Bloomberg IntelligenceTrump Says He’s Doubling Tariffs on Canadian Steel, Aluminum
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Bloomberg Intelligence hosted by Paul Sweeney and Isabelle Lee
Joe Deaux, Bloomberg Mining Reporter and Richard Bourke, Bloomberg Intelligence Senior Analyst, Basic Materials, discuss tariffs. President Donald Trump announced he would increase steel and aluminum tariffs on Canada to 50% in response to Ontario's move to raise taxes on electricity sent to the US. The U.S president said he would also “substantially increase” tariffs on Canadian automobile parts on April 2 if Ottawa does not drop tariffs on dairy products and other US goods.
CERAWEEK Interviews:
Bloomberg Intelligence Co-Host Alix Steel speaks with:
Carlyle Chief Strategy Officer of Energy Pathways, Jeff Currie
TotalEnergies CEO Patrick Pouyanné
Toby Rice CEO of EQT
Williams CEO Alan Armstrong
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Tariff news coming out of Washington, d C. President Trump raising the tariff on Canadian steal on aluminum from our good friends. I like to think still in Canada, and that is certainly roally in the markets. S and P's off six tens a one percent, the nastacs off quarter one percent. We're gonna break down with a couple of experts over the next couple of segments. Let's go right to Joe Dough. He covers all the metals I'm mining for Bloomberg News. Joe, how much aluminum do we get from Canada? I know it's a big deal for them. Is it a big deal for US consumers?
Yeah, it's massive.
One of the numbers that we ran out and Richard and probably get this a little closer, but it's something around seventy percent of the aluminum consumed in the United States per year is produced in Canada.
Oh boy, oh boy.
All right, So what's the feeling here within the industry about what's happening, how the industry might react.
I think at this point there's quite a bit of confusion with an industry. I mean, we don't know for sure, but it's not clear that the President of the United States had at least telegraph that he might be going to double the aluminum and steel tariffs. So you probably had. You're probably having a lot of chatter around boardrooms at places like Ford and Molten Cores and Budweiser and Coca Cola.
I want to bring Richard Pork He covers the metals and mining stocks for Bloomberg Intelligence. Richard, give us a number on kind of how material this is in terms of how much aluminum do we in fact steel all that stuff do we get from Canada?
Okay, so Canada is the number one export as Joe mentioned, they're also number one export of steel the US aluminum. It's a much bigger problem because the US doesn't can't needs to is that needs doesn't have the capability to produce aluminum. Because our electricity electricity is number one costs to produce aluminum, we're not competitive. Electrical Mark energy costs, So therefore we need to import aluminum steel. On the other hand, the US imports about twenty percent of its steel needs. Our look, our analysis shows that maybe a third of that is steal that the US producers don't want to produce or maybe can't produce. So therefore, with the current industry utilization at around seventy five percent, they can ramp up and cover a short fall you know on steel lunum. We don't have that capability.
Ryan Gribrins give stratigue is said another day, another tariff announcement. How seriously should we take this? I mean, markets are reacting, as we've seen the whiplash the past weeks, But when do we know if it's the quote real deal.
Well, you know that's the twenty four dollars dollar question that everybody's asking. You know, this one sounds like it was in response to Canada coming with twenty five percent energy tariff, so I could see it, you know, if Canada rolls back there tariff, the US rolls back, you know, maybe back down to twenty five percent.
Hey, Joe, so you mentioned kind of the people that actually use a luminium, whether it's a you know, making a can for beer or soda. Are we hearing anything from just those types of people, because those are the ones that can have to deal with as well.
Yeah, I mean the packaging companies in particular are a little more careful because there's a lot more competition there. Like the first time around, I remember hearing from one of the big beer companies saying, you know, Joe, if we raised the price of you know, a twelve pack or a six pack of beers, you know, the other company would come in and eat our lunch for it.
Right.
However, I was saying earlier with Richard on another segment, you know, the Ford CEO came out a month ago and said these terrafts will blow a hole through the industry. So I think you are starting to hear more CEOs actually be a bit more aggressive with what they're saying now. Partly that is because of the bigger concerns that go beyond just metal terrafts. You know, Mexico and Canada terraces would be absolutely difficult to handle. But yeah, I think you're hearing it from them. Rich Third thirty seconds. What if some of any of the companies reacted yet so far today we him you.
Know, a Cola on their latest call had kind of outlied in scenario what they saw would happen, and what they saw happen is they would shift their production to Europe or shift their shipments to Europe, and they expect a lower tariff country. You have to come in and backfill what they didn't do to the US.
Okay, all right, appreciate getting both of you guys. Jojoe covers medals of money for Bloomberg News. Richard Boord covers it from Bloomberg Intelligence side, looking at the companies here, so again the news President Trump doubling the tariff on Canadian steel and aluminum to fifty percent, a bigger issue for aluminums. What kind of what we're learning here.
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Let's sit down to Houston. Right now, Bloomberg Intelligence co host Alex Steele speaks with Carlisle, chief strategy Officer of Energy Pathways, Jeff Curry. Let's go to Alex right now.
