Ideas for Strengthening U.S. Economic Leadership (2024)

Lawrence H. Summers discusses the U.S. economy and inflation, recovery from the COVID-19 pandemic, and the global economic consequences of Russia's invasion of Ukraine.TheC. Peter McColough Series on International Economicsbrings the world's foremost economic policymakers and scholars to address members on current topics in international economics and U.S. monetary policy. This meeting series is presented by theMaurice R. Greenberg Center for Geoeconomic Studies.

Amy Myers Jaffe, research professor and managing director of the Climate Policy Lab at The Fletcher School of Law and Diplomacy, discusses economic sanctions on Russia and their implications for U.S. energy markets.TRANSCRIPTFASKIANOS: Thank you and welcome to the Council on Foreign Relations State and Local Officials Webinar. I’m Irina Faskianos, vice president of the National Program and Outreach at CFR.We are delighted to have participants from forty-six U.S. states and territories with us for this conversation. So thank you for taking the time to join us.Today’s discussion on “Russia and the Future of U.S. Energy” is on the record. CFR is an independent and nonpartisan membership organization, think tank, publisher, and educational institution focusing on U.S. foreign policy. CFR’s also the publisher of Foreign Affairs magazine. As always, CFR takes no institutional positions on matters of policy. Through our State and Local Officials Initiative CFR serves as a resource on international issues affecting the priorities and agendas of state and local governments by providing analysis on a wide range of policy topics.We are pleased to have with us today Amy Myers Jaffe. She is a research professor and the managing director of the Climate Policy Lab at the Fletcher’s School of Law and Diplomacy at Tufts University. She served as executive director for energy and sustainability at the University of California, Davis, and as senior advisor to the Office of Chief Investment Officer of the University of California Regents. And she was formerly a senior fellow for energy and the environment and director of the program on energy security and climate change here at CFR.So welcome, Amy. Thanks for being with us to talk about this issue. We are looking at—I think we are to the fifth week of Russia’s war on Ukraine. So I thought you could talk about the global energy market and the effect on U.S. oil and gas supply, and how this is affecting our U.S. energy policy.JAFFE: Thank you very much, Irina. It’s really a pleasure to be here, and a pleasure to be here with your State and Local Official program, which I found to be one of the most productive and successful programs at CFR. So really great to be back.I want to start out by saying something that will sound partisan, but I’m going to be actually saying that I think corrects dis- and misinformation. So we have in the oil market, and to a lesser extent in the natural gas market, a boom and bust cycle. If I have some local and state officials from my home state, Texas, you’ll know what I mean. But a lot of us, you know, read the paper. We know, you know, this is like the sixth or seventh time in my lifetimes, maybe more like three or four in some of your lifetimes, that we’ve had an oil price shock that’s affected Americans and American consumers.And I want to describe what’s happened in a slightly different way. I know there’s a lot of narrative that somehow we passed the Green New Deal and it’s left us with an oil crisis. But of course, we didn’t pass the Green New Deal. None of that legislation that was proposed was actually passed. There still is not a climate bill that passed the Congress. And so you say, well, then what happened? Well, it was other policies. Like, no, it wasn’t other policies. This is exactly what happened: We had a—from an oil perspective—we had a huge bust in 2020, which you can all remember, because nobody needed any oil because we were all locked in our homes.And so the price of oil, you might even recall—if you’re not inside baseball you might not remember this—but there was a day when the price of U.S. crude oil went to negative-$47. You’re hearing me correctly. It was not worth a dollar. It was not worth two dollars. People were literally having to pay to have the oil taken away because there was so much of it. And that caused—companies in the United States had to stop drilling because they’d run out of storage. Members of Congress from Texas and Louisiana had to call Saudi Arabia and tell them we’re going to cut their arms sales—our arms exports to them if they let their other new cargos that they didn’t have space for come to the United States, because it would have clogged up our system. We lent our Strategic Petroleum Reserve caverns to Australia because they needed some place to put their oil, right?So we had just too much oil and not enough demand. And then, lucky for us, the vaccine worked, in the sense that people—it lowered hospitalizations. We had a stimulus package. People got back to work. Oil demand went way back up. It went up in other places too. You know, China got out of lockdown. They felt they had a good policy for getting people back to work. The economy was churning. Oil demand rose suddenly. But remember, in 2020 everybody stopped drilling. So now we get to 2021, and oil demand snaps back up. We have a shortage.So price starts creeping up. And in the middle of that price creeping up, that would have been a good time—here in the United States companies started drilling again. That would have been a good time for OPEC to have put more oil on the market to prevent the market from getting overheated. And guess what they did? They did the opposite. They cut and restrained production. And then that gave Vladimir Putin a moment, where everybody was teetering on the brink of this very high oil and gas price, to take action. And I’m not even talking about the war yet. To just take action in markets.So Russia just didn’t provide extra natural gas into the markets in Europe. They owned the Gazprom, the state natural gas monopoly, owned storage tanks in Europe. And they just didn’t fill them. So we got to—we’re in the fall, and you have extremely low inventory of natural gas in Germany because, of course, the Russians own the natural gas tanks and they didn’t fill them. And things got worse and worse over time. And indeed, things would be even worse but for the fact that, number one, the U.S. companies started drilling more and we were able to sell and ship more natural gas from our export terminals in the Gulf of Mexico. And then the president, in my opinion wisely, started releasing oil from the strategic petroleum reserve.Now, the president has an uphill battle releasing oil from the strategic petroleum reserve. I mean, this is what it’s for. We are not at war in military men, but we are facing other means to try to prevent Russia from winning and jeopardizing the stability of Europe. And some of those means are economic sanctions. And therefore, we’re trying to ameliorate that with different policies, including using strategic stocks. The problem that you’re seeing, or you’re going to see, number one, is that if I am an American driver, and we have, you know, 300 million to 350 million cars on the road in the United States, many of us are using our cars to visit family because we’re not taking the train or doing other things we used to do as frequently because of COVID.And so normally everyone in the United States drives their car, on average, with half a tank. And figure, you know, the average car has, you know, an eighteen- or twenty-gallon tank. That means that for every car in America that’s driving full, you’re having an extra ten gallons. It’s forty-two gallons to a barrel of oil. So, you know, we could do the math in our head, but basically some of the oil the president has released from the Strategic Petroleum Reserve is sitting in the tanks of people whose cars are on full. And so when you ask, well, you know, how come it’s only brought down the price a little bit? How come it hasn’t done it more? Well, you know, that’s the explanation.So the president and yourselves, as local officials, we do have some other tools. If it turns out that further sanctions need to be placed on Russia or there’s going to be a larger disruption—I can talk to you a little bit about how much Russian oil I think is off the market. For sure we’ve lost a million barrels a day, maybe a million and a half barrels a day, just because European countries don’t want to buy it and they can’t sell everything they want to sell. So that is—you know, we already have a bit of a disruption. But, you know, the disruption could get worse depending on how things progress.And so we do have tools that we—you know, without being Jimmy Carter and putting a sweater on and saying Americans need to conserve energy—which is, I guess, and unpopular political statement, we’ve all learned that major employers in particular cities can allow employees to take a few days a week to telecommute and not drive into work. We know that because we can telecommute—I’m very productive in the morning when I don’t go to the office. So we could have people driving to work at different times of day. When we have everybody commute at the same time, believe it or not, we waste a half a million barrels a day of oil roughly, just from congestion in cities.So we could eliminate that by staggering—either staggering commuting hours or, alternatively, we could have restrictions on delivery vans operating during rush hour. Now, you know, we have these things—I, you know, spent many years in New York City. We get times of day you can’t go a certain direction on a certain road, you can’t use the bus lane, you can’t make a right turn, right? So people are used to having certain restrictions during rush hour. We could have restrictions of deliveries to not be made in the hour or hour and a half of rush hour. And then also it would relieve congestion, which believe it or not would greatly reduce oil use.So there are things we could actually do. I want to be sensitive to time because I really want to talk to you about what you are wondering about and what you are thinking about, so I just want to make an extra statement. Many of you might remember when Colonial Pipeline went down in the cyberattack. We’re on high alert for Russia to make cyberattacks on U.S. infrastructure. It’s not correct to ask me how come it hasn’t happened yet, because actually there have been extreme attempts to disrupt the operations of our largest natural gas producing companies and our big LNG export terminals that are competing with Russia. They’ve all had cyber intrusions since the invasion, or even just prior to the invasion.So it’s just that we’ve been vigilant. But, you know, one can never be vigilant enough with these multiple attempts at hacking. So one of the things I wanted to mention to you was that around the time of Colonial Pipeline, there were cyberattacks on various cities in Oklahoma. I think Tulsa was one of them. And they were trying to get, I think, to billing programs or other kinds of assets, tax records or whatever, that would help them pierce a cyber pathway, a computerized pathway to a major storage terminal in Cushing, Oklahoma.So different things around Cushing, Oklahoma, got hacked, but luckily the hackers never got to Cushing, Oklahoma. But all of you need to be thinking about the systems that you have in state government and local government that connect to the offices of energy facilities or interact with energy companies that pay their taxes—you know, maybe in the automated fashion or electronically. You want to be thinking about your electronic connections to energy infrastructure, because that was a big problem with the Colonial incident.And then the other thing I’d just point out, which—you know, is that there were passwords for the VPN—names and passwords for the VPN system of Colonial Pipelines employees. I know that they said publicly that they were circulating a week before the attack. I can tell you, some of those names, from what I understand from talking to people from industry, were circulating for a year or more on the dark web. So I’m sure you all use cyber consultants. The question is have you—have you had them search the dark web for you to see if your names and passwords are circulating?If you have them circulating, you obviously have to go to dual authentication to make sure that someone can’t just use those passwords. They have to then, you know, send a message to someone’s cellphone and the person has to respond before you can enter the network. But it would be a good time again to think about the security of different facilities, and then also the electronic connections electronically to any energy facilities. So let me stop there and let me hear what’s on your mind and what you’d like to hear about.FASKIANOS: Fantastic. Thank you, Amy. And let’s go to all of you. We already have hands raised, so when I call on you please identify yourself. You can also write your question in the Q&A box. And if you do that, please identify yourself there so that we know who you are.Let’s see. Ronald Cope has written a question but has also raised his hand. So why don’t you go ahead and ask it yourself? And please unmute yourself.Q: So my question is, on the first day in office President Biden revoked thousands of oil permits. And the petroleum industry says they can produce much more oil. Can we be energy independent, as we were two years ago?JAFFE: OK. Let’s take that one apart, Ronald. That’s a great question, on everybody’s mind.First