the american association -- the association of american medical colleges issued a report calling for much stronger conflict of interest standards. we had leaders within individual(hb schools saying we just can't keep going. our profession can't keep going the way it has.shppjzìáhp &hc% so all those things came together and the law passed in 2010. but the other piece of context ?yñ8dlfb x5.pá i think isn't approximal to the law's maspassage but is really important to understanding how it fits now is this sort of much wider recognition that wi really,[z need to understand in this country the drivers of health care costs and where the dollars go.ffñ and if you went back to 2007, i think it would also be close to unimaginable that cms would be publishing individual physicia.? uv f1 o payment records. but that's happening now, too. as rodney mentioned this morning, we now have the first report from the sunshine act ydññ)

$3.7 billion in payments to p=n hospitals in fiveú&r months of the first year of reporting. that's a÷n1szw+eájjr(hvqp). those are funds that are either going to research and product development, and that's important and important for the public to understand. or going to drive uptake of particular products. that's also important and important to understand.éb÷ so where are we now? pew has been involved in this áçs issue in a long time, as have the other folks on the pafj0o% today, and many other organizations. and since passage we have s continued tkgf$%-:)hp orking group of consumer organizations, and also individual companies to build shared understanding about how the data should be presented. and about some of the technical challenges in getting that data d,s7÷? úujeu)q ublic domain.

data for the first full year of reporting has been collected. 2014 data has been collected. it will be submitted to cms in march. and in june we will have publication of the first full ÷ $bko year ofút9 data along with some delayed publication of data that for various reasons wawant released from the first five so the law is moving forward and the question is what happens now.o$ let me give you three thoughts. one thing that i think will happen, one that i think ñ probably will happen, and one ç/qp÷ that's important, but will take some concerted effort on the 39,÷ part of stakeholders if it's going0fhxaa9ñ so what will happen is that the tdjá process of]%qq%9 (hu)s& continue and be refined and we will have this year the first full year of data.á0!ñ

what i think and probably will happen is center forf. medicare continue to refine thep presents that data and as rodney said in his remarks this morning, the firstnc website wasz8ç not very user friendly. it was pretty difficult to go on there and find your own but cms to its credit within a couple of weeks of launching that first website put up a much;:ei÷49 more user friendly tool to let consumers search, find their own doc, and the agency tells me that they continue to work on refining t improving the search tool, but tz(h also thinking about how to provide the data in context by medical specialty, by geographical location with time trends. so those are all things that they're thinking about as a way to make the data more useful. so they're working on that. and i credit them for their dqmh9

.t willing to continuously improve that. the third thing and this is the thing that i'm not sure will happen but is really important rlyç is the law creates a lot of descripters for payments, so is it a consulting payment, or is wsájñ it for marketing, or is it a meal. áxt and those aren't defined in the law, and some of them are overlapping. and what we suspect right now and don't know is that probably companies are using the terms in.e x fairly different ways. so if the data is going to be useful and comparable across compana(fzájjtjuu(áq here will have to be a concerted effort by stakeholders outside to sort of sit down and say what do we mean when we use this descriptor category? and that will have to happen.p ñ there's also an ongoing discussion about how to provide fñq+q context on this data.l=3wñ

the law allows for individual essentially a comment field associated with each payment most companies haven't used that and from what i hear they sd probably won't because from a p0hóñ compliance point of view the compliance officer at a company doesn't want somebody on the 3g front lines to be just free texting into an individual payment field and we're talking about millions upon millions of payments here. so, we're left with how does cms, how does the public, interpret the payments we've got. and there is some context language on the website saying what's meant by a consulting payment, what's meant by these other kinds of payments. but there needs to be an ongoing process of developing that. but there's also inevitably ir going to be a need for an bha ongoing societal process of understanding which payments are+7a&ñ we concerned about, which ones / ÷ are we okay with, and what do they mean? so that culture change in

medicine that i talked about that help to drive the move towards more transparency. v awt will have to continue, andn$j. so the data in the)q4r public do7 really an "i"çgm step and the result of a lot of hard work by thegc÷ people here and people across thebb÷ country in the industry. and believe me there are a lot of committed people in companies who are spending a lot of time and money to collect this data 3'ñ and ad@%qzue)ju)q ublic. and by the way, learning some interesting things, too. i've had people from companies say once we started collecting this, we realized we were payingj>ña$m the same guy from five different budget lines. that was really interesting.l9tw there's a lot of work yet to go in terms of collecting this data, understandokgt, and thend6té deciding as a society what to make of it. thank you. ñ

>> we're just going to pull up my slides.íz.yvxra9(t&háhp &hc% so i'm bill jord!?@i %9qñ elect of national physicians alliance. i want to thank the hot having us as well and also the i'm going to talk about the f 6÷ influence of pharmaceutical companies on doctors, and ny+g personally as a doctor, but aluv as leader of an organization that has taken on this issue as d9ú one of our core issues around professionalism. i don't have any disclosures in terms of receiving payments. áuájsju )ju and einstein but the opinions are my own. background on national z@b physician's alliance we were founded in 2005 to strengthen yzñ movement on behalf of patients and build a community that dvlk and really restore integrity and trust in medicine.&

we don't receive any funding from pharmaceuticals companies or device manufacturers. ÷ so let's talk about some of the ñ

and our education of up and coming physicians. and it really erodes public pfzd trust in health care.nq it's also clear as everybody mentions companies target physicians.yb 9iz[éñ drug reps -- oh, there's an error.i!e there were 38,000 in 1995 and 100,000 in 2005.vaj÷c!eá so this is old data but there was a drug rep for every eight doctors. and with a cost of about $12,000 to $13,000 per docto d country, which is enormous.ñ you can see on the chart on the )fp, right that detailing doctors made up about a quarter of the j promotional spending budget.1gm%m this is also old data but the per same. and actually more than half of the promotional budget was connected to free samples. so )u nd talk lj about that for a few slides.qxbyí just because i was asked in partyfd3 to talk about what are the gaps m xñ that the -- that the movement

forward in transparency are not addressing.íú-ubeym i would say that it's mainly q2lcq!%m ejt$u$at's going to free samples.1@ so 94% of doctors have a relationship with pharma. that's all the red frowny faces. doctors self-report that 83% took food or gifts.

