 I don't actually have a very formal presentation prepared. What I'm going to try to do is to sketch a picture of what I see as some of the important developments in the energy, a global energy scene in the last several years and how that might develop into the future and how that might affect all of us and then open it up for a discussion. I find that I'd always learn more from the audience than probably the audience learns from me. So that's what I'm going to try to do. I work in a think tank in Washington, which is a non-partisan think tank. Although the American Embassy helped get me here to Ireland by no means do I speak for the US government on any of the subjects that we're about to venture into. So I think from the standpoint of someone who's worked in this area for almost 40 years, the first thing I would say is that to remind us that we are going through the highest oil prices the world has ever experienced and I hope it's a little hard to look at the slide. But this is the price of oil through the 153-year history of the modern petroleum industry in both nominal and real terms, the slides from BP. And the last two years in 2011 and 2012 are the highest oil prices the world average prices the world had ever experienced. We forget that sometimes because we saw an even highest spike in 2008, but that just lasted momentarily and then we had a collapse as a result of the worldwide economic recession preceded by the financial problems. And this year we are starting 2013 at an even higher level than we did in 2011 and 2012. So we could have a third year of the highest oil price the world has ever experienced. One of the things about the energy industry is that it sometimes feels like it doesn't respond to price. That is because it's a long-term energy capital intensive business. There's a lag in response. Most of us don't go out and buy a different car the next day after the price of petrol goes up. But we remember what happened to price the next time we buy a car. Same thing for housing, same thing for capital stock. There is a lag in demand response. There's even longer lag in supply response because it takes 5, 10 years to find new resource, explore, discover, produce, develop new resources. So sometimes it feels like the energy industry doesn't respond to price very well. And that's because there is a lag time involved. What has happened as a result of very high oil prices is that the industrialized world energy demand has declined in relationship as the share of the total world energy demand. So we see the difference, the increases in energy consumption around the world are from the emerging economies. And of course, we all know about China. But this gives you a picture of what it looks like in 1975, more than half of the global energy demand was from the industrialized world from OECD countries. That ratio has now flipped. And increasingly, we're looking at China, but not only China, India, Middle East, and then the rest of the world emerging economies. By the way, these are Fatih Burrell's slides from the World Energy Outlook that the International Energy Agency came out with back in November, I guess. And I understand he was here a couple of months ago. He may or may not agree with my narrative using his slides. But they are his slides, so I should credit him with that. So there's been a demand response to higher oil prices and seeing the shifting of energy demand centers from the industrialized world to the emerging economies. Keep that in mind. We're going to talk a little bit, I hope, about what the geopolitical implications of that are. The other thing that you would expect is a supply response to higher prices. And what has really surprised us in the last five years is that that supply response was most prominent. You would never have guessed, well, most of us were not smart enough to guess, that it would come into the United States. Because after all, the United States is where the modern petroleum industry started 153 years ago in Western Pennsylvania. Western Pennsylvania should be all played out by now. But yet that's where the boom came was in the United States. And this is the direction of conventional oil production in the United States historically, but also the IEA's forecast. And here's the boom of unconventional oil that the IEA reckon is going to be coming. Here's the picture on gas. For four years in a row, this will be the fifth year, the United States produced more gas than Russia. Now, if you told me that 10 years ago, I would think that you're nuts. Not no way that can happen. Because most of the American gas should have been produced already. Russia has the big resources on the books. It's not possible for the United States to out-produce Russia. And because of the unconventional or shale gas or fracking revolution in the United States, that's the picture that has emerged instead. Now, it's interesting to contemplate why that is. Why did it happen in the United States and not elsewhere? Why didn't it happen in the North Sea, for example? Why didn't it happen in Mexico? Why did it happen in the United States in the Q&A session? If you're interested, we can get into the details of it. And then the other question is, is that experience or the expertise technology developed in the United States how transferable it is to the rest of the world? But what we know is that that's already had an impact on global gas markets first. Because the first thing that happened with the United States is no longer importing the liquefied natural gas that we were expected to import even seven, eight years ago. And all that LNG that's produced in countries like gutter are now available for the North Atlantic market available for Europe to import. So even before the question arises as to how transferable that technology is into countries like Poland in Europe, for example, you've already seen an impact in the availability of more supply sources than the traditional suppliers in Russia, Norway, and Algeria to European markets. And that has had, whether you realize it or not, an impact on European gas pricing. So one of the things that happens is the question of European gas prices being linked to oil prices, that's eroding, that relationship is eroding as a result of spot gas availability in the North Atlantic market. And this is before the United States starts exporting gas. You've already had this impact. And we'll talk about exports in a minute. What does that mean for Middle Eastern oil, where is it going, where will it be going into the future? This is the picture from 12, 13 years