Dr. Daniel Yergin ’68, chairman of the Cambridge Energy Research Associates, returned to Yale yesterday and lectured to his son, who recently began his freshman year. Fortunately for the young Mr. Yergin, the lecture focused on “The United States and the Grand Strategic Challenges of the 21st Century” and was not directed solely toward him.
The author of “The Prize: The Epic Quest for Oil, Money and Power,” Yergin spoke to a crowded room of students, professors, and alumni in the Hall of Graduate Studies about American energy policy. He described the principles behind international energy security, stressing the importance of Winston Churchill’s assertion that in order to maintain this security a nation must diversify its energy supply.
Yergin said various post-World War II crises, including the Yom Kippur War, the war between Iraq and Iran, and unrest in Venezuela have demonstrated the danger of reliance on a single country for oil imports.
“I would argue that [these crises] give us the capability to manage shocks,” Yergin said. “If we’re going to be dependent, we should be dependent on a number of different countries and a number of different sources.”
He also pointed out that most of America’s oil is produced domestically or imported from the Western Hemisphere, debunking the myth that most of the world’s oil originates from the Middle East. Up until war with Japan in 1905, Russia had been the world’s largest oil supplier, and Venezuela was the United States’ largest supply of oil after World War II.
“Look at Iraq,” he said. “It was made to sound like it was a more crucial element [of the oil market], but it was only making around three percent of the world’s supply.”
Yergin underscored the importance of maintaining surplus production capacity, asserting that a strategic petroleum reserve is crucial to a country’s energy security. He said that, contrary to suggestions made otherwise, these reserves should not be tapped and should serve solely as an “insurance policy.”
He used gas prices as an example of how energy can be both a political and economic issue. When a company has a monopoly on oil production, he said, prices go up, and “no self-respecting politician can do anything but charge collusion.”
Dr. Yergin then analyzed the new dimensions of energy security. International programs to liquefy natural gas have helped natural gas become “the hottest area in the energy business on a global basis.” Such a cooperative relationship between countries is not only one of Yergin’s strategies for achieving energy security, but also shows the impact technology can have on energy supply.
An expert on international politics, economics, and energy, Dr. Yergin also expressed his own doubts about some of the issues surrounding energy security. He said a debate is always ongoing over whether or not America should cut itself off entirely from petroleum imports, thereby eliminating the need to worry about foreign crises.
“There’s a lot of rhetoric surrounding the move to an independent oil industry, but it’s really a very complex issue,” he said.
Noah Heymann ’06 said he agreed with some of Dr. Yergin’s solutions to the rising energy demand in the United States but not with all of his political assertions. “I appreciate what he said about hybrid [energies], that they are a feasible short-term solution, but I think he was incorrect to write off taxes on petroleum as completely politically unfeasible,” Heymann said.
David Noyola ’04 said he was struck by one statistic in particular.
“I didn’t know about Canada potentially being the [world’s] second largest oil supplier,” he said.
While the complexities of energy security can be confusing, there is one principle Dr. Yergin said a country must absolutely adhere to.
“I interviewed Margaret Thatcher [for a book],” Yergin said. “And as I left, she called out, ‘Remember Thatcher’s Law!’ Not familiar with the axiom, I asked her what exactly Thatcher’s Law was. ‘The unexpected happens,’ she said, ‘and you’d better prepare for it.'”