 Good afternoon. I'm Steve Levine. I'm a Schwartz fellow here at the New America Foundation Today we have Michael Levi the author of a new book today is the launch of his book the power surge We're lucky to be the launching pad for for him Michael Comes from an unusual background to be looking at energy. He's got an undergraduate degree in physics He went on to get a master's degree in mathematical physics studying string theory and cosmology and then got his PhD in War studies and what one of the questions is this a line of Study that you recommend for energy analysts. I think it's great it's basically one of these hangovers of The 50s and 60s and 70s when political science departments became obsessed with doing only doing things where you could do statistics and formal models and so the a political science department of the University of London sort of had half of their people break off their historians broke off some of the political scientists did they brought in some technology folks and Continue to take a more holistic look at international relations. So I think it's great. All right, so Today we're on the record where this Session is being live webcast When we get to the Q&A Please wait for the mic State who you are and go ahead and ask your question. We're we're at the Beginning stages right now. We have been for the last two or three years of brand-new age in energy Perhaps the most turbulent age since Modern energy began the middle of the 19th century a lot of moving parts a boom in gas a boom in oil technology and This is what? Michael is is latching on to and he calls this book the first major study of of the new age of how the boom is affecting Geopolitics and American policy and it and it is and it's a terrific book and I recommend it Why don't we start out? Mike if if you don't mind you in the book yourself start out by Laying down the basement laying down the historical foundation of our current age Do you want to start with the 1970s just sort of capsulate how we got here? Absolutely first. Thank you for having me here today It's great to be at the new America Foundation to talk about this book and to talk about what's happening in American energy One of the things I got to do when I was writing this book was transport myself to the 1970s by reading memoirs reading newspapers Looking at how the debate over energy unfolded the last time We were experiencing major change in American energy and and really you do need to go back to the late 1960s Early 1970s to see a period with this much change at the time You had the first all-crisis the first Earth Day, which we just saw the 40th anniversary of a week or two ago the Continuing rise at the time of nuclear power You had a host of different changes in the energy scene, but also different changes in the world And so all at the same time people were grappling with what to do about energy and how to find Our footing when it came to the environment when it came to the economy when it came to national security Throughout the 1970s in the aftermath particularly of the first all crisis You had a very intense debate and you had a debate that that pitted advocates of essentially doubling down on fossil fuels growing supply as the answer to our problems and People who advocated a very different energy path They talked about it as a soft energy path where the focus was on efficiency and an alternative energy sources and both sides Largely agreed or at least asserted that the two roots were exclusive. You had to pick one or you had to pick the other as I read it this all culminated in the 1980 election I spent a lot of time reading about the 1980 election during last year's election season and it sounded awfully familiar The rhetoric was very similar on one side focusing on opportunities to grow supply and putting down the Importance of curbing demand and promoting alternatives and on the other side really dismissing Opportunities that come from oil and gas and at the time nuclear power. So there was this sharp split The 1980 election happened There was a decisive win at least politically in the 1980s. You saw Essentially a hands-off approach from government to energy for a while that worked Particularly as you were coming out of a period of deregulation of heavy regulation You did see decreasing demand and you saw increasing supplies, but as time went on that largely petered out and if you look 10 years Beyond that what you basically had was Stagnation and then decline in US oil and gas production You saw eventually moratorium on new offshore drilling at the same time You stopped tightening fuel economy standards on cars and trucks and the fuel economy of our cars and trucks Stagnated and we started starving clean energy of support from government So neither side really got what they wanted except for knock the other one down We coasted along for a few decades on that until We got to the place where we are today or at least the place We were a few years ago before things started to change again. All right, so Ever it's it's not new anymore. Everyone's heard about this the boom in gas the boom in oil the Bakken shale the Barnett shale and and and and all the repercussions of that and and you frame this interestingly how the 1970s were about for America Americans trauma suddenly we were no longer in control of ourselves of our own destiny and the decade since then have been how can we get that back and That is how I think what you're saying that is how Americans and American policymakers are viewing it now, but you don't see it exactly that way I see opportunities here, but I don't see the same Transform it sort of Fundamentally transformative outcome that some people claim There's a habit. Maybe it's not unique to the energy world Insisting either that a development doesn't matter at all or that it's going to change everything in the world And the reality is that this is somewhere in between Oil and gas production are increasing. It's helping hold down greenhouse gas emissions. It's increasing economic activity On the gas side in particular making us more secure in the world But that doesn't mean that we're now and going to be energy independent in a meaningful way that this is going to solve our Fundamental economic problems or deal with climate change But we have this habit of grasping for those answers And I think the 70s do reveal that this is not a novel phenomenon This is what you do when you don't know what's going on in the world when you're scared you grasp for answers and sometimes you over read developments and Expect too much out of them I worry that when we expect too much out of particular developments, we make bad decisions when everything is in in extremes You tend to go to extremes in order to make sure that it delivers and that often plays out quite poorly All right, so so we're going to divide our talk into what we'll talk about the United States We'll talk about technology and climate and then we'll get to foreign policy So sticking on onto the the US part you you see in an optimistic scenario You say we could add five million barrels a day to US production, but you say that it peaks and Then it comes down. So therefore it's not it's not this answer that optimist sequel What is it then? Well a lot depends on the choices we make I think you could add more than that to us supply you could add less than that and I Go through a variety of different sources of supply You're talking about one scenario that I outlined, but I talked with the different Potential gains from offshore drilling to tide oil to enhance solar recovery with carbon dioxide part of what Convinces me that this is a trend that's likely to be sustained is that it comes from multiple sources But over the longer run there are some constraints to what can happen The first is one that might be imposed and that's a carbon constraint. I don't think that that automatically hits US oil production I think for the foreseeable future even if the world got pretty serious on climate change We'd continue to have relatively high oil prices that would make it profitable to invest in these areas But over time a serious effort on climate change would bring oil prices down and deter US production The second piece is more fundamental even if you did let's say double US oil production or triple US oil production It wouldn't it might allow you to use the words energy independence in the sense that an accountant might talk about there being balance on his On the form that he fills out But that doesn't actually mean we would be independent and then we conflate this jargon with some actual state of the world in a fairly Unproductive way and the the basic logic behind it behind why this doesn't make us Independent in a fundamental way is straightforward prices are set on world markets events on the other side of the world affect us here even if we produce our own oil and critically The fact that during a crisis money would go from an American consumer to American producer Would not shield us fully from the brunt of of a oil shock because Producers don't spend money as quickly as consumers do. This is one of the things I was surprised to learn when I was reading the book I assumed that at some point between 1973 and now the economics profession had figured out How vulnerable we are our art to oil shocks and how much it matters if we produce our oil here as opposed to importing it It turns out that there was an intense debate in the 1980s about