Transcripts For CSPAN2 Key Capitol Hill Hearings 20151015

That polar approach. And so weve learned the absolute necessity of a close relationship with canada, we learned that was in our National Interest. That relationship we have with canada has enabled us to truly be able to provide Aerospace Control and maritime morning. That relationship is critical to the security of the United States and canada. Both our countries have benefit from the against existential threats. That relationship we have with canada is a model that is worthy of emulating. But in Aerial Threat over the poles is not the only threat that north america faces are the Security Landscape is evolving, and north america faces a threat from the south. Now, our threat from the south is not presently an existential threat but it is a Security Threat nonetheless. And this threat, that is transnational in nature, exploits seems between countries. Its an organized threat. It is a networked threat. It is agile, its adaptive and it can reach the point where it actually destabilizes regions, it could also challenge sovereignty. And so we broadly describe the threat is transnational organized crime. This thread enters the United States through the land of domain transiting through mexico and through the maritime domain coming up through the caribbean. And like i said while the threat is not as of yet existential, it is a National Security matter. And mexico is postured to play every bit an Important Role against that kind of threat that canada plays against of the aerial domain threat that we face from the poles. Answer these kinds of threats include such things as special interest aliens from the potential smuggling of weapons of mass destruction, the trafficking of drugs and persons moving north or weapons and money moving out of the United States and so. And from a safety or human rights perspective, the migration of unaccompanied children. So supporting mexicos southern border strategy is in our National Interest in the United States. Because of the threats that mexico seize on their southern border, if not checked, we see then on our southwest border. So we are working with mexico to provide a cooperative plan that supports the implementation of their strategy. And in the near term were focusing on providing them with some needed capabilities like biometrics or tactical communications. And in the long term were working on helping build sustainable capacities that will improve what we are turning as we do in the opera building, enhancing equipment commonality between our forces so we can Work Together. There is a leadership role that mexico can play in the region to address this kind of a threat and that is something we are seeking to foster. And what we consider to be a very historical event, weve had the leaders and the staff from a trilateral meeting of north america defense ministers, so thats our defense minister and attorney, the Canadian Defense minister, mexicos defense ministers, i all got together and acknowledged fishermen at the same threats and theyve been actively developing with the term the content of threat assessment. And that collates all of the common shared threats that are facing north america as a continent. So we are already moving closer to recognizing a shared responsibility and collective security. And were working with mexico in the development of an externally focused security capability in our partner capacity develop and work that we are doing with them. And so right now im very pleased to say that from our perspective we have an unprecedented level of Security Cooperation with mexico, and he continued to increase annually. And kind of the four main areas that are necessary for interoperability, training and exercise engagement and equipment. And this really began a number of years ago with president called the roads mexicos former president s decision to begin fighting calderon transnational criminal or positions at it has evolved holistically sinc sensitive. And as we interact with the leadership of mexicos army and air force and mexicos navy and marine force, their leadership is actively voicing an interest to be interconnected with the United States come at a routinely talk of collective defense of north america and these are good words to be saying. And so we are routinely interfacing at the tactical and at the senior levels. Mexico has requested in our work we begin in facing with them at the operational level. And this kind of Capacity Development that we were working with them, north comes perspective promotes interoperability. And thats our objective, the cooperative defense of north america against all threats in all domains. And if we can obtain in the mexico, the United States in canada all working together and integrate and cooperative defense of north america, we will increase security on our continent and we will decrease risk in all domains against both existential threats and national Security Threats. So from our perspective its not inconceivable that we will one day be able to reach the kind of bilateral structure with mexico that we enjoy with canada. Our cooperation on our southwest border and on the mexican southern border has been expanding. Northcoms body to exercise with mexico that focus on cooperative defense, one is called it concentrates on crossborder air interdiction coordination and other is, focuses on defense support of civil authorities humanitarian assistance. We have information sharing agreements in place. We are working on acquisition Cross Service agreements and we are also working toward common noun of equipment comic imitations this aircraft, radar, everything that we need to be able to Work Together interactively. And our cooperative efforts with mexico on Regional Security are increasing. So from the perspective of the United States northern command, a Security Partnership with mexico is necessary, given our security situation, and its possible and the timing is right to make the investment now with mexico just like we did with canada over 50 years ago. I look forward to your questio questions. Hello, everyone. Thank you for letting me. Appreciate it. Ive talked about this, going to talk about the relationship from Homeland Security perspective the we are new players in the world, having only been around for just a touch over decade if we are still learning who we are. And, frankly, concept of Homeland Security as a framework for engagement is still maturing to kentucky to look at the difference between the original quadrennial Homeland Security review done in 2004 and the more recent one, youll see theres been a lot of growth and we anticipate the next review which would be out in a couple of years will continue to reflect some maturation of our department. We are fortunate to have pass our head now a man who comes out of the department of defense and to brings a significant amount of expertise, working very hard to help dhs, the department of defense under partners abroad work closely elaborate. I want to start by saying the story of u. S. Mexico relationship is in many ways a story about a border. Its a border story. It started roughly you might want is just in 1848, the treaty of guadalupe a when we did delineate the line that separates the current line that separates our two countries. And for a long time that the line was viewed with all commit carried over some baggage. It was viewed from the north. It was the dividing line between us and them, from the south it was the invaders from the north, the line that kept us apart and despite the asymmetrical differences of power, the border was the location where all of those asymmetries disappeared. It was at the border were National Sovereignty could be asserted in its most to reform. Us as a result the border became sort of a symbol of the division in some ways. Particularly from a national perspective, from the d. C. But the border region to the people who lived understood the border itself didnt actually matter. It didnt really exist and so the border region became known as the third country. And we had this very difficult time for me National Policy perspective when yo you you go a state at a Community Perspective trying to reconcile how the border plate and the u. S. Mexico bilateral relationship. For a long time it was a source of tension. There are two things though that really forced us to do with the border at the national level. The first there was an obvious economic imperative. This was thrust into the limelight. Our countries cant survive economically if we are not integrated. I think at this point thats almost beyond question. Our economies depend on each other in a way that is critical to economic security. And secondly, 9 11 sort of forced this one, we begin to recognize that our National Security is integrally connected as will. So the two things that nationstates are most concerned about, economic and National Security, it became clear in the u. S. Mexico bilateral relationship both of those things were sort of him to present. We had to figure out how to make that work. Omnipresent. The real sort of, i wouldcome in with a long history of cooling, and long history of warming i guess, a warming relationship, but really i think became sort of put on hyperdrive during the Calderon Administration when he for the first time sort of stood up and came to the us and said we want to work with you to tackle the transnational criminal groups that are responsible for so much crime and violence. President bush didnt stood up and suggest. We own some responsibility for the consumption of drugs and the availability of weapons, and were going to do our best to fight that. So begin been in the early stages of the initiative we could a framework that allowed us to start to Work Together. On a parallel track the department of Homeland Security was created, and the department did something that i think is critical to the evolution of u. S. Mexico relationship is what it was able to do was take a challenges that were previously intractable, like what the border was, and redefined the challenge in a way that was mutually beneficial for both countries. So a good example of this is a dichotomy between security and facilitation. For a long time we used to believe that a secure border meant we had to limit the things that came through and that facilitate to on a person or a piece of cargo to move rapidly across the border and were giving up security. The homeland from the department of Homeland Security perspective were able to break the economy down and to actually the more we know about a person or piec abuf cargo the more rapidly it can cross the border the so what happens is where able to say the border is a place of cooperation its a place where the u. S. And mexican counterpart can work to rapidly facilitate the movement of legitimate goods and cargo between our countries. And that sort of twist allowed us to engage in ways on the border that we have never been able to engage before and foster the level of cooperation and collaboration that had been for centuries almost unheard of. And right now we are sort of in the beginning stages of that. Just today in fact secretary johnson is done in mexico city. Hes meeting with secretary down there as well as president enrique pena nieto. He will be signed a memorandum of understanding enshrined in a cargo preinspection program which will allow for the first