of all, the oil industry, which I—you know, I lived in Houston twenty-five years—which I know intimately from my twenty-five years in Houston, they’re a shrewd bunch of executives. And in 2020, because they weren’t sure what was going to happen, they stockpiled—especially in New Mexico, where their drilling was on federal lands—they stockpiled permits. And, you know, people like the chairman of Devon Energy and EOG, you know, reported to their shareholders at investor meetings that they had enough permits to last them through 2024. And if you don’t believe me, you can go to the Associated Press and they’ll give you the actual tallied information. If you follow me on Twitter it’s on my Twitter feed, right? So permits are not the problem.Now, I have talked to the oil industry because it’s possible—and your question highlights a concern—which is we want to make sure that the Biden administration isn’t doing anything to prevent us from having the industry be able to gear up, especially if the United States were to wind up being in a much—more involved in Europe’s security. I don’t know how to put that in a tactful way. So right now, we’re supporting the Ukraine but, you know, there’s diesel fuel shortages in Europe. Takes a lot of oil to, you know, run a war. Hopefully, we will not become militarily engaged, but we have to plan as if it could happen because we don’t want to be caught out of turn.So the question is, what can the industry do? And I’ve talked to the industry. And I’ve talked to people in the Biden administration. And I do believe that there is a solution. It’s a kind of a strange mix of things that happen in the global market. So if needed more oil and the oil companies have certain budgets that they’ve already planned we’re going to have an extra 900,000 barrels a day of oil being produced, mostly in Texas but around the country, from our onshore production this year. And I asked the industry, could you do more? And if you wanted to do more, what would you need?And, you know, different companies say different things. You’ve probably seen the explanations in the press. Nobody said leases. Nobody needs leases. They said they needed the following things: They might need the U.S. government to prioritize access to steel to the oil industry. They might need the U.S. government to prioritize certain chemicals to the oil industry. They would need to have—gear up to have more skilled crews to do some of the work. That might be a little harder. And then they have—the constraint is that, you know, companies are commercial entities. They have budgets. They don’t necessarily have extra cash. They’re under pressure to provide dividend checks to their shareholders because that’s kind of the direction we’ve been going in, in the industry. A lot of times they, unfortunately, buy back their own stock instead of using the money to drill.So but the point is, there’s a paradigm where governments—in this case it would be the U.S. government—in 2014 when Russia invaded Crimea, they needed money otherwise they were going to have to stop drilling. And so Chinese gave—China gave Russia the money in advance. They used that money to drill. And then they gave China the oil. Now, that sounds crazy, but we could actually do that here in the United States. The United States government could pay for oil that the oil industry would drill from the shale. The oil could be available in three to six months, right, depending on how much of an emergency we thought it was. The United States government would then own the oil, and they would have the opportunity to do different things with it.We could put it back in the Strategic Petroleum Reserve to replace the barrels we’re using now. We could use it, if we—God forbid—the Pentagon needed fuel for its own operations. That oil could be processed at refineries and the products could go to the Pentagon. Or we could sell the oil to our allies. If Germany was short oil because they got cut off by the Russians, then this extra U.S. oil could be sent to Europe. So it’s a really interesting plan. I wish that everybody would stop saying their partisan soundbite and work on this plan, because I’ve been told by the chairmen of multiple oil companies from the United States that they’re on board with this plan, this plan could work.And then when you get into the details everybody goes back down their favorite cable TV narrative show, and they’re not doing the hard work of figuring out exactly how you would structure the pricing. It’s been done all around the world. Angola’s done it, Nigeria’s done it, many countries have done it. It could be done well here by the U.S. Treasury Department, together with the oil—you know, major producing oil companies. We could use a tender system like we use for the strategic petroleum reserve. So it’s highly doable. And we now know from COVID that we really could, you know, target the materials that the oil industry needs to do more. We could allocate it to them, because we’ve done that for, you know, vaccination production. So we know how to do that. So, Ronald, there’s many things we could do. And I hope I’ve made you a convert.FASKIANOS: Thank you. Let’s go next to Georgi Touchef (ph), who works for Representative Matthew Bradford in the Pennsylvania House of Representatives.Q: Hi. Good afternoon. Can you hear me OK?JAFFE: I can.FASKIANOS: We can.Q: My name is Georgi Touchef (ph). I’m your average budget analyst for Committee on Appropriations for the state of Pennsylvania.My question relates on the end sale in terms of gasoline. So I’ve done some tracking. It’s not only myself that’s done it. If we track crude oil prices to price at the pump, they normally move in a similar direction. That has not necessarily been the case through the beginning of the conflict—basically since Russia invaded Ukraine. My question is, is there a possibility that we would actually hold, whether it’s, you know, gas stations, whether it’s businesses that basically sell gas to the general public, responsible for lack of movement in those prices? Because it is—I’m of the opinion that there is a significant sort of efforts to gain profits rather than relieve the price at the pump. So those prices are almost artificially held above a certain level. So I was looking to get your opinion in terms of what can—I mean, you know, traditionally those should be market prices, with a number of variables that are included as how they’re set. But it doesn’t seem to be that way.JAFFE: So, Georgi (sp), you will be interested to know that I sat for three years on a panel in California on this very topic. So the crude oil feedstock price to refineries is, like you say, a major determinant on what influences the price of gasoline. But, you know, you can have local variables. And as I mentioned, you know, the—when people tank up ahead of a hurricane, or whatever, you know, you get outages. And we’re seeing some outages in different places in the United States today because people are afraid so they’re running their tank high, and that holds the price up.But that doesn’t mean that some particular set of station owners couldn’t be in a particular locale price gouging. And I think the best way to look at localized price gouging is to look at average gasoline prices statewide or in a particular part of the state. We spent a lot of time in California looking at it, and we concluded—(laughs)—that there was some problem in California—which policymakers decided not to take my advice for how to fix it, but that was their choice. And they still have the problem. But there are things that could be done. My opinion is, it's a matter for your local Justice Department, honestly. That’s, I think, where the investigation needs to go. And they probably need some people who would help them. That would—like, you’re doing, you know, look at a survey and see if there are particular owners that are overcharging. And then one would also look at whether those owners have ever met with each other because, of course, that would be against the law.So I think there are things that can be done. I think it kind of belongs to the Justice Department. And I think the Biden administration has the Justice Department looking at it. The Justice Department in California decided not to prosecute the companies. But I can tell you, sitting on a panel for three years, there were some very dicey things that got done to keep that market up in California, where companies literally moved gasoline out of the state to hold the price up. So, you know, it takes a full investigation, but I think that the place that that investigation belongs is not in the political domain, but in our legal domain.FASKIANOS: Thank you. I’m going to take a written question from Mayor Pro-Temp Carole Moore. Mayor in Laguna Woods, California.We are down 30 percent in our reserves. Oil for vehicles is only one use, although largest. The oil products used in many products such as plastics, paint, et cetera. To end use dramatically is not a clear and sustainable policy. What can be done to make certain reduction is sensible?JAFFE: Well, listen, you know, you’re in California. There’s no question the larger amount of vehicles we have that run on electricity the better off we’re going to be. And, you know, you can say, well, but we don’t have a lot of—we have to generate that electricity. And then people say, well, some of—we’re using coal, or we’re using this, we’re using that. The point is, we generate electricity in this country without using oil. We use nuclear. We use hydro. We use many different things to generate that electricity. And we have a lot of natural gas, and we have a lot of renewables that are untapped—renewable resource that’s untapped. California is pursuing that.So clearly, we want to accelerate electrification of the vehicle fleet. And we also want to try to get fleet trucks and delivery trucks, electric. So, California, your ARB is doing the right thing. You know, having the ride hailing companies have to go to electric, that’s a good thing. Meaning that the delivery vehicles for Amazon or other e-commerce companies have to go electric, that’s a good idea, right? So you know, the challenge we have in today’s crisis with the war is it’s hard to do those things—as you know, from sitting in California—it’s hard to do those things quickly. So now we have a shortage of new cars because we don’t have enough chips, and then we’re not going to—same thing with electric cars.So I actually—literally, my husband called our dealership last week, because we saw that the electric version of a car we wanted was coming out in 2022. They told us they would put us on the waiting list for 2024. So I may put myself on that waiting list or I might shop some other brand of car in hopes to find one, but I know from other friends of mine who are wealthier than I am that the waiting list for Tesla is also over a year. So, you know, there’s only so fast we can go. But it doesn’t mean we shouldn’t go that way, because the year will come around very, very fast. And it’ll turn out that we’re probably not out of the problem a year from now, even if hopefully the war is resolved a year from now. You know, this problem of the boom/bust cycle in oil we’re going to get out of quickly, and we need to try to transition as fast as possible to other technologies.FASKIANOS: But to that point, Amy, how are we doing in setting up electrical charging stations across the U.S.?JAFFE: Well, California’s better because the states put a lot of emphasis on that. You know, we’re lagging what I think makes people feel comfortable. If you were really going to drive electric across the entire United States, you might have some difficulty. I mean, Tesla claims if you have the app then you can make it, but it’s a little harder than it seems. And we haven’t solved one—I mean, we’re talking about, you know, the infrastructure bill had more charging—public charging stations. And you’re seeing some states being proactive. And even some of the oil companies are investing in charging station companies.The problem really becomes, frankly, for places where people live in apartment buildings. Because I can tell you, as an electric car owner, that if you’re plugging into your house—really, truly, people misunderstand how much they actually drive. You only drive probably thirty miles a week if you’re not commuting—like, if you’re just doing local driving and you’re not using your car to go back and forth to work. The average American commutes thirty miles each way. So that might be a little more of a hassle. But if you actually thought about it, thirty miles each way, that’s sixty miles. A good electric car has got two hundred miles to the charge. I mean, that’s good enough to go back and forth to work. Then you’re going to come home and plug it into your garage. When you get up in the morning, it’s fully charged. So you don’t even really need charging stations if you’re willing to charge at home.And I lived that way. And I will tell you, my husband—I was the one with the electric car. He always took my car. He’s like, taking your car because it’s charged. And then we were like people with a cellphone, right? Neither of us would want to take the gasoline car, because that would mean that person would have to go to the gasoline station and pay for gasoline. (Laughs.) And even though it was in our electricity bill, so we’re obviously paying for the fuel, it had a different psychological feel. So we would game to stick the person with the gasoline car so they’d be the one who would have to stop at a gasoline station. So everybody used this electric car unless they were going way farther than