 David Henderson is a long-time friend and colleague of mine in the libertarian movement some of you may remember his articles in reason and libertarian review He was a delegate to the 1979 and 1981 national LP conventions but he's also been very successful as a An entrepreneur and an ideologue in the larger world I think you I really regard him as an academic entrepreneur somebody who's never stayed at one school Long enough to get tenure and settle into a comfortable life, but keeps going out and doing interesting things in journalism and academics and government He's I've been told by former students of his that he's a very good teacher I've seen his work in government Most relevantly, I suppose for today's speech He was the energy economist on the staff of President Reagan's Council of Economic Advisors And I don't know how much role he played in it But you know one of the few successes of the Reagan administration really was energy deregulation and then refusing to Reregulate at various times when it was suggested David is currently a professor at the Naval postgraduate school here in the Monterey area Although it should be noted that whatever he says today does not represent not necessarily represent the views of the Navy I hope that will be obvious He also is a frequent book reviewer for Fortune magazine if you read the back of the book in fortune You will see his name frequently. I remember particularly his review of Robert Higgs's book crisis and Leviathan I cite Higgs's book frequently in my own writing and I never turned back to the book I just look at David's review, which is stuck in my copy and it has all the essential details So that always reminds me of what Higgs said He is currently editing a forthcoming book called the Fortune Encyclopedia of Economics Which will have articles by a number of distinguished economists Ranging from people like Robert Eisner on the left to Murray Rothbard on whichever direction that is With people like William Niskanen and Milton Friedman also included so it should be a very interesting book most relevantly for today's talk he wrote an article in the Wall Street Journal last August on the Saddam Hussein's oil weapon the threat to Western oil prices and access to oil It got a lot of attention. It got an article in the Washington Post on the editorial page about the argument He was making he was on CNN and other broadcast programs And he has talked about this subject quite a bit since then so it's pleasure to introduce to you David Henderson That's about one of the nicest introductions. I've ever had thank you David It's nice to be back speaking before a libertarian audience. It's been a long time It's fact. It's been I think about ten years And I noticed one big difference when I was here for David's talk Whenever he made some joke about politicians everyone laughed You know and and whenever he mentioned about you know how the government doesn't provide things very well produced things very well People understood what that meant and why that's true and if there was a joke in there they laughed And I must say I've felt lonely at times And this reminds me this is this is satisfying at least one part of my loneliness being with people who have Who see the humor in many of the same things? I see it in I was watching the news a couple of months ago just local news local newscaster here and I live in Monterey by the way and The the newscaster was just announcing that Germany had said that day that we're gonna send a lot of food to the Soviet Union And let me just try to imitate what the announcer said he said and The German government has announced that it does it fears the food getting into the wrong hands So it has been it is having the food distributed by the KGB. I mean this man did not crack a smile and That was scary As David mentioned I teach at the Naval postgraduate school, right about 200 yards from here actually and a Lot of missed a lot of preconceptions about military people bit the dust when I got there six and a half years ago My not the world's preconceptions my preconceptions They're much more human military officers than you might think in fact, they're totally human They have concerns they can be warm and For the because of a lot of experiences I've had with them I Have a I feel like I have a real personal stake in this that I Really don't want to see them killed and I know and I'm one I'm waiting for the first announcement that someone who I taught Was killed or captured. I think the odds are low actually But I know it could happen. I know that a number of my students are over there, especially my marine students So that's kind of my own personal interest in this why are we at war well president Bush and Secretary of State Baker Made that very clear very early That one of the main reasons we were at war was for oil. Let me quote President Bush said on August 15th That if sedan gets greater control of oil reserves in the Middle East He can threaten quote our jobs unquote and our way of life how by controlling the flow of oil and raising the price He said in a guest article in Newsweek in November Our national security is at stake Can the world afford to allow sedan who's saying a stranglehold around the world's economic lifeline? That is exactly what would happen