This action might not be possible to undo. Are you sure you want to continue?
WITH JOHN FELMY, CHIEF ECONOMIST, AMERICAN PETROLEUM INSTITUE
WEDNESDAY, MARCH 7, 2007
Transcript by: Federal News Service Washington, D.C.
Following is the transcript of the teleconference, It was moderated by Monte Lutz of Edelman Public Relations, who introduced Felmy. JOHN FELMY: Great. Well, thank you very much. And I appreciate very much the opportunity. What we are doing right now is – I guess the best way to characterize it is telling our story for the industry. We learned from a year-and-a-half ago from the Hurricanes Katrina and Rita that we were stunned by some of the things that happened afterwards. Of course, the industry took a huge body blow in terms of our facilities, our people losing their homes, offshore production shut down, a quarter of the U.S. refineries shut down, major pipelines, barge traffic – virtually everything. At the same time, you had demand spiking leading into the Labor Day weekend. We work very hard as an industry to restore production, to bring in imports to fill the gap, to try to meet the needs of consumers, but markets worked. We had prices increased to allocate scarce supplies, and we felt like the system was recovered fairly significantly, fairly quickly. We thought we were doing a good job. But the bottom line was that we were excoriated by everybody you can imagine. We were attacked by politicians. Our executives were dragged onto Capitol Hill. The industry really took a beating in many different ways that stunned us. And we, in the process of feeling this blow, we talked with folks, and we got the message back that you’re not telling your story. And so what I have been doing, along with API, is telling our story primarily, for example, to editorial boards around the country, to media folks, to anyone who will listen to an economist to basically say, these are the facts in the industry; you decide then at that point what is going on, but let’s at least talk from the facts. And so what I would like to do is just quickly go through that PowerPoint presentation. And I’m not going to go through page by page, but I’m just going to talk about a couple of high points of it that are points I would like to make in three areas: First of all, what is happening with pricing right now, and to an extent what has happened in the past? Going forward, what are we seeing in terms of potential legislation and policy discussions that are happening in that regard? It could also include discussions about not just energy but climate change issues. And finally, a plea to let’s not repeat the mistakes of the past. And that is what we are unfortunately starting to see in terms of at least some preliminary legislation that was out. Now, if you want to, first of all, look at where prices are right now – that is starting to get into the press – we have seen gasoline prices in the most recent period go up by roughly 35, 36 cents a gallon when you convert from $50 a barrel to over $60 a barrel with crude because there is 42 gallons in a barrel. And so, when you see the gasoline at 35, we are seeing crude prices go up by 27 or 28 cents a gallon, we have seen
ethanol prices that, if you’re blending at 10 percent, have gone up another 4.5 cents because ethanol has gone up 45 cents a gallon. We have also seen demand surge. The latest data today showed the demand was up roughly 5 percent, which is very high compared to last year when it was up .8 percent. And so we’re seeing, primarily I guess because of spring breaks and other types of travel going on, demand for gasoline recovering. And it’s occurring at the same time that we’re going through the turnaround periods for the refineries where we have refinery utilization down because of the required maintenance and investments you have to make, but it’s not significantly down. We are seeing imports down a little bit, but not significantly, and stocks are down a little bit, although today we did see a lower gasoline number than what most of the market was expecting. So it’s a combination of those cost factors which are close to 32 of the 35 or 36 cents a gallon per gasoline, and the function of the market in terms of what else is going on. So that is gasoline. Now, let me turn to what then goes into gasoline by itself. There is a chart in the PowerPoint that shows the dollar bill of gasoline and where it goes. And of course I use this because most Americans do not know what goes into gasoline. They know the price of gasoline within the penny, but they don’t know that 56 percent is crude oil, another 18 percent is taxes, and then refining and retailing are 17 and 9, and when – if you take the earnings and add them up total, you see that we make somewhere in the mid-9 cents on a dollar. And so we like to point that out because when you ask consumers what they think actually goes gasoline, something like 50 percent of consumers think that 30 percent of that dollar is profit; another third think it’s 50-percent profit, and there is some that think it’s 80-percent, and that includes my father-in-law in Albany, New York, who continually accuses me of that. And so when you look at the profitability of the industry, we’re basically a little bit like with woebegone children. As compared to manufacturing industry, we are above average. We made 9.9 cents on a dollar in the third quarter versus the average for all manufacturing of 8.5. And when you take out the car companies, which have had obviously a very big challenge and are losing money, and you just take the average of manufacturing industry that makes money, they made 10.5 cents on a dollar, and that is more than what we made as an industry. So one of the things that we’re seeing going forward in terms of policy is repeated attacks on the industry as having excessive profits, and they want to take away these profits and spend it on alternatives. You are seeing of course politicians talk about that. You’re seeing a House bill that was passed, that basically took $14 billion from the industry and decided to set up alternatives.
