An hour with John Hofmeister

for mccain auditorium at kansas state university k pr prisons an hour with john hofmeister i'm kay mcintire john hoffmeister is president of shell oil company and the one hundred forty fifth speaker in the landon lecture series on public issues he holds a bachelor's and master's degree in political science from kansas state university is the kansas state alumnus to speak thank you presently fall like a rag and distinguished guests ladies and gentlemen it is a privilege it is a pleasure to be at this podium today to address you on what i believe was one of the most optimistic forecasts that we can see in the years ahead for america and the world as we approach the energy requirements of the future

but first let me commend the landon lecture series for what it does to kansas state university in the people of kansas i had the privilege also the meeting governor landon as a student seeing him on this danish representing points of view some of which he agreed with some of which he did not always encouraging points of view to be broadcast across this great state i had the pleasure of meeting him privately with a group of students and discussing his views during the nine early nineteen seventies when as you recall campuses including this campus had its own issues with the direction of the administration and we had a wonderful exchange of views of that time an open minded receptive gentleman who i remember all of my days kansas represents a tremendous asset to the energy industry both for its history and for its

future and we will come back to that in a moment but let me suggest to you that tampering my optimistic remarks we'll also be some messages a pragmatic reality which we will have to deal with in the days the months and the years ahead to achieve that optimistic forecast which i hope to share with you part of the message ladies and gentlemen of the energy story of the future is we are not we are not running out of oil and gas contrary to the views of some refer to peak oil has already having been reached i would submit that that is a minority view based upon what we would consider skeptical studies and we are far more robust and looking at the oil and gas reserves of the world and why is that important it is important ladies and gentlemen because the entire global

economy the infrastructure of the world as we know it today whether we like it or not is predicated on an oil and gas energy source whether its mobility whether its power generation whether its heating and cooling whether it's lighting whatever it is we are predicated on an oil and gas natural resource base in our economy today those who advocate change and we welcome those ideas must understand that we will continue to require massive amounts massive reserves of oil and gas going forward if we are to sustain economic growth into the future in this country there is tremendous reserve of oil and gas kansas as i mentioned historically didn't peak in terms of its local production many years ago the eldorado find was one of the most prolific

finds of oil and gas this country has ever known in one year for example twenty nine in barrels of oil were produced in the eldorado region a tremendous asset to the economic development of the state and the nation those days have seemed decline looking forward however kansas as you know and kansas state in particular has a role to play the biofuels future of kansas couldn't be more robust we will come back to that a little later in my remarks but as we look across the nation we think about the scarcity of supply and the increased demand that we have seen over recent years there is an explanation for the high prices we don't like the high prices anymore than you do every employee at shell including myself phase the exact same price for oil and gas that you do we offer know discounts inside the company we pay the same we feel the

price at the pump as you do what can we do about that in this country there has been a shortage of strategic directions for a long time the industry has been counted upon by the national leadership to find oil and gas reserves and ladies and gentlemen we have we can identify a hundred and twelve billion barrels of known recoverable oil and gas in the outer continental shelf of this country and in the continental regions of this country which we do not have access to lacking a strategic direction by our national leadership we have been asking for access to the hundred and twelve billion barrels of produce of all oil and gas in order to bring more supplies to the american people to take away the pressure that imports present imports which by the way come from regions of the world that are not always stable not always

peaceful in which the threat of a reduction in imports is always present which leads to a dramatic rise in the price of crude oil by developing more national resources in this country america faces greater prosperity greater access to oil and gas to support the economic infrastructure of the country in a regime that is peaceful that is workable that is predictable where oil companies do their best work if we had access to those hundred and twelve barrels of oil and gas we would be in a different situation in terms of the supply demand relationship bringing more crude oil at possible or prices into the nation's marketplace but is that enough is that enough to satisfy the economic trends of the future and to satisfy the infrastructure of the nation no it's not

we need more than simply conventional oil and gas we believe we should have access as well to unconventional oil and gas unconventional oil and gas is that oil and gas which is not pump in the traditional way it is for example the oil sands of alberta it is for example the oil shale of colorado utah wyoming where two weeks ago i had the pleasure with one of the distinguished senators from the us congress to walk around ladies and gentlemen one one trillion barrels of oil and gas in the state of colorado and extending into wyoming and utah one trillion barrels in this country represents five times the known reserves of the entire saudi arabia reserve story five times we have technology which we're testing today to get access to that oil and gas we believe that is recoverable