on to prescribing medication.gd:ytíry tñ and 27% said they would dispense a free sample to this patient.n and about a quarter of them said they would give the free sample ñ6 w even though it was a different medicatioák)ln what they 'r),ñ thought would be best for the patient.=ñ and even more troubling is if this patient went on to get insurance, 17% of the doctors would continue the free sample 1sñ insured.zjú!v there's good data as well from clinics that bann ia1 ññc-cz increases prescribing of first $m. line drugs like the most appropriate drug for that @=z patient.l

report and they're more often vvcjz subject to black box warnings 4;@b=5 ue)u released to market.p obviously it's a major marketing tool that's very expensive to health care./fnb it increased patients' out-of-pocket expenses. 5dr5 accounts for a large portion of pharmaceuticals' promotional rw&v fvé$!xu expenditures and really is a main driver of#c 2cy the increase in spending.ó6ch out of the huge number of medications that are on the market, the ones that are most promoted are driving most of the spending.$q this is a report from ims healt vñ talking about avoidable costs in the health care system. data from 2012.1y÷ you can see $213 billion they tallied up.# you can see that major chunks of this are nonadherence which i often due to patients not being able to afford the medications that were prescribed for them u which is directly linked to advertising.]

and underutilization of genericsj'bew which is also directly tied to ix that.f;aô4 obviously there are a lot of alternatives to free sampl% some of them are politically challenging such as universal =p health insurance and government pc negotiation with prices, things áe5> that are good enouó háhe department of defense should be -hjtdtb

that's out of the good stewardship project and became the choosing@7 sñ@'ds is one example y.p )jjunñ(ñ that came out of that choosing z8; wisely campaign in terms of really need this medication or procedure. so definitely patient engagement is needed to engage in this issueèfv@ obviously a lot of the speakers ys"áñzz have spoken about the open áú:bhó&pñ payment sy t length which has been getting better as time goes on.é1nkaiváww this is just a review of the pi statistics that are already offered. as the data has been clean the number of individual physician &háhp &hc% records has come down.\ but, you know, hundreds of ay÷áo÷ thousands of physicians, and over $3d&#t&ion.>& and that's just over five months.&1m also i wanted to highlight 1300 teaching hospitals.czac)e and that speaks to the point of the formulary of particular hospitals being influenced by pharmaceutical 3j

obviously press attention has these issues to the public. making them more atn ñ# id(5#%9sr(pi this is one example that pro-puno3ó ejt that was making $124,000 in speaking fees. where physicians are already paid much higher in the u.s. that in other c]m & ven accounting for cost of living.,v& and then you'll see that amsa ez]jt&háhp &hc% has been a great partner in this doing a score card forbwa 9 institutions.jór,éwañv the schools that also have academic affiliates which don't always have the same rules as the school that they're affiliated with. information on drugs, including this example from consumer reports.ípf6$ toeá s conflict-free educationt!hdbç npa has led national grand rounds that has been in part od÷ydfté$s, funded by an attorney general grant and we worked with zfdé partners like amsa and community2q

catalyst to get information out )>fnn to academic institutions around the counhand practicing physicians to really change the culture, andr u of the seriousness of this efl< @r(t&háhp &hc% issue.yafdq so we can use transparency for good, and i'm hopeful this will ye"t(ju)áu b as the improves, it works as a shaming tool for better or worse. that's a speed bump for getting involved in these entanglements in the first place. and also allows for the /$ ñ possibility of loss of peer respect when people become aware of these relationships. also affects patient opiih patients are often very concerned when they find out e ÷ that the doctor that prescribed a particular medication has received payments from the manufasv nd can have career implications as academic institutions increasingly have $';añ strong policies around conflict of interest.a5y÷páb7rbp@r(t&háhp &hc% obviously we need to follow the6r8á money to know where most of the money is going and how to v6+ @r(t&háhp / g% improve the situation. ñ.g

this is a quote taken from a x n- ,bú (áá$u$e iom report, and i hope that this will be a springboard for action as we úif have better access to information on this issue.zpx 4ñúi0#1pçd yl4ñ thank you.áó÷ >> i think we had a wonderful ìáhp &hc% panel that has raised lots and >g lots of issues. i just wanted to highlight a couple key points. one is that there were a lot of í8jñm different industry players both pharmaceutical and mepjp+ey device manufacturers that emb gq dea of transparency.n%w some did it because of consent but i think moved forward being hgkh very open to the issues around &hp:÷ transparency. and some were real voluntary leaders, and so i really want tozqpr÷

cite the fact that there wasn't =uáum@qz1%f÷pç massive industry opposition, at " gé÷3e!ú-o cf1 o least at the federal level to this legislation.: q as allen said, it has changed their business practices from what we've heard.oyíx but that there really was a coming together across lots of groupsu0n saying that this information can be valuable to the public.; + i also wanted to point ou$ú í rodney's point on clinical research. and the value =)klowing when researchers have conflict of 7 ;e interest. senator grassley's office did an amazing series of investigations]of that highlighted some of these conflicts that weren't being reported to medical journals.hfzx and several of the medical ffcúñ journals have, as a consequence pgk9 over the last several years, really changed their practices on disclosure.x÷ and you could hear that from thezx@r(t&háhp &hc% doctors as they got up today and announced whatever disclosures that is a lot more common and we/of

