#279 | Matt Schrimpf; Price of oil, strategic reserves, enterprise succession

Matt Schrimpf [00:00:00] But today it's still traded in the dollar. But if you look at the strength of the dollar and what it's done over the last several months, and you look at the price of oil and that same time, you will see the price of oil just dropping almost precipitously with the, with the strength of the dollar. Howdy. I'm Hannah Newin Schwan, a production lead at a soybean seed facility in central Illinois. And you're listening to the Vance Crow podcast.

Vance Crowe [00:00:26] Welcome back to the podcast. I'm glad you're here. Today we speak with the CEO of Pau Enterprises, Matt Shrimp. Matt and I have been friends for a couple of years now and I've been asking him to come on the podcast, but he is a very busy man. PSA Enterprises is a company that delivers fuel oil to the large wholesalers that eventually get it to gas stations where you fill up your car. Matt and I sat down to have a conversation about what is going on in the world of energy, what is the consequence of tapping into the strategic oil reserves and what happens when people's energy costs go up 500%. But then after we have this in-depth conversation about energy, we have a chance to talk about what it's like to be a part of a business that's been running for more than 90 years. Matt's great grandfather started this company and it's been passed down to four generations, and Matt is preparing to pass it down to the fifth. So we talk about what does it take to raise children that are worthy of having a business passed down to them, and how do you face the challenges of things being equal and a family when some people aren't gonna continue on with the business? I noticed so many similarities between the energy world and the farming world that I think you will find this to be a fascinating conversation. Before we get to the interview, I thought I would tell you about a funny experience that Ben and I have found ourselves in longtime listeners of the podcast, know that we record Legacy Interviews here in the studio. These Legacy Interviews capture people telling about their childhood, their career, the way that they decided to raise their kids, and the legacy that they wanna leave behind.

Vance Crowe [00:02:03] But the challenge comes in that we treat these as strictly confidential. We don't even talk about individuals that have done the in interviews themselves. And so when we wanted to start putting together a website, we realized we can't use any of the footage or photos from the interviews themselves. And it would be a little bit awkward after somebody has had such an intense and really intimate experience recording their interviews to ask them if, Hey, would you mind if we put that up on the website? So what Ben and I decided to do was to hold a photo shoot where we invited beautiful people that we know from around the St. Louis area to sit down and get their photos taken in the studio and record short Legacy Interviews so that that way you could see what they're like. We're still getting the videos up on the website. We wanna make sure everybody's comfortable with what we're doing, but we are really excited to show you the photos of these people and the studio and really get the feel for what it's like to do a legacy interview. So if you've not taken the time to go to our website, I highly recommend doing it now. You can do that by going to Legacy Interviews dot com. Alright, without further ado, let's head to the interview with my good friend, Matt Shrimp. Matt Shrimp, welcome to the podcast. Well, thank you. Appreciate

Matt Schrimpf [00:03:18] You having me.

Vance Crowe [00:03:19] So, oil prices down, I went to fill up my car the other day, cost me like, you know, $30 less than it did the day before. Are we out of the woods? Is the storm over?

Matt Schrimpf [00:03:30] It's, it's hard to know, but certainly the last two weeks we've seen a significant fall in prices. On the future side, we've had both gasoline and diesel fuel fall over 40 cents a gallon each. So some of the fears of the tight supplies I think, have waned a little bit. I think the, some of the news coming out of China with the COVID lockdowns has maybe dampened some of the demand or the fear of demand globally. So there's a lot of factors going into, into the pricing right now, and certainly we have seen a, a relaxation in the prices over the last couple of weeks.

Vance Crowe [00:04:09] It's funny, 'cause like you, you must have like one of the most complicated jobs because world events, a war in Ukraine, something going on in China impacts your business in St. Louis, Missouri. Right? Like how, how do you handle, you know, having all these international things directly impact you?

Matt Schrimpf [00:04:29] Sure. Well, we're a, we are a hedger, so we don't speculate on pricing. So when the price ran up, you know, early in the year, that wasn't a win for us. But certainly it impacts our business from the standpoint people buy less when it costs a lot more to fill up their tank. The cost of financing increases the cost of not only for inventory, but also for receivables. So certainly it's impacting our business from that standpoint, but just the outright price is not impacting our profitability.

Vance Crowe [00:05:01] So let's start off with what your business actually does. If you're a hedger of oil, what do you do with that oil? Sure. So

Matt Schrimpf [00:05:07] We, we own four pipeline terminals. So these are very large tank farms that are connected to a pipe. So we have three of 'em that are exclusively sourced from the Gulf Coast, and that is in North Little Rock, Arkansas, north City, Illinois, which is southeast Illinois and Seymour Indiana, which is halfway between Louisville and Indianapolis. And then we also have a terminal here in Hartford, Illinois, which is just across the river from St. Louis. And that terminal is not only connected to the Gulf Coast, but it's also connected to the wood earth refinery. So we buy products in the pipeline and we resell them, you know, to end users to retailers. And then we also buy renewable fuels, ethanol and biodiesel and, and to blend in with the gasoline and the diesel fuel to, to sell to our customers.

Vance Crowe [00:06:00] So when you say you buy it in the pipeline, these pipelines, they're running from somebody that's already refined it and they're running it up the right alongside the Mississippi River, or they're Correct.

Matt Schrimpf [00:06:11] So, so the refiners in the Gulf Coast, the Houston area is the easiest one to think of. They, they source a lot of product out of that area up into the Explorer pipeline, which feeds directly into the St. Louis market and then goes on up to Chicago. And then there's another pipeline system we have terminals on called the Enterprise Pipeline System. And it all, it goes through like Springfield, Missouri, and then on through Cape Gerardo, Missouri up through North City. And then it also continued on up to Chicago, Indianapolis, and on into Chicago. And actually one of those lines in 20 10, 20 12, they reversed their second line to take Ethanes from the Marcella Shale in the Pennsylvania area to take it down to the Gulf Coast to be processed.

Vance Crowe [00:06:57] So if there's all these pipelines running around, why then a few years ago were people all up in arms about a pipeline, the Keystone Pipeline?

Matt Schrimpf [00:07:04] Well, the pipelines we have, if you think about this country, probably up until oh 4, 0 5, nearly all of the refining capacity was in the Gulf Coast, and it went north and it went east and it went to the Rockies. Well, as we discovered and were able to drill our own oil through horizontal drilling, all of a sudden the oil sources started being in the Midwest and the Dakotas and such. And then the refining capacity was actually, it was cheaper to have refined products here in the Midwest. So the pressure was then to push barrels back south. So that's a big part of what has occurred over the last, oh, 15, 20 years, and how the dynamic has changed and how barrels get to market.