time the officers on the side of the order to inspecting cargo moving between our countries. Just even five years ago that was almost unthinkable. So i think this perspective Homeland Security has played integral role in helping the relationship. I tossed two things that doesnt include we think we are headed. The first and the general mentioned this, north americas really position for how we engage. We think in the end that the u. S. Mexico and candid working together is going to be how we solve many of the challenges we all face independently. Secondly, and this has become more apparent, dhs and dod have worked very hard to try to try to cross the line between Homeland Security and homeland defense. And i think our work with jg of north and army north in the border region one of the best examples of how we been able to start to cross those bridges. The ability to take the civilian authorities in mexico and partner with the defense authorities in areas where theres appropriate overlap really is the next level of integration in terms of how we start to do with the Homeland Security challenges. I guess i will leave it at that spirit, thank you, michael. We have really gone from a Strategic Alignment pace of general taylor mentioned, to sort of a framework of cooperation. Lets go now to a little more of the details within the countries. Duncan . Thank you, richard. Good afternoon. Great honor to share this state with such a distinguished panel. Im going to try to make three points today. The first focusing on the mexican military traditions that we understand what the reality is of the mexican military. Secondly, to look at some changes that are new in the Mexico Military and authority to make observations about mexicos southern border with guatemala and belize. We just returned from a weeklong tour of mexicos southern Border Crossing all the way across to the east. And sing the entire border along the way that i wanted to share with you a little bit of what we observed while we were there. General point about mexicos military that he think are worth mentioning so that were all on the same page, [speaking spanish] [laughter] first of all i think i should just mention, the Defense Attache of mexico this year so i just want to make sure we have an auto correct. First observation i would make about mexicos military is that due to mexican political and military traditions, mexicos military has been focus on the homeland, the nationstate. Its been very much focus on territorial control within mexico. Because of different doctors for Foreign Policy end of military doctrine such as then we see the mexicos military has been prevented from projecting itself outside of mexican territory. This perspective has long been focus on whats happening within the nations borders. For large part of mexicos militarys history its been focus on dealing with some political threats within the country. And so as i was in second the transition to focus and organized crime is somewhat of a new task that brings with it challenges and risk. Theres a history of military coup in mexico. Thats what makes a stand and we look at the military compared to the rest of the region, to the rest of latin america. They had maintained a distance from politics and there is a Mutual Respect between the political branches of government and the military branches of government and thats a fine balance that is struck there but it is a very important one. Lastly i would sit on the general observation about mexicos military is that it is the second or third most trusted institution within the country. Time after time in opinion poles across the country the mexican military is one of the most trusted, first of all the church the second is the arm and third of all is that the navy. After the teachers, professors, we in academics like i myself. Now that is something that is a source of enormous pride for the mexican military. Part of it of course comes because from the fact that so many of mexicos citizens have either served in the military or of course have government who have served. And is seen as being a very, very highly respected institution. Let me move on to talk to some of the changes i see ugly in the Mexico Military right now that are relevant for this conversation about Homeland Security. The war on organized crime as i mentioned earlier on from focusing on a little threat, guerrilla threats within the National Territory to focus on organized crime means that you are an number of challenges that the mexican military has to deal with. What is the change in a in the e of the threat moving from a lot of rural conflicts do not been present on the street have cities and thats a different operational theater. Steadily because of the close contact with mexican citizens theres enormous concern for questions of human rights. And, of course, theres been some high profile cases where mexican military have been accused of human rights abuses and this is a very, very sensitive issue within the country. Furtively mexicos military is being forced to take a somewhat of a police function for which i would argue is that particularly wellprepared thirdly. I dont mean and equipment orienting but in terms of its legal basis to mexicos military doesnt have the Legal Function to be up to the oppressed. It is there to stop the illegal activity but it cant make an arrest and had to wait for the police to come in and do that. This puts the military and a very difficult situation what is offered on the streets or cities across the country. Second factor which is bring about change within a mexican military, i would say this is cooperation with the United States. Weve seen that through the initiative to of course there has been the sharing of training, sharing of intelligence and, of course, we have seen the donation of equipment from the u. S. To mexican military. We have moved into the phase where the equipment side of things is much less important, that effective intelligence sharing and the training is underway. This is helping to shift perspective i would argue within the mexican military. We have seen it much earlier on within the mexican navy and we are beginning to see a very, very strongly within the mexican army. This process as was mentioned earlier on the road again under felipe a calderon and his war on crime. We reached a point where there was sort of a stop, a hard stop at a reexamination of the relationship with the United States. A lot of people within the currentrifecta but did not feel comfortable the love of interaction between u. S. And Mexican Security agencies. And was intent on the part of the Mexican Government to try to centralize all coordination for all cooperation to what they call a single window for cooperation. That really did pose a huge challenge to Security Cooperation between the two countries in the first 12 months of this administration. But since then weve seen a significant opening up, i security relations so that now there is a much higher level of trust and there is a much higher acceptance within the Mexican Government, that this is a necessary thing. Key events such as the rest of held shop o. Guzman have played the role in the and, of course, the escape of l. Chappell from prison has provided another threat or challenge to this relationship and jessica agencies are now saying who is it that we can really trust and wanwhether competent counterpars on the mexican side . I mentioned a few times and we talked about the mexican army and the mexican navy i would mention here that the fact that the navy has been a more progressive more open institution in mexican military recent history is a very, very important factor. Its seen as being a more trusted institution by u. S. Counterparts and increasingly has been seen by this administration as a was by the Calderon Administration before. I think this is something we are seeing forcing a change in attitude on the mexican army as well. The mexican army is now beginning to see that there are certain changes world views that need to be a doctor if theyre going to keep up with the steps being taken by the mexican navy. A generational shift within the mexican military progress in younger officers as they have been educated in a different system than their predecessors. They have a much more open attitude towards the world they have been raised in an extra which is globalized and those attitudes are beginning to be seen as well. Lassoed with a view toward the future of peacekeeping, mexico made the decision that will put a stake in peacekeeping operations that this is something i need to focus on and understand what impact it will have upon the mentality of the military. Ive gone horribly over to the music couple points that maxis southern border. As we were down to and crossing from west to east is extraordinary to see the massive investment that is being undertaken by the Mexican Government in terms of building installations on the southern border and remote from the southern border as well. An attempt to get a handle on the skill of illicit traffic that is booting from guatemala in particular northwards through mexico to the United States. A lot of focus in this country has been on immigration and the undocumented migrants as they come through the i would argue far more interesting is whats happening in terms of expanding mexicos military presence in the tabasco. Thats something which is a remarkable. We are seeing fixed location basis that are highly credible and were also seeing mobile units moving around. One in formal Border Crossing we visited is just a river crossing. Theres a fear that goes back and forth across, between the two countries and people use this frequently for comments. Whats interesting is there is no presence from mexican customs, from immigration, from health, et cetera but there are mexican military representatives there to try to stop the illicit flows of drugs and weapons that come in. This is something which may seem like a small step but, in fact, is revolutionary. The fact is that you now have the presence of the mexican state at a much higher level than youve ever seen before in mexican history among mexicos southern border. That provides a whole new area for cooperation both with their counterparts in guatemala and belize and, of course, for the United States, and i believe there. Thank you. That was a great context, for the tremendous transition that has been made the last years in terms of how the militarys role has played in the Mexican Society and in the relationship with the United States. Thats a great context to offer the rule general wiggins who can talk about how its going on the ground. First, id like to say thanks to my mexican friends who are here. I think is visually highlights where the relationship is. I had been as you were a part of army north for the past six years and have been working with my mexican counterparts so those passages throughout all of mexico. We talk about relationships come and relationships are key. To show how important that is, in 2006 standing next to some water in the back of the room, meeting with their mexican counterparts, a tall one star general at the time of stand up against a wall struck up a conversation, literally now Flash Forward to 2009, brought into this general. Because there trade commander of the basically equivalent, then Flash Forward a few short periods later and he is the chief of