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tv   60 Minutes on CNBC  CNBC  May 8, 2012 10:00pm-11:00pm EDT

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thanks for joining us. captioning by captionmax www.captionmax.com [ticking] >> in the last few years, we've discovered the equivalent of two saudi arabias of oil in the form of natural gas in the united states. not one but two. >> he's talking about natural gas extracted from shale, the new hope for america's energy future, with production or exploration in over 30 states, making overnight millionaires of the farmers who lease their land for drilling. so you gentlemen are living in a good, old-fashioned gold rush. >> it's a gift from the good lord. [ticking] >> [chuckling] >> craig venter doesn't fit the stereotype of a world-famous scientist. now the iconoclastic, egocentric adrenaline junkie who deciphered the human genetic code is experimenting with synthetic
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life in the laboratory. aren't you playing god? >> we're not playing anything. we're understanding the roles of life. >> do you believe in god? >> no. [ticking] >> this is the first all-electric sports car, the roadster, made by tesla motors. >> yeah, you can floor it, no problem. it'll be fine. >> all right. here i go. you ready? the chairman of tesla, elon musk, says the roadster can accelerate from 0 to 60 in four seconds. it's propelled by more than 6,000 finger-sized laptop batteries and not a single drop of oil. welcome to 60 minutes on cnbc. i'm lesley stahl. in this edition, we look at the business of powering the planet. we meet a group of overnight millionaires getting rich from gas dug out of rocks. we also take a look at the financial promise of an emerging science known as synthetic biology.
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and finally, we examine an alternative car fuel that you probably never heard of: laptop computer batteries. we begin with an unconventional process for extracting natural gas from shale, a dense rock formation two miles underground. it's being touted as the hope of the future, the answer to our energy problems. and if you're sitting on top of it, you may become a new american phenomenon: a shaleionaire. and yet, as we all know, exploring for energy has safety risks. but as we first reported in the fall of 2010, that can get lost in all the excitement. what's increasingly evident is that shale gas is overwhelmingly abundant right here in the usa. >> in the last few years, we've discovered the equivalent of two saudi arabias of oil in the form of natural gas in the united states.
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not one but two. >> we have twice as much natural gas in this country-- is that what you're saying-- than they have oil in saudi arabia? >> i'm trying to very clearly say exactly that. >> aubrey mcclendon is the ceo of chesapeake energy, one of the largest independent gas producers in the country. he's on a mission to get us off foreign oil and dirty coal. gas has nearly half the carbon emissions of coal and no mercury. but natural gas is still a fossil fuel. >> so is it perfect? no, the answer is, "it's not perfect," but for the next 20 years, natural gas is probably our best bet, and the good news is, we've got it, and we've got as much of it as anybody else in the world. >> look at a map of shale formations across the country, and you'll see that in 2010, there was production or exploration in over 30 states. it's an american energy renaissance. 10,000 wells will be drilled here in northwest louisiana in some of the poorest communities in the country
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where impoverished farmers are becoming overnight millionaires as they lease their land for drilling. >> i never dreamed of money like this. >> now you can do whatever you want. >> i can do what i want. >> c.b. leatherwood, a retired oil field worker, got a bundle to drill under his farm. >> i've got a copy of the check here. >> oh, my. look at that. $434,000. just like that. >> it fell out of the sky. >> boy, you done good, c.b. >> it fell out of the sky for c.b.'s cousin mike smith too. >> golly. look at that. >> he was paid nearly $2 million. so what'd you do that day? >> [sighs] i sat back and thought about it for all day, and i said, "i'm a millionaire," and that didn't sound right, but... >> they actually call them shaleionaires,
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and they don't mind putting up with the noisy, smelly drilling when the wells are built because they get a cut of the profits, which could last for years and add up to millions more. so you gentlemen are living in a good, old-fashioned gold rush. >> it's a gift from the good lord. >> within a year, shale drilling generated almost $6 billion here in new household earnings. as the rest of the nation plunged into a recession, this place added 57,000 local jobs, and the cadillac dealership in town was hopping. this is your new car. oh... >> yes. mm-hmm. >> that is nice. >> yes. >> you love it, don't you? >> yeah, i love it. >> i like the color too. champagne. >> it's gold mist. >> this is a million years' worth of shale. >> people have known for a century that shale contained gas, but it was too difficult and pricey to extract. i can't believe there's anything in this rock. >> well, it doesn't look like it. >> it is so solid. >> i mean, you can tap...