legislation itself. xy a good thing for all people to know who's funding what information. a couple other points we heard /zuz about the legislation that there the physician payment sunshine act was targeted towards physicians, and as we heard wcfc different states have expanded pr#no that coverage to other v

at correlations.(ajp and then i want to finish with a question and then i'll open it up to the floor.qà# which is to rodney, because i 8l?ñ think his boss really has set : the standard for transparency on a variety of different ways. yj and in particular, the efi legislation or the push to cms directly to doctors, along with t/#[y the physician payment sunshine act transparency.[égxxwm,[a

cms ra5urá )(p)e payment g g data to " cr"ers and the physician payment sunshine act, r/í>c5gz the open payments website comingrõj7c0.fp online within months of each other that it does provide payments and the patterns of practice.zaid÷ information particularly as research has done to see what is going on there that will inform zilka us in the policymaking realm as to whaãol!q _t(qááp)y, what might be things of interest or 8x n/ and again, consistent with the 9 theme from senator grassley that we're better off with more information than less. allen and the doctors on the ÷ panel, if i'm sitting at home cky@fg@r(t&háhp &hc% and as a consumer and want to know what are these íx

relationships for my own doctor. how do i go about getting that informationù9yñi.v$pïc what's the best resource that rcl0÷ you think is out there for consumers to understand this new allen, do you want to take that one? >> i think right now there is some context information on the open payments website lhl 5y very general descriptions of $pñqaúy cf1 o what's meant by the different payment types in there. beyond that, i think you need tohx ñ /ñ4sf look to a variety of resources. and i think different people ylvrá$rju$ey interpret and value those payments.™÷ but you 3 organizations like npa, consumer) reports, consumers union as wellvdjb as to industry websites and

continued medical education companies and so on. so i think right nn2 uá to read broadly so they can make up their own minds. >> do you want to add to that?b÷ >> patiñ 4jáj$áqq physicians who see drug reps.c01xr it's easy to tell whether d[$u"uo see drug reps or not.3qeq> theyadvld be looking up their cix7a@vñúf÷ doctors on dollars for docks to see what money they are taking it's l5ncuáq#ul to figure out :dút#b",ç'$7 what the effect is on individual?$-÷swmhñ drugs. like i [°ñ marketing starts0sbíl seven to ten years before a drug comes on the market.6h-, a patient isn't going to know but they s#rp+e a conversation with their doctor. if there's payments on that websiter48 to their doctor about it. but i think patients shouldn't -6!r see doctors who see drug reps. gznuátjáp!out the 40%.c.+n 40% of physicians limit or d forbid drug reps to see them

about 1 out of 4 doesn't see yh÷ drug reps at all. doctors out there.+r=ñx$ ñ >> bill, a similar question. you talked a lot about samples.f7a my own physician. what are the questions i should j5 doctor's office when that is offered to me?6fé >> say no.:ózop >> yes, just say no.>s work.n xrç i think that all patients should ask their doctor do i have other alternatives to what you're this and any alternatives cjbb including the cost.f y>5÷tqaas and that that often leads to a ] better decision both for the patient and the doctor.ziy &úñ i uy/)háhat it's great for patients to become more aware : and to think twice about seeing 1hijñl doctors that have clear reé cy coming into their office. it's not always possibth%kxf(ñ0u9

but i think having more of an ezv activated patient makes a huge í:ojt&háhp &hc% difference in terms of thinking about these issues. >> samples are the most clf$a= effective marketing tool that pharmaceutical companies have. to see the look on the doctor's face when you say can i have a an sñ:ñolder time-tested medication, please? and really it would be the best thing for your health. >> you also mention consumer tz[y look, who do studyçi the drug costs anda jw effectiveness and they're good rux]awqáá they have. i'd like to open it up to the audience to ask questions. wait until the microphone is n÷2op handed to you by mr. mcneily and your questions for this 0xv9)j @r(t&háhp &hc% pane,]2÷d m right here in the front.8ó&w4/çifh"ñ

>> joyce freeden fmi1h> t today.@@ç i was interested in what you jo:ñ said about how pharma companies have different marketing targets now and that they are getting into who does the doctor's son play baseball with and all that. is that a relatively new thing k and can you give examples of vd .kfe what they're doing?/o,ykte/nhñ9gé >> targeting people around a physician is not new. so the tarb@r-d doctor is the atom and everybody around them 7tsñ is the molecule. so that's not actually new.i)ñ while physicians know that a drug rep who comes intg $ office is there to sell them !ñh something, they are not really bf÷ being suspicious of their ]vt receptionist or golf partner or their friend. 0s9sç[%iátázwy if a marketings"omqf3÷ message gets conveyed through another person whov3vs isn't their sales rep, it's much more effective.;dvjneásp)keting

messages are not necessarily about using a specific drug. it might be that the marketing s message might be that excessive sleepiness is not a joke.2f$@ it's a real condition.7e% ç low "t" is a tragic epidemic. or that a particular competing drug is so problematic no one should prescribe it.j so every drug on the market is j/s q8] 15 to 20 mg associated with it.rmñ have nothing to do with the drug itself. it's a very difficult to figure out.m:"m >> other questions from the aud yes.9j)ó( 6déuwéñ you raised an interesting point drkj during your discussion about 0828 marketing practices and one [cjf thing you mentioned is one place practice you see around vya÷ and as you on the panel likely

