00:00:03
this podcast is brought to you by
00:00:04
knowledge at wharton please visit
00:00:06
knowledge.wharton.upenn.edu
00:00:09
for more information
00:00:16
there are
00:00:17
a lot of similarities between the two
00:00:19
candidates so
00:00:21
mccain
00:00:22
has had a long history of being in favor
00:00:25
of a climate change statute in fact he
00:00:27
was one of the first co-sponsors of a
00:00:29
climate change
00:00:30
regulation statute in the united states
00:00:33
and
00:00:34
has fairly consistently supported new
00:00:36
generations of those
00:00:38
of those kinds of those kinds of
00:00:40
approaches and also
00:00:42
obama has
00:00:43
committed to a climate change regulation
00:00:47
the target for the obama campaign is
00:00:49
slightly more ambitious than for the
00:00:51
mccain campaign but i actually think
00:00:53
that
00:00:55
what voters probably should focus on the
00:00:57
most is who is going to be the most
00:00:58
likely to provide the necessary
00:01:00
leadership if you're in favor of climate
00:01:03
change regulation i think both of the
00:01:04
campaigns are uh are supportive of
00:01:07
developing alternative energy
00:01:10
sources so knew uh both sides have
00:01:12
committed to significant increases in
00:01:15
and funding uh probably subsidies of
00:01:17
certain kind of mix
00:01:19
both candidates have said at least in
00:01:21
their campaign that they're in favor of
00:01:23
developing new alternative energy
00:01:25
technologies
00:01:26
technologies such as solar wind
00:01:29
geothermal
00:01:32
both are in favor of nuclear for example
00:01:35
so i think the question the difference
00:01:36
there
00:01:37
depends on what you would what you would
00:01:40
see as a as emphasis so for example the
00:01:43
mccain campaign seems to be much more
00:01:45
strongly pro-nuclear
00:01:47
there's been a commitment of 45 new
00:01:49
nuclear power plants in near-term
00:01:52
building up to 100 nuclear plants that's
00:01:54
a fairly significant shift from a
00:01:56
situation where we've had zero new
00:01:59
nuclear power plants built in the next
00:02:01
in the last 30 years
00:02:03
now the obama campaign is also in favor
00:02:05
of nuclear power development as a part
00:02:08
of a mix of other alternative sources
00:02:10
but i think it's it's fair to say that
00:02:12
the mccain campaign seems to rely on uh
00:02:15
more heavily on nuclear as well as the
00:02:18
everyone knows about the bil the drill
00:02:20
baby drill
00:02:22
claims in the argument that we're
00:02:24
we'll increase significant supplies of
00:02:26
petroleum domestically
00:02:31
i think there's a significant difference
00:02:33
between the two campaigns in terms of
00:02:35
developing
00:02:36
oil resources
00:02:38
i think the obama campaign is in favor
00:02:40
of some
00:02:41
some limited development of oil
00:02:44
resources that we have here there is a
00:02:46
position to put additional pressure on
00:02:49
oil companies to exploit resources that
00:02:51
have already been allocated to them
00:02:54
mccain seems to be very strongly in
00:02:56
favor of drilling almost as much as you
00:02:59
can
00:03:00
opening the arctic
00:03:02
it seems to be at least a potential
00:03:04
uh a potential approach
00:03:07
um
00:03:08
so i think that
00:03:09
the the more general question is how
00:03:11
much is that really going to matter uh
00:03:14
if you look at even if you maximize your
00:03:16
your the drilling capacity in the united
00:03:18
states and all of our resources i think
00:03:20
the best estimates are you don't really
00:03:22
make much more of a dent and you don't
00:03:24
make a very big dent maybe two percent
00:03:27
uh of of total supply would be affected
00:03:30
so you're still going to be if you don't
00:03:32
change the overall mix of your energy
00:03:33
supply you're still going to be fairly
00:03:35
heavily dependent on overseas oil
00:03:38
both campaigns have made a commitment to
00:03:40
becoming independent uh of the of of
00:03:44
overseas overseas petroleum resources
00:03:47
but uh it it it doesn't
00:03:50
there's some question about how each one
00:03:51
of those
00:03:52
each side would would try to achieve
00:03:54
that
00:03:58
well i think some people raised this
00:04:00
issue and and suggest that the
00:04:02
commitments that both campaigns have
00:04:04
made to to new energy resources and in
00:04:07
particular the the obama campaign's uh a
00:04:10
commitment of of funds to energy
00:04:12
resources would somehow be somehow be
00:04:14
compromised by the current crisis and
00:04:16
i'm not sure that really uh that that's
00:04:18
really going to happen you you're going
00:04:19
to have uh you're going to have
00:04:21
significant challenges economically
00:04:24
and those challenges depend directly on
00:04:26
energy supplies so the extent to which
00:04:29
your economy runs is quite directly
00:04:31
dependent on energy supplies and so i
00:04:34
don't think you can sidestep this issue
00:04:36
it may be that will be more somewhat
00:04:38
more expensive you may
00:04:40
there may be decisions taken that you
00:04:42
would not be able to balance the budget
00:04:44
as fast as you might otherwise try to do
00:04:46
it i think one of the reasons for that
00:04:49
is uh is to understand energy also in a
00:04:51
geopolitical context uh that the
00:04:54
question of energy independence isn't
00:04:56
just a question of economic viability or
00:04:59
growth in the united states it's also a
00:05:02
question of who has most of fossil fuel
00:05:05
resources in the world
00:05:10
yeah it's likely that both sides will
00:05:11
will be developing policies on energy
00:05:14
and then the question is which
00:05:16
i think for voters is which one do you
00:05:17
think has a better uh version of how to
00:05:20
develop
00:05:21
my own estimate and as as we've
00:05:23
discussed
00:05:24
i'm in favor of the obama campaign and
00:05:27
