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The Crude Truth Ep. 113 Karr Ingham, Economist, President, Texas Alliance of Energy Producers

Rey Treviño [00:00:00] Texas state legislation number 89 has just started. And what’s going to happen to the oil and gas industry? I bring back expert. President of the Texas Alliance of Energy producers Karr Ingham to see how the next six months are going to go. On this episode of The Crude Truth.

Narrator [00:00:18] In 1901, at Spindle Top Hill near Beaumont, the future of Texas changed dramatically as like a fountain of fortune. Thousands of barrels of oil burst from the earth towards the sky. Soon Detroit would be cranking out Model TS by the millions, and America was on the move thanks to the black gold being produced in Texas. Now, more than a century later, the vehicles are different, but nothing else has truly changed. Sure, there may be many other alternative energy sources like wind and solar and electric, but let’s be honest, America depends on oil and entrepreneurs. And if the USA is truly going to be independent, it has to know the crude truth.

Narrator [00:01:01] This episode is brought to you by LFS Chemistry. We are committed to being good stewards of the environment. We are providing the tools so you can be to. Nape Expo, where deals happen. Air Compressor Solutions, when everything is on the line, Air Compressor Solutions is the dependable choice to keep commercial business powered up. Sandstone Group. Exec Crue, Elevate your network. Elevate your knowledge. Texas Star Alliance. Pecos Country Operating, Fueling Our Future.

Rey Treviño [00:01:36] Well, as we all know and I’m sure you’ve heard in the news, there’s already been fireworks as 89 Texas legislation is underway and really right now on the crude truth and as an empty company and operator in the great state of Texas, I need to know what’s going on, how I can help, where I can play offense and where I can play defense. Because at the end of the day, it’s about producing oil, selling that oil and making it as inexpensive for our American brothers and sisters as possible. And on this episode, to really dive into what’s going on, because as I’ve said many times before, as Texas Leads, America Follows brought back on the Texas Alliance of Energy Producers President Karr Ingham to talk about that Karr. How are you?

Karr Ingham [00:02:17] I’m great. Good to see you again. Great for having me on.

Rey Treviño [00:02:20] My gosh. Thank you so much. You know, this was unofficially last minute. I know that sessions going on and you guys are just now just out getting started and it’s only going to ramp up from here. How’s it going and what’s been going on in Texas live before we dive in.

Karr Ingham [00:02:35] Yeah, I mean, that’s exactly what’s about to happen as we record this here today, the very first day of the 140 day legislative session. I’m sure you’ve heard this old joke, right? Our Texas legislature constitutionally meets 140 days every two years now. And if you’re a little government guy and you don’t want, you know, government legislature meddling in your business, then you might want that to be two days every hundred and 40 years. That’s the old joke. And I think it’s still a good joke. That joke still has legs because that’s not so much here in Texas. Man. When Congress meets in DC, don’t you wish they weren’t meeting because things are happening that you just often don’t want to happen? Yeah. And we we try to make sure in Texas that this is not how this turns out. I mean, we are a fantastic state for oil and gas, for business generally, for free enterprise and markets and a of of a free people with more liberty, I think, than even a number of other states around the country. I mean, you’ve got red states and blue states. We all know this. You’ve got high tax, high regulatory, high cost of living states that are not Texas. We don’t want Texas to turn into one of those. And so we see the value of this and we see how this plays out in the legislative session, because that’s where the people’s priorities kind of come together in the mix of representatives and senators from that around the state that they send to Austin to do this work. And you can imagine, I mean, we’ve got Texas is such a fantastic, massive state, 254 counties. You got, you know, guys representing counties with very little in the way of population. You’ve got very urban, inner city kind of stuff. I mean, you’ve got all these guys having to just just kind of slug it out in terms of what we do in Texas. We’re still a Republican majority state. We have a Republican legislature. We have a Republican House and Senate governor, lieutenant governor, virtually every statewide elected office. And I want to make this so much about politics. But but, you know, at least in my view, the Republicans, as a rule, are more business friendly, market friendly. Pretty loving. On and on and on. And that’s why Texas is what it is. And again, our objective economically and with oil and gas is to keep it that way. As the session goes on.