defense. So i have the distinct honor and privilege to be a good close friend with general salvador del fuego so i think is the guy who is leading the transformation in the mexican army. And s so youve heard of body or an interest of time so we can get to some important questions i will just say what my perspective is of my friends and ask them from particularly the army. Ive had the privilege to conduct many training sessions with both the army and the navy they added that one thing, and im not countering your opinion i think weve got to be careful how we draw conclusions between them and we draw those conclusions from because i correlate it to teaching somebody to fish or providing them a fish. There is a big difference in the process and i will tell you we worked very hard to work through really on the intelligence for example, to talk about intel tries maneuvers and how you work site exploitation and other things to drive onto the energy execute an operation. And i can take that both have really excelled in that arena. And in some cases weve got to be careful because some of the agencies that are within mexico, and i wont remember who they are or mention of the our, you have to release the controls. You have to do that. And so i have actually been throughout mexico. Like i said i have seen the programs that they put in place to a lot of people ask me, southern border strategy, mexicos southern border strategy, seems a bi big countr, how do you do that . When i asked him help me get the mexican army is, i get in at about that is welcome the army is 20,000 its about 220,000 strong, 106 infantry battalions thats not a click of parachute brigade Northern Special force of the and 45,000 reserves into army. They have 13,000 or so in the air force. And in their marine they have 32 and 24,000 in the navy and the marines. It is a sizable force in different capable force and a very professional force. And as you heard stated here, they operate and one of those publics and privates in the world and that is your own home. They jumped into chihuahua, mexico. They went into the urban complex. They orchestrated Operations Side by side and within that the comment that came out of the after action review from the 82nd airborne paratroopers was, the most beneficial training they got out of that the human rights training they conducted at that facility. So they are working very hard to make sure that professionalization and those programs that the general has put forth and really gets after some of the things that youve heard about that theyre taking care of and i can tell you, ive seen it personally, been on the ground with it and talked specifically within young soldiers with sedana have been with the training and been out there prosecuting the fight. For me it is a distinct honor when i go and meet with the human rights directorate that the general has established and i talk to those individuals and i see what theyre trying to strive and get after. A lot of people approach me. We read about things in the paper. You have to realize as well that there adversary within mexico right now that deals similarly what we had in afghanistan and iraq. They try through information and campaigns and other measures try to make things certain places and ways. I can tell you ive seen firsthand knowledge get them on the ground and bet after these issues. This is professional army. One i take pride being side by side with. Ive been you there the southern border and trekked through the mountains and jungles with the soldiers and i can tell you once you get to the top of one of those hills and go through the jungle and sharpen the machete seventh time the first mile you trekked, you realize how difficult to operate in that environment and how key it is and you realize the adversary is adaptive, he is very cunnings, and a lot of cases they adjust your Tactics Techniques and procedures, when they go about smuggling whatever they will smuggle. For me i will tell you it has been a distinct privilege to work side by side. More importantly ive seen maturation process in the military in the relationship on both sides of the border. Ive seen the u. S. Military gain an appreciation of our counterparts and understanding of the professionalism and confidence of the mexican military and ive seen the mexican military on the other side exude that professional competence and exude capabilities and capacity to take on and i will tell you the threat to north america, although we talked about Transnational Criminal Organizations that is not the threat were focusing on or should be focused on with that security piece. There is a threat out there on the horizon we have yet to really materialize or understand. That bilateral defense cooperative framework we build with our partners in mexico will be key to create a defense in depth and that strategy as general simfugos and i believe he is right, needs to corporate stabilization of Central America and tie itself into south america with countries click colombia. We have got to work that and make that come to fruition. We have to make sure we seal off and make it difficult for ad very larry in the future that will threaten both our democracies we take that. That is not Transnational Criminal Organizations although they do pose a significant challenge and danger but i think there is a huge threat out there on the horizon that we to prepare ourselves for. Working with our partner in mexico, making sure we stand side by side with them, is the only way we find a solution to this threat to north america. Thank you very much. Look forward to your question. Thank you, general wiggins. I think what you heard is very interesting array of perspectives. You heard, and lets not mince words, we have three representatives on this panel who are from the government, from u. S. Northern command, from department of Homeland Security and from army north and i think we heard very encouraging remarks regarding the relationship. Duncan is an academic. He is not from, kind of from the government but not really. He is an academic. So he has given us a perspective that is also encouraging. It is a little more analytical but he also raised some of the challenges and there are some real difficulties in this relationship. Mexico has particularly after the change in government, there was this period of, about a year where the things were difficult. Things were changing from the very close relationship during the Calderon Administration to the point where were once again we could Work Together but there are challenges within mexico regarding security. The role of the military in this policing function, the police has not yet taken on that Mission Capability yet, to be able to address this issue. So theres a long way to go but getting back to our topic of Homeland Security, the importance of u. S. , of mexico for u. S. Homeland security, i think youre seeing a very positive, kind of collaboration and cooperation working forward. But very much like to hear your thoughts and your questions on these issues. So i open the floor. I ask you to, we have a microphone here on the sides, and sir, i think you have a microphone to hand to the individuals . Yeah. So if you would hand, once you get the microphone, if you would state your name and what organization or unit youre from and ask your question please. Open up the floor. And while were waiting for someone to bet the courage to ask the first question ill, yes, we have one here. Please. You know, please, join me, this is bob pelegren, a very courageous man to take the first question. Big round of applause to bob. [applause] thank you, sir. We go way ack. We were lieutenants together in germany in 79 so. With, advent of mexico contemplating idea of exporting security to the pko, peacekeeping operations, i guess what do you think will happen first, that or bringing all of the partner nations from the south together and sitting down together and in a unified effort to, you know, quell the violence coming from the south . Thank you. Its a really important question. Ive seen how negotiations take place in Central America before on less difficult questions than that. I can tell you it takes decades. I think were likely to see mexican military forces in peacekeeping operations before that actually happens. And not that there isnt good cooperation. We were talking before the panel about the strength of cooperation between the mexico and guatemalan border but however government to government cooperation is an interesting issue. There is aning interest with the belize case that is very positive at this but with the military not so much. Another fact we have to remind ourselves of, while the mexican military significant side has substantial resources and capacity, their counterparts in Central America do not. One conversation we had with a vice admiral in chapas about cooperation with their counterparts in guatemala. He said these guys want to do a good job, they want to cooperate but they dont have the resources. From the guatemalans themselves we heard similar story. We wish we have the resources our mexican counterparts have because we would like to do a lot more. The followup comment i think was really illuminating, which was, although we was Guatemalan Military do not have the resources the mexicans do, we are the only representatives of the guatemalan state in this particular area of the country. They said nobody else is here. There is nobody from the education ministry. Nobody from the health ministry. The people turn to us for their concerns and their interests. And thats something which is radically different as well. So when you try to compare mexico to its Central American counterparts i think you see a huge difference. That helps explain why it will be so complicated to do that. Would you like to add . No, the bottom line, i absolutely concur with every little bit of that. One thing that is a little disconcerting to me, when i go down to the southern border of mexico and i see the mexican military and guatemalans patrolling simultaneously using harris radios and communicating with each other and i come up to our southwest border and our cpb doesnt even have harris radios and cant communicate directly with the humvee across the border. In some case what is mexico is doing with our partners to the south and particularly guatemala, and smaller case belize i applaud. This is something were trying to mitigate on our own southwest border to be able to communicate as well. I truly believe the peacekeeping operations theyre both embarking on will happen relatively sooner as opposed to later. They have sent out personnel observing and embedded themselves with some training. They are training with some countries right now. They will look forward to a establishment of a peacekeeping center of excellence per se within mexico to train their officers and soldiers in peacekeeping operations. And that was initially identified to be established, i think 19, year 19. Now that has been pushed to the left, not the right, to hopefully get that established so they can start training their officers in peacekeeping operations. And that is a positive and good sign and very Capable Military i think the world could absolutely use that type of partner doing peacekeeping operations with the capacity and capability that the mexican army brings to the world. So, thank you very much. Just a couple of other