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pretty solid. >> yeah, i know. it's really solid. but this is shale under a microscope. the dark spaces are where the gas is, and it's everywhere. >> here's a great one. for example... >> that's what's going on in the middle of this thing? >> yes. >> the breakthrough in extraction happened when two existing technologies were combined. the first involved accessing the shale by drilling sideways underground. >> we're currently over two miles down. >> two miles down? >> two miles down. >> okay. >> now, later today, we'll turn the bit from vertical to horizontal along this path, and then we'll drill in our target zone for a mile down to the south. >> the other technology is hydraulic fracturing, or fracking, where millions of gallons of water mixed with sand and chemicals are pumped down the well at enormous pressure. >> we break the rock. we fracture the rock, and that stimulates the ability of the gas to flow into the well bore, where we can flow it to the surface and sell it. >> in light of the b.p. oil spill in the gulf,
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i asked aubrey mcclendon about the safety of fracking. what would happen if you go down to dig for shale, and you have an explosion, and you destroy a whole part of the country? >> it cannot happen, okay? >> it cannot happen? why do you say that? >> well, because we're not a mile underneath the surface of the ocean, and if something were to get away-- and there are incidents where wells have loss of control-- you can go--you can go fix it. >> an underground explosion is impossible because there's no oxygen or anything to ignite a blast, but as you can see from these pictures chesapeake took of their operations, drilling is now a fact of life near homes and farms, and the industry has racked up thousands of accidents and safety violations above ground. this really is your backyard. oh, look at this. what happened in tim and christine ruggiero's backyard is happening more and more. they moved to this pastoral 10-acre ranch in decatur, texas, in 2004
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to raise their horses and their daughter, reilly. but in 2009, a company called aruba petroleum came and drilled two wells outside their windows, leaving behind this permanent eyesore. >> you see over here on this tank? and you see where it's just been--still leaking? why is it doing that? >> that leaking is just the half of it. they videotaped oozings and gushings. when the state environmental agency shot these hissing, toxic air emissions with infrared cameras, the company was hit with a fine. i keep hearing that this process-- the horizontal drilling and the fracking--is safe. >> well, define "safe." safe for who? safe in the process, or safe for the people that are 200 feet away from it? >> they put a concrete casing down into the ground in between your water table and the drilling fluids, but cement doesn't ever crack? you don't ever have well blowouts? >> in other words,
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taking shortcuts and human error are endemic to this drilling process. here, valves weren't tightened, a tank left unattended overflowed, fluid spilled from a frack container. aruba said they could not comment because the ruggieros were suing them. aubrey mcclendon's company, chesapeake, has a much better track record, but that doesn't mean they haven't had problems too. >> if people are involved, accidents are gonna happen. planes crash, trucks crash, cars crash. it happens. [ticking] >> coming up... are there dangers in fracking? >> i can take my water, just put it in a gallon jug, shake it up, turn it up, and it'll explode, like... wow. scary? >> that's next, when 60 minutes on cnbc returns. [ticking]
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[ticking] >> shale gas may be a significant new energy source, but it may come with some very toxic side effects. among them, the chemicals used in fracking may cause health problems and contaminate the water supply. the safety record of chesapeake energy may be better than most, but the company had an accident in louisiana that drew a lot of attention. it happened in 2009 when 17 cows grazing near a drilling site
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died a gruesome death after drinking fracking fluids that ran off into their pasture. industry-wide, accidents keep happening-- like this well explosion-- due to machine malfunctions or workers cutting corners. environmentalists like michael brune, executive director of the sierra club, say the industry is under-regulated. >> i would say that they've been cavalier. i would say that they've been irresponsible. >> what should they have done? what should they do right now? >> the first thing that the industry should do is disclose what chemicals are being used in fracking and then limit the amount of toxic chemicals to a point of zero. >> the industry doesn't have to disclose what's in the tens of thousands of gallons of chemicals they use when they fracture the shale because of the so-called halliburton loophole. halliburton is a leading fracking company, and the loophole was created in 2005 under vice president dick cheney, who used to be halliburton's ceo. >> the 2005 energy bill