we believe that is recoverable in a range of the price of crude oil between thirty and forty dollars a barrel we're testing it and hope to make a financial decision within shell by the year twenty ten working with the bureau of land management working with the us congress we need to create the political infrastructure which will support a royalty regime that will enable the technology to be applied and successful to develop that natural resource will that be enough now we don't believe that will be enough to be there for the future and so we're working in other areas for example liquefied natural gas we know in this country that the reserves of natural gas are in decline while we are temporarily at a period of great storage of natural gas a long term outlook for natural gas is not good for the country as a whole and we can augment that supply for liquefied natural gas coming from abroad in which gas

is cool shit and then re gassed in terminals along the coasts but we have a problem ladies and gentlemen the problem is building re gasification terminals where no one seems to want a re gasification terminal in their backyard the supply is there the market is there but in order to move from liquefied natural gas into this country we need to be build recast terminals and pipelines to move that gas from the coasts to the interior instead of the current methodology of taking gas from the interior to the coasts some of those same pipelines can obviously be used but we believe we will need more is that enough no it's not this is a country that is naturally and down with bountiful reserves of coal coal has been around for a long time and we know cole as a dirty side to it ladies and gentleman technology has moved

on technology exists to turn that coal into carbon free electricity produced energy carbon free is a major step forward and the reduction of seo to pollution the greenhouse gas and still gain the benefit of electricity what is that technology that technology is integrated gas combined cycle technology simply called coal gasification how does it work smash the coal into powder the consistency of talcum powder enter that powder dry powder into a gas a fire under extreme temperatures extreme pressures the molecules of the powder explode yielding the components of the coal itself which is natural gas natural gas liquids carbon dioxide nighters oxide

sulfur the last three being nasty things to deal with but with years of technical membranes we can separate the ceo to and manager through sequestration or other productive uses we can separate the sulfur and capture we can separate the night your socks it and manage it and the consequence of that is essentially clean energy for call or is it happening in the world today yes in china and australia and europe such technology is under way not in this country why the capital cost is greater than the cost of building conventional coal fired plants public utility commissions need to be better understanding of this technology so that in their wisdom they can grab great relief to utilities to be able to install such technology at the front end of building a conventional coal

plant rather than after the fact it does require great relief because the capital cost is more expensive as coal gasification enough to meet our energy requirements of the future no we think not as we look ahead we have an expression in shell which we like to use and that is just as the stone age did not and for the lack of rocks the oil and gas age will not stand for the lack of oil and gas but rather technology will move us forward the technology we refer to is best captured in the term alternative energies alternative energies represent a small today but growing opportunity for more energy for the world of tomorrow such forms of energy include biofuels or shall happens to be one of the world's largest distributors of biofuels and believes there is a long run ahead of

us in terms of biofuel development biofuel production and biofuel use in particular for transport mobility purposes shall decided a long time ago rather than being in the gasoline business we're in the mobility business and so does our objective to bring fuels to the american people much as gasoline fuels from bio mass represent a good alternative provided the engines are designed to accept this new form of biofuel namely ethanol which is a form of out they basically alcohol and the production of such biofuels represents some future choices to be made and shell we prefer not to invest our money in first generation ethanol which is basically corn based or sugar based ethanol which is also part of the food chain and i have to smile as the head of an oil company facing the concerns that citizens have about the

high prices of gasoline i don't think i can take much more pressure before also being blamed for the high price of food in the future if the corn and the sugar cane is all being used for fuel instead of corn chips de repos and high fructose are up for coca cola and pepsi cola therefore we prefer to invest our resources and invent technology or predict or or develop technology on what we consider to be a second and third generation ethanol such ethanol comes from biomass but it comes from the waist of the corn not the corn kernels themselves it comes from the corn stover the cornstalk it comes from not the germ of wheat which we eat but it comes from the stalk of wheat we call straw the cellulosic makeup of those plants broken down by enzyme reaction within a distillery produces alcohol in the same manner alternately as

