Summary

In this episode of the Executive Connect Podcast, host Bryan Hancock sits down with Ted Smith, a seasoned oil broker and investment expert, to uncover the realities of alternative investments in the oil and gas industry.

👉Key Topics Covered:

The role of oil and gas in global energy markets
How politics and elections impact oil prices
The difference between WTI and Brent crude
U.S. oil production, strategic reserves, and global supply chains
How Saudi Arabia, Russia, and China shape oil markets
The future of alternative energy investments
If you’re interested in investment opportunities in oil and gas or want to understand how energy impacts global economies, this episode is for you.

Chapters

00:00 Introduction – Alternative Investments & Oil Industry
02:00 Meet Ted Smith: From Football Coach to Oil Broker
03:30 The Connection Between Politics & Energy Markets
05:00 WTI vs. Brent Crude: Understanding Oil Price Benchmarks
08:00 Global Oil Production: How Much Does the U.S. Consume?
10:30 The Influence of OPEC & Saudi Arabia in Oil Prices
12:45 Russia & China’s Role in the Oil Market
15:00 Geopolitics & Energy: Strategic Reserves & Global Power Plays
18:00 The Future of Oil & Gas Investments: What’s Next?
20:30 The Rise of LNG & U.S. Energy Dominance
25:00 How Much Oil Does the U.S. Have? Strategic Reserves Explained
30:00 Why Oil Prices Fluctuate & What Investors Need to Know
37:00 Closing Thoughts & Future Podcast Episodes

Transcript

Bryan Hancock (00:02.118)
Well, welcome to the executive connect podcast. We’re doing a new part of the series this week. We’re to start talking about alternative investments. And I’ve got one of our friends here, Ted Smith, a long time wool and broker. He’s going to talk to us a little bit about the wool industry. Welcome Ted.

Ted Smith (00:18.229)
Hey, good afternoon. Thanks for having me.

Bryan Hancock (00:20.474)
Yeah, yeah. Do you want to give the audience a little bit of a background about your, you’ve been got going on there in the whole business for the last several years?

Ted Smith (00:27.669)
Sure, sure. So I’m a registered representative. I guess the informal term is I’d be an oil broker, kind of like a stockbroker. I work for a company called The Title Group, which is a licensed broker dealer. We’re down here in Shirts, Texas, just north of San Antonio, right off I-35. I’ve been working with them for 15 years. And what we do is we do syndications of oil and gas projects.

much like people do apartment complexes and those sort of things for real estate. We do the same thing for oil and gas deals. People come in and they buy a piece of it. It’s worked out pretty well. Love living in Texas. Never thought I’d be in the oil business. Before I did this, I was a college football coach. 20 years ago, if you’d have said I’ve been living in Texas and or I’ve been in oil business, I would have laughed you out of the room. chase a girl down to Texas.

start a family, find something else to do. you know, it’s really, it’s actually been phenomenal. It’s been great. I love what I do.

Bryan Hancock (01:33.98)
All right.

Ted Smith (01:39.65)
I lost your sound.

Ted Smith (01:46.305)
Brian, I can’t hear you, I lost your sound.

Ted Smith (01:52.353)
Hello.

Bryan Hancock (01:53.755)
Can you hear us?

Bryan Hancock (02:06.994)
I don’t know. Can you hear me?

Ted Smith (02:08.277)
I lost his sound for a minute.

Bryan Hancock (02:14.076)
Test, test, test.

Ted Smith (02:17.055)
Alright, I couldn’t, I knew his mouth was moving, but I couldn’t hear him.

Bryan Hancock (02:21.468)
Well, that’s going to be a problem if you can’t hear me. Can you hear me now, Ted? Sound went out. So that ever happened to you before? Okay, well, let’s just keep rolling. If it happens again, we’ll figure something else out. It might be how you have it’s back. might be how you have the focus right tuned.

Ted Smith (02:24.929)
Yeah, now it’s good. I don’t know what happened. It came back.

Bryan Hancock (02:44.168)
we thought it was a computer, it might be the mic. Okay. All right. So Raph, what do you want to do here? You want me to just pick it up from, we just had an election.

Bryan Hancock (03:00.274)
Can you guys hear me?

Ted Smith (03:00.629)
lost.

Ted Smith (03:09.117)
him.

Bryan Hancock (03:13.99)
Yeah, I think it just went out for a second. Melissa said she’s had that problem before. So do you want me to just pick it up from? All right, sounds good.

