the opec countries, it would lead to, at the very least, a substantial depression and economic problems. quite possibly, violence of different types. i look on this in a way as deciding whether or not to lance the boil on your foot. if it keeps getting worse, and you do not do anything, at some point, you will have to deal with it and it will hurt even more. if you go ahead and deal with it, you can start getting things better sooner. i think that the eight arab countries that are part of plus the two sub-saharan

countries, plus the two south american ones, they are all dictatorships, autocratic kingdoms, and will go through some real tangles and difficulties and real, very substantial, serious problems. if we do not do something about it, one by one, the rest of us are going to go through some pretty awful times. once half the wealth of the world is in the hands of 12 oil exporters, what they can do to and with us will be very unpleasant.

>> hi. i am a hopkins student and a federal employee. you spoke briefly on security vulnerabilities and the electrical grid. specifically oil rigs and pipelines. >> refineries are a special problem because if you turn them off, and one of the things you can do with the cyber is turn things on and off, if you turn every refinery off and for a week or two or three, the catalyst goes. you have to get a new catalyst and you have to get one made. i do not know about the pipelines. haveefineries themselves

very substantial vulnerabilities to cyber. they are probably what most cyber attackers would go after first, i would imagine. >> i teach at the american university of iraq. for the oil the united states is not going to be importing, is in china replacing the u.s. as a buyer? the second question, do you think there is any value in the

reform bills, the dodd-frank bill that requires oil companies that have presence in the united states to declare their purchases from oil companies? introducing transparency in the oil market. will that battered the political downside? >> i think it is probably ok, but i do not think the transparency does much. the problem is not that people need to understand where the oil comes from better. i think what we will find is that if we succeed in getting another fuel to compete and actually get oil down to 50, 60, $70 a barrel, what is going to happen is about the same of oil will be pumped, but opec will get less for it.

it is really mainly about a transfer of funds. the oil exporters, and we have moved up into those ranks, those who sell oil will get less their oil because it has a competitor. i think that is healthy for the world as a whole. i forget the exact numbers, but i think something like 30% or so of american households are single mothers. 25, 30%. try to think of a single mother with a couple of kids trying to get them to school, get them to soccer practice, go buy groceries, get to and from work, however much driving she do, she cannot cut down

on it. isry mile she drives something that she has to do. for her to be $10 to $12 better off after filling her gasoline tank then she was when oil was $100 a barrel, that changes a lot. i think something like that can be happening all over the world. we have unemployment problems today, we have a lot of people working part-time that want to be working full time. we could stand people being able to earn more and take home more without sticking a lot of it into the gosh darned fuel pump. it is not so much country

versus country. i think that is what mainly as an issue. it is not necessarily the need for transparency. >> [inaudible] veryank you for a informative talk. georgetown university. what prevents us from using ethanol as a fuel source for cars? it seems like a no-brainer. >> i think it is, methanol is one disadvantage compared to gasoline is that has less energy density. you get only about 60% of the miles per gallon from methanol that you get from gasoline. but you get much better miles per dollar.

isis cheap enough and it pretty simple alcohol. it is clean, in an accident, it would burn more slowly than gasoline does. it has been used in the indianapolis 500 for years. the drivers see it as a safety issue. they can be made from wood chips. it has high octane. it was called wood alcohol for centuries. it can be made from coal or natural gas. substantial deposits

all over the u.s. i imagine it would mainly he made from natural gas here. the changes to the car is about $90 per car in the manufacturing process if you take a relatively new model car that is probably in the range of $200 to $300. in any case, it is much cheaper than modifying the car to drive on natural gas. although you can get that done in some countries for a few hundred dollars a car, it is several thousand dollars a car in the united states because we have very demanding requirements for the tightness of the fit and the type of material and so forth. changing the family car to be able to drive on compressed natural gas or liquefied natural gas is probably prohibitively expensive.

