have been destroyed. A huge number of them have been very heavily damaged and they've been hit persistently because it takes a month or two or three for a damaged refinery to turn back on and some of the damage on the recent attacks has been more extreme so it may take longer.
20:57 So that's the biggest single impact to the refining market — is actually Russian refining offline and Russia going from a large net exporter of gasoline and diesel to actually an importer of gasoline and diesel, which — I'm actually not sure that Russia has ever been an importer. It's like Saudi Arabia importing oil.
21:19 [laughter] >> It's the Soviets overbuilt Russian refining capacity like 3x. I think they got scared during World War II or something. They just decided we'll have the world's largest refining capacity by the nth degree. So that's the biggest thing. And then secondarily, China is a close trading partner and ostensible ally with Iran.
21:41 And when the US attacked Iran, within a month or so, China stopped their refined products exports. China is the second largest refining exporter outside of Russia and they cut it off. It looks more geopolitically related because the economics were very good but they just stopped their independent refineries from exporting.
22:01 I think they might have stopped everyone from exporting. And so mostly it's been a geopolitical shortage. This is not a real shortage of refining. It's Russian refineries being attacked and then Chinese refineries that turned off. My expectation on all this with China was that they would wait to import oil until a few months before the election and then start importing a lot of oil.
22:25 I think we might have actually talked about this in July. They would start importing a lot of oil to try to raise the price of oil and then wait a couple months, have the refiners refine a bunch of it, and then export a bunch of diesel and gasoline after the election to earn a lot of money on their refining.
22:41 but basically have maximal political damage here in the US while also earning very healthy margins on their refineries, for refineries that employ a lot of people and have absorbed a lot of their capital. And so far, we'll see. It's a theory and again maybe I say this with a little too much confidence, but so far it's working.
23:02 My guess is they keep importing more and more oil coming into the election to push up prices and maybe force refined product prices in the US up. They've started to export but just in small quantities. And my expectation is that they'll ramp up their diesel and gasoline and jet fuel exports a lot right after the election.
23:21 And what that'll do is raise the price for oil and then make the price for refined products basically net flat or maybe even fall because you could see at a $100 diesel — $100 margin for diesel, $200 diesel essentially. You could see diesel fall to let's say $150 net to the consumer and you can see oil at $110 and you'd still have — that would still be an elevated margin, a very elevated margin for refiners.
23:50 And then just specifically in terms of the other way for this to get settled out besides China is that refiners in North America run seasonally. So during the demand season, so summer and winter, they tend to run close to 100% utilization and in the fall and spring they do maintenance and they run at let's say 80% utilization plus or minus a little depending on the year.
24:15 Recent years it's been closer to let's say 85%. So if they defer maintenance, which is not always possible, but there tends to be some flex on this, you could end up with an extra, let's say, 2 million barrels a day of refining activity in the US, plus maybe another, let's say, 500,000 barrels a day of refining activity in Canada.
24:35 which would be enough to really — if you have that, that'd be an extra meaningful amount of diesel and gasoline coming on at a time where seasonally you don't normally have that. And so there's a price signal for them similar to Chinese refineries where these high margins, they're so high that it's very economic to defer maintenance.
24:56 And so most of these refineries that were planning maintenance, it looks like so far of the ones that have made announcements, all of them but one that I've seen have deferred their maintenance. Only one, I think the Irving refinery in — I think it's the Greater Toronto area. I forget the name of the spot, if it starts with an S.
25:14 they didn't defer their maintenance, but everyone else has so far that I've seen. And so that large amount of refining should pull oil out of the system and dump refined products into the system right as we're going into shoulder season. My kids are back in school, your kids may be back in school, and so we're traveling a lot less, driving a little less maybe, than big summer road trips, big summer trips, and so on.
25:44 And so I think that that'll resolve this problem, but it may get a little worse, let's say, for another month or two. And it's not an accident in my view, that it would get worse going into this election and then potentially get a lot better after the election. >> Yeah. That's the game, right? Especially if you can influence an election in certain types of ways, especially driving the price of oil up and then after the election, if you get the results you want, then making the price come down. So, I could
26:18 definitely see that makes total sense. Okay, so Marco Rubio and Treasury Secretary Scott Bessent both said that the Strait of Hormuz would be irrelevant in two years. There was about 20 million barrels per day coming out of the strait and where's that going to be replaced? Where's that oil going to come from? >> I mean honestly it's just propaganda.
