>> Well two things.
One I think there are many around the world
who don't they are benefiting from this at all.
Particularly those who are in areas where we are securing those oil supplies.
>> Got it.
>> But I'd say more generally, it, it is certainly true that those who are
intervening are stabling, stabilizing a price that benefits
large oil and energy consumers around the world.
>> Yep.
>> I would also add to that, we're not the only ones who are in this business.
There's, there's a, there's a large European footprint
in a, in a lot of places where.
Where, where energy is important, and, and the tricky part of this, which
is why all these numbers should be taken with a grain of salt, is
how much of that intervention you can directly attribute to the production of
fossil fuels, and how much of that is, is related to other geopolitical interests.
>> Okay.
So it's a big expense, but, what part of that is energy versus what part?
>> And that's clearly the fuzziest of numbers that I have presented.
It's hard to come up with a precise algorithm to measure those costs.
>> So is that 20 to 30 cents that's sort of the low estimate of what it is?
>> I think that' s probably a lower bound.
>> Okay, alright so I notice that on your
cost estimates for climate change and for air quality.
That coal was at least twice the cost of natural gas.
In, in one aspect, in climate change.
But almost 20 times worse in, in air pollution.
So I guess the question are you know, number one, why
are these numbers that dramatically different for two sources of energies.
And, and why do we continue to use coal at all
to generate electricity if, if the externalities on that are so bad?
>> That's a great question.
So first I, I think, remember these numbers are reflecting
average production levels across the energy sector in the U.S. So
that means that for coal combusted power plants, we're talking
about plants that were built 20, 30 some 50 years ago.
And so many of those plants are very inefficient in their
combustion and as a result they throw off lots of bi-products.
>> Just old, old technology that we're still using.
>> Old technology, and the raw ingredient
of combusting coal versus combusting gas is
also, there would be differences even with the state of the art coal power plant.
>> Yup.
But, but these older power plants are clearly much inferior to the state of
the art gas power plants that have been coming online for the last 20 years.
>> Alright, so, so there's nasty stuff in coal to begin with.
>> And then [INAUDIBLE].
>> But even so, the old technologies didn't get that out at all.
>> Yes.
>> Okay.
>> Nasty stuff in coal to begin with, and inefficient
combustion only contributes to getting more of that in the air.
And then I would say the reason we're, the
reason we're not moving away from coal, I guess I
would say we are moving away from coal it's just
a very slow turn, because this is long lived capital.
I would venture to bet we will not build another single
coal fired power plant in the United States in my lifetime.
But we have ten, 20, 30 more years of useful, low cost life on those old
power, coal power plants, and unless we're prepared
to start pricing externalities in a serious way.
>> Yeah.
>> There's no way, there's no incentive to
tear them down or replace the with natural gas.
>> Got it.
So it's old dirty technology, but we're not taxing people for using
that, so they're going to continue to use it because it's still cheap.
The economic spill right.
>> And, and even to be fair if we fully taxed
it many of those would still continue given that they're already built.
>> Yeah.
>> And that their margin cost of operation are quite low.
It's a waiting game every new plant coming online is pretty sophisticated natural gas
plant and it's a waiting game to replace the whole coal fleet with that.
All right.
And I assume that's also true in the rest of the world, or
less so maybe, they don't have the natural gas that we do here.
>> We certainly have a bounty of natural gas that, that incentivizes that.
Most of Europe wants to get away from coal
even if they're not sitting on mounds of natural gas.
And there's lots of evidence to suggest that there will be
a fracking bonanza in Europe if regulate, if regulators allow it.
>> Yeah.
>> The, the wildcard is China, because China has been building out coal fired
power plants like gangbusters to meet an incredibly fast growing, amount of demand.
And all those plants are two, three, four, five years old.
If the U.S. is any, any indication, those plants
are going to be around for another 50 years in China.
And so the hope is, at the very least, that the new plants that star,
that continue to come on at a blistering
pace transition quickly from coal to natural gas.
>> All right.
Okay, so maybe send some of our technology, our fracking technology so
other parts of the world could be an advantage, if they got more.
>> Our fracking technologies, LNG that allows that gas to get
outside of the U.S. and to China, technologies that allow for
more efficient combustion of coal for the coal-fired power plants that
are there, and efficient combustion of gas where gas is available.
>> Okay, so that sort of brings up a final question, then, which is, one of
your slides said that government should not pick
winners and should let the market determine those.
But I guess for me, it, it's hard for me to imagine how a market can pick
something that's a brand-new, you know, infant industry, I think as you called it.
You know, it's not really tried and true yet, so how does
the market really choose those things when they're not up and running yet?
>> So, when, when economists say we want the market to pick winners, what
we mean is, put a price on all the bad stuff you don't like.
Make that price reflect social, the social damages associated with it.
And that creates strong incentives for innovators to come along
and create technologies that produce less of that bad stuff.
And I think the key point is that we should be agnostic
about, how we get there as long as the technology delivers safely.
Energy with a lower side effect profile.
As I said in my talk, I think the infant
industry's argument is a, is, is slightly more nuance than that.
Which is to say, we should support basic R&D.
And basic R&D can be about how do we reduce Knocks emissions from the
combustion of X or Y or Z but once that moves into the applications base that
technology space we shouldn't be betting on
one particular technology because once we bet on
one we foreclose options in other places which may or may not be better options.
>> Got it.
So, so government should make the investment in
research to get the basic technology developed, and then
let the market decide how they're going to apply that
technology to reduce you know, the bad things [INAUDIBLE]
>> Yes, and, and just to put a fine
point on it, government can intervene for some basic R&D.
We let industry step up to actually
commercialize that R&D in a variety of ways.
But we, but the reason why that will work is because we've set up an incentive
and price structure that pushes industry to produce
industry with the kinds of profiles we value.
>> Got it.
>> And historically we haven't done that, partly because we
haven't understood the ill effects at the time we set up
the system, and partly because setting that system up, setting
up those incentives is in fact hard even when you know.
>> Alright.
Well Josh, thanks very much, and I look forward to
hearing more about the economics of energy in the future.
>> Thanks for having me.