MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The U.S. is forecast to become the world's largest oil-producing nation by 2020. The projection is fueling hopes for job prospects and geopolitical shifts. But there are also concerns. Joining me to talk about America's oil production boom: Robin West of PFC Energy -- that's an energy consulting firm -- Coral Davenport of the National Journal, David Goldwyn of Goldwyn Global Strategies -- he's former U.S. State Department special envoy for international energy -- and, joining us by phone from San Francisco, Michael Brune of the Sierra Club.

MS. DIANE REHMYou're invited to be part of the program. Give us a call, 800-433-8850. Send us your email to drshow@wamu.org. Follow us on Facebook or Twitter. And good morning to all of you.

MR. J. ROBINSON WESTGood morning, Diane.

MS. CORAL DAVENPORTGood morning.

MR. DAVID GOLDWYNGood morning.

REHMRobin, if I could start with you, talk about the trends in U.S. oil production. Why are we seeing such growth?

WESTWell, Diane, I -- first thing, I think it's important to recognize it's not just oil. It's oil and gas. There was a report from the International Energy Agency yesterday, which, frankly, we don't agree with entirely in the details, that the United States is going to be the largest producer. But it's -- what's happening is that production of both oil and gas is surging in the United States. And it's really changed the position that the United States -- our energy security. We don't like the term energy independence.

WESTWe like the term energy security, which is reliable supply at reasonable cost -- that our energy security has really been transformed. Now, if you go back to the shock of 1973, which was a traumatic event for the United States -- and people felt very vulnerable, and I like to say this is the energy equivalent of the Berlin Wall coming down -- this is a transformational event for the U.S. economic and energy markets.

WESTBut I'd also point out, there's a book that came out after that called "The End of History," which had just -- democracies of liberal economies would flourish, and it didn't quite happen like that. So I think the energy area -- energy era is going to be in the future very complex, but it's very good news for the United States.

REHMAnd how much of the increase that you're seeing is coming from shale, oil and gas today?

WESTThe vast majority is surging from shale, oil and gas.

REHMAnd there is something called reshoring. Explain what that means.

WESTWell, reshoring -- this is really about natural gas. It's important. Oil is used as a transportation fuel. Natural is used in power and manufacturing, petrochemicals. And what's happening now is that because natural gas is so inexpensive and so abundant that it's really changed the position of the United States, and it's giving both manufacturing and the economy as a whole a tremendous boost because both electricity and petrochemical feed stock prices will be low.

WESTThere was a story in the Financial Times -- there were two stories in the last week where top executives of the biggest companies in Germany were complaining that they are being put at a disadvantage. And reshoring means jobs coming back to the United States, and so this energy is one of the factors that's going to bring jobs back.

REHMAnd to you, Coral Davenport, you write that there has been a radical shift in this global energy picture. Tell us what's going on from your investigation.

DAVENPORTWell, there are two pieces that have changed. One is this tremendous surge that Robin talked about in U.S. oil and gas production that is repositioning where the U.S. is in the global energy picture and geopolitically. The other big change is what is going on in the developing world. Over the past couple of years, the developing world has, for the first time, surpassed the U.S. as the biggest consumer of energy.

DAVENPORTSo in the next 20 years, the U.S. -- in the 20th century, the U.S. was -- the world's biggest consumer of energy and also the world's biggest fossil fuel polluter. It is no longer going to be number one in either of those areas, and that creates big changes. China and India are driving global energy demand. As all these new Chinese join the middle class and become drivers, same in India, there's going to be a huge demand in China for more oil. There's going to be a huge demand for more electricity.

DAVENPORTWhere is that coal going to come from? Where is that energy going to come from? Where is that oil going to come from? China gets to make those choices. The U.S. kind of loses its primacy in driving the global oil market and the global energy market in that way. And we're looking at China and India with great concern. If they increase their construction of coal plants at a rapid pace and continue to increase CO2 emissions in the way that the U.S. did in the last century, that's a huge problem for global warming.

REHMAnd to you, David Goldwyn, what is this increase production here in this country mean in terms of the amount of oil we'll have to import?

GOLDWYNWell, the more that we produce, the less that we have to import. The projections are that our imports will drop to perhaps as low as 3 million barrels a day by...

REHMFrom its current...

GOLDWYNFrom its current levels, where we're probably importing around eight, 9 million barrels a day. You know, historically, we had been as high as 50 percent of our consumption. And the fact that we can import less can have huge balance of trade impacts. I think it's important to notice that the fact that we are able to import less is not just because we're producing more. It's because gasoline demand is flat, because we've made huge progress in fuel efficiency, because we have an increase in biofuels and because driving habits have changed.

