 Sorry about the delay Lou, but we're good It's okay Okay, we're live. We're here. I'm Jay Fidel here on TinkTek And we're doing energy in America here at the 3 p.m. Block We have Lou Plurician from E-princk, which is an energy think tank in Washington, DC And Lou apparently in the last couple weeks got back He got back from Japan and he looks fine to me of no worse for the wear. Hi Lou I was actually in Cyprus last week. Oh, okay. You get around man. Yes last week there was a major conference on the resurgence of natural gas supplies from the eastern Mediterranean Interesting get a lot of gas in the world. It turns out. Yeah, I'm wondering just a Footnote is there were about maybe three four years ago. There was a discovery off Haifa that there was minutes in the Mediterranean that there was gas there and the Israelis were trying to find a way to You know mine that No, good the Israelis were at the conference and that project has gone to final investment Interesting. It's underway. Yes things are changing volumes will go into the Israeli power sector and They I believe had concluded I deal with Jordan of all things to shut gas to Jordan And in fact while I was in Cyprus Rex Tillerson called the president of Cyprus and The as you know Cyprus is divided under this old Turkish and Mr. Gringa who are the head of the unrecognized government of northern Cyprus To encourage them to proceed with the final agreement. That's good reconciliation Well, Greece needs a good agreement doesn't it Greece needs a boost for its economy and hope hopefully You know Cyprus really is an independent country British protectorate with a heavy Greek influence I guess so anyway, so coming back to the US and Still, you know observing the changes that are happening through the Trump administration You know, we were going to talk about the EPA the EPA Is is changing and Trump's appointment to the EPA Is has some specific feelings about about protecting the environment and maybe changing the regulations that existed before in the Obama world About the environment and my question to you has been, you know those changes around the environment ostensibly, I guess they would favor Fossil fuel would favor coal they would favor oil they would favor I guess gas too and I wonder what it looks like now that you're back in Washington Yeah, let's you know, I think in the devil's in the detail and all these programs and I would say that Yeah, whether Scott whether Pruitt, you know the new head of EPA really favors fossil fuels I guess you could say he has a more benign attitude towards it then Then his predecessor, but If you look at the his main approach is his fundamental approach is that I think he would argue that the agency became very preoccupied with climate and Let go some of the fundamental Requirements of the agency which was like clean air and clean water and the traditional Requirements that the agency is supposed to pursue. So I think that would be I Can't speak for mr. Pruitt, but that's what I believe he would say and that The agency is responsible for a lot of overreach Undertaking tests for which the Congress never gave them authority to do so and there are three immediate areas I think in which the So-called Overreach of the agency is being addressed and we can put this aside from the budget call The first one is the mid-term review or the mid-term evaluation For the automobile standards is a very complicated issue, but Under the analysis done by the National Academy of Sciences, which participated heavily The understanding was with that all the stakeholders the environmentalist the auto industry Would have until the spring of 2018 to evaluate The mid-term review and to determine whether the standard should stay where they are or go to the higher level that were required That were proposed under the rulemaking so and President Obama did not wait for the review for this was supposed to take place through 2017 He just issued the reg and as a midnight rule in Before he left office in December. So this is an area of which not just I would say the environmentalist Probably liked it, but the auto industry was very disappointed and lots of other for lots of other stakeholders who had a Who wanted to look at this standard more carefully and keep in mind that? Because we are entering and continue to be in an era of lower gasoline prices The EPA standard pushes the industry to build a fleet of cars that the consumers don't want to buy and That creates some potential for dislocations in the auto industry and if you think about President Trump The manufacturing folks in the Midwest. These are very strong supporters of it. So I believe that That standard may not be changed But I do think the review will be pulled back and the ex ante condition in which we would have a whole year to look at It will be restored Well, so, you know, where does it go on? You know the notion of climate change? Where does it go on? You know keeping carbon out of the air? Let's talk about that, you know People get you know, I realize that a lot of you have their hair on fire over this climate stuff And they're really nervous people forget, you know, the United States Never signed the Kyoto protocol yet. We far exceeded The implied requirements we would have had after it we far exceeded it Largely because the resurgence of natural gas So I do think we are going to an era here on I mean this question on climate Will we pull out of the Paris Accord? Does it matter whether we pull out of the Paris Accord is a more interesting