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National Security Consequences of U.S. Oil Dependency: Report of an Independent Task Force: Press Briefing [Rush Transcript; Federal News Service]

Speakers: John Deutch, Institute Professor, Massachusetts Institute of Technology; Former Deputy Secretary of Defense; Task Force Chair, James R. Schlesinger, Senior Adviser, Lehman Brothers; Former Secretary of Defense; Former Secretary of Energy; Task Force Chair, and David G. Victor, Adjunct Senior Fellow for Science & Technology, Council on Foreign Relations; Task Force Director
October 12, 2006
Council on Foreign Relations Washington, DC


SCHLESINGER: By way of background. Council on Foreign Relations focuses on foreign policy, and our concern was what are the foreign policy implications, as the title suggests, of the oil dependency. Oil dependency is a problem that has erupted since 1973 and has slowly increased its shadow over foreign policy. If you go back to 1956, we had—we the United States had enough shutting capacity in Texas to carry not only ourselves, but our allies through the Suez crisis. Those days are in the distant past.

And what we have today is an increasing shadow on foreign policy. So that was our central focus. It is particularly an intense problem because the world’s troubles now do not emulate from Moscow or the Soviet Union. The emulate from the—imminent from the Middle East from where much of the oil is and where more of the production will be concentrated over the years ahead. And this has all been reinforced in recent years by the shrinkage, just almost disappearance of spare capacity.

To what extent this reflects the growing difficulty of finding what is called—what the industry calls easy oil, which means conventional oil, and to what extent this reflects the new dominance of the national oil companies is a question. You can attribute some of our problems to the difficulty of finding new oil. As you all know, we are dependent upon old fields for a substantial part of our present production. These—some of these old fields are beginning to play out, and new discoveries in recent years have been very modest compared to the levels of production.

So over the decades ahead, we are going to have to face the fact that energy prices will continue to rise. Right now, the cost of a marginal barrel of new production is probably around $35-$40 a barrel.

QUESTIONER: What was that?

SCHLESINGER: Thirty-five-$40 a barrel. So there’s an—there is a—what shall I say—an illusion in the body politic that somehow or other that we can go back to an era of cheap energy. That just is not possible.

Over the decades, we will face a rising oil price, not necessarily from the recent highs. There will be variation in the price. There will be periods of recession that will pull the price down. There will be some restoration of spare capacity, but over the decades ahead, we can look forward to rising oil prices.

Now, the consequence of the recent surge in oil prices has been to give leeway to producing powers to follow their own strategic objectives, and this has been quite notable in the case of—cases of Iran, Venezuela, Russia in a different context, and it has also led to a spillover from these high energy prices and high revenues into the coffers of the terrorist entity.

Lee Feinstein, James Schlesinger, John Deutch, and David Victor brief top journalists on the task force's recommendations.

So all of this has imposed a burden on the foreign policy of all importing nations. As you will notice, the European reaction to the Russian cutoff of oil through the pipelines in Ukraine last winter, the Europeans began to talk about what we can do to solve our energy security problems. The answer is probably not that much. There is going to be no solution to the energy security problems.

Concern about supply has led to importing nations accommodating the exporters. A classic case is developing right now in Georgia, in which the president of Georgia said, “We are adhering to democracy. We are unlike many of the former states of the Soviet Union. We know that the West will come to our aid.” And listening carefully to the response from the EU, it is plain that Georgia will not have much support from the EU.

Now, the U.S. is in a somewhat different position from other importing nations, either in that it has international responsibilities as a leading world power or, if you prefer, it has taken on international responsibilities as the leading world power. These were not necessarily thrust upon them.

And what do we urge that we do internationally? We urge all countries to increase capacity to produce oil—and incidentally, to some extent gas, as well. That includes OPEC, it includes non-OPEC, it includes Russia, it includes the United States. While the United States is pontificating about the need to increase capacity, it has got to display, in our judgment, a willingness on its own part to turn to increasing its own production. For some on the board, that means opening ANWR, for some it means doing everything but open ANWR, but we all agree that the United States must demonstrate its own willingness to increase production.

In some places, like Nigeria, there has been a problem in that none of the benefits of substantial oil production trickle down to the locals, and that this requires more openness on the part of government, transparency in the use of oil revenues so that we know what is going on, and then perhaps more importantly, that the people in the local production area see some of the benefits.

What this means all in all is that the United States must be serious about its energy problem. By being serious, we mean you’ve got to speak home truths to the American people: There is not going to be energy independence; worldwide we are not going to turn away from the Middle East; we are going to be dependent on oil imports worldwide and as a country as long as we depend on the internal combustion engine and air transportation.

There are many things that can be done to alleviate the problem, and that involves domestic policies. All in all, we will not achieve energy security. We must recognize that we will live, to a greater or lesser extent, with energy insecurity over the decades ahead, and the question is best to balance the risk. And that requires domestic action, which John will discuss.

DEUTCH: Thank you, Jim.

I think it’s evident that there is a tremendous linkage between—in energy issues between their foreign policy aspects and their domestic aspects. And I want to draw your attention to the fact that this task force membership represents a broad range of views and experience about energy matters. And the one thing which is remarkable is that they have a common assessment of the international picture that Jim has sketched for you, and also the domestic actions which ought to govern our future conduct if we are going to deal with these energy problems.

I’m going to mention very briefly four or five salient recommendations of the task force in the domestic area. The first is that there’s a unanimous view that it is in the interest of the United States, and other countries as well, to adopt measures which encourage greater efficiency in oil use.

The specific three measures that the task force considered and draws attention to as a possible—would be, clearly, that the United States could do, is to adopt a tax on oil, tax on oil-use; too stringent—to make the CAFE standards, the Combined Auto Fuel Efficiency standards, more stringent; or perhaps to adopt a tradable permits scheme of allocating available gasoline supply.

Of course, all of these options present political difficulties. But it is an example, again of where Jim’s point about the political leadership having—needing to take—to really support these kinds of measures is very important.

Why do we care about this? Higher prices will dampen demand, higher prices will encourage supply in the United States and elsewhere, but most importantly or as importantly, higher prices are also a massive incentive for innovation in the energy area of the private sector. I think here in area code 202 there is a lack of appreciation about how much innovation is taking place in the energy business because of the increase in oil prices that we’ve seen over the past couple of years. There’s tremendous activity among big companies, big oil companies such as Chevron, chemical companies such as Dupont, but there is also very, very important innovative activity by small, start-up companies and companies which are supported by venture capitalists.

Let me just mention two areas where I think the technology change is worthy of note.

