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WoodTV: Q&A with Shell Oil president

Updated: Oct 4, 2007 10:56 PM

By PATRICK CENTER

GRAND RAPIDS – Shell Oil Company president John Hofmeister sat down with 24 Hour News 8 for a one-on-one interview Thursday. Hofmeister, in town for an appearance at the World Affairs Council, answered questions on a wide range of energy-related issues.

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PATRICK CENTER: The motoring public says, ‘Wait a minute it seems like there’s always an excuse, every week, to raise prices.’ what do you say to those people?

JOHN HOFMEISTER, Shell Oil Company president: The law of supply and demand is the driving law and people’s behavior is what addresses supply-demand issues. So, we don’t sit in Houston, for example, and decide what prices people in Grand Rapids are going to have to pay for Shell gasoline. That’s decided by local market conditions, by wholesalers who serve the retail market here and the customers in this region…

PC: Why have oil prices been rising at a rapid rate in recent years?

JH: It really is a basic supply and demand equilibrium. The relationship between the supply side and the demand side is such that we’re barely keeping up with the growth in demand. 

PC: So it’s a refining issue at this point?

JH: Refining is the big balancing factor for meeting street demand. And the nation needs more refining capacity which was why Shell and our partners, Saudi Refining, decided two weeks ago to make a major addition to refining capacity in Port Arthur, Texas. We’ll go from 285,000 barrels a day to over 600,000 barrels a day in that one site…

PC: What is the breaking point as you see this down the line? When you look at the refining capacity, supply and demand, is there a break point?

JH: I think it depends on how we treat bio-fuels in the future. In other words, um, right now we’re very dependent upon petroleum-based products. Where ethanol is coming in at about a five to six percent of the supply chain. If bio-fuels continue to increase, let’s say to 10 or 15 percent, that relaxes some of the pressure on the petroleum supply side. But now it’s got new pressure on the ethanol supply side, or the bio-diesel supply side. Those economics and those supply chains really haven’t been worked out yet.

PC: You’re in the oil industry, isn’t it in your best interest though to protect oil and keep that going as long as possible?

JH: I’d, I’d rather say, really would say, we’re in the mobility industry. We like to keep people on the move. We do bring fuels to the market place. Most of those fuels are today, and will continue to be, petroleum-based fuels. But we don’t rule out bio-fuel as a major factor in the future.

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Hofmeister said there’s more oil than we’ll ever use, and when it comes to US oil, Hofmeister said there’s plenty here, but environmental laws prevent it from coming to market.

Instead of transferring wealth to other parts of the world, he said, we should be developing oil supplies that would help lower prices.

http://www.woodtv.com/Global/story.asp?S=7170886&nav=menu44_2

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