changing trucks makes a lot of sense because these are commercial vehicles and the change pays for itself within a year or two. i think there is no major reason for us to stay away from people the option to drive on methanol and gasoline. if they can drive on methanol, you can also drive on ethanol. it seems to me it is a very straightforward case and one can either get the cars modified by having a requirement for the automobile manufacturers or if you want to be less coercive, if you want to do it solely by

persuasion and regulation, you could say, look, under the transportation act, we have the standards and the car manufacturers fight hard for that extra little bit of weight reduction that lets them get their requirement mileage up. why not give the automobile manufacturers of very substantial credit, several miles per gallon, and all they have to do is say that next year, half of their cars and the year after that three quarters, have to be able to use gasoline, methanol, and ethanol? there are several ways you can go about it, but i do not see any downside from people who have made serious studies. i commend the m.i.t. studies on using natural gas in

transportation and another one. it was in the last two to three years. >> i will interject with one from twitter. what would a true global natural gas market mean for the u.s. and eu strategically? >> natural gas is a lot harder to ship because you do not ship it -- if it is liquid, it is not at room temperature. if it is in gas form, it takes up a lot of space. alwaysg natural gas has been something that can be done, but it is harder and more costly than shipping oil. oil, for many decades, they

cost the same amount for btu. btu is one burnt match. per btu, they were the same for decades. now natural gas is five times cheaper than oil and some things that were too expensive ofdo, like some types liquefication, is now becoming plausible to do it this natural gas is so much cheaper. and you've got more slack. generally speaking, people have stayed with oil for shipping. it is easier, i think, to

establish something like a cartel for oil that it would be for natural gas. natural gas is largely a continental matter. prettysians are working hard to make sure that nobody gets in the mediterranean or western europe. nobody gets natural gas that does not come through a russian pipeline. they use it as an instrument of state power with poland and ukraine and all sorts of other places. you might see for central and western europe, you might see more and more liquefied natural gas being shipped. it is expensive to liquefy it and the terminals are costly and people have been a bit slow to move toward large volumes. >> the gentleman behind the camera.

>> i am daniel with climate nexus. you have described ethanol as likely to be more expensive than methanol butfor a number of years, there have been claims that biofuels will increase efficiency and reduce the cost of ethanol. would you emphasize more research and development for methanol over natural gas? or do you feel they should both be pursued concurrently? >> in 1999, senator richard lugar and i wrote an article called the new petroleum, which was about moving to cellulosic ethanol. what happened is the enzymes to break down the cellulose have not come along as fast as most people hoped.

another thing is in order to get the biomass, the people who were jumping on the bandwagon since those companies to take away their waste, they will get that waste for free. the companies were not down. -- or not saddam. once they saw the people who -- were notnot doma dumb. going to make ethanol out of it, they started charging for it. brazil has a big advantage with its double growing season and its climate and the soil. it is nowhere near the amazon, it is done by sã£o paulo. it is going to be awful hard for ethanol to catch methanol.

it may be close, depending on how expensive gasoline is. it may be close in some countries on an equal energy basis. about say one thing ethanol. tributeect and grubby to the junk food manufacturers because their lobby, otherwise known as the grocery manufacturers association, has done a superb job of convincing an awful lot of people that there are some serious food fuel conflicts and producing ethanol. -- in producing ethanol. there are, but it is a particular category of food called fat. here is what happens.

to grow the corn, 97% of our corn is in animal feed corn. if we want to increase the amount of corn and wheat grow for corn chowder and corn on the cob, we can do it easily and to vote taken a land away. if, for the normal ear of corn, if you grow it and harvested and take it to an ethanol plant, first to extract the proteins and oils, it is good and it sits on futures markets and everybody agrees it is good animal feed. then you have essentially the cornstarch.

cane are three things you do with the cornstarch. you can turn it into ethanol and drive on it. which is fine but more expensive than one would like. two,you can take it to the consolidated animal feeding operations you jam the cornstarch down his throat. steer. it is hard to digest. of have to pump him full antibiotics. gets sick. that degrades the antibiotics for use by humans. thenity's build up and entire purpose is to create cholesterol for you and me.

it is called nicely marbled beef. if you do not want to drive on it, you can turn it into cholesterol. the other thing you can do with it, only a third of american children are obese, and they figure there is plenty of room for double digit growth. [laughter] you take the cornstarch and you turn it into fructose. it is about four times cheaper per unit of sweetness than dextrose or sucrose. you make a lot of money making junk food and you get double- digit growth in obesity for american children. it is, in fact, the case that there is a food fuel conflict with respect to ethanol. whichbcategory of food, the junk food manufacturers will not tell you about, which really is the alternative, is fat.

