US Energy Security: How We Got Here and Where We Are Headed featuring Daniel Yergin

>> Michael Boskin: Welcome everyone to a very special podcast from the Tennenbaum Program for Fact-Based Policy at Stanford University's Hoover Institution. I'm Michael Boskin, Senior Fellow at Hoover, Director of the Tennenbaum Program and Professor of Economics at Stanford. And I chair the President's Council of Economic Advisors under Senior Bush.

I'm joined today by a friend and a great thought leader, Daniel Yergin. He is the Vice Chair of S&P, Global Chair of Sarah Week. I assume that grew out of your founding of Sarah out of Cambridge Energy Research. His newest book is the New Energy, Climate and the Clash of Nations.

Dan is a Pulitzer Prize winning author of the the Epic Quest for Oil, Money and Power among his other books, Commanding Heights and several others that are not only a wise investment of your time, but are the definitive work on energy and its interaction with geopolitics and economics.

Dan is basically the guru of that subject. He was a Marshall Scholar at Cambridge, where he got his PhD. He was an undergraduate at Yale. And he's just widely known as not only a great thinker but a wise thinker, someone who bases his analysis and facts and lends a great air of reality to a subject many people try to ignore the basic facts about.

And that's what we're all about, trying to get to some basic facts. So let's start with a simple question, Dan, with maybe let you elaborate for a few moments on an overview of American energy. Our production, our consumption, our trends, our challenges and how we're doing right now

>> Daniel Yergin: Well, thank you Michael, and thank you for that more than gracious introduction. The position of the US in terms of energy is much better. If we went back less than two decades, we'd be really quite worried because the US was just importing more and more oil. Its energy security was really getting undermined.

But we've had this shale revolution which has basically made the US essentially self sufficient in oil and gas. And indeed has made the US a force in global markets not as an importer but as an exporter. So, it's been a radical change in the position of the country and one for the better.

>> Michael Boskin: This is sort of upended or at least throw some sand in the gears of OPEC's tremendous power. They still have power, but we have some countervailing power to some extent. Is that correct here? Am I overstating that?

>> Daniel Yergin: No, no, absolutely. At one point, I remember writing many years ago an article called OPEC Imperium where the Middle east was basically where the world was gonna get most of its oil.

That's changed now the United States is a significantly larger oil producer than either Saudi Arabia or Russia. And if you look at the current numbers, the Western Hemisphere currently actually produces more oil than the Middle East. So there's been a big rebalancing that's gone on. Middle East continues to be very important, but as you put it, there are countervailing forces now.

>> Michael Boskin: Yeah, this is quite remarkable, as you mentioned, it's very hard to imagine this a couple of decades ago. In your essay for the Tennenbaum Program, you mentioned that nine consecutive presidents worried about energy security. You wanna say a little bit about that history and how we got to this much, much better position?

>> Daniel Yergin: Well, now it's really a broad sweep of history because for decades and decades and decades, the US was the world's largest producer of oil. In fact, every seven barrels of oil used by the Allies during World War II, six came from the United States. But over time, that changed.

The US Production was going down, demand was going up, and we had going back to what I think is, in a sense, the beginning of the modern age of energy, the energy crises of the 1970s. And that was when America suddenly woke up and discovered it's a big oil importer and not energy independent.

So starting with Richard Nixon, you had one president after another promising energy independence. And it seemed that that was just going to be impossible to achieve until you had a major technological breakthrough called shale.

>> Michael Boskin: You wanna say a little bit more about shale? Not all of our viewers heard the word, but they don't quite understand what's involved.

>> Daniel Yergin: Good point, so shale, the idea of shale is that basically oil and natural gas were trapped in very dense rock. And while it was there, there was no way to get it out and commercially produce it. And the textbooks, the petroleum textbooks, said you can't. There's no commercial value to it.