the car’s range.FASKIANOS: Great. I’m going to go next to Rich Mallory, who has a raised hand, from the Maryland Energy Administration. And unmute yourself. Hopefully, you can do—there we go.Q: Thank you, Irina. And thank you, Amy, for taking my question.If Colonial Pipeline had been a publicly traded company, if there had been a more diverse group of smart money involved, do you think they would have been hacked?JAFFE: Yeah. I mean, they’re like the jugular. If you were a state actor—I’m not going to accuse any particular country—if you were a state actor and you wanted to make the point to the U.S. government that you could make the president very uncomfortable, right, for strategic negotiating—whatever your geopolitical reason—Colonial’s a great target. So, I mean, the different things that Colonial did wrong, I mentioned the thing about their VPN system. And, by the way, if you quit Colonial and left, they didn’t bother to shut down your VPN account. So that means that every former employer (sic; employee) was a risk to the company because all those accounts were just floating around unused.But going beyond that, they had all kinds of firewall problems, because they actually automated the entire pipeline with all these sensors. And then it was really very high tech, because they could eliminate all their employees and save a lot of money and make more money for the management by, you know, eliminating all the people who did things clerically because they could do everything by computer. The sensors would tell you how much gasoline was delivered in a particular place. And then it would send that data back to the business office. And then that would automatically make an invoice that would go to the customer.Do you know what the problem was with that, Rich? The problem with that was that if that hack had been worse, they could have gone—that same hack could have traveled into all the customers of Colonial Pipeline. That means it would have gone into military installations. It could have gone all through Washington, right? It could have hacked everybody’s distribution company. So, you know, it’s a very—airports. It was a very dangerous hack. And it really raised the question about whether or not it’s OK for private infrastructure to not be regulated in how it manages its cyber preparedness.And we’re still fooling around with that topic on Capitol Hill. There have been more bills passed in the last week or two about the requirement of reporting. If you have a breach to your—say you just had a breach to your business office, and you were Colonial. You felt you didn’t have to report that to CISA, but, you know, actually that turned out to be a material thing for the U.S. military that you had that breach. So now we’re changing the rules and we’re making it much more tight that you have to report payments of ransomware. (Laughs.) And you have to report breaches.And, you know, what’s tracked is what’s measured is fixed. So my feeling is if I have to report it, then it means I have to monitor it. And if I have to monitor it, I’m less apt to be hacked because I’m monitoring it. So I think those regulations are a good thing and hopefully will help.FASKIANOS: So I’m going to go next to Brandon Bowser who wrote his question, but also raised his hand. And it’s on—I think it’s on cyberattacks. So, Brandon, why don’t you ask your question? And identify yourself, please.Q: Sure. Thank you very much. Yeah, I also work with Rich at the Maryland Energy Administration. I’m our agency’s energy resilience program manager.So I offer a few incentives that help grow microgrids throughout the state of Maryland. And so, yeah, sort of pulling on the theme that Rich started with, with the Colonial Pipeline. You mentioned early in the call that cyberattack threats are on the rise, obviously, with the geopolitical situation. That being the case, and with the increasing prevalence of distributed energy resources coming online on our grid, that makes more entry points for these bad actors, of course, to get in and start attacking things. I mean, I’m really thinking about those real critical infrastructures like hospitals, medical facilities, water treatment plants.What is the federal government doing really to take a look at ramping up any security protocols, recommendations, or regulations that can really help prepare us for these types of threats? Because more entry points obviously increases the severity of attack that could be carried out.JAFFE: Correct. So you have—I mean, there’s the flipside to that. There’s the more entry points, right? And Colonial was instructive on that. But there’s also the practice. So if you segment all your entry points, then you are less apt to have it go all the way through a system. So another thing Colonial did wrong was the way their IT worked was along the entire pipeline, through all those different states, they had no IT and firewall segments. It was just all one program, right? So that’s a problem, because they couldn’t shut down one section and analyze it, and they couldn’t find the hack in one place and only shut down that place. And also, they couldn’t operate anything manually, so that’s also a problem. So just mentioning all those problems.But, you know, you raise a very important question, which is that if you have all these different ways that, you know, hostile actors can enter the system. So a couple of things. You know, you are a resilience officer so maybe I’m preaching to the choir here, but the most important thing actually—I mean, you know, we want to do monitoring, and we want to do segmentation, and we want to do all these things to try to prevent an attack. But, you know, law of averages, some attacks are going to get through. So the other thing we want to concentrate on is restoration and recovery.So one of the things again we learned by accident, is that the shipping—container ship company Moller Maersk, had a major attack on itself in 2017. And their entire—I forget the name of it—their entire software management system for the entire company—you know, hundreds of countries—you know, hundreds of locations in multiple countries—went down. Their whole system went down. And it happens that on the day that everything went down and they lost all their data, there was a unit that was operating in Nigeria. And Nigeria had a blackout that same day because they had bad power—(laughs)—you know, stability. And the systems in Nigeria for Maersk were shut off from the internet. And none of the data was compromised because it was turned off. It was disconnected from the internet. It was on devices that were literally off.So that made people realize that one of the things that operators need to do is they need to have regularly updated data, real-time data for their operations, that is one a device or a storage platform that is not connected to the internet, so that the restoration process can be faster. And also, you don’t have to pay the ransomware. So that was a lesson which the oil industry now does. I know a lot of the people in the oil and gas industry now, they have separate mainframes that are off that store the data. And they turn them on briefly to load back up the data and then they turn it off again, right? (Laughs.) So that’s one process that one has to think about.And, you know, I mean, the federal government unfortunately can’ be everywhere. And that does mean it falls to state and local agencies, like your own. And if you think about it, because I’m sure there’s someone in Maryland who’s done this and this has not been instituted at the federal level but it’s something we could think about—so I mentioned the strategic petroleum reserve. We do have an emergency fuel system where there’s a communication—like, the schematic, it’s been used in the past, where state officials make assessments about fuel shortages. I mean, I’ve seen that myself. When I lived in Texas, of course, we had all the hurricanes and suddenly there was no fuel and people couldn’t evacuate, right?So we have these—and I was on a panel for the U.S. Department of Energy for a year where we studied the emergency fuel system, which is a combination of energy companies that provide the fuel—you know, distributors and refiners—these states agencies that would be assisting people if there was a fuel emergency, and the U.S. Department of Energy, where the director of the Energy Information Administration is the coordinator. And the idea is to, you know, like we did, you know, during COVID or other times, we look at the data nationally and for a particular state. We can move fuel from one state to another. We can have refiners address outages by inventory. We can move things by truck. There are all kinds of things we do when we’re in an emergency fuel situation.And my feeling is we could have a similar system for cyber training and information. The way we do these drills for fuel emergencies, we could also have something like that set up for energy and cyber. And we do not have that yet. So that would be something, I think, that the states and the federal government could look at, which is how do we do training and coordination for emergency procedures?FASKIANOS: Thank you. I’m going to take the next question from Erica Blyther, who is the petroleum administrator for L.A., city of Los Angeles in California.There’s been a large focus on vehicles and fuel. Are there also plans for jets and air travel to reduce fuel demand?JAFFE: So jets is very hard. You have some companies—United in particular has been very forward-looking in trying to come up with biofuel that would meet the unbelievably strict and tight and important specifications for jet engines, because, of course, they can’t be a molecule off-spec or, you know, we have all these people up in the air. So people are working on that. Companies are working on that. There’s R&D money from the federal level that looks at that. Some people have suggested that maybe we could get to the point where we could use hydrogen in planes. Some people experimenting with very small planes running on solar electricity. That seems a little harder to do at a large scale. But it’s a harder puzzle than doing on the ground vehicles. And that’s why it’s probably going to be the last place that we tackle.And, you know, speaking from L.A., you know, I mean, I was out there. It would be great to have a high-speed rail between San Francisco and L.A., and then we wouldn’t need to use all those planes for people who just don’t have the time to drive or don’t have the health to drive. You know, for years—for years I frustratingly drove back and forth from Houston to Dallas, another fantastic route that could be easily serviced by high-speed rail. Obviously on the East Coast it would be fantastic if we had high-speed rail. And I just—you know, we don’t have the political will to spend the money on that because it would take all new rail. And we would have to actually build new tracks because, you know, the tracks we have between the East Coast, you know, just couldn’t do it. And, you know, you have entrenched players like Southwest Airlines, an important company in Texas, you know, tried to squash the high-speed rail. And you know, California’s story, as you know, I’m sure well from L.A., was a very complex story for why it got funded and then not built.FASKIANOS: Thank you. I’m going to go next to Utah State Representative Ken Ivory who has raised his hand.(Pause.)And if you can unmute yourself—Q: Here we go. Thanks.FASKIANOS: There we go.Q: Thank you.Yeah, I wanted to follow up on the New York Times article from last week that talked about the Defense Production Act, mentioned forty-six-some-odd minerals that we import at least half, and wondering if you could comment on what the use of the Defense Production Act would do to get us to some level of independence on these forty-six different minerals.Then the article also mentioned that the administration would look at further potential uses of the Defense Production Act in relation to the energy sector. I wonder if you could comment and flesh that out a little bit.JAFFE: Well, we definitely need to be more independent on the metals that we need if we’re going to, you know, move forward on electric vehicles, if we’re going to move forward on some other kinds of technologies that we want to do, and also—just honestly—as a matter of U.S. defense. We have minerals—we either don’t have them—rare earth minerals where we don’t have them and they are needed for the U.S. military to operate; for example, night vision glasses. We don’t have the materials being produced here in the United States. We’re importing them actually from China, so that seems like a problem.But we also don’t have the processing here, so we definitely need to hasten manufacturing. We’ve all learned with COVID that having one supplier country for something is unwise. Now we’re doubly learning that with the crisis with Russia, and it goes across so many different things because now we’re learning that the key ingredients to make fertilizer for food came from either Russia or the Ukraine, or Belarus, and now there are some parts of the world where people are concerned there might be food shortages. I don’t think we’ll see that here in the United States, but the farm community is going to have to pay a lot more for their inputs than in the past because of the crisis in Europe. And, I mean, the list of things we offshored is so large. It’s almost hard to like wrap one’s brain around it.And we are—I think the reality is we’re not going to be able to be self-sufficient in everything. I think I’m not making an extreme statement when I say that whereas the