our vulnerability and it was it came to some conclusions the 1973 oil shock caused part of the stagflation in the next decade, but not all of it But we still continue to this day to debate how much oil shocks hurt the economy and there's almost nothing that's done to look at how much Domestic production might or might not insulate us. It's really shocking how little we've dug into some of these things that we talk about Every day. Let me flag one last piece though Let's imagine that you were to double us production in short order and at the same time Canadian production grows and as a lot of folks assume Iraqi production grows in a significant way it's not clear that there's space in the world for all of that oil production and At some point if people are producing a lot more oil than anyone wants to consume prices have to fall now that would Only last for a relatively short period of time because falling prices would crush that us production that had stimulated increased Increased oil supplies and the price drop in the first place, but it could be It could be pretty tough for a couple years It puts a real limit on how much you can add us supplies to the market when I look at some of the studies out there Where a team will put out one study saying we're going to have massive growth in supply and another study saying no one's going to Want oil anymore? I have to ask Where do these pieces all add together if you're producing that much more? You do need somewhere for it to go right, so so this is this is a big question about The studies that are out there. Let's let's just dive into what you just said so the the The forecast the geopolitical forecast we see the geostrategic forecasts of the salutary impact for the United States financially balance of payments and and and so on rely on They were the US Becomes an energy independent or whatever, you know when you count in Mexico and Canada and so on But everything else had all the other moving parts have to stay the same They don't just have to stay the same everyone has to cooperate and help us let this happen There's one study. I won't attribute it, but it floats around US government circles and some outside that Projects a middle case of a 10 million barrel a day increase in US supply So that's almost a tripling of US supplies with a high case of 15 million This is a spectacular change and they project this in the next seven years and then they say well this will bat we will balance supply and demand because OPEC countries Saudi Arabia and others will decide to hold Something like 10 million barrels a day of oil off the market in order for supply and demand to balance and prices to stay high So we can continue to do that Now that's basically Saudi Arabia Unilaterally deciding to go out of the oil export business as not a great assumption to make if you want to look at the future So I think we have to be really careful with these I'll give you one other example the International Energy Agency Last year its projections said supplies going to keep going up demand is going to be pretty stagnant and Countries will hold six or seven million barrels a day of oil off the market again It it ascribed this to a potential fear premium. I don't want to get into the technical details But I don't find that all that plausible there are ways to square rising supply and Relatively stagnant demand, but I think we need to think through those those pretty carefully Look, I when I was writing the book one of the more interesting conversations I had was with the secretary general of OPEC and I went and asked him. How do you feel about all this? Will OPEC be able to handle it and he basically said yes, you know, we just don't invest quite as much We don't grow quite as much But we allow prices to say hi and everyone gets what they want and I think he's right up to a point But when you get to some of these more extreme projections and more extreme expectations For what will happen? I think some of the assumptions fall apart. Something has to give somewhere out there Let's let's throw in one more moving part jobs. So so here part of the last presidential election and probably the election next year will be the impact of energy on on jobs and why Aren't federal lands opened up and offshore and so on and so on and and so you you quote the Reports that are out there API the American Petroleum Institute, which is quoting IHS US energy industry supports nine point two million jobs It will add three million new jobs by 2020 three and a half million more jobs after that 2035 from unconventional You're not so sure so one of the things I do throughout this book is take various estimates that are out there and pick them apart Explain to people how you actually get to those and then ask are the assumptions and are the techniques? Correct. So let's take the most obvious one. You started with that people talk about there being nine million jobs Related to the energy industry and there's this casual extrapolation. Well, if we let's say double oil production Maybe we'll double that number of jobs Well, given that a large fraction of those jobs are things like service stations. That's that kind of Reading out from the baseline doesn't work We're not going to have twice as many gas stations just because we're producing twice as much oil It gets trickier when you really drill down. So the other the other big constraint Historically in thinking about job impacts of a new industries is that when the economy is healthy You don't really add jobs by creating new industries You add wealth but the level of employment in the country is determined by more fundamental things like federal reserve policy And how easily people move from one job to the other right now We're in a weaker economy and so you actually can add jobs in an absolute sense You're not just moving people from one job to another you're creating jobs So I think the basic estimates of the number of jobs that could be created in Directly in oil and gas industry are pretty solid. We heard about a couple hundred thousand jobs probably being created in oil and gas over the last few years directly in the industry and Maybe a similar number upstream so people who supply steel and cement and catering service and everything you need at the drill sites I think those are pretty solid There's a more complicated bit of territory where you talk about induced jobs These are the jobs that you get when people making money in the industry go out and spend and some of that's real I I met someone in Northeastern Ohio when I was traveling for the book who told me that she had been asked to keep her diner open till 4 in the morning At 4 in the morning and hire new people in order to support it. She'd also taken in borders above her house So some of that is new jobs Some of that is Continuing old jobs in a different way. She still would have been running the diner. She just wouldn't have hired other people So you've got to parse this out pretty carefully. I think as we look out at 2020 and 2030 It's much more difficult than it is now to say this will add Lots of new jobs in an absolute way because we should be back to a more healthy economy by then at that point We're talking more about wealth and jobs But as at a minimum as an insurance policy, it's a good thing one of my favorite parts of the the book is a chapter where I talk about wild cards and what happens to the analysis and the understanding in the book and more broadly if you If some of the basic assumptions are wrong and one of the assumptions I asked what is what if we're wrong about the economy? We're turning to full strength within a few years What if we're really lagging for a much longer time and in that case this has a much larger potential to add jobs Taking a consumer dollar and paying it to a US company is like throwing Have any five cents in the trash It's a quote. Let's add the sentences before and after that it No, but that so here's the context It's a it's a I think it was something that I found really interesting when I looked into it So what you're talking about is what happens if there's a spike in the price of oil? How does the US economy respond? Because the casual understanding and this used to be my understanding Was that if you had a spike in the price of oil and the United States was producing all of its own? Supplies you would take money from a consumer and put given in a company But the country would still be roughly the same and so we would be insulated from the economic impacts of oil shocks It turns out that in the short run. That's not true The typical consumer doesn't have a lot of money if you put an extra dollar in their pocket They spend it the typical company does have more money The typical shareholder has more money the typical executive has more money And so it takes longer for them to spend whatever they get quickly So if you have a sudden Surge in the price of oil and you're you're taking a dollar From a consumer who tends to spend and putting it in a typical company. Yeah 75 cents of that dollar roughly And this is controversial. These are controversial numbers, but the order of magnitude isn't wrong Maybe about 75 cents on the dollar doesn't get spent quickly and that is a hit to the economy now I take pains to say that that doesn't mean that Moving that that corporate profits are not good and that this money doesn't eventually get spent in profitable ways Ultimately, it gets returned to shareholders put into the