>> GOOD EVENING.
I'M DIXIE ANDERSON WITH
THE WORLD AFFAIRS COUNCIL...
AND WELCOME TO THIS,
OUR FINAL "GREAT DECISIONS"
LECTURE SERIES OF THE SEASON.
SO, BITTERSWEET FOR US.
WE'D LIKE TO THANK
 OUR SPONSORS THIS EVENING.
VARNUM LAW-- UM, MR. GOODMAN,
WOULD YOU LIKE TO STAND
AND BE ACKNOWLEDGED?
(applause)
AND THE CENTER FOR SUSTAINABILITY
 AT AQUINAS COLLEGE,
DR. DEB STEKETEE IS HERE...
WHO IS ALSO 
OUR MODERATOR.
(applause)
AND OF COURSE, WE THANK MICHIGAN RADIO,
OUR MEDIA SPONSOR.
WELL, HOW MANY OF YOU 
HAVE ACHIEVED PERFECT ATTENDANCE?
I'M GONNA GET MY GLASSES ON, 
SO I CAN SEE.
HOW MANY WERE HERE
 FOR ALL EIGHT?
WOW.
GOOD, GOOD.
(applause)
OKAY, HOW MANY MADE
 SIX OR SEVEN?
WONDERFUL, WONDERFUL.
WELL DONE.
UM, WE'VE HOPED YOU ALL ENJOYED 
OUR NEW ARMCHAIR DISCUSSION FORMAT.
I THINK YOU HAVE, 'CAUSE WE CERTAINLY HAVE
GOTTEN A LOT OF POSITIVE RESPONSE OVER IT.
SO, WHAT I WANNA DO TONIGHT 
IS GIVE YOU ALL A GREAT BIG "THANK YOU,"
AND THAT'S TO YOU, 
OUR AUDIENCE.
WITH THIS NEW FORMAT, 
WE'VE--
THE AUDIENCE HAS HAD 
AT LEAST 25 MINUTES OF DISCUSSION
AND Q&A AFTER EVERY SESSION,
AND I JUST THINK THAT'S FABULOUS.
SO, CONGRATULATE YOURSELVES.
THANK YOU--
THAT'S WONDERFUL.
(applause)
IF YOU WOULD LIKE 
TO STAY UPDATED ON OUR EVENTS,
YOU CAN SIGN OUR EMAIL ADVISING LIST
OUT IN THE LOBBY
AND WE'LL SEND YOU AN EMAIL.
UH, YOU CAN JOIN, AND YOU'LL
ALSO GET DISCOUNTED PRICING.
WE DO HAVE A SPECIAL 
$10 EMAIL MEMBERSHIP AGAIN--
THAT'S OUT IN THE LOBBY, TOO.
WE HAVE TWO EVENTS COMING UP
 IN THIS NEXT MONTH OR SO.
OUR FIRST ONE WILL BE
"DEBRIEFING SAUDI ARABIA"
WITH DR. ROGER DURHAM,
WHO'S OVER HERE, WHO JUST RETURNED
LAST WEEK FROM SAUDI ARABIA.
SO, WE'RE GONNA DO
 A BRIEFING ON IT.
ROG', WAVE YOUR HAND.
(applause)
I'M LOOKING FORWARD
 TO THAT ONE.
AND THEN, OF COURSE,
THE FIRST PART OF MAY
 IS OUR CELEBRATION
DURING WORLD TRADE WEEK,
WE'LL ALSO BE DOING OUR SEMI-FAMOUS
INTERNATIONAL TRIVIA GAME
CALLED "WORLDQUEST."
SO, WE HOPE YOU'LL CONSIDER
 COMING TO THAT.
THAT'S GREAT FUN.
WE ARE GOING 
TO CONTINUE
WITH THE ARMCHAIR FORMAT
AGAIN THIS EVENING.
DR. BARTIS WILL MAKE
 BRIEF REMARKS,
AND THEN DR. DEB STEKETEE, 
OUR MODERATOR,
WILL ASK FOLLOW-UP QUESTIONS,
AND THEN TURN IT OVER TO YOU.
SO, TEXT YOUR QUESTIONS
 AT ANY TIME.
THE NUMBER 
IS IN THE PROGRAM.
AND OF COURSE, IF YOU'D RATHER JUST COME
RIGHT DOWN TO THE MICS, DON'T BE SHY.
JUST COME ON DOWN 
AND ASK YOUR QUESTIONS.
OUR MODERATOR FOR TONIGHT
IS DR. DEB STEKETEE,
WHO IS A PROFESSOR
IN THE SUSTAINABLE BUSINESS PROGRAM
 AT AQUINAS COLLEGE.
OUR SPEAKER FOR THIS EVENING
 IS DR. JAMES BARTIS
FROM THE RAND CORPORATION.
AND I HAVE TO TELL YOU 
WE BRING IN RESEARCHERS FROM RAND
AS OFTEN AS WE CAN, BECAUSE
THEY ARE ALL UNIFORMLY EXCELLENT.
A HALLMARK OF RAND RESEARCHERS
IS THEIR COMMITMENT
TO PRESENT 
UNBIASED RESEARCH TO YOU.
AND INCIDENTALLY, DR. BARTIS
HAS SENT ALONG A "RAND REVIEW"--
AGAIN, THESE ARE IN THE LOBBY.
IF YOU'D LIKE TO PICK ONE UP,
 FEEL FREE.
SO...
I HAVE TOO MANY SHEETS
 OF PAPER HERE.
PLEASE, JOIN ME IN WELCOMING
DR. BARTIS FOR HIS PRESENTATION,
"ENERGY GEOPOLITICS-- 
AN ISSUE OF NATIONAL SECURITY."
DR. BARTIS.
(applause)
>> THANK YOU--
THANK YOU VERY MUCH.
AND THANK YOU AND DEB
FOR THE HOSPITALITY...
THAT YOU'VE SHOWN 
SINCE I'VE ARRIVED HERE.
IT'S MY FIRST TIME IN GRAND RAPIDS,
AND IT'S EVIDENTLY A VERY NICE CITY.
I WAS ON A PLANE ON FRIDAY--
 A VERY LONG FLIGHT--
AND I HAD A COPY OF THE
"INTERNATIONAL HERALD TRIBUNE" WITH ME,
AND I WAS READING THE MAGAZINE
 TO PASS THE TIME,
AND I NOTICED THAT
THERE WERE A FEW ARTICLES
THAT I THOUGHT WERE VERY CURRENT
 AND IMPORTANT
FOR THE KIND OF TOPIC
I WANTED TO HAVE TODAY.
SO, THIS IS THE-- THIS IS LAST
FRIDAY'S ISSUE THAT I'M GONNA BE--
THIS VERY PAST FRIDAY.
SO, WHAT I'VE DONE 
ON THE NEXT SLIDE IS I'VE, UH...
WRITTEN DOWN SOME OF THE HEADLINES
OR TOPICS AS THEY APPEARED--
EXACTLY AS THEY APPEARED IN THE...
IN THE "HERALD TRIBUNE."
AND IT'S REMARKABLE THAT 
IN A LITTLE 20-PAGE NEWSPAPER,
THERE ARE THIS MANY RELEVANT TOPICS
ON ENERGY OR RELATED.
AND SO, 
LET'S BEGIN WITH...
THE TOPIC-- I WOULD LIKE
TO SPEND A GOOD PORTION
OF OUR DISCUSSION TODAY ON,
 NAMELY--
THIS WAS THEIR
FRONT PAGE ARTICLE--
"ENERGY GAINS CHANGE 
THE EQUATION FOR U.S. LEADERS."
AND BEHIND THAT ARTICLE
IS THE FACT THAT WE ARE--
WE ARE PUMPING MORE OIL
IN THE UNITED STATES,
WE'RE GETTING MORE OIL FROM CANADA,
AND THERE'S SOME TALK THAT,
EVENTUALLY, WE'RE GONNA BE
 MUCH LESS DEPENDENT ON IMPORTS...
AND THAT WE OUGHTA RE-THINK
OUR FOREIGN POLICY,
IN THAT THIS--
THAT THE ONLY REASON THAT WE HAVE 
ALL THESE PROBLEMS IN THE MIDDLE EAST--
UH, THE IMPLICATION BEING THAT WE HAVE
THESE PROBLEMS IN THE MIDDLE EAST
BECAUSE OF ITS IMPORTANCE
TO OUR OIL IMPORTS.
SO, I THOUGHT-- YOU KNOW, QUITE FRANKLY,
I'M VERY CONCERNED WITH THAT--
THAT THE WHOLE ARTICLE 
AND THE GIST OF THE ARTICLE,
UH, ON THAT TOPIC,
AND WE'LL TALK MORE ABOUT THAT
A LITTLE BIT LATER IN THE TALK.
THE NEXT ARTICLE 
WAS TITLED
"U.S. ALLIES SPARED
IRAN OIL SANCTIONS."
AND THIS ONE IS REALLY
 CLOSE TO MY HEART.
I'VE BEEN LOOKING AT
THE GEOPOLITICAL POWER
OF OIL-EXPORTING NATIONS
FOR SOME...
SOME 12 YEARS NOW.
BACK IN THE EARLY 2000s, 
WE WERE TRYING TO PRESSURE JAPAN
NOT TO MAKE LARGE INVESTMENTS
 IN IRAN,
UH, THE AZADEGAN OIL FIELDS
THAT WERE BEING OFFERED--
JAPAN WAS BEING OFFERED THE OPPORTUNITY
TO INVEST IN THESE OIL FIELDS.
AND WE STILL HAD, AT OUR-- 
AT THE HIGHEST LEVELS OF OUR GOVERNMENT,
WE HAD GREAT RESERVATIONS
ABOUT JAPAN'S PROSPECTS THERE.
AND AT THE TIME, 
THE MESSAGE COMING FROM JAPAN IS,
"WELL, YOU KNOW, WE ARE YOUR GOOD FRIEND,
BUT WE'RE ALSO...
"OUR OWN COUNTRY, AND THIS IS VERY MUCH--
 WE NEED TO HAVE THIS OIL.
"WE NEED TO PUT OUR FLAG 
ON IRANIAN OIL."
WELL, IT TURNS OUT
 THAT THEY--
THAT THE SITUATION IN IRAN GOT SO BAD
 THAT EVEN THE JAPANESE REALIZED
THAT THEY COULD NOT INVEST THERE.
BUT HERE'S ANOTHER EXAMPLE OF,
 YOU KNOW--
ONE MORE EXAMPLE 
OF THE FACT THAT WE CAN'T--
THAT OIL EXPORTERS
REALLY DO HAVE SOME POWER,
AND THE FACT THAT WE CANNOT MOVE
FAIRLY STRONG ALLIES OF OURS
TO GET OFF 
OR TO MOVE AWAY FROM IRAN.
AND THE SAME POWER IS HELD
BY VENEZUELA, FOR EXAMPLE.
EVEN THOUGH 
THEIR OIL EXPORTS--
AND NOR ARE IRAN'S OIL EXPORTS THAT MUCH,
COMPARED TO THEIR POPULATION.
IRAN'S A POPULATION OF--
WHAT-- 70 MILLION PEOPLE?
THEY EXPORT ABOUT
 2.4 MILLION BARRELS.
YOU DO THE MATH.
IT'S NOT THAT MUCH MONEY
 PER PERSON.
BUT THAT MONEY 
DOESN'T GO TO THE PEOPLE.
IT GOES TO THE GOVERNMENT.
THE THIRD ONE 
WAS AN EDITORIAL
ENTITLED
"THE OIL UNDER OUR NOSES."
AND THE BOTTOM LINE OF THAT EDITORIAL
 WAS "WE NEED TO DRILL MUCH MORE
"IN THE UNITED STATES 
BECAUSE THERE ARE GREAT BENEFITS--
"NATIONAL SECURITY BENEFITS--
 IF WE DRILL MORE IN OUR OWN COUNTRY."
AND THAT GOES-- 
SORTA REINFORCES THE HEADLINE.
YOU KNOW, "IF WE ARE ENERGY INDEPENDENT 
OR OIL INDEPENDENT
"OR CLOSE TO INDEPENDENT, 
DOES THAT REALLY CHANGE OUR SECURITY?"
THE FOURTH BULLET THERE IS--
UH, CONCERNS THE NUMBER TWO--
UH, ACTUALLY, 
THEY'RE ALMOST TIED WITH IRAN--
UH, I MEAN SAUDI ARABIA.
BOTH SAUDI ARABIA AND RUSSIA PRODUCE
OVER 10 MILLION BARRELS A DAY OF OIL.
SO, THIS IS A VERY IMPORTANT
 ENERGY COUNTRY.
THEY'RE NOT A MEMBER OF O.P.E.C.,
SO WE DON'T HEAR AS MUCH ABOUT THEM,
BUT THEY'RE VERY IMPORTANT
ON THE ENERGY SCENE.
IT'S INTERESTING THAT, UH...
THAT THE SITUATION IN RUSSIA-- 
THEY HAVE LOTS AND LOTS OF COMMODITIES,
BUT THEY'VE ALL THEIR EFFORT BEHIND OIL
 BECAUSE OIL'S BRINGING IN CASH FLOW.
