From an interview with Daniel Yergin in the April 2 issue of Business Week:
Charlie Rose: Why have gas prices become such a huge political issue in America?A full-time consultant, Yergin is perhaps America’s most famous energy economist — a former Harvard lecturer and the author of several energy policy books, including the famed Carter-era book Energy Future from the Harvard Business School and more recently The Prize and The Quest. While predicting the future is always a matter of opinion, it’s hard to think of a more authoritative source on this subject.
Yergin: There are two reasons. One, this is the one price everyone sees every day. And secondly, it’s something that, you know, people feel very directly and immediately. They feel it in their pocketbooks and feel it in their wallets. Seriously, for a lot of people, when prices go up like this, it’s a big and unexpected financial burden.
How much difference would the Keystone pipeline make?
It’s not only U.S. oil production that’s gone up, it’s also Canadian oil sands production, which has almost tripled since the beginning of this century. Canada’s now our most important source of oil by far. And the Canadian oil sands—to get the volumes in perspective—they’re greater now than Libya’s output before the civil war. The oil that would flow through Keystone is equivalent to about a third of Iran’s total exports. There are a lot of arguments about Keystone, but the argument that people haven’t paid as much attention to is what it would mean for our energy security. Keystone would signal that, within two years or so, there would be major new oil that would help shrink the number of Iranian barrels on a tight world oil market.
How does fracking change the picture?
The development of shale gas has created—my company [Cambridge Energy Research Associates] did a study—indirectly something like 600,000 jobs. It is a major stimulus to the revival of manufacturing in the country, and in ways that were not anticipated a few years ago. This inexpensive, abundant energy, directly and as a source of electricity generation, makes the U.S. more competitive in the world economy.
What about environmental risk?
I was on a committee that did a report for [Energy Secretary] Steven Chu and Obama. What we concluded is that there are environmental issues to be addressed, and we identified 20 pragmatic ways of addressing them. There’s this public debate, and then there’s what seems to be reality. The scientists on the committee were firm: The chemicals that are used that have gotten attention, it’s very, very unlikely that they’re getting into the water supply. What needs to be managed is what you do with the spent water from the drilling.