Transcript
Jigar Shah: The way we power the world is changing at a fundamental level. Across the United States, clean energy now makes up more than 90% of new electricity added to the grid — not because of politics or ideology, but because these technologies simply work better.
Jamie Nolan: They're cheaper to build, faster to deploy, and easier to scale than anything we've had before.
Jigar Shah: Whether you're curious about where the economy is headed, how energy affects your daily life, or who's behind the billion-dollar deals shaping our future —
Jamie Nolan: Energy Empire is your guide to what comes next.
Introduction
Jigar Shah: It's already been a crazy, eventful year. We started with the invasion of a country in our hemisphere and the removal of a president and his wife. Everyone keeps saying it's an oil story — and it is partly — but we wanted to get an expert's take. So we invited Kevin Book, who I've known for years and is the resident nerd on all of these things.
Jamie Nolan: What made you choose Kevin Book? I've heard he's the guy, but why is he the guy on these issues in DC?
Jigar Shah: The thing about Kevin is he plays it straight, all the time. He's not an oil guy. He's not a solar guy. He's an analyst's analyst. He doesn't sugarcoat it. He doesn't spin it. Ever since the Dick Cheney and George W. Bush era, he's been a fixture in DC and is really relied upon by a lot of serious people.
Jamie Nolan: How important are we talking? Oval Office phone calls? A direct line on Capitol Hill?
Jigar Shah: He really is the guy people talk to when they want the straight scoop. When you think about national security implications — how will China or other countries view this? How does the industry read it? How do trade negotiations get impacted? He writes thousands and thousands of words every week and sends them to his clients. He's on the record all the time.
Jigar's Hot Take on Venezuela
Jamie Nolan: What's your hot take on this? The news cycle moves so fast under this administration — the zone flooding never really ends. Now that a few weeks have passed, what do you really attribute this move to, and what happens next in Venezuela?
Jigar Shah: As with a lot of things in the Trump administration, there's a kernel of truth in what the president does, but sometimes he takes it too far. It is very clear that the Russians have invested heavily in Venezuela, and the Chinese have been taking all the oil. Venezuela's financing of Cuba is real. The United States, since the Monroe Doctrine and certainly since Kennedy, has said we don't want other powers in our backyard. So a lot of this is really about kicking out Russian and Chinese influence.
I don't think getting back to four million barrels a day for Venezuela is in the cards — people have spent way too much time talking about that. But the million barrels a day they produce now is going to shift from China to the Gulf Coast refineries that were all built to process Venezuelan crude. What people don't realize is that a refinery can't just process any kind of crude oil — they're specifically made for certain types. When you think about what that means for trade negotiations with Canada, Trump expects leverage: we don't need your oil anymore, we've got a million barrels a day from Venezuela.
The Chinese are also huge importers of oil, even as they've done a remarkable job moving to electric vehicles. The fact that they get cheap oil from Russia, Iran, and Venezuela is something they rely upon. Getting cheap oil out of their hands is a significant move and starts to change some of the balance of power.
Jamie Nolan: If you're a decision maker at a U.S. oil company with a footprint in Venezuela — what are you thinking about the geopolitical risk of expanding there?
Jigar Shah: When Hugo Chávez came in, he kicked all the U.S. oil companies out — Exxon, Chevron — and wiped out all the equity that had been invested. We had Export-Import Bank loans into Venezuela, and we were able to force the Venezuelan government to pay those back, but the equity Chevron and Exxon had put in was gone. Chevron managed a slightly different side deal and still produces about 100,000 barrels a day there. But the broad memory of the U.S. oil industry is that Venezuela is not a safe place to do business. The super majors are not clamoring to put money in. And even for a wildcatter entrepreneur, this is really heavy oil — expensive to produce. With oil at $50-something a barrel right now, it's not a very profitable time to go in.
Jamie Nolan: Where does the buck stop if this doesn't work out?