26:44 [laughter] The plan is to send some more oil via pipelines to other spots, but a lot of it is just ridiculous. So first of all, most of that production is within what, like 10 miles of the Persian Gulf. So, okay. So, you build a big pipe that takes the oil from your oil field offshore in the Persian Gulf or onshore but within a few miles of the Persian Gulf and then sends it somewhere else.
27:15 You have to defend your production facilities, your water facilities — there's all kinds of stuff that is actually almost as vulnerable as these tankers. So, it's a very, very weird claim and it seems much more just engineered along the lines of the jawboning we were talking about to try to push the price of oil lower in the short term. It does not solve the problem.
27:36 If the IRGC is still in power and they still have missiles and they want to, they can frankly destroy more energy infrastructure than they have so far. And again, it is noteworthy. These escalation points are worth watching. And the real risk is that you don't go to war casually and you have to win wars very quickly because if you don't, there's always this risk that these things can escalate dramatically.
28:06 And so I think these statements, it's really unfortunate to see these guys comment on these things. It's also notably odd to have them comment on it. Why is the head of the State Department and the Treasury Secretary of the United States commenting on energy flows through a strait halfway around the world when we're at war essentially in that strait? It's a very strange thing for them to be doing.
28:34 And again, I just don't know that I agree with it. Even if it were true that they would build pipes — which it is within human capacity, I don't know about 2 years, but let's say over the next 5 years, to redirect nearly all oil and refined products flows, it is possible. One, you're actually going to have problems because you're redirecting the stuff, so part of it's that the infrastructure is still vulnerable but also a lot of where they're redirecting is to Fujairah, which if you look at a map it's just
29:03 a joke because they're redirecting from one side of the street to the other side of the street, but it's still visible. You can see it from Iran. And there's pictures of it from these mountains and stuff from Iran. So, okay, if ships were vulnerable offshore Dubai, they're not going to be vulnerable offshore Fujairah.
29:24 There were even ships that were hit offshore — was it offshore Oman early on — that were quite far from the strait and Fujairah is right there. So, it's this like they're just capitalizing, I think, on people's ignorance and then also trying to encourage people to make speculative bets against the price of oil, which really I think is just out of place in what's supposed to be a constitutional republic with a free market.
29:52 It's a very weird way to navigate things and I think these things need to get taken with a very big grain of salt. >> Yeah. That's important to know. Yeah, help us keep our sanity through all of this madness. Josh, so do you think some of this may be related to maybe they're genuinely believing that the Venezuelan oil is going to bail us out? Because Trump came out and said, "Oh, we just got the biggest —" I think it was billions of barrels of oil out of Venezuela. And it seemed like that came
30:26 out after Marco Rubio and Scott Bessent made these comments. And so, do you think they could be believing that the Venezuelan oil is going to save the world? >> I mean, it is truly hard to believe. The White House Twitter account or X account posted a celebratory President Trump dark silhouette, 65 billion barrels.
30:50 They should have put a little asterisk on it and given a nice little disclaimer there because I run a fund. I have to go disclaim it 10 different ways. But they could just make these outright completely fabricated nonsensical claims. Okay, so Venezuela did used to produce a lot more oil than they currently produce.
31:10 And a year ago or so at this time, they were producing around a million and a half barrels of oil a day, which was down a lot because they're a communist country and they've degraded all kinds of stuff. And they've nationalized their oil fields, I think, a couple of times. And so when you nationalize your stuff, especially in a communist system, your productive capacity degrades because there's no financial incentive for people to perform work.
31:31 And so productivity falls to the lowest common denominator. It's the classic economic problem with incentives, which is you want to provide incentives for people to be successful and people will behave according to those incentives. And so Venezuela is a great success case or test case of that where it just completely failed and collapsed.
31:52 So, we're at a million and a half barrels a day, let's say a year ago. The US imposes a blockade on Venezuela in December, and by January knocks production down to 800,000 barrels a day. We steal their leader. Imprison him. Probably deserves to be in prison. Horrible guy. Killed a lot of his people. Did a lot of drug dealing. Fine.