court and there's a whole lot of wasted mass bio mass out there for us to utilize to turn into fuel and in addition third generation of them all is taking what biomass and gas to find out what bio mass which could be wood chips registries leaves grasses you name it into a gas afire and shot was involved currently today in both technology is investing in a company called iowa gen for straw ethanol a company called cronin or biomet wet bio mass of them all and there are other technologies underwood development as well kansas state and the state of kansas offered great opportunity for biomass development in the future is bad enough now there's more we know the sun was full of energy full of the tech creation of electricity from photovoltaic cells creates electricity from solar electricity for use in homes offices factories et cetera now shell

has moved on from silicon based photovoltaic cells to a chemical compound based camp of photovoltaic cell called copper indium to sell a night silicon itself as a highly energy intensive product which basically comes about as you know from melting of sand to melt that stand requires huge amounts of energy to make the copper indium de sela night film takes very little energy and actually yields more electricity from sunlight so are investing in that technology is that enough no others win in kansas has a lot of wind so does colorado so does california so does idaho sodas iowa we have a map ladies and gentlemen of the windy as sections of the united states and the foothills is not one of them so those of you who care about the flint hills this is not likely to be a land when terminals are win win turbans i should say and so there are other parts of kansas that will absorb great amounts of wind

and wind turbines and shell is very actively involved in the creation of wind farms and recently i had the pleasure standing on the island of maui announcing a new wind farm on maui which was twenty five wind turbines will replace the need on the island of maui to build a new coal fire generating plant then there's hydrogen i didn't represent we believe the best chance for a technological game changer which could change energy for better as we have known it in the past hydrogen as the enabler of electricity generation through fuel cell technology represents for both stationary power stations or mobile power stations such as automobiles trucks buses a tremendous opportunity in the future to have hydrogen fuel cell vehicles as our vehicle of choice it exists today in washington dc three miles from capitol hill at a shell retail

station we have a hydrogen pomp the president himself was there to have a ride in a general motors feels a few fuel cell vehicle and to see it the tank filled with hydrogen at the shell station just a little over a year ago when i spoke to the president recently i said we need more hydrogen stations he said we will we will see to it that it happens and were working on a hydrogen highway ladies and gentleman between washington and new york between los angeles and san francisco there are some technological breakthroughs that we still need particularly in the storage and distribution area but also in the vehicle itself the last thing you want to do is go to a party or hydrogen fuel cell vehicle at an airport come back three days later and hydrogen has evaporated it doesn't get you home very quickly so we have some work to do in order to find the solutions and we will

is that enough now the final comment i would make on energy future is ladies and gentleman we need to affect the hearts and minds of the values and the behaviors of americans throughout our society and moved toward what we would call and shell a culture of conservation a culture of conservation which at the values level at the values level changes how we see energy i was quoted recently in a newspaper having visited a city recently in which the hotel i stayed in the ring this summer had a fireplace going in an air conditioned lobby and the temperature outside was in the eighties not exactly the most efficient use of energy that is an example of a counterculture in the abuse of energy what we need is a culture of conservation in which the minds of our

technologists and engineers are shifted towards the design of homes the design of vehicles the design buildings and factories in which energy is used differently because it can be entered should day and we simply need to apply and then and the behaviors that we use around energy which are at a micro level is not that easy to produce because we all like our lifestyles as we have known them in an era of cheaper more affordable abundant energy but absent a culture of conservation all the alternatives i've described will not be enough for the security of energy for our children our grandchildren and their grandchildren coming back to the price of oil why is it so high i do not believe we are in a permanent state of high

oil price we're suffering the effects of two dynamics at the moment in the energy world we live in one in the late nineteen nineties less than a decade ago it is and gentlemen the price of crude was ten dollars a barrel a ten dollars a barrel the kinds of investments necessary to produce future of oil were not being made we couldn't see a return on investment a ten dollar oil and decisions were before in the oil business or take seven to ten years for decisions to be recognized because of the time span that it takes to move projects forward and we can twenty faster than that because of the risks to the complexities and the difficulties of what we do but seven to ten years ago we were in the midst of a ten dollar oil cycle in which we defer decisions so we're suffering a shortage of not having made decisions seven years ago which are being felt today second dynamic which is also impacting us is that for