know, there are many fire walls '.d÷÷2q in place to ensç&t ád accredited providers are prevented from allowing @vvñq pharmaceutical companies or commercial supporters to have • undue influence over the content$@ of those cme events, the attendees.rzlñ0 ?r but as you also may know, this 80n is an issue that's kind of come q%s under a little consternation during the rule-making process. the "wall street journal" recently reported that cms has essentially changed their position or interpretation as h ÷ many as five times on whether cme payments should be reported..py6y so my question for rodney and % for the panel, you may be able to provide some consy#on the ú! congressional intent aø reporting for accredited cme k.s payments, but especially ep]]fñ considering the unique reporting>kvzúugi challenges considering that thatjie firewall is in place to make $ [h sure that the

manufacturers or the pharmaceutical companies don't 5÷]çx #rz don't know, for example, who the speakers are that are being recruited for those events. how could we overcome some of /b.sula8y2y ÷ these reporting challenges?r[r was there any conversation on éñ ñ the political side about whether those payments should be ê reported.h14hñ are there any other thoughts on the panel about reporting for #z continuing medical education? >> we'll start with rodney and líñ then allen.çtf >> cme, the conversation there is ongoing. that we spoke to cms, we talked to folks who were from the cme x+ñx sidui3"áuj$u$roughout )fh last summer.gt+ cms, they issued their cúw regulation as it relates to

have that to become more l1.a;w8f subsl8 páed, expected that the questions about how the report ing there worked prior to aggressivelv jurt$r'to the world because the cme world usi% zq is much more complex b7 npçi &háhp &hc% the nature of the blinded transactions that occur there.

good morning welcome to the woodrow wilson center. we become the ambassador of italy. good to have you. good to see you frank islam from our national cabinet. and i should be pointing out others but welcome. it's good to have you here in

the wilson center. this is a signature event we're doing on energy. it is let from january kalicki. you will hear from him in a moment. this short book you can all read it by tomorrow -- no it is truly an expert take. they have done two editions of this, an expert take on energy security -- energy and security, as they say. looking at global trends in energy and putting it together and looking at where we're going globally. today today's event we have looked regionally at eurasia and east asia and north america. we'll continue on africa, the 34i8d east and other parts of the world as well. the idea today is to take stock globally where are things goingich. and we're at the time where oil price is dropping and a number of conflicts around the world in which energy is in one way or another part of the equation. and there are other opportunities in places like

north america where energy is also a huge opportunity in people coming together. so you are going to hear really a broad overview today on what the trends are. this is an issue that matters a great deal to the administration, it matters a great deal to congress that was [inaudible] yesterday. and hope flyfully we'll have great ideas for the future. we invite you to be part of the discussions moved forward and today you will have a fabulous overview of the entire world and you will hear later from the secretary of energy as well later today. let me turn you over to january. take it away. >> thank you very much andrew. great pleasure and thank you for your kind and welcome introduction. and as andrew mentioned this turns out the on that particularly important time four

regional event here at the center. and also we'll be joined by secretary ernie moniz about 11:30. so we can look very forward to that. we're fortunate in the meantime to have a canal of the ed morse andrew slay and david goldwyn. ed morse heads global commodities research as citi group. ana depalacio is the former foreign minister of spain and will speak to the 2015 european energy outlook and key issues in the e.u. and the e.u.'s neighborhood, including ukraine. and david goldwyn is the former special envoy and international energy coordinator under former

secretary of state hillary clinton and david will focus on the u.s. domestic and foreign action agenda based on ed and ana's remarks and as a segue to ernie moniz. in fact moniz joined me and our authors of the book. and there is a sample of the book and even order forms -- that is the oechbtdend of the advertisement -- outside of the auditorium. and it was published by the wilson center press and johns hopkins university press. energy and security. and the sub title of our second edition is "strategies for a world in transition." and little did we know what this transition would be when we were putting this together. second edition already in its second printing and it is a book that offers both regional and global perspectives on energy,

the environment and technology. and service as a framework for our bimonthly energy series here at the center. in the book we acknowledge the progress made, especially in the domestic front. although a lot more has to be done. and we point out that that has to be done not just here domestically but in developing regional and global policies. and we propose a global energy security system, or what we call gess with five main components. first to propagate the unconventional energy revolution abroad. second to create a global natural gas market. third to forge greater coordination of emergency response measures. fourth, to lead a multilateral effort to end energy poverty. over 1.4 billion people still do not have access to electricity in the world. and fifth, to commit to global

engagement and protection of sea lanes. so that is a framework that you see edwards thetowards theened end of the book it is full of regional ideas. with the shift of the global energy balance from east to west and advent of lower oil prices, we have opportunity to make real progress on this agenda, and more broadly environment, energy and technology. and i look forward very much to our panels' views on these items and more on our policy agenda. and without further ado, i will segue over to ed chief of global commodities research at citi group to get us going on the overall situation in 2015. >> thank you very much. good to be here with people i've been friends with for a very long time. the chapter that amywe were

responsible for in that big book came to the question of the opec. and answered the question if it was likely to be as important in the next 45 years as in the previous 45 years. and the answer was almost certainly not due to structural changes happening within the world. happening within oil-producing countries, if not slightly less than the consequences of high prices and bringing to bear new technologies to exploit. including u.s. resources shale resources that reeves ss previously had been beyond the complex of the international exploitation. a lot of that chapter is unfolding and in sets the stage for 2015 which opens with significantly lower pricer than

the year before and opens with significantly additional disruptive changes that are likely to be occurring in the oil market over the course of the next few months the next year. as oil prices test the cost of producing oil around the world including in the united states. and has as one of its consequences kind of unknown disrupted, unintended consequences that result from a world of ultimately lower oil prices. so what are the three trends that the market is starting with now? trends that are continuities from what had transpired in the latter part of last year? first a weak economy. last year we reckon global gdp growth was 2.7% that. compares to expectations of 2014 gdp growth as of the middle of 2013 for 240u014 to see 3.4 5 or