Well, some entrepreneurs, some risk-takers, some experimenters, said there's gotta be a way. And there was one named George P Mitchell and spent over 15 years of his company's money, trying to find a way to do it. And so the breakthrough was what's called hydraulic fracturing and horizontal drilling, which were this sort of merger of two technologies at the end of the 1990s and the beginning of the 2000s.

And that enabled this oil and gas that was locked in these rocks to come out. And it upended the textbooks, it upended the global markets. And today, about 75% of US oil production produced is, if I can use that term, fracked. It's shale and about 85% of our natural gas.

And that was a technological revolution driven by need and incentives and experimentation that has really changed the world, the global energy map.

>> Michael Boskin: I think it's probably significant that this was done by the private sector. It was not primarily a government program that did this.

>> Daniel Yergin: That's right.There was research money starting in, really in the 1970s by the Department of Energy and various national labs that provided understanding or experimentation. And so I think we need to give credit to the government spending on R&D.

>> Michael Boskin: Absolutely.

>> Daniel Yergin: And that essential role of things that don't seem possible.

And so there was learnings from that. But then the big breakthroughs were driven by the private sector, and to a considerable degree, by the conviction of this one man, George P Mitchell. People said to Mitchell, who controlled his company, said, George, you're wasting your money. And he said, yeah, but it's my money and if I wanna waste it, I will.

And he just kept at it for about 15 years when even people in his own company was telling him it was a fool's errand. Turned out it really was not a fool's errand, it really just changed the picture.

>> Michael Boskin: There's another important point, I think, that tends to get lost or not emphasized enough, which is how much more efficient fracking has become since those early days.

The cost per barrel of oil, or per we have million BTUs of gas, has fallen dramatically. So it's become more economically viable.

>> Daniel Yergin: Yes, technology people are constantly looking to improve, to increase efficiency, to improve processes. And now this kind of horizontal drilling where the drill goes down 5, 6, 7,000ft and then goes another 5,000ft horizontal underground 2 miles.

That wasn't possible at the beginning. And the understanding of how to frack, how to open up the rocks, the knowledge has improved. So costs have come down and companies will find that they can accomplish more with less drilling, because they're more capable. So it's been a steady process of improvement since around 2000.

>> Michael Boskin: Well, we're all better off by the fact that America now has assumed this position, has regained substantial production. And this sense is, we are not a large importer anymore. As I recall in your paper, you mentioned something like several hundred billion dollars a year of cost of those imports that we were shipping to these other countries.

>> Daniel Yergin: If we went back to about 2008, we were spending upwards close to $400 billion a year to import oil. Now we're basically spending zero. I mean, we import some oil, but that's because we import lower cost oil from Canada, for instance. But that enables us to export higher value oil to other places in the world.

So you get economic efficiency from that. But on what you call on a net basis, we saved $400 billion. And by the way, actually writing the paper for the Tennenbaum project led me to another question, which is what about LNG, liquefied natural gas? Because the US is now the world's largest exporter.

And when I was writing the paper, there were no numbers on, well, how much is that value? And so we did subsequent research on that and that's been worth several hundred billion dollars to the US economy as well. So it's not only oil, but this liquefied natural gas, which is natural gas which is cooled to -260 degrees Fahrenheit, and exported.

It's become a major US export industry. And just to give you the scale of this industry, to give you a comparison, because this industry didn't exist in 2016, it exists today. The value of US LNG exports are half the total value of all semiconductor export to the United States.

It's more than soya bean export, which is a big export product to China and other countries. And by the way, the value of US LNG exports is twice that of all Hollywood and television entertainment exports altogether. So this is a major new US export industry that simply didn't exist less than a decade ago.

And it's because of the shale revolution.

>> Michael Boskin: This is a remarkable success story. Just to repeat, we have many hundreds of billions of dollars staying in or returning to the American economy that were previously flowing out to other countries. It's really quite a remarkable change.

>> Daniel Yergin: And Michael, just to say, I mean, to me it's so striking that it's kind of just taken for granted.

And a lot of people in Washington didn't pay any attention to it. And yet other countries would love to be in the position we are. And take China, which imports 75% of its oil, it would love to be in the position the United States is. And we were just kind of taking for granted that or even forgetting about it.

