 Okay, we're so glad to be back with Lou Plurici. He's the CEO of Aprink, an Energy Policy Research Think Tank in Washington DC. He's got so much going, so much on his plate, and yet he has time to talk with us. We're so delighted. Hi Lou. Hi Jay, great to be here. So we're going to divide this show in two parts. The first part is we're going to talk about isolationism and we have named that part of the show. What is it? Isolationism as a hidden cost of American energy independence. Which is really an important discussion these days because we don't think of the consequences of our foreign policy or non-foreign policy as the case may be. And so we ought to explore that at least on this one, you know, drill down level of energy to see what affects our policy, our foreign policy is having. And so Lou, I'd like to ask you to give us your thoughts about that so we can examine the trends that are going on. Yeah, so one of the interesting things, I don't know how much of the audience really is following this, but the United States and kind of in Mexico, you know, the North American production platform, we've talked about it before, is now a net exporter of oil and gas to the world market. So it's true that we import lots of crude oils and energy from different parts of the world, but we also export a lot of finished products. But if you do the balance is North America, particularly in the US, is now a net exporter of oil and gas to the world market. And that's a good thing. In many ways, it creates a lot of the North American production platforms with about a trillion dollars a year, a quarter of the world's oil production, less than a quarter of the world's oil and gas consumption. But one of the interesting aspects of this is that, and I think longly, lots of political leaders and our last two presidents have the sense that the world beyond the United States is less important than it used to be. And the Middle East, we don't leave them as much as we used to, that we're not as interconnected, at least the belief among our political leaders is we're not interconnected to the world and as dependent on the world as we used to be. I think this is wrong. This is wrong technically and also long as a matter of US national security. The liberal order, if you call that free trade, the growth of democracy is there in the world because the United States is the area. We have two big oceans on each side of us and that means we need allies. And I think if we start to, I think I want to pull from some recent work by this French philosopher that as the US withdraws, what he calls the five kingdoms, begin to vie for global power. This is Russia, China, Turkey, Iran and radical Islam. I think the other aspect of this is that some of Trump's action, though, is really an extension of what Obama was doing. And the American people don't like to be engaged in this war, in endless conflicts, in which there doesn't seem to be any immediate resolution. So in a way there's a kind of fatigue setting in and this is adding to this view. So now, but once again, I think it's important not to take two kind of black and white view of this. The US does, has engaged in very aggressive policy to counter the Russians in many respects. We have actually provided lethal weaponry to the Ukrainians to deal with the Russian invasion and intervention, something Obama refused to do. The US has taken a relatively hard line on Iran, in fact, rejecting the Electoral Agreement, but also the pullback from Syria is disturbing, the inability to successfully conclude a trade agreement with our non, let's say, authoritarian ally, Pacific Rim. All these are adding to a sense of, I think, moving towards isolationism, as we've become more secure with our energy independence here at home. Well, let's look at that one by one and see how those countries could affect our energy policy. If we go sideways with some of them, we're going to have a much more significant effect on our energy policy and our independence, our energy independence. So for example, you know, can we take them one by one? Let's take Russia. Let's assume for a moment that we are going to go sideways. For one reason or another, whether it's whether it's Trump, whether it's Russia, whether it's a whole perception of isolationism or our worldview, collectively our worldview, and we are no longer friends by any stretch with Russia. So how does that get into our energy independence? So when you think about Russia, I think the biggest energy issue now is the so-called Nord Stream 2 pipeline. And in fact, both the Obama and the Trump administrations have argued to the Europeans that they should be quite cautious about this project. And if you know about this project, right now, Europe gets a substantial quantity of its gas, not as much as much people think, 30 to 40 percent from Russia. But most of this gas transits the country of Ukraine. Under the Nord Stream 2 project, this gas from Europe, I mean from Russia, would begin to land in the European continent on in Germany by crossing the Baltic Sea and completely bypassing Ukraine. So in one hand, it would provide a new transit route for gas supplies to Europe. On the other hand, it would further isolate Ukraine from the European community, which today is a major bulwark against Russian expansion and influence in the European continent. And I think both, you know, both, you could argue both Obama and Trump have made a strong pitch to the Russians to go cautious with this project, not to proceed. The Russian behavior is inadequate. But the Europeans have been reluctant to accept this view. And the Russians also see this as a way to continue their influence in Europe. Well, let me interrupt by just asking this. So there's obviously a strategy here of isolating Ukraine, of depriving Ukraine, of having that gas go through Ukraine. And the revenue from it, yes. That's an attack in some way on Ukraine. But can you tell us, you know, assuming that Russia would ultimately like to, you know, take Ukraine over so that it is no longer a buffer between NATO and Russia, how