Transcript for June 11

MR. RUSSERT: Again, again, it’s this question of image. We have this poll question from Quinnipiac. How much do you blame oil companies for the high gas prices? A great deal 63, some 27. So combined, that’s 90. Not much, 5; not at all, 4. And it seems to be tied to headlines like this. This is Exxon—they’re not here today—but this is what greeted readers, certainly, of the Connecticut Post: “Exxon Mobil Corp. invested only $10 million last year on direct research on alternative energy while reaping a record $36 billion in profits. Meanwhile, it handed its retiring chief executive officer a nearly half-billion-dollar parachute. ... The New York Times reported that recently retired Exxon Mobil CEO Lee Raymond received a $400 million compensation package in his final year.”

And I read in—Lee Iacocca, the former head of Chrysler, offered this: “When I was at Chrysler, I took only a salary of $1 a year, though I made a lot of money on stock options. When I saw Lee Raymond of Exxon Mobil made $400 million in one year - that’s pretty absurd. How do you explain that?” What do you say...

MR. O’REILLY: One company’s decision on what to pay a chief executive isn’t going to solve the problem of energy supply, Tim. We’re here today to talk about the solutions. And, and this, this is not going to help resolve the issue of how we bring more supply to the market, which we’re investing in heavily to do that, and, and, work at promoting alternatives, which we’re also working on. Most of our companies are involved in this. I know we are. We’re promoting the use of biofuels, biodiesel. We are the largest renewables producer of any of the major oil companies at the moment, and we’re working to try to see what can be done to solve these problems. So I think we’ve got to work on the solutions to these problems. And, and, and I think it’s a very important time, because of the recognition now that we’re in a period of high gasoline prices, that the public look at these issues and encourage our lawmakers to address the real policy issues here that need to be addressed on the supply and the demand side.

MR. RUSSERT: I want to...

MR. O’REILLY: This is a time, this is a time to explore this.

MR. RUSSERT: I want to do that, but you would acknowledge that that payment by Exxon was a black eye for the oil industry with the consumers?

MR. O’REILLY: You know, it’s a black eye for one company, perhaps. But I would argue that most of, of this industry is struggling mightily with thousands and thousands of people working hard through hurricanes and through ups and downs to bring energy to the American people.

MR. RUSSERT: Let me talk about alternative energy and self-sufficiency in this country. This is an article about Brazil.

“[Brazil] expects to become energy self-sufficient this year, meeting its growing demand for fuel by increasing production from petroleum and ethanol. Already the use of ethanol, derived in Brazil from sugar cane, is so widespread that some gas stations have two sets of pumps, marked A for alcohol and G for gas...

“Today, less than three years after the technology was introduced, more than 70 percent of the automobiles sold in Brazil ... have flex fuel engines [that run on both ethanol and gasoline], which have entered the market generally without price increases.” If Brazil can do it, why can’t we?

MR. MULVA: Brazil is a unique situation. Reason Brazil is self-sufficient in energy is not so much because of ethanol. It’s because they have a very strong, growing, thriving oil production, both onshore and offshore Brazil. It’s been for several decades that Brazil uses sugar cane to make ethanol. It does have an impact in terms of the price of ethanol and also on the price of sugar. Just recently, Brazil reduced the amount of ethanol that they applied towards—for fuels for automobiles from 25 to 20 percent. The reason Brazil is self-sufficient—they make great strides in terms of ethanol—but it’s primarily be—due to the success of their oil production business onshore and offshore. It’s been like a ninefold increase in their oil production in Brazil. It far outstrips the increase of ethanol production.

MR. RUSSERT: As American citizens, when you wake up in the morning and you think to yourself, Venezuela, Saudi Arabia, Iraq, Iran, Nigeria—places where we get oil—those countries could, in effect, shut us off tomorrow if some awful thing happened, would it not be better to be self-sufficient, get off oil? Or, as George Bush said, “We’re addicted to oil and we have to get rid of the addiction.”

