Tucker Carlson Show: w/ Morgan Downey on Energy Crisis (Transcript) 

People have disconnected from where their energy comes from that enables everything, where their food comes from. Everyone talks about the fertilizer crisis because of the Hormuz shutdown this year. Fertilizer, 80% of the world’s food that’s grown everywhere across the entire world comes from natural gas. Natural gas, remember it’s 30% is oil, 30% nat gas, 30% roughly is coal.

That 30% of nat gas, that makes urea and ammonia and all of the fertilizers. And if those fertilizers didn’t exist, it’s basically ammonia and urea are nat gas in a bag used as fertilizer. If that didn’t exist, we would have, say the world’s population is 8 billion, we could only support maybe 2 billion if we didn’t have nat gas. So not only is it the energy system—

TUCKER CARLSON: (00:05:25 – 00:05:25) Wait, what?

MORGAN DOWNEY: (00:05:26 – 00:07:26) Yeah, if you turn off nat gas production, natural gas production, it’s very closely, very similar to the oil industry. It’s one-third of the world’s energy that produces nitrogen in the form of urea and ammonia. It is the essential fertilizer for growing crops globally, all crops.

And with the Hormuz situation this year, because you had natural gas production comes out of Qatar, you had a disruption in fertilizer production because natural gas is what produces fertilizer. That’s going to result in next year, 2027. Usually there’s a lag because crop cycles or seasons, that lag is going to be one of the more laggy effects of the Middle Eastern situation with Iran this year.

But so it’s not only energy, it’s also food. And there’s this simulation that most people in the world are living in, especially in Western civilization, is that they have forgotten or just are not aware of the fact that hydrocarbons are 9 out of 10 portions of the energy that they consume.

And also for food, all of the food, pretty much most of the food that you eat today, and it doesn’t matter what kind of food you might say, oh, well, I eat vegetables. Well, that’s also fertilizer goes into that as well. There’s fertilizer used in every crop. And all of the world’s food is dependent on natural gas. And so we can go back to why is natural gas used as a fertilizer?

It was a discovery in Europe in the 1910s. It was the Haber-Bosch discovery where you take it, it used to be back in the 1800s, and this is why how all new this situation is. Back in the 1800s, if you wanted to put nitrogen into a crop, nitrogen’s one of the essential nutrients for growing any kind of crop pretty much. And you used to have to rotate crops.

It’s a very slow process. You put down tubers and you had to do it cycle by cycle. Every few crop cycles you had to plant nitrogen-fixing to get nitrogen from the air and pull it into the soil.

TUCKER CARLSON: (00:07:26 – 00:07:28) Otherwise you would exhaust the soil.

MORGAN DOWNEY: (00:07:28 – 00:08:50) You would exhaust the soil within a season or 2 and your yields would drop down. And this discovery around 1910, you could take natural gas, which is a hydrocarbon. And when I say hydrocarbon, these molecules contain hydrogen and carbon from amoeba millions of years ago or animals millions of years ago buried underground.

Basically with pressure and heat over millions of years, it turns into crude oil or natural gas or coal, one of these hydrocarbon fuels. And around 1910, it was discovered how to use natural gas.

And you take the nitrogen from the air, you use the hydrogen that comes from the hydrocarbon of natural gas, and you can make fertilizer, which basically you can put the nitrogen into the ground with the powders and things like that as a fertilizer, and it increased crop yields by 500 or 600% over time. 500 or 600%. So everyone goes, “Why did the population grow?”

Because cheap energy and cheap food because of natural gas. Those 2 reasons. That’s why we live in this world today. And it doesn’t annoy me, but it disturbs me when people are disconnected from that base reality. Base reality is 90% of the world’s energy today and 50 years from now and 50 years in the past, and a similar proportion of food comes from that hydrocarbon ecosystem.

TUCKER CARLSON: (00:08:51 – 00:09:54) So you’re saying if we were to shut down natural gas production globally, 6 billion people would starve to death?

MORGAN DOWNEY: (00:09:55 – 00:11:47) Pretty much. Yeah. I was in New York yesterday. New York has banned drilling for nat gas. New York State sits on top of a field, a nat gas field that runs right through West Virginia, Pennsylvania, the Marcellus and Utica, the names of the hydrocarbon basins. New York City has, if you go to Manhattan, New York, you’ll see these big power stations, 4 big power stations on the east side of Manhattan.

Those run on natural gas. And so all of the electricity for, and there’s a big one in Queens and a few others, but those big power stations in Manhattan, they run natural gas. New York State has banned natural gas, drilling for natural gas. They sit on top of a huge amount of natural gas. They’ve banned it. They’ve also banned the pipelines to deliver natural gas, new pipelines.

So they’re cutting off their face to spite, or cutting off their nose to spite themselves in that they’re denying the fact that the reality is all of the electricity in Manhattan or New York City comes from that gas. But then they banned sourcing that fuel and they banned the piping of that fuel. To the source of what turns on the lights. I mean, that is absurd.

It’s a distortion of what environmentalism is. Environmentalism should be you have a sustainable environment where you don’t create negative consequences and pollution into it, but you also have to be aware of you need energy just to live in modern civilization and you need energy for food. You need natural gas for food. And It’s enabled the food supply for people living in the West.

Luxury civilization is dependent on it, and not just luxury civilization, also the developing world. China and India are similarly dependent. There’s no one sneaking away getting a trick of secretly building solar panels and wind turbines that they’re getting away with some magic. There is no magic. It is oil, natural gas, and coal.

TUCKER CARLSON: (00:11:49 – 00:11:54) It’s interesting that the 2 wars in progress threaten the world’s natural gas supply, or a lot of it.

MORGAN DOWNEY: (00:11:55 – 00:11:59) Yep. 20% is out of Qatar of the world’s LNG, liquefied natural gas.

TUCKER CARLSON: (00:12:00 – 00:12:04) Right. Which is the process by which the gas becomes liquid so it can be transported by ship.

MORGAN DOWNEY: (00:12:04 – 00:12:06) Correct. You just cool it down into a liquid.

TUCKER CARLSON: (00:12:06 – 00:12:09) It’s the same fuel, it’s just in a different form for transport.

Why Europe Pays 10 Times More for Energy

MORGAN DOWNEY: (00:12:09 – 00:12:24) Yeah. And what’s interesting about in the US natural gas, the US produces around a quarter of the world’s natural gas. The US, I just looked at it this morning, nat gas is around $2.50. If you look at Asia—

TUCKER CARLSON: (00:12:24 – 00:12:25) But by what unit?

MORGAN DOWNEY: (00:12:25 – 00:13:15) Per MMBtu, it’s like the gallon equivalent of natural gas, but $2.50. And in Europe it’s $31, the same unit. And in Asia it’s around $31. And it’s basically that energy blindness of Europe. Asia has got a separate issue in that they don’t use nat gas as much as Europe does.

But the reason to say that the discrepancy between the US being a major energy producer, and it has become so over the last 15 years. Before that, the US was struggling up until 2005, 2009. But that disconnect between those who are truly energy blind, I mean, I was kind of mentioning Manhattan being energy ignorant, if you will, of what base reality energy is. Europe is even doubly so.

They’re paying 10 times more for their electricity than the US is, and it’s primarily.

TUCKER CARLSON: (00:13:15 – 00:13:16) 10 times?

MORGAN DOWNEY: (00:13:16 – 00:14:30) Yeah. And you get these same situations where I’m from Ireland and I was reading legacy press over the last few months and people are confused about why is our, they’re saying in Ireland and similarly in all of Western Europe, “Why is our electricity so expensive?” And I’m kind of shocked of the fact that people kind of go, well, you’re paying 10 times the price of natural gas compared to the US.

And the reason being is that Europe has shut down a huge portion of their energy system for ideological reasons, not for base reality reasons. They’ve turned it off because in an energy sense, they kind of hate themselves.

And it’s like self-flagellation of let’s shut down all the coal plants, let’s shut down all the nuclear plants, let’s try and move off nat gas and replace it with solar and wind, which I’m not knocking solar and wind, they’re good. And then they turn around and go, “Why has our electricity gone up by 200% this year or 100% this year?” And there’s a kind of a disconnect there.

And it’s amazing that just the level of lack of knowledge of basic energy economics.

How the Environmental Movement Was Captured

TUCKER CARLSON: (00:14:32 – 00:14:40) And this is because of political pressure from green parties in Europe? Where did this come from, this idea that you have to destroy your own civilization.

MORGAN DOWNEY: (00:14:43 – 00:14:52) There has been a lot of ideological capture. There has been a different movement. I mean, the environmental movement kind of started in the US back in the ’60s.

TUCKER CARLSON: (00:14:53 – 00:15:20) Can I stop you right there and just to be clear, our environment is disgusting. This country’s much dirtier. Europe is much, much dirtier than it was 30 years ago. I mean, I visit a lot, I know, And so there’s no actual concern for the environment, for trees and cleanliness and keeping graffiti off your buildings and cleaning up your streets. It is dirtier and the US is way dirtier. We’ve had unconstrained development.

So none of this helps the environment. Just, I just want to be clear about terms, no matter what they tell you.

MORGAN DOWNEY: (00:15:20 – 00:15:34) Yeah, yeah. The original environmental kind of the modern environmental movement started in the 1960s in California. Yeah, California had a real smog problem and You had, and legitimately had an environmental issue.

TUCKER CARLSON: (00:15:34 – 00:15:35) I lived in Los Angeles at the time.

MORGAN DOWNEY: (00:15:35 – 00:20:59) And this is before the EPA existed as a concept or as an organization. And in the 1960s, California had an issue and they created the CARB, C-A-R-B, California Air Resources Board. And they clamped down on the amount of sulfur and other pollutants that were really in oil back then. And they also removed lead from gasoline. Lead had been added to gasoline from the 1920s. It’s a neurotoxin.

Lead is obviously, but it improves the octane of gasoline. But California was leading for legitimate environmental reasons. This is all a very good reason to kind of start an environmental movement. And it started in California and it did really clean up the air in California.

They removed, they got ultra-low sulfur diesel, they brought, everyone had to put in catalytic converters and those catalytic converters, Lead in gasoline did reduce IQ levels back when it was in the 1920s to 1960s or ’80s. And the lead wasn’t removed because of that reason. That’s kind of the dirty little secret of the business is that it was removed because lead damages the catalysts in the catalytic converter.

But anyway, California did clean up its air in the 1960s and it was a cutting edge. They were the leading edge of that movement. And then EPA was established and there became a federal kind of environmental movement. But what happened was that movement kind of was then captured by political agendas and social agendas and ideologies that were independent of environmental reasons.

It became more of control, of controlling how people think and behave. And so environmentalism is a good thing and was a good thing, and it had a good origin story and had a good impact in the 1960s and ’70s starting with California.

But then over the past 50 years, it’s been captured by political movements that have wanted to have a kind of a controlling effect on society and some of the things, and you can see it morph into over time. Back in the aughts, the 2000s, you had a big movement against fracking.

Remember you had that Matt Damon movie, someone turned on the faucet and flames came out of the faucet because of nat gas. And that doesn’t happen. I’m sorry, that was propaganda, that movie and myth. And But that was kind of when the fracking industry started, a portion of the US oil and gas industry started, and it was kind of a novel new technology.

It is, by the way, the core reason US has become energy independent over the last 20 years has become because of fracking and horizontal drilling. But anyway, if you fast forward, there was the anti-fracking lobby. And so all these kind of ideologies trying to stop different pieces of technology. Now it’s the anti-data center lobby. So basically there’s the Stop Oil group.

I look at that group and I think that’s a death cult, a social death cult, because you remove, you stop oil, we all die. We stop natural gas, we all die. And it’s not just we in the West, everyone, India and China, that’s where we get all our food from, fertilizer.

So all of these different movements have been about an element of control because there’s a kind of a feel-good, like who is anti-environmental? No one. Even people work in the oil and gas industry, they love the environment. Just normal people like you and I. But it’s been a capture of that environmental movement has been captured by the carbon capture, the net zero growth in Europe and in the UK.

All these countries have destroyed their economy under the auspices of taking care of the environment, ignoring base reality of energy production and where all that energy really comes from. And ultimately it’s been about, the environmental movement has been captured by control.

People who want to control how you live, how much energy you buy, what your carbon credits are today, what your welfare check from the government, to make you dependent on the government because then they can control you. And even in New York, I was talking to a friend of mine there yesterday in Manhattan and they get a $100 check from the government because their electricity bill was too high.

And I thought, “Hang on a second, excuse me, you got a what?” And so every taxpayer, I guess, in New York get a $100 check. And meanwhile, they’re banning pipelines that are bringing that fuel to New York. They’re banning natural gas production, which is the fuel that’s burned in those power stations. And natural gas is a very clean fuel.

And by making you dependent on the government, by controlling or trying to shut down energy production, it makes you even more dependent on the government. And Europe has been far more ideologically captured. And the reason for that is of course the centralization of power in Brussels and the EU, people don’t know who they’re voting for in Europe anymore. They’re voting for the blob in Europe.

And if you ask your average person in Ireland or England or Ireland or France or Spain who their MEP is, their member of the European Parliament, they have no idea. They might know their local member of their local national parliament, but the blob in Brussels, they can get away with a lot of these kind of control, especially of how people consume and use energy.

The net result is they pay 10 times more for energy in Europe than they do in the US.

TUCKER CARLSON: (00:21:00 – 00:22:18) What effect does that have when a society begins to pay 10 times more than it used to for energy?