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completely exempted the natural gas industry and fracking technology from any regulation under the safe drinking water act. it's an outrage. >> did the vice president put that in there? >> the vice president advocated for it, and he pushed congress to insert it into the language. >> part of the fracturing process involves you pouring down some pretty nasty chemicals. what happens if they spill all over the place? >> okay, let's define "nasty chemicals." nasty chemicals are underneath your sink. reality is, you don't drink drano for a reason, but you have drano in your house. if you want to define what's nasty, go ahead. >> there are nasty chemicals that affect your liver, that cause cancer, that shut down your system. >> yeah, you don't want to drink frack fluid. if you take away nothing from this interview-- >> no, but isn't there a possibility that you go down, and something seeps, and it gets into the water supply, gets into the aquifer? >> ah, that's the fear, isn't it? >> well, yes, it's-- of course, it's the fear. >> okay, but freshwater aquifers are only from the surface
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to about 1,000 feet below the surface of the earth, okay? we are fracking wells at depths of 7,000, 8,000, 10,000, 12,000 feet, okay? so there is almost two miles of rock between where we are active and where freshwater is drawn from. >> in 2010, the environmental protection agency began studying the effects of fracking on drinking water. is the problem fracking per se or human error? consider what happened in this appalachian town in pennsylvania. in the shale gas gold rush, dimock is the ghost town. how many of you lost your water supply? all of you. every single one. and there are many more? >> [together] yes. >> a company called cabot oil and gas paid many of the folks here $25 an acre, and they were happy until one day, a water well exploded.
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>> my boy had come over the night before and said-- he said, "dad, you're--we got gas in the water over there. i can actually shake the jug up and light it." >> you put a match to your water and it went up in flames? >> i can take my water, just put it in a gallon jug, shake it up, turn it up, and it'll explode, like... >> bill ely demonstrated it for us by hooking a hose from his well to a jug and lighting it. >> wow. scary? >> state authorities have determined that gas leaked into the water because of a poor cement job. cabot began supplying bottled water to the residents but admitted no guilt, so these folks sued them. >> you know, this is a poor area. you know, this was a perfect place to come in and drill. lot of guys didn't have work. now they're driving trucks, the bars are hopping, the rentals are full, so there is an economic boom here, but at what price? >> i can live without natural gas. i can't live without my water. >> no. >> we have these landowners who will say
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that their water was clean. they could drink. they couldn't light it on fire. and then the gas industry came in, and now taking a shower makes them sick. there are too many landowners who are describing the exact same scenario, and so it's-- >> all over the country. >> can't just be a coincidence. there is something wrong here. >> so here we have natural gas from shale, touted as the solution to our energy problems by one group. another group says it's the biggest environmental nightmare. >> ah, well, actually, they're both correct, so what we need to do is promote gas as a cleaner alternative to coal and oil but hold the industry accountable for tighter standards. >> which aubrey mcclendon says he would go along with because, he says, natural gas is such a huge game-changer. >> if you use natural gas, america can establish independence from opec, it can put americans back to work, we can lower our carbon emissions, and we can begin to improve the economy as well by not exporting $1 billion a day of american wealth. greatest wealth transfer in
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human history takes place every day, and it doesn't have to. >> since we first reported this story, tim and christine ruggiero sold their ranch in decatur, texas, and moved away. they have also resolved matters with aruba petroleum. as for the problems in dimock, pennsylvania, when cabot oil and gas stopped supplying bottled water in late 2011, the environmental protection agency stepped in. the e.p.a. is supplying replacement water to some residents and testing well water in 60 homes. the e.p.a. also plans to propose new rules for shale gas extraction, which, by 2012, accounted for 30% of our natural gas supply. [ticking] coming up, maverick biologist j. craig venter on dna. >> dna is the software of life and the key to evolution of life on this planet, and now the key to the future of life on this planet is understanding how to
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write that software. >> designing life, when 60 minutes on cnbc continues. [ticking] i went to a small high school. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number.