We’re very concerned about this because it sounds all too much like what we experienced in the early ’80s when we had windfall profits taxes that drained $79 billion from the industry, poured it down the drain on alternatives they were trying to develop, and largely accomplished nothing. And we would make a plea that, let’s not repeat the mistakes of the past. In addition, there is no way you can make an argument that raising costs on the industry helps consumers of petroleum products. You can say a lot of things, but you can’t say that. We also would like to point out that the industry is being attacked, demonized in a lot of ways, and so on, as though the folks who are attacking us think that our companies are owned by space aliens, when in fact, they are owned by millions of Americans who have put their hard-earned savings into retirement accounts that are invested in the equities of these companies. Fully 41 percent of the equities of the major oil companies are owned by retirement plans alone. So when you hear somebody say, I’m going to take that money from that company, you know, they are taking money from Joe and Martha, retirees who have saved for secure retirement. And many of those same politicians are saying that they want to take money from the oil industry are also ones who have not helped solve the Social Security problem. So we find that fundamentally unfortunate, and really an attack on hardworking Americans, and can’t be justified. Now, going forward, a lot is talked about where we should spend our money as an industry, that you’re not spending it the proper ways. We would like to object to that as just not being factual for a couple of points. First of all, if you look at where America gets its energy, 40 percent comes from oil; 23 percent, gas; 23 percent, coal; 8 percent, nuclear; and the rest is what they call renewables of which half of that is hydroelectric power. Another 2 percent of that 6 percent is wood waste, biomass, and then you have about 1 percent, roughly on the order, is renewables. And if you look at EIA’s forecast going forward, that is unlikely to change much even with the 31-percent growth in energy demand out to 2030. So where should we invest our money? Well, first of all, we have got to keep cars running, we have got to keep our natural gas flowing to consumers to heat homes. So we have to invest a lot of our money that we get to keep those energy sources going forward. If you don’t invest in oil and production and natural gas, ultimately you have reserve declines and consumers will suffer. So the first priority we have is we need to meet the needs of what people want. But we also believe that you need to invest in energy efficiency. And if you look at how the economy is growing, we are seeing continued improvement in energy efficiency. If you look out to 2030, you’ll see a 34-percent increase in energy efficiency for that dollar of GDP that is produced. And that is important, but you still need more
energy. And our companies are involved in investing in that energy source in terms of things we do. If you look at where we invest in alternatives, we are also investing in things like frontier hydrocarbons, we are investing in end-use technology and efficiency improvements, and we’re investing in non-hydrocarbons. We are investing in, like, wind, solar, geothermal because their companies know how to drill, L&G, gas to liquids; we’re working with car companies. So we are doing a lot in terms of investing in those technologies. And our industry is the largest investor. Of $135 billion invested in emerging energy, we’re investing 73 percent or almost $100 billion. So the answer to the folks who are saying we are going to take your money and we’re going to invest in alternatives is we are already doing that, and we’re doing a prudent amount based on what we think is appropriate for the future needs of the consuming public, and also what our shareholders need in terms of they are the owners of our company. So this notion that somehow we just aren’t doing what is appropriate is we object. We would like to invest more in the United States, for example, in terms of exploring for oil and gas, but they are off limits. And you have got some charts in the handout that show what