generations we have been used to a production overhang in the opec countries where they were never producing all that they could produce and through the seventies the eighties the nineties there were always eight to ten to twelve million barrels of surplus capacity not being used but more available if needed between two thousand and one and two thousand and four that surplus disappeared where did it go it went to china it went to india and went to the galloping countries around the world it also went to europe also came to the united states because our economies have been growing thank goodness during this entire period why we're suffering the high oil price today is the world produces eighty five million barrels a day added uses more than eighty four million barrels a day and there is no surplus capacity anywhere as a consequence we face the extreme imbalance of supply the cooling demand

demand on the verge of exceeding supply and as a result of that any attention in the system any disruption of supply causes the world trade community who are bartering barrels of oil twenty four hours a day seven days a week causes them to be nervous and it moves the price up but the nervousness is arabic is aggravated by geopolitical tensions the geopolitical tensions we see in the middle east today are driving the price of oil higher there are so significant risks still out there and while today you may be seeing a slight reduction in the pump price because of the end of the driving season and the can and they change in behavior patterns associated with some high priced oil and gas during the summer we are still at the precarious edge of the demand supplied balance moving the other way if tragically something were to happen in the world

that somehow reduce the supply we could see a return to much higher cost of oil very quickly because the demand is out there the demand is actually good because it represents economic growth but what the oil companies need and what shell is arguing for on capitol hill trying to use some of that prairie pragmatism that i learned at this school is to take the message a practical reality to our leadership in the nation's capital to say please senator chambliss vice president president please give us more access more access will yield more oil soon or to meet the economic growth the man's of the future and take some of the tension and the pressure off the demand side by increasing the supply side those of you who took a time on a one and i did thirty some years ago i'm sure the lesson

is still taught today supply and demand are the economic drivers which change prices and that's what we should be working on is an increase of supply to offset the increase and the man to yield better prices in the energy marketplace when it comes to the middle east ladies and gentlemen we watch it closely shell has been in the middle east a hundred years we've been very successful working in every country in the middle east over these years in some cases we've been nationalized and told to leave and some cases we've been invited back we're currently working in the empty quarter of saudi arabia with the towel trying to find gas and saudi arabia were ready to work interact as soon as security and as soon as the rule of law and as soon as we invite invitation to work there comes but we need all three but ladies and gentlemen the middle east needs attention little is a new resolution when i was a student here thirty some years ago the

question of the middle east was what will happen in the next generation or future generations if the problems are not so that was the discussion on campus in nineteen seventy that is still the discussion today what will happen if these problems aren't solved the reason for shell success in the middle east over a hundred years is we talk to everybody everybody has a point of view everybody deserves to be listened to everybody deserves to be in the dialogue we believe that would be a good step forward to bring more regional peace and harmony to try to move issues forward shell does not enter the politics of nations not the us not israel not lebanon not iran not a rack but shell is there is a citizen to offer its view and our view is we should all be talking to each other ladies and gentlemen thank you for your attention i hope you agree with me that we can be optimistic about the

future the energy is there we simply need to go get it thank you the pain and we have plenty of time for questions remain judy and leaves a hundred and twelve billion barrels of oil off the continental shelf are you referring to the arctic national wildlife wildlife reserve and if not the new dress that political football the hotter than twelve billion barrels does include what's known in the end and what's called anwar but there's so much more the estimates in them are really quite small compared to the entirety of the hundred twelve billion barrels and juarez really a question for policy makers as a as an industry we will go where we are allowed to go we do believe that we have the technology and the wherewithal to develop what resources

in the arctic reserve and safe and sustainable ways or we wouldn't be proposing to do so we have for example take an offshore technology and learn how to reduce the platform size of operations to relieve postage stamp type size of cement exaggerating a bit but did move the acreage that's required for drilling down to a miniscule amount of land we believe that with the right regulations with the right accountability is to the companies so that the companies are held accountable for their actions we believe that mr can be developed but we have to leave that decision to our policymakers yes first of all thank you for very much for coming to chase day and i really want are still needs a metaphor than i could preface the end of my book a question well companies are making record profits the greatest in history money and with history profits of leeds the speculation about market manipulation by the oil companies on critics point two months leading up to katrina gasoline prices increased three times faster than the price of crude