AND AGAIN, THAT CASH FLOW
DOESN'T GO TO THE PEOPLE.
IT GOES TO THE GOVERNMENT.
SO, IT ALLOWS 
THE GOVERNMENT OF RUSSIA
TO HAVE ITS WAY 
WITHOUT ASKING FOR TAXES.
THE, UH--
AND THIS ARTICLE RAISES ANOTHER
ISSUE ABOUT ENERGY-- EFFICIENCY.
AND THE RUSSIANS 
ARE NOTORIOUS,
AS WERE MANY OF THE EASTERN EUROPEAN
 SATELLITE NATIONS OF...
OF THE FORMER SOVIET UNION,
WITH REGARD TO THEIR LACK OF EFFICIENCY
 ACROSS THE BOARD.
AND IT'S CERTAINLY STILL THERE
 IN ENERGY IN RUSSIA.
AND EFFICIENCY'S 
IMPORTANT TO US.
SAME PAPER-- AND IT'S A REAL PAPER--
I MEAN, IT'S RIGHT HERE.
SAME PAPER...
HAD THREE MORE ARTICLES 
THAT I WANTED TO SHARE WITH YOU.
THE NEXT ARTICLE 
TALKS ABOUT A CARBON PLAN...
COULD PAY OFF 
FOR AIRLINES.
WE'RE TALKING ABOUT
WHEN THE CARBON PLAN--
IT'S GLOBAL WARMING,
AN EXTREMELY IMPORTANT ISSUE.
IF WE DIDN'T HAVE 
A GLOBAL WARMING PROBLEM,
WE PROBABLY WOULDN'T
HAVE AN ENERGY PROBLEM,
BECAUSE WE'VE GOT LOTS
 OF OIL IN THE WORLD
AND LOTS OF COAL
 IN THE WORLD...
BUT BECAUSE OF GLOBAL WARMING, 
WE HAVE A BIG CHALLENGE AHEAD OF US.
BUT THIS IS A STRANGE ARTICLE 
BECAUSE IT'S TALKING ABOUT HOW AIRLINES
CAN MAKE PROFIT BY...
BY SOME SCHEME BEING PUT FORTH
 BY THE EUROPEAN UNION.
AND IT'S TRUE--
THEY CAN.
A LOT OF COMPANIES-- 
THERE ARE CERTAIN THINGS YOU CAN DO,
WITH REGARD
TO CARBON TAXES--
AND WE CAN TALK ABOUT THEM LATER
 IF THERE ARE QUESTIONS--
BUT THERE ARE CERTAIN SCHEMES
THAT YOU CAN COME UP WITH,
SO THAT COMPANIES BENEFIT.
THEY BOOK THIS BENEFIT
AS PART OF THEIR...
TOTAL EQUITY.
AND THEN, PASS THE SAVINGS 
THAT THEY MADE
INTO COSTS 
TO THEIR CUSTOMERS
WITHOUT ANY NET BENEFIT, 
IN TERMS OF GREENHOUSE GAS EMISSIONS.
BUT THAT DOESN'T MEAN
 GREENHOUSE GAS EMISSIONS
ARE NOT IMPORTANT
 TO ADDRESS.
THE NEXT ARTICLE WAS
ABOUT NUCLEAR REACTORS,
AND ALTHOUGH...
THIS ONE CONCERNED THE FACT
THAT SOME OF THE COMPANIES,
BECAUSE OF THE LOW INTEREST RATES
 AND THE POOR PERFORMANCE OF WALL STREET,
SOME OF THE COMPANIES
THAT OWN NUCLEAR REACTORS
DON'T HAVE AS MUCH MONEY
IN THEIR CLEAN-UP FUNDS
UH, WHEN THESE REACTORS RETIRE
AS THEY HAD HOPED TO HAVE.
BUT MORE TO THE POINT,
IN TERMS OF MY INTEREST
IN BRINGING IT TO YOUR ATTENTION IS,
IS THERE IS THAT 
NUCLEAR COMPONENT
AND NUCLEAR WASTE COMPONENT
 TO ENERGY...
AND NUCLEAR PROLIFERATION,
AS WE ARE SEEING 
WITH IRAN.
AND FINALLY, THIS ISN'T OIL
BUT IT'S PRETTY CLOSE TO OIL--
YOU HEARD LAST WEEK
OR A COUPLE OF WEEKS AGO,
THE PRESIDENT ANNOUNCED THAT
 WE'RE GONNA TAKE CHINA TO THE W.T.O.
WE AND OUR ALLIES--
THE EUROPEAN UNION--
THEY'RE GONNA TAKE CHINA
 TO THE W.T.O. ABOUT RARE EARTHS.
AND I DON'T WANT
 TO GET INTO THE DETAILS
ABOUT THIS PARTICULAR
RARE EARTH REFINERY--
IT REALLY IS ALL ABOUT PEOPLE
DON'T WANT IT IN THEIR BACKYARD,
AND THAT'S COMMON.
THIS HAPPENS TO BE, 
I THINK, IN MALAYSIA.
BUT IT'S ALSO COMMON HERE.
BUT I JUST FINISHED A STUDY
 ON CRITICAL MATERIALS,
AND I'D LIKE TO SHARE A LITTLE BIT
 OF THAT WITH YOU TODAY.
EVEN THOUGH IT'S NOT OIL,
IT'S VERY SIMILAR TO OIL.
AND SO, 
THERE'S A LOT IN COMMON.
SO, LET'S...
MOVE ON,
 A LITTLE BIT BACK 
TO THAT VERY FIRST COMMENT
ABOUT "ENERGY GAINS CHANGE THE EQUATION
 FOR THE UNITED STATES."
AND THIS SET OF...
COLUMNS SHOWS THE MIX
OF U.S. ENERGY OF OIL.
THIS IS ABOUT LIQUID FUELS, 
OKAY?
AND THE BLUE--
UH, THE BL--
AND THE YEARS ARE 1998, 
2005,
AND JANUARY OF 2012.
SO, I'VE GOT TWO YEAR AVERAGES 
AND THEN THE LAST ONE IS JANUARY 2012.
BUT WHAT HAPPENS--
 WHAT--
JANUARY 2012 IS JUST SHOWING
 AN UPWARD TREND.
SO, I'M NOT PLAYING GAMES--
I HOPE I'M NOT PLAYING GAMES
 WITH YOU ON THE DATA.
IN THE BLUE THERE IS--
WELL, THE TOTAL SIZE
IS TOTAL U.S. CONSUMPTION 
OF LIQUID FUELS.
OKAY, SO THAT SHOWS WHAT WE USE,
AND YOU CAN SEE THAT IN 1998,
IT WAS A LITTLE BIT HIGHER THAN TODAY--
 TODAY'S ON THE RIGHT--
AND THEN, 
IT WENT UP PRETTY HIGH.
FROM 1998, IT REALLY
 STARTED GROWING.
BY 2005, IT WAS OVER 
20,000 BARRELS A DAY,
AND, UM...
IF YOU LOOK AT THE MIX,
THE WHITE REPRESENTS--
WELL, THE BLUE REPRESENTS WHAT
WE PRODUCE IN OUR OWN COUNTRY...
THE RED IS WHAT WE GET
 FROM CANADA...
AND THE ORANGE IS WHAT
 WE GET FROM MEXICO.
SO, YOU CAN THINK OF U.S., 
CANADA, MEXICO--
PRETTY SECURE SUPPLIES.
AND THE WHITE REPRESENTS WHAT
 WE GET FROM THE REST OF THE WORLD.
NIGERIA, VENEZUELA, 
PRIMARILY--
NIGERIA, VENEZUELA,
A LITTLE BIT FROM THE PERSIAN GULF--
 NOT TOO MUCH.
AND YOU CAN SEE THAT THERE'S
BEEN A FUNDAMENTAL CHANGE
OVER THE LAST SEVEN YEARS
FROM 2005, WHEN PRICE--
WELL, FIRST, THE REASON
I PUT 1998, BY THE WAY--
1998, OIL WAS $10 A BARREL.
OKAY?
IT'S ABOUT $100-SOMETHING
 A BARREL TODAY.
AND 2005 WAS JUST AS IT 
STARTED GOING UP IN PRICE.
SO, YOU CAN SEE THAT THOSE LOW OIL PRICES
 SORT OF ENCOURAGED
A LOT OF CONSUMPTION,
AND YOU CAN SEE THAT WE WERE
PRETTY DEPENDENT ON FOREIGN OIL.
OKAY, WE WERE MAKING
LESS THAN HALF OF OUR OIL.
AND YOU CAN SEE HOW FUNDAMENTALLY
DIFFERENT THE SITUATION IS TODAY.
WE'RE PUMPING MORE OIL
FROM THE UNITED STATES,
WITHIN OUR OWN COUNTRY,
WE'RE GETTING MORE FROM CANADA
BECAUSE OF THE TAR SANDS OR "OIL SANDS"--
IF YOU'RE FROM ALBERTA,
YOU CALL IT "OIL SANDS."
IF YOU'RE FROM 
THE ENVIRONMENTAL COMMUNITY,
YOU CALL IT "TAR SANDS."
AND, UH, UNFORTUNATELY, MEXICO,
BECAUSE OF ITS GOVERNANCE PROBLEMS,
MEXICO'S PRODUCTION
 HAS GONE DOWN.
IT DOESN'T MEAN THAT OIL 
IS NOT IN MEXICO.
IT MEANS THAT MEXICO 
HAS SEVERE GOVERNANCE PROBLEMS
THAT PREVENT
 INVESTMENT IN OIL.
SO, IT LOOKS LIKE THERE'S
A PRETTY GOOD STORY HERE.
I MEAN, THIS IS, I GUESS, GOOD--
THIS IS GOOD NEWS.
IT MEANS, TO ME, UM...
THAT MARKETS RESPOND
 TO HIGHER PRICES
BY LOWERING DEMAND,
AND IT MEANS THAT SUPPLIERS
RESPOND TO HIGHER PRICES
BY PRODUCING MORE OIL.
AND THE REASON IT DIDN'T HAPPEN,
AS OIL PRICES WENT UP IN 2005
OR WHEN THEY PEAKED 
IN 2008,
IS BECAUSE ONCE YOU DECIDE,
IN THE OIL BUSINESS,
THAT YOU'RE GONNA
 LOOK FOR MORE OIL,
IT TAKES AT LEAST TEN YEARS BEFORE
YOU GET THAT OIL OUT OF THE GROUND.
SO, IT'S DIFFERENT FROM, SAY,
 AGRICULTURAL COMMODITIES
THAT HAVE A VERY SHORT CYCLE
 RESPONSE TIME.
IN THE OIL WORLD,
 IT'S A VERY LONG RESPONSE TIME.
AND THAT'S WHY THERE'S
SO MUCH VOLATILITY IN OIL.
IT'S ALSO ON THE CONSUMPTION SIDE.
ONCE YOU'VE BOUGHT YOUR S.U.V., 
EVEN IF YOU SELL IT AND BUY A SMALL CAR,
SOMEONE ELSE HAS BOUGHT IT
 AND THEY'RE DRIVING IT.
CARS STAY ON THE ROAD 
A LONG TIME.
SO, THERE'S A LONG RESPONSE TIME
 ON BOTH SIDES.
WHEN YOU HAVE A LONG RESPONSE TIME
 ON SUPPLY AND DEMAND,
THE ONLY THING THAT
 CAN REALLY INFLUENCE
AND MAKE THOSE TWO QUANTITIES
 COME TOGETHER-- IT'S GONNA BE PRICE.
AND THAT'S WHY YOU GET 
THE PRICE VOLATILITY IN OIL.
THERE'S SOME SPECULATION
THAT GOES ON THERE, TOO,
BUT THAT'S PART 
OF THE WAY MARKETS WORK.
WE COULD PROBABLY DO
 A BETTER JOB OF CONTROLLING IT,
BUT I'M NOT AN EXPERT
 ON THAT.
WELL, THE NEXT SLIDE...
 I...
I PUT DOWN--
THE NEXT SLIDE IS DEVOTED TO 
"WHAT IS THE MEANING OF ENERGY SECURITY?"
BECAUSE I FEEL THAT'S...
THERE'S A TREND IN THE U.S. 
TO BELIEVE
THAT ENERGY SECURITY
IS ENERGY INDEPENDENCE.
AND THE PREVIOUS SLIDE THAT I SHOWED YOU--
 IS THIS THE BEGINNING--
IS THIS THE BEGINNING 
OF A TREND?
AND IF WE KEEP ON GOING...
WILL WE GET TO THE POINT
WHERE THAT WHITE DISAPPEARS?
SO THAT NORTH AMERICA 
WILL BE ENERGY OR OIL INDEPENDENT?
AND MOST RECENTLY, 
THE NATIONAL PETROLEUM COUNCIL,
WHICH IS THE INDUSTRY--
OIL INDUSTRY ADVISORY GROUP
TO THE SECRETARY OF ENERGY.
THEY HAVE DONE A STUDY 
THAT SHOWS THAT BY 2030 OR 2035,
WE CAN BE ENERGY INDEPENDENT
IF WE JUST OPEN UP 
MORE OF OUR FEDERAL LANDS
AND OUR OFFSHORE AREAS, 
AND THE ARCTIC--
OFF THE NORTH SHORE
 OF ALASKA TO PRODUCTION.
