 Well, good morning, everyone. At least we had the advantage that we didn't schedule this for the day at Snowd, which is perhaps the first time we've had a snowstorm and not had a program scheduled to start on that particular morning. I'm David Pumphrey, Senior Advisor in the Energy and National Security Program here at CSIS. And it's really a great pleasure to be able to moderate this session looking at the economic impacts of unconventional oil and gas revolution. My own training is in economics, so when we have the chance to get some economists here to the table or start talking about economics, I get excited where many of my colleagues at CSIS get rather bored. But at any rate, we will go ahead and proceed. We've been doing quite a bit of work over the past several years on the changing dynamics of the North American oil and gas market, looking at shale gas revolution, tide oil revolution, the emergence of new production in Canada. And one of the issues that keeps coming up is how transformative this may be for the US economy. And you hear people talking about this in terms of this will be a whole brand new economy. We will be moving forward in a different way. And others who are saying it's important, but it's another piece, and it's a shift and a rebalancing to a degree, but it's not necessarily a huge transformation. So it's really a pleasure to have our two speakers here who have done work in this area help us understand all the dynamics here and how the economy may evolve over time. You should have the copies of the full bios, so I won't run through the bios of all the speakers. But our first speaker will be Trevor Hauser, who is we've known for many years here at the Energy and National Security Program and have a good relationship with him. He's a partner in the Rodeum group and has also done work at the Peterson Institute, where most recently he published a book, I think he released it in January, called Fueling Up, which is I think what he will take his presentation from. And he'll speak first. And then, motion Benochtepar is with IHS global insight, or just IHS. IHS is a company which many of you know keeps changing form and growing all the time. So we were just having some discussion. He has a wealth of experience, was with Wharton econometrics, which probably many of you recall from work that was going on here. And he will present some of the results of work that IHS has been doing in this area as well. And they've done a number of studies. So without any further ado, Trevor, would you like to get started? Great, thanks very much. It's always a pleasure to be at CSIS and my first time speaking in the new building, which is beautiful. It's a privilege to share this podium with both David and Mohsen. David, because he's been a fantastic mentor to me over the past decade. And Mohsen, because IHS's work was fairly instrumental in our own analysis, we used both their assessments of the investment profile of oil and gas production and the IHS macroeconomic model in our modeling. So our work would not have been possible without Mohsen's work. So it's great to be up here with him as well. What we sought out to do with this study, I'm not a geologist or petroleum engineer. I don't necessarily have a useful point of view about what the future of US oil or natural gas production is going to be. What we wanted to do was try to quantify the economic impact of the range of current supply forecasts that have been put out there either from private consultancies or from government forecasters to give policymakers a sense of what's the magnitude? How large of an effect will this be on the economy as a whole? How will it shift both the rate of economic and employment growth, but also the composition of the US economy going forward? And so what we do is we take recent projections for both natural gas and crude oil production from private consultancies, including IHS, Wood Mac, international oil and gas companies like BP and Exxon Mobil, and government forecasters like the Energy Information Administration in EIA. So those are current natural gas production forecasts in the US than natural gas production, both because the resources a little bit newer. We're still understanding what decline rates look like and costs look like in tight oil plays in the Bakken. And the Eagleford and elsewhere. But also because the crude oil market is global and the future of US production will be determined in large part by how producers elsewhere in the world respond. And there's a lot of uncertainty about how producers elsewhere in the world will respond. Point of all that, though, is what we did in our modeling is we took a optimistic production scenario, which is the upper bound of current private sector forecast for natural gas, crude oil, and natural gas liquids production, and a conservative scenario, which is the lower bound of current forecast. And we compared that to what we call a pre-shale scenario, which is using the national energy modeling system, the model that the EIA uses for their annual energy outlook. We held everything else constant, but we changed the shale gas and tight resource base to where it was in 2007. So if resources were still at their 2007 level, but everything else was the same, how big of an impact does that delta have on economic growth, employment, et cetera. A little bit of context for why over the past few years we think that the shale gas and tight oil boom has been particularly economically beneficial. Historically, during economic recoveries in the US, oil prices have fallen. During the average post-recession recovery in the post-war period, we had oil price tailwinds. As the US economy was emerging from recession, oil prices were falling, giving consumers a little bit of a break. The past two economic recoveries have been different. The 2001-2002 recovery and the 2008-2009 recovery, during both of those recoveries, oil prices were rising as the US economy was struggling to emerge from recession. So we faced oil price headwinds. That was one of the factors that helped contribute to the length and depth of the current US recovery. There were a number of other factors that were probably more important, but that was a significant contributor. Oil prices would have been considerably higher over the past five years had the US not added three million barrels a day of liquids production to the global market. At a point in time where Iranian exports were falling by one and a half million barrels a day, European production was down by one and a half million barrels a day, it's difficult to say exactly how much higher crude oil prices would have been over the past five years absent that three million barrels a day of US supply, but they would have been considerably higher. And at a point where the US recovery would have had a difficult time absorbing considerably higher crude oil prices. So that's the most significant economic impact in our view that we've seen today. The oil price future that this helped us avoid. Going forward, the reduction in energy prices from the shale gas and tide oil boom is also the most important economic benefit. On average between our optimistic production scenario and our pre-shale scenario, we see a 180 billion dollar a year reduction in annual energy expenditures between 2013 and 2035, which is our projection period. That's both for household energy consumers, commercial, industrial, transportation consumers. There's a fair amount of uncertainty around that estimate because there's a fair amount of uncertainty about what the increase in US tide oil production will mean for global oil prices, how other producers will respond. So that number could be a little bit smaller, it could also be a fair amount larger depending on how OPEC and others respond to the increase in US oil supply. But it's nice to say that's the most significant benefit. Producers are also seeing an increase in their revenue, despite the fact that overall US energy expenditures are falling, we're displacing imports, so US energy producers are making more money. Interestingly though, that's concentrated in the oil side, not the gas side. The gas industry as a whole today is making less money in the US than they did before the shale boom. It's because the decline in natural gas prices that we've seen over the past five years has more than offset the increase in volume. There's a reason why there's an OPEC in the oil market, there is a level of production that is optimal for producers, that is considerably less than what's optimal for consumers. So while the shale gas boom has been great for US consumers, it hasn't actually been all that good for the profitability of US natural gas producers. Second most important economic impact is the increase in investment. Oil and gas is a very investment intensive industry. This chart is total fixed asset investment in the economy in 2011, using Mohsen and his team's estimates of the investment intensity of new shale gas and tight oil wells. We estimate