Natural Gas: How Important

is it to Our Energy Future?

(Session 3)

IEPC Roundtable Event – Kansas City, MO

October 13, 2010

International Energy Policy Conference

c/o The Energy Advocates
1701 Pennsylvania Ave. NW, Suite 300
Washington, DC 20006
Table of Contents
 Lifestyle
 Independence and Conflict
 Politics
 Forward Thinking, Higher Education and R&D
 Energy Prices & Availability
 Education & Information/Media
 Use of Resources/Energy Industry
 Cost & Economics
 The Environment
 Safety
 Impressions
 Summary of Attendee Statements
 Conclusion

Disclaimer
The views expressed within this publication do not necessarily reflect the views
of the International Energy Policy Conference, Participants or the Energy
Advocates. Those persons listed within this document are those that were in
attendance of the afore-mentioned date and event. No direct correlation is or can
be attributed to a direct quote for a specific person, organization and/or company.
The content within this document is a summary of an open, multi-person
discussion that took place.

© 2010 IEPC/Energy Advocates www.energypolicyconference.com 1

INTRODUCTION
On October 13, 2010, a select group of individuals gathered in Kansas City,
Missouri, to discuss openly issues surrounding the U.S. Energy Industry,
specifically Natural Gas. The following is a review and result from the dialogue.

The part that we’ve been missing is talking directly to the consumer. We have
talked to ourselves [the industry] and we are convinced that natural gas is great
and may be a big part of the energy mix. But then we go to the consumer to find
out if we’re dreaming or if we have good vision. Dreaming will not get us there.

Are we good at marketing to the consumer? Are we getting the message out?
We talked to consumers from a range of backgrounds, and this paper is the
summation of that discussion.

WHAT FIRST COMES TO MIND WHEN THINKING ABOUT ENERGY?

Lifestyle
Attendees were ask to read Mark A. Stansberry’s book The Braking Point and
comment on what they had read. Comments were made on how much America’s
usage of energy as a component of lifestyle has changed our way of life: “energy
has completely changed everything, even within the family and men’s and
women’s roles,” said one attendee. “At one point, women opted to go back to
work, and now I think that most families are dependent on two incomes. This has
changed our society—not just in that, but in our ability to, say, commute from the
suburbs to the city. It’s changed our lifestyle.”

Independence & Conflict

For other attendees—many of them—the topic of energy independence was a
top priority: “What I’d like to see, obviously, is independence—from OPEC and
others. I’d like to us (the US) not beholden to other countries or entities. They
shouldn’t have such an impact on our lifestyle and what energy does to our
lifestyle,” one summed up.

Energy is nearly universally seen as a primary point of past and potential conflict.
One attendee expressed, “Most of the time our conflicts are connected to oil. Not
to religion [or anything else].”

Chinese energy interests are a strong concern, with the country being seen as
friend, foe, and competitor—and everything in between. “We talk about
independence in our country, but as you are well aware, earlier this week, a
Chinese oil co decided to make a 1.8 billion dollar investment in the natural gas
industry in the US. What the US investment is saying is we’re willing to develop

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the US for you and ship that product to you in China [But not for ourselves].
Because they’re willing to pay more than an American investor.”

Another commented, “I don’t know if anyone was following the Australian

elections, but the Australian gov was actually going to introduce a 40% mining
tax, straight up, on all of our resources going to China predominantly. They
basically got thrown out of the gov for it. But to give you an example, my family in
Australia has iron ore mines, and they’ve got a $20 billion dollar a year contract
with China and they’re in the middle of negotiating one for $69 billion dollars. And
that’s just one small piece, yet it’s happening all around the world.

“Their [China’s] greatest resource is human. We [Australia] couldn’t compete with

taking that iron ore straight from our mines and developing it there in Australia,
because the labor is so much cheaper in China. It was better to process the ore
in China. They have human resources no one else can compete with. But that
balance is going to start shifting because people are making greater demands,
unions are coming in, and gradually—over the next 20 years—that will probably
change.

“In terms of energy, they’ve already surpassed the US in terms of consumption;

there’s no end in sight. There’s as many vehicles in China as…but they’ve got
1.3 billion people.”

“Many of us discuss globalization and interdependence. It’s almost impossible to

be independent,” expressed one attendee. “But can we think how we can work
with interdependence and try to be collaborators instead of trying to destroy each
other? Think about the whole planet, rather than “us” vs. “them.”

