Russ: This is the BusinessMakers Show, heard here and online at thebusinessmakers.com. And this is that show that champions innovation and entrepreneurship. And we really like to focus these days on the energy challenge because we think it's a challenge of extraordinary proportion. And that's why I'm very pleased this morning to have as my guest Dr. Michael Economides, energy expert and author. Dr. Economides, welcome to the BusinessMakers Show.

Michael: Thank you very much.

Russ: You bet. Well, I said author, man you have three books that are just ringing the bell over and over and over again in energy. The Color of Oil released quite a few years ago, and then from Soviet to Putin and Back: The Dominance of Energy in Today's Russia. And then Energy: China's Choke Point. Wow. So let's just start here. Why don't you give our audience a general perspective of the challenge in the energy sector these days.

Michael: Energy, I think to put it simply, is a victim of its own success. We take energy for granted. It is my contention, my opinion, that in the 21st Century you take any national indicator, from illiteracy to infant mortality – any number of things – energy and energy abundance has become the national characteristic that separates rich from poor countries. We expect it to be there. Everything else, really, depends on energy.

Russ: And therefore it's a challenge the way that we debate on the future of energy.

Michael: Sometimes I think it's outright silly and quite irresponsible. Some of the government pronouncements – by the way, from both the left and the right, there is blame to go all around. And not just in the United States, in practically everywhere in the developed world. It's almost like we have a death wish or something that I would call national hara-kiri. To destroy something that does not need to be destroyed because of some cockamamie idea of a different future that I can hardly see.

Russ: I know that today there's just a total abundance of misinformation, particularly about what we should do about alternative energy, about global climate change. Your perspective on that?

Michael: Most of these issues are kind of an unholy mixture of ideology, politics, even the very essence of their philosophy of life was how life should be. And there are these romantics that believe that if somehow we will remove vestiges of modernity, we somehow become purer, more closer to nature. And so you start putting all these things together and you get this mixture of unadulterated silliness, by the way that people talk about. See, I'm Greek for instance. People tell me, "Don't you like how Greece was 2,500 years ago?" I said, "Yes, that was a golden era of Greek philosophy and history and so on." But the truth of the matter is infant mortality in classical Greece, a most troubling fact by the way, would run about, I think, 50 percent of children would not grow to be two years old. Life expectancy was in the 30's. Sanitation was non-existent, things like that. So once you scratch the surface of ideology, you end up with reality and the reality is energy and modality. Some of the problems that I hear right now are, for instance, we don't like oil and gas and coal because they create greenhouse gasses. Although they account for 87 percent of the world energy mix. And they continue to amount for eighty-seven percent –

Russ: Eighty-seven percent.

Michael: Eighty-seven percent. So we're talking about solar and wind, which would never account for more than one percent of the world energy mix.

Russ: No matter what?

Michael: No matter what. It is thermodynamically, as we'd say in engineer, impossible. You can use even Einstein's venerable old equation, E=MC2, this has become a t-shirt slogan. But if you apply that, you will see very clearly that alternative energies also just simply don't measure up.

Russ: So we can't get there with solar or with wind power?

Michael: Oh, I mean, it's beyond silly for people to think like this. Solar is so diffuse that to replace Middle East oil for instance, only, that we have in this country, it would take solar collectors that would cover the entire state of Illinois, as an example, okay, and trillions and trillions of dollars of costs.

Russ: So what does that mean your perspective is on the impending cap and trade legislation in the United States?

Michael: I have a theory. The reason that governments are both the left and the right, everybody in the world have adopted lock, stock and barrel, goals extraordinarily alarmist pronouncements. It's that this is the best source of revenue is Godsend. This is the largest tax scheme in the history of humankind.

Russ: Cap and trade.

Michael: Exactly. You know the advantage of it? You don't call it tax. Of course, if it looks like a duck and quacks like a duck, it's a duck, okay? And who is gonna argue when it is presented, that we are doing this in order to save the planet? So this is the biggest scam in the history, by the way, the whole notion of cap and trade.

Russ: Okay. What about global climate change?

