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Shell’s ex-president presses on

Shell’s ex-president presses on

with message on energy markets

Published: Thursday, August 28, 2008 at 1:00 a.m. 

During an appearance on CNBC early in the summer, John Hofmeister made a startling statement: “Oil isn’t a free market.”

Soon after he said it, the show cut to a commercial and someone handed Hofmeister, who was about to retire as president of Shell Oil Co., a piece of paper. It was a message from Shell’s headquarters in the Netherlands telling him he could not say that. He crumpled up the note, went back on the air, and repeated his statement.

“The myth of the free market still resonates as if it’s a reality,” he told me recently over coffee and egg sandwiches at the Breakfast Klub in Houston. Oil markets, he said, are regulated at every step in the route from the well to the gas pump.

Customers can choose to buy their gasoline from a Shell or Exxon station, but Exxon Mobil and Shell are limited in choosing where they buy their oil. Most available crude comes from the OPEC cartel or other state-run oil companies. Until Americans understand how little control the U.S. and its corporations have over global energy supplies, we remain economically vulnerable, he said.

Hofmeister, who showed up wearing the official uniform of retirement — Hawaiian shirt, khaki shorts, black tennis shoes and white socks — spent his final years at Shell trying to explain the nation’s looming energy crisis to the public.

He feels that despite “town hall meetings” in more than 50 cities, he largely failed.

Now he is trying again.

This summer, Hofmesister formed a nonprofit group, Citizens for Affordable Energy, which will take his message to the people. He hopes someday to have local chapters across the country, which will join in national grass-roots efforts, as well as address local and regional energy concerns.

Everyone these days, from T. Boone Pickens to me, seems to have an energy plan, and Hofmeister is no different. His, though, has executive suite cred. He doesn’t have an interest in any particular fuel source, as Pickens does, and, as he’s quick to point out, he’s not running for office.

His plan is based on what he calls the “four mores”:

1. More supply of all kinds of energy. “There should be no barriers to developing energy supplies in this country,” he said. We’ve done that for too long because when imports were cheap, nobody cared.

2. More pursuit of technology and innovation to more effectively use all forms of energy. That means everything from better conservation to better land use. “Technology represents the best form of conservation,” he said.

3. More environmental stewardship. Technology works in our favor in finding ways to reduce emissions of all kinds. We’ve been able to effectively reduce physical and liquid pollutants, and we need to take a similar approach to gaseous waste.

Hofmeister also returned to a favorite theme from his Shell days: Climate change is an ideological argument that won’t be won. Instead, we should have practical discussions about how to reduce airborne pollutants economically.

4. More infrastructure — from pipelines to refineries to power plants — to match supply with consumption. Use the capital markets to fund improvements, but ensure that reasonable regulations are adopted. We’re trying to meet tomorrow’s energy needs with yesterday’s planning and rules, he said. We also must ensure that regulations don’t change in midstream, otherwise private companies won’t take the investment risk.

The biggest impediment to solving our energy problems, he argues, is the political process, which is focused on expediency.

Politicians, much like consumers, prefer easy answers — windfall profits taxes or gasoline tax holidays — rather than complex ones.

Developing more secure and cost-effective energy supplies, though, requires a long-term, broad-based effort.

“In modern society, energy can’t be turned off,” Hofmeister said. “It’s as important as air, water and food. Energy is survival.”

Two years ago, I accompanied Hofmeister to a round of town hall meetings in Philadelphia. He had the same message then as now, but much of the time was spent convincing skeptics that the president of a big oil company cared about something more than short-term profit.

Now that he’s left Shell, Hofmeister plans to dedicate his retirement to broadening America’s understanding the looming energy crisis.

The question is whether anyone in Washington will listen, or whether they’ll crumple up his plan and throw it away.


Houston Chronicle business columnist Loren Steffy can be reached at [email protected].

This story appeared in print on page D3

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