is off limits. And finally, we’re investing in refinery production, we’re investing in expanding existing refineries, and we think we are doing what is prudent. And I’ll close by saying the one thing that we hope going forward is that let’s not repeat the mistakes of the past. We have heard discussions about taking money from the industry, about spending in alternatives that have been tried in the past. We have also heard discussions about price gouging legislation that we are very concerned about, which could be worse than price controls we experienced from the 1970s. So we would hope that as the Congress deliberates and go forward that the states look at this issue. They really take a careful look at these things. And so with that, I will stop and answer any questions you have. MR. LUTZ: Great. Thanks, John. We’re now going to just use the rest of the time for your questions. So we have a handful of people on, so you should have plenty of opportunity to ask your questions. So just be clear and concise with them and state your name and we’ll get through them all. Any questions there? Q: Yeah, this is Kevin Holtsberry from Red State. What is the sense that industry’s perspective of climate change and these kind of issues – it seems like an awful lot of – there is some shifting going on where industry is going to be willing to compromise down in the hopes of getting something better than what might be coming down the pike. Do you have a sense of how much of a compromise is going to made and how that is going to impact the industry going forward?
MR. FELMY: Well, our position on climate change is pretty much what it has been for a while, and that is, we take it as a serious issue; we think that it’s something that needs to be continually evaluated. We need to continue, as I mentioned briefly to improve energy efficiency, to improve technology because this is long-run potential problem and it will probably take long-run solutions. We as an industry are committed to doing those improvements for our facilities. Our refining industry is committed to improving our energy efficiency by 10 percent over 10 years. We’re also committed to first of all measuring emissions. We’re the first industry to do that, to have a comprehensive compendium that looks at all of our emissions from our facilities, and we have been doing that for about eight years now. So we have been looking at the issue, we have been trying to understand what the requirements are. We remain committed to voluntary actions that improve the efficiency of the economy to reduce emissions. But we are opposed to actions that may cause economic harm without improving emissions. If you think about it, there are many proposals that are out there that basically require for mandatory reductions, which, as long as the United States just does it by itself, largely the impact could be one of exporting jobs because if you make it too high a cost of operation in here, you could just simply see economic damage activity moved to China and possibly emissions get worse. And so we have been pretty constant in our viewpoint on this. We think it’s important. We also want of course a seat at the table in terms of discussions because we think that we have an important contribution to the overall discussion. Q: This is Geoff Styles from Energy Outlook. MR. FELMY: Yes, sir. Q: Could I follow up on that? MR. FELMY: Sure. Q: I mean, if you read the tea leaves, I think most people would say that there is probably a 50 – at least a 50-percent chance of some sort of mandatory cap or other mechanism for limiting greenhouse gas emission in the U.S. within the next three years, if not before the 2008 election then at some point after. I mean, given that API and most of its membership is opposed to doing that, how do you guarantee that you have a seat at the table as the implementing rules for a cap-and-trade system, for example, are actually formulated. What is the risk that this happens and you guys are basically just left out of it? MR. FELMY: Well, the way we do it is we continually have discussions with the important policymakers who are talking about these issues. A cap-and-trade system is not costless. A cap-and-trade system is in many cases more efficient but it is not costless.