SO, ENERGY INDEPENDENCE 
IS PRESUMED TO HAVE SOME VALUE.
SO, TO DISCUSS WHAT VALUE
ENERGY INDEPENDENCE HAS,
I THOUGHT IT 
WOULD BE USEFUL
TO THINK ABOUT 
WHAT ENERGY SECURITY MEANS.
SO, THAT'S WHAT THIS SLIDE
 IS ALL ABOUT.
IT'S...
A SLIDE I'VE USED
 A NUMBER OF TIMES,
ESPECIALLY WHEN I'M TALKING
TO OFFICERS IN OUR MILITARY--
AND THAT'S ONE OF THE THINGS
 WE DO AT RAND.
AND WE EXPLAINED THAT THERE
 ARE THREE COMPONENTS
TO ENERGY SECURITY.
THERE'S AN ECONOMIC COMPONENT,
AND THAT ECONOMIC COMPONENT
MANIFESTS ITSELF 
AS ELEVATED PRICES,
BECAUSE WE HAVE A CARTEL 
OUT THERE
AND WE HAVE LOTS OF NATIONAL
OIL COMPANIES IN THE WORLD.
SO, WE HAVE ELEVATED PRICES AND
WE HAVE HUGE WEALTH TRANSFERS.
HUGE AMOUNTS OF MONEY 
LEAVE OUR COUNTRY AND GO TO...
THE MEMBERS OF O.P.E.C.
AND THEY LEAVE
OTHER COUNTRIES--
THEY GO TO THE MEMBERS
 OF O.P.E.C.
AND BY THE WAY, 
HUGE WEALTH TRANSFERS...
OCCUR BETWEEN 
OIL USERS IN THE U.S.
AND THE FAIRLY MODERATELY-SIZED
 COMPANIES--
A WHOLE BUNCH OF 'EM--
THAT PRODUCE THOSE 
10 MILLION BARRELS A DAY.
I MEAN, 10 MILLION BARRELS A DAY
 TIMES $100 A BARREL...
WE'RE TALKING 
A LOT OF MONEY PER DAY.
I MEAN, 
THAT'S $1 BILLION A DAY.
SO, THERE'S 300--
ROUGHLY, $360 BILLION
MOVING FROM ONE PART OF AMERICA
TO ANOTHER PART OF AMERICA.
AND THE SAME-- ON TOP OF THAT,
 THERE'S ALL THE MONEY
THAT'S MOVING FROM OUR SHORES
 TO OTHER SHORES.
AND I GUESS IT'S BETTER TO MOVE IT 
WITHIN AMERICA, BUT, YOU KNOW--
FROM YOUR OWN POCKETBOOK,
IT'S HARD TO TELL 
THE DIFFERENCE, RIGHT?
YOU WANNA SAY, "WHAT IS THE OIL BILL
 MEAN PER HOUSEHOLD?"
IT'S ABOUT $4,000 TODAY.
IT'S ABOUT $4,000 A YEAR PER HOUSEHOLD
IS WHAT WE PAY FOR THE CRUDE OIL WE BUY.
SO, IF OIL WERE 
$50 A BARREL,
WE WOULD HAVE AN ADDITIONAL
$2,000 TO SPEND ON OTHER THINGS.
THAT'S A LOT OF MONEY.
I MEAN, WE THINK ABOUT THE AVERAGE
HOUSEHOLD INCOME OF THE UNITED STATES--
IT MAY NOT BE WHAT YOURS IS,
BUT THE AVERAGE HOUSEHOLD INCOME
OF THE UNITED STATES IS, WHAT,
$40,000 OR SOMETHING LIKE THAT.
SO, IT'S A GOOD FRACTION 
OF THE AVERAGE HOUSEHOLD INCOME.
SO, THERE'S AN ECONOMIC COMPONENT.
THE PRICE VOLATILITY HURTS THE ABILITY
OF OUR BUSINESSMEN TO DO THEIR PLANNING,
AND ANYONE THAT USES OIL
 TO PLAN AHEAD.
THERE'S A SECURITY COMPONENT TO...
TO ENERGY SECURITY, AND ONE COMPONENT
 IS ABOUT RELIABLE SUPPLIES.
BUT YOU KNOW, SINCE WE NOW HAVE
AN INTERNATIONAL OIL MARKET,
RELIABLY SUPPLIES
ARE REFLECTIVE--
UH, REFLECTED INTO
 MUCH HIGHER PRICES.
AND THEN-- AND SO, I DON'T THINK 
RELIABLE SUPPLIES
IS REALLY A BIG ISSUE ANYMORE.
IT'S REALLY ABOUT MONEY.
AND PART OF THE SECURITY COMPONENT,
HOWEVER,
WHICH I MENTIONED EARLIER 
WAS THESE GEOPOLITICAL POWER SHIFTS.
THOSE WHO HAVE OIL,
THOSE WHO SELL OIL--
THEY HAVE POLITICAL POWER
ON THE INTERNATIONAL SCENE,
AND THEY USE THAT POWER.
THE, UH--
AND THEN, FINALLY, THERE'S
THE ENVIRONMENTAL COMPONENT,
AND THE ENVIRONMENTAL COMPONENT
 MANIFESTS ITSELF
NOT ONLY IN LOCAL AND REGIONAL ISSUES 
BUT, AS WE MENTIONED EARLIER,
IN GLOBAL CLIMATE CHANGE...
AND THE PROSPECTS
 FOR THAT.
AND IF YOU TOOK AWAY ANY OF THOSE--
ANY OF THOSE THREE--
YOU KNOW, 
ANY TWO WE COULD SOLVE.
IT'S THE PROBLEM
 IS TRYING TO FIGURE OUT A PATH
THAT ADDRESSES 
ALL THREE TOGETHER.
AND, UM, SO,
IN LIGHT OF--
THIS IS WHAT ENERGY SECURITY 
IS ALL ABOUT.
WHAT DOES ENERGY INDEPENDENCE
HAVE TO DO WITH ENERGY SECURITY?
BECAUSE IF WE DON'T...
IF WE DON'T IMPORT ANY OIL,
OR WE IMPORTED 
ONLY FROM CANADA,
IT MEANS THAT INSTEAD
OF SENDING THE WEALTH TO, UM--
A PART OF OUR WEALTH TO, SAY,
SAUDI ARABIA OR VENEZUELA,
WE'RE GONNA BE SENDING
 PART OF OUR WEALTH
TO THE OIL PATCH GANG
 IN THE U.S.
IT'S STILL A WEALTH TRANSFER.
I MEAN, IT'S NOT AS IF
 THE PRICE OF OIL
ISN'T GOING TO BE REFLECTIVE
OF THE WORLD MARKET.
THE CANADIANS ARE NOT GOING
TO SELL US OIL AT A DISCOUNT
COMPARED TO WHAT THEY COULD GET IT
 ON THE WORLD MARKET,
NOR WILL OUR OWN COMPANIES.
I MEAN, THEY'LL SCREAM
BLOODY MURDER IF THEY--
IF WE TRY TO FORCE THEM TO SELL IT--
 AND WE SHOULDN'T.
I MEAN, WE SHOULD LET THE OIL 
BE PRICED INTERNATIONALLY.
SO, ENERGY INDEPENDENCE ISN'T...
DOESN'T OFFER TOO MUCH
FROM THAT PERSPECTIVE.
FROM A NATIONAL SECURITY PERSPECTIVE,
THE IMPLICATION IS,
"WELL, WE WOULDN'T BE...
"FIGHTING IN THE PERSIAN GULF
 IF WE, UM...
"DIDN'T-- IF WE WERE NOT GETTING OIL
 FROM THE PERSIAN GULF."
YOU KNOW, IT'S HARD
TO BELIEVE THAT--
I MEAN, WE'RE NOT IN IRAQ 
FOR ANY RATIONAL REASON THAT HAS--
WELL, FOR ANY RATIONAL REASON,
AND CERTAINLY NOT FOR OIL.
AND WE'RE-- WITH REGARD 
TO AFGHANISTAN, I THINK IT WAS--
THEY DON'T EVEN HAVE OIL.
SO, YOU--
YOU KNOW...
IT'S QUESTIONABLE THAT 
OUR DEFENSE BUDGET WOULD COME DOWN
 IF WE SIMPLY DID NOT IMPORT OIL
 FROM THE MIDDLE EAST.
BECAUSE, YOU KNOW, WE LIVE IN A WORLD
THAT'S CONNECTED AND...
SO, WHAT'S MY THEORY
ABOUT WHY IS EVERYONE 
TELLING US
THAT, UH...
THAT DOMESTIC PRODUCTION 
IS IMPORTANT
AND THAT ENERGY INDEPENDENCE
 IS IMPORTANT.
AND I THINK IT'S ON THIS SLIDE
 THAT TELLS US THIS.
THIS SLIDE SHOWS--
THIS GRAPH SHOWS, 
UM, THAT...
THAT 47 PERCENT OF OIL RESERVES
 ARE OFF-LIMITS
TO PRIVATE COMPANIES
 ACROSS THE GLOBE.
IN OTHER WORDS, THERE ARE COUNTRIES
THAT SAY, "YOU CAN'T TOUCH IT."
MEXICO'S AN EXAMPLE.
NO PRIVATE COMPANY CAN COME
INTO MEXICO AND PUMP THEIR OIL.
IT HAS TO BE DONE 
BY THEIR NATIONAL COMPANY.
THEN, IN THAT RED-- OR ORANGE WEDGE 
SHOWS ABOUT 37 PERCENT
OF THE WORLD'S OIL RESERVES
ARE IN COUNTRIES 
THAT WILL LET YOU COME IN,
BUT THEY'RE GONNA 
BARGAIN HARD.
AN EXAMPLE OF THIS 
WOULD BE QATAR.
OKAY, SOMETIMES SAUDI ARABIA
LETS A COUNTRY-- A COMPANY IN.
BUT FOR THE MOST PART,
IT'S THROUGH THEIR OWN COMPANY.
BUT THAT DOESN'T MEAN THAT YOU
CAN'T PLAY AS A SERVICE INDUSTRY,
BUT NO ONE WANTS TO BE
 A SERVICE INDUSTRY IN OIL.
THEY WANT AN EQUITY-- 
THEY WANT PART OF THE EQUITY ACTION.
SO, WHAT'S LEFT?
WHAT'S LEFT IS THE 15 PERCENT
OF THE WORLD'S RESERVES
IN WHICH YOU CAN BE 
AN EQUITY OWNER.
YOU CAN OWN IT.
AND NEARLY ALL OF THOSE RESERVES
 ARE IN NORTH AMERICA.
SO, IF YOU'RE A PRIVATE COMPANY,
YOU WANT 
TO HAVE THE ACTION
HERE IN NORTH AMERICA,
AND THAT'S WHY 
THERE'S SO MUCH EMPHASIS
AND MISINFORMATION
ABOUT THE IMPORTANCE 
OF ALLOWING THEM ACCESS TO OUR OIL.
OUR OIL IN THE U.S., 
OUR OIL IN CANADA.
AND, UH...
I'M-- NOT ONLY DO I NOT THINK
IT'S THAT BENEFICIAL--
I MEAN, IT'S GOOD THAT WE PUMP OIL
WHERE OIL CAN BE PUMPED.
I JUST WORRY THAT
OUR VERY EASY--
THE VERY EASY ACCESS WE GIVE
THESE COMPANIES-- ACTUALLY--
YOU KNOW, WE CHARGE THEM 
AN EXTREMELY LOW ROYALTY RATE.
I MEAN, NOBODY ANYWHERE ELSE
IN THE WORLD-- EXCEPT CANADA--
WOULD ALLOW THESE OIL COMPANIES 
THIS KIND OF EXTREMELY LOW ROYALTY RATE.
AND SO, WHAT IT DOES 
IS IT'S GOING TO BE DEPLETING OUR OIL
BEFORE THE REST OF THE WORLD
DEPLETES ITS OIL.
AND THAT SORT OF A SITUATION
THAT HAPPENED IN THE '60s
WHEN WE PUT AN EMBARGO 
ON IMPORTS.
TO PROTECT TEXAS-- 
WE PREMATURELY DEPLETED TEXAS--
OUR OIL-- 
OUR OWN NATION'S OIL.
SO, I WONDER IF IT'S NOT 
IN OUR BEST INTEREST
TO ACTUALLY MAKE IT
THAT WHEN COMPANIES WANT TO HAVE
ACCESS TO OIL ON PUBLIC U.S. LANDS,
THAT WE CHARGE THEM
 A SOMEWHAT HIGHER ROYALTY FEE,
FOR OUR OWN LONGER-TERM SECURITY.
SO, THIS IS, I THINK, 
WHAT'S DRIVING
WHAT I'LL CALL 
IS THE "PARTY LINE" OF--
ITS ENERGY INDEPENDENCE
 IS SO IMPORTANT.
IT'S REALLY AN EXCUSE TO DRILL, DRILL--
 "DRILL, BABY, DRILL."
IS THAT THE PHRASE?
