"We don't know what the new normal will be yet," says Bank of America chairman Charles Holliday. Alex Wong / Getty Images / AFP
"We don't know what the new normal will be yet," says Bank of America chairman Charles Holliday. Alex Wong / Getty Images / AFP

Shale gas boom in the US ignites a revolution

Charles Holliday is the chairman of Bank of America and a former chief executive of DuPont, the US chemical giant. In an indepth interview with The National, he discusses the changing global energy landscape and competitiveness.

How has the shale gas boom in the United States changed the petrochemical industry?

Brought up in the US chemical industry there were two things you could rely on - the sun would come up in the morning and Gulf coast gas would be a dollar a unit. So there was tremendous build out of infrastructure on the Gulf coast of America because of that. Then the world changed and all of a sudden I found myself hedging gas at US$12 a unit. Now the world is trying to figure out where it's going to settle.

I don't think it will change the balance of power in the world but it's a nice step in the right direction.

We don't know what the new normal will be yet. I don't think you will see a rush of people building new plants with the possible exception of gas liquification plants. The US needs clarity on longer-term energy policy. I'm not sure we have an energy strategy today that people can believe in. Once that's in place I think you'll see investment.

We read about the US becoming more competitive and taking back some of its lost manufacturing. Is that just about wages?

It is about more mechanisation and more robotics. When I first started my career at DuPont I think they had two robots and I was working on one of them.

Some of the jobs that are coming back are not at the same wages they were before because the premium you had to pay for the technology that was used then isn't there today.

So you will still pay a premium for technology but you are going to need a community college education or maybe a master degree to get some of the wages you had before. So we will have to find ways to move up the education and skill level.

How can Arabian Gulf countries seeking to industrialise encourage school leavers to take science, maths and engineering courses instead of public-sector jobs?

The first question for them is do I want to attract a particular set of skills and industries and then how do I develop the education for that and attract people into the education system and recognising there is a limit to how many government jobs you can have.

The challenge for the UAE is picking out the one or two they really want to be good at - where they can be a technology leader and attract the best minds in the world. An example is the work in the UAE around renewable energy and Masdar.

Youth unemployment is challenging governments regionally and globally. How do you tackle it?

What we found in the wake of Hurricane Katrina was that there was great unemployment in Mississippi and Louisiana where the hurricane hit, even when there was a need for all kinds of jobs. But there was no way for people to get started. So we said to people if you will take 12 weeks of apprentice training, we will guarantee you a job and if you work on that job for three months we'll give you 12 more weeks training. So it was a path people could see and once people saw that path they would sign up to it. The jobs didn't pay that well to start with but they could see where the path was going. There are practical things around youth unemployment we can do like that.

Fracking has received a lot of bad press in the US. Is it justified?

I've been on a fracking site and I know exactly what it is. It can all be done absolutely safely but we have to have the rules and regulations in place to make sure everybody does. The worst mistake we could make is for the public to become concerned about hydraulic fracking. We've already made the mistake of calling it 'fracking' and given it a vocabulary that's not that friendly. The industry and government need to work together to explain this to people. Natural gas is a tremendously good bridge if we use it right and we can reduce the amount of coal and the impact on the environment. Whether it is a bridge fuel or a destination fuel you could debate forever.