MORGAN DOWNEY: (00:22:20 – 00:22:29) You don’t have economic growth. I mean, everyone looks at Europe and says, why is there no economic growth in Europe? Because they are killing their energy industry.

TUCKER CARLSON: (00:22:29 – 00:22:32) And that means people don’t have—

MORGAN DOWNEY: (00:22:33 – 00:22:33) Everything’s expensive.

TUCKER CARLSON: (00:22:34 – 00:22:37) Families, they don’t have houses, they don’t have children.

MORGAN DOWNEY: (00:22:37 – 00:23:42) Everything becomes expensive. Oil, gas, coal. And you don’t necessarily see the energy being produced. That’s kind of the reason it’s so dangerous for people to be energy blind is that people don’t see where their food comes from or where their energy is produced. And so they just think, oh, things that are more expensive, everything, building a house is more expensive, buying a car is more expensive, everything, it becomes more expensive.

It just becomes part of the background noise of living, of life becomes that everything’s a little bit more expensive. And the real reason is that energy in Europe has been deliberately made more expensive than it needs to be. And one part of it is control.

Another part is you’ve got social agendas that have pushed energy blindness because people don’t want you to know that 90% of your oil and gas, or that 90% of your energy comes from oil, gas, and coal. They want you to think it’s solar and wind because you can kind of see those things. Spinning. And so it makes people feel like something’s been done, but there’s nothing been done.

Nord Stream and Europe’s Dependence on US Energy

TUCKER CARLSON: (00:23:42 – 00:24:01) So explain what you can’t see. So let’s start here. 10 years ago, Europe, let’s just say Western Europe, the countries Americans vacation in, got its energy from where? Where’d the energy come from? From Germany, Spain, Belgium, France, UK?

MORGAN DOWNEY: (00:24:02 – 00:24:48) A third came from oil. And that oil came from— oil is a global market, so it’s always been a global market. And that comes from Russia, the Middle East, Western Africa. So oil kind of comes from a little bit, I mean, it comes a little bit from everywhere. Oil, that’s a third of European energy 10 years ago, 5 years ago, even today, 30% is oil global.

Then they’ve got natural gas, Europe used to buy a lot of its natural gas from Russia. They famously built the Nord Stream pipeline across the Baltics, these 2 big pipelines. One never became active, Nord Stream 2. One was destroyed in unusual circumstances, I’ll put it that way, 5 months into the Russia-Ukraine—

TUCKER CARLSON: (00:24:48 – 00:24:49) The US government took it out.

MORGAN DOWNEY: (00:24:51 – 00:25:21) It made Europe dependent on the US exporting natural gas. So it basically, there’s a theory, one theory behind a potential situation where that was a very difficult operation for someone to knock out an undersea pipeline. Did Ukraine really do that 5 months after the war started? I don’t know if they have the skills to do something like that.

So I wouldn’t say it was the US just for argument’s sake and not Ukraine.

TUCKER CARLSON: (00:25:21 – 00:25:39) Well, just for the record, we were told at Fox News and the whole world was told that Russia took out its own pipeline. Because Russia is so evil that having run out of people to hurt, they decided to hurt themselves. They told us that. That was on the front page of the New York Times. I was encouraged to repeat that lie. I didn’t. But

MORGAN DOWNEY: (00:25:40 – 00:25:44) Yeah. Wow. I mean, that just shows you how stupid

TUCKER CARLSON: (00:25:44 – 00:25:45) They think people are.

MORGAN DOWNEY: (00:25:49 – 00:26:28) I don’t know if it’s stupidity. I think it’s more of that it’s more of narrative setting. If you kind of set a kind of a dystopian view of information that everything is absurd, everything becomes— you’d be like, “You don’t believe anything.” It’s almost like they know you’re going to laugh at that Putin would destroy his own pipeline.

But then it kind of makes people who read that think, well, why do I believe anything? It’s kind of like you set people into the mush of believing, being more malleable to— Right.

TUCKER CARLSON: (00:26:29 – 00:26:33) They’re turning the populations into nihilists because nihilists are easier to control.

MORGAN DOWNEY: (00:26:33 – 00:26:59) Yeah. But say it was the US government, just let’s put it out there, and it did make Europe much more dependent on the US. And it goes back to also Trump, we were talking this morning at breakfast, has a very He operates in a very— people say he’s transactional. He’s not, in terms of he’s not strategically— I think he’s strategic also, but he’s very transactional, like a business.

TUCKER CARLSON: (00:26:59 – 00:27:01) Yeah, he’s not ideological.

MORGAN DOWNEY: (00:27:01 – 00:28:11) Yeah. But he’s also very personal. He takes things personally and he’s a normal human being. And so he became president inspired by Seth Meyers mocking him back in 2011 at the Correspondents’ Dinner. When Trump won the first time he was president, you had Angela Merkel and all the European leaders openly laughed at him. They mocked him. And when he told them, he chastised them.

There was a famous NATO meeting where they were laughing at him. He was warning them, “Do not be dependent on Russia for natural gas.” And then also at the same time, push Russia, threaten Russia with weapons on Russia’s border via NATO and other structures. And they mocked him, openly mocked him and laughed at him. So I think that Europe, was it the US that knocked out Nord Stream?

I mean, the US benefited hugely from that situation. It also was a little bit of revenge of Trump on those European leaders, Merkel and that, that mocked him and laughed at him when he warned them about them being overly dependent on Russia.

Fracking, Horizontal Drilling and America’s Energy Boom

TUCKER CARLSON: (00:28:12 – 00:28:18) So how much more LNG does Europe buy from the US from what about 10 years ago?

MORGAN DOWNEY: (00:28:19 – 00:28:22) It’s a huge amount more. It’s doubled at least.

TUCKER CARLSON: (00:28:23 – 00:28:23) Really?

MORGAN DOWNEY: (00:28:23 – 00:31:59) Yes. Yeah, it’s very much. And the US, and it’s growing every day. And Europe is becoming a hugely energy-dependent vassal of the US. I mean, the US did make a decision back in 2005. It didn’t make a decision, it happened in 2005 starting that The US oil and gas industry was transformed by 2 things. You had fracking, which basically you pump water at high speed or high pressure underwater and fracks.

It basically became a new production method back in 2005, roughly at scale. And then you had horizontal drilling where you can drill down. It used to be, that was, it sounds old school now, but now you can turn the drill bit and steer it sideways for 3 or 4 miles and you can produce a huge amount more oil and gas that way than you could before that.

And the US oil and gas production had been declining since the early 1970s. To 2005 with fracking and horizontal drilling, it transformed the oil and gas industry. And the US now produces roughly a quarter of the world’s oil and a quarter of the world’s natural gas. That’s up from under 10%. So it’s doubled over the past 15 years. And it didn’t happen because there was no government policy that really enabled this.

This is the oil and gas industry realizing this new technology transformed the space. And fracking was banned. You go to France, I think France bans fracking. And fracking, it was a new technology 20 years ago in 2005. It transformed, as I said, the US oil and gas industry. And it was like 1 well in 100 back in 2005 was fracked. Now it’s all wells.

That is the default method of production of oil and gas in the US is you frack and you drill sideways. You have a fracking crew and it’s a hugely interesting technology, that development, but it’s transformed the US into a global superpower.

And that also then has kind of changed the US’s view on foreign adventures and going up against foreign oil producers because the US had been in decline since the early 1970s as an oil producer. And now we’re net exporting oil and making Europe dependent on nat gas. If the US shuts off— the US released an SPR back earlier this year, and you know who benefited most from that SPR release?

Not the US, Europe. They import 90% of their oil. And so all those SPR crude oil releases, they went into European refineries and Europe went, “Thank you, sir,” to Trump, to the US administration. So Europe is hugely dependent on the US for energy.

And because of that, I mean, oil has steered every war over the past 150 years, has been at the core of and enabling, just like it’s enabled civilization, with food and oil and natural gas. It’s also enabled the political sphere and geopolitics. And Europe is dependent hugely now on the US. And they made that decision. They made that choice. They banned energy production pretty much in the North Sea.

I mean, they’ll say, oh, they technically didn’t ban it, but they made it such that you can’t drill in the North Sea. I mean, the difference between Europe and the US is very striking energy. In the US, if you buy a piece of land, you buy the land under this table.

In the US, as a private individual, you own that land the whole way down to the core of the Earth, all the minerals, anything’s in there, gold, oil, whatever, you own it. Everywhere in the world outside of the US, in Europe, the government owns it. You own the surface down to a few feet.

TUCKER CARLSON: (00:31:59 – 00:32:00) The dirt.

MORGAN DOWNEY: (00:32:00 – 00:33:10) The dirt, that surface layer. Everything below that is owned by the government. And are you going to risk your private capital to drill in a very The oil industry is not risk-free. There’s a lot of dry holes that are drilled and there’s a huge amount of capital risk and capital required to do that business. You’re not going to drill it when the government’s going to take it all.

Why would I do that? So that’s why the US also has a hugely booming oil and gas industry. The government just stepped back. There are environmental controls and you can sue an oil and gas company if they pollute your water or whatever. It doesn’t happen, but as in they don’t pollute water tables like the environmentalist groups say can happen.

But the US, just the government stepped back and in a lot of parts of the US, it didn’t happen in all of the US, it didn’t. But the government stepped back and the oil industry and nat gas industry flourished and we just let them do the thing. And look at the situation. Nat gas, oil is, I filled up my tank here yesterday, In Maine, it was $3.45, sorry, $3.85 a gallon.

In Denmark, in Europe, it’s $12 a gallon. I mean, these guys are—

TUCKER CARLSON: (00:33:10 – 00:33:10) For gasoline?

MORGAN DOWNEY: (00:33:11 – 00:33:21) Yeah. And Denmark is obviously kind of the high price point in Europe, but roughly in Europe, it’s 3 or 4 times gasoline. And people—

TUCKER CARLSON: (00:33:21 – 00:33:28) That’s so weird because, I mean, there’s in the region, in Scandinavia, famously off Norway, there’s massive energy reserves.

MORGAN DOWNEY: (00:33:28 – 00:34:56) Yeah, Norway’s a very— they’re as based in terms of energy economics as more so. I’m glad they exist in that environment, but they’re not part of the EU. They never joined the EU because they knew they would have to join into that blob of no energy production and self-hatred in terms of energy production. And so Norway is in Europe, but it’s not part of the EU.

They deliberately stayed out there in the EEA, the European Economic Area. So it’s kind of like a junior version of the EU. And because they realize that the blob in Brussels, they have no idea about how energy works. They’re so disconnected and they’re blind to it. And so Norway’s a very good example of, they produce a lot of oil and gas. So Europe has a lot of energy resources there.

They just don’t use it and it’s hurt them. And that’s why they have no economic growth. And a lot of the reasons why buying everything, houses, electricity. They have no money because they’ve made their energy, they’ve taxed the hell out. I mean, that difference between $3.85 here in Maine and $12 in Denmark is tax. It’s not because the oil is, it’s the same thing.

It’s the exact same molecules in Denmark as Maine. It’s just that they tax the hell out of it there and it has destroyed their, is destroying their economy. Energy is the fundamental bedrock of everything.

Taxes, Gasoline Prices and the Lesson of Ireland

TUCKER CARLSON: (00:34:56 – 00:36:17) So the idea was that you— yeah, because I mean, it’s priced on the international market, so Denmark’s buying oil at the same whatever the Brent crude price is or whatever, however you’re marking it, the same price everyone’s buying it for, correct?

MORGAN DOWNEY: (00:36:17 – 00:36:20) Pretty much, yeah. The difference is just tax. Yep.

TUCKER CARLSON: (00:36:20 – 00:36:24) So you tax things in order to discourage their use. That’s why cigarettes are $20 a pack.

MORGAN DOWNEY: (00:36:25 – 00:36:37) Yeah. And so I noticed recently I was reading something that in Australia they tax cigarettes or something ridiculous at $20, $30 a pack. The amount of illegal untaxed cigarettes now in Australia is like it’s 80% or some ridiculously high amount.

TUCKER CARLSON: (00:36:37 – 00:36:39) And they lecture you like you’re a bad person.

MORGAN DOWNEY: (00:36:39 – 00:38:49) And I mean, tax has an impact. We were talking about it earlier that I grew up in 1980s Ireland, Ireland unemployment at the time was 22%. It was bad. We joined the EU and it was a legitimate thing. We joined the EU and it was the EU that did it for a good reason. I mean, Ireland was in the ’70s. In the ’70s, we joined 1973.

Ireland had a protectionist environment back then. We made shoes and weird stuff. There was no economic reason for Ireland to do that. So we joined the EU and we had 3% unemployment in 1973. By 1985 or late ’80s, it was around 23%. So it went up 20% because we had to drop all the tariffs. All these companies went bankrupt. But Ireland could have gone socialist.

Ireland would never really go that kind of weird socialism. But what Ireland did was, and it was one of the most great government decisions I think in history for a Western European economy, is that Ireland’s income tax rate was 65% or something ridiculous. Corporate tax rate was 40% or something very high. Ireland just, it was so desperate, we were going to go bankrupt. This is in the middle ’80s.

Ireland just said, let’s cut tax to zero or as close to zero as possible. Corporate tax zero. We’re that desperate anyway. We’re going to default next year. Let’s see what happens. And true to, remember the Laffer Curve with Reagan where you cut taxes, growth takes off? Ireland cut its corporate tax rate to zero and income tax cut out hugely as well. And we had 23% unemployment. What happened the next year? Boom.

And it’s boomed for the last 50 years since, or 40 years since. It was basically proof that tax has a real impact. And there was no lag. It didn’t even take 10 years, 5 years, 8 years. It was the next year. As soon as Ireland made that pivot to become a low-tax environment, economic growth took off. And hasn’t looked back since.