32:13 puts his number two, who was like number three or whatever when Chavez was in charge, communist leader in charge, and then opens up the faucets, turns off all the sanctions for the first time in decades essentially for Venezuela and then celebrates when production goes back to the levels that it was at a year ago before we blockaded it and blocked it off.
32:37 So I have an investment down there. My investment down there is in a drilling rig company that's actually a Canadian headquartered one and it's run by this billionaire tycoon, very famous. He runs an upstream company, too. And publicly traded and they have two rigs running in Venezuela.
32:53 And on their recent conference call, they talked about — and they're the only company that's actually running drilling rigs. So, they went from two to two. And they said that they might be running three drilling rigs by the end of this year. And it was fascinating because there was all of this news coverage around this.
33:12 And you could see they even listed in a Wall Street Journal article which companies were supposedly going to send rigs down there. And they listed three American companies, not the one company that actually runs rigs in Venezuela. And two of those three companies, as far as I understand, them or their predecessors had rigs down in Venezuela that were nationalized essentially, aka stolen.
33:33 Right. So, are they really going to send rigs again? How much is the US government going to have to pay them and guarantee them in order to actually send the rigs down? And then, I don't know. I just have a lot of questions, but nothing's happened as far as I can tell other than that the production that was turned off by the Trump administration has been turned on by the Trump administration.
33:55 I would not want to invest in growing oil production in Venezuela because they already stole it twice. So, I wouldn't want to be there for them to steal it the third time. I don't know how anyone could use let's say client money. So what am I going to go tell my clients — hey, we're going to go invest in this high return project in Venezuela.
34:15 and you just lose it and then you get sued by your clients for breach of fiduciary duty, right? Because what, you didn't know that Venezuela would steal it once they grew the production? And so I think the real open question here isn't if it will get stolen. It's just will these assets get stolen while they're being developed or right after they're developed or a year or two or three after they're developed, because we did leave the Communist Party in charge of Venezuela.
34:45 We left the Communist leaders in charge of Venezuela. We just took the very very senior guy. And they even did it in a room with this giant portrait of Simon Bolivar just to tell you how absurd that is. This was a revolutionary who basically sacrificed his life, dedicated his life, and they lost so many people in the process of it fighting Spain and fighting against colonialism and he's an anti-colonialist hero and they signed essentially colonialist oil agreements in the room with him on the wall. Right.
35:18 It's a horrific farce. So, who's putting money down there? I don't know. Some companies have said they will. We'll see. But man, no, unfortunately it's propaganda. I would love, by the way, to see a free Venezuela. I would love to see an economic boom there. I would love for the people of Venezuela to have freedom and prosperity, which would bring both more oil supply, but also likely a lot more oil demand.
35:45 Unfortunately, what we're seeing is nothing like that. And so I guess I have a lot to say about it. Some of it's economic, but yeah, what it isn't going to do is crash the oil market anytime soon from what I can tell. Or maybe ever, because unfortunately this trajectory we've seen before and this trajectory leads to confiscation of the assets and then production collapsing again.
36:09 >> Uh-huh. Okay. So on the Venezuelan note, I'm aware that Venezuela used to be a wealthy country before they became communists and they were very oil rich and so what did it look like back then? Was it still like this? I mean 1.5 million barrels per day doesn't seem like a lot. Were they producing a lot more back then? Also the type of oil that comes out of there —
36:39 I hear that it's a heavy crude that has to be processed significantly. I think we have some of the infrastructure to process that type of oil. But just curious your thoughts on Venezuela when they were an oil rich nation and they were prosperous, to how does that — is there hope for that in the future with this US connection there? >> Yeah, I'm just pulling up the historical oil production levels.
37:09 Yeah. Okay. It's around where I was thinking. I was thinking it was 4 million barrels a day at the peak. It was actually at 3 and a half million barrels a day at the peak. >> And that was — see where was that, in 1998. It looks like that was the peak. Okay. So the fields that were getting produced from in the method that they were getting produced from are pretty depleted.
37:36 So you can't go back and do what you did. Not just that the infrastructure is damaged, but those fields themselves are actually pretty depleted. There are other things to do there. There's both light oil that can get much more exploited than it's been and there's big fields to go drill there and there's Canadian technology, these fishbone or multilateral open hole wells to drill which probably could unlock billions of barrels, and then potentially you could go do steam assisted gravity drainage which would be a different technology and a different
38:05 approach to unlock more of the resource than you could unlock previously with the huff and puff and other sorts of methods that they did back in the '90s to juice that production. So, it is possible theoretically to produce billions, if not tens of billions of barrels more oil from Venezuela and to ramp that production maybe all the way back up, but not if it's going to be a communist country.