Vance Crowe [00:07:53] So it seems like whoever is in office, whoever's in the White House, determines like where things are going is like,

Matt Schrimpf [00:08:02] Yeah, I mean, pipelines are needed. I mean, here in St. Louis, you've, you've heard of the Spire pipeline, that's a natural gas pipeline. I mean, the safest and most efficient way to transport products is through pipeline. I mean, that's just hands down the best way to do it. And and my fear, you know, as, as I look at the picture is if we can't get a keystone pipeline built, Canada's gonna utilize that resource in some form or fashion and, and probably sell it to somebody that may not be nearly as friendly to us. And, and just as soon, I just as soon have a refinery in the US turn that crude oil into a refined product as opposed to somebody that maybe were adversaries with globally.

Vance Crowe [00:08:46] Is most of the gas that we have here, is it American made? I mean, like we, we mine it.

Matt Schrimpf [00:08:52] Yeah, I would say most of the gas that we consume in this country is refined in this, in this country. Is

Vance Crowe [00:08:58] It dug outta the ground?

Matt Schrimpf [00:08:59] Well, it comes out as crude and then, and then that's part of why we did see prices really spike this spring, is we haven't built a refinery in this country in a really long time. And we're also turning refineries into renewable diesel refineries. So, you know, our, our capacity to refine finished gasoline and diesel fuel is on the decline.

Vance Crowe [00:09:25] Wow. Like why though you would think that, I mean, everybody needs gas. Well,

Matt Schrimpf [00:09:31] I agree with you, but when you take a refinery and the push, I would say that that major oil really has not gotten the credit they deserve for the processes and changes that have been made to be cleaner over the last 10, 15, 20 years. They've, they've reduced the sulfur and gas it, the diesel fuel, they've done the same thing. It's down to 15 parts per million or less. It's cleaner burning. The engine manufacturers are also aren't getting credit. And I'm all talking about liquid fuels here, so we're competing against this new ev push. But, but you know, the motors today burn so much cleaner. And I was just thinking this morning on the driving to work, when I was first outta college outta a Ford Explorer, they got 15 miles to the gallon. I now drive a half ton pickup truck that's diesel, but it gets 30 miles to the gallon. So you have the consumption of, of liquid, and, and there's a lot of that going on that I don't, I think it's overlooked in the presses and they're much cleaner burning than they were 20 years ago. So this, this whole evolution is, is the government incentivizing the transition of these refineries, these smaller refineries, for instance, as refinery out west, it was a 56,000 barrel a day refinery, and it would put out two parts gas and one part diesel of that refining process. Well, when you take it to a renewable fuel plant, it's all vegetable oils going in and a renewable diesel only coming out, but they're only able to make 6,000 barrels a day.

Matt Schrimpf [00:11:08] So they've almost reduced 90% of the production coming off of that refinery that that won't be rebuilt or replaced.

Vance Crowe [00:11:14] And it makes sense on the balance sheet because the government provides subsidies or it allows you, right, yeah.

Matt Schrimpf [00:11:20] Government subsidized. What

Vance Crowe [00:11:22] Kind of subsidies are,

Matt Schrimpf [00:11:22] I'm not sure it's, it's gotta be significant though for the Yeah. For somebody

Vance Crowe [00:11:27] To be able to walk away from 90% production. Yeah. You know, I, when I worked for Monsano, I had just been hired and, and my job was to be like, Hey, we people are really afraid of GMOs and pesticides. We need to try and change this conversation. And so I flew out and met with this guy named Stewart Brand. Stewart Brand was one of the, he was a hippie, but he used to advise Steve Jobs. He has all these thinking about how does human nature work. And he told me, the reason I went to see him was, 'cause in the seventies, British Petroleum came to him and said, Hey, how can we do this? Like, we all know we need oil. Look at the, the crisis that we've had here. Like, how can we make a better relationship with the public? And he said, you know, really help people understand how ubiquitous fuels are this, you know, like, this is such a huge problem if you don't have them. And he said they were all going in one direction and then one day they said, no, you know, we're gonna change our name to bp. We're gonna take petroleum totally out of it. We're gonna buy wind farms that we know won't pay off in the next 20 to 30 years. And he said, I puzzled over this for a really long time. But then it came down to the fact that the government has, is always willing to pay the, the write the check. And so if you do what they want, then you get to stay in business and, and keep going. It sounds like that's what's going on either still or again.

Matt Schrimpf [00:12:50] Yeah, I think there's a lot of that. You know, right now there's this, this moniker out there, ESG and you know, there's people that have gotten on the boards of an ExxonMobil, for instance, and they're really pushing where the investments of dollars are going. I mean, ExxonMobil's a wonderful company, always been a wonderful company who'd paid great dividends, and now they're going to do projects with substantially lower ROIs simply because there's this ESG push. And, and I, I would never say that, that any of us want anything other than clean water and clean air for our kids grandkids. I mean, I, I think everybody has that goal. So to think oil companies didn't have that goal. I, I think is misguided a bit, but, but we're chasing returns maybe that, that aren't prudent currently, and that's stealing investment dollars away from the development of new oil.

Vance Crowe [00:13:46] Yeah. Not to mention like, not necessarily making good choices. Like I drive through Illinois, this is the most rich abundant farmland in, in maybe in the world, right? This is beautiful. And they've started putting up all these windmills of which there's no possibility that these things are going to last longer than what that soil could have lasted for. And in order to put those things up, you gotta dig a hole out of the ground. You gotta put all these roads out there, you pour all of this concrete, and then you erect these giant steel structures that's never going back to farmland. And like, it's not a huge amount of space, but it's several football fields and you do that, you know, a few hundred or a few thousand times over all that, you're just evaporating that farmland,

Matt Schrimpf [00:14:29] Right? Yeah. And I, you know, I've always been one to think that there should be a goal down the, down the road of how do we get cleaner? But I, I think we really have an issue of different policies, different politicians get in, and the belief that you can flip a switch and the infrastructure just magically appears to go a different direction. I mean, it took us, it's taken us over a hundred years to get to where we're at with petroleum. You can't just walk away from it and, and have a new, a new form of energy take its place overnight.

Vance Crowe [00:15:01] Why you had said that there hasn't been a refinery built in a long time. Like why not? It's gotta be super profitable. If you owned a refinery, you'd be able to just print money.

Matt Schrimpf [00:15:09] It's cyclical. And that's, that's a big belief. And of course all the news is how well the refineries have done this year and, and they, they have had probably higher than normal refining spreads on products in total this year. But everybody forgets about 2020. They had negative refining margins in 2020, several refineries lost 8 million plus dollars or 8 billion, I'm sorry, in 2020. And, and people just wanna forget about that. And then another reason people would wanna buy 'em, not only is the permitting very difficult from the, from the government, the pipelines we talked about, it's hard to get that permit to evacuate the products from that refinery if they won't let you build a pipeline. So, so there's all all kinds of barriers that, that the government puts in place. And then when you have a year like this and they've forgotten about two years ago, they wanna talk about a windfall tax. So, so when you're an investor looking at how you're gonna build out, you know, it's very difficult, you know, to understand where, where the stroke of the pen is gonna incent the next person. And it might not be you.