that in our optimistic scenario, fixed asset investment is about $100 billion a year larger in the oil and gas industry than in our pre-shale scenario. So in the short term, by which I mean now to let's say 2017, 2018, 2019, when the economy is still below full employment, when there's capital and labor on the sidelines, that combination of increased fixed asset investment and lower energy prices serves as a fairly powerful stimulus for the economy, right? It acts on the economy in much the same way that the Recovery Act passed in 2009 did, which combined a tax cut with infrastructure investment. Here we have a tax cut equivalent in the form of lower energy costs with a infrastructure investment equivalent in the form of fixed asset investment. And in our estimate, the magnitude of the economic impact between now and 2020 of the shale boom is about on par with the magnitude of the economic impact of the Recovery Act. So an additional 20 to 30 basis points of annual economic growth, so GDP growing 0.2, 0.3% faster on average. And the level of GDP being 2.1% higher in 2020 than it would have been otherwise. So cumulative addition to GDP of about 2.1% and cumulative addition and employment of about 1.7% in the optimistic case. So it's a pretty good news story. We need every 20 to 30 basis points of additional economic growth that we can get. And the oil and gas boom is accelerating the pace of recovery in the US. As the economy starts to return to full employment, which, if you're pessimistic, maybe happens in 2020, if you're optimistic, maybe happens in 2016, less and less of that investment in oil and gas production is additional. More of it has to come from other sectors of the economy. There's more competition for capital and more competition for labor and broader equilibrium effects start to take hold. And after 2020, unless there is a continual decline in crude oil and natural gas prices post 2020, the economic benefit of the oil and gas boom will largely have been captured in our view. That this will not lead to a sustained increase in the rate of economic growth. It's a significant one-time shift in potential GDP in the level of economic growth, but not a sustained shift in the rate of economic growth. That's very different than the IT revolution, which is often used as a comparator for the oil and gas revolution. The IT revolution delivered sustained increases in the rate of economic growth, not because we sold more Dell computers, but because of the productivity improvements throughout the economy that the application of that IT enabled. So when logistics companies or financial services companies or hair salons bought IT and put it to work in their business, they were able to do what they did more efficiently and more productively. You can grow your economy over the long term in three ways. You can add more labor, you can add more capital, or you can use your labor and capital more efficiently, and that's total factor productivity in economist, speaker, technological change. And it's that total factor productivity that drives sustained rates of economic growth. Energy has had that kind of long lasting productivity improvement in the past. When we went from wood to coal in the late 1800s, coal was a more useful type of energy. It allowed us to do things that we couldn't do with wood. The industrial revolution wouldn't have been possible with wood. It's just, it's hard to move. It's not very energy dense. It's hard to harvest. Likewise, when we went from coal to electricity, you can do things with electricity that you can't do with coal. It enabled new types of services and economic activity. What we're talking about today is not a newer, more useful type of energy. It's the same energy, it's just cheaper. That's an economic benefit to be sure, but it's limited in its duration and in its magnitude. The shale boom is, however, changing the composition of the US economy in important ways. There is a view that the shale boom will lead to a manufacturing renaissance in the US. If that does occur for us, that'll be one of the first times in human history that a country has had both a natural resource boom and a manufacturing boom at the same time. Traditionally, the opposite occurs. As a country experiences a resource boom, their natural resource sector attracts labor and capital away from other sectors of the economy. A decline in their natural resources trade deficit or an increase in their natural resources trade surplus puts upward pressure on their currency, which makes other tradable goods less competitive. If you look at Australia or Canada or Brazil over the past decade, they've seen a decline in their manufacturing trade balance almost commensurate with the increase in their natural resources trade surplus. If you go to Sao Paulo today and you talk to the Labor Federation, their public enemy number one is not Chinese light manufacturers. It's Valle, the iron ore company, because Brazilian iron ore exports push up the value of the reall and make it tougher for Brazilian manufacturers to compete. It's a phenomenon known as the Dutch disease. Now there's a number of reasons why the US could be different. First, the magnitude of the natural resource boom in the context of our overall economy is much smaller than in Australia or Canada or Brazil. If we become the largest oil producer in the world in 2020, which we may very well might, oil will still be a much smaller part of our economy than Saudi Arabia's, obviously. So the effect of the oil and gas boom on the exchange rate is going to be more modest than in other countries. If we see a reduction in our energy trade balance as a share of GDP from 3% down to 0.4%, which in our optimistic case is what occurs, then you could see up to a 7% appreciation in the US dollar relative to other currencies, so fairly modest. Also, there's a disconnect between the price of energy in the US and the price of energy in other countries that could offset some of the downside impact of a more expensive exchange rate for US manufacturing competitiveness. So in 2005, industrial consumers of natural gas in the US paid about it as much as their counterparts in China or in Europe or in Japan in 2011. Japanese industrial consumers were paying three times as much and European and Chinese consumers paying twice as much as the US. So the question then is, for what parts of the US manufacturing complex will the reduction in energy costs be large enough to offset the potential headwinds from exchange rate appreciation that you would expect to see as a result of a sharp decline in your energy trade balance? So who are the winners and the losers in the US manufacturing sector? Top of the list of winners is the chemicals industry. US chemicals production is largely ethane-based. Ethane is a natural gas product. Most of our competitors in Europe and Asia use NAPTAs, their primary feedstock, which is a crude oil derivative, as the price of natural gas in the US has collapsed. Ethane prices have collapsed as well, and US petrochemicals manufacturers have become pretty competitive relative to their counterparts in Europe and Asia, and you can see that in the valuation and profit margins of large US chemicals firms today. To look across the rest of the landscape, what we do is we take a survey that the Department of Energy puts out called the Manufacturing Energy Consumption Survey, which tracks how much coal, oil, natural gas, electricity, renewables is consumed by 440 different US manufacturing industries. And we feed into that the change in energy prices that we see between our optimistic shale production scenario and our pre-shale scenario to see how much of a change in overall production costs, each of those different 440 industries would likely see occur as a result of the shale boom, how material it is. And for a handful of industries, the impact is significant, greater than 10% reduction in total costs, so that includes chemicals, fertilizer manufacturing, plate glass, some types of steel manufacturing, you know, really energy intensive stuff, where a reduction in energy costs is considerable. But you have to look at that in the context of US manufacturing as a whole, and the vast majority of US manufacturing is not actually terribly energy intensive. Manufacturing where the reduction in energy costs that we'd expect to see as a result of the shale boom is greater than 10% of their total production costs, so industries that could see a more than 10% reduction in their costs relative to competitors are less than 2% of total US manufacturing by employment. They're greater than that in terms of output and value added, they're probably 10% of US manufacturing by value added, but 2% by employment. Automobiles, aerospace, electronics, machinery, total energy expenditures are maybe one to 2% of the cost of production. And if you were to go to Boeing in Everett, Washington and give them a choice, they could either have all of their energy for free or they could have a 