Or even, I think, some in the last administration being quite ambivalent about it.

>> Michael Boskin: Let me pick up on this in two directions. First is staying with LNG exports. We saw with Russia's invasion of Ukraine and the cutoff of Russian gas to Europe that there was kind of a desperate short run need for a lot more imported natural gas.

And now rebalancing in Europe, they have some storage, they have some of their own production, but they were trying to get a lot more natural gas. We were supplying some, the Aussies, I think, were some, Qatar was some, etc. But maybe you could just fill us in for a minute on the importance, the geopolitical strategic importance of us being able to export LNG to our allies in need.

>> Daniel Yergin: I think it's not only a rebalancing of global energy markets, it is a rebalancing of geopolitics. Mr. Putin, when he launched his invasion of Ukraine, made several errors. He overestimated his army, he underestimated the Ukrainians, he doubted the resolve of the United States, and he assumed that he could use the energy weapon.

He could use Europe's heavy dependence on Russian gas as a weapon, cut it off, shattered the coalition because of the economic impact and shatter the coalition's support in Ukraine. And it failed, it was one of his major miscalculations. And the major reason it failed was because of the availability of LNG in the world and in particular the development of US LNG.

US LNG replaced over 40% of that Russian gas which Mr. Putin cut off to Europe. And he didn't expect it. And I think in the new map, I described a scene in 2013, when I was in St. Petersburg at Putin's large economic conference. And this was before the annexation of Ukraine.

And after he spoke, I had the opportunity to ask the first question. And I started to ask him the perennial question about the over dependence of your budget on oil and gas, I mentioned shale. And he exploded in rage. He called it barbaric, he said it was terrible.

And cuz I think he recognized that shale had the capacity to undermine Russian hegemony in terms of its position and energy. And that is exactly what happened when he invaded Ukraine and cut off the gas and thought he had the high cards. It turned out we had some of the most important high cards in terms of our ability to export LNG.

>> Michael Boskin: Now, President Trump has now said that he wants to go beyond energy security, energy independence, to energy dominance. What are the obstacles for us to become even an even more important player in LNG and crude oil production in the world? What are we capable of? We're already producing a lot.

So is this a question of sustaining it for a long time or boosting it or removing some regulatory obstacles or permitting obstacles?

>> Daniel Yergin: I would say all of the above. Certainly, there was a lot of regulatory and administrative obstacles that took time or prevented things from getting done again and again and slowed it down.

I think that obviously the last administration had put a pause on development of new LNG projects, and that pause is gone. So, I mean, energy dominance is a term that's used, and what it's really just saying is that the US Is the world's number one producer of oil and gas today, and that's an enviable position to be in.

I think our production has capacity to continue to increase. It requires continuing investment to do that. And I think, obviously, if you look back at President Trump's first administration, he's a big promoter of LNG, and I think he will continue to be a promoter of other countries taking USLNG.

By the way, that's one way to address the trade deficits that he's so focused on in terms of the Europeans.

>> Michael Boskin: Shall we say, some stop and go in some major energy projects domestically? Perhaps the most Famous one is the Keystone XL pipeline. Maybe you could talk a little about that but it was on, and it was shut and then it was put back on and stopped again.

What's been going on?

>> Daniel Yergin: Well, I think that those who are opposed to energy development have realized that pipelines is a spot that you can really seek to prevent things from happening. So Keystone XL would have brought additional oil down to the United States, to our refineries in the Mid Continent and to the Gulf Coast.

The ironic part was that the lower part of the Keystone XL, Barack Obama actually showed up in person to basically dedicate it. But the upper part became very controversial. The State Department did this long review of it and said it could go ahead cuz it needed government approval, the State Department, federal government, cuz it crossed a national boundary between US and Canada.