The first is in biofuels from cellulosic biomass feedstocks, where there’s a potential over time to produce ethanol and transportation substitute fuel at a reasonable cost, even without subsidies, which would help alleviate our dependence on imported petroleum and our petroleum use generally. But as I hasten to say, it’s going to take time, and even when it happens, it might be as much as, let’s say, 2 million barrels of oil per day equivalent of ethanol production from biomass—cellulosic biomass. That’s still only 10 percent of our daily use.

The second area I want to mention is nuclear power. The task force is unanimous in its view that the country should be considering greater use of nuclear power. We’re well aware that in the short term, that does not substitute for transportation fuels. But investing in that technology today allows there to be an orderly progression to more electricity substitution for transportation liquids through, for example, hybrids, plug-in hybrids and electrical cars. So it’s a long-term move away from liquid fuels.

The point is today if you make these investments in these technologies across a broad array, we will in the future have a less dependence and a quicker transition to—away from a petroleum-based economy. DOE has—the Department of Energy, of course, has a role to play. They have been for many, many years sporadic in their attention. They do not have the resources required to really encourage this transition away from a petroleum-based economy for many reasons, partially because of inconsistent and variable congressional support. The Congress is terribly important here. Congress must support research and demonstration and development—research, development and demonstration programs that are consistent over time and have an effect on our transportation fuel—alternative transportation fuel picture.

SCHLESINGER: Without excessive earmarking.

DEUTCH: Without excessive earmarking. Let me just give two examples.

There is a protectionist tariff on imported ethanol today. So on the one hand, while we are giving subsidies to corn growers for gasohol for corn, we are at the same time putting this protectionist tariff not to allow ethanol—lower-cost ethanol from Brazil into the country. Congress left on its adjournment without having extended the R&D tax credit, which is the single-most important thing that industry needs to improve its innovation in the energy area and in other areas as well.

A brief word about natural gas. There are concerns about long-term availability of natural gas in North America. It’s a market which includes Canada, Mexico and the United States. Canada remains an important source for incremental supply to the United States. The U.S. production for gas should increase, as well as the oil that Jim mentioned, especially from unconventional gas sources; for example, coalbed methane. And eventually much of the—some of the supply for gas is going to have to come from LNG, imported LNG. That means that everything the government can do to encourage the siting and construction of regasification facilities in North America is important for assuring the long-term supply of gas.

Two words on the energy infrastructure. Our energy infrastructure is vulnerable to disasters, either natural disasters, such as Katrina, as we saw last year, and also to terrorist attack. Much needs to be done—much is being done, much more needs to be done to protect these facilities, the grid, pipelines, power plants and the like.

The Strategic Petroleum Reserve, introduced by my beloved friend, James Schlesinger, in 1978, has not had a policy review in some time. We think it’s worthwhile to review its size, its purpose, the rules for use from the Strategic Petroleum Reserve to help us in a stand-by case where there is an interruption of supply.

My final point has to do with because we’re old, because we’re old, we have eschewed a recommendation which groups like us often make to reorganize the government. We really thought about, you know, we’ve been through that too many times. This is a subject which is only is going to get better in the United States if there is consistent, serious, informed political leadership by energy leaders. At present, our political leaders especially—either party—our political leaders, when they are running—especially when they’re running for office, are tempted to offer solutions which seem to suggest to the American people that we can simultaneously enjoy abundant energy, lower-cost energy, and energy which does not come from other parts of the world all at the same time. And that is most unlikely and not the case.

David, do you want to say a few words?

VICTOR: I’ll just say—make two points.

Your question inevitably will be what’s new about this; this is not the first time people have worried about the energy problem.

I went back—the council did a report in 2001 on energy and foreign policy. I went back and reread that just a couple of days ago, and there are three parts of this report that are striking for how—for the attention we give to them here and their absence in the 2001 report.

One of them is, obviously, today, compared with 2001, we’re in a high-price environment. I think to echo something John said, the report exudes concern that as prices come down, that political attention is going to move on to other topics. There’s some evidence of that happening already.

The second thing that’s in this report that is not new in the industry but is very new in the concern about its impact on the way the markets function is the attention we give to national oil companies, to state oil companies, which vary enormously in their performance. There are some that are investing massively in new production—Aramco is one of them, PetroGaz is another, a handful of others. And there are others that are really very dysfunctional firms and that channel the resources into activities that are unrelated to the oil market and harmful overall. And that’s part of the logic for why one needs to do something about this problem.

And the third thing that’s different about this report is the significant attention we give to the fact that in some places in the world, places that tend to be poorly governed, the flow—huge flow of oil and gas revenues into these countries has actually made things not better, and in some cases actually worse for the local population. It has undermined governance, and that, in turn, has reduced the stability that you need to attract investment for the long term. And this—some people call this the “resource curse.” We don’t use that language. But this is something, when you look at a consensus report, people with a wide range of backgrounds, a consensus report giving as much attention to this problem of governance in some oil- and gas-rich countries, I think is very notable, and that’s something that’s really quite different today compared with the way the council looked at this just five years ago.

DEUTCH: We’re open for questions, comments, objections.

QUESTIONER: In the past couple of years, we’ve had Congress pass the Energy Policy Act; we’ve had the president over the past year speak out on oil imports and announced a few initiatives, the American Energy Initiative, and other things to promote alternative fuels. In fact, as we speak, I think the president is—they’re having a conference in St. Louis on renewable energy and it’s focusing on biofuels. The president’s there and Cabinet members are there, and all of that.

So it seems as though there’s the appearance that there’s a lot of attention to this and a lot of money being authorized for these activities and all. You know, is it not enough or is it poorly focused?

SCHLESINGER: It’s not enough, and it’s not necessarily poorly focused, however. The president is quite right that the ultimate solutions for our energy problems will have to be technological. That much is clear. We are certainly not doing enough to constrain our use of oil. That is a very tough problem in the United States.

Let me mention two facets of it. First, gasoline taxes. I still have some black and blue marks from 30-odd years ago. It just doesn’t move on the Hill. Some administrations are, what shall I say, willing to consider it and others are unwilling to consider it.

But we talk about hybrid vehicles. It is important to recognize that hybrid vehicles have come along—they are not necessarily reducing the use of fuel, in that the improvements are put into improved performance in terms of the weight of the vehicle, the acceleration of the vehicle, rather than in terms of reducing the requirements for fuel.

So some of these things that we talk about as solutions are will-o’-the-wisps. And it’s been a problem over the years.