Rey Treviño [00:05:12] You know, you talk about bringing politics into it. It’s hard to, especially with the example, again, as we record that current president at this moment, President Biden, just added more sanctions to Russia and oil prices have gone up over 10% and the less than five business days. So it’s hard not to mention.

Karr Ingham [00:05:32] Listen, it’s impossible, really. I was so.

Rey Treviño [00:05:35] I understand.

Karr Ingham [00:05:36] At the Texas level, I mean, I’ll start out bashing anybody really at the federal level. I don’t mind bashing these guys. They’re awful for oil and gas, which means they’re awful for consumers of oil and gas and petroleum energy products and energy products, broadly speaking, because everything they do makes it more expensive, less abundant, less affordable, less reliable, frankly, to American energy consumers. And it just seems like this bunch, the president and his team on the way out the door, are doing everything they can to stick their thumb in the eye of of this industry of American domestic oil and gas producers who they have objectively, plainly hated from day one of their administration. And so they can’t get gone and out of there fast enough. And they’re doing everything they can actively, proactively, on the way out the door to make things worse for oil and gas and by extension for consumers. So no, politics is impossible to ignore. That’s that’s where all of this happens. And this you know, this is what the industry is affected by markets. I mean, you know this better than I do. You’re on a small independent oil and gas company. So markets and cycles and inflation and access to capital, all of these things are difficult enough, right? Without piling on regulation and costs that are artificially imposed by somebody at some level of government, some somewhere. Right to to no logical end. That’s almost like doing it just for the sake of doing it because we don’t like those guys. And so, again, this is the charge of us representing our members with the lives of energy producers to try to keep the wolves at bay. With regard to all of this, both Austin and DC.

Rey Treviño [00:07:29] Right. And and that’s something that I really want to point out to everybody. That’s what the Texas Alliance of Energy Producers is doing for operators and E.M.P. companies like Pecoss Country operating in my family offices, really fighting the good fight to keep oil and gas, you know, reliable, abundant and as inexpensive as possible. And so that’s why as soon as, you know, it was like, my gosh, we got to get down there and let’s talk about what’s happening here in Texas. And then as we all know, as I’ve said many times before, as Texas goes, America follows. We have several important bills going on in this session over the next six months, give or take, that really affect the oil and gas industry. You know, water re simulation along with really where money needs to be placed. Where do you want to start?