Bryan Hancock (03:29.586)
Well, so Ted, we just had an election and, you know, as always, energy is a big issue. remember them talking about things up in Pennsylvania was a big election issue issue. You know, how does energy and specifically oil and gas play such a central role in politics?

Ted Smith (03:44.757)
Well, I mean, look, energy, oil, politics are so intertwined on so many levels, you know, look, money out of the ground is what oil is. Money is power. Power is money. It’s always been that way for a long time. Some people want more access to it for more people. Politically, other people want it constrained. Other people, you know, you’ve got the Green New Deal type of agenda.

It’s just, it’s, an incredibly powerful issue. I think it probably moved the state of Pennsylvania. I think it moved the needle dramatically in that one state, right? It’s big where we’re at in Texas. It’s actually big everywhere because we have so much of it here in the United States. But, I think in this particular election in that particular state, it really moved the needle.

Bryan Hancock (04:35.206)
Yeah. Yeah. So, you know, kind of going from the global to the local level, you know, how important is oil to the production of the world?

Ted Smith (04:45.941)
It’s everything, right? mean, you know, we can’t have a modern society without oil. Bottom line, right? Pretty much anything you look at or touch is made from hydrocarbons, whether it come from gas or oil. It’s in all the plastics in your house. It’s in every hospital. It’s in every car. It’s in just about every product you’d ever use. Can’t have a functioning military without them, right? Can’t have a modern world. know, if you think back…

Like I like to think about, you think back to World War II, it was pretty much everything was metal or some other fiber of some sort. After that, when we truly got into the hydrocarbon age, when we started getting into modernity, what you and I and most people would call the modern world, it doesn’t exist without oil out of the ground. I mean, that’s just all there is to it.

Bryan Hancock (05:41.192)
All right. Well, so let’s talk a little bit about oil prices. You know, there’s a WTI and there’s a Brent crude. Can you talk a little bit about the difference between them and, know, this price, you know, the price spread between the two different benchmarks.

Ted Smith (05:55.115)
Sure. WTI, a lot of people see that. Most people don’t know what it means. It stands for West Texas Intermediate. So that’s a benchmark price set from the Permian Basin. One of the things that a lot of people don’t know is that oil comes out of the ground in different qualities, at different gravities. It’s not all the same. So there’s an intermediate level of that.

And the biggest basin in the United States is the Permian Basin. So the West Texas Intermediate is kind of the price that we go by. There’s actually different prices here in Texas. There’s a Houston Ship Channel price. And there can be other fields that are so big that they kind of get their own price. they would all, anything produced in America or in the Gulf or Alaska would probably fall under WTI. Brent crude price is pretty much everyone else.

It comes from the Brent Sea up north of the UK where, you know, there’s been a lot of production, but that also counts for anything found in the Middle East, anything found in Russia, anything found in South America or Africa. The relationship between the two is that there’s always a, there’s always a spread. And if you go back for the last 15 years or so, Brent crude is a little bit more expensive than WTO.

Bryan Hancock (06:51.569)
Okay.

Ted Smith (07:19.881)
So even though there’s a lot of American oil made that’s actually a better quality right out of the ground, it’s what you call sweeter, it’s not sour. Typically that spread is somewhere between three and seven dollars. If you look today, so for anybody that likes to play spreads, if the spread between WTI and Brent gets more than seven dollars, if Brent gets a little higher than seven dollars above WTI, might be a good bet.

that it’s going to contract and go the other way. And conversely, if they get down closer than $2, it’s probably a good bet that it’ll go back the other way. They don’t deviate too much, but there’s always a spread. They do march in tandem with that spread.

Bryan Hancock (08:03.624)
Okay. And so how much oil is produced and consumed worldwide daily? And then, you know, how much of that does the U.S. consume?

Ted Smith (08:13.909)
Well, worldwide, the latest numbers that have come out a couple months back from the IEA has the world at about 103.8 million barrels a day consumed. now when I started in this business about 15 years ago, that was right around 92 or 93 million barrels a day. So that’s gone up dramatically. Here in the States, we’re

we use, we consume just under 20 million. So we take about one fifth of all the oil that’s produced on a daily basis. So we’re by far the biggest consumer in the world.