GOLDWYNAnd that's really the -- one of the big economic benefits to the United States is if -- as we import less over time, both from increased production and reduced consumption, that's where we get the balance of trade benefits. That's where the money stays in the United States, and that's, in terms of natural gas, that's what makes our energy so cheap.

REHMWhat could that mean for price volatility around the world?

GOLDWYNUnfortunately, I think not much because it's a huge market, and U.S. production, even at, you know, at the levels that are predicted -- 10 million barrels a day -- will be about 7 percent of global oil production. And the reality is the IEA predicts that global demand for energy is going to increase by a third. Buffer stocks, the amount of spare capacity that we have if oil supply goes out is very thin.

GOLDWYNSo price volatility is going to be a continuing part of this problem. If there's an oil disruption, if Venezuela comes off the market, if Iran obstructs the Straits of Hormuz, we're still going to have the potential to have a price shock. We're still going to need diversity of supply. We're still going to need to use strategic reserves. And that means we still have to care about all those other places in the world that are large oil producers.

REHMAnd, Michael Brune of the Sierra Club, all this still means there are concerns about the environmental impact. Talk about some of the questions raised by what's happening here.

MR. MICHAEL BRUNESure. The concerns go beyond just environmental impact. The concerns go to what is best for our country. If we're looking at making investments in energy infrastructure, we should be thinking about what is the best thing for our country over the next 20, 40, 60 years. You know, all of the surge that's happening in oil and gas development -- first of all, it is certainly happening. There's no dispute about that. And all of it would be great if this were 1950, maybe 1960.

MR. MICHAEL BRUNEBut at some point, we have to acknowledge as a country that we're living in a different world, and we can't just mine and dredge and drill and muck up every corner of our country when we actually can build an economy with energy that is safe and secure. So consider this. Coal use over the last several years is down from 52 percent of power production to 36 percent today. It'll be below 30 percent in a couple of years.

MR. MICHAEL BRUNEOil use is down in this country. We used to be using about 21 million barrels of oil every day. Now, it's down around 18 million barrels of oil, and with policies that are already in place, that will continue to drop. Despite this, gas use is only up slightly, and it's still within, this year, it's still within its five-year average. At the same time that all this is happening, where we're slowly weaning ourselves off of fossil fuels, solar has grown by a factor of five.

MR. MICHAEL BRUNEWind use has doubled in just the last four years, and so all of this means that we don't have to trudge along on the same development pathway that our country has been on for the last 50 to 60 years, dependent on fossil fuels. We can build on the progress that we've made in getting off fossil fuels and transition towards clean energy. The question is what we'll do. What -- we're at a crossroads. We can either double down on dirty energy or start this transition, go to clean energy and dominate the world economy in clean energy, just like we dominated in oil and fossil fuels in the last century.

REHMDavid Goldwyn.

GOLDWYNWell, I think, you know, Michael points out that there's -- an important point. There's been great growth in renewables. But you have to deal with the laws of large numbers. The developing world in particular is going to need enormous amounts of electricity. Until we have battery storage and a way to retain renewable energy, they need scalable solutions. It's going to be gas, or it's going to be coal. And the availability of gas is going to be important to that.

GOLDWYNTransportation, as -- until we reinvent the transportation paradigm -- we're making progress. Maybe there'll be electric vehicles. Maybe there'll be hybrids. Maybe there'll be advanced biofuels. It's too early to tell. But there's an enormous amount of vehicles, and the developing world wants mobility and electricity. If we don't have scalable solutions for them in the next 10 or 15 years, then you've got a big problem in terms of development, in terms of price. And so we're going to need oil and gas for the next 20 years.

REHMCoral Davenport.

DAVENPORTAnd this is a conversation that, right now, after the election, as we see a new Congress coming in, we're really seeing, you know, move to the fore. There's a moment right now where, you know, we may see an opening for a significant energy policy, a significant climate change policy that would help make the changes in the U.S. market, that would help drive those changes.

DAVENPORTYou know, I do see, when I talk to -- certainly the Obama administration would like to do -- would like to see energy and climate change as a legacy issue that they would achieve in the next couple of years, and I'm seeing movement on this from some Republicans on Capitol Hill. And so the question is will they find that opening in the next year or two?

REHMCoral Davenport, energy and environment correspondent for National Journal. We'll take a short break here. When we come back, we'll talk more about these issues, take your calls, your email. I look forward to speaking with you.

REHMAnd as we talk about the changing environment as far as oil and gas extraction are concerned, the growth here in this country of extraction, meanwhile, other countries, especially in Asia are beginning to use more energy. There's certainly a change in the geopolitical outlook, and I know you want to comment on that, David.