Michael: Climate does change, and I'm not a climate expert incidentally. And, of course, we know that it has changed several times, but by some diabolical coincidence I did my masters in radiation years and years ago, and I understand the physics of radiation. Some of it is anthropogenic, manmade. No question about that. The question is what do you do about it? That is really a fundamental question. But there is another issue. Alarmism again raises its ugly head. People have to say the most alarmist things in order to get your attention. And, of course, can you do something about it? I think absolutely not. And the debate has really gotten into very ridiculous dimensions; will the seas increase by 20 meters or 2 centimeters. And we'll have more hurricanes and less hurricanes and that kind of stuff. So in other words, it becomes serious when it comes to alarmism.

Russ: So your comment that probably some of it is caused by mankind, but it could be a real small percentage and there might not be anything we can do about it anyway?

Michael: There is no doubt that there may be some element of it, that is thermogenic, but it may be nothing. It may be miniscule. And, in fact, we are quite arrogant as human beings to believe that we caused it, and Number 2 to believe we can do something about it.

Russ: Okay. We're talking with Dr. Michael Economides and we're gonna be back with more with him after this. You're listening to the BusinessMakers Show, heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show, heard here and online at thebusinessmakers.com. And continuing on with energy expert, Dr. Michael Economides. Well, Michael, I know from doin' a little bit of research on you, too, that you actually are a democrat and voted for President Obama. Are you pleased with the direction he's goin' with energy?

Michael: I have always been a democrat, socially, okay? But the kind of pronouncements that come out of his administration and the energy business are mystifyingly silly. I mean, we have a Secretary of Energy who ought to know better, after all, this guy has a Nobel in physics, who comes and tells people that the solution to our energy predicament is to paint the roofs of buildings white. I mean, anybody knows that this is silly. Or we have the Secretary of Energy going to Atlantic City to talk about America's off-shore energy resources, and he talks about wind. Gee, and I thought it was oil and gas. So in other words, they become victims of their own politically-correct rhetoric.

Russ: But it's so serious it seems.

Michael: Right. This is the tragedy. In other words, that if it's not an ideal, logical issue, it's a national issue of huge proportion. They seem to worry about this one percent solution and they ignore the 87 percent question. They have precious little pronouncement of where Americans are getting this energy from.

Russ: I would assume you've seen An Inconvenient Truth, Mr. Gore's movie. Is there some truth in that movie?

Michael: That movie, it's so rife with scientific inconsistencies, that in fact the U.K. Supreme Court has decreed that any time the movie is going to be shown, the teacher is obligated, in the U.K., to point out the inconsistencies, including the opening scene, by the way, the carving of icebergs, which for most engineers know that the horizontal stress must be larger than normal in order to carve an iceberg. That means the vertical stress is high. That means you have more ice, you have more snowfall, which proves what? Global cooling rather than global warming. Here you have the opening scene of a movie and nobody's challenging the guy because it's a politically correct thing to accept this nonsense.

Russ: I've also heard you talk specifically at one point in time, about the whole global climate change issue being really a frontal attack on the United States of America.

Michael: There is no question about that. I'm a naturalized U.S. citizen, but every time they discuss global climate change issues with my American friends. I demand – it doesn't matter if you are left or right. It doesn't matter if you believe in anthropogenic global warming elements or not. You have to admit, I demand, that the rhetoric about global warming is a full frontal attack on the United States by a bunch of people outside of the United States who are jealous of the U.S. Think not that British intellectuals and French intellectuals and governments are not imbued by jealousy towards the United States, okay? That's what derives much of that. So I demand that we accept that. And then let's debate what to do about this depending on what you think about it or not, okay? But we have to admit that much.

Russ: Okay. Now, Dr. Economides, we talked a lot about solar energy and about wind, but there are other alternative energies. There's biofuels, there are ethanols. Is that the secret game changer?

Michael: People on national media and national TV, they hate me when I bring numbers, so maybe your audience won't hate me. We use a lot of corn in this country. We probably use a lot of corn. If we use all of the corn we grow in the United States to produce motor vehicle ethanol, we never get to what it's going to do to the food prices. That's 20 percent of our gasoline demand.

Russ: Twenty percent.