Bryan Hancock (08:55.706)
Okay, that’s kind of interesting because you hear a lot from all the green movement and everything lately that everybody is expecting for the consumption to go down, you know, and meanwhile, over the last however many years that is what 15 years, it’s actually gone up about 10%.

Ted Smith (09:04.255)
Yeah.

Ted Smith (09:09.451)
Yep. Yes. Even look, even with all the electric cars, all the solar panels, every windmill you could ever possibly hope to build here, we’ve still gone up dramatically. When you think about every time you see new construction, whether it be a home, a business, a road, there’s oil used in building that and there’s electricity in every one of those homes. That’s power. So all the folks in India, all the folks in China, everybody in Africa.

They all aspire to have the life that most of us do here in the United States. So there’s nothing to stop them from getting that. So it’s grown dramatically. I don’t see it stopping anytime soon. And by the way, 104 million barrels a day in consumption, that’s an all time high.

Bryan Hancock (09:57.096)
Right. So aside from, what we’ve talked about a little bit for the producers and in the States, you know, outside of the U S who are the biggest producers? And can you tell us, you know, I think most of the listeners are probably familiar with OPEC and you tell, talk a little bit about OPEC and their influence and its role in the market today, maybe as opposed to kind of its role 20, 30 years ago.

Ted Smith (10:10.965)
Mm.

Ted Smith (10:21.259)
Sure. Outside the United States is the largest producer, just over 13 million barrels a day, but OPEC has got about 12 countries in it. It was formed way back in 1960. Probably a lot of folks who listen to this will at least have heard about the oil embargo back in the 70s when they decided to get together and really put a crimp in things and not…

not allow so much exports because of one of the wars going on there in the Middle East. We’ve gotten that straightened out. OPEC though, by and large, is Saudi Arabia. Saudi Arabia is about 40 or 45 % of it. It’s the steak on the plate. Everything else is kind of the carrots and potatoes. OPEC is more or less controlled by what Saudi Arabia or …

Bryan Hancock (11:07.804)
Right.

Ted Smith (11:15.329)
Whoever’s running Riyadh there, Mohammed bin Salman, whatever he wants. If they’re asking people to cut their production, they’ll generally do it. If they’re asking people to open the spigots, they’ll generally do it. Within OPEC, Saudi Arabia is, they are the swing producer. So if they want OPEC to produce less, they can turn off the spigots. Now outside of OPEC, you’ve got Russia. A lot of times you’ll see it written up as OPEC plus. Well that’s…

OPEC plus Russia. They’re not necessarily together, but they’ve started to work more in tandem here in the last 10 years because we’ve increased our production more and we’ve become the number one producer on the planet. at nine or 10 million barrels a day, that’s what Russia puts out. Canada is pretty powerful. They have got a lot of tar sands in Western Canada. They’ve got about five million barrels a day, obviously very friendly to us.

China is a large country. They don’t produce near enough to support themselves. They’re around four million barrels a day. Brazil is probably three to four million a day. There’s some other oil there off the west coast of Africa and off Venezuela. But those are the major ones. We get a couple million a day out of Mexico. So the Mexican oil and the Canadian oil are very friendly. That helps supply us. We’re obviously their biggest market.

Bryan Hancock (12:43.176)
Okay. Yeah. And who’s in control of that? You know, the production in those other countries is the government’s is it national companies? Is it private entities? Imagine that it has to be kind of a mixture of all of the above depending on the country, but just can you talk a little bit about the geopolitics of that?

Ted Smith (12:49.857)
you

Ted Smith (13:00.433)
Absolutely. It is, you know, it is a mixture of all the above. Some of the European nations here in the last 20 years have really moved more towards sort of a free open market style of private ownership like we have here in the United States. pretty much everybody else has one large oil company for their country like Petrobras. That’s Petro Brazil.

That is the government-funded oil company. It’s huge. It’s corrupt. It’s not extremely efficient, but you’re not allowed to access your own minerals. You’re not allowed to hire a private drilling and exploration company to produce your minerals for you. Same thing in, what is it, Indonesia. It’s Petronas, the Petronas Towers, famous from that one movie with Sean Connery, right? That’s the headquarters for the Indonesian National Oil Company.

You know, in China, you’ve got the Chinese National Offshore Oil Company. You’ve got a couple others in Russia. You have Rosneft and Gazprom, you know. So to speak, they’re independent and private, but they’re not. They’re under Putin’s thumb. And when you look, there’s one oil producer in Libya. They’re in Saudi Arabia. Look, that’s that is the House of Saud. That’s sort of a foreign concept to a lot of Americans, right?