6% for the world as a whole. a lot of that decline, some .9% was situated in emerging markets. china which performed less well than people had thought. the other large merging market countries as well india, brazil russia for obvious reasons related in part to sanctions and turkey. so there was a radical deceleration of growth in emerging markets. we think this will be a weak year too although not as excpected and that is because low oil prices tend to have repercussions around the world in terms of spurring on economic activity. the imf blog had has some very interesting calculations on this. our own calculations are similar to those of the imf. we expect that if prices stay

more or less where they are, the gdp impact of that globally by the first or second quarter of 2016 could be as much of .8 of 1% of gdp growth. and that will bring more oil demand although probably less demand than what's associated with the global gdp growth because global demand has become less energy intensive, less oil intense. and china is kind of leading the charge in losing the energy growth and --. a second feature has been the shale revolution in the u.s. we expect that the continue. we expect there be no way in the first six months of the year to show a decline in the rate of growth of u.s. production. so u.s. production is likely to grow by a rate of over a million

barrels a day per year for the first six months and then the consequences of lower cap ex on the upstream will come in probably an accelerating way over the rest of 2015 so that by the end of the year we expect u.s. production growth will have slowed down from 1 to 1.1 million barrel a day increment on analyzed basis to something on the order of 2 to 300,000 barrels a day analyzed. the third feature of the year has been saudi marketing problems. and yes, the saudis are selling less crude oil. they are consuming more production at home. they have more refining capacity than they used so. so rather than being an exporter of 7.3 million barrels a day of crude they are around 8 or 900,000 barrels a day lower. still the largest exporter of

crude in the world. as they discovered over the course of 2014, they were losing market share considerably. in the u.s. market they were exporting around 1.6 million barrels a day just under that in the last four months of 2013. in the last three months of 2014 it looks as though they were exporting less than 850,000 barrels a day to the u.s. a drop of more than 45% overt the course of a year. they found it very difficult to market that crude elsewhere. europe because of difficulties in the european refining system and competition against other crudes. china though in particular where their exports have been falling and where their market share has been falling even more and where due in part to u.s. sanctions and chinese buying habits, by

buying oil on a pre export basis, the market available to those competing in a market are shrinking. and particularly in a country where we reckon incremental oil product demand last year was less than 2% and we think it will be less than 3% in 2015. so we've had this well publicized clash between saudi arabia and the shale revolution in the u.s. as the market unfolds. briefly we think the market will be more disruptive in the coming weeks and coming months. we have a new pipeline structure open to bring canadian sour crude to the u.s. gulf coast market. the flow is going through the seaway system at the moment. look as though it is an incremental 400,000 barrels a day coming from canada into a market where competition by the saudis venezuela and mexico, among others is particularly

acute. and this will probably have significant -- pose significant challenges to sour crude producers on the u.s. gulf coast. to say the least we have iraq ramping up and russia increasing exports, actually, into europe. all coming in the first quarter. leading to lower prices and in all likelihood if we separate the financial flows from market fundamentals. but weaker market fundamentals going into the second water when oil demand tends to plunge compared to the middle of the winter. so we think there will be much more difficulty ahead before the market begins to settle. markets balance. they always balance. it takes a long time to balance. there are many ways that the market can balance. i suggested one in terms of lower increments of u.s. production growth by the end of the year and another, increments of higher demand by the end of

the year. but i think the year will be challenging because of the inintended consequences. -- unintended consequences of very low oil prices on things we don't really know about. we have opec countries. other than iraq by the calculations of adam sminski's e.i.a. calculated that opec revenues other than iran were around $825 billion in 2013. and it looks as though their recent calculations are going on the on the high side. and it may be that 2015 will bring less than 400 billion of opec revenue to countries that are challenged by fragmentation problems by general governance problems, by problems delivering to their publics. the concentration of paying from lower prices is a sovereigns that depend on oil and gas revenue, whether they are opec countries or non opec countries

like oman or russia. and we don't really know the unintended consequences of this. i was in g.c.c. countries in the middle of december talking to -- more to locals and to ex-pats who reminded me about the unintended consequences of saudi arabia and kuwait raising production by about a million barrels a day a right at the end of the iran/iraq war when the world expected more oil coming out of those countries. oil prices went down and one of the unintended consequences was the iraqi taking of kuwait. so we don't really know what the unintended consequences are. but they can be chilling. and they could give rise to more disruption. so with that i'll pass the baton. >> thank you very much. and yes over to ana. >> thank you. first of all if i say it is a great pleasure and a great honor for me to be here. it is not rhetoric.

this is the transatlantic relationship with content. and if there is an area where today because of geoeconomic reasons that you have hinted at, but mostly because of strategic reasons there is is precisely in energy. so now a disclaimer. i will be with paint with big brush strokes, and when you do that you exaggerate. my disclaimer is that the energy policy of the european union is a policy in the making but it couldn't be otherwise. and it has a lot of contradiction. it is not easy, but honestly this is a working progress. why, if you take the prospective of the construction energies

and there was an ambition of having a common energy policy but ambitions that have not yet been fulfilled. we have just kept pushing the common market in electricity and gas. this was the last deadline. we are far from there, but this business today. it is what we do, in common. the best way and more descriptive way. and in the last -- the one that just what we do there is an important novelty and you will say it's worse, but we are a construction of law, and it

means a lot. for the first time we have solidarity. as for the rest a lot of contradictions. the community has to -- is in charge of security of security of supply but at the same time every member state has an absolute freedom to have it's mix, energy mix, so on and so forth. the second, the second issue is that in this evolution, we have gone from a policy of the '90s, the policies that we're now in. in the '90s, it was market oriented and short-term oriented. this was before 2000 and in the run up to 2008 the other

marking moment energy policy had nothing yet hijacked by climate change policy. 2008 could not mention competition because you would be -- immediately. there was no security of supply. there was no concern about the competing. everything was geared towards this issue of climate change. second characteristic is it security of supply, which is really our biggest problem. why? first because of our resilience of our system. i will speak about it later. because of our external dependence it goes to almost 90% -- almost 70% in gas, and