previous administration might have pooh-poohed the fact that we don’t need these alliance systems, when you look at all the different material we need, both to conduct our own national security and to manufacture the things we need to make sure that Americans have the food they need safely, have the equipment to have automobiles, and so forth—now that we can see all that, then you can understand that we’re just not going to be able to manufacture all of that in the United States. We also need to tap our alliance system. And so I just think it’s important.And then we also—corporations I think are learning the hard way that having risky places in your supply chain might be cheaper in the short run, but could be very damaging to their operations in the long run. So I think you will see the private sector make its own adjustments.FASKIANOS: Thank you. I’m going to go next to Andrew Epstein who wrote his question, also raised hand, so why don’t you just ask it yourself?Q: Hi. Sorry, can you hear me?FASKIANOS: Yes.JAFFE: Yes.Q: Hi, good to be with you. Thank you for your expertise and knowledge.I am Andrew Epstein. I’m chief of staff to Assemblymember Gallagher in New York State, and we’re gathered here today, a day after the IPCC, reflecting the overwhelming consensus of hundreds of scientists around the world, told us that we have 30 months, right—the distance between October 2019 and now—is the same distance that we have into the future to start turning around the trajectory of global emissions if we are going to have a prayer of having a livable planet for us, for our kids, for our grandkids. It’s dire, and it’s happening right now.And I totally recognize the context of the Ukraine conflict and the very real pain Americans are feeling at the pump, but I just feel like I’d be remiss if I didn’t ask you to reflect a little bit on how releasing oil from the strategic reserve, facilitating increased domestic production—all of these things we’ve been discussing today—how that comports with the incredibly clear message that the global scientific community is telling us right now about the livability of our planet. So I would love to hear some thoughts on this.JAFFE: OK, Andrew, can you tell me, how did you get to work today?Q: I took a bus.JAFFE: OK. And what did that bus use for fuel?Q: Unfortunately, I believe they use, quote, “clean gas”—I’m in New York City, right? They advertise some form of—JAFFE: They use—they use—they probably use natural gas, right?Q: Right, right. So-called, yeah.JAFFE: OK. So here’s the problem, right? First of all, the Biden administration is not producing extra oil and making extra emissions. We are replacing Russian oil and Russian emissions. And the Russian oil and gas is the most methane-intensive in the world. So to the extent that we replace a barrel produced in Russia with a barrel produced almost anywhere else in the world, we’re better off from a climate perspective.Q: Is that what the IPCC has to say about it?JAFFE: That is the—that is absolutely a scientific fact. If you do not believe what I am saying, you can email me. My email is—(inaudible)—Q: Sure.JAFFE: —and I will send you the data.Q: Sure, I would love to see where the IPCC has said that a barrel of American gas is better than a barrel of—JAFFE: It’s World—it’s World Bank—it’s World Bank data. It’s World Bank data, right? It’s World Bank and other data sources—International Energy Agency data—that shows that the Russian production is the most carbon-intensive in the world. That’s a fact. It’s just a fact.Now I understand how you feel. I feel the same way. I mean, I was just telling Irina before I came on the call I actually changed jobs so that I could work a hundred percent of my time on the climate crisis. You heard my title. I am the managing director of the Climate Policy Lab. My lab spends every minute of every day trying to help countries develop decarbonization strategies that will work without putting people out of work. That’s what we do, right? Reindustrialization is what we call it, right?But that said, with all due respect, are you going to not—I mean, there are just people who have to go to work. They can’t work from home, and they have a car or a vehicle that runs on fuel. And, I mean, they can’t afford an electric car, and even if they could, there isn’t one available to buy. And by the way, New York State, right? Why don’t you call up Maine and ask them why they won’t let there be a wire to bring clean hydroelectric power to New York City so that you don’t have to use natural gas for your bus, right?Everybody has an ax to grind. Maine doesn’t want a wire in their forest land. Other people don’t like hydro because, you know, it affected some other ecological system, right? You know, energy requires infrastructure. Infrastructure disrupts somebody’s backyard, disrupts some animal, disrupts something. So we have to make decisions, and I agree with you, right? Climate change should be the top priority. I do that, made that commitment in my own daily life. It’s all I work on a hundred percent of the time except when people call me up because I know a lot about oil and gas, and say, we’re in a national emergency.I mean, honestly, if we were at war, right? I mean, I hate to speak like this because I only have five minutes left. I watch the international news with great intensity because even though I try to work 99 percent on climate change, you know, I have a background in looking at security, and last time I looked, Vladimir Putin made a speech that explained to our country that he’s got nuclear submarines off the East Coast of the United States pointing at us. And right now, in this ten minutes, every piece of military equipment that operates in the world, from the United States military to everybody else, operates on liquid fuel; i.e. some form of oil. That’s just the reality of the way it is. Maybe there’s a drone out there that operates on electricity, you know, or hydrogen. Everything else is oil. And we cannot be caught in a situation where we can’t defend ourselves as a nation because there is not enough oil.And it happened. Part of the reason that we just stopped having electric cars in 1910, Andrew—literally—is because we had to move all that metal into weaponry, and then Europe didn’t have railroads, and the Germans did. Germany controlled all the railroads, so we had to get Ford Motor Company and other companies to make trucks that could run on liquid fuel so that we could move men and people around so that we didn’t lose the war.And that’s just the reality of where we are. We’re in a horribly dangerous time, not only because of climate change, but because there is this small percentage chance that we could have a nuclear war. And the president has to deal with that every morning he wakes up. He has—his best and top goal, I’m afraid, is to make sure we don’t have a nuclear exchange with Russia. That’s the first thing on his mind. And maybe the second thing on his mind is climate change, but the first thing on his mind is to make sure we don’t have nuclear war.FASKIANOS: All right. So we have three minutes left. I’m going to take the last question from Matthew—I’m not going to be able to pronounce his name properly—Kazmierczak—who is government and legislative affairs in San Jose.What should local government agencies be doing to ensure stability and resilience for its residents given the uncertainty of energy supplies, and that this isn’t an issue that local government have any control over? So what about ensuring stability for local budgets at the micro and macro level?JAFFE: Oh my God, I would hate to be a city official doing the fuel budget today. You are definitely going to have to allocate more money for fuel, and that’s very depressing because my daughter used to work for the city of San Jose, and I know you have a lot of really worthwhile services for people. That would be horrible if you had to cut them just because fuel costs are going to go up.So, you know, unfortunately, I mean, there’s not much I can tell you. To the extent that you have urban—you know, city vehicles and you can move those to alternative energy, I think—I still think you are going to do better with electricity than you are going to do with oil over time. You know, I mean, it just is what it is. I mean, your best bet is efficiency. So if there’s money that you could spend to replace equipment, to make the current equipment—whether that’s your vehicle fleet, or your power generation fleet, or your buildings—more energy efficient, that’s going to be money well spent. It not only lowers emissions, but it means that over time your energy bill will go down. And maybe that’s an investment to make because there’s really—it’s going to be hard to avoid.FASKIANOS: Well, with that, Amy Myers Jaffe, thank you very much. I apologize for not being able to get to all the questions and comments in the Q&A box. We obviously have run out of time, but we do appreciate your being with us and for your good questions.We will send out a link to this video in the transcript, and we’ll circle back to you, Amy, for anything else you want us to include—some of the reports you mentioned and some of the work that you are doing at your lab.And you can follow Amy on Twitter at @AmyJaffeenergy. You might need to change your Twitter handle to climate change. (Laughs.)JAFFE: Yeah, right. Well, energy, you know, transitioning our energy system is a climate change activity, so—FASKIANOS: There you go. And you can also follow State and Local Officials at @CFR_local so we hope that you will do that.Please email us with any suggestions to state and local at cfr.org, and as always, go to CFR.org, ForeignAffairs.com, and ThinkGlobalHealth.org for more expertise.So again, Amy Myers Jaffe, thank you very much. And to all of you, we hope you stay safe and well, and we look forward to continuing our conversations.JAFFE: Thank you for having me.(END)

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Jennifer Hillman, CFR senior fellow for trade and international political economy, discusses how the Russian invasion of Ukraine is affecting trade in the United States with host Carla Anne Robbins, CFR adjunct senior fellow and former New York Times deputy editorial page editor.TRANSCRIPTFASKIANOS: Thank you, Erica. Welcome to the Council on Foreign Relations Local Journalists Webinar Series. I’m Irina Faskianos, vice president of the National Program at CFR.As you know, CFR’s an independent nonpartisan organization and think tanks focusing on U.S. foreign policy. We take no institutional positions on matters of policy.This webinar is part of CFR’s Local Journalists Initiative, created to help you draw connections between the local issues you cover and national and international dynamics. And so through this programming we put you in touch with CFR resources and expertise on international issues and provide a forum for sharing best practices. Thank you all for taking the time to be with us today. This webinar, again, is on the record, and the video and transcript will be posted on our website after the fact at CFR.org/localjournalists. And we will also send out a link to the discussion as well as to other resources mentioned.We’re going to talk today about “The Implications of Russia’s Invasion on U.S. Trade” with speaker Jennifer Hillman and host Carla Anne Robbins. I will just give you a few highlights on their distinguished careers.Jennifer Hillman is a senior fellow for trade and international political economy at CFR. She’s a professor of practice at Georgetown University Law Center, teaching courses in international business and international trade. From 2007 to 2012, she served as a member of the World Trade Organization’s appellate body. And prior to her time at the WTO, she served as a commissioner at the United States International Trade Commission and as general counsel at the Office of the U.S. Trade Representative.Carla Anne Robbins is adjunct senior fellow at CFR. She is faculty director of the Master of International Affairs Program, and clinical professor of national security studies at Baruch College’s Marxe School of Public and International Affairs. And previously she was deputy editorial page editor at the New York Times, and chief diplomatic correspondent at the Wall Street Journal.So thank you both for being here today. I’m going to turn it over to Carla to run the conversation, and then we will go to all of you for your questions and comments. So, Carla, over to you.ROBBINS: Thanks so much, Irina. And thank you so much, Jennifer, for joining us.And thank you to all of our colleagues who are here with us today. Thank you for everything you’re doing. It kind of just doesn’t stop, the news. It’s pretty extraordinary, and a particularly grim time—and has been a particular grim time for such a long time. So, you know, I’ve been thinking about this Richard Holbrooke quote about sanctions, when he said, “What else fills the gap between pounding your breast and indulging in empty rhetoric about going to war besides economic sanctions?” You know, and there’s a pretty impressive list of sanctions that we put on Russia. And of course, we’re giving an enormous amount of military aid to Ukraine as well.But in the end of the day, we’re really sort of hoping that the economic pressures are going to change Putin’s mind. So I want to talk about the impact on the United States, and certainly I want to talk about how we as reporters cover all of this. But I thought maybe we would start out, Jennifer, to talk about the sanctions themselves. You know, are these extraordinary sanctions? And are the Russians feeling the pinch? And