I mean, there were a few issues over time with the housing crisis. Everyone had that, the great 2008. But it was a proof point of tax creates incentives. I mean, it’s a—

4 Barrels of Oil Per Person

TUCKER CARLSON: (00:38:50 – 00:38:56) So the reason you tax hydrocarbons is to get people to use them less, use less of them. But that hasn’t worked.

MORGAN DOWNEY: (00:38:57 – 00:39:05) No, it hasn’t. Not at all. The interesting thing is that if you go back over time, Global population is now 8 billion roughly, give or take.

TUCKER CARLSON: (00:39:05 – 00:39:06) 8.3.

MORGAN DOWNEY: (00:39:06 – 00:39:27) All right, 8.3. If you go back over time, 50 years ago, generations back, I mean, say 50 years is a generation roughly, say just for argument’s sake. Today, the world, every person per capita in the world consumes 4 barrels of oil today, 2026. 50 years ago it was 4 barrels of oil. 50 years before that it was 4 barrels of oil. So doing the tax situation, all it does is—

TUCKER CARLSON: (00:39:27 – 00:39:28) Is that true?

MORGAN DOWNEY: (00:39:28 – 00:39:35) It’s 4 barrels of oil per capita. That’s across the entire world. China, India, it’s 4 barrels of oil per person. And you’ve got a—

TUCKER CARLSON: (00:39:35 – 00:39:36) And that’s never changed?

MORGAN DOWNEY: (00:39:36 – 00:39:42) No, not at all. It hasn’t changed in the last 100 years. And the oil industry’s not that old. It’s 4 barrels of oil per person.

TUCKER CARLSON: (00:39:42 – 00:39:43) That’s amazing.

MORGAN DOWNEY: (00:39:43 – 00:41:52) And what’s interesting is that the US, in the US, the US consumes, the US is a very unusual place in that there’s a lot of space here compared to Europe. Europe’s a very dense place. You’ve got, the US consumes around 20 barrels of oil per person. So remember, the global average is 4, the US per person per year. The US is 20.

So the US is quite up there, but the US, you’ve got a spread out population, a lot of commuting, driving to and from school and offices and whatnot. I mean, everyone thinks of the US as being New York City. No, everyone lives distant from their place of work. So the US consumes 20 a day, sorry, 20 barrels of oil per year per person. Europe consumes 10, half.

And then because it’s a more dense place, they don’t drive as much. And China is around 4. So to give you a sense of just over 4, but the world average is around 4 barrels per person per year. And so because Europe is more dense, remember they consume 10 barrels per person per year versus the US, you can build a lot more trains in Europe.

Everyone thinks trains in Europe and bicycles are more popular because they’re just greener. No, it’s because you’ve got a lot of population living closer together. Europe is a very, very dense place. The US is not. I mean, you have dense spots of the US, but in general, the US is much more spread out. And where is going to Denmark?

Denmark is one of the most densely populated places in the world, or that portion of Europe. And so there you can tax people, put a lot of tax on gasoline because it’s a more easy thing to tax. And then also politicians lie about it. They just say, “Hey, it’s the oil companies making that money.” No, 8 of that $12 is going to the government.

4 goes to the industry that gets it out of the ground, that refines it, that produces it, that has to transport it. 8 of the 12 is going to the government. And so most people in Europe, they’re disconnected from the energy market. And I don’t want to kind of harp on Europe, but they are the most extreme signs of that energy blindness, that just complete unawareness of—

What Happened to the North Sea?

TUCKER CARLSON: (00:41:52 – 00:42:01) Well, let’s just take the UK for example. The UK had a pretty robust oil and gas industry based in the North Sea. That’s where the Brent—

MORGAN DOWNEY: (00:42:01 – 00:42:03) Yeah, the Brent back in the 1970s.

TUCKER CARLSON: (00:42:03 – 00:42:10) The famous Brent oil field was there, which is now defunct, I think. But they’re not extracting from the North Sea. Is that because there’s no energy left there?

MORGAN DOWNEY: (00:42:10 – 00:42:15) No, there is oil there. I mean, look at Norway. Norway’s still producing. What happened in the UK is—

TUCKER CARLSON: (00:42:15 – 00:42:16) Also from the North Sea.

MORGAN DOWNEY: (00:42:16 – 00:46:54) Also from the North Sea. It’s roughly the same oil fields and gas, not gas fields, And what happened in the UK was that you did have oil fields. When you drill them, they do decline. They’re a non-renewable resource, so they do decline. So you’ve got to constantly go exploration and production. You’ve got to go out and drill and explore, and you take some risk because you can drill a dry hole.

So there’s a lot of capital to be risked there. But in order to encourage people to risk that capital, say oil today, say roughly $100 a barrel, to produce that oil is $60, $70 a barrel in the US. It depends on where you’re producing and if it’s onshore, offshore, different environments, but say it’s $60 a barrel. And so just before the Hormuz situation, oil was $50.

So there are periods of time where you can lose money for years as an oil producer. And so to risk capital to go and produce energy, you have to have some a profit incentive to do that. The UK in the 1980s, 1990s, and up to today removed all that incentive.

They basically, they’re a country where you drill a hole in the ground, even offshore, as long as you’re in the UK, that money goes to the crown, it goes to the British government. And so there’s no incentive. I’m not going to drill in the North Sea when there’s these, there they call them windfall taxes and whatnot.

No one’s going to risk money in that environment to drill up, build a rig offshore and helicopter everyone out there every few weeks and you might drill a dry hole. The Norwegians understand how it kind of works and they’ve kind of created a more profit incentive for part of that oil and gas industry to take that risk. But the US has kind of proven they’re like the Ireland.

Ireland proved that the Laffer Curve, low taxes, economic boom, it just works. The US proves the fact of stand out of the way, give private individuals the rights to the profits if they risk capital, and look what happens. The US becomes one of the largest energy producers in the world. Sorry, not one of, it is the largest now energy producer in the world for oil and natural gas.

And just by stepping back and just let these guys do what they’re going to do, they are regulated, there’s controls around in terms of environmental, but the UK, regulated, remove the profit incentive, no oil production or natural gas. It just dwindled to almost nothing. The Brent crude, the Brent crude is kind of the price people quote on television, $110 a barrel. And there’s the WTI crude index, which is West Texas Intermediate.

And the Brent crude, that field stopped producing a long time ago, 20 years ago. And so now they changed the underlying way that pricing works such that US crude goes transatlantic and sets the price for Brent. So Brent crude is actually now set by West Texas Intermediate, set by the US crude oil market.

And so even with that Brent crude as a price, people say, “Oh, it’s the international benchmark,” which historically it has been, but it’s now set by the US. The US barrels that move across the Atlantic, just like US natural gas moves across the Atlantic, We set here in the US the price of oil in Europe and by extension the world.

And because the US, the government stepped a little bit back, gave people the authority to just take the profit risk on production and it worked. It was a very simple thing and the proof is here we are. And no, it was not all the US, parts of the US, Washington, New York State, then up here in New England, Maine and so on banned natural gas production just like Europe did.

And even California, the 2 coasts, California and New England in the US have got the same energy blindness as Europe, the EU writ large in that, as I said, all the electricity for the Northeast. I was coming here driving my car this morning, I passed 4 propane tankers driving past me on the road. The electricity here is either oil or, sorry, it’s nat gas or coal.

And so the regulations here and in California have crushed the energy industry in parts of the US and similar to what has happened in Europe. And as I said, it goes back to a combination of ideology and I don’t want to say ignorance because ignorance would imply that The information is not about available out there on how energy is produced. It’s more ideology than anything else.

Energy Policy as a Method of Control

TUCKER CARLSON: (00:46:55 – 00:49:05) It’s the impulse towards self-harm. To see leaders intentionally punish the people they lead is a dark thing to watch, and that’s what you’re watching, I think. I mean, to take the cloudiest part of the United States and clear-cut forests in order to build solar panels in the cloudiest place in the United States tells you the point of this is not to help people at all?

MORGAN DOWNEY: (00:49:07 – 00:51:39) I think that energy policy globally, especially in the West, it is definitely not designed to help people at all. That is no part of the consideration. It actually, it’s more, it’s designed, how can we get, because the political class know that energy is essential to modern life. And so it’s a method of control.

If we control how people consume and produce energy, we can control a lot more of their lives than otherwise. And so yeah, the energy policy’s more ideological. It’s not to help people. Helping people on energy policy would be to step back, to reduce government involvement in energy policy and allow it to operate more freely. Another good example is The sanctions.

Oh my God, it’s sanctions over the past on energy sanctions on oil. So Europe, you couldn’t even, this is so crazy. Europe just before, just during the invasion, Russian invasion of Ukraine, Europe put these sanctions on Russian oil, crude oil exports, and they set the price at $60 per barrel versus Russian exports. And it didn’t change hardly one bit what Russia produced in terms of crude oil.

It was basically self-harm on Russia, on Europe. They set the price at $60, the price went to $70, and Europe basically starved themselves of crude oil. I mean, you couldn’t believe how badly Europe has used things like sanctions and energy policy. They have done almost everything you could possibly do wrong. In terms of energy policy and all those sanctions.

And the US has fallen into the sanctions trap also, imposing sanctions on Venezuela, Iran on their oil production, and Russia. And so what has happened, those 3 countries, Russia, Iran, Venezuela, the US and Europe put oil sanctions trying to restrict by economics how much oil those countries could export. It didn’t restrict one barrel of exports. You know who bought all that oil?

China, they bought 2 million barrels a day from Venezuela, 2 million barrels a day of sanctioned crude from Iran, 2 million barrels a day of sanctioned crude from Russia, and they bought it all at a $10 to $20 per barrel discount because Europe and the US transferred that money.

How Western Sanctions Helped China

TUCKER CARLSON: (00:51:39 – 00:51:41) So all you did was lower energy costs for China?

MORGAN DOWNEY: (00:51:42 – 00:51:49) Yeah. And it enabled China to— China’s been gorging on the sanctioned oil from those 3 countries for the last 5 or 6 years.

TUCKER CARLSON: (00:51:49 – 00:52:23) So I mean, again, back to your point that you can’t ascribe decisions like that to ignorance because the information is available. It’s demonstrable. It’s obvious. I mean, just look at Russian, Venezuelan, Iranian oil output and you’re like, “Well, where’s the oil going?” It’s being bought at a discount by our main geopolitical rival, China. So you can’t say that they don’t know that that’s happening.

So you have to, at a certain point, if it continues to happen, assume It happening is the point of the exercise. This is an effort to help China over the West. How is it not that?

MORGAN DOWNEY: (00:52:25 – 00:52:46) I think that it showed the limits of control of the blob, if you will, the deep state, the blob, the bureaucracy. They think they can control energy markets writ large globally. They cannot. And so that was kind of, it showed where that controllability—

TUCKER CARLSON: (00:52:46 – 00:52:47) But they kept doing it.

MORGAN DOWNEY: (00:52:48 – 00:55:44) Because these are not quick-moving entities. The EU, I mean, they make a decision and it goes in place and it stays there for 5, 10 years. And they’re very slow-moving bureaucracies. And the oil and gas industry showed the limits of the stupidity, if you will, of those decisions. And I think They thought that they could somehow control the oil industry and we say industry, just oil production globally.

They can’t and they shouldn’t. I mean, my God, if they did, we would all be in trouble. If those sanctions and things like that worked, we’d be paying. If they stopped Iranian production, Russian production, Venezuelan production, it would hurt us all.

But China has been sitting there quietly buying up this $20 per barrel discounted crude from those 3 sanctioned countries, saying nothing, secretly saying, “Thank you very much, EU and US, for these sanctions. They’ve been so great.” China has been building a strategic stockpile of oil. And China’s— say the world is 100 million barrels per day of crude oil. China consumes 16 million barrels. They import 12 of that.

So they’re huge oil importer. They don’t produce that much oil. They’ve been building up their stockpiles ahead of Taiwan 2027. I mean, it’s a publicly acknowledged invasion plan of Taiwan or control plan of Taiwan for next year. At least that was the plan 2 years ago and 3 years ago. And as part of that, they needed to bolster their inventory of crude oil ahead of that 2027 invasion of Taiwan.

And they’ve been using sanctioned barrels from those 3 countries to fill their stockpiles. And China went from almost very little strategic storage 4 or 5 years ago to now they have 1.5 billion barrels of oil in storage, underground salt caverns. And to put that in perspective, the US SPR has 300 million roughly. China has 1.5 billion. So it’s got it 5 times.

And that storage that China’s built up has happened, all of it pretty much with sanctioned oil cheaply created by the US sanctions and European sanctions on Russia, Iran, and Venezuela. China’s gorged on that oil to build up their SPR ahead of a Taiwan 2027 invasion. And so sanctions aren’t necessarily economically irrational. They also have side effects that you basically are doing an economic transfer and enabling China to build up strategic reserves.

And strategically it creates all these side effects that China now is sitting on. They still need to store more, I think, than they have, but they’ve been and able to build a huge reserve ahead of a potential alleged plan for 2027. So the sanctions—

China’s Strategic Oil Stockpile and Taiwan 2027

TUCKER CARLSON: (00:55:44 – 00:55:52) Why? I mean, if you wouldn’t mind stating the obvious, why would China want to stockpile energy before moving on Taiwan?

