From his office in the nation’s capital, and from CERA headquarters in Cambridge, Massachusetts, Yergin surveys the world – its history, geopolitics and storied movers and shakers, the economy, corporate strategy – and the role energy plays in all of these.

As he says, “I like the way energy is involved with everything: the frontiers of exploration, frontiers in technical innovation, making economies work, geopolitical strategy – I find that continually stimulating.”

Whenever a government needs to know more about energy, Yergin is there. He is a member of the US Secretary of Energy Advisory Board, a board member of the United States Energy Association, and a member of the US National Petroleum Council (NPC). He was vice chair of the much-praised 2007 NPC study, Hard Truths, and is vice chair of the new NPC study of North American natural gas and oil resources. He also chaired the US Department of Energy’s Task Force on Strategic Energy Research and Development. Yergin currently chairs the Energy Security Roundtable at the Brookings Institution, where he is a trustee, and he is a member of the advisory board of the MIT Energy Initiative.

No stranger to the energy press, Yergin is also a frequent commentator in national newspapers and cable TV shows, and is CNBC’s global energy expert. He is the author of the Pulitzer Prize-winning bestseller, The Prize: The Epic Quest for Oil, Money and Power. His new book, The Quest: Energy, Security, and the Remaking of the Modern World, was published in September 2011 and at press time, entered The New York Times bestseller list at No. 4. It picks up where The Prize left off, to dissect the past 20 years of energy history, and it looks to what the future may bring in new fuel alternatives.

About his new book, Yergin said, “The Prize was a chronology, but The Quest is about a series of energies and how they will interact, the future of innovation and what’s going to be the car of the future. You know, Thomas Edison competed with Henry Ford by building an electric car…but by about 1910, the race was over. Now, it’s on again.”

Hart Energy had an opportunity to sidetrack Mr. Yergin during his latest book tour. The following is an excerpt from our interview:

Daniel Yergin, chairman and co-founder of IHS Cambridge Energy Research Associates. (Image courtesy of CERA)

You have always spoken of how important scenario planning is to governments and companies. But could anyone have foreseen the Arab Spring scenario?

We (IHS CERA) had a very good call in 2008 about the financial crisis; the scenarios really worked well back then. We did not have a scenario for the Arab Spring. But we do know that the top people running the governments in the region are getting very old and there is a youth bulge of unemployed and underemployed young people with expectations. We knew that something combustible could happen. The real question now is, “What happens next?”

Doesn’t this adversely affect OPEC?

Not yet. Obviously, Libya is a member, but not one of the major oil exporters. Part of the strategic balance that underpins the Middle East has been upended and there are a lot of questions about how the geopolitical scene will work itself out. Iran’s nuclear program is still a big shadow overhanging the whole region as well.

At their last meeting, OPEC members could not agree on much of anything. Do you feel OPEC is in disarray?

I wonder if that meeting was so overtaken by (political) events that it won’t matter…remember that that meeting had several peculiarities including that the Iranian oil minister who attended had just been appointed and had no experience. OPEC certainly has new challenges ahead. The increase in output that is coming from the US, Brazil, and Canada adds up to being a significant factor in the world oil market. Countries in the Middle East need more money for social investment and to aid other countries in the region. You know, Egypt is going to need a lot of help.

You mentioned all the new oil production that is coming on stream. Will that really change the geopolitics of oil?

It is striking what has been happening with technology. These innovations that started with the shale plays will continue to be applied in more plays in the US and soon, all around the world. New production from tight oil above the shale reflects enormous change coming from innovation. This was not counted on a decade ago. It was only in 2008 that the natural gas industry really woke up to what it had – it is a classic case of the way innovation changes our thinking. This has taken off to a degree few expected. We dubbed it “the shale gale” in 2009. I think people thought then that we were being too optimistic, but that’s turned out not to be true. If anything, we were too cautious.

How does the European economic crisis play into your thinking?

This is an unfolding story, but I think the risks of a sovereign debt crisis or bank crisis are high, and well recognized. The last time we had a global economic crunch it triggered consolidation among the majors into super-majors, but I don’t think that will happen this time. In fact, we are seeing just the opposite, a disintegration. But the fate of the oil industry and oil prices is very much tied up with the global economy.

With emphasis on unconventional resources, do you see a rise of a new kind of super-major?

The shale gale is very recent and as it continues, it will change the competitiveness among various fuels, and thus, it changes strategies. We are still in the early days to see how it might change corporate strategies. You go back four years and the discussion was all about importing LNG.

In closing, Yergin used the overall theme of his new book to draw attention to the modern energy landscape.

“The underlying question that runs through all the chapters of The Quest is this: We now have a $65 trillion world economy. Will we have the resources required to keep that growing, what kind of investments will be made as globalization shows up in growing demand? For the first time, technical solutions will be carried out on a global scale. The US is still the heart of the innovation machine, but that, too, is shifting. We can’t take anything for granted.”