38:34 And so, I just don't think — I think Exxon, their CEO, commented on this, and I can't remember if it was Exxon or KICO. They asked, "Hey, are we getting our money back?" And they got smacked by Trump, verbally — oh no, that's ridiculous — which is of course obscene because Trump himself personally has made himself billions of dollars on trading these crypto coins and he has been very very personally economically focused but is very worried about oil companies even getting paid back for the
39:03 stuff that was stolen. So until probably both reparations to these oil companies are paid and until there's a political system that enshrines private property and free markets, I think it's very unlikely. Maybe you'll get to, let's say, 2 million barrels a day of ultimately probably Chinese companies coming in and having their own large-scale private security and maybe some government control or something to be able to make sure they get paid like they've done in certain other countries around the world. I think you need
39:36 some sort of arrangement like that. The US is out of that business at this point. Again, KICO is not getting paid back, so it's really hard for a US company to rely on that government protection. But other countries are still doing that. Maybe even France. So maybe you could see Total or someone come in and then, if they get stolen, they send in the French Foreign Legion, which is what it was for — to go reseize stuff from former colonial whatever.
40:01 So >> I just don't think — I think this is not that different than Trump declaring victory in the war with Iran for the 39th or 40th or whatever time, unfortunately. And there's a big — so there's the economic aspect of this which is that suppressing the price of oil is going to lead to much higher oil prices and real tragedy, real negative humanitarian consequences for people who are the poorest in the least powerful countries in the world — sub-Saharan Africa and Sri Lanka, various other places. It's going to be really hard
40:37 and it's even worse to see this getting played out under American government quasi control via places like Venezuela where again we saw this earthquake and all these people died mostly unnecessarily because they don't have civil society because it's falling apart because they have this totalitarian communist country and system and we're not fixing that at all.
41:00 We're just making stuff up along the way in order to try to suppress the price of oil. So it's very sad. There's a simple answer which is we're not going to see a lot of oil coming from there. That's the short answer. The long answer is it's tragic. It's unforced. And if anything, there's a risk that we may see less production and more instability in the region from all of this rather than more.
41:25 One last thing on that, I will make a lot of money if the 50 rigs or whatever that they say they're going to send down to Venezuela actually go down there. My exposure to these rig companies, I think they'll do really well if that happens. So, I just want to clarify this isn't like me wish casting oil prices higher. This is just realistically assessing it.
41:44 And I find it's helpful to be positioned where possible to make money either way. So, my drilling rig investments — pulling 50 active, capable rigs out of America or Canada or both to go down to Venezuela would really tighten the rig market and my exposure there is sufficient where that would be a huge win for me.
42:03 So, I hope it works, but there's just a reality, which is I was just trying to share the reality of what happens, just to be clear. >> Man, Josh, appreciate you breaking it down for us, especially trying to understand these headlines and these clickbaits that just get thrown out there with the leadership of our nation.
42:24 And I think it's important to break that down. So, Josh, appreciate you coming on the show. People go to Bison Insights — what are they going to expect when they go to your site? >> So, I have two companies, two websites. Bisoninterests.com is for my investment firm.
42:45 I shared some performance information just to share my background. It shouldn't be relied on. Past performance may not be indicative. Bison Interests for my investment firm. And then I started a newsletter a little more than a year ago called Bison Insights. And at bisoninsights.info, I share behind a paywall a number of different stock ideas of things that I've been investing in that I find interesting as well as macro analysis and data to support various specific macro views like some of the stuff I've
43:14 shared here. >> Yeah. Definitely. And I appreciate you coming on the show providing us with some insight and education. You all be sure to hit the subscribe button if you haven't subscribed yet. Would love to have your support. And Josh, appreciate your time and look forward to our next conversation.
43:31 >> Thanks a lot, Daryl. >> If you enjoyed this interview today and found it valuable, I encourage you to click the link that is pinned in the comments as well as the description to the Commodity University as we go deeper into what drives commodities and commodity pricing. And we also jump into different dynamics of this industry.
43:48 And so encourage you to click that link to learn more, or go check it out.