ago. The picture more or less today in 2011. And this is what the IEA says is going to happen in the future. United States was never a big importer of Middle Eastern oil. This is something that's not well understood, including in the United States. I mean, the fact of the matter is, we're geographically situated to import, even though we're the largest oil importer in the world still, we're geographically situated to import it from the Western Hemisphere. So from Mexico, from Venezuela, from Canada as the largest exporter to the American market of oil. But this is, according to the IEA, what it is going to look like in the future. What are the geopolitical implications of that? With a Europe that still relies on Middle Eastern oil, Japan and Korea at a very high level, United States with negligible imports from the Persian Gulf, and the new incremental consumer of Middle Eastern oil would be in countries like China and India. Contemplate that for a moment. Contemplate that for a moment in the time of budget austerity around the world, including on defense budgets. If you were a military planner in the United States, what are the implications of this long term? How do you plan for that future? Should it affect you or not? There will be two schools of thought about it. One is, well, if the Europeans and the Japanese and the Chinese need that oil, let them be concerned about security out of the Strait of Hormuz, not us. Why should we be concerned about it? That could be one extreme school of thought on it. Another school of thought might be, we live in an integrated world that's economically linked up in a world where people wake up and are concerned about what Spanish bond rates are going to be, that we're not going to be removed in the United States from the rest of the world. We are for the foreseeable future a superpower that has global responsibility. And if our closest trading partners, our allies, are going to be affected, we're going to be affected anyway, so that responsibility doesn't change very much as a result of this. But we're talking about real life challenges that governments have to address. We're reducing the sixth fleet in the Mediterranean. We have been. What does that mean for the fifth fleet in the long run? Who patrols the Indian Ocean, the South China Sea? That's the sort of challenge that we need to necessarily share rather than dominate with countries like India and China as they look at their geopolitical priorities into the long-term future. It's the sort of thing that we don't have the answer to that, any of it, but it's kind of questions that come up in Washington quite a bit recently and all because of energy. What happened to the map? That's a very abstract slide, isn't it? Try this again. What happened to the map? Something happened. Fatih called on his copyrights. And said, you can have all the arrows, but we're not going to tell you where they go. But imagine a traditional map of the world, Mercado Projection, Western Hemisphere on the left side, Europe. This is global gas trade flows right now. The big fat blue line, for example, is Russia going into Europe. And the point, and I won't dwell on this since you can't see it, is that it's going to look a lot more complicated in the future with multiple trade flows. Most of that gas going into Asia but not just from the traditional areas like Russia or North Africa into Europe, but also Australia, which is down here. It's going to be a major supplier. There'll be supplies coming out of West Africa, South America. And that light blue line is US exports, the potential of US gas exports. And where is it going to go? Is it going to go to Japan, which right now have even higher gas prices than Europe does, or will it come to Europe? I think this is a very interesting picture of different countries, or in the case of Europe, regions. Oil and gas import dependency. Japan is always easy to pick out. They're the most extreme example on the right upper corner, because they import almost 100% of both their oil and gas. And this is the direction that things are going for most of those regions if you believe in the IEA's forecast that European Union will become more oil and gas import dependent, moving closer to Japan's position, but not just the European Union, but also China and India. And the United States is going just the opposite direction. So not only will our imports of oil be reduced, we're not the largest oil importer in the world by all conventional projections in about another 10 years or so. China, which have already exceeded Japan as the second largest oil importer in the world, will become the largest oil importer in the world. The United States will be importing less, and will be a net exporter of gas. And what are the geopolitical implications of that, if you will? What are the implications of that for practical policy? If the West, US, and Europe no longer play a large function in oil trade as it does today, what does that mean? On practical things like, let me pick one, Iran trade sanctions. If we're no longer the incremental importer, if the exports go mostly to China, India, and other emerging economies, will we have the same leverage on imposing trade sanctions on producing countries and consuming countries? Right now, we're in a different position, because we're a large importer. The West also controls financial flows through the Bank of International Settlements, or insurance schemes through Lloyds, and so on. Will the new consuming countries be satisfied with allowing the West to continue to dominate that, are they not smart enough to figure out their own schemes on insurance? Once again, things that we don't think about, I submit, enough in places like Washington. We tend to talk to the EU, maybe, maybe sometimes, sometimes not, about how to coordinate our policies, and then we roll out to the world and we tell China, Turkey, India to get on board. That's the MO up until now. How effective is that going to be in the future 10, 15 years down the road? We're going to have to think about that. If we want these countries to follow, or at least coordinate the policies with us, maybe we need to consult them first, and not after the fact. So there are really important foreign policy implications of this. And because I work in the foreign policy institutions, those are the kind of questions that I ask. I would say in Washington, the work of a think tank is not necessarily to have all the right answers, but at least we ought to raise the right questions so that policymakers are aware of the challenges and try to address