You mention addiction to oil. Going back to 1974, we had energy independence. I think if I remember correctly, we were going to cure our dependency by 1980. You can check that out; I don’t remember exactly what it was. Curing addiction to oil was easier when we were importing 4 (million) or 5 million barrels a day than when we are now importing 14 million barrels a day. Curing addiction is not a simple thing, and talking about curing addiction is much easier.

I think I may have covered the points.

A lot of the things that were suggested by the administration in the Cheney group were quite sound in terms of improving the energy infrastructure of the United States, but there was no substantial attack on the question of the use of oil or imported oil. Our problem is fuel liquids. And as I mentioned, as long as we’re dependent on the internal combustion engine and air transportation, that will continue to be a problem. And we are not going to cure imports as long as that is the case.

QUESTIONER: Can someone talk about a change that you describe briefly but don’t really go into, and that is the nature of the—the possible change in the nature of the world oil market. In other words, even with the nationalization of a lot of the reserves in the countries, where these national oil companies become the owners and control, the supply of oil has been essentially distributed by the market. That these are off-loaded to major and minor oil companies that sell to people who pay them.

And now there are, as you mention in the report, some arrangements, essentially government-to-government, for supply. And at least there’s a fair amount of rhetoric that somehow that large consuming countries, China particularly, will attempt to gain political commitments to supply. And you mentioned earlier the use of oil—well, at least when it’s in tight supply at high prices—to further the political ends of the suppliers.

So my question is, are we at the beginning of a fundamental change in the nature of the world oil market? And if so, is that something we can prevent? And if we cannot prevent it, is it something that we have to change our policy substantially so that we in effect join the competition to try to secure what we consider to be relatively safe and stable supplies?

SCHLESINGER: With regard to the narrow aspect of your question, which is potential for competition with other importing countries like China locking up supplies, what the report says is, “Look, we’ve got to have a a serious conversation with these other importers.” At the moment, the supplies being locked up in this manner are marginal to the world oil market, as your question indicated. It could become troublesome, and that’s the reason that at some early point we ought to have a serious discussion with these other oil importers. John mentioned the change in the rules of IEA, which is, as you know, limited basically to the Western democracies in some kind of associate membership or a broadening of the relationship amongst the consumer nations so that we can have common policies. As your question implies, we may at some point be forced to compete on a government-to-government basis, and it would seem to me to be ill-advised for other countries to get into a competition of this sort and that we ought to power relationships with the United States. And therefore, I think we have the basis of the dialogue.

With regard to the broader aspect of your question, yes, the international oil market has changed substantially in that in the past the international oil companies were dominant. They are no longer dominant with regard to reserves. They are no longer necessarily dominant with regard to production and slowly losing our position with regard to refining, and this has altered the international oil market in a substantial way.

For one thing, many of these national oil companies do not share the desire of—the national oil companies do not share the desire of—(word off-mike)—oil companies to provide energy supply in the same way. Some of them, most notably now the Russians, say, “We’re not solving the world’s energy problem. We are going to operate in the interests of the Russian Federation.”

So that has had a significant impact on the structure of the oil market. There are people in the oil industry who are confident that when crisis—when and if crisis come down, that some of the national oil companies will open up to Western investment. I wouldn’t bet the ranch on that.

DEUTCH: I want to underscore three things here. I think, first of all, there is a change. National oil companies are much more important. National oil companies, major resource holders, national oil companies are much more important.

Secondly, what is of concern is not just their national oil company, but when they enter in the state-to-state arrangements, which have political concessions associated with the commercial transaction, that’s not necessarily the case. There are some national oil companies—PetroGaz—which both on the buy side and on the supply side are very vigorous in having commercial—(word inaudible). Others not so. So it is a matter of concern and central to this problem is the—you have the importing countries have a common view of their—of a view of the common interests, China, India, as Jim said, along with the OECD countries.

QUESTIONER: Can I just follow up?

MR. : Yeah.

QUESTIONER: Suppose that we entered into a conversation with the Chinese about energy, a serious conversation, what would we tell them? In other—what could we tell them? In other words, we’ve had a system that we believe that the supply of oil ought to be distributed essentially by price, and the intermediaries, at least up until now, are private—mostly private companies.

That’s a system that obviously was worked well for us. Many of these companies are American companies. But if I was a Chinese minister sitting across from you, what would you tell me that would convince me that that’s a system that would be best for China? If I told you—actually, you know, we know what our demand is going to be in 15 years, and we’d like to have contracts with governments that will give it to us.

SCHLESINGER: Well, not necessarily to the Chinese minister—(I mean, I would apply it a ?) higher level, pointing out that China has been in recent decades the chief beneficiary of free trade, and that free trade is not necessarily—we are not necessarily limiting ourselves to reducing free trade by dealing only with the oil market. And I think that if I were a country that’s running a several hundred billion dollar trade surplus, I would reflect on the consequences of that. That’s, I think, a very important point from the Chinese standpoint.

Secondly, I wouldn’t get into a duel with the United States with regard to its influence in various parts of the world. We have limited ourselves, let’s say, in the Sudan because we don’t like the government that we see there. But in many parts of the world where you got into a bilateral competition with regard to marking up supplies, I would really be hesitant to be competing with the United States.

That’s—there’s another point that I would be making to him, but for the moment it’s slipped my mind. Maybe I’ll come back to it.

VICTOR: If I can just say something briefly on this. There is an enormous debate inside the Chinese government right now about how to organize their oil sector. And there are forces that think about this as a global market that clears, and there are forces that think about this as (more of ?) of Chinese flags on oil, and that’s (why you create ?) security. Almost all of these deals—there’s a very telling chart in the report, near the back of it—almost all of these deals have been done in a rising price environment, in a panic, if you like, about energy security and with capital that is priced inside the Chinese government way below its real cost. And that environment produces an understandable income, but I think part of the dialogue is to help the forces inside the Chinese government understand—as I believe they do—and then strengthen their hand around the idea that this actually does not produce security, that most of this oil actually just trades in the oil market and also by breeding instability, that that actually is not a reliable way to increase production.

SCHLESINGER: Now to the third point that I would—(as a salesman ?)—locking up supplies is a great thing if we are going to avoid conflict. But if there is conflict with the Chinese, I would worry about the lines of communication to the places (where the ?) the oil supply are going. I’m not going to go into much greater detail on that at this point.

We frequently talk about free trade as it benefits all parties, right? But we—and we say even if some countries are—do not embrace free trade, it is beneficial to those that do. I think in the oil market, we will, one way or another, continue to emphasize it must be a two-way street, by and large.

MR. : Other questions?

