Russ: This is the BusinessMakers Show, heard here and online at thebusinessmakers.com. And now it is time for the Aflac BusinessMakers Flashback, brought to you by Aflac, ask about it at work. And for this mornings Flashback, we are going to roll back to November of last year when we had Dr. Michael Economides, the energy expert on The BusinessMakers Show. We enter the interview where I asked Dr. Economides to give his general perspective on 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: Okay, from there I knew a little bit about Michael's background from research and I knew he was a Democrat and voted for President Obama. And so I asked him, are you pleased with the direction he is taking us with this energy policy.
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 proportions. 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: So a little bit later in the discuss we got to the topic of global energy demand. And it seems like you can not talk about that without talking about the incredibly rapidly growing demand in China. So I asked him to tell us about that.
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: And the number of people that own automobiles there, it's growing at an incredible rate.
Michael: 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: After that we moved on to the topic that China is not the only place that demand is increasing. That we also manage to find new uses of energy right here in the United States, new incremental uses.
Michael: How many people realize that depending on how you count it, 10 to 20 percent of the power generated in the United States is used by computers and the Internet. It is not the SUV, for example, that is the culprit. What are you gonna do? Yank people who have not lived in a world without computers and the Internet? Those big servers, Amazon.com uses as much energy as a 10-story building. So we manage to find new uses of energy. So conservation has never played a role in reducing total energy demand. In fact, the opposite is true too. There is something known as the Jevons Paradox. Jevons was a British economist of the 19th Century and he wrote a landmark study called How Conservation Affects Total Energy Use. His conclusion? It leads to increase rather than decrease. This is why people associate the use of energy with a better life. There is no question about that there is a correlation between energy consumption and wealth and welfare. And as a result, let's say your house becomes more efficient, what do you do? You buy a bigger house. Your car becomes more efficient, you buy two cars. In other words, we have not really decided on frugality. It doesn't really matter even, we can become irrelevant in the West because you have the Chinese that have four cars per 100 people. We have 110 cars per 100 people.
Russ: But is there, perhaps, a silver bullet in nuclear energy?
Michael: Nuclear can play a big role, especially if my notions of electrifying the transportation - and I'm not talking about battery-operated cars, I'm talking about technology. We have vehicles taking electricity from the guide ways of the future. And you become independent when you get off and you become dependent or relinquish control when you get on the future highways. It can be computerized with technologies that are available. We can travel about 200 kilometers an hour and so on. Nuclear in that environment can play a huge role.
Russ: And lastly we move on to that part of the interview at the very end where I ask Dr. Economides to tell us what he would do if he was made energy czar of the world.
Michael: Some very simple things. First of all, what I say needs to be said by the President of the United States, and no President has said that - Republican or Democrat. In fact, I have said years and years ago that the same way as rabid anti-communist Nixon went to China, and populist politician Bill Clinton tried to reform the welfare system in this country, it may take a democrat to explain to the American people the importance of energy in the life we live. I am one of those people who believe - and here's why it's consistent with me being a Democrat socially and ideologically in many ways - energy should be the most populist of all issues. It should be no different than the air we breathe and the water we drink and the food we eat. It should not have been delegated to the right-wing fringes of the Republican Party. It becomes, in other words, such a big oil bum rap.
Russ: I know what you're saying.
Michael: Right. So the first thing you need to do is articulate that reality. What's real and what's a fantasy. Now we are blending the two. The Obama administration lives in the Never Neverland of fantasy in the energy war. They have adopted this outrageous, ridiculous fantasy as you can imagine in the energy business. So that's the first thing. The second thing is the energy supply becomes important. Proactively we should develop nuclear power plants - proactively. Instead of having 800 permits, it should be a pull rather than a push from the government. Governments must understand the importance of energy supply in the world we live in. And then we can start talking about nuances. Which of these energy supply sources should be first, second and third. One other thing that is very important, by the way again, that governments should work on, is energy diversity. You know, we don't use any gas, any natural gas, for what we use oil for today and vice versa. Oil is not used for power generation. Oil is use almost exclusively for transportation. There is nothing else than oil for transportation. So unless you can have this idea that energy sources can be pulled together, and the critical catalyst is electrifying practically everything because you can produce electricity from too many source, and then have the end use to be electric. If you can do that, then that is a giant leap forward for the future of the world. That's the kind of thing that I would be pushing for.
Russ: Alright and that concludes our discussion with Dr. Economides. To hear the entire interview go to thebusinessmakers.com and search for Economides. Thats E-C-O-N-O-M-I-D-E-S. And that wraps up this mornings Aflac BusinessMakers Flashback, ask about it at work. You are listening to the BusinessMakers Show, heard here an online at thebusinessmakers.com.