does bypassing Ukraine with the supply of gas to Germany by way of the Baltics, how does that help Russia, you know, ultimately deprive Ukraine, marginalize its economy, you know, convince its people, its government, they have to surrender to domination by Russia? How does that, can you connect that up? Yeah, so I think, I think it's a, it's a person will deny the Ukrainian much needed revenue. It is, to some extent, the Ukrainians do have some leverage over the Russian. You could argue the Russians have leverage over them in many respects, but from a point of view of Russia's access, Russia's access to the Western European gas market, Ukraine is essential for them. It is the only major route. Yes, there are alternative routes for some gas supplies through Turkey, the so-called, you know, you know, blue stream projects to come across the Baltics through Turkey and up through the Southern Corridor. But Ukraine is the bulk of US gas supplies that come from Russia, generate a lot of revenue for Russia and also generate revenue for Ukraine. The Russians are spending an enormous amount of money with the help of the West of German to build an alternative route. And I think the US and some of the Eastern European nation states have argued in Brussels, look, this is a mistake. The Russians are not stable enough, not reliable enough. You shouldn't do this. And I think you could argue that US, US gas supply, which is becoming much more prolific in the form of LNG, represents a counterweight to this, that this LNG is available to the Europeans. But for many reasons, the Europeans are not feeling comfortable enough with the US alliance and second, I think, not feeling threatened enough about what the Russians can do to that long term. So this sounds like if Russia wants to build a relationship, an economic relationship, a relationship of economic necessity with Germany and Western Europe, then this aids that. If Russia wants to get into a position where American energy supplies and gas whatnot from US to Western Europe is not as important, is under competition from Russian gas, they're doing that. So it sounds to me like this is this all the our isolationism, our treatment of our former allies in Western Europe is and Russia's moving into the vacuum, so to speak, is changing the way changing our influence and our energy market in Western Europe in favor of the Russians. Am I right about that? Yeah, of course, it's always, it's never quite black and white. The Russians are, I mean, some of the Eastern European countries have built LNG receiving facilities, and we, yes, the Russians will benefit from this project. But the benefit from that is not disappearing overnight. The US will have some capacity to provide supplies as a leverage. So and the Europeans do have a highly integrated pipeline market now. So yes, it's a kind of mixed bag, but basically, you know, my view is or my view is the behavior of Russia does not suggest it's a reliable partner and that the Europeans should feel confident enough to tell the Russians, look, this is probably not a bad project. It probably makes a lot of sense. But, you know, you guys are not, you guys are not giving us the confidence that you want to be a stable neighbor. You're engaged in all this kind of disturbing and disruptive behavior in Ukraine and other parts of Eastern Europe. And so we're not going to proceed with this project. And by the way, we don't need to proceed with this project. We can, we can draw our supplies from other parts of the world, including the US. So why is Germany do this? Germany is overriding that kind of objection. Germany in its self interest sees this as a benefit to Germany. Call it a nationalism of sorts. You know, every country on its own. That's that's that'd be Trump's philosophy. And they're saying it serves us. You know, don't don't tell us what to do. It serves us. We want to have this pipeline come through the Baltic and serve us. This will give us whatever comfort we require will give us sufficient comfort to spend the infrastructure and to be the gateway to the rest of Western Europe for Russian gas. Probably enough, you know, the Europeans have spent a lot of money on renewables. They're trying to wind down their use of coal. Their own domestic supplies of natural gas are declining. You know, different parts of Germany are, I mean, in the Netherlands, there's an anti fossil fuel trend and element that's limiting their development to produce more North Sea oil and gas onshore in the United Kingdom. The interest in proceeding where they seem to be some interesting potential to do hydraulic fracturing continues to have a lot of opposition. So this is viewed as a way to substitute for declining supply of indigenous resources throughout the European continent. So it's a it's a hidden cost, though. How does that work? What changes? So the hidden cost is, I think that in if you went back to the 70s or the 80s, where the U.S. was very dependent on import, in which we got the formation of the International Energy Agency, and there was an engagement with the allies. Look, we're all in this together, right? The U.S. and we have to stick together. The alliance is absolutely essential. And when we do that, we should come to a joint agreement on our mutual energy security because we are obligated to each other if there's a major oil disruption, if there's a major disruption in supplies to help each other under the International Energy Agency. And you know, I agree, it's not exactly a black and white. There's a gray area here. But I would have, I think in an era where the U.S. was more dependent, we would have been in a position with the Europeans to say, look, let's roll this out for a while. Let's see how this plays out. Let's see if we can get the Russians to behave a little bit better before you proceed with this project. And we did do that, as we remember when we had the sanctions in Russia, and actually this is right after Jimmy Carter, the Reagan administration, when the invasion of Afghanistan took place. And we limited the supplies of gas