broader economy invested in additional production, but that takes time And in the meantime, there's a lot of pain that the economy goes through so we have to continue to be aware of that If if we're not aware of it theoretically and we get to the point where we're producing all of our own oil We'll find it out practically when the price of all spikes and the economy still gets hurt Okay, just to clarify I'm just about to move into Technology, but you're you're not a critic of the boom absolutely saying just be smart about What's really good? What could possibly happen and what policies are right? So I think two things are essential one is we need to be smart and serious about what's actually happening I don't want people to say let's not worry about getting our jobs policy writing our growth policy writing our foreign policy Right because this is going to make us independent of the Middle East and solve our jobs and economic problems I think in a time where we do have so many problems It's really tempting to say let's check a couple of these off the list And I don't want to do that if they can't genuinely be checked off the list The other thing and we haven't we haven't talked about this and we can later on is that they're big environmental challenges associated with these particularly in the areas where development happens and not only the traditional ones like air and water But the challenge of integrating this activity into communities. I talk a lot about that I visited with a lot of people who are grappling with that challenge from all sides of it And we have to get that right not only because it's the fair thing to do But because if you don't get it right all of these jobs impacts and other impacts however large or small they are Could be foregone if there's a serious backlash and these developments can't go forward So here let me interject a question. There's something that I've wondered the last sentence We know that that if a micondo happens in a fracking field This could have very serious repercussions in terms of the companies being able to proceed with this boom Do the companies themselves take that seriously in in in terms of you know Proactively getting out there and making sure it's done right. There's enormous variation among the different companies I think some of them are out there trying to make sure it's done right, but The onshore oil industry in particular the sort of hydraulic fracturing tide oil shale gas world is much more diverse even than offshore drilling and so I think some companies probably believe that as long as They keep a good reputation. They'll be insulated from problems that others Encour I don't think that's right. I don't think people distinguish carefully among the different companies We're starting to see some progress in a good direction particularly at the state level. We're seeing some private initiatives aimed at trying to boost confidence and development an impressive Looking effort that combines environmental defense fund with a couple big oil companies and some Universities trying to certify companies for good practice in Pennsylvania. So we're seeing developments part of what I worry is that even if a handful of big companies went to their typical friends in Congress and said look I'm afraid that something will go wrong and Some of my competitors will cut corners do something stupid and ruin this for all ruin this for me Their friends in Congress would say I still don't want to put additional smart regulation on the industry I think we've got a really weird situation there where everyone would benefit from making sure that The whole effort can't be undermined by someone doing something stupid But the prospects of actually getting people in Washington beyond the regulators using their existing tools to do things are pretty limited Isn't it inevitable that there's gonna be a big accident? I mean this It happens right now Yeah, well when we've seen accidents I don't know how inevitable it is that there's something on the scale of the Deepwater horizon disaster That's a peculiar circumstance and the details onshore are very different from offshore But I think there's a good chance that we have something go badly wrong and then the question becomes how Does that more broadly influence development? It's a bit trickier than off-shore. I think the dynamics are different This is so spread out throughout the country and affects so many different people that there's going to be a big There's a lot of pressure to keep it going. But yeah, I think it's a I think it's a real risk I don't I never like to say that anything is inevitable, but the risk is high enough that we should be doing something about it. Yeah Technology all right, so you you have this line Well, first let me introduce that that we've gone through a boom period in Clean tech right for the last five or so years Clean tech was the hottest you yourself lay this out the hottest investment in Silicon Valley all the VCs wanted to get their piece of you know biofuels or batteries what whatever There's been a there's been a waking up Regulators are beholden to the progress of technology So we think of regulation as something that drives technological change and at some level it can drive adoption of new technologies But regulators can't push Hard if there isn't a clear way to satisfy their demands The auto industry is a great example a Big part of the reason why we've been able to see new fuel economy standards that will continue to push Forward on fuel economy over the next decade is because technological change has made it possible To actually fulfill those mandates So when the EPA and the Department of Transportation go and estimate the cost of complying with these regulations It's not astronomical Why because we've seen big gains in materials and in the way that cars operate so in a lot of ways computing We've seen the advance of hybrids that allow us to foresee much bigger penetration into the market But the other piece of the story is that we don't have all the technology yet That is going to allow us to comply with the various requirements that we've set out so when we When people talk about our future trajectory they'll often say well our fuel economy rules say that we're going to have Cars that get fifty four point five miles per gallon measured in a strange way by twenty twenty five If you go and talk to the car companies and I did this when I was working on the book They'll say look we know how we're going to get to around 2022 and comply with these mandates We're not so sure about the last three years of this and by the way That's why we insisted when we negotiated this that there be a review in in 2018 to determine whether The regulations need to be tweaked if we don't have the right progress on technology if we don't have the right progress on costs I assume that when we get to 20 to 2018 there will be a big push to change the rules And if we have made a lot of progress Then I think the companies will still buy in at this point. You know if you go back 40 years pushing for more Fuel-efficient cars was really about selling smaller cars instead of bigger cars if you're a car company You don't want to sell a smaller cheaper car instead of a bigger better car because you're not going to make as much money on it To the extent that it's technology rather than size that's allowing you to be more fuel efficient This is actually an opportunity for a lot of automakers. They're basically selling technology Instead of gasoline so they can take market in in a very broad sense away from the fuel producers If you're in that world, you have a very different interaction and a very different opportunity so on on cars on electric cars one one of the big Advances that's been expected in these years and a big investment that the Obama administration made and really the Bush administration and the Clinton administration was in the development of electric cars Batteries we haven't quite gotten there and you say that that the the most Perspective improvements in fuel efficiencies are gonna have happen are happening and will happen in gasoline Propulsion, so I'm waiting for for your book to really learn about batteries But a lot of the big improvements you're absolutely right a lot of the big improvements are in doing conventional cars better We're still moving forward on From hybrids to plug-in hybrids to fully electric at some point in the future But a lot of the big gains are in conventional cars. I live in New York City, so I don't drive a lot So I may be a bit naive on what improvements have happened in cars and I talk in the book about visiting the Ford The Ford test facility. I was supposed to drive this peppy little Ford Focus electric. I saw this Mustang out of the corner of my eye and I said I'd really rather drive It looks like a lot more fun. They wouldn't let me a few weeks later. I was off doing research for the book I got to a car rental station at the airport. They said We'd like to replace your tiny little car that you've reserved with a Mustang I said you got to be kidding me My my you know work will fire me if I spend two thousand dollars on gasoline over the next week of driving around the state of Colorado and then I went to my smartphone and looked at and looked up the fuel economy of Mustang and it was 31 miles a Gallant I was shocked Now maybe I shouldn't have been shocked Maybe had I been driving a real car for the last ten years I would have