UM, BUT YOU KNOW, WE DO HAVE
 A COMPLICATED GEOPOLITICAL SITUATION
WHEN IT COMES TO OIL,
AND THIS IS A CHART 
I PREPARED FOR A STUDY
THAT'S GOING TO BE COMING OUT
 VERY SHORTLY BY RAND,
AUTHORED BY ME.
AND THIS CHART SHOWS THE--
ALL NATIONS IN THE YEAR 2009--
EVERY SINGLE NATION 
THAT HAD NET EXPORTS
OF OVER 200,000 BARRELS
 A DAY.
SO, REMEMBER, THE WORLD
 USES 87 MILLION BARRELS A DAY.
SO, WE'RE TALKING ABOUT SOME
PRETTY SMALL EXPORTERS HERE,
BUT ALSO THE BIG ONES
 ARE ON THERE.
AND WHAT WE DID IS-- UH, WE DON'T--
 AT RAND, IS WE SPLIT THEM UP INTO GROUPS.
AND THE FIRST GROUP
IS THE O.P.E.C.--
WHAT WE CALL, AT RAND,
THE "O.P.E.C. CORPS."
BECAUSE WE DON'T THINK O.P.E.C.
 IS A COHESIVE ORGANIZATION.
WE THINK O.P.E.C. IS SAUDI ARABIA,
 THE EMIRATES, AND KUWAIT,
AND EVERYONE ELSE
 IS THERE FOR THE FREE RIDE.
I MEAN, IRAN NEEDS 
ALL THE MONEY IT CAN GET.
VENEZUELA NEEDS
 ALL THE MONEY IT CAN GET.
THE FACT THAT THEY'RE NOT PUMPING
MORE OIL IN VENEZUELA AND IRAN
IS DUE TO GOVERNANCE PROBLEMS.
RIGHT NOW, IT'S ALSO DUE 
TO OUR SANCTIONS.
BUT IN VENEZUELA, FOR EXAMPLE,
IT'S DUE TO GOVERNANCE PROBLEMS.
SO, I'VE SHOWN THE O.P.E.C. CORPS
 IN THE DARK BLUE.
AND...
AT THE OTHER EXTREME-- THAT'S--
SO, THAT'S THE CARTEL POWER.
THEY'RE THE ONES WHO ARE
DELIBERATELY NOT PRODUCING
TO KEEP PRICES HIGH.
BUT THEY DON'T WANT TO GO TOO HIGH--
 THEY'RE NOT FOOLISH.
THEY DON'T WANT TO GO TOO HIGH.
BUT THEY'RE NOT-- 
AS YOU MAY BE AWARE,
THEY HAVEN'T BEEN VERY EFFECTIVE 
OVER THE LAST, OH, SINCE THEIR EXISTENCE.
THEY CAN BE EFFECTIVE
FOR A LITTLE BIT OF TIME,
BUT IF THEY GO TOO HIGH,
THEN THE MARKET COMES IN 
AND ALL PRICES CRASH.
THE NEXT GROUP 
ARE THE LIGHT BLUES,
AND THOSE ARE WHAT WE DESCRIBE
AS "MARKET-RESPONSIVE DRILLERS,"
AND THERE IS ONLY 
THREE ON THE LIST
OF MARKET-RESPONSIVE DRILLERS
 IN THE WORLD THAT EXPORT.
ONE IS CANADA, ONE IS NORWAY,
AND THE OTHER ONE IS OMAN.
AND NORWAY'S A LITTLE-- YOU KNOW,
WHETHER NORWAY'S IN THAT CATEGORY OR NOT
IS SORT OF UP IN THE AIR.
BUT, UH...
SO, WHAT'S THE REST?
THE REST OF THE WORLD
IS EITHER PLACES
 THAT HAVE ONGOING CONFLICTS...
OR AT LEAST HIGH CONFLICTS 
WHEN THIS CHART WAS MADE, 
AND I THINK-- 
AND YOU'LL SEE THAT NIG--
YOU KNOW, 
IRAQ, LIBYA,
NIGERIA, SUDAN...
WHO ELSE IS ON THE LIST?
I THINK THAT'S IT.
SO, WE HAVE-- A ONE, TWO, THREE, FOUR--
 FOUR MAJOR COUNTRIES
THAT HAVE ONGOING CONFLICTS
 THAT IS STIFLING THEIR OWN PRODUCTION.
NIGERIA IS AT LEAST 2 MILLION BARRELS
 BELOW WHAT IT WOULD BE
IF IT WAS STILL A CRAZY COUNTRY
 BUT DIDN'T HAVE CONFLICT.
OKAY?
AND IT HAS A HUGE AMOUNT OF OIL.
I MEAN, WHAT THEY
RECENTLY FOUND--
AS YOU MAY KNOW THAT WE RECENTLY
FOUND A HUGE AMOUNT OF OIL
OFF THE COAST 
OF BRAZIL.
IT'S CALLED THE "PRE-SALT."
IT'S DEEP BUT IT'S HUGE.
WELL, GUESS WHAT THEY'RE
FINDING OFF THE COAST
OF NIGERIA AND...
GHANA 
AND ITS NEIGHBORS?
PRE-SALT OIL.
REMEMBER WHEN AFRICA AND SOUTH AMERICA
 WERE TIED RIGHT THERE?
IT'S THE SAME SOURCE.
IT'S AMAZING.
I MEAN, IT'S ONE-- IT'S PROBABLY 
ONE OF THE FEW GEOLOGICAL FACTS I KNOW
IS ABOUT THE CONTINENTS 
BEING PUSHED.
WELL, BUT, UH...
I MEAN, HUGE AMOUNTS OF THIS--
THAT THEY THINK IS THERE.
IT'S NOT BEEN FULLY DEVELOPED
AND IT'S NOT GONNA BE CHEAP,
BECAUSE YOU GOTTA GO DEEP.
UM, IRAN-- 
IRAQ HAS A MASSIVE AMOUNT OF OIL.
AND NUMBER THREE IN RESERVES--
MAYBE NUMBER TWO, NUMBER THREE--
THERE'S AN ARGUMENT
 HOW BIG THEY ARE IN THE WORLD.
HUGE AMOUNT 
COMPARED TO US.
I MEAN, WE PRODUCE
 10 MILLION BARRELS A DAY
ON ONE-TENTH 
OF THEIR RESERVES.
IF THIS WAR--
IF PEACE EVER COMES 
TO THAT POOR COUNTRY, 
CAN YOU IMAGINE--
THEY'RE GONNA NEED MONEY.
THEY'RE GONNA WANNA PUMP.
THE OIL MINISTER HAS ALREADY SAID,
"WE'RE GOING 12 MILLION BARRELS A DAY.
"THAT'S OUR GOAL."
I MEAN, RIGHT NOW, 
THEY'RE PRODUCING LESS THAN TWO.
WHAT HAPPENS WHEN THIS OIL 
GETS ON THE MARKET?
WHAT HAPPENS TO O.P.E.C. 
WHEN THIS OIL GETS ON THE MARKET?
AND ALL THE OTHER COUNTRIES
THAT ARE HAVING MUSTARD--
OR WHATEVER THAT COLOR IS--
THOSE ARE COUNTRIES--
WE LOOK AT THE WORLD BANK 
LIST OF GOVERNANCE INDICATORS,
AND EVERY-- ALL THOSE COUNTRIES
ARE IN THE BOTTOM 25 PERCENT,
SOME ARE IN THE BOTTOM TEN PERCENT
 OF, YOU KNOW, CORRUPTION,
LACK OF THE RULE OF LAW.
WE DEAL A LOT 
WITH RUSSIA.
WE RUN A-- AT RAND, 
WE RUN AN OLIGARCHS FORUM.
I MEAN, IT'S UNBELIEVABLE WHAT WE HAVE
 TO GO THROUGH TO DEAL WITH RUSSIA.
I MEAN, THERE'S SO MUCH CORRUPTION
 IN THAT COUNTRY.
SO-- BUT YOU CAN SEE THAT, YOU KNOW,
THE OIL WORLD IS NOT A SIMPLE WORLD.
I MEAN, THERE'S A LOT OF PROBLEMS
WITH THE OIL SUPPLY CHAIN.
AND...
DEPENDING ON
 THIS OIL SUPPLY CHAIN
ARE COUNTRIES THAT 
ARE VERY IMPORTANT TO US...
UH, EITHER AS OUR ALLIES 
OR BECAUSE THEY'RE EMERGING POWERS.
FOR EXAMPLE...
75 PERCENT OF THE OIL FROM--
THAT GOES THROUGH
 THE STRAITS OF HORMUZ GOES TO ASIA...
TO JAPAN, 
OUR VERY CLOSE ALLY...
KOREA, AND OTHER ASIAN COUNTRIES
THAT WE'RE VERY FRIENDLY WITH...
AND A LOT OF IT 
GOES TO CHINA.
SO, WE HAVE ENERGY INDEPENDENCE.
WE WALK AWAY 
FROM THE PERSIAN GULF.
WE SAY, "OKAY, 
IT'S GOING TO CHINA.
"YOU'RE IN CHARGE."
DO WE REALLY WANT THAT?
I MEAN, IT WOULD BE NICE 
IF WE COULD DO THIS
IN A MULTINATIONAL,
MULTILATERAL WAY--
WORRY ABOUT THOSE (indistinct)
AND PROMOTE PEACE.
BUT I DON'T THINK 
WE'RE WALKING AWAY FROM THIS.
SO, TO SORT OF SUM UP--
 'CAUSE I ONLY HAVE A FEW MINUTES.
YEAH, I DON'T KNOW IF I'VE GONE OVERTIME
'CAUSE I DON'T HAVE A W-- AM I OKAY?
UM, I THOUGHT I'D...
TALK ABOUT ENERGY STRATEGY
 FOR A--
IN LIGHT OF WHAT
 I'VE JUST SAID.
AND...
AND YOU KNOW, 
TO BE HONEST,
I'VE BEEN DOING THIS 
FOR A LOT OF DECADES
AND I'M SORT OF DISAPPOINTED 
WITH HOW LITTLE PROGRESS WE'VE MADE
WHEN IT COMES TO HAVING 
AN EFFECTIVE ENERGY STRATEGY.
WE HAVE AN ENERGY STRATEGY TODAY,
AND IT'S BASICALLY,
 "LET'S PUMP MORE."
AND THERE'S A DEBATE BETWEEN
THOSE WHO CARE ABOUT--
WHO CARE MORE ABOUT 
THE ENVIRONMENT
OR HAVE A VERY STRONG
CONSERVATION ETHIC--
THERE'S A DEBATE ABOUT
WHO GETS ACCESS TO WHAT.
BUT IT'S BASICALLY, 
"LET'S PUMP MORE."
AND THEN, IT'S MODERATED BY 
WHAT THE ENVIRONMENTAL CONSEQUENCES
OR THE LAND-USE CONSEQUENCES ARE.
AND, UH...
AND THE BIG ISSUE THERE IS,
"WHO'S VALUES GET PROMINENT?"
SO, IF YOU USE ENERGY INDEPENDENCE, 
YOU CAN SAY,
"WELL, THE 'DRILL, BABY, DRILL' GANG
 GETS MORE."
UM...
AND A LOT, OF COURSE, AS YOU KNOW,
 THERE'S SOME PRETTY--
A LOT OF THE LAND IN ALASKA, IN THE WEST,
 IS OWNED BY THE GOVERNMENT.
SO, IT'S DRIVEN BY OFFSHORE LAND,
IS CONTROLLED BY THE GOVERNMENT.
SO, IT'S DRIVEN BY LAND ACCESS
AND IT'S DRIVEN, TO SOME DEGREE--
NOT TOO MUCH-- BY A LOT OF SUBSIDIES
THAT OIL AND COAL COMPANIES GET,
BUT THEY'RE NOT THAT BIG.
I MEAN, THE PRESIDENT OBAMA
 HAS SAID
THAT HE WANTS TO GET RID
OF THE SUBSIDIES, UM...
WHICH IS, I THINK, 
A GOOD MOVE
BUT IT'S NOT GOING TO 
CHANGE THINGS TOO MUCH.
THE SECOND COMPONENT
 OF U.S. ENERGY STRATEGY--
AND THIS HAS BEEN GOING ON
FOR A LONG TIME,
IT'S NOT UNIQUE 
TO THE OBAMA ADMINISTRATION--
IS THAT GOVERNMENT
 SELECTS THE TECHNOLOGY.
IT SORT OF SELECTS 
THE WINNERS.
WHEN GEORGE BUSH WAS PRESIDENT,
THE WINNER WAS HYDROGEN.
WE'RE GONNA HAVE
 A HYDROGEN ECONOMY,
AND THEY PUT A LOT OF MONEY
INTO DETROIT INTO BUILDING CARS
THAT WOULD OPERATE 
ON HYDROGEN AND FUEL CELLS.
UH, WHEN PRESIDENT OBAMA 
CAME IN,
HE DECIDED WE'RE GONNA HAVE
 THE ELECTRIC CAR.
IT'S SORT OF LIKE BUREAUCRATS,
YOU KNOW, PICKING TECHNOLOGIES.
AND, UH...