data points that will illustrate both processes are happening in parallel. So even though one may occur faster than the other, they are both happening in parallel. In our partner capacity with mexico we have programs and interfacing with them on peacekeeping initiatives at the pace they desire to go and also on Regional Security matters, you know, in really groundbreaking nunnish tiff at the instigation of general sinfugeos. He and northcom and southcom are collaborates on a conference where we will invite the chiefs of defense of Central American countries and northcom and southcom to address some of these Security Matters from a regional perspective. That is also a positive development. So i think you will see this is happening in parallel. One of a quick point here and blue sky, we think of opportunity for mexico, canada, United States to Work Together on Global Leadership issues. One of the ideas we came up at the Wilson Center was a north american brigade for peacekeeping. May seem like something that is way out there. It is very, very intriguing idea. If you see three military force of the countries come together in a peacekeeping operation around the world there are enormous benefits that come out of a operation or exercise like that. There is another question over here. Sir, colonel delarosa, north, g7. You mentioned we had tactical engagement and Strategic Engagement but you identified in your comments there is gap in between. Can you expand on that a little more and techniques we can use to close those gaps you identified . As we seek to get grand you larry at this on that grand you lairty on that request, one of the things move our participation up from the level. We have done a lot of training with mexican military forces but they have largely been individual and small unit training, one of the immediate things and working with sdana and smar, moving to larger unit type operation training. That is probably the first area were focusing on. Second, second is in the staff functionality at larger unit formations on operations and the specific application is peacekeeping operations. One of the requests we recently received for example was technical english and battle staff training to allow for, you know mexican military individuals to embed in large unit staffs that are conducting peacekeeping operations. And so were seeing requests for a larger type unit operational engagement. Thank you. Other questions . Good afternoon. Major figueroa, army north. Like dr. Wood mentioned as he visited the southern border he has seen a lot of mexico is focusing, a lot of facilities are being built up. Have you seen any Security Cooperation with mexico, with the southern borders, with guatemala and belize and what type of Security Operations are they doing with their Southern Partners . Well you know, one of the things that was enlightening to me, and i didnt plant this question although he is from my organization, thanks. One of the things that was enlightening to me is, when i travel down my last time to the southern border, i actually saw field Security Cooperation being done by mexico with our guatemalan partners to build partner capacity and capability within the Guatemalan Military which i thought was absolutely stunning because they were actually doing planning training with the Guatemalan Army and there was nobody else around. And then, i saw the same thing go on with our belize partners as well. I thought to myself, at that point in time, when i remember a vignette that took place back when there was a guy named chavez down in venezuela. President chavez at the time said some pretty nasty things about the United States in an open forum where he had the stage and our president of the United States at the time, went back at president chavez and basically countered his comments. I remember that a former president in mexico named fox, stood up as well in mexico and chastised chavez for his comment and basically told him, sort of the same things our president said. But the difference was, not a lot of people and not a lot of press, because i read a lot of press down in central and south america really paid note what we were saying here as americans but when former president of mexico stood up and said it resonated throughout all the latin american press. To me i learn ad very valuable lesson, mexico can resonate with come countries and bring them to the table where we can number that is why i bring up guatemala and belize. Mexico is the key to the southern border and they have a incredible relationship with both those countries that are absolutely key to mitigate the gaps so the adversary can not be using it. What i found out as well in southern mexico that i thought was absolutely interesting, there are individuals, tribal, indigenous in southern mexico that dont recognize mexico or guatemala as their country. They dont speak spanish. They speak mayan. So when you deal and you have those individuals that dont recognize a border, that create as complexity all of its own. And therefore smugglers can take advantage of that, and sort people can take advantage of that and traffic a number of things across that border. We have to Work Together in order to seal that particular piece off. The key is really our partners, by, with, and through. We learned that in the middle east. I think we can take that lesson and apply it as well. What is really neat, and think perfect, we heard it mentioned here it is really a north american solution. If we dont address it and apply it like that, make it solely an american solution we will fail. Security will not and solution will not be as good as we can get to unless we do this as partners. Please. I want to get a question for michael as well, if i may, i know michael, duncan mentioned that after the first year of the pineto administration there was a single window, that was somewhat brought us back from the high point of the phillipe Calderon Administration. Talk about the Homeland Security. Have we gone beyond . What is your Homeland Security perspective on that . So first, two things. The change in administration almost had no effect on our relationship because the types of things that were challenging for the government of mexico at that time were primarily sort of the hard Law Enforcement type of activities. Deas and atfs. That type of engagement was the stuff that was particularly challenging. We were facilitating commercial trade and travel. Something they not only desire to continue at current rate but to expand. While at beginning of the pineto administration, there was a lull in types of hard security engagement that didnt touch the department of Homeland Security. So we were almost unscathed. That said we now i think sort of more broadly as a u. S. Government, i think were at, and i think duncans characterization was correct, were basically at place we were before. Doesnt look the same. The channels are not exactly the same. The way we coordinate isnt exactly the same but level of cooperation has certainly met, certainly expanded over the Calderon Administration. In terms of intelligence would you agree with that as well. Absolutely, absolutely. If i could make a quick comment on the southern border and i will being quick, this notion of dealing with Indigenous Peoples is something we deal with on a regular basis on the border. One of the things where the cooperation between military and civilian expertise is actually highly valuable. From a Homeland Security perspective we have a lot of experience how you deal with these regions of the border that are not necessarily under the same sort of rules as everywhere else. And so, thats one area where i think we can collaborate. Taking that down to the southern border, mexico southern border with guatemala, it has not been highly publicized but somewhat wellknown there is large operation, large, i say 300 people, operation being done by mexican immigration to apprehend those smuggling people. We expect this year mexican immigration will apprehend 100,000 more people than they did in 2013. In 2013, they apprehended 87,000. This year we anticipate they apprehend 180,000, 190,000 number. This is largely done by 300 immigration officers in addition to people already deployed. The importance of trying to cross this bridge between civilian and military activities. Certainly, im not advocating that the military should go out and arrest people who are crossing the border illegally or advocating that they should undertake militarily activities but certain think there are places there is overlap developing intelligence packages to get stash houses or using communications to identify smuggling routes where there are areas of overlap. In the u. S. Side we started to cross those bridges, in many cases do quite well with the military and provide direct support to civilian action. If we help that model take root in mexico in a way it hasnt quite yet i think there is a lot of growth that can happen. Thank you, michael. Thank you all. I hope you all are encouraged as i am with the kind of cooperation weve been hearing about. Unfortunately the time, time went fast but general, you had a question . Well, lets, if you dont mind in terms of time we would love, please if you have a question or comment we would love to hear it. Its coming. Thank you. Im the general defense secretary of mexico thank you. I appreciate your comments on the mexican army but, unfortunately at this moment in the media there are the concept about the mexican soldier dont have the culture about the human rights the general say about it. You know what these, this concept in the mexican army and navy and the air force. Do you think this problem, the the as you say against to the permit the mexico or mexican army with the criminals, do you think its possible to, the soldiers in mexico have a problem in this moment because the human rights is long culture in the soldiers but the media maybe dont know of what is the exactly the problems and education in the schools in mexico . I dont know. Very quick answer to that, i would say that the Mexican Government in general has done a poor job of sharing information with the mexican public and with the International Media about exactly those kind of programs. A lot of people are unaware those kind of training, either national or cooperative with the United States, that those programs exist. I think there is also very difficult when were dealing with a huge institution, that is the mexican army, to make that transition overnight. It is a huge task to try to change the mentality the way of thinking, of, your average soldier as well as their Leaders Within a short period of time. Now the education that has happened within mexico for some of the younger troops that are coming in, where human rights has been a standard issue within the education system, i think its a lot easier but a lot is about change agriculture within an organization i think and as we see in Large Organizations across the world it is very, very difficult to do that. You can change the organization. You can change the equipment. You can change the culture around way of thinking is very, very difficult task to do and it takes a long time. This is where i always come back to in mexico, we have to celebrate a lot more about all the good things that have happened with mexico, while at the same time recognizing how far we have to go, on all issues we