americans, we've got to demand that our country, our national ledge islators come together with a national energy strategy. i think it has to be a uniform strategy that all sides of the issue can agree on. that we can agree upon and will take us through the next 10 or 20 years. it's got to transcend in administrations and until that happens, i think we'll don't bounce around with a few policies, but we don't get to where we need to be in this transition period. >> if we do get to the energy security that we, that is so desired, can we really abandon missions that we have in terms of protecting global congress? >> i don't think we'll ever do that. we are a global power. we will continue i think as the primary, at protecting the sea

legs and international commerce. it's in the best interest of the world to do that. it's a responsibility that we have evolved to over time since the end of world war ii. i don't think that's going to change much and i don't think our country would want it to change much. i know certainly american business is very comfortable with us being there. it also brings aboard a lot of other values i think that come with it, not least of which is just the presence and the engagement with our friends and allies across the globe. so the united states military will always be a global military and i think it's the price we're going to have to pay with that kind of inference. >> you were critical to the creation of sun come and saw something decades ago that others didn't. would you care to say something about the creation? >> would you say that again? >> would you say something about

sense com and your role in it. >> well, that's a good question. as some of you may recall when we were considering sun com, it r started when harold brown realized we did not have a world force. a force that did not go globally. it's so narrowed down because of circumstances going on in the world today. it's so narrowed down to the middle east. but meanwhile, in searching for a commander in central commend after a lot of due diligence in the pentagon in one story that i do like to tell when my name was mentioned to the chairman of the joint chiefs, he didn't know me and said he'd like to meet me. i went over on a sunday morning and his secretary was there in his office and i told her i was here to see the chairman and she

said, well, he's over in the white house. i said, well, how long is he going to be there? she said, well, i really don't know. why? do you have a problem? i said, quite frankly, i do. she said would you mind telling me what it is? i said, not really, i promised by granddaughter i was going to take her to see snow white and the seven dwarfs and by golly, i'm going to take her. the chairman thought that was rather humorous. with the commander officer actually -- company in a unit that was stationed, aidan is a center, or was a center element to a middle east oil.

and the facility was actually a royal marine facility and i was the assistant operations officer of four or five commanders and our job was to protect the oil in aidan, which was considerable and also one of the main arteries of the u.s. or world navy operations in the middle east. going back to central command, that started out really as a worldwide command and the first thing that struck me was the fact that there was no central facility, no focus on middle east. it was worldwide, but it wasn't in the middle east and that was at the time when the middle east was really starting to flare up as you may recall. with that said, when we started

to do our planning for the middle east, we realized that we're talking about an 8,000 mile zone between u.s. facilities and the middle east, 8,000 miles where the airplanes had to go and ships had to go and this was a tremendous demand on oil. tremendous when we started to plan, we realized that this was a bigger problem than just having a small litter force of the middle east. so, that's when we started the wheels were in motion for the european commander rather than central command and that's what started the history of central command. was the fact that we had no unified commander actually in response, who was responsible for the middle east. in fact, the people who were in the middle east r were reporting through -- through the senior

commander in europe, which was a totally unworkable situation. that was the birth of central command as you know today is the command that's in the middle east and reasonable for the middle east. >> thank you. we're going to shift gears now and i'm going to turn it over to ask questions about the focus on this issue of electrify. let me ask you, talk a little about why you and gm chose to build the volt? the way the future looks for cars like these, obviously, this is the vehicle that we see significant amount of criticism. especially from political conservatives. as we noted today in our discussion. many say the government shouldn't be involved in this kind of technology. many question the readiness of this technology. what's your message to skeptics

like this? >> let me start with popular mission conceptions about the chevy volt? those of you who listen to fox news or listen to o'reilly or neil cavuto would believe that the volt catches fire allot. consumed $53 billion for only 6,000 bill was product of the obama administration. when in fact it is none of those things. chevrolet volt was conceived largely by very self-serving comment, largely by me because it was very promising technology which would link all of a advantages of a lightweight vehicle, which was 40 miles with no fuel consumption whatsoever with all the range of a conventional car beyond the depletion range of the battery and internal, small internal

combustion action would provide electricity to the battery for about another 300 miles. seemed like the ideal solution for most daily trips, it would be electrical, but if you have to go long distance, you're in the limited by range. we had a concept car at the show in 2007 and history will show that obama was elected in november of 2008. so, in fact, an interesting fact when in the post subprime meltdown and $4.50 gasoline environment in the latter part of 2008 when the american awe automobile market went from a going rate of 16 million a year down to 8 million a year and general motors and chrysler both had to go chapter 11, at that point, when the obama task force

came in for the restructuring in early 2009, the obama task force in fact recommended that the chevy volt program be dropped as somewhat too capital intensive, not a good enough payback and it was a marginal business proposition. there was in fact those of us at general motors who argued no, this is the vehicle of the future. this is the vehicle that can technologically leapfrog the prius and paves the way to the future. we are probably a couple of months away from b mrmw announc the i3, which is volt technology. they hired most of the volt team to do it. audie is going to introduce the audi e tronic.