QUESTIONER: Yes. Which do you—of the three energy efficiency incentives that you—that the panel proposes do you see as the most politically feasible, especially in light of a possibility of a flip in the House? And if you don’t want to address that specific issue of the (flipped ?) House, then just in general.

MR. : You want that?

MR. : Well, I mean, I will give you a personal view about the political likelihood, and you can take it for what it’s worth.

The three measures—the CAFE’s—increasing the stringency of CAFE is probably the politically most feasible. Whether it’s the most effective is another story. Gasoline taxes is—Secretary Schlesinger will tell you it’s enormously difficult, on either side of the aisle. It would certainly be over time effective. And the tradeable permits scheme is very complicated.

It is one which has got its virtue in theory rather than in practice, so I would say it is the least feasible. But I don’t think Jim or I or anybody suggest that this is going to be easy or it will happen next month. We’re just saying that leadership of the country should continue to point in this direction over time and hope that we adopt these measures in the future. That’s, at least, where I’m at.

SCHLESINGER: Well, CAFE is easy because—

DEUTCH: It hides things.

SCHLESINGER:—it hides the impact on the consumer voter. It’s relatively easy, I should say. And it’s complicated at the moment because—what shall I say—Ford and General Motors do not appear to be in flourishing condition. And this would be a heavy burden on Americans’ concerns that are struggling.

The problem with CAFE is that it cheapens the cost of driving, and as a result, the lowered cost means that more miles are driven. And it’s not clear, once again, how much one saves, in contrast—well, this is similar to the hybrid vehicle in that you can take improvements in energy efficiency out in the form of higher performance of the vehicle. Alternatively, in the case of CAFE standards you take it out in the form of either higher performance or possibly increased driving time.

Q And if I may ask another one.

SCHLESINGER: Now, I’m going to say—somebody here is going to tell me that we should organize the American government better. We are not going to give up on the separation of powers. And Mr. Dinmore, if you want to blame that, we can blame it on the late George III. (Laughter.

QUESTIONER: Speaking of a dichotomy there, you declare that free markets continue to be something that you want to encourage globally, and yet you also are calling for the administration to almost choose a winner in terms of technology, I think you said, to be pragmatic about that, and encouraging what are in nature subsidies in terms of incentives for specific types of technologies and fuels. How would you address that dichotomy?

VICTOR: I must say I don’t think there’s anywhere in the report that we say we want to choose winners. I do think that we are suggesting that we want to avoid choosing losers. There certainly are plenty of examples where I think you could look at government measures which don’t achieve the policy objectives that they are alleged to be serving, but I don’t think there’s anywhere in the report we say choose winners.

We’re saying there is a role—first of all, we stress the private sector’s very active and reasoned concern with energy, energy technology, energy investment, both big companies and small companies. Government has an important role here. We don’t want to get into all the dimensions of it. We certainly can give examples of places where the government can (make a ?) business and examples where private-sector technology change is important. But I don’t think we’re trying to choose—or don’t advocate choosing winners.

QUESTIONER: I’m sorry, I must have misunderstood what you said earlier, that Congress needed to be pragmatic about what technologies it encourages.

VICTOR: We’re trying to say to Congress—

QUESTIONER: That seems to me to be choosing the winner.

VICTOR:—don’t earmark projects which seem to benefit your constituency too often.


VICTOR: That if you try and set up in Congress and say here’s the kind of a program we need for one aspect of energy development, research and development demonstration, all too often it gets tinkered with, change in direction modified for local interests or short-term profit. Congress has to be of help here by insisting on a sustained and coherent approach.

Q But aren’t you, by talking about nuclear, isn’t that basically picking a technology? You can’t offer enough incentives for someone to build a new nuclear plant.

DEUTCH: I mean, I think that what we try—we certainly don’t talk about incentives for nuclear plants. I think, you know, I would personally tell you that the single-most important thing you could have there is not a financial incentive, but to do something about improving waste management.

But what we say about nuclear—and this is a substantive point—it’s important in the United States and elsewhere in the world—in the near term, in the near term it is an electricity generation that does not rely on natural gas, in certain parts of the world oil. And it is also a technology if it becomes cheap enough, if it’s safe enough, if it doesn’t have too many proliferation risks, it brings you on a road which will eventually offer more electricity substitution for liquid transportation fuels.

And the panel—I must say again here, I draw your attention to this panel, they are unanimous in their view that the nuclear option deserves to be considered both in the short run and in the longer run because of its ability to offer a transportation alternative. Clearly, in the short run it has little, if any, effect on transportation fuels. So we want to be clear about that. But I think the panel also thinks you cannot just have a report and not mention—as many such reports do—and not mention nuclear at all.

SCHLESINGER: Subsidization is not limited to the nuclear industry. If you look at the production incentives for wind power, for example, they put into shadow what the production incentives will be for the nuclear proposal. Moreover, one of the things that one can say about the government support for the nuclear industry is the great vast majority of it is in the past. (Laughter.)

DEUTCH: Yes, ma’am?

QUESTIONER: Yes, I wonder if you could talk a bit about the changing political coalition in favor of issues of energy independence compared with sort of 30 years ago, because we seem to have a much broader group of people at least talking the rhetoric about energy independence, from the trade unions to foreign policy hawks who are now engaging with this, at least rhetorically.

SCHLESINGER: Energy independence is not going to happen.

DEUTCH: Wasn’t going to happen then, it’s not going to happen now.

SCHLESINGER: I think that it came up in ‘73, we began to have some—‘73, ‘74, we had some chatter about it. And President Nixon—I forget the exact date, but that we were going to be energy independent in 1980. That was when we were importing 4 or 5 million barrels of oil. Today we’re important 14 million barrels of oil a day. We are not making rapid progress towards energy independence. It’s something that is appealing to the public. Unfortunately, in election periods, which seem to occur all the time, the tendency is to say somehow or other we’re going to become energy independent. There are various members of—various senatorial candidates and House candidates who are campaigning on energy independence. It’s not going to happen.

MR. VICTOR (?): I would have to agree with that.

SCHLESINGER: As long as we depend upon the internal combustion engine and on air transportation.

QUESTIONER: My question, folks, is on the tax issue. It was suggested taxes. Can you give us some idea of the range in which you think taxes ought to be raised that would really have an effect on consumption? That’s one aspect of it. The other is, are you simply looking at it in terms of gasoline or across all energy? I go back to having done some calculations 30-some years ago, and if you did it on all energy, we could have solved our budget problem in that particular period. So, to what extent did you really get into the tax issue in a meaningful way?

