Houston Chronicle: As his 50-city journey nears its end, executive says the results have been mixed

Shell Oil President John Hofmeister brought the energy giant’s message to Hobby Center.
MELISSA PHILLIP: CHRONICLE

Nov. 13, 2007, 12:04AM
ENERGY

Quest for dialogue drove Shell Oil tour

By BRETT CLANTON
Copyright 2007 Houston Chronicle

JOHN Hofmeister has gotten his share of letters from customers who are angry about high gasoline prices.

But in March of last year, the president of Houston-based Shell Oil Co. received a piece of hate mail that startled even him — it contained no note, just a hand-drawn image of the executive hanging from a tree.

That letter is part of the reason Hofmeister has spent the past year crisscrossing the nation, trying to engage regular Americans and opinion leaders in what he calls a dialogue on energy issues.

The goal was to create better understanding of the economic and political factors that have driven energy prices to record highs in recent years and, with any luck, to move beyond animosity directed toward the oil industry.

Last week, as he prepared for the last stop of his 50-city tour, which is Wednesday in Atlanta, Hofmeister reflected on the ambitious campaign and said it has had mixed results.

While academics, business groups and some government officials have grown more receptive to the industry’s point of view, most people have not budged, he said.

“We continue to be, as an industry, grossly unpopular,” said Hofmeister, sitting at a conference table in his 45th-floor office in downtown Houston. “The general public considers the high prices to be a function of greed and an expectation of excessive profits, when the reality is quite different.”

Domestically produced

But there is another message, he said, that came through loud and clear during the tour, and that reaffirms a long-held Shell position: Americans want more domestically produced oil and natural gas, both for national security reasons and to keep up with rising demand.

That response has driven Shell to ramp up efforts to try to change federal policy that now limits offshore drilling to 15 percent of the U.S. coastline, he said. It’s also prodded the company to consider more investments in alternative fuels, he said.

The Shell tour comes at a time when rising global energy demands and regional supply disruptions have sent oil prices to near $100 a barrel and kept oil company profits in record territory. Those profits have angered consumers and politicians who have accused oil companies of profiteering, a charge the companies deny.

To blunt that criticism, Hofmeister kicked off his 50-city tour in June 2006 in Dallas, and has since carried his message to the likes of Miami, Philadelphia and San Francisco.

In January, Houston-based ConocoPhillips launched a 35-city tour similar to Shell’s effort in which executives held town hall meetings across the country to discuss energy issues. The company aims to wrap up its tour today with a final gathering in Baton Rouge.

But Dan Pickering, industry analyst with Tudor, Pickering & Co. Securities in Houston, said Shell and its peers are fighting an uphill battle.

“Even though these campaigns are typically aimed at explaining the complexities of the energy business, the huge amounts of reinvestment and the ongoing commitment to safety and the environment, the consuming public has a generally negative image of Big Oil that is reinforced every time they pay more for gasoline at the pump,” he said.

Hofmeister said he sometimes felt that skepticism from audiences as he traveled the country, even if none were openly hostile.

In some cases, as with a questioner in San Francisco who challenged the company’s aim to drill in Alaska’s Arctic National Wildlife Refuge, discussions ended with an agreement to disagree, which was fine, he said.

“We’re not trying to convince everybody that we’re right,” Hofmeister said. “We’re beyond that.”

“But in a democracy, the majority rules, and so if the majority of the people of this country want public policy which produces more oil and gas, I think we can help them come to that view.”

Last month, however, at a Shell employee gathering at the Hobby Center, it was not clear Shell could win over even a majority of its own employees to the same way of thinking on energy issues.

In a version of the 50-city tour presentation, Hofmeister had employees break into small groups to offer suggestions to broad questions like “What is your vision of the U.S. energy mix in the next 10 years?” or “What should Shell be doing to increase domestic oil supply?”

Some of the answers, written on hundreds of Post-it Notes, were revealing.

“Stop killing the planet!” read one.

“Encourage the use of public transportation,” said another.

“Biofuels, hybrid cars, solar energy,” said another.

Compiling report

Shell will compile all the suggestions into a report that it intends to share with policymakers and, possibly, with the presidential candidates, as part of a push for an energy policy that encourages more domestic exploration, Hofmeister said. Or the company may use it to defend itself the next time it is called to Capitol Hill to testify about high gas prices or other industry issues, he said.

But he said some of the ideas from the tour, while well-intentioned, are just not feasible, like replacing large quantities of gasoline with ethanol anytime soon.

“Keep in mind that we are in a long-term business,” Hofmeister said. “There are very few radical quick steps that a capital-intensive company like us can make.”

Even so, Hofmeister said he keeps a drawer in his desk that is full of some of those big ideas and letters and special questions from people he met during the tour. They are there, he said, to remind him where he’s been and what’s at stake as he goes forward.

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