From Calgary down into the United States, from Alberta, rather Alberta, the province of Alberta in Canada, which is a big oil producer. But on climate grounds, the Obama administration said it can't go ahead. Trump administration said it can go ahead. And then it finally, the company promoting it just gave up on it because you just have this regulatory back and forth and you would expend millions of dollars and you just give up.

And so it gave up. But it does highlight one big issue that this country needs to address, which is the ability to get things permitted and built. There's a lot of focus now on critical minerals and how important they are. And we just did a study on how long does it take on average to get a new mine from discovery to production.

We said around the world the average is 20 years. United States, it's 29 years.

>> Michael Boskin: That's remarkable, especially given we have these issues with respect to China having a very large say in some critical minerals and the need for many rare earths, for lithium, for cobalt, etc. Much of which has to come from elsewhere, at least for the time being.

We have some of those deposits, but it's a big, big, big investment with a very, very long horizon before you actually start getting any revenue. So the fact that there's this instability in permitting that whipsaws back and forth when administrations change makes it very, very difficult.

>> Daniel Yergin: That's right.

And you know that any of these projects transcend the four or eight year term of a president and so you're making commitments. And it's not just in the United States, I was talking to the CEO of a major mining company and he said he'd just been down in a Latin American country finally trying to get a green light for deposits.

They discovered copper deposits from the government. And I said, when did you make the discovery? And he said, 1997.

>> Michael Boskin: My. Well, there's a lot of stuff out there that could be developed, but there's a lot of opposition. Some of it localized, we don't want in our community, not in my backyard, some of it on grounds of damage to the environment, the climate, etc.

I want to get to climate in a moment, but you mentioned China and I thought we just might dwell on that for a moment. You mentioned them, massive importers of oil to run their economy. They also depend heavily on coal. We haven't heard much mention of coal, but maybe you could fill us in on the role coal is still playing in global energy.

>> Daniel Yergin: Well, actually that gets us to the issue of energy transition. And here's one way to think about it. In the 1960s, oil finally overtook coal as the world's number one energy source. Today, world coal consumption is three times what it was in the 1960s. And last year was the highest consumption of coal ever.

So coal continues. Used to be 50% of US electricity generation, now it's under 20%. But in other parts of the world like India or Southeast Asia, it's a very major part of electricity trip generation. And it's still the largest source of electric generation for China, despite their advances with solar and wind and liquefied natural gas.

>> Michael Boskin: They keep building new coal fired power plants. And this is a big source of emissions. We all know in the pantheon of how dirty different types of fuels are in terms of carbon dioxide emissions, that coal ranks at the bottom relative to natural gas and the like.

But there's still a lot of other stuff. There's still a lot of biomass being consumed, etc. Maybe you could talk a little bit about the energy needs and the energy uses and sources in what's come to be called the global south, broadly speaking, the developing world.

>> Daniel Yergin: Well, it's remarkable to think, Michael, that there are 3 billion people in the world who each of them uses less electricity every year than an American refrigerator.

And I think a lot of the discussion.

>> Michael Boskin: Let me stop you for one second and just have you repeat that and dwell on it, because I think it's a remarkable fact and it's something that is really underappreciated by most people in the United States.

>> Daniel Yergin: So I'll say it very slowly.

3 billion people on per capita basis, each of them uses less electricity every year than a standard sized American refrigerator. And what that tells you is that there's a huge gap between, call it the Global north and the Global South. And I found, and that was one of the impetuses for our new Foreign affairs article, that in the Global south, the developing world, they have a different set of priorities than the Global North.

We put on a conference in Malaysia called Energy Asia, and the Prime Minister there opened the conference and he said, we have our concerns about climate. But we're not going to have the agenda set by people in Northwest Europe and in North America. We have to worry about economic growth, we have to worry about poverty reduction, we have to worry about health.

So we have a different set of priorities. And there's the case of a pipeline being built in Uganda to Tanzania. And this is part of an economic development that people think could double Uganda's per capita GDP. But in Europe, you have environmentalists, you have the European Parliament denouncing it.