talked about today, i think that applies. I would say especially true for human rights. If i can quickly make a comment on that the issues in mexico, the army in particular, has been very hard trying to work on human rights issues. Last year there were couple incident which the mexican public became very concerned about human rights and as duncan mentioned earlier, the use of the military in this role of a policing function has brought them into a different role. So it is highlighted this issue of militarys ability to deal with the public in this manner. But i call your attention, general, the examples from columbia. Columbia, as duncan said, literally had to change the culture and they did. And one of the things, the reason i want to highlight this, bringing media in is so important because if they dont know, they cant talk about it, but, if you bring them in, the other side of that is, theyre going to want to have an input and in how, and shape how you do training. So there is a double edge to this. Changing culture takes that. I thank you for your question. I thank all of you. Ill sorry we gone way over our time. This has been a fascinating panel. I appreciate all of our perspectives and your questions. Please join me thanking our panelists for a wonderful job. [applause] gnawed [inaudible conversations]. He said from the beginning, you know, i look in the mirror and i dont see a president. Our response was that was quick looking in the mirror. From the beginning he said, this is nothing i ever thought about. This sunday night on q a, former on Mitch Daniels and his decision not to run for president in 2012. I became convinced as we came towards the end of the process that he is very competitive and i think if he had made a decision to do it he would have had his heart and soul it into it but from the very beginning it is not something he ever thirsted after. Sunday night at 8 00 eastern and pacific on cspans q a. Signature feature of booktv is our all day coverage of book fairs and festivals from across the country, with top nonfiction authors. Here is our schedule beginning this weekend. Were live from austin with the texas book festival. The following weekend we are live in the nations heartland for the wisconsin book festival in madison. At the end of the month well be in nashville for the southern festival of books. At the start of november were back on the east coast for the boston book festival. And in the middle of the month it is the louisiana book festival in baton rouge. And at the end of november were live for the 18th year in row from florida from the Miami Book Fair international. And the National Book awards from new york city. Just some of the fairs and festivals this fall on cspan2s, booktv. A talk about the future of Shale Oil Production, Manhattan Institute senior fellow mark mills argued that new technology has the potential to double u. S. Production. Panelists also discussed Shale Oil Production in other countries an the Environmental Impact of fossil fuels. This is an hour. All right. Hello, everyone. Thank you very much for joining us here this afternoon. My name is or ren kass, im a oren cass. Im a senior fellow at Manhattan Institute. Were fortunate to have the opportunity to talk about the Energy Markets. I think the Global Energy market is obviously at very interesting crossroads right now. Shale boom created enormous disruptions over the past several years and the question is, was this a blip or in a sense a new normal . Is there more to come . Certainly recent headlines imply the boom is over. I cant help but feel there are certain people in government and in media who are hoping that this was a blip but we have mark mills who thinks it is the new normal in a sense and theres a lot more to come and that in fact we could be headed to production here in the United States at the same kind of 5 to 20 a barrel level only saudi arabia sees today. And i at least have learned that when mark mills said something about energy and technology i listen very carefully. Mark is a senior fellow here at the Manhattan Institute. He is also the ceo of Digital Power group and he is a faculty fellow at Mccormick School of engineering and applied science. So he bring as really unique combination of expertise in the business of energy, in the theory and policy of energy and also in the science of energy. And think the paper he has written on this subject is really new and exciting and suggests that the direction were headed is not where the media is necessarily predicting it will go. Not even where a lot of analysts say it will go but in a direction that could be phenomenal for america and for Energy Consumers around the world. So, mark mills. [applause] thank you, oren, for the kind introduction and thank you all for spending your lunch hour with us here. Im going to use my time with you after lunch here today to give you a broader framework to give you think about where the oil and Energy Markets are going as opposed to give specifics in my report that you have, shale 2. 0. If you read that, subject yourself, you will know everything i know. If you read the citations and go to the primary sources you will know that i know. Many people in this room know much more than i do about the oil and gas business. I want to really do a framing presentation for you, how to think about Energy Markets and i think thats critical, in fact. I have always thought that of my life because maybe it is bias of being a physicist, you like to have frameworks to think about things and you try to build things within inside the realty of frameworks. You can tell a lot about the future when you know boundaries of nature are. That is what i want to do. I will not give you very specific information about shale fields, because that is in my report. I really cant talk about energy today in particular without starting. You have to acknowledge the release of the popes environmental encyclical, that is released officially today. As you know, probably know, it was leaked globally earlier this week. So it is not news whats in it. Amongst a lot of things that the pope wrote and, without regard to what people have already claimed that he wrote or will yet claim that he rote but that will bear no resemblance to in fact what he did write, without regard to that, the one thing that is in the encyclical, the call for accelerated abandonment of fossil fuels of the so if you havent read that, that is one of the, one of the recommendations from pope francis. So given the kind of global Media Coverage this already got, what weve got going on here, we reignited this intellectual race, debate about how society gets its fuel. That is an old debate, right . In encyclicals those as an aside, for those that are not familiar what encyclicals are, in encyclicals popes properly give advice to the world, their faithful but world in general about moral principles. That is what the encyclical is about. That is the animation of it. What i will talk about energy and particularly hydrocarbons from the foundational principles of physics and derivatively economics this is what you call a two magisterium, for those familiar with steven gold intersection of the debate about evolution and theology. He talked about the two magisteria. This is good way to articulate that. The intersection of the two and resolution of them where we create policy and politics, that is how that happens. That how we create, if you like the operating system of governance is the intersection of two magisteria, of morals and physics and reality. You have to dieth with both. As important as morals components are, and chronological to say that theyre important, it is also important to understand the underlying principles in the magisteria of physics and economics. That is what i will talk about. I will talk about how this is relevant to energy. You know energy is important. This is not a discretionary subject for the human race. I mean energy is not just fundamental to society. Its the very existence of life in the universe is anchored in the fact of energy. It is not a discretionary commodity. It is foundational to everything. It is how we do everything from growing to distributing food and growing pure silica and distributing data. Energy matters in everything. To give you idea what the challenge are in the imagine steer yaw of physics and economics. I will give you instead of big picture, give you technical specifics what i mean by the challenge of intersection and aspirational views that are frequently pursued in the energy domain. Let me start with cars. All of us are familiar with cars. The world has a billion cars on the road today. Well have about a billion more cars on the road in about two decades as a lot of people in the world become wealthier. Now, you know this. I mean there is a lot of people who believe that a lot of those cars, maybe even most of them could be propelled by batteries pretty soon. I call this tesla derangement syndrome. [laughter] let me tell you why. Nothing to do with elon musk. So this is sort of facts that you need to know at the a very specific and narrow level. It tells you a lot. Roughly speaking electric cars and gasolinepowered cars excluding fuel weigh the same. Have same components and do things the same. The key thing you need to know when you build a vehicle, how much the weight of the fuel you have to put in the vehicle so it can be unheatherred and fly or drive. The metrics matter. Derivative metric how many miles you can go pure pound ever fuel. This is metric that is anchored in the physician chemistry. It it is h up number. There is limit of how many btus per pound and how many miles you can go through pound. Roughly speak aghast lien powered car, average car today by six miles per found of fuel, per found of fossil fuel, gasoline. A Battery Powered car can take you a third to a half a mile per pound of fuel. Quite a difference. Those say, technology will get better, batteries will get twice as good somehow. First you should know that the National Academy science looked into issue of batteries Getting Better. They concluded there is no physical chemistry will permit doubling energy densecy of batteries wildly deployed. Most visible science. If you double the density of batteries widely deployed you get to go about a mile per pound of fuel. If you doubled the effectiveness of a gasoline powered car, which you can do with existing Technology Already known, so if you double effectiveness of that you get 12 miles per pound of fuel. That is locked into the physics of these two forms of chemistry. This tells you why there not ever going to be any batterypowered airplanes. Probably wont be very many batterypowered cars in the future. This says nothing about the underlying economics. Battery fuel is 300 more expensive than the fossil fuel. Give you another sort of example, one more to frame the economic, physics what is going on. In this case we talk about the production of electricity. Here is another law of physics very wellknown, law of thermodynamics. You heard the words. Relative one, increase temperature of come bus shun, in this case combustion of burning fossil fuels, you increase the officially of combustion. Temperature goes up. You get more efficiency. If you can find steel and do research and development to produce superior steel would allow 75degree increase in average temperature of combustion you could increase