GOLDWYNYes. One of the more interesting things potentially have -- coming from our own growth and natural gas is the ability to export LNG to the global market. And the potential for gas for us to be able to change geopolitics with gas is really enormous. Right now, we pay $2.50, $3.50 in MCF for gas. The Brits pay about $10. In Asia, they're paying about $18. So if we can enter the LNG market in a significant way, and we seem to have plenty of gas to do that without hurting U.S. prices, then we have the ability to erode that correlation between oil and gas prices.

GOLDWYNThink what it would mean for the Japanese economy or for the European economy to get a 10 percent decrease in their price of energy. Think how much more competitive gas could be with coal in a place like China and India to increase their ability to access gas. So it's really strategic for climate. It's important for economics and for U.S. political relationships with countries like India and Japan. It could be quite powerful.

REHMMichael Brune, I know you want to comment.

BRUNEYeah. Thanks, Diane. I would actually like to comment on two comments that David made. One before the break about -- I think his comment was the law of big numbers and then about LNG exports. You know, regarding the law of big numbers, this is something that we have heard for several decades about renewable and clean energy. And to be fair, for most of that time, it was true. We had clean energy that was coming in in tiny, tiny quantities.

BRUNEAnd when you think about the scale of the challenge of replacing dirty fuels, it seems daunting to even consider the prospect that we could help to either get communities on the grid or shift the grid from dirty to clean energy sources. But the reality is that if you want to apply the law of big numbers, clean energy wins the game, right, because what we have right now -- consider Germany where 27 percent of the power right now is coming from renewable sources, solar and wind. By the end of this decade, they'll be well over 40 percent, close to 50 percent. That's a pretty big number.

BRUNEYou've got Portugal that's already getting 35 percent of its power from clean energy. Spain is getting more than a third of its power from clean energy, Iowa that's getting 30 percent -- almost 30 percent of its power from wind, South Dakota that's getting almost 30 percent of its power from wind. These are big numbers. These are real numbers, and they're growing fast. In 2011, more solar was added to the grid in the United States than in every year prior to 2010.

BRUNESo the from the '60s, '70s, '80s, '90s and the first decade of this century, we added -- all of the solar that was added to the grid was doubled in just one year. So when David says that we have to think realistically about whether or not we can build a society on clean energy and his assertion is that, unfortunately, we can't, I just think it's an outdated notion. Solar prices have dropped dramatically in the last three years. Wind prices have continued to drop. So there's a lot more that's possible today than was possible even two years ago.

REHMAll right, Michael. And before you go on, I know Robin wants to comment on wind and solar.

WESTWell, I -- there's one big number that Michael didn't talk about, and that's cost. And the cost of electricity from wind and solar, which is heavily subsidized by the German government and is now causing big disruptions in the economy, it's very expensive. The European program and the notion of Europe, which is not the world's sunniest country -- excuse me, Germany, not the world's sunniest country, having a big solar program that really hasn't been very successful.

WESTAnd there's excess capacity in Spain, again, a huge cost. It's -- there are all these distortions that have been caused. And what happened in North America happened because the private sector responded to high prices.

REHMBut, Robin, isn't there a possibility that as usage of solar, wind, all kinds of alternatives, that prices could go down...

WESTWell, I...

REHM...and cost could go down?

WESTI think, yes. But I think that, you know, there are places -- solar, I think, actually makes a lot of sense in places where the sun shines, such as the Middle East. Wind, the problem with wind, it's interruptible. I mean, in the North Sea, there's been this vast program, a very, very high cost program of off-shore wind.

WESTWell, there's one slight problem, and that is the highest peak demand days in Europe, the coldest days in Europe or when a high comes in over the North Sea, there is no wind. And so you have to shift back to coal or natural gas. So there should be -- the answer in the end is a mix, an efficient mix. And, frankly, this mix is becoming more efficient. Prices are coming down.

REHMCoral Davenport, an efficient mix of these various types of energy?

DAVENPORTWell, right now, Michael's right that wind and solar are going by leaps and bounce in the United States, but there's still a tiny, tiny fraction of the U.S. electricity mix. Only about -- renewable electricity -- renewables are only about 5 percent of the overall U.S. electricity mix. And right now, it's hard to see how they would get any bigger without some kind of outside push in the form of federal policy, in the form of a price on carbon emissions.

REHMAnd do you see that happening in this administration?

DAVENPORTWell, that's what interesting. I think that in the days after the election, we started to see a kind of a cracking, a splintering in this partisan blockade that has existed on energy and climate change policy over the past few years. I think that a lot of Republicans, who have been quiet on the issue of climate change, see this as something that their party is going to have to address in the same way that they have to address like immigration.

