 Energy in America, we should never underestimate its role in America going forward. And we have Lou Puliarisi, our correspondent and the CEO of E-PRINC, an energy think tank in Washington, D.C. to help us understand these macro issues. Welcome back to your show, Lou. Be here, Jay. Just in from Japan a few hours ago. Oh, that's great. I'm going to carry your bag next time. Anyway, you're doing so many great things and I'd love to follow your travels, your adventures, and the lessons you learn. Anyway, so this is a great topic for us to discuss. We're calling it, to what extent is energy a factor in these campaigns? Energy and the elections to come. It's, what, 15, 18 months away and it's not very far and, you know, warming up. The working title for this would be, will the Green New Deal elect Donald Trump? Yes. Right. Well, yeah, or could a Green New Deal hand the election to Donald Trump? Exactly, exactly. So what do you think? What about that? So I think what we ought to do is, you know, I'm quite stunned watching the democratic debates of the lack of any moderation among the candidates. I guess you could say Joe Biden is at least close to the center, but that, and you know, I understand that the way these elections work is that you try to work your base to get the nomination and then you drive to the center to try to win the election. But I actually think they've gotten them, some of these candidates have gotten themselves so far out on the limb, it's going to be pretty hard to get back to the center. So it's not, it's not easy to change your position as we've seen with Kamala Harris. Right. It's not easy. So I thought we would just take a look at the new, I guess the Green New Deal, not the new Green Deal, but the Green New Deal, just a small few pieces of it and talk about why not only is it very unrealistic and kind of pie in the sky, but why it is likely to cause a huge backlash among a lot of the constituents that they're trying to get to vote for them. And we can talk about some aspects of this, but I do think the proponents of this program are going to be subject to a lot of ridicule and actually frightening counterattacks. So maybe we should go to the first image here. Okay, let's do that. And this is, you know, AOC or Anastasia Cortez. She's really, she's speaking, stridently I can tell from the photograph. Right. And so if you look at the, now some of these positions or the compositions of the Green New Deal are under debate, but basically it talks, you know, from what we understand it requires, or at least as an objective, the elimination of all cows, because I don't know if your audience is aware, cows emit quite a bit of methane. So that is a problem for those worried about climate. Then the Green New Deal also provides subsidies for those unwilling to work. You could say people don't find jobs unwilling to work. A hundred percent of power demand through clean renewable energy sources, upgrade all existing buildings with energy efficiency technology, and of course all of these goals should be completed over the next 10 years. And the reason why I think this is kind of important is the U.S. has become a major oil and gas producer. It is now the largest oil and gas producer in the world. And I'm going to show you why, even in areas where you might be able to get renewables for a little more than these, actually generally will be a lot more expensive, you're going to lose something else. And that's something we're going to talk about a little bit, it's called economic rent. And this economic rent has value to society because people can use it to do things like build schools and roads, mental health clinics, things like that. So if we go to the next kind of picture here, Graf, I think that it's very interesting to see that there is a kind of radicalism in the implementation strategy, right? What they want is a Manhattan-style project of clean energy sources to immediately stop burning fossil fuels. And then this quote I really like, we need to ditch the patriarchal models of wealth and status reproduction that have been constituent of nearly all expansionist war-making and resource-depleting societies over the past 10,000 years. So I thought that this- Oh, that's pretty heavy stuff. Yeah. And I just think before we get, I'm going to show you a nice little picture here coming up in a second, but I don't think you'll understand. Last year, I looked this up today, last year, producers, refiners, and marketers of oil and gas spent about $184 billion in new capital investment. That's one year. The utility industry spent $131 billion last year. It was not all on green. Very little this went to- some of it went to green in the utility sector, but most of it went to kind of making the existing capital base more efficient, maybe substituting out some coal for gas, but these are colossal amounts of money. I mean, if you think about the stimulus package alone for the 2008 recession, which was considered a huge number, that came just under $50 billion for energy programs. And that was special. This is huge, yeah. Yes. So these numbers are big, and these capital outlays occur every year, right? So why are