Vance Crowe [00:16:21] Is this gonna change if you just have one new president? Or like, how, how does this ever get reversed?

Matt Schrimpf [00:16:27] I'm not sure it does get reversed. I mean, I, I think, I think people will understand over time that many people our age and younger have never be or had to pay for in real terms the chase for this emission free and zero sum game, right? So you don't hear much from the German Green Party right now. Why? Because they can't afford their electric bills.

Vance Crowe [00:16:56] Yeah, I just saw today the UK is gonna cap people's electric bills at $2,400 a year. So it doesn't matter what the electricity costs to generate or, or move, you're gonna cap that. Like that's Atlas shrugged territory where they start doing crazy things.

Matt Schrimpf [00:17:13] Well, but think about the other side of it. So, so if people have never had to really pay for this chase for a zero emission environment, why not, why not chase it when all of a sudden now when, when you talk about two months ago when it, when it costs you a hundred dollars to fill up your gas tank, you know this, this basically saying we're not gonna invest in oil and we don't care what it costs. I think the term was there's gonna be some pain. I think what the pain will be for a very long time, and that's what will change the narrative because people don't want to have to make a choice between taking, you know, signing their kids up for soccer or putting food on the table. So I, I think over time, as, as, as these decisions cause prices to go up and not just a little bit, but materially increase that, that's when you're gonna start seeing some people realize that maybe we need to have a longer range plan on how we, how we marry, you know, hydrogen vehicles and electric vehicles and, and you know, liquid powered vehicles. So I, I think that will come, but only through, you know, people's budgets.

Vance Crowe [00:18:21] What was the deal with the strategic oil reserves and tapping into this? Like what, I mean, I understand we've got some caverns of, of oil that we can just pump oil into and then when we need it, we can tap it and get it out. Was was the $5 gas worth worth tapping into the strategic reserves?

Matt Schrimpf [00:18:40] It's elections. I mean, it's plain and simple. You're, it's, it's votes. It, it affects everybody. And you know, as an industry, the biggest thing we put out on our, our street signs or our retailers do is the price.

Vance Crowe [00:18:56] Oh, that's super interesting.

Matt Schrimpf [00:18:57] So, so we have the price out there so everybody sees it, it's impactful, you know, when you're plugging in your car, it's, it's, you don't see that 20, 30, $40. You get that bill once a month, but you don't think about it being how you fuel your vehicle. And I, I just,

Vance Crowe [00:19:15] Is that what it cost to charge a car?

Matt Schrimpf [00:19:17] I don't know. I don't have an

Vance Crowe [00:19:18] Electric vehicle. That'd be super interesting. I've never even thought to ask. I just, just last week we had a, had a guest in here that want, he talks about his te Tesla wants to talk about it. Yeah. But I never really thought about what does it fill up cost in the afternoon? Yeah, if you plug in your car,

Matt Schrimpf [00:19:31] I'm not sure, but I did hear on cable OX radio on the way in today they're interviewing a lady with a business in, in Belleville and Illinois and her power bill for July and August was 3.4 times higher than it was a year ago. So it's back to your strategic reserve. So when you, when you put oil into the market, supply and demand tells you that if you add supply prices should go down. Right? So certainly it's gonna have a short term effect, but we've tapped a finite resource, right. We have to refill that at some point in time. We've pulled down the SPR reserves to the, I think the lowest point in history or just about the lowest point in history. So, so we're playing a game with a finite resource that at some point in time you should refill in the event there's a war or something more critical than $5 gasoline.

Vance Crowe [00:20:27] Yeah. And that's not inconceivable, right? Right. You, you actually could need that fuel,

Matt Schrimpf [00:20:31] Right? I mean, there's a lot of tension that still exists in the world. So, you know, you've got all of these, these gyrations going on out there and then, you know, over the long term, if, if oil prices go up, electric seems maybe less expensive to get into as an alternate. But I know in Illinois we have shut down 11 or 12, you know, electric producing facilities. I think we're importing electricity now. So electricity works in very similar ways to refining petroleum and getting it out onto the grid. And as you put demand on that, prices are gonna go up. So supply and demand, the relationships exist in the electric world as well. And I think that people don't think about that piece and those costs that are associated with the electrification of, you know, of our vehicles.

Vance Crowe [00:21:25] When I was living in Kenya, if you wanted to watch tv, I was staying with this family. If you wanted to watch tv what you did was you took a car battery and you walked to this like little town center where there was this like 8-year-old sitting with a generator and he would plug it into a, a charger and charge that battery up and then you'd take it home and you could run like three lights and a tv. And I remember, you know, thinking like, oh, how quaint and then having it dawn on me like, no, the reason you, you would have to do this too. You just happen to have the infrastructure that transports the electricity all the way here. But I, if you have never seen that, you really don't know. It's, it's like trying to understand, well why wouldn't, if I just plug this this phone into this outlet, why wouldn't it just charge? And the diffusion between when you charge it and when you pay that bill really throws people's ability to understand what that costs off.

Matt Schrimpf [00:22:19] Right. Yeah, I, I agree. I I would be very interested to know too what it costs to, to really charge a vehicle that'd be very intriguing on how it would relate to a per gallon or a per mile cost.

Vance Crowe [00:22:32] When you talk about like three times energy costs or I've heard in Germany they're anticipating 500% increases to their electric bills. What do you think happens to people like regular people?

Matt Schrimpf [00:22:47] Well, that's where I get back to, it's never cost any of us to chase this zero emission society that, that some desire. And, and I, I don't think anybody wants anybody freezing to death. So, you know, currently, you know, getting back to pricing, you know, the natural gasoline not coming down or natural gas coming down from Russia, they've got the Nord streams shut down. So the alternative for that in many instances is diesel fuel. And we have tremendous infrastructure in our Gulf Coast to export diesel fuel. We do have some infrastructure as well to, to export natural gas, but it's much more difficult to export natural gas. Do

Vance Crowe [00:23:30] Are those the giant tankers with the like huge ball on them?

Matt Schrimpf [00:23:33] Yes, I think so. Yep. Okay.

Vance Crowe [00:23:35] Yep.