And so it will cost economic activity, it will cost jobs, and ultimately it may not result in any reduced emissions. And so that is an important point that seems to have been lost in the discussion. People tend to just go back and talk about the cap-and-trade system for sulfur dioxide and seem to think that it was the cap-and-trade system that made it relatively costless. Well, it didn’t. If you look back historically over what happened with the sulfur-dioxide program, the main reason why you saw relatively low costs was very cheap powder-river basin coal cheap freight rates to get it there. So what we are trying to do is lay out the facts and in terms of what actually can happen when you have a mandatory reduction in emissions. And we feel that that really has not been discussed at this point. Q: Thank you. Q: Hi. Robert Rapier, R-Squared Energy Blog. I have got a question about profits. I beat the drum quite a bit that the profit on sales is relatively low. Like you said, it’s below 10 percent, and that often – well, most of the time, the government’s take is more than that. So they are being a bit hypocritical when they say that our profits are so high when they are actually taking more out of the dollar than we are getting. But how do you answer those who point to the return on capital employed and say that shows that you are actually more profitable in what you’re saying because your return on capital employed is 20, 30 percent. MR. FELMY: Well, first of all, if you look at the data on return on capital, for example, for the FRS companies, you find that in 2005, for example, you had overall SNP industrials that are return on investment of about 21 percent versus the oil-and-gas production of 22.5 in refining of 23.5. So around the total – and then if you look back over 10-year periods, you see similar types of returns. So, first of all, one has to be a little cautious. But second, the return on in capital employed is very much a function of the fact that you happen to be a cyclical industry, you happen to be prudent with your investments, you happen to be cautious in terms of where you put your money. So even if oil is at $60, you don’t willy-nilly going out and throwing money at the problem and don’t get a fair return to your shareholders. And finally in terms of the return, it is a return to shareholders, and that is what we are committed as an industry; our executives are committed to getting that kind of a return. So one has got to look at it. And if you look down to return on capital to other industry, you’ll find some that are much, much higher than ours.
Q: That is actually the way I tend to answer that question, but I just wondered if you had a better answer because I’ve pointed out that you’re not comparing apples to apples, if you point out, our return on capital employed, and what’s Microsoft’s? Microsoft doesn’t have to employ any capital – very little, so their ROCE would be in the stratosphere, I would imagine. MR. FELMY: Well, that’s right, and also in that vein, we have been criticized, for example, that, you know, you’re not investing in R&D enough as an industry, and then compare our investments compared to, say, like pharmaceuticals. And it’s also there’s a case where you’re not talking apples to apples because, you know, the R&D industry investments – for example for pharmaceuticals – are creating new drugs. We’re improving processes, so you can’t have the same comparison in that way too. So I agree with you that one has to be – really line them up to have a fair comparison. Q: John, this is Jerry Taylor at the Cato Institute. Last year, economist James Glassman from JP Morgan told the Wall Street Journal that he thought the ethanol mandate was wrapped into the 2005 Energy Policy Act that increased gasoline prices by up to 60 cents a gallon by the early summer. I’m curious if you think that estimate seems reasonable, since that was sort of his impression; I don’t think he had any model to calculate it. And secondly, what do you think the increased prices due to that mandate will look like this summer? MR. FELMY: Well, if you look back at what happened with ethanol prices over that period where you had from the beginning of the year up through the middle of the year, as memory serves me, you saw ethanol prices go from roughly around $2 a gallon up to 4.50 a gallon. So if you were blending, for example, gasoline at 10 percent, you’re talking about 25-cent increase in, you know, the cost of blending that gasoline. In terms of availability, in terms of other things that went in, you of course had crude prices reach $79 a barrel – went up sharply. You saw, you know, those combinations. You saw lingering refinery damage from the hurricanes, and basically continued demand for the increase. We saw an example also switching to ARBOB (sp), which is a different blend of base gasoline than what you blend MTBE with. It’s a higher cost. You know, some argue how much it is, but there’s no question that it’s a higher cost of blending. And finally, the whole facilities cost that you had in terms of what investments you had to put in place to be able to actually blend ethanol was another challenge that we went through. In terms of the future, I mean, right now we’ve seen ethanol prices already, as I mentioned, up 45 cents a gallon, so if you were blending at 10 percent, that would be four to five cents. The future is going to be very much a function of what happens with ethanol prices, what happens with crude oil prices, and how well we keep the refineries going.