from Russia. Well, let's take a short break, Lou. Come back. I would like to talk about how this works on a parallel basis in China, who also want to talk about competitors or rivals, as you, as you like, we'll be right back after a short break. Lou Pugirisi of e-prime. Aloha and welcome to At the Crossroads. I'm your host, Keisha King. You can catch me every Wednesday. Alive at five. I'll see you there. Aloha. I'm Wendy Lowe and I'm coming to you every other Tuesday at two o'clock live from Think Tech, Hawaii. And on our show, we talk about taking your health back. And what does that mean? It means mind, body, and soul. Anything you can do that makes your body healthier and happier is what we're going to be talking about, whether it's spiritual health, mental health, fascia health, beautiful smile health, whatever it means. Let's take healthy back. Aloha. Aloha. This is Winston Welch. I am your host of Out and About, where every other week, Mondays at three, we explore a variety of topics in our city, state, nation, and world, and events, organizations, the people that fuel them. It's a really interesting show. We welcome you to tune in and we welcome your suggestions for shows. You got a lot of them out there and we have an awesome studio here where we can get your ideas out as well. So I look forward to you tuning in every other week where we've got some great guests and great topics. You're going to learn a lot. You're going to come away inspired like I do. So I'll see you every other week here at three o'clock on Monday afternoon. Aloha. Okay, we're back. We're back with Luc Plurici of April. We are having this most interesting discussion entitled isolationism is a hidden cost of American energy independence. Okay, and we talked about Europe and there's more to talk about there because that's an ongoing issue and it's very dynamic. But it's also worth talking about what's happening in our relationship with China, which has degraded over the past year or two. And now we are having tariff battles and trade battles and we're having tech battles and cyberterrorism battles and is a real friction going on between the US and China, which is really not so good. And that's part of this isolationist mentality we have in the White House and also in the country, in the base anyway, in the country. And so, can you describe our relationship with China on energy and how this changes a little? Before we get to that, I think we should sort of describe a little bit how energy independence, how it changes the perception versus the reality for a second. Historically, the right way to think about the sort of energy security problem facing the United States was we lived in a world in which, particularly for oil and gas, which is extremely important to the national economy of the United States, lived in a world where there was a concentration of low cost resources among unstable parts of the world. And that posed, this was mostly the Middle East, but not just the Middle East, and that posed two risks to the United States. One, relatively few number of players could get together and raise the price and extract wealth from the United States. Or two, they could go out of business for a while, spike the world price and cause a lot of damage to the national economy. Now, that actually hasn't changed that much as we're a net exporter, but it does make it better. If we're a net exporter and the price goes up, theoretically our government could just recycle the money. It's not like they're extracting wealth. We're actually getting a lot of the wealth into the country. We're not paying it to foreigners, we're paying it to ourselves. So I think that has created a sense of Congress and administration look. Why don't we have to deal with all these crazy people in the Middle East and other suppliers in the world, you know, they're a pain in the neck. You know, it's too much effort. We have a big Navy. Let's stop doing that. And because we don't need to do it. And that sort of flops over into Asia as well. Now, I think it's a little different than with the Europeans in that. Yes, I would say if I were making a criticism of Trump, China is a problematic player in many ways, right? But the way to deal with China is not to disengage from our alliance in the Pacific Rim, but actually to strengthen them because China is going to be much more receptive to changes in policy into becoming a responsible member of the Pacific Rim. If the U.S. is in a strong alliance with Japan, Indonesia, South Korea, and I do think that the sort of isolationist or the America-first behavior towards Asia is particularly troublesome because it makes it harder for us to address these central threats from China. So on the other hand, China is a growing user of commodities. It's not a major exporter of commodities. It is a huge industrial finished goods export economy. It needs large supplies of oil and gas from the world. And part of the reasons China has become more outward looking, more aggressive is because those sea lanes and communications and those things, they feel a certain threat from that. So you have to build out of the Chinese Navy. But we should not forget, we and our allies in the Pacific Rim have a much different value structure than the Chinese. And basically to hear the democratic principles, principles of open and free trade, open discourse, this is not what's happening in China under Xi. Well, it's interesting that if the U.S. goes isolation on this and creates the vacuum, just as there is a vacuum in Europe and Russia is falling into it, the vacuum in Asia, China is falling into it. And China, it's an easy trip for China to take. But query at the same time, and we talked about this in the break, at the same time you have one belt, one road. You have China using its economic twist to influence all the countries along the one belt, one road all the way to Europe and Africa. And so I guess what I would like to know is does the one belt, one road initiative give China influence to obtain resources, including energy resources from all the countries