learned something different But what's happened is you have turbo charging which actually improves fuel economy if you use it the right way You have better materials you have design that allows you to improve the fuel economy of cars You have all sorts of esoteric technologies to do fuel injection in different ways all sorts of little bits that add up To large changes in the fuel economy of our cars and trucks And on top of that since gasoline is expensive people are much more interested in actually buying these things All right, so we have so so so far we have a boom in oil and gas in the United States and around the world On what level and what what scale we have yet to see we do not have what we thought was going to happen in clean Tech and and and and let's see where that goes With our climate change Well, this is a huge issue overlaying everything we talk about and I should say we've had a pretty Significant flow of money into clean tech if you look in 2011 is almost as much money Went into clean tech investment as went into Exploration production of oil and gas in the United States. So these are big numbers. This has become a big business It's not up to the scale of the climate challenge at this point But we're seeing falling costs and new opportunities and one of the ironies of falling costs It actually makes it more cost-effective to try and push things to the next level You can't subsidize or provide government support for something. That's extraordinarily expensive at a large scale But if the costs are close enough, you have new opportunities climate change We've gotten to a odd debate about climate change where we focus We if you go back five years, we actually had a somewhat coherent debate about climate We had two presidential candidates fighting over whose cap and trade system was better and about who was going to provide a larger boost to clean energy industries Today we have a very polarized climate debate and we've in a big way started shifting to fighting not about What will actually solve our climate problem? But about whether oil and gas development is bad so bad for climate change that we should not either allow it to go forward or Encourage it to go forward. I think we're in a quite a bit of a model there. So Let's start with oil More us all production mostly displaces oil from the rest of the world not just in the US market But in the global market and that means that its impact on emissions is relatively small More natural gas production right now is mostly displaced in coal-fired power And that means that emissions come down as a result even though natural gas entails greenhouse gas emissions So we've got oil where we're making economic gains without much of a climate penalty in the United States And we've got natural gas that's actually helping us on climate My big fear in all of this is not that oil and gas will be disasters for the climate change But that we're going to get distracted from taking the other steps when we need in order to solve the problem Take a look first at natural gas replacing coal. Well, we had last year all these headlines about how natural gas use had reached Such high levels that emissions had dropped to I believe 1994 Levels if you look at the new Department of Energy projections for natural gas use, they don't see Gas use returning to last year's levels until 2026 The last year was an anomaly prices were really low They're more normal now and that means coal gets to claw back So we need to use gas as an opportunity to push forward with policy That reduces emissions more cheaply than we could have several years ago rather than hoping this will solve our problems for us On the oil front we need to make sure that abundant oil doesn't distract us from the need to cut our oil consumption And we can do both of those at the same time cutting our oil consumption is a much more powerful way to confront climate change And as natural gas gains this foothold We need to also make sure that we are encouraging the development of alternative energy technologies Whether it's renewable energy nuclear power carbon capture and sequestration I have I don't have enough confidence In my ability to predict the future to say well, we should pick one and dive in I think we need to Create opportunities for all of these all these to improve and that's partly the sort of standard talk about R&D It's partly getting the stuff out in the field some of the most exciting innovations in clean energy have to do with business models You don't normally think when you talk innovation about lawyers doing their job better bankers doing their job better You usually think about a guy in the lab But whether it's finding the right contracts to let people put solar panels on someone's roof and have an alternative way to finance that or New schemes for financing sales of cars that require a lot less fuel I think a lot of the innovations are there and you got to get things out in the field in order to make that happen So we need to make sure that this The that particularly in the power world natural gas doesn't crowd that out Let's go on to geopolitics all right all right All right, we already introduced this the US come comes into the equation Everything else has to remain Equal but we have a lot of moving parts OPEC supply India and China demand we didn't we didn't mention and that's the big wild card in a lot of this particularly China if Chinese Demand continues to accelerate Then there's a lot of room for everyone in the world market You can have high prices and continued growth in US production decline in US consumption and it still all adds up That's roughly the world of the 1970s where you had or at least the early 70s late 60s Where you had big gains in demand around the world that basically let everyone pour supply in if you got to a point Where Chinese demand came in a lot lower than people expect Then and you combined it with some of these big supply gains then you could turn things around then you could get a bit closer To the 1980s world where you have this surgeon Production at the same time as stagnant demand prices crash And there's a lot of follow-up around the world from that you talk about geopolitics our conversation here is mostly about The the geopolitics of American energy independence, but a lot of what will happen as a result of the developments here It will be about impacts on in other parts of the world So I painted this picture where I said well We can increase production because others will hold back a bit on theirs and let the market balance up to a point Well for them holding back on their production means taking in less in the way of revenues, right? So that is consequential for the countries that decide to do that if you have a temporary crash in prices That is very consequential for producers It's also pretty important for consumers as some of whom are in the same region as the producers Jordan Egypt they would benefit from lower prices even if for a period of time Give them a little breathing room instead of having to negotiate deals with IMF and remove subsidies and invite popular unrest On the natural gas front Even the threat of US supplies coming into the market makes it tougher for some of these countries in East Africa Mozambique Tanzania that are trying to produce relatively high-cost gas and put it on the market to develop it So there are all sorts of geopolitical consequences that are not directly about us and it's important to keep those in mind So why don't we talk about I mean we can separate but let's talk about China if you don't mind so the Confluence of all of these trends plus China's own internal politics are creating a certain Laboratory you know in which things can happen. What do you what do you expect there? How do you add all that up? So China provides a lot of government support to a variety of strategic technology industries And so they've been trying to get electric cars off the ground in a big way They've been trying to build a strong wind industry They subsidize solar in a way that has helped solar installers a lot here But hurt a lot of solar developers that are trying to put in place new technologies I think we'll get some interesting developments out of China is just on such a big scale and so much variety From place to place that we'll see we'll see some big things happen I don't know which those will be the other big question mark is will China develop its shale gas resources in the way that the United States has and I My guess is that eventually if the geology is right, and I think that's a big question mark as we don't really know Then they will But with an emphasis on the word eventually The United States has a host of circumstances that have made the boom here more feasible We have private land rights that allow a lot of things to happen without government stepping in We have deep and liquid futures markets for natural gas that allow companies to sell their gas forward and raise money to invest We have an open pipeline system that allows independent developers to produce gas and then put it in there We have a robust service industry that again adds to flexibility and so on and so on we have Resources that are close enough to cities that you can get water to them easily But not so far from cities that it cost a fortune to Close enough to cities you can get water in not so close that the environmental challenges are insurmountable I think in a lot of the world these pieces