SCHLESINGER: The easiest thing to do—it’s not consistent with our obligations in the World Trade Organization—would be to put a substantial tariff on imported oil, okay? I remember back in the late ‘70s we were talking about a dollar per barrel, which amounts to 2.5 cents per gallon. If we didn’t reduce our dependency, we would put a second dollar, and maybe even a third dollar. It’s kind of like the Weber-Fechner effect, you remember, with the frogs and the heating the water gradually.

MR. : (Laughs.) Zoom!

SCHLESINGER: That is one strategy. It didn’t work in the ‘70s. The other is, you know, let it rip. Put on two, three dollars.

So whatever sells, I think—if you’re talking taxes—whatever you can get through to Congress, that is desirable.

We had a 50 cent tax in ‘77, ‘78. It was laughed out of the Senate. It the House, it started at 50 cents; it dropped to 25 cents, it dropped to 15 cents, 10 cents, and at 5 cents there were 35 brave voters in the House of Representatives who actually walked out into the well of the House and voted for it. So it’s not a lead-pipe cinch.

QUESTIONER: One day in the mid-‘70s, during the Ford administration, I had a call from four people to the White House asking me about what would be the effect if we put 5 cents a gallon on gasoline this year, 5 cents the next and 5 (cents) (in increments ?) ? And I laughed and I laughed all the way home that night.

But you’re really saying, if you’re going to do it, it has to be two, three dollars, it has to be an impact. But have you only done it for gasoline or are you thinking about it across all energy?

SCHLESINGER: Well, I think that the problem is the problem of dependency on imported oil, and I think that the focus should be on imported oil with regard to taxation. And you want to encourage alternatives to imported oil. I don’t think you really want to tax them.


QUESTIONER: I am from Germany. We pay taxes on our gas, and I can tell you—(inaudible)—any time you go there.

MR. : (Laughs.)

QUESTIONER: You said the biggest problem or the real problem is fuel liquids so far. I’m wondering about the GTL technology in relation to natural gas. Is that really an alternative, just an additive or—and if so, what are the big companies doing to improve—to enhance it?

DEUTCH: Yep. There’s no question—I mean, there are three ways of getting gas to the market as liquids. You could either go LNG, you could go gas-to-liquids, you could make methanol. There certainly are big projects now off of West Africa where methanol is being made and brought here, and that’s the kind of thing that’s going to happen. I mean, natural gas, it’s not sent here as LNG. Some of it will go to Europe or the United States or Japan as a form of liquid fuels, as diethyl ether or dimethyl ether or as methanol, but it’s something that’s going to happen.

QUESTIONER: Can I ask about Iran?


QUESTIONER: You seem to have dodged some of the big questions on Iran in the sense of a very typical conundrum, you’re pursuing efforts on the nuclear front and there’s obviously more damage to Iran’s oil production prospects through the sanctions, et cetera, which then hurt the oil markets. Do you think this administration has been right to sort of put pressure on its allies not to invest in Iran’s oil infrastructure? Is it right to continue putting pressure on India not to build a gas pipeline? Has it actually helped the situation with Iran?

DEUTCH: It does show you how complicated these problems are. I mean, I think that it is absolutely evident that in the next decade at least—or two—we’re going to need the oil production from Saudi Arabia, Iran, Iraq—we have not been tremendously successfully there—and Kuwait. And in each one of these places, we have mixed foreign policy objectives, and we have to try and—with our allies, balance our way of doing it.

But let’s make no—let’s not be confused about it. If we push on any one of these issues to the point of interrupting the production for a significant period of time, there will be very serious economic consequences. And over time, our countries—and now, I not only mean the Western countries, I’m now including India and Japan—India and China—are going to be dependent on Persian Gulf oil. And so you’ve got to balance your policy measures. You can’t—that’s my view.

SCHLESINGER: Specifically with regard to Iran, the evolution of Iran suggests that this is not the time to let up on the pressure. One could argue—

DEUTCH: Let up on the pressure.

SCHLESINGER: One can argue when Khatami was in power that we were overdoing it, perhaps should have gone in the other direction. Ahmadinejad is, to say the least, a different kettle of fish, and given his behavior lately, for the United States suddenly to indicate reducing the pressure on Iran would be contrary to a principle foreign policy objective, which is to prevent the spread of nuclear weapons, particularly to what we call rogue nations.

QUESTIONER: I’d like to ask you on another—your view on especially—(word inaudible)—in the region, in the Gulf of Mexico, its potential and the feasibility of the oil exploration. So Chevron has announced recently its discovery of big oil field in the deep sea of Mexican Gulf, and—but there are many experts who doubt economy of this project. Does this project has potential to change the landscape?

And related to this, in the (EZ ?) or Cuba, already many international players, including Chinese national gas company, is pretty active. Do you see some necessity to coordinate somehow with those international players?

DEUTCH: I know that we are depleting, what is it, 5 billion barrels of oil per day—capacity for 5 billion barrels of oil per day have to be found every year just to keep the world production levels up to its current. So the Chevron fields will contribute to that if it becomes successful, either oil or gas, but it’s not going to do it by itself. And certainly how much it costs to do it is something that Chevron is perfectly able to carry out itself. It doesn’t need our assistance to tell it whether it’s economic or not. They’ll be able to manage that technically successfully.

And I don’t know what you mean by coordinate in the region. I think the rules on exploration in offshore areas is pretty well established, and I don’t know—except in the Caspian, I don’t think there are many outstanding calls on that issue. I may be wrong.


QUESTIONER: The report talks about the Blair government’s Extractive Industries Initiative and to help promote transparency in some of these third world countries that have large oil reserves. But if I read your intent right in the report, you stopped short of actually endorsing that program.

Did I read you right? And if so, why?

DEUTCH: You may want to add something to this, David, but I want to say something about this. The point that Jim made two or three times is, in the near term we are going to have to encourage production everywhere. One of the places which is very important is in smaller regions of the world, especially in Africa, but also Ecuador and other places, where we want to do that in a way that contributes to the governance so that there is a stable political system, so that it’s a system which takes care of its people, so it can continue to do its energy production. That is the purpose. That does mean that you have to pay attention to governance, and all too often, that has not been done.

Now, EITI’s one way of paying attention to that, and the federal—U.S. government has not been giving it a lot of support. There may be better ways, but we do think that if you care about production, you have an interest in good governance in these countries, and you should work sensibly to that purpose without assuming you can make another Jeffersonian democracies. You could consider that desirable over the next short period.

Maybe you want to—

SCHLESINGER: Good governments—good governance may be more than we can achieve—avoiding very bad governance. (Scattered laughter.)