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[ticking] >> in 2010, microbiologist j. craig venter announced that his scientists had created a synthetic bacteria designed on a computer with man-made dna. the announcement was greeted with a mixture of praise, skepticism, and rancor. known for his pioneering work in deciphering the human genetic code, venter may be one of the most famous scientists in the world, but as steve kroft first
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reported that fall, he is also one of the most controversial, a brilliant iconoclast with an outsized ego who has tweaked the staid scientific establishment at every turn. >> you don't have to spend much time with craig venter to understand that he likes to go fast. >> [chuckles] >> he's an adrenaline junkie whose willingness to take big risks has led to bold scientific breakthroughs, and he is not exactly shy about touting those accomplishments. where would you rank yourself in terms of scientific accomplishments? >> well, in the field of genomics, i think the record is pretty clear-cut, so-- the first genome in history, the first draft of the human genome, the first complete version of the human genome, and having the first synthetic cells. >> so the answer to the question is, "pretty high." >> i mean, it's really hard to assess that yourself, but i think the teams that we
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have and what we've accomplished are certainly amongst the biggest discoveries in modern science. >> if you have some stereotype of a scientist in your mind, craig venter probably doesn't fit it. he has scuba dived with sharks to gather microbes in the pacific and sailed through the greek isles on his 95-foot research vessel, plucking new genetic material from the sea. he rarely goes anywhere without his wife, heather, and their dog, darwin. and their home high above the pacific in la jolla, california, suggests the quest for scientific truth requires no vow of poverty. this is a nice place. >> i have been lucky. sort of the accidental millionaire, in terms of people keep giving me money to start companies to exploit the science. >> he runs both a privately held biotech company called synthetic genomics and a nonprofit research lab, the j. craig venter institute. together they employ about 300 people on two coasts, including one nobel laureate, hamilton smith, and some of the
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top scientists in the world. >> so i'm much more like an orchestra conductor, you know, than the violinist. >> what do you think your greatest talent is? >> you know, i have an unusual type of thinking. i have no visual memory whatsoever. everything is conceptual to me. so i think that's part of it. i see things differently. >> venter likes to think big, and his latest advancement is no exception. so this is what all the fuss is about? >> this is the first synthetic species. >> and how long did it take you to make this? >> well, if you count the total time from the conception, about 15 years. >> and how many millions? >> about $40 million over that entire time period. >> in practical terms, it's about as useful as the mold that grows in a bachelor's refrigerator, but scientifically it's a milestone. the bacteria, which is similar to one found in the intestines of goats, was designed on a computer, manufactured in the laboratory, and gets its genetic instructions from a synthetic
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chromosome made by man, not nature. and it's alive? >> it's alive and self-replicating. that means it can indefinitely grow and make copies of itself. >> did you design this to do anything in particular? >> no, we designed this just to see if we could do this whole experiment using synthetic dna. and now that we know we can do it, it's worth the effort to now make the things that could be valuable. >> just how valuable remains to be seen, but venter believes this is the first baby step in a biological revolution, one in which it will be possible to custom design and reprogram bacteria and other organisms to churn out new medicines, foods, and clean sources of energy. what you're doing is programming cells like somebody would program software. >> dna is the software of life. there's no question about it, and the key to evolution of life on this planet and now the key to the future of life on this planet is understanding how
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to write that software. >> so you see bioengineered fuel for example? >> i see, in the future, bioengineered almost everything you can imagine that we use. >> he signed a contract with a major pharmaceutical firm to try and develop a flu vaccine from synthetic dna processes. b.p. is funding research to experiment with underground microbes that feed off coal and produce natural gas. and exxon mobil has committed $300 million to venter's company to genetically enhance an algae that lives off carbon dioxide and produces an oil that can be refined into gasoline. so you're trying to cut down on co2 in the atmosphere, which people believe causes global warming and also create a fuel? >> exactly. the question is on the scale that it needs to be done at, you know? facilities the size of san francisco. >> really? the city? >> yeah. >> venter and his team are not the only players in this growing field known as synthetic biology.