That’s one family controlling 26 million people in every drop of oil that comes out of the ground. When I sit and think about it, that’s actually a throwback to the Middle Ages. That’s the House of So-and-so controls this area. Well, that house controls the biggest oil field in the world. If one leader says, turn off the spigots, then we do. Everywhere but the United States and Canada.

And probably Australia, you’ve got government control, certainly over mineral rights, but then probably over production. And even then, when you look at Europe, you’ve got France, they have Total, one large company. know, the United Kingdom has BP. There’s other producers, but they’ve got one large company. Italy has one that was their state-controlled company that’s recently been public within the last 20 years. Here in the United States, we’ve got hundreds, if not thousands, from small, mom and…

Ted Smith (15:25.331)
mom and pop operations to the whole way on up to Exxon. So it’s a vastly different scenario about who controls things around the world. Too often as Americans, I think we assume that it’s just the way we are, but it’s not because it is, like we said earlier, money is power and there’s money in the ground. That’s what oil is.

Bryan Hancock (15:29.906)
OK.

Bryan Hancock (15:40.455)
Yeah.

Bryan Hancock (15:48.58)
sure. Hey, Ralph, I’m gonna have to cut right here because I have my laptop is gonna die if I don’t. So I’m just gonna pause, I’m gonna get my charger, and then hopefully we can cut into the next section. Is that okay?

Ted Smith (16:10.113)
Raph, how’s it sounding?

Bryan Hancock (17:24.582)
How’s that for a rookie mistake, Ted?

Ted Smith (17:27.975)
How am I sound? Do I sound alright? Am I answer is okay?

Bryan Hancock (17:30.293)
You’re doing great, All right. So here in a second, we can cut back in.

All right, let’s cut back in.

So how does, you you talked a little bit about OPEC and Saudi Arabia. How does Saudi Arabia through Aramco and OPEC, you know, how they exert influence on global markets? And then you talked a little bit about the Saudi Arabian, you know, leadership, particularly Mohammed bin Salam. How do they, you know, how does that dynamic play into what goes on over there?

Ted Smith (17:45.301)
Mm-hmm.

Ted Smith (17:57.153)
Mm-hmm.

Ted Smith (18:06.721)
Well, it’s really interesting because look, the Middle East is volatile all the time, but they’ve got the biggest chunk there on the Arabian Peninsula, Saudi Arabia does. They don’t have that many people that have got a population about the size of Texas, but they have a tremendous amount of oil. So when they want OPEC, the rest of the countries to jump, OPEC, nine out of 10 times going to jump. They’ve got the ability to…

United Arab Emirates and Bahrain and Libya and everybody else that’s there, they’ve got the ability to sort of crack the whip when it comes to increasing or decreasing productions. The market always looks to two or three times a year as when they come, when OPEC has its meetings, I think they hold their meetings in Geneva of what their decisions are gonna be about their future output, whether they dial it back or they crank it up. OPEC was something.

started in 1960, but Aramco, which is again the only oil company in Saudi Arabia, that’s Aramco stands for the Arab American Oil Company, right? That Americans helped them find it. It was standard oil, right? It was Rockefeller and Standard Oil first went over there and started to find some oil and help them develop it. And obviously now they run it themselves, but their decisions to open up the spigots or cut off the spigots, they move markets.

There’s just no way around it. Now, because it’s owned by a family and there’s no true accounting of them yet, there was about four five years ago, I think it was before COVID, there were some rumblings about them wanting to go public. Aramco’s listed as one of the top five largest companies in the world, you know, by revenue.

They investigated, they were looking into it, they were going to list on the New York Stock Exchange because they wanted some more money and it didn’t fly because of all the accounting regulations need to be public. So that’s a privately owned company with the most power probably of any privately owned company on the planet. And the leader of it is the Crown Prince, it’s MBS, Mohammed bin Salman. He got put in power a few years ago by his father, the king, that ruffled a few feathers over there.