mobile's going to have one. mercedes is going to have one. in other words, this technology is going to be become generalized. to me, the unfortunate thing is that because electric cars are very closely associated with the left wing environmental green movement and to combat global warming and reduce co 2, the idea of vehicle -- triggers this visceral reaction on the parts of conservatives, which is if it's electric, it must be a product of the democratic left wing political machine, therefore, we hate it. this is an unfortunate knee jerk reaction because what the volt and other vehicles like it are about is and this is the first

generation. we're in a period of transition, but what these vehicles are about is shifting portions of the american sector on to a more efficient and domestically produced power source. and in conjunction with a lot of other measures and fred smith likes to say, we're for everything. more drills, use of coal. we're for use of much more use of natural gas. we're for all of the things that can be, that are domestic resource and can reduce america's dependence on imported petroleum products. one component is the electric automobile, which makes all kinds of sense and will make increasing sense in another five years when the cast cost of

batteries and the technology will come way down. so it's part of, it's an important part of the overall mosaic of energy efficiency and by the way, reduce cost of driving because driving an electric vehicle costs the fraction of petroleum powered vehicle. so, my plea to the right and i have written e-mails to rush limbaugh, who likes to describe me as my good friend, bob lutz, whom i never get an e-mail response from. who want me on the show, but i couldn't go because i'm a cnbc contributor. all these people i find frustrate me in the unwillingness to accept that electrify rification is a good g to do whether you're a conservative or liberal. one final thing on the volt.

many of you have heard that they catch fire. my int lek cull chul idol charles krauthammer has described it as the flammable chevy volt, thus perpetuating the fiction that the volt catches fire. in fact, one chevrolet volt caught fire in a government crash test which totally destroyed the vehicle. the vehicle caught fire three weeks after the test and i would say three weeks allows adequate time for survivors to exit the vehicle. other than that, no chevrolet volt has ever caught fire, but as we speak, there are three vehicle brands that were -- has issued recall notices or asked the man factturers to issue

notices or they're under investigation, where meanwhile, the customers are asked to park the vehicles outside. do not place vehicle in your garage, close to other vehicles. one is german. one is a jeep and one i've said to say is a chevrolet, but they're all internal combustion, conventional cars. one of which catches fire every 120,000s. 275,000 a year. no electric vehicle has ever caught fire, yet the political right is talking about the flammability, overheating, fire hazard and so forth of electric vehicle and it's a folks, it's a pure fiction. please get it out of your heads. thank you. >> thank you. let me turn you back to fred smith. in outlining the energy and leadership counsel's policy agenda, you're known as a

champion of deregulation of free markets. menti mentioned you're a trustee of the cato ins tus. what government actions do you think are justified in this area and how do you justify the cost? >> i'm a member of the cato board, but you're right, i'm a conservative and i believe in the main and free market. solutions. the prop with the oil market is that it's not a free market. the oil market is controlled by opec. opec is a cartel which owns some place close to 90% of the proven oil reserves in the world. it meets a couple of times a year to set the price of oil. oec even though they own this tremendous amount of the world's resources, although we're

starting to find additional significant reserves because of this new technology being developed here, but the opec nations produce about 42% of the oil used by the world each year. so think about that. they own 80 to 90% of the reserves and produce 42%. that's not classical economics. they're not maximizing their economic return. in fact, if there's an intell t intellectual fight, but maximizes their income, they need about 94, $95 a barrel in sars to make their social payments these days. that's not my figures. that's the saudi government's figures. the iranian would like to run the price up as high as possible in order to hurt the west. particularly during this period

of time when the west is is put sanctions on the iranian regime. and in 2001, the average american family spent about $1700 on fuel. last year, that figure was about $4,000 per family. a huge size took place as we all watched in congress over weather t the payroll tax would be reduced in 2011 and continued to 2012. the value of that to the american public was about $110 billion. the cost of the american public of the increase price in fuel in 2011 was about $110 billion. so, the increase price of fuel served as a tax that took the

increased economic activity, our increase in gnp and put at least half of it into the hands of people who supply us, supply us oil. the geo political issues surrounding oil have been going on for a long time. the cause was when we embargoed their oil supplies from indonesia. the famous battle of the germans battle the russian was about oil. germans had gone to stahlengrad and going up the river which simplied the army. the biggest air raid that the united states ever conducted up to that time. certainly the most heroic was to try to knock out the oil refineries.