40% something in solid. with this, how come that woee don't -- in the situation but we could do -- never with the ambition that this would be a changer as it has been in this country. the ambition should be there. it isn't. this is really simplistic. there are also reasons of how our property is structured. you don't own -- you have no rights on what is under the -- but the last thing is when they say you have a reason -- okay but this is not realistic.

the european union makes it reasonable, but it is not realistic. the defense is 98% on oil. with this, i think that i would highlight four challenges. the first is to keep abundance between realism and ideology. okay. do it, realistically. today, the industrial electricity in germany is 13 cents. it is 5.5 cents if my figures are good. or another residential electricity price it more than double in europe than in the u.s. in spain my country, because of our betting on renewables we

generate 30 billion euros which is a lot of deficit that we, we change that by changing the frak framework of the responsibility. the first thing that we have to understand is that 60% of our infrastructure has to be renewed in the next 40 years. this means 2.2 trillion euros. at the same time what we have is that -- it is getting out of generation. in spain and germany we're closing plants because it is -- companies, many companies have existing models on the brink of just bankruptcy. the third important challenge is

to balance public and private. 2.2 trillion. it must be an imbalance. you know that president of the european commission launched this idea of 313 billion euros in the next 30 years. it's for infrastructure and i don't know how much is marked for energy, but it is not sufficient. we need to find a better balance between private and public. but we need to have a short vision, and the united kingdom is a good example. they have bet on nuclear, and because nuclear means such a big investment, they have proposed a fixed price to warranty the price. and today, in europe many times

the wholesale price of electricity is zero. which by the way doesn't benefit the consumers. . the last challenge for me is the national nalal association. as i have hinted, we think we have the market. policies are made in the member states. for instance germany goes out on nuclear from one day to the next. not at all. but this means a lot for the system. and this is something that there, we have to really put our words and our deeds in order. because we speak about this internal market. now, if security of supply is important, because of our dependence this has a name

today, it could happen any time but not to the same extent. we import around 14%. but for the moment, the name is russia. and the concentrate today in ukraine. and this is where this transatlantic community of interest and purpose makes sense. we need to stand together in the sanctions, but as you know the sanctions for us and are important for you. many americans told me that they will never accept the sanctions we did and we are there. there are some that are unfortunate. and a disclaimer. what he is said to have said. he said that if conditions

improve, we should scale down, which is different from what we have been reading in the news. so our policy towards russia is a point where we really need to -- with this space. sanctions first, and the support of ukraine. ukraine, we cannot expect a success to start tomorrow. we have to be persistent and consistent. and they have to get their act together. in order for ukraine to have their act together we have to support them and to support them in an effective way. there have been criticisms and with this i will finish and we can touch up on, there have been criticisms on the world bank, the imf have been doing. i think that these are not really that founding but let's

not forget in the world bank and the imf between you and us, we have 37 or 38 of us, and you 16 point something, so we have a majority. so let's just put here together our -- where our mouth is, and just understand that this is a challenge in the long term. >> thank you very much. >> thank you for your leadership in this series and in the book. i want to acknowledge robin west, one of our contributing authors in the house today. all of what we heard this morning about economic volatility and policy confusion in other places questions what we in the united states should do at this moment. i offer three framing comments. now when we talk about energy

security, it's really not just oil security any more. in the u.s. we're talking about comprehensive energy security, the security of the grid the stability of the grid the resilience of the system, oil is still part of that, but it's more of a comprehensive picture. the second reality and political reality is that we can't talk about ways to increase domestic production without talking about the environment and the consequences that come with it. it's two sides of the same count and we will not have a reasonable political conversation about any of these issues unless we deal with both of those. that may mean as we try to grow the productive bait that we have to deal with issues like methane. right now the polarization of the debate leads to paralysis. also avoiding complacency. being self sufficient, not caring about the middle east, and that's an understandable perspective if you're looking

ahead sixth months. this is not the time to drop the strategic agenda. we should be thinking about what will happen when we come out of the cycle. right now with things like low interest rates a light jpgs competitive advantage, this is the critical time to act. there are a lot of suggestions in the book, probably hundreds of them but i pulled ten that are still relevant right now that i think we ought to think about. we had to take care of business at home before we take care abroad. but there are five steps domestically that remain important. the first is investing in infrastructure. this is really the time as we're building our economy where we're investing in a smarter grid, or a safer grid, but also building out the energy transportation system for the country. we have great production and it's not close to the command centers. we need a system of pipelines to

move product to the southeast move oil east to west. and along with that, most of that will happen for private sector investment and there is a lot the government can do to expedite that infrastructure. you also have to think regionally. it's not just us. there is an enormous amount of resilience. the ability to help each other in the case of energy to have reserves over the border. that's important. the second is that we suggest in the book and there is a huge consensus, is market based approach. larry summers had a different version that came out a little while ago. we think revenue neutral is the easiest to do, but a market based approach says we deal with this issue, we create a level playing field, and we have predictability.