Matt Schrimpf [00:23:35] But so the infrastructure to to export liquid natural gas is not nearly as robust as a liquid diesel fuel. So, you know, we're, we're exporting a lot of diesel now, and I'm sure for your, your farmer audience, they're not gonna wanna, you know, pay these prices where they're at. But that's what's supporting diesel at a much higher spread than gasoline. So right now diesel fuel is still over a dollar a gallon higher in the futures board than gasoline. And what's supporting that is that export as they're using diesel as an alternative to power the power plants.

Vance Crowe [00:24:13] And if it's at a dollar above, like how long does this go on for? They always say, you know, the cure for high prices is high prices. 'cause then all of a sudden people get in there and start building things. Is that the case here or is there a difference?

Matt Schrimpf [00:24:25] Well, I think there is a difference here only because Russia is the sup. They all got married to Russia and, and you know, some may not appreciate Trump in any form or fashion, but I can tell you that he warned Europe of getting married to Russia.

Vance Crowe [00:24:43] Oh yeah. You can watch a video video warn where he sat there and said, what are you doing?

Matt Schrimpf [00:24:47] And, and they did it. And th this, this is what's happening right now. So, so when you talk about that high price I is, it's relative to natural gas. 'cause it had no idea. That's the alternative. Okay? They're, they're, they're, they're displacing that natural gas demand with diesel demand. And we are one of the, the countries that can import diesel fuel into Europe.

Vance Crowe [00:25:11] So let's talk about Russia. It seems, you know, hard to believe like people just ate it up. But you know, when they came out and said a war between Russia and the Ukraine changes your gas prices, why?

Matt Schrimpf [00:25:25] Well, it, when, when the sanctions happened, I mean, you, you, oil is a global commodity. I mean, just like, you know, a corn or soybean or anything. It, it's traded globally. And when sanctions are put on those countries, our turmoil exists. Generally, people start feeling that there's, it's, it's fear mongering to an extent, but people will start, you know, speculating on which way prices are gonna go. And then the sanctions went in on Russia saying they, you know, don't buy their oil. Well, I think it's still getting on the market, maybe not as easily as it once did.

Vance Crowe [00:26:05] I was just reading today that people thought, you know, there's only two countries right now buying from Russia. You think it's just China and India. They actually, there's 150 countries Yeah, that Russia sold oil to since this whole thing began. That's most of the countries in the world.

Matt Schrimpf [00:26:19] Well, it gets back to people really enjoy their lifestyles and and if you take that oil off the market, truly you're really gonna push prices higher. And and we did, we rallied to a hundred, I mean, right after it happened, we rallied what to 120, $125 a barrel. And, and right now it's relaxed to, to 80, 84 or so. And I think that's what people are starting to realize that this oil is still getting to market. You know, Iran, the, the sanctions there, everybody's figuring out that that oil's still getting to market. So, you know, it's always used to be called

Vance Crowe [00:26:55] Maybe even with a bonus, maybe with a little black mark bonus. Right?

Matt Schrimpf [00:26:58] So, so it used to be called buy the rumor, sell the facts. So, you know, if, if you did that, you probably did really well in this instance,

Vance Crowe [00:27:05] When you think about what's going on with Russia and the Ukraine and this kind of division, how long does this go on for?

Matt Schrimpf [00:27:13] I heard somebody say or speculate it two years, but I, I don't know, I don't really understand it. I, you know, you, you look at what was going on over there and it, it seemed like everything was pretty copacetic and, and I, there's a lot of speculation around why Putin did what he did. I don't know what what to believe really. But, you know, it's, I don't know if there's a good resolution out of this. I mean, they've destroyed a lot of Ukraine and I don't know how you come back from that.

Vance Crowe [00:27:44] Yeah, it's, I, one of the most bizarre things, and now I'm not as surprised because of COVID, but when the whole Ukraine Russia thing happened, the United States started pressuring places like YouTube shut off all of the media that comes out of Russia. So now you can no longer go to, you know, Russia today to be like, what do the Russians think is happening? Because they were saying, oh, this is propaganda or misinformation. But like, that was supposed to be the joy of the internet. It was supposed to be that if something happened in the world, you could go talk to somebody from another country. And so that all got cut off. And I found very quickly that if you wanted to read, for example, a transcript of Putin's speech, you couldn't do it unless you went to another country's news outlets because ours would play these clips. That would be him saying something completely bombastic, right? Something you'd be like, well, that's crazy. And then you'd go read it somewhere else and you'd be like, I don't know that I liked what he was saying, but doesn't seem quite as crazy as, as the way it was presented to me. And that's been a bizarre thing of, of all of this, to be in a position where you're like, I don't know that, I like to genuinely understand that you don't know what's going on over there.

Matt Schrimpf [00:28:55] Yeah. I think that can be said for a, a lot of the media today of, of how it's being filtered. You know, I I think it's too easy to, to get viewpoints that you agree with and it's, it's really difficult, I think to find true journalism that'll tell both sides of the story, which I think just makes, you know, the, the, the divisions that we see, not only abroad, but even within, you know, this country, even in some households, you know, everybody gets, gets focused on their point of view and, and isn't able to have a discussion or a thought or a viewpoint presented that's, that's maybe in conflict with what they feel.

Vance Crowe [00:29:35] We, and we said like at the beginning, like, you're in an interesting position because international events dramatically impact you. So how do you, what news matters to you? What do you watch?

Matt Schrimpf [00:29:47] Well, actually we, we watch a lot of charting

Vance Crowe [00:29:51] The real news. Yeah,

Matt Schrimpf [00:29:52] Well, well, yeah, so, so really a lot of the charting that we watch really basically says that global events happen, national events happen, natural disasters occur, but at the end of the day, the charts are gonna kind of tell you where you need to go. And that's just noise. I I think there's some truth to both sides of, of the equation. But again, hedging when we see these big price fluctuations and swings, you know, it's impactful again from what it costs us to do our business. But as far as the successes or, or the, or or having a, a tough time is really not driven by, by higher prices or lower prices. For instance, this year, one of the, the biggest obstacles has been, you know, we, we came from off from off of COVID where, where all of a sudden getting back into a springtime march of 21 and pe people were tired of being at home. So all of a sudden it was almost like a shock demand event while the refineries couldn't really catch up from being shut down. I mean, you, again, you just don't flip a switch even in an existing industry to catch up with the new demand. So what that does is it creates, in the futures market, that front month will be worth more is people bid the price up and the deferred month they say, oh, we're still not sure where this is going. So it'll be a cheaper price.

Vance Crowe [00:31:19] So like June or July we had a cheaper price, but the futures when they were buying 'em in April for

Matt Schrimpf [00:31:25] Right.

Vance Crowe [00:31:25] Okay.