the 1990 war in iraq was clearly about oil. osama bin laden declared war on the united states. nobody paid much attention when he did it and i think 1998, because of the presence of american troops, have been left there after the first gulf war. so the united states has gotten ourselves into a position where importing now a little bit less because of these improved technologies. we are still dependent for half of our oil from foreign sources, so the only way that we can prevent the united states from being taxed if you will, every time we have any type of economic growth by increased oil prices that are set by cartel that would not be legally possible if it were operating inside the united states is to

diversify our fuel simply along the lines that we mentioned. so even though i'm a conservative and i support free market principles, this is not a free market problem. it is a military and national security problem and it should be looked at in the same vein as if we're buying another couple of squadrons of f 35 or another aircraft carrier and the technology that bob had talked about, this lithium ion battery technology, which is on a very good clip to become self-sustaining on its own, it is in our best interests as a nation to do all those things lest we move to another military con fill over this issue. >> let me ask you a follow up in this area about new alternative

energy sources or new energy sources. given the recent boom in oil and natural gas production, is it simply not possible for natural gas to meet the growing needs we see to improve our energy security sufficiently? do you think the -- why is critical? >> it's not just elect electryfication. maximize oil and gas production in every way. in alaska, on the gulf, on federal land. we need to maximize indigenous u.s. gas and oil production. then i mentioned -- for light duty, personal and commercial vehicle. the use of natural gas for heavy and over the road and centrally fuel vehicles. renew

renewed standards. you need to do all five of those. in the case of natural gas, they both get at the fundamental problem about our oil use. and our con sumgts of oil. by the way, president eisenhower, when he was in office and he knew a thing or two about national security, said it would be a national security emergency if we imr ported over 15% of our oil needs. just a few years ago, we were up to 60%. but here's the issue in a nutshell. oil is basically transportation. of the slightly now under $19 million barrel a day that we burn per day, about 20% of world demand, 70% of it's transportation and of the 70% of oil used in transportation, you have to recognize that somewhere

around 97% is powered by oil. the light duhty sector is by far the biggest single user of petroleum. it represents somewhere around 10 million of our daily con sumts. the heavy, over the road vehicles represent around 3 million barrels a day. let me give you some gee whiz numbers here. we have 250 million light duty vehicles in the united states. that's personal automobiles and small trucks, coca-cola, verizon, at&t might use. if you could wave a magic wand and convert all to battery powered and recharge those every night, there is enough energy capability, productive capability in our existing power

plant system to refuel every one of those vehicles every night and they can be done in an off peak time. now, there are lot of details here. transformers in the right neighborhood and having the 220 like you have for your washing machine in the right place to power your vehicle. but the trajectory that bob lutz knows a lot better than i do, is going to give us the potential over the next 10 to 15 years along with fuel efficiency standards that we could take 10 million barrels a day that we use for light duty trucks and personal automobiles and cut it at least in half to 5 million barrels a day r or less. of the 4 million barrels a day used in the heavy truck sector, conversion of a great percentage to natural gas, which is now possible because the engine man

factturers are beginning to come out with 12 liter engines. the equivalent price is almost $2 per gallon less. so it isn't just the one thing. it's doing all of these in order to eliminate the national security and economic risks the country faces. i'll just close with this. we're seeing in the headlines every day about the deliberations of the israelis and our government and europeans and what to do with the iranian nuclear situation. if the strait of hormuz was shot, through which 17 million barrels of oil go through per day, let's just say somehow that happened. there is no question that the

price of oil in the united states would go well above $200 per barrel. the price of fuel at the pump would go from $3.75 to $4 to $7, $7.50. the 7% of our gdp would shoot up to 10 or 12% and i can assure you, we would have an economic contraction that would make the one we just went through, the twin sister or brother. so we have to deal with this issue as a streenategic militar and geo political issue that cannot be solved in the shorlt run just by domestic production. it has to be a part of the equation and we support all of it. but it's going to take us doing all of those things and not be on the right or the left about that, but to be an american about the problem. >> let me turn to general conway for a second to comment on your

remarks about iran and future of u.s. energy security. >> yeah, well, fred's exactly right. the figures scare us all. that 17 million a day constitutes 20% of the world's oil simply and you know, i honestly think that the situation with iran is the wolf closes to our sled. happily, there are negotiations taking place right now. i'm pessimistic about their outcome, quite frankly, because i think we'll see delay and little tangible result. iran has said they want to develop a nuclear capability so that they have sustained energy over time. that's like say eskimos need freezers because they've not more energy right now than they know what to do with and they will for generations to come. we have said that position's unacceptable because terrorism is recognized element of national power. from an iranian perspective and 33 other nations of the world

agree with us on that. so i'm afraid we're headed towards confrontation. and i think there is a window of time here for negotiation but it's a window that's closing rapidly because the israelis, we see the issue as a problem. israelis see it as existential to the survival of their nation. and you know, the unfortunate part is if they do attack, it will be with american made problems dropping american made bombs and they'll defend israel -- so we'll be perceived as being a vital part of all that takes place. we don't need another war, but could be pulled into one through the actions of another nation. options available to us in the near term limited attack? we'll delay, but it will not stop an iranian program. in the process, we poke the tiger. a full scale attack is regime

change i guess is always an option, but there aren't any beaches close to tehran and so it would be long, bloody. tens of thousands of iranian would die. thousands of others. we'll also find that a very difficult task. there's another option, that's change from within. we did not take advantage of unrest inside the country to help off set the problem. if iran let me put it like this. if i were an iranian general giving my best advice -- it would be don't avertly close the straits because the american navy will kill us, but if we simply drift off every once in a while on