REHMAnd after Sandy...

DAVENPORTAfter Sandy…

REHM...and the hurricane had followed, David, do you see that?

GOLDWYNI see it breaking but because of the fiscal cliff, not because some sort of a sea change in Republican thinking on climate change. The -- most economists, serious economists and even George Will and others, believe that a carbon tax is a fare, sort of a neutral way, especially if it's revenue-neutral, to create market incentives for all kinds of energy and to eliminate some of these externalities. And the fact is it can raise an enormous amount of money.

GOLDWYNAnd there was a little dance yesterday between the Treasure Department official, who said, we're not going to put a carbon tax on the table. But he didn't say, we weren't going to entertain a carbon tax. It needs to come from the Republican side, but it could be huge win for the fiscal cliff. It could be a huge win for the traditional Republican view on conservatism and for climate as well.

REHMMichael Brune.

BRUNEThanks, Diane. So there's a few factors that play here. One is that federal policy will be very important to determining the future of this country in terms of how we achieve energy security. But what we also should remember is that, right now, there are more than a 100 old, outdated, dirty, coal-fired power plants that are scheduled for retirement. Some of them will be retired in the next year.

BRUNEMany of them will be retired in the next three to five years, a 100 coal plants in the country. What that means is that over the next couple of years, utility operators, state by state, region by region across the country are going to be making big decisions about where they will get their energy from in the future, and so none of that is being driven by federal policy.

BRUNEA lot of that is being driven by local policy and local decision-making. So it's important for those of us who are in the grassroots who really care about climate change or who care about energy security to realize that there are a lot of ways in which change can be affected. And there's an enormous opportunity to scale up clean energy at a level that we haven't seen before.

REHMDavid.

GOLDWYNI give a little bit of credit to federal policy, at least in terms of mercury and air toxins and the cross-state rules on pollution. You know, there's been a strong effort by the Obama administration to deal with the greenhouse gases. And those kinds of rules make it more economic to build gas plants than coal plants.

REHMRobin.

WESTMichael's absolutely correct that there are -- enormous number of coal plants are going to be phased out, and coal clearly is the big pollutant in greenhouse gas generator. But what's going to take its place mostly is going to be natural gas because it's so much more economic. And that I think that this -- given the state of the economy now, the challenge is going to be, do you want to heavily subsidize energy? Or do you want to let the market work? And right now, the market is working on natural gas.

BRUNESo...

REHMLet me understand because I had been under the impression that gas fracking had slowed down because the price of gas had gone down so far that the developers sort of walked away for the time being. Coral Davenport?

DAVENPORTThat is what happened. There was just this tremendous glut of natural gas. The price plummeted so low that it started to not become profitable. So we do have this glut of cheap natural gas. That's actually been great for the economy. Natural gas means cheaper manufacturing, cheaper electricity. Again, that's contributed to this reshoring. And it looks like Robin wants to...

REHMHe wants to jump in.

WESTNo. I -- there's one other -- I couldn't agree more, but the best cure for low prices is low prices if investment doesn't take place. But there's enormous amount of gas behind it. But the other thing is, remember, in terms of natural gas, is that if you look at CO2 from energy, from fuel use in the United States, it's down dramatically in the last few years, whereas it's surging in countries like Japan and Germany. So, I mean, it -- in terms of the climate, actually, natural gas has been very effective as well.

REHMHere's an email from New Mexico, from Albuquerque. Kevin writes, "The Economist recently estimated that the added cost to the gas industry of doing fracking cleanly added only 7 percent. So all we need are good rules." David.

GOLDWYNYes. That came -- I was a peer reviewer on the IEA's golden rules of shale gas program. They came up with the 7 percent number. People can quibble whether it's 7 percent of the cost of the gas well. I think gas well -- Marcellus gas well is about $4 million, given certain specifications. But that's right. And so the kinds of things that you're talking about -- baseline measurement of air and water, inspection of cement integrity, disclosure, tracking water, using modern technologies for recycling and disposition -- they do cost something, but the benefits are tremendous as well.

REHMAnd another emailer is very worried about the huge amounts of water being used in this process. "With the water crisis looming, I find this an appalling use of a resource we require for life." Coral.

DAVENPORTI talked to some farmers in Colorado this summer, which is an area that has been a central part of the fracking boom and which, this summer, was devastated by the record drought that swept over the country. And they said this is a huge concern for them. They don't have enough water for their crops, and yet they saw -- they would sit and watch truckloads and truckloads of water that was -- water supplies that had been purchased by the fracking companies.