VICTOR: But that’s what’s happening in the EITI is it’s having its greatest effect on countries that already want to do something about the problem. So that’s Nigeria, interestingly enough, is Azerbaijan, Angola to some degree, and we have to be sober about what’s achievable. And we have to work with governments that already want to try to get a handle on the problem, and in none of those countries has this been a silver bullet. In Nigeria, the first audit lost a few hundred million dollars, which is problematic, but it’s a start, and it reflects Obasanjo’s desire and the rest of the government’s desire to do something.

QUESTIONER: On U.S. foreign policy to latecomers like China and India, that they are—their demand on oil is surging, and they don’t have a strategic reserve. China just started to fill its reserve tanks. So it’s understandable China and India—(inaudible)—about energy. What can the United States do to help them to merge into the international community and tackle this energy security issue?

DEUTCH: We have a recommendation in here which is that the International Energy Agency, originally established only for OECD countries, be broadened through some appropriate mechanism to include the large emerging economy consumers—China, India, Mexico, Brazil, and Indonesia would be five—so that there is a common place to talk about the common issues and interests which the large importing countries have, such as a strategic petroleum reserve, a product reserve, capacity sizes, rules on what to do in time of a supply interruption; the common interests we have in a transparent world energy market. It won’t solve all the problems, it won’t get rid of competition. Indeed, we’re not trying to get rid of competition. The idea, though, is to make sure that the common interest in a transparent, open energy market is mutually understood by the big importing countries. That’s very important. And I think in general, it would help a lot to include these new countries—these emerging countries.

QUESTIONER: (Off mike)—relax a bit on its requirement of 90 days—(inaudible)—to join—(inaudible)?

DEUTCH: I think the point is that if you don’t get these large emerging economies as part of that system, you’re kind of ignoring, you know, where the action’s going to be.

QUESTIONER: You said we need strong, consistent leadership on energy issues. I forget your exact line. Where do you see that coming from? And is it possible we can get that out of Congress, or is this going to have to come from the presidency?

And just to add on to that, as long as we’re talking about theoretical constructs, if the nation were to move toward some kind of a carbon regime, or a climate regime, either a carbon tax or a cap-and-trade system, something like that, to what extent would that address these problems we’re talking about here?

DEUTCH: Well, as I think both Jim and I mentioned, we did not address global warming and, therefore, didn’t talk about cap-and-trade systems. So we have nothing to offer on that.

QUESTIONER: A carbon tax would do similar things to a gasoline tax, right?

DEUTCH: Well, the purpose of the gasoline tax, the motivation for that is influencing demand, influencing supply, and influencing innovation. The purpose of a carbon tax is quite different. We did not discuss it, so we have nothing to offer on that subject.

QUESTIONER: (Off mike)—about Venezuela, you mentioned Venezuela, the way Chavez uses his oil as a diplomatic tool. So—

DEUTCH: Any leader that holds up a book by an MIT professor has got to be a good leader. (Laughter.)

(Cross talk.)

SCHLESINGER: What book did he hold up? Excuse me? Tell us what book he held up.

DEUTCH: Noam Chomsky’s book. But go ahead.

QUESTIONER: How do you deal with Chavez when he’s using his oil as a diplomatic tool to further his ends? Clearly, the U.S. imports large amounts of Venezuelan oil. I mean, you clearly don’t advocating using—sort of turning off the taps on him, do you?

SCHLESINGER: Chavez’s use of oil as a diplomatic tool is marginal. He’s replaced, to a considerable extent, the Soviet Union’s supply to Cuba, and thus, he’s elevated the Cuban economy. He has bribed New England, possibly because of Noam Chomsky or—(laughter). But, you know, that’s really—the real problem is that he is draining the funds from Pedevesa.

DEUTCH: He’s taking a competent national oil company and making it into a less competent national oil company.

SCHLESINGER: And as a result, Pedevesa’s capacity, which was at one point 3.5 million barrels a day, is now probably down to 2.3 (million), and he’s driving his own industry into the ground. So if you’d look at the trade-off between what he accomplishes diplomatically and what he is doing domestically, it looks like a very bad deal from the standpoint of Venezuela.

QUESTIONER: My question is more about what to do (to end ?) that. I mean, if you want to encourage good practices, what can America do? Is there a nuclear option, where you just turn off the taps and say we won’t import any—

SCHLESINGER: (Off mike.) We will say that he is misbehaving. But we have sovereign powers around the world, and he is—Venezuela is one of the sovereign powers. It will decide on its policy. And although there are illusions in this country, there are severe limits on American power.

DEUTCH: That’s a very important point.

QUESTIONER: So the United States—(off mike)—Iranian oil, then.

DEUTCH: The Iranian issue is much more complicated. I agree with—

QUESTIONER: I mean, you don’t buy Iranian oil, do you?

QUESTIONER: Not directly.

DEUTCH: We don’t buy Iranian oil, but the problem with Iran is not that we don’t buy Iranian oil, the problem with Iran is that we have a policy which, as you—(off mike)—earlier, a policy which is to constrain other people from working with them to produce oil and gas. For example, the Japanese, I think, have just been—pulled out there in a gas—(inaudible). But that’s much larger quantities, much more important.

I think that Jim makes an important point. Our group does not believe that every possible fight that you might get into, that you’ve got to have.


QUESTIONER: I have two questions, one of these you made me think of. On foreign policy, mostly you’ve been talking about energy policy, but the point was supposed to be about how this affects foreign policy. And two questions. One, in the case of a populous country like Venezuela, my question is, isn’t in that in some ways better to have Venezuela sending a large number of supplies to the United States because maybe that moderates Venezuelan foreign policy?

And second, that if you accept your view, which is not that hard to accept, of where we are going to be long term in terms of energy dependence, that’s a pretty pessimistic view on what’s going to happen to our foreign policy over the next foreseeable future, is it not, because—

MR. : It will be strengthened.

QUESTIONER:—you know, even at a lower-level dependence, you’re going to have pretty much the same dynamic going on foreign policy.

SCHLESINGER: On the first question, you’re quite right whether the notion of increasing pressure on Venezuela would be a mistake. And which of the American companies do they own?


SCHLESINGER: All right. They own it. In fact, it’s sort of helpful that they own it, because they’ll better keep supplying it.

The answer to the second question is, short-range pessimism, long-range optimism; the Chavezes of this world come and go.

MR. : But the Saudi royal family is forever.

SCHLESINGER: Well, that used to be our solution to the energy problem, that King Fahd would live forever.