AND THE THIRD COMPONENT
OF THE CURRENT ENERGY STRATEGY
 OF OUR NATION
IS A HOPE
 FOR TECHNICAL BREAKTHROUGHS.
AND I'M A BIG ADVOCATE OF RESEARCH,
BUT, YOU KNOW, I THINK WHEN YOU--
IN THE RESEARCH WORLD,
YOU'VE GOTTA BE REALISTIC
ABOUT THE TIMING OF INVESTMENTS.
SO, WHEN I JOINED 
THE ENERGY DEPARTMENT
AS A MERE CHILD 
IN 1978,
PHOTOVOLTAICS
WERE FIVE YEARS AWAY...
AND THEY'RE STILL
 FIVE YEARS AWAY.
I MEAN, IN TERMS OF--
YOU KNOW, WITHOUT SUBSIDY.
UH, I THINK THEY'RE LONGER
THAN FIVE YEARS AWAY.
I THINK-- YOU KNOW, I THINK 
WE NEED TO PUT A LOT MORE MONEY
INTO PHOTOVOLTAIC RESEARCH.
I MEAN, 
ALGAE IS ANOTHER AREA
WHERE I THINK THERE'S
A BIG POTENTIAL BENEFIT,
BUT THE BENEFIT IS NOT IN SHOWING
 THAT I CAN FLY AN AIRPLANE
USING THE ALGAE-DERIVED FUEL
 THAT BENEFITTED SOCIAL--
WHICH I PAID $400 A GALLON FOR, 
WHICH IS WHAT YOUR GOVERNMENT IS DOING.
BUT THE BENEFIT IS GETTING
THE PRICE OF THAT FUEL
DOWN TO, YOU KNOW, 
$3, $4, $5 A GALLON.
THAT'S THE BREAKTHROUGH
AND THAT'S WHAT WE WANT.
THAT TAKES A LOT
 OF RESEARCH.
THE, UM...
AND SO, THERE'S THIS-- 
UH, FUSION WAS 25 YEARS AWAY IN 1978.
I WAS ON A FUSION PANEL.
NOW, IT'S 50 YEARS.
UH, THAT'S-- SO, IT'S SORT
OF AN UNREALISTIC HOPE FOR--
YOU KNOW, 
A NAIVE HOPE.
I MEAN, CONGRESS WANTS THINGS
RIGHT AWAY, SO THE PEOPLE--
THE RESEARCH COMMUNITY
 AND THE DEPARTMENT OF ENERGY
CAN'T TELL CONGRESS,
"WELL, I NEED TO HAVE 
A GOOD 15 YEAR R&D PROGRAM."
I MEAN, THEY'LL BE
 THROWN OUT THE DOOR.
SO, IT'S ALWAYS "FIVE YEARS FROM TODAY,
I HAVE THIS GREAT NEW BREAKTHROUGH."
UH, AND I THINK
 A BETTER APPROACH--
IN FACT, NOT ONLY DO I THINK,
BUT I THINK MOST OF MY COLLEAGUES
WHO HAVE SPENT 
THEIR CAREERS IN ENERGY,
AND CERTAINLY THOSE AT RAND, 
WOULD BE A TECHNOLOGY-NEUTRAL APPROACH,
IN WHICH WE GET RID OF...
OF THE SUBSIDIES 
ACROSS THE BOARD
AND PUT IN MECHANISMS--
BROAD-BASED MECHANISMS--
THAT VALUE THE EXTERNALITIES,
THE ENVIRONMENTAL EXTERNALITIES,
THE GLOBAL EXTERNALITIES...
THE IMPOR--
THE FACT THAT--
THE EXTERNALITY ASSOCIATED WITH
BEING DEPENDENT ON A CARTEL,
WHICH WE'VE BEEN ABLE TO PRICE
THROUGH THE WORK WE DO AT RAND.
UH, AND...
AND THAT WAY,
 YOU LET THE BUSINESS COMMUNITY COME UP
WITH THE MOST 
COST-EFFECTIVE OPTIONS,
AND IF THAT'S PHOTOVOLTAICS,
IT'S PHOTOVOLTAIC.
IF IT'S WIND, 
IT'S WIND.
BUT YOU DON'T HAVE 
SOMEONE IN WASHINGTON
PICKING, YOU KNOW,
 BATTERIES OR...
OR WHATEVER.
YOU LET THE MARKET DECIDE 
WHAT IS CHEAPEST WITHIN YOUR FRAMEWORK--
WITHIN THIS BROAD-BASED FRAMEWORK.
AND WHEN I TESTIFY
 BEFORE CONGRESS...
I CAN SEE THEIR EYES GLAZE OVER
 WHEN I SAY THAT.
ONE OF THE THINGS 
THAT WE'RE DOING AT RAND
IS WE'RE PUSHING INFORMATION
 OUT THE DOOR
ABOUT THE IMPORTANCE OF, "IF WE CAN'T
GET PEOPLE TO ADDRESS GLOBAL WARMING,
"AT LEAST WE CAN DROP 
THE SUBSIDY ON AUTOMOBILES."
RIGHT NOW, THE GAS-- 
THE NATIONAL GAS TAX DOESN'T PAY--
AND STATE GAS TAXES, 
FOR THE MOST PART,
DO NOT PAY 
FOR WHAT IT COSTS
TO KEEP OUR HIGHWAY INFRASTRUCTURE
 IN SHAPE.
SO, HIGHWAY-- 
BASICALLY, THE GENERAL TAX FUND
IS PAYING FOR OUR ROADS,
IS BASICALLY SUBSIDIZING
 THE USE OF CARS.
SO, WE'RE SAYING, 
AT A MINIMUM,
AT LEAST GET THE PEOPLE 
WHO WANNA DRIVE TO PAY
 FOR WHAT IT COSTS
 TO DRIVE.
THAT JUST MAKES SENSE...
AND THERE'S LOTS OF WAYS
 TO DO THAT,
AND ONE WAY IS SIMPLY
RAISING THE GAS TAX--
IT'S PROBABLY 
THE SIMPLER WAY.
WHAT WE'RE SEEING 
IN VIRGINIA IS,
IS WE'RE SEEING A LOT
OF TOLL ROADS GOING UP...
AND, YOU KNOW, 
MIDDLE OF THE BELTWAY ROADS,
SO THAT THE WEALTHY
CAN TAKE THE FAST ROUTE
AND THOSE THAT ARE LESS WEALTHY
 WILL BE GOING SLOWLY.
THE, UH-- 
I MEAN, ON THOSE TOLL ROADS--
WE JUST SOLD THE MIDDLE PART 
OF OUR BELTWAY
AND THE PROJECT'S
 ALMOST DONE.
WE SOLD THE MIDDLE PART OF OUR BELTWAY
 TO AN AUSTRALIAN COMPANY
THAT'S GOING TO CHARGE QUITE A FEW DOLLARS
 TO BE IN THEIR FAST LANES.
AND THAT'S BECAUSE POLITICIANS
DON'T WANT TO RAISE THE GAS TAX.
ANOTHER IMPORTANT ITEM TO ADD
WOULD BE THE IMPORT PREMIUM
THAT I MENTIONED EARLIER.
IT COMES TO ABOUT
 25 CENTS A GALLON.
IT'S NOT GONNA BREAK THE BANK.
BUT YOU KNOW, DURING AN ELECTION YEAR
 OR ANY OTHER YEAR,
IS ANY POLITICIAN GOING TO SAY,
"I'M GONNA RAISE-- PUT A TAX ON GAS"?
AND FINALLY,
 CARBON FEES.
I DIDN'T TALK MUCH 
ABOUT GLOBAL WARMING.
I'M NOT AN EXPERT 
IN THAT AREA.
I AM VERY FAMILIAR WITH
ALL THE POLICY ALTERNATIVES.
WE THINK THAT SOME KIND OF CARBON FEE
 HAS TO BE PUT IN THERE--
NOT JUST FOR GASOLINE
BUT ALL ENERGY WE USE.
AND THEN, YOU LET THE PRIVATE SECTOR
 PICK THE MOST ECONOMIC COST.
AND SO, I WANNA SHIFT GEARS
 VERY QUICKLY
'CAUSE I JUST FINISHED A STUDY
 ON CRITICAL MATERIALS.
AND YOU KNOW, 
WHEN I MENTIONED ABOUT OIL
HAVING A REAL IMPACT ON HOUSEHOLDS--
 IN WEALTH TRANSFERS.
WELL, ON CRITICAL MATERIALS, AND 
THE ONE YOU HEAR ABOUT IS RARE EARTHS,
WE USE SO LITTLE--
OR TUNGSTEN--
WE USE SO LITTLE OF TUNGSTEN
 OR RARE EARTHS
THAT IF THE PRICE OF TUNGSTEN
WENT UP BY A FACTOR OF TEN,
YOU AND I WOULDN'T KNOW 
IT HAPPENED...
BECAUSE, YOU KNOW, EVEN THOUGH
IT'S IN EVERY INCANDESCENT BULB
AND IT'S ACTUALLY IN SOMETHING
 MUCH MORE IMPORTANT,
WHICH I'LL TALK ABOUT SOON,
 IT'S A SMALL FRACTION.
SO, WHEN IT COMES TO OIL,
 OUR BIG CONCERN IS WEALTH TRANSFERS,
AND OF COURSE WEALTH TRANSFERS MEAN
INVESTMENT AND SAVINGS DON'T OCCUR HERE.
SO, WE DON'T BUILD UP
 OUR CAPITAL STOCK...
SO WE ARE HURT WHEN IT COMES
TO THINGS LIKE MANUFACTURING...
AND U.S. OWNERSHIP
 OF COMPANIES.
BUT WHEN IT COMES 
TO CRITICAL MATERIALS,
WHAT WE FOUND 
IS SOMETHING FAR MORE SUBTLE.
AND THE FIRST THING WE FOUND WAS--
YOU HEAR A LOT ABOUT RARE EARTHS.
THERE ARE ABOUT-- I DUNNO--
 EIGHT OF 'EM-- I'M A CHEMIST BY TRADE.
I FORGOT THEM--
HOW MANY THERE ARE,
BUT THERE ARE ABOUT EIGHT OR SO
RARE EARTHS, OR MAYBE A FEW MORE.
BUT IT'S NOT JUST RARE EARTHS,
AND WHAT WE SHOW
 IN THIS CHART IS THAT CHINA
CONTROLS A HUGE AMOUNT
OF THE GLOBAL PRODUCTION
OF A NUMBER 
OF VERY IMPORTANT MATERIALS.
AND 97 OR 98 PERCENT
OF ALL THE RARE EARTHS
IN THE WORLD 
ARE MINED IN CHINA TODAY.
NINETY-TWO PERCENT OF ALL 
THE ANTIMONY IS MINED IN CHINA.
EVERY PLASTIC THAT HAS ANYTHING
TO DO WITH A PIECE OF ELECTRONICS,
THE ANTIMONY IS THERE
AS THE FIRE RETARDANT.
ALL CABLE
 HAS GOT ANTIMONY IN IT
FOR THE FIRE RETARDANT,
SO THEY DON'T CA--
THE PLASTIC DOESN'T 
CATCH ON FIRE.
UH... TUNGSTEN.
WHY IS TUNGSTEN 
IMPORTANT?
BECAUSE THE NUMBER ONE USE 
OF TUNGSTEN IN THE UNITED STATES
IS IN CEMENTED CARBIDES.
I DIDN'T KNOW WHAT A CEMENTED CARBIDE WAS
A FEW MONTHS AGO.
CEMENTED CARBIDES ARE THE SHARP PARTS 
OF ALL CUTTING TOOLS.
SO, IF YOU GO INTO A MANUFACTURING PLANT
 IN THE UNITED STATES
THAT'S CUTTING METAL
 OR CUTTING ANYTHING ELSE,
ALL THE TUBES ARE GONNA BE COATED
 WITH TUNGSTEN CARBIDE.
DRILL BITS HAVE
 TUNGSTEN CARBIDE.
I'M TALKING ABOUT THE LATHES,
EVERYTHING-- THE ROBOT--
THE ROBOTIC CUTTERS 
IN A FACTORY, OKAY?
TUNGSTEN CARBIDE.
SO, I WENT TO...
 TUNGSTEN CARBIDE MANUFACT--
UH, PEOPLE WHO MAKE THOSE CUTTING TOOLS
 IN THE UNITED STATES.
I WENT TO A FEW COMPANIES
THAT MAKE THOSE CUTTING TOOLS.
I SAID, "WHAT'S GOING ON--
HOW DO YOU FEEL ABOUT THIS?"
THEY SAID,
 "WE'VE BEEN TOLD THAT IN 2015--"
THEY SAID,
 "IN 2015,
"WE CAN'T COUNT ON WHAT 
WE'RE GETTING TODAY FROM CHINA.
"BUT THE CHINESE 
HAVE MADE US A DEAL.
"IF WE OPEN A FACTORY IN CHINA, 
WE CAN GET ALL WE WANT."
SECOND, WE FOUND OUT THAT
THERE'S TWO PRICES FOR TUNGSTEN.