REHMSo a really legitimate concern then?

DAVENPORTAbsolutely. And there's a debate about, well, which of these is better for the economy? I talked to these farmers and they said, well, we're seeing our crops whither away. On the other hand, we know that this fracking growth is good for our local economy being, you know, an energy center is, you know, creates jobs. But, absolutely, the amount of water required is tremendous and as fracking -- as natural gas fracking continues to grow, this is going to be an increasingly growing concern.

REHMAnd you're listening to "The Diane Rehm Show." Michael.

BRUNEYes. You know, this last example is really just tragic because you have farmers who have been experiencing a dreadful drought over the last couple of months, one of the worst in our country's history that is being exacerbated by climate change, and now they're competing for water with fossil fuel companies, either coal-fired power plants or fracking operations that are exacerbating that climate change.

BRUNEYou know, the shift from coal to gas is of questionable benefit for our country. It is true that as we come off of coal, gas will need to play some role. But the danger here is that if we rely on gas too much, if we shift from coal to gas, it's like shifting from cigarettes to chewing tobacco at the same time when clean energy can do a better job. So I think it was David earlier who said that as we come off of coal, gas is going to pick up most of the mix. It's not true.

BRUNEIt's actually not true because what we're seeing in coal plant by coal plant across the country, more and more utilities are choosing clean energy. Look at the Boardman coal plant in Portland. They're going to be relying largely on wind as coal comes offline, the Centralia coal plant in Washington, same thing. The Deely coal plant down in San Antonio, Texas will increasingly be using large-scale PV solar installations as opposed to coal as the coal comes offline.

BRUNESo the question here is do we, as a country, have the capacity to think big? Do we have the capacity to really imagine a rapid, reasonable and responsible transition away from dirty fuels at a measured rate but an aggressive rate towards clean energy? And the reality is that we have to make this transition. We have to make this transition.

REHMWell, how do you respond, David?

GOLDWYNWell, a couple of thoughts. One is any place where you have -- first, I think we can have -- think they got renewable energy, we can have renewable energy standards, a clean energy standard, but any place where you have large-scale demand for electricity, you've got to have base load power. And that's not renewable energy. You've got to have both. So you can't just substitute renewable energy for all of that.

GOLDWYNSecond, with respect to water, coal and nuclear use a tremendous amount more water than fracking does and than gas does. So I think there's huge benefits for gas versus coal on water, and of course, it's half the carbon emissions. So as we are looking at, you know, 40 gigawatts of coal plants going off offline, if we get 10 percent of that renewable energy, that would be fantastic, but the rest of it is going to have to be gas because people want the lights on 24/7.

REHMWhat about the use of water, Coral, and the comparability that David just gave you, saying the mining for coal uses tremendous amounts of water?

GOLDWYNWell, it's -- actually, it's not mining. It's coal plants and nuclear plants. So when they are producing the electricity, they do use a tremendous amount of water. Production of natural gas, the fracking process, getting the gas out of the ground...

REHMAbsolutely.

DAVENPORT...uses a tremendous amount of water. Actually, generating electricity from those other sources also uses a tremendous amount of water.

REHMSo is it comparable?

DAVENPORTI'm not sure. I'm not sure if it is.

REHMCan you speak to that, Michael? Are we talking about the use of comparable amounts of water here?

BRUNENow, what has been said is accurate. There's no dispute there. We all agree on something that nuclear power plants use the most water, coal comes second, and then the amount of water used by gas is significantly less. I would take issue with, I think, maybe David, who said that the greenhouse gas' impact of gas is half that of coal.

BRUNEThat's a statement that has been proven to not be true. It's not updated with the latest climate science that's out there. So the question, though, again, is not whether we should go from nukes and coal to gas, but whether we can shift largely from nukes and coal to clean energy with some small amount of gas firming up the supplies that we have.

REHMMichael Brune, he is executive director of the Sierra Club. Short break. We'll be back and then your calls and more of your email.

REHMAnd it's time to open the phones and hear from our callers. First to Jim in Carrollton, Texas. Hi there, Jim.

JIMHi, Diane. Boy, you sound great.

REHMThank you.

JIMMy question is this. I believe that if the petroleum and natural gas that we're driving right now, if that were to stay in the United States, it would fuel more of an economic boom than just developing the resource and exporting it. So my question is, would an export tax be legal? And if it were done, would it achieve the desired result of keeping that petroleum here and causing lower energy prices?

REHMDavid Goldwyn.

GOLDWYNWell, right now, in the United States, we're not allowed to export petroleum other than -- we can send it to Canada if it's going to be consumed in Canada, essentially refined. And in the case where we need to use a strategic petroleum reserve, I think we can get an exception. So right now the law doesn't permit export of oil.