won't necessarily add up in Europe population is so dense that the environmental problems will be very difficult On top of that again in Europe. You don't have this liquid financial market that will allow you to sell forward and fund development in China You have remote deposits, so water is a challenge and infrastructure to get this stuff out as a challenge But I see two big differences first there isn't this ambiguity between public and private The Chinese government has the ability to do a lot more coordination than you can in most of the world So we have something closer to a pure private system. They have something closer, but not quite a pure public system That at least provides some coherence China also has an alternative way to finance these sorts of developments other than through selling Solid production forward they have state financing, so I think they have a couple pieces that make it easier for this to happen in Europe but still Quite a bit of time before I think we see something big there So we sticking on China. We we have a flashpoint out there in in the east and South China Seas Between Japan and the Philippines and China. We have those countries asking for us Naval support. There's friction between the United States and China who who's going to control those lanes and further out into the Pacific and then going on This direction in the Indian Ocean Persian Gulf one of the perceptions of the US boom Going forward the US no longer has a Geostrategic interest in controlling in securing these seas You have a different view Well, I think we've heard this from senior figures in administration recently and I'm happy that they've been emphasizing it that the United States still does have This big stake in what happens in sea lanes around the world and in producing regions around the world first Whatever people's projections are for 2020 or 2025 or 2030. We're not in 2020 or 2025 or 2030 We're in a world where we do depend on Physically and directly on imports from elsewhere, but on top of that. It's really difficult To separate yourself from these global market dynamics. Let's imagine for a moment that North America produced all the oil that it consumed and There was and so all Middle Eastern oil was flowing east to Asia And there was a disruption the Straits of Hormuz or something happened in Saudi Arabia. What would Our friends our allies others in Asia do Given that shortage of oil they would go around the world and try to bid it away They would spend money to bring oil in and that would raise our oil prices Okay, if they took oil from Canada, for example, or if they tried to bid off in the United States that would raise our prices So it's very difficult to isolate yourself On top of that if the United States were to pull back it would be a really fundamental Decision in terms of US relations with allies in Asia in the Middle East. We'd basically be saying to Japan Korea we're done with you. You do your own thing sort it all out with China. We'll be sitting over here and You know, hope it turns out. Okay. I don't see us heading down that that road in a deliberate way what I would say though is that regardless of what the underlying logic is the Politics could push us at least to some degree in that direction Political decisions aren't made based on what your economics advisor tells you. They're made based on what you think is going to happen in the world and if we look throughout history Leaders believe that their physical dependence on oil supplies is hugely consequential and they make decisions based on that So as we have a debate on how much we should pivot or rebalance or whatever. We're calling it these days to Asia This will enter into that. We're not going to create a new debate over the balance of US forces But this will enter into it and a lot of people will believe that this weighs on the side of Shifting more toward Asia and less to the Middle East in China There's a lot of discussion and a lot of confusion about whether the United States will shift its posture And regardless of what we say they are not going to fully believe us and they will take steps to hedge same thing in the Middle East you travel to the Middle East and This is certainly not universal, but there are a lot of people in the Middle East who genuinely believe that the United States is there to take the oil and If you believe that and then you see the United States no longer needing to take the oil You act differently you find new partners you find new people to support you again I think these are slow burn things in part because there's no other country with the will and the capacity to replace the United States in these security responsibilities China you might be able to talk about China doing it on paper But we're not anywhere close in terms of aircraft carrier capacity and other abilities to operate Far away, but I do think it's important for the United States to continue to emphasize that it is committed to having this role That's not to say that it always does it well But there is no ready replacement and certainly not one that we would like for the United States in these Regions and providing for open commerce Including in oil and other natural resources around the world. All right perceptions are important. Let's open this up Let's get questions please wait for the mic and Identify yourself we have one question up here if the Oil that we would produce in the United States trades on the global market Why does that truly increase? Security here wouldn't it actually decrease security if there are significant environmental? Impacts of it. We are actually distributing our oil at an environmental cost to us, especially in terms of water If fracking is a is a key factor in the national natural gas element of it So that's a good question first. I don't want to suggest that there are no security benefits from producing our own oil We would still be more resilient to price shocks I don't like I said I don't think we would be fully protected from them But we would be more resilient in a very extreme case that I think is unlikely and we could if we were totally Self-sufficient cut-off exports and use that to insulate ourselves again. I don't think that's particularly likely The environmental consequences you talk about we need to I think think about First as climate and then as local environmental impact. So on the climate part The US and the US contribution is on the margin and so it's useful to think of it in terms of cost and benefits And you can quantify the costs You can say let's say that a ton of carbon put in the atmosphere Does $20 worth of damage, which is what the US government says you can say let's imagine it causes a hundred dollars worth of Damage just to be safe and compare that to the economic benefits that come from adding this to the market and Given current oil prices is very tough to come to the conclusion that the Environmental damage is there outweigh the economic gains. I mean and we can talk about that in detail later I don't want to do math in front of a large crowd Never a good thing to do On the local environmental side, I think there's a lot of stuff we do need to do we need to deal with water properly There's a good story. I think it was in courts this morning about from one of your colleagues Looking at the water impacts region by region the United States We may have enough water as a country to supply this but there often are infrastructure bottlenecks and so on I don't think that that is a security issue. I don't think that water distribution in Colorado is a national security issue That doesn't mean that it's not important, but I don't know that you can put those two together and say well Here's how we weigh the security balance next Hi, I'm Chris Leonard. I'm a shorts fellow here I was I would love to hear your thoughts about this notion that the growing domestic supplies could create sort of an Industrial renaissance in the US. It'll be cheaper for manufacturers to do things here and also petrochemical manufacturers might have an edge so Let's separate this into three categories petrochemicals energy intensive manufacturing and other manufacturing So start from start from the third most manufacturing does not require a lot of energy inputs And so cheaper energy does not make a decisive difference Energy intensive manufacturing steel cement glass Let's set aside petrochemicals for the moment Does depend more on energy costs, but there's still a relatively small piece of the equation. I find it unlikely that Radically lower natural gas prices will cause a lot more investment in those areas in the United States I do think it will deter some plant closures I once you've already put in all the capital for a plant then this energy cost difference looms much larger in your decision-making And so you're likely to keep things open for longer. I also think the other big impact on that kind of Manufacturing is from the supply chain for oil and gas production We tend to conflate these pieces, but about 20% of the capital it goes into a shale gas well is steel That's an energy intensive Manufactured product about 10% of cement another energy intensive manufactured product demand for that is certainly bolstered By oil and gas production, but it's not because natural gas is cheap It's because people need it need this to put in it to to build the wells I think that the the simultaneous discussions about that impact and the low prices are