5% depreciation in the value of the dollar versus the euro. I'm willing to bet my kids a college tuition that they're gonna go for the 5% depreciation of the dollar. So we map all of that out. X-axis here is the change in energy costs as a share of shipment value, so how much benefit industries could expect to see from lower energy costs. Y-axis is a concept called net export orientation that the Fed uses to measure the vulnerability of an industry to exchange rate appreciation. And higher up you are in the axis, the more vulnerable you are to a more expensive exchange rate. As you can see, chemicals is the clear winner, outlier. And that's evident in the, both profitability and investment decisions we're seeing in the chemicals industry. But if you're in transportation, equipment, electronics manufacturing, capital equipment, there's potentially more downside in terms of your competitiveness. That doesn't mean that your industry as a whole is going to suffer. The U.S. economy is growing faster, right? So that means there's more domestic demand in the U.S. economy for a range of manufactured goods. But if we're talking about competitiveness, right? So the cost of U.S. production relative to other countries' production, then the impact is fairly concentrated to energy intensive industries. So that's the kind of theory. So let's look at some empirical data to see whether that theory is holding up in what we see in both the production and the trade data over the past few years. So this is an index of industrial production, U.S. versus EU. And as you can see, we're outpacing your up in total industrial production growth, right? That is primarily because the U.S. economy is growing faster and domestic U.S. demand is greater. If you look at export, not export performance, so this is an index of the change in real net exports of manufactured goods, U.S. versus Europe. Europe has seen a sharp increase in their net export position, in part because of a cheap euro because Europe's a basket case. And in the U.S. has seen a relatively flat in real terms net export position, this is net import position in manufactured goods. And a real in dollar terms means declining as a share of GDP. If you look at the U.S. trade balance right now as a share of overall GDP, our energy trade balance, our energy trade deficit is declining very fast, but our manufactured trade deficit is increasing as a share of GDP, which is exactly what you would expect to occur given macroeconomic theory. Now, that picture is still good for the U.S. economy as a whole, but the point is that there are gonna be winners and losers as there always is with any macroeconomic development. And large parts of U.S. manufacturing in terms of their competitiveness are not necessarily on the winning end of this trend. Just some kind of final thoughts. Well, I don't think that this boom alone is a transformative event for the U.S. economy. I think it provides us with the headroom, the space to enact some of the policies that are needed to really transform the rate of future economic growth, right? So if we take advantage of this economic relief, faster recovery, increased state and federal revenue from excise taxes to do some of the tough things we need to do, like tax code reform and structural adjustment in the economy and education investment and infrastructure investment, then this will pay dividends down the road. My concern is that the opposite will happen. The policymakers will say, look, I don't need to worry about education policy. I don't need to worry about tax reform because my children have a bright future in chemicals manufacturing. The oil and gas boom is gonna drive the U.S. economy for three decades to come. If that's the response, then we're really in trouble. So it's all about how we use this window, this opportunity to invest in future economic growth and competitiveness. Thanks. Thanks for our great presentation. Motion, do you wanna join us here? You'll have to forgive us going back and forth, but it's awfully hard to see the slides if you're sitting up here, so. Well, thank you very much, David, for having me from IHS to present RVU, which is very much in line, actually, with what Trevor presented earlier. Just the methodology that we have used is somewhat different, and we did not really look into the bigger impact of the trade, but we did look into a much deeper impact of the supply chain. So let me just go through this quickly. Series of IHS studies were launched during 2012 and 2013. I'm gonna just touch base on those and give you a little bit background about the energy landscape that the old Sierra, or IHS energy, puts together for the economics group to assess the contribution to US economy and show you basically some of the results and if there is any manufacturing implication in this case. And finally, go through the conclusion. So at IHS in October of 2012, we launched a national level study that measures the unconventional oil and natural gas contribution to the US economy. For that, basically we used a static type of a modeling approach to basically figure out what the supply impact and the income impact is on the national economy. Later, we took that and then regionalized it by state and released the second report there, which showed basically you didn't have to be a producing state to benefit from this revolution because tremendous amount of networking of the supply chain is very much domestically grown here. The capital expenditure and the investments is going to feed into other states as well too and actually will benefit if you're not a non-producing state. And finally, along with our energy group and the chemical group, we put a much bigger look into the whole value chain of the energy starting from upstream, midstream and downstream, contributions that is coming from this unconventional and also ramification on the chemical industry, specifically only those energy intensive chemical industries. And then used the macro economic model in that case to see what the implication is. And the finding was very much in line with what we saw from the representation that the benefits are very much in short term. By 2017, 2018, it peaks and then it starts to basically diverge into a baseline forecast and it's not something that going to contribute constantly grow to the US economy. So the stories that is put together is basically the domestic unconventional gas comprises of changes in the activity, changes in the prices, impact on the manufacturing sectors that transforms the energy sectors and in the short term for sure it gives a lot of fueling to the US economy. So some of the assumptions that here that we have put together in general is that as we know unconventional oil production has been going up roughly 25% since 2008. The shale gas was only 2% of total gas production reached actually 37% in 2012 and now it's up to 44%. And years ago, of course, we were thinking of becoming LNG importers and now a good possibility of becoming an LNG export country for sure and putting the whole stories together and running these economic models with those series of assumptions in the whole value chain gave us estimates of roughly 3.9 million jobs being supported, which some of them are being newly created by 2025 and roughly $500 billion of contribution to GDP again by 2025. So looking at the unconventional evolution, if you wish to call it, by 2010 you see really limited number of plays in the US being explored and extracted oil and natural gas and in two years horizon, tremendous amount of activities going on and expansions in the place in Canada and US as well too. This is basically the chart for unconventional oil production which was very low, of course, in the beginning of the decades and 25% increase since 2008 till present or 2012 when we did the study, translated to quite a bit activity going on in extraction for tight oil here. And tight oil which actually leads by 2015, 2016 to be the much higher contributor to total oil production while unconventional activity, I should say, is in a decreasing rate and the deep water is pretty much flat here. Our estimates shows that roughly around 63% of total oil production by 2025 is unconventional oil. The natural gas story as well too that in 2005, a little bit more than 50 BCF a day was production and then the decline in conventional production is apparently brought it down below 50 BCF and with the shale gas and tight gas increasing during the same time period, it's now reaching much more than 65 to 70 BCF a day production for the US. And now putting all these assumptions together, this is basically what we input into the model on the upstream side and our production profile that is shown here is from 2012 and it's much more aggressive and liberal right now as Treville talked about it, the oil production specifically even in quarterly or monthly basis changes because of the nature of the global production scenarios that we see here. The well production is more actually sought to