Joining us on this month’s For the Record we had veteran energy analyst, author, reporter, and documentary film-maker, Robert Bryce.
We met Robert at Tony Greer’s TG Macro Conference back in February, and quickly realized we had to chat to him on camera. Robert’s boots-on-the-ground data shows that tech’s digital footprint is starting to be held hostage by old-school geopolitics, supply chains, and Joe Public.
Let’s get into it…
THE FERTILIZER CANARY IN THE GEOPOLITICAL COAL MINE
When it comes to the Strait of Hormuz crisis, the market’s focus on oil is far too narrow, Robert said. The real, immediate threat of the blockade in the Strait of Hormuz isn’t just about oil tankers; it’s about the vital inputs that keep the global agricultural sector from collapsing.
“A lot of the public and media focus on the Strait of Hormuz has been about oil. And I’m not saying that’s not important, but don’t forget sulfur, sulfuric acid, which is important in petrochem, urea, phosphate fertilizer. Depending on which one we’re talking about, we’re talking about 10, 20, 30% of the global supply of those fertilizers coming through the Strait.”
Robert read data from a recent Senate hearing on fertilizer from a developer building a fertilizer complex in Nebraska, highlighting the exact on-the-ground cost pressures :
“Since February... We have seen a 33% rise in anhydrous ammonia prices, 55% rise in urea, 25% in liquid nitrogen and 5% in DAP, 3% in potash . Same time, farm diesel prices are up 72% increasing the cost of field work, fertilizer, transportation and irrigation. So those are massive increases in farming, which of course is a difficult business to begin with.”
The anxiety from people directly affected by this is real. Robert just got back from addressing rural electric cooperatives in Wyoming:
“I was speaking to Wyrulek, which is a rural electric cooperative in Southern Wyoming. The audience, 300-400 people, all ranchers and farmers. And to hear them talk about what’s happening with fertilizer prices, diesel fuel prices, they are very, very concerned.”
THE PERMIAN PARADOX: NEGATIVE GAS PRICES
While the rest of the world (TTF in Europe and JKM in Asia) deals with natural gas prices ranging from $17 to $19, the US remains insulated by the shale revolution, with Henry Hub sitting near $3. In fact, in the Permian Basin, an overwhelming surplus that has occasionally led to negative prices.
“At the beginning of this month, the natural gas prices in the Permian Basin here in Texas, in some cases were as low as... minus $5 per million BTUs,“ Robert said. “In parts of Texas... natural gas prices were not selling. They were giving them away. So if you have a fertilizer plant in West Texas, you were getting natural gas suppliers to pay you to take their fuel because there’s so much gas.”
Quite extraordinarily, Permian is producing more gas than the entire country of Canada, and yet there is not a single gas rig running in the Permian Basin. The gas is a byproduct of oil drilling, creating a massive, low-cost supply that serves as a deflationary shield for the US economy, at least for now.
Robert’s thesis:
“My hunch is that those European and Asian prices are going to pull Henry Hub higher, but how much higher is the question... Because the drillers are so good at responding to price signals.
The US is sitting atop galaxies of natural gas and they just keep and the drillers keep getting better and better at producing it. So could we see $4, $5 natural gas? Yes, we could. And I think that would be good for the drillers. But I think still this differential between the US and Asia, US and Europe is going to continue because you got to put it on a ship. You got to freeze it, put it on a ship, unload it. And then that adds, you know, depending on what number you’re five, six, seven dollars per million BTUs.”
AI IS A NATURAL GAS STORY
Despite the push for “clean” or “alt” energy, the physical reality of powering the AI revolution comes down to one fuel: natural gas.
“AI is a natural gas story, right?” Robert said. “The power for AI is all going to be generated, nearly all of it will be generated by natural gas-fired generation, whether it’s reciprocating engines... or gas-fired turbines. There’ll be some wind and solar and a little bit of batteries... but it’s a gas story”.
However, the “Giant Five”—Microsoft, Apple, Google, Amazon, and Meta—are so cash-rich that they are becoming price-insensitive. They are willing to outbid everyone else for parts and power, which Robert warns will drive up electricity bills for everyone else:
“If the hyperscalers can come in and bid up the price, say, of transformers, what does that do for Wyrulek or a small electric cooperative in Wisconsin or you name it, right? So again, these repercussions, these impacts are felt more broadly in the economy because of this, you know, the market size and market power of the Giant Five.”
THE UNPRECEDENTED POPULIST GRID REVOLT
But the tech sector’s assumption that they can simply buy their way into unlimited grid capacity has ignored a vital variable: local human nature.
A grassroots backlash is starting to get real traction across the country. Local citizens, farmers, and ratepayers are looking at these massive concrete server complexes and realizing that they are consuming their water, ruining their local environments with high-decibel cooling fan noise, and hogging their regional power supply.
The sheer velocity of this resistance is catching Big Tech completely off guard. Robert’s tracking data reveals a trend:
“89 rejections of data centers, rejections or restrictions of data centers in the US... just since January 1st. There were 49 in all of last year and I think four or five in the year before. We’re seeing an unprecedented backlash against big tech, Silicon Valley, the tech elites. I’ve never seen anything like it.”
🔒The conversation doesn’t end here. Below the paywall line, we dive into the details of this populist uprising. Robert takes us directly onto the ground to analyze town hall showdowns where billionaire investors are being shouted out of rural counties, problems on the supply chain side for the US, and reality checks on alt energy and nuclear.
To unlock full access to this and all future editions of ‘For the Record,’ upgrade your subscription here.