Karr Ingham [00:08:21] Gosh, it’s hard to know where to start, but that’s a pretty good list right there. I mean, if you if you go into a session as an oil and gas guy or as an oil or gas trade association, you’re thinking first and foremost, okay, make sure nothing bad happens to you this session, that you don’t get clobbered with a new cost, that you don’t get clobbered with a new regulation, that something is a put upon the oil and gas industry in this legislative session. That shouldn’t be. That increases costs and makes it more difficult for people to operate oil and gas wells and produce oil and gas for the state in the country. So we’re going into this session first and foremost with that mentality. Keep bad things from happening just means we’re always playing defense, getting up every day, looking at bills that are filed and seeing what they are. Do they have something to do with oil and gas? Is that good or bad? This is helpful or harmful to the industry? And then what do we do with it at that point? And how do we go to work on this? And we’ve got people that are great at doing this on our team. And so that that’s job one job too, though. I mean, we we talk about oil and gas and taxes correctly. I think from kind of a high level overarching standpoint, how much do we produce, how many people do we employ, What’s the economic impact of this business? Fact of the matter is. Oil and gas in Texas is principally regulated, and we think this is the way it should be. At the state level, there’s a lot of regulation comes out of D.C. We like state level regulation best right there. We’re closer to it. They know the industry better and they’re representing Texans as well. And so there are practical aspects. And you’ve made some reference to these. This industry has been around a long time in Texas. There are not just tens of thousands of oil and gas wells in Texas. They’re hundreds of thousands. I mean, there are approaching 300,000, maybe somewhere around 280,000 active oil and gas wells. And as you know, there are a number of wells out there that are just inactive. Yes, they’re wells. They’re holes in the ground. They used to do something. They used to do soil and gas probably, but they’re not now, just call them inactive wells. And if you do this long enough, decades and decades in Texas, I mean, the volume of those wells continues to grow. And at some point you have to do something about this or your regulators or your citizens start to think that you need to do something about this. And this is this is a growing number that’s probably going to have to be addressed in this session. What do you do about inactive wells? How long do you get to call them inactive before you do something about this? And so I think that’s an issue that is going to be dealt with this session. And we’re kind of working through some ideas with our members about what that looks like. Because you said it earlier, I mean, this does affect affect transactional stuff. You can go look at a package of wells that might be great for your operation. And if it comes with the number of inactive wells on that lease or settle leases, and you might have second thought about this. And, you know, and if you do acquire these while all of a sudden you’re the one on the hook for them, So what are you going to do about this? That is growing problem? I think we need to recognize that it’s growing. Problem is gonna need a solution that’s probably going to happen this session. That’s kind of part defense and part offense. On the offensive side, the thing we looked at took a run at that and were unsuccessful at getting done last session was what we just call a stimulation bill, which is to say wells have been around for a long time and formations that have been around for a long time. I mean, it’s possible in many respects for companies to go back in there and frankly, this gets back to the inactive oil thing. I mean, let’s say you can go into an inactive well, do something that gets it producing again and gets it off the inactive list, gets it off of the near term plugging liability list, orphan and abandoned list potentially on into the future and get it producing oil and gas again for the benefit of everybody. Yeah, that’s a costly thing to do and there may be some incentives that the state can provide in terms of severance tax relief or whatever the case may be. It’s ultimately beneficial for everybody if we can get this done, because among other things, it deals somewhat with that class of wells and lowers that number of inactive wells. But there are reasons to do this. Companies can do it. They have expertise that can make this happen. And so going back in and re stimulating well and and either increasing production or returning it to production could be a valuable thing. So again, we took a run at that last session. We got a bad what they call a fiscal note from the controller, which the short version of that story is. I said it’ll cost the state too much money. So we’re looking at ways to get that number down. And so on the offensive side, that’s almost certainly a thing we’ll be looking at doing and getting accomplish this Texas legislative session.

Rey Treviño [00:13:39] Will because with it getting shut down and this is just a question from, you know, how Texas legislation works with being shut down at the control level. That means it didn’t even make it to a vote on the floor, is that correct? Well, the House and Senate,.

Karr Ingham [00:13:54] If the if the controller says here’s the fiscal note and here’s here’s how, here’s the cost to the state, then the legislature has to has to go in and say, okay, well, how are we going to pay for that? Right. You know, what are we what are we going to do is call it a pay for. They really call that in DC a pay for pay for a pay for. And that fiscal well, really just kill that bill. I mean, the House and the Senate just let it go after that so that that needs a solution. And so, again, take another run out of this session.

Rey Treviño [00:14:27] Well, you know, with that being said, you know, obviously, I guess you can have one thing could be for a lot of people in the oil and gas industry, definitely talk to their local congressmen and women, say, hey, let’s probably reach out to them, say, hey, let’s figure out a way to get this to come across. Because, again, there’s so many ways there’s a. Hundred thousand plus idle wells. And if we can figure out a way to get them back online or plug them responsibly and financially responsibly, what a great thing for Texas. Only continue to lead it, because if we have 100,000 wells, that means there’s other states that have a lot, too. And if we can set that example. How cool will that be? The only show ways that we can be tax friendly and also be environmentally friendly as well.

