The New Prize

On October 29, Daniel Yergin, Pullitzer Prize-winning author of The Prize: The Epic Quest for Oil, Money, and Power, released an updated edition of The Prize with  Steve Clemons, director of the American Strategy Program at the New America Foundation.

To begin, Clemons posed the question, why update the The Prize?  Yergin discussed four trends that have emerged since he first published the book and are covered in the new edition.  Yergin first observed that oil has acted as a financial instrument in a time of currency instability.  The second trend he identified is the increased globalization of demand.  Yergin pointed out that at the time The Prize was first published, China consumed two and a half million barrels of oil in a day, whereas today China consumes 8 million barrels a day.  A third trend is the traction of climate change as a major concern and how that has impacted the energy industry.  The fourth trend covered in the new edition is the increasing importance of technology across all energy sectors. 

Clemons then moved the discussion to the future of the oil industry, especially with regards to these trends.  After first discussing the implications of government-owned oil companies controlling 80 percent of oil, Yergin asserted that oil would be a part of the picture long into the future.  He commented that an entire system does not change overnight, especially one so politicized as the oil industry, in which commercial interests and the politics of governments are so intertwined.  Yergin predicted that we will see more technological innovation and geographically diversified investments in energy sources.

In the wake of Yergin's predictions about the continued importance of oil to the global economy, Clemons asked him to discuss whether we will reach peaks in oil demand and supply.  Yergin claimed that we may have already seen the peak demand in the industrialized world, attributing a decline in demand to aging populations with fewer drivers, government efficiency regulations, changes in the auto industry and a new market for fuel efficient cars.  However, he described a much different picture for the newly industrialized world in which China outpaced the United States in new car sales last year.  Yergin also contended that supply is more constrained not by the amount of energy resources but rather by geopolitics and the technological complexity of extracting resources. 

Finally, Clemons requested an assessment of the Obama administration's emphasis on energy independence.  Yergin criticized the use of this terminology.  Rather, he suggested, we describe the challenge in terms of "energy security," and devise a strategy to secure the U.S. against shocks and political turmoil by encouraging energy investment around the world.  In closing, Yergin asserted that diversification makes for greater "energy security." 

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Participants

featured speaker
Daniel Yergin
Chairman
Cambridge Research Energy Associates
Author, The Prize: The Epic Quest for Oil, Money, & Power

moderator
Steve Clemons
Director, American Strategy Program
New America Foundation
Publisher, TheWashingtonNote.com