be productive now relative to two, three years ago so CAPEX is somehow lowered in the upstream but it totals close to $2.4 trillion over the 13 year horizon on cumulative basis. Looking at basically the requirement in the infrastructure, the different story is going to be required to support this upstream activity. We build basically for the peak in the initial periods to support all the activity coming online in the latter years. So the pipelines and the storage and the processing and all that that is required for infrastructure is gonna initially peak in CAPEX spendings and then later flattens and slow down toward the period of 13 years. We worked actually very closely with the IHS chemical team as well and through plant by plant announcements and expectations of the team, overall roughly $129 billion of CAPEX over the 13 year horizon. They're forecasting to be benefiting series of resins industries and organic chemicals through this time period. The interesting to see that when you look at really the CAPEX for upstream, it's constantly going on and it's fueling basically the investment in the economy. The infrastructure peaks very early and then flattens later and then the chemical industry kicks in through the middle of the forecast period and then slows down toward the end as well too while the production of the chemicals starts to peak and that's where we see some global competitiveness picking up for the US chemical industry as cheaper natural gas price basically impacts the feedstock cost that they have here. And pre-recessions, there was constantly announcement for shutdown of series of organic chemicals and resins in the US. Now we hear announcement for opening up for series of plants by Dow and Sasol and what have you and it's due to totally abandoned and cheaper natural gas outlooks that we have observed in the US. The share of production of some of the organic chemicals expected to increase very rapidly toward the next decade. And this basically shows the relationship of the investment profile for the infrastructure versus the chemical industry and expectations that the production in chemical will really bounce back much toward the end of the period and this industry is very much supply chain intensive. So as the production keeps rising there is actually a feed through into whole indirect effect if you wanna call it or supply chain impact in the US that it's very much of it as our home domestic. So looking at the economic contribution of these series of assumptions and assessing if to what degree we'll see a manufacturing renaissance the process is originally we build the upstream and then go ahead and append it with the expansions of the required infrastructure and chemicals. And then at this point we have observing constant lowering natural gas prices. So our model is not going to only look at the natural gas price impact. It's going to feed into electricity prices what the ramification of that is on the US economy on both residential and commercial and industrial side. If there is a very high let's say input of natural gas into series of industries what is the implication of other product prices to be impacted? The model measures that and feeds it into the whole economy. So it's a much more simultaneous and a dynamic system that captures a lot of different angles of the economy as well too. At the same time measures the impact on the supply chain and if there is any income effect it will picks up that as well too. So some of the findings here is that yes it is reshaping for sure the energy sector in the United States and the in the short term unconventional it will have impact on the US economy. Those industries that are energy intensive are going to benefit more than the others or those industries that are using natural gas as feedstock even are going to benefit more than any others as well too. And some of the findings is that 3.9 million jobs will be supported by this whole value chain and chemical industry activity and more than $500 billion is contributed on GDP and close to $1.6 trillion and cumulative basis of government revenue including corporate personal royalties, federal and state level and bonus payments. And finally a real household disposable income per person basically in measures or per household if you wanna call it starts to picking up close to $1,200 in the current period and reaching close to 3,500 by the end of the forecast. And the findings are yes, there is a different impact that you see due to the activity that is going on in the upstream versus the infrastructure and the chemical industry while majority of the support or contribution is coming from the upstream, the midstream picks up initially as the buildup of the capacity increases and it slows down. And the story for the energy related chemicals is that as the output kicks in toward the end of the forecast it will start benefiting to the US economy. Majority of these numbers that I'm presenting here is a static version of the models and we double check basically the social accounting methodology versus the macroeconomic general equilibrium model to see what kind of a differential aspect it will give us. And at peak they were very close while the macroeconomic model tends to be more realistic in the long term and shows less of an impact as we go toward 2025. And these are some of the results from the macro model and the way that we did it we actually constructed a counterfactual scenario over current baseline that includes the unconventional activity. So removing the production of unconventional, removing all the investment in different type of categories, laying over let's say for example the LNG European exports instead of current natural gas import was basically the way that we structured the model to come up with the counterfactuals and it seems a little bit roughly less than what Trevor showed that the growth of the GDP is around 0.10 of a percent over the 10 years is contributed to unconventional and it peaks around 3.2% in 2016 and it levels off later after that for sure. While the story for industrial production is somewhat different and it has a lot to do with the feed through of the prices and the supply chain impact in US manufacturing that initially starts at around 2% from the baseline and then reaches around 4% by the end of the period. So we see some kind of a resurgence in the US manufacturing here. Drilling down into different types of industries as well here. This is ranked on 2012 again counterfactual relative to the baseline or vice versa if you want to call it on the positive ground. Some of the series of industries that are showed here are those that are benefiting from lower natural gas prices. They are benefiting from the supply chain for upstream or downstream or midstream or chemical or they are intensive users of energy. And as you go through the ranking through time, the ranking for sure changes and those industries that are users of the feedstock of natural gas seems to be showing the benefit much more than any other ones as well too. So employment, the impact is through the supply chain and the price effect is captured for sure here. The estimates that we have shown here, every one out of every eight jobs that is created or supported by this, let's say revolution is in manufacturing and roughly 3.2% currently of the manufacturing employment is contributing to the unconventional value chain and energy related chemicals and it reaches to 4.2% which translate basically to 400,000 to 500,000 employee. And there are series of other factors are in concert going on here. It's, we measured only the unconventional contribution here but productivity gains for sure relative to a lot of trading partners is a major factor here that it's supporting the manufacturing sector. The technological advances and efficiency of usage of energy is another one which lacks behind Europe but leads, let's say, relative to Asia and also the slower growth of the hourly wages is another major factor that it's contributing here and overall it's contributing to those industries as we talked about that are major feedstock users or they're intense users of energy. In this case, series of them being petroleum refining and aluminum and steel and cement and glass. And finally, very much tangible measure to all of us is that a real household income is up due to this unconventional revolution close to $1,200 in 2012 and reaches 3,500. But again, those are not only the wage impacts. Again, we have to look at it at the whole conceptual aspect of the macroeconomic model. There is impact on the electricity prices that consumers are benefiting on paying much less for, let's say, home heating and water heating and what have you and also the feed through through series of different product prices are impacting wholesale prices and consumer prices such as consumers are paying less to some of the product and services. It's again the integration of all the impacts of this that it's benefiting the real households. So