“The Biggest Bottleneck Is Moving Energy From Where It’s Created To Where It’s Needed” With Rob West, Thunder Said Energy

Today we are thrilled to kick off the first COBT episode of 2025 with our good friend Rob West, Founder and Lead Analyst at Thunder Said Energy. Rob started Thunder Said in 2019 and provides unique, thought-provoking, and economic-driven insights into energy transition research and technologies. He is a long-time energy analyst and previously built and led the energy practice at Redburn and served at Sanford C. Bernstein and Partners Capital before launching Thunder Said. This episode marks Rob’s fifth appearance on COBT; he most recently joined in January 2024 (episode linked here). We were delighted to connect with Rob to reflect on 2024 and explore what the future might hold for energy in 2025. Rob has now kicked us off in 2022, 2024 and 2025. This may be becoming a tradition!

We covered a lot of territory in our conversation starting with Rob’s musings on trying to define what energy transition actually means, how the world’s current focus on avoiding catastrophe needs to be replaced with more aspirational visions of human progress, the role of policy, subsidies, and competitiveness, the need for energy abundance to support human development, and the risks of pursuing costly and ineffective strategies that fail to achieve their objectives. Rob shares his perspective on how energy affordability and economic competitiveness influence voter behavior and government policy shifts, how shifting geopolitical dynamics are shaping global energy strategies, the potential for AI to enable breakthroughs on everything from materials value chains to DAC, the geopolitical situation in Estonia, and the broader implications of Russian aggression. At one point Rob observes “the West is already at war, it just doesn’t admit it because of the implications.” We discuss the importance of assigning real weight to geopolitical risks in energy forecasts and market strategies, Rob’s “F-U” Recession Scenario where countries retreat from global trade and cooperation leading to disruptions in energy and other value chains, and Texas’s continued role as a hub for energy innovation and growth. We ended by exploring the global bottleneck in moving energy from where it’s created to where it’s needed, growth opportunities in utilities and midstream, the increasing volatility in energy systems, the concept of the “third great energy transition” with semiconductor technologies, and much more. As mentioned, Rob’s “Energy Transition: Classic Blunders” video from December 2024 is linked here. We can’t thank Rob enough for sharing his time and thoughts with us today to kick off the year in style.

Mike Bradley kicked us off by discussing the performance of bonds, commodities and equities since our last COBT on December 17th with Dr. Steven Koonin (episode linked here). He noted that the 10-year bond is currently yielding ~4.65% (up from ~4.4%) which is a Trump post-election high and a one-year high. The FED cut interest rates 25-basis points at their last FOMC Meeting, and bond trader consensus is now in the camp that there’ll only be two additional interest rate cuts in 2025. On the broader equity market front, the S&P 500 has taken a bit of a breather (down ~1%) with the Energy (+2%) and Technology (+1%) sectors outperforming. On the crude oil market front, WTI oil price has rallied ~$4/bbl (to ~$74/bbl) and has pushed above its recent narrow trading range of $68-$71/bbl. Crude oil trader sentiment heading into 2025 continues to be mostly bearish, even though WTI time spreads having recently spiked, which could be signaling a tighter physical oil market. He further noted that Saudi seems to be getting more constructive on crude oil given that it raised its official selling price to Asia for the first time in three months. Global oil prices also seem to be getting a bid due to low crude oil inventory levels (global & U.S.) and a growing belief the Trump Administration could move quickly to reinitiate/reinstate Iranian crude oil sanctions. On the energy equity front, Goldman Sachs is hosting their Annual Energy Conference this week and investors will be looking to gather insight on E&P’s 2025 capex plans. Canadian energy equities could gather additional momentum in 2025 given the belief that Trudeau’s resignation lessens investor’s political risk. On the IPP/Electric Power Index front, he highlighted that it’s up over 10%! One of the reasons for the recent surge in IPPs is due to Constellation Energy (CEG) inking a $1 billion electricity services deal (early this year) with the U.S. Government. He ended by noting that Microsoft recently announced an $80 billion 2025 capex budget (AI & datacenter), which is equivalent to the combined 2025 capex budgets of Chevron, Exxon Mobil, Shell & TotalEnergies. Arjun Murti joined from the Goldman Sachs Energy Conference in Miami and discussed what he believes will be a normalization of energy outlook scenarios away from purely toggling around various “net zero” pathways and back toward ones that recognize energy abundance, reliability, affordability, and geopolitical security are the main areas of focus for the wider world.

From the Veriten side, we are also pleased to introduce Dr. Robert Kester, Partner, Innovation & Technology, for his first COBT appearance. Robert officially joined the Veriten team on January 6th. Welcome to Team Veriten, Robert! Look for a more in-depth story on him coming this Friday.

We hope you find today’s discussion as insightful and interesting as we did. Our best to you all and Happy New Year!