Mapping the new energy world: face to face with Daniel Yergin in Washington

The Pulitzer Prize-winning historian discusses his latest book about the energy industry, the issues driving the US presidential elections and America's complex relationship with China

Pulitzer Prize-winning author Daniel Yergin is known as a guru in the oil and gas industry. Image:  Cary Hazelgrove

It is easy to like Daniel Yergin.

The Pulitzer Prize-winning historian goes out of his way to meet face-mask to face-mask, coming to the Park Hyatt in Washington DC. After he arrives, Dr Yergin explains that he has been on US networks promoting his latest book about the energy industry, which is also the reason for our interview on this warm mid-September day. Though we sit down together indoors, in an alcove to the side of the hotel lobby, where it is hopefully quiet enough to talk undisturbed.

Dr Yergin says he has been doing the other interviews online rather than in person and since about 4am, after which he politely asks if he can get a coffee. The place is light on serving staff in these Covid times and it is left to someone at the front desk to arrange for our drinks. We are eventually settled, but, as if on cue, when we start talking about his book The New Map: Energy, Climate, and the Clash of Nations, several people emerge at once and begin hollering at each other across the echoey chamber. Dr Yergin laughs good naturedly, pauses a beat and then begins talking again as the din fades. This is a man who was once shouted at in public by Vladimir Putin (more on that later) and remained calm. He has a wonderfully unhurried, air, which is completely at odds with the prevailing hysteria across the American political landscape which seems inescapable right now.

Election fever is in full swing across the US with the big day itself only about six weeks away at the time of our meeting. President Donald Trump’s handling of the coronavirus pandemic is one of the key issues for voters choosing between him and Democratic rival Joe Biden. There have been more than 8.8 million Covid-19 infections in the US and more than 230,000 people have died - both the highest figures in the world. More than 5.7 million have also recovered.

Jumping with both feet into the presidential elections 

“Well, that's the battle that's going on in United States ... about testing, about wearing masks, which shows that ... this is a divided country ... divided not just politically but culturally, socially,” Dr Yergin says.

“I realised that with the book, I was jumping with two feet into the presidential campaign inadvertently.”

How so, I ask, perhaps a little too eagerly, having not expected to head into urgent political territory so soon into our conversation.

“Well, first of all, the whole discussion about energy transition, just saying, you know, that wasn't going to happen in 10 years. This is [going to take] longer and oil and gas are going to be part of the economy for much longer. There'll be a more mixed economy, and then ... climate is a big issue in the campaign, China is going to be a really big issue.” (Also more on China later.)

The environment and concerns about climate change have become polarising issues in the United States with the president three years ago pulling the country out of the landmark 2015 Paris deal on limiting global warming because of what he called "draconian financial and economic burdens the agreement imposes" on it. In contrast, Mr Biden's campaign pledges include the US achieving net zero emissions by no later than 2050.

“One of the things I want to do with this book is just create a framework for rational discussion about these issues. And just, you know, so that there is a framework at a time when it's a subject of great debate,” says Dr Yergin.

How shale changed the world 

As befits a very rational man, he speaks in the deliberate and measured way you would expect. Dr Yergin, who is also vice chairman of research and information company IHS Markit, is best known for a series of books on the history of the energy industry. Today, he is its foremost chronicler. Almost thirty years ago, his best-seller The Prize: The Epic Quest for Oil, Money, and Power won him a Pulitzer. He followed this success up in 2011 with an equally worthy sequel, The Quest: Energy, Security, and the Remaking of the Modern World.

“These books have been a series of journeys, personally, and in terms of the research and writing, and in terms of what it means to the reader.”

Completing the trilogy is The New Map.

“So really what started me on the book was actually literally looking at how the maps of energy flow are changing and the impact of the shale revolution on supply chains, and then it developed, you know, became the metaphor.”

“It's a book about energy and geopolitics, but geopolitics across geography.”

A large part of The New Map charts the last decade and the rise of the United States to become the world's top oil producing country thanks to the shale revolution. The use of fracking has helped the US triple its oil output between 2010 and 2020 while at the same time its imports declined sharply. These developments in turn had knock-on effects on the world market, helping to bring about a supply glut and oil price slump about five years ago which leading producers such as Saudi Arabia and Russia continue to grapple with today. In parallel, China's incredible rate of economic growth has slowed and with it projections for future oil demand have been undermined. Meanwhile, growing climate change activism, evolving consumer behaviour and rapidly progressing technologies are impacting jobs and businesses across all sectors and industries. Factor in the pandemic's impact on global economic output and the outlook for hydrocarbons is fluid to say the least and demand for oil may even have now peaked. This has been an ongoing and popular debate for years related to how people think oil prices will behave in the future. At the moment the consensus is that demand will peak by the end of this decade.

Dr Yergin says “the two most common words now are energy transition and the question of what it means. I mean, there's an energy transition or call it an energy evolution”.