Jigar Shah: The money, from what I can tell, is going through Qatar — the funds from oil sales are being held there and theoretically used to help rebuild Venezuela. I find that highly unorthodox. It's hard to audit a fund sitting in Qatar, and we have perfectly good banks here in the United States to do this transparently. I'm not accusing anyone of anything, but I don't understand it.
The other big thing: we are in an interesting situation right now with very low oil prices and a lot of excess production capacity. Part of what's happening while everyone talks about Venezuela is that we're deploying clean energy technology at such a scale that it's creating excess oil supply. That's a good thing for consumers.
Introducing Negabarrels
Jamie Nolan: That brings us to one of the big topics from your conversation with Kevin Book — the concept of negabarrels. Can you talk about that?
Jigar Shah: That's a concept completely ripped off from Amory Lovins — the godfather of all things "nega." It started with negawatts and his decades of work on energy efficiency. We've had a cultural shift in the United States where people now think of energy efficiency as the first fuel. But in the oil industry, we haven't seen that. We have a whole range of technologies — electric vehicles, industrial efficiency, solar and battery storage microgrids to replace diesel — that can dramatically reduce oil consumption around the world.
Most political leaders don't know how to deploy these technologies quickly. So they're stuck paying for imported oil in U.S. dollars — which means they can't use those dollars for AI, manufacturing equipment, and other things. The concept of negabarrels is about empowering governments to say: if you want to control your own destiny, you now have tools fully under your own control to reduce oil demand — which then reduces oil prices and makes everything easier for you and everybody else.
Interview: Kevin Book
From Tufts to Clearview Energy Partners
Jigar Shah: Kevin, welcome to Energy Empire. You and I have known each other for a long time — I think we first met around 2009, maybe during the global financial crisis. I remember us fighting about energy density. You were like, solar doesn't have enough density.
Kevin Book: Maybe even 2007 or 2008, yeah.
Jigar Shah: We've been friends for a long time. Tell me about your career trajectory. You graduated from Tufts — what did you study?
Kevin Book: Economics with a double in English.
Jigar Shah: Is that what makes you a good writer?
Kevin Book: My dad joked about it. He said, "What are you going to do — write about money?" And the answer is yes.
Jigar Shah: Where did you go after college?
Kevin Book: I had applied to law school, got in, and deferred for a year. On the advice of an attorney who had recommended me at the firm where I'd interned in college, I took that year and fell in love with research and strategy consulting at a firm called the Advisory Board Company. That led me to another consulting firm. I ended up with an eight-year stretch — the last three and a half years of which were at the Motley Fool and personalfinance.com.
Jigar Shah: Did you pick the right ten stocks?
Kevin Book: I didn't always pick the right ten stocks. We were brilliant until we all stopped looking brilliant, circa 2000.
Jigar Shah: When did you become the go-to analyst that politicians would actually call for the straight scoop?
Kevin Book: I was lucky to be in circulation where they could find me here in Washington. When called, I answered. The first principle is that when anyone in our government, regardless of party, asks for information, it's incumbent on us as citizens to give the best information we can. That's been our approach since we started Clearview in 2009. The second thing is that it's genuinely educational to learn what the people who are actually making decisions are wondering about and how they think. It's very easy to distill abstract notions about what political leaders are doing — but when they actually ask you questions, it's an education like no other.
Energy Efficiency: The Fifth Fuel
The Jimmy Carter Problem
Jigar Shah: I want to fast-forward to where we are today, which I think was shaped significantly by the Ukraine crisis. For me, that was the first crisis where energy efficiency actually played a major role. In the past, the image was just Jimmy Carter telling people to wear a sweater. But in Ukraine, we didn't just ship more LNG — we deployed a huge amount of heat pumps, energy efficiency upgrades, and insulation. To me, that's the most underreported part of that story.