confusing things a bit what we're seeing is mostly an impact of Greater demand for these products because of the industry petrochemicals is a special case Because you're not only using methane or natural gas liquids that well You're not only using methane natural gas to power the plants. You're actually using it to make the product You're using methane to make the product and using something called natural gas liquids Which is somewhere between gas and oil it comes up with natural gas in order to feed into big facilities and produce Ethylene that allows you to make a whole host of different products. I think there there is a much bigger Set of gains to be had one of the questions one of the variables We'll still face is whether some of those natural gas liquids are exported and we have this whole discussion about liquefied natural gas exports and There's a lot of attention on that and a lot of concern about the manufacturing impact I think it might be at least as consequential for manufacturing whether people start to liquefy and ship ethane to other parts of the world And there's certainly folks looking at that Michael if I might ask about about one of the big consequences we hear and one of the great biggest components of the Rhetoric is OPEC getting off oil get out Saudi Arabian oil and and there's a Lot of xenophobia. That's all yeah, it's all wrapped up into that What happens to open these countries their economies the longevity of the leaders of those countries rely on that oil? What do all of these trends mean for them? Can they really cut back? So I think that as long as these countries Need to cut back only in the sense of not growing their production as much as they might have they're generally fine so if you sit still with whatever you're producing and you are able to keep a lid on prices then you're basically okay if you have to actually Cut back your production not just in it in a relative sense relative to what you were hoping to do But in an absolute sense I think that politically becomes more difficult. You're actually shrinking revenues And causing yourself to make tough political choices I don't think the United States alone is going to push the world to that kind of decision But if you combine the United States with Canada maybe with Iraq, which is its own OPEC story because it's part of it And maybe with a change in Chinese demand then you start to get some of these tough decisions I think you need to put a lot of those pieces together the other thing I'd say is that If the sort of there's a theory out there that if OPEC didn't constrain supplies We would have oil that was $20 a barrel because they have all this in the ground and it cost next to nothing to produce if that were true And we were to defeat OPEC. We would not have all this big US oil production Right if defeating OPEC means $20 oil that also means a crash in US oil production So you have to have a self consistent story at least over the long run The oil industry can sustain a lot of internal contradictions for a year or two, but over the long run. It's very tough to to really Bring down prices in a big way, which is what defeating OPEC would be about If what you're using to do it is high-priced oil But that is the narrative the narrative big abundant age of abundance oil prices crash and it's come by up for the United States I think that that is a wrong way to look at the world again Low oil prices Would be good for the United States But it would not sustain this US oil production It would have to come from some kind of other source and one thing that we ought to be thinking ahead about is The economic impact of volatility in the oil and gas industry. This is not a stable industry Again, we've got a good news story right now, but this is an industry with a big history of ups and downs We talk a lot about multiplier effects in Oil and gas so people talk about how many jobs are created You you put out all those numbers in the beginning and a lot of that is because people say well for every job in the industry There are so many jobs upstream. There are so many jobs induced and so on those multiplier effects work on the way down also And so if you had a big crash and you had a significant contraction in the industry, you would see ripple effects Downward and I think we need to be thinking ahead about that people in Texas have thought about that for a long time people in North Dakota who are going through this boom right now have been through busts before and To imagine that we've eliminated booms and busts in the oil market might turn out to be just as good of a Prediction belief as the belief a decade ago that we had eliminated booms and busts in the business cycle we have a Question all the way in the back Andrew Holland with the American Security Project Michael you and I have had a couple of debates over Twitter about this and I guess I Kind of contend that demand in the developing world China Developing Asia Africa is essentially unlimited at 80 to 90 dollars a barrel of oil So I don't see a collapse in prices I kind of want to you to unpack it a little bit more why you think that there could be a collapse in prices Due to China or you know, I'm not I'm not saying that it's likely that there will be a collapse in prices I think you can Certainly for C circumstances where it will happen and again, you don't need to have wild ideas about this if you look at Again the International Energy Agency projections if they are remotely close to true you open up a big gap between capacity to produce and demand for oil in the next several years and That has to resolve itself somehow Either that is because that gets resolved because some countries decide to invest less in production and grow it less and preempt this kind of problem for prices or Prices fall forbidden wipe out some of the incremental supply including in the United States So I don't think it's implausible over the next few years I think over the longer run you either have this continually growing production that you're talking about or you have a big change in the world where Countries decide to curb their consumption substantially Then I do think you get into a very different picture. I hate projecting what will happen in the world 10 20 30 years from now It's a great way to make yourself look like a fool And I know that in some circles when you say I don't know what will happen that counts of saying I don't understand what's going on but In this case, that's really what we should be saying if we understand the problem correctly because the dynamics internally in a country like China that combined Different functioning of market different policies Urbanization different consumer preferences. You can't project that well 10 or 20 years out into the future Hi Marsha Johnston or a steward associates Um, I just I'm a little confused whether we're talking about demand reduction being the trend or whether we're talking about, you know Big increases in demand from developing countries. Can somebody clarify a little bit? So we're talking about demand reduction in the United States But if trends are any indication we're seeing still large demand increases from elsewhere in the world The United States is heading in a different direction We've had oil consumption fall not perfectly steadily, but pretty steadily since about 2005 This is the first sustained trend like this since the 1970s at the same time We're seeing large supply sorry large demand increases elsewhere in the world And that's what allows these different pieces to to add up now again to be clear I would prefer that the world got its act together and start consuming less oil or at least increasing its demand for oil in a more modest way But the United States has pretty limited control over what happens in these other countries are limited influence I don't think it has any control in a meaningful sense Hi Stephen Lacey with green tech media I'm curious as you traveled around the country How extensively you found the oil and gas boom has impacted clean tech? Certainly the industry has gone through a number of challenges many of those Independent of the oil and gas boom particularly in manufacturing and electric vehicles and solar But energy production continues to grow How intertwined are these two in the US? It's a great question One of my favorite experiences while I was writing the book was visiting with the CEO of a Company that makes batteries for electric cars and Silicon Valley and he bragged to me about how cheap his natural gas Fueled vehicle was and how he'd gotten a great deal and was saving all this money But he still did not think that it could expand and take over his market And so he was still going just as hard on batteries for electric cars and wasn't having problems with getting the financing And there's obviously an impact particularly from the gas side and the oil side is again the price impacts are much more moderate We're in a big global market. There are offsetting Factors that make it hard for US supply to move prices all that much natural gas is more challenging It puts a cap on you know, it it reduces peak prices. And so that creates challenges for Technologies like solar that are supposed to make their money delivering cheap energy around peak times But I still think the bigger factor is policy here If you look at what's happening and if you look at various modeling efforts and all these should be taken with a grain of salt You look at the