do you think they have a chance of changing Putin’s mind?HILLMAN: OK, I’m going to start out by saying yes, yes, and not so sure. So are these unprecedented? I think the answer is unequivocally yes. And I do think it’s important to sort of think about why they are so unprecedented. I mean, for me, one is that they’re way more comprehensive than anything that we’ve ever done before for any other kind of sanction—whether you compare it to what we did with respect to Iran, or Venezuela, or others.They are just far more comprehensive. And when I say that, I mean, partly it’s because they cover financial transactions and, again, are very comprehensive in terms of both the number of the banks that are—that are subject to the sanctions, the freezing of the assets, the denial of banks access to SWIFT, the clearing/processing system for banks. You know, again, extremely comprehensive sanctions on the financial side. So it is really depriving Russia of access to dollar-denominated deposits that it has around the world and to other things.But they’re also very comprehensive in terms of when you move over to the goods side of the equation. You know, significant sort of import bans on sending anything into Russia. And I would say, particularly strong bans when you think about goods that have any technology sort of component to them. And so, again, very strong across there.I mean, thirdly, when you think about it’s pretty hefty ban on travel. I mean, you’ve effectively grounded, you know, Russian civilian airplanes. I mean, Aeroflot, the Russian airline, is no longer flying any flights internationally because such a high percentage of all the actual physical planes run by any airlines in and out of Russia are leased, they don’t want to fly them anywhere and have them land and be seized. So there’s kind of a travel ban, if you will. You know, and then you add on top of that the sort of technology bans, to me it’s extremely comprehensive. So that’s part of it.Secondly, to me, it is very unusual, compared to all of the other sanctions, in terms of how many other countries are in on this. It is all of the members of the European Union and some of their individual member states, going even beyond that—Canada, Australia. I mean, even usually always neutral Switzerland joining in on it. So it is much more of a coordinated, you know, kind of a ban. And I would say the last thing that really is usual, and I’m sure is making it really hard for all of the journalists out there, is the swiftness of it.I mean, if you think about it, it was February 21st that Putin decreed, you know, that the—that Donetsk and Luhansk were independent regions. It was less than four hours later that the president of the United States is issuing an executive order, you know, stopping new investments in or exports from those regions. And, again, it’s less than six hours later the European Union is putting on bank sanctions. And so you just keep going, with every single day that something happens in Ukraine there’s an immediate sort of response. So, yes, they are really new and different sanctions from anything we’ve seen before.ROBBINS: And, you know, the thing about sanctions is—as Holbrooke said, it’s the thing between going to war and wringing your hands, pounding your breast. Is it crimping Putin’s ability to fight the war? I mean, he’s certainly probably still eating steak. Or is he a vegan? You know, he’s not changing his—(laughs)—you know, he’s still—he’s still got his black belt—although, I think they took his black belt away. I mean, is it crimping his ability to fight? I mean, are they pressuring enough the people around him? I mean, sanctions at the end of the day probably have to change his mind or really fundamentally limit his ability to fight the war.HILLMAN: Yeah. So I think this is a really hard question, because in general the problem with economic sanctions is they’re not immediate. You rarely see an effect immediately. They take time to sort of starve off an economy or something. But here I think in this instance I think we are seeing—we are seeing a relatively immediate effect as a result, in part, of the ban on goods. I mean, so it is the fact that, for example, many of the parts that are needed to build cars, to build tanks, to build trucks, they are already having an effect. They have to some degree shut down—you know, the largest tank producer in Russia is now shut because it doesn’t have the parts. Lada, which is, you know, the national car of Russia, again, those production lines—at least some of their production lines are being shut down. Their large truck producer, again, does not have access to parts.So in that sense we are actually seeing a bit more of an immediate impact, and an immediate impact on his ability to, again, produce more tanks, supply the tanks that are already there in Ukraine with necessary parts. So in that sense we’ve actually seen an unusually fast response. You know, on the money side it’s a lot harder, because Russia did before this invasion started start pushing money out into various pockets, some of them fairly secret, maybe some of them hidden to some degree in—by the Chinese sovereign funds, et cetera. But they pushed a fair amount of their dollar-denominated holdings out into various secret places. So do they still have access to money at some level? Yes. Again, and that’s the sanction that’s going to take a lot longer to really cut off Russia from access to money at all.But to me, the other thing where I do think there is some immediate impact is the fact that unlike a lot of other sanctions, most—many, many companies—(laughs)—private companies have decided to join in on pulling out of Russia, not doing business with Russia. They’re not necessarily required to do that. Again, this is not necessarily a mandatory obligation. But if you look at them—I mean, it’s Apple, and FedEx, and, you know, Harley-Davidson, and H&M, and John Deere, and, you know, MasterCard, and McDonald’s, and on and on, PayPal. These are private companies that are choosing to stop doing any business with Russia. And that is also, I think, having a pretty immediate impact on the Russian people. And the question is whether an impact on the Russian people translates into any rethinking in Putin’s mind. And I think at this point we have no way to know that and would assume that at this point the answer is it hasn’t happened yet.ROBBINS: So, and of course, you know, in the past, certainly after the sanctions were put on after Crimea, there were all these people who did this research who suggested that as less access to, you know, banking system, less access to borrowing had the opposite effect, that a lot of the oligarchs became more dependent on Putin because he did have access to money, although it was much more limited. So you’re right, we have no way of knowing. And the difference do, in Ukraine, roll a hell of a lot faster than sanctions do.Now, the other side of this is the impact on us. We’ve never seen this sort of yanking an economy—now, granted, it’s a reasonably small economy, but it is an economy that does supply some important things—yanking an economy like this out of the global economy, and coming on top of such major disruptions from COVID, on top of the highest inflation in forty years. I mean, grocery prices were rising, you know, I think in February before the war started, by 8.5 percent over the prior year. So, you know, Biden’s people can, of course, say that gas prices are all due to Putin. Probably not true. But you can say COVID, Putin, all the other disruptions.So how much of the war, you know, is—how much worse are things going to get, I suppose is what I’m asking? And how much of—you know, where should we be looking for disruptions? I mean, I was looking this morning about, you know, what the Russians produce. And is it just what the Russians produce? Or are there just—are there all these other knock-on effects in supply chains. I mean, there’s palladium and nickel. There’s wheat that’s produced in Ukraine and Russia. You know, what’s the impact on the U.S. economy that we should be looking for?HILLMAN: Well, your question is perfect because I think you’re touching on why is this going to have such a significant impact? Because it is—it is not the case that we import directly so much from Russia. I mean, we get, grand total, probably 8 percent of our oil and gas from Russia directly. And ditto on many of the other products. But it is going to have—these sanctions are going to have a major impact throughout the world because of what they do to everything else. And your point about wheat is a really good one.I mean, Russia was a huge supplier. Russia and Ukraine collectively were huge suppliers of wheat to the international market. Maybe not so much directly coming into the United States, but to the rest of the world. And the problem is the whole world is now going to be facing a very great shortage of wheat, you know, and a significant rise in the prices of everything that is made, you know, sort of using wheat. And it is compounded. I mean, wheat is a crop that needs to be put in the ground in April and May. That’s when it needs to be planted in Russia and Ukraine, and in the United States. And wheat is a crop that is heavy in its need for fertilizer. OK, where does fertilizer come from? It’s a derivative of oil and gas. So who is one of the major producers of fertilizer? That’s also Russia.You know, so you start adding on the fact that there’s probably not going to be a wheat crop going into many parts of Ukraine. And we don’t know whether Russia will continue to plant. What we do know is Russia has already banned the export of wheat. They’re going to hoard whatever wheat they have for themselves, and they’re not going to be exporting it. So you’re going to see a huge shortage throughout the world of wheat. And that shortage comes at a time in which the United States has had particularly poor crops of wheat over the last couple of years, in part due to all of the climate change effects of flooding and droughts in various parts of the United States at the worst possible time for a wheat crop.So we have a low stock in the United States, high prices already. And you add all of this on top of it, and it is going to have, you know, again, a very dramatic effect. As you say, the metals that are really essential in the high-tech area, again, heavily produced in Russia. Russia is going to start hoarding those. Again, they’re not going to be likely to sell them on to any of what Russia is deeming unfriendly countries. And we would be in that category. So it is going to make it harder for our manufacturers of semiconductors, microprocessors, and other things to get those hands on those. Even though they need a small quantity, they need them absolutely in order to be able to produce a lot of these components.So the ripple effect is going to be very, very severe. And, I would argue, it goes both ways. I mean, part of the reason why these Russian companies are starting to shut down is they need components from the West. We also will need some of these things coming out of Russia, and we’re not going to get them. So again, from my sense of it, you know, one of the things that has to start happening right now is the United States has to start thinking about how do we have a higher wheat crop in order to support the rest of the world and ourselves?And that may mean things like stop producing biofuels and other things that are produced using grains and put all of our effort into growing more wheat. I mean, don’t grow corn in order to produce biofuels. Grow wheat. Let’s see what we can do to lower the price of fertilizer. Let’s see whether or not some of the funds in the commodity credit corporation or other forms of support could encourage our farmers to start going into the areas where we are going to be deprived of product coming out of Russia.ROBBINS: So let’s sort of break this down a little bit more. So the sectors that we should be watching that are going to have an impact on what we see in the grocery store, of what we see when we go shopping or we pull our cars up to the pump, or potentially our—that’s one set of questions. And the other one is the sectors are then going to drive, potentially, inflation because of scarcity of goods. So before we talk about inflation for a minute, let’s talk about the sectors. So grains are a really important one, and also the things that grow grains, which is fertilizer. So are we talking potentially about shortages of things that produce bread, or shortages for—because wheat and grains are also for animals. So that’s meat production as well. So do you think we’re going to haver shortages in the United States, or is it just going to drive prices up?HILLMAN: I think for us it will just drive prices up, because we are still a very large producer. I mean, even with less-than-stellar crops, we are a very large producer of all of these. So I don’t think we will literally see, you know, shortages of product here in the United States. But what we will see, unequivocally, is higher prices. And what we will definitely see is significant shortages elsewhere in the world. And again, shortages of major important things like food—bread, wheat—you know, has the potential to create huge amounts of domestic problems. You know, you think about how much of the Arab Spring, you know, started over concerns over food shortages. How dependent Egypt and others are for—again, for bread, that is largely produced from wheat that is largely coming out of Russia and Ukraine. So again, the concern in the United States, I think, on food is more on the inflation side. The