>> way in the back. >> i am colin smith. i feel like you were kind of getting to this when you are talking about solar and issues of the grid. the nsa and feel that distributed generation can be the solution to our grid vulnerabilities? >> absolutely. one of the things we can do that would help a lot against several of the threats i described to the electric grid is to make it possible for the grid to island and island into distributed generation into micro-grids. the technology is here, or very close to being here.

it makes it a lot easier to secure the grid is you are not using a transmission and distribution. electricitying your from the rooftop and storing it into the basement after it is produced. you will not do all of that at once, but even if you have 30% of your electricity coming from the roof and stored in the basement, and you have something like a major storm or an outage, having 30% of the electricity you would like to have and the difference between having zero is titanic. once you begin to be able to go with distributed generation, even partially, you will not have an aluminum plant outside town.

and have it running on distributed generation. it will have to use the grid because it takes a huge amount of electricity. able to do exactly what you said, distributed generation,i think mainly using solar, distributed generation with solar looks better and better to me all the time. the key things that would take it from partial use to substantial use is affordable storage. i am not talking about lithium- ion batteries that you can use on your tesla. i am talking about simple, cheap, safe batteries that can store affordably.

they are coming even faster than i had hoped. greatwill make a difference and are being able to have electricity will we want it and when we need it, it even if a big chunk of it is still coming over the grid. >> right here in the blue and green. >> my name is chelsea and i am interning at geo strategies. you said they were making some changes in china in provinces and the government -- who is heading that? since last year, it seems like

they have gained more momentum in the government. i attended a meeting last week or the week before and i know from -- russia has a lot of knowledge of these attacks. i am assuming china has the most influence on north korea. i was wondering if there has been any international dialogue on the matter. >> if so, i am not aware there has been any dialogue. disturbpeople did not themselves too much as long as it was just part of the chinese nuclear capability and russian nuclear capability, which we kind of lived with for a long time. they would probably like to do a lot of things to us, neither

russia or china would like to destroy an excellent customer. pairi think that emp is starting get some traction and discussion in the government. it is not a major subject of discussion on the international front yet. it ought to be because people love to shield their electronics from the pulse from the sun. that will, at some point and it can take out our electric grid just as much as a north korean satellite with destination. the first question you asked was about the chinese leadership, the best thing to read is

"petropoly." petroleum and monopoly. there was a chapter in the end about how china got going on methanol, what happened between a central authority in the big oil companies, chinese oil companies in the local provinces. i will send you to his book. it is terrific. >> i am going to take one from laura on facebook. could you please address the national security implications of a north american energy community? the opportunities and obstacles to create energy cooperation with mexico. >>i do not know a lot about it. the reason is i have gotten less and less convinced that location of energy generation matters much.

i think the major effort ought to go into local generation and storage. and for oil, the effort ought to be -- it does not do a great deal for us if we buy mexican oil rather than saudi. somebody else will just buy more saudi oil becausethis is all kind of one pot. there are some nuances to that. the refineries and different types of crude would sulphur content. as a general proposition, it really does not matter that much where the oil comes from. the key thing i think is

getting something into the tanks and the filling stations in a year or two rather than five, 10, 15 years, that can compete with oil. at that point,what will happen, about the same of what will be produced, but it will be produced for less money. that will be the major affect on oil-producing states, whether canada or mexico, or us. >> i think we have one in the back. >> hi. i have one question. how do the u.s. and the eu break cartels without causing a war? when you break the oil cartel, you are talking about breaking their budgets.

>> the eight nations of the middle east and the persian gulf and north africa are not likely to be able to effect us or the other countries that would join us in this area. the one country that is a major oil exporter and that will feel extremely aggrieved by the approach i suggested is russia. when king abdullah came home at the beginning of the arab spring, he paid over $100 billion to the young man in the streets. that meant that year, saudi arabia needed to have a

reasonable return on the two dollars a barrel, that they would have needed, say, 40 or $50 a barrel at least. the amount of money they need to add to the ordinary price of oil in order to take care of their population and keep their population from demonstrating, they call a fair price. if you hear somebody from opec or russia talk about a fair price for oil, what he means is although they could lift oil $80 or $90 a barrel, they to sell it for 110 dollars