REHMAll right. To Syracuse, N.Y. Hi there, Charles.

PROF. CHARLES HALLHello. My name is Charles Hall. I'm a professor and professional oil analyst. I got recently dozens of emails from my professional oil analysts who are very upset about this IEA report. And there are two main issues, which I would try to simplify. Number one is almost all of the new oil out of the oil shales are out of the sweet spot, out at the very best places in the Bakken.

PROF. CHARLES HALLThe Bakken appears huge on the map, but almost all of the oils comes out of a very few places. I saw this myself when I drove across the country last year. The area with enough oil to be exploitable, at least at the moment, is very small compared...

REHMAll right. And your second point?

HALLHello?

REHMYour second point, sir.

HALLYeah. My second point is that the energy cost of getting out much of this oil and gas is very high compared to what we're used to, and we need a much better analysis of these issues. Thank you.

REHMAll right. Thanks for calling. And, Michael Brune, do you want to talk about those sweet spots?

BRUNEWell, yeah, I actually like to address the second point, which is the energy cost of getting this oil...

REHMSure.

BRUNE...is significant just like the energy cost of taking oil from the tar sands is significant. We're investing now in higher carbon fuels right at the same -- which make the problem of climate change much worse, right at the same time that we need to be getting off of fossil fuels. So when you look at development in the Bakken oil fields or you look at the tar sands or you look at mountaintop removal, it's fair to say that these will produce jobs and it will bring -- and it'll help to add energy security in the U.S.

BRUNEBut it's wiser to say at what cost. At what cost to our air and our water and our climate? But also at what cost to achieving genuine energy security? And there's a better way than going after more dirty fuels.

REHMDavid Goldwyn, what about those sweet spots?

GOLDWYNWell, I think Robin may have more to add on to this point, but my understanding is really just at the front end of developing the Bakken Williston Basin. There are lot more basins -- as these companies are developing this, they're finding that there's a great deal more resource and they're learning how to develop it. Also, I think the production cost of this, I think, is economic at $55, $60 a barrel as opposed to some of the deepwater fields, which are economic at $100 a barrel. So I think it's not higher cost, and I think we're just to the front end of the development.

REHMRobin.

WESTWe -- there's an enormous amount of oil and gas in the shale. But what you have to do -- this is a process very different than usual oil production. And it's -- you drill tens of thousands of wells to do this, and you have high decline rates. These fields are produced very quickly. So it's a completely different process, and it's a function -- I keep coming back to this.

WESTIt's a function of the market. The higher the costs are, the more will be brought on. It's very simple. And at lower cost, it will not justify the investment. But the best cure for low prices, which block investment, is low prices. And then it'll stop and prices will start going up.

REHMAll right. Coral Davenport, let's talk for a moment about the Keystone pipeline, about which you wrote this week.

DAVENPORTSo the Keystone has been a huge political issue. That's the pipeline that would be built to move the tar sands oil that Michael talked about from Alberta, Canada, down to refineries on the Gulf Coast. And, of course, that exploded as a huge campaign issue. The State Department was last year on track to approve construction of this pipeline. The question at the heart of it and that was -- ultimately goes before the president is, is this pipeline in the national interest?

DAVENPORTAnd instead of answering that question, saying yes or no -- because this became such a huge political issue, environmentalist rallied around the White House. They wrapped a big pipeline around the White House. They called on the president not to approve the pipeline because they said giving a market to that tar sands oil would be a tipping point for climate change. The president didn't answer the question one way or the other. Basically, they sent the pipeline back for more environmental review.

DAVENPORTThey -- ultimately it was decided that the on-the-ground route of the pipeline potentially could cause treats to an aquifer. They rerouted it. They completed it. They worked on another environmental review. During that time, the president was getting hammered on the right saying, you know, you're blocking this pipeline that will create jobs and create a market for all this oil. He kind of balanced a delicate tight rope all the way through. Now, it's coming down after the election.

DAVENPORTHe's going to have to make a decision. The environmental reviews will probably be finished by the end of the year. And we expect at the beginning of 2013, President Obama will have to -- and the environmentalists are coming back on this. I think Michael knows about this. There is another big protest planned at the White House. I think it's next week.

DAVENPORTThey're going to bring back the pipeline, everything, call on the president and say, you know, we came out for you. We spent money for you. We brought out the environmental vote. You know, this is our asked. And the other side is going to say, this is an issue of jobs. This is an issue of labor. Is this in the national interest? And it will be really interesting to see what the president decides because we haven't seen him tip his hand either way.

REHMMichael.

