In this episode, Mike and Paul discuss the Iran MOU, and how it affects Canada and the rest of the world, including the impact on oil prices, trade with Iran, and the impact it could have on the global economy.
00:00:14.460Hi, thanks for joining us. This is tplmedia.ca. I'm Mike, and today the topic, well, it is what everybody's talking about on a global front,
00:00:23.880an MOU that has been drawn up by the U.S., presented and negotiated with Iran.
00:00:29.360and today we're going to dive a little bit deeper into that topic to find out how this directly
00:00:35.240affects Canada and to do that of course Paul Micucci who does the deep dive on the numbers for
00:00:40.980us always and beyond I appreciate you doing this because you've gone through this almost every
00:00:47.700section of this MOU yeah and you've looked at it from a number of perspectives kick us off Paul0.93
00:00:54.040what do you think overall this has done globally what do you think that this mou is going to do0.87
00:01:03.080to the economy of the world oh my goodness well the world changes it forever you know and we0.96
00:01:09.600talked about this on other shows mike it changes uh how transportation logistics happens throughout
00:01:16.080the world the global powers who secures what nation what nations eventually take over other
00:01:22.300nations it is it basically causes a chain of reaction which will impact every continent
00:01:30.780in the world every country so but you know i'm really really focused right now on canada because
00:01:36.220of course we live here and what impact it has on us and how we are so oblivious to the impacts i i
00:01:44.300am shocked that actually this summer everyone's just going off on summer vacation after this and
00:01:50.860when i looked at it i thought am i missing something you know should we be more focused on
00:01:57.180how this is going to impact us because i think we thought okay you know the the u.s for all intensive
00:02:02.700purposes that are pulling out they've lost they've decided to back down and go come home and last
00:02:09.020night even you know it was interesting i don't know late late in the day yesterday the senate
00:02:14.300voted the u.s senate voted 50 to 48 with a bunch of republicans turning uh the to make the vote go
00:02:22.860through um empowering the wars act which is interesting that basically says he has to stop
00:02:29.020you you have to come home now you have to come home now which you know of course they're saying
00:02:33.260i have veto power because this is the house bill it's gone to the senate the senate finally passed
00:02:38.460it and he's saying no it won't have any impact it makes my life more difficult but i'll still get
00:02:44.060this mou done i'll still get the agreement done um but i don't know right it's it's it's kind of
00:02:50.620crazy because senator um wicker who is the armed services committee chair roger wicker from a
00:02:58.140republic from mississippi um i saw was tearing up the mou and just disgusted at how it had in his
00:03:06.220mind had uh downgraded or uh made epic fury look like it was nothing and then now he's asking the
00:03:15.180really big question is where does the 300 billion dollar reconstruction fund money come from which
00:03:21.420is right now unanswered that's on the table who makes up that money within minutes of this uh
00:03:26.700occurring uh in the senate floor of course the iranian parliament and and you know this uh
00:03:32.700galabaf of one of the parliamentary ministers and uh representing speaker yeah i came out and this0.72
00:03:38.620is uh the islam is bad the islamabad understand that it's not the result of pressure and coercion0.74
00:03:45.340but rather the result of the resistance and authority of the brave iranian nation0.81
00:03:50.540that's what he said on national television that's why the islamabad memorandum of understanding
00:03:56.140became and i like that he calls it that's very interesting uh became a declaration of america's
00:04:02.540defeat right well so now iran is saying okay he's got to go home he lost right that has a huge
00:04:10.460impact oh it does and i want you know for those of you and we want to spend a few minutes mike
00:04:15.180and just go through the mou yeah sure so i really wanted to go through um a little bit about what's
00:04:21.420going to happen so the biggest thing is it reopens the straight yeah right so you know
00:04:29.660whatever you have to say the straight controls one-fifth of our oil supply so now the u.s is
00:04:37.820going to back off they said they're not going to uh you know be uh blocking the straight of hermuz
00:04:45.100so it now opens up the straight and they're going to go in and they're talking this morning or
00:04:49.660yesterday about sweeping it for landmines making sure it was all clear again and really rolling
00:04:55.260through right which as we're seeing now i don't know if you've noticed at the pumps the price of
00:05:00.540gas is starting to go back down it is yeah it's it's back into the realm of some sort of reality