we spending so much? You say upgrade, make more efficient. We have to spend as much- There's some of that awful lot of money just to do that. Yeah, it sounds like a lot of money, but we're a big country, and we use a lot of energy. And if you look at the- so one of the things I want to talk about though before- there's a couple of other things. Let's go to the next picture, the next- and you see this is a quite- I think this is really interesting. Now, I don't know if you know that the state of New Mexico, it's dominated by the Democratic Party, and it has a very active initiative to ban all fracking, you know, because fracking is bad, right? And I found this picture, which I think is interesting, not too long ago, not too long ago at the beginning- sometime last year, the Interior Department, you know, the state of New Mexico has a great deal of public lands, held a lease sale, but as a bid for the rights to produce oil and gas from public land in New Mexico, right? The sum of those high bids came to $1 billion. But under the sort of revenue sharing laws of the Congress, a big chunk of that money went to the state of New Mexico. And that- you can see the picture of this check, a relatively low level Interior Department official is handing a check to an even lower level set of county officials for $486 million. And so the reason why this is important is because this conventional fuel source, energy source, oil and gas, has in it a lot of economic rent, and that is its value to society. Its value to society far exceeds its cost of production in many cases. And in the case where there are public lands, the government collects this extra value. And so if you want to have a program to get rid of this, someone needs to go look at that check and say, well, gee, what could I do with that money? I could build schools. I could take care of old people. I can have health clinics. I can- I can take care of people who don't want to work. You can do a lot. And so any decision to transform American society out of these traditional energy sources into these fuels of the future probably mean moving to a set of fuels which are relatively expensive and have little or no rent. Actually in many cases they will require subsidies. And so it's not just the cost of the- of production of these alternative fuels. It's what are we going to do with the- what do we do about the loss of this economic rent? What we call- it's a kind of term of art among economists. And this exists all through American society now because we are the largest oil and gas producer in the world. So that's- Have you mentioned- have you mentioned the cost of changing out the infrastructure of transitioning to new systems? No, we're not even getting to that. That's going to be- we know in the- in the- there's a lot of discussion, particularly for the electric grid. It can be quite expensive. But just think about the cost of transitioning the entire auto fleet to electric cars or all the- all the other aspects that we use oil and gas for in the petrochemical industry and the- the- how we're going to distribute these new supplies, however they might be. So I think that of course you can argue the Green New Deal is just a silly idea and it's not going to go anywhere. But I do think a number of very prominent politicians are now promoting it. And I think they're not- you know, they haven't really had a chance to confront it. I actually don't think it would have much chance even if- even if one of the candidates won. I don't think in the Congress it would get very- Well, let me- let me- let me add this though, I mean we had a millennial on the show last hour and what she was saying, 27 years old, local, and very articulate and smart, what she was saying is my generation is willing to make a compromise. We know we have to change things. We know we're going to suffer a certain amount of discomfort and, you know, and you know, change is hard, change is painful. We know that. We're willing to do that. Now I'm not sure that's true for everyone or for her entire generation, but there are those people out there that are saying, you know, OAC may be unrealistic and certainly this- this Green Energy Plan sounds- Green New Deal Plan sounds unrealistic, but it becomes more realistic if everybody gets out there and says, we know it's painful, we're willing to suffer it. I don't know if I see that political will, but- So this young woman lives on the- somewhere on the Hawaiian Islands, I guess. Yes. Right. So if it gets too hot, she opens the window and if it gets too cold, she closes the window. I'm not really thinking- I don't know what sacrifice she's talking about. If she lived in the Central Valley of California, right, we have people who, when it gets too hot, they can't afford the electricity, they have to go to the Walmart to Kula. Okay. Oh my God. So I think- and we do have people who don't make a lot of money and who high electricity prices is a huge problem. Okay. And we do. We've talked about this before. The California has as close to a new Green Deal as anybody in many ways and we know that the price of electricity has risen over the last 10 to 15 years, five times