Q: Why has Australia also rejected nuclear?
A: It's the fear factor. It's a lack of confidence in our ability to solve nuclear waste. We've offshored the problem, and nuclear waste becomes a weapons issue. Why don't we use nuclear ourselves and come up with solutions on how to store it and not get it in the wrong hands? It would be a tremendous boon if this country built 50 nuclear plants in the next 20 years. The first three could be government subsidized. Expensive, but there is $13 billion in government funding out there, $7 billion alone spent on corn-based ethanol. We could redirect that to figure out clean coal and bio-fuel.
Q: Why can't the private sector do more?
A: Frankly, when free markets prevail, we have to shut down factories and replace them overseas in places like Saudi Arabia, Kuwait, Libya, Russia, Brazil, Thailand, China and Oman, where governments lock in energy availability, guarantee prices and de-risk our investment. The chemical industry is down 120,000 jobs in the USA in the last five years. Manufacturing as a whole is down 3 million jobs.
Dow is investing $40 billion to $50 billion in the next five to seven years. A lot of that is already in flight to countries where governments work with us through their national oil companies. In Brazil, it's through a company that converts sugar cane into ethanol, a much better energy converter than corn.
Q: So we lose jobs unless the government subsidizes your energy costs?
A: It's common in many countries to regulate the price of energy inputs to spur economic downstream investment. It's saying that energy is a national resource. You can burn it or add value to it. For every $1 Dow Chemical uses in oil or gas, we generate $20 of GDP. You need to give certainty to those making large capital investments. Not just chemicals but steel, paper, metals, even cars. That's how other countries are building industries.
Q: Where does it stop? Dow Chemical is raising its prices. I'm sure your customers would like that regulated, too.
A:My answer is self-serving, so you're going to have to forgive me. I'm for regulating certainty. The enemy is volatility. For me to make a $20 billion investment, it really makes a big difference if oil doubles or falls in half. The U.S. could take 10% of the resource, as they do in the Middle East, and give certainty to those who add value.
Q: How about taxing oil so it never falls below $100 a barrel? Would that spur investment in alternative energy by de-risking investments that would be wiped out if oil prices fall?
A: Yes. I want stable prices for manufacturers and a price floor that would protect the innovators, although the floor should be much lower than $100. We need a Silicon Valley equivalent for energy.
Q: What's wrong with T. Boone Pickens' campaign to replace foreign oil imports with wind, solar, nuclear, coal and natural gas for cars?
A: Cars running on natural gas is problematic. Forget the distribution system for a while, which is its own headache. It's implying that we have the natural gas. We do, but we're not drilling for it, so if we increase demand for natural gas, then I can guarantee the price will hit the price of oil at the speed of light. Hybrid cars may be a good way to go if we allow electricity from nuclear or clean coal. Otherwise, it's robbing Peter to pay Paul.
Q: Does a U.S. military presence in the Middle East stabilize or destabilize oil prices?
A: We certainly aren't getting more oil, if that was the intent. We aren't occupying Iraq for the resources. With new demand from China and India, maybe it is irrelevant. Maybe it didn't matter if we are there or not. Hopefully we did something great for the people of the region, but I travel and I listen, and when I'm in the region, people are pretty unhappy with the U.S. presence.