Karr Ingham [00:15:13] I think that’s right. I mean, we’ve done that over the years. We’ve shown that we can lead the nation, frankly, and oil and gas production and we do by a lot. And but but our nation does as well. I mean, we’ve grown in turn. I mean, right now and we have been for a while, the largest single country producing crude oil producing country in the world. And so we’ve done that. That’s all led by Texas, by the way, because we’re throwing in 40 to 43% of all US crude oil production, which is spectacular. So we we have led the way in this, and we’ve shown that this can be done in a well-regulated but not stupid, regulated and not over regulated fashion responsibly, correctly, appropriately regulated where it doesn’t pile costs onto the industry. And frankly, we can continue to maintain this kind of wonderful ecosystem that we have. We have great big companies operating great big wells and drilling great big, deep, horizontal, expensive wells. And then you know how this works. They they produce them for a while. The decline curve takes hold and they sell those off to kind of next to your company and on and on down the line until you’ve got, you know, frankly, tens of thousands of wells out there producing a few barrels a day or a few. ZF Yeah, but there are companies who are really well set up. This is their business model. This is what they do, they know how to do it. They operate these wells kind of through the end of their useful life cycle and then put them to rest in a responsible fashion, we hope. And so piling regulation on that affects these little guys operating these low volume wells really fouls up that ecosystem. And that’s an ecosystem I’m interested in maintaining for a host of reasons. But you’re talking about calling your representative or senator. The reason to do this is that this is pervasive around the state. It’s really virtually everywhere. The last time I looked. Of the 254 counties in the great state of Texas, some reportable volume of crude oil and or natural gas is produced in about 85% of them. Wow. Isn’t that incredible?

Rey Treviño [00:17:34] Yeah.

Karr Ingham [00:17:34] So it really is top to bottom, side to side, east to west, north to south, all points in between. There’s oil and gas activity and beneficial things that come from this. Every every thing that comes out of the ground generates revenue. Right. Production, revenue. And you know where all that goes. Royalty payments, working interest payments, local tax payments for school districts and municipalities to the state in terms of production taxes to employees, to contractors, to sponsoring the Little League team right over there. I mean, you know, these these companies and these wells are really just part of the fabric of the landscape of virtually everywhere in Texas. And so you are we all are affected by this. And the last thing we want to do during a, you know, a a time of rising energy demand is to take product off the market by closing and shutting in a lot of wells that we’ve turned uneconomic from one day to the next by overregulating and piling regulatory costs on them. So these are the things that we try to keep from happening at the state level and at the federal level.

Rey Treviño [00:18:42] You know, with everything that is going on, another big deal here in Texas is going to be the produce water. That’s something that’s on the docket in some form or fashion. How.

Karr Ingham [00:18:52] Without a doubt. I mean, this is again, it’s it’s a it’s a consequence of something good, which is rapidly rising crude oil and natural gas production and crude oil production in particular, and Permian crude oil production, most notably, although produced waters. I mean, it’s generally a problem everywhere. I mean, you get some barrels and in most places, as you know, it’s more barrels of water that come up than oil. Right. What do you do with this? And in the Permian, you know, where some places it’s a 4 to 1 ratio and some places higher than that. The disposition of that water, which is not nice, clean, fresh water that you can do something with, is increasingly a problem. Yeah, it’s injected into formations. I mean, it’s like there’s not much question that it is having something to do with seismicity issues. And parts of the Permian Basin and the places where this has been injected underground are filling up. It’s about what amounts to. So we’ve been working on and frankly, we’ve been working on this as the alliance for years. I mean, we wrote I produced a water white paper in 2014 that attempted to address these issues and look ahead and try to get ahead of this problem. And and, you know, what it seems to come down to is a non injection solution, a disposition solution for that water, which could be what while some beneficial reuse. I mean, you take it, you treat it to a particular standard and you can use it for something helpful, beneficial, which might be watering some crops, let’s say non-food crops, water in cotton, crops in West Texas, using IT and sewage treatment systems and maybe ultimately treating it to a higher standard than that or treating it to where it can be discharged on to the ground or a waterway without causing any problems whatsoever. These are solutions we have to continue to work towards. But an oil and an industry like oil and gas in a state like Texas, where it is principally regulated at the state level, this is just a thing that is I mean, it’s had the attention of legislators and regulators for a number of years now. But it’s really, I think, coming to a head. And we’ll see what happens in this session. Again, from an oil and gas standpoint, we’re first and foremost do no harm. Do no harm to the industry. Don’t come up with a proposed solution that’s really costly to oil and gas because then you end up limiting production, shutting down some wells and other bad things that just don’t need to happen. But the industry, as it has been looking for and working toward solutions on this were part of the British Water Consortium that was established a session or two ago, led by Senator Charles Lubbock, and that consortium is headquartered, attack is housed attack. So we’re part of that and a number of companies are as well. So produce water is a huge thing. I mean, it’s just we think about all the oil that comes up and those daily numbers are staggering. I mean, in Texas. Just broadly speaking, call it 6 million barrels a day. Well, that means, I don’t know, 18 to 22 more, you know, million barrels a day of produced water. They come up with it. That has to go somewhere.