faster in California than it has in the rest of the country. And that gasoline prices are about a dollar more than the rest of the country now. For lots of Californians who have high incomes and live in the coastal regions, that's not a problem. But for a lot of Californians, it's a severe problem. And I don't want to get too far off track here, but this is an exotic program, a very complicated program. And I always wonder, you know, I think before the governments take on these very complex programs, that will show us that they can take care of the homelessness, that they can prevent dams from coming apart, and they can keep the road system and the transit system operating. I mean, I just think there should be some requirement apart of the government to show that it can functionally deliver the basic services before they go ahead and sign up for these more exotic programs. But yeah. Yeah. Oh, that's very important. I mean, those are the things we depend on, sometimes for life itself. And so that's why I think this, this, this very, you know, I could, we could do a lot of analysis with charts and graphs. But seeing, seeing this government's federal officials handing this monster check to the state of New Mexico, I think it brings it all home for me. Sure. So where do we go from here? You have another slide that points this out. Yeah, yeah, we can go through. There's two, there's only two more. This, this is a slide. I think a lot of people don't understand the scale and scope of the American kind of energy infrastructure. This kind of elaborate slide where all these bubbles show you all the natural gas, they show all the kind of pipeline. They don't really show all the pipeline show the major pipeline networks and then all the distribution hubs for natural gas in the United States. OK, that is a massive investment. It's worth, you know, probably several hundred billion dollars, if not close to a trillion dollars in capital investment. Are you really going to abandon this actually functional energy complex in a few years? And do you really think you can abandon it without any kind of serious economic consequences? So I think, and once again, to get back to the politics of that, I think if, in fact, one of the Democratic candidates really embraces this. And I don't think, and it's quite possible, Biden's not going to make it. You know, but I think Biden is probably, you know, he's probably a center left guy, but he's going to be commonsensical. But if Kamala Harris or Elizabeth Warden get and they run with this, I think there's just going to be a big big bullseye for Trump. And he's going to start talking about this and scare and the American people are going to get scared. Well, I think I'd be scared of this. Part of this is, you know, the fact that he has. He has not really endorsed renewables. He has not endorsed clean energy. And when he gets a chance, he tries to, you know, incentivize coal yet again. And I mean, you know, I mean, speaking as somebody who at least is, you know, interested in and wants to see renewables succeed, maybe not at the same speed as OAC does, but ultimately succeed. I have a lot of trouble with Trump going back to coal. Because I mean, I consider him ill educated or and ill motivated on the subject. So people like me are not I'm not. I don't think that she's going to hand the election to him on that basis. She's going to have to come up with a better plan. So it's a dynamic, Lou. And I want to offer you the two possible dynamic. One is OAC gets more realistic and her friends. And the other is Trump gets more moderate about renewable energy. These two possibilities may happen. So I think the first let's talk about the reality. In the electric power sector, the federal government is a very minor player. Renewable fuel, renewable portfolio standards, what you have in the state of Hawaii and the government and 100 percent of these are driven by state or regional transmission, you know, offices or, you know, organizations and not by the federal government. In fact, in all the modeling on the Clean Power Plan for which we participated in, there was almost very little difference between what Obama tried to do with Obama's Clean Power Plan and without his clean, clean power. I mean, you I just tell you that the error term around the where you ended up swapped any point estimate because the relative price of coal versus gas was driving the coal out, even though many cases the coal was cheaper. Let's say when there, as far as I know, in the last 10 years, no utility in the United States has built a new coal plant. We're just talking about the pace at which the coal retirements occur. Right. So so it's hard to now. I I don't I think I think the way Trump uses Twitter and the way he talks to the American people is very counterproductive. I don't know whether he's an evil genius or or if just he's a wacky he's got a wacky guy with some sort of crazy ideas on this stuff. But the he does appeal to a certain number of people, enough, apparently, in the last election to win, which say, you know, he's right. You know, all these crazy people in Washington, they're not talking to me. They're talking