2019 OU Price College of Business Energy Symposium - A Conversation with George P. Shultz
So, our last session. Here, a few, weeks back I had, the privilege to go, out to Stanford, and meet. Secretary. George Shultz, I've met with him a couple of times. He's. A fascinating. Individual. His, resumes. In your program, I, mean. From serving, as a marine, artillery officer, in World War two to. Four. Cabinets, under three presidents starting, with President Eisenhower, he's. 98, years old. An. Immense. Amount, of both, knowledge and wisdom, and. So, we taped the interview, and I'll. Step off and if you can roll it he. Has a lot, of. Advice. On where, he sees where. The world needs to go so, we'll, play the tape. I'm. Here today at, Stanford, University, at the Hoover Institute, was. Secretary, George Shultz, and we're. Going to talk, about energy, and, especially, some. Of the things that the secretary is doing now and, maybe. Draw on some of his incredible, experience. Serving, for, three Republican, presidents, on four different cabinets. Starting. With President Eisenhower. President. Nixon, President, Reagan. Mr.. Shultz, started. His career at, Princeton, University. Graduating. In economics, served. In the. South Pacific as, a Marine Corps officer during, World War two went. Back to MIT got a PhD in economics. Taught. At MIT for, some period of time. Also. Served as the Dean of the Chicago, School of Business the. President of the Bechtel corporation. Was. The author of the Montreal Protocol, and used, his experience. Advising. These, presidents. On many global. Issues, and today we're going to talk about a number, of energy issues, including. Some of the current work that mr. Schultz is doing, with. Former. Secretary, James Baker, on. The climate Leadership Council about, a revenue-neutral carbon tax, so. It's great to be here and hear these words of wisdom from, such an esteemed, statesman, as, short Schultz. So. Mr. secretary, just. Really want to say thank you for, your time to, talk, I always. Anxious, to. Propagandize. Some people interest in the subject of energy it's, a key component of, our life, and economy. I've. Had the fortunes be the third time I've met with you here, and I've, just always, been. Thrilled, to hear your views on the energy my world. Someone. With. Your experience. To. Engage in the conversation, I think is it great. It's. Such, a rapidly, evolving topic. Right now and. It's. Maybe changing, faster. Now than it's ever changed. And, we. Moved, from essentially. A state of scarcity, to a state of abundance, but. That's created, a whole new, set of challenges for. Us and. Even. With, abundance. There's still a preponderance. Of energy, poverty, around the globe and then, there's the whole issue, of. Global. Sustainability, on, the environment. And advancing. Those. Developing. Countries. Where they can advance their standard, of living, and you, know you kind of have these pillars. Around. The, economy the, environment that, called the climate and things, we're. Just hoping for our audience, that, we may be able to garner some of your wisdom, on some. Of the enormous, global challenges, you faced under multiple, presidents, and, maybe, put put some of that in perspective so, you, know with with that maybe we just, get started. You've. Faced, a lot of challenges over. Your career, enormous. Challenges, that seem, daunting. But. Now you're really very. Focused, on one challenge, of climate. Change and, you have a deep concern over this, maybe. You could just tell. Our audience. How. You got involved. In that what your concerns, are and then we can work into some of that very. Pragmatic. Solutions. That, you've put on the table to actually advance progress at a time when progress, seems to be pretty slow if, at all. All. Right now the. Subject energy, is, went. Up there in the number one category. As. Soon as you say think about energy you have to say we. Need something that runs our economy we. Need something, that pays, International, Security and, we need something compatible. With a good. Environment, and, the. Relative. Challenge. Of each one of those changes, over time, right. Now I think we have we. See enough energy to run our economy well we don't have to worry so much about that, and.