MORGAN DOWNEY: (00:55:53 – 00:57:07) Because all of their ships, everyone has this myth about China being solar and electricity and whatnot. And they do produce a lot. China gets electricity, 60% of energy comes from coal, 20% oil, and the balance is natural gas, 20% natural gas. And then they have solar and wind, even in China, are under 10%, and nuclear under 10%. So they’re in the same 90% hydrocarbon world.

But that 20% oil is for all of their ships are diesel. I mean, they do have nuclear-powered vessels, but all of their ships are diesel. All of their military equipment are diesel, or some are gasoline, but they And they’re importing 12 million barrels a day. If they didn’t have a strategic reserve, they would be done within 20 days, 30 days if they were blockaded.

If you blockaded Malacca and Singapore or Hormuz, it’s already blockaded, but if you blockaded those, if China was trying to invade Taiwan, they wouldn’t have the oil for their ships within 3 or 4 weeks. And so that was why they’ve built up a stockpile that they need that oil to power their navy. And their military equipment.

And they do have electrical equipment and vehicles, but not the hardcore Navy military equipment that they need for an invasion.

Why Coal Still Powers China and India

TUCKER CARLSON: (00:57:07 – 00:57:10) What percentage of China’s electricity is produced by coal?

MORGAN DOWNEY: (00:57:11 – 00:57:15) It’s around, I think it’s up in the 70s, 70% most of it.

TUCKER CARLSON: (00:57:15 – 00:57:16) Overwhelming.

MORGAN DOWNEY: (00:57:17 – 00:57:17) Yeah.

TUCKER CARLSON: (00:57:17 – 00:57:17) Why coal?

MORGAN DOWNEY: (00:57:18 – 00:58:43) It’s cheap. It’s cheap. That’s actually a very good question to ask about why and any of this, like why oil, why coal, why? The first thing is cheap. Why does India use 80% of its electricity from coal? It’s cheap. Coal is the cheapest way to produce electricity and not just anywhere, it’s in the US. The US produces, 1/3 of the US energy consumption is coal.

And coal has got a bad rap and I’m going to be not careful here, but coal back in the ’60s and ’70s, back when the smog issue was around and the coal industry did really transform And yes, there’s this whole thing of marketing word of clean coal, but basically when you burn coal, the most dangerous thing, the most immediately dangerous thing is sulfur going into the atmosphere and it falls, it turns into sulfuric acid, acid rain, and there’s lead comes out of the coal also.

But what the coal industry did, not just in the US but globally, has put scrubbers on all of their towers where they burn the coal. And those scrubbers can remove pretty much most or all of the pollutants that come out of coal. The only downside is it’s very expensive to put those scrubbers on and whatnot. But coal gets a bad rap, but it’s cheap. It is so cheap.

And it’s still the base.

TUCKER CARLSON: (00:58:43 – 00:58:45) Why is it so cheap? Because it’s so abundant?

MORGAN DOWNEY: (00:58:46 – 01:01:18) It’s abundant. It’s similar to Yeah, it’s abundant and it’s an easy material to handle. Natural gas is a challenging material to handle because if you want to ship it overseas, you’ve got to compress it into a liquid or cool it down to a liquid. That’s a very expensive process, incredibly. That’s one of the reasons why Europe has $30 natural gas. We have $3 natural gas.

The big difference is that while European banned natural gas production. And so they don’t produce any, but they’ve decided to be dependent on others. But natural gas is a situation where it’s very hard to transport. The most ideal fuel of all is oil because it’s a liquid, it’s dense. It’s enabled so many different techniques.

One of the most ideal energy sources is crude oil, and it’s the refined products of crude oil, diesel, gasoline, all the others, plastics. It’s in everything. But yeah, going back to your original question, coal is cheap. That’s why it’s the baseload. It’s 1/3 of the world’s energy is coal, 1/3 oil, 1/3 natural gas. And that other 10% this year, last year, 50 years ago has been all the others. Nuclear.

Nuclear is very expensive just because of all the regulations around it. Solar and wind, the economics of solar and wind are dependent on location. The oil and gas industry, these are sharp guys and women who are, they’ll make a dollar if they can. And so if you look at the biggest buildout of solar in the US is Texas in oil country.

And because people are realizing, okay, there’s a good, it’s sunny in Texas a lot during most of the year. And Solar panels are cheap from China. I mean, we don’t want to become too dependent on China for those solar panels, but you’re basically kind of technically importing coal because that energy to produce those solar panels was built by— China gets 70% of electricity from coal.

And so those solar panels are really disguised coal. And China basically is willing to do that for now in terms of building solar panels. No one else really at scale in the world builds solar panels or any other of these quote unquote environmentally friendly energy sources.

Wind Turbines and the Limits of Renewables

TUCKER CARLSON: (01:01:18 – 01:01:19) What about wind turbines?

MORGAN DOWNEY: (01:01:19 – 01:02:25) Wind turbines, I mean, that’s tiny in terms of the global energy. It’s tiny. It’s like a few percent and it’s very difficult to scale. And you’ve got issues with it can be too windy, not enough wind, or it can be, it’s a very unreliable energy source. I’m not knocking them because they are useful in some parts of the world at some times of the day. They’re an additional energy source.

It’s a good thing to have, but it’s not a baseload. We can run our society off that energy source. That for all good and bad intents, it’s hydrocarbons. We depend and need hydrocarbon production. And maybe with AI we come up with fusion or some new technology over the next 50 years or 40 years.

But right now there’s no alternative and we should just appreciate that and be okay with that, make peace with that.

TUCKER CARLSON: (01:02:27 – 01:02:33) How many countries have deep coal reserves? So the big countries? I mean, how much coal is there in the world?

MORGAN DOWNEY: (01:02:33 – 01:02:42) There’s a lot. A lot more. We’re not going to run out in the next 50, 100 years. Australia produces a lot of coal.

TUCKER CARLSON: (01:02:42 – 01:02:43) Or has a lot of coal.

MORGAN DOWNEY: (01:02:43 – 01:02:51) Has a lot of coal. Yep. China itself produces a lot of coal. The US produces a lot of coal in Appalachia.

TUCKER CARLSON: (01:02:52 – 01:02:52) Wyoming.

What Really Killed the US Coal Industry

MORGAN DOWNEY: (01:02:52 – 01:03:02) Wyoming. Yeah. It’s less than it has been because you know what destroyed the coal industry? Everyone thinks Mike Bloomberg walks around, he is who he is, the ex-mayor of New York.

TUCKER CARLSON: (01:03:03 – 01:03:12) Stalinist midget. Well, no, he’s been called that. I’m not endorsing the title, but yeah, he has been called—

MORGAN DOWNEY: (01:03:12 – 01:04:06) He banned straws in New York. Let’s put it that way. He’s one of those guys. But he railed against coal industry in the US and claims, he says that he helped destroy the coal industry. The coal industry, coal production mining in the US was destroyed by fracking and natural gas, cheap natural gas. It was undercut. Coal wasn’t destroyed by burning coal, wasn’t destroyed by environmentalists.

It was undercut by the nat gas industry in the US that discovered fracking and horizontal drilling, drilling these wells sideways. That was amazing technology development back in the early 2000s. And fracking as well. You’re pumping these wells with water and cracking the rock a couple of miles down. That’s what killed the coal industry in the US. The environmental regulations were more on putting scrubbers—

TUCKER CARLSON: (01:04:06 – 01:04:07) Because gas became cheaper than coal.

MORGAN DOWNEY: (01:04:07 – 01:08:13) Nat gas became cheaper. And it’s one of those interesting things. People in the US say gas, and as an oil guy, energy guy, I always make sure gasoline is the stuff you put in the car. Nat gas is the— So if you say gas to an energy person, they always think you’re talking about nat gas. Gas. But it’s natural gas and no one ever talks about it.

It’s like a hidden fuel because it’s in pipes. No one ever pumps it. It just goes to the power station. It’s 1/3 of US electricity or energy, not even electricity, energy is from nat gas. And it just hums along behind the scenes. No one ever complains. Earlier on this year it was $10 per MMBtu because it was a cold snap. Up here, sorry, down in Texas, and it’s now $3 per MMBtu.

But no one complained when it was $10. It’s a third of the US energy supply was $10. Now it’s $3. And it’s because diesel gets a lot of the attention this year, but it’s— natural gas is probably— everyone talks about energy independence.

It’s probably the fuel that can most make the US truly energy dependent because oil production, one of the problems Trump’s had this year was he dumped all the oil, crude oil from the SPR. Year, that went to Europe pretty much, which for good or bad, because it goes into the international bucket or basin of oil. The oil market is very global because you can ship it around.

Natural gas is not as well connected. It’s very expensive to ship it. You have to cool it down and compress it. But if you want the US to be truly energy independent, nat gas is that fuel. And basically that has not been unlocked in the US. Look at the whole Northeast. There’s a huge amount of nat gas under there. There’s also in terms of potential.

There’s pipelines that are blocked that people are not allowing. Those 2 things, just uncracking the nat gas production, uncracking nat gas production in the US, that truly will make the US such that it will not just disconnect the US from physical energy, it will also price disconnect. Because remember, Europe is $31 nat gas, the US is $3.

So if the US increase, the US can become energy independent as well as price independent of the rest of the world. And the only fuel to do that is really natural gas. Oil is always going to be linked to the world. Coal pretty much is going to be linked to the world. But natural gas, because it’s so difficult to ship, it’s kind of for good or bad, it’s trapped in the US.

There are some exports, but it’s very expensive. So that is the fuel for true energy independence is natural gas. As I said, no one talks about it because it’s under It’s in pipes, it goes into the power station. People in Manhattan ban it and they don’t realize, “Hang on, that’s the reason the light works. What? They’re banning the fuel that makes the light work?”

And so it’s an interesting fuel in that regard. And production is growing at a rapid rate in the US. Even at $3, it’s so cheap, nat gas. Cheap nat gas killed the coal industry. That did, not Mike Bloomberg. Nat gas killed the coal industry and nat gas can actually continue to transform.

We’ve got energy demand growth over the next 5 or 10 years because the US now is learning that just like Ireland learned when you cut taxes, if you increase energy production in the country and make it cheap energy, your economy grows. And it doesn’t matter, it just happens. It’s like people, because the cost of doing everything manufacturing becomes cheaper.

See, whether it be a data center or it becomes a factory making something, China’s making something because they’ve got cheap energy. They use coal, that’s their cheap energy. The US, if we increase natural gas production, that’s how you get manufacturing back to the US, at least to a certain extent. There’s some manufacturing that’s been lost pretty much forever, unfortunately, or at least for the foreseeable future.

But you can at least stop the drain of manufacturing out of the US with cheap energy. I mean, people will build things here with just cheap energy. So yeah, it’s nat gas.

Coal-to-Liquids and the Fischer-Tropsch Process

TUCKER CARLSON: (01:08:13 – 01:08:15) It kind of gasifies some of its coal?

MORGAN DOWNEY: (01:08:16 – 01:08:18) Yeah, there was a big thing of it this year.

TUCKER CARLSON: (01:08:18 – 01:08:19) What is, can you explain that?

MORGAN DOWNEY: (01:08:20 – 01:11:14) Yeah, actually it’s an interesting thing because again, these are oil, gas, coal are hydrocarbons. So you can turn coal into crude oil, you can turn coal into nat gas. You basically have to heat it and put it under pressure. And those hydrocarbons, and even oil refineries do this as well, they transform the hydrogen carbon atoms into a different hydrogen carbon atom. And so coal is hydrocarbon in solid form.

Nat gas is kind of the most pure form of methane, another form of hydrocarbon. And oil is the same. And so you can change by heat and pressure, it’s a relatively simple chemical reaction, coal into nat gas, coal into gasoline. The problem is, and it was made famous in the 1930s in Germany, that’s where it was. Fischer-Tropsch was the technology.

Germany had no oil at the time, or tiny amount, and oil basically defined World War II. Japan going down to invasion. They had coal. They had coal. And so what they tried to do is, it is a very expensive process. It costs $200 a barrel to do that process, to turn coal into crude oil, into gasoline. So it’s very expensive, $200 a barrel.

And so you can technically do it and it’s called the Fischer-Tropsch process. And Germany did it out of desperation. South Africa did it. Everyone says, “Okay, China does this now.” They’re not economic idiots. They’re not going to do a process that costs $200 a barrel. So they have it available, but they don’t do it at scale because it’s a very expensive process. And you don’t necessarily do it with coal.

You can convert other parts of the energy space into gasoline. So coal gasification or turning coal to liquids is what people call it in the industry. You can do it, but it’s a very expensive process. But China is basically a very basic, in terms of oil consumption, they import crude oil just like any other place. They boil it, which is basically what an oil refinery does.

You boil it and it separates into naphtha, gasoline, diesel, heating oil, jet fuel, all the way down to asphalt. Called, and they do the old school. I mean, the oil industry is very basic. You basically boil this crude and the different crudes. Venezuela’s got heavy oil, it’s basically like tar, thickly. You’ve got some very light oil out of West Texas. All this is very light.

It produces a lot of gasoline very easily in a refinery. You don’t have to boil it that much kind of thing. And Canada produces a lot of heavy oil. So crude oil is a— people define it by weight. Is it light or heavy crude oil? But China basically just buys oil and refines it. They don’t get into the coal to liquids. It’s very expensive. You kind of only do it in desperation.

I think that one of the reasons they do it at a small scale, very small scale, is that they do it just in case they are cut off from oil from the Middle East in a war situation, that they would at least have some oil. Because remember, they import 12 million barrels per day of their 16.

Why China Cut Its Oil Imports in Half

TUCKER CARLSON: (01:11:16 – 01:11:21) Curtail, almost shut down their oil imports when the war in Iran started?