question and that leads me to the second big issue Which is the so-called clean power plan That's very important that under the clean power plan the US Through another regulatory measures would have required all the regional utilities To comply with a certain standard of lower co2 emissions Yeah, this was this was in play in Hawaii for sure. Yes, but No one ever talks about even if you run the IPCC models the UN models No one ever discusses the fact that even a fully implemented clean power plan Would have no effect on world climate If you take the US piece and stick it into the model you cannot measure the difference Even if you even if you accept the model, which many people do not if you run it You can't tell the difference. So that whole program was based entirely on the benefits of Leadership Well, but but going back. I mean if you impose higher standards on the emissions from a power plant Then there should be a global difference. Don't you think I mean, I'm not saying one power plant's gonna change it or even No, I agree with you You know in theory, you're right, but the point is the US has made such remarkable improvement Through the marketplace through the use of additional supplies and natural gas that the incremental benefit From the clean power plant as measured in the climate models was close to zero That doesn't mean it wasn't worth doing or not or worth doing it. That just means that's what the data show And the basic position much like the president Obama's decision to kill Keystone and These other projects were based on well The US had to put on a hair shirt to show the rest of the world That we are prepared to do these things and if we're prepared to do these things Then you should go ahead and do them yourself. Okay. Yeah, but this was this Whether this is an effective strategy suggests to me is a matter of some You know facts For example, the Indian government has announced that they are not that impressed with our leadership And they are going to proceed and build a great many coal-fired power plants So I Gets back to an old argument. We have where should you put your money? Should you put it into adaption or choose you put it into climate mitigation? That well, that's interesting because I mean the leadership aspect I mean Yeah, if he came out of the bank and out in and and you know made that impression on around the world And even if not everybody followed even if some people followed it That you know that would have a positive effect, but it strikes me now That that that leadership doesn't doesn't exist That nobody is going to say well We're going to clean up our act because the United States has gone the extra mile Although I would say I mean you must know more about this, but some countries are cleaning up their act anyway They don't necessarily follow our leadership with First I would like to point out Carbon dioxide is an odorless and colorless gas. It's not necessarily clean or dirty It's you know, you could argue that Yes, if you burn coal you get particulate matter And it would be a nice thing if the Chinese would turn on their scrubbers and take the particulates out of the atmosphere Which apparently they don't like to do because it uses a lot of energy, but You're correct in that sense that some countries are proceeding with abatement strategies to reduce co2 Even though and we by the way, we will continue we've had the most massive reduction in co2 in the last 20 years probably outpacing any other country But going back to the point you made earlier, and I think it's really worth discussing at least for a minute That it's not so much Whether the United States will withdraw from the Paris Accord I mean Trump has said he wants to do that, but whether it will mean anything if we withdraw from the Paris Accord Suggesting maybe that it won't mean anything will it mean anything Lou. What do you think? No, I don't think I think that There is we talked about this. I think there is this sense of many supporters of Trump that You know a combination of bureaucrats academics with too much power The international association of name droppers the Davos attending elites have all conspired To take away, you know to prevent us from having anything bad happening And in doing so have prevented all the upsides and that this this kind of Atmosphere or can needs to be disrupted. I think this is what banning these folks want to do And so we were going to see a lot of this for a while One of the thing we talked about just before the show was permitting reform Yes, there's changes in the EPA about permitting reform and let's touch that brief briefly before our break So if you think about permitting Let's say you want to build an LNG export facility in Oregon, for example You have to get permits from the EPA the Corps of Engineers the Department of Energy the Bureau of Land Management the Fish and Wildlife Service and various other state and local agencies and I know for a fact that In a meeting with President Trump He met with a lot of senior Executives where they had this high You know this high-minded view about what we need to do to grow the economy But the folks from One of the major LNG exporting facilities said look we have a real project and let us explain to you How hard it is for example? We want to put a pipeline through Bureau of Land Management, you know public land in Western Oregon But we when we put that pipeline through we need to You know cut some trees down and But we're happy to mitigate that by bringing in other trees somewhere else, but