concern in the rest of the world is going to be on shortages.ROBBINS: So, you know, the car—and then there’s the car issue. I mean, I thought—we’ve seen this problem with semiconductors. And is this going to get compounded, that we’re going to—car prices are going to get even higher, or the availability of cars is going to be—and was that getting sorted out before this? Or was it—was the whole sort of supply chain thing and such disruption—HILLMAN: Well, again, so supply chain disruption is caused by so many things and, you know, largely related to COVID. But I think the semiconductor situation was getting sort of better, in the sense that, you know, the orders in and the producers in—you know, particularly in Taiwan and Korea, where there’s a huge amount of semiconductor production, are sort of fully back online in terms of through their COVID situation, and are turning out, you know, at high, high numbers their semiconductors. So that was starting to get in a better place.But then when you think about it, you know, I mean, some of it may be that—so, right now, you know, the single-largest product, if you pick one good, that Russia imports is cars. I mean, they are a large importer of cars from Korea, from Japan, from Germany. Those are not going to be sold into Russia anymore, because all three of those countries have banned, you know, exports to Russia. So there will be—those cars that were going to go to Russia are, arguably, going to be available in the world. And that’s not maybe huge numbers, but it is some numbers that will be diverted out of Russia into other markets. So we may be OK on the car front, but it will be, again, some increase in U.S. production but largely, potentially, increased imports from Japan, Korea, and Germany.ROBBINS: So I’m puzzled by—I can’t believe—this sounds like such an incredibly naïve question. I’m puzzled by gas prices. (Laughs.) I think everyone’s puzzled by gas prices. I mean, like, one day you go and it’s, like, a dollar higher than you expected, and the next day it’s seventy-five cents higher. It seem as if it’s changing almost day by day at this point. I mean, and then, of course, I mean, I’ve never—you know, the strategic petroleum reserve, of course, is all not real. It’s all—that’s all psychology and there’s not enough oil in the strategic petroleum reserve to have an impact on gas prices. Has the world found a substitute for Russian oil and gas? Can we put more pressure on that? What’s driving oil prices up? And how much of this is fear? How much of this is reality? And if the Russians do something even worse, is this, you know, the next thing that’s going to be totally, totally tamped down? And are gas prices going to go to $5, $6 a gallon?HILLMAN: Well, I’m going to just start by saying I am not a maven on energy or gas prices. So I’m going to share you sense of I don’t know. But a couple things I’ll just throw out there. One is, you know, it’s my understanding that there always is a lag between the price of oil and the price of gas, just because obviously an import of oil takes a lot of steps before it is actually turned into gasoline and sold, you know, at your local gas station. And, you know, prices vary across the United States for reason that never made any sense to me or others. You know, a couple other things, though.I mean, obviously the United States is—has become, you know, one of the world’s largest producers and exporters of oil. The issue I think for the United States is that a lot of what we produce is out of shale, you know, in North Dakota and other places. So it’s fracked oil. And/or it’s now increasingly out of West Texas. And again, that tends to be a lighter, sweeter oil, if you will. And our refineries that are going to turn that oil into gasoline, are geared up to refine heavy, dirty, sulfur-based oil, which is the kind of oil you can buy from Russia, Venezuela, and Saudi Arabia. So our whole industry is geared up to refine a different kind of oil that what we’re producing.And so part of it is going to be how quickly can our refiners—which, again, the answer is not very quickly—I mean, how quickly can we start maybe refining some of what we produce or figuring out other sources? And again, I think, as I understand it, the Biden administration is trying to figure out whether we could start re-bringing in Venezuelan gas or, again, whether we can put more pressure on the rest of the OPEC countries to supply more of the kind of oil that we are good at refining, in order to keep a higher supply. So, you know, at some basic level the laws of supply and demand still operate. And so prices are, at some level, a function of a lack of supply and very high demand, as everybody, you know, decides to start traveling again in the post-COVID worldI’m sure there is also an element of profiteering on the part of the oil companies. I mean, if you just look at what their profit levels are, there’s no question there’s a fair amount of that going on as well. And that’s another one of those ones that’s very hard, you know, for the administration or others to really get their arms around what you do about that.ROBBINS: So if I’m, you know, a local reporter—and then I’m going to let people—turn it over to the group. But how do I make this accessible to my readers? This has been our challenge throughout COVID, is to try to see how this big, global, you know, disruption is affecting my local, you know, experience. I mean, is this by comparison—was COVID just sort of a minor blip and it’s pretty much the same story? Or is this a new story, a new way of looking at it that we should be looking at?HILLMAN: Well, I won’t say that it’s as large as COVID, but I think it is far more than a minor blip. And again, to me, the reason why I say that is to go back to, again, the comprehensiveness of these sanctions. So what’s happening where you do this kind of sanctioning on an economy, even an economy that is not the biggest in the world, of Russia, but nonetheless a significant economy. And significant, why? Because it is such a significant producer of oil, of gas, of wheat, and of some of these metals that are absolutely essential. So you sanction them off, and you basically don’t allow any trade in or out of these major products. And, yes, it has a significant ripple effect on the whole world.So in that sense, yes, it is not a minor blip. It is definitely something—and the longer the war goes on, the longer the sanctions stay in place, I think the more that effect is there, and then the more you will ultimately see, you know, everyone scrambling to come up with alternatives. I mean, whether we will, again, create refineries that can actually refine, you know, fracked oil out of North Dakota, that would be a big change. But that is going to be slow in coming. So part of what would be interesting, I think, for reporters to think about covering is how are companies and communities reacting to these shortages and these supply chain disruptions. And that is not maybe a different story than what we saw in COVID, but it is more tailored to the specific items that are going to be heavily impacted by Russia. So it’s not the whole globe and every product that is going to be affected. But because it affects energy, that at some level does have a very major global impact.ROBBINS: So, energy, fertilizer, obviously, for anybody who’s—who lives in a farming community itself. Prices, what’s going to happen to inflation, which of course has a huge political impact as well.HILLMAN: And then all of the grain products. I mean, again, so those are huge. You know, and then, again, Russia is also a major producer of many of the chemical products. So it’s—you know, it’s plastics are, you know, again, one of those things that’s a derivative of oil and natural gas. Plastics, rubbers, fertilizers, soaps, detergents. A lot of those things, again, are affected by Russia. And then, again, Russia is, like I said, a huge producer of wheat but also, you know, barley, sunflower oil. I mean, you know, poultry, meat, et cetera. So, again, in the food area major issues if there are compete sort of cutting off of Russia. It results in significant impacts.ROBBINS: So I see we have, I believe, a question. So Robert Chaney, I hope I’m pronouncing your name correctly, would you like to ask your question?OPERATOR: Robert, you’re unmuted. You may go ahead, if you like.ROBBINS: Or would you like me to read it? Oh, no mic connection, OK. Robert Chaney from the Missoulian.On farm commodities, wheat, et cetera, how does the sanctions disruption of Russian agricultural—or, is it Russian ag—compare to the war disruption of Ukraine’s ag sector? Guessing sanctions can be turned off, but planting can’t be retroactively produced.HILLMAN: Yeah. So, again, I think it is—I think the sanctions are going to have a bigger effect on the world in terms of Russian than Ukraine. I mean, part of that is just the size of the market in Russia is larger in terms of their total wheat crop. And partly because the Russians are, at this point, you know, banning these exports. So that is going to have a big, immediate effect. What we don’t know is whether there will be any ability for the farmers in Ukraine to get a crop in the ground. Again, as I said, the planting season is April and May. And a lot of that crop is—you know, so the question is whether they can get a crop in the ground in the midst of this war. And I think that we don’t know yet. We simply do not know whether there will be that ability.From everything you hear and read, you know, the hope is that any Ukrainian that can continue to do what they need to do will continue to do so. So there’s a possibility that a crop will go in. I think crops will go into the ground in both Russia and Ukraine. The issue will be whether anybody will have access to it. Those crops will be harvested in July for wheat kind of products. So the question is, once that harvest happens are we still going to have Russia keeping it all or sending it only to what it will call its friendly allies, or whether the market will have opened up to some degree then. I think on that sense it’s just too early to tell. But as between the two of them, you know, Russia is the larger producer.ROBBINS: So I think we have—may have another question, or more. So waiting for more questions from you guys. To follow-up on that, have gotten smarter about this, since we’ve certainly had, you know, two years of disruptions. And we don’t really have an industrial policy or, you know, sort of a national—you know, we have national trade policy. We really don’t have an industrial policy that—in which we try to tell industry how to behave. We provide support for farms. Have we gotten smarter about how to deal with supply chain disruptions? And are there things that we have done because of COVID that can now provide support for different industries or for farms, and all that are springing into place now to try to cushion some of this? Or are we still scrambling?HILLMAN: So the answer I think is yes. We’ve gotten smarter. At least, you know, again, for example, in the agriculture area. There is now a multilateral database that is trying to let everybody know kind of who’s planting, what, where, when, how, and what are the expected yields, so that you, you know—again, not that it’s a perfect system, and not that everybody reports into it. But it is still a far better set of data and information than we used to have, so that there can be a better ability to plan. There’s certainly, as a result of COVID, a much stronger awareness in institutions like the World Trade Organization about whatever transparency, and about doing some serious naming and shaming of countries that are engaging in export bans that are harming the world.And so there is a lot more of a sense of, no, you cannot just ban this, because your ban affects, you know, everybody else. So in that sense there is a lot more transparency, a lot more data being put in, I would say, both at the WTO and at this AEGIS—I’m not going to get the acronym right—of this agriculture monitoring international system. And there is in general a lot more information out there about how pernicious these export bans can be, and how harmful it is if countries try to hoard. That there really is a sense of the trading system works when you can count on your trading partners to sell to you and to buy from you under the rules of the WTO. So I think in that sense there is more awareness of the need for transparency, for immediate time information, and for a better understanding that you should not be engaging in the kind of hoarding activity.ROBBINS: So Dana Cronin has a question.Q: Yeah, can you hear me?HILLMAN: Yes, we can.ROBBINS: Yes, absolutely.Q: Great. Thanks so much for taking my question. I’m Dana Cronin. I am an agricultural reporter for Harvest Public Media. I’m based in Illinois.I have kind of a two-part question here on—related to the potential global wheat shortage that we’ve touched on. I wonder, Jennifer, whether you’ve seen evidence that farmers here in the U.S. will plant more wheat this year to offset some of those losses for Russia? And then as sort of a second part to that question, you know, can the U.S. offset those wheat losses, given that most of the wheat planted in the U.S. is winter wheat, and is already in the ground in many cases?HILLMAN: Yeah. Yeah. So both good questions. And I wish I were more of an agriculture maven than others. But I would refer you, for example, Joe Glauber at IFPRI, the—I don’t even remember—IFPRI, is a very good think tank on these issues. I would refer you to him. And for what it’s worth, I happened to hear recently a