Another suggested, “You mentioned that in China the government is allowing

them to do what they do. My perspective is a little different. Government is telling
them what to do. Remember Sputnik? What happened in the US after Sputnik?
Why not do the same with energy?”

Another sentiment surfaced as well: “China isn’t any different than India or a host
of other countries. Who’s the bigger foe? It may be internal. The individual states,
the gov (Washington), the inability to take a couple of things and develop them
and show a return on investment for somebody.”

Politics
A recurring topic surrounded politics, both as they pertain to energy
independence and planning for the future with comprehensive energy policies
many perceived the US lacked, perhaps in comparison to other nations/groups
(the European Union, for example). One commented, “one of the major issues
today from a macro perspective is the energy/political clash or agreement that we
need to have in order to make our country more energy independent.

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Specifically, the thing that comes to mind is the fact that there have been no
refineries built in this country in…a long time. Why? I have to chalk that up to
strictly political issues—environmentalists, etc.”

Forward Thinking, Higher Education and R&D

Attendees were concerned with the future: “The US seems to be sorely lacking in
R&D and long-range plans, and I would tie that R&D into many different
industries for the sake stockholder have lost their way regarding R&D. I read
about China saying they’re going to produce solar energy panels, and they’re
probably 10x more polluted than here…but they’re going to get the business to
produce solar panels because we’re stuck with the gridlock in WA, saying, ‘Why
would we want to invest in that now?’”

“It’s disheartening to see, in my opinion, what is a dysfunctional approach by our

political leaders around energy in general. And it seems to me they’re not taking
a comprehensive look at it. They’re pretty quick to rule our certain types of
technologies when you’re looking at trying to pull together an entire strategy on
how we get from where we are now to some other point in the future—whether it
be natural gas [or another resource]. I think natural gas has a role in that; I don’t
think natural gas is where we’re going to have to end up as a society in 50-60
years. It’s a tool in the tool kit to get us where we need to go.”

A lot was said about higher learning and the fact that many students getting
educated regarding energy…are taking that learning outside the US back to their
countries of origin.

Energy Prices & Availability

Price and a lack of understanding regarding the futures market and its affect on
gas prices was also a point of concern: “and I became interested in energy after
9/11. I remember writing a paper at the time on oil prices going up to their high—
predicting them. Of course I was completely [shocked] because ‘OPEC doesn’t
control the prices, the market does’—or so goes the old cliché the market goes
by.”

Another asked, “I’ve always been perplexed by how the oil futures affect the gas
pump the next day. That gas is already in the ground, but the price went up
because they traded a barrel of crude in NY on the futures market. Is that price
gouging? Why am I paying an extra $.50 for the gas they drilled out of the ground
however long ago and that’s already at the station?”

Some even expressed concerns post 9/11 over basic availability. “Ever since
9/11 and the run on gas, I never leave my car too empty—because we’re so
dependent, if something happened, I would be unable to get anywhere. There is

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literally no where within walking distance of where I live. We don’t have mass
transit, and we’re so wasteful.”

Education & Information/Media

Education—the lack thereof—was a topic of high concern. General education
about energy is a base level issue for many, and most attendees did not seem
satisfied with their level of understanding of fuels, their prices, and infrastructure.

Another related issue was information available and the media’s hold on the flow
of it. One attendee in particular was concerned over lack of news of major geo-
political moves that will effect energy in the future: “One of the things that really
concerned me—and this was missed by the press—was that Saudi Arabia and
Russia signed a contract to negotiate oil prices in Sept 2003…and we didn’t hear
a single thing about it. From the press or our leaders. If you consider that Saudi
Arabia is part of OPEC and Russia is 52% of the rest of the energy in the world,
by any measure that’s a global monopoly. So global peace and stability and long-
term energy independence is what I’m most passionate about.”

Another commented, “My general observation is … influenced by the media and

what I think is a lack of foresight on the behalf of the media to cover these
issues.” Sensationalism was a big topic, with the BP Gulf oil spill being likened to
an airline crash—the vast majority of the time, both are very safe. We only hear
about them when there is an exceptional problem. “

Another chimed in: “The challenge is also what the press wants to report on.
There are a number of deep water wells and nuclear power plants around the
world that have operated for decades without a problem—so we know how to do
it. The problem is that we don’t hear about that—it’s not on the news. We never
see how well they’re doing with this nuclear power plant. It’s, “Oh hey, look at this
disaster.” The media is going to publicize what gets the ratings—[and that’s
sensation and disaster.] When things are operating as they should, we don’t hear
about it.”