our conclusion is that it is for sure unconventional reshaping the energy market for sure and in short term, more than long term it's contributing to benefits to the US economy and the industries that are benefiting are generally the intense users of energy or the ones that are using feedstock and will have global competitiveness over some of the trading partners and employment, GDP, taxes and real disposable income per person is generally higher as you see based on the numbers that we present. Thank you. Great, thank you. Excellent, different view on the economic impacts that we're going forward. We're now going to go ahead and move to questions and answers. I see hands coming up already. I'm gonna though take the prerogative of asking the first one. We have a couple of rules here which is identify yourself and who you represent if it's yourself, that's okay. And your questions if they can be in the form of a question even if it follows a lengthy commentary that's fine as well. The question I was gonna start with though is the debate that's been going on here for several years is the role of exports of energy for the US and how that affects the US economy. So we've seen the debate around the exports of natural gas and should we or should we not do the non free trade countries? And right now we're starting in the discussion about exports of oil. And I was just wondering if you have any thoughts and obviously you probably haven't modeled this explicitly but any thoughts on how that changes or does it change the outcomes in terms of your economic assessments. I'd also mentioned that it's becoming a part of trade negotiations with our Asian and European allies or friends or future friends hoping to get access to this cheaper energy. So if you can start with that one then we'll open it up to the floor. The LNG of course has been very hot recently and there are series of initiative that we have put together to go forward to figure out what the ramification of that is whether it will start impacting really the US economy and also on global basis the impact on the natural gas prices in Europe and Asia. And the findings that and the signals that are here it's going to be benefiting for sure the US but however the impact on global basis on LNG exports is going to be not as strong or strength that we expected to be. On the oil export actually we are initiating study right now to undertake two different constraints for the baseline, two different scenarios for the baseline, the constraint scenario and the unconstrained scenarios. Ramifying basically what the requirement of the upstream initiative is going to be to satisfy the export of crude and what the ramification of the prices are going to be because less and less we are going to be obliged basically to hold to those policies and then not starting basically looking into the export of the oil on global basis. So the findings are coming to us. Unfortunately I cannot speak to it right now since it's a not really study for series of clients but it's some initiative that we are undertaking for now. Yeah, I mean I think I can frame what we see as the most important questions but I don't have an answer for you. I mean we would look at what's the potential impact on the rate of U.S. crude oil production and what's the potential impact on global refined product prices. To try to understand what the potential impact on the rate of U.S. production would be you have to know the marginal cost of production in the U.S. and what the discount to those producers would be under a constrained scenario. If you think that the marginal cost of production in the Bakken is $80 a barrel then you could very well see a crude export ban pushing the net back to the Bakken down to a point where there was some production that came offline. If you think it's $50 a barrel then it would take a pretty healthy netback discount to push that offline. For the global product market the question is what is the cost and ability of U.S. refiners to add capacity to deal with more LTO. So how many hydro skimmers can be put in place at what cost to take something from crude quote unquote to product quote unquote where it can be freely exported and what does that do to the price of refined product around the world. My intuition is that the magnitude of, in comparison to the trends we're talking about here the magnitude of that policy decision one way or the other is gonna be considerably smaller but those are the questions that you'd want to look at. Okay, I know I had one question there in the back, Fernando, and then Scott, sorry. Oh, thank you. The other rule is to wait for the microphone, sorry. Peter Blair from the National Academies. Just as David actually asked my question but I wanted to sharpen it a little bit to get back to natural gas and maybe you could speculate a bit on the industry by industry exchanges as it would happen if the natural gas price, if we started exporting natural gas and eventually got to the point where US prices were similar to world prices and what the net impact would be on industries in the US. I mean, so I guess since my view is that the number of industries that materially benefit from cheaper natural gas are limited, then the downside risk to US manufacturing for more expensive natural gas is limited. If you take the other view that cheap natural gas will lead to a broad-based manufacturing renaissance, then you'd want to think pretty long and hard about doing anything that would gore that sacred cow and risk raising natural gas prices. So it kind of, you have to start by how big of a deal do you think cheap gas is for US manufacturing to get to an answer to that question. Yeah, I agree. And as we showed here as well to series of energy related chemicals for sure will benefit but the share of those relative to total production of manufacturing is around eight to 12%. So impact of higher natural gas prices is going to be really shared by limited number of industries here that are going to suffer if prices again start to shoot up. Let me add on that, I mean I think that's this important. So I would guess just from your presentation, Mohsen, and from reading the report, most of the increase in industrial production that Mohsen shows in his charts so look like a 4% shift in the level of industrial production. So important to keep in mind, that's not a 4% change in annual industrial production. That means that in 2025 industrial production is 4% higher than it would have been otherwise. I would guess that most of that is the supply chain impacts of the increase in investments. So the steel that goes into oil and gas production, new crackers, not the competitive. So that stuff, you actually have more demand for that stuff if you're producing more natural gas. So there's kind of differentiated manufacturing impacts between firms that are supplying the oil and gas industry and related infrastructure versus those that might potentially benefit from lower cost feedstock. That's a good point, but the numbers that we presented here is really the combination of both of them because that comes from the macro model and it is the supply chain impact, right? You're correct, that's the indirect impact, but at the same time the prices of natural gas is lowered and feeds basically into those industries that are heavily feedstock users of natural gas and our expectation is that production in those are going to peak as well. We didn't exactly measure what the share or the split share is, but one can do that very easy to figure that out. And I thought, I'll take off my moderator hat just to address one aspect of it, that the other thing in, you made mention of sort of the concept of some kind of globalized natural gas market that might emerge from having exports, but I think it's important to keep in mind that that doesn't mean prices are the same everywhere in an industry where transportation and transformation, the liquefaction process is so expensive. If you get to that market that's globalized, you will still have very different prices in markets that rely for their gas on LNG being delivered versus a country like the US, which will potentially be a supplier to the marketplace, which I think also works to maintain some of that differential that's so important in the manufacturing. Scott? Thank you, I'm Scott Miller with CSIS. I wanna build on Dave's question about energy trade and ask the policy implications. US energy trade policy, unlike most US trade policy is still stuck in the 1970s, 1973 specifically, with a crude oil ban. And while there is robust trade in refined products, and actually the US is a prominent exporter of refined products, the crude oil ban seems to make less and less sense given the revolution in both tight oil and gas production. If you were to change US trade policy, what would you change it to? My initial presumption is you just wanna liberalize it completely, but there are security and environmental implications here as well. So given what you know