really good podcast on this. So would recommend to you the most recent Trade Talks podcast that talks about this wheat issue because, like I said, I am not so much of a maven on this.But my understanding from this is this is not something that can be turned around really easily. And for the farmers, obviously their decision on whether they want to plant more wheat or not is going to depend on whether they can—they can get more money for growing something else. So it depends on sort of what their land is, what is the other crops that can be grown on their land? But if we’ve got really high prices for cotton, you know, you may decide, forget it. I’m not going to grow wheat. I’ll grow cotton, because that’s—you know, I can make more money doing that, or barley, or corn.So again, I don’t think in the absence of some, you know, really concerted effort by the government, I think farmers are going to make decisions the same way they always do, which is what do they think is the most viable, valuable crop that they can put in the ground? If all they’ve got is X amount of land that is good at growing Z crops, they’re going to do it based on what they expect the prices to be. And the prices for everything are high. I mean, this is the problem. The prices across the board are high. And so I think it’s hard to know whether we will seriously enhance, you know, sort of our wheat crop.And part of it is going to depend on whether or not, again, the U.S. government could do a number of things in terms of trying to help offset the cost of fertilizer, trying to move money—you know, government money out of the Commodity Credit Corporation to help farmers. Because part of that is, you know, whether they can get financing for what they need to do to plant right now. So I don’t know the answer, but I do know that there are certain things that we probably could and should be doing, and maybe USDA is doing but I don’t know about it, that would try to figure out how to encourage more growing of those things that we’re going to be short of as a result of Russia.ROBBINS: So the things we should be looking for to see is whether there is an agricultural policy, if not an industrial policy, to provide support to persuade farmers to more in that direction. And one would be under helping, support on the finance side and there is money for the Commodity Credit Corporation. And the other one would be to help offset the rising price of fertilizer.HILLMAN: Yeah. And again, and the other one is whether—you know, how fast any of these can be done? So whether there can be encouragement to start thinking about this in advance. We have a lot of land that we’ve been paying farmers for a lot of years, don’t grow anything. The problem is, when you say don’t grow anything and it’s been twenty years, that land is not, like, readily available to just start plowing tomorrow. So, you know, again, if we’re going to move in this direction it’s going to take some thinking, and some foresight, and some pushing, because these things are not going to—not going to turn on a dime. It isn’t going to be as quick as we might think.And so part of that is also hard. How long is this war with Russia going to go—between Russia and Ukraine going to go on? How long are the sanctions going to remain on Russia? Since nobody knows, I think farmers, like everyone else, are reluctant to plunk down a lot of money in the absence of some kind of guarantees, or insurance, or backing if there is a risk that, you know, tomorrow everything could turn around and become very different. And I think farmers are understandably very cautious. They’ve been very burned by significant swings in commodity prices, and don’t want to get burned again. So I think there’s going to need to be some effort to provide some financial support to give some assurances that they’re not going to be caught again in these very wild price swings in basic crops.ROBBINS: Dana, do you have a follow up or is that good?Q: No, I think—I think that answers my question. And I’ll be sure to check out that podcast. Thank you.ROBBINS: That’s great. John Allison, would you like to ask your question and tell us—I don’t have the list in front of me—tell us with whom you’re reporting?Q: Hello. I’m with the Tribune Review outside of Pittsburgh.And I’m speaking to you from a former industrial area along the Allegheny River. Used to be populated by factories and steel mills. And so my question is about reshoring, which has a nice pithy—sounds so easy. Bring it on back. And we heard that in COVID. Well, we’re going to have our means of production right here. Did that happen to any extent after COVID? And could this episode we’re in how accelerate it? Crystal balls, please?ROBBINS: I love this question. It was one I wanted to know, I was going to ask.HILLMAN: You know, I think it’s really—I think the answer is, in some instances, yes, there was some significant reshoring. Particularly in—you know, you think about how available now masks are, N-95 and KN-95 masks, made in the USA, are now readily available everywhere. So to the extent that we used to import all of our masks from China, we don’t have to do that anymore. So again, I think you can find pockets where as a direct result of COVID we have reshored some things.I think there is an effort underway to start reshoring things that are going to take a lot longer. And I would put semiconductors at the top of that list, where there really is a sense of, you know, semiconductors drive everything, and we need to be making more semiconductors at home. Because we may be designing the semiconductor here in the United States, and all of the technology, particularly for the high-end semiconductors, is largely U.S. technology. The problem is, they’re being actually produced—I mean, fabbed and produced in Taiwan, in Korea, in China. And again, that’s one where I think there’s been a huge effort to try to figure out, as part of this CHIPS Act and other measures, to try to figure out whether we can reshore that.The reason why the answer’s also really complicated is because a lot of it is also not just COVID but, if you will, the trade war that we’ve had with China. So again, we’ve put on—tariffs on $360 billion worth of imported products from China. And the theory was that then anybody that was producing product in China to bring it back into the United States would bring the jobs back to the United States. I think on that score, we’ve seen fairly limited amount of coming back into the United States. What we have seen is some of that production move out of China to Vietnam, to Malaysia, to Indonesia, to Mexico. So again, it has to some degree been pushed out of China as a result of these sanctions, but not very much evidence that it’s directly coming back to the United States.The other thing that we clearly are seeing as a result of, you know, some combination of COVID, of, again this China trade war, and in general as part of, you know, companies looking at their supply chains, is a sense of much greater regional integration. So to the extent that you’re seeing reshoring, I think, in the United States, you’re seeing more Canadian-U.S.-Mexican production. And supply chains across all three of them becoming much more dominant, particularly in a lot of the sectors you just talked about—steel and, you know, auto parts, et cetera. We are more integrated with Mexico and Canada than we ever have before.Now, that matters from a—the jobs, kind of community, perspective that you’ve talked about. Because when we import product from China, in terms of the jobs, the vast majority of the work, the jobs, were in China. When we import from Canada or Mexico, an awful lot of the work that was in that product was likely done in the United States. You know, so a huge amount of the jobs are actually local, because we’ll make a part here, we’ll send it across the border to Canada. Canada ships it to Mexico. Mexico does something else. And it comes back in.So we are better off from a jobs and reshoring/revitalizing standpoint, to the extent that we are trading regionally with Mexico and Canada more and with China and other suppliers in Asia less. And that is happening and, I think, will continue to happen.ROBBINS: So does that answer your question? Because I have a follow-up on this, which is—which is if you were called into the White House, and they said, are there particular industries that we absolutely must have based in the United States just for national security reasons—you know, we can’t take the risk again. And, you know, masks, that’s great. We certainly don’t want to go through what we went through with PPE. But a lot of mask manufactures are now going out of business because there’s less demand for masks.HILLMAN: Right, right.ROBBINS: There has to be government support, like you were saying with the agriculture producers. There has to be government policy to support and encourage, the same way there’s—you know, there’s still credits for the oil and gas industry. (Laughs.) But are there certain industries that absolutely have to be based within the United States?HILLMAN: Well, again, to me, those always—so the answer is yes and no. I mean, do we have to make all of it in the United States? I think there’s very few products where you can say, no, it’s important that we make 100 percent of it in the United States. What you don’t want to have is one critical component of a very long supply chain be entirely outside of the United States, so if you’re missing that one little piece you can’t do anything. And I think that’s where, you know, there is this huge effort to really relook at supply chains, to make sure that you are not highly dependent on, you know, again, particularly in China, to the extent that we’re going to have difficulties or trade wars with China. And now I would add Russia into that list, make sure that you are not highly, highly dependent for one essential component of a very large product on 100 percent reliance on China and Russia.And what we clearly saw in this China trade war is there were a number of companies that were 100 percent reliant on supply from China for a piece, a component. And once they could not get access to that, and there were no other sources, you know, it was dramatically negative for the United States to have put these tariffs on China—hence, this whole process to try to exclude certain items, item by item, from those sanctions. But if you step back from it, to me, it is—you know, what are the products that really play to America’s strengths over the long haul? Where do we need to have that in the United States? So to me, that is in these areas of what feeds artificial intelligence, what is going to feed the 6G telecommunications network? What is going to feed all of the high-tech, you know, where are we in terms of producing ultra-high voltage lines, renewable energy?I mean, the technologies of the future are the ones where we need to have a significant U.S. presence, U.S. making it. And it plays to our competitive strengths. I mean, that’s where we have a competitive advantage over others, is in the sort of intellectual property, in the tech areas, in the—you know, in artificial intelligence, et cetera, where we still have a clear competitive advantage and where we need to keep it. So, yes, those are the ones where, you know, a lot of this industrial policy that we’re potentially embarking on need to focus.ROBBINS: So, Antonio—is it Fins, or—from the Palm Beach Post—do you want to ask your question? Because it’s a good follow on from what we’ve been talking about.Q: Yeah. Thank you for taking the question.So we’re seeing a lot of bipartisan solidarity with the effort in Ukraine. And my question is, as we keep seeing—you know, keep seeing prices increase, and inflation and although we don’t expect to see shortages, but at what point does this start to erode public opinion and public support for Ukraine, and particularly complicate some of the measures that you have been talking about, like agricultural policy, you know, more forward-thinking on some of the—you know, on grains and production and products.HILLMAN: It’s an excellent question. I don’t think I or anybody else really knows the answer. I know, for example, the Pew has been researching—I mean, I’m sorry—has been polling this question of, you know, are you willing to pay more for gas to support Ukraine, duh, duh, duh. And they’ve been trying to do this over time to just sort of judge, you know, sort of where the sentiment is. And I think it’s pretty clear right now, as Americans are seeing these horrific images from Ukraine, just horrible, horrible images of the bombing of the maternity wards and the schools and the children. Right now I think the sense is, yes, I’m willing to pay more for gas. Yes, I’m willing to do X, Y, and Z in order to stand in solidarity with Ukraine. And so for right now, I think that’s pretty solid.Whether and how long it’s sustainable I think will depend on both sort of how the war is going, if you will, about whether—how much perception there is of hope for the Ukrainians, hope much there is this sense of we have to stand with Ukrainians because look how far they are going to protect their own freedom and democracy. You know, we need to be on their side. So part of it is going to depend on how the war goes. But part of it, I think, is going to depend on whether we have more success in taking enough steps to ameliorate the inflation, the potential for shortages, the potential for price increases, whether there is a perception that we’ve done everything we can to protect ourselves as much as possible from the negative effects on the United States.And