00:05:06.620it feels like we're headed back to normal right back to normal the interesting part is remember
00:05:12.380before this happened normal was low right we were remember we were talking on shows a few months ago
00:05:18.380before uh the war happened about 60 58 we were even in calgary and they were complaining about
00:05:25.180it oh man you know things aren't so great they had several zero barrels which is you know they
00:05:31.260basically just keeping the flow going yeah uh at zero profit uh per barrel uh for a long time the
00:05:36.940the bottom had been hit i think in canadian oil by the time this occurred yeah exactly so it kind
00:05:43.340of breathed a new uh a new existence into that oil business here in canada yeah yeah we rode
00:05:49.420the waves so we've been you know it's interesting we we've been in a uh a recession you know uh
00:05:56.300technical how dare you yeah a technical recession as they're calling it but we've been in a technical
00:06:01.580recession now but we've been in a technical recession with the bump in oil prices so where
00:06:07.420does that leave us without the bump in oil prices we're about to find out yeah so you know the sugar
00:06:12.940coating is coming off the apple right now and quite frankly uh the prime minister got to be
00:06:17.980saying oh now i've got a few more quarters coming i'm going to lose the advantage of the uh large
00:06:24.300exporting cost of oil right and i haven't got a pipeline going which we're going to talk about
00:06:30.380that in a minute yeah i don't have a pipeline going and i don't have the backdrop of that
00:06:34.620happening so when we did our last show on the technical recession that was one of the caveats
00:06:39.340we put on it it's gonna just watch out if this war ends and and oil plummets right where does
00:06:45.340that leave us yeah so how do you feel about this i'm just gonna this is the you know the expert
00:06:50.140opinion keeping the root open helps stabilize gasoline prices transportation costs and inflation
00:06:56.060directly benefiting canadian households and businesses that sounds opposite to what we
00:07:02.300think the effect might be because if we're not if we're not beholden to our own oil
00:07:09.260dollars and we need the straight of her moves to subsidize this i really don't believe that
00:07:15.020to be honest with you paul i think that no i think that it will cause a destabilization in
00:07:19.900our economy because the price and value of our own oil is about to plummet right now this is
00:07:26.220we're going to get into in a minute what's going to happen to the reconstruction who's going to
00:07:29.740bear the cost how that's going to be passed down whether there are fees on the so that that's coming
00:07:34.700up but i want to say thanks to our research team for putting up a nice powerpoint for us to follow
00:07:38.540along and maybe what we could do is actually post that along with this episode so that you can follow
00:07:43.100along yep uh the restoration of commercial shipping yeah yeah so all of a sudden it's back so you know
00:07:51.580the we were starting to see the impacts it was funny i was going to order something yesterday
00:07:56.860and it was 500 and it had a 500 shipping cost that's a crazy yeah situation for those of you
00:08:04.940who do any shipping internationally you find that your shipping costs were starting to match your
00:08:10.860goods costs and so we were stopping right this yeah so you know hopefully that'll go back if
00:08:17.420i'm a manufacturer and i have global shipping challenges this one's got to be hurting me right
00:08:22.380now well i think any petroleum byproduct uh which is an enormous amount of products that we use on
00:08:29.500a daily basis uh i think have been drastically reduced over this the agreement puts that back
00:08:35.660in place the partial removal of u.s sanctions on iran now you and i had a discussion about this
00:08:42.380we'll talk about that the united states could agree to ease selected economic sanctions in
00:08:47.340in exchange for Iranian compliance with security commitments.
00:08:50.600And for Canada, the impact would be mixed, according to some experts.
00:08:55.300Additional Iranian oil exports would increase global supply and lower energy prices,
00:09:02.440but Canadian consumers and transportation companies would benefit from lower fuel costs.
00:09:07.920But at the same time, lower oil prices reduce revenues, investment, and royalty income in Alberta
00:09:13.920at a time where we're trying to get people interested
00:28:07.660So this has, in my mind, pretty negative effects potentially on Canada.
00:28:11.720Oh, yeah, definitely has negative effects.
00:28:13.680And, you know, the real key issue that we have to think about now is are they going to put a transfer fee on everything going through the strait?
00:28:20.280So that was on the table, off the table.
00:28:23.000So it's now part of, you know, the negotiation that's going forward.
00:28:26.560So are we going to see an increase in prices in our oil and gas going forward?