National. Security but the environment, is a challenge, because. The climate is getting warmer and. There. Are consequences. I say. It's getting Warner, because. You have to say to yourself why is there, a new ocean being created, on the Arctic, why. Is the ice mess over Greenland melting. Why. Are tropical diseases, coming north they're. All because, of climate change. We're. Having a meeting here at Hoover in another couple of weeks on. The relation of comet change to, health and disease, it's. Huge, so. This is something we need to be paying attention to. And. I think there are two things that can be helpful, number. One, put. In place a system. That. Calls people's, attention, to, the. Need to do something about the co2. They emit, my. Suggestion. That is a healthy. Revenue. Neutral carbon, tax, I say. Revenue neutral because it's not a way to raise money and. By. Passing the money back on an equal amount to each person. Sever the social security number, to make it a progressive, tax and. You, avoid, having it be a tax that has a fiscal, drag to it, so. That's why I'm very. Insistent. On the rezidentura aspect, of this, so. Put that in and one yes, something about a lot rise. My legislation, so, people can see that and people, will start thinking about out, of my deal with this, problem, and then. Second, you want. To put, a lot of effort into energy, our research, and development. I'd. Share the MIT, advisory. Board on there program, and I, pay, a lot of attention to, what goes on here at Stanford, and. I see these scientists, and engineers working, on this and they are making headway. It's. Really astonishing. Solar. And wind power, are. Competitive. Now that. Didn't used to be the case it's because the Rd. They. Are working hard and they will get to a. Large. Scale storage of electricity, that's. A big. Breakthrough because, it. Means you take the intermittency, problem, away from the solar and wind energy C so, that's a big thing and, then, many other things going on I have. Had solar, panels, on my house here at Stanford, for, quite a few years I've long since paid for them by, what I've saved in my electric, bill I Drive. An electric car and the. Panel's produce more electricity than my car uses so. My cost, of fuel is zero what's, not to like it works, and. So. There are things happening, that. Give us a dance on these matters and more. Things will happen if we keep the energy Rd, and, one of the interesting things about it is that here at Stanford, and also at MIT. The. Federal, government's, program, cost. Is. Is. More. Than matched by its three to one private funding. Because. When private. People interest, in the subject see a worthwhile. Program, they want to be part of it and. So. That's the station MIT it's the case here and some, people say oh my goodness you're, going to have private, interest but involved in the university and we say it's. Good because. We know something about the R&D but we don't know how to commercialize something. And scale it but, these guys do so. It's good to have them involved if you're going to get something done so. We're very happy about that. So, I. Think these are things that need to be pushed hard. So. Broad and said Oklahoma, and. Just. For. You putting, it in perspective what, I'll call the heart of energy kind oklahoma's number two in the nation in wind power number. Three in the nation and natural gas production. You've. Articulated, the. Compelling, economics. Of how renewable, energy has, become. More competitive in the marketplace, but. I know you've also been. A supporter. Of natural, gas as. Part of a complementary. Component. Significant, component, of the energy system, in. For example your work with dr. mark so back here at this natural Stanford. Natural gas initiative, on. How. To make. The, development of natural, gas. Compatible. And done right can. You talk a little about, sort. Of. Your. Motivation, with dr. Sol back in the Natural Gas Initiative. Well. If you say to yourself what. Fuels. Are. The best in terms of giving you of the. Energies. That you want but. Not. Having so, much co2. What. About coal. What about again, well, what about natural gas natural gas is the best by far, and. Nowadays is being produced, economically. So. It's not so expensive and. I, might say that. The LNG side, of natural gas is also getting. A lot of attention, so. There is a security, aspect, to it for instance as. Russia looks down its nose at the Baltic states. They. Need to have LNG, so. They're not so dependent, on Russia so, there's a security.
Element, To this the. Natural gas is very important, in every, way so. You've. Talked. About the revenue neutral carbon tax. Letting. The markets. Participate. And be involved in this, but. You also had, a unique experience, in the Montreal Protocol, and, you. I believe, called that an insurance, policy that you, talk to President, Reagan about and. I've, heard you talk in the past about the comparison. Of that. Methodology, of the development, of the Montreal Protocol, which by. All accounts seems, to be a huge success and. Can. You talk about how. That came, about and. And how that same plan of attack. Could. Parlay, into, the revenue neutral carbon tax. Insurance. Policy, if you like well, my own experience. Started. Out when I was Secretary, of Labor in. 1969. And. For, some reason the president, made, me the chairman, of a, Cabinet Committee on the oil import, program. President. Eisenhower thought. That. We imported, more than 20%, of the oil we use were asking for trouble and. National, security terms, so. We had a quota system for, being above up against it that's the reason for it so. We studied the subject carefully, and we made a nice report, was published, President, patted me on the head thank, you for the report, there. Were congressional, hearings but, nothing, happened, and. We, recommended, some obvious things like. Let's. Have some storage as an insurance policy. Let's. Change the quota system to, a chaff system, so we get the rats not Saudi. Arabia, elsewhere we. Said energy. Is a strategic, resource we know more about anybody, else in the government there. Should be a government agency of some kind paying attention, and, a few other things like that nothing. Happened, then, I become secretary, of the Treasury a few years later and here, comes the Arab boycott, of oil and. All, hell broke loose a lot, of MEK trustee was produced by out of those days. So. Gas, stations, were closed on weekends Christmas, lights for discouraged, made a gigantic, impact and. We've. Had a study made here of the. Contribution. Of more, efficient, use of energy. And. It's really huge. And the. Inflection points, are all 1973. Because, it made a big impact on the American people. Well. I might say that all of our recommendation, would put in effect right away so. I learned it, takes more than the speech analysis. To get something done and if. The, moment arrives when you get something done you can get it done if you're ready if, you're not ready it's liable to slip, away from you. So. A. Few. Years later I'm Secretary of State, and. It becomes more and more clear that the. Ozone layer is. Depleting. And. If that happens it's a very serious matter, and. I had twice, a week private meetings with President Reagan and, he. And I talked about this and. He, became convinced, that it. Was. A big problem. So. Most. Of the scientists, thought there, was right but they were perfectly. Respectable, people who didn't think so. So. Rather do what people do now and which is to try to murder your opponents. Nobody. Could put his arm around them and. He said we don't, agree but you do agree that it just might happen and. If it just happened you agree that it would be a catastrophe. So. We take out an insurance policy. And. So. He got they that you can get him with us but it got, them off our back and. Out if it came what's called now the Montreal, Protocol, which. Effectively, dealt with the problem. So. That was a big lesson and.