Ted Smith (20:25.541)
Maybe one or two people disappeared or had a rough week or two in the family there But he’s younger. He’s much more modern. He is seen as an ally He’s been friendly with and friendly towards Donald Trump much more friendly towards Israel That’s a big departure for the Middle East, you know in the past there were wars over You know, the oil embargo was put in place because we supported Israel back in the Yom Kippur war so his influence is

incredibly important into the direction that OPEC will play going forward here and how things change as we work our way into the middle of the 21st century. And they are the one big swing producer. If the other side dishes of OPEC don’t want to play along, they can dial back production themselves or increase production themselves. So they’ve got a power that the rest of the producers just don’t have.

Bryan Hancock (21:24.168)
All right. Yeah. I think most people think about, you know, Saudi Arabia and sort of OPEC with regard to the oil markets, but, know, sort of the more recent headlines are more about Russia and China. Can you talk a little bit about, know, you mentioned Russia a little bit earlier, but, know, what, what role do they play in the production and kind of how does geopolitics tie in there? And then also, you know, China is a major consumer.

Ted Smith (21:32.961)
Mm-hmm.

Ted Smith (21:50.611)
Yes.

Bryan Hancock (21:51.812)
obviously now, so how does that impact the overall global markets?

Ted Smith (21:56.715)
So China’s, to me, China’s major role is as a consumer. They’re producing less than five million barrels a day. They need more than that. If they got to the point where they had full consumption of, know, and everybody was moved into the 21st century over there, they would use more than us. So their influence right now is that consumer. And if something happens in China and the financial markets or elsewise,

and the Chinese financial markets sneeze, it seems like the oil market catches like a three-day flu. Our oil prices will drop two or three bucks for no reason. And then two or three days later, you’ll see the prices come back up because you’ll see and hear articles or people talking about, well, Chinese demand is going to slow down. So Chinese have made…

Lots and lots of investments in other countries including here in United States trying to buy up acreage buy minerals or Just maybe even come in and buy some operations that are already in place So they’re they’re trying to acquire and grow To feed all the people they need feed all the energy they need Conversely Russia really only has about 150 million people but They’ve got a ton of it. They’ve got it up in Siberia. They’ve got it right there

Not far from them in Azerbaijan there in the Caspian Sea. So they produce a lot, but their importance is to Europe, especially in the form of natural gas. That’s been in the markets, right? Talk about the Nord Stream 2 pipeline going into Germany. Russia needs the European markets to buy their natural gas. That exerts control over them.

Bryan Hancock (23:32.744)
right.

Ted Smith (23:46.173)
If you don’t pay up, if you do things politically that we don’t like, we can turn off your gas in the middle of winter. And your Ulma and Opa will have to put on an extra sweater there in Germany or in Austria or wherever it may be. So Putin, one of the reasons that you never really think about this, but Russia sometimes is involved in things politically and militarily in the Middle East. Why? They don’t need the oil from the Middle East.

Bryan Hancock (23:56.872)
you

Ted Smith (24:16.435)
It’s not immediately next door to them. The reason why is what they don’t want is any sort of major pipeline built from the Arabian Peninsula to go north, get through Syria. That’s why Russia was in Syria. They wanted to make sure that there was no major pipeline built from the Arabian Peninsula through Syria into Turkey. You get across the Bosphorus and up into Romania, and now Eastern Europe has a different source of natural gas.

That would be bad, bad news for Mr. Putin. The other thing he doesn’t like is the American natural gas, right? Our natural gas, you take it from the gaseous state, you liquefy it, you freeze it, you stick it on a boat and you send it over to Europe. He does not like that at all. The guy who hates American shale production the most is Mr. Putin, because that cuts off his money tree there in Europe for natural gas.

Bryan Hancock (25:09.768)
Yeah. And there’s a lot of that coming out of the Eagle Ford Shale right now, you know, in Texas has got, you know, those, you know, pathway to those markets. Can you talk a little bit about that?

Ted Smith (25:19.297)
Yeah, it really is. So we have more natural gas than anybody. In the United States, there’s five or six major, which call shale drilling place, where you go down, you drill horizontally into a layer of rock, you fracture it, and out comes oil and gas. Geographically, the biggest one is the Marcellus shale. That’s in the Northeast. It runs from New York.

down to West Virginia, almost all of Pennsylvania, parts of Maryland, and the eastern part of Ohio. Lots and lots of natural gas. There needs to be more pipelines built. When you get that down to the Chesapeake Bay, again, you take it from the Gash Estate, you liquefy it, you freeze it, you stick it on a boat, you send it to Portugal, right, somewhere in Lisbon or in Barcelona or something like that, and get to another plant, and then they re-liquify it, and they can ship it anywhere.