Many expressed concern that at all levels of education, children are not taught to
be savvy energy consumers. “In general, our culture and society needs to be
educated and work at being more conscious in saving energy—rather than
“because we have it, use it.” If we’re not comfortable, we can put on another
sweater or blanket or whatnot.

Use of Resources/Energy Industry

Attendees expressed many concerns over wastefulness and inappropriately
prodigal energy usage in the US, again compared to other countries. “My
concern is, long term, is not just the energy independence but also what is
driving it [the energy industry] …. My concern is, from having lived over seas for

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a few years, is the great difference in the way the rest of the world approaches
their available gas and other resources. Many times my landlady would say,
‘After 6:00 you have no heat in your apartment.’ I learned to use an extra
blanket. So how much of this is driven by a culture that is uniquely American and
the energy excesses and our country’s ability to have enough resources.”

Another expressed concerned that the US has lost touch with those who are
interested in having enough energy to survive: “The US is a big country, so many
people do not think about that. In Europe, most of the countries are very
conscious of that. First of all because everything is very expensive, and also
because everyone goes through stages of thinking how to survive. My point is
that it is very important to be educated energy consumers.”

“I feel like you’re talking about a problem with consciousness,” one suggested
when speaking about America’s use of resources.

“As a population as a whole, we don’t think about turning out the lights or turning
down the heat. We try to in our house—to unplug the outlets we’re not using—
but not all of them. We keep the coffee pot on because it’s on the automatic
timer. We waste so much… When we had our conference in Berlin, you have to
put your key in the room, and that’s the only way the lights come [on]. There are
so many things other countries do that we don’t do. And we’re raising a
generation that’s not even thinking of anything, because everything is
instantaneous for them.“

Some represented that organizations may be cutting down on their usage: “In the
professional world, one of the professional responsibilities I have [for my job] is
environmental sustainability. We have that from a corporation perspective, and a
lot of those goals were set out of our group working with other divisions on
energy reduction and usage. [We are on part of the city-wide “energy shedding”
plan.] We monitor high demand, but we don’t generate our own energy—so solar
panels or any of that. So have goals to reduce our energy use by 25% of a base
year of 2006.”

The nature of our society and economy came up: “Our greatest export is our
lifestyle. China and India are going to emulate what we have, and we’re [not]
going to be able to say, “No, you can’t have it because we have to start worrying
about the environment.” Well, its always been expressed to me that you start
worrying about the environment when you have wealth. You’re worrying about
survival in many cases in countries around the world.”

Costs & Economics

Others expressed interest and concern in energy costs for the US. “I’m
concerned about what is cost prohibitive. If it is cost prohibitive, maybe we should
go to a longer house loan like the Germans do so we can afford our energy

© 2010 IEPC/Energy Advocates www.energypolicyconference.com 6

costs. If in fact we have finite oil resources, perhaps we need to make such
arrangements.”

The economics of the energy industry, lobbyists, and others were also a point of
concern and attention. Attendees recognize that money was a strong driving
force for all entities involved in the energy equation.

“We have five drivers in our house, and we had an opportunity to purchase a
vehicle recently. We took a hard look at clean diesel vehicles as possible options.
Not so much a hybrid. That was mostly a cost factor. Ultimately, we decided
against the diesel option because it didn’t fit the needs that we had from a size
perspective. My kids aren’t driving the most energy efficient vehicles, either.”

The Environment
Environmentally sound energy is a concern. “How can we accomplish these
things [providing power] in a way that’s still conserving the environment?” One
attendee wondered if there were non-extremist groups with good information.

“I had to go car shopping recently, and I looked at hybrids. They are cost
prohibitive. They were another $10k more, plus whatever you wanted on them.
For me, I couldn’t afford it. And the sales person wasn’t selling me on how much
better for the environment it was. He was like, ‘You’re not going to get your
money back on it anyway. By the time you make up for what you’re spending,
you’ll want a new car.’ He wasn’t pushing for the environment; he wasn’t
educated on what a hybrid’s purpose really is.”

Safety
One summed up nicely: “Any time we develop a technology with a single point of
failure, you’re only as strong as that single little problem—that casting on the
blowout preventer. Even if you never use them and they’re cost-prohibitive, that’s
the only way you can be safe—especially when you talk about messing with
Mother Nature.”