Matt Schrimpf [00:31:26] Right. So, so we, it's called backwardation to the people that are more technical. And I'm sure,

Vance Crowe [00:31:30] Oh, people will love this because

Matt Schrimpf [00:31:32] A bunch of

Vance Crowe [00:31:32] My audience are commodities traders YeahAnd. So I was gonna ask

Matt Schrimpf [00:31:34] You about this. So it's, it's called backwardation and it's been horrendous. For instance, in July, the, the value of gasoline as you went from July to August was 37 cents backwards. So for every gallon of inventory that you still owned was worth 37 cents a gallon less. So as a, as a shipper, that's what's impactful to our business. You know, the the, whether it's $2 to, you know what, a dollar 63 doesn't matter if it's, you know, $3 to 2 63, we don't really care, but we, we do care about that spread that difference because you don't really wanna hold inventory when you've got that kind of backwardation pressure.

Vance Crowe [00:32:17] Oh yeah. Because it's just, it's just sitting there. It's a cost. Wow. Yeah. And so then you also had to deal with that then when COVID was going on and all of a sudden people stopped driving. Did you all your tanks totally full.

Matt Schrimpf [00:32:29] Well, so, so that's why, so I think October, I just remember because I was, I was telling this story to a bank because they, they like to try and understand the business and sometimes it's hard to give them real world examples of, of pricing and how things work. But in October of 19, I think our, our gasoline was, was valued at a dollar 97 a gallon in February, it was 17 cents

Vance Crowe [00:32:53] Whoa. Of

Matt Schrimpf [00:32:55] 2020 because you just stopped and that was the cash price. But, but what happened was people stopped driving, the pipelines didn't stop. The refineries can't just flip a switch and stop producing. So you had to evacuate product at any cost so you could make sure you could contain the next batch that was coming up the pipeline. So it was so, so march of of 2020 was a very, very difficult time for the oil industry.

Vance Crowe [00:33:24] And you also were dealing with, I remember talking to you when all of a sudden it, you had to pay people, excuse me, to take oil. Yeah.

Matt Schrimpf [00:33:32] So, so crude oil went negative for the first time ever. And you know, we're not in that side of things, but I think it went down to a negative $34 a barrel. But again, it's, it's tanks for filling up. You couldn't shut wellheads all fast enough. But it's amazing how people can find a little more room when the price gets cheap enough or in this instance, potentially getting paid to take it.

Vance Crowe [00:33:58] So you, you have a multi-generational business. What do you think your father, grandfather, great-grandfather would say about the state of the oil fuel world today?

Matt Schrimpf [00:34:10] Well, certainly I think it's moving faster, but I don't know. I'm sure they dealt with a lot as well. I mean, my grandfather dealt with the transition from leaded gasoline to unleaded gasoline. So, you know, a big change there. He was, he was the first to install automated ethanol and diesel blend or ethanol and gasoline blending in the mid seventies. What

Vance Crowe [00:34:34] Does that even mean?

Matt Schrimpf [00:34:35] So, so up until the people didn't even used to use ethanol before, I'm gonna say the mid seventies, early seventies, but a DM being an Illinois company took a liking to my grandfather. And, and again, we, we don't really care what we sell as long as it's liquid and we try to sell it for more than we buy it for. So my grandfather was like, sure, we'll we'll put an automated blending system in so when the drivers come in, they can just choose the product. So we've been selling E 10 gasolines since the mid seventies through our pipeline terminal in, in Hartford. So, so, you know, he did a lot, it was fast moving for him, but you know, I I think these price swings would probably be most intriguing to him where we have days where ranges might be, I mean, today's range is probably 12 cents a gallon. Normally right now, in the last year, we're seeing 20 cents a gallon range as high to low. I mean, even, even when I started in 95 outta college, several years of my employment, we didn't even have 25 cent a gallon gasoline or diesel fuel. So, you know, when you, when you look at the trading range being greater than the price of what was 25 years ago, oh wow. It's, it's, I think that would probably be most intriguing to, to, to my grandfather and, and, and my dad.

Vance Crowe [00:36:09] Yeah. I was just talking with a guy that does some commodity training, Michael Ring, and he was telling me about how wheat kills, he doesn't, he doesn't trade wheat because the price fluctuations can float so much, but if you're a hedger, you're, that's not as big of a concern for you who is out in the market getting killed or gloriously rich. I'm sure

Matt Schrimpf [00:36:29] That there's several, and they might do it more than once in a day with these kind of bounces, these, these kind of swings. Right Now we talk internally about a spread called the widow maker that is truly, it's, it's either called the suicide squeeze or the widow maker. So you, you can tell that that over time people have have done really well and when it's flipped on 'em, they've, they've some really bad things.

Vance Crowe [00:36:55] And so what does that look like? How, how does

Matt Schrimpf [00:36:56] That happen? So that is the spread between the cost of the futures of gasoline and diesel fuel.

Vance Crowe [00:37:03] Okay.

Matt Schrimpf [00:37:04] So it was out to a dollar 50 about a week ago now it's probably a dollar 10. So that, I mean, to make 40 cents on a, on a trade is, is, I mean, it, it probably put a big smile on some people's faces, but there's usually somebody on the other side of that. You know, everybody, everybody talks about speculators and, and my dad even would frequently have unfavorable things or opinions of speculation. But I went to a seminar one time and it's so true for every time we buy or sell something, there's somebody on the other side, you have to have that opposing position or you can't make the market. So it takes it all to go around. But I, I do feel that sometimes you can get, you know, some momentum behind the market. And especially right now cost of money's gone up for the first time in what, 20 years. So there's a true cost of money, it's taking liquidity outta the market. The high prices have taken liquidity outta the market. And when there's less liquidity and less trading, you see this volatility just spike. And I'm sure that's what must be happening in the, in the wheat market.

Vance Crowe [00:38:14] Are you familiar with this concept of the milkshake theory? Have you heard of this?

Matt Schrimpf [00:38:18] I have not.

Vance Crowe [00:38:18] So it, it's one that strikes me 'cause I am highly interested in inflation. I like, I'm, I'm, I have to realize over time, like my fear of hyperinflation happening clearly isn't happening at the speed that I thought it was going to happen. But the milkshake theory is, well one of the reasons that hyperinflation has stopped in the US is as you raise interest rates, right? It's not just raising interest rates for the value of getting the cost of money in the us it's also raising the cost of money everywhere else in the whole world. Although the dollar is still so much stronger than in other places. So people as they see their weakened euro, for example, which is really getting crushed and their prices just keep going up because of their energy and being so out of control, that that what ends up happening is people say, I want any cover I can get, so I'm going to go buy US dollars. And so you flood all this capital back into the US and until I had heard this theory, I didn't really understand just how dominant it is to be the reserve currency. Because if you have the chance to raise interest rates when things are not going badly, sure you're not printing money freely, but you can just grab all that capital from all these other countries and, and just like in no country for old men, you just pull all that, that wealth back, back into your own coffers.

