 Okay, we're back. We're live. I'm Jay Fidel. This is Energy in America here on a given Wednesday We are joined by Lou Plurici of E-Pring in Washington and Lou is going to try to make me feel better about the coronavirus. What do you say? I Don't think I can make you feel better as long as you don't get it. You're gonna be fine. Right on So Jay I thought you know, this is I'm a little bit outside my lane here, but I Do have some You know discussion. I think we ought to have we'll talk we have a kind of what the measures We are undertaking is tending to do to energy in America and how that is a kind of Graphic if you like a representation what it's doing more generally to the national economy Even the tourist trade in Hawaii, you'll see some we have some data what's happening in the US oil production What's likely to happen over time? Part of the oil production is also because of the Entrance of the Saudis and Russia's Russia in the price war, but it's happy at a time when We're undergoing rather massive contraction and demand and this is going to come at a heavy economic cost And then I think we should have a you know discuss a little bit about As I say here or the measures worth the pain or is what we don't like to say in the public policy community Is the juice worth the squeeze? That's sort of what I'd like us to talk about today okay Because we're going to go through a big squeeze Yeah, we are we're going to go through a process where we're buying ourselves some improved health outcome and We've had very little discussion on whether what we're exactly we're buying for all the pain And I know that's a very unemotional way to talk about it. People think about health in a very emotional way But in fact, it's like everything else in life. It comes with a cost. Well, we're spending trillions I mean if you if you listen to the last press conference or two we're spending trillions, but not all of that is for health Some of it is for trying to boost the economy. Let's jump change what the government spending. That's not that What we're doing is we're devastating the world economy. We're contracting the world economy Millions of people out of work now if they're out of work for a few months We need to find some way to bridge through but if we're going to go and actually contract the world economy from from something anywhere from five to ten percent that much like the corona virus comes with a huge cost to society and I would be very Surprised if it doesn't also come with a substantial death rate and I actually think this is a kind of hard Hard news. It's difficult for people to kind of get their head around it I do this doesn't mean we shouldn't do anything But I think we should have a much more Unemotional and careful discussion of what we're doing to our national economy and the world economy So that's my back at one thing you said if we have a you know a big slide on the global economy You said that would have its own impact on health and and create a death Tell me how that works. How would that work? So people who lose their job not just in the US. They have bouts of anxiety depression the family strike You have suicide You have a lots of health concerns people are worried. They don't have enough money. They don't go to the doctor I mean we have a lot of models that have looked at this over the years that suggests that if you have Sustained periods of low economic activity high unemployment. You have a health outcome That's quite bad So just on that level, but also making people poor now, that's not a very good outcome either No, it's a quality of life outcome Going to be laying off hundreds of thousands of people from the you know tourist business from restaurants from a lots of traditional economic activities around the United States and We have a we do have a stimulus package, but it's run by the government God knows if it's going to get to the right people or How much good it's going to do because in the end all the productive activity of society has eventually have to I mean traditionally when we had the When we had the financial meltdown the concern was bailing out bailing out the banks, but really getting money into the system So product productive productive activity could continue what we're doing now is saying. Oh, no You should stay home. You can't do traditional productive activity yep, so We can dole out a lot of money But we still need the goods and services to be made Yeah, that's where the crunch comes everybody expects to have at least some semblance of quality of life, but if the whole economy You know winds down and is becomes inactive You won't be able to have those things. You don't have any income. You don't have any supply line Yeah, so let's take a look at the at first a couple a couple of modeling outcomes and See, uh, you know compare a very strict quarantine with a somewhat more modest quarantine This is from rice dead energy world a meter plus some other folks out there. So if you look at the US model results from intense government intervention scenario What we call a strict quarantine Now keep in mind All models are wrong But some are useful So the first one you can see here shows what we might expect from uh and Or a strict quarantine and this would be very similar to what Still happened in China one of the problems we have in the u.s. Is we don't have enough measurement going on But you can see here if you look at the kind of light the pink You can see that a big chunk of society gets minor symptoms We have a group