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THE WALL STREET JOURNAL: Shell’s Hofmeister: Still Fighting for “Pragmatic” Energy Policy

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Outgoing Shell President John Hofmeister

March 19, 2008, 6:50 pm
Posted by Keith Johnson

Why is one of Big Oil’s biggest cheerleaders still so optimistic when his industry is increasingly under fire thanks to high oil and gasoline prices, even higher oil profits, and rabid consumers?

John Hofmeister, who will step down as head of Shell Oil U.S. in June after three years at the helm, thinks there may eventually be a silver lining to the current pain at the pump and the black eyes the industry’s received in recent years.

“Aggravation leads to education, and education leads to pragmatic public policy,” the 60-year old Mr. Hofmeister said in an interview. That, in oil-speak, would mean recognition from Washington that fossil fuels aren’t going away anytime soon, and would translate into greater access for U.S. oil and gas production.

Mr. Hofmeister says that’s what he learned after criss-crossing the country as part of Shell’s two-year roadshow to take the energy pulse of the American public.The outreach idea was apparently prompted by hate mail depicting oil executives strung up in a tree after the 2005 hurricane season wrecked summer driving season. “We lost the plot decades ago” in communicating with the public, he says.

His key takeaways from the tour? U.S. energy policy ultimately depends on buy-in from the public—and people have to be interested to buy in. Gasoline above $3 “piques a lot of interest,” he says. The final Shell report on the roadshow describes one pony-tailed townhall atendee who came around to “hard energy realities.”

Mr. Hofmeister’s “fundamental belief in the pragmatism of American policy-makers” makes him hopeful that big oil companies like Shell will eventually get access to more domestic production, easing — albeit slightly — U.S. reliance on imported oil. He’ll keep pushing that belief in his new incarnation as an advocate for “a sound energy policy” with the consulting company he just started with his wife, JKH Group LLC. “I’ll present my knowledge, my voice, and my pen” to fight to shape U.S. energy policy, he says.

But isn’t much of Big Oil slowly turning bearish on future supply prospects and inching toward the “peak-oil” crowd? Not everybody. Despite recent peakish noises from Shell headquarters, Mr. Hofmeister says “there are very good reasons to be bullish about sustained production,” citing new leases in Alaska, deep-water drilling, enhanced recovery of wells, and the economic viability of unconventional reserves. “America has the resources that deserve to be developed.”

Shell, and Mr. Hofmeister, are even finding a way to defend the future of Big Oil while cheering more action on climate change. Both think a cap on carbon emissions—like that proposed in pending legislation—is a good idea; just not for the transport sector. Power companies, the biggest target of climate legislation, have alternative fuels. The transport sector doesn’t, yet. Without real mass-transit alternatives, “taxing fuel won’t reduce CO2, it will just mean higher prices” for those that can least afford it, he says.

http://blogs.wsj.com/environmentalcapital/2008/03/19/shells-hofmeister-still-fighting-for-pragmatic-energy-policy/trackback/

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