Rey Treviño [00:22:24] And you know, the I know that that’s that’s the billion dollar question. I don’t where it goes with with the produce water and also with what’s going on with the re stimulation. What is something that you’re keeping an eye on that the alliance is also keeping an eye on at the at the state level this year.

Karr Ingham [00:22:40] The other thing that frankly is pretty high on the top of our list is, is what any legislative response to the wildfires up in the panhandle may have been or may be as as you know, citizens, states, governments, legislatures are many times just reactive to something that’s happened. Hard to blame them for this. And we saw it after winter storm Uri. Right. And where storm Uri actually happened during a legislative session right after it started in February of 2021. That’s right. So, my goodness, you know, I mean, the legislature is going to do something and they did. So the wildfires did not happen smack in the middle of the session. That did happen, what, last year. And, you know, there’s there’s no great there’s no great sense and certainly no overarching evidence to suggest that something some oil and gas company or operator did on lease that that that started any of those and yet and some of the interim hearings that were that were conducted and the the chairman of that committee was actually a panhandle guy good guy named Ken came from Canadian. And so, you know, we’ll be working with his office and some others to to just make sure that that whatever the legislature is thinking about doing in response to that wildfires issue, I mean, listen, this was a terrible thing. I mean, you know, it was millions and millions of acres burned, Some livestock was lost, some property homes or other facilities were lost. Not much in the way of oil. And gas was was just burned out because most of these guys do what they’re supposed to do. They keep their facilities mowed down, wild up whatever it is, it keeps the fire from get. Who the. Well. Yeah. And most of our guys did that. And so the short version of the story is we want to make sure that oil and gas operators are not held to account for something they didn’t do. Right. And so but it was a it was a it is an issue. It’s going to be an issue in the session. And that’s another thing we’re really closely keeping an eye on.

Rey Treviño [00:25:06] You know, with as much as as close to the time as you guys continue to watch here at the local level behind us here in the Texas state Capitol in Austin. You’re heavily involved in what’s going on at a federal level where you you and I had a chance to visit almost, I guess, maybe two months ago, right after the borough President Trump had selected Chris Wright and Doug Burgum for the Department, Interior and Department of Energy. And we haven’t discussed that. But what are some things that you guys are working on at a you know, at the federal level that’s going to get in front of the Congress and the Senate on a federal level?

Rey Treviño [00:25:44] Yeah. So the the same thing. I mean, you’ve got federal things that happen that are either done through regulatory level, principally by EPA, although on occasion some other agencies as well, or the Congress. And there I don’t know. I mean, there’s not much that comes out of DC that is good and positive for oil and gas, right. And so we know this, our members know this, our big members, our small members, our private independents know that when you can just get clobbered in DC, you can get clobbered by the regulation, you get clobbered on the tax front. You know, a thing that is of enormous benefit to small independent producers is the thing called a percentage depletion allowance. I mean, this is what makes small independent oil and gas actually work, right? And it seems like somebody coming after percentage depletion year in and year out to try to do away with this. The government, the federal government would would realize very little savings or money out of this if they do away with it. Just tweaking us all the time. Yes. Some of these after the some of these after probably a bigger thing that affects virtually every country and certainly a country company and every independent or almost of any size is IDC is intangible drilling costs. And that’s a bad name for that tax provision because you know as well as I do that intangible drilling costs are not intangible at all. They’re real hard dollar cost incurred in the process of drilling a well. These are dollars that leave your company and go somewhere to pay for surface preparation for labor, for you name it. And being able to expense those as actual costs of doing that work is just critical. Critical. And it’s silly that we’re even talking about somehow restructuring that. But but it’s a fight that we continue to fight in DC.