Kevin Book: It's the fifth fuel that everyone talks about in academic discussions but that's historically underutilized. The concept of negative-priced supply in an abatement curve — where efficiency plays a significant role in foregoing demand — is well understood in theory. But why doesn't it actually happen? Usually there are fixed cost barriers, regulatory barriers, price indifference on the end user's part, or structural impediments to new entry. In Ukraine's case, there was a very powerful catalyst for efficiency, and it did happen.
Jigar Shah: I feel like it's mostly vibes. The Jimmy Carter wearing a sweater thing gave Americans the wrong feeling. Then Reagan came in and said: you don't need a sweater — you can burn as much as you want whenever you want, it's your right. The biggest problem with efficiency is that it feels like sacrifice, like going without. Today, with heat pumps, smart water heaters, smart thermostats, and appliances you can control from your phone, the features feel like things people actually want.
Kevin Book: Making things more user accessible matters. But you're right about the vocabulary too — "efficiency" sounds like eating your broccoli or doing your homework. Whereas "economizing" or "profiting" sounds a lot better. The notion of achieving energy independence through starvation, through doing without, was never particularly popular. Over the years I've probably made hundreds of energy-food analogies. The idea of growing yourself to fitness through working out rather than starving yourself to environmental or economic rectitude — that framing was, and still is, very appealing.
Jigar Shah: Great analogy for today — so many people are on Ozempic right now. Build more muscle, people.
China's Energy Independence Journey
From Oil Importer to Electrostate
Jigar Shah: Part of what drives China is that they felt they had to import enormous amounts of oil — even coal, which they were importing at very high prices from Australia at one point. So around 2008 to 2010, they set off on a journey: how do we become more independent? They built massive solar manufacturing capacity, went all in on electric vehicles, bought up a bunch of our bankrupt battery companies in 2011 and 2012. Now they're dominating what some people call the electrostate. How do you view their journey?
Kevin Book: The easiest way to look at it is through the numbers. Net imports as a share of total supply is a clean metric for energy independence. In 2005 at our peak, the United States was above 32% net import dependence. China at the beginning of this century was roughly even on that score. Now they're at about 25% net import share of supply — which is still significant. They're consuming 16 million barrels per day of oil and importing about 12 million of that.
So there's a natural economic and security mandate pushing them to ask: where can we generate energy endogenously, within our own borders? Where can we build alternatives to globally priced, variable-cost petroleum? For China, one of the biggest engines of independence wasn't drilling — it was engineering technologies to electrify transportation and industry, combined with nuclear power, massive hydroelectric development, and renewable deployment. All in service of reducing that import reliance that's vital to their economic growth but deeply risky in an increasingly fragmented world.
Jigar Shah: I have to ask a follow-up about the dams that are literally changing the spin of the Earth.
Kevin Book: Outside my immediate area of expertise, but I've read from people who do understand it that the Three Gorges Dam was so significant in redistributing the Earth's weight that the planet moved slightly on its axis. Great cocktail party conversation.
Jigar Shah: Are you saying that's what's causing climate change?
Kevin Book: I mean, a couple drinks from now I might say that. But I'm not saying it yet.
Venezuela: More Than an Oil Story
Monroe Doctrine 2.0
Jigar Shah: Now we get to Venezuela. Most people I listen to cover it purely as an oil story — a million barrels a day shifting from China to Texas. But that seems so small-ball. How do you read it?
Kevin Book: There's no way to talk about Venezuela without talking about oil, given how central oil is to the Venezuelan economy. But in some ways, the oil story for Venezuela is very much in its rearview mirror for now. They were once producing three to three and a half million barrels a day — a founding member of OPEC in 1960, one of the big dogs in global supply management. Today they're a much smaller player. A chihuahua and a Great Dane are both dogs, but they do play different roles.
The Trump administration has explained this to itself in several different ways. One of the stories isn't about oil at all — it's about a hemispheric sphere of influence, reviving and expanding the Monroe Doctrine. If the last administration was trying to address a fragmenting world by tightening alliances, this one is responding by trying to make America bigger and ensure alignment within the hemisphere. The two things — oil and influence — can't be entirely separated, given Venezuela's reality.