And then you look at per capita incomes in Europe and it's 50, 60,000 dollars a year. And you look at per capita incomes in Uganda and it's something like less than $2,000 a year. So very different perspectives about energy and meeting energy needs and economic growth. And I think that difference has not been taken into account enough in the global discussions about energy and climate.

>> Michael Boskin: There's kind of a demographic and economic growth underpinning of all this. That is the places that still have pretty high birth rates, for example, in Africa, whereas in the developed economies. Fertility rates are below replacement so populations are growing slowly and then they'll probably stabilize. But there's going to be a large increase in the global population in the south, where the energy needs are greatest.

And there's a gap between something approaching modern life as we know it in North America and Europe versus how they're living at the moment is immense. There's gonna be huge energy demand growth in those places. Maybe you can say a word about that.

>> Daniel Yergin: Africa, in not so many years will be a quarter of the world's population.

And again, the energy levels there, the energy use is very low. And they need energy for economic growth. They need it to create jobs, they need it to raise the standard of living. And if they don't have it, the migration issues that we see now particularly facing Europe will only become worse.

And so energy is a very important factor for stabilizing the situation. And, I think again, Europe, really many in Europe just haven't seen the connection. But they need economic growth and you're not gonna get economic growth without energy.
>> Michael Boskin: I think you say in your terrific foreign affairs piece, which is just out, that for better or for worse, there's gonna be some carbonization before net decarbonization.

>> Daniel Yergin: Yeah, what that means is that in particular in Africa you're gonna need natural gas and even in India, take India, which has very ambitious renewable goals. But it also has a $67 billion program, I think is a number to expand its natural gas usage. And building natural gas pipelines is a very important way to get energy and tapping the resources and to get economic development.

And so that's what we mean about that. And at least until recently, you've had the multilateral banks that have not been under great pressure not to finance anything that involves a hydrocarbon, which includes natural gas. And that stunts economic development.
>> Michael Boskin: Really interesting because you mentioned earlier about fracking having grown out of necessity and incentives and entrepreneurship and insight and grit would be another way to describe Mitchell, right?

He stuck to it for a long time, despite all that.

>> Daniel Yergin: We could even say as his granddaughter, I mean, I knew him, but his granddaughter said grit and stubborn, stubborn.

>> Michael Boskin: Well, he wouldn't take no for an answer until the answer was finally yes. And we all benefited from that.

But we see some of the same things going on in a variety of areas. But I wanna get to the so called green transition for a moment because certainly we've seen a decline in the prices, the costs of renewables. Some places here in California are extremely aggressive with renewable goals.

That comes with a high cost and it also comes with some risk of the grid, etc. But we saw in Europe when they had problems after they decommissioned some nuclear facilities in Germany and started importing lignite, that they wound up including natural gas as a renewable briefly. So, sometimes you just have to be a little flexible in this regard rather than just be so stubborn about things of that sort.

>> Daniel Yergin: Right, and I think the advance of wind and solar, those are major innovations and is really around 2010 when the cost of both of them really started to come down. And of course with solar, it's really Chinese manufacturing at a massive scale that does it. But there's one country which is really putting up quite a lot of solar.

But what they've noticed is that a difference between the cost of solar generation and the cost of integrating solar into your power system. In terms of what you need to deal with the intermittency, the backup and so forth, the grid connections and so forth, and that's a different cost.

And that cost is not so well recognized cuz you look at it and say, why is electricity so expensive in Germany or elsewhere in Europe or in California, the highest electricity cost of any of the 48 states? Cuz you're told it's supposed to come down. So, I think there's been a kind of, people haven't looked at the total system costs and right now that's suddenly on the agenda where in a way we have energy security now in terms of oil and gas.

And now the focus is, wait, we don't have energy security in terms of electricity, in terms of reliability, cuz electric power industry uses the term reliability, but it's really security and that we've underinvested in it. And then with what seems to be the rollout of data centers and AI, suddenly electric power generation, which people thought the demand would be very flat or might even decline a little.