Rey Treviño [00:27:47] Are you hearing any rumors about maybe any additional IDCs coming out with the Trump administration?

Karr Ingham [00:27:53] Well, I hope I haven’t, but that doesn’t mean it might not be happening. I mean, the the outcome of the election was paramount. Right. Because when these things were under attack, I mean, it was a really the first two years of the Biden administration where they had the White House, they had the Senate and they had the House. Yeah. And so you had you had the whole of government in D.C. trying to figure out a way to eliminate these tax provisions for oil and gas. And somehow we managed to beat these things back, even in a Republican or pardon me, in a Democrat House led by Democrat committees. And the whole build back better process, which is a ridiculous name to tear back. Worse, I think, or tear down worse, I think is what I was trying to call it. I mean, is build back better my foot? I mean, what. But you know, that whole bill by better discussion was a series of bills designed to do one thing or another. And a lot of that had to do with oil and gas and mess with these tax provisions. The tax the tax benefits, the tax bill from the first Trump administration in 2017, which we were right in the middle of and had a lot to do with, which preserved intangible drilling, cost, preserve percentage depletion, and then did other things for virtually all Americans. I mean, tax tax decreases on most Americans and certainly most, you know, what you would call middle class working Americans, whatever the phraseology of the day is, those expire. They had a time limit on them. And that time limit is coming up. Thankfully, that time limit is going to happen in a Congress where we have now Republican majorities across the board. So these things I mean, the the outlook is just. Much more favorable for preserving these things because we’ve got we’ve got a party in power now that doesn’t hate the oil and gas industry. There’ll be plenty on the other side that are still coming at them. But preserving these things as they are is job one. We actually, as you mentioned, are very active in D.C. We have our own federal lobbyist up there. Right. And I spend spend a fair amount of time doing that, too. I’ll be up there. From when we’re recording this. I’ll be up there next week. And, you know, we we do that several times a year. And I have him at work all the time with a list of federal priorities. And the other thing is the methane regulation part of the equation that’s coming out of EPA, part of that came out of the Congress and in the last administration, in the last Congress, which is the Inflation Reduction Act and this thing we call the methane tax. Yes. Otherwise known as the waste emissions charge that came along with that. We’ve been working with offices. We’ve worked with Senator Cruz. I’ve met with him and his staff. He introduced a methane repeal bill last Congress. He’s about to reintroduce it. I was talking to his office just yesterday about this. They’re about to reintroduce that methane repeal bill. That bill had no shot in the last Congress because Democrats were running the show. Right. It’s chances are much better this time around. And as you know, even if that had gotten out of the Congress last time around, the president would have signed it. Yeah, but he may. You know, I mean, if it gets that far, I think this president will sign that. That thing needs to go away. Yes. That is an odorous, horrific thing. And frankly, when you pile that on, along with the new methane regulation of what we call, quote, ozone, which takes facilities that have been around for a long time but now applies these stringent methane emissions regulations to them, they don’t make any sense. They’re too costly. They don’t really reduce methane emissions. And by the way, the oil and gas industry in the US is already and has been for a number of years, reducing methane emissions. So what is it we’re trying to accomplish here other than punish the industry? And so the methane tax, layered with the methane rule, you know, the combined effect of these two things, you know, stands to do away with. Tens of thousands. I mean, my estimate as our petroleum economist is maybe 60 to 70,000 wells. Wow. Up to a third of them, which would be even a few more than that, just because they’re low volume wells. The revenue coming off these wells is not sufficient to absorb this cost of regulation, which makes them uneconomic from one day to the next. And you can tell me what happens to uneconomic wells. I mean, do you just continue to operate them at a loss? I doubt it.