because that is the fair price. they need to buy off the chunks of their population that do not manufacture things. the russians manufacture very little except military hardware. they are good at that. when is the last time you bought a table or a chair or a stove made in russia? they do not really have an economy other than selling military hardware abroad and selling natural resources, mainly oil and gas. it pushes the price of oil down. they will be very upset. i do not think it is a good idea to guide our foreign-policy based on whether the russians are upset or not. i think we really need to fly ahead and if they let us, we can help a number of these

countries. russia would be hard, but not impossible. we can help these countries develop new economies. we did it after world war ii. we helped a lot of countries -- south korea is an outstanding example. we have helped a lot of countries moved into taking an economic place in the modern world. if we beset by $100 a barrel oil, we will have a lot more resources to help other countries move in a useful direction. we have done before and i think we could do it again. >> down here in front. >> when needed to have provided jogging shoes for the folks with the microphones.

keystone think the pipeline is good for national security? what do you think about the role of anonymous and other groups on the web? >> on the keystone pipeline, i do not think it is all that important one way or the other, but the canadians are nice folks. them improve their balance of payments. if you say, but we do not want that kind of oil exploited because it is dirty, it also costs a lot to get it out of the ground. here is an idea. let's have fuel choice and then people are not going to be able to produce oil successfully and profitably and so a good deal that will stay in the ground. the way to keep it there is not

to block the pipeline, the canadians are our friends and we work with him on a lot of things, and there is no particular reason to oppose the pipeline. they cannot make money on it at $50 a barrel, i do not think. >> right here. >> i am reading about exxon mobil. to what extent do you think the u.s. carries power through its companies that are the prime drivers of oil exploration and development in the world? >> i think the united states role with respect to innovation is what is essential.

although we tend to think of silicon valley will me think of innovation and some aspects of technological history, the most recent case of world shaking innovation in the oil business, as is often the case outside the world -- not from big companies, but a man named george mitchell. not the senator but the oil man in texas and i talked to his son and he is still sitting down there at age 92 doing deals in houston. he is the guy who put horizontal drilling together with fracking and produced natural gas at 1/5 the price of oil. he did it almost all on his own

money, on his own time, subject to a great deal of mockery from the oil and gas business, but he stuck to it for several decades. he has completely changed the energy picture with respect to natural gas. i asked his son -- if there were a nobel prize for petroleum engineering, your father should win it. if there was a nobel prize for stubbornness, he probably ought to have won that, too. his son chuckled and he said we have been close but he is an outstanding with stubborn man. he was, is andthat is essential to do the kind of things that he

did. big of the problem with organizations is they do not often let people operate that way or if they do, they do it by setting up a completely separate entity. inside a lot feet, it never permitted lucky executives to which wasskunkworks --it was a hanger were they invented all sorts of amazing things. as part of at&t, it was an incredibly creative place. kind are examples of this of extraordinary creativity in big american institutions and companies, but rather frequently, it is because they have been fenced off in some way from the normal corporate motivations.

people have to be free to make mistakes. think,as an article, i in "the economist" a few years ago. the germans were doing a study because they were worried they were not getting enough nobel prize is and patents. they wanted to get back to the scientific promise they had for a long time sothey did a study, which is understandable. someone wrote into the magazine, and he said, look, this is not hard. came born in germany and to silicon valley when i was 30. i have lived here for 20 years. in germany, if you ever fail at anything, especially if you should ever go bankrupt, you will generally not get even your phone calls returned, much less an actual appointment with somebody with money. here in silicon valley, we wear

our bankruptcies the way prussian officers used to wear their dueling scarfs. i've often thought that is a marvelous example of the american spirit of creativity. and in technology and the like. i have been in venture capital for a while now one of the best briefings, the guy who came in with a very innovative idea. let me tell you about myself. i was born in israel and served in the army, came to the united states, just finished my doctorate at stanford. started a company, did pretty well. my second and third companies have gone bankrupt. ine are the mistakes i made here as i'm correcting them. tos fourth one is going

succeed. let me tell you why. with everything i could the people i was working with to get that guy funded. that is the attitude you want. it is hard to get it as part of a huge institution unless it is an island within that institution. >> right here, yes. >> thank you. thank you for coming. i was wondering, you were talking about innovation and all of the research we are so close to would come into solutions for all of these problems. in the wake of budget cuts, who is going to pay for all of this? how do we engage in smart economic practices and good innovative public policy? >> it will not be the federal

government in the way that it has been in the past. somestration did have effect on optional funds and funds that are being used in a creative way, like basic research. we have to look at tax incentives, like reducing the corporate income tax and giving companies an incentive to operate in the united states. i do not think this will be what it was in the 1990s. life is good, everything is fine, add another 10% to the budget.