Hey, Paul, thanks lot, really appreciate it. Jeff, I've been asking CEOs for the last day and a half, what do you do with twenty five percent tariffs? And now it's going to be what do you do with fifty percent tariffs?
What's going to happen to the market.
Well, it's pricing it in, you know, copper, you know, heading towards five dollars a pound right now. But I think aluminum is the one to really watch because the question is can you on shore aluminum.
Production and the answer is absolutely not.
You know, if you think data centers in AI are power intensive, aluminum smelting is in a whole different world. It's six times more power intensive per dollar revenue than AI data centers. So if you're already power constrained, there's no possible way you're going to bring all of this aluminum smelting into the United States.
So where do we get most of our aluminum and steel? Then the refined products, well.
A lot of it comes from the hydroelectric power up in Quebec, so it comes down into the US from that. So shutting down that cheap source of aluminum supply and trying to replace it with really expensive produced domestically produced supply.
I think it's going to be a tall ordered ask.
It's been a tough commodity road in the last couple of weeks. If we did with this moolatility, right oil, was it a six month low? That's on recession fears, tear fears, growth fears, et cetera.
What kind of cycle are we in right now?
Well, I think what we're going through is a huge shift in the global order around security. And I think you know what is the response that probably Ontario is going to do to these Tariffsy're probably going to cut power. The governor's already threatened he's going to do it. He cuts power into the US. Energy security is top of mind, and I think that's what's going on right now, whether it's in Germany. Actually Germany, the Norwegians threatened to cut power into Germany back in December when a crisis occur there. So I think energy security is top of mind for everybody around the world right now.
Okay, so what does that look like?
Because what's so interesting about commodities is it'll always clear it a price, right, You'll always buy something.
It just depends on what price you'll buy it. Is that still true?
Absolutely?
And I think what we're going to start to see is that's what's going on with aluminum and copper today. Is there going to price in a security premium to make sure you have that supply in your country domestically.
Protected, in duty paid.
You're seeing it in gold, and you're seeing it across the metal space and then particularly an energy.
We're beginning to.
See that and I think that that is going to be the primary driver of the you know, let's call it the new cycle and commodities.
So it's not geopolitical risk, it's not a green premium, it's a security premium.
Correct, you're gonna pay up to produce this stuff at home?
Yep, exactly. That.
That's a humongous shift.
It was huge, huge, and it's going to be really difficult to do, you know, whether or not. And I think the argument we take is it's going to be a diversified set of energies.
That's why we call it the New Jewel Order.
Is because you're gonna want oil and gas, you're gonna want renewables, nuclear, you're gonna want everything, and you want to diversify yourself because if you lose.
One of those supplies.
You want to be diversified so that you can deal with that that disruption. And I think the key point here is when we think about fossil fuels, why do we like fossil fuels so much, is because they're tradable, they're portable, they're stortable, and they have high energy density, which is why we move them around the world. Those same reasons we like them, it's the same reasons so dangerous because somebody can just take them from you. And so when we think about what's driving I think this new environment we're living in, let's call it peak trade instead of you know peak.
Actually, look at the evolution of peak oil.
It started out peak supply, we're going to run out a supply, and then peak demand. We got too much of the stuff, so we need to reduce you know, the emissions. And now it's peak trade, meaning I can't get my hands on it.
So it's going to be really interesting then, is if we get a piece in the Ukraine War, what happens with Germany and Europe and buying Russian gas.
They're going to be hesitant, they'll probably take a little bit. Yeah, they're still buying it, but they're going to diversify their sources. And I think that's the key message here is diversify your sources so you're not so dependent on one supplier one type of energy.
And I like to point out what is the best selling.
Car out there, a PHEV, a plug in hybrid. Why because it operates off oil, gas, solar, wind, nuclear, the entire gambit.
Of all the energy sources.
And I think that that type of diversity is to be key in this new jewel order.
Okay, So if I'm looking at prices in general, like does the band move up?
Do prices become more volatile? Do they move down? Like if I'm looking at say oil or copper, what's my trading band?
I think that the volatility is going to explode across all these markets. You're already seeing it in power and the metals and across the space.
That's going to lead to a higher average price.
By the way, the volatility then discourages the MS made I don't want to invest in this thing is too volatile. Lower investment creates more volatility, and it just feeds off of itself.
You're one of the first to invent the word supercycle, right I mean have big supercycles. There's big ups, there's big downs, and there's an investment cycle that goes with it.
Are we no longer in that, you know?
I think that's a great question.
And those supercycles before were created by demand pull creating big shortages, created these big trends that created that supercycle.
This one's a malinvestment cycle.
It's industrial policy push which creates pockets of ince is like to call it.
It's like a bubbling cauldron, a little mini.
Supercycles everywhere, and you get these high volatility and that's what we're seeing. By the way, the opportunity for investors in this environment is phenomenal. In fact, one of the themes going around here in Seer Week is the oil market. And these markets are micro bullish but macro bearish, So that micro creates these little opportunities inside there that you can take advantage of.
