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JAX DAILY RECORD: Shell president: ‘The last days of affordable gas are behind us’

by Mike Sharkey
Staff Writer

The price of gasoline is certainly one of the biggest issues facing both the United States and the world. According to Shell Oil President John Hofmeister, the current $3 a gallon gas price can be directly attributed to two things: America’s dependency on foreign oil and the federal government’s refusal to let oil companies tap into the vast crude oil reserves below ground in the continental U.S. and in the Gulf of Mexico.

Hofmeister was the guest speaker at Friday’s Quarterly Cornerstone luncheon at the Hyatt and gave the full room an overview of both the current state of the oil industry and its future outlook.

“Energy security in this country is a fundamental need for the future. The question is, can we secure energy in ways we can embrace?” said Hofmeister, adding that the dilemma for oil companies is finding a way to provide affordable energy that also allows Americans to enjoy the lifestyle they’ve become accustomed to. “We are at a crossroads.”

Jerry Mallot, the executive vice president of economic development of the Cornerstone division of the Jacksonville Regional Chamber of Commerce, said he began pursuing Hofmeister as the speaker in January. Mallot said Hofmeister — who was named president of Shell in 2001 — wasn’t as hard to secure as you might think.

“The big oil companies want to get out there and let people know that they aren’t the bad guys,” said Mallot.

According to Hofmeister, Hurricanes Katrina and Rita in 2005 began a tailspin oil companies still haven’t recovered from. He said Shell suffered a 25 percent shortage of refined gasoline supplies as a result of the damage done to refineries and pipelines in the Louisiana and Texas area.

“To this day we have not completely recovered from the 2005 hurricanes,” he said. “And, what’s today? It’s June 1. And, What’s June 1? The beginning of hurricane season. We are much better prepared today because of the lessons we learned.”

Hofmeister related having to call the secretary of the Department of Energy the Friday night after Hurricane Rita passed through Southeast Texas, leaving much of the area without power.

“I told him, ‘We are almost out of gas.’ We did not have any electricity and we couldn’t move the last 300,000 barrels to the Southeast United States, which runs from Washington, D.C. to Texas.

“The last days of affordable gas are behind us.”

According to Hofmeister, there are about 110 billion barrels of crude oil on the outer shelves of the United States. However, due to federal restrictions, 85 percent of that is “off limits.”

“That’s public policy,” he said. “Sixty percent of the oil consumed in the United States is imported and sometimes that’s from unreliable suppliers. Imports are what’s driving up the price of crude oil. We have a choice: continue to import crude or allow access to those 110 billion barrels.”

Future options that would help dramatically decrease America’s dependence on foreign oil and lower prices at the pump — if allowed — include drilling the oil shale and oil sands fields in Canada and Colorado, Utah and Wyoming. Hofmeister says there are over one trillion barrels of crude in those underground deposits.

“We are not going to run out, but we need access,” he said.

Hofmeister said the future of energy in the United States lies in the efficient mining, refinement and use of coal, natural gas, wind power and solar power. He said there are musts for the future:

• Greenhouse gas management has to be addressed

• Energy efficiency is a huge opportunity

• Education as to the benefits of alternative energy sources and conservation.

Other notes from the Cornerstone luncheon:

• IBA PT, Inc. announced it will move it headquarters to Jacksonville from Edgewood, N.Y. Ion Beam Application is the Brussels, Belgium-based company that built and maintains the $50 million dollar proton beam therapy system at the $125 million Proton Beam Therapy Institute at Shands Jacksonville. Cornerstone Chairman and Baptist Health President and CEO Hugh Greene said this is great news for Jacksonville.

“This likely will introduce our city to a much larger audience,” said Greene.

• CIT announced it will add 300 additional technical and financial jobs to its Deerwood Park complex. The company started with 200 employees in Jacksonville.

• Mayor John Peyton briefed the audience on the impending special session of the State Legislature and the potential $50 million impact that property tax reform could have on Jacksonville.

“The decisions coming out of Tallahassee could be the most significant setback for Jacksonville since the Great Fire of 1901,” said Peyton, referring to the fire that wiped out most of Downtown Jacksonville.

• The engineering firm of England-Thims & Miller was recognized with the Cornerstone Chair Award, which honors outstanding business performance, corporate citizenship and commitment to employees in businesses that either relocated or started in Jacksonville. England-Thims & Miller CEO Doug Miller was on hand to accept the award.

“England-Thims & Miller is a homegrown company that has provided innovative engineering solutions throughout the Southeast for nearly 30 years,” said Greene. “Their success speaks directly to the business advantages, quality of life, excellent workforce and opportunities that exist in Jacksonville and Northeast Florida.”

• The Cornerstone luncheon wasn’t the only high-profile event at the Hyatt Friday. The annual EVE Awards were going on in the ballroom next door. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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