the third is to continue investing on the key bottle nexts, that is battery storage and sequestration. it is a key for coal, a huge rourt worldwide. in 2040 it is projected. it might be high efficiency boilers. but we have to deal with coal, so that rnd agenda needs to be sustained. the fourth fourth is to harden the productive base. making sure that we can sustain the growth we had in oil and gas, the biggest boom for our foreign policy that we have had in decades. it has given us norm capability. we have to make sure that when we come out of this low price cycle that we have the ability to sustain that so we don't go back to import dependency. we thought about it in 2011 and

said it in 2012, to liberalize exports of natural gas and crude oil. a lot has been done on the imported gas side. crude is really next. even the issue is when demand picks up and we're below margin, will they participate in that rise? will they be able to produce the supply and meet global demand or not. and that means we have to join the global economy in the way that others do. so rather than saying if you lifted the band today we would not have much exports. now when it is close to zero. we should think about how that is important going forward. also when gasoline prices will rise, and they have nowhere to go up but, but they will slow that rate of growth. and that is -- the fifth one i

think, is to address the climate repercussions of increased production. that comes down to methane and the d.o.c.s. they're thinking how they will regulate through methane. we need to think about global production and gas prices without acknowledging it will have an impact on the climate. we will do it in the smartest and safest way. it has to have a concrete man manifestation manifestation. the first of our recommendations is the boom abroad. it is about the technology and the regulation. you would be surprised or maybe not about the great concern in european countries. people worry about their water and air. there are ways to do this. we have tremendous practices at the state level. we should be teaching that to others and i think in this

hemisphere next, the two top candidates and it is an enormous help for paris. if you have serious climate reduction, it will come from substitution from natural gas from coal and from diesel. i think the more that we can make gas cheaper, we forget that gas is here but not cheap anywhere else in the world that remains important. creating a competitive market in oil and gas, really, part of that is exports, but a lot of it is the european agenda. what are we going to do to make a real integrated market in europe. we can't deliver more l and g to europe right now. but if you could sell it, if you had a real competition policy if you could not buy the capacity and use it there would be space for other supply. it is really helping the europeans help themselves.

that is a diplomatic agenda for us and top of the order. and russia and youukraine is the reason why. the pending implosion is a big hit on central america. we talked about that here before, but they have extremely high electricity prices. uncompetitive, and a lack of finance that would blow a hole in all of their budgets. we have to help them convert to use gas, and integrate renewables that will cut emissions and electricity prices and it will be a sweetener and it is something we can do. africa will be helped by low prices and gasoline but it harmed by the lack of resource revenues. helping africa get access to electricity is an important agenda. some of that is distributed. other resources. but some of it is base load as

well. for them it is also a conversion from coal to gas. in asia a highly insecure area from a resource point of view, exports help in that agenda too. one is whether we ought to get a two for. one to help asia get better oil security, and to help ourselves repair and renovate the spr by thinking about taking some of what we have in the reserve and selling other countries special drawing rights to access. we have more oil than we ahead to, but don't think we should sell it off or make it go away. we could give other countries the right to purchase draw down down rights. and the final recommendation is a process one. we're in washington. you have to have a process

recommendation. it is not a kpre hen si energy policy which we don't and shouldn't have. it is still a hodgepodge and still a competition of agencies. i think president obama had a great idea with his counsel on energy and climate change. you have to deal with those finishes together and you can't wag the dog from the tail. it and all of the efforts, you have to have white house leadership to pull these folks together. and an agency can't lead it the secretary of energy can't lead the whole government. you have to have white house leadership on climate and

neither one of them should be silent. >> i will just ask a question of our panelist and look forward to questions and comments from the audience. the question is, in low pressuring to the recommendations that david gave to us are there any others that you would add to or any comments that you would add on to david's list in the contest of the following question. we're talking about low oil prices. some people feel they will be here for a longer period of time. if that is the case, does that shed any different kind of light on the kind of strategic opportunities or the proposals they have sent forward? shall i ask for comments from -- >> i was going to comment on the assumption of low oil prices for a long period of time -- >> but it's a question not an

assumption. >> no nothing -- nothing cures low prices like low prices. i expect that there is a problem related to market operations that eluded that agenda, and that is markets left to their own devices and likely to exacerbate -- we can see it in the shelving of projects that would be bringing new supply on in the framework. and unless there is some concern of that, which is hard to generate in a period of low oil prices, the markets will be sight and there will be inevitably an energy security problem on the horizon. >> i fully agree i think the main impact in the rest of the

energy panorama is a show of -- is how to assure that we keep long term programs with a short term market reality. i want to make another comment. i think that you have highlighted and you're absolutely right about the regulations that you have, and that you have experienced -- i think that this goes beyond. of course i'm going to do a pitch. from a perspective we have of course the mechanisms of -- to solve the controversies and we cannot. this goes far beyond. i think that one of the

important parts of this is the energy chapter. and we should -- this issue of being together on one of the biggest challenges that we have which is russia and ukraine. it should push us to work and not to be hijacked by the exception of france or by how you measure. that we measure it through the water. you know, it just -- i'm not sure that, if it was this is, we cannot let this -- it is geopolitical, first. it is to be hijacked by these issues. i think that working on the energy chapter could be good.