Jigar Shah: That feels like the bigger part of the story. Marco Rubio has been on the Venezuela beat since at least 2015. Kicking the Chinese and Russians out of our hemisphere seems like what he's actually focused on — and then separately, figuring out how to return Venezuela to its historic role as the economic engine of South America. It used to have some of the most educated, most vibrant business people in all of Latin America.
Kevin Book: There are several drivers at work simultaneously. One thing that may have actually worked in this administration's favor is that the Secretary of State and the National Security Advisor are the same person — Marco Rubio. That eliminates one of the usual sources of friction you see in many administrations, where Foggy Bottom and the West Wing have different views on priorities.
Chevron, Canadian Oil, and the Trade Angle
Jigar Shah: When you say oil will be important — nobody believes we're getting back to four million barrels a day anytime soon. It's really just the current million, maybe 1.5 million through strategic maintenance. That money is now flowing from U.S. refineries instead of China. So who gets displaced? Who was shipping us a million barrels a day that now gets crowded out?
Kevin Book: Initially, probably not as much as you'd think. The Gulf Coast refineries are specifically designed to process the heavy, sulfurous grade of Venezuelan crude. They lost that crude stream in January 2019 when the first Trump administration put sanctions in place and never fully recovered it. They substituted with partially refined Russian barrels, different crude grades, and some Canadian oil that normally goes to the upper Midwest. Bringing Venezuelan crude back will at least initially increase uptake in that Gulf Coast refining region.
As the volume grows, it probably does crowd out marginal Canadian barrels — and it forces a pricing discount up in Alberta for sellers who now have to compete with a flusher market in the Gulf of Mexico.
Jigar Shah: So Trump and Prime Minister Carney are not going to be warm with each other. The tension between the U.S. and Canada might actually go up from here.
Kevin Book: It's interesting — at the beginning of this century, Canadian oil was considered an essential supplement to North American energy security. We encouraged greater connection to the Western Canada sedimentary basin. Now we're looking at a more hemispheric energy security template, and it's not as clear that it goes smoothly. The U.S.-Mexico-Canada Agreement is up for renegotiation in July at its six-year review point. Both sides are likely to try to extract as much collateral for dealmaking as they can. Oil could easily be part of that story.
Jigar Shah: You're talking about Keystone XL.
Kevin Book: Keystone XL — 830,000 barrels per day, yes. Canada is currently shipping us four million barrels per day, three million of which is the heavy sour crude we're discussing. Even taking all the Venezuelan volume and bringing it to the U.S., you couldn't wholly displace that. But you could change the pricing dynamics for that marginal Canadian barrel. Canada is well aware of that — they're already trying to build conduits to the West Coast via Trans Mountain to diversify their client base. They don't love being so dependent on a single customer to the south, especially as that relationship gets more complicated.
EVs, Negabarrels, and the Global Displacement Effect
The Numbers Behind EV-Driven Oil Displacement
Jigar Shah: China has built its electrostate and can now export several million electric vehicles a year. Canada just agreed to let in Chinese EVs at something like $13,000 a unit. As China continues to push electrostate products into markets around the world, it has to reduce pressure on oil demand growth — even in emerging markets like Mexico, Brazil, India, and Indonesia, where EVs are now approaching 10% of all new car sales. How do you think about the displacement effect?
Kevin Book: There are two parts to this: the dumping question and the displacement question. On dumping — it's not that easy with a 100% tariff in place, put there by President Biden, plus a non-tariff barrier barring Chinese software from vehicles starting in 2027. Those are real limitations on market entry here.