THERE'S THE PRICE 
WHEN CHINA SELLS IT TO OUR FIRMS
AND THERE'S THE SECOND PRICE
WHEN CHINA SELLS IT TO THEIR FIRMS.
THAT'S AGAINST W.T.O. RULES.
ALL RIGHT?
IT'S NOT JUST--
SO, IT'S NOT JUST RARE EARTHS.
SO, WHAT THEY'RE DOING--
AND NOW, IF THIS TUNGSTEN CARBIDE
 CUTTING FIRM BUILDS--
IF THE TUNGSTEN CARBIDE BUSINESS--
THAT'S JUST ONE BUSINESS
COMPONENT OF TUNGSTEN--
MOVES TO CHINA, 
AND AN AMERICAN MANUFACTURER
HAS A PROBLEM
 ON HIS ASSEMBLY LINE,
WHAT HE DOES TODAY 
IS HE CALLS THAT COMPANY UP
AND THEY SEND A TECH REP OVER 
AND SAY, "OKAY, HOW DO WE CHANGE IT?"
WELL, IF IT'S IN CHINA, THEY'RE GONNA
 HAVE TO CALL THE CHINESE GUY UP.
AND THEN, THEY'RE GONNA COME
INTO THEIR ASSEMBLY LINE--
SO, YOU'RE GONNA HAVE THE CHINESE FIRM REP
 LOOKING AT YOUR ASSEMBLY LINE--
THAT'S JUST NOT GONNA HAPPEN.
SO, IF WE CARE ABOUT 
MANUFACTURING,
WE HAVE TO CARE THAT 
WE HAVE ACCESS TO THESE METALS.
UM...
GRAPHITE, GERMANIUM,
 INDIUM, UH, VANADIUM.
VANADIUM-- 
IT'S ALREADY 37 PERCENT.
CHINA ONLY CONTROLS 
37 PERCENT OF THE MARKET.
SAUDI ARABIA ONLY CONTROLS
15 PERCENT OF THE OIL MARKET.
AND THEY CONTROL
 THE MARKET.
THESE ARE WAY ABOVE--
I MEAN, IF THESE WERE
 AMERICAN COMPANIES,
THEY WOULD BE BROKEN UP.
AND YOU CAN'T-- YOU KNOW, 
AND TO THINK YOU CAN GO TO CHINA
AND SAY, 
"OH, BE NICE TO ME."
IT'S LIKE GOING TO ROCKEFELLER
BEFORE THEY BROKE UP STANDARD OIL
AND SAY,
 "OH, BE NICE."
ALL RIGHT?
SO, WE HAVE-- I--
IT'S REALLY CHINA.
I MEAN, THERE'S A COUPLE
 OF IMPORTANT THINGS THAT RUSSIA HAS.
THERE'S-- SOUTH AFRICA HAS A LOCK
 ON PLATINUM AND CHROMIUM,
BUT, YOU KNOW, THEY'RE PRETTY RESPONSIVE
 TO THE MARKETPLACE.
CHILE IS VERY RESPONSIVE,
BRAZIL'S GOT THE LOCK ON NIOBIUM--
IT'S JUST--
IT'S GEOGRAPHY.
UM, AND THE CONGO HAS-- 
WHICH IS VERY UNSTABLE PLACE--
HAS A BIG PIECE 
OF THE COBALT MARKET.
BUT WHAT REALLY COMES OUT IS,
IS THAT THIS ONE COUNTRY THAT IS CEN--
HAS A CENTRALIZED GOVERNMENT,
 CENTRALIZED PLANNING,
THAT DOESN'T THINK IN TERMS 
OF JUST THE MINE AND THE MINE OWNER
AND HOW I OPTIMIZE
HIS PROFIT,
BUT IS THINKING OF CHINESE INDUSTRY
 MORE BROADLY
AND, YOU KNOW,
 IT'S ALL CENTRALIZED.
AND WE'RE DEALING 
WITH THAT KIND OF COUNTRY.
SO, IT SUGGESTS TO ME
THAT WE, AS A NATION,
HAVE TO ACCEPT THIS NEW REALITY 
THAT THIS IS NOT GONNA CHANGE OVERNIGHT,
AND START MUCH MORE AGGRESSIVELY
ENFORCING AND COMING--
BRINGING IT TO BEAR
THE FACT THAT, YOU KNOW,
 WE ARE THEIR MARKET.
AND SO, WE HAVE POWER HERE
AND SO DOES THE W.T.O.,
AND I BELIEVE WE HAVE TO BE 
MUCH MORE AGGRESSIVE WITH THE W.T.O.
IF WE WANT TO PRESERVE
 MANUFACTURING.
SO, THAT'S THE--
THOSE ARE MY REMARKS
AND I'LL BE VERY PLEASED
 TO TAKE JUST ABOUT ANY QUESTION.
(applause)
>> GREAT.
DR. BARTIS, WHY DON'T WE MOVE OVER
TO THE COMFORTABLE SPOT THERE.
AND IN THE INTEREST
 OF TIME,
WE JUST GONNA OPEN THE QUESTIONS
RIGHT UP TO THE AUDIENCE.
AND SO, PLEASE, MAKE YOUR WAY
TO ONE OF THE MICROPHONES HERE
OR TO THE TEXTING NUMBER 
THAT YOU FOUND IN YOUR PROGRAM,
AND WE'RE HAPPY 
TO GET STARTED.
DOES SOMEBODY HAVE
 A PRESSING QUESTION?
I'VE GOT A LITTLE LIST, 
JUST LIKE I DO IN MY CLASSROOMS,
IN CASE THE STUDENTS
 ARE VERY QUIET.
SO, COME ON DOWN 
AND GET THAT FIRST QUESTION ANSWERED.
>> HI, I'M CURIOUS AS TO WHAT RAND
THINKS ABOUT THE DEPLETION OF MATERIALS.
BECAUSE CERTAINLY, 
AS TIME HAS GONE BY,
A LOT OF THE EASY TO GET OIL, 
FOR EXAMPLE,
HAS CHANGED SIGNIFICANTLY
THE GEOPOLITICAL SET-UP.
WHAT KIND OF STUFF IS RAND 
LOOKING AT IN THAT, FOR THE FUTURE?
>> WE--
I MEAN, MY OWN VIEW IS
 IS THAT WE'RE FAR FROM DEPLETION.
AND THAT'S WHY I THINK 
IT'S SO IMPORTANT THAT WE ENGAGE
IN ADDRESSING
 GLOBAL WARMING
BECAUSE OF OUR CONCERN
ABOUT THAT PHENOMENON--
THE DAMAGE THAT MIGHT HAP--
 IT MIGHT DO.
UH, MY OWN VIEW IS
 IS THAT THERE'S ENOUGH OIL IN THE WORLD
TO TOAST THE ATMOSPHERE
 THREE TIMES OVER,
AND THAT WE REALLY...
NEED TO TAKE--
GOVERNMENTS HAVE TO ACT.
IT'S NOT-- GEOLOGY ISN'T GOING TO GIVE US
THE SIGNAL THAT WE'RE RUNNING OUT OF OIL.
>> WE'RE NOT RUNNING OUT OF OIL,
BUT RUNNING OUT OF EASY ACCESS.
NOT JUST TO OIL, 
BUT TO OTHER MATERIALS.
>> I THINK IN--
OUTSIDE OF A FEW COUN--
THERE'S STILL A LOT OF EASY OIL
 IN THE WORLD,
BUT WE DON'T HAVE
 EASY ACCESS TO IT.
SO, WE-- 
IT DOES COST MORE TO GET OIL.
I MEAN, BUT, YOU KNOW,
 OUR OIL COMPANIES--
EVEN THOUGH THE PRICE OF OIL
 IS $100 A BARREL TODAY,
OUR COMPANIES 
DON'T LOOK FOR $100 OIL.
I MEAN, THEY'RE GETTING OIL OUT
FOR MUCH LESS.
BUT YOU'RE RIGHT-- THE VERY EASY OIL--
THE OIL THAT YOU JUST, YOU KNOW--
SO, WE'RE GOING DEEPER,
WE'RE GOING TO MORE 
EXTREME ENVIRONMENTS,
AND TECHNOLOGY'S DOING
A TREMENDOUS AMOUNT.
I MEAN, JUST THREE YEARS AGO 
OR FOUR YEARS AGO,
WE THOUGHT WE HAD ABOUT
30 YEARS OF NATURAL GAS.
AND NOW, BECAUSE 
OF HORIZONTAL DRILLING
AND FRACKING 
SORT OF COMING TOGETHER,
WE NOW HAVE OVER-- WE THINK 
WE HAVE OVER 100 YEARS OF NATURAL GAS.
AND ESPECI--
WELL, CONTINGENT UPON RESOLVING
SOME ENVIRONMENTAL ISSUES.
>> THANK YOU.
>> UM, IN THINKING ABOUT YOUR SLIDE 
WITH THE THREE CIRCLES
AND, UM...
AMERICAN INTERESTS--
PROTECTING AMERICAN INTERESTS.
UM, AND YOU WERE TALKING
ABOUT INDEPENDENCE ALONE
IS NOT GOING TO PROTECT 
OUR INTERESTS.
AND SO, I WAS THINKING
THAT YOU WERE TALKING,
ON THE SLIDE
PREVIOUS TO THAT--
THAT WHITE SECTION
ABOUT LOCAL RESERVES--
>> THE WHITE SECTION WAS WHAT WE IMPORTED.
>> WHAT WE MAKE OURSELVES.
>> NO, IT WAS--
>> OKAY, SO THE SECTION
THAT WE MAKE OURSELVES
THAT HAS BEEN GOING UP 
AS A PROPORTION OF WHAT WE CONSUME--
>> NO, NO, THE SECTION WE--
YES, THE SECTION WE MAKE OURSELVES
IS GETTING BIGGER AND BIGGER.
>> RIGHT.  
>> WHICH IS A GOOD-- YOU KNOW, NOT BAD.
>> SO, I WAS THINKING-- 
I WAS WONDERING IF YOU COULD COMMENT ON,
UM...
THE NATURE OF ENERGY COMPANIES
BEING MULTINATIONAL,
AND HOW THAT ACTUALLY
PROTECTS OUR INTERESTS,
IF THE COMPANIES ARE, 
FOR INSTANCE, BRITISH PETROLEUM,
WHO IS A MULTINATIONAL COMPANY
WHO'S GETTING OIL FROM OUR AREA.
>> YES-- I MEAN, 
WE ALLOW BRITISH PETROLEUM
TO COME IN 
AND DRILL IN OUR...
OUR WATERS AND IN OUR FEDERAL LANDS
 OR ANYWHERE ELSE.
I MEAN, WE'RE AN OPEN--
WE'RE OPEN TO COMPETITION.
UM, THAT'S AN INTERESTING QUESTION.
IN FACT, WE WERE TALKING
ABOUT THAT EXACT QUESTION--
"WHAT IS THE BENEFIT
"OF HAVING AN AMERICAN-OWNED
"OR AMERICAN-BASED
"BIG INTERNATIONAL
 OIL COMPANIES?"
AND, UM... 
I DON'T KNOW.
THAT'S A GOOD QUESTION.
IT'S A REAL-- I MEAN, I'M REALLY--
WHEN I INTERACT WITH EXXON MOBIL,
I AM REALLY IMPRESSED WITH
THE QUALITY OF THAT COMPANY.
AND YOU KNOW,
 THEY HIRE AMERICANS AND THEY--
YOU KNOW, THEY HIRE EVERYBODY
FROM AROUND THE WORLD,
BUT AMERICANS HAVE A BIG ROLE
 IN THAT COMPANY,
AND IT'S AN OPPORTUNITY
FOR AMERICANS TO PLAY.
MOST IMPORTANTLY, THEY PROBABLY ARE
FAR MORE ENVIRONMENTALLY CONSCIENTIOUS
THAN A LOT OF THESE SMALL
"MOM AND POP" OIL COMPANIES.
SO-- YOU KNOW,
 'CAUSE THEY HAVE DEEP POCKETS,
THEY HAVE A REPUTATION.
UM, YOU KNOW, THEY DON'T PLAY--
IT'S-- IT'S AN OUTSTANDING COMPANY.
AND SO IS CHEVRON.
I MEAN, WE HAVE TWO--
 CONOCOPHILLIPS--
WE HAVE THREE VERY, VERY
GOOD AMERICAN OIL COMPANIES.
WE ALSO HAVE A LOT
 OF AMERICAN COMPANIES
THAT YOU'VE NEVER HEARD OF
THAT ARE OUT THERE,
DRILLING OIL ALL OVER THE WORLD AND,
YOU KNOW, OFF THE COAST OF AFRICA,
AND THERE'S A LOT OF ENTREPRENEURSHIP
COMING OUT OF THIS COUNTRY IN OIL.
BUT I DON'T KNOW-- 
YOU KNOW, THEIR PROFITS COME BACK--
SOMETIMES, 
THEY COME BACK HERE.
NOT ALWAYS, BECAUSE 
OF OUR TAX LAWS OR WHATEVER.
BUT GOOD QUESTION.
I WISH SOMEONE 
WOULD PAY US TO...
(laughing)
TO LOOK INTO IT.
AND IT CAN'T BE THEM.