i don't think that will happen. >>, over here. -- come over here. >> thank you. i am a spanish student here in washington. i wanted to asked you about this ethanol-methanol possible alternative for energy. it seems very interesting. opecmakes you think the countries will maintain the oil they produced>> maintain the price? >> reduce the amount at the pump. if methanol goes well and you introduce it into the usa and europe,gas comes from the same countries that oil comes from.

>> a lot of gas and oil does come from the same countries, including this one. what has been a breakthrough in gas is opening up so much more of the area that used to be the ocean floor that was their hundreds of millions of years ago. parisall of those animals died and became oil and gas. the mud turned into shale. what has happened with high fracturing, it has opened up that undersea area to exploration, which before was being done by searching for particular formations where the rocks were in such a way that

it look like a trapped some gas and drilling for that. instead of drilling underwear -- and still there -- instead of drilling everywhere. hydro-fracturing is revolutionary. gooda country that has a deal of gas may not have anywhere close to as much as it could have if it would do the fracking. i would be glad to talk about why i think fracking can be managed, only you have to be careful about what you are doing. it can be managed in such a way to be environmentally sound. the thing about hydro- is that it opens up so much more to the person who is drawing the gas out that it

drives the price way down, and i think something else that has an effect here and is very common in the u.s., but rare outside here, is the mineral rights to oil and gas underneath your property are largely the property of the individual property owner. in most countries, they are not. mineral rights underneath the ground are controlled by the state. in other countries. if you have a system whereby -- let's say, a couple in my home state of oklahoma, he works at the filling station and she works at the grocery store, but they have 20 or 30 acres of dusty land out there.

they inherited from somebody's grandparent and they have never thought too much about it and all of a sudden, a guy shows up and says, we will like to be fracking underneath your property. how does $50,000 a month suit you? they tend to say, it suits me very well. awas in western louisiana couple of years ago asking questions, at a dinner, i set next to the sheriff. he said, five years ago, do you know how many millionaires that were in this county? he said, one. now?

42 and climbing. that is why fracking is popular in lots of parts of the united states and why it has caught on. average people are making money from it. systemhelped a lot that of private ownership of mineral rights under your property. that has helped a great deal in getting it going. other countries, a lot of places where they have oil shale and can get into it and get gas, but you have to not only have the technology, what you have to have the property ownership structure that makes that attractive. question answer the about -- it was about the nsa. >> [inaudible]

role of anonymous? doingr as what they are is exploring and looking at stuff, lots of people do that. insofar as what they are doing is destroying information or producing classified material, which can undermine our ability to deal with terrorist threats, i am quite opposed to it. i would be glad to go into that more people wanted. -- want to. >> this gentleman right here. >> i go to school here and you mentioned your admiration for nitzer. he said we should be superior.

at the time, defense spending was on popular and in order to massage public opinion, as we say now, the soviet threat was, by choice, exaggerated so americans were made to feel less safe than they really work. i'm wondering if you think he was right about that and if you think that should built -- should still be the case. onesd threats like the that come from iran or north korea or al-qaeda be exaggerated in order to make us more competitive and able to control the global energy? >> the short answer is no, you have to call it straight. about thesting thing missile gap, which you are referring to, i think in the late 1950's and early 1960's

when john f. kennedy ran for president on that because they allowed this missile gap to be created. it was a military capability gap. what is interesting about that team -- theme - i'm reading a romanianby the head of intelligence in 1979. he has two prior books out. the interesting thing about the missile gap of the 1950's where people thought that the russians were definitely ahead of us and the lesson they drew was we had to catch up, but the reason they thought that was that this was a very sophisticated and delivered exercise by the soviets to convince the world, including us, that they had nuclear superiority. it turned out they didn't. they had two bomber bases.