about the markets, what would you recommend to policymakers as the wisest US trade policy for energy? You brave enough to take that one, Mohsen? I'll let you go ahead. We both currently, this is gonna be very unsatisfying to you, Scott, but we both currently have separate studies on the impact of lifting the crude oil export ban, and I think we're both gonna be good researchers and wait till the results of those studies are done before positive conclusions. Donge that, Mike. Hi, Cláudio Trevisão from the Brazilian newspaper Stado de São Paulo. I'd like to know how do you see the constraints for the production of tight oil, shale oil, especially from the environmental side, like the intense use of water? Do you see any risk of this derailing, these predictions that you have? There are a number of people both on this podium and in the audience that are better positioned to answer that than myself, including Robin West and Jan and David. I'll say from a political standpoint, I think one of the differences is that with conventional projects, you invest a ton of money, you put the straw on the well, and once you've got it there, it's gonna pump for a while, with conventional, unconventional oil and gas, it's kind of like riding a bicycle, right? If you stop fracking, if you stop drilling, the rate of production is gonna fall very quickly. The risk that I take from that is a political risk that if the social license to operate of unconventional producers was to be suddenly revoked, like you had a large, you had a rogue actor that dumped a bunch of frack fluid in somebody's drinking water, you had a major front page environmental incident, then the market reaction from that could be fairly quick because of the nature of production, right? You could see the change in social opinion about fracking lead to a relatively quick impact in terms of market outcomes, and given how contentious this issue is, despite the absence of any serious environmental incidents to date, I think that's a risk that's worth paying attention to. Yeah, and I agree. I mean, Trevor really hit on the main points as well too, and for our study, we really tried to stay away from that because the quantification was really the major objective that we had on the US economy, rather than bringing in the social costs or the environmental costs or the political ramification of it. Actually, no, Trevor did a great job as usual, so he tries to defer. But I do think one of the points that he's indicating that really needs to be kept in mind is that in a way, we've moved the oil and gas industry from one where you make large investments that have a flow that continues for a long time into something more like manufacturing. So it's almost becoming part of the manufacturing process that you have to continually be working at it to sustain output rather than having very large mega projects that produce for a long time without considerable additional work. So Sarah, I think you had your. Hi, Sarah Ladislaw with CSIS Energy Program. Thanks very much guys, this is great. Without sort of asking you to launch into a whole new separate presentation, I know that both of you probably thought a little bit about what the unconventional revolution, oil and gas in the United States means for other countries in terms of economic benefit. I mean, we talk a lot about what it means for us, but could you just offer a couple of views maybe on how people should think about whether and how it's impacted other countries? And then Trevor, I wanted to pick up on something that you had said, which I thought was a very useful way of thinking about how, so say natural gas in particular has a sort of limited effect vis-a-vis sort of other energy transformations we've gone through like wood to coal and the like. But I do wonder, there is another sort of conversation out there about are there things on the end use side of the equation that gas can do, that does give it greater economic utility than has been in the past. And so is it, could we also think about this as in the same way that $12 gas brought about this revolution, this revolution being something that enhances some sort of technological development that then could have further knock-on effects? I mean, is that something you've thought much about? It's okay. I can maybe address the first part of your question since I just have taken the initiative to look in on the global impact of unconventional. In Europe, Latin America, Asia, and of course Middle East, we know there is a tremendous amount of the reserve in unconventional as well. Initially, we have approached a study in Germany and now we are following that up with study for France. The reserves and capability of course in those two countries is not comparable relatively speaking to the US, but they have different types of problem. They have very high electricity problems and due to having the inputs from the renewables and their manufacturing being heavily, heavily specially in Germany, export dependent where 40% of GDP is defined basically by exports, they're vulnerable as series of policies coming up, let's say in Germany and France, both, that it's going to make some of the energy cost much higher than what it is right now. And basically our study showed that it's going to impact the GDP growth in those countries in intermediate term if I call it and explorations of those unconventionals and bringing natural gas into the picture could have ramification that can counterbalance those electricity price increases in Europe. I'm waiting Sarah for your study to answer the question on who the winners are. Despite our kind of desire to frame things in zero sum, winner and losers terms, I mean the shale boom is a economic benefit for almost everybody in the world to varying degrees. Biggest winners are countries like Jordan or Zimbabwe where oil imports are 20% of GDP and oil subsidies are a major drag on the fiscal resources of a country. They benefit far more than we do economically from any reduction in global oil prices that the US shale boom has delivered. The other energy consumers, both on the oil and the gas side, so German utilities are getting a little bit more of a break because they can maybe renegotiate gas contracts with Gasprom just because of both the absence of the US as a large LNG importer and then the prospect of the US becoming a large LNG exporter increases negotiating leverage of other gas consumers. Obviously the biggest losers are large gas or oil producers elsewhere in the world who are seeing lower prices and less market share. And there are a number of countries who have grown kind of fat, lazy and happy on $120 oil and so any downside on oil prices or quantity from those countries could create some challenges. Your other question was, what was the second question? You're sort of the ability for there to be future transformative. It's a good question. So I think that there's a lot of debate about could natural gas get to the point where it was a competitive alternative to oil in transportation, let's say. If that occurs, it's a fuel switch, but it's not making transportation cheaper. You're just getting to the point where oil is a decent substitute. If you got to the point where that substitution was could be done quickly, you would create more economic resilience against oil price spikes. In the macroeconomic literature, one of the largest channels of macro damage from oil price spikes is dislocations in the auto industry, because you gotta fuel your car with oil and when oil prices spike, people don't wanna buy hummers anymore and GM has situated itself to make hummers and now it has to think about different products and those are expensive dislocations. If you could fuel switch in your vehicle where when oil prices go up, you just switched to natural gas, that would provide quite a bit of resilience. The problem is that cars come either in the oil or gas variety. There's not a lot of substitution between them. Outside of that, it's hard for me to see, like with the electricity example, it was electricity is just very different in its form than coal was, right? Like doing semiconductor manufacturing would not have been possible in the same way with just coal, like steam coal generators inside the semiconductor plant. There are probably examples where lower cost, more abundant natural gas would be a more productive type of energy. I think if it led to greater use of combined heat and power in buildings, more distributed generation, there's some resilience benefits to that, particularly in New York or other places that might get more frequently flooded in the years ahead due to climate change. So that I think would be an economic benefit, but don't have a lot of other examples coming to mind. Robin, I was just gonna follow up with Trevor and then get to your question. Trevor, you've done quite a bit of work looking at the structure of the Chinese economy and how it uses energy. Lot of speculation, even in the presentation we had earlier