Rey Treviño [00:32:49] No, you don’t do that at all.

Karr Ingham [00:32:51] And so there they go. And when they go, every bit of beneficial economic activity that reminds production goes away with it.

Rey Treviño [00:33:00] You know, I always joke and if you can clarify for me, because I always joke Karr about how Texas goes. America goes at the federal level. How important is the work that you’re doing along with everybody else from the state of Texas, really representing the state of Texas, but fighting for every American, you know? Tell me about that.

Karr Ingham [00:33:19] Critically important. I mean, we work alongside. We’re not going this alone up there doesn’t make any sense. We could. We could be. And I’m inclined, frankly, to act like big bad Texas. And we’re we’re carrying the big stick. And but we work alongside a lot of great other state level trade associations. We’ve got, what, 33 producing states in the country and they’ve all got oil and gas associations that do great work. So we kind of work as a coalition that is under the umbrella of Independent Petroleum Association of America. So we’re really shoulder to shoulder with all of these organizations working on these things. We pony up money to a legal coalition, and we have a lawyer who really knows his stuff about dealing with EPA, pushing back on these things and reworking regulations that are really technical level. So we participate in that. But listen, we are Texas. We do throw in we produce 42 to 43% of all of the nation’s crude oil. We produce 28% of the nation’s natural gas. The refined products, the everything. We are bigger and frankly, I think better than everybody else. What we what we do does matter. And my goodness, I mean, this this crowd in DC that doesn’t seem to like us. It’s hard to imagine life without us. It’s hard to imagine what life looks like without the energy that the state of Texas is providing, most of which comes in the form of petroleum energy. I don’t have a problem with renewables. I truly do not. As an economist, I, I and I listen. I’m a purist. As an economist. I am a an unfettered, unapologetic, unabashed free market guy. Whatever the market brings us, I’m good with. The market is incredibly distorted in renewables just because of the incentives and subsidies that are thrown at those industries. And so who knows whether they can compete or not? They don’t have to.

Rey Treviño [00:35:33] Yeah.

Karr Ingham [00:35:35] And so this is my problem is just distorted markets and people go on doing things that really don’t pass the smell test in terms of sound economic thought and principle. So that said, we’ve got a lot of wind and solar in Texas. Y’all fine. I mean, we need we need all the power we can get. You know, we all and gas guys are fond of saying that I’m frankly not that fond of. Yeah, we’re an all of the above kind of state. Well, maybe we are. I’m only for all of the above. That the market and the market alone brings us not for an all of the above strategy that includes the use of your tax dollars and mine to prop up one industry to the detriment of another. Right. I’m not for that because I’m not just against that, because it’s bad for oil gas. I’m against that because it doesn’t bring the best consumer outcome in terms of these things that we talk about all the time. Abundance, affordability and reliability markets bring us that petroleum energy right now brings us that. And I reject this notion that petroleum energy and natural gas all exist as a backup to wind and solar in terms of electricity. Nonsense. You can back us up. Yeah, not the other way around.

Rey Treviño [00:36:57] You know, when you talk about the fact that that you as an economist, you’re a purist, that was one thing. I just want to kind of go back that we talked about briefly when you were last on in late November was, hey, the market was already showing that Trump was going to win with what just happened with Biden. Putting these sanctions on oil is now up. To the West. Brent’s already over 80 again as record West Texas Intermediate 78, which he as a producer of great. But as a country, you know, do you still see a staying between 75 and $85 oil or do you see us stand a little bit less? You know, just I’m not going to hold you to it. I know it’ll be.

