captions copyright national cable satellite corp. 2008 but i think the correct view of judicial activism at least for many is calling the balls and strikes as the law requires. one exchange to senator feinstein, roberts said "no, i will not rule for the little guy or the big guy. i will rule as the law requires." so if he did that in this case, no one i think on my side would have any complaint. if he -- i think it is an incorrect view of judicial activism to say whenever a court strikes down a law because that is their duty if they're

following their oath to the constitution in many cases. >> and he was part of citizens united. i mean, they struck down a 60-some--year-old limit on spending by corporations and unions and john roberts was the fifth vote and thought the first amendment required it so we struck it down. it's not like john roberts is shy and never voted to strike down a law. he certainly has. >> right here. >> sandy rios with afr talk and fox news channel. my question is for mr. safrage. i'm just curious because you made a statement about it is important to guard the court's reputation and i'm just curious, except for misbehavior or sedition or immoral behavior, under what constitutional edict is the court supposed to guard their reputation? >> well i don't think i said his job is to guard the court's reputation.

i did think that he, the chief justice would rather not have the court decide a whole lot of cases on sort of 5-4 seemingly partisan or political votes. he said that when he came on as a chief justice, and that just sort of as a general matter. i've not talked to him about this. i don't know what his view is, but you no he that if the court had struck down the affordable care act on a 5-4 vote with the five republican appointees voting to invalidate it entirely, the four democratic appoint gees dissenting, it wou have been perceived by many people as a political or partisan decision. do you remember a couple, about the time of the argument there was some polls and a lot of the american public said do you think the court will decide the case based on the law or do you

think they'll decide it based on their political preferences, and i think about two-thirds of the public said oh they'll decide it based on their political preferences. now, i don't think that concern would cause john roberts to say i'm going to move from here over to here because i'm concerned about the political reaction, but i do think he would think that, in line with what we were talking about, i have a duty to uphold laws where i can, and if there's a plausible basis for doing it, i'm going to do it and if thatthis perception that the court is strictly knee-jerk political on big political questions, seems to me that's a good. >> howard and mark, any final thoughts? okay, well, with that i want to thank everyone, but especially join me in thanking the panel. [ applause ]

>> we're live now at the new america foundation here in washington for discussion on the future of oil, a group of energy analysts talking about oil reserves in north america, oil imports from the middle east. the event just under way, live coverage now on c-span3. >> jergen attempted to chronicle the central issues in the energy world. primarily that included the theory of peak oil and of course global warming. these are issues that have residents not only in the oil industry, of course, but also to

civilization. one issue that was not covered in the book, however, and was not mentioned at all was a new age of, a golden new age of oil abundance, a flurry of new oil discoveries in north america, in south america, on both coasts of africa. these discoveries are so large that they could remake the world. they have the potential to make north america independent of oil from the outside, and they could disrupt the geopolitics and the economics that we know around the world, in china, in the middle east, in russia, too. jergen was not alone in noticing this momentous shift. two weeks ago, rex tillerson, the ceo of exxon mobil, said

that he was blind-sided by it. for the last few months we've seen a cottage industry of reports and conferences on the topic. it's an issue of the first priority, yet did tillerson, did jergen miss something? do we have a priori evidence that the volumes under discussion are at that scale, in fact, are going to materialize? is our world going to be shaken up by a flood of new oil in the coming two decades, or is what we're talking about an aspiration, what could happen if all the stars line up, if the costs are right, if the price is right, if the right technologies are applied correctly, if we don't get pushback from the

environmental community. today we put the scenario, the oil abundance scenario to the test. two months ago, i sent around e-mails to the analysts, who were behind these reports, who were behind the theory that we're talking about, and i asked them, are you willing to be challenged on stage live, all at the same time, all at the same place? the response was enthusiastic. so it is that today that we're privileged to have six of the energy thinkers to put, to scrutinize the age of oil abundance. this session is on the record. it's being broadcast live by c-span3. it's being webcast live on the new america website. if you, please, turn off your phones, or turn off the sound on your phones. if you wish to tweet from today, please use #delveinto12.