QUESTIONER: You didn’t mention one aspect of political leverage that you might exercise, or the U.S. and its allies might exercise, in the sense that most o the technology and investment required to develop these resources in these politically unstable areas are necessary, and that there is the tool of regulation at a stock level that isn’t used, really, at all. There’s law, but firstly it’s a slap on the hand; it’s $20,000, I think, is the fine. And there’s no sort of leverage used there.

Do you suggest that’s not—by leaving that out, do you suggest that’s not a policy tool that should be used and implemented; if the U.S. and its allies were to apply that on all the stock exchanges, that that would potentially encourage some of these countries to better utilize their resources, be more Western or ally proactive in its policies, et cetera, et cetera?

DEUTCH: I mean, I’m not sure I get the full drift of your question. I will say that I think the report emphasizes that the—(word inaudible)—of U.S. investment or U.S. technology to national oil companies when it helps them to maintain or increase their production and serves—you know, helps them to bring them into the world oil system, that that is a positive thing to do. And we would advocate doing so, that is using our investment strength and our technology in countries ranging from Russia to anywhere to help them maintain and increase production is an important private tool that we have in our foreign policy.

QUESTIONER: Yes, but, like, Russia. Russia needs Western technology in order to develop its—


QUESTIONER:—Siberian and Bering Sea resources, where predominantly its resources lie.

If—the fact that the U.S. and European companies have been bowing down to Gazprom in order to help develop those resources without any sort of a restraint from U.K., Norwegian, U.S. governments saying that we’re not going to allow you to invest in there, then that would give much more political leverage in Russia and take away the leverage that Russia has.

Am I wrong? Am I missing something?

SCHLESINGER: Well, I think that you’re not wrong, but there is—you are missing something, which is that in order to use provision of technology as a tool, you have to have a demand on the other side. And the recent run-up in prices has made the Russians in particular rather less eager, if not impervious, to the introduction of Western technology, reflected in recent developments—when Gazprom expelled the Western partners from the development of the gas field up there in the Arctic. And they need desperately to have Western technology to develop resources in those kinds of environments. They don’t recognize it or they have been told not to recognize it. With regard to Sakhalin 2, they just—the government has just withdrawn the permits to Shell.

So the Russians at the moment, because of the immense change in the balance of payments position, are feeling pretty cocky. And amongst the ways in which their cockiness is displayed is that they’re kind of rebuffing outside investors, whether or not they can bring technology to Russia. It’s short-sighted of them, but you can’t use a tool unless there is a desire on the other side to make use of the tool.

QUESTIONER: Well, it seems to be a gambit—a Russian gambit that Western companies and countries are willing to allow to fall into that trap.

SCHLESINGER: I would think that it is potentially a tool, but right now, given the Russian mood, I don’t see how you would exploit it. The Russians, first of all, expect Western companies to compete with each other to invest on their terms. They may be disappointed in that. They could have increased disappointment because of the policies of Western governments. But at the moment, they’re saying, “We’re doing splendidly. We have replaced our nuclear capability as the instrument of superpowerdom with our energy resources.” There’s a conviction that you can find throughout Moscow, and that has altered the willingness to compromise even on questions of technology.

DEUTCH: Especially the—(word inaudible). But you know, there is something to be said occasionally for patience. The Russian policy is as described here, but it may not be always that way. And so there will be a moment when I think it would be wise for the United States to be prepared if their attitudes change, under the right circumstances to invest and to transfer the technology. You don’t have to—it’s not going to be there for all time.

QUESTIONER: If I may pursue that one last time, with your patience.


QUESTIONER: Iran has just—well, in the last year found one of the biggest oil finds in the last decade. There is a company that has the technology to develop that high-pressure field which is listed on the U.S. Stock Exchange, and there is a law that’s not being used in terms of pressure. Now, that is a foreign policy that is not being applied, that you’re saying that, look, we have all these other ways in which we can address it, but we aren’t even using the ways in which—the means in which we do have.

DEUTCH: You’re talking about (Total ?) ?

QUESTIONER: No, I’m talking about Hydro.

DEUTCH: (All right ?), Hydro. What would you like us to do with this—

QUESTIONER: Well, I’m saying that it’s not—it’s—I’m not asking you to do anything.


QUESTIONER: I’m pointing out something that you have left out of your report. That’s apparently—

QUESTIONER: Can I come back—

SCHLESINGER: No, just one second.

Personally, I’ve been long skeptical about the use of sanctions, one—

MR. : Yes.

SCHLESINGER:—and two, particularly unilateral sanctions. They just don’t work. And in the past I have argued that we would be doing ourselves as much damage as we are to other countries.

But as I mentioned earlier, given the present stance of the Iranian government, I would not alleviate the pressure on them, partly—or largely for psychological reasons and atmospheric reasons rather than the substantive—

DEUTCH: He brings out, in case of North Korea, we’re not using all the (hammers ?) that we have available on that subject.

Yes, sir.

QUESTIONER: Can I just come back to the issue of taxes and CAFE? Your report makes a big point of the necessity of restraining demand, and yet you really don’t make any specific recommendations. In other words, if I were a member of Congress and I was inclined to say, “Well, the Council on Foreign Relations says we should do this. We should do it.” But if somebody reads your report, it’s not clear what we should do.

Here is my question: why weren’t you bolder? Why are you so timid? In other words, here is a group of people, none of whom I think is running for office—I don’t know about political ambitions, but none of the people really seem to have any obvious political ambitions—if you can’t come to a consensus that you can publish that says we ought to increase the tax on gasoline by, what, 1, 2, 3, 4—whatever it is—dollars a gallon, and that we ought to raise CAFE by some year—2020, 2015—whatever year up, you know, to 40 miles per gallon or 45—if a group like this is incapable of coming to a consensus which it can publish, what chance is there for Congress, where the pressures are much more insistent, of coming to any kind of conclusion?

SCHLESINGER: All that is a very hard question. Now, to me—by the way—

MR. : (Off mike.)

SCHLESINGER:—if you’re battle-scarred, you tend to be more timid, even if—particularly if you’re shell-shocked.

DEUTCH: May I say something? I want to go back to the first sentence you made—


DEUTCH:—that is the reason for seeking this increase is not only to moderate demand. It also has two other very important functions. It is the stimulus to greater supply and it is an incentive for innovation. And that is—it’s the three reasons that we (would not just tolerate ?) demand. And I just want to—

QUESTIONER: Well, I want to come back—let me just—my point here is that in a political context, if—

SCHLESINGER: It’s altogether too clear.

MR. : Yeah. (Laughter.)