BRUNEAll right. Well, thanks, Coral, for mentioning. The rally is this Sunday. The Sierra Club is helping to organize it with 350.org. I do appreciate the plug, Coral. You can learn more about the rally at...

DAVENPORTI love your pipeline. I mean, your prop pipeline.

BRUNE...sierraclub.org. Here's the issue that we're wrestling with, right? So it really is, are we taking the destabilization of our climate seriously or not? Because you can't have more development of more fossil fuels and have a legitimate shot at stabilizing our climate. If we take out more than a third of our known fossil fuel reserves, we're going to -- temperatures on this planet are going to exceed, are going to grow more than 2 degrees Celsius, 3.6 degrees Fahrenheit.

BRUNETo put this in perspective, all of the fires that we saw this year, record wildfires across the Intermountain West, the drought that we saw with, you know, covering 60 percent of the country, the super storm that hit where I grew up, on the Jersey Shore, all of these is happening in a year where we've only seen warming of 1.4 degrees Fahrenheit so far. So over the last 150 years, the Earth's temperature has warmed by 1.4 degrees. There's already about another degree of warming baked into the atmosphere.

BRUNESo even if we cut off all fossil fuels today, we're almost going to double the amount of warming that we've seen on this planet. Last week, we saw projections that said we could get to eight degrees of warming by the end of the century. If you look at how bad it is today, imagine our warming doubling and then tripling again. So in that context, does it really make sense for us to invest in the tar sands, which will make the problem even worse?

REHMDavid Goldwyn.

GOLDWYNFour points: one, a little difference with Coral on the history. The -- this was on track. The environmental impact statement was out for comment until the governor of Nebraska called a special session into power and said, this pipeline will not go through the Ogallala Aquifer, will not -- particularly will not go through the sand hills. And he passed two laws and said, now, we've got to have an environmental impact statement.

GOLDWYNWe've got to have a new process. That's underway. They still haven't approved a new route. They still haven't completed the environmental impact statement. Nothing happens in Washington until that gets done. That's point two. Second is, as far as the environmental impact assessment went, it proved two important points.

GOLDWYNOne is that the Gulf Coast refineries will refine heavy oil 'cause that's what they were built for whether they get Canadian or not. They'll just use Saudi or Mexican or somebody else's heavy oil. And, second, that the Canadians are going to produce this oil whether or not the Keystone pipeline exist or not. So those emissions will -- are going to take place regardless, and you can already see their move to Asia.

GOLDWYNAnd so the question for us on Keystone is, do you want to take this oil -- heavily discounted, the money for which gets recycled into the economy, which is not going to make a difference on the extremely important agenda that Michael talks about, it's not going to make any difference on global warning -- and all the job creations that come with this? Or do you want to tell the Canadians, you keep your oil, send it to Asia, we'll get it from the Saudis and the Venezuelans or someone else? I think in terms of the national interest, that's not a close call.

REHMAll right. Michael, you're up.

BRUNEHey, David, what you said isn't true, and you should know that because the pipeline that would go to Asia would have to go through British Columbia, and it's been rejected. It's been rejected.

GOLDWYNIt's still under discussion there.

BRUNESo -- but it's not happening. It's not. It's been rejected. The people in British Columbia have rejected it. So that won't happen. The whole point here is that we cannot expand tar sands development. Whether it goes to Asia, whether it goes to India, whether it goes to China or whether it comes into the U.S., we cannot expand the tar sands and have a shot at arresting climate change. That is the fundamental question regarding the tar sands pipeline.

REHMCoral.

DAVENPORTMy question for David is, if you had to bet, which way do you think that they'll choose?

GOLDWYNI think the administration -- if Nebraska approves the line, I think they'll permit it probably in the second half of 2013. But oil, Michael, it's coming by truck. It's coming by rail. It's coming through far more carbon intensive and dangerous ways than a pipeline, and so I think because it's coming either way, they'll approve it as in the national interest.

REHMMichael, do you agree with that?

BRUNEDo I agree that it's coming by truck? (unintelligible)...

REHMYeah. Do you agree that the administration is going to approve the pipeline?

BRUNENo, I don't think so. I think that the president has a lot of pressure to build the pipeline, certainly. But I do believe that the president considers his climate legacy to be one of the most important things that he has to burnish in the next few years. I think it's very clear that 15, 25 years down the line, this administration will be judged by just a couple of things: health care, perhaps immigration policy and also what it did regarding the climate crisis.

REHMAll right. Coral.

DAVENPORTQuestion for you, David. I agree with you that I think that President Obama is -- wants to use climate change as a legacy issue and that he's trying to figure out how to make a deal with Republicans and that Keystone might be one piece of making a deal.