But you don't get that big upward trend.
And I think this bubbling cauldron of a little supply and demand imbalance is probably the best way to distry.
Does it change the time horizon for investments or the return for those investments When.
We think about long term investments, it's going to provide a very similar return.
But you've got to manage that risk.
And I think that that's the real the message here we think about you know, the focus before was on levelized cost of energy.
Get the l COE down. We got it down, but we were unable to deliver the jewels. So you think about Germany.
It got its levelized cost, but it could only produce the power when the wind blue or the sunshine. Now the focus is on that delivered jewel. You can think about Now the focus is on Roe instead of LCOE. And so get another way to say it is dispatched power that goes through the consumer is opposed to a centralized production of power.
Okay, fascinating.
One more quick question, because you're you and it's an oil conference, what's the lowest price of oil you think we're going to see this year?
And what's the highest? Totally bad question.
I think that's a great question because about this drill, baby drill, we're sitting on the bottom of the cost structure. You already see it, drillings coming off. You know, you know all the OPEC countries are under pressure.
Yeah, maybe you can get.
Down into the low sixties or something like that. I would argue you know, the markets to the upside. You know, looking at the amount of investment out there. Inventories are low, by the way, and now you put the security premium, people are going to be scrambling to get the barrels bringing in and I think that that's going to get to be the key message.
Jeff, always a pleasure. Love chatting with you.
Is always going to co w at Siah as well, Jeff Curry, Carlisle, chief strategy officer of Energy Pathways.
Paul back to you, all right, Alex, thank you so much. We appreciate that. Bloomberg Intelligence co host Alex Steele speaking with Carlisle, chief strategy officer of Energy Pathways at Jeff Curry.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple coarcklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Let's head down to Houston, Texas h Town, as they say. Bloomberg Intelligence co host Alex Steele speaks with Carlisle. I'm sorry that was the last moment. Speaks with Total Energy CEO Patrick Puyoni about the French oil company. Let's go to Alex right now, Alex, all right, thanks.
So much, Paul, I appreciate it. Right I'm here with Patrick Preona. He's chairman and CEO of Total Energies. And the amazing thing about Total it's a European energy company, but it uses its money from oil and gas to do stuff in power and alternative energy. That's a model that not a lot of other companies actually subscribe by. So it's great to get your perspective. Patrick, thank you so much for joining me.
Thank you for welcoming me.
News of today, we just heard that we have an emergency electricity issue in the United States. President Trump is now declaring fifty percent tariffs. I'm still on aluminum imports from Canada. Your reaction to a.
Trade war, I think it's that I think this war should. I hope it will hand quickly. I think it's better not to have wars, to be honest. Maybe it's a tactic to negotiate, and I think, honestly, there are all these economies are interconnected. In facting in North America, you know in many ways the cars or bots, et cetera, including by the way electricity you know, of course you the northeast of the US are receiving electricity from the idea of Canada for the benefit of the citizens, so they have a lot of issues. I understand a about drugs, migrations, it's not.
Only about trade.
So my view is that as a global ward company, it's better to hope if you will take be so quickly, that's all what I can hope in the benefit of all the parties. And like it was for Trump, and I remember it was a debate at the end. Maybe the shortest would be the better for everybody, including by the way, for the US economy.
Does it make you think two or three times about investing in the United States?
No, No, because I'm an energy company.
Energy.
It's a nice country for energy. You have the cheapest gas, you have oil.
We can explove, we.
Can develop in the electricity booming market of xtricity.
You need more electricity.
It's gonna cost more now now, Yeah, but it's good too.
We can build gas plants, cheap gas gas. Five poor plants we are building also in Texas. Were in Texas today. I have five giga webs or solar plants. It was easy to build here because you have a lot of space. Combining plants with gas plants, it's a nice way to produce more equicity. So for me, the US is a large market and we are ready to invest in the US.
I understand that.
The only point is that if we need to reshure, for example, all the solar panels that we use on our neway board films, why not. It's just a little more expensive, so the customers will have to pay somewhere.
So not you, but the end market. Yeah, okay, but then let's just tackle say after win for.
A second, I put it in the pools.
A pause or like the garbage.
Pine not garbage pause.
We got a concession for fifty years, okay, So I understand during the next four years no way to obtain any federal license. So I don't want to spend my time to lose my time my team, so I don't need to spend pay money to spend money for that.
So we say no, we put a poose.
We have reduced our teams to minimum, and then four years we'll see if federal GLD policies are changed.
Are you worried about any existing leases that you currently have and operating for wind and solar I was talking to the Secretary of the Interior, who didn't who didn't rule that out? To do what to take away those leases?
To take away the leases, but the leazes, it can manage that on federal lands, so I check. I have no leazies on federal lands. So and by the way, in Texas there is no federal lands or most so no that we make. We make our due diligence. So we are fine. And I think, honestly when I discuss by the way, lund mask is a big fan of solar and batteries for good reasons, so I think, and we will see the debate. I trans choose the debate the Congress and the Senate would be interesting with the reconciliation bill.
So that's clue.
But for the time, I mean, we will wait to see what are the new physical conditions to develop solar in the US. But you know there are a lot of red states where we develop new way bores. And again, what the priority for Trump administration is. We want more electricity for AI for data centers.
It's all of the above. More electricity is gas.
It could be nuclear, but it could be also were bares with batteries.
So I'm optimistic.
I think at the end common sense in the US, but have observed at the end business interests are always respected, and you have a fundamentalism. Trum is very business friendly, So why not for energy, which is the core of all the program for golf.
Okay, so I'm optimistic.
Globally though, I mean, we're looking at starts taking a hit. The sentiment's not great. They're worries about recession, either in the US or elsewhere because of terrorsts are using any.
Indication of that.
Yeah, but what because you know what people ate, it's uncertainty. What has been created is uncertainty. We've all these started for us. So suddenly we don't like the markets. The stock markets do not like. We don't know what we go. So putting the caroos is a nice way to negotiate. I can use it myself from time to time. I'm not a big I'm not sure obtaining the good reserves.
But short, callous please, that's all.
But the markets are saying to the administration we don't like uncertainty.
We are changing the world. Where do we go?
So I think the shortest will be the better for all the interests, including fundamentally for the US. Economy, and I'm sure that President from Trump and his administration are very led by the un lf US economy, which was not too bad in fact, so stuff is uncertainty. But I think the best thing to do in order to avoidization and things, which honestly is the US economy SHO should not get again.
No globally for China, for example, China puts a tar uf on US energy that does directly impact your business. You're a huge gas and energy traders.
It does not impact.
I will tell you what, because the Chinese are smart if they choose that product is because it has a little impact. Because in fact, a company like Total we produce energy fourty million terms in twelve countries. So yes, my energy from the US will not go to China because there is a tariff, but I will use the energy from cat or from Australia to go to China. So in fact we made the analysis. The impact on China is very minimum, almost nothing. And for honestly, today for US we are the largest exporter of US energy more than Telemeton's. Our primary market is more Europe today, so we are so we bring recent Europe, which is fitting by the way, effect exactly with the Trump administration policy to expand the business the trade or to the trade with Europe food, energy, and in particular energy.
What happens though, if there's peace in Ukraine and Europe starts buying Russian gas more.
We'll see, First we need to have peace.
Second we need to see if Europeans will buy more Russian gas.
Any indication that they might from here where you say, I think you know, it's not an easy It will be a debate between economy and geopolitics.
Economically, for sure, Russian gas is cheaper, so it was part of the competitiveness of the German industry. Politically, I think it still will be a big debate to see if.
We take back some gas.
Yes we'll take some Russian gas, but surely not at the same level before the war. The other dependency from Europe to the Russian gas. I think this eries over we will be in between will not be zero. It will not be one of the fifty percent per year, maybe alph of it eighty. And so that means that still we will need more energy after the peace when we were using energy.
Before the war.
So for the US energy it is a growing market.
And also you have Germany that's trying to pass money to be able to rearm and reindustrialize. What kind of demand you like, what's your opportunity set there that really comes to pass.
But I think Germany is a very strong market for us. We love it because the Germans in an excity have decided to get a non nuclear get.
Off of coal, so it will be a mix of gas plants.
We need to build a twenty GigE out of gas for appartments and renewables exactly of strategy.
So there is for us.
We have invested in the last two years strongly in Germany to build what we call our integrated power business. So I think, yeah, Germany, and it's true as well, but we need to gain the kis. We need to produce more weapons in Europe for sure, in order to be more independent somewhere. And because the message from the US is clear we need to take ourselves of future in our hands. So that's good for globally, for the economy, in the industry.
So what's on your M and A list right now?
Yeah, you're going to buy something for that's a opportunity.
First, we have a huge organic growth. I have five percent in front of me for the next five years now.
We have been clear that we.
Want to in particular to build a larger gas business production business in the US. So we made so many ideas last year. Maybe there is more to come because I need to increase my gas production in the US.
But boltons or bigger deals.
Boltons is fine.
It depends opportunities, some matter of to make good m n as.
It's good to become a cyclical.
So I will not announce that today.
I need to, Okay.
I get that.
Is this also a good time to get out of certain assets that aren't working for you, say Ista, maybe on the list.
Yeah, we last year one of our piers has done a very good deal. You know Argentina. We have the strongest gas producer in Argentina.
We have also some share roll.
We are not very keen to develop the share all for different reason. And so last year one of our piers has done a very good MNA. So yes, I'm ready to at the same price one of our coolies. I'm ready to divest my share old production license in Argentina as part of the divestment.
But you know, we have been getting close to that, and.
I don't know we have processes. Well, it is good news.
All right, let's go to one other area that mona make some news. So Mozambique, El gie. I know you've been working very very hard on that project. To get it restarted. You need approval reapproval from the US Import Export Bank for a four point seven billion dollar loan.
How's that gone?