and also along critics have provided is uncovered internal oil company documents showing how well companies have discussed ways of keeping more of the time my question deals with the baker for bakersfield refineries one the reasons well companies say gasoline prices are so high some like refining capacity united states so well what this refinery which according to show itself allen was one was possible refineries in united states and then sell close it down one reason sell soda or closing down there was enough available korea comes the refinery it's located right next to the current will fields which is one the largest in the united states so my question is slowly what's the deal with this refinery oh what's happening with it and you claim to be looking for a bar having fun and yet his interest in buying this refinery bakersfield is operating today it's up and running it is on by another company not shall shall did make a decision to sell the bakersfield refinery for a couple of reasons we

are a company that does best only do things a very large scale bakersfield refinery dates back to the turn of the last century in other words the early the middle nineteen hundreds it was built in a very small section of land and it basically has had a community built around its gates and its fences and as a consequence has nowhere to expand some years later shall bought a second refinery in bakersfield about a mile away between the two refineries together we were producing less than a hundred thousand barrels of gasoline today in today's world a scale that's a very small refinery and it doesn't work in our strategic investment plan to get new investment so rather than clothes that we chose to sell out to a company that really works in smaller scale and we do for example in port arthur texas with our partner multi va were about to make a decision to build a refinery edition in port arthur of three hundred and fifty thousand barrels a day taking that plan to six hundred and fifty thousand barrels per day production that's the kind of scale that we invest in while

smaller refineries simply are better owned by other companies but it's operating today and i do take exception to the comment on price manipulation i don't wanna go to jail that night i know what i don't wanna go to jail ottawa a tutsi colleagues in the industry go to jail we do not discuss prices we do not discuss our different competitive plans in fact we rarely talk and anytime we do talk there's any trust lawyer sitting between us but the industry does have to work together on some projects because the capital intensity that simple but usually reaches one company where the other to be an operator so that one company is left in charge and then four week we speak very little to each other thank you a couple questions and then now what's your comments are you from a look by john perkins called confessions of an economic hitman know he talks about how i did after corporations have a minute manipulated

developing countries and working against the best interests of local people and there's a place in ecuador called shell believe in them no rock show has been this world why the oil exploration in that area which really my question my question is found for new yorkers held beliefs and isis and then how you project that has a leader where do you stand on the environmental stewardship and shell toes and its hard core values they're called honesty integrity and respect for people as a consequence of those core values we do not tolerate employees or managers in our company who do not act according to our values honesty integrity and respect for people extends not only internally to our relationships among ourselves but externally to the communities in the countries in which we live we work under the auspices of government we do a government asks us to

do and we meet every rule and regulation that government establish as if we find that's not economic then we would leave a country but as of today the only country that we have left and many years as angola and large part because we could not meet our business principles and continue to do business in angola so we have surrendered our reserves in an hour operating license an angle because we will not pay bribes we have other issues with sustainable development because what we're going as we're destroying molecules as a consequence of finding oil and gas and refining it that is a dirty business by definition having said that countries established rules under which we will operate were required to meet those rules our stewardship of the environment is caught up in our social responsibility code of conduct within shell and which for the last nine years we have made a public report audited by third parties to demonstrate whether or not we are doing what our social

responsibility mandate requires we do make mistakes accidents do happen but we're there to clean up and be accountable for our mistakes or accidents but in the main we are operating in our view according to all the rules and regulations of the nation's in which we operate good morning sir john can see recently re election why question regards natural gas and it's very basic web like knows what the unit of natural gases it is sold at the international level and what the market pricing phone of the price of gas is being sold at an international level well natural gas is hardly moves internationally except between countries that are immediate neighbors and in this country generally uses the but the hearty home price that is set lately it's been between five and six dollars per thousand be to use as recently as last winter it was over fifteen dollars

it has also been as low as two dollars three dollars and twenty five cents over much of the decade of the nineties b there is no international price yet of liquefied natural gas it's either sold on the spot market or it's sold with where the buyer will pay whatever it costs were sold through long term contracts the crude price which is the most often cited price in our industry is set on a daily meeting basis by traders from singapore to dubai to london to new york in which the oil companies themselves have very little involvement it's done by these international trading organizations mr hofmeister thank you for coming today as a student and as an suv driver i thank you for your comments i'm sure you're familiar with the group twenty five by twenty five and their goal is to have a twenty five percent of war energy that we consume come from renewable resources by the year twenty twenty five are you working currently with this border