and they pay a lot more for it. Here in Texas, same thing. The Eagleford Shale is about an hour, maybe an hour and 20 minutes north of the Gulf Coast. We’re at the forefront of the whole LNG phenomenon. Down in Corpus Christi, there’s a massive plant with five trains heading into it. So all the natural gas coming out of the Eagleford Shale.

runs in a pipeline. You can’t put natural gas in a barrel or a tank. It’s got to go into pipeline. It’s got to, cause it’s gas, it’s going to expand. Oil, can move by pipeline. So that’s, there’s an entire small city built near Corpus Christi for the entire purpose of liquefying the natural gas. We’re building two more of them down in the Rio Grande Valley, right near the coast. So, and those got kind of got put on hold by the Biden administration.

That’s going to get reversed here quickly. Those will get built. That’ll allow for more of Texas product, which we just have more of than anybody in Oklahoma and Louisiana and New Mexico and Colorado and Wyoming, all of it. It will all come down and get out of the Gulf and go to the world, the rest of the world. And they’ll pay. They’ll pay a lot more for it. And we have hundreds of years worth. I’m looking forward to what happens here in the future. And you know, it just.

Ted Smith (27:39.131)
Oil has always been the backbone of the Texas economy. You’d be surprised how many names, how many companies, and how much wealth is descended from money out of the ground, you know, from a long time ago. But there’s a new wave of it that’s happening right now.

Bryan Hancock (27:54.406)
Right. So, I mean, where do you see the global oil production going and consumption trends heading into the next decade?

Ted Smith (28:05.141)
You know, I see it increasing, you know, just steadily. You know, like world population, they’ll come a day when it balances off or tops off or levels out. But I do see it increasing. You know, we’re sitting here, we’re almost in 2025. I think by 2030, there’s a good chance that we’re pushing 110 million barrels a day consumed, you know.

As a country, we’re producing 13.3 million now, 13.3 million barrels a day. I think we could easily get to 15 or 16 million barrels a day, but that would take time. We could easily do it, but it will not happen fast. That’ll take the next five, six, 10 years. And it would be a concerted effort to get there.

Bryan Hancock (28:57.648)
Okay. So let’s talk a little bit about, people hear about the strategic oil reserve or us oil reserves, you know, how much does, does our country have and you know, how long.

Ted Smith (29:05.217)
Mm-hmm.

Bryan Hancock (29:22.344)
How about now, is that better?

Bryan Hancock (29:27.515)
Okay.

Bryan Hancock (29:31.004)
So let’s talk some about our US oil reserves, Ted. How much oil does the US have? And how long would that supply last just in our reserves?

Ted Smith (29:33.899)
Hmm. Hmm?

Ted Smith (29:43.073)
Wow, that’s a great question. Our strategic oil reserves were created coming out of the oil embargo and the oil crisis of the 70s so that we would have oil for a national emergency. It is separate from commercial reserves, right? We have the capacity for, it’s right around 650 million barrels.

give or take in storage, literally stored in barrels underground in salt mines where you get less evaporation. It’s down at the Texas Louisiana coast. It was started back in 1975 and is run by the Department of Energy. it’s been on a controlled fill and release plan pretty much ever since it got going. But it’s only supposed to be for emergencies.

We have a massive hurricane like the one that hit New Orleans so many years ago. If we get into a war, that sort of thing, it’s for emergencies. It’s not a political football to be used as sort of like the last administration used. Now, when Trump’s first administration ended, we had almost 700 million barrels in there. So he took the opportunity of COVID to buy oil at

Bryan Hancock (30:55.271)
All

Ted Smith (31:11.485)
generationally low prices on behalf of the American public and fill that up. That’s a good business decision. Since then, the Biden administration, certainly in their first two and a half or three years, they slowly depleted that. They decreased drilling and they replaced that decreased production with oil from the strategic reserve to keep oil prices from getting too high. They did go higher, but they, you know,

that didn’t get crazy as they should have because we oil coming out of the strategic reserve. Right now we’ve got about 380 million barrels. So we went from 680 down to 380. In the last six months, they’ve been slowly refilling it a little bit. So we’re about 40 % below the level where it was, say, three and a half, four years ago.

Ted Smith (32:04.356)
I lost your sound.

Ted Smith (32:21.439)
Now I can hear you. You’re good now. It’s alright.