let's begin, the first session which will scrutinize the golden age of oil abundance is moderated by michael he will vie who runs the energy and security program at the council on foreign relations. >> thanks, steve. thanks for asking me to moderate this panel. that's a ton of feedback, thanks. for today's discussion we're going to have two components to it. this first one is really about kicking the tires on scenarios of oil abundance, understanding what assumptions go in, what factors might affect outcomes, and trying to decide how plausible, how likely these are, and then the second we'll talk about the consequences, and so we'll separate those two pieces, i think, in order to have a really rigorous discussion.

in order to first talk about where we are heading and where we might be heading, we have two fantastic panelists, discussants with us. the first will be adam sieminski, administrator of the u.s. energy information administration, who was previously briefly senior director for energy and climate at the national security council staff, and before that, for seven years chief energy economist at deutsche bank. adam will be giving us essentially the base case. eia is sort of the gold standard for government forecasts of the energy world and he'll be talking to us about what they see in the future. the second presenter will be ed morse, who is managing director and global head of commodities research at citigroup, and really the man responsible for identifying a lot of the trends that we're all talking about now, and really trying to flesh them out, when everyone else is putting out three-page papers on the issue, he's putting out

100-page ones. i don't know whether his staff enjoys that, but it is a benefit to all of us, and giving us really robust data and information to talk about. he's previously served as head of commodities research at credit suisse, and deputy of state for international foreign policy. no more introductions. adam you've got eight minutes to tell us your view and the eia view on the future. ed, you'll have eight minutes and then we'll have a chat. >> are we going to have the slides? all right. do we have the technical help that brings up the slides? otherwise i'll do it without the slides.

well this is a good opportunity to thank -- >> audio? >> is this working? now it's working. okay. and there are some slides, we're in good shape. okay. i'd like to thank the new america foundation for the for pum it's a great opportunity. steve and michael, thank you, and ed, it's always a pleasure to see you. in a very quick amount of time, i'm not going to spend a lot of detail on these slides but i just want to set the scene and i'm going to particularly use the u.s. as an example, but let's start off with some world numbers. this comes from the eia's annual energy outlook that was just published just a little bit ago, we're looking at global oil demand growth between now and

2035, going from roughly 89 or 90 million barrels a day up to 110 million barrels a day almost all of that in the non-oecd countries and that has interesting implications we can kind of come back to. this is fascinating to me, this is just the next few years but look at where the main growth in non-opec production is. the united states leading the table here with tremendous oil and oil liquids growth in 2011, '12, and '13, followed by canada and russia, china, colombia, kazhakstan, brazil, all of these countries are likely to continue to see production growth we believe out into the future and that has implications that we'll be getting into. how is this happening in the united states? tight oil production in places

like the bakan and eagle fyjord formations growing very, very strongly in 2012 and likely to continue along those lines as the industry gets more comfortable with tight oil development. how much tight oil production we could see in the u.s. is going to depend at least in part on what the actual reserve base is. it's still early days. looks pretty good, if we, in the eia reference case, that will support a certain level of production, but a high estimated ultimate recovery case, or a high total reserves case could push production or potential production numbers up even higher. the reference case is the darker shade here, but as you can see,

there are a number of cases particularly with high reserves, where net petroleum imports shrink quite a bit as you get out to 2025 and 2035. obviously the net imports number is going to depend on not just domestic supply but what's happening with demand as well. so let's, you know, again look at some of the possibilities here. the reference case in the eia's annual energy outlook for the u.s. shows dependence on imported petroleum will shrink from about 50% in 2010 right now we're already down below 45%, to 36% in 2035. if we were to take the high production case and combine that with the low demand case, that

number could be 14%, down close to 3 million barrels a day. it's not impossible to think of some cases that would lead to even further shrinkage and dependence on net imports. if you had higher oil prices and more conservation, if you had stronger fuel efficiency standards, if you had better technology in the demand sector, including things like how much oil is being consumed in home heating, in commercial heating, all of that could lead to further shrinkage in that import number. one thing that i think that you should keep in mind in all of this, and then i'll close on this topic, is a bit of caution