the average efficiency of power plant by three percentage points. Thats it. Three percentage points. If we employ the steel to americas power plants and 3 increase and combustion efficiency would supply to the american grid 1000 more electricity than all of the installed solar capacity in america today. Fairly big gap between the underlying, sort of physics what is possible in these two domains. Usual response when i say this kind of thing, in particular to students but to everybody, is alternative stuff will get better. Of course it is going to get better but it is a pretty big gap that you have to overcome on get better part. In fact the gap is so enormous. You dont need more subsidies or more solyndras if you like to be more political, you need new science to overcome that gap. I dont know if you followed this, google reached same conclusion pretty recently. In 2011 google quietly abandoned a big project they cutely labeled r, c. Renewables cheaper than coal. Spent huge amount of money and team to produce alternative technologies and cheaper than hydrocarbons and they bailed out. Last year the two lead engineers in the project published article in the ieee spectrum, most widely read engineering publication and largest society in the world one which i happen to be a member a long time. Google engineers wrote, a very honest article, they discovered in their work it was impossible to compete with hydrocarbons, without in their words, new science. So new science could come. Im, a huge an of the belief that we dont know all science but new science doesnt come easily and it doesnt come soon. But new technologies do come along and new technology that has come along, look, if you think about it, so the claim that Technology Keeps Getting Better and will make alternatives cheaper is true but technology has a funny attribute. It is agnostic. It gets better everywhere. It got better in the hydrocarbons at same time it was Getting Better in the nonhydrocarbons. It got better faster in the hydrocarbons. You know this. This take us to shale. The shale revolution is technological revolution. Unlocking the ability to produce oil and gas in a sense literally from rock. Which is very interesting transformation that is funnily fundamentally unalterably a transformation. That technology has got enbetter and gotten better at furious pace. I dont know if you follow this data, the national level, proven efficacy of shale rigs last five years has been 500 . That is the amount of Energy Produced per dollar capital spent on a rig has improved 500 . That one fact alone, that single fact tells you why there has been a shale revolution. Over the same time period, measured the same way, alternatives gotten better too. Batteries gotten better. Wind farms have gotten better. Solar arrays gotten better. Measure same way, capital spent, energy out, they improved a rate one quarter to onehalf as fast as shale technologies. That is gap hard to close when one is Getting Better at double and triple the rate. Consequence of this kind of Technology Revolution that was unexpected by most people, i hear nobody expected it, i do want to take some credit for expecting it with my colleague computer hueber, a fellow fellow here at Manhattan Institute in our book which, sort of explained to you what our view was, the bottomless well. We pushed this some time ago. We anticipated this. We were voices in the wilderness in heyday of peak oil. We anticipated exactly what happened, technology improved and improves fastest in the areas where there are inherent advantages which happens to be hydrocarbons. So 2014, last year, the United States Oil Production went up by over Million Barrels per day. That is the fastest single year increase in the production of oil since the dawn of the oil age a century ago. Total Oil Production in america, you know these facts went up 4 Million Barrels a day over last seven years. That comprised more than 3 4 of worlds total increase in oil supply over that time period. In fact the shale fields were a country, they would be the fifth largest hydrocarbonproducing country on planet. And they have just begun. Remind you, this is transformation that did not come about because somebody discovered new oil, which is how commonly written about, the discovery of shale. These shale fields were mapped out a century ago. Weve known they have been there a long time. We know it is called source rock. We know it contains oil and gas. Geophysicists know it was aware of i for a long time. Was not known is technology to extract it in affordable way in over a decade. This is biggest single disruption in the Energy Markets in the United States and the world for 30 years. That brings me to shale 2. 0. The United States has spent over the last 10 years in private money about 600 billion in building out shale infrastructure. Over the last decade we drilled about two billion who are soal wells, not counting vertical feeds in hundreds of thousands of shale wells. If youre not doing math in your head that goes around the earth 2times. And back a couple times. A lot of well fields. But all this activity, all this money and capital, all this drilling, all formation and all this processing generated something more than just more oil and gas and jobs and revenues to the federal government, it generate ad tsunami of data. This is fascinating. Think about it. Tsunami of data comes at a time in history which is unique. Were on the verge of profound changes in our ability to operate complex systems because of big data analytics. This wasnt the case 20 years ago or 10 years ago. In 21st sentry this kind of data set has profound value. Total data set with shale oil is measured in hundreds of pedi bytes and unmind. To give you number if prefixed challenge, the Health Care Industry is in the same range of 100 pedi bytes. Untapped efficiency from Health Care Comes from mining data. It is through in agriculture. True in the Entertainment Industry and manufacturing and particularly true in the oil and shale industry and particularly true in the shale indus because it is such a young industry and a new industry and driven by entrepreneurial spirit. Driven by the same kind of spirit, same kind of entrepreneurial drive that created oil age in the first place which makes it very receptive to technologies because it is fundamentally a Technology Innovative driven business. This is what is sort of fascinating. Unwittingly when the Silicon Valley investors poured billions of dollars finding alternative to hydrocarbons, the people that changed game, the twice in Silicon Valley created Data Infrastructure for big analytics which will unlock more cheap oil and natural gas in the future. Shale 2. 0, this is what will happen. Three complimentary things take place over the next decade. We will get underlying improvements in the existing technologies at least equal to that that already occurred. The drilling, the operational capabilities for pumps. The seismic mapping. All the stuff has a matter of as i said aggregate 4 or 500 . That will happen again. Second what happens, layer in new stuff. Only 10 of shale rigs are fully automated. Automated ones are more efficient. Well have robotics an industrial drones. That will layer into the system, get absorbed quickly. All of this will be optimized with analytics and big data. What well do is uberize the entire shale industry. This is a kind of uber of everything is the new trope but true of what analytics and communications are permitting in complex, Big Industrial infrastructures. When you think about this as bottom line, no reason to believe but in fact every reason to believe adoption of new technologies in particular new an let tick techniques come faster, not slower in the low price environment. Time you try new things when margins are new things. You dont try new things when mardi gras is going on. You can make money with factor drilling, doing same thing over and over again when it is not particularly efficient. This whole revolution began with oil being cheap. Shale fields began when price was below 40 a barrel. Took off below 50. People couldnt get into bakken fast enough. Now it drops to 50 to 60 it is over . Technology has gotten 4 to 500 better and it is over when prices are same as they were with Old Technology . Operators today make same margin at 55 to 60 a barrel as they did at five, six years ago at 95 a barrel. The revolution is far from over. May be for players that are poorly operating and overleveraged but not for the core business. The bottom line is specific forecast which i put in my report is if you think what it means to double or triple the efficacy of shale rates with new technology, translate that into dollars per barrel. We know average cost to find or lift a shale oil ranges from 10 or 12 a barrel to 55 a barrel, depending where you are. Thats the range. If you double efficacy without changing your Capital Expenditure you get your average costs, do the arithmetic here to 5 to 25 a barrel. That means that the United States shale fields as oren pointed out in his introduction as i conclude in my report, shale 2. 0 are on track now to having the name inherent cost metrics and the same scale of physical resource as the vaunted super lowcost saudi oil fields. I think the saudis know this. They fully understand it. They think it es profoundly transformational, not just economically but geopolitically. Also socially transformational. The fact the United States has the capability to double the same production again. We added 4 Million Barrels per day in the last 10 years. We could easily do that again. We could double that. We could double down. Impact much that will be profound on prices, be profound on saudis and russians. Would be a very good thing for the world. The world is going to grow. It will be increase in aggregate Energy Consumption in the world no matter whose for cast you believe equal a the least to addition of United States worth of production. Thousand of billions of air miles and thousands of billions more road miles driven 20 years from now. Remember my miles per pound of fuel. That is a lot of pounds of fuel need to be produced. It will all be dominantly in the 80, 90 range, hydrocarbons. I think is profundly bullish for the world. Profoundly bullish for economic growth. Not just Wealth Creation but wellbeing. But nonetheless, we have spent, we will continue to spend, we spent, the world, hundreds of billions of dollars, north of trillion dollars in last 15 years devoted to idea of disrupting or displacing oil markets but hydrocarbons, you know this data, still comprise 85 of the Worlds Energy supply despite this aspirational consumption of vast quantities of capital. Well spend more of that yet. Odds are some politicians want to make hydrocarbons more expensive, taxing them, or equivalent, onerous regulations, making hydrocarbons more expensive does not make alternatives to hydrocarbons cheaper. It punishes everybody in the world, particularly the worlds poor. Brings me back to, i want to end with the popes encyclical. Hes it does something in his encyclical, i wish i agree with. I agree with a lot of moral teachings. Worth reading what he has written in this about our responsibility to the poor in the world. That is the essence of this encyclical by the way. It is about poverty and obligations of the wealthy to the poor. He gets off on side tangent on Climate Change