[Please note this podcast episode is longer than 60 seconds.]
"You might ask, what will the price of oil be? And the answer is, we don't know."
That's Steven Chu musing on oil at the second annual summit of ARPA-e in Washington, D.C. on March 1.
Chu is a man who knows a lot, Nobel laureate in physics, our nation's 12th secretary of energy. But given the world's increasing thirst for oil—and the demand for energy more generally—guessing black gold's future price is a speculator’s game.
This is not a new problem. Forty years ago, the U.S. endured its first oil shock and, as a result, reduced its use of oil by improving gas mileage in cars and researching alternatives. What happened? Increased exploration spurred by high oil prices paired with that drop in demand led to two decades of low oil prices.
Then we hit the snooze button and fell in love with the SUV. Bad news for the atmosphere—and the economy. We now import roughly $1 billion worth of oil every single day, a huge wealth transfer out of the country into, often, the bank accounts of our adversaries.
Now the residents of China and India are getting their first chance to fall in love with the automobile. Paired with much needed democratic revolutions in places like Libya that seems to be the recipe for cooking up even higher oil prices.
The real question is: what will we do about it this time? Here's what Chu suggests: "Let's take a longer term more measured approach to solving this problem." That means not panicking at high oil prices but investing in the invention of a different future for energy.
That's the purpose of the Advanced Research Projects Agency for Energy that Chu started two years ago. The goal is to turn scientific advances into deployable technology, like better batteries for the electric cars that could further reduce U.S. demand for oil and cheaper photovoltaics to produce the electricity that would go into those batteries.
"If you get renewables that are actually cost competitive with fossil fuels then it's a very very different world."
Of course, just like last time, truly rolling out these new technologies would ultimately have a significant impact on oil prices, potentially making it cheap again. So then the question becomes: will that lead us to remove the solar panels on our roofs like President Reagan did to the White House in the 1980s?
Chu, for one, hopes we don't hit the snooze button again. "Our national security is very dependent on our energy security. So, and I want to stress this, energy we create at home is wealth creation at home."