DOE of course, I’m sure you just saw their forecast, that I believe was an increase in price up to a peak of 2.67. We don’t forecast prices here because of antitrust, but they just released that yesterday. So it would be very difficult to quantify it in the same terms as you just mentioned. Other questions? MR. LUTZ: We have one question that I’ll read right now because it’s related to ethanol that came in from a blogger, Danny Norman of Free Thinking Americans blog that was not able to join us but wanted to see if we could ask this question. So for everybody’s benefit: “With ethanol, there has been the talk of increases in food prices. My question is, would that benefit the U.S. economy with the amount of produce that is exported from the U.S.?” MR. FELMY: Well, in terms of exports – I mean, the first thing you’ve got to look at, if you increase requirements for ethanol, that could result in reduced corn exports as the primary reduction, and of course that’s income that we earn, you know, from exports. But the big impacts of course are potentially on corn prices that go into feed, for example, for beef, pork, poultry, milk, where direct feed is 54 percent of corn use. Right now ethanol use is about 20 percent of the total corn crop. We’ve got high-fructose corn syrup, which goes into soft drinks, baking, things like that, which has increased in cost. So there is no free lunch, as an economist would love to say, and so as we’ve seen the demand for corn driven by ethanol demand go up, we’ve seen this as a cost. It could result in reduced export earnings, either from corn itself directly or from products manufactured from corn. MR. LUTZ: Any additional questions? Q: Yeah, this is Robert Rapier again, and I better mention the Oil Drum or those guys will get mad at me because I write for them too. But what is your policy on gas taxes – too high, too low? MR. FELMY: Well, in terms of the excise taxes that we have, we’re largely a – you know, we’re a collector of that gasoline tax. It’s a tax here in the U.S. that’s used primarily for highway and road – highway and bridge construction. It’s been in place since the ‘30s in terms of its use. That contrasts sharply from European uses where they have an additional $3 or $4 a gallon in taxes that are put in place, using those taxes for a broad range of programs in the federal government. You know, that’s a – the amount of taxes are really the politicians’ decisions in terms of how much they want to impose taxes on consumers, on the industry, and what they’re going to use them for. We have heard in the past recommendations to dramatically increase gasoline taxes for a variety of reasons. They have all fell by the wayside. I think it’s not inaccurate to say that there are many presidential candidates that
have fallen by the wayside because of proposals for dramatically higher taxes on gasoline. Now, I will add one other quick thing, though, about taxes on gasoline here. We have just seen a couple of states try to enact gross receipts taxes or other kinds of taxes on the oil industry that we think are fundamentally of grave concern to our industry. They are trying to of course tax our industry and then prevent those taxes from being passed on to consumers. Of course, that’s, first of all, a legal question that we don’t have an answer for right now, but even if it were, we find it unfortunate that any state would try to tax, say in Wisconsin, gasoline, and then if they are successful at not passing it alone, it would ultimately mean potentially taking away money from the state and local employees who have invested in funds that are invested in oil companies. So, for example, in Wisconsin there are 400,000 people that are part of state and local funds that are invested in oil companies. They could be hurt by these proposals, and in Pennsylvania there’s 560,000 people out of a population of 12 million that have the same situation. So some people are trying to get creative with new taxation and we would caution them to look at the potential unintended consequences of those taxes before you proceed. Q: This is Geoff Styles again. Earlier I think you alluded to some DOE forecasts about the relatively unchanging energy mix over the next 20, 25 years, and I spend a lot of my time on my blog advising my readers that that’s probably the likely scenario, for a lot of reasons. But what if it turns out that that’s wrong, for a variety of reasons? What if the supply isn’t there? What if alternative energy comes on much faster than people expect? Do you believe that the industry is appropriately positioned in case those forecasts, the status quo forecasts, are wrong? MR. FELMY: I think we are because, as our slides demonstrate, for example, on emerging energy that we’re looking at other energy sources. Our companies are energy companies, and so, for example, Shell is an investor in Iogen, a leader in cellulosic technology. Now, cellulosic technology is in a sense, I like to say, potentially a holy grail because if you can convert waste into fuel, that would be a tremendous opportunity, but the technology is not there. We don’t know when it will become commercial. There are no commercial-scale plants that have been built. OPERATOR: Mary Katharine Ham has joined the conference. MR. FELMY: Welcome. So in terms of technology, I think we are looking at a whole range of potential technologies. We’re looking at methane hydrates, for example, which could be a dramatic new source of natural gas for the economy. We’re looking at oil sands, oil shale. We’re looking at improved energy efficiency in L&G. Also, of course, we’d like to look for more oil in this country. You know, we feel that the resource base here is quite large, according to USGS. For example, I noted last week that the potential resources are over 100 billion barrels. I was subsequently attacked by the blog Daily