>> it is an interesting point, it is about the low oil price cycle. i'm curious also. i remember in 1998 when oil was $10 and the people were panicking and it was not more than a year and a half before it went up from $10 to $18 to $25. and the swing from 2008 was fast as well. it turns quickly quicker than we think. and i agree we need to be prepared for it. how long do you think it will last? >> that is a question that you don't leek to be asked. >> i think there are good reasons to think that you can find stability in the market for a period of time, could be an extended period of time. in a $70 to $85 range. if you want to debate the

adjustment it is another issue. i think there is something very new about the revolution that has a lasting impact and it is hard to summarize it. i will do my best. we typically think of a conventional oil well exaggerated by reservoirs in deep water, or found in iraq where you drill and drill more. and typically the first drill is the cheapest. and then has you extend production, and production conventionally becomes more difficult, it becomes more and more expensive. and the ultimate well before you close a field is the most expensive well. and we're seeing very expensive wells because the cost of the recovery is not worth it. it is just too high.

and the unconventional revolution, the first well is not the most expensive, the least expensive and the first, the it is really unbelievably extensive, they are not only extensive but they're dispersed throughout the world. i think as we have seen in part on the natural gas side there are a couple things to think about. one is drilling for natural gas in the u.s. it is down about 78% and each year we have more production than before. the growth from august to when ever the last report was out, it is 4.1 per day. so you are growing but you still get more. it's like an accordian. if the price incentive is there

to drill more you can produce more. so we are changing from an expectation of the world where we're used to thinking about the call on opec, the international energy agencies, and others that talk about the call on opec, and it is more like a call on shale. it is the expandable resource base that didn't exist before. so i think there is hope. escaping some of the history of while springs between low and high prices. that depends on how much the shale revolution can be exported around the world. and what the mark mechanisms are in those places. >> thank you panel, and now it's time for the audience to put a few questions before them. i see a hand up there, yes?

and would you please identify yourself? >> did you -- >> we have a mic we would like to hand over to you as well. >> did you say that the shale output would be how many million barrels. >> i said in six months it is likely to be what did was over the last 12 months. a rate of growth of about a million barrels a day or so. the reason for that is multible. there are efficiency gains for the first -- it will be a cushion of a significant drop in the cost of services. there is a half year of uncompleted wells. been the cost to complete is

very low. the structure of the system if you add up especially add up and go forward the bay son if you forget about the others, it is such that the momentum will continue that rate of growth for a long time. and it may surprise those who are testing the resiliency of the system, how resill yept it is likely to be for awhile in a hour price environment. >> just another question. >> yes i said we would slow down. we will slow down the rate of growth. i think it is unwide tose to say it will go negative. >> does europe make it's own forecast for when the united states natural gas might be available to europe or do you rely on the eia estimates. >> no, we pray for it to happen

as soon as possible. frankly it would be symbolic. of course what happened from one day to the other but symbolically it would be extremely important. the feeling of dependence on russia for the gas, and we mentioned many things, but the pipelines. the north stream that leads germany to russia it is a european company. they own almost 25% of the storage capacity in germany. >> thank you. another question in the back. lady in the back? >> hi i have a question for ed, could you, you touched upon this briefly, could you say a few more words on how, in the short and medium term low oil and

coal prices will affect the energy mix and policy decisions in china, and also turning it around perhaps in the longer term, and low the hour growth command in china will affect the markets for coal and oil for these commodities in the future? thank you. >> very briefly. i think since china's economy is partly top down, partly bottoms up, it is directed, and part of the direction is essentially to be able to produce twice the amount of electricity with the same volume of coal. to increase the btu content. reduce the sulfer and ash emissions. i don't think it will reject the

per project projectory. nay have been very reluctant to accept oil and prices. they won that battle on a export -- a low oil price environment, is a low natural price environment and is one where a spot market is likely to provide a significant growing volume of gas, imports into china where the infrastructure is more than ample. so i think the lower oil price environment translated into a lower gas price environment will have an impact that will change

the trajectory expected by agenciesly the iea. >> very good, question from the gentleman in the back. >> i understand that a great many oil fields have become exhausted over time leaving behind about 50% of so called unrecovebles. do you know if the recent developments that got a great deal of publicity will make it possible to revisit these oil fields and recover the unrecoverables? >> the shail reveal revolution has

total recovery of fields that once thought to become close to exhaustion. recovery rates have gone up considerably and they can be as much as 25 to 30% with resources in place. a number of that is roughly double what it was thought to have been two decades ago. on the unconventional side around 5% of the known resources are currently expected to be recoverable. but the technologies are growing at a rate yielding 20% to 30% gains per year. going from 5% to 15% of recoverability.

>> i think we have time for one more question. the gentleman in the red sweater there, please. >> it is for david i think, mainly. i guess i'm curious about this notion of coal continuing. and getting to sort of zero emissions with some sort of carbon sequestration technology. is it really likely and what approaches make that cost effective compared to the greatly decreased prices for renewables and other kinds of things sources of electricity. >> i don't think we'll get to zero emissions from any coal combustion any time soon. i think the point i was trying to make is every projection

even if they assume a very large share of renewables, baseload energy, and in order to deal, i think we have to deal with that issue, i think there are multiple ways we have to deal with that issue. if you have a large hole in the ground nearby, carbon sequestration would work for them. the other thing is more high efficiency boilers. what you have right now would be a huge improvement over what you have right now. in china you have a huge amount of coal consumption and you want to steer them in that direction. and there may be other technologies that the d.o.e. can look at. it is ways to capture emissions or using better coal.

i don't think any of them are perfect solutions. i think it is a reality that they will be dealing with them. it's not cost effective in a lot of places. we're much better off continuing to invest in ways to minimize the impact of coal combustion than just trying to wish it away. >> there is a quick question i think we can do that, do you qualify? all right, please. >> thank you david nelson with g.e. my question is what is needed politically to get european countries to exploit their shale resources? how would you encourage it? >> first thing, i would find a way to reward the owners and all of those that -- honestly this is not all. i, in spain for instance we

had a big debate. one thing i would do, the second thing, i think that for many years in europe there was an idea of don't ask don't tell in terms of electricity generation. so people don't know. and this is fine, but people don't know what it cost because you don't -- i mean i'm not able to read the reseat of the electricity every month. i don't know what i'm paying for the renewables. people should know and should know that we are bound to be dependent on a import and the efficiency is very good. >> thank you on that very spirited note, let's go back.

they will be joining us very shortly. [ applause ] screeria -- nigeria. -