this week on potential for shale gas becoming a major player there. Do you see within the structure of the Chinese economy major benefits that come from bringing gas into the system when you look at the relative prices that may be at play, how might that play out? Yeah, I mean there's tremendous potential appetite for gas in China, appetite that grows every day that the air quality index tops 400 in Beijing. And there are policy directives to shut down coal in the Beijing, Hubei, Tianjin region, the Pearl River Delta and the Yangtze River Delta and replace it with combined heat and power, gas fire, combined heat and power. Problem is is that it's a gas type market and so a meaningful share of the gas that supplies those CHP plants is gonna be gasified coal from Xinjiang and Inner Mongolia which has about 40% more CO2 emissions than just coal fire power generation. So that's not, it's good from an air quality standpoint, it's not great from a climate standpoint. Also coastal China is becoming more mature which means that load which used to be super flat because industry was 75% of demand is now looking a little bit more like a developed country. So there's an economic incentive for peakers like there is here. So all of that means that there's lots of potential demand for gas. It's about getting that gas to market at a competitive price with coal. There is a relatively abundant shale resource base in China still learning what the cost is. It's from studies at IHS and others would Mac have done. It seems like it's probably certainly higher cost than most of the US place but it's not that much higher cost than conventional Chinese gas. There are a number of barriers bringing that to market. The one that I think generally gets overlooked is market structure. I mean we have this view that it's the Chinese government if they decide they wanna do it, it'll get done. So if they decide they wanna do shale gas, it'll get done. In 1975, the Chinese government decided they were gonna produce 12 million barrels a day of oil and the Chinese government is powerful but they cannot do things like put hydrocarbons in the ground where they don't exist. And China still produces four million barrels a day of oil, not 12. What gave rise to really dramatic growth in shale gas production in the US was a competitive market structure where hundreds of firms could race around the country leasing up private land. And like I talked about before, that hasn't actually been good for producers as a whole but it's been very good for consumers, that competition. If Chevron and Exxon held 90% of the US shale acreage we probably wouldn't have seen $2 gas in April of 2012. CMPC and SinoPak hold 90% of qualified Chinese shale acreage and they're interested in shale production but they're not in a terrible hurry. And until you change the structure of the market you're not gonna have as rapid of a takeoff as we've had here. Robin? Hi, my name's Robin West and I'm hanging my hat at CSIS. I have a question, it's a little different and that is on this issue of reshoring there's been talk about industry returning to the United States. And if you have a situation where crude oil prices remain pretty high, which will affect transportation costs, moving goods from Asia and things like that, you also have rising labor costs in Asia. And if you have lower energy costs and the petrochemical industry being a big winner and a growing role for petrochemicals in 3D imaging and all this kind of thing, will the energy surge affect reshoring or will it materially affect reshoring, do you think? Yeah, I mean, I think it certainly does for energy intensives and I think we've already started to see that. The question at the end of the day is a macroeconomist that you have to ask yourself is are trade balance is determined by our savings and the difference between savings and investment, right? So unless there's a significant change either in our savings rate or our rate of investment, our trade balance theoretically should be the same. So if what we do within that trade balance is reduce the amount of oil that we're importing, then that's going to be offset by an increase in our imports of some other type of good. Now there is a number of reasons why the shale boom could lead to a change in our savings or investment rate and I'd actually be interested in most sense thoughts on how that changes our net current account balance. But I think in terms of the direct impact of the shale boom on reshoring decisions, it's going to be relatively modest. The challenge though is that the decisions that are made because of low cost energy are attributable and they will be anecdotes that are used in the press, right? So when someone sets up a new ethane cracker because of low cost ethane, they're citing low cost ethane. The extent to which broader macroeconomic effects, exchange rate effects, reduce the competitiveness of other industries, that will not be attributable, right? And so you're going to always hear the winners talked about and you will never hear the losers talk about because they're getting lost in the macroeconomic noise. Yeah, but the winners are the one that really have the global competitiveness, right? And the losers are the one that are going to suffer basically due to this energy boom that we will see here. But overall, when the analysis that we undertaken, as Trevor said, there is no question that the energy intensive industries are going to benefit because of the lower, you know, natural gas. I asked this question to one of our chemical specialists and he said, the other cost, including labor and transportation are very relative. The feedstock is the most important actually to the organic chemical industry. And as that reduces to the degree that has been going through in the US, there is no place really else that they will consider to putting those. Now, remember, there is that going on at the same time, there is refined product exports are benefiting as well too. And some of the industries are being losers. So the overall impact as we assisted with the macro model was a benefit to US current again. That basically seeing the big picture, not only focusing on lower, let's say natural gas price and then keeping everything else constant. There is impact of supply chain internally and there is impact of refined products basically, you know, picking up. So, you know, when you look at the overall impact with the continuous, you know, downward trend in oil imports, for sure we have seen to some degree an increase in trade balances for the US. Is that across, I mean, overall trade balance is your analysis does not, what happens to the non-energy intensive manufacturing trade balance? Yeah, you have to start dissecting it down to assess that and we don't know. I think the important point both from, you know, if you take, so I would say Mohsen's probably more optimistic than I am on the impact of industrial production, but his optimism translates into a 4% shift in total industrial output in 2025 relative to the base case. So it's just important to put all of this in context when we're thinking about what the magnitude and the drivers of future economic growth are gonna be. Yeah, but I felt that one thing that we captured was the indirect impact on the supply chain in some of our numbers. Right, but that gets you, that's still your, you're still all that included industrial production, total industrial production is 4% higher, right, in 2025 than in the base case. Correct, yeah. Sorry, I couldn't. I have two questions if that's okay. Molly Cedar, Radio VR in Washington. First question is, I believe you said 1200 to 3,500 will be the average savings across US households due to shale gas production. In Oregon, my heating bill was maybe $80 a month in January divided by three people. It was nothing. In DC with electric energy, it's a different story. How widespread will these savings be across all Americans? Will they be regional? My second question for you related, I think to the conversation you were just having, I think your story was almost a half million people gaining jobs thanks to manufacturing. Your story, I believe was overall apart from chemicals, manufacturing will be hurt by this energy revolution. Are these contradictory or am I misunderstanding something? Okay, let me then comment on it and then you can pick it up. Your first question is well taken. There is absolutely regional diversity on benefits that this is coming due to differential aspects and diversity of the energy inputs in different states and regions of the country. And the analysis that we have done was only on the national level. It starts digressing it down into state level. You see absolutely different impact for sure on different states, but we haven't really assessed that. On the second part, the 500,000 jobs in manufacturing is not all new jobs being created. We are not only measuring the impact of new jobs. If it was all new jobs, we would have gained four million jobs, new jobs by now the economy will be fueled up and going very strongly right now. These are, some of these are new jobs. Most of them are supporting jobs. So they are supporting basically the unconventional revolution. Now started at 400,000 and expectation is by 2025. Roughly half a million are supporting this. And a lot of it is due to supply chain. The machinery, the steel, the chemicals, all the, you know, cements that is required because tremendous amount of upstream capex is fueling the industrial base. Do you know what in 2025 of your 3.9 million jobs, how much of that is in net addition and employment? 