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for years, dupont has been using genetically modified bacteria to make a compound used in clothing and carpets. amyris discovered a way to genetically modify yeast to produce an antimalarial drug. another company, ls9, has altered the genes of e. coli bacteria to produce fuel. but all of them are modifying a few genes, not designing all of them. venter's rivals say his method is commercially impractical, but he's made a career out of bucking the scientific establishment and earned lots of enemies with his brash behavior and his knack for grabbing research money and the spotlight. so what are your faults? >> probably impatience is the-- you know, the biggest one. i don't suffer fools too well. that--you know? i'm not going to ever win a political contest. >> a lot of people have said you're a self promoter, an egomaniac. true? partially true? not true at all? >> you know, if we hold a press conference, it's considered
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self-promotion. but somebody at a university, the university holds the press conference, and that's not self-promotion. >> overly ambitious? >> i'm sure i'm very guilty of that. [ticking] >> coming up... >> you accomplished all this stuff, and you got fired by the company that brought you in to do this. >> yep. >> they locked the doors. >> they locked the doors and sent me away. >> that's next, when 60 minutes on cnbc returns. [ticking] wgg [ female announcer ] it's time for the annual shareholders meeting. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer.
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[ticking] >> famed microbiologist j. craig venter hasn't always been so ambitious. he grew up in the suburbs of san francisco as the prototypical surfer dude and
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a classic underachiever. >> i was a horrible student. i really hated school. >> were you good in math and science? >> i was not really good in anything, you know? i almost flunked out of high school. >> you got a college scholarship for swimming, right? >> yes, but i didn't take it. so at age 17, i moved to southern california to take up surfing. >> that was it? >> that was it. >> in 1965, reality set in. he got drafted off his surfboard, joined the navy as a medic, and was sent to vietnam to work at a field hospital in da nang. the experience changed his life and motivated him to go back to school and pursue a career in medical research. he became a rising star at the national institutes of health and just as quickly grew frustrated with the politics and bureaucracy of government science. when the n.i.h. declined to fund some of his unorthodox new ideas, he left and found private investors who would.
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>> i think we have a real problem with how science is funded and done in this country. almost every breakthrough i've been associated with is from having independent money. and once they worked, we can get tons of government money to follow up on it. but we could never get the money to do the initial experiment. >> in 1998, a company that made cutting-edge technology to analyze dna hired him to take on the federal government in a race to identify all the genetic material in the human body. the federally funded human genome project had already been working on it for years. why did you decide to challenge the government? >> the way it was being done just didn't make any sense. we ended up doing it in 9 months instead of 15 years. that's a big difference. >> when the competition produced bad blood and bad publicity in the scientific community, the clinton administration arranged for the two sides to announce a truce and a tie, even though many believe that venter's
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company, celera genomics, was ahead, but for venter, the celebration was short-lived. the tension between making science and making money and personality conflicts with his corporate bosses got venter sacked a year and a half later. you accomplished all this stuff, and you got fired by the company that brought you in to do this. >> yep. >> they locked the doors. >> they locked the doors and sent me away. >> the experience left him deeply depressed, but he was financially well off and still in business, having endowed his research institute with $100 million in stock at the height of the biotech boom. within a few years, he was once again making waves in the world of science. only this time, he's not just trying to decipher genetic codes. now he's trying to create them. this is a quote from one of your critics. "he's trying to short-circuit millions of years of evolution and create his own version of the second genesis. it's the height of hubris. it's irresponsible.