i would encourage you to have a look at the box. -- at the book. it might have been something that the united states ginned up but it was part of a soviet disinformation program. go in the back. ross - resources for the future. with the changes in the oil market, is there a change in the insurance we need as far as a strategic petroleum reserve and what is the size and role of the reserve now? >> strategic petroleum reserve started out mabel. i don't know what the size is now. naval .arted out as

it has deteriorated in that purpose overtime. carriers and submarines are nuclear-powered. some of the other ships are powered by petroleum products. there is a very vigorous effort by the navy to move into biofuels for those things that are not nuclear. they are running into criticism on capitol hill for people -- from people don't like biofuels but the navy sees real advantage in being able to fuel its aircraft and destroyers and cruisers in parts of the world war i might be able to make fuel on the ship itself out of biomass of different kinds. i don't think there is a great deal of interest on the navy's part in the strategic petroleum reserve and it tends to get

jockeyed by both political parties as an effort to keep the price of gasoline down in the summer driving months if it looks like it might go up and create on popularity. i think it has moved reasonably far away from its original purpose and probably is not as strategically important as it once was. left.ve got a few minutes i think we will end on one from facebook -- from kevin. what can a young person do to prepare themselves to be the most competitive applicants in the fields of foreign policy like the cia and state department? >> if you have an aptitude for to start withges that. the two that are probably a strategic to the most important but not the only ones -- i would

say would be chinese, mandarin, and arabic. those parts of the world are likely to have lots of dealings, good and bad, in the years to come. even if you don't end up becoming fluent or work in country but if you just know a foreign language well enough to be comfortable in its and to have read some of the country's literature and know some people you are talking with, you can someonede the head of and understand their point of view a lot more easily if you have -- if you both speak the same language and especially if you speak there's an something other than english. people just don't have an

aptitude for foreign languages and others have aptitudes for different ones. insofar as you can take a foreign language relatively say mandarinould or arabic, it is probably worth doing because you can then theched off into reading literature of the country or reading its famous economists or what ever and you can do different things with it. smith, fluent in arabic or harriet jones who is mandarin, you will sort of look a bit taller than the other folks in the crowd who do not have any foreign language capability. it is not the only thing but if i had to pick one thing, i would say that.

>> on that note, we will wrap things up here. first and foremost, thank you to ambassador woolsey for taking the time. [applause] and just a couple of other notes of thanks to sys for letting us use this room. members of the media that are here covering this, thank you and everybody that submitted questions online, we appreciate it and especially to the ypf teram that brought to this. >> i brought a set of quotations, the articles themselves, from some of the local press out in san jose about this incident that i spoke about involving the rifle shots

into the substation. i think they have a number of copies back there but i just wanted people to be able to see what had been set in the local press out there. i don't think this issue will go away but if you are interested, you can see what was being said there. >> we will have those in the back and you can grab them on the white house. thanks again to the marketing team and our programming team, great work everybody. this has been great and thanks to all of you for being here and with that, have a great evening. >> thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> joe biden will be impressed that, arizona to speak at a memorial service for the firefighters killed on june 30. at 1:45 p.m.er way eastern on cspan 3. the house is back in the morning

at 10:00 eastern to begin debate on energy and water spending legislation for 2014 at known for the white house has threatened to veto the measure over cuts in energy research. live coverage will be here on c- span. on c-span 2, the senate will look into new legislation for the doubling of student loan interest rates. that will be a 10:00 eastern and on c-span 3, the president obama pick to head the fbi will testify at a confirmation hearing this morning. he served as deputy attorney general in the george w. bush administration. live coverage is at 10:00 eastern. back from its july 4 recess and, in 45 minutes, we'll talk with jerrold nadler as to whether the house and senate can work out a final immigration bill. the mississippi senator joins us to discuss the republicans'

agenda including health care and the economy. later, a look at u.s. trade policy. ♪ [captioning performed by national captioning institute] congress is back in session this week with three weeks to go before the month-long august break. they will debate what to do on immigration reform after the senate passed its bill last month. both sides playing of political blame game. democrats plan to push a one- year extension of the 3.4% student loan raite. a competing proposal ties into the financial markets and under consideration with bipartisan support. that is happening on the senate floor thisee