John Hofmeister is the founder of the non-profit Citizens for Affordable Energy and is author of the book “Why We Hate the Oil Companies.” He travels the country in a grassroots campaign providing an insider’s view of what’s behind the energy companies’ posturing and how politicians use energy misinformation and lack of information to get elected and, once in office, to stay there.
Hofmeister joined Royal Dutch Shell in 1997 and served as president of Shell Oil from 2005-08. Prior to his Shell affiliation, he held high-level positions at major energy consuming companies rather than producers, such as GE, Nortel and Allied Signal.
Hofmeister is a world apart from the stereotypical “awl man” who sometimes may not see beyond the confines of the industry. He packs degrees in political science rather than the expected petroleum geology and/or engineering sheepskins, and arrived at Shell more an outsider than an insider in the business of hydrocarbons.
With his acquired vast insight into the industry, his strong global business and strategic leadership experience and his knowledge of the political process, Hofmeister is a formidable spokesman for America’s energy needs, supplies and the path to the future. He speaks with candor and is a straight-shooter, as evidenced in the introduction to his book, where he states:
“Americans have long had a love-hate relationship with the oil industry. Myself included.”
During a conversation with Hofmeister, he offered the EXPLORER an overview of his thoughts on America’s energy situation. His responses and observations, in his own words, are printed here:
Oil versus politics – and the winner is?
HOFMEISTER: The challenge to hydrocarbons going forward is coping with the politics of energy, particularly the politics of oil and gas.
Politics is the death of hydrocarbon energy. It’s unwarranted, unfair and unnecessary.
In part it’s because the hydrocarbon industry does as bad a job explaining itself to its stakeholder community as any industry in the world. By not explaining itself, ignorance is the enemy, and ignorance is winning.
In a democracy that is predicated on informed voters, the industry must accept its responsibility for educating those voters on the importance of what it does and the necessity of its products. What we’ve seen in the last several decades from the industry is not encouraging – that it cares or understands how important it is to explain itself.
In the meantime, elected officials, especially those who are funded by opponents to hydrocarbons, have “open season” on attacking, diminishing and debilitating the hydrocarbon industry.
The Number One challenge to resume drilling in the Gulf of Mexico, for example, is 100 percent political.
Without good information, the industry stands to lose at the hands of anti-industry advocates and the politicians who agree with them and also take their money.
When it comes to the Strategic Petroleum Reserve (SPR), politicians still don’t get it.
HOFMEISTER: Ever since the Strategic Petroleum Reserve was created, there has been a knee-jerk reaction by populist-oriented politicians to utilize the SPR for what it was never intended to do.
It exists to support national security in the event of extreme emergence.
It is not a hedge on fuel prices.
Is it hopeless?
HOFMEISTER: It has to be better than hopeless – we have to live another day.
The industry and those who care about America’s future, because oil and gas are very much in our future, have to turn the negative to the positive. That’s not hard to do, it just needs to be done – it must be done.
It’s an absolute essential for the survival and success of the American model. We can have aspirations of a different kind of energy system over the course of time, but the only way aspirations can become a reality is if we move forward with a plan – a short-term, medium-term, long-term plan.
The political process in our political system is plan-averse. That’s the issue we have to deal with. The adversity to a ‘planful’ set of solutions is where the industry could add great value to itself and to society by helping to develop such a plan.
It also could help itself and the political challenges hydrocarbons face by explicitly pointing out the negative effects of political choices that make energy more expensive than it needs to be.
For example, we have more oil than we will ever need in this country – but we’re not allowed to produce it, but forced instead to import it. By importing two-thirds of our oil, we’re at the mercy of the global oil trading system, which is volatile and tends toward ever-higher prices – which causes consumers and companies to pay more than they need to for a basic commodity like oil.
We have to overcome resistance to producing domestic resources in order to assure affordability of our energy future. That’s an example of addressing a practical reality that is held back by political unreality.
In today’s USA Today on the editorial page, Daniel Weiss of the Center for American Progress puts forward the completely misleading statement of the Obama administration that the United States only has 2 percent of the world’s reserves and therefore can’t drill its domestic oil to promote lower prices.
That is a gross misuse of the technical SEC definitions of “proven reserves” to mislead the American consumer, because proven reserves is a small fraction of probable reserves and the natural resource base of this country.
Mr. Weiss knows better, but he prefers to mislead the American public for political purposes rather than offer solutions to the instability of global trading markets. He would rather send the American people into despondency over high prices than to explain the truth of our natural resource base for his own narrow self-interested political objectives.
He’s attempting to promote a new energy system, and that’s fine. I support, and my book describes, a new energy system of the 21st century. The new energy system needs to be tempered by today’s reality, and it’s not here yet, which requires the existing system to carry us forward to the new system.
We don’t have the possibility to achieve a new system if we’re priced out of the energy marketplace and destroy American competitiveness and empty Americans’ pocketbooks for overpriced oil.
The American people deserve the best of the old system while we build the new system – it’s not either/or.
That’s kind of my story.
The “Four Mores”
HOFMEISTER: I have a solutions proposal on our website outlined as the “Four Mores:”
- More energy from all sources.
- More technology for efficiency.
- More environmental protection.
- More infrastructure.