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and he can't tell you it's going to be safe." >> except for the second part, i was taking that as a compliment. [laughs] i can tell you what we're doing is safe. there's no way that i can guarantee that other people that use these tools will do intelligent, safe experiments with it. but i think the chance of evil happening with this and somebody even trying to do deliberate evil would be pretty hard. >> why? >> because the complexity of biology. you know, we're not working with human pathogens. we're working with algae cells. and part of our design is cells that won't survive outside of a facility or a laboratory, and we think other scientists will adopt these same approaches. >> there are some things that concern you about this. >> oh, it is powerful technology. you know, it's something that needs to be monitored, absolutely. >> president obama was concerned enough to ask his commission on bioethics to hold hearings on venter's new technology shortly
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after the results were published in the journal science. apart from the legal and regulatory questions raised, there are some moral and ethical ones as well. there are a lot of people in this country who don't think that you ought to screw around with nature. >> we don't have too many choices now. we are a society that is 100% dependent on science. we're going to go up in our population in the next 40 years. we can't deal with the population we have without destroying our environment. >> but aren't you playing god? >> we're not playing anything. we're understanding the rules of life. >> but that's more than studying life; that's changing life. >> well, domesticating animals was changing life. domesticating corn... when you do crossbreeding of plants, you're doing this blind experiment where you're just mixing dna of different types of cells and just seeing what comes out of it. >> this is a little different, though. this is another step, isn't it? >> yeah, now we're doing it in a deliberate design fashion with tiny bacteria.
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i think it's much healthier to do it based on some knowledge and a better understanding of life than to do it blindly and randomly. >> you know, i've asked you two or three times, "do you think you're playing god?" i mean, do you believe in god? >> no. i believe the universe is far more wonderful than just assuming it was made by some higher power. i think the fact that these cells are software-driven machines, and that software is dna and that truly the secret of life is writing software, is pretty miraculous. just seeing that process in the simplest forms that we're just witnessing is pretty stunning. >> in december 2010, president obama's commission on bioethics released its report. the report recommended that the emerging science of synthetic biology and the federal policies for regulating it should be
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developed in tandem to minimize any health and environmental risks. venter agrees that both government and private oversight is necessary as he continues to see this science as the answer to developing new food sources, new vaccines, and replacements for fossil fuels. [ticking] coming up... for electric car owners who miss the roar of an engine... >> we sell 'em this cd with various engine sounds. so you'll be able to pick ferrari v12 or, you know, le mans corvette. >> the race for the electric car, when 60 minutes on cnbc returns. [ticking] it's very important to understand
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how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies. riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking...
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[ticking] >> the jury may still be out on whether electric cars can ever really be practical, but that didn't stop a newcomer with no experience at building cars from trying. when someone wondered, "why not use the same batteries in cars that they put in laptop computers," the environmentally conscious silicon valley geeks jumped in. at the time we reported this story in the fall of 2008, detroit's automotive industry was on the verge of collapse, and a new wave of electric cars was just beginning to hit the road. this is the first all-electric sports car, the roadster, made by tesla motors,
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a small start-up in northern california. >> you can floor it. no problem. it'll be fine. >> all right, here i go. ready? the chairman of tesla, elon musk, says the roadster can accelerate from 0 to 60 in four seconds. it's propelled by more than 6,000 finger-sized laptop batteries and not a single drop of oil. silicon valley's elon musk made his fortune by inventing paypal, the online banking service. he launched tesla in 2003 with no experience at all in the car business and received orders for the roadster from people like george clooney and then governor arnold schwarzenegger. they could afford it. this beautiful roadster costs a fortune. >> yeah, $109,000. >> $109,000. >> it's a deal. >> "it's a deal." >> and our car's twice the efficiency of a prius. so a prius is a gas-guzzling hog by comparison with our cars. >> he says the roadster can go
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over 200 miles before you have to plug it in to any ordinary wall outlet. it can take anywhere from 4 to 30 hours for a full charge. >> it's very easy. it's just like plugging in a hair dryer. it's super simple. >> oh, yeah? >> yeah. >> even a girl could do it? is that what you're trying to say? >> uh, even--yes, even a girl. >> from the beginning, musk wanted to prove that innovative and nimble silicon valley could build a better green car than lumbering, bureaucratic detroit. >> outside of detroit, everybody thinks detroit is dumb. >> well, they think you're hidebound. >> yeah, exact--same thing. >> bob lutz, former vice chairman of general motors, was the man in charge of developing their new products, and he says he owes tesla and its roadster a debt of gratitude. >> if a small silicon valley start-up believes that they can do a commercially viable electric car, are we gonna sit here, as general motors, and say, "well, a guy in california can do it, but we can't"? well, that didn't sound very good. >> that's embarrassing.