MORGAN DOWNEY: (01:11:23 – 01:11:42) That’s the biggest question in the energy space this year, or oil space, because it didn’t matter which analyst you talked to or which oil company you talked to or which people in government that should supposedly have deeper knowledge from various means. How did China and why did they do that?

TUCKER CARLSON: (01:11:42 – 01:11:50) I’m glad to hear you say that because I asked a lot of people, including in the US government, what is this? And some of Some apparently hadn’t even thought about it. I thought it was one of the weirdest things I’d ever seen.

TUCKER CARLSON: (01:11:51 – 01:11:52) And there’s no consensus on why?

MORGAN DOWNEY: (01:11:53 – 01:15:32) It is a very unusual thing. I mean, basically China, they consume 12 million, import 12 million barrels per day. They dropped it at one stage to 6. And then people said, okay, that’s a lot. They halved their oil imports. And you can’t just do that. But they did. And so people said, well, where did they get that extra 6 million barrels from? they get that extra 6 million barrels from?

Because they cut their imports. And remember, they were getting 2 million from Venezuela of the 6, 2 million from Iran, gone, 2 million from Russia, kind of restricted with the sanctions and that. But anyway, they cut their imports by 6 million barrels per day. And one is they have that big strategic 2027 Taiwan, and people outside of China have no idea how much oil is in there.

People estimate, because you can count the barrels and tankers going to China from the Middle East, people estimate it’s half billion barrels. Remember, the US SPR is 5 times less, 300 million. So people, they definitely dipped into that strategic reserve because they had to save their own economy. They need to transport their manufacturing economy. They have to transport diesel trucks and cars.

And so they dipped into that strategic reserve, which kind of set back their Taiwan 2027 strategy a year or two, maybe longer, because they were building that up ahead of 2027. So they dipped into that strategic reserve. Then everyone says, okay, they did coal to liquids. I’m very skeptical of these other reasons. Coal to liquids, they did. They told everyone to drive electric cars. No, not even in China.

You can’t tell people drive the BYD today. They don’t use Teslas as much over there, but you can’t tell people to drive an electric car. You can’t force that kind of behavior. But people put this out there as a reason. I think the main thing they did was they dipped into their own reserves and no one knows how much they did.

People say, oh, they maybe only reduced it by 1 million of the 6. They ate in just a little bit and they were relying more on— they cut their petrochemical productions. I mean, a huge portion of oil and gas globally goes into petrochemicals, making plastics and making fertilizer also, but making plastics. And there are people saying, oh, they diverted crude oil from petrochemicals, plastics into gasoline.

And again, technically you can kind of do that. Very expensive, awkward process to do. You can’t just do it on a turn of a dime like that. I think what they do, it’s the most simple answer. They dipped into their reserves that they were using. They had built up from all the sanctioned oil from those 3 countries that they’d gorged on for the prior 5 years ahead of Taiwan 2027.

They dipped into that and they dipped into that big time. They had no choice because they can’t survive. Their economy’s kind of fragile. They’ve got a housing crisis, pretty much slow-moving housing crisis, but it’s going through their economy. They’ve got a debt crisis. Their debt-to-GDP is huge if you add in all of their debt levels, like government debt, personal debt.

So they had to kind of save their economy and they have a record of doing this. They did this in the financial crisis, 2008. They pumped a huge amount of money into their domestic manufacturing economy in an emergency way immediately following 2008. So they basically dipped into that strategic reserve in a big way. And people say, oh, they didn’t. No one really knows. I don’t know. No one really knows.

If I were at an intelligence organization, I would try and determine how much oil. I’m sure there are people that know that.

TUCKER CARLSON: (01:15:32 – 01:15:38) Well, I’ve heard that. That’s exactly what I have heard, but it doesn’t explain why. Why did they do that?

MORGAN DOWNEY: (01:15:39 – 01:15:42) One, to save their economy. They need, because oil is a critical part of their—

TUCKER CARLSON: (01:15:42 – 01:15:47) No, no. Why did they have their imports? Why did they cut their imports in half?

MORGAN DOWNEY: (01:15:49 – 01:16:05) Well, there were, one is there was a blockade and they couldn’t get the oil. They physically couldn’t get the oil out of the Persian Gulf. And so that was one thing. There were, back in March of this year, exports from the Middle East were zero through the Suez Canal.

TUCKER CARLSON: (01:16:05 – 01:16:08) Oh, I remember. But they couldn’t increase it from Russia?

MORGAN DOWNEY: (01:16:08 – 01:16:09) No, they couldn’t.

TUCKER CARLSON: (01:16:09 – 01:16:10) Or West Africa?

MORGAN DOWNEY: (01:16:10 – 01:17:04) No. I mean, you can technically do it, but the ships have to go the whole way around Africa and you have to get the tankers and it becomes a logistical nightmare. And China is trying to build pipelines to Russia. That’s a very long distance. And the oil and gas industry, and long distance in oil and gas means expensive, and it’s also very cold, harsh environment.

Look, you’ve got to heat the pipes or put diluents in there to enable it to flow. So one was technically China couldn’t get access to the crude oil at that time. And that, not just China, a lot of Southeast Asia and Asia in general, India. One was that.

Two, they really did want to save their economy by just releasing crude oil from their own stockpiles into the world, into the domestic refining space. The other one is that they didn’t want high oil prices. I mean, oil looked at one stage like it was going to go straight to $200, $300 a barrel.

TUCKER CARLSON: (01:17:05 – 01:17:05) Oh yeah, I remember.

MORGAN DOWNEY: (01:17:05 – 01:18:50) And so the oil industry operates at a margin that they basically didn’t want them to contribute to that $200, $300 price spike. And so they just decided, their relatively centralized government, not to import. And it just made a decision and they had a stockpile that they could use and they had these other marginal things like the electric cars.

I don’t believe those are at scale a big reason and they just dipped into that stockpile. And then there’s also the economic thing of China has been buying that $20 sanctioned oil at a discount for the past 5 years. When oil went over $100 and historically they stopped their imports.

And so every time it goes over $100, even right now we’re at $105 or $110, China’s imports over the past 2 weeks have dropped off a cliff again. And so they’re economically rational. I mean, everyone thinks of them as being communist or whatever. They know the value of a dollar or yuan or whatever. But they basically stop buying. They buy below 70 and they stop buying above 100. And it’s true.

It’s a simple thing. And they stopped buying once we got above 100 back in Feb, March, they stopped buying. And so they don’t want to buy expensive oil. That culture in China is a naturally trader instinct and they stopped. And so I think it was just a combination of they dipped into their reserves, how their imports dropped, they dipped into their stockpile.

It set them back in terms of their Taiwan invasion plan. So people think that Trump was playing 5D or 8D or whatever the D is chess. It did have the side effect of knocking them back. And also Venezuela knocked them back in terms of China was buying almost 2 million barrels a day of Venezuelan oil. Venezuela, everyone forgets about that. That was only this year.

It was back in January of this year.

TUCKER CARLSON: (01:18:50 – 01:18:50) January 4th.

MORGAN DOWNEY: (01:18:51 – 01:19:04) There you go. It seems so long ago, but that was basically the Monroe Doctrine knocked China out of the Western Hemisphere, but also knocked 2 million barrels a day of sanctioned discounted oil that China was getting.

Venezuela, Iran and China’s Belt and Road

TUCKER CARLSON: (01:19:04 – 01:19:06) Where’s Venezuela oil going now?

MORGAN DOWNEY: (01:19:06 – 01:19:07) The US.

TUCKER CARLSON: (01:19:08 – 01:19:08) All of it?

MORGAN DOWNEY: (01:19:08 – 01:20:31) Yeah. I mean, I’m not saying it’s good or bad. It’s just that’s what reality is and it’s going there. And China had invested a huge amount of billions of dollars into Venezuela. China had also invested billions of dollars into Iran. They built this Hormuz bypassing pipeline called JASK, J-A-S-K, that went around the Strait of Hormuz. It’s never been used. It was about to be completed by this year.

But China basically has been, the whole Belt and Road Initiative, they’ve been applying that to the oil and gas industry. And Russia, I think, is kind still independent of that influence of China. I mean, Russia will sell their oil to anyone, but they haven’t been kind of captured by that Belt and Road Initiative economics. Iran was captured by it, by Chinese, that Belt and Road Initiative. Venezuela was captured by it.

And China doesn’t care about Venezuela’s politics or people, they care about the economics. They don’t care about Iranian politics, religion, Israel, that whole situation. They don’t care. They basically, “Can you get me cheap oil below $70 a barrel? How do I get that oil?” And if you could ask the EU to put more sanctions to discount it even further, please.

That would be a bonus because all that money is not going to Europe. It’s just going straight into the pockets of Beijing.

TUCKER CARLSON: (01:20:33 – 01:20:40) To restate your point, which seems provable, Western sanctions against outlaw countries help China’s economy.

MORGAN DOWNEY: (01:20:40 – 01:20:48) Directly, and it is. There’s, and China would love for more European sanctions and US sanctions.

TUCKER CARLSON: (01:20:48 – 01:20:55) Western sanctions, which Western politicians brag about continuously, Western populations feel good about.

MORGAN DOWNEY: (01:20:56 – 01:20:59) I think it makes them. It’s a— it feels good. It’s a feel-good policy.

TUCKER CARLSON: (01:20:59 – 01:21:00) All help China’s economy directly.

MORGAN DOWNEY: (01:21:01 – 01:21:13) Yes, and it’s quantifiable. $10, $20 a barrel, and the Chinese would love nothing more. Than the EU to flagellate themselves even further. More sanctions, put a $20 cap on Russian oil.

How the Wars With Russia and Iran Hit Global Energy

TUCKER CARLSON: (01:21:15 – 01:21:38) So the main reason I want to have this conversation, of course, was the war, which has heightened the world’s awareness of how important energy is and how hard it is to have a civilization without it. And this war, and both wars, the war against Russia and the war against Iran, have both reminded us of that. So what effect have those wars had on global energy?

MORGAN DOWNEY: (01:21:40 – 01:22:40) I mean, obviously it’s because of it being the regions that they are in, it’s had effect on crude oil and natural gas. So coal, you can just put that aside. So that’s again, a third of the world’s energy that’s not involved in this whole situation. Put that aside. So it’s oil and natural gas.

And the world or the energy market had kind of war-gamed out the shutting of the Strait of Hormuz for a long time. And it kind of did happen a little bit in the 1980s. You had the tanker wars when Iraq and Iran were fighting. And there were, I think it was a huge number of tankers that were knocked out in that war.

The US was escorting tankers in and out of the straits at that time. And so there was kind of an awareness that the vulnerability was there of the whole choking of Hormuz. The oil market immediately in Feb 28 assumed it was going to be a week or two. And you can tell how—

TUCKER CARLSON: (01:22:40 – 01:22:42) ’26 this year.

MORGAN DOWNEY: (01:22:42 – 01:23:14) Of this year, of 2026. And it was because you can tell that there’s the forward curve, which is the price of oil as you go out into the future. So you could tell that the in the front of the curve was very high, but it was backwardated, they call it, but very low only a few months forward.

And so even the oil market itself, and the oil market is hyper geopolitically aware and very reactionary. It’s kind of like almost prediction markets existed, but oil markets use futures and options to do the same thing as prediction markets do. And so the oil market was saying—

TUCKER CARLSON: (01:23:14 – 01:23:17) Are they pretty accurate? Sorry to interrupt. Are pretty accurate in their predictions.

MORGAN DOWNEY: (01:23:17 – 01:23:28) They’re accurate in the very short term. They’re very short-term aware. So the first thing I do when I wake up in the morning is I look at the price of WTI. I can tell if Iran has been hit. I just looked this morning, it was down at 70-something.

Why WTI Now Sets the Global Oil Price

TUCKER CARLSON: (01:23:28 – 01:23:30) You don’t look at Brent, you look at West Texas.

MORGAN DOWNEY: (01:23:30 – 01:23:33) WTI. Yeah. Brent is, there’s an issue of manipulation there.

TUCKER CARLSON: (01:23:34 – 01:23:35) Yeah. Well, I’ve noticed.

MORGAN DOWNEY: (01:23:36 – 01:23:38) But it’s WTI. I look at WTI.

TUCKER CARLSON: (01:23:39 – 01:23:48) So just for people watching this, if you’ve made it this far in the interview and you’re interested in understanding energy, markets. WTI is West Texas Intermediate.

MORGAN DOWNEY: (01:23:48 – 01:26:14) And West Texas Midland crude is also what now sets the price for Brent crude. So Brent is a derivative of West Texas crude. So there was a window of 15 years where Brent took over because this is before fracking, before that 2005 revolution, and US crude production was declining and Brent took over for about 15 years between 2005, 2020. But now that has flipped back to WTI crude in the US.

That’s the global benchmark. And so yeah, sorry to interrupt. I look at WTI every morning, first thing I look at, and you can tell how geopolitically changed the world is overnight by just looking at that one thing. I can tell if there’s a war or whatever, and just by looking at that one thing.

So I look at other things as well, but that’s the first thing I look at, the price of crude. And back in February, We went from $60 WTI up to, we got up into the hundreds and very quickly, but the curve, the forward curve, you can trade crude oil out into the months ahead for delivery futures curves months ahead. That price was going down to like $80, $70.

So the front was $120. You go out 3 or 4 months, it was back down to $80. So the market was predicting this thing’s going to be quick. The oil market was predicting, and which I think Trump went into this also thinking it was going to be quick.

And the US intelligence agencies and the blob, the deep state, everyone thought that this was going to be really quick because we were just coming off Maduro in early January in Venezuela. Everyone thought this would be a hit and you’re one and done, would be out within 2 weeks, just eliminate a few politicians at the top layer, which I think was strategically a terrible thing to do.

But it basically, and the oil market very quickly rallied. And then once it wasn’t over in 2 weeks because Iran went to that mosaic structure where they basically distribute control of their military throughout the entire country, the IRGC and Basij do. And so it went to that, in other words, you can’t slice off the onion layer by layer at the top. It just doesn’t work.

And Iran has developed this method of working for the last 30, 40 years since the late 1970s. And that’s when Iran started retaliating with drones. That’s when the oil market went, oh, okay, this is going to be a more protracted thing.

TUCKER CARLSON: (01:26:14 – 01:26:14) They started hitting

MORGAN DOWNEY: (01:26:14 – 01:27:39) Gulf production facilities. They hit Qatar’s natural gas LNG plant, which is still out and will be out for the next 3 to 5 years. That’s Qatar’s main source of revenue is that LNG plant, and they knocked half of its production out. And Qatar produces 20% of the world’s LNG. So that gas will go to Europe, natural gas, and will go to Asia. That’s gone now for 3 to 5 years.

Again, who benefits from this? The US nat gas industry, like Nord Stream, Qatar. If you were to be conspiratorial about it, you could just knock out all from Qatar, and then the US would benefit even more. So it’s kind of an interesting kind of secondary effect that this situation in Hormuz has kind of been very positive to the US economy because the US is a huge nat gas and oil producer.

But anyway, so the oil market initially priced in a quick win, and then Iran started attacking all the production facilities, in particular refineries in the Persian Gulf. And these refineries produce a lot of diesel. And that was kind of the second effect was the diesel price spiking crude oil. The spread between diesel and crude or gasoline and crude is called the crack spread.

That blew out to diesel to crude used to be— diesel used to be $10 refining margin above crude. It went to $100 and it stayed there since.

TUCKER CARLSON: (01:27:39 – 01:27:41) That’s crazy. And that’s because of reduced refining capacity?

MORGAN DOWNEY: (01:27:42 – 01:27:46) They knocked out 2 million barrels per day of Persian Gulf refining capacity.

The Diesel Price Spike

TUCKER CARLSON: (01:27:46 – 01:27:52) But why would it have not the same effect on jet fuel, gasoline, heating oil, the rest?

MORGAN DOWNEY: (01:27:53 – 01:28:33) The world the US produces is a lot more gasoline dependent than diesel. And so it just was the way of the world’s supply and demand system for gasoline and diesel. It had that impact much more significantly just because Asia consumes more diesel, Europe consumes more diesel. It seems kind of like a kind of convoluted thing, but basically the world had more gasoline capacity in refineries than it did have for diesel.

So diesel was more tight as a global situation than gasoline.

TUCKER CARLSON: (01:28:34 – 01:28:39) How hard is it to switch a refinery’s proportion of gasoline to diesel to all the other refined products?

MORGAN DOWNEY: (01:28:40 – 01:28:40) Extremely difficult.

TUCKER CARLSON: (01:28:41 – 01:28:42) Oh, really?

MORGAN DOWNEY: (01:28:42 – 01:28:57) Yeah. You can switch 2 or 3% from diesel molecules that come out of a— you put crude oil in, you can move a slight 2 or 3% of the barrel from diesel into gasoline or vice versa. So it’s a very, very difficult thing to switch.

TUCKER CARLSON: (01:28:57 – 01:28:58) Oh, wow.

MORGAN DOWNEY: (01:28:58 – 01:30:00) And so, yeah. But everyone talks about diesel, but gasoline margins went from $10, $15 to $60. So gasoline did also rally a lot, that refining margin. And so diesel went to a $100 spread over crude. So you’ve got crude at $100, diesel is $200 a barrel. Crude at $100, you had gasoline at $160 a barrel. So it did cause a rally in gasoline also.

It was just that diesel was much more tighter as a reaction. And then that was combined with, and I know people knock Trump for blaming Ukraine and Russia. Ukraine did start hitting all these Russian refineries. And that did start coincidentally with the first half of this year when the Hormuz situation. So that knocked another 2 million barrels per day of refining capacity out of Europe.

And the world, as I said, is 100 million barrels per day of production. You knock 4 million barrels per day of refining capacity out, it does have an impact and it basically caused diesel prices to spike.

TUCKER CARLSON: (01:30:00 – 01:30:01) Why would Ukraine do—

MORGAN DOWNEY: (01:30:02 – 01:30:03) Because the CIA helped them.

TUCKER CARLSON: (01:30:03 – 01:30:09) Well, obviously. I mean, thank you for pointing that out. Ukraine’s not an independent actor.

MORGAN DOWNEY: (01:30:09 – 01:30:14) Everything Ukraine hits pretty much in Russia is approved and signed off.

Ukraine’s Strikes on Russian Refineries

TUCKER CARLSON: (01:30:14 – 01:30:28) Well, that’s factually true what you said, and thank you for saying it. Why would the US intel community want to reduce Russia’s refining capacity when it affects the price of diesel fuel and gasoline in the United States?

MORGAN DOWNEY: (01:30:29 – 01:31:04) I think that even though they’re very sophisticated entities, the CIA and other entities in the US government, sometimes I don’t think they think about the effect. They’re energy blind to a certain extent as well. I didn’t think that they thought it would have— they thought it would just like sanctions on Russia. They thought that if we just target Russian refineries, we can kind of damage Russia and it wouldn’t affect global markets.

I think they themselves Are you serious? They thought that they could just pinpoint target these Russian refineries. And oil refineries are easy to target. They’re big pieces of equipment. And they thought, let’s—

TUCKER CARLSON: (01:31:04 – 01:31:05) They’re exposed too.

MORGAN DOWNEY: (01:31:06 – 01:32:30) And they did want to create a little bit of pressure on Russia, Putin to come to the table this year. Trump wants out of Ukraine and Russia, that whole situation. He wants out of it as everyone should want out of it. That war should never have started, but everyone wants out. Except for a certain few vested interests.

Europe again, here we go talking negatively about Europe, but the CIA or whoever was providing the targeting information, they didn’t think about the impact on diesel. Now they realize that of course, because they thought, “Hey, it was just 2 million barrels per day of refining capacity out of 100, it can’t have that much of an impact.” It did, it immediately did.

And so they talk about blowback, this blowback was in the energy market. And so it was a mistake. The CIA should never have targeted those refineries. They did, but they provided all the targeting because they do want to pressure Putin to come to the table. They want to pressure Zelensky by Elon Musk flipping on and off the Starlink button every other day that seems to be doing now.

And these are kind of the 2 pressure points that they’re applying. They’re trying to destroy Russian revenue with refineries and Zelensky’s defense with the Starlink, turning it on and off every few days to try and force these guys to come together and at least have some sort of ceasefire. And that was kind of the original thought process behind it. I think they were surprised by how much diesel prices rallied.

TUCKER CARLSON: (01:32:30 – 01:32:32) It’s a really interesting explanation.

MORGAN DOWNEY: (01:32:32 – 01:32:38) And it happened at the same time as Hormuz. If they did this when Hormuz was not happening, diesel would not have spiked as much.

Getting Oil Out of the Persian Gulf

TUCKER CARLSON: (01:32:38 – 01:32:43) How much oil and natural gas is making its way out of the Gulf now?

MORGAN DOWNEY: (01:32:44 – 01:32:58) So now it depends on day to day. You have a pipeline. It was a pipeline that the Saudis built. It’s called the East-West Pipeline back in the 1980s because of the original tanker war, Iran-Iraq tanker war back in the 1980s. And

TUCKER CARLSON: (01:32:58 – 01:32:59) Can you explain where it goes?

MORGAN DOWNEY: (01:32:59 – 01:34:05) It goes from all of the oil and gas and pretty much oil, let’s call it crude oil in Saudi is produced on the edge of the Persian Gulf. So on the east side of Saudi Arabia, but Saudi Arabia is a big piece of land that goes the whole way, all desert. There’s no greenery there whatsoever, all the way over to the Red Sea.

And the Red Sea is, they’ve got issues there with the Houthis and whatnot over the past few months. But basically all of the oil production is trapped in the Persian Gulf, but the Red Sea is kind of one place they can get it out outside of Hormuz. So during the 1980s, they built this pipeline as kind of a backup plan, and it was a 7 million barrel per day capacity pipeline.

Again, scale, The world produces 100 million barrels per day. The Saudis produce 10 of that 100. So they’re not as big as these 2. The US produces 25. But of the 10 the Saudis produce, they could get 7 of this out through this pipeline. But they didn’t used to do this because this pipeline was usually run at 2 to 3 million barrels per day of the Saudi 10.

And so they kind of used it as a backup plan.

TUCKER CARLSON: (01:34:05 – 01:34:08) Why is it cheaper to ship it through the Gulf?

MORGAN DOWNEY: (01:34:08 – 01:34:54) Yeah. And you’ve got to pump it across all these pumping stations. And also if you’re a buyer from China or Asia from Saudi, for them to send a tanker the whole way into the Red Sea and past Yemen, and it’s a very much more dangerous area, it’s more confined. And so it was just cheaper for the tankers. Pipeline shipping is cheap also.

But if you were to buy the oil from the Red Sea at the end of this East-West Pipeline, it was $1 per barrel. Nowadays it doesn’t seem like that much, but it was $1 a barrel. More expensive. It was cheaper to buy it from the Persian Gulf for China. And so Saudi used to produce oil. All those Gulf producers are trapped inside the Persian Gulf.

It’s kind of the same oil basin, that whole region.

TUCKER CARLSON: (01:34:54 – 01:34:55) Clearly.

MORGAN DOWNEY: (01:34:55 – 01:35:09) And even people talk about Tehran. Even Tehran is almost the other edge of Iran to where their oil is produced. Their oil is also produced at the edge of Kharg Island. I’ve noticed. It’s also down by the coast.

TUCKER CARLSON: (01:35:09 – 01:35:10) It’s the same reservoir, obviously.

MORGAN DOWNEY: (01:35:10 – 01:35:26) Pretty much, yeah, it’s the same basin. It’s different reservoirs. Some of them are connected, like Kuwait and Iraq, their reservoirs are connected, but it’s the same basin. It’s the same millions of years ago. It was created at the same time.

TUCKER CARLSON: (01:35:26 – 01:35:27) Low spot.

MORGAN DOWNEY: (01:35:27 – 01:36:48) And so basically some of them are connected. But anyway, when the whole situation kicked off, The first surprise was the issue of refineries. Then it came into tankers because no one would in their right mind send a tanker through the Straits of Hormuz when there’s an active war and Iran is targeting tankers. These are civilian tankers. These are not military tankers.

And Iran was hitting them and would hit the occasional one and they were hitting them cheaply. They don’t send these $20,000, $50,000 drones to hit them. And so you had the spike in crude first. That was the first wave, then you had a spike in refined products.

Diesel was the most extreme one, but because you hit these refineries combined with the Russia hits on refineries, then you had a spike in tanker rates. And these tankers went from, you could hire a supertanker. Supertankers are 2 million barrels a day, sorry, 2 million barrels capacity, a supertanker. They call them in the oil industry VLCCs, very large crude carriers, but they’re these buildings effectively carrying 2 million barrels of crude.

And these things, hire them for $50,000 to $100,000 per day. That’s the day rate they call it. Before, in January and February of this year, now it’s $1.5 million per day. So we went from—

TUCKER CARLSON: (01:36:48 – 01:36:48) Per day?

MORGAN DOWNEY: (01:36:49 – 01:37:02) Per day. From $100,000 per day to $1.5 million per day. And the reason the tankers have gone up is that first of all, you can’t get insurance. You can technically get insurance, but the insurance rates have gone up.

TUCKER CARLSON: (01:37:03 – 01:37:04) Insurers raising their fees.

MORGAN DOWNEY: (01:37:05 – 01:37:21) Saudis, well, they self-insure that a lot of the tankers that are doing this route, it’s like a speed run of the Straits of Hormuz. You hug the coast of Oman and you speed run. And the only people doing that are the Saudis because they have their own tankers. So they’re not paying other people to do this.

TUCKER CARLSON: (01:37:21 – 01:37:23) And the Emiratis have their own tankers too.

MORGAN DOWNEY: (01:37:23 – 01:38:40) Yeah, the UAE have got their own tankers, Abu Dhabi. And so those guys are half of the tanker run and basically they’re at speed. When I say at speed, these are supertankers that are full of 2 million barrels of crude. They can’t move at speed, but they’re trying to. They move as fast as they technically possibly can into the Persian Gulf, grab the oil, load it, and come back out.

And usually before February, they would then continue on to China or continue on to Asia somewhere. And now they don’t. They stop outside of the Gulf of Oman, they lighter, they load the crude onto another tanker, and they go back in again and do that loading. So those supertankers are now doing this speed run into the Persian Gulf.

And Persian Gulf is 20 million barrels per day of— Persian Gulf produces 20 million barrels per day. The east-west pipeline that was built in the 1980s, they ramped that up from 3 to 7. So they got some oil coming out of that pipeline, extra oil. They got some oil out of this. There’s another pipeline to Fujairah, so they get another million barrels per day out of that.

They cranked up all the alternative bypass pipelines. So that compensated a little bit for the Straits of Hormuz being shut. And then the big one is they started doing these tanker runs, speed running in and out of the Gulf and doing what’s called ship-to-ship transfer, STS, outside the Gulf of Oman.