Michael: Twenty percent. If you use all of the soybeans we grow in this country to produce biodiesel, Willy Nelson notwithstanding who supports this, okay, it's four percent of our diesel demand. So I don't now what we are talking about. This is a scam. And we are actually using the most subsidized fuel based on the most subsidized crop – that's corn – and this silliness will continue as long as Uncle Sam subsidizes this stuff. Now there is nothing wrong with ethanol as an oxygenant for gasoline. We need that for engines to run better. And it has replaced another chemical that was kind of nasty and an even nastier chemical – do you remember leaded gasoline? So ethanol, think of it, has replaced lead and that's a good thing, up to 10 percent maybe. But to say that ethanol, especially from corn, will replace gasoline – that's a lot of nonsense. It's just not gonna happen.

Russ: Okay. We're runnin' into lots of nonsense today. In fact, here's another topic. There's often the cause and debate by those that propose these alternative energies that the United States should strive for energy independence. That sounds like a good thing no matter which side you're on.

Michael: Well of course. By the way, this is not a Democrat or a Republican slogan. Every president since Eisenhower as been talking about energy independence. How many times do you hear a politician or a teacher tell you, "Lower the thermostats in the winter." Or "Increase the thermostats in the summer." To save from importing foreign oil. Well, this is idiotic. It's beyond silly. You know why? We don't use any oil for power generation in the United States. So play yo-yo with the thermostat – that is not gonna save any foreign oil. You cannot talk about energy independence unless you address the transportation problem, and that is a much more recalcitrant, cumbersome problem. We have 170,000 filling stations in this country geared to sell gasoline and diesel. We have trillions of dollars of existing infrastructure. We are cursed by it in many ways. We have 110 cars per 100 people in this country. The Chinese on the other hand, have four of them – four cars per 100. They are a virgin ground. They may develop – technologies do exist, for example electrifying the transportation. Nothing is going to happen overnight. We're talking about decades in the future. Like the press says things will happen tomorrow. It's not gonna happen.

Russ: All right. I want to talk more about that after this. We're talking to Dr. Michael Economides, energy expert, and we're gonna be back with more with him after this. You're listening to the BusinessMakers Show, heard here and online at thebusinessmakers.com

[Aflac Commercial]

Russ: This is the BusinessMakers Show, heard here and online at thebusinessmakers.com. And continuing on with energy expert Dr. Michael Economides. Now, you've just touched upon China at the end of that last segment. I've gotta think that the whole supply and demand thing is really, perhaps, out of kilter and driving a lot of the hysteria. Talk a little bit about China.

Michael: China is like no other country you've ever seen before, okay? I always tell both my American and European audiences that the world is not gonna be Americano-centric – centered around America, or Europe. It's gonna be China. China will lead the energy world. There has never been a country in the history of humankind that increases oil consumption by 20 percent per year, and the Chinese did three years in a row a few years ago. They are on a clip to probably around 15 percent increase oil demand over last year. It is something to behold. So China is going to define in the world energy. They are moving all over the world, taking energy assets while we are watching – and in fact, I work in China very often. The Chinese ask me, "Why are you guys letting us do that?" Because what we are witnessing right now, since energy equals power, is the largest transfer of power in peacetime without resistance we have ever experienced in 100 years. While in this country we're trying to save the planet and all these slogans and all this rhetoric, they are going all over the world taking energy assets because they recognize the connection between energy and economy.

Russ: I keep reading where they go down to South America and struck a big deal there. They keep marching around the globe. It sort of is beginning to feel like we're making a huge mistake by not being involved.

Michael: To people like me, this is so obvious it's painful to talk about. But you know when the Chinese ask me, I said please go ahead and take it as long as we don't recognize the importance of it. What are you worried about?

Russ: And the population there, you've already talked about the number of people that own automobiles there, but it's growing at an incredible rate.

Michael: Just by coincidence, there were three pieces of news one after the other. The Chinese increase their car purchases by 67 percent over last year – one year. They bought 1.2 million vehicles in October. The U.S. bought 800,000. Fifty percent more than the U.S. GM sells more cars in China than they sell in the United States. This is the kind of thing, you know, that we have to certainly pay attention to.

Russ: Great. Unfortunately, we're running out of time for the radio broadcast with Dr. Michael Economides, but there's obviously more that we're gonna talk about. So go to thebusinessmakers.com and look for the Dr. Michael Economides WebXtra. You've been listening to the BusinessMakers Show, heard here and online at thebusinessmakers.com.