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>> yeah. >> and so the race was on, with lutz overseeing the research and development of the chevy volt, which is a four-door family electric. >> so you see that it's got twin screens. >> the volt is not purely electric. it's called a plug-in hybrid. it'll drive on battery power alone for 40 miles. go beyond that, and a small gasoline engine kicks in to recharge the battery while you keep driving. >> 78% of trips in the united states are under 40 miles a day. if all those people had volts, you would have 78% of americans basically never using another drop of gasoline. >> everything about the volt, he says, works like a conventional car except there's no noise. >> there's one thing we can do for people who miss the sound of the engines. we sell them this cd with various engine sounds. so you'll be able to pick ferrari v12 or, you know, le mans corvette. >> a car that can go up to
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40 miles before it uses any gas at all. >> g.m. is already touting the car in tv ads, even though they don't yet have a working prototype. >> the real trick on the car is software. the car needs to know where home plate is. so if you, for some reason, have gone from work--instead of directly home, you've gone shopping, and you're starting to run out of battery on the way home, the computer will tell the gas engine, "look, he's 5 miles from home. only run for three minutes, because he only needs enough to get home." >> what about safety? in 2006, dell was forced to issue the biggest recall in electronics history when its lithium-ion batteries burst into flames. lutz says g.m. has solved that problem with its batteries, but they need a lot more testing to check how durable and reliable they are in extreme weather and real-road conditions.
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still, lutz insisted the volts would be in dealerships by 2010. we've spoken to people who say, "lutz is crazy. they cannot do this by then. it's just not gonna happen." >> right. we'll see. somebody's going to have egg on their face. >> it was g.m. with egg on its face in the late '90s for killing off its first electric cars, the ev1s, and then crushing them into scrap metal, which fuel theories that g.m. had conspired with the oil industry to get rid of the electric car. >> i think even our lawyers now would admit that perhaps crushing them was not the smartest thing in the world to do. i get emails that say, "i hope you enjoy the billions that you got from the oil companies, you swine." >> it's that history and his record of promoting suvs and the hummer that make people wonder about lutz's new role in developing g.m.'s new green cars.
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now, you have a terrible reputation with environmentalists, as you well know. >> no, actually, some of them kind of like me, but go ahead anyway. >> don't think there's global warming? is that really true? >> you know, i'm not gonna get into this, because-- >> because you got into so much trouble when you said it the first time? >> that could be right, yeah. >> what lutz said is, "man-made global warming is a crock of [bleep]." so he's no environmentalist. but he is a realist. gone are the gas-guzzlers. to save g.m., he knew he had to come up with gas-efficient cars. but detroit was broke, while in california, things were buzzing. the venture capitalists who funded the information superhighway were now pouring money into the actual highway, backing at least 30 small start-up companies. ray lane is a senior partner at kleiner perkins, the venture capital firm that helped start google and amazon.