I. Think Ronald Reagan's idea of an insurance policy is. After all today. People. Who doubt that the climate is changing like, the president, ought to say well you know it just might be possible I'm wrong so. When I take out an insurance policy. And. Rather, than have the government tell you do this don't do that and regulate the daylights out of you put. A price out there and. Let the market work the. Price system works we. See it over and over again and, I. Think if we put a price out there it will work and, of, course at the same time if somebody decides that. They want to do something we have to assemble and here are some ideas, of what to do and that's. Why the yardie is so important. So. I'm hearing from you President. Reagan, really. Exhibited, leadership, in, an open mind to, acknowledge. That. A problem, could exist let you say even if very. Accomplished. People, didn't. All agree on, it well, but in place. Let me just, build. On something you said President, Reagan exhibited, leadership, he. Exhibited, leadership, on the economy, on, national, security, on. A relationship. For the Soviet Union under clear weapons and. Also on this he had, a way of doing things and getting things done and seeing. What the point was he. Was a fantastic, president I just. Was sure around here right now. So. As part of your. Advocacy. Now on the revenue neutral carbon tax you've worked with the, secretary, Baker and. You. All were cofounders. Of the climate, Leadership, Council and, you've articulated. And. Sort of the founding, pillars, of, the, climate Leadership Council. Some. Of the things that have to happen and, that's the. Revenue neutral carbon tax, the. Return of those. Monies, to the, general. Population, in, some. Form. That. You would have, some. Type of border, adjustment. So. You could have. Make. Sure countries. Around the world with one atmosphere, that, everybody. Participates, somehow. And. Then I think you've mentioned, this before and I think it's a very important, point of it if, you let that markets, work, it.
Actually Diminishes, the need for prescriptive. Regulation. And, you and you sort of let the market, good our program, we would, reduce. Drastically the, amount of regulation. Substitute. The price system for it you, mentioned one thing that I didn't mention but it's important, not, as we would also have a border, adjustment tax. So. It's an import from some country, that. Didn't pay at adequate, attention, they. Would pay a price, that. So. It's a way of getting the thing spread around the world I, found. It fascinating and. Reading through the Clinton, Leadership Council the CLC. The. Way you identify. What. The entitlements, were and, some. Of those is in, contrast. To say, to market, thinking which is a short-term. Thinking. For. A long-term problem, which is a challenge. You. Identified, that the notion of Free Riders so, it's sort of a tragedy, the Commons, that. Everyone. Benefits, everyone. Needs to participate in how you overcome. That and then, I think today, especially, you have sort. Of the red-blue, divide. And. I'll call another one the sort, of green-brown divide, so. The. Environmental, movement is, fighting, the fossil fuel industry, when it seems, like there, could be areas for collaboration. Actually. In terms of the fossil, fuel industry, Exxon. Have signed on to our plan shell. Is signed on to her plan so. It isn't as though they don't pay attention a lot of companies have signed on and practically. Every economist. You ever heard of is signed up to our plan. Symphony. How long it takes so it. Was at, least ten years ago that I, very fine. Economist, named Gary Becker and I wrote a piece. In The Wall Street Journal, with us advocating. This and, that's, at there and people discussed, it then. It gradually. Took off and, now it's really a player. From. Your experience. Especially a Secretary, of State and, if, you look at the. Trends, globally now, there's, a very. Rising, movement, of nationalism, and if you have a challenge. Like climate. Change that's a global challenge with. One atmosphere. It. Really requires, a collaborative, solution. What. Are your thoughts, on an. You can overcome. The. Sort, of rise of nationalism, to get. Countries. And leaders to work together that seems like a really large challenge, I don't. Think it's a nationalism. So much as. It is the issues of one kind nationalism. Being one of them it tends to command people's attention, and they. Can't pay attention to too many things that went and the. Climate change is coming at them and. I, take a. Leaf. Out of my, experience of Secretary, of Treasury that I mentioned, to you when the Arab I part it and, we had a calamity, and. More. And more people are looking at the climate aspects. And saying. Wait a minute we've had a calamity, on our hands. The. Health. Hazards, are. Large. And growing. And. We're not paying adequate, attention. Tropical. Diseases come north we can identify them, we can get. Up our diagnostic. We can get up our treatment, we make we fix these mosquitoes there's much of a problem let's get it going let's do it you don't have to have a lot of people die in. Order to see the sense of this and. There are other things like that that maybe will, dramatize the. Problem a little more, you've. You've written both, in