The Supertanker Speed Run Through Hormuz

TUCKER CARLSON: (01:38:40 – 01:38:42) I mean, what’s that journey like?

MORGAN DOWNEY: (01:38:43 – 01:38:45) It’s a few days. It’s a highly risk—

TUCKER CARLSON: (01:38:45 – 01:38:47) What are they paying these crews to do that?

MORGAN DOWNEY: (01:38:47 – 01:40:01) They’re paying them, I think it was in the FT a few weeks ago, they’re paying them for each run, which takes a few days. They’re paying the captain, I think, $100,000, $200,000 per run. I mean, they’re taking their lives under risk. Right now today, Iran is hitting 1 to 2 tankers a day. Hitting. So they’re hitting the engine room.

A surprising thing, and there are some spills as a result of this, these are carrying crude oil, these tankers, 1 to 2 tankers a day. And that is the real thing that can’t be sustained. I know Bessent and Trump have got these economic sanctions and pain points, that’s going to take too long. That operation, that financial operation that goes back to the sanctions things, it doesn’t really work.

It causes immediate pain, those sanctions. They close down money transfers and try to sanction companies that deal with Iran, but that’s not a long-term sustainable. And when I say long-term, I’m talking about we need to resolve this within 3 to 6 months max before things just are Things are already bad. They need to start recovering because it’s flowing through to food and fertilizers.

But Iran’s hitting 1 to 2 tankers a day right now today in November 2026. There are only 1,000 supertankers in the world.

Iran’s Attacks on Civilian Tankers

TUCKER CARLSON: (01:40:01 – 01:40:02) Are people getting killed in these attacks?

MORGAN DOWNEY: (01:40:02 – 01:40:44) Yes. And unfortunately there are crews from India, Philippines. These are just civilians. These are not military people. These are civilian tankers. They’re Marine. I know you mentioned your father was in the Marines. Are they civilian Marines? These are just people just earning a— working. Iran is treating them like military hardware. They’re hitting them. And so that can’t be sustained.

And so one of the things to stop that, because Iran— the US reaction so far has been to do these mass kind of fireworks-style campaigns, dropping the mother of all bombs Trump is talking about, things like that. Iran is very— there’s a very well-educated population, surprisingly, and they historically have been.

TUCKER CARLSON: (01:40:44 – 01:40:44) Higher median IQ than we do.

MORGAN DOWNEY: (01:40:46 – 01:40:50) One of the most successful ethnic groups in the US are Iranian.

TUCKER CARLSON: (01:40:50 – 01:40:52) Obviously the Persians.

MORGAN DOWNEY: (01:40:52 – 01:42:53) Yeah. They actually think they may be the number one. Everyone thinks it’s like the Asian population. It’s the Iranian Americans, Persian Americans. And so these guys are very, they’re rational. There’s a kind of a logic to what they’re doing. They’re also highly, they’ve got a religious aspect to it.

But I think that hitting 1 to 2 tankers a day, you annualize that, going to knock out the entire global fleet of tankers because they can be repaired. They’re not completely knocked out of commission, but the repair takes 3 or 4 months. The US basically has to make every tanker hit matter. And so one way to do that is Iran has 150 power generation stations. I mean, this is an energy war.

You say to Iran, and you don’t secretly do this, you tell Iran there’s a direct price to pay. “For every tanker you hit, we knock out 2 power stations.” Start with Tehran. They’ve got 5 major ones and just make it each incrementally painful to stop that tanker hitting situation because Iran is hitting civilian infrastructure going through on a civilian purpose. There’s no military purpose for this.

And the US should just make every hit painful to stop that ahead of negotiations and everything. But to kind of right the world’s economic situation in terms of energy, that has to stop. And that’s one way to do it. Iran has 150 power stations. You continue to Iran to do that for another month or weeks or months.

If you do it for another week, you hit 7 tankers, we’re going to hit 14 power stations. There should be some sort of, it’s a tit-for-tat retaliatory strike. You don’t tell them which power stations, but you make it economically energy painful. That’s one thing the US could do. And to try and stop those tanker hits because it’s like triage.

That is the most important thing is to stop those tankers being hit on a daily basis now. Because it just can’t be, as I said, you can’t do this for months. You can do the economic war behind the scenes, whatever, but the tanker market, the physical base tanker market can’t wait 6 months. It has to stop. That has to stop today.

How Many Supertankers Are There?

TUCKER CARLSON: (01:42:55 – 01:42:58) How many oil tankers, supertankers are there in the world?

MORGAN DOWNEY: (01:42:58 – 01:43:04) There are around 9,000 oil tankers in the world. 1,000 of these supertankers, the 2 million barrels.

TUCKER CARLSON: (01:43:04 – 01:43:05) Total on the planet?

MORGAN DOWNEY: (01:43:05 – 01:45:04) Yeah. I mean, 2 million barrels is a big amount of crude. If the world is 100 million barrels per of oil production and not all of it is tankered. So a few pipelines and so about 9,000 tankers in the world, 1,000 are supertankers. But if you hit one a day, annualize that, that’s 400 or 500 a year. That’s a big chunk of the supertanker. That has to be stopped.

And the other way is that you can stop the Iranian army, the IRGC. Iran has 5 refineries, just knock them out. Just take the CIA, they know where they are. These are not hidden things or secret things. And just within 20 days, the Iranian economy energy-wise. The financial side is the best in strategy of this. It’s like the sanctions thing. It’s a very messy long-term.

It creates all these weird side effects like China gorging on that free oil or discounted oil. You could just knock out their 5 refineries within 20 days. That country ceases. It stops operating. As in they can’t diesel trucks, gasoline cars, motorbikes, the entire economy, it physically can’t operate. So the US has got options. All this talk about nuclear weapons and that, don’t do that.

It’s not Sorry, Iran is an extremely vulnerable, on an energy side, economy. And these things also are repairable. You don’t want to destroy civilian infrastructure or dual-use infrastructure in Iran just to be negative and punish these people. You basically want to say, stop, let’s stop, let’s parlay, let’s take a breath here. You can’t hit these tankers every day. We’re not going to negotiate with you even as you do that.

And then the third thing, I think going back to kind of the original sin of this war, I mean, Trump, the US government killed the Ayatollah and his family back in late February, early March, and then went onion layer, tried to wipe out another layer. That kind of behavior, I don’t think is not— that is not conducive to getting a balanced negotiation. First of all, I—

TUCKER CARLSON: (01:45:04 – 01:45:04) Love—

MORGAN DOWNEY: (01:45:05 – 01:45:05) There should be—

The Killing of the Ayatollah

TUCKER CARLSON: (01:45:05 – 01:45:13) That kind of behavior is not conducive to getting a negotiated settlement. No, it’s not. Their religious leader? No. And it is murder.

MORGAN DOWNEY: (01:45:13 – 01:45:15) I mean, but here’s the thing. Trump did it.

TUCKER CARLSON: (01:45:15 – 01:45:17) Killing old people? No offense.

MORGAN DOWNEY: (01:45:17 – 01:45:27) Trump back in March said, people were asking him the logic behind going to war and whatnot. I know you talked to him beforehand, but he said, “I got him before he got me.” That’s what he said about the ayatollah.

TUCKER CARLSON: (01:45:27 – 01:45:30) That’s just a child talking. It’s absurd.

MORGAN DOWNEY: (01:45:30 – 01:45:35) I’m sure. But even if it were that, I’m sure there were people whispering in his ear that were the truth.

TUCKER CARLSON: (01:45:35 – 01:45:36) I know for a fact that there were.

MORGAN DOWNEY: (01:45:36 – 01:45:37) Yeah. And so—

TUCKER CARLSON: (01:45:37 – 01:45:44) There are all kinds of flatterers and whisperers and liars around him, mostly in the Israeli lobby, all telling him this lie that they’re trying to kill you and you have to kill them first.

MORGAN DOWNEY: (01:45:44 – 01:45:53) As a sign of good faith, the US should have a policy, revert back to, it used to be a policy in the US not to intentionally kill or assassinate foreign leaders. That needs to be—

TUCKER CARLSON: (01:45:53 – 01:46:06) Well, that was our policy up until we did this. I mean, we have assassinated, as you know, foreign heads of state, but we always lied about it and pretended we didn’t. And I think there’s some value in upholding the standard, even if you don’t meet it.

MORGAN DOWNEY: (01:46:06 – 01:46:20) There you go. And it does matter because I think that every leader in Iran, and there are, as I said, they’ve got that mosaic structure, but you can’t negotiate with someone under that kind of threat. And it’s not just, it wasn’t just the leaders.

TUCKER CARLSON: (01:46:20 – 01:46:22) By the way, it was during a peace negotiation that we did this.

MORGAN DOWNEY: (01:46:22 – 01:46:22) Yeah.

TUCKER CARLSON: (01:46:22 – 01:46:24) As you know, it was a surprise attack.

MORGAN DOWNEY: (01:46:24 – 01:46:36) That was, I mean, that was just, it was a wrong. I mean, is it right or wrong to kill anyone? But just as a strategic negotiating kind of tactic. That was— that just doesn’t work.

A Path to Ending the War

TUCKER CARLSON: (01:46:36 – 01:47:01) You send in fake negotiators into a fake negotiation, and then you kill the elderly head of their religion and his family in the opening salvo. And then, by the way, in case they didn’t get the point, you double-tap a girls’ school. That’s not the kind— and then you demand unconditional surrender, which our president did. Unconditional surrender, whatever that means. Yeah, I mean, that’s— you went all in and you failed.

So where— what do you do now?

MORGAN DOWNEY: (01:47:01 – 01:49:20) I think there needs to be a restatement of US policy, and Trump could do one of his executive orders and whatnot, just sign it, whatever. It says that US and no one endorsed even secondarily via the US, like CIA or whatever, should get it back into that business of killing politicians, elected politicians, even if we don’t like the election or whatever, for whatever reason. Stop that. That is not good.

It’s not good ethically and morally, but it’s also a basic military strategy. That was why you would never kill the generals. You need someone to parlay with. And it destroys for a whole variety of reasons. That should be a key component of this stage. One, stop the daily tanker wars. Two, by saying you hit one, we’re going to knock out 2 power stations. Let’s see how long that’s going to quickly stop.

I mean, if it doesn’t, Iran is making a rational decision to wipe out their own power grid. Okay. I think that you need to have some tit-for-tat escalation there because that needs to be stopped right now. That’s triage. 2, you tell the Iranians, we are no longer going to endorse, we’ll publicly do, we’re not going to endorse even on a secondary basis with other entities doing that.

We’re not going to support it, endorse it, or promote it. Stop. We’re not doing that anymore. The US doesn’t do that. It should go back to that doctrine because you can’t negotiate on that basis. And then once the situation is triaged, okay, then we can go back and talk about all these other issues. We have Iran wanting this silly toll. We’re not doing the toll. They want their money.

You know who owes Iran more money? China. They’ve been buying all this discounted sanctioned crude over the last 5 years. They have $60 billion in yuan. I mean, The fact that the Iranians were stupid enough to sell their oil for yuan. But anyway, they’ve got it locked up in China, $60 billion worth, way more than the US has got locked up in assets for.

So if Iran wants to pay someone, someone wants to pay Iran that toll, China can pay the toll, a dollar a barrel, whatever it is. Take it out of China’s money. They’re the guys that have been taking advantage of Iran over the last 5, 10 years. But let’s put it back on the table. You want the toll? Have it be a toll that’s addressed by the GCC.

Put the toll as GCC plus Iran manage that toll. But that’s something—

TUCKER CARLSON: (01:49:20 – 01:49:22) The other countries on the Persian Gulf, in other words.

MORGAN DOWNEY: (01:49:22 – 01:49:25) Yeah, yeah. Put them all on the toll and have an equal share of the toll.

TUCKER CARLSON: (01:49:25 – 01:49:26) Plus Iraq.

MORGAN DOWNEY: (01:49:26 – 01:54:54) Yeah, yeah. A dollar a barrel and get them all sharing that toll. Yeah, okay. But no other party outside of the Persian Gulf is going to contribute that toll. So you’ve got the assets, getting money from China first. They’re your biggest debtor, if you will, Iran. The toll, make it a GCC toll, put that in place. We’re not going to target your political infrastructure and even nefariously do it.

Really have it as a real thing where there’s even secondary parties are not going to target that. And let’s come to some sort of an agreement on the nuclear situation. Trump talks about bombing Pickaxe Mountain and all this nonsense. I mean, let’s go back to, and it’ll probably disgust Trump, go back to the prior UN inspections situation with Iran. Have Iran, treat Iran, by the way, as if it’s a nuclear power.

Because even if you take all that dust out, you think they aren’t going to now try with every means possible to get one of those nukes from North Korea or 5 of those nukes or Pakistan? And you always treat them as if they are a nuclear power. Iran is a major power in the Middle East. Accept that as a reality. You can’t crush it. You’re not going to defeat it militarily.

It’s just too expensive to boost them around. Let’s come to an agreement where that we treat them as if they’re a nuclear power, constrain it, if you will. Ideally, I mean, this is me personally, I hope they don’t go back to the Ayatollah regime and all of that. I would prefer Iran, They tried the civilian rebellion back in January.

It’s probably going to end up being a military junta like Pakistan controlled by the IRGC. They’ll have the Ayatollah. They’ve kept that guy out of sight. People speculate why the son of the Ayatollah, why they haven’t— he’s been maimed or he can’t speak, or legitimately they’re afraid for him being killed by the US or Israel. The US should remove itself from that game and say, we don’t play that game.