Now we're looking at substantial increases and something between anxiety and panic about how you're going to generate that electricity and meet the needs and maintain the reliability of the system that's on the agenda. It's certainly an issue in California. And as data centers are built, I mean, we were doing some analysis that data centers could by 2030 require 10% of all the US electric generation.

I saw the US Department of Energy had some numbers that said by 2028 it could be 12%. Well, we're not in position to do that.

>> Michael Boskin: Absolutely. And that's leading many companies to announce very large data center projects with co-located power sources looking at small modular nuclear reactors.

Microsoft is looking at Three Mile Island, etc. Oracle as part of Stargate has-

>> Daniel Yergin: Michael, I think there's certain things that are symbolic and Microsoft making that deal with the part of Three Mile Island, a famous reactor that was not damaged but was shut down in 2019 to bring it back into operation.

I think that's kind of just a dramatic symbol as well as being very practical solution to the fact that kind of there's a big rethink going on now about electricity.

>> Michael Boskin: Absolutely. And there's also a concern about the cost and we've seen in California some bills being introduced in the legislature to require certain types of pricing on new data centers as opposed to residential, etc.

And we have a history in California of the state government trying to get involved in this and causing problems. We have that now with our homeowners insurance and fires and recently adjusted, but the refusal to let insurance companies project future losses rather than have it based on earlier losses when fire damage wasn't so great, for example.

>> Daniel Yergin: And also, clearly in California you would know me much better than I do, but there was a real clash between call it fire safety and certain environmental policies.

>> Michael Boskin: Absolutely. We have California Environmental Quality Act, which is used to delay a lot of projects, sometimes Perhaps quite sensibly, but other times it just becomes a vehicle for obstruction.

>> Daniel Yergin: Well, and also management. I mean, management of forest.

>> Michael Boskin: Forest management is a big problem, of course, we have a lot of federal land and they're trying to work some joint improvement that. But it's clear that even if it's the case that climate change has contributed to the prevalence of the fires, even though they've existed for recorded history in California, even if that's the case, California alone is not gonna do a whole bunch about climate, right?

No matter what we do, we're a tiny part of global emissions, and it's global emissions and global concentration of carbon that matters for the climate. But we could do something about fire and that would have its own benefit. Also, those fires are emitting a lot of carbon dioxide as well.

So there's a lot of tension about how to work through all this. We have a very different administration with different goals in Washington than we do in California. There are political antagonisms, but also policy antagonisms. California's often gotten waivers from federal policy, and it's unclear that the Trump administration will continue that.

What do you see as the biggest obstacles now to moving at a sensible pace for a green transition? Which I think you wisely, I think you're somebody who's emphasized full cycle analysis from, well, to wheels from etc, who's emphasized the whole system, including distribution, etc. But you've also been a leader in understanding that previous energy transitions, and so far this one have been energy addition rather than energy replacement.

You wanna-

>> Daniel Yergin: Well, it was interesting when I was writing the new map already then, everywhere you went, people talk about energy transition. So I said, well, I've got to learn a little bit, go back in history. What do we mean by energy transition? And I went so far, and maybe I went out putting on economic historian hat going but since the energy transition actually began in 1709 when an English metal worker figured out that you could make iron better using coal rather than wood charcoal.

But these transitions all took a century. And as you say, it was always an energy addition. Over time, no source went down, including biomass, by the way. And so, when we looked at these goals for 2050, and by the way, there were five countries that represent about 45% of emissions that never signed on to 2050.

They signed on to 2060, 2070, but when they looked at 2050, it just seemed, how are you gonna do this? You're gonna change what today is a $115 trillion world economy in 25 years with technologies you don't really know. And by the way, you also get a backlash, or in Europe they call it Greenlash.

Look at the populist parties. Immigration is a big issue for them, but so are climate policies a big issue. And so, came to the conclusion when we were in the foreign affairs article called a Troubled Energy Transition, that this notion that you just draw a line on a graph and you get to 2050, and everything works perfectly, it just is not the way it's gonna be in the world.