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now he's investing in three electric car start-ups. >> when i first started talking about the possibility of investing in automobiles, my partners thought i was crazy. we're not out of the woods yet. i haven't proven i'm not crazy yet. [ticking] >> coming up... bob lutz on the chevy volt. so a lot about general motors' reputation and image is riding on this. >> that is probably an understatement. >> that's ahead when 60 minutes on cnbc returns. [ticking] with the spark cash card from capital one, olaf's pizza palace gets the most rewards of any small business credit card! pizza!!!!! [ garth ] olaf's small business earns 2% cash back
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a four-door plug-in hybrid like the volt with some added gee-whiz features. this is a solar roof. >> it's a solar roof, so this will generate electricity. it will not generate enough to drive the battery, though, like the engine does. it will drive enough electricity so you can maybe cool the car while it's in the parking lot. some of the other start-ups in california were less conventional, like this all-electric. it's a bird. it's a plane. it's an aptera. but one issue with all these cars is that much of the electricity to power them would come from burning coal which produces greenhouse gases, so they're not necessarily the perfect green solution. four years ago, we had the hydrogen car. three years ago, there was ethanol. and now it's the electric car. >> right. >> in each case, there were such problems with them that everybody's focus moved on to the next thing. isn't that gonna happen again with these electric cars? >> it could.
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i mean, that is what silicon valley is all about. a good entrepreneur that fails, we will pick that person up, fund them again to do something new, if it's a good idea. >> is there any thinking, with these 30 little henry fords, that we've got to crush detroit? >> some. there was a company--it's pretty well known--tesla, for a long time believed that what would be their advantage is, they had no car people. no detroit people. "we're going to build a vehicle company exactly like we'd build a computer company. so it's--when you have your car repaired, it's going to be like going into your apple store. we'll give you a latte; you watch your car being repaired." these are real statements. so they've certainly found out you can't--you cannot build a car company without car people. >> there's sort of this feeling of--especially in silicon valley--that people in the automobile business aren't
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very smart. and then they get into it, and they find out, "holy mackerel. look at all this government regulation. look at what everything costs." and then once they're into it, they figure out, "hey, this isn't an easy business after all." and i think that's about the point where tesla is right now. >> but these start-ups out in california don't have the union problems, the health care costs, the labor issues. these start-ups don't have boardrooms. they don't have nervous shareholders. >> yeah, but they have no experience in the car business-- >> and you think that outweighs all of this? >> absolutely. sure. >> it's true that tesla has hired lots of people with detroit on their resumes. their next project is development of a four-door family sedan that'll compete with the chevy volt. did you used to think this was going to be easier than it was? >> yes, i probably thought it would be a little easier. >> how much did you put into this company? >> [sighs]
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oh, man. about $55 million. >> $55 million of your own money? >> yeah, it's a little more than i expected. >> no one's figured out how to make an electric car cheap. tesla plans to sell its four-door sedan for $60,000. lutz at g.m. wants the volt to be more of an everyman car. how much is it gonna cost me, the consumer? >> i started out very optimistically and said, "okay, well, i think we can sell this thing for $20,000," and that turned out to have been, like, one of those, "i wish i hadn't said that." and then we started hoping for well below $30,000, and now we're trying to keep it south of $40,000. >> bob lutz is trying not only to produce a moneymaker but also prove with the chevy volt that his company and his town are still the address for innovative cars. so a lot about general motors' reputation and image is riding
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on this. >> that is probably an understatement. >> so basically, in your mind, it has to succeed. >> of course, it does. for what it's worth, i stake my reputation on it. >> in late 2010, g.m. rolled out the chevy volt with a price tag of $41,000. the volt was received so enthusiastically by the automotive press that motor trend voted it the 2011 car of the year. by then, bob lutz had retired from g.m. tesla motors has sold over 1,800 roadsters to buyers in 32 different countries. its four-door sedan is scheduled for delivery in the summer of 2012. but these cars are a pricey ride, and even with tax credits, sales have been disappointing. as for the aptera, that car never hit the road. the company later went out of business. well, that's it for this edition of 60 minutes on cnbc.

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