Shell Oil President Addresses US Oil Policy and More at Stern's CEO Series
With oil over $100 a barrel, the CEO Series on April 8 with John Hofmeister, President of Shell Oil Company, proved to be especially timely and of interest to Stern students and alumni who packed Schimmel Auditorium to hear Mr. Hofmeister speak.
Interviewed by Vijay Vaitheeswaran, an award-winning correspondent for The Economist, who teaches the popular Stern MBA course, Energy and the Environment, Mr. Hofmeister discussed energy security, alternative energy sources and technology, and the need to educate the public on oil policies and the industry itself.
Vaitheeswaran opened the interview by asking Hofmeister about his recent 50-city speaking tour where he met with consumers and local elected officials to educate them on the need for a comprehensive US energy policy. Acknowledging that the oil companies had not done a good job of telling their story, Hofmeister used these town meetings to debunk common myths: 1) the world is running out of oil; 2) oil companies control gas prices; and 3) alternative energy is a silver bullet that will solve the world's energy needs.
The world is not running out of oil, but Hofmeister pointed out that current US policy is an impediment to oil production since it restricts domestic drilling. Americans consume 21 million barrels of oil a day, or 10,000 gallons a second, but the US produces only 7 million barrels a day domestically. If the US produced more oil, we could "flip oil prices on its head" Hofmeister said. That change would signal the OPEC countries that their ability to set oil prices unilaterally would be challenged. If the US produced more oil and was less reliant on foreign oil, gas prices would inevitably go down.
While admitting that there is no "silver bullet," with alternative energy, Hofmeister said that Shell is investing significantly to develop alternative energy sources and technology and has reduced its own carbon footprint to below 1990 levels. Alternative energy sources are still not competitive in pricing with oil, and have had the consequence of driving up food prices (ethanol) and causing other environmental problems (disposal of lithium batteries or energy-efficient light bulbs). Hofmeister advocates that government set energy policy so that oil companies can compete on a level field while being environmentally responsible.
The importance of energy to economic growth and the complexity of the issues that remain to be solved assures that energy will remain an exciting sector to work in. Hofmeister pointed out that this sector will need the next generation of talented individuals to address these issues.