(audience laughing)
>> HI.
TODAY, THERE WAS AN EXCELLENT ARTICLE
IN "THE WALL STREET JOURNAL" ABOUT,
UM, NATURAL GAS
AND ENERGY INFRASTRUCTURE
OF THE UNITED STATES.
AND THERE WAS A COMMENTATOR IN THERE 
WHO TALKED ABOUT FRACKING
AND HORIZONTAL DRILLING
BEING A "BLACK SWAN" OF THAT,
AND HOW YOU CAN USE NATURAL GAS NOW
 AS A SUBSTITUTE FOR OIL.
IF YOU WANTED TO GO TO
 A TRANSPORTATION INFRASTRUCTURE
DEPENDENT ON NATURAL GAS.
AND YOU KNOW, I'M LOOKING AT
YOUR CRITICAL MATERIALS HERE,
YOU KNOW, HAVE YOU CONTEMPLATED
ANY "BLACK SWAN" SCENARIOS
WHERE WE COULD DISCOVER THE CAPABILITY
 OF MINING IN THE SEA BED
FOR RARE EARTH MINERALS?
>> ALL RIGHT, UM...
WITH REG--
THERE--
A LOT OF WHAT'S DRIVING-- 
I MEAN-- NATUR--
YOU KNOW, THIS FRACKING,
THIS HYDROFRACKING TECHNOLOGY'S 
REALLY VERY NEW,
AND A LOT OF WHAT--
AND I DON'T KNOW HOW MUCH CHEAPER
 IT'S GONNA GET.
I MEAN, GENERALLY, AS YOU DO MORE
 AND MORE OF SOMETHING,
YOU LEARN MORE, AND THE PRICE
GOES EVEN LOWER AND LOWER.
ON THE OTHER HAND, A LOT OF LOCALITIES
WHERE THIS IS GOING ON 
ARE SAYING,
"WELL, WAIT A MINUTE.
"WE WANT YOU TO PUT MORE MONEY
INTO ENVIRONMENTAL PROTECTION."
A LOT OF THE CONSUMERS--
 I MEAN, A LOT OF THE LAND OWNERS
FEEL THAT THEY DIDN'T
 GET THE RIGHT DEAL.
UM, YOU KNOW,
 I MEAN...
AN OIL COMPANY COMES IN
 AND MAKES IT--
YOU KNOW,
 THEY'VE GOT ALL THE LAWYERS
AND, YOU KNOW, YOU'RE SITTING
OVER YOUR KITCHEN TABLE.
SO, I THINK-- YOU KNOW,
 SOME OF THIS STILL HAS TO BE FILTERED--
YOU KNOW, 
HAS TO, UH, SETTLE OUT.
BUT, UM-- AND A LOT OF WHAT'S GOING ON,
ESPECIALLY IN THE MARCELLUS,
IS DUE TO THE LIQUIDS 
THAT COME WITH THE NATURAL GAS.
SO, THE LIQUIDS 
SELL FOR A FORTUNE.
I MEAN, THE LIQUIDS ARE ETHANE
 AND BUTANE AND PROPANE,
AND THEY SELL 
FOR A LOT OF MONEY.
THEY'RE VERY VALUABLE.
AND THERE'S A VERY HIGH FRACTION
IN THE MARCELLUS OF THESE LIQUIDS,
WHICH COUNT AS PETROLEUM
 IN THE MIX
AND SELL AT THE PRICE OF PETROLEUM,
 IF NOT HIGHER.
AND SO, THE NATURAL GAS
IS COMING OFF
 AS A BYPRODUCT
OF, REALLY, LIQUIDS...
BECAUSE, YOU KNOW, WANNA--
 SO, WE'LL--
I MEAN, WE'LL SEE HOW IT
 ALL TURNS OUT THERE.
UM, WITH REGARD TO, YOU KNOW,
THE RARE EARTHS AND TUNGSTEN,
YOU KNOW,
 THE RESEARCH COMMUNITY
IS LOOKING AT SUBSTITUTES
FOR THESE MATERIALS,
BUT SOME OF THEM ARE VERY-- 
AND WE'RE ALSO LOOKING AT RECYCLING.
I MEAN, A LOT OF THE TUNGSTEN THAT WE USE
IN THE UNITED STATES IS RECYCLED TUNGSTEN.
YOU KNOW, THAT-- 
BUT SOME OF IT, YOU JUST CAN'T GET.
YOU KNOW, THAT MACHINE THAT CHOPS UP
 THE ROAD, THAT'S ALL TUNGSTEN--
THOSE ARE THOSE CEMENTED CARBIDES
 ARE ON THAT MACHINE.
THE TUNGSTEN-- YOU KNOW, 
YOU CAN'T COLLECT THAT BECAUSE IT'S GONE.
BUT WE'RE PUSHING RECYCLING.
THE INDUSTRY'S OUT THERE
DOING THE RECYCLING.
THE PRICE OF RARE EARTHS
WENT UP BY A FACTOR OF 100.
I MEAN, OIL WENT UP BY A FACTOR OF,
 WHAT, FIVE AND WE ALL--
YOU KNOW, AND SEVEN, I GUESS,
WHEN IT WAS AT ITS WORST,
WHEN WE ALL, YOU KNOW, WERE--
THIS IS 100.
  TUNGSTEN WENT UP
 BY A FACTOR OF THREE.
SO, ALL THESE INCREASED PRICES
ARE PROMOTING
 NEW MINES,
BETTER TECHNOLOGY
THAT USES LESS OF IT--
THE NANOTECHNOLOGY ADVANCES
 ARE COMING IN HERE.
SO, THE MARKET RESPONSE.
BUT JUST LIKE OIL, IT TAKES TEN YEARS
 TO OPEN A NEW MINE.
SO, YOU'RE SORTA STUCK
 WITH WHERE YOU ARE.
WE ARE TRYING TO OPEN THAT MINE
 IN CALIFORNIA-- IT WAS--
WE HAD A MINE.
AND SOME OF THE STUFF 
WE'RE SEEING THAT CHINA'S DOING,
YOU KNOW, IS DUE TO THE FACT THAT,
YOU KNOW, AS CHINA'S GETTING RICHER,
THEY'RE RECOGNIZING THAT THEY NEED
 TO HAVE BETTER ENVIRONMENTAL
AND HEALTH 
AND SAFETY CONTROLS.
I MEAN, YOU KNOW,
 IN 1910,
I THINK 10,000 U.S. MINERS DIED 
IN THE MINES.
AND SO, WE'VE PROGRESSED A LOT
 IN THE LAST 100 YEARS.
AND THEY'RE A LITTLE BIT BEYOND
 WHERE WE WERE IN 1910,
BUT NOT MUCH IN TERMS OF SAFETY.
>> THANK YOU.
>> I HOPE THAT ANSWERED. 
>> YEAH, YUP.
>> WE HAVE ANOTHER QUESTION.
>> HI.
LAST YEAR, THE I.M.F. WAS WARNING
 THAT HIGH ENERGY PRICES
WERE GOING TO UNDERMINE
 ECONOMIC RECOVERY.
EUROPEAN UNION AND THE UNITED STATES
 SLAP IRAN WITH SANCTIONS.
OIL SPECULATORS SAY,
"TENSIONS IN THE MIDDLE EAST,
"TENSIONS IN THE MIDDLE EAST."
HERE WE ARE AT $4 GAS,
 OIL'S $1.20.
HOW COME THAT CONVERSATION
ISN'T GOING ON NOW?
EITHER THE OBAMA ADMINISTRATION
REALLY GAMBLED WITH SANCTIONING IRAN
OR THERE'S SOME UNDERLYING
ECONOMIC RECOVERY
THAT SAYS THAT THE GLOBAL ECONOMY
CAN HANDLE THIS KIND OF AN OIL SHOCK,
TO USE THE PHRASE.
>> UM, IT'S NOT JUST IRAN.
I MEAN, WHEN...
WHEN WE HAD THE $140 A BARREL OIL,
 WE HAD PROBLEMS IN VENEZUELA,
WE HAD PROBLEMS 
GOING ON IN NIGERIA.
SO-- YOU KNOW, WE HAD
 A HURRICANE OR SOMETHING.
WE HAD SOME PROBLEMS 
IN OUR OWN GULF, SO IT'S THIS--
YOU KNOW, IT'S WHEN A BUNCH OF THINGS
COME TOGETHER AND IT'S REALLY BAD.
SO, WE'VE JUST HAD LIBYA,
WE'VE GOT SUDAN RIGHT NOW
WHICH IS NOT PRODUCING, BECAUSE
THE TWO PARTS OF SUDAN ARE ARGUING.
UM...
 NIGERIA IS STILL NOT ANYWHERE
 NEAR ITS PRODUCTION.
IRAN-- 
IRAQ IS BETTER.
IT'S GETTING UP THERE, 
BUT NOWHERE NEAR ITS LIMITS.
IRAN PUTS OUT ABOUT
 2.4 MILLION BARRELS A DAY
OR, 
UNTIL RECENTLY, DID.
I DON'T KNOW 
WHAT'S GOING ON NOW.
AND IF YOU TAKE 2.4 MILLION BARRELS
 OFF THE MARKET OVERNIGHT,
YOU'RE GOING TO SEE THE PRICE
OF OIL GO UP PRETTY FAST.
I DON'T KNOW WHERE IT WOULD SETTLE OUT,
 BECAUSE IT'S SUCH A CRAZY MARKET.
UM...
WE HAVE-- BETWEEN US,
 WE HAVE 750 MILLION BARRELS OF OIL
IN OUR STRATEGIC 
PETROLEUM RESERVE.
OUR ALLIES HAVE
A SIMILAR AMOUNT OF OIL.
SO, YOU KNOW, 
DURING THE FIRST IRAQ WAR,
GEORGE BUSH SR. DID CONVINCE
OUR ALLIES AND OURSELVES
TO SIMULTANEOUSLY
 HAVE A RELEASE
THAT GREATLY PUSHED
 THE PRICE OF OIL DOWN.
UM, I CAN IMAGINE THAT IRAN, 
IF THERE WERE MORE THAN SANCTIONS--
IF WE WENT INTO A COMBAT SITUATION,
WHICH I HOPE WE DON'T GET INTO--
UM...
THE, UM-- I CAN IMAGINE THAT THEY MIGHT
DO SOMETHING ABOUT THE STRAITS OF HORMUZ.
BUT I DON'T THINK, 
IF THEY WOULD BE SHUT FOR THAT LONG.
YEAH, IRAN-- THERE'S A NUMBER 
OF REPORTS THAT WE'VE DONE ON IRAN,
AND THE GIST OF MOST
 OF THOSE REPORTS IS
IS THAT THERE'S A LOT
OF DISSENT WITHIN IRAN,
AND YOU JUST GOT TO LET THE IRANIANS 
WORK IT OUT, AND BE PATIENT.
AND, UM--
BUT THERE ARE A NUMBER OF OUR ALLIES--
 NOT JUST ISRAEL.
I MEAN, THERE'S A NUMBER OF--
 YOU KNOW, SAUDI ARABIA
AND ALL THE COUNTRIES
 IN THAT REGION
ARE VERY WORRIED
THAT A NUCLEAR-ARMED IRAN
 WOULD BE A PROBLEM.
THE INTERESTING THING IS,
IS THAT IRAN HAS ALL THE LEGAL RIGHT
 TO DO WHAT IT'S DOING.
SO, UH--
SO...
I MEAN, 
UNDER THE NONPROLIFERATION TREATY--
THE NUCLEAR 
NONPROLIFERATION TREATY--
THEY HAVE THE RIGHT
TO DO ALL THESE THINGS.
AND SO, THEY TAKE GREAT UMBRAGE WITH US
SUGGESTING THAT THEY SHOULDN'T HAVE THAT--
BE ABLE TO DO THIS.
ON THE OTHER HAND, WE SAY TO THEM,
"LOOK, YOU'VE GOT ALL THE GAS--
"YOU'RE THE BIGGEST GAS-PRODUCING COUNTRY,
OR THE SECOND BIGGEST IN THE WORLD.
"IT'S CHEAP.
"NUCLEAR POWER
 IS NOT CHEAP.
"WHY ARE YOU TRYING TO DEVELOP
A NUCLEAR POWER CAPABILITY?"
AND, UM...
SO, THERE'S GOOD REASONS
TO THINK THAT THEY ARE.
BUT YOU KNOW, TO DATE,
THEY'VE BEEN-- IT'S A--
YOU KNOW, THEY'VE TAKEN GREAT UMBRAGE
 WITH OUR POSITION.
>> WE GOT ANOTHER
 QUESTION HERE.
>> THE COMMODITIES MARKETS
AROUND THE WORLD, UM...
BY WAY OF SPECULATORS, 
ARE SUPPOSED TO HEDGE THE MARKET
SO WE GET LESS 
AND LESS FLUCTUATION.
FOR INSTANCE, HERSHEY GETS THEIR CHOCOLATE
 AND THE PRICE OF CHOCOLATE GOES UP,
 WE DON'T PAY ANOTHER $10
 FOR A CANDY BAR.
HOW COME THAT IS NOT WORKING
 WITH THE OIL PRICES?