that are infected and undiagnosed And then we have this whole group that becomes Uh, eventually recovered And undiagnosed. Okay, so that's a smaller group and we're now we're now moving up this you see these little These little bubbles in here. We're now moving up which we might call the path of the hospital treatment and uh people who need critical care, right now We're kind of looking at a time period running the model from 16th to February to the 1st of july And let's compare that to a Modest quarantine, right And so basically if you look at the next slide, this is a little a little different And so what I want you to understand is the real outcomes That we're facing is do we take a high intense hit? And then get over the hump very quickly but maybe Put a lot of pressure on our hospital system Or do we delay The number of cases, all right, and we stretch it out over a longer period of time the interesting Probably are not going to Substantially change the total number of cases what we're going to do is shift And delay the cases over a period of time to give the hospitals a more time to deal with it flattening the curve Would be would allow a lot more economic activity to take place Um And uh, would you know would not shut down, you know, if you if you're sick you stay home If you are uh, if you if someone in your family has coronavirus you would stay home But much of the other activity of society If you have a cold you would you check with your doctor, you know, so We could do a lot of things, but we wouldn't have this severe shutdown all the travel now Let's go to the next, uh, this impact of this What's going on right now if you go to the next slide So this shows you and this has been a good marker of uh, world, uh economic activity Because global oil and petroleum products, right They are the kind of Liquid that runs the world economy jet fuel gasoline diesel fuel operation of factories And you can see these are the components of east asia europe north america the rest of our world and the kind of, uh Managed the pandemic and by this by the way The pandemic it's very disturbing to me that they would use this word pandemic Yeah The spanish flu was a pandemic This is not a pandemic. This is a serious illness But to call it a pandemic and create all this panic. I think it's been very unfortunate um It's it's uh, it's not really It's not really, you know, I mean Something close to a hundred countries in the world And it's in every state of the union every state in our union It's pretty much everywhere you look and there's a number of cases just came up today In central africa, which they claim came from europe and the united states So I think there's no there's no place you can hide. It's it's there. It's everywhere. Isn't that a pandemic? I'm not saying it's not a bad thing What i'm trying to say is that compared to If you look at for for example, if you look at the korean data where they've done the most testing Right the fatality rate Uh for folks under 50 years of age is quite small, right? So it's very much Uh directed, you know 60 to 69 you have like a 1.3 fatality rate Above 70 it goes to 5 above 80 it goes to 9 it's bad. It's bad But why wouldn't that suggest to you that we would have a program that focuses on our uh senior citizens and tries to uh, you know sort of To address them directly than this kind of massive shutdown of the world economy So, I mean the question is From a public policy point of view Would it not have been better To target the interventions where they were needed towards the high-risk populations Older people and other people with health conditions You know, I mean We don't know exactly how it's transmitted. We don't have any cure For it, and we don't have a vaccine against it. How can we how can we target and you know and benefit A subset of the older generation People put them in quarantine Protect them They would their incidents would be a lot less would just be a lot less Okay, let's go to the let me just show you a couple of more kind of Charts here So if you look at this chart here, this shows you the number of flights at risk of being suspended in the this year 2020 And you can see here Uh, uh, so shangan, which would be the european, right? We've had about 1,400,000 flights over the next four weeks United's down, um, actually I was quite shocked. There's a lot less than I thought 20 internationally delta 20 25 international Singapore 25 of their total flights Uh air france klm are cutting 70 to 90 april of may Lufthansa, so you can see and if you look at the data 2020 Pre-virus was going to be a boom year For the airline business and you can see right now the actual rate Is starting to look like uh, a very uh, potentially a very deep dive, which I found was very interesting Uh, apparently 2018 was a tough year in uh until summer You look here if you manage the so-called manage the virus scenario Will help us to get back some of it, you know, but we are going to have a year for the airline business That is going to be substantially below 2017 even as a fairly good case And then let's look at What's going to happen to domestic well-gassed production? Now this one, which is the next slide, right? Now this one is a little more difficult to blame strictly on the corona virus uh us you can see here as of Probably production through Now we're about 10 11 million barrels a day Uh, this is shale productions. Let us include other production in the u.s But you can see that under Different price scenarios and one of