quantities should cancel but in other places some, of these solutions, really. Have to address sort of inequality. The. Developing. World and. Some. Of the impacts. As you see of climate, change. Disproportionately. Impact, those populations. One. Of the reasons why in. Our. Proposal. Let me say let. The. Administers say by the Social Security Administration. That's, a bureaucracy that takes in money and pays it up let. The money flow into them then. They pay it out to anybody who has a Social Security number an equal about, that. Means you're redistributed on the. Basis, that makes it a progressive, operation. So. We're paying attention to. The, inner quality issue in the way this is being set, up. If. I look back in your career, in some of the big, global crises you, faced whether. It was nuclear, missiles, in Europe with the. Soviet, Union or. Whether, it was the Lebanon, crisis, where the Marine. Barracks was bombed or. Whether, it was in Latin America, with Nicaragua or. China, and Taiwan just, what, I see is daunting. Media. Tasks. At hand. How. Do you how. Do you write, your. Concern, of climate, change it's different, but it's it's, similar, in as the approach the, same in, the way you, handle those other issues well. It's different in the sense that this is not.
The Product, of some, country, after some other country, it's. A question of something that's happened in our global, basis, and. That means you have to have global. Byun and. If, so. The problem of freeriders, is, important. And, the. Ability, to reach out and get people involved, is, important. The. Paris Accord. Didn't. Have a lot of teeth in it but. It did bring the international. Community together and say yes, we have a problem that's, the not to finish that's the beginning, but. That's a necessary beginning and, very important. Then. You can start, working on implementation, and, the, more through your Rd, you can find things that, people can do that. Make sense of them like. I said my solar. Panels, now give me fuel for my car it doesn't cost me anything, so. It's not a bad idea. You. Can see the gas price has gone up so what I don't care it's. Not my problem so, I, think we're, going, to look for things like that and they're things are coming, along, you're. Doing your. Work you're, important, and impactful, work here at Hoover Institute, at Stanford, you've. Been, a very. Strong. Supporter, of the Natural Gas Initiative. But. That kind of work needs, to happen other places too, so if. As, I say in the heart of energy country, in Oklahoma, you. Have, the. Captains, of industry there, who really. In, a large part I've been responsible, for the shale boom and this, enormous, new resources. And very important. So. What advice would you have for those, leaders, as they, contemplate their, how. They position, their companies, to. Participate. As part of the solution. What. What advice to get for them and what advice, do you have for those. Universities. Like University. Of Oklahoma and in, the things that they, should be doing to drive change where. So, much of the nation's energy and, how the globe's, energy, produced, well I think the universities, should.
Make. Themselves, part of the, R&D, effort that's going on around the world and I'm sure they are and I. Know the people at Stanford and MIT are always happy. To collaborate, to. Send people there have people to come here and so. I didn't have, a broad. Joint. Research, enterprise. So, that's one thing I think. Anybody. Operating. A Shell. Operation. Or whatever ought to be thinking how do I conduct, this in such a way, that, we minimize the. Amount of damage, done in, the process and. I'm. Sure that there have been big improvements, along. The way I also. Think that they, shall not only, produce as well produces, gas, so. How you maximize. The gas and that, combination. I think would be worthwhile I, was. Out here this fall. In. Fall of 2018 at, the global energy forum, yeah, gentlemen now what's our great for him it was you were Speaker Bill Gates, several. Other secretaries. Secretary. Chu Secretary, Rice. Among. Others. And. It. Was a it was a great discussion, I came, away a little bit like, the problem, was almost insurmountable. And. I was looking. For what the solutions, are going, to be and, as I've looked at your work and especially like efforts like the climate Leadership Council and. You know your advocacy, with secretary Baker, is. Both, of you are you know Republicans. And from a Republican, administration being. Sort of the leading voices on, this issue. But. I still. Came, away with the feeling like, we. Could be doing more and I love, your. Reference. To President. Reagan and, he, just put his arms around those, who disagreed, with and, said, let's acknowledge this, and, so. My question, is how do, we, push those solutions. Well. Let me give you a. Way. Of thinking I used. To be in the construction, business. If. You say to me as a construction, guy built, me a bridge across the Potomac River I think. My peers are my steel I put. It together you can buy the truck over problem-solve. Done with that, if. You say to me build the bridge in such a way, there's, no lost time accidents, well a bridge is being built and. I put up some guardrails, and I think I've solved the problem I've lost, because.
