Shell Oil Co. Pres. John D. Hofmeister discovered some troubling attitudes as he met with local business and government leaders during his most recent visits to 50 US cities.
“People have embraced $3/gal gasoline. They haven’t embraced the oil industry. We’re more than disliked; we’re disrespected, and it’s the industry’s own fault,” he told reporters during a stop in Washington, DC, on Feb. 14.
That makes the oil and gas industry an easy target for some politicians who use oil companies’ high profits to justify punitive legislation, he said, adding, “Bad public policies for the purpose of spiting the oil companies hurt consumers.”
Hofmeister also is concerned by substantial beliefs that the US is running out of oil, and that biofuels will solve the problem. The first ignores the 100 billion bbl of technically recoverable resources within this country and the 1 trillion bbl trapped in Colorado, Wyoming, and Utah’s oil shale deposits. The second overlooks considerable logistical and technological challenges in making biofuels commercial.
More than fuel
“We think there’s a lot that can be done with biofuels and refinery additives, but the problem is not just with the fuel. If miles driven increase or if engine technology doesn’t change, there won’t be much carbon reduction,” Hofmeister said.
Shell does not oppose taxes generally because it considers them a cost of doing business, he said, adding that the company doesn’t even mind levies to help finance new technologies because it fully intends to be a leading participant. But the company dislikes recurring proposals to tax only the five biggest US oil companies.
“Taking money from these companies because they’ve been successful is objectionable. If a tax was imposed across the entire industry, that would be another matter,” the Shell executive said.
When Congress considered dramatically expanding the Renewable Fuels Standard in 2007, Shell expressed strong concern that the technology did not exist to meet such an aggressive goal, he said. It also pressed for an “off-ramp” in case it became obvious that the mandate would not succeed. Its biggest argument has been the significant differences between pilot plants and commercial production.
‘We don’t fear it’
That does not mean that Shell opposes a role for alcohol in motor fuels, Hofmeister said. “We’ve been in the ethanol business for 30 years. We don’t fear it. But we believe that more of it needs to come from waste products, such as the corn stalk instead of the kernel.” Hofmeister said failure to recognize that oil and gas will continue playing a major part in meeting near-term US energy demand is probably the biggest single domestic policy mistake made.
“Since our independence, homeland security has been a priority of this country. So has economic security. Energy security should be on the same platform. Without it, homeland and economic insecurity increase,” he said.