It's gonna be multidimensional with different mixes of technology, different priorities, different timing, different regions, that it's gonna unfold over a longer period of time. And that just to keep saying all we need is more ambition became an empty phrase finally, because it wasn't working and it's not going to work.

It's just a much more complicated world. A couple of years ago there was huge excitement about hydrogen, as though that would be an answer. And of course renewables are part of the answer. But it's a big complicated system to provide the energy that a world economy runs on.

>> Michael Boskin: That's a really, really fundamental point and I don't think it's appreciated widely enough by typical citizen thinking about this, maybe voting on issues in this regard. So your wisdom is greatly appreciated in that regard. I wanna come back again to this north south divide. And we've got a lot of poor countries that want economic development and are gonna probably use, for example, a lot of natural gas, if and when they wind up transitioning to more renewables, or they'll do it simultaneously, but the natural gas will become dominant for a while.

In what's envisioned in net 0 in 2050, there would have to be a massive transfer from the rich countries of the global north, primarily Western Europe, North America, especially the US Canada, Australia, New Zealand etc, to the global south or to the poor countries. And that's just not a technical issue or an energy issue.

It's a massive geopolitical fiscal issue. Getting citizens to agree to have very large, as you think you mentioned in your foreign affairs piece, several percentage points of GDP per year is going to be needed and there's going to be a need for very, very large transfers to the global south to meet any of those goals and getting agreement inside any country, let alone a group of countries, to fund something like this.

There have been some attempts with the Paris Accords and so on, and there's a modest amount that's been done, but it's really quite small.

>> Daniel Yergin: Yeah, and we used, obviously guessing how much it'll cost is a lot of guessing and estimating. We use the projections of the cost that were used as the kind of foundation document for the last COP summit that took place in Baku a few months ago.

>> Michael Boskin: This is the UN Climate Group.

>> Daniel Yergin: Yeah, UN Climate is exactly the UN Climate conference. And it said that to actually achieve these goals is about 5% of GDP. Well, the Global south doesn't have 5% of GDP to spend on this. So that says it's gonna be the Global North.

And you start to look at the numbers and say you're talking about to fund this, assuming you have the technology and capabilities and people and everything to do it is going to be roughly 10% of GDP. Really? I mean, which budget constrained country is going to do that.

And so it's just that there's just this discontinuity between the ambitions that are out there and the economics in terms of doing them. Yeah, that 10% of GDP is a sizable multiple of what any country, including the United States, spends on defense. Three times what we spend on defense.

>> Michael Boskin: And probably something like the combined entitlement budget, something like that.

>> Daniel Yergin: Yeah, it's certainly bigger than Medicare, Social Security. I mean, the numbers are just there. And we can tell right now with what's happening, at least some part of the American polity doesn't want to spend any money on anything outside the United States.

>> Michael Boskin: Well, it's gonna be a challenge for sure. And let me just conclude by saying, if there's anybody that can keep us well informed about what's going on and what to look out for in the energy sector and especially its interaction with geopolitics and global affairs, it's Dan Yergin.

And Dan, I can't thank you enough for joining us and we looking forward to more insights from you and from S&P Global and your team there. And we'll look forward to having you back again. It's been a pleasure having you join us on the Tennenbaum Program.

>> Daniel Yergin: Well, thank you very much, Michael.

I think the Tennenbaum Project and what it's seeking to do, which is fact-based analysis of these very difficult and very important issues is a real contribution. And so I was very pleased to have the opportunity to be part of it. And I thank you and the project for being able to be engaged in it.

And I have to say, writing the paper for the project was great for me because it really enabled to bring together kind of a broad sweep of understanding of how US policy and US energy has evolved over the years. So many thanks to you and very glad to join you today on this podcast.

>> Michael Boskin: You can find more on the Tennenbaum Project for Fact-Based Policy at hoover.org where we post informative essays, books, podcasts, and other materials about important public policy issues. If there are other topics you wish we had covered, or if you have any questions, please send them in and we will make every effort to follow up in additional podcasts down the road.