oh wait a minute The interior department took all that land that could have been used to mitigate it and already put it in reserve So we can't find any reserve to do this So each step of the way and I'm not saying these are good or bad things. I'm just saying that If you want to grow the economy if it's important for you to get jobs And to have wealth creation you actually have to give people permission to break ground occasionally And if you don't give them the permission to do that Talking about a hotel in Maui or a pipeline in the US You're not going to get economic growth. You may choose to do that that you may think that's a good thing That's fine, but you need to confront that directly. Okay, and we need to take a break I really enjoy your comments. Let's take a short break. We'll come back and talk about oil in this in this country and the production of oil How it's going. Yeah, yeah, yeah, that's a good Aloha, I'm Bill Sharp your host Asia review watch us every week every Monday afternoon for exciting up-to-date information and analysis about contemporary affairs in Asia Aloha, I'm Richard Ermey. I'm with co-host Jane Sugimura condo insider Hawaii's weekly show about association living The purpose of these videos is to educate board members and condo residents about issues relating to association living we hope they're helpful and that they assist in resolving Problems that affect the relationship between boards and their residents Each week Thursday at 3 p.m. We bring you exciting guests industry experts who for free will share their advice About how to make your association a better place to live and answer a lot of very interesting questions Aloha, we hope you'll tune in back. We're live. We're here with Lou Plurici having a what do you call it hair down discussion? about energy in America and We talked about some of the things that have flowed out of if you will the changes in the EPAs and Now we're going to talk about oil. We're going to talk about the you know the oil production in the United States And I guess in the world, how is it doing and how is it affecting things Luke? Yes so as you know the organization of petroleum exporting countries were quite distressed when the price oil dropped down to $30 a barrel and Led by the Saudis and some other major producers and even getting cooperation from the Russians They've been able to cobble agreement together to curtail output but somewhere around 500 to 700 800,000 barrels a day This depends how you do the number and the price of oil has begun to settle around 50 to $55 a barrel But the interesting thing about this is As the price of oil has moved to around $55 a barrel US production has begun to recover and to recover at a very fast rate Much of this has to do with the Permian basin, which has what's so-called stacked plays that is you can produce from various zones, you know below the earth using hydraulic fraction fraction hydraulic fracturing and directional drilling and the productivity of the drilling rigs and the productivity of all the integrated technology Has continued to expand at such a fast clip That it now appears that the Permian basin alone could expand production over the next seven to ten years by ten million barrels a day at Existing prices. Where is the Permian basin? It's in West Texas largely And it's all on private land Which makes the permitting issue we talked about earlier much easier to deal with so if you have an oil so if you have a I mean this joke is is that if you think about Oil and gas development historically you usually search for a very large Discovery somewhere a trap somewhere Maybe deep offshore the Arctic this would take you eight to ten years to get going You'd have a lot of technical risk and a lot of financial risk But for shale oil and gas for unconventional reserves You can as they say pass the hat at the River Oaks Club in Houston Get enough money to drill a hole and in 30 to 60 days you have revenue pretty good So it's a very fast responding Technology and since it's on private land you don't have to write a national environmental policy assessment You don't have to visit a half dozen bureaucrats in Washington and beg for your permit you just Contact the Texas Land Commission and the Texas Railroad Commission which are generally very favorable to oil and gas development and You're on your way. So the fundamental structure of the of the technology the nature of how it's produced because you're producing from source rock not from Traditional traps and it's more like a manufacturing process all of this is starting to play out To fundamentally change the way we think about the world oil market. So and well, it's the American oil market That's interesting that we have this supply of oil And it actually affects pricing So what do you think that prices will go up or down at the pump now that we have this new level of production? Well, the Permian may be more productive than the other parts of the US and I know that the the head of OPEC who was at Houston this week at the giant conference They have down there Was trying to talk to the shale producers and say look, you know Be careful. You don't overdo it might undermine the price. But the thing is we have 8,000 shale producers in the US. You can't really negotiate with them in any meaningful way so And so the question is will the other big basins in the US and North Dakota, New Mexico, Wyoming, Colorado? They are not quite as productive as the Texas basins So they may they may decline or not do as well at these