if we failed Saddam would dominate the Gulf and the bulk of the world's petroleum reserves Even now without an actual shortage of oil. Saddam's aggression has almost doubled oil prices Secretary of State Baker has said similar things He said that Saddam quote could strangle the global economic order Determining by Fiat whether we all enter a recession or even the darkness of a depression and Then on November 13th Baker said to bring it down to the average American citizen. Thank you, mr. Secretary Let me say that means jobs if you want to submit that is the justification for intervening the Middle East up in one word It's jobs, and I assume he didn't mean his own So then let me ask the question If Saddam Were unchecked by the United States Could he impose large costs in our economy? Both Bush and Baker have said that he can Economic analysis says No way first of all one thing Saddam cannot do is Cause a shortage is cause us to line up for gasoline Only the US government can do that the US government did that in 1973 and in 1979 How by imposing price controls on oil and gasoline? They impose price controls that kept the price from adjusting to reflect the lower supplies as a result people demanded more than was available and We had line-ups people lining up sometimes for as much as two hours to get gasoline Countries that avoided price controls Switzerland West Germany avoided line-ups. It's even rumored that in 1973 Service station attendance in Germany continued to wash windshields. That's no surprise. It's no surprise that Price controls cause shortages and that get it and just avoiding price controls means you you don't have a shortage Because if you avoid price controls and supplies fall what happens? The price is bit up People look at a higher price and make different decisions about how much oil and gasoline to use and they would have made at a lower price They close off unused room They Take fewer driving vacations They combine trips to the store and so on and notice something interesting there all of those examples I gave are adjustments people make on their own No government policy is required to adjust to the higher price of oil So the the there's a there's a lobby in Washington called the cafe lobby Ralph Nader is part of it other Environmentalists are part of it and they're pushing for a higher cafe now That's not something you drink in a coffee shop that stands for corporate average fuel economy And the idea is to require the auto companies to produce cars that get a higher average fuel economy Now that's the kind of thing higher average fuel economy that would occur anyway if the price was expected to stay high People would make those kinds of choices But by requiring it Estimates are from a study done by an economist at Brookings and an economist at Harvard that it will cost about 2,000 lives It will kill 2,000 Americans Because auto companies will respond to higher cafe By cutting the size of cars and all of the things equal smaller cars are less safe than larger cars Which incidentally I Did a piece on Ralph Nader for Barron's a couple of years ago and I managed to Get to interview Nader directly on the phone. We ended up. It wasn't an interview It was an hour and a half argument And I was trying to get him to admit that a smaller car is smaller than a large one He certainly believed that when he trashed the Corvair And he wouldn't because he knew where I was going and I try to get Clarence Ditlow to do the same and If any of you are interested Give me your car and I'll send you the the result I base anyone who looks at it could see they admitted it Ditlow finally said to me when I said do you think that a large a small car isn't Is just as safe as a large car and he said a small car with an airbag is just as safe as a large car and I said a large car with an airbag and Then he said you simply are not going to get me to admit That's the cafe kills people Now of course sedan doesn't doesn't have to cause gas lines to hurt our economy if he cuts the supply of oil that will hurt us We are a net importer of oil We import roughly half our oil eight million barrels a day and just facing a higher price for something we buy Hurts us But the hurt is much smaller than most people think Let's look at some numbers and take What I think is the absolute worst case possible Which is that sedan not only keeps Kuwait but Grab Saudi Arabia and the United Arab Emirates if he did that he would control all oil production in the Middle East Except for that of Iran Well, that's 12 beat before the crisis that was 12 million barrels a day How much would sedan produce after he grabbed it? Who said that good answer 12 million barrels a day is probably the best estimate why? because There's already you might think well if he grabbed it the cartel would be strengthened and on his face That's plausible. I don't think it's true though Because the Saudis have always been what are called the price hawks in the open cartel The Saudis are newfound allies have always been the ones who wanted a higher price and they argued for a lower price Down to they all they're trying to keep it at $20 a barrel roughly Because they have now come to realize that if it's above $20 for barrel for more than say half a year at a time It will give people too strong an incentive to invest to make long-term investments in other alternatives And that will therefore reduce the value of those reserves in the future So if Saddam is smart and no one anymore is saying that he's not He would price it he would produce the same amount of oil to set the price at the same level and and That means no impact on us, but I went further in my Wall Street Journal article I said, let's say he cuts output by a third. That seems pretty extreme. Let's say he cuts four million barrels a day Well, that sounds like a lot a third but That's only seven percent of world output now if you cut output you drive the price up How much so know that you have to know the elasticity of demand And it is true that oil is a good whose demand is very inelastic Which means to translate that jargon that a lower supply translates into a fairly high price So I use Department of Energy estimates on elasticity to say what would be the effect on price and Doing that it translates into a $10 increase. So we're talking $20 roughly before the crisis $30 if he took over remember not just Kuwait But United Arab Emirates in Saudi Arabia How much would that cost the US? $10 a barrel Now we're into something that all those high school students could could have learned if David had had his way with education It's multiplication $10 a barrel 8 million barrels a day 365 days in a year it works out to 29 billion dollars 29 billion dollars Every year That's not small change But we've got to say is I mean to say whether it's large or small we have to compare it with something Well, let's do a couple of comparisons The US gross national product is 5.4 trillion. So 29 billion is A half of a percent of our gross national product a half of a percent For the effort for per person it would cost a hundred and twelve dollars per year It doesn't sound big. It doesn't sound if someone said our our GNP fell by half a percent You wouldn't say oh my god We're being thrown into a depression It just that's just not so and Let's do another comparison because it's not as if we can just snap our fingers and Stop who's saying we know that So let's compare the cost per year with the cost of our military action The cost of that Latest estimates are for the first for just three months the three months of the war with in which they think in which time They think they can win it 56 billion dollars Now granted you're comparing Let me not not granted. Let me tell you the argument that a bunch of economists have made against me And then I'll tell you my response They've said look you're comparing a one-time expenditure 56 billion with 29 billion a year So 56 billion looks smaller if you take the present value of that 29 billion annuity And if that were it if it were that simple that would be right But it's not that simple because if you stop who's saying You aren't just going to leave Baker has said this we're going to have a permanent military presence in the Gulf and that will cost something Moreover, let's look back at some history not that ancient history to use Jimmy Carter's term Some history about the Carter administration Jimmy Carter was so upset by what was happening in the Persian Gulf and by his inability to control things that he put together Something called the rapid deployment force the explicit purpose of which was to go to places like the Middle East Mainly the Middle East in the event of a crisis The rapid deployment force was transformed in the Reagan administration same goal just different name into something called sent com Sent coms budget according to Earl Ravana. All is about 46 billion dollars a year and Remember the whole purpose of it or the almost The almost the whole purpose of it was to be able to handle these kinds of things So now we're comparing an annuity and an annuity and which one's bigger I want to say something else at this point because I want to Sometimes you'll hear analysis like this and they make sense and you just and you think well, why can't other people see this? Why can't you know, why can't other economists see this? Well, there's no you don't have to you don't have to ask that other economists do see it Jonathan Marshall Road or no, he's the economics editor for the San Francisco Chronicle wrote an article in the San Francisco Chronicle About my piece that Kato put out a longer version of my Wall Street Journal article and he interviewed James Tobin a liberal economist at Yale who won the Nobel Prize a few years ago and Milton Friedman a libertarian economist at the Hoover Institution and He quoted and he said here's what Henderson found. What do you say? Tobin stated There are other ways of coping with 30 or $40 barrel oil than going to war The ultimate loss to a 5.5 trillion dollar economy is less than 1% It's hard to say we should go to war to save 1% of GNP Sound familiar? I Want to take a little credit for that. I had called Tobin and tried to get him to sign a petition On this issue and he I sent him copies of my analysis and we talked about it. He seemed convinced Friedman said Henderson's analysis is correct There is no justification for intervention on grounds of oil Friedman stated further the Saddam's revenue maximizing price quote would be higher than a competitive price But not that much higher and certainly not enough to justify what we are doing in the Middle East. I Want to say by the way in case anyone takes the wrong message from here Friedman favors war He's real clear on that But as far as is there an economic justification the title of my talk is do we know do we need to go to war for oil? The answer is no. I'm saying no. He says no. He favors it on other grounds Another thing that I just came across this week the International Monetary Fund put out a study in October With estimates very similar to mine of the cost of that amount of oil to the economy So it's really not even that controversial. I Was actually I mean I'll take some credit here I was just the person who sat down and said what are the numbers look like? No one else had done that now. There's a related issue That comes up Bob Samuelson who's a very sharp economics columnist for Newsweek Wrote a piece on this issue and he said well, it's not really an issue of the price We don't you know that kind of analysis is right. He quoted William Scanan of the Cato Institute with a similar analysis to mine But he said the problem is availability if Saddam took over all that oil he'd stop us from getting it uh-uh We learned that in 1973 in 1973 OPEC Embargo'd the Netherlands and the United States They said we will not sell oil to the Netherlands the United States So what happened? Wow good oil is fungible, which means what it means they sold it to other people and It was resold to the United States You cannot impose a selective embargo on oil. It cannot be done And in fact what happened was you sell, you know think of how the oil market works you sell oil to someone It he someone say in England that person owns title to it puts it in the tanker It's crossing the ocean and then transfers title. It doesn't have to come somewhere else It just keeps coming straight to the United States and in fact the ownership of a tank load of oil often changes Hands a number of times while it's being shipped Now I Want to go back to that quote from Bush also because there's something else that's really It the Americans American public is being misled a lot on this and I just think it's important to set it straight And unfortunately here I have although I think Michael Boskin Who is Bush's chairman of the council of economic advisers is a first-rate economist and he's very good He's been not completely forthcoming on on on on this item Let me just read that quote from Bush again Who said even now without an actual shortage of oil? Saddam's aggression has almost doubled oil prices It's a dam's aggression Who imposed the embargo? The United Nations The United the embargo is what increased oil prices because the embargo was not a selective embargo It said Iran Iraq and Kuwait cannot sell oil So it reduced the world supply and that drove up the price Now that was one of the one of the things driving up the price the Saudis though picked up their production and Made up for most of the most of the reduction in supply Nevertheless the price was higher. What else drove it up fear of war well Takes two to tango Takes two to have a war so dams a direct aggression which was war it was war in Kuwait, but it was resolved Isn't what drove up isn't what caused the fear of war it was it was Bush's statement that we're willing to go to war and The price of oil on the futures market rises Every time it looks like the war will last and falls every time it looks like the war will be resolved quickly Because it's very hard to produce oil when there's fighting around the oil wells And just so I can explain what I meant about Michael Boskin Michael Boskin was on I'm a C-span junkie sometimes and he was on talking at the National Press Club and he just made a very casual statement that that the that the Something like Bush's that the that sedams You know aggression has has has caused the price of oil to go up and I think he knows that that's not true Now if I I've basically covered what what the title of my talk was about do we need to go to war for oil and my answers know And I guess I could stop but I Would like to get into some of the bigger issues if I have time do I have time? Okay? There are other arguments that have been made for war One is that the added oil wealth that sedan has grabbed from Kuwait will make him well wealthier and therefore more dangerous And by the way, I totally agree with that argument. He will be wealthier and more dangerous But how much more again, let's look at numbers The GNP of Iraq before the war was 60 billion dollars That is 1% of ours. It is one-fifth of our defense budget The GNP of Iraq if they kept Kuwait and been able to just go on producing oil and not fighting Would have been an extra 30 13 billion dollars more per year So then it would have been one and a third percent of ours Now if he grabs Saudi Arabia and the United Arab Emirates, it would have been an extra And then and also raised the price it would have been an extra 70 80 90 hundred billion So then it would have been four percent of ours. I Mean the idea that somehow this guy is going to be like another superpower is Absurd and let me also say that it I don't think it's a good argument to say added oil wealth Makes someone dangerous and that justifies going to war with them Imagine the following imagine that because what I gave an example where he's where he say quadruples GNP Well, imagine that he quadruple GNP with a laissez-faire economy Which would happen over time but but also had this Predelection to invade other countries at the same time and do all these crazy things on the military side What would we say? Hey you impose you you start a laissez-faire economy. We're gonna zap you. I mean is that how it would work Now the other argument Or so and another argument that has been made and it's it's the other one that bush has emphasized And I think it is the strongest argument is that this guy Aggressed against another country. He violated their rights incredibly and we've got to say to the world You can't get away with that kind of thing and that's what this is about and let me just say I I've I'll be totally honest. I've gone back and forth on this myself on whether that's a good enough argument So I can I can tell you my my thinking of the last 24 I'll tell you all my thinking but but my bottom line of the last 24 hours and By the way, I want to I want to state the best case I can and bush didn't say it as well as Tom Hazelt said it in a forthcoming reason article in the April issue And Tom gave me permission to quote this if there is a minimum civilized bound. You've got to say Saddam Hussein has crushed it Here the world has both abundant cause and abundant ability if we look away here. We look away anywhere The line surrounding acceptable conduct has been terribly stretched in this century But now a line can be drawn around Saddam Hussein If the world can't deal some justice out of this hand There's no point in reshuffling just leave the table quietly Failure to respond to this test case of incoming barbarity sends back a very clear signal to the world's crazies huddled in the in the Middle East Anything goes the world has no insanity defenses in place I'm not so sure that's wrong. I Think it might be a signal that as far as the United States if we didn't go over there That as far as the United States is concerned. We're saying that's not our business But here's my problem with that argument It's acting like there's only one other country in the world besides Iraq and that is the United States Take a look at the globe and everyone's been doing that lately and by the way I forgot to bring it, but I was gonna hold up a picture of the Middle East and tell and see if the person Halfway back in the room could show me could tell with normal eyesight where you can see Kuwait If you if you start thinking what countries are threatened By Iraq by a more powerful Iraq and how much is the threat? It's hard to find a country that's safer than ours I was at at the Cato symposium on this last month and there was a British journalist from the financial post on on the on the ah bill Can you see Iraq or can you see Kuwait? Raise it up a little bill. Well if you look at the Persian Gulf, it's right at the end on the left Um Where was I? Oh the British columnist and he said, you know These things are so abstract to Americans Because they don't really deal with it They weren't really gonna have planes taken out by this all this stuff in the in the airports. It's really nonsense Whereas in Europe people really do have this happen and he pointed out that London is much closer to Baghdad Than Los Angeles is to Washington DC You know and that that's where it's happening So it's really hard to make a case that there's a vital interest of the United States there it doesn't mean that there's that there's not a strong case against making war with Saddam Hussein and I think other countries would do it and they wouldn't do it necessarily and by the way I want to thank David David and I were talking about this at some length last night David Bowes and I was thinking well, you know Saudi Arabia has 35,000 troops. Saddam Hussein has a million. I mean, how could they handle it? Well, David taught me an economics lesson about incentives Why does Saudi Arabia have 35,000 troops? Because they know that the United States will defend them if anything happens And so yes, I guess it's conceivable in the short run You could Lou that's that Saddam could take over Saudi Arabia and maybe maybe a couple of other countries But what a signal that would send to the world To any other people expecting the United States to defend them consider the alternative Which is what we have now where we say hey, this is a new world order Okay, this is a statement. We're not just making a statement about what we're going to do to Saddam Hussein We're saying here's what we'll do if this kind of thing happens anywhere That's been Bush's whole thing that we're trying to make a stand trying to make a statement Well, the statement is totally incredible if you just single out who's saying and don't ever go anywhere else People will pick that up pretty quickly too with the next invasion of some other country So what it means is the United States is taking on a commitment to do this again and again and again And it's just hard to see why that's why our taxpayers Should be burdened with that How about the fact of Saddam's terrorism and clearly he is a terrorist Well again, why single out that one look at look at What a sad the dictator of Syria is doing? He's taking over Lebanon He is on the US governments official list of terrorists and he is now a US government ally in what in What George Bush has called a? Battle of good versus evil black versus white Now there are more emotional arguments that get used for war and One was made there's a woman who writes for the new Wall Street Journal Dorothy Rabinowitz and she's very sharp And I like a lot of what she writes But this one I didn't She said that she was an article on the POWs and the war protesters and how until the POWs came along the war protesters we're getting all the coverage and She quoted senator McCain from Arizona as saying that the treatment of the POW should convince all anti-war advocates to favor the war Huh Let me get this straight seeing US officers on TV who are obviously abused by their captors Is what's supposed to want us to to to favor war we should like I mean That's a good thing. I mean that wouldn't have happened if we hadn't gone to war. I mean, it's really strange in short There's a slight case for war, but I don't think it's nearly strong enough Now this is the point in a talk where some speakers would say But even though we should have not gotten the war I support the president I support our troops and we must close ranks and see this through to the end I'm not gonna say that Instead my position is this oh, and by the way, I want to say that I do support the troops Tom Hazlett who wrote that article I quoted in favor of war was was joshing me the other day on the phone He said don't you support our troops and I said I support every one of them. I want them all home alive My position is this we should get out of Saudi Arabia tomorrow and we should disband the part of our military We'd already set up for dealing with crises in the Gulf so that this doesn't happen again I don't want to disband the whole military. Yes George By the way, I want to say you're welcome and thank you for saying that okay I don't know because I'm not in George Bush's mind. Okay, but hell I can speculate, right? I think it's bait and switch You know what bait and switch is someone says I got this great deal come down look at it You've already have made the car taking taking the time to come down. You look at it Isn't there and he tries to tell you something else if you look at the emphasis on oil in the first month If you look at reasons the the emphasis was on the oil reason However, and it was real interesting. I got on CNN of the Washington Post wrote a whole editorial around my piece making the same point Three days after my piece appeared CNN had me on the next day and Jordan James Baker testified the day after and They really started that was about when they started down playing the oil thing the oil reasons and for a while it became reason of the week You know what what is it this week and what George Bush has settled on and by the way? I think he believes this I don't I don't think it's dishonest is The aggression against Kuwait and how we've got to make a stand against aggression But I don't think that he felt he could sell it to the American public On those grounds alone now he can there's this there's this kind of There's a real inertia when it comes to war people tend to get on the bandwagon once it started and now he can emphasize aggression. I Think that was the reason all along Alice David Bose by the way had wrote an editorial saying something like that and and I well Maybe I want to have a job to go back to but I Think there's a lot to that If you look at who really was pushing hard for war It was Colin Powell Colin Powell head of the Joint Chiefs of Staff. He had a war plan Ready to go. Excuse me. This is really distracting. Would you mind? He had a war plan ready to go within hours of the takeover so he was set for it Now, I mean that in itself isn't enough evidence because I'd want mice if we really were threatened I'd want my soldiers to have plans ready too for various eventualities, but I mean, I don't think we're ever gonna know I mean, I don't think Colin Powell knows You know what I mean? I mean it would take a lot of honesty a lot of real self value self a real self look to know What we can say is that that is the effect the effect is the peace dividend is now gone and And who knows longer term? That's there was a guy that yes you back about you have your hand up longest you He said basically the same argument is the one I quoted from Tom Hazel Good question. If I were you I'd ask people who make that argument. I'd really like to know the answer. Yes You and then you afterwards Yeah, by the way, my Wall Street Journal numbers are a little off I did them on an airplane when I was away to Canada for a holiday and I didn't have the numbers handy Yeah, I don't think so Well with my estimates of elasticity. No, it wouldn't pay them to They could make a lot of money at 10, but they could make more at 20 and even more at 30 But but let me just also say that Even see the other thing and again, it's a reasonable argument. I just don't think it's right that If he took over all that oil he could make a lot more money than he's making now By cutting output way back and driving up the price to 50 and that's true He could but I'm saying he could make even more money by selling it at 30 Yes Good, I'm glad you raised that I was part of my prepared talk and I didn't look at my notes much So I forgot to what he was saying was that 29 billion is the cost the first year But it's gonna be lower the second year because over time there are more possibilities for substitution You might just drive your car a little less now, but when it comes time to get a new car Say two years from now, you're gonna make a different decision. We are still by the way adjusting We are still in our long-run adjustment to the increase of the price of oil in 1973 Because buildings last 50 or 60 years and we're still in that process buildings our old building stock dies and new ones Are much more energy efficient. So we would go 29 billion something less than 29 something less than that and so on over the years And I haven't really worked it out because I get skeptical the longer out it gets My guess would be the present value of the cost to us Would be 200 billion No, yes. All right, John. You've had your hand up. Do you want me to read you her answer by the way? April Glaspie who was the U.S. Ambassador to Iraq met with Saddam. He called her over there on July 25th a week before invading and They were talking about this and that and here's what she said This was the transcript that the Iraq's Iraqis Released and the U.S. government has not questioned its accuracy We have no up. This is her. This is her talking to him. We the United States government have no opinion on the Arab Arab Conflicts like your border disagreement with Kuwait That's what she said and James Kelly said something similar a few days later to Congress. So he was told you've got the green light But no, I don't think I think it's It's a classic example of central planning Foreign policy is the ultimate in central planning You can't keep track of everything at the same time and and the way the the way the media and the pundits put it was Kuwait was off Baker's radar screen. He wasn't looking at that one and it just happened Yes, you're next I'm sorry We have Let me give you a couple of numbers and let me and let me take issue with one of the things you said the Arland-twisting and Samuel van Bactor Claimed that a price their energy economists in Seattle and by the way, they've had a very good track record unlike most energy Economists in the late 70s and early 80s at predicting oil prices most people were predicting if by the way just to put the price in perspective the price now the highest it made it I believe in the last few months was thirty eight dollars a barrel and Thirty eight dollars a barrel the high it reached a price as high as $52 a barrel in today's dollars in 1981. So we've been there before But they twisting and van Bactor Estimate that at a price much above $20 a barrel there would be a lot of these long-term irreversible investments in energy Alternatives and the main one isn't all the exotic stuff. It's natural gas. It's there. It's cheap. It's plentiful according to the oil and gas journal Reserves of natural gas outside the US and Canada were equivalent to 80 years of production by the end of 1989 Throughout the 80s additions to natural gas reserves were three times annual production And it's used in almost all the areas where oils use. It's a great substitute Utilities now use half use less than half of the oil they use to produce electricity that they used back in 1973 they're using less than half of that now, but I don't think they did us a favor With the higher price of oil. It's always good to get something cheap and you know, it's like saying I you know You know the the neighborhood grocer raises price and I did go to you know I so I don't go to him I go to Safeway and I say thank you You know, I've just been putting off going to Safeway, but now have you given me the reason uh-huh The reason I was going to the neighborhood grocer was that he was cheaper or better or something I liked him better and by raising the price. He's made me worse off So it's not a favor, but you're absolutely right that We do have these alternatives the the strangulation of the US economy is not an issue here I promised Yes Well, you know, it's funny. I I sympathize with Virginia Pastrell because Actually, I'll can I tell you that's the story David about your what you said to me last night No, no about what you said to me about my position. Okay, okay, okay, I'm not gonna get Let me just say that if I had had to give this speech at about two o'clock yesterday afternoon I would have said something like what she said You know, I think it's a it's been a tough issue for me to figure out where I stand except that one thing I would not have said in case you didn't read it by the way, I haven't yet going with what David quoted to me She said that well on the one hand They're all these good arguments in favor of war on the other hand They're all these good arguments against war and I don't know which way I come down So I guess I'll support the president Well I'd go the opposite way, you know If on the one hand there are these good arguments in favor of something and on the other hand There are these good arguments against something this is this is the voters rule by the way California voters followed all the time with initiatives you vote no If you aren't sure you vote no Yeah Well, thank you, thank you