Shell Chief Responds to New Energy Bill

DES MOINES, Iowa -- The new federal energy bill may be a big step in the right direction for global warming, but it won't ease the current supply worries that have led to high gas prices, Shell Oil chief John Hofmeister told Iowans recently.

"Nobody seems to focus on the short-term," Hofmeister told The Gazette in a telephone interview during a visit last week to Des Moines, where he met with state energy officials and addressed a local Rotary gathering.

In terms of understanding the need to address short-term supply worries, Hofmeister said America's leaders have lagged. "The teachable moment was in 2005, and so far, the teachable moment has been missed by our public leadership," he noted. "The hurricane devestation in 2005 taught our citizens how vulnerable we are, and yet in the 2007 legislation, not a single law or paragraph was in the act to deal with short-term oil and gas requirements in the country."

Hofmeister's recent visit to Iowa came during the height of presidential caucus politicking. He recommended opening outer continental shelf areas within U.S. territorial limits to oil exploration and drilling, the newspaper reported. "We're only allowed access to 15 percent of the outer continental shelf and we're denied access to 85 percent of the outer continental shelf," he said, adding that the Pacific coast and mid-Atlantic coast are off-limits to drilling, as is the eastern Gulf of Mexico.

Under the new Energy Bill, Shell and other big oil companies were able to keep $13.5 billion in tax breaks that were targeted for elimination by House and Senate Democrats who wanted to redirect that money to spur renewable energy programs. Yet, the bill included provisions strongly opposed by the U.S. auto industry to raise car and truck mileage by 40 percent, and require that ethanol use increase six-fold by 2022.

Hofmeister said the bill's ethanol requirement contained one surprise for the petroleum industry -- a much more aggressive requirement for ethanol use by 2008 than had been expected. "It's going to be a real stretch to figure out how to do that," Hofmeister told The Gazette. "Nevertheless, we will try hard to figure it out."

Transporting ethanol is one of the biggest problems, he said. Using truck and rail are inefficient, so Shell is researching how best to use pipelines to move ethanol.

Shell's investment in research to produce biodiesel from algae was highlighted in Hofmeister's Des Moines speech. In a project being developed with HR Biopetroleum on the Hawaiian island of Kona, Hofmeister said the algae consumes more carbon dioxide than is created during the production process, helping to reduce climate change.

He also said he believes educating school children and other Americans about where energy comes from is key to creating a better long-term energy vision for the country.

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