MR. HOFMEISTER: Tim, on Friday, I was in Dallas on the first city of a 50-city tour that Shell has begun to try to take the message of energy security through energy diversity to the American public. We think we need to do a better job of explaining what we’re up to. And what we can talk about in this country, in terms of energy security—I think energy independence is going too far—but in terms of energy security, we can deal with conventional oil and gas, we can move over to unconventional oil and gas—such as the oil sands in Canada or the oil shale in Colorado—we can then move into the LNG world, bringing a lot of liquified natural gas into this country. We can move into coal gasification, clean coal, turning coal into gas, gas into electric power. Much cleaner than most current power-generating stations. Then we can get into the alternatives, the alternatives of wind, solar, biofuels, hydrogen. There’s so much we can do in this country, and we’re actually working on all of that. And I look forward to taking that message forward.

MR. RUSSERT: Do you agree with the president that we’re addicted to oil?

MR. HOFMEISTER: I think we’re entirely oil-based in our economy the way we’re currently structured, and I think we will be for decades to come. And there’s plenty of oil out there to keep the economy moving. And we can go develop it if we had public policy to support the access we need to get more oil in the United States.

MR. RUSSERT: Are you not troubled by our dependence on foreign oil?

MR. O’REILLY: Well, I think every citizen should be troubled by it. And I think this is the big policy issue, we have actually become more dependent on foreign oil over the last 30 years. Now, at the same time, we have policies that restrict access to areas where we could explore for and produce oil and gas in this country. We can’t have our cake and eat it. We’ve got to look at opening up access to more oil and gas production in this country if we’re going to ever turn around this trend of going the other way or importing more.

MR. RUSSERT: Where would you try to find more oil in the United States?

MR. O’REILLY: There are two areas that remain relatively unexplored and that’s the outer continental shelf on, on the coast, which is a very sensitive issue for the American people, but I would argue that we need to look at this issue and we need to look at how we can safely and securely develop resources that are there, because today’s technology allows us to do it with much less of a foot print and in a much safer and environmentally sound way.

MR. RUSSERT: But politically, you have two Republican governors, Jeb Bush, the president’s brother in Florida, Arnold Schwarzenegger in California, both totally against that kind of exploration.

MR. O’REILLY: But, well, we’ve gone through a period where demand and supply have been in relatively good balance. We’re now in a situation where on a global basis we’re competing for our resources around the world. If we’re going to be more independent, we’re going to have to address the tough, tough question of should we allow more oil and gas development here in this country? If we don’t, then we’re headed in the wrong direction.

MR. MULVA: In terms of—I just said the world uses about 85 million barrels of oil a day and—just about 83 million, and there’s about 85 million worth production, so there’s a very tight excess supply, has an impact on the price of oil. For decades to come, we’re going to be based on fossil fuels providing energy.

MR. RUSSERT: Why does that have to be, though, when people read about what’s going on in the world with the dramatic amount of corn that’s available in this country, with the potential of nuclear power, if that were to be explored?

MR. MULVA: We need to develop every source of energy. It’s oil, gas, coal, nuclear, solar, alternatives, renewables. But on the other hand, we also need to face the facts—we can point our fingers politically to how this has happened over the last 20, 30, 40 years, but the facts are we’re going to be based on fossil fuels for a long period of time, even with all these other sources of energy. And so what we need to do as a country—historically, where the oil has come from has been very reliable suppliers of energy. So we’re part of the global community.

If we use one-fourth of the globe’s oil, we need as a consumer to work with the producing nations in a much more sophisticated, ongoing dialogue so as to make sure for energy security that it’s available medium- and long-term where it’s a much better dialogue between the producers and the consumers. We need to be doing this. And the second thing that’s mentioned just a moment ago with respect to demand, you know, we—you look almost 30 years ago that we made any real movement or progress on efficient use of transportation fuels, and when we did this 30 years ago we effectively over a five-year period of time reduced demand for oil for transportation fuels by two to three million barrels a day. It seems to me there’s been enough finger-pointing for a long period of time that we need to improve the efficiency of transportation fuels. And this goes a long way.

MR. RUSSERT: You mean miles per gallon?

MR. MULVA: Miles per gallon.

MR. RUSSERT: So with the American people lining up to buy hybrid cars, would each of your companies embark on an accelerated policy to have ethanol pumps in equal number, in equal visibility, to the gasoline pumps in all your stations?

MR. HOFMEISTER: We’re, we’re already selling ethanol in our gasoline at 5,000 stations across the country. I think...

MR. RUSSERT: But that’s a miniscule amount. Most customers...

MR. HOFMEISTER: Yeah.

MR. RUSSERT: ...will complain they can’t find it.

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