and i've so are you optimistic about their goal in their vision to have this we're not working directly with twenty five by twenty five a woman we are aware of that we're aware of quite a number of associations in many states are also working in the same direction i mentioned being in maui and the governor of a whole why has set a goal of twenty percent renewable energy by twenty twenty and as a double twenty twenty five years but i think we all have to work together on this and some political leadership who i admire and respect and hope they are successful are calling for a national energy strategy we applaud that effort of national leadership to call for a national energy strategy our job will be to get behind it i believe the work we're doing and when renewable biofuels solar hydrogen are going in that direction twenty five percent of the entire energy however served as a huge huge amount of energy considering how much gas and oil is used today it's a noble objective we will work towards that it would be

much easier if there were a national strategy to move in that direction there are good morning <unk> her honesty and in the leadership studies program here can stay on all facets and some boulders or a partnership with the city in the people of new orleans after the devastation of katrina always sent money and by refugees come study with us and then didn't alternative spring break that seven number stings down to see the devastation firsthand scale we understand it shell of the big staple not only in the city of new orleans but the region of the gulf coast could you please describe some the humanitarian efforts at that you've done was shelved in the rebuilding process in the men's economy future endeavors as katrina was approaching the louisiana coast we call a meeting of our show leadership tame we had shut down our platforms in the gulf which shut down refineries along the gulf coast of louisiana and we said there's nothing more we can do to protect our facilities are people are

all safe our number one priority as the storm moves through is to ensure the safety of our employees and their families and their communities we can't help but the storm does the platforms of the refineries but we can't help what happens with our employees and the communities afterwards since that time we have been involved directly with the state with the parishes with the city of new orleans in the restoration and activities that are required talking with everyone from dawn powell who is the president's appointee in the reconstruction to governor blanco to mayor nagin and parish presidents in between in terms of dollars and cents we stopped counting it's a huge number we return week we took six hundred employees and their families out of new orleans shortly after the storm came through and found holmes and housing for another four hundred who couldn't leave louisiana for one reason or another so we house a thousand people and their

families for a period of six months in february of issue returned a thousand people back to downtown new orleans so as a telephone systems and the nine one one systems in emergency response units were back up and running i invested in orleans has mainly to do with jobs jobs is what that city needs it adds to the tax base of adds to the culture of the community and our priority was to bring the jobs back to new orleans we have largely done that we have about four thousand employees in and around the area and economic multiplier of our wage base in that area approaches hundreds of millions of dollars keeping those jobs there is the most important thing we can do but in addition we work with the police department the fire department all the first responders the city the parishes to try to help in the recovery probably the most prominent visible activity was helping to underwrite jazz fest anyone who knows on orleans knows the jazz fest is the event of the year exceeding even marty role in terms of its economic impact on the community and

we made a commitment for example to support jazz fest for three more years after the sheer to see that it gets back on its feet we love that community we believe in that community we believe in the human potential of that community to restore itself but they have many problems and we will work with them on the problems thank you lil kim thank you for coming today on here recently has spent quite a bit of time looking at the energy industry as a whole and you know i've been looking at some of the prospects of peak oil and i think one of the things that's most concerning in terms of energy future and how are going to appeal to really meet the tremendous increase in energy from now and despite any point most in twenty fifteen i'm used in the increasingly difficult i think the number one thing that people are looking at is what the energy return on energy investor this

and if you look at you historically over the last hundred years in terms of hull has moved in terms of energy return on energy invested you know it's gone from somewhere around three hundred to talk and you know it's falling down into the twenties and if you look at the you know i think you mentioned one trillion barrels of oil that may be rhetorical in the rocky mountain region you know they'd energy returned on the energy investors is quite low you know and same also for canada i think one of the issues is that you know its fairly well known there as a whole i'm you know on a global scale once we will get a full production was hubert winners aisha has fairly easy but is predictable in terms of when we show it should peak and then the estimates as you mentioned go from very pessimistic that we have already peaked

intel peeking through art specifically around twenty thirty five and i just like listened as how much risk you feel there is in the future in terms of being wrong in terms of being overly optimistic it's a fair question you know in twenty thirty five i do we do watched carefully the energy coefficients that we are creating in the various and sundry means by which we develop energy which is why we are proponent all the above all of the means by which we can achieve an energy future including conservation we believe that in the whole makeup of that that we will be better off not worse off if we develop all of these resources but i think we will need all of them some will be more energy efficient than others and they will be priced by market mechanisms we hope so that we use more of the energy efficiency and less of energy and efficiency but this is where the culture of conservation has a role to play