the reasons the price oil is falling so dramatically Is because of all the restrictions on travel and The ongoing price war between the Saudis and the Get into more detail But this is probably going to take A hundred billion dollars in direct capital investment out of the us economy uh Lou can we just take a Short break come back sure and i'd like to i'd like to get a handle on how this is going to recover What the elements are for a recovery when it happens and how will we see it? You know spool up again That's lupus of eprinck energy policy research foundation We're talking about energy in america and beyond we'll be right back Yeah, welcome back to think tech and energy in america I'm jay fidel and we have a lupus of eprinck on the on the line from his office or his home in washington dc um, and we're talking about um, I guess the interaction If you will of everything is connected now energy is connected. Certainly with the corona virus seven We're talking about expectations for both So lu you had more charts you want to talk about? Give us a little on how this is going Yeah, one last chart. This is really a question of policy and uh Three so this I think three reasons these epidemiological models may be too pessimistic First They underestimate the rate of adaptive responses Which should slow slow down the replication rate? Actually, I saw a couple of very interesting studies today that even showed that The a submit the people who are non, you know symptomatic they have the virus, but they don't Show it that the initial evidence suggests that they are Less infectious and people with a full blown Then the models if you look at the models carefully They seem to assume that the vulnerability of infection for older people Give some clue As to the rate of spread over the general population When it does not right so that I think that's very important And then find what is the lesson of that? What is the lesson that we we now know about? The basic assumption driving these very worst case scenarios these scenarios which are causing the governments to take very drastic action is that They assume that the vulnerability of the infection for older population It gives some clue, you know to the rate of spread over the general population And you know the folks I've checked with this You know of course we're going to learn a lot more and finally right There's a there's a general assumption all these models that There's a sort of tacit but maybe question or assumption that the strength of the virus remains constant throughout the period when we know the it's going to Its potency is likely to decline over in time particularly because of temperature increases now two or three good studies out there now showing that It is quite clear in a study by four chinese scholars that looked at over the different parts of china and Places like taiwan and hong kong are doing relatively well Singapore, malaysia And it's a mixed bag because of course malaysia hong kong taiwan They went through the SARS and they were very very well prepared for this But also they are areas with warmer climate and there's a lot of evidence that's having the effect So as we enter in the spring and the summer I think these models are going to prove to be too pessimistic And so I guess my feeling is if you're balancing costs and benefits As we get into the summer months and as policy makers see or as we get into the warmer spring, let's just say I think they should begin to unwind this he'll try to get the people to you know increase the testing so we know if someone had People should wash their hands of course to all the other responsible things Begin to turn the travel back on Get to turn the restaurants back on And get people back to work that should be And policy makers should start to be giving this message. Look, there's an end game here This is not the end of the roman empire, you know There is an end game to this thing and we're going to get to the other side of this And we're not going to be unreasonable, you know, I always feel that We really want the government to step in and do the right thing But we should always be careful of turning out for our lives to the bureaucrats Amen to that You know, but the problem the problem is that somebody has got to call the balls and strikes somebody's got to say Here we are July 1st And the numbers are going down as many people are getting infected according to our Tests hopefully by them we'll have tests not as many people are in duress and in distress over this Not as many people are dying So, okay, we're we're we see the light at the end of the tunnel and now we can, you know, turn the jets on again That's I guess that's a pun on the economy We can focus on recovering the economy. Let's let's start doing business again, you know, all the businesses that stopped Let's start them up that the risk in that And it's yet to be it's yet to be determined in China China had these very draconian Measures and and it seemed to stop the contagion and the deaths. I mean they're very I think they had one case yesterday. That's it But the problem is they're going to send everybody back to work yet We don't know Whether it still lives in there somewhere and when everybody goes back to work shoulder to shoulder You know, we'll have we'll have another epidemic or how serious it will be This will eventually be like h1 n1 Like three or four other flu variants we have there an endemic piece An endemic virus which will be with us For which we will have to develop a vaccine