along the way, all the way to Africa, all the way through the Middle East? Does that give China another market from which to obtain consumable energy? So in theory, yes. But in practice, the Chinese, this is where the opening is for the sort of liberal democracies of the Pacific Rim. The Chinese have mishandled many of these belt and road initiatives. And the countries, even India, Bangladesh, Pakistan, Sri Lanka, are beginning to look at their relationship with China in a more suspicious or more let's say skeptical manner. Because some of these projects have been highly uneconomic. They have left the countries with large debt that they can't easily, they can't easily serve it. It's quite interesting if you look in Venezuela now, the new so-called interim president, Guaido, who is challenging Maduro. The Chinese and Russians now are on, yes, they're supporting Maduro, but they are also reaching out to him and saying, you know, when you take over, don't forget, you owe us a lot of money. Sure. So I do think once again, there's an opening. I don't think, I think it's unfair to say, well, you know, Trump is just some crazy cowboy who has, as I say, most of my problems with Trump are more style than substance. He is trying to do different things that make sense. He just doesn't have the kind of sort of integrated strategy and selling that strategy to our alliance, you know, our allies in the Pacific that I would like to see. It sounds like there's really a general principle involved here, and I would ascribe to it, namely that when you engage, when the United States engages with the world, as we have mostly since World War II, where we've set the global order, so to speak, the liberal global order in the world, a moral order of essential kindness and caring, that order has returned to us. It returns economically. We have economic benefits out of being a nice guy. Engagement yields economic benefits. But then you say, well, we've decided not to engage. We've decided to isolate ourselves. We've decided, you know, to withdraw from being a leader in the world order and not to set the standard anymore. When we do that, it seems to me, and the economics of energy is only one element, it seems to me that there are economic penalties to pay across the board, energy and other things, that we lose the economic benefit of being a world leader. Engagement has a value. Engagement has an economic return. I agree, and I once again, I don't want to overdo it. I don't want to overdo it because I do think I can point to, for example, the U.S.-Japan cooperation on LNG is a very effective program that's going to show the reliability of the U.S. as a supplier of new supplies of clean energy or cleaner energy throughout the Pacific Rim. A lot of the work we're doing at NATO with our allies, I mean, I think you have to step back and think about this very carefully. We have deployed troops and equipment throughout Eastern Europe. We are engaged with Japan, South Korea, and some of our other allies from the Pacific on strength and political, military cooperation and energy cooperation. Part of this is, if you're also going to be the moral leader, you have to step up on human rights, the detainment and the isolation of the Uyghurs in China, the growing sort of autocratic tendencies of Xi Jinping. You need to sort of call them out on this thing. And I think that that is a missing part of U.S. foreign policy. Well, that actually opens to my last question to you, Lou. My last question is, if I made you, if I made you the president, if I made you the American government, I'm working up to that. What would you do here right now, today in 2019, in order to take advantage of our our possibilities here in the world? Yes, so I think, you know, part of what's missing is a coherence to the policy, right? I don't think it's bad to sit down with the South Koreans and tell them, look, you should pick up more of the cost of the base. Actually, that's been going on for a while. I think part of the thing is to begin to give our allies a sense of our predictability that we have a long run vision of where we want to be or we want them to be, that we're in this together, that, you know, this America first stuff. Yes, of course, U.S. is pursuing its own interests, but the pursuit of U.S. interests are recognized as tied to the success of our long-term allies, particularly in the Pacific. It's very important. You know, and this, you know, the U.S. isn't, by all standards in the world, an enormous economic success story. You know, you're up to date. I just want to say that from your lips to God's ears, Lou, that, you know, that's a kind of thinking we should all be engaged in. And we have to recreate, if you will, the kind of engagement we used to have. We should go forward. We are still the greatest country on earth, and we have to connect up with all the other countries in the world and take leadership, and it will adhere to our lasting benefit. Yeah, and I think actually the one thing that needs to happen now is we need to find a mechanism to engage a lot of brain power in the U.S. with our allies in Asia and in Europe and Latin America and begin to think about, okay, what does the world order look like, need to look like in the future? What do we need to transmit in terms of information and the building blocks to the next generation? We can't sort of just say, well, we have despair over the turmoil in American foreign policy because actually it's not, you know, it's got a lot of good features to it. It's a question of giving it some more coherence and sort of building the capability and understanding, educating the American people. So as the next administrations come into power, that they begin to grasp some of these things. Well, Lou, you know, this is a thread I'd like to cover going forward. There are so many things to discuss, so many implications to connect with us, and I hope we can do that on the shows coming soon. Absolutely. We are loaded. Our plate is full, Lou Puglieri, CEO of E-Pring. Thank you so much for joining us. Okay, Jay, thanks so much.