I think it's for US In first, this was approved on the Trump one administration. So it's a contract which has been signed. I just would like to remember, and I believe in a rule of roof. Fundamentally the contract exists. What happens is that in twenty one were to declare force measure because there were some security events, we had to stop the and so it's just a matter to amend this contract to put a new completion date in twenty thirty to reflect the fact that between twenty one and twenty four we are forced to stop. That's what we want be amendment. So it's not a big amendment, you know the debate. I think now you have a functional USXEM. President Trump has decided to put in place a new board.
So we'll say, but I'm optimistic.
But years, days, hours, month, Okay, I don't know Tondamentally, I think honestly there is normal debate with this administration.
The mandate of USXIV is to be neutral in terms of support. In fact, why USXM is supporting us because most of the contracts have been awarded to US companies, US contractors. This project represents sixteen thousand jobs in the US. That's why USXM is supporting it. We inevited the project from Manadako. We are not a US company, but we kept all the US contractors and that is the driver behind.
Which supports USXEM.
It's not total energy, it's fundamentally the support of U SXEM is an export credit supporting the fact. But we have awarded more than forty percent of the contracts to US contractors, which are all asking me please resetart because we have the jobs, and they have written to all their congressmen, to all their this is for what, But this is the reason why we can be also pro US industry when we invest abroad, when we give jobs to US companies. And this is the reason why I think USXEM will honor his word for simple reason. It's not because it's energy, it's just because it's US jobs.
That's the fundamental reasons.
That's a good pat to You're one hundred percent component that money is going to come your way.
Yeah, pernfident Patrick. It's a real pleasure. I love speaking with you. Thank you so very much for joining me. I really appreciate a package pre and a chairman and CEO of to Hotel Energy.
I'll sign it back to you, all right, Alex, thank you so much.
We appreciate that.
That's Bloomberg Intelligence co host Alex Steel speaking with Total Energyopatrick P and A on the global oil and gas business down there in Houston, Texas.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Well, yesterday Toby Rice, CEO of e QT, spoke with Boomberg Intelligence co host Alex Steele about the impact of tariffs on energy investments. And it's Sarah Week in Houston.
Let's take a listen.
So for our business, surprisingly from a cost perspective, doesn't have a material impact on our costs. But when you step back and you look at energy as a whole. Tariffs on a country like I say, Canada would actually be bullish on natural gas prices here domestically. So that's a big why gus more demand because of the fact that Canada imports so much gas into the United States, which would have terrifs which would lift lift the price of natural gas here domestically, but from a minor amount. I mean, if you think about it, gas prices are four dollars and fifty cents. That's the energy equivalent of call it thirty dollars a barrel. So I mean, natural gas still is the most cost effective energy solution, but tariffs are certainly a big theme of the conversations we're hearing this.
Week with some o real services.
Say, look, we're looking at shale, you're gonna drill a well, like it could really increase those costs to actually get more oiler get more gas out of the ground.
True for you guys, absolutely, that definitely is an issue for people that are playing the spot market for their services and looking to gauge their activity levels based on the current commodity price.
At EQT, we take a much.
More long term, steady focus on our activity levels and because of the fact we've contracted so much of our services. We've muted or we've insulated the impact of these tariffs, but they are going to be felt by others playing the spot market.
Unleashing American energy is a cornerstone of the Trump administration. You have been saying that for a very long time. Also, when we talk about unleashing, do you interpret that to me unleashing oil or unleashing gas?
All of it at all American energy?
I mean, Alex, we are in a place right now in this country where we are producing record amounts of energy. If you added up the oil in the gas that's being produced today, it's over thirty million barrels a day of energy.
OK. But here's the challenge. People are scratching their.
Heads at home because Americans have seen their energy bills increase over thirty five percent. How can we live in a world where energy production is up but prices are still still going up. The answer is quite simply, because political force has overwhelmed market forces, and that's made it incredibly difficult for the.
Market forces to work.
And that means we see big disconnects between where energy is produced and where it's consumed. I'm selling Gas and Appalachia today for four dollars, and in Boston they're paying fifteen. There's an incredible opportunity for us to get ourselves out of this. It's not about drill, baby drill, It's about build baby build. That needs to be the mantra that's going to unleash America energy and unleash energy dominance here in this country, which is going to lower energy bills for American and strengthen our energy security.
And by built, you're basically goo pipelines.
Like the reason why people in Boston are paying fifteen bucks is because there's no pipeline that's going to get a gas efficiently there. Do you think we're going to get East Coast pipeline? Would you bet money on that?
Well, you know, you look at the headlines last couple of weeks. The Trump administration has already thrown support behind the Constitution pipeline, which could bring up to a BCF day of natural gas. That was one of the travesties that has happened in the past, was one of the pipelines those blocked cancels are opposed. So for the fact that this administration is putting focus on that, I'm optimistic, but it's not just going to be executive order or political support that's going to make this happen. We need to see real permit reform in addition to legislative reform to give our pipeliners the confidence to get these projects built. Because the market is screaming in four.
Years, I get built in four years. That's a tough that's a tough road.
Yeah.