On displacement: in mature markets with well-saturated vehicle penetration — the U.S., North America, the OECD broadly — you see a different kind of EV demand than you see in markets where mobility itself is underprovided and a low-cost EV is a solution to a genuine need. In terms of actual oil market impact: replacing an American ICE vehicle with an EV, for every million you put on the road in the United States, you eliminate about 30,000 to 32,000 barrels per day of liquids demand. We drive more miles and our incumbent fleet has lower fuel economy than most. Globally, the displacement effect is closer to 20,000 barrels per day per million vehicles. In China, where light-duty vehicle mileage is lower and fuel economy higher, it's closer to 15,000 barrels per day per million vehicles.
So if you're looking at oil market impacts of EV penetration, widespread deployment in the markets where you get the biggest bang for your displacement buck — like the U.S. — would change the supply-demand picture more dramatically than substitution in markets where volumes are still growing from a low base.
Jigar Shah: What I'm getting at is the vibes of this moment. For a long time, oil felt sticky — no matter how high the price went, people just had to eat it. Going forward, governments have choices. If a world leader really wants to go to war against oil imports, they have a far greater toolkit today than they did ten years ago. Ethiopia has basically banned the import of internal combustion engine cars — not because they hate emissions, but because they don't want to keep importing fuel. They have surplus hydropower. So they said: let's choke it off now.
Kevin Book: There are legitimate questions about what you give up when you make that choice. The variable cost risks of globally priced petroleum — which are significant, and we all know what happens when prices spike — are up against the fixed cost risks associated with the transition metals and materials that go into EVs. The concentration of critical minerals processing in China is, arguably, greater than the concentration of oil supply globally. So the people who take the other side of that bet say: there's a different kind of security risk here that you have to account for.
Jigar Shah: That feels very academic to a world leader running Indonesia or Nepal. They're probably just going to say: BYD is offering me 100,000 EVs, I'll take 100,000 EVs. And on critical minerals — I'm pretty sure the EV industry could use a lot less copper and a lot less of those materials if the price tripled. The solar industry used to use enormous amounts of global silver supply. Today's solar panel uses one-tenth the silver it did ten years ago.
Kevin Book: There's something to that. Consider this: in 2005, when the Chinese National Offshore Oil Company wanted to buy Unocal, one area of concern was a rare earths mine at Mountain Pass, California — the only one at the time. That was 2005. It's now 21 years later and Mountain Pass, now called MP Materials, is still the only operating rare earth mine in the United States. We managed to go two decades without responding on supply. So maybe it's not surprising we haven't seen much response on the demand side in critical minerals intensity from a relatively nascent industry like EVs either.
That said, we got very good at producing oil domestically. Our vision of energy security started looking very different from the countries you're describing — and I think that shapes how urgently we feel the need to move.
Is the U.S. Getting Complacent?
Jigar Shah: Are you worried we're going to fall behind — that we're so addicted to our petroleum wealth and cheap natural gas that we'll be late to the electrostate? Defense is going all-in on batteries. Look at Ukraine: that conflict is being fought with electrostate technologies — drones, precision electronics, all of it. Are we getting complacent because of our oil wealth?
Kevin Book: I don't know that that's necessarily true. Some of the countries with the most successful EV transitions are also oil producers — the Scandinavian countries have been able to make that transition. And both the last administration and this one have shown an affection for industrial policy, identifying strategic sectors and mobilizing government resources to develop them. I wouldn't be surprised to see that continue.
But on why electrification hasn't moved faster in the U.S. specifically — there's a Dutch social theorist named Geert Hofstede who studied multinationals and looked at country-level cultural attributes. One was individualism versus collectivism. The United States topped the individualist ranking, closely followed by the UK. In highly individualist societies, particularly far-flung, long-distance-driving ones like ours, you have a lot of what economists call edge cases that influence consumer behavior. It's not that you actually need to drive 300 miles every single day. It's that on any given day you might need to, or you think you might. Range anxiety still plagues widespread consumer purchases.
The second issue is purely economic. The fixed cost delta for buying an EV is still a real barrier. Innovative financing — the kind your former agency was involved in — is partly a way to address that. The Inflation Reduction Act had both a demand pull through the EV tax credits and a supply push through the manufacturing incentives. Whether you can maintain a supply push without the demand pull is now an open question.