them. Here, this is the IEA's picture where the new sources of energy sources for power generation is going to come from. And you see, again, the US and Europe and Japan really not growing very much because we are already well-developed societies and all the growth coming from India and China. And in spite of the fact that the Indians and Chinese are working very hard, and we don't get them credit, for investing as much as they actually do on renewables, for example, because they have growing energy demand, investing in nuclear, as well as changing their primary energy portfolio to go beyond oil and coal to gas, there's still going to be a significant amount of coal-fired power plant that will be built in both China and India. Renewable energies, favorite subject around here. I gather, in Ireland. But we know that it comes at some cost. This is the IEA's projection of what the energy subsidies to continue to grow renewable portfolio is going to cause over the forecast period based on existing projects as well as people's announced targets. That's for electricity. And that's the picture they painted for biofuels. At a time of economic slowdown or the big recession, as we call it in the United States, economic competitiveness, which one doesn't think about as much in the time of prosperity and abundance, is becoming increasingly important for governments to consider. This is the picture that the IEA projects into the future. I go to Japan regularly. They're very proud of having the most energy efficient economy in the world. That's because they have very high electricity prices. And that comes at some cost to your economic competitiveness, something they're thinking about much more. You will see in the next several months a Japanese political discourse on whether and how fast, how much of their nuclear power plants they're going to reactivate. I think after the Japanese upper house elections in June, there will be an attempt by this government to restart nuclear, maybe not all the way back, but at least some of the way back. Otherwise, they're going to be stuck with high electricity prices for the foreseeable future. But Europe is clearly similarly situated in terms of high electricity prices. The United States were a little bit better off than large part because of the available gas supply, supplementing renewables. And China may have electricity prices that are too low for their environment to withstand, because that's the environmental picture in China. This is Tiananmen Square last month. And I always think of that little girl in the corner, because my mental image of why the Chinese are going to do something about the energy challenges that that little girl has four grandparents. The four grandparents only has one grandchild. And every time that little kid coughs, there are a lot of grownups worried about her future. And why isn't the government, which is the forbidden city behind that you can't see, why isn't the government doing something about it? For many years, I've told Western climate negotiators that they should stop talking to China about climate. Because greenhouse gases is a problem the West created. After all, it's cumulative emissions that count. It's the 250, 300 years of industrialization in the West that led us to where we are now. If the Chinese are going to do something about their emissions, it will be for their own reasons, not for global reasons. It will be because they worry about water pollution, land use, particulates in the air. It's not great when you can see the air. You're about to breathe. Self-dioxide, nitrogen oxide, the sort of thing that we were concerned about in the 60s and 70s. And if they do something about that, if we talk to them about our lessons learned to remedy those traditional environmental problems that we tackled decades ago, the effect of those new policy would be a reduction in greenhouse gas emissions anyway. But if you talk to them about greenhouse gas emissions, it becomes an international bargaining process. You want us to do something where you're going to give us in return, right? It's a negotiation. Give us technology for free. We don't care if it belongs to GE or some company. It's not the US governments to give. But if you want something from us, then you've got to give us something. But you're going to help us improve our environment that may be a different kind of conversation altogether. So just some suggestion on that score. Efficiency, at the end of the day, efficiency improvement is the best thing that we can all do. And we all must do. This is the IEA's projection of what global energy demand is going to look like out into the future under their base case. And this is what it would look like if we were to, the world is to adopt a kind of efficiency policy improvement that they suggest. This is the reduction in co-use, oil use, gas, and so on. So we never forget that even as we are able to produce more oil and gas because of the technological improvement that I mentioned, that there are still a tremendous amount of efficiency improvement available. The IEA tends to make its forecast because it's not supposed to be a political organization, tends to make its forecast based on GDP projection and then fill in all the energy necessary to drive that GDP. As someone who works on energy security and geopolitics of energy, I also worry about the ability to physically move more and more oil and gas and coal around the world. The choke points, the vulnerability in the system, even if we can geologically produce it, setting climate concerns aside for a moment, can we physically move more and more oil and gas around the world? Are there not limits to that? We're moving 80 million barrels per day, more or less, of oil around the world today. These projections will suggest that we'll be moving more than 100 million barrels per day. And can we actually do that? And every day, we are reminded of the vulnerabilities, whether it is Algeria a few weeks ago, what's happening in Syria, what's happening in Nigeria just this week. And so efficiency improvement is still the cheapest barrel that you can have is the barrel that you don't burn. So even though I'm a traditional oil and gas guy, that's something that I try not to forget in my work. And given what I've learned about the environmental consciousness of Irish people during my short trip here, I'm sure that's something that is utmost in your mind as well. So with that, Amy and Johnny, I'll close and try to respond to your questions in a conversation. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.