Hopefully the legislation reform, the perperform that takes place, will include some some litigation reform that will prevent people from actually going back and trying to vacate permits for assets that are already built. I mean, this is the type of situation that that's happened in this country. Imagine a pipeline company getting their permits, starting construction and then having their permits yanked away from them. Yeah, okay, that's exactly what happened with Mountain Valley Pipeline, one of the most controversial pipelines in this country. And that's an asset that eqt owns today. And for people that maybe say, hey, we don't need these pipelines, well, let me tell you what's happened on that pipeline this last winter. That pipeline that people have said is not necessary for this energy for this country's energy security, have flowed at max capacity over to bcf a day. And here's a shocker, the price at the tail pipe of that pipeline reached over thirty five dollars per mcf. What would have happened if that pipeline was not built. Clearly there's a sign that we need to get more infrastructure built. And if you think it's hard to get a pipeline built, understand this. It's hard to get a transmission line built. It's hard to get an oil and gas location built. It's hard to get a five thousand acre solar facility or wind farm. I don't care what type of energy you're building. It's gotten incredibly difficult to get things built in this country. That's why to get out of this, we need to get back to letting market forces rule and build baby built.
Okay, So that's the pitch. I get that.
The other side of it is not only to get say gas to the East Coast, but also to get our gas out of the US and export it and form of lag. You're going to need a pipeline from the Haynesville to get to the Gulf Coast.
As it happen, there is going to be some more opportunities that people are looking at leveraging existing assets.
That we have.
It's one of the questions that I think a lot of pipeline operator looking at, is the right of ways that we've already established. What is the extra capacity we get put inside those right aways? You know, the environmental disturbance from creating a right away can be muted when you're using existing core doors that have already been created. That can be an opportunity. But the theme isn't just the three themes I look at it when it comes to natural gas. One, continue to evolve our energy systems using natural gas to replace coal. Two is this LNG theme that's taking place. And the third big theme that's taking place is with AI. So there's a really amazing opportunity for natural gas in the future.
Well, currently you can't benefit off of the LNG export trade right now, right because you need your gas to get there.
Well is America's largest natural gas or Big America's natural gas champion EQT. We sell our gas all over the country and so to the Gulf Coast specifically, we move about one point three bcf a day of our product down to the Gulf Coast. About eight hundred million a day of that is going to the Energy Corridor. So we do have access to that market, and we are excited about the America's ability to continue to supply LNG to the world and help them lower their global emissions and also provide energy security.
At the same time, you also brought up AAI and power demand. How are you guys going to play in that space? What are conversations like? It feels like it's not just independent power players, it's now regulated utilities. It's also energy companies that are now trying to become power companies in essence, what are your conbos like?
So AI is the thing that everybody's talking about. Whether you're at an energy conference or any conference, people are talking about AI.
Just remember it's only.
Been twelve months since people really started saying this is going to be a big deal. So in less than twelve months we've seen the momentum for AI only continue to strengthen. How big could this be is there's a lot of wide ranges. Some people are saying fifty gigawats or seventy five gigawatts. That's people are basically saying between ten or fifteen New York cities power to feed in New York cities. This is a really big deal. We're seeing some technology investors come into EQT that have estimates that we're going to see one hundred and seventy five gigawatts of power demand when you do the build up on how many chips?
So, but how do you play in that right now?
Well, right now EQT, about a third of our now gas in this country is used for power generation. So we've consistently seen year over year higher and higher natural gas utilization to meet power. So when you're talking about AI, you're talking about power, you're talking about natural gas. The evolution that's taking place over the last twelve months, people have questioned, say, well, how will natural gas.
Meet this power demand? Will they play a role?
Well, twelve months ago people were thinking they were going to be able to meet that security or meet that.
Demand with renewables. We've moved past that.
Then they looked to nuclear and realize it's hard to get nuclear built, it's probably going to meet the time ambitions that they have, and so now they've moved to natural gas, which is the most cost effective most reliable form of power generation and most importantly, it's the fastest speed to market, and we think those attributes are going to allow natural gas to lie and share of the power gen that's coming.
All right.
That was Bloomberg Intelligence co host Alex Steele speaking with Toby Rice, the CEO of EQT, at Sarah Week down in Houston, and my takeaway was not much so much build. I mean, drill, baby, drill, but build baby build. So that's kind of a takeaway there. We need more pipelines to get the energy that we do produce to.
Where it needs to be.
It's actually great. I'm learning a lot just watching Alex's interview. I mean, this is a space that's very important and crucial to the economy, but I think doesn't really get a lot of headlines, not like that.
S and P.
Yeah, exactly exactly.
So the energy business is front and center down there in Houston, Texas. And again you know the EQT. They have a lot of oil and gas coming out of their shale areas, but the challenge in some markets is to get it efficiently to where it needs to be, whether it is via pipeline to the East coast or down to the Gulf for export LNG market. So again, great stuff there.
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All right, let's head down to Houston once again. Bloomber Intelligence co host Alex Steele speaks with Williams, CEO of Alan Armstrong.