Impressions
What’s your perception of the oil industry?

Rich. Necessary. Rich. Politics. Politically shortsighted. Greedy. Product

revolution/renovation.

When I say natural gas industry, what comes to mind?

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Necessary. Clean. Cleaner. Natural—they use that word, but what does it mean?
What are the limits? How limited is it? Untapped. Big distribution issue—getting it
from A to B. It’s not available [snap] just like that.

Coal?

Necessary. Dirty. Dangerous—miners. I don’t think the benefit in investing the

money to clean up the industry is not creating any great consumer liability.
Clean vision of coal—it needs to go that way.
Necessary.
Limitations on supply; even if it’s there, I can get it out without safety issues,
transportation, etc. So it may be a potential resource, but if I can’t get to it…

Nuclear?

Dangerous.
Scary—I wouldn’t want to live near 3-Mile Island. Chernobyl.
With the old uranium, absolutely, but there are new technologies—the beads that
don’t have the meltdowns like the old fuel. It’s actually new generation.

Wind?

Good. Clean. Kansas.

Distribution—I like it though.
Everyone likes wind energy.
It’s a limited tool.

Solar?

Bright.
I grew up with solar.
Lots in favor—we like solar.

What are the drawbacks?

Installation.
Aesthetics. Bulky.
Costs.
Again, the demand is greater than the supply capabilities.

Hydrogen

No idea.
I’m not educated.
It may have potential.
(Most don’t know much about it.)

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Are global warming and climate change an issue for you today when we talk of
energy? Important or not? Do you factor energy as part of that problem?

Not in terms of energy, no. In general, yes.

One factor, but not the only.

Summary of Attendee Statements

One attendee wrapped it up well in a single statement: “I do have a concern
about our dependency on importing oil, especially from the Middle East. But on
the flip side, we have to use our resources here in America and…drilling. And
that’s all politics. We have to stop blockading and allow for that to happen. But…
I’m also concerned for our environment. Because what’s it going to do to our
country if we go into areas that are preserved…ruining our landscape and maybe
causing more damage? The BP oil spill [is a prime example]. That’s going to
happen again. So those are my concerns—knowing what I know, which isn’t a lot
on this specific topic, as a consumer, I’m concerned.”

CONCLUSION
While many issues came up the discussion, a few seemed repetitive ingredients:
our energy dependence and the effect of other nations such as China, and other
nations’ impact on our economic landscape domestically, was a consistent issue.
Another was education and the availability of information. Much was said on the
country’s energy future as it pertains to higher education and general education
of the populace.

Fears and worries tended to surface in the discussion more than forward-thinking
or plans or opinions. General worry regarding our leaders’ ability to form and
execute non-partisan energy policy in the country’s favor (rather in favor of their
own pocket book) seemed strong. Frustration with availability of affordable,
environmentally-viable alternatives came up. Great distrust for large corporations
ability to police themselves surfaced. This was partially tempered domestically
with comments that having them here, in the US, and regulated was a potentially
better alternative for the planet than getting our energy from “dirty” and
unregulated sources abroad, such as Nigeria.

However, as it pertains to natural gas, little seemed known about it as a

resource, about its pricing, and about its availability or the extent of its reserves.
Attendees were surprised to learn of the nation’s surplus and estimated reserves,
showing that more education is a key component.

© 2010 IEPC/Energy Advocates www.energypolicyconference.com 9

THE INTERNATIONAL ENERGY POLICY CONFERENCE (IEPC)
The International Energy Policy Conference was founded in the fall of 1992 By
Mark A. Stansberry, Chairman of the GTD Group. The first conference was held
at the University of Oklahoma with the conference-founding corporation being
The Oklahoma Royalty Company.
Each year IEPC selects a host city in which to hold the event. Past conferences
have been held in Washington, D. C., Tulsa, OK, Denver, CO., Dallas, TX. The
2007 was the official Oklahoma Centennial Salute to the energy sector of
Oklahoma. For that celebration, IEPC had events held in both Tulsa and
Oklahoma City. Washington, D.C. was the selected location for 2008's
conference held in conjunction with the Oklahoma State Chamber's annual "D.C.
Fly-in".

THE ENERGY ADVOCATES

Since 1974, The Energy Advocates, a national organization, has provided energy
education nationally. Its primary mission is to inform the general public about our
vital energy industry and energy policy issues. To learn more about energy
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