Matt Schrimpf [00:39:41] So interestingly enough, I saw a chart today that showed the price of a barrel of oil versus the value of the dollar.

Vance Crowe [00:39:52] Oh, interesting. Yeah. Okay.

Matt Schrimpf [00:39:53] So, so you know, this is one thing that I think we're, as a country we probably need to be careful with because the strength that China is showing and the sanctions on Russia, there has long been a, a push to start trading oil on something other than the dollar. But today it's still traded in a dollar. But if you look at the strength of the dollar and what it's done over the last several months and you look at the price of oil and that same time you will see the price of oil just dropping almost precipitously with the, with the strength of the dollar.

Vance Crowe [00:40:31] So that's interesting. So all of a sudden, if it becomes really expensive for you, so for people that don't know, this is my understanding, you can correct any of this. 'cause this is just like a caricature of knowledge that even though we went off the gold standard when when we started to develop a relationship over the Middle East, we said, Hey, wouldn't it be great if we denominated all barrels of oil in dollars and in exchange we will sell you arms and we'll protect you when something goes, goes wrong. IE Iraq invades Kuwait, the United States brings all of its might and overthrows that government, right? Right. So we, we, the, in some ways the, we maybe lost the, the dollar as as backed up by gold, but it's now denominated in oil prices. So if anybody anywhere in the world wants to buy from most of these countries in order to buy that oil, they have to buy it in US dollars. Is, is this correct? That's

Matt Schrimpf [00:41:23] That's pretty, I I don't know if they've started trading anything outside of US dollars yet, but definitely

Vance Crowe [00:41:28] Up until this point Russia,

Matt Schrimpf [00:41:29] Russia and China are, are trying to do something. And I don't know how far along they are to speak at, you know, definitively, but, but definitely that has been the case for the most part up until this time is, is oil is in dollars.

Vance Crowe [00:41:45] So our, our fellow St. Louis Bank people will, will find this a little bit of a crazy idea, but also Russia just said that they would denominate things in cryptocurrencies, specifically Bitcoin. And I think the world flips upside down if they start selling their barrels of oil in Bitcoin because, and and to me it would make a whole lot of sense if they did that right? One of the huge powers that we have in the banking system is the, the SWIFT system, right? Like how do you actually transfer hundreds of thousands or millions of dollars worth of value? Somebody, you, you trade oil for somebody, you need to have dollars come into your account. You don't actually move those dollars. You just have an account through the SWIFT system that says, yes, PAU Enterprises has this money and we're gonna move it over to this account. But that even though they say yes, that occurs, the money moving accounts takes time. It's, it's intermediated by people, it costs money with Bitcoin, all that is gone. All those, all those people, all of that technology just gone I, that that would be my prediction on where things will go.

Matt Schrimpf [00:42:54] Very interesting. Yeah, I, it'll be interesting to see how it plays out. 'cause again, the, the global stresses and, and I think some of these people wanting to get out from under the, the USS control to an extent they're, they're looking for optionality. And I'm sure as, as technology continues to build out, you know, whether it's whatever kind of cryptocurrency it might be, it definitely adds another option to the playbook.

Vance Crowe [00:43:23] So we mentioned your family and you've run, you're a part of a business that's been around for 90 years. What does your family know about being able to keep a business together that that's made you be able to do it?

Matt Schrimpf [00:43:37] Well, it's, it's fun. But it, but it's hard. I mean there, there's, there's hard decisions that have to be made. You know, my, I think back to my dad, you know, so my, my great grandfather started it. He passed away when my grandfather was in high school. So, so the transition to, to my grandfather and his brother when they were, you know, still in school was, was something that they just, I'm not sure if they wanted it as much as they just had to do it. I mean, the business was there and they wanted to keep it on. Well then it, it became a passion and my, my grandfather ended up buying his brother out and then the, the business went on to, to my dad and his brother and sister. And through some planning, you know, my grandfather was always, you know, some people like to ignore this fact, but he was always very much about the estate planning. I mean, he is like, it's a fact I'm not gonna be here forever, so how do I continue the business? And so he passed along the business to his three kids through, through a lot of early estate planning. Then when my, when I came along at a, at a outta college, we sat down with some consultants and, and actually we all had, what do you want to do? What are your goals in three months, six months, 12 months, 18, et cetera. And, and my dad's brother, his, his response was, was to be doing something else. So that was an easy transition to buy him out.

Matt Schrimpf [00:45:10] So my, my dad and his sister bought him out in 97. And then, then, then my dad approached his sister in 2000 and, and bought her out. Actually my sister and I bought her out, but my dad had to do all the, the legwork to, to bring that to fruition. But you know, my dad was a big believer in, in, you know, keeping the, the, the business smaller from the family standpoint. You know, I don't know what drove that decision, but that was, that was his belief that that's the way it would work best.

Vance Crowe [00:45:47] What do you mean keeping it smaller?

Matt Schrimpf [00:45:48] So instead of having, so, so my, my uncle had two children. My aunt had, and and uncle had three children, my dad had two children and he could just see, okay, there's, there's seven children coming up the pipe, so to speak. So we don't really have, you know, the footprint or the businesses now to, to sustain that, that level and of people of head count. And he was always a big believer of, of, you know, you only got paid if you worked in the company. And, and so he just, he utilized that strategy to then buy his sister out. And then in, in 2010, my sister and I bought, bought my dad out and we immediately started estate planning then, which, which is crazy when I look back on it because we set some things in motion and actually my, the fifth generation, my son and and nephew will, will become part of the ownership group in October this year.

Vance Crowe [00:46:51] Wow.

Matt Schrimpf [00:46:52] And it's, there were hard discussions in that family meeting too, because I've got two daughters and my sister has a daughter. Well they've not shown interest in the business. And I'm like, okay, we're gonna, we're we're gonna make sure that since the boys have worked here, since they were, you know, young teenagers and have shown interest in the business, you know, they're gonna have the chance to carry it on into the, into the hundredth year plus hopefully,

Vance Crowe [00:47:17] It's striking to me how similar this is to ag. Right? I, I hear these things all the time I've been in, I've been involved in negotiations and different meetings and, you know, there's only so much land. Yeah. And if you keep dividing it out among everybody to be fair, then nobody has a plot of land that they can be profitable on. But then you have the, the, the tension between well, who gets it and how does that all work? And I think the families that have the tough conversations while the person in charge is still alive, end up doing a lot better than if the person that was in charge dies and then they've, the the kids have to figure it out after the fact.

