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War, Security Policy, Energy, Oil/Gas and the Future

March 22, 2022

(Excerpt from Transcript: Ezra Klein Interviews Daniel Yergin)

... Energy policy is foreign policy. It always has been. But it particularly is right now. It’s widely believed that Vladimir Putin timed both his 2014 invasion of Crimea and his 2022 invasion of Ukraine around tight energy markets. It’s thought that he thought, maybe rightly, that he’d have the most leverage to act when Europe was most dependent on Russian oil and gas and when leaders everywhere feared the domestic turmoil that higher energy prices could bring.

The reverse theory was an operation, too. In a decision that now looks naïve, Germany’s Angela Merkel thought that integrating Russia into Europe through the energy trade might smooth the road to peace, giving Russia too much to lose if it considered doing something like, well, what it’s doing right now. All that is to say, to understand this war, to understand this moment, to understand this world, you need to understand global energy production and global energy markets. You need to understand why a war in Ukraine raises gasoline prices in California. You need to know why the fact that America produces more energy than it needs, the fact that we got to that much vaunted, much desired energy independence, doesn’t actually make us energy independent. It doesn’t actually protect us from disruptions half a world away. And in the bigger, broader sense, we need to think hard about what all of this domestic sensitivity and turmoil around the price of the pump means for the always looming threat of climate change. How do you decarbonize in a world where people care more about the price of fossil fuels today than about the devastating consequences their use will bring tomorrow?

... Daniel Yergin is an economic historian and writer who The New York Times once called America’s most influential energy pundit. Time magazine said, quote, “if there’s one man whose opinion matters more than any other on global energy markets, it is Daniel Yergin. He’s the author of a bunch of books on the intersection of energy and geopolitics, including the Pulitzer winner “The Prize: The Epic Quest for Oil, Money, and Power” and most recently, “The New Map: Energy, Climate and the Clash of Nations.”

And “The New Map,” for a book written a few years ago, ooh, it’s scarily prescient, that the lengthy sections on Ukraine and Russia now read like they were written by someone telling the future. But Yergin doesn’t tell the future. He just watches the energy markets.

Daniel Yergin is also vice chairman at the energy, analysis, and consulting firm IHS Markit. So if you want to go deep on how energy markets work and what they mean for world politics, he is the guy to talk to.

"How do you decarbonize in a world where people care more about the price of fossil fuels today than about the devastating consequences their use will bring tomorrow?"

• https://www.nytimes.com/2022/03/22/podcasts/transcript-ezra-klein-interviews-daniel-yergin.html

• https://www.nytimes.com/2022/03/22/opinion/ezra-klein-podcast-daniel-yergin.html

If you look at the International Energy Agency’s goal for decarbonization by 2030, a big part of that is removing — replacing coal generation of electricity in Asia with natural gas. We could actually be exporting more natural gas, which is a hydrocarbon, but we could displace a lot of coal. And I think that would be one objective.

The one thing that unites renewable people and oil and gas people is that they’re all very frustrated by the permitting process, just how long it takes to get things done in the United States and how long they spend in courts and moving through one regulatory agency after another. But I think the biggest thing — I headed a task force in energy R&D for the Department of Energy a number of years ago. And I just come out thinking the most important thing is the money you spend on research and development and then taking things out of the lab. That’s what really pays off.

The problem is it doesn’t pay off tomorrow. But even the International Energy Agency said, to achieve the decarbonization goals by 2050, half the technologies you need on a commercial basis don’t exist today. So what we really need, if I’m an optimist about anything, it’s about technology innovation, to see what we’ve seen happen with solar, what we’ve seen happen with shale, and what we need to have happen with new technologies to get to these goals.

EZRA KLEIN: I think that’s a good place to come to an end. And so always our final question, what are three books you would recommend to the audience?

DANIEL YERGIN: The number one book I would recommend, by far, as most relevant today is "Putin’s World,” by Angela Stent. And the subtitle is “Russia Against the West and with the Rest.” And it explains why India, Brazil, Indonesia, and many other countries abstained on the vote condemning Russia for the invasion of Ukraine. And it also gives you insight into what his geostrategic and global strategy is. So I think that’s the book of the day to read.

EZRA KLEIN: I think I should get you to make a disclosure on this book, which is an amazing book. But I should have you say it.

DANIEL YERGIN: Fair enough. I should mention it is written by my wife Angela Stent.

EZRA KLEIN: I really wish we could just do a podcast of the conversations the two of you must be having around the dinner table right now.

DANIEL YERGIN: Oh, it’s very much around these topics, of course. The other book I read was called — it has a title called “The Power Law.” And the subtitle is the “Venture Capital and the Making of The New Future,” by Sebastian Mallaby. And so much of what we have in the world today and we take for granted, the technologies we use every day, came out of venture capital. And understanding how that system works and what it’s done for the economy and for innovation, it’s very interesting. It’s a very colorful story.

The third book is called “The Cloud Revolution,” by a fellow named Mark Mills. And it’s about how the convergence of new technologies will create the next economic boom. When we see changes come, things come together. And he’s focused on around the cloud and how it will be sort of like what happened with electricity and radio, and things like that, in the 1920s.

EZRA KLEIN: And Daniel Yergin, your book is, or your more recent book is, “The New Map,” which is startling and how relevant it is, how much it has on Russia, Ukraine, how presciently it reads today. People should very much check that out to understand the layer of all of this, that it’s energy-based. Thank you very much.

• https://www.amazon.com/New-Map-Energy-Climate-Nations/dp/0143111159/

• https://www.amazon.com/Putins-World-Russia-Against-West/dp/1455533025/

• https://www.amazon.com/Power-Law-Venture-Capital-Making/dp/052555999X/

• https://www.amazon.com/Cloud-Revolution-Convergence-Technologies-Economic/dp/1641772301/

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