Veteran energy reporter Wald reflects on the sector's evolution

Having just completed a 37-year stint at The New York Times covering the energy sector, few people understand its evolution better than Matthew Wald. Prior to the Chevron-hosted roundtable, he spoke with PRWeek editor-in-chief Steve Barrett about topics including the US' strides toward self-sufficiency, fracking myths and misperceptions, and the key issues that drive public sentiment.

Matthew Wald

Steve Barrett: Calling on your 37 years of covering the energy sector, how would you best describe public sentiment?

Matthew Wald: In the public mind, energy is driven in alternation by fear of gasoline prices and fear of pollution. The former is much stronger.

When the price of oil crashed – not quite as important, but still very important to a lot of American consumers – natural gas crashed and then electricity crashed with it. In between that peak year at $147 a barrel and the crash, the average price of a megawatt hour on the New York system went from $100 to $50. That created a major change in people’s electric bills.

People sometimes forget that the technologies of extraction and the technologies of generation advance along with the technologies of consumption. We have a bipolar, manic-depressive market, and at the moment we’re manic. That will go on for a while.

We are vulnerable to more changes about energy suddenly if we get the feeling Mother Nature is coming after us for our profligate ways. With another couple of Katrinas, the national debate will change. For example, the debate over global warming really picked up that incredible year when the Mississippi River got so low, barges were stranded, and it was 102 degrees for several days in a row in Washington.

Global warming was always out there as a scientific issue. That’s when it became a public issue and we’re vulnerable to big shifts in public opinion, given stochastic events such as big hurricanes and big heat waves – the types of events you have to be ready for, but can’t exactly predict.

Barrett: How will the US’ rising energy self-sufficiency change the dynamic?

Wald: If the US becomes self-sufficient and as politics in the US shift for a variety of reasons, we could have an energy policy that’s essentially more isolationist. We could decide it’s not worth our time to keep the Strait of Hormuz open to benefit the Chinese, the Japanese, and the Europeans.

It could be that politics have a way of leveling out the market, that Mideast disruptions restore an average-priced oil that’s more like what we’ve been used to, although that average is an average of wildly divergent prices.

The public will return to consciousness about energy when we get to the inevitable thinking that oil is a commodity and it behaves like a commodity. It just happens to be a commodity that’s more in the public mind than nickel, pork bellies, or wheat.

Barrett: Will energy always dictate global economies, or might there come a time the economy is not completely tied to it?

Wald: Oil could play a smaller role going forward in the US because it’s a smaller component of gross national product. As economies mature worldwide, the same will be true. The thing about oil is we’ll always be able to find some and we use it in lots of places where we really don’t need to.

Electricity, as an economy matures, becomes more important. Electricity is still generated by oil in some places, but that probably won’t go on forever.

Of great interest to me is what happened in the US when diesel fuel hit close to $5 a gallon. Fleet owners, especially with heavy trucks, went into this sustained campaign of converting to natural gas. If that happens, you could knock 1.5 million or 2 million barrels a day out of US demand. And if it can happen here, it can happen anywhere.

As for fracking, if there’s a lot of natural gas out there, it means oil will be less important, relative to other possible ways to get around. And as for electric cars, they might be a sexy niche now, but they will start to make some serious inroads and nibble away at oil’s share.

Barrett: What is your general view on fracking?

Wald: It can’t be as apocalyptic as some people say it is, but its environmental footprint is larger than generally acknowledged. However, while there is not enough incentive right now to clean up, the technology for detecting, fingerprinting, and fixing it will get better over time.

As for the prevalence of fracking, here’s an interesting example. Pittsburgh International Airport used to be a hub for US Airways. It no longer is, and the amount of passengers that now go through it has dropped significantly. So what do you do with a gigantic airport that doesn’t have traffic? If you’re in western Pennsylvania, you start fracking under the runways. They are looking at literally a couple billion dollars worth of gas that they will produce quickly if prices are good, not as quickly if prices are bad, but there’s a whole lot more natural gas available. And if there’s money in it, almost every resource will be exploited to do it. That’s why we still dig coal.

Barrett: How do communicators best tell the fracking story?

Wald: There’s a lot of hyperbole attached to a lot of public conversation about all forms of extraction and all forms of energy. Eventually, some of the debate over fracking must be influenced by facts. And there will be facts going forward.

Barrett: Thinking back over your 37 years at the Times, what were the most memorable stories you covered in the energy sector?

Wald: The Exxon Valdez was clearly one. Watching workers in bright yellow outfits with a small barge that’s burning oil and producing steam. They’re standing there with long hoses, spraying cobble rocks on shore, and letting the oil run back off into the water where it’s collected by flumes. It’s like washing your car with a toothbrush. Meanwhile, they’re sterilizing the beach. The gap between what we actually did after the Exxon Valdez and what we ought to have done really struck me.

And in hindsight, I have to admit I don’t think we covered it very well. I don’t think anybody did. There was lots of tragedy, lots of stupid waste, but lots of follow-up that wasn’t quite optimized either. They did things so badly in causing that accident, it sort of shifts over from error right into sin, but the follow-up wasn’t great either.

The 2003 blackout is another one. Just the all-around sloppiness, carelessness, and ignorance. There was a software bug in the alarm system at a control room in Ohio. A lack of alarm left operators unaware of the need to redistribute power after overloaded transmission lines hit unpruned trees. This triggered a race condition in the control software. A manageable local blackout ended up causing widespread issues on the electric grid.

Barrett: What can energy-sector communicators do to shape the narrative more and not have it molded by disasters or doomsday theories?

Wald: The energy system needs to be cleaned up, which will take a sustained effort over years, decades. Leaders in the sector need to keep their eyes on the horizon. And they do have a long-term strategy for decarbonization and creating adequate infrastructure. The challenge is getting the public to have that long-term vision.

The other problem with energy is it comes into the public mind when it’s local, when somebody wants to build a transmission tower or a pipeline. The interested public that will show up at the hearings and file comments may be different from the public interest. It’s hard to reconcile those two.

Barrett: How have you found the energy sector in terms of its communications with journalists?

Wald: One of the things that excited me most was translating the very technical and complex aspects of the energy sector for a lay audience. I found CEOs to be helpful sometimes, vice presidents helpful more often, and the people who wear shirt-pocket pencil protectors and are down in the trenches to be the most helpful in understanding what was going on, why things happened the way they did, how they hoped to make things happen differently, and so on.

Generally, companies that are willing to talk about their technologies often have very interesting stories, sometimes without realizing how interesting they are.

Barrett: Solar and wind are becoming bigger parts of the energy conversation. Where do you see them in the grand scheme?

Wald: Solar is still pretty small, though wind has gotten to be quite substantial. The problem with wind is that it will give you energy, but it doesn’t give you the other basic component of electricity – capacity.

If you had widely dispersed wind farms around the country and you had a really good grid, you could average wind production over a broader area and get a much firmer idea what the capacity was. Wind, and to a certain extent solar, could cut the number of cars, could reduce your need for other investment, if you had a better grid. However, we don’t have a better grid and we’re not on our way to getting one.

Barrett: What will be the biggest energy story over the next decade?

Wald: The tension between declining fossil fuel prices and the desire for decarbonization. A subsidiary to that will be the political drive to push California, for example, to 50% renewables and the necessity for keeping the system stable. If you recall, Gray Davis was removed as governor of California because of an energy crisis many felt he didn’t handle well. The stakes can be high.

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