to all their friends at the universities and all these elites in New York and they don't have a clue about how I live my life. And I think he you know, you could argue that he sort of understands that. And that's what he's he's just operating as a political animal. And I think that's true. He's connecting with that's not an efficient way to proceed, either. I agree with you. And there and their numbers are increasing. Last last number I heard is a 47 percent approval rate for him. It's a problem. I mean, let's say in any if you any political analysis, the United the a normal president, but this kind of national economy would be at 55 or 60 percent. It's strictly Trump's behavior, his commentary, and you could argue, his character that's holding him back in mind. And all the major political models. Yeah, it's so interesting that you will win. The young people, let's call them the millennials and the ones who are not in the in the red states per se and form that that red base of his. They have a completely different view of the world than he does. And so many issues. And there's, you know, they're they're completely, you know, turned off by what he does every single day. I agree. I agree. And but I think the opposition has to present something that, you know, that addresses the fundamental fundamental issues of the national economy and job security and a lot of other concerns that have brought appeal in the American electorate. And, you know, climate is I mean, my view is that we're going to be much better off when we get to the point where climate issues are a technocratic issue and not a religious issue. As long as it remains a religious issue, I cannot I cannot talk to anyone. If it's a technocratic issue, then we can talk about, OK, how do we get on the gradient that is least cost that doesn't sort of bankrupt the country that is robust against uncertainty? We can start talking about those things. And then finally, yeah, go ahead. I worry that climate is going to catch up with us, though. And it could be on a sudden death basis. So but we do have some research on that, which suggests that most of the a lot of the discussion of it is quite alarmist. In other words, climate is a technocratic problem. It is a problem. It is in my mind, I don't think the data supports it, including the non-Trump touched worst case scenario that the interagency process generated. It is not an existential threat. OK, it's the earth is not going to explode in a big fireball in 10 years. I mean, that's just and I think if you present this to the American people this way, they're going to not listen. That's why it's, you know, they people keep saying it's the end of the world. And people say, well, OK, it's hot, but, you know, is it really the end of the world? Well, you know, if there is extreme weather in a given look, you know, what what is it? Somebody said that there is another climate change incident in this country every week, every single week. So I don't know who said that before. And I suggest that all we need is one really bad one and the subject and the discussion will change. I got it. But if you are a hard data person, the only research that I have seen on this at NCARA in Colorado by a group of four eminent scientists, Pellke, who led that research that cannot find, for example, for hurricanes and typhoons that cannot find an increase in the incidents and the severity over the last 100 years. I just can't find it. Yeah, you can have colossal damage to these things, partly because people are building in places that used to get hit by them before. And there was nobody there, so there was no damage. And so I think, yeah, we have a. The climate is a problem, right? It is not, in my opinion, an existential threat. Well, let me ask you this problem. Let me ask you this. You know, we talked about always see in the New Green Deal, talked about the economy. We talked about how unrealistic some of those points on our New Green Deal are that they'll never be adopted, but they're not good policy, either, in view of other needs of various constituencies in the country. But if you integrate your thinking, your research and the political factors that are in play and that are likely to continue to be in play in the next 18 months, what do you get? If you were advising the president or, for example, all these Democratic hopefuls as well, what would you say the best platform would be on energy to get them elected? What should they espouse at this point to cross the board to bring in both sides to the middle and sort of try to satisfy everybody's concerns and everybody's sense of reality? Yeah, so if you look at sort of what I would call responsible Democrats, right? Like the former secretary of energy, Ernie Moniz, has this Energy Futures Initiative and and you sort of think about, OK, we can't really go and we're not nobody is going to agree to live in a cave. We have to accept that and that if this stuff is too costly, the American American people will walk against it and people say they're willing to sacrifice. OK, well, how much this test? Go do a little survey on the streets of Honolulu and ask them, OK, I've got a plan for