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Author Daniel Yergin on U.S. Need for a ‘Diversified Energy Portfolio’

December 23, 2011 at 12:00 AM EST
Amid concern over tensions and violence in Iraq and Syria, oil prices rose to nearly $100 a barrel Friday. Jeffrey Brown discusses the ongoing hunt for untapped reserves of energy and how the demand for energy has shaped political and economic change around the globe with Daniel Yergin, author of "The Quest" and "The Prize."
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JUDY WOODRUFF: Next, a look at the ever-growing global search for energy.

Oil prices rose to nearly $100 a barrel today amid concern over tensions and violence in Iraq and Syria and the possible disruption of oil supplies.

The hunt for untapped reserves and other sources of energy is the subject of a new book.

Jeffrey Brown has our conversation.

JEFFREY BROWN: New drilling platforms in South America, a contentious pipeline through the heartland of the U.S., the enormous demand for automobiles in China, they’re all part of the changing world of energy around the globe and the worries over its environmental impact on the planet.

Author and analyst Daniel Yergin tackled the history of oil in 1991 in his Pulitzer Prize-winning book “The Prize.” Now he’s updated the story and widened the lens further in a new book, “The Quest: Energy, Security, and the Remaking of the Modern World.” Yergin is the chairman IHS Cambridge Energy Research Associates, which does consulting work for the industry. He has also served on government panels looking energy use.

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And he joins us now.

And welcome.

DANIEL YERGIN, author, “The Quest: Energy, Security, and the Remaking of the Modern World”: Thank you.

JEFFREY BROWN: You write “The Prize,” a panoramic history of oil that brought us to the first Gulf War, and then, as you write here, a lot of things changed.

DANIEL YERGIN: Right. Exactly.

JEFFREY BROWN: What are the most important changes?

DANIEL YERGIN: Well, first was the collapse of the Soviet Union, its disappearance, and the other major thing was the rise of China.

China had just a couple of words almost in “The Prize.” And in “The Quest,” it’s the only country that gets two chapters of its own.

JEFFREY BROWN: Now, one major question that remains from then to now is whether and how quickly the world is running out of oil, the so-called peak oil issue.

DANIEL YERGIN: Right.

JEFFREY BROWN: Now, you argue and you have argued here on the program before that such fears are exaggerated.

DANIEL YERGIN: Right.

It’s a very contentious, it’s a very emotional question. It also goes in cycles. We have gone through about five cycles of this. And when prices are high and markets are tight, you get it more intense. But, right now, what we are seeing is an expansion of production in, of all places, the United States in ways that were not expanded even a couple of years ago.

It still doesn’t mean — there’s a big challenge assuring energy for a world in which China and India becomes big players. But the notion that we’re going to run out physically soon just doesn’t seem to be borne out by the evidence.

JEFFREY BROWN: Is it a certainty, or just you are going on the explosion of what you see around the world?

DANIEL YERGIN: Well, it’s the assessment of reserves and activity around the world. And you see things that no one was — no one expected North Dakota to be the fourth largest oil-producing state in the United States five years ago. And yet it is today.

JEFFREY BROWN: Now, these new sources of oil, they’re often not easy to get to, to extract. They raise a whole lot of other new challenges, right?

DANIEL YERGIN: Well, including the new challenge of price, because they’re not cheap. And so it kind of puts a higher floor under the price.

JEFFREY BROWN: But in terms of the potential — well, witness the Gulf oil spill, right? All kinds of new things happen when you go to places you formerly didn’t go.

DANIEL YERGIN: Right, and that you didn’t have the tools in place to deal with an accident of that scope. And, yeah, you were operating at depths where nobody had ever tried to solve that type of problem before.

JEFFREY BROWN: So, if people see an experience like that, why shouldn’t they be wary or worried about the impact of searching out new sources of…

DANIEL YERGIN: Well, I think you do see that in terms of shale gas, which is now 30 percent of our natural gas production. And some people are very concerned about water, air, all of those issues.

JEFFREY BROWN: This is so-called fracking.

DANIEL YERGIN: The fracking, the famous fracking.

JEFFREY BROWN: Yeah.

DANIEL YERGIN: And I think the issue is that the environmental issues have to be managed, and they have to be managed properly. And that means technology. That means best practices. And that’s a requirement really for going forward and for public confidence.

JEFFREY BROWN: You were on a government panel that advised going forward.

DANIEL YERGIN: We were charged by President Obama to look at how to manage the environmental issues around that.

And we have 20 recommendations that we’ve come up with as result of our study that we think would mean that you could go forward on a sound environmental basis with transparency, disclosure, all those things you need, and have the benefit of this resource for the country.

JEFFREY BROWN: But is there evidence that that can happen, that the industry looks at what it does with transparency, that the government regulates? Again, I’m going back for the average person thinking about, whatever happened — what happened in the Gulf?

DANIEL YERGIN: Well, that is. And I think that cast a shadow over everything in the energy arena.

And thus the issue of public confidence and public trust becomes all the more important. Disclosure is happening because people want to know what are the chemicals that are used in the fracking. And a very important role is state regulation, which most people don’t realize, but it’s really the states that regulate oil and gas production.

JEFFREY BROWN: Now, inevitably comes the question of the impact of our energy use on the planet, right, in the form of climate change, something you address here.

Is it possible to continue our focus on fossil fuels and still protect the planet?

DANIEL YERGIN: Well, that is, you know, a big question.

I started off, I was going to write one chapter in the book on how did climate change go from being something a few scientists worried about in the 19th century to, as you describe it, an overarching question. I ended up writing six chapters on it because it’s such a fascinating story.

And I think it’s one of the three major themes of the book for which we will see the answers, they will unfold, about how to match environmental objectives, including on climate, with the world’s need for energy, particularly when, again, you look at what has happened in China, where they sell many more cars every year now than the United States does.

JEFFREY BROWN: Well, so how worried are you?

DANIEL YERGIN: Well, I think it’s a — again, it’s a concern and it has to be managed.

But I think that so much of the book is really about what I call the great revolution, about technology and finding technologies that provide answers. We have been doing that for two-and-a-half centuries. And I don’t see why we will stop. There’s a process. Some people think we are where we are, but I have a sort of optimistic frame of mind.

JEFFREY BROWN: And where do you see us going in terms of some of the alternatives, renewables?

DANIEL YERGIN: Well, I think it’s interesting.

When you look back — I talk about the rebirth of renewables, because in the ’70s and ’80s, great enthusiasm. Now you look back, you say, those were very immature technologies.

A wind turbine today is a much more sophisticated machine than a wind turbine in the 1980s. So, I think they have become big businesses, but they are still small relative to the overall energy mix. But wind is really kind of part of — it’s almost not an alternative. It’s now another form of accepted energy.

JEFFREY BROWN: Well, I notice one of your areas of optimism here is the idea of conservation and increased efficiency.

You almost — you say we should think of these as actual sources of energy now. We underestimate the impact.

DANIEL YERGIN: Yeah. Well, just think.

We, as a country today, are twice as energy-efficient as we were during the era of the energy crisis. If we weren’t, we would really be in trouble. And so the problem is, it’s not dramatic. As — I quote a former European Union official saying, there’s no red ribbon to cut, you don’t get great photo opportunities, but it’s a fundamental part of any sensible energy strategy.

And we’re implementing it. Our cars are going to get a lot more efficient. That counts for a lot.

JEFFREY BROWN: And one last thing here. The whole idea of energy independence, which we constantly hear from politicians, right, you seem to think that that’s not the way to think about it.

JEFFREY BROWN: You agree with Churchill on this idea of variety of sources.

DANIEL YERGIN: Right. Yes.

We have been having — we could do a litany of presidents saying we could become energy-independent, and it doesn’t happen. We’re part of a global market, but it’s really our security that matters, that our economy not be vulnerable, that we’re not vulnerable to disruptions.

And, thus, I think that, certainly, domestic resources are important, but I think that diversification — just as you diversify your retirement portfolio, a diversified energy portfolio is a really important part of our energy security.

JEFFREY BROWN: Alright, we’re going to continue this discussion online. And I hope people will join us there.

For now, Daniel Yergin’s new book is “The Quest.”

Thanks very much.

DANIEL YERGIN: Thank you.

JUDY WOODRUFF: And a postscript to Jeffrey’s conversation: Earlier this month, the Obama administration resumed selling leases for oil and gas drilling in the Gulf of Mexico. BP was among the 20 companies bidding on the first leases in the Gulf since the Deepwater Horizon oil spill. The bids are subject to three months of environmental reviews.