2025 in the macro model? We don't. So it's, my story isn't that other manufacturing will necessarily be hurt. It's that it's competitiveness, international competitiveness will decline. And this is, so like Mohsen's study goes very deep on the supply chain impacts. And greater US demand means greater production, US industrial production. But if you're thinking about competitiveness, so how what our net trade position in manufactured goods is going to be, our assessment is that we could see a net change, net improvement in our competitiveness and chemicals and a handful of other energy intensive manufacturing industries, but likely a net decline in our international competitiveness and other goods. Now those industries, their output might still be greater than without the shale boom, because the increase in domestic demand for steel, for example, is greater than the reduction in their trade position. So even though we're importing more steel, demand is growing even faster. So steel mills in Pennsylvania are doing a little bit better than they would have otherwise. Other questions? Okay. Hi, Michelle Melton, CSIS. Trevor, I thank you very much. Thanks to both of our panelists. I have a question for you. I've really enjoyed your manuscript and it's really informed my thinking about the macroeconomic impacts of the shale boom. I'm actually wondering if you could talk a little bit more about the currency impact. Your comparisons with Canada and Australia, you pointed out that the US economy is just tremendously larger than those economies and more diverse than both of those economies, but I'm wondering if you could talk a little bit about the position of the dollar in the global economy and how that, as a reserve currency, how that affects the ultimate impact on currency appreciation. I mean, I'm just wondering in the scale of the dollar in the global economy is just completely different than the Canadian dollar, right? Or the Australian dollar and the fact that it's traded much more broadly and the fact that it is a reserve currency, what kind of impact does that have on the amount of appreciation that we can expect the dollar to see from this, which is relatively small in comparison to those movements? Right, so like I said, I mean, the most in the extreme case, you would see up to 7% appreciation of the dollar, which is obviously considerably less than the appreciation that's occurred in Canada and Australia and Brazil, and that's because the scale of this boom in the context of the overall US economy. That is, before people run out and put on their dollar euro cross position based on that statement, the oil and gas boom is like the second violin in the New York Philharmonic determining the value of the dollar with everything else being QE3, and so it's not, it doesn't mean that, I'm not saying that the dollar will appreciate is that both of our tasks were to look at this boom in isolation, what is its impact, and so in the same way that energy prices could end up going higher because of a polar vortex, independent of the shale boom, the exchange rate could end up depreciating because of effects other than the shale boom, but if you isolate that piece of it, and then there's the difference between nominal exchange rate appreciation and real exchange rate appreciation, so if you just think about it in relative price terms, the kind of analogy I use is, if you were going to Williston, North Dakota today and deciding to set up a T-shirt manufacturing company, you're gonna have to pay $120,000 a year for a secretary, $400 a night for a hotel room, you're not gonna be the most competitive T-shirt manufacturing company on earth because it just makes more sense to drill for oil in Williston, North Dakota, that's comparative advantage, right? So it's the relative prices that change what we're competitive at and what we aren't competitive at because as the economy returns to full employment, you're competing for the same labor pool, the same capital, and that pushes up the cost both of labor and capital, even if the nominal exchange rate stays roughly the same. No. So are there questions? Oh, I did wanna mention that this is not to say that the second violin in the Philharmonic is not important to the overall sound. Right, absolutely, absolutely. Apologies to any second violins sitting there. So do we have additional questions? Okay, this will be our last one, so thank you. My name is Frank Brone, I'm an independent investor and I've had the advantage of feeling the sting and feeling the pleasure of this ebb and flow we've been through here in the last couple years. Some phenomena that I've observed as I walk the walk as an independent investor, I followed what's been happening on the Panama Canal with the SuperPanamax with great interest because it represents a gigantic surge in import-export potential. It's nearly the equivalent of the IT internet, if you would, in terms of transportation. Places like Savannah that are building huge Kia plants that are infecting railroads like Norfolk Sovereign, which is all electricity-based, brings me to this magic model, which says that probably from what I'm seeing personally, two things are enormously valuable based on this. One is I've seen a big shift from scarcity to plineness in the boards of directors that I'm investing in and making decisions to move forward with capital investments because of the assurance of the availability of energy. Two is I'm seeing that the majority of the big industrial moves that are coming are going to be looking for electricity, not necessarily for gas and electric, per se. So what in your model contributed to the electric model? When you looked at your analysis, both for the benefit as well as for the cost. So we model the electricity sector impacts of our two scenarios. And as you might, in the pre-shale scenario, you have load growth that is met through a combination of additional coal, some nuclear, some renewables. In either a conservative or an optimistic production scenario, almost all load growth is met by natural gas. Just because it's hard to beat the kind of combination of natural gas capital costs and low-cost natural gas fuel. And given kind of uncertainty about future environmental regulation, building an NGCC is kind of the least cost thing to do in our modeling. That said, the shift from coal to gas that is going to occur just because of cheap natural gas prices in our view has pretty much run its course. So gas rose to 33% of power generation, kind of historic high in April of 2012 when gas prices were below $2. Since then, as gas prices have risen, coal share of dispatch has grown back to the 41, 42% range. That said, there is a lot of dispatch in this country that is sitting on a razor's edge where relatively modest environmental regulation could push it from coal to natural gas. So low-cost natural gas leaves the coal stack pretty vulnerable and certainly makes new coal additions uneconomic but is unlikely to lead to much of an additional reduction in coal generation absent new environmental regulation, was our view. Yeah, we looked at the whole aspect really on macroeconomic basis. We did not do, let's say, ramification on the electricity prices. But I can give you some of the results that the model gave on the macro base and also I can give you tremendous amount of demand is going on right now for IHS consulting to assess the ramification of shifting from a coal fire plant to natural gas. What are the benefits and what are the costs on regional basis? So more and more of those are for sure are coming on board right now. But if you lay over really the LNG prices, European LNG prices on top of the US economy right now, you'll see around roughly between 200 to 300% increase in prices on natural gas. That translated basically to around seven to 8% impact on electricity prices. So that's basically the finding on the macroeconomic level in the short term that was. The differential between US electricity prices and what they would be if we were buying gas at the European level. So yeah. Well, great. I think we've come to the end of the time here. This has been a great conversation, especially for the economists in the room who don't get this chance very often to do this. So please join me in thanking Trevor Emotion. Thank you very much, thank you very much. Yeah, same. We did, we really got something out of it.