Karr Ingham [00:37:36] No, no, I, I, I, I’m not sure we’re going to stay there. We might fall off of that a little bit and let’s it be all right with me to be wrong about this. I. I used to have a friend. I still have a friend, he used to say. And he’s. He’s still with us. He’s actually here. He’s an all star guy. He used to say, you know, there are two kinds of people in this world. Yeah. Those that can predict what crude oil prices are going to be in the future. And wait, there’s only one person in this world. None of us can predict what crude oil prices are going to be in the future. And so that even applies to me. As smart as I think I am, that even applies to me. But the funny thing about this is what tends to happen in Republican administrations if prices are low or not high or low, because what they do is just tend to foster, you know, unabated production. Yeah. And try to get the things out of the way that are restrictive to production. So who knows how this is going to play out. And I’m you know, it matters to me from an oil and gas standpoint because I want kind of two things to happen same time. I want you guys I want our oil and gas guys to do well. And I want consumers to not get clobbered by high prices. And and, you know, we’re sort of in that sweet spot right now. You don’t hear much of anybody complaining about the price of gasoline right now. And we’re still at 70 plus dollar crude oil. What I am excited about is beginning to see some increase on the natural gas. You know better than I do. I’m sure these prices have just been horrific. And so now we but it’s a consequence of just massive volumes of production right here in the US, particularly where we’re so good at producing natural gas and we’re just overwhelm markets. It’s a great consumer outcome, but it’s lousy for you guys. And so we’ve or finally starting to see some higher gas prices because of shifts in markets that are better. And you know, it’ll continue to stimulate plane production. We’re now sending more of it overseas right through LNG. That’s another thing that’ll happen. And this administration will quit treating LNG as stupidly as this current bunch did and has a just an additional market outlet that helps to keep prices propped up. I mean, when you produce something, it comes out of the ground. You want a market outlet for it. LNG increasingly provides a greater market outlet as we send this to other countries around the world so they can benefit from it and have the thing that we’ve had I mean, a cheap, clean, affordable, reliable natural gas energy, which is a great thing, incredible the extent to which this is somehow been demonized. But it has. And this is where we find ourselves happy to fight back against that.

Rey Treviño [00:40:41] Well, that is what you all are doing, are fighting like there’s no tomorrow. I, I commend you for for basically now for the next six months, you’re going to be traveling back and forth. You guys have been fighting the good fight and that’s all y’all continue to do. And the energy that you’re about to to have to go back and forth from DC to Austin, you know, keep it up because, you know, the Texas alliance with the energy producers, you know, we need you guys and everybody that’s even against oil needs you guys to continue doing what you’re doing. So, Karr, thank you so much. You know, are there any other things that you think really surprises that you’re expecting or anything like that on the state level or the federal level moving into 2025?

Karr Ingham [00:41:23] I think we’ve covered most of it. And the thing about surprises is you never know when they’re going to pop up. So again, it’s mostly a matter of being really diligent and and frankly, you know, in our case, just having to have a good team of people that do what they do really well. Our state level government relations folks are our lobbyists. And in Austin and then in DC, our communications team, everybody we have is kind of focused and targeted on this effort. In this outcome. We’ve got a great board that kind of steers this in the right direction. That is everybody from small mom and pop independents to mid-sized companies to some of the larger publicly traded private independents. I mean, independents, although publicly traded, but are on our board, which is a relatively new thing for us, as a matter of fact. But. Two great companies on our board now, Diamondback and Matador. So this mix of board members is great and interesting, and they kind of keep us moving in the right direction. And our staff is just fantastic at what they do, which means part of their charge is to get up every day and make sure nothing bad’s going to happen to us. And if it is, find it and let’s get to work on it.

Rey Treviño [00:42:42] Well, Karr again, I cannot thank you enough for coming on.

Karr Ingham [00:42:46] My pleasure. Thanks for having me.

Rey Treviño [00:42:47] But there’s so much going on that I have to get you on now because it’s about to be a wild one. So thank you very much. And again, to all our listeners out there, you know, if you got any questions this session, you’ll reach out to me. I’m going to be doing my best to kind of stay with it this year, keeping up with it and keep you guys posted on what’s going on, especially from an oil and gas standpoint. So, as always, thank you for tuning in and we’ll see you again on another episode of The Crude Truth.

Narrator [00:43:16] Again, The Crude Truth would like to think today’s sponsors LFS Chemistry, Nape Expo, Air Compressor Solutions, Sandstone Group, Exec Crue, Texas Star Alliance, Pecos Country Operating and Real News Communication Network.

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