President Obama’s energy priorities

LISA MULLINS: I’m Lisa Mullins, and this is The World, a co-production of the BBC World Service, PRI, and WGBH Boston. President Obama made it official last night during his speech to Congress: Energy is one of his key priorities.

PRESIDENT OBAMA: The only way this century will be another American century is if we confront at last the price of our dependence on oil.

MULLINS: Those words are often understood as a reference to foreign oil from unstable or unfriendly countries. That’s not necessarily true, though. Daniel Yergin is chairman of Cambridge Energy Research Associates. He’s best-known for his Pulitzer prize-winning book, �The Prize: The Epic Quest for Oil, Money, and Power.� Yergin says America’s biggest suppliers are actually close and cozy friends.

YERGIN: When we talk about foreign oil, our number one source of foreign oil � almost a quarter of it � comes from Canada. Our other big supplier is our other neighbor to the south, Mexico � and together, that’s almost half of our imported oil. So to some degree this discussion about foreign oil is really a metaphor because when you look at oil and energy with Canada, it’s part of an overall relationship with a country that happens to be our largest single trading partner. And we’re not going to stop importing energy from Canada or they’ll stop importing goods from us.

MULLINS: And what about those other countries, though, especially in the Middle East? I think that’s probably who he was talking about most when he said, �Look. We’re relying now on more foreign oil than ever before.�

YERGIN: Well, you know, the number that keeps being thrown around is that we import 70 percent of our oil. We import 56 percent of our oil. It’s still a big number. And of that, about 20 percent or a little bit over 20 percent of those imports come from the Middle East. But I think in the political discourse, in the public’s mind, when you talk about imported oil, it really is about the Middle East and now to some degree these days about Venezuela, but it’s not the whole picture.

MULLINS: Daniel Yergin, you listened to President Obama’s address to Congress last night. When he talked about his energy plan, what struck you most?

YERGIN: This emphasis on energy technology, on innovation all across the energy spectrum � whether you’re talking about renewables, alternatives, or conventional energy. And he talked about spending 10, 15 billion dollars a year on energy research and development over a number of years. There’s never been that kind of commitment to energy R&D. And if you make that kind of commitment and you mobilize the scientific community, the engineering community, I think we could see some surprises that we are not very clear on the horizon right now.

MULLINS: Well, I wonder how realistic the plan is, though. When he said that his plan would double America’s supply of renewable energy in the next three years, is that realistic and is that wise?

YERGIN: Yeah. Well, if you look at solar and wind, they have great potential. They’re growing. But today, what share of our energy they are, it’s maybe about a percent or so. So doubling it is still going to be a pretty small part of the picture, although those could start to be big numbers for those industries.

MULLINS: One other question. A lot of people say that what we need now are jobs, and that research and development, in terms of alternative energies, will not generate jobs.

YERGIN: Research and development, by its very definition, is not about this afternoon or tomorrow morning. It’s about five years or ten years down the road — but it is what creates whole new industries and whole new opportunities. And we have I think really under funded energy research and development for many, many, many years and so it makes sense to step it up. Within the overall mix, those are still relatively small numbers. What we really need in our economy to get the jobs is we need credit. And it’s not only for homeowners, it’s not only for individuals, but it’s this problem of big businesses, small businesses not having access to credit in order to make investment. And while we’ve seen the government really stepping up with the stimulus program � vast investment program � what’s happening on the other side is the freezing up of investment by the private sector, by businesses � where every Board of Director is very cautious, �if you can postpone an investment, postpone it.� And that’s not going to change until the credit system’s working and then we’re not going to get recovery until you get that flow of investment and credit going again. And that is where the real focus has to be in the next month or two.

MULLINS: All right. Nice to speak with you, as always. Daniel Yergin is the author of the book �The Prize: The Epic Quest for Oil, Money, and Power.� He’s got a new epilogue. In fact, the book has been re-released now. He’s also the chairman of Cambridge Energy Research Associates, an energy research consultancy. Nice to talk with you.

YERGIN: Thank you very much, Lisa.