Hawaii. It's fantastic. It's only going to cost you $1,000 more a year. I know you're a good Democrat and you're ready to sacrifice. Can I sign you up? I just want you to go go down to your local Starbucks and just cry that out next week. OK, and let me know what you what kind of results you got. We should try that. I would be so interested in it. Tell them they need to give you a hundred dollars to get it started. Or how about five thousand or ten thousand? Yeah. And so and I think the thing is, is that, all right. So if you're going to do this, you can't give up on nuclear power, right? Nuclear power is clean. It doesn't emit anything and all these these. So if you abandon all kinds of what we know works and you just sort of want to run on a bunch of slogans, it's not going to happen. It's just not going to happen. You may even lose the election. You could win the election with slogans. I agree. I agree. You can win. Lots of wacky people have been made president before. Trump is not the first one. But do you think, you know, here's one thing that I would like to post you. You think that energy is that important in the mind of the electorate? I'm not really sure it is. I'm not sure they understand that they know about it. Energy is is prolific. And in the United States, relatively cheap. As a percent, I would be surprised if the. Tire percent of growth of disposable income dedicated to energy, including gasoline. I doubt it exceeds 10 percent of most Americans income, disposable income. That's amazing. If you think about it, when we went back in history, food and energy probably consumed half of the income. So the productivity of the world and the United States economy, especially, has made it cheap and plentiful. So we have room to do some things as long as they're not too wasteful. Yeah, yeah. Well, I just think it's I don't hear that much discretion over it. And we should put a lot of, yeah, and we should put a lot of money into research. I don't have a problem with that, but a lot of money. That's the kind of Bill Gates strategy. Look, I mean, what Gates and what these big, you know, these big billionaires who are thoughtful and giving away their money. What they're saying is, look, we have to have technologies that are competitive. That's how we're going to transform society through technology, not through command and control, not through sort of forcing you know, the whole world to move on to something that is unrealistically, operationally and in cost-wise. And you could see by the last, we can go quickly, look at the last picture, something we're very interested in everything. And you could see here that the growth of LNG worldwide is now, you know, virtually exploding. That means that the large supplies of gas from the United States, West Africa, Australia, are now making their way to all these destinations around the world. Where they can be used to back out coal and heavy fuel oil. And that's why I get kind of upset with AOC and a lot of folks saying, well, you need to get rid of the gas. You need to get rid of the oil and get rid of the gas. No, we have to get on the gradient. You can't just do it overnight. This is the, and by the way, although US CO2 emissions were up last year, over the last 10 years, the US is probably, I'm sure of this, the US is the best performing large economy in reducing CO2 emissions by far. We have reduced emissions. I think after I will send you the data on it, but two to 3% a year per annum for the last 10 to 12 years. We did have a bump upward last year having to do sort of some unique conditions in the American economy. Well, I come away with two thoughts on this. One is we don't yet know how much of a role energy is going to play. And I think that AOC's program, the New Green Deal, it needs a lot of work. And I think I agree with you that if she sticks on those points, it's going to work in Trump's favor because he's absolutely going to argue it's all unrealistic. But the other thing that reminds me is that from a discussion is that we need to plan these things from the technology on out. And not only a matter of planning, you know, the type of resource you have or or what the grid is made of or the electronics, it's a matter of looking at every step you take as against the economy and other things that government has to do. And I don't think we're doing that. I think we're limiting ourselves to planning in silos. Don't you agree? No, I absolutely agree. And I think we need to have a more honest conversation. You can't. Is my wife always says when we go to a party, don't talk about climate. And we have one guy who comes out of the School of Journalism. He says, that's the only thing to talk about. Don't talk about climate. It was great to talk to you. Let's get together in two weeks time, assuming that we can find you on the planet. So two weeks time. Yes, I might be in Mexico City, but I will be able to do it. OK, well, they have broadband down there. I know. Yeah, they do. Thank you, LuPoZarisi, CEO of E-Prank, joining us from Washington about energy policy and how they will. That policy will affect the elections coming soon. Thank you so much. Thank you, Jay.