in terms of interpreting what it would mean if the u.s. were to become self-sufficient in oil. the harvard kennedy school just published the report a month ago, suggesting that even if the u.s. were totally oil independent, we would still be dependent on global oil markets in terms of price setting and the critical importance of middle east and foreign policy issues would not go away, despite the potential for oil imports to shrink considerably. so with that, i'll close, and we'll turn it over to ed now, i think. >> don't put it up. i'm going to use the slides, so thank you very much. thanks very much, steve, and the

foundation for setting this up and thank you, adam, for setting the stage. what's happening is a really big deal. i'm not going to talk about foreign policy issues right now. we're going to have time for that later, but trying to deny that this is a big deal is like trying to deny that the internet would have a significant implications. this is, what's unfolding is truly a technological revolution, assisted by entrepreneurial capacity among a bunch of independent companies in north america, and the capital markets of north america that have, with the assistance of higher prices, over the last decade, been able to exploit geology that was hitherto outside the scope of mankind, and it's not just the shale-like resources of north america. there are three levels of unconventional resources that high prices allowed technological innovators to tap

into, and these are clearly the deepwater. they are the oil sands, particularly in canada, and they are the tight formations from which shale and source rock has managed to escape, not completely escape but to escape into slightly more porous rocks that, high, new technology it make even more porous and the world will tap nowe know the scope of the resource rock and resource base. we don't have a technologically defined set of commercial resource numbers so just to put the technological revolution in kind of perspective, even though, in terms of the resource base for the shale light oil place, only a slight increment for the u.s. resource base, the source rock itself is many times larger than the amount of oil that is commercially available

globally, if there's 1.5 trillion barrels of oil that are available globally there's 1.5 trillion barrels of source rock in wyoming, utah and colorado, and there clearly is at least in terms of what will be commercial, 100 billion barrels and that's kind of enough in north dakota, saskatchewan and montana. this is a big deal and it's not just america. it's the world as a whole. our report looked at north america and it's important for north america. our numbers are significantly less conservative than those of the energy information administration. we looked at what is potentially available and by the way, our numbers on mexico show a different profile than the numbers adam showed from the eia, which quite conservatively show a continued decline in mexican production. i think the world is going to

find at the end of the year that mexican production will be up year on year from onshore production, there are discoveries offshore in deepwater that have just been announced. the full results of experimentation and the extension of the eagle fjord from texas from just the other side of the border are just becoming publicly available and there's oreason no assume that the geology won't work. what there's reason to be somewhat skeptical about is whether a company like pemex can do what the independent entrepreneurial companies of north america can do, and let me be very specific about this. what has allowed this to work and what makes it difficult for this to work in a company like pemex or saudi aramco or even exxon is that the entrepreneurial independents empower people at a significantly low level in the hierarchy, to make decisions about drilling and to experiment on drilling, and this enables the entrepreneurial companies to

do things that others can't do. now, what has triggered this clearly was on the natural gas side, what's happening on natural gas is truly important, and cannot be ignored, because we look at the oil balances in north america, we have to think of where natural gas is going to by the end of this decade, almost certainly start displacing oil consumption. one of these, by the way, is in natural gas vehicles, and it's probably going to enfold pretty quickly and probably in the heavyduty truck fleet, so i want to just make a note on this and we can talk about it later. the economics of converting the heavy truck fleet from deez toll natural gas are compelling. it costs about $7,000 to do the conversion without having a new rig, without having a new engine, and that $7,000 can be made up more or less in a year, because depending on where in the u.s. you might be able to get lng or cng for a truck and

that is a big issue. that is a comparison to 4.5 gallon diesel you can have the equivalent amount of natural gas feeding for somewhere between $1.10 and $2.50, so the economics on that are really compelling and we in looking potentially at 2 million barrel a day decline in u.s. consumption have a not very aggressive conversion of the trucking fleet from diesel into natural gas. i want to talk about what triggered this revolution. it was high prices. the high prices certainly had an impact in north america first with the shale gas play but it is really global and when robin and i were trying to build petroleum finance company in the early 19 and mid 1980s, one of