“[In the book] I talked about the shale revolution, there's also been a solar revolution, solar costs coming down. When you get to the later part of the book, the energy eras divide between before Paris and after Paris, and the degree to which Paris has become the benchmark against which everything's been measured in terms of those objectives.”

His conclusion is that "it's way premature to see peak oil”.

“Life has been changed by Covid. But the real effects we won't know, until about a year from now, I think.”

“Before the end of World War Two people expected another Great Depression, instead there was a great boom in terms of expenditures, and it's possible when this is over … either the global economy is going to be the walking wounded ... or it could be a real rebound and that would be reflected [in oil markets].”

"The scenarios that [energy multinational] BP and others have of demand peaking sooner is based upon the notion that work patterns are going to change, communities are going to change."

There is also a misconception amongst the public at large about which products come from oil. It isn't just about petrol, Dr Yergin says.

“People think that transportation is all there is to oil. And there's a lot else, you know, when you tell people that the tools to put a stent into the heart of a presidential candidate [Bernie Sanders] who's had a heart attack are plastic, or that the N95 masks that people want to wear is plastic or ... Tylenol, which is paracetamol ... is an oil product. I mean, people are stunned. You know, they don't realise, they don't know how versatile these molecules are and how much they're embedded in different parts of life. People just think of oil. 'Oh, that's cars'.”

“There's been this kind of growing anti plastics move. But actually, this crisis has showed there's something to be said for plastics and food, sanitation and things like that, that people are being rather cavalier about the benefits.”

Abraham Accord 'rewrites the script'

The day before Dr Yergin and I sit down together, the Abraham Accord is signed at the White House between the UAE, Israel and Bahrain – the UAE agreeing to normalise relations with Israel in return for a halt on a planned annexation of Palestinian land. The peace treaty "rewrites the script", according to Dr Yergin.

“This agreement that was made between UAE, Bahrain and Israel represents the new map in the Middle East … it really does rewrite the geopolitical map of the region. And you know, a lot of other things will follow from it. So, I think we'll look back on this and see this event in the middle of Covid-19, was a very historic event in the future in the Middle East. It's changed the dialogue. It's changed the framework.”

There is a link between these diplomatic breakthroughs and the new found energy security that the US now enjoys thanks to its diminished reliance on imports.

“What it does say is that with the US, essential self-sufficiency and energy, not completely mind you, that that these are new regional links that come together for both for security and economic relations, that may have existed before, but not in this way, that now really exist in a very open way and will be a foundation for a lot of other things that will happen.”

A Cold War with China

Dr Yergin is also a scholar of the Cold War and says he is witnessing a new one evolving between the US and China this time.

“Attitudes towards China in this country have changed a lot and I think the attitudes in China towards the United States have changed.”

“So the section [in the book] on China, I think is also very significant ... my first book, before I became obsessed with energy was a book about the origins of the Cold War, [the] Soviet-American Cold War, and I didn't really think I'd be writing about other cold wars. Some very worrying things that are happening now between the United States and China, just this polarisation. And I hear from other countries, ‘we don't want to be caught in the middle, we don't want to have to choose’."

“It's about intellectual property, hidden subsidies and it is about data.”

“It's about technology too. I mean, there is a struggle, who's going to be premiere in these technologies. It's about who controls the data and who has access to the data.”

“On the one hand, these two countries are much more interconnected economically than most people recognise. On the other hand, there really is a polarisation,” he says.

“I have a very simple-minded conclusion at the end, China's not going to go away and the United States is not going to go away.”

Putin and St Petersburg 

Born in Los Angeles two years after the Second World War ended, Dr Yergin was educated at Yale and Cambridge universities. He then embarked on a career in academia at Harvard in the 1980s while simultaneous building up his own consulting business, Cambridge Energy Research Associates, which is perhaps more well known via its acronym CERA and the eponymous 'CERAWeek' conference in Houston. The annual event is a huge draw for the oil and gas industry. Dr Yergin has also been writing almost all his life, including for leading publications, as well as on world events in his book. He has been an energy advisor to the administrations of four US presidents.

His position as a recognised authority has given him the chance to witness history unfolding first hand. He once managed to inadvertently draw an irritable response from Mr Putin at a conference in St Petersburg with a question that triggered a tirade from the Russian president about the booming US shale industry. The incident is mentioned in the book but Dr Yergin refrained from writing in it that he was Putin’s target so as not to get in the way of the story, he tells me. He freely admits though that few get to have such singular experiences.

“I wouldn't have had that opportunity before I'd written The Prize, you know, so it's been a cumulative impact and of course, you know, everywhere I go, people have read these other books and in effect, they feel they've spent time with me, because they’ve spent time reading these books. And so, there's almost a sense in which people feel they have a personal connection.”

The New Map: Energy, Climate, and the Clash of Nations by Daniel Yergin is out now.