and fossil fuels but fundamentally it is about our moral obligations to the poor in the world but the pope also says two things which are important. He does call for debate and dialogue on the science. Doesnt call for silencing of the scientists but calls specifically for more debate and discussion. He also calls for more basic research. Which is what the google scientists did. What i did in my previous Manhattan Institute paper which may have not read. I feel passionate funding basic science. We need more basic science. Fortunately though, here is why im fundamentally an optimist, tomorrows hydrocarbon technologies clearly can fuel the world and do it affordably. And tomorrows scientists, im quite confident, will, they will pursue new science and eventually find kind of magic everybody hopes will ultimately displace and compete affordably with hydrocarbons and do it in a way world can afford financially which is nontrivial what it talks about transfers. I have to say from a moral perspective we have the obligation to do both. Thank you. [applause] all right. Thank you, mark. I thought that was fantastic. We are going to take questions now. I will use my prerogative to ask the first question, because i have the microphone. I guess one thing im struck by, mark, as you were describing whats coming next, you talked about what this will mean for oil prices. What is step 4 . What does it mean for the market . Is this a case where you see the current pause essentially being a deep breath before prices go further down and production goes further up . Do you see other highcost producers getting pushed out and replaced by the u. S. . Where do we go from here . So if i got oil prices right in timing i would be a commodities trader and major donor to the Manhattan Institute as opposed to a senior fellow at the Manhattan Institute guessing about future prices. [laughing] i give you my card. Well see what we can do. Im bearish, bullish on production and bearish on price as a consequence. There is obviously exogenous events. Major wars or disasters can take a supply out. That does bump price. But technology fundamentally has put the world into a oil glut for the next 20 plus years. We can easily supply the worlds demands with sources that exist, technologies that exist. Theyre known. So this is bearish for oil prices. How low they go, depends on same inverse. There is exogenous events. We have slight oversupply, making traders nervous. We end up pushing prices down. I think we could, if the worlds economy slow as little bit, we, production is not slowing we could see prices dip back down again. It would not be shocking for prices to drop to the 30s briefly, inflation adjusted dollars, last time we had this much oversupply in 86, oil was at 21 a barrel. Oversupply was three Million Barrels a day. Absolute production is not issue. It is as you all know the oversupply. We have 4 Million Barrels oversupply today. You could say why isnt 20, 25 . I think because of inherent demand pull is so much bigger today than it was. So i think probably, inherent demand pull is 30 Million Barrels more consumed now than 86. If you sort of did relative difference, oversupply of 8 million to get same impact of three. My arithmetic says were probably at floor, give or take. I dont think it goes north into the 70s, maybe 8 . My view, world doesnt like 100 oil. Only had oil over 60 a barrel three times in 100 years. E prices. The saudis know that. If you could just say your name and affiliation and your question. Julian epstein, economics editor of barrons. Thanks for your exciting talk an inspiring words. Two questions. Well, three questions i guess. First of all you would agree, however, that in the short run the frackers are a little bit in disarray . Second, for the long term you focus mainly on the u. S. Potential for shale and, isnt there enormous potential for shale production abroad . And third, are you interested at all in what i gather is, also happening within hydrocarbons, that fracking is driving Natural Gas Prices so much lower in relation to oil and there could be greater use of liquid natural gas, rather than oil which indeed is also bearish . So could you give me the short run view of, arent the frackers in a little bit of disarray . Second what about oil abroad and natural gas . And he thanked the resource productn and there is a deep track record for these things. But setting that aside, the United States has an advantage to 600 billion of infrastructure on top of the largest Hydrocarbon Infrastructure on the planet. We have tens of trillions of dollars and the equivalent of being the first if you like if you were in that business and have a marketbased y. Would u. Go anywhere else . The capability to hear the infrastructure here is extraordinary for the market in the United States because it is an incentive to go there. Setting aside the fact that they are different and have to do what we did and understand how it works and build the infrastructure china will do that and it will take even if im guessing 15 to 20 years to catch up. The biggest wild card is a chemist invented the catalyst that allows you to liquefied natural gas. If you could make gas as cheap to transport as well come up with the biggest single semito hit the world economically in the last century you mentioned and i support the concepts of what you presented. The question becomes the Investment Capital decision. You think right now the way that the servicing sector for the market have run out of capital there is the investment in this, so a lot of it is being concentrated in the big features, halliburton, exxon mobil etc. How is the next influx of private capital going to come to fuel shale 2. 0 and how does it get kick started when its on the hands of the big guys . There are a lot of midsized players that are seeing a significant Capital Support from companies. But the trigger isnt complicated. Prices rebound slightly which is normal in the slowdown of the Production Growth and its very easy to turn the fields back on so to speak. They have a high air velocity as weve already discovered so as you know when they collapse below the operating cost, everybody going back as it crisis recovered and people rush in so they can make more money. They have have the correct correct wrist and its a profoundly different characteristics than the people have been accustomed to the last 30 or 40 years where the velocity is so low you have to build billiondollar projects. Very long cycles so its very predictable. Now what you have is a fact prices go up a little bit and if i could make my money at six months of production which you can easily do to make a profit in the first year you wouldnt care if the prices collapsed two years or 18 months out you could spend a few Million Dollars and make that three times and prices collapsed and stopped. It means we have actually markets functioning for the first time in a hundred years. Its a big deal and it wasnt driven up by somebody saying we should have market. It is by technology and entrepreneurs creating the market. Its fascinating. Congratulations on eight paper impacting the way people think about energy. We know theres a lot of reserves around the world and they havent been exploited because the land is Government Land and they have been minimal about exploiting it. Where do you see potentially the most exploitation of the reserves outside of the u. S. The next ten to 20 years given the limitations . For those of you this is a mutual admiration deciding that the Manhattan Institute thank you. I think england is most likely to light the fuse and we have seen evidence of that happening. Im not sure about the rest of europe and. We will have a bipolar world again or cold war this will be over the gasoline exports are difficult to shale is difficult and hot but they are very rich so thats challenging the technology if you think of it in electronics but that is once its done. Once you have australia to the united United States it is coming on later this is i keep writing as you know because you are part one, part two, part three to drive home the fact we are in an oversupplied world at the macro level, and this is exciting. I think that its hard to invest in this world its going to require a very clever work for investors to understand where they can make money but for consumers and for the before, this is great. Please ask your question into the microphone. How will. How will the new technology affects the cost of production. It affects the cost of production by roughly the amount it improves the efficacy and. I think it could do better in math than that looking at the average it will be about to ask. We know several disclosures on projects with analytics, just analytics have seen 30 to 50 increases in the efficacy so that is synonymous with the 36 cut in the cost of production which is why you are seeing such little pullback its not just the residual production. We are already cutting the cost of production without new hardware. The new hardware for losing to another 30 in the analytics and you drive another 30 we are a very big pressure of cost production. My question is could you comment on the alternative to fossil fuel which is Nuclear Energy and can it be utilized and may possibly be utilized . Its certainly the only form of energy that has the hydrocarbon which is Nuclear Energy and its not news. But we have built a combination of regulatory and psychological impediments to that certainly the United States that means if i were guessing today when the United States would have a significant return on building a Nuclear Plant i would say we are certainly im hoping the relevance of decades. The biggest now is china and so as the rest of the world starts to modernize which has already happened and is happening and then chinese nukes which is a challenge since we pioneered the industry that we sort of lock that in and break the cycle but its good to be difficult and take a lot of political courage and there is no evidence that extends anywhere in either party at the moment. One of the biggest powers is about 20 of the economy used to be larger. Would you care to speculate what typical manufacturing cost of power being three to five years in and what can one infer from that that it may actually boost the sector because of the power being cheaper and theres more opportunities to expand in production . Short answer is yes you are. We already have the resurgent as im sure you know in the Energy Intensive manufacturing Chemical Products and plastics because natural gas is so cheap in the supply in america so the Companies Point out that if they are german operations in the united United States Public Safety ordered off i believe it was 500 million a year its a very big number and the profit is flowing to the bottom line for that is attracting i think the last number 380 billion in the correct investment in manufacturing related claims. There is 100 adapter and plants under industrial plants under construction near completion the next couple of years. That will cause a resurgence just just than the one sector and whoever is the next president will see the jobs go out and they up and they will have nothing to do with the policy because those hundred plans will come out of line. That will then have then have to spell out effect and create more demand for the associated manufacturing support and that will be