Matt Schrimpf [00:47:54] Well it certainly doesn't do anybody any favors if you choose to do nothing and then let, let somebody else handle it when you're gone. But yeah, I I'm not sure if water down's the right word, but I I think that's what you're saying in the farm industry too, you just, you just get so many land landholders and then, you know, they go off and get married and it just generations down the line. There's no sense of ownership possibly for the people that are running it who have all the risk of buying that, you know, that I've, I've got a, a father-in-law that farms in southern Illinois, so I don't know exactly what combines cost today, but I know there are a lot. But I've seen his equipment, you know, and, and the amount of assets it takes to turn that crop and just get one chance a year to make it right. The stress load, the capital requirements, I mean, the people that are, that are doing the work truly need to be rewarded for the risks that they are taking. And it's not to take away from the people that aren't involved, but, you know, it's, it's, it's prudent to have the conversation and try and, and be as fair about it as you can with what other assets are available and then, and then let somebody carry on that's, that's involved.

Vance Crowe [00:49:07] So I'm not asking you to disclose family things, but how do you make that fair if there's, if there's some people that weren't in the business, how did that, how do they feel at the end of this? So

Matt Schrimpf [00:49:17] Again, foresight from my, my grandfather and, and dad, they, they started some family limited partnerships that, that distributions are made into with, with the profits of the company. And those assets and equal values will be given to the, to the girls that, that aren't involved and, and interested in the company. And the boys will, will not appreciate or or receive any of those assets. And they'll, they'll get the, the business and then they'll obviously, hopefully have the chance to have a long successful career at it.

Vance Crowe [00:49:53] How did, how did family meetings go? Like, you know, if you're working for your dad, sometimes that's a tense thing. You have new things you wanna do and dad has a way that he figured out how to make money. How did you guys navigate that?

Matt Schrimpf [00:50:09] Well, he always had a list of about five questions. He needed an answer on any idea. So I always knew, or I shouldn't say always knew. He taught me very quickly what I needed to have answers for before presenting a new idea. And it wasn't ever rocket science, but it was, it was very, very grounded. But, but you better have your ducks in a row on, on any chances you want to take. And as far,

Vance Crowe [00:50:34] What are those five questions?

Matt Schrimpf [00:50:36] Well, I don't know. I, it, it was, when I say five questions, I'm gonna say that loosely, but you know, who needs the product? What opportunities exist? How long is the payback? And what kind of capital is it gonna take to really make this go? We talked about the stroke of a pen, so, so we were the second and third automated biodiesel blending facilities in the nation in oh five. Yeah. So Bush signed the jobs bill in 2004, December 15th. So we had automated blending in, in Hartford, Illinois and North City Illinois in March of that year of oh five. So four months is speed to market that we could bring that. And I remember going in into my father's office and he is like, well, why do you think this works? And I'm like, well, you know, Lakovic like a couple years before that signed, so, so to regress a little bit here, Illinois is one of only six states to charge sales tax on motor fuels. Well, like 2003, July of 2003, Blagojevich signed that blends of greater than 10% were sales tax free.

Vance Crowe [00:51:54] Oh man. So everybody's going to

Matt Schrimpf [00:51:56] Till

Vance Crowe [00:51:57] 10.1%, but it

Matt Schrimpf [00:51:58] It 11 And we started that because I'm like, I don't want to cut it too close 'cause it doesn't make sense. But in 2003 it didn't make any sense. So 2003 goes by and we're selling a lot of farmers, two and 3% biodiesel blends. That was the market, that's all the market could bear. And the only people that wanted it or that were willing to pay the incremental cost of biodiesel were the people growing it. Well, when the jobs act was signed, there was a blender's tax credit of a dollar a gallon. So again, stroke of a pen, all of a sudden biodiesel could compete not just in Illinois, but almost throughout the whole country with petroleum diesel. Well then in Illinois you almost got another 22 cent a gallon advantage because it was sales tax free. So we would have lines every day of, of trucks waiting to get B 11 blends to take to the retailers. So, you know, I'm always, I've always been a, I don't like mandates. I I think they're too many state by state it, it breaks things up, but incentives, I i I do love. And, and when you marry those two incentives together, the state and the federal Illinois was just the place to be. And we were the first ones to market. So we were, we sold 20% of the nation's biodiesel to end users in oh five and oh six.

Vance Crowe [00:53:27] And you were one of the people that brought this idea forward to say, let's,

Matt Schrimpf [00:53:30] Let's make this happen. Yeah. It's like we need to, we need to do this.

Vance Crowe [00:53:32] Well that probably really dealt you into the game as far as like what other ideas

Matt Schrimpf [00:53:36] You have. Yeah.

Vance Crowe [00:53:37] It,

Matt Schrimpf [00:53:37] It, it's amazing what a little bit of success can do to, to the confidence and, and the way you look at markets and the way you look at opportunities and, and it, it is easier when you already have the asset that where trucks are going to load. But it was, it was a new product. It was, it was a little unproven back then. I'm like, we got into BioD in 99 and did it through some bulk plants, but very inefficient. So, so again, driving that efficiency to put it at the terminal rack where a driver's just picking a recipe off of a, of a screen and then it, it auto blends as it goes onto the truck. That, that really brought it next level and, and really took it throughout the state of Illinois. Because

Vance Crowe [00:54:17] You're really in the business of delivering the fuel to the gas stations that, that, or at least the wholesalers that then take 'em to the gas stations,

Matt Schrimpf [00:54:25] Right? Yeah. So it's, it's at the rack we call it the, the pipeline terminal we call where they load at the rack. So that's, we offer a price there where the trucks would come in and, and load. But it, you know, talking about efficiencies, I mean, most people don't know this, but we, we price to a, a hundredth of a cent every day to try and earn business

Vance Crowe [00:54:45] Because people will make a decision based on the hundredth of a cent. Right?

Matt Schrimpf [00:54:48] Right. And and if you think about the way petroleum terminals work, they're located about every 90 miles. So for the people in the St. Louis market, if they think about it, St. Louis has several pipeline terminals. Effingham is a pipeline terminal. Cape Gerardo. So that's a little bit further, but you know, 150 miles. And then you got Columbia, Missouri and Palmyra Missouri or Hannibal, Illinois or Hannibal, Missouri, Quincy, Illinois area. So these are scattered throughout the nation. And usually your, your supply, normal supply radius is a, is a 50 to 70 mile supply radius if everything's under normal condition or all the price and markets are under normal condition.

Vance Crowe [00:55:34] I read your, you know, your family's history with the PAU business and one of the things that I noticed was your, when your great-grandfather died, your grandfather was in high school. Yep. And he had to take over the business. So he was gonna school in the morning and then working in the afternoon and actually driving trucks to be able to deliver fuel. Fast forward to today, you can't have your high school son go drive trucks, I assume. What, how can you involve them in the business in a, in a world that's very different from what your grandfather had?