Take it away, all right, thanks so much, Paul.
That's right, I'm here with Allan Armstrong, CEO of Williams. Williams is one of the largest natural gas infrastructure companies in the United States.
Great to see you, Thank you for joining me.
Glad to be here.
Thank so.
The news of the last hour is that President Trump is increasing tariffs on steel aluminum imports from Canada to fifty percent.
What does that do to your business?
Well, you know, we we have a number of suppliers the large diameter pipeline business, a lot of European suppliers, Korean suppliers for that space as well, so you know the market will have to react to that certainly.
Though.
You know.
Something that companies will have to react to and respond to in terms to the supply chain. It's always been a great relationship with Canada, you know, as a supplier, particularly in the still into the energy business and the large diameter pipeline. So a lot of people don't appreciate, you know the fact that the still pipe making process involves making the plate still and then converting that into large diameter pipeline.
A lot of capacity here in the US for smaller diameter.
Still products like is used in the drilling and uh in in the production area, but when you get the large diameter pipeline, pretty limited capacity here in the universe.
Capacity to be built would be.
Quite the build.
Yeah right, it takes a while to to gear that up, and a lot of those mills are already you know, booked out pretty far so so but the good news is, you know a lot of really good suppliers in Europe that we've always used, as Williams, those.
Traffs are coming up.
Yeah, so we'll see I mean, I think you know them.
Certainly laying pipe right now on the ground where this would be an immediate issue, or.
We've already i mean anywhere we've got a project like that we've already bought the steel well in advance, and we line those up well in advance. So it's not it's not a situation where we've got pipe coming across the border and we're gonna have to figure out how the tariffs work. So most of our pipe gets bought. You know, we contract the business. Once it's contracted, then we go by the pipe. And so you know, the kind of ironic thing about that is because our permitting processes take so long here in the US that we have plenty of time, unfortunately, to go buy the pipe's while we're working on the permitting.
So the theme here the administration originally it was sort of a drill, Baby drilled, But the theme here among CEOs is build baby built, which was is one hundred percent up your ally and in your business, right, what are the biggest hurdles, Like is it permitting?
Is it going to be sourcing? Is it labor?
Yeah, no, it's I mean it is first and foremost permitting in the markets that we serve.
We serve some of the more.
Heavily populated areas like Seattle, Portland markets, New York, New Jersey.
Up provides supplies.
Up into New England and all along the eastern seaboard, so areas that have a lot of data center load right now going on, and as well as some big projects here in the Gulf Coast area serving LNG market.
So we've got a forty.
Two inch pipeline right now that is being built from the Hainesville down into the Tying into our Transco system, large diameter pipeline. So we've got a lot of big projects going on. But truly, when you get into the northeast, the state's ability to block pipelines has been pretty chronic, particularly in the New York City mark into New York City, Like you know, Governor Cuomo block two of our big pipelines. The outcome of that is ninety eight dollars natural gas in the winter this year into New York City, which is going to make.
The federal government fit. That said, if that's a state.
Issue, if the federal government, I would say that I think what's going to fix that is people being really upset about their utility bills. Yeah, and you know you saw yeah, so you saw a couple of weeks ago where where Governor Hokeel actually went out in supported the Iroquoid pipeline expansion into Long Island, and she recognized that it was because customers on the con ed system, while they were providing low income.
Assistance for people's utility bills.
That was being completely eaten up by the fact that the cost of gas into those markets. And it's not because natural gas is high. Natural gas is, you know, so much cheaper than crude oil or fuel oil. It's used for heating there. But it's just the fact that there's a bottleneck on infrastructure.
And then you add on to the fact that AI data demand need for power is going to increase a lot. You recently struck an agreement with an undisclosed investment grade company to provide natural gas and power infrastructure at the tenure purchase power agreement. The total cost of projects about one point six billion dollars.
Can you tell us anything about who the customer is?
No, we cannot, so, and you know, the good news is we have a customer that really wants to make sure we get all the permitting done that we work closely with the local authorities to get permitting done there. So we very much respect that as much as we'd like to, you know, talk about who that is.
Are you in other conversations that with other companies do something similar.
How far long are those conversations.
I would say they're pretty advanced. And one thing we've learned is that speed to market is so critical right now.
And what we learned in this last process was actually that.
These companies don't really want to have to go to the gas company to buy their supply and to the power generator to build the generation and then to manage that. They just want somebody to show up with the power and provide the gas supply to provide that power. And that's obviously something that Williams is really well positioned.
We'll talk about that because I think of you guys as like a pipe that like moves liquids, Like, what are you to do with power?
Yeah?
So, you know, if you think about today, most of the natural gas now in the US.
Is produced are sorry, most of the power.
Generation in the US today is coming off the backs of natural gas. We've been in the generation we've been in and out of the generation business for years. But what people probably don't appreciate is those same gas for our generators that are used to compress the gas and move the gas on our pipelines are exactly the same piece of equipment that's used to spend the generator to provide power. So we're one of the largest buyers for solar turbines, which is a Caterpillar arm and so we have a great relationship with Caterpillar through that.
