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Energy: The Past Must Not Be Prologue

George Shultz PhD '49: October 15, 2008; Running Time: 57:43

About the Lecture

About the Lecture

There are few people who have spent as much time wielding high-level influence in Washington as George Shultz, and in such a variety of roles (Secretary of Labor, Treasury and State, plus the Office of Management and Budget, among others). So the MIT Energy Initiative has much to gain from a friend with this kind of distinguished government record.

Shultz discusses our nation’s “roller coaster” energy ride. He harks back fondly to Dwight Eisenhower, who thought if the U.S. imported more than 20% of its oil, “we would be headed for trouble in national security.” Eisenhower instituted an oil import quota program, many viewed as the “OPEC of its day,” says Shultz. Prices stood at a whopping $3 per barrel. Then came the oil shocks of the ‘70s – the Arab oil embargo, the Iranian revolution and the Iran-Iraq war. The U.S. faced rationing and prices that landed at $40/barrel by decade’s end. During each of these price spikes, there was a “kerfuffle” that subsided rapidly, says Shultz. We never learned our lesson.

Shultz sees the U.S. at a momentous crossroads that he views, this time, with optimism. “Powerful constituencies are involved in this, all oddly pointing in the same direction.” National and economic security and climate change are converging to force our hand. Shultz envisions the next administration taking on a host of actions: a “stable tax regime” for wind and solar power; carbon capture and transformation (rather than the iffy sequestration); implementation of nuclear power, if we can “come to grips with the nuclear fuel cycle issue;” ending the “dumb policy” of corn-based ethanol subsidies; and finding a better car battery.

These things seem doable, says Shultz. He adds to his wishlist “a wedge” -- something that would keep the price of crude oil at $70 or above, to help people working on alternative fuels. And there’s also need for a carbon tax (preferred by economists to cap and trade). But “the big enchilada” for Shultz is “investing heavily in basic research.” If you’re going to subsidize something, he says, support activities that “will get results that will pay off for us.” Shultz acknowledges the kind of partisanship and game-playing that take place in Washington around wise energy policy and science. He offers advice for people in the scientific community who wish to gain the ear of politicians: “Get people in there who are fun to talk to, and when the president thinks they’re coming to the Oval Office, he’ll look forward to it, and enjoy it and get some education.”

Lecture Details

Location: 10-250

About the Speaker

George Shultz PhD '49

Former Secretary of State

George P. Shultz is the Thomas W. and Susan B. Ford Distinguished Fellow at the Hoover Institution at Stanford University. He served as the 60th United States Secretary of State from 1982 though 1989. He is a member of the board of directors of Bechtel Group, Fremont Group, Gilead Sciences, Unext.com, and Charles Schwab & Co. He is also chairman of the International Council of J. P. Morgan Chase and on the advisory committee of Infrastructureworld.

Shultz graduated from Princeton University in 1942, receiving a B.A. degree in economics. That year he joined the U.S. Marine Corps and served through 1945. In 1949, Shultz earned the Ph.D. in industrial economics from MIT and taught at MIT from 1948-1957. He is Chairman of the MIT Energy Initiative External Advisory Board and is also a member of the External Advisory board for MIT’s OpenCourseWare.