Matt Schrimpf [00:56:08] So, yeah, so, so my, my dad also was, as part of his learning experience, driving a truck, I drove a truck for four years between my junior year of high school and junior year of college. But you're right, the, the commercial driver's license requirements, you can't do that anymore. And some of the best times of my life getting to meet people, getting to, to see how other people do things, huge learning experience. But before I turned 16, I, I was very good with a paintbrush and a weed eater.

Vance Crowe [00:56:41] And

Matt Schrimpf [00:56:42] I, I would say my, my nephew and son are both proficient as well, maybe a little better than I was at, at, at operating the weed eater. But no, you, they have been in a, so my nephew, he's, he's been a, a year and a half inside now. He, he graduated from SIUE and my son's a a junior at Mizzou now. And over the summer he was very integral. We added jet fuel back to our rack in, in Hartford. And he, he went through the, the jet manual and completely redid all the, the testing protocols. And so he intimately worked with, with not only myself and the knowledge I had, but he, he worked with our terminal guys to do all the testing to make sure that everything flowed, everything made sense, that all the quality controls were in place. So, you know, just giving 'em little projects as they come along, because it's hard just to have a, here's what we're gonna do today in our company. It's, you gotta wear many hats and, and be very flexible. So when you have chances like that to involve 'em in something new and different, you know, you, you gotta get 'em involved with different people in the business.

Vance Crowe [00:57:47] Yeah. And anytime you're doing something as, as sophisticated as jet fuel, right? Like you have to learn the business and people that you go to show your work to can point out where you're not doing well or where you're doing well and figure out actually what is this kid like? Because I think as a parent, now that I have a little 2-year-old, I remember when people say, as a parent, you can't really tell your kids like, you've got blinders on. And I was like, no, I'll be able to be objective. There's no way. Like you, you have these feelings for this child that make it completely impossible. I mean, you might have a good sense for your child, I think that's what a good father does, but at the end of the day, you need to see what they can actually deliver because you love them so much.

Matt Schrimpf [00:58:28] Right. And, and through that love, I think you set high expectations. And I, I think in family business settings, you know, I I just communicate to 'em that the eyes are always on you. You know, everybody's watching. Whether it's, whether it's when you're walking through the garage to, to deliver something back to the back part of the office, or if you're driving up to the terminal to inspect something, you're, it's not just the, the terminal operators that are watching you, but every driver, whether it's one of our employees or somebody else, is just watching what you're doing and how you handle yourself and how you communicate with people. So definitely there's a, there's a tremendous amount of scrutiny that I think those two have been under, and I'm very proud of the way that they've been received by, by not only our employees, but but other, other clients that come through and see them doing their job.

Vance Crowe [00:59:20] Man, I love that. Like I, I've worked in several businesses that are family businesses and you know, the kids that take that family business seriously. And the ones that take it for granted and the ones that take it for granted, it degrades, it degrades the employee like the way they feel about things. But if you have a son or child that's taking things seriously, now all the employees say, I, I mean look at that then, then I can do that too. That's a very insightful way of looking at it.

Matt Schrimpf [00:59:47] Yes. I I think it's a lot about respect. I mean, they, they know where they've come from and they, they've seen that they've worked to get where they are instead of just, you know, here's a title and here's an office. And I, I think that goes a long way when people see 'em out in the field doing, doing different projects.

Vance Crowe [01:00:03] What is the future of fuel in the United States? Will we be driving gas cars in 20 years?

Matt Schrimpf [01:00:11] I think so I, I think that, I think cooler heads will prevail over time saying we need to have a, you know, everything must be a part of the solution. You know, I think as we continue to move toward more EVs, that technology will come along. I also think that just no different than ethanol. I mean, if you remember oh eight or so, ethanol was gonna be what's gonna take us to energy dependence. It's the best thing ever. And I always thought that was interesting 'cause we've been at it for over 30 years, but then there was discussions from some of the environmentalists about the amount of water that is needed to make ethanol. Well, you know what, that technology's coming along as well too. So they're being more efficient what they do. So as these industries drive for efficiencies, I, I think you're gonna see that there is a place for liquid fuels and there's also gonna play be a place for EVs, but it doesn't work for everybody. And you just can't snap your fingers and, and say we're gonna have charging stations every 50 miles. I mean the, I don't remember how many hundreds of millions of dollars they've set aside for, for infrastructure for charging stations. But it, it's very significant. And, and it won't happen overnight, but you know, there's hydrogen still coming along. So, you know, I think it will be an all above board solution. And I think fuels, liquid fuels will continue to play a role in that for the next 20 years.

Matt Schrimpf [01:01:43] Yeah.

Vance Crowe [01:01:43] I actually think the subsidies will hold them back, right? Because as soon as the government starts putting their thumb on like, hey, these are the minimum requirements for charging stations and this is the way you set them up. Like then you've taken out the market from being able to figure out who really can produce these things in an efficient way and get 'em out into the right way that customers can use them. So I I actually think anytime the government gets involved, it's gonna take you a lot longer to bring the market to full fruition.

Matt Schrimpf [01:02:10] Right. And how do you get paid? I mean I, I'm, I'm still hearing there's some confusion on when you have a retail station, for instance, and you put a charging station, and how do you get paid for that? You know, do you, do you charge time to rent the spot? Because if you can't, if the, if the utility has to charge for the power, how do you get paid for your, the space that you're taking up on a parking lot? And, and again, technology will help things out, but right now, like, what do I hear? It's like 45 minutes to charge a car. Well, you know, you're getting what, 10 gallons a minute in your car, so two minutes and you fill up with a, with a hose and think of the size of a, of, of a typical gas station and the volume they need to do in gas to be viable. Well, how many charging stations would it take at 45 minutes a piece? How much land would it take? So it'll all get better, but I, I think there'll be a role for, for, for liquid fuels on the, you know, for for long as I'll be alive anyway.

Vance Crowe [01:03:13] And when is the time, how far into the future when, when people say, did you know they used to stand next to their car and put a little gun in and it would just pour 20 gallons of the most flammable fuel that they could have and they would just drive 'em around like that? What, how, how far into the future until that It's as shocking to think about that as it was to think about people riding horses. It's

Matt Schrimpf [01:03:39] A great question. Never. I've never thought about it. But you know, I also remember the rotary phone and my kids have no idea what that is. So, so, so it's a fair question. I just don't have a good answer for you.

Vance Crowe [01:03:50] Well, Matt Shrimp, you came over on the on a moment's notice to be able to do this. I've been wanting to do it for a long time. I'm really grateful you were willing to come over and talk energy. Thank you so much for coming on

Matt Schrimpf [01:04:01] Again. Thanks for having me. Appreciate it.