counterfactuals and say what would happen if we took away? Cheap natural gas you see much larger gains in coal and you see still limited gains in clean energy Technology if you ask what happens if we reduce the capital costs of clean energy by 20 or 30 percent You can do that by changing the technology or by putting in place different policy you see much larger changes in Renewable generation so for the time being I think the main impact in terms of sort of straight economics It is from policy rather than from the market itself over the longer run I think that could change as The costs for renewable energy technology come down and get closer to where natural gas would have been without this abundance And by the way where coal would have been because that's the other competitor that gas is sort of obscuring Then that becomes more complicated and as part of why if we want to really get to zero carbon energy We still need policy That's not news that was true before there was a boom in natural gas It's still true But that definitely has to be a big part of the equation the other thing I would say and this goes beyond the sort of basic economics even the policy decisions as there is I'm sure an impact on People's mentalities, right? So when you go out in your venture capitalist, you've got your own host of problems I think we found the venture capital model isn't fantastic for funding a lot of clean technology solutions that we want But when you take that and then you combine it with the stigma that that followed cylindra for right or wrong There's real stigma when you want to go raise capital And then you add on this natural gas story that people aren't quite sure what to make of It can't help you raise money for these funds. I think that's I think it would be foolish to claim that it that it has no impact What happens to nuclear? Well nuclear is Cost challenge, let's say if you go back five years nuclear was cost challenged nuclear was not a competitive Way to generate us electricity before natural gas got cheap It's suffering from some additional challenges of the margin from a combination of cheap gas which stops it from making as much money as people would like during the day and Wind subsidies which stop it from making as much money as people would like at night So when some of these small older plants come up for safety upgrades it turns out to be cheaper to shut the thing down replace it with a gas plant then to Pay for the upgrade and continue to operate, but I think that's a small impact We'll see a bigger impact when we get Relicensing some decisions down the road But before the gas boom and after the gas boom the big variable for nuclear was still a price on carbon if you let nuclear capture the value of The fact that it does not entail greenhouse meaningful greenhouse gas emissions You're going to get a lot more nuclear power generation That it's that simple now. We would at that point have to face challenges Like waste disposal and safety and all these things. We will have plenty of debates And it might be that at that point renewable energy was a better economic bet Or carbon capture and sequestration turns out to be a better economic bet But we won't find out absent a serious carbon policy because nuclear just won't be able to compete It couldn't compete with with coal even with scrubbers and good Efforts to deal with particulate emissions and so on and it can't compete with cheap natural gas right now in this country The rest of the world is a different story, but in this country Nuclear has a very large uphill fight This man has been very patient Michael Swapota Yale for my climate change to the media. I just wanted to ask about two things We haven't heard about Canada Tarsans Keystone And the German energy vendor So Canada Tarsans Keystone To me this is a This is a great example of how we focus on a symbolic fight Instead of getting down to the guts of what we need to do I wrote a study on Canadian oil sands four or five years ago My colleagues used to make fun of me and and ask why I was working on an issue that no one cared about And and then all of a sudden this came out of nowhere As some as a huge focus in American energy debates I mean the the bottom line reality is that Keystone would not have a large impact on American Energy security on the American economy or on climate change I mean you can just do the numbers and it doesn't have a big impact The only way to imagine that it would have a very big impact on climate is to say Keystone is really a proxy for massive expansion of Canadian oil sands And all that expansion would be additional to the world market not substituting for anything else If you believe all those things you also have to believe that Keystone would lower oil prices enormously Because that same set of assumptions would drive you to make that conclusion So you can't sort of escape this you can't say it's huge for climate change and nothing for the economy Or it's huge for the economy and nothing for climate change The two go together But it's a small issue. I understand that it's galvanizing. I understand that it's important for people to focus on something But here you have an issue that 70 percent of the American people say they would like to see Keystone go ahead And I think the president would have real political challenges if he said no to it He's trying to promote an approach that says we're going to push forward on oil and gas production And I'm going you know, we're going to use For now existing regulatory authority to really screw down on emissions on the demand side Um, I think he'd have a harder time selling that as a as a coherent approach if he said no, uh, if he said no to the pipeline I also find it slightly peculiar that we're spending so much time debating Canadian energy policy when we have some very large problems in this in this country, but You know, this is the fight we're having I wish we were at least using it as an opportunity for people to get smarter about energy about Energy security about climate change. I don't think we're using it as an opportunity to get smarter to say the least The other question was about what's happening in Germany. I'm not an expert on Germany I'm not going to pretend to be one You know the german experience tell tells us first that if you want to put in the policy muscle You can get a deployment of a lot of different technologies But it's also providing us with a learning experience on what happens when you push a lot of intermittent technologies Into the system and so there's a lot of backlash in Germany against what's against some of this from the industrial world There are challenges with grid integration. Again, maybe it's good for the united states to have Germany go through this We can learn some lessons. We should pay some attention We we love to talk about how we'll export the american experience on natural gas the rest of the world With the american experience and innovation the rest of the world Here's a case where we should be really paying attention to europe and learning From them again, whether it's grid integration or how to do setbacks for Renewable energy projects so that people actually are open to having them built near their homes And there's a lot of lessons to be learned from what's happening over there I'd also one small small thing In any germany comparison you have to be very careful to take into and frankly a lot of european comparisons You have to be careful to take into account the fact that these countries can import electricity at Large scale in order to balance their system And that's an important piece so It's more practical to think about germany as an analog Let's say to new york state or to colorado that it is to think of it as an analog to the united states as a whole Yes, sir We wait I'm jack rigs with the aspen institute I want to go back to two of your answers and and follow up a little bit one just recently you mentioned the Potential political difficulty of a keystone decision Do you think it would be feasible for president obama to announce? To allow the keystone permit If he did it at about the same time that he issued a strong Carbon rule for existing power plants And second i want to go back to your comments about oil demand since transportation is such a key part of oil demand And i want to ask you to make a projection because you say you don't want to do that But how should we think about the potential for alternative fuels to displace large amounts of oil whether it's electricity or gas Great questions so feasible totally feasible uh I mean the only challenge to the detailed scenario you paint is that it A keystone decision might have to come in the not so distant future And figuring out how to really do the epa regulations rate is going to take time This is not just a matter of taking a study off the shelf and implementing it to really get some Solid ambitious regulations you need to come up with some clever ways to make them flexible within existing regulatory authority And that's not actually easy So that's going to take some time, but you can send a strong signal if you mean politically feasible Well, the president can do what he wants to do Will it satisfy his uh his critics who have focused on the keystone pipeline? I doubt it I think the keystone pipeline has been set out as a litmus test Uh, I would also say by the way There's become this discussion about how the president might do this as a trade for