 Aloha, I'm Jay Fidel, here with the Three O'Clock Rock on a Wednesday. I am the host of Energy in America, which plays bi-weekly on Wednesday at 3 p.m. Our guest and co-contributor on this show is Lucian Pulireci. He's the CEO of E-PRIG, an energy policy think tank in Washington, D.C. Welcome to the show yet again, Lou. Welcome. Happy to be here. You know, this has been an active week in terms of Mr. Trump's appointments and suggestions of appointment later, and we're surrounded with news about his most recent ones. He has announced that he'll be appointing Rick Perry, who was Governor of Texas for 14 years, as Secretary of Energy, which is a critically important post for you and me and everyone. And he's also announced that he is appointing Rex Tillerson, sorry, the CEO of ExxonMobil as a Secretary of State, also Ryan Zinke for Interior and Scott Pruitt for EPA. All of these things play on energy. So at this point, we'd like to know from you how these things will play on energy and what, if anything, we should be thinking and doing and how the community should react. So let's start with Governor Perry. Okay. Infamously in 2011, couldn't remember the name of what agency he wanted to eliminate, which was the Department of Energy. Yes. But the Department of Energy, people may not know, this has about a $32 billion budget, but a $12 billion of that goes to the, essentially the bomb program and the building up of Naval to the reactor. So about $7 billion goes to clean energy. And there's a lot of discussion about Perry as a climate denier. He's probably not a big fan of climate control policies and things like that. But what's interesting is Texas probably has the most successful wind and solar program in the USA. They spent their well over a billion dollars building out their grid. They have the highest level of wind and solar generation in the West. He was very supportive of renewables. And he was there at the time all this was happening, too. He supported that. So he supported renewables really as a diversification strategy as a way more of a criteria of pollutant concern than a climate concern. A lot of people don't like coal because of SO2 or particulates, things like that. They may view the climate stuff as sort of unimportant, but they may still can support the renewables. Well, assuming it was left up to Rick Perry. Given his experience in Texas and the views he has expressed about energy, what's his profile look like? What would he do in office? So you know, VOE really doesn't have direct control over oil and gas development. It's really, oil and gas development is really managed by two groups. First access to public lands by the Interior Department and then the regulation of national elections by EPA. But much of the regulation, particularly hydraulic fracturing, is done by the states. But I do think that I would expect from Governor Perry to restore the role as DOE as the counterweight to EPA and whether he'll need to do that in the Trump administration we can talk about. But historically, DOE played a big, you know, EPA had often a very aggressive program to do X, O, Y, and the DOE folks would weigh in and say, well, you know, that's not really a good thing for national economic growth or for energy security. We think you should, we should gather in our agency meeting and talk about it. What has Donald Trump said about energy? I mean, obviously not as much into renewables as Obama has been. But what has he said he's going to do about it? I mean, we know he's made statements in favor of coal and, you know, some of the fossil fuels. But what do you think is in his plan? What has he said is in his plan for renewables? So, you know, President Trump speaks in very broad strokes, we might say. And he doesn't really have a specific plan. I think his basic, and you can look by the people he's meeting with. His basic approach is, well, oil and gas is a huge engine of economic growth. He's really worried about this low rate of growth. We have low rate, we have what many people might call a job filled non-recovering. Unemployment is down, but, you know, wage rates are stagnant. Generation rate is still low. We're not seeing, one of the reasons he became president, I believe, is we're not seeing the growth in wages and opportunities and the rust belt in other parts of the country. So I think part of his theme is to turn loose this huge engine of oil and gas development. And in that case, I think you will see things like the Keystone pipeline, the Dakota access pipeline, perhaps even more permitting breakthroughs and natural gas pipelines. This sort of thing, I think, is going to be much more aggressive in trying to approach it like a businessman. And he keeps saying, I'm not sure he really understands how all this stuff works together yet, but he does have a sense from talking to people that, well, you know, there's too much uncertainty in the permit, too much uncertainty in business development. And this ties all back to his strategy for a lower corporate tax rate to bring back the funds from abroad. And today he met with all the high-tech companies, Bill Gates and, I think, Bezos, Amazon. And basically said, look, I want to grow the economy, I want to grow much faster. I know you guys didn't vote for me, but let's talk about what we need to do. He's a very transactional guy. Yeah. Well, you know, one thing that came out today was that Janet Yellen said that the Fed would raise interest one quarter point. Does this have any effect on the, I mean, and the commentators are saying, well, it's not going to have much of an effect on the economy. But does it have an effect on energy, do you think? No, I don't think it, well, I think energy is almost, I mean, of course, you have to raise capital to make investments. But that is more determined by the price of oil and the price of natural gas. I mean, you can pass the hat at the River Oaks Club that used to get capital almost any day of the week to drill a hole in the air. Now, that's not exactly what's happened, but a lot of folks did it that way. So I don't think so far we're not seeing a shortage of capital. What we're seeing is a shortage of profitable prospects, but with the recent OPEC deal, the fact that oil prices appear to be settling around 55 to 16, EIA, in fact, announced this morning that this was the first month since the downturn that U.S. oil production had actually increased. Well, OPEC, so OPEC finally, I mean, they were trying to get themselves to all agree and to limit production. Now they finally did agree. How's that going to affect the price of oil at the pump here in the U.S.? So I think there may be somewhere between 10 and 15 cents there, but it really depends on how well this thing sticks. I remain suspicious that they can get a lot of yield out of this. The natural, the long-run equilibrium price of oil is probably somewhere between 50, 55 and 65, probably $60, and sometimes it will go over, and sometimes it will go below, and sometimes OPEC will be able to get it there a little faster, but that's where we're headed. But you know, it raises something that I think a lot of people forgot about, and namely that, yes, oil can go up, and some people are predicted, and a lot of people are predicted that it will go up. And now here's some proof that it is going up, and maybe this will make people more aware of the need to get into renewables to hedge against an ongoing increase in oil. So the U.S. now produces about 10% of its energy from renewables, right? But 78% of that, 10%, is from other sources than wind and solar. That means hydro, and maybe a little geothermal, and cats and dogs, woodbellets, who knows, stuff like that. So wind and solar, you know, people talk a lot about it. Its rated growth has been fantastic. It is still an extremely small player in the U.S., and, in fact, in some communication I did have with Governor Perry, I felt that as a follow-up for our discussion we had last week, which is if he's really looking for a mission on the research side for DOE, we need to address the intermittency. You know, they're probably going to get that budget cut, but if you really want the wind and solar to come in, it appears to be performed above what we expected. But it still doesn't, we still haven't solved the intermittency problem. And the only way we're going to solve the intermittency problem is to get the storage issue fixed. And the only way, that's probably, if it were me, I'd put more money into storage than carbon capture, than all those exotic enzymes and biofuels. Yeah, I agree with that. And the interesting point is that maybe it's a time to invest in storage, or invest in companies that are investing in storage. The other part of storage, of course, is all the software and the black boxes that connect the storage to the renewables and ultimately the grid. And we have in Hawaii a number of them that are trying to do that, and it's a software play. So I'm thinking that if I was going to commit, say, as part of my New Year's resolution in 2017, to invest in energy, that's what I would put my money. I'd put my money in storage, wherever in the world it was being developed. And I would put it in the black boxes and the software that will deliver the energy to and from the storage devices. Right, I still think that we still have a lot of advantages with this dispatchable problem. And only if you can get the storage down to be efficient. Cheat, ease of use, and address also the capital costs of the grid, only then will it compete on a pure economic realm with dispatchable power. Now, that's going to be the interesting thing about the Trump administration. Most of the renewable programs in the utility sector are renewable portfolio standards, subsidies driven by the state, by the states. I'm almost positive that you're going to see some retrenchment of the U.S. federal programs in those areas. How do you mean retrenchment? I mean, we're talking about going back, what's the extent of their mandates or other kinds of directives from the federal government? I think there's going to be a lot of pressure to pull back on them. Yeah. Well, let's have our own retrenchment here for a minute, Lou. We're going to take a short break. We're going to retrench. And I'm going to come back and talk to you about some of the other appointments that have come up in the last week or so. That's Lou Pulirezi of E-Print. We'll be right back on Energy in America. Hello, this is Martin de Speng. I want to get you excited about my new show, which is Humane Architecture for Hawaii and Beyond. We're going to broadcast on Tuesdays, 5 p.m. here on Think Tech Hawaii. Aloha. I'm Kauai Lucas, host of Hawaii Is My Mainland here on Think Tech Hawaii every Friday at 3 p.m. We address issues of importance for those of us who live here on the most isolated landmass on the planet. Please come join me Fridays at 3 p.m. Mahalo. Aloha. My name is Richard Emory, host of Condo Insider. More than a third of Hawaii's population live in some form of association. And our show is all about educating board members and owners about their responsibilities and obligations and providing solutions for a great association. You can watch me live on Thursdays, 3 p.m. to 4 p.m. each week. Aloha. OK, we're back, retrenched, Energy in America with Lucy and Pulirezi of E-Print, an energy think tank in Washington, DC. So Lou, you know, there were other appointments mentioned. Not only Rick Perry, but also the Secretary of State. And you mentioned that when we spoke. And I'm wondering, what is the connection, at least for energy policy, between the appointment of this guy, who is the CEO of ExxonMobil, and the Secretary of State? How does the Secretary of State? How could he, would he, might he affect energy policy? So historically, there's been, at least in the recent history, there's been two or three ways the Secretary of State plays in this particular sandbox. First, we are, the State Department is responsible for negotiating international agreements, for example, coordinated drawdown of the strategic patrol in reserve and eclectics through the International Energy Agency. Under the Obama administration, Secretary Kerry had a special envoy for climate. Indeed, interesting to see whether that special envoy for climate will continue in the next administration, which is curious about this, because Trump himself said climate was a hoax. But Rex Tillerson's company, and Rex Tillerson, supports three things. He supports a carbon tax. He supports the Paris Accord. And I think he supports doing some carbon capture and storage for natural gas production, natural gas combustion. So it's going to be quite interesting to see what happens when he goes up for Senate confirmation. But the biggest problem he has, it seems to me right now, is that he is viewed as having a close relationship with Vladimir Putin. And the House Foreign Affairs Committee has started to raise a lot of concerns about this. So you'll want to watch the hearings with great fun. Well, there was an article in The Times, a very well-researched article about what happened with Putin and manipulating the election electronically. And it's pretty scary. I mean, before it might have been just a suggestion. Now there seems to be really legs under that argument. And I think it has a way to go before we find out what happened. No, I'm sure it seems as clearly as the educated Senator McCain, Lindsey Graham, and some others on the committee. So I think they will be, that's a sort of separate drill. It's really not a Tillerson problem. I do think, though, it's going to be very interesting to see what Tillerson says about both energy policy and about Russia. I think this question that he's a good buddy with Putin is way overdone. I mean, they hand out those awards to anybody who helps out Russia as part of a deal. It's not that big a deal. And Rex Tillerson's a very smart guy. I suspect his testimony will go quite well. And he is supported by the majority leader, Macon. So what effect? I mean, it's a really interesting question to raise that somehow, in some way, the Secretary of State would have an effect on global energy, energy policy, the allocation of resources, the price of resources. Does the Secretary of State have a real hand in that? Because if so, we should be looking at him from that point of view. And I think his levers are really in international cooperation, contingencies. Actually, the State Department did try to encourage some tech transfer for hydraulic fraction. They encouraged the polls. They created various seminars and workshops so they could have access to the understanding of the technology. And in a general sense, the motivation behind that was to expand the world production of natural gas as opposed to coal. Well, let's move on to a couple of the others now. I'd like to talk about Scott Pruitt. Is he the one who is appointed to the EPA, I'm thinking? So Scott Pruitt, yes. And he was the Attorney General of Oklahoma. Oklahoma, lately famous for the earthquakes, 600 or more per year. And there are a lot of academicians anyway, geophysicists, who were saying that's a result of the fracking there. So this is not quite specific enough. It is true that there are a lot of earthquakes related to oil and gas production in Oklahoma. But this has to do almost entirely with the reinjection of produced water. So this can be fixed either by recycling the water or more careful geologic assessment in selecting which wells you re-inject this produced water. Well, as a secretary, rather as the Attorney General of Oklahoma, that he express or develop any particular position on this environmental question over the earthquakes. Because now he goes to the EPA, and is he an environmentalist or the other? No, I think he is a traditional state's right federalist, in the sense that his view is, Oklahoma's been producing oil and gas a long time. So we don't need some disconnected bureaucrat in Washington DC to tell us what to do. We're responsible to our local population. We're responsible to our local businesses, our own tax revenues. So why does the government, why does a federal government want to come to Oklahoma and tell us how to produce oil and gas? I think that's really where he is. I think the only issue of how they've regulated is the separate issue. Without him, when you watch him operate, I think that's going to be a theme. People are down on him because he's against the clean power plan. But they forget 22 other states have joined him in that suit. It's not really alone on this issue. Donald Trump has said that he's going to shrink the EPA, pull its wings off, make it smaller, deep-funded. I don't know what. And so this is an interesting job to get. He might be an undertaker rather than an administrator here. A lot of people have come to Washington trying to shrink agencies, and that fails. It's not that easy. So what do you think that Trump is going to, given this appointment of Scott Pruitt and his predilections and Trump's view of the EPA? And some people, reasonable people, including people who wouldn't ever have voted for Trump, agree with Trump on the EPA. Don't find that it's a successful agency. Some people feel that it's failed in its mission. It isn't worth the money we spend to keep it going. What do you think is going to happen to the EPA, all those things considered? Well, I think it's going to be a huge fight. And the environmentalists are extremely well organized, extremely well funded. And what might be good about this is if we begin to have a real debate on the science and issues we talked about previously, are we spending too much at the margin? The story of the Mustang driven by Steve McQueen that we talked about last time. The whole question of what's a more cost-effective way to do these things? What's the right role for the states? What's the right role for the federal government? I think all of this stuff has not been able to have that debate in the Obama administration. We're going to have that debate. Well, OK, and this evolves. Our discussion, Lou, you and me, our discussion evolves. And a few weeks ago, the rest of the country were in shock about what happened. And we're following it. And now we have some of the, you know, the flesh is going on the bones. We see these appointments. And the other one we don't have time to talk about is Ryan Zinke, Department of Interior. But all these things considered, you know, we're, what, a month away from inauguration day. And I wondered, you sitting there with your Hawaii shirt, University of Hawaii shirt, but looking into Washington, looking across the street through the government, sitting in the lap of what's happening. I wonder, it's a personal question, but how do you feel about things? How has your thinking evolved in terms of what we, you, can expect, what energy can expect from this administration? So, you know, I'm pretty realistic. I've been here a long time. And, you know, the bureaucracy can blunt a lot of sharp lances. But I think this could be a quite exciting time if they're able to figure out the levers to expand economic growth. Once we start expanding economic growth, they won't have some money to talk about. Different things we might do that make sense. And I think almost everyone wants money. So, you know, almost I'm going to agree with you. We could probably make the government more efficient. There's probably a lot of dumb things that government does. And maybe this is a shot to fix some of those things. I so enjoy these discussions, Lou. So, that's Lou Plurici of E-Print, the energy policy think tank in Washington, D.C., talking about energy in America, as we will again in two weeks from now. Let's see, that will take us not quite to the end of the year, but at that time we can, you know, see what else has happened, what other appointments, what other revelations and tweets we have received, and we'll compare notes again on the subject. Thank you, Lou. Great, I'm looking forward to today. Aloha. Aloha.