MR. : If you don’t—

QUESTIONER: (Off mike)—here’s an independent authority. They’re not running for office. It’s harder for the people who are actually running for office to do anything.


QUESTIONER: So my question is, why couldn’t you do something here?

SCHLESINGER: Well, I think part of the answer—a large part of the answer is simply that some of the members—clean believers in CAFE—because they want to protect the income of, well, consumers, right, and they don’t like gasoline taxes—and some of the members think the gasoline tax is a more effective way of reducing mileage than CAFE. And it was not possible to get a consensus amongst people who preferred that they use different mechanisms. But if you each—ask each individually, or many of the members individually, you can get very clear recommendations.

DEUTCH: I would have a different answer for you. I would say that if I was in government and I was interested in advancing legislation on one of these grounds, before I got myself into concrete on any one of them, I’d want to try and figure out what was most possible to do within the constraints that Congress places. For example, how are you going to use the revenue of the tax? And rather than say there is a single way that I would recommend, I think that would be a foolish way to try to enter a negotiation with Congress. You’d have to have a menu of things that you could talk to them about. Not which we have—I don’t think we’ve got them all sorted out. But I don’t think that the right thing to do is to say there’s a bullet point, 50 cents per gallon, and a dollar per gallon, full stop. It requires a better negotiation than that, and very importantly, what are you going to do with the revenue?

This conference is supposed to end at 12:30, which it is now. I welcome everybody here to stay and talk, but I must go. (Laughter.) So I thank everybody. But I must leave. Good to see you all.

SCHLESINGER: When you get back there, give my regards to your colleague, Noam Chomsky. (Laughter.)

DEUTCH: He’s actually my most distinguished colleague when he writes about linguistics and not so about foreign policy! (Laughter.)

SCHLESINGER: Fire away—or continue to fire away.

QUESTIONER: You fellows were among the most—sorry. It’s been clear to many of us going back 30 years at least, that energy independence was some sort of a dream out there. If you looked at any of the—(off mike)—even the most optimistic—(off mike)—realistically from the standpoint of—(off mike). Why did it take so long for a group of you to finally come out with the first—really the first kind of study of this sort that says, “Look, that’s a myth.” Why did it take so long? You knew better.

SCHLESINGER: Well, over the years it’s become more mythical, for one thing. If we had been constraining demands through a gasoline tax or some other method over the years, and it hadn’t burgeoned up to 21, 22 million barrels a day, we would be a lot—we would not have drifted so far from energy independence at 4 million, 5 million barrels a day. I remind you that in ‘77, the proposal was not to have energy independence, but to reduce our dependency to about 30 percent, which actually was achieved, not necessarily through policy, but by opening up the North Slope. And there was a recognition that we wanted to balance between low-price imported oil and reducing the vulnerabilities to our national security position by not being so heavily dependent on foreign production that we couldn’t live with it.

Incidentally, one of the things you might bear in mind is that if we actually drove at 55 miles an hour—which we could in an emergency—(laughter)—that you would reduce gasoline consumption by a couple million barrels a day. That’s a cushion that some time or other in a crisis we should remember. I wouldn’t try and push it through right now, given the nature of the electorate.

(Audio break.)

QUESTIONER: (In progress following audio break)—that the report has for developing a mechanism to try to—(inaudible)—energy and foreign policy? Have you seen anybody in the past or perhaps in the present who maybe understands that and who maybe, you know, has attempted to do that in some fashion, who may be receptive to this sort of thing?

SCHLESINGER: You mean politicians?

QUESTIONER: Yeah. In Congress or in an administration, either this one, maybe a past administration.

SCHLESINGER: One has got to recognize that the political system will—this political system in particular will take only so much at one time. And Tom Enders, who used to be the secretary of State, later was ambassador to Canada, used to observe, you know, we get a tranche of policy improvements and that’s all that you have, and then along comes a crisis and you get another tranche of policy improvements. There’s no single solution. You build up with little improvements.

Now, I mentioned earlier the Cheney report was quite useful with regard to energy infrastructure. Some of those things, such as taking responsibility for transmission lines away from the states and giving it to the FERC, is something that should have been done 25 years ago and was proposed 25 years ago.

So you don’t have a single solution. It’s going to be lots of little things. It will include hybrid cars. It will include improved efficiency of internal combustion engines. It will include some fuel switching. It will include some synthetics. All sorts of little things that wil help. And don’t expect things to change radically all at once. That’s not the way the system works.

Your colleague over there will tell you that when the headlines are about high gasoline prices, shortly thereafter there are congressional hearings and a whole slew of bills that come along. And when the prices ease off, suddenly the headlines change and the congressional hearings are dropped and the legislative proposals disappear. And you come along to the next crisis, and following the rise in prices, you will see that same phenomenon.

We are—happily, I suppose—constrained by the nature of the political system under which we live. And that, perhaps, explains the shell-shocked, battle-scarred or what have you that—you’re quite right and you’re painfully right in your comment. The reality is that the willingness of the system to embrace something like a substantial gasoline tax has just—has got to be recognized, and the unwillingness, I should say, has just got to be recognized as you look at policy, and that you are looking for increments that will be helpful.

MR. : Any last questions? (Joe ?)?

QUESTIONER: One more. You said when you look for leadership on these issues—I kind of asked this earlier—do you think this is going to have to come from an administration? Or is this something that can boil up through Congress?

SCHLESINGER: Big problems can only be (assaulted ?) by the president—big problems.

Once again, going back to what I just said, you can have helpful things from members of Congress—I mean, Pete Domenici’s legislation has been helpful in many regards—but they’re not going to solve—they’re not going to mobilize the American people, and only a president can do that. And it’s not clear to me that the political climate in this era is such that it can be done.

Now, I have to, growing up in World War II—I remember an entirely different climate. And when the president of the United States said something must be done, it was done. We just don’t have that today.

MR. : I want to thank everybody for their time. And if there are—if anything that you would like to follow up on, please don’t hesitate to contact us at the council or the two co-chairs. And the idea behind the report is precisely to lay out a logic for the problem and an outline for some solutions, knowing that in the real world, you end up with a lot of—small steps end up being taken. But I think it’s extraordinary, per Bob Samerson’s (sp) point—it’s extraordinary that a group that is as diverse as this has such a strong view about the need for stringent action in this area.

Please don’t hesitate to get in touch with us if there’s anything that you’d like to follow up with. And we want to thank all of you for your time in joining us today.

QUESTIONER: Thank you.

QUESTIONER: Thank you.

MR. : Thank you.

QUESTIONER: Thank you very much.








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