of the things we were able to do is get a contract with the world bank where we looked at investment cycles in the oil industry, and we looked at the things that go into capital expenditures. there are six things that go into cap tap expenditures on the upstream side. they explain a lot about the peak oil fad and they explain a lot about what's happening. the total capital spending in the world on the upstream side peaked in today's dollars at $200 billion in 1981 and then sharply fell off as oil prices fell off. among the six elements of upstream capital spending is enhanced recovery, extending the life of a field, low prices, make that uneconomic to the early abandonment of a field leads to an increase in decline rates, and we saw that one of the areas of capital expenditures in acreage acquisition, companies were long on acreage in 1981, they lived off of that length in acreage for two decades, as the price of

acreage, the cost of it went down, and in 2002-'03 for a bunch of reasons related to opec, they started increasing capital folds like six-fold and the results of that are just coming home to roost so what's happening in north dakota and texas and ohio and pennsylvania on the gas side and the oil side and the ngl side is a reflection of the results of capex deployablely and it's happening in the deepwater as well. it will happen in the deepwater gulf of mexico again as drilling activity has now resumed. there's a big lead time between the release of the capital and the results of it, and the chart on your right shows that for most years before 1980-'84 the amount of oil discovered excluding extensions and revisions to old discoveries was more than the amount of oil consumed, for this period of year in which the years in which the industry was living off of

old investment the amount of oil discovered was less, and now the evidence is clear that discovery rates are significantly higher than and will remain significantly higher than oil consumed for a period of time to come. what's required to keep this going is clearly high enough prices. this is a map, it can't be seen but it's 250 most recently discovered fields and their economics. most production in today's prices can be done at $70 a barrel, some of it can't be done if prices fall much below $70 a barrel. one has to ask a question about the sustainability of oil prices which is another issue, but if oil prices are sustained at a robust enough level, there's plenty of evidence that the production growth that we've seen can continue and thanks very much.

>> thank you both for illuminating presentations that i think will really set the stage for the rest of our discussion. i want to try and dig down to some of the assumptions behind these cases. i want to start by actually asking each of you, when you look at the other's case, what are the one or two biggest differences not in the outcome which we can see in the total numbers, but in the assumptions that go in? what do you see as the biggest factors explaining the difference in the projections? maybe adam, i could ask you that first. >> well, ed was looking at a global case and the numbers that i was presenting were for the u.s. next year, the eia will actually be publishing the international energy outlook again. it's one of the decisions i got

made in the first few months there that i'm at the eia. i don't know whether anybody noticed but we also had a brent oil price forecast and the short term energy outlook which came out yesterday. >> say for the north american case, right, he puts out on there that you could come close to self-sufficiency or in fact beyond self-sufficiency for north america by 2020 and that's certainly not in any of the cases that the eia has out. >> that's actually not right. if we take the load demand case and you're down to u.s. net imports of 3 million barrels a day. if you combine most of that or more than that already coming from mexico and canada, so that would actually imply on a total north america, mexico, u.s. and canada basis that you would be independent. one of the things i think that

you should keep in mind is, and it was on that last slide that i showed a number of the different cases that eia ran in the annual energy outlook, not all of them lead to lower demand or higher production. i mean, there are possibilities. we have stronger economic growth, for example, that could lead to higher demand or problems on the production side that you know, maybe the resource base isn't, just doesn't turn out to be as good as expected, or that there are complications in terms of the costs associated with hydraulic fracturing, all that could lead to lower production, which would then give you a situation where the u.s. would still be importing let's just say 5

million, 6 million, or million barrels of oil a day beyond 2025. it's not impossible to conceive of the circumstances. i'd say in general the direction that we're going is towards more optimism on higher production and lower demand. >> ed, same question, what are the big sources of the different outcomes as you see it? >> well, one of the things that i should make it clear is that when we did this report, we did a report based on what could happen, all other things being equal, and i think it's important to bear that in mind, but among the things we saw happening was with the resumption of drilling in the gulf of mexico, a doubling of production there with the deepwater based on pretty decent information coming from