driven by the cost as opposed to the electric side. The electric site is that regulators get the layout of a lot of taxes and other social programs and electricity so what are that the electric bills will go down or not is a speculative end so far theyve been doing it for the first time. The United States reversed the trend of the rate over the last decade and a reversed the trend of the rest of the world has tried to follow except germany and england so im not sure it will make electricity cheaper in the near future but it may be moot given the incredible sort of tailwind that pushed this increase in the plastic manufacturing. If i could jump in with a followup. The policy question is interesting. Obviously eluded some things that would hurt with short of that what what the ucs you suggest the policy debate that is imported today coming to the next election to determine the trajectory . And false on two markets that are easy to articulate. One is easy to stop the slow reverse and federal reflex to further regulate because you can make it more expensive and dropping some of the regulations of it is as you all know theres a lot of movement on the part to try to burden the industry. The second is stimulating the issue without getting a subsidy. The biggest stimulus is to the ancient ban on prohibition from american producers of an american product, oil and natural gas from sharing it with any willing buyer in the world. The ban on exports and petroleum to use a simple word is max. The ban was put in place and it was a strategic resource. We got lots of it and we should sell it to the world. That would be the single against buildup when you open up the World Markets to every american fracker. Excellent paper. It was very profound. What does this mean that the increased use in hydrocarbon is going to come about for additional Carbon Dioxide in the atmosphere it means there will be additional Carbon Dioxide in the atmosphere. [laughter] in terms of people feeling we need to reduce its spinnaker he was being only mildly facetious. What i mean by that response to your good question is that with regards to the aspirations of lots of people including its cyclical that we should reduce the consumption of hydrocarbons. The economics are overwhelming. They simply cant be resisted at the macroeconomic level. The world will want to find more and produce more and have more lighting and the world is poorer energy at least a Million People in the world who are so far as we consider the census level is criminal and the only way they move up is to consume more energy in hydrocarbon walked into the physics of energy i dont think theres any policy that can be passed that would stop that. What can be done is to make it more expensive for those people or for us. But you cant what you could argue if it doesnt change the underlying facts fact of the consumption and they will go up and will be with oil Carbon Dioxide emissions will increase. Its walked into the underlining underlying demographics of the world and the physics of what people can actually do. Aspirational idea that the battery will replace it or biofuel is silly. The United States gets 4 of all of its Transportation Energy now from biofuel by using 30 of our corn. The last time we used 40 we managed to get off that and you do the math here we took it all and made it into into transitional fuel and the secondbiggest consumer in the world. And its medically silly to think that that would happen and its morally wrong but i do believe we will spend a lot of money trying to make it happen anyway to the regulations and the tax. Two we had a do we have a problem doing that later in the century. Fact is the fact is we will burn more hydrocarbon. Its walked into the physics of energy. We wont use more. There can be some obviously negative attributes to the production of the material and use of energy and in my view we will mitigate those through technology and spending money and that will be cheaper and morally superior to not having the growth. Its not a choice for making we are dealing with economic foundations and when the sun rises things should happen. But if they are going to happen, they are going to happen anyway. Its not going to stop. I want to ask a question more about the funding of effective improvement as you mentioned the 600 billion spent in the last ten years and how much do you think would need to be deployed to achieve the two and a half times the efficiency and improvement and that isnt there a risk also in terms of operating in the environment where there is a low Interest Rate asset and investment in the companys. They are not available for the funding who will step in to make your vision as you describe the reality. All these points you might want to make as well . A lot of points i could add in here. So a lot of private money not public money so the idea it might not seem correct. And i think theres plenty to go in in the lower rates of return but they will rise even though the higher Interest Rates when you have higher efficacy. The capital required as of the 600 billion. It doesnt drive the efficiency. It came because the efficiency went up and you have to build the infrastructure to take technology to create so much production for downstream requirements. The updating refineries and seismic imaging and so forth. At the efficiency is declining. We can get more efficiencies without less capital because its sort of an it centric bill that is made which means the capital now is not a constraint the constraint because the capital constraints are once you are making money can you afford to build pipes and so forth and just a matter but you are just inexcusable dance of the rate of return and if it goes up im waiting for the technology to get that much better and my point is they go up a couple of points 20 or 30 of drive down continually in the cost of production not just domestic capital but the other secret is we have seen this influx of capital and vesting in the shale because it is a good place to make money and its a safe place to make money saver and places in africa or south america. Its not a pretty picture of whats happened in terms of the corruption as investing in american fields i think that we would have no shortage of capital flooding into the u. S. Markets once they figure out what i said is true and i know they know what i told you its true and what i wrote in my report and they know what i said in my report is true and they know much more than i know about this and i think they worry about it but they also know what i know is the world demand for oil will go up and the question isnt a vision. It is a consequence of what is happening in humanity. Theres a lot of people who dont have a car or a car twice as good as will happen if already exists. It gets twice the amount but when you add 3 trillion road miles to the world, it is a lot of pounds of fuel it will be done in hydrocarbon and we will supply a lot of it in the world which is what i think is transformational and exciting survey puts the dependency argument is. Thats the part that hasnt been absorbed into politics. U. S. Has gone from an independent player to influence and it keeps upping the production and the world is dominated in the way you work it into that changes the politics. In my view all things are good but fundamentally good for america. [applause] known as the city of good neighborhoods explores the life of buffalo new york on booktv we will visit the room at the Buffalo County Public Library whose centerpiece the pages of the original manuscript of adventures of Huckleberry Finn then we will feature the buck against the grain about the history of the first board. The irish settled in this neighborhood because they were desperate and came over across the atlantic during the famine and the years after they still were not great. It would take one relative to find out about these plentiful jobs along the waterfront working in the Grain Elevators or in the mills and then the words with words would go back to ireland you want to come back to buffalo you are not way to become rich but you are not going to have steady employment so they came to this neighborhood and called the first board. It was first created in 1832 as a city that was divided into five political boards and in this area along the waterfront has always been the first. On American History tv on september 6, 1901 president William Mckinley was assassinated in buffalo. We will tour the History Museum exploring the news in exited asserting that they begun used to shoot the the president. Then discover the history of the waterfront and how its adapted from the nations green center to the modern redevelopment. Right now this is a collection of the Grain Elevators in the Buffalo River which originally was built for Different Companies but they are all owned by the owner of the battles over on ohio street and its now read generated from many different purposes for music and history tours where we take people around the Grain Elevators and and told a story about the buffalo history that a production start here for poetry readings in all sorts of different uses and. 6 p. M. Eastern on booktv into sunday afternoon at two American History tv on cspan. The two are working with our affiliates and visiting cities across the country this week democratic president ial candidate jim webb spoke at a conference of the no labels. He talked about his experience at the Navy Secretary and senator and answered questions about the federal budget and criminal justice reform. This is 35 minutes. I thank you for being here and to the kids in the green shirts, god bless you. Thank you so much. So, i have the privilege of introducing a fantastic gentle man and a hero and im going to say at couple of words i feel describes him. Senator, secretary of the navy, journalist, husband, father, attorney, vietnam veteran, marine. But i think the most important word and i think that he would absolutely agree with this is this man is a soldier and he has a lot of respect. I had seen him. Hes into our home for dinner and we had a dinner where he has spoken and you have a lot of very conservative republican veterans that are on his bandwagon. So ladies and gentlemen, one of the most endearing people ive ever met, senator jim webb. [applause] let me say that im very impressed with what you have been able to do and what your organization has been able to do today and in many ways it reverse the journey that ive had in the journey of Public Service during my professional career i spent about half my time in Public Service and half of it doing other things independently as a writer and author and school proprietor. But its been a great pleasure for me to have renee and work with her and we said something of an example in New Hampshire earlier this year when she sponsor a lunch for me. And at that lunch in order to discuss the issues that are facing our country, we have about half of the room republicans and half of the room democrat and we talked about how to Work Together. It was one of my big missions as a government leader and how to Work Together and how to solve problems. Working with renee and also having worked for six years with joe lieberman, i was very grateful to an editorial that he wrote in the Richmond Times dispatch in virginia talking about the types of things that we were able to accomplish during my term in the senate