ultimately we believe the market will serve will determine what is best for the outcome not regulation and marc rich royce says the best way to get energy efficiency because that will be more highly rewarding and so that's where people will pursue there the research and their development but let's not underestimate we live in a society that uses energy frivolously and there are many ways to achieve greater energy efficiency through conservation and we need to put as much attention into that as we do and to energy creation through energy research and development thank you and good morning nice to prison then you stir our house mr thank you for coming to speak eyes and my question is about your viola years in china relationship from an eighty one do you your speech she her mission twice about china i

said an ag industry leader i'd like to hear reveal the background is i'm a chinese language instructor and nastier well for chinese language here on campus and this spring it was first time when offer a trap it gets into china of course our prize the house and that a dedication to china this summer and we're working with chinese universities so i think you can achieve years china has been at helping marianne much attention the word is so i want to hear your point view we could talk a long time about china and energy and us and i believe it is a good relationship and my wife karen and i were in china as recently as july and we were amazed over the last ten years since we used to live in hong kong how much china's economically has advanced and grown and prospered and of course that is on the back of a greater use of energy and where there used to be very very many bicycles in many chinese cities now there are very few bicycles in very many cars and so the lifestyle has changed dramatically

all of which requires more energy much as the energy of fuel that the energy of production of automobiles and we believe that there is great opportunity for the two nations to work together on energy solutions i mentioned coal gasification shell is currently gas to find more than fourteen license agreements in china's electrical generation plants bringing the technology i describe to china for clean coal conversion of electricity to electricity we're also working with china government and various provinces on various and sundry projects to develop the petrochemical industry in the south of china for example l n g in one show or perhaps one day in shanghai or in delhi and we would be visited recently beijing galyen and shanghai and we're because we were going working with petro china china national oversees oil company and other chinese petrochemical industries to try to develop the economy in

ways that use energy efficiency also working with universities in china one hydrogen research and other kinds of fuel research to try to bring together what the two countries can use together because quite frankly ladies and gentleman as goes china as goes the united states in terms of energy usage in the world so goes the world so let's work together on that thank you very much your little bit younger than me so he may not be able to actually this question i work for mobile on petroleum marketing in the late sixties in the makeup to the mid seventies and in the scene that was in central kansas and this was a very competitive state because of the independent oil producers like steel aol in others and i don't remember because a long time ago but my question of you is not always wondered after i left that the oil industry change in the way of his approach to marketing his approach to probably on refining and most every other capacities

how did that since you brought up the subject of antitrust violations and i do know some people also went to jail and the oil industry for price manipulation how did the oil industry and the country decide which states the talk of a video mobile oil left missouri in kansas and some other states philip state in kansas and that happened throughout the rest of the country and i'm not implying anything wrong ideas avoid war learn how the country was divided up and with that it was welcoming decide together what's that thank you i i i must confess that i'm not a historian of the oil industry and i've been with the industry just ten years i know that as we look at market so shell we look at all fifty states as potential markets and try and determine which markets

offer the best opportunity for our branded products to be so now we have adopted a business model and shell in which if we're going to be present in a retail market ninety percent of our market will be desegregated the wholesalers in other words we on the property we don't own the station we don't own the pumps we don't own the distribution channel in most cases we own the brand and so people choose to use our brand and bring our branded product to customers but to use our brand requires certain standards of health safety and environmental responsibility certain standards of business principles certain standards of cleanliness and and and an appearance of the station and so forth but it's an independent business person who is choosing to use the shell brand rather than shell saying we will put a station there or we will put a station there because of our deep concern for anti trust we find that a desegregated business model in which many hundreds or

thousands of business people and local communities choose us and to bring our products to that local market is a far better way both for economic development of local markets it's also a way of not having the issue of anti trust to face because we're not a decision maker in terms of which station goes where what prices set where it simply being done by our wholesale community as independent business dealers using michele brand with respect your question in the past i'm sorry i don't have an answer well that's it so think of your work for you just heard a lecture given by john hofmeister president of self oil company recorded september eighth two thousand six at mccain auditorium at kansas state university the recording engineer was larry jackson of the kansas state radio network i'm kate mcintyre at our present is a production of kansas public radio at the university of kansas

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