Coast for misinterpreting or mischaracterizing the terminology. In fact, I was precisely correct and they were not. There are over 100 billion barrels of oil resources that have yet to be found, according to government agencies, but we really won’t know until we’re allowed to explore for them and so much of our country is off limits, whether it be the East Coast, the West Coast, the Eastern Gulf, Alaska and so on. So we’re looking at a balance – we’re going to need all forms of energy. We’re going to need conventional energy, we’re going to need renewable energy, we’re going to need energy efficiency, and that’s what our companies are looking at and from a broad sense. MR. LUTZ: Mary Katharine, you were just able to join us. Thank you for joining us here. MARY KATHARINE HAM: Yeah, sorry I got here late. MR. LUTZ: Not a problem at all. Do you have any questions? MS. HAM: Hold on. Give me a second. Who else is on the call? Sorry. MR. LUTZ: Okay, great. Sorry. Yes, we do have Rob Louie (sp) from Red State. MS. HAM: Oh, sweet. MR. LUTZ: We have Kevin Holtsberry. We have Robert Rapier, Geoffrey Styles, and Jerry Taylor. MS. HAM: All right. Did anybody ask you to comment on Al Gore’s energy consumption? (Laughter.) MR. LUTZ: No, I think you just asked your first question. MS. HAM: Sweet. I’d love to hear about that. MR. FELMY: Well, you know, every – we feel in this country that people have a right to what their comfortable lifestyles for their families, for their children are. But, you know, as for example I’ll look at myself in terms of how I do my energy use. At home I have a geothermal heat pump, which I installed because it’s got a 50-percent improvement in energy efficiency. I’ve got on-demand water heaters. I’ve got lights that are compact fluorescents and I put them in everywhere that my wife will let me. And so we’re all sensitive to wanting to try to do the right thing, and I’ll leave it at that. Q: You mentioned the geothermal heat pump that increases your energy efficiency. Do you think, as a guy with an economic background, that those kind of free
market sort of cost efficient things are the way to go about environmentalism as opposed to government enforcement? Any thoughts on that? MR. FELMY: Well, I really do believe that the free market will tend to properly allocate resources in the best possible way. In terms of the geothermal heat pumps, there’s a case where there probably is more of a role for government in terms of education, in terms of getting the industry to have more technicians who know how to work with them, and a variety of things of an informational type role because while – you know, I think that this system works very good. There are a limited number of technicians who can work on it. And there’s a limited amount of information on it. So I think there is a role, but one has to be cautious about moving toward mandates of the type that sometimes haven’t worked. Q: Okay. MR. LUTZ: Continuing on, any additional questions? Q: This is Kevin Holtsberry again. Circling back to alternative energies, do you have a sense – it doesn’t get a lot of play in the media, but what do you think of technology in terms of coal to liquid fuels and that kind of a – not really seen as green, but unique ways to use the coal we have in this country to produce fuel and not just electricity. Do you think that’s a promising avenue, or some – or not so sure at this point? MR. FELMY: Well, coal to liquids is actually a technology that has been fully demonstrated. It has been used in World War II. It was used by South Africa for developing oil for their needs from their coal base. It is actually, I think, going to play an important role in terms of the future production of liquids for transportation fuels. The Department of Energy I believe has a forecast that they will have up to 700,000 barrels a day of coal to liquids produced. It’s a technology that is far more advanced in a commercial sense than cellulosic ethanol. And so I think it can play an important role. You know, if you get back to the president’s proposal on alternatives, on first of all having 35 billion gallons of alternative fuels, whether it be renewables or coal to liquids, so on, one has to dissect it carefully in terms of – most forecasts out there indicate that the biggest amount of ethanol you can get from corn is about 15 billion gallons, without severe disruption of the food supply, and that’s by a variety of analysts. And so the next 20 billion gallons has to come from a relatively new technology, whether it be cellulosic technology or a role for coal to liquids. And so that 20 billion is an enormous challenge that can we make the investments either for, you know, a technology that exists like coal to liquids, or for a new technology that has not been commercialized, in the case of cellulosic technology. So those are some very big questions that we still have about achieving that kind of a target.
Q: Related to that, though – here’s an abstract question – how does the industry try to overcome the sort of negative branding that they have? You know, people see ethanol and other things as green and good and healthy and coal and oil as dirty and bad for people. How do you overcome technology that is getting cleaner and cleaner but still seen as dangerous and unhealthy? MR. FELMY: Well, the way we do it is we prove concrete examples. For example, our ultra low sulfur diesel that we introduced this year that went from 500 parts per million to 15 parts per million. We’ve also introduced gasoline that is very low in sulfur – 30 parts per million versus 300. We continue to take sulfur out of other types of diesel fuel, for example off-road diesel. We’ve got a new program this year that lowers the sulfur contents of off-road vehicles. And then you’ve got a host of other potential changes that will come online. So the main thing we point is, look how much cleaner gasoline is burning right now. With the ultra low sulfur diesel, once you have new vehicles that can use it, it will be a dramatically lower amount of emissions, with improved efficiency. And so, at the same time, we’re talking about how we’re reducing our emissions as an industry. We’ve spent $50 billion in the refining industry over the last 10 years in terms of environmental expenditures to reduce emissions or improve fuels. So we’re working very hard. But it is a fact that you need these fuels to maintain the needs of consumers and we’re trying to meet both objectives. Q: Do you have links on the low sulfur diesel – a place I can find that? MR. FELMY: Yeah, there is a website called Clean-diesel.org. And I think it’s Clean-dash-diesel.org that is a effort of a whole bunch of folks involved – the oil industry, the refining industry, the users of the product. And so there’s a lot of good information on what’s happened with that program as it just came into effect in October of last year. Q: All right, thank you. MR. FELMY: You can also try our website, of course. That has links to that and other information on the program. Q: This is Geoff Styles again. I’d like to tie together a couple of things you said earlier. One was related to the resources within the U.S. that are currently off limits. And then the other relative to technologies like coal to liquids and oil sands and things like that – the missing link there I think relates to the externalities involved with those different energy sources. Do you see the energy industry ever getting to a point where it would be willing to push for access to the resources that are off limits on the basis that those resources, whether it’s conventional oil that’s offshore and off limits, or natural gas in places that we’d rather not drill, that the environmental impacts of those are actually
significantly lower than the impact from coal to liquids, oil sands, et cetera, et cetera, et cetera? MR. FELMY: Well, I don’t see us every getting involved in a discussion of a battle of fuels because we think that that’s unfortunate because going forward we think we’re probably going to need all different types of fuels. We’re going to need all of these that we’ve talked about. We’re going to need energy efficiency and conservation, we’re going to need continued development of the infrastructure, and so what we prefer to look at this way is to say, you know, look, we think we’ve demonstrated that we can explore for oil and gas in an environmentally sound way. If you look at what we went through in the hurricanes and what minimal amount of effect we had from two back-to-back once-in-a-century storms. We had no well spills. We had – you know, thousands of platforms had to be evacuated. We had damage from platforms, we had destruction of platforms, but yet a minima amount of impact in terms of the environment. We think we’ve demonstrated that we can do that. I think if you look at the footprint that we use as a industry in terms of exploring for oil and gas, it has dramatically been reduced. And so we think that on its own merits that these programs, whether it be exploring in Alaska or the Outer Continental Shelf, should go forward without any other comment. Q: Thank you.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.