Name, but basically normalize the entire situation and triage the tanker situation, normalize Iran as a proxy nuclear power. I mean, it’s sad to say, but it is what it is. And there you can knock out the dust, but put some guardrails around it. And like Pakistan, the US controls Pakistan’s nuclear, supposed nuclear weapons. And yeah, that would be it. Just those things.

And you don’t need to go out and do a large, all this escalatory talk of we’re going to bomb huge things and make it a big spectacle. No, these are small incremental things that can be done. And Iran is looking for an out also. They don’t want this situation to escalate. I remember 10 years ago when Instagram kind of kicked off, they had the rich kids of Tehran.

These were all like these rich kids driving Ferraris around Tehran. They’re just normal people like you and I. I mean, I don’t drive Ferrari, but they’re normal people that have— we should treat them with dignity and respect and realize that they want to de-escalate the situation as much as we do.

And they’re great at— their media game throughout this whole war has been amazingly I mean, they put out that 1,000-page or whatever it was, number of page document saying, here’s the legitimate reasons why. Their grievance document, if you will. And they said, they’re trying to spin the US word of, “We don’t have a problem with the people of America, we have a problem with the government.”

And I’m thinking, hang on a second, for 50 years or 47 years since they’ve death threatened America. So you only meant the government? You didn’t mean the people of America? In other words, Iran, they’re not the innocent party in this whole escapade either. They’ve done some terrible, horrible, terrible things. And then they say, “Oh, but the Shah is the whatabout.” The Shah before the current regime was even worse. No, not really.

The Shah, supposedly he had people tortured and killed during his time, but maybe 2,000 people, 3,000 people. There’s a great book that I read recently, The Cauldron, it’s called, and just talks about the Shah. Yeah, He was a dictator, pretty much a king figure, and he was US supported because the US just needed someone stable in that environment. But the IRGC killed 20,000, 30,000 people in January of this year.

The Shah, over a 40-year period, tortured or killed 2,000 people. I mean, so no one is innocent in this whole situation. Let’s stabilize it. For the energy market’s perspective, there’s a way out of this. It doesn’t involve using nuclear weapons or doing these weird showy things. It revolves around accepting that they’re a rational player.

They have legitimate concerns that we’ve kind of adopted the Israeli style, Mossad style, kill all the politicians first. No, the US should just back away from that. Go back to 1980s style. And yes, there were some behind-the-scenes things happening, but don’t, as a policy, Make it a crime.

It was never really a crime in the past, but make it as close to a crime as possible to kill or assassinate a foreign leader or especially their family. I mean, that is just not a good—

TUCKER CARLSON: (01:54:54 – 01:54:59) It’s not a Western understanding of justice at all. The family didn’t do anything. It’s not a crime to be someone’s child.

MORGAN DOWNEY: (01:55:01 – 01:55:25) And Trump again said, “I got him before he got me.” I mean, okay, George W. Bush used the same logic back in Iraq when Iraq II, he said, why did he go after into Iraq and Iraq, too. They used the disguise of weapons of mass destruction a lot. But the one thing that sticks to me about that time is that George W. said, “He tried to kill my daddy.”

Can the US and Israel Accept Iran as It Is?

TUCKER CARLSON: (01:55:25 – 01:56:02) And when in fact it was the Israeli government that plotted to kill George H.W. Bush. And that came out in Victor Ostrovsky’s memoir, Mossad officer’s memoir. I think that’s a fact.

So whatever, it’s a complicated world, a lot of bad players in it, but stability has got to be the Let me ask you though, do you think the United States and Israel can accept an ending to this war in which the current Iranian government or some version of it remains in control? There are no, or certainly fewer American bases on the Gulf.

America is not keeping the peace in the Gulf going forward. We can’t even keep the strait open.

MORGAN DOWNEY: (01:56:03 – 01:57:21) Yeah, I don’t think the loss of those bases is a bad thing. I think they basically did what the US should have done. Those military bases, they were exposed targets for years. They shouldn’t exist in the modern drone warfare. So they kind of did the US a favor by shutting those bases down.

The US should still, when I say everyone talks about the US walking away from the Middle East, the US is not going to walk away from the Middle East. US still needs to be there and protect those countries because we need energy prices to remain low at its core level, but also just for general stability as the hegemon globally and to stop China becoming the hegemon, especially in the Middle East.

So the US is not going to walk away from the Middle East no matter what Iran wants or needs or thinks they’re going to do. Those bases, okay, whatever, they’re sunk costs, they’re written off. The US is going to have to come up with a more kind of even like Iranian-inspired mosaic mobile base structure to defend the Middle East, the non-Iranian side.

But the US and Israel have to accept that Iran is It’s a— it can’t be defeated. And Iran, good on them. They shouldn’t be defeated. I mean, they’re— they can do whatever they want as long as they don’t assault, especially with nuclear weapons, the rest of the world. They can do whatever they want. They’re an independent country. So the US, we just— and Israel.

TUCKER CARLSON: (01:57:21 – 01:57:51) But accepting what you just said, which seems demonstrable, I mean, the geography of Iran is ultimately its power and the fact it’s a cohesive country basically, and an ancient civilization. But just even saying that out loud is so contrary to what we have been told for 40 years and what even policymakers are saying now. We can’t accept this government, we can’t accept Iran as a nation.

I mean, they’re going to have to, right? But do you think they can?

MORGAN DOWNEY: (01:57:53 – 01:58:27) I don’t know. I don’t think it’s a matter of if they can, they have to. They have no choice. We have no choice. But to accept Iran as it is. Sometimes it’s like North Korea. Would the US love to— they have nuclear weapons in North Korea, Rocket Boy. And so would the US love to destroy North Korea? Would everyone around them, the Japanese and South Koreans? Yes, of course.

But it just is what it is. And sometimes you take the draw and you walk away and just allow it to exist. It’s sad, but that’s just beyond—

TUCKER CARLSON: (01:58:27 – 01:58:29) There’s a limit to your power because you’re not God.

MORGAN DOWNEY: (01:58:29 – 01:58:31) Yeah. And that’s not a bad thing.

TUCKER CARLSON: (01:58:31 – 01:58:31) No, I agree.

MORGAN DOWNEY: (01:58:32 – 01:59:53) Everyone thinks that the US has to intervene everywhere. No, no. You basically, there’s a payoff structure here where sometimes it’s not worth intervening. It’s just not in US interests. And Iran is a classic case of that. North Korea is another case where you do as much as you need to, but you stop when the payoff stops working.

And Iran is one of those situations where we need to walk away from the situation. When I say walk away, we’re going to walk away with those bases. Okay, tell Iran they’re gone. I mean, but we’re going to have them still defend, highly defend the western side of the Persian Gulf. But we still need to be there.

The US still needs to be there and defend oil production and natural gas production One is a bulwark against China and what they’re doing, but 2, because it does affect global energy prices and all of our allies as well as our selfish own needs. We need to defend that side. And even if you ignore, take Israel out of the equation, we still need to be in the Persian Gulf.

We need to be in there. Even if Israel, I think, messes with the mind of the US military in terms of tactics, like the thing about assassinating leadership, the US shouldn’t do that and shouldn’t get into that, but the actual physical logistics of defending those countries, the US still needs to be there irrespective of Israel. If Israel didn’t exist, the US unfortunately still needs to be there.

What’s Next for Global Food Supply and Prices

TUCKER CARLSON: (01:59:53 – 02:00:16) I don’t think that’s crazy at all. So my last question is about global food supply and prices. And you said at the outset that there’s just a huge lag because the growing cycle between the constriction of certain inputs, fertilizers, and outputs. You don’t see the consequences right away. What are we going to see in the next couple of years?

MORGAN DOWNEY: (02:00:18 – 02:00:42) So one of the two of the big things that were knocked out this year, most fertilizer is nat gas in a bag. Natural gas is about 1/3 of the world’s oil production. Qatar was knocked out this year, half of its production, was a big nat gas producer. And because of that, the feeds, the thing that makes the fertilizer, producer, that gas has gone up in price.

As I said, it’s only $3 in the US, it’s $30 in Asia, the price of natural gas.

TUCKER CARLSON: (02:00:43 – 02:00:49) Sorry again, sorry to interrupt you. What percentage of global food supply is directly traceable just to the nation of Qatar?

MORGAN DOWNEY: (02:00:49 – 02:00:51) 8%. Oh, sorry, no, to Qatar.

TUCKER CARLSON: (02:00:51 – 02:00:54) Just Qatar, which is one of the biggest gas producers.

MORGAN DOWNEY: (02:00:54 – 02:01:04) It’s 1/5 of the world’s LNG. So it’s a decent chunk. It’s like of the world’s food, it’s a 5th in terms of LNG. And ammonia production.

TUCKER CARLSON: (02:01:04 – 02:01:16) It’s just funny. So you’ve got a country of 400,000 people, such a tiny little country, one of the smallest countries, and is responsible indirect, but kind of directly really for a huge percentage of global food supply.

MORGAN DOWNEY: (02:01:17 – 02:04:10) Yes. And also not just nat gas, you have sulfur. A lot of heavy crude oil produces a lot of sulfur and you have to remove that sulfur. And sulfur is pretty much free. You can buy the sulfur, someone will give you away the sulfur. If you go up to Canada, they desulfurize those oil sands that they dig up. So they have mountains of this yellow brick sulfur.

The problem with sulfur is that it’s not the actual material itself. It’s kind of free. They would love to give it to you. Go up to Canada and get it. But the challenge is the Persian Gulf sulfur is used to make— most fertilizer is natural gas, goes into urea and ammonia and sulfur. And so sulfur is kind of free pretty much because it’s a side byproduct of the oil and gas industry.

But the problem is it’s not produced in all places around the world. And a big source of sulfur is also the Middle East and getting sulfur out. So the fertilizer industry has been hit by natural gas out of Qatar being shut down and sulfur.

And the problem with sulfur is that Canada has a huge amount of sulfur, but it takes a while for the supply chains to turn a huge industry to point to Canada because Canada has to rail it out and get it to fertilizer production facilities. And so the net effect is that fertilizer prices have gone up by 300 or 400% this year.

And it doesn’t really have a big impact in developed economies, even places that are not developed economies as much, like Russia and Ukraine, they produce a lot of wheat. The US produces a huge amount of grain, these huge food exporters, the US, and especially to places like China. China imports a huge amount of Western food.

So it doesn’t really have as direct a big impact in the West, Western farming, but has a huge impact in places like India, Africa, poor countries. And for those people, the main variable on their crop yield is fertilizer, and that has just gone up by 300%. So that will impact a lot of countries next year when crop cycles come through next year.

And I don’t think it’s— I mean, people always talk about famine in the most extreme case. There will be less food produced next year. It’s not going to affect the West, like America, or it’ll just become slightly more expensive food, but you will People get— it appears a lot of the world is still living at the breadline, if you will, and that is going to have a real impact.

So that’s why stopping this now as quickly as possible and reverting to a more quote unquote normal situation is not just urgent for energy prices, it is going to have an impact. And that impact is going to be on the— you know what’s going to happen? No one will talk about it. It’ll just happen under the radar.

People will be hungrier, and especially in poorer countries, places like India and places like Africa. And no one will really talk about it and it’ll just be into the background for the next year or two. But that’s actually already unfortunately baked in. That’s not—

TUCKER CARLSON: (02:04:10 – 02:04:20) Well, you’ll see people move. I mean, you saw in the 19th century Finns move to Sweden. Then also you saw the Irish move to the United States.

MORGAN DOWNEY: (02:04:20 – 02:04:21) Food reasons.

TUCKER CARLSON: (02:04:21 – 02:04:21) Food.

MORGAN DOWNEY: (02:04:21 – 02:04:21) Yeah.

TUCKER CARLSON: (02:04:22 – 02:04:27) And so you’re going to see mass migration every time food prices reach a certain threshold, people move.

Energy Blindness

MORGAN DOWNEY: (02:04:29 – 02:06:50) Yep. It goes back to this kind of the thing I began with is that everyone is so disconnected on where their energy, all of like 90% of their energy, people have this misconception where it comes from. But also in terms of food, people also don’t realize how it’s not fragile. The oil industry and natural gas, everyone thinks they’re fragile. They’re very robust. Just as proven by this year, the Persian Gulf.

They’re not a fragile space, but they do have a price, the market price sensitivity. The global market for food and the global market for energy, they have impacts. And some of those impacts are very, very bad for especially poorer countries.

And I hope that people can have a realization of that people in Europe, people in the US that rail against reality, they’re railing against how food is produced, how energy is produced, should kind of have a, not a, remember there was that when J.D. Vance was complaining to Zelensky, he was like, “You’re not grateful.”

I think that the world as a whole is kind of not grateful for where its energy comes from and is not appreciative of it. Because it should be something that people should learn more about and understand and appreciate. And because of that, it will affect how people deal with their own lives and reality. It’s a very fundamental part of the world we live in is oil and gas and coal and food.

And we didn’t leave that world. It still exists underpinning modern civilization. It’s just that people have disconnected themselves and are living in this simulated world where it’s all solar panels and wind turbines. That’s not reality. That’s still 4 or 5% of the world’s energy. And people need to anchor themselves, however they do it, into understanding where their food and oil comes from.

And sometimes they’re forced to because the situation in Persian Gulf this year. But it’s Yeah, it’s kind of an interesting kind of blind spot, energy blindness.

TUCKER CARLSON: (02:06:51 – 02:06:57) Morgan Downey, one of the great experts on the topic, author of Oil 101. Thank you very much. That was great.

MORGAN DOWNEY: (02:06:57 – 02:06:58) Thank you, Tucker.

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