DAVENPORTOne of the -- among the conversations I hear is, you know, he's got some things in his back pocket and that there might be a possibility for a broader deal, maybe with a carbon tax, if the president is willing to say yes to Keystone, open up Virginia for off-shore drilling, maybe open up liquid natural gas exports, that those are the kinds of pieces that could be part of a grand bargain. What would the environmentalist community think of, you know, a broader deal with a price on carbon that would come with approval of the Keystone as part of the package?

BRUNEWe would very much favor a deal that put a price on carbon that was combined with rejection of the Keystone pipeline. That...

DAVENPORTWell, yes.

REHMThat's what I thought. I know you want to get into this, Robin.

WESTWhere Michael and I do agree is I think that the issue of climate is very important politically and, after Sandy and the droughts and everything, is growing. I think that one of the things we have to do is really change how we -- our climate policies. Again, I keep coming back to -- if you look at what happened in Europe, it's really a fiasco.

WESTAnd they've pushed renewables. They've created a carbon trading mechanism, and none of these things have worked. And I think we really have to rethink the tools we use, and I think we have to shift away from production to looking at consumption and find ways to do that.

REHMAnd you're listening to "The Diane Rehm Show." Let's go now to Birmingham, Ala. Hi there, Paul.

PAULHi, Diane, love the show, love the topic.

REHMSo glad.

PAULYour panel is talking about paradigm shift and thinking big. And to me, I mean, from an outsider looking in, just a consumer, it seems that a voluntary paradigm shift would be the biggest tool to making -- well, solving all of these problems. And you were talking about thinking big. What about market solutions? I never hear the big ideas that you were mentioning.

PAULOne thing that I've thought about and I've heard mention a couple of times -- for instance, like captured transportation system, for instance, where you can drive your car onto a system that interlocks with your vehicle and takes you along at greater speed, safer, more efficient. You can have that efficient mix of energy, for instance, scalable solutions like that. I rarely hear those things talked about, and I think there's a huge market out there for, worldwide, for people who want to have better, clear solutions, but also want to have better solutions period.

REHMAll right. Coral.

DAVENPORTThe caller makes a great point that we probably -- that any real solutions that are going to happen are going to be market-based or going to be driven by the market. Those are still probably going to have to be initial -- initially pushed by some kind of policy, whether it's a price on carbon emissions. Things like major changes in transportation infrastructure, things like major policy changes will require huge deals and agreement in Congress and more federal spending. And that's where the rub is.

DAVENPORTI mean, right now, the biggest story in Congress is the impending fiscal cliff, is the federal deficit. I think it's very unlikely that we will see any kind of new federal spending on exciting new infrastructure. You know, there's barely enough money to keep our current highways from falling apart. If there is -- you know, if -- and even kind of a long shot deal on something like a carbon tax or some sort of market signal, that would be the kind of thing that could turn -- you know, help drive that change, but it's -- in this partisan Congress, it will be hard. It will be hard to see that.

REHMAll right. I want to take one last quick call from Raleigh, N.C. Stephanie has a question. Go right ahead quickly, please, Stephanie.

STEPHANIEMy concern was with the fracking. And they talked about the clean fracking, but it's hard to make those rules be obeyed. And once the groundwater is ruined, there's really no going back. So how do they deal with that?

REHMWhat do you think, Michael?

BRUNEOnce your groundwater is contaminated -- the caller from Raleigh is right -- it's -- it is hard to turn back. But I have not yet heard someone whose groundwater was contaminated from the solar panels on their roof or the wind farm down the road. So, again, we have an ability to make a better bet on clean energy that doesn't pollute. I want to actually just make a quick comment on Paul from -- the caller from Birmingham who talked about market solutions.

BRUNEThis isn't theory. We're seeing market solutions springing up in cities all across the country. There are more than 400 cities now that have different car share mechanisms where people are reducing the amount of time that they're spending in vehicles or reducing the amount of time -- oil that they're consuming by sharing their vehicles and saving cost at the same time.

REHMAll right. We'll have to stop right there. Michael Brune of the Sierra Club, David Goldwyn, president of Goldwyn Global Strategies, Coral Davenport of National Journal, J. Robinson West, chairman of PFC Energy. That's an energy consulting firm. Thank you all so much.

DAVENPORTThank you.

WESTThank you.

GOLDWYNThank you.

REHMAnd thanks for listening. I'm Diane Rehm.

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Denise Couture, Susan Nabors, Rebecca Kaufman, Lisa Dunn and Jill Colgan. The engineer is Erin Stamper. Natalie Yuravlivker answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales.