Charlie Rose talks to Daniel Yergin “The oil that would flow through Keystone is equivalent to about a third of Iran’s total exports”

The Pulitzer prize-winning energy expert discusses the political side of gas prices, the impact of fracking, and the importance of efficiency


Why have gas prices become such a huge political issue in America?

There are two reasons. One, this is the one price everyone sees every day. And secondly, it’s something that, you know, people feel very directly and immediately. They feel it in their pocketbooks and feel it in their wallets. Seriously, for a lot of people, when prices go up like this, it’s a big and unexpected financial burden.

And how much responsibility should President Obama bear?

In the short term, there’s not much that any president can do about gasoline prices because they’re determined by what happens on the world oil market. And the world oil market today is pretty tight in terms of supply. Supply’s missing from a number of countries. And the oil price right now is registering this rising tension over Iran’s nuclear program, which entered a new phase a few months ago with the UN report. World oil prices are up about 20 percent since mid-December, and U.S. gas prices are up about 20 percent.

Then what will stop rising gas prices?

Other suppliers have to actually come into the market, and that’s going to be critical over the next several months. Will Iraq put more oil into the market? One country that will put more oil into the market is actually the U.S., where our production has probably increased by at least 300,000 barrels a day. Also, if people become more efficient, that could take some of the pressure off the market. And if Iran decides that the new sanctions we’re putting in place are really going to hurt them and they start negotiating seriously, I think that would take some of the tension out of the market. But all of those? We won’t know the answer for the next few months.

Is it a credit to Obama that we’re producing more oil and natural gas?

U.S. oil production is up about 20 percent since 2008. The last time we were in this kind of fix in gasoline prices, it seemed like the world was going to end, that we were going to run out of oil. This time, one of the very positive things is the significant improvement in the U.S.’s own oil and gas position. But that was really set in motion by the private sector, by people applying for technologies, by companies taking initiative.

How much difference would the Keystone pipeline make?

It’s not only U.S. oil production that’s gone up, it’s also Canadian oil sands production, which has almost tripled since the beginning of this century. Canada’s now our most important source of oil by far. And the Canadian oil sands — to get the volumes in perspective — they’re greater now than Libya’s output before the civil war. The oil that would flow through Keystone is equivalent to about a third of Iran’s total exports. There are a lot of arguments about Keystone, but the argument that people haven’t paid as much attention to is what it would mean for our energy security. Keystone would signal that, within two years or so, there would be major new oil that would help shrink the number of Iranian barrels on a tight world oil market.

How does fracking change the picture?

The development of shale gas has created — my company [Cambridge Energy Research Associates] did a study — indirectly something like 600,000 jobs. It is a major stimulus to the revival of manufacturing in the country, and in ways that were not anticipated a few years ago. This inexpensive, abundant energy, directly and as a source of electricity generation, makes the U.S. more competitive in the world economy.

What about environmental risk?

I was on a committee that did a report for [Energy Secretary] Steven Chu and Obama. What we concluded is that there are environmental issues to be addressed, and we identified 20 pragmatic ways of addressing them. There’s this public debate, and then there’s what seems to be reality. The scientists on the committee were firm: The chemicals that are used that have gotten attention, it’s very, very unlikely that they’re getting into the water supply. What needs to be managed is what you do with the spent water from the drilling.

It’s often said the U.S. dwells on its energy supply but not on using it efficiently. You wrote about this in The Quest, your recent book.

I concluded it’s the underappreciated energy source — the field of energy efficiency. As a country we’re twice as energy-efficient today as we were a few decades ago. If we could be twice as efficient again with all the tools we have, that would make a very big difference. Energy efficiency used to be a partisan issue; but I now see it embraced across the political spectrum.

Watch Charlie Rose on Bloomberg TV weeknights at 7 p.m. and 10 p.m. E.T.


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