so i'm a i'm a volunteer and have
00:05:29
offered offered advice to the campaign
00:05:31
although i'm not a i'm not a spokesman
00:05:33
for the campaign
00:05:34
but my feeling is that the obama
00:05:36
campaign is more persuasive and has a
00:05:38
better strategy about
00:05:40
about how to go about doing that my
00:05:43
sense again this is partisan but
00:05:46
my sense of the mccain campaign
00:05:48
basically has an old-fashioned idea of
00:05:51
how you're going to advance in this area
00:05:53
you know ideas of really expanding
00:05:56
nuclear drilling more
00:05:58
these are really traditional kinds of
00:06:00
approaches to the problem that i don't
00:06:02
think are going to do it i think what
00:06:03
you really need is
00:06:05
the commitment to
00:06:07
to to fund and to provide
00:06:09
good economic incentives for the
00:06:10
development of new kinds of energy
00:06:12
supplies
00:06:17
you can't really force the development
00:06:18
of new technology very easily now at the
00:06:21
same time there have been
00:06:23
times in history where there has been a
00:06:26
specific kind of technological problem
00:06:28
say going to the moon or developing a
00:06:31
manhattan project in a weapons sense or
00:06:34
or other kinds of other kinds of
00:06:35
examples where there was a very high
00:06:37
strategic priority identified and that
00:06:40
the government decided that there should
00:06:42
be investments across maybe an array of
00:06:44
different possibilities
00:06:46
to try to achieve a strategic objective
00:06:49
and i think that those have been
00:06:51
those have been successful in in history
00:06:53
but i think it's also true that you need
00:06:55
to try to get the economic incentives
00:06:57
right and i think one uh one area one
00:07:00
place in which to start is to look at
00:07:02
the subsidies that are currently
00:07:04
available already to you know available
00:07:06
to traditional fuels so there's a lot of
00:07:09
oil subsidies for example that are being
00:07:11
paid and there's a lot of
00:07:13
there's a lot of implicit subsidies that
00:07:14
are given to the coal industry etc so i
00:07:17
think one question is to let's first get
00:07:19
the economic playing field uh
00:07:22
level
00:07:22
uh and then it might make sense to
00:07:24
provide certain kinds of subsidies for
00:07:27
uh
00:07:27
for for different for different
00:07:29
proposals
00:07:30
but i agree that it's very difficult to
00:07:32
select the winners in advance in this
00:07:34
way but another basic way to encourage
00:07:37
innovation that is not a
00:07:38
government-centered
00:07:40
approach is to
00:07:42
provide the right incentives so and what
00:07:45
that means in the environmental
00:07:47
area is that you would have
00:07:49
correctly caught correct costs so
00:07:51
there's a lot of externalities and the
00:07:53
use of different kinds of fuels
00:07:55
and if you can uh you can provide
00:07:58
the accurate accounting for those costs
00:08:01
in the use of those fuels then you start
00:08:03
to level things out now politically
00:08:05
that's been very difficult neither
00:08:06
campaign has uh has actually said that
00:08:10
they would be in favor of attacks for
00:08:12
example on
00:08:13
coal
00:08:14
carbon
00:08:16
oil
00:08:17
now many economists would say that's the
00:08:19
best approach because what you do is you
00:08:21
provide the correct incentives that way
00:08:23
for someone else to develop alternative
00:08:25
methods of fuel
00:08:27
the other thing that you do with that
00:08:29
sort of approach is that you encourage
00:08:31
efficiency measures energy efficiency is
00:08:34
one area where there's a lot of gain
00:08:36
that we could have
00:08:38
and
00:08:39
it wouldn't take a lot you the
00:08:40
technologies are known uh government
00:08:42
policies would not be that difficult to
00:08:45
uh to implement uh you'd have clear
00:08:47
gains and so the the the potential for
00:08:50
energy efficiency to solve a number of
00:08:52
these problems is something that that i
00:08:53
think is going to be important
00:08:59
i think that i think the price of oil
00:09:01
has has shown a lot of volatility and
00:09:03
one of the reasons it's shown a lot of
00:09:04
volatility is that it's geopolitically
00:09:06
uh there's there's a lot of sensitivity
00:09:09
to what exactly is happening there so i
00:09:11
think a a short-term fluctuation in the
00:09:14
price of oil if it goes down a little
00:09:15
bit uh or uh uh if it if it radically
00:09:19
spikes really should not determine
00:09:20
policy over in the long run now i think
00:09:22
we made a mistake in the united states
00:09:24
where
00:09:25
during the carter administration there
00:09:27
was a a spike in oil prices because of
00:09:30
opec and there was a push to realize you
00:09:32
know it should be energy efficiency etc
00:09:35
and we basically forgot that lesson and
00:09:37
we fell back into a complacency about
00:09:39
energy resources
00:09:42
we uh i think even george bush somewhat
00:09:44
ironically said that we got addicted to
00:09:47
oil uh it was he was a little bit of a
00:09:49
late convert on that particular issue
00:09:51
and i think some of the policies suggest
00:09:53
that that's somewhat um
00:09:55
as i said ironic but um but the but the
00:09:58
point is that we've i think now learned
00:10:00
our lesson and we see that the
00:10:02
geopolitics of oil are are extremely
00:10:05
difficult um where the united states is
00:10:08
in a much weaker position if we don't
00:10:10
develop alternative energy sources that
00:10:12
are
00:10:13
not dependent and so i actually think
00:10:15
that for from a long-term perspective
00:10:17
and from the point of view of policy
00:10:20
that that will not affect
00:10:22
the commitment which is emerging that we
00:10:24
need to develop new energy sources
00:10:29
for more information please visit
00:10:30
knowledge.wharton.upenn.edu