every year as adapts or whatever to help us address this And uh, it's part of the flu It is not The Spanish flu It's not even SARS or Ebola, but it does have a higher infection rate. I got that But it also has an enormously positive recovery rate and all i'm asking for is Some weight Of the economic costs when they think about the medical repercussions That's what i'm asking Well, I don't you know, I but I think the level of uh, what do you want to call a concern? I don't want to use the word panic, but concern That presently exists is probably going to get worse because the number of cases are going to get worse When the testing comes through and the number of deaths of any of so if you look 30 60 days We probably have more concern than less. We probably have more draconian methods in this country Um and more and and there'll be less business not more business And really the question is not only how do we give people confidence? So to go back to work and concentrate on the recovery instead of staying alive. That's a hard choice um But uh, you know, how exactly a recovery will unfold and dangerous business in the in the uh, Spanish flu What happened is it the the flu developed here somehow patient zero was here in in the midwest in kansas I think and it got into a military base and all the guys were going overseas for world war one They got on troop ships shoulder to shoulder They went they went to uh, france and the like shoulder to shoulder And while it diminished in the us It grew in europe and then when the war right over they came back with it and reinfected the us a year later But let's put this in perspective. Okay We probably had a half a billion Infections with the Spanish flu according to most of the data 50 to 100 million deaths worldwide. Okay well We we're not even competitive with the flu yet Okay, i'm not saying we won't be but we're not even competitive with the flu But we don't want to be every year We want to slow it down We have 20 to 60 thousand deaths of the flu every year in the us And it's not shown on the ticker tape On cnn every night for two or three hours Another person died of influenza. We don't see that on the ticker. So let me ask you why are people so concerned about this Is it completely irrational? It's new they don't understand it. They have not it's been all the media talks about it little Discussion of the target groups the information and the analysis is still too early For cdc to be very smart about it The measures the chinese undertook were quite impressive, but they also Were, you know, they can only take place in a very authoritarian regime and so people people are afraid they're sort of Panic because it's an uncertainty. They don't know how to judge but We accept a whole bunch of risks a whole bunch of risks Which are much more serious than this We get the we have a 1% chance lifetime risk of dying Driving a car. I haven't seen anybody say look. I'm not going to drive a car because I know it's a lot more Risky than the coronavirus But I'm going to completely change my life because I'm afraid of the coronavirus right I think once we get a a better a better sense that look Yeah, it's a really bad It's a it can be a bad flu. It can be tough to recover from But that it's really going to be attacking largely the elderly and we should have a program that focuses on them Well, you know, I'll tell you where this is going to be a very very ironic And and that's where you know, the hospitals are going to be all committed and loaded up with coronavirus virus cases But the people who have The the old-fashioned classical conventional life-threatening illnesses Right now today the kind we've always had Call it heart attacks call it stroke Call it cancer, whatever that might be They're not going to have medical care available because the hospital the hospital all loaded up with coronavirus Um, and so they won't have the medical care that they had hoped to get They're going to be in trouble You know, they've just brought the uss comfort into uh, new york Uh, navy ship not to take care of coronavirus, but to take care of everyone else Who can't get access to the hospital? There you go because of coronavirus There you go. This thing has like 12 operating rooms 1100 beds. I mean we have resources in this country We can we can address so we only have a minute left blue I just I want to sort of ask you a last question and uh, you can answer it any way you want How do you really feel how do you really feel about the subject? How do you really feel about the economy and energy? How do you really feel about public health? Yeah, look, I think that these are difficult decisions and trade-offs but We need to weigh the economic losses. We need to weigh them carefully You I I you should go out on the street in Honolulu and ask some of the displaced hotel workers How they feel about what's going on now. They think this is the right thing I mean, I don't you know, you that there are lots of things we can do to to reduce the risk And the taking it to zero is very hard Yeah, it's not a perfect world. That's for sure. It's not a And it seems like the more people on the planet the more complex things get The more interdependent we are The less perfect the world is Well, thank you Lou So much more coming down the bike And I'm sure we'll look back at this show and in a few weeks and say, oh my god, we didn't understand anything I want to come out there. Why you got warm weather. It's probably killing the corona virus Thank you, it's always