IS IT ALGORITHMS 
IN THE TRADING?
MATHEMATICAL?
OR IS IT PSYCHOLOGICAL TRADING?
OR ARE THE MARKETS 
REACTING TO,
"I CAN GET MINE,
 AND SCREW EVERYBODY ELSE"?
>> I-- YOU KNOW,
 A LOT OF THE HEDGING THAT WE SEE,
IS WHAT WE CALL
 "PHYSICAL HEDGING."
I MEAN, 
THE CHOCOLATE MARKET--
YOU KNOW, SOMEONE'S GOT THE CHOCOLATE
 IN A WAREHOUSE, ALL RIGHT?
AND IN THE OIL MARKETS,
 A LOT OF IT IS...
IT'S JUST FINANCIAL HEDGING.
IT'S SORT OF, YOU KNOW,
"LET'S PLACE OUR BETS."
UM...
WE HAVE NOT LOOKED--
AT RAND, WE HAVE NOT LOOKED
AT THIS HEDGING ISSUE IN DEPTH.
I MEAN, MY ECONOM--
MY COLLEAGUES WITH THE PhDS
IN ECONOMICS AGREE WITH YOU
THAT THIS IS AN IMPORTANT COMPONENT
OF ANY MARKET IS THE ABILITY TO HEDGE.
SPECULATORS HAVE A VERY IMPORTANT ROLE
 IN STABILIZING MARKETS
AND PROTECTING BOTH SIDES...
THE SUPPLIERS 
AND THE USERS.
SO, SPECULATION WORKS 
BOTH WAYS.
I MEAN, SPECULATORS CAN LOSE MONEY
 AND THEY CAN MAKE MONEY.
>> (indistinct speaking).
UM, WHEN CHINA AND VIETNAM
WENT TO WAR MANY YEARS AGO,
THE GOLD MARKET WENT CRAZY.
>> RIGHT.
>> AND, UM...
THERE WAS NO CONNECTION, REALLY,
 IN THE GOLD DISTRIBUTION,
MANUFACTURED, AND CONSUMPTION
 IN THAT WAR THERE.
DO YOU THINK THE SAME PSYCHOLOGICAL THING
IS HAPPENING TODAY, IN TERMS OF OIL?
>> I THINK-- I THINK SPECULATION IS NOT--
 I MEAN, I THINK OUR MARKETS--
I MEAN, OUR COMMODITY MARKETS,
ESPECIALLY, ARE HIGHLY REACTIVE.
IT'S SORT OF LIKE
 THEY OVERREACT.
I MEAN, I EVEN SEE THIS
ON WALL STREET, I FEEL.
SOMETHING SMALL HAPPENS
AND, FOR SOME REASON,
THE DAY IT'S ANNOUNCED, THE MARKET...
 REALLY STRONGLY REACTS.
AND THEN, THE NEXT DAY,
IT DOES A CORRECTION.
>> BUT NOT ALL THE WAY BACK DOWN
 TO WHERE IT WAS.
>> NOT NECESSARILY, BUT I--
THERE IS SOMETHING IN OIL,
AND I DON'T KNOW WHAT IT IS.
I MEAN, THERE IS-- I MEAN, THERE IS 
AN ELEMENT WERE SPECULATION
IS KEEPING PRICES HIGHER
 THAN THEY ARE.
BUT YOU KNOW, THE SPECULATION
 ONLY GOES SO FAR.
I MEAN, THE GROUPS 
THAT ARE MOST UPSET ABOUT THIS
ARE ACTUALLY SAUDI ARABIA
 AND THE OIL-EXPORTING COUNTRIES,
BECAUSE THEY'RE SELLING
 AT ONE PRICE...
AND THE SPECULATOR
 IS PUTTING IT UP HERE.
AND AT L-- AND IT'S DUE TO, YOU KNOW,
THE WORRY ABOUT DELIVERIES WITH LIBYA
AND THE WORRIES ABOUT
WHEN LIBYA WAS UNSTABLE.
AND LIBYA'S STILL 
NOT WHERE IT WAS.
THERE'S STILL CONSIDERABLY
LESS THAN IT WAS.
AND ALSO, YOU KNOW,
THIS CURRENT IRANIAN CONCERN.
UM...
BUT THERE'S ONLY
 SO MANY SHIPS.
I MEAN, IF THE PRICE
 GOES HIGH ENOUGH,
YOU KNOW, THE REST OF THE WORLD
 STARTS SELLING,
THERE'S ONLY SO MANY TANKER HULLS
 TO STORE THE OIL IN.
SO-- AND SOME TIME, 
THE SPECULATORS BLOW.
I MEAN, THEY CAN'T JUST--
THEY JUST CAN'T KEEP IT UP.
>> THANK YOU.
>> FOR TIME TONIGHT, 
THIS WILL BE THE LAST QUESTIONS,
AND THEY WERE SENT BY TEXTS
 FROM THE AUDIENCE.
I WON'T HAVE TIME TO ASK ALL OF 'EM,
 BUT TWO, IN PARTICULAR,
HAVE ASKED ABOUT, UM...
EITHER GOVERNMENT OR MAYBE 
PRIVATE INVESTMENT AND EFFORT
 IN ONE, 
OIL SHALES,
AND THEN PHOTOVOLTAICS, 
LIKE YOU WERE TALKING ABOUT EARLIER.
>> WELL, I'M GLAD YOU ASKED ME ABOUT--
AND NOW, "OIL SHALE" MEANS WHAT?
WHAT-- DO YOU MEAN THE OIL THAT'S
IN COLORADO OR DO YOU MEAN TIDE OIL?
BECAUSE EVERYONE 
GETS THOSE TWO MIXED UP.
>> COLORADO.  
>> COLORADO-- THANK YOU.
WELL, I MEAN--
UH, OIL SHALE IN COLORADO,
 I HAVE DEEPLY STUDIED AND, UH...
THERE'S NO NEED FOR GOVERNMENT
INVESTMENT IN TECHNOLOGY
BECAUSE WE HAVE OUTSTANDING COMPANIES
LIKE EXXON AND CONOCOPHILLIPS
AND CHEVRON AND OTHERS,
WHO ARE DEEPLY ENGAGED
IN TECHNOLOGY, IN SHALE...
AND, UH...
PETROBRAS FROM BRAZIL, 
THAT ARE PAYING WITH THEIR OWN MONEY
FOR TECHNOLOGY ASSOCIATED
WITH DEVELOPING THAT.
AND THE U.S. GOVERNMENT 
HAS MADE PLOTS OF LAND AVAILABLE
IN THAT OIL SHALE AREA...
UM, AND SO, THAT,
FROM A TECHNOLO--
SO THAT THEY CAN ACTUALLY GO AND 
APPLY THEIR TECHNOLOGY AT A SMALL SCALE.
OIL SHALE IS A HUGE RESOURCE
FOR THE UNITED STATES.
I MEAN,
WE HAVE, UM...
THE TOTAL RESOURCE IS SOMEWHERE,
THAT WE THINK IS EXTRACTABLE,
IS BETWEEN 
ABOUT 500 BILLION
AND 1.1 TRILLION 
BARRELS,
AND SORT OF THE MIDPOINT 
OF THAT
IS ABOUT THREE TIMES
 THE RESERVES OF SAUDI ARABIA.
THE PROBLEM 
WITH OIL SHALE...
IS THAT THIS VAST AMOUNT OF OIL
 IS IN THIS--
MOST OF IT IS IN THIS LITTLE PART
 OF COLORADO.
THE BEST STUFF 
IS IN COLORADO
IN SOMETHING CALLED 
THE PICEANCE BASIN,
IF YOU SAY IT POLITELY.
AND, UH-- AND IT'S ABOUT
600 FEET UNDERGROUND...
AND, UH...
UNDER A SINGLE ACRE OF LAND,
 THERE'S ABOUT 2.5 MILLION BARRELS OF OIL.
THERE'S NO PLACE
 IN THE WORLD
THAT HAS MORE ENERGY 
UNDER AN ACRE
THAN IN THIS PLACE
 IN COLORADO.
NOW, I USED THE WORD "OIL."
IT'S CALLED "OIL SHALE."
IT'S ACTUALLY A SOLID.
IT'S "TEENAGE" OIL--
IT'S NOT YET FORMED.
IT TAKES A FEW MORE MILLION YEARS
 TO MAKE IT-- GET IT OUT OF THE GROUND--
I MEAN, TO MAKE IT
INTO A LIQUID NATURALLY.
SO, THE GAME THAT EXXON AND SHELL
AND CHEVRON ARE LOOKING AT IS,
"I'M GONNA HEAT 
THE GROUND UP.
"I'M GONNA GO 600 FEET DEEP,
 OR 400 FEET DEEP,
"HEAT UP THE GROUND,
 AND WITHIN--
"AND I GOTTA HEAT THE GROUND UP
TO ABOUT 600 DEGREES FAHRENHEIT,
"700 DEGREES FAHRENHEIT."
THAT'S PRETTY HOT--
I MEAN, WATER BOILS AT 212.
UP IN CANADA, THEY DO 180 FAHRENHEIT
 TO GET THE OIL SANDS OUT.
SO, WE GOTTA HEAT IT UP 
TO THIS FAIRLY HIGH TEMPERATURE.
IT DOESN'T TAKE-- WHEN THEY TOLD ME THIS,
 I THOUGHT THEY WERE CRAZY,
AND I DID THE CALCULATION.
IT DOESN'T TAKE 
THAT MUCH ENERGY TO HEAT IT.
AND THEN, WHEN THEY HEAT IT,
 THIS PROCESS ACCELERATES,
AND SO THAT WITHIN A FEW YEARS,
 IT ALL COMES OUT.
AND IT'S EXCITING.
IT'S REALLY HIGH TECH.
THE PROBLEM IS...
IT SITS ON
 THE COLORADO RIVER BASIN.
ALL THE OIL SHALE 
IS CO-MINGLED WITH SALT.
UH, IF YOU WANT TO HAVE
 A REAL INDUSTRY,
YOU WANNA BE ABLE
 TO BE PRODUCING MILLIONS.
THE GOAL OF THE U.S. IS TO PRODUCE
 MILLIONS OF BARRELS A DAY
FROM THIS LITTLE AREA.
YOU KNOW,
 THAT WOULD BE NICE.
BUT YOU DON'T WANT 
THE FIRST PLANT TO COME IN,
PUT OUT SO MUCH POLLUTION 
OR MESS UP--
DO SO MUCH DAMAGE,
 ENVIRONMENTALLY.
SO, I THINK THE NEED
FOR GOVERNMENT RE--
SO THAT YOU CAN'T 
HAVE BIG DEVELOPMENT.
SO, I THINK THAT THE NEED
 FOR THE GOVERNMENT
IS TO DO
 ENVIRONMENTAL RESEARCH,
INFRASTRUCTURE, 
START THINKING ABOUT THIS.
BECAUSE RIGHT NOW, THIS AREA
HAS NO MONETARY VALUE TO US.
THERE'S A LOT OF PRESSURE
FROM SOME POLITICALS...
IN CONGRESS AND IN SOME GROUPS,
 SOME PRESSURE GROUPS,
THAT WE SHOULD 
IMMEDIATELY LEASE THIS LAND.
AND IF WE LEASE IT NOW, 
IT'LL GO--
IT WON'T DRAW
 ANY VALUE.
A SINGLE LEASE TRACT OF THIS LAND
HAS ABOUT $1 TRILLION WORTH OF OIL.
BUT IT'S ONLY GONNA BE MONETIZED
 IF IT HAS VALUE.
PHOTOVOLTAICS-- GOVERNMENT RESEARCH
 OUGHTA BE DIRECTED TO ME
AT ADVANCED CONCEPTS.
I'D OFFER TO MAKE ELECTRICITY
AT ONE-THIRD THE PRICE
THAT CURRENT 
TECHNOLOGY DOES.
>> THANK YOU, OKAY.
(applause)
>> UH, DR. BARTIS,
YOU'VE GIVEN ME A WHOLE DIFFERENT WAY
 OF LOOKING AT THIS ISSUE.
I, UM...
OUR DISCUSSION TONIGHT--
I DON'T KNOW HOW THE REST OF YOU FEEL
 BUT, JUST, UM...
VERY COMPREHENSIVE.
AND I THINK THAT YOU'VE ALL GIVEN US
 A LOT TO THINK ABOUT,
SO THANK YOU VERY MUCH.
(applause)
DR. STEKETEE, THANK YOU VERY MUCH
 FOR YOUR HELP THIS EVENING--
WE APPRECIATE IT--
AND THROUGHOUT--
FOR GETTING US THROUGH
THE TOPIC AS WE DID.
AND THANK YOU TO ALL OF YOU
FOR COMING FOR OUR LAST SESSION,
AND ALSO, 
WE'RE VERY HAPPY THAT AMY,
OUR PROGRAM ADMINISTRATOR'S
BABY DECIDED TO WAIT
UNTIL AFTER "GREAT DECISIONS" WAS DONE.
(audience laughing)
IT'S BEEN TOUCH-AND-GO,
AND THANK YOU, BABY.
SO, THANK YOU ALL--
WE ARE ADJOURNED.