Jigar Shah: I'll say this — I never thought we needed the $7,500 tax credit. I had to keep my mouth shut while I was serving, but people like going zero to sixty in two seconds in a car that's reasonably priced. Once we get past whatever twelve months of people remembering they're giving up the tax credit, most people will forget it ever existed.
The summary of this whole conversation: less Ozempic, more time in the gym.
Kevin Book: Hear, hear.
Jigar Shah: Thanks for joining us, Kevin. It's honestly such a pleasure, and I look forward to learning more from you in the future.
Kevin Book: Thanks for having me. Great to be here.
Takeaways
Chinese EVs, Canada, and What Comes Next
Jamie Nolan: That was a great conversation with Kevin Book. I understood most of it, which feels like a win. One thing that really stuck out was his discussion of Chinese EVs taking hold in Canada. I've heard they're incredible — there was a recent Wall Street Journal piece where a reporter test drove one in the U.S. for a couple of weeks and was thoroughly impressed. Is the U.S. next?
Jigar Shah: Kevin is as thorough an analyst as you're going to find — that certainly came through. When you think about how important the U.S. auto industry has been — we converted all of our auto manufacturing facilities into war production during World War II — our automotive supply chain is deeply tied to our national defense. And that supply chain extends into Ontario. Canada is part of it. That's why they added tariffs on Chinese EVs when the Biden administration did. For them to reverse course now is a small number of vehicles today, but it's kind of a big deal.
Jamie Nolan: The Chinese government is actually suing the U.S. over these tariffs. We'll see what comes of that. But as someone with severe asthma, more EVs on the road means a lot to me just in terms of local air quality, especially in summer. There are so many second-order benefits of electrification that don't get talked about enough.
Jigar Shah: Local emissions are almost entirely about auto emissions in your neighborhood. Moving to EVs is such a big deal. But the bigger point is this: when governments have these tools available and understand that scaling up EVs can actually reduce oil prices — because oil prices are just an approximation of what people think future supply and demand will look like — that gives you real power. People haven't felt real power to influence the price of oil in a very long time. China is leaning all in. Canada, which has a thriving petroleum industry, is also pushing EVs hard.
Jamie Nolan: Why is the United States such an outlier?
Jigar Shah: We weren't for a while. Tesla was born here, born in California. The number one export in the entire state of California is Tesla. But we've lost our leadership — we let the Chinese get access to our technology when Tesla built its Shanghai facility. They've used their massive domestic market to iterate year after year on improved designs.
That's why I think we're probably going to move to plug-in hybrids before pure EVs. Moving an SUV with a pure electric drivetrain means something like a 125-kilowatt-hour battery pack — twice the size of what's in my car — which makes the car more expensive. Companies like Stellantis have gone all-in on plug-in hybrid versions of everything, and people really like it. They drive fewer than 50 miles most days, that 50-mile electric range covers them, and gasoline kicks in when needed. The U.S. is going to take its own path.
Jamie Nolan: Americans want their oil. We're going into Venezuela. Prices are low. Trump wants to push them even lower. So if we follow this path — what's next? Cuba?
Jigar Shah: I'm pretty sure we're going to cut Cuba off from Venezuelan oil. Venezuela was supplying Cuba for free, and I don't think Trump is going to sell it to them for free. But here's the thing — you can imagine Cuba going all electric vehicles very quickly precisely because they're cut off from oil. You can imagine Cuba electrifying everything, because that's what they can access. The time when petroleum was used as a tool of political control is coming to an end, because there are real alternatives now.
Jamie Nolan: Let's hope you're right. And if the U.S. invades Cuba, we'll have to have Kevin Book back to give us his hot take on that.
Jigar Shah: We'll absolutely have him back. He is a big thinker and a very important advisor to a lot of people here in DC.
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