It's Not a soluble, problem, it's. What I call a workout problem. And. If you workout it hard enough the. First thing you do that, happens see if you've got on one of our jobs once. You get a safety bill no matter who you are and. You're told about safety and you're told about your own performance you're, told if you see something it looks tell. Us right away immediately so. We do something about it and. If we work at it consistently. Professionally. Carefully. Constantly. Well, the bridge is being built we just might get it built without a lost time accident, but. That's because we realize it's. A workout problem not a soluble. So. I think this climate, issue is like that it. Is as though there's a solution out there if you can just find it that's, the end of it you. Have to keep working at it and. A little bit here a little bit here and a little bit here a little under that up as. I said earlier I think people, don't. Begin. To understand, how important, it is to use, energy more efficiently. And. When. You do that, it. Makes a huge difference I, know. I I. Used, to work, at back home and, we. Had a big electricity, problem here in California, at one point so. We dimmed the lights in our quarters, actually, they were on, too strong so. It didn't bother anything and, we made a lot of people traveled in those days so we said if somebody's, not coming into his office it's traveling don't turn the lights on and if, you leave turn off and. We saved a huge amount by. Paying attention, so. We pay attention to saving, energy you pay attention to all, kinds of little things and they add up so. I think you have to get it on your mind as something to do and. Yes. They'll be a break, since we'll come over but. In the meantime all. Those things turn, the lights out when you leave the room. My. Wife and I have my, job is to turn lights off her job is to turn them on so we we. Have a distribution. Of duties but, I go around turning lights off all the time. So. I've asked you what. Executives. In the energy, industry can, do how they can engage. Like. This says it's you've, witnessed this. Incredible. Evolution, in energy, you, know, from. Where. We've gone this scarcity, to abundance and. All the. Diplomatic. Issues that raised in. We need to you know your pillars of the economy and security, and the environment.
If. You now. Target. Sort, of the younger members of the audience and. Especially those, considering. Energy as a field. For. Their profession. What. Advice would you have to, the younger generation. From your experience. Things. They ought to be considering. And just, how the. Changes, you've seen over your career you, talk to the younger people and they, are very conscious, of the climate problem, this. Is their future. I'm. 88 years old so. What's. The future actually, I have six. Great-grandchildren. And, I, watch these little kids they're. Curious about everything everyone, so well what, I'm learning so they look at you in laughing look at me I did learn something and you say to yourself what, kind of a world are they going to inherit, and. What, can I do to make it a little better I, think. We all need to be, working, at it as, a workout problem, and do, all the little things we can do to. Make it better, some. Things are big things some things are little things, but. If you just keep at it all the time and they let them see. This you're working out that's inspiration. So. The first time I met you here and we'll wrap up in you respect, your time and, I just I want to thank you for your time and the powerful message you have and it's, so. Motivational. Inspirational. For. All, of us who's been our career and energy but I I love, your perspective. All. The photos, in this room of you with different heads of state and. The. First time I came here you you, took me to iPhoto and you're you're ballroom, dancing, with Ginger, Rogers and. That. Was the picture of white how do you think Nancy, Reagan, always fix me up with a Hollywood starlet as my dinner partner had, way downstairs, so. That's how I got to dance with Ginger, Rogers in. The center of the picture of us dancing she wrote a, George what. Fun for the first two minutes I thought I was dancing with Fred let's, do it again love ginger, it's. Going to get sauce that's, a yes. And I think that's a great note their clothes on so again thank you very much thank. You and all you've done and I'm very glad to see hear about people working. On the energy subject. And trying to get it right, the. Economy, security. The, environment, right now the environment I think. Deserves, special, attention. Thank you all for hanging. Out that was a lot of fun on that interview, and the wisdom there's, is just, amazing, so thanks. Again and look forward to doing this again next year.