lower prices, but The introduction of these new pipelines of Dakota access pipeline I'm sure you've read about that which looks like it might be in operation in the middle of this month The chance to go forward with the Keystone XL pipeline is making the Transportation of crude oil through the North American continent much more efficient So the prospects for these other basins is looking quite good So I can easily give you a model of the world in which it says it doesn't matter if OPEC cuts back Their cutbacks in production, you know, they may keep the price from going to 30 But they're not going to be able to get it much higher than 55. Yeah. Well, then all this oil development in the US actually Helps in terms of our need to buy you know Oil from the Middle East. No, we have it. Yes, right now right now one of the things that we're concerned about is that the the Let's say the kerfuffle over manufacturing trade with Mexico and Canada some extent, but mostly Mexico not disrupt the energy trade Which is extremely productive and helpful to the US. In fact, if you took the US Canada and Mexico as a single country Those three countries together are consuming 22 million barrels a day But their net imports are only four million barrels a day and Those three countries in four or five years will be net exporters Combined that'll change things. You know around the world. It's already changing things rather dramatic and it will You know, we've had to kind of a monopoly in some ways or at least a large Economic force in the market from the Middle East This will this will change that now this this has deterred it substantially And here's the other interesting thing for all the climate buffs that are out there the surge in US gas production is Moving to Mexico and exports to Mexico on a massive scale and the Mexicans are backing out their heavy fuel oil Power generation facilities and replacing them with natural gas. Mm-hmm. Well, how does the natural gas? You know the Boom if you will in natural gas affecting this increase in oil production I mean, it's it's directly competitive in some areas of energy in it. Well oddly enough if you produce Unconventional oil you usually need gas to move that oil to the surface So when you produce the oil you get some gas. Mm-hmm now for the US the bulk the most productive resources are the gas fields in the Marcellus Basis and basin of Pennsylvania But gas and oil really don't compete with each other in the continental United States Very little power gen is done by oil in the US Mexico was an exemption Hawaii is also an exception Most of the you know, most of the world is moving away from Power gen through with oil. Mm-hmm. And we've also had announcements of three major Petrochemical facilities in the US quite remarkable Well, let me let me zoom back for a minute to the climate change issue because you know these changes at the EPA We talked about in the first part of the show and the increased production and oil in the second part And and and the clear fact that the Trump administration You know is is looking to make it easier for these producers looking to make it easier for these carbon fuels Now, you know, we we saw a lot of information and a lot of discussion at Paris and otherwise about you know, what what appears to be a Climate crisis and that if humanity doesn't do something in the near term We are we're gonna lose the planet And and you know, this may be all and well from an economic point of view. I'm from a national, you know national economy point of view national Nationalistic point of view It it doesn't help much does it on the climate change issue? I think I'd be less worried now about climate change. Yeah, I actually I think I would I would suggest that there's There is a legitimate uncertainty over the Scale and scope and magnitude of the climate consequences. In fact, there was a very interesting hearing On the House Science Committee last week I'm happy to send you the link for that or for your read and it would be interesting to listen to it because there were there were like researchers on both sides of this issue and I would think that within the within the Trump administration I Wouldn't necessarily call them deniers, but I would say that their view is that the Consequences of co2 increases in co2 are At least among some serious research is less concerned than others And I don't know what it means to lose the you know to lose the planet I think there's a legitimate debate here. What is the most important issues in the world? You know, you have large Poverty dysentery you have war Conflict in the Middle East is really climate the most important thing with face Well, I well some people feel that way. I mean look at some people do feel that way Glaciers look at the ice caps. There's something profound happening to this planet a larger scale It's our platform whatever we do and if we lose the platform we are no more Well, the earth has gone through major, you know, they used to call it Greenland for a reason. I mean I just think that I Mean I had something I think we should pay attention to I think we should get on the gradient I actually don't think it's a serious a problem as lots of other ones we face But that's just a you know personal I really enjoy these discussions and we will follow it will follow all of this The son of things happening in energy in every way and in every country and every in every system And I really enjoy talking to you about it two weeks from hence. We'll do it again, right? Okay. Absolutely