the keystone pipeline All indications I have is that this administration wanted to do power plant regulations in the first place So it's not like it would be a new trade to the extent that there is a trade I think it's a much more ambiguous soft one. It's that if the Administration said no on keystone I think it would create an atmosphere where people were more suspicious of these kinds of regulations And I don't think it would Prompt congress to take away his authority, but I think it would make it easier for them to do it if they wanted to It would be much easier for people to tell the story about how the president is using his regulatory authority to do things That we don't think he should be doing and therefore we should claw back that regulatory authority a bit So I think I would like to see uh, I would like to see stronger regulations on existing power plants I want to make sure they're done right. I don't want I don't think we want to see them thrown back The way the new power plant regulations were so people are going to need to take time to figure out how to get this right It's complicated territory because it's not traditional use of epa regulations. It's not a widget that you have to add to your plant It's essentially a system change you're trying to promote And it's tricky to feed that into the existing laws That gets to a broader point by by the way and we started the discussion talking about the 1970s we're still We're still sort of using the vestiges of the legal authority that was built up over decades to deal with very different problems from some of our biggest environmental challenges including climate change And even the keystone fight is trying to take rules that were set up to do something very different decades ago And use them to tackle climate change. They're just not effective in tackling climate change And so ultimately you do need to be able to as as impossible as it may seem right now in washington You do need at some point to be able to pass legislation to get on top of these challenges There is no way around it. You can do things now with existing authority But ultimately you do need a broad approach That a wide spectrum of people can buy into there. There is no way around that in the long run Uh, you asked this separate question about how do we tackle? Uh, how do we tackle demand for uh, for oil in the united states? Globally i'm going to talk about the united states because i'm uh Globally let a thousand flowers bloom in each country is independent. I don't think you know Has their own way of doing things. I think in the united states We're working through fuel economy regulations enabled by better technology I personally would love to see in the context of a serious deal on the deficit the use of a stronger gasoline tax instead of hiking taxes on income or uh on personal or corporate income I don't know that that's all that likely But I think that if you do the modeling and I've I've done modeling with at least one model with a colleague where You compare deficit package that uses a gas tax raise money with one that Uses personal income and corporate taxes to raise money and uh, if you do it the right way you get better economic performance better job growth And lower oil consumption, but i'm not going to bank on on then the and the details matter there um So that that's sort of the regulatory piece You can also then ask a sort of the technology level what's going to deliver and I think over the near term It's mostly changes in our cars and trucks It's also changes in people's patterns of where they live and Where they choose to work and how much they drive I think people are changing with high oil prices And we're pretty far out of sample as economists Say when we try to extrapolate from the past to the present. So I think it'll be interesting to see how that develops Two other two or three other categories people tend to look at biofuels Uh, I love read. I love reading these modeling efforts that assume that every piece of the biofuels mandate will be delivered Through the next decade. I find it very unlikely that that will happen And we're about to have a large fight over even the existing pieces of the biofuels mandate I don't want to get into a technical discussion about renewable identification numbers, but You know, we have some problems in the ethanol world The two other places where you have a lot of talk is on natural gas and vehicles So are we going to start putting natural gas in our cars and trucks in a big way? I think we're we're seeing some appetite for long distance trucking For personal vehicles, I suspect it's less likely. I mentioned before this This battery executive who bragged about his natural gas car Then he pointed out that he happens to drive by the san francisco airport on the way between His home and his work every day. So he is able to stop every day Or almost every day to fill up his car because you get about a quarter of the distance on the same On the same tank of gas of natural gas. So I think there's some pretty big barriers You can put in home filling stations, but that's a pretty big incremental cost And I'm not sure that people will do that in a big way You could see more conversion of natural gas into liquid fuels Methanol or into Probably more likely in the gasoline or diesel But there are a lot of risks that a developer will take doing that. We'll see what the sassaw project How far along it gets and how the economics turn out And the last piece and I haven't left this for last because it's the least important is electrification I started off as a bit more of a a skeptic on electrification before I started reaching the book researching the book in part To be honest because we'd cycled through hype and so many different technologies that I assumed that we were in the same cycle of hype on electric cars We went through hydrogen fuel cells Then we went through biofuels and so electric cars are next. Why shouldn't it turn out any differently? I I was at least in part convinced by a senior engineer I I met who talked about electric vehicles providing an evolutionary platform to develop technology We've got huge penetration of hybrid cars, particularly globally. That allows you to learn a lot about how to deal with electric engines Then you can evolve from that Using existing infrastructure to plug in hybrids and then eventually In the places where it makes sense to fully electric cars And I tend to believe that these evolutionary changes are more likely to happen than ones that require Infrastructure and technology and preferences to all change at the same time again far from a given but Because of this evolutionary opportunity I tend to actually see a lot of potential there, but it will take a long time People replace their cars as you know every 15 years or so or at least cars themselves turn over every 15 years or so So any change takes a long time I like that answer Okay, we have one more time for one more question. So Michael Aylward. I'm an economics graduate student First just a quick sidebar you mentioned the second last thing about oil Dependence reduction oil reduction strategies There's a neat paper by a couple of edf scientists last year on the global warming potential of several different strategies one of which was replacing long-haul freight trucks with natural gas And they concluded that it would not have any Climate mitigation benefits for at least 150 years So that was an interesting piece there and that's even with conservative estimates on or I should say liberal estimates on on methane fugitive emissions But I my first my question was with respect to the Aspen Institute person Speaking of of trades possible trades for for quiescent excel And speaking of your previous mention of the possibility that Less good or less responsible gas drilling actors in the u.s. Could ruin it for the responsible ones I wonder what you think about the possibility of a trade for More stringent or more prudent drilling regulations for a quiescent excel permit So firstly on on the first piece of what you talked about this edf paper on on methane I think steve when you outlined my bio in the beginning use the word physics a bunch I haven't written anything in physics for a dozen years last year I got so frustrated at the methane debate that I actually published a couple physics papers on it And I think it's just a muddy muddy debate A lot of that edf paper is fantastic But for the long haul trucks it relies on decades old estimates that assume that the efficiency of engines in those trucks Are about 20% worse than the efficiency of any other engine and that Drives the results in a very strong way On trades again. I'm not sure who would be doing the trading in that case But I do think stepping aside from pretending to be a political strategist as a matter of good policy Allowing increases in oil production To the extent that they're economic given prevailing prices and at the same time Really making sure that we do this right So that it's safe so that it's fair to people in communities where it's affected and so we can continue to enjoy the benefits As a matter of policy that seems to me like a no-brainer As a matter of politics it like pretty much anything else these days is pretty tough All right Mike thanks for doing your launch here at new america the power surge Michael will be be signing his book Just out here. We have a few copies. Thanks very much for coming and thanks mike again