So we're able to get access.
To these, you know, very in demand power generation facilities because of our relationship there.
So when you came to this deal and the conversations that you're also in, what's it like to come to pricing?
Top part?
Is it you know, the main issue use While I would say, you know, we were very transparent about what our pricing expectations were, the main issue at the negotiating table was speed and reliability.
Okay, so they're willing to pay a premium or does pay.
I wouldn't say it's a premium.
I would say it was it was, you know, better than they could get off the grid, and certainly from a timing standpoint, a lot better than they could get off the grid. And so the grid in some of these areas is so you know, one of the areas that we serve a lot is the PGAM market Northeast, and it takes you know, people are getting told it's going to be eight years before they can get an interconnection, get somebody to study the interconnection for some of these large loads. So the market just has no appetite for tangling with that kind of bureaucracy, and that's why we're going to see more of this kind of behind the meter. You know, people use this term behind the meter like everybody would understand what that means. It simply means. It simply means that these people are buying their own generation facilities and they're not being connected into the grid.
Well, funnily enough, my next question was about behind the meter projects. So what's your willingness to increase capex if those kind of projects go through or those you have potential like thirty behind the meter projects that could come through, Like, what's your capex tolerance?
Yeah, I mean we have a lot of capacity right now. The good news is that our gas pipeline business and our gathering business has been producing very high returns for so a lot of incremental cash flow.
So we have a lot of capital, a.
Lot of financial capacity right now to invest in this space. Obviously, it's going to have to be you know, secured with strong credits for us to take that on. But it's it's we've got quite a bit of capacity right now. Six months ago, our investors were asking us what are you guys going to do with all this cash flow? Like cash flow is piling up on you, what are you going to do with it all? So this is actually kind of a nice place for us to be able to go, a nice investment for us to be.
Able to go to.
So you do have a cap cycle going there. There's also potential M and A opportunities. There's been a lot of action in this space, particularly as it surrounds power.
What would you be in the market for.
You know, we've been very successful at doing setting our strategy each year with our board and so we kind of predetermine, hey, here's the stuff we want to go after. For instance, last year and the year before that, it was going after the storage business because we knew with both LNG loads and with intermittent power loads that the amount of storage demand for storage.
Was going to go up.
We've seen the demand for gas over the last ten years go up by forty seven percent and storage only went up by two percent. So store new storage capacity only went up by two percent. So we kind of sit back, study and get real conviction at the board level on this is what we're going to go after. Until we see the signals change, we're going to go after that. So we went out and we're the largest owner of storage now in.
The Gulf Coast area.
So now what's the.
Theme and so so now we are in the process of continuing to do bolt on transactions in particularly in areas where we think there's going to be a.
New call on gas. We talk about all.
This demand side you know investment, Well, there's going to have to be a lot of supply side investment in the gathering areas to be able to keep up with all this demand. And so that's the kind of the next area we're looking at is where is all this gas going to come from? And how do we position ourselves to be able to take advantage of that.
Is volatility an uncertainty good for helping make those decisions?
No, No, you know, you know, we have a we have a you know, a gas trading arm that you know loves to see volatility obviously, but but no, in general, you know, we like to see gas prices at a level that producers are making a decent return, and that it's low enough that it incents people making big capital investments like LNG export facilities, like power generation facilities. You know, it depends on you know, where we are in the inflation cycle. But right now we think, you know, kind of the high threes is a pretty good number, and a lot of producers are saying, no, no, no.
It's four fifty, it's five dollars.
Well, you know, we're seeing pretty good response right now from the producing community at these kind of prices. So, but we definitely have got to get after it because there is a lot of incremental demand coming on between L and G and the power generations, and at least for the time period, it's going to be pretty sticky demand. It's going to be some pretty pretty heavy loads on the system. And so, you know, in January of this year, this is an amazing stat to me. We get so much attention from our investors on oh my gosh, you guys got a data center project that it's so cool. Yeah, well it's not that big a load, frankly, I mean, it's nice load and it's a nice return and hopefully the first of many to come. But what we did in now said earning scoll this year was in January of this year, on trans Goo alone, we saw a ten percent increase over the highest January we'd ever seen on our system.
And it wasn't cold weather.
This is on top of the January of twenty two when we had a blizzard that hit the Northeast and that really peaked a demand. So a ten percent increase for the entire month in terms of volumes on our system.
And this winner alone, we.
Have seen eighteen now of the top twenty peak days ever on our systems, all the weather cycles we've ever seen eighteen the top twenty peak days. So the demands on our system are really picking up. If I was an investor, I'd be wanting to know more about that.
Frankly, I'm sure.
And so that's more business opportunity for you and not just out of center demand. Really appreciate Alan, thanks very much. On I'mstrong William's CEO joining.
Us there, Paul, back to you, all right, Alex Steel, thank you so much.
We appreciate that.
That's former intelligence co host Alex Seal speaking with Williams Company CEO Alan Armstrong. That it's Sarah Week down in Houston. Texas.
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