00:28:31.280as a transfer fee but remembering quite frankly that transfer fee strictly goes back to Iran
00:28:37.160so that doesn't have any economic benefit to Canada other than a cost so that's not going
00:28:42.660to help our economy no and and also the U.S. economy I was going to say or the U.S. yeah
00:28:47.360uh this really and and okay so we'll get to the 300 billion down the road I wonder if this is part
00:28:54.340of that you know settlement okay you'll be able to you'll be able to charge a uh i guess a toll
00:29:01.320yeah as you make your way through the yeah and that will be part of the 300 billion so in other
00:29:06.100words if that does happen the u.s has negotiated on behalf of all of us a an increase in cost to
00:29:13.520our countries yes so and not an economic benefit not at all so you know again when the price of
00:29:20.900oil goes up in canada you know the west coast actually we lived listen we can't deny it you
00:29:27.060know in the harper days we all benefited from the increased cost of oil and gas right you know we
00:29:34.040were we were a rich country we were flying because you know a barrel price per barrel was you know
00:29:39.720just below 100 we were rocking development was happening on the west coast we were all seeing
00:29:45.360the spinoff benefits everyone was heading west to work you know manufacturing back home the auto
00:29:50.840industry was robust all those things were happening right now we're not in that now and
00:29:56.360quite frankly a uh a tariff or a transfer fee on oil coming through the strait just increases the
00:30:02.680cost of our all of our manufacturing again and makes us less yes so self-sufficient would be a
00:30:11.080better scenario for us you know kind of okay so let me take a dive off to the left on this one
00:30:16.040if i'm yeah let's go this is the moment where you think to yourself okay we really do need to think
00:30:22.760about our own oil it's not going to be valuable in the global marketplace yeah we don't have uh
00:30:28.760delivery mechanisms to make it efficient and a better deal for people in other countries
00:30:33.720the last time that we found ourselves in this scenario uh thanks to jimmy carter i believe
00:30:39.560we pivoted really in a smart direction as a nation and we started our own oil company
00:30:45.640a national oil company that processed shipped became internationally uh well-known and and
00:30:54.040quite a vibrant corporation petro canada yeah here we are uh let me share some of this with you
00:31:01.640mark carney and uh daniel smith of course i met uh in when was it september i believe
00:31:06.920october september or october something like that for the first time and then they uh got together
00:31:13.880and put together an mou to create a pipeline so uh the deal lowers the effective carbon price
00:31:22.140this is so crazy for alberta to 130 a ton by 2040 instead of 2030 and still we have
00:31:31.180no this is a major project we have no plan for this no it's not a major project at july 1st
00:31:37.660we're going to know if it's a major project coming up well it can't be a major project
00:31:42.300two big two big things on july 1st mike right yeah kuzma with the united states and what happens
00:31:48.420with the pipeline yeah well kuzma i don't think anybody's going to i think that i haven't got my
00:31:52.340invite i think they forgot about it uh the provincial government have uh said that they'd
00:31:57.500like to see the new pipeline up and running no later than 2033 out of alberta 2034 that's eight
00:32:03.680years eight years to get this up and running uh but there's no answers whether or not they've got
00:32:09.160anybody private to come in and back this and let's talk about that for a second why would they
00:32:15.000no why would they what is the appeal to coming into a country that has such strict regulation0.53
00:32:21.040yeah it's going to take eight years to build the thing yep it goes through indigenous lands that
00:32:26.660have not properly been negotiated through this thing already it's a bad investment by all accounts1.00
00:32:32.740we'll throw it up actually they haven't even figured out a route of north through northern bc
00:32:37.620so i was actually looking this morning trying to find if they determined a route take a look at this
00:32:42.020map what yeah okay so we'll throw it up on the screen for the show but there's three routes
00:32:46.340they're still looking at they don't have a route determined they don't have anyone interested so
00:32:49.940far in building the pipeline they don't have a timeline that's reasonable but it's okay here's
00:32:54.980the thing mike here's that i find ironic it's okay for everyone to take the summer off it's okay for
00:33:00.500us to you know relax a little yeah right on the heels of what's happening with iran so you know
00:33:07.380there are and the funny thing is they'll say you know what it's a good thing you know well our
00:33:12.420prime minister came out our prime minister came out and he said it he said you know i'm happy that
00:33:16.420there's an mou being signed yeah okay i'm happy too right i'm happy when any war ends i'm happy
00:33:22.500right but what are the consequences of that war ending and how does it impact us and
00:33:30.100you know it's too easy to say oh thank goodness the war ended just in time for summer vacation
00:33:36.180yeah so what what yeah i'm with you this is interesting i think that our our parliament
00:33:41.860needs to be working visibly yeah for canadians right now saying here's how we're going to react
00:33:47.780Our major projects need to step up now, and we need to add oil to that because of this, this, this, and this.
00:33:53.800Here's the economic impact this whole thing has had on us.
00:33:56.660Here's how we're going to react, and here's our plan.
00:33:59.580Well, so think about our earlier conversation.
00:34:02.420Our earlier conversation is the price of oil goes down, right?
00:34:06.540So therefore, the economic benefits we get from the West Coast, from an increased price per barrel, go away.