if there is a perception that we’ve done that, and it has some degree of success, then I think there would be more support over the long haul. And if we don’t, I think you’re right. Implicit in your question is at some point Americans are going to say, enough. You know, I’ve paid enough to support Ukraine. You know, I can’t keep doing this. I can’t put myself into bankruptcy in order to have this effect on Ukraine. I’m done with this. In the same way people are sort of I’m done with—I’m done with—(laughs)—COVID, there is going to be this I’m done with supporting Ukraine. So I don’t know that there’s a good answer, but obviously the more that we can do right now to take away some of these negative effects, the longer the U.S. can stay united with others on this.ROBBINS: Lindsay Moore has a question, from MLive in Michigan. Lindsay, do you want to ask your question?Q: Yes. Thank you. This has been really helpful just kind of macro level of the domino effects.I guess my question is, being a statewide economy reporter here in Michigan, for that micro level. You know, if I’m going to tell our readers, yes, this might impact your food costs, it’s going to impact technology, auto. You know, what do people do with that information? Does that change spending or saving habits? I mean, do we just buckle up and prepare for another economic wild ride? I don’t know, what are your thoughts on that?HILLMAN: I’m not sure I really know, because, as you say, it becomes very micro. You know, because, like you said, I don’t know how you know whether, you know, the fact that Russia is a major wheat producer will necessarily produce higher prices, or whether everybody should go out and start, you know, hoarding flour or sugar or, you know, any other things. So I don’t know that there is—that’s a really hard question. I’m curious whether Carla has an answer on that one, because it’s just really hard to know.And in general, I think the inflation is going to affect almost everything. So there isn’t any easy way to get around it. You know, what’s been interesting to me is the big impact has been, so far, on energy, and then everything derived of energy. And yet, what you don’t see, at least not—that I don’t see, is this huge effort to say take public transport more, ride your bicycle. You know, whatever it is—you know, turn up or down the temperature in your own home, I mean, weatherproof. All the things that we can do to be energy saving, that is not something you’re really sort of hearing being pushed at some level.And that’s what I don’t know, is whether we will get to the point where that will be one of the things that will really be suggested, is that all Americans do whatever they can to conserve energy, because that is one of the biggest drivers of all of the change as a result of the sanctions on Russia.ROBBINS: You know, I—you raised a really good question. I’m not an economics reporter, I just play one on television. (Laughs.) No, I mean, I worked at the Wall Street Journal for a really long time and sat next to them. But I have lived in places where there was hyperinflation. And I did go through—I was very young, of course—go through the Carter inflation. And I think as a reporter, because so many people who are reading now have never seen inflation, I think that we have a responsibility and we have good stories to write to just talk—you know, to talk to people who understand inflation and understand sort of news you can use about how you, you know, protect yourself in inflation. You know, what are rational decisions to adapt to inflation? Does it really make sense to, you know, spend your money on durable goods? Does it make—you know, where should your investments be? I mean, how do you protect yourself in an inflationary environment is, I think, you know, really a useful thing.I think other really useful things to report on would be to take a look at, you know, as Jennifer was saying, which sectors are going to potentially be the most affected, and take a look and see how—whether or not our, you know, political leaders are doing everything they need to do to try to mitigate the impact, as Jennifer was saying, and not just saying—obviously, saying to people you should—you know, you should—you should, you know, spend less money on gas by taking public transportation, but the things she was saying about cushioning the agricultural sector. I mean, maybe they are doing those things already, but that’s our job as reporters because I certainly haven’t read stories about them doing it. You know, and, you know, now we have questions to go and ask them about whether they’re doing it.And so those are—I think those are—you know, if we can highlight the sectors that are the most vulnerable and hold, you know, political leaders’ feet to the fire to make sure that they’re doing the best that they can do to mitigate the impact, I think those—I think those are great services that we can do for our readers. Does that make sense?Q: It does, thank you. And I know I asked you a hard question, but it’s because I didn’t know the answer, so—right? (Laughs.) That’s—so I appreciate it. Thank you.ROBBINS: And I think sort of—because I think people can have an irrational response to these things because, I mean, I think there are few things that have a worse—to back to Antonio’s question, I think there are few things that can have a more invidious effect on politics than inflation. I mean, inflation’s terrifying to people because—you know, someone said, well, I got a 3 percent raise and inflation’s at 10 percent. I mean, people, you know, are sort of running and they’re falling behind all the time. I’ve seen this happen having worked in countries and lived in countries with hyperinflation. It’s really terrifying. It’s incredibly politically debilitating.And, yes, right now people can say, well, this is Putin’s, you know, gas prices. But I think it’s—in an already polarized, you know, country, I think it’s—you know, if this goes on, it can have a really, really further, you know, very negative effect. So to understand where it’s coming from and to understand, as Jennifer said, that the government is doing what it needs to do to try to at least cushion the impact—and if they’re not doing it, to ask why—I think that’s sort of our job. But it’s—to do it sectorally is really the best thing that we can possibly do because it’s very hard to hold politicians’ feet to the fire unless you say to them: What are you doing about fertilizer shortages? You know, that’s the—you know, that’s the real question. You know, what are you doing about semiconductor shortages? What are you doing to cushion, you know, the price of—you know, the price for gas right now, and does it make sense? I mean, if I read one more story about the Strategic Petroleum Reserve as if that were really a solution, I’m going to scream.I mean, I think that’s the other thing. I think we have to reality test what they’re—what they’re doing because, you know—and I think that’s—those are all of our responsibilities. And that’s why we’re so lucky to have people like Jennifer who can tell us what questions to ask because—so, anyway, thank you, Lindsay. Great question. And thank you, Jennifer.Steve Patterson has a question.Q: Yeah.I’m in an area where there’s a small amount of export of American LNG that goes to—goes to, like, Caribbean island consumers, goes to small overseas markets. And politicians here have occasionally talked about how it would be a great thing for American economy and for national security to have—to have a market in Europe for American LNG, and I have no idea whether this is going to have any impact on—potentially make that more than just some politician’s talking point.HILLMAN: Well, again, I’m going to once again profess that I am not a real maven on energy products, et cetera, but a couple things I’ll just note.I mean, for example, one of the things that came out of this China phase-one deal. As you may recall, you know, we had this—a bit of a trade war with China, and then right at the tail end of the Trump administration they negotiated what was referred to as a phase-one deal with China. And under that phase-one deal, among other things, China pledged that it would buy $200 billion worth more of U.S. stuff more than it bought in 2017. That was the promise. And the stuff was divided into various categories, including energy. And so the expectation was that China would be significantly more LNG—I mean significantly more LNG—than they had been buying in 2017.And so when—you know, before the ink was even dry on this phase-one deal, there started to be this assessment of can the United States even supply it. I mean, assuming even that China is willing to buy that much more, can we do that? And so there was a fair amount of assessments of the volume and quality and number of our LNG terminals that are at ports that are readily available to export LNG, and there was an effort to increase that so that there would be more ability for the United States to export LNG. So the answer is, I think, at the end of that process that we have more LNG—the physical ability, you know, to—again, to park up that boat and load on the LNG and move it than we had, you know, two or three years ago.Then the issue becomes on the receiving end in Europe. And my understanding, again, is the Europeans are fast working at this issue of being able to be more receptive of LNG that is coming not from Russia but from, you know, other places. So I do think there is some ability—some; not massively, but some significant ability—for the United States to export more LNG to Europe and some ability on the European side to be on the receiving end of it. And that is one of the ways in which, you know, the European Union can get weaned off of Russian oil and gas, is to have supplies from elsewhere including from the United States.And I—my understanding is that is part of the conversation that is going on between the United States and the European Union as part of this coordination of the sanctions. So one of the things that could come out of all of this coordinating the sanctions is much greater purchases by Europe of U.S. liquid natural gas.ROBBINS: So Rickey Bevington, who did come in late because she was moderating another event—we are professional moderators. We just voyage from event to event. And she had asked a question which I had already asked, so—but somewhat, but she’s asked it better: What other kitchen table symptoms that make these issues real to Americans? We’ve already talked about, obviously, the impact on food prices, wheat, gas prices. Is there anything else that, you know, people should be paying attention to as local reporters? Which also goes back—you know, back to, you know, Lindsay’s question as well, things to keep an eye on. That also has a public-policy question, things that we should be asking our leaders about what they’re doing to protect us, as well, or at least to come up with sound public policy now and in the longer term.HILLMAN: Well, the one other one that we have just not touched on at all so I’ll just throw it out there is what are we doing about refugees. Again, we, obviously, have a significant Ukrainian American population in the United States, again, in various pockets. We are, obviously, seeing at this point now Poland become overrun. And the issue is going to be for us and for others whether there is going to be any kind of change in policy and any greater willingness on the part of the U.S. economy to absorb any of these Ukrainian refugees, and what do we make of that? Because I do think we are going to have to at least give more thought to what are we doing to increase our willingness to take onboard. And again, where would those people go? What would they be doing? Again, many of them are coming out of a highly productive, highly capable Ukrainian economy. But that would be another issue that I would throw out that we need to start doing some thinking and planning for.ROBBINS: That’s an incredibly, incredibly important point. And obviously, politically it will—a lot of the anti-immigrant people would be much more willing to take Europeans, and there are so many people who are displaced around the world, but the immediacy and the sympathy for that may make it easier politically to change—to change the policy for that, at least for that group. But, yes, I mean, when you look at the numbers, the disruption is so huge.Jennifer, this has been great. Thank you so much for doing this, and there have been so many great questions from everyone. So, Irina, I’m going to turn it back to you and to thank everyone.I put into the chat one link about—that you—Reuters has an interactive about—just that they’re updating constantly of the sanctions. We’re going to share other things, other reports that Jennifer and other sources to share with everyone. And if you have any questions, obviously, send them on to us. But I’m going to turn it back to Irina.FASKIANOS: Right. Thank you, Carla, and thank you, Jennifer. We will send out a follow-up email with those resources. And just a reminder that you can follow Jennifer Hillman on Twitter at @j_a_hillman and Carla at @robbinscarla.And as always, go to CFR.org and ForeignAffairs.com for the latest developments and analysis on international trends and how they’re affecting the United States. And of course, please reach out to us with suggestions for future webinars. You can email us at [emailprotected].So thank you again for being with us today, for all the reporting you’re doing in your communities; and to our experts, Jennifer Hillman and Carla Anne Robbins.HILLMAN: Thank you.FASKIANOS: Thanks so much.(END)