Bryan Hancock (32:24.259)
Yeah, don’t know. Fortunately, I’m not. Fortunately, I’m not speaking very much.

Bryan Hancock (32:31.845)
It’s connected to the sound box, I think.

Bryan Hancock (32:39.534)
Yes.

Bryan Hancock (32:49.775)
There’s the gain buttons.

Bryan Hancock (32:54.809)
I don’t see a volume. Yeah, this might be volume. Is that better or worse?

Bryan Hancock (33:03.897)
Turn it all the way up. Is that better?

Bryan Hancock (33:09.283)
Alright, that’s 80%.

Bryan Hancock (33:46.809)
Hardware and sound.

Bryan Hancock (33:57.582)
I don’t have an apple.

Bryan Hancock (34:01.73)
I don’t have an Apple computer, Rolf.

Bryan Hancock (34:07.459)
Yes.

Bryan Hancock (34:31.211)
Okay. are you guys able to hear me? Okay. Maybe what we can do is let’s, we can do this later. Well, why don’t we try to finish up this episode and then we can, we can, we can shoot a different one.

Ted Smith (34:33.665)
Yeah, I can hear you now. Let’s roll.

Ted Smith (34:43.723)
Yeah.

Bryan Hancock (34:49.861)
That’s all right. We’re making progress. Yeah, we’ve already got some, some stuff shot here. So Ted, let’s talk about, let’s talk about where it’s stored and then we can, we can break out the second half of the outline for a separate show. How’s that?

Ted Smith (35:00.031)
Hmm?

Sure.

Bryan Hancock (35:07.21)
So you talked a little bit about the reserves, know, where’s all this stuff stored? You know, is it just in one location? Sounds like a strategic reserve. Maybe it might be a good idea to store some of it in different locations.

Ted Smith (35:20.021)
Yeah, there are different locations. The big one though is in Southeast Texas near Louisiana. There’s caverns underground. Somebody once told me they were sort of like salt caverns, but they might also be limestone caverns. I’m not sure which one it is, but they’re stored in there and there’s planned releases from there that every so often Congress sets it up that we sell some and we replenish it.

Now the commercial inventory, the commercial storage in the United States is cut up into what you call, the industry has cut the country up into different sections called pads. The big storage report that comes out once a week, comes out on Wednesdays, is the commercial storage report. And it’s based off of the biggest, most important commercial refining hub, which is in Cushing, Oklahoma.

So again, the commercial and the strategic, two different things, strategic, you’re just taking it and sitting it there. The commercial ones are based off of large refining capacity. So like the one in Cushing, Oklahoma, that gets the weekly report. They need at least 21 or 22 million barrels to run that, to keep the equipment lubricated, to keep it doing what it’s supposed to do. That’s run down a little bit here. We’ve gotten some reports in the…

in the past 12 months or so that they were reaching their low point on that. But the report comes out every week about storage and how much we have. Again, we use about 20 million barrels a day. look, hurricane and earthquakes all hit us all at the same time, and we had national emergencies and we needed every drop from the strategic reserve just to sort of keep the military going.

keep the lights on here, at 20 million barrels a day, we’ve got about 380 million barrels in there. So you’re looking at about 20 days. 380 million sounds like a very large number. It is, except for maybe barrels of oil, right? So at 20 million barrels a day, that’s a little bit over a month to keep things rolling. So it behooves us all to have that as filled as it possibly can be all the time. Buy it low and…

Bryan Hancock (37:26.978)
Right.

Bryan Hancock (37:43.749)
All right.

Ted Smith (37:44.737)
and release it when it’s

Bryan Hancock (37:47.695)
Well, hey, Ted, I really appreciate all the insight. You know, we talked a lot about kind of the global markets. We’ll have to have you back on the show to talk specifically about Texas and our role and the overall industry. And then, you know, also maybe a little bit about how we get the stuff out of the ground and how that all works. But I think this is probably probably a good place to put a button on it for this show. So thanks for joining and I appreciate you sharing your insight and wisdom.

Ted Smith (37:58.282)
Mm-hmm.

Ted Smith (38:05.237)
Yeah, I’d love to.

Ted Smith (38:09.313)
Okay, bye.

Well, thanks for having me. Appreciate it.

Bryan Hancock (38:15.461)
Yeah. All right. Thanks everybody for joining. That’s the executive connect podcast until next time.