Shell Exec. Faces Heat in California

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Shell Exec. Faces Heat in California

MARTINEZ, Calif. -- Orange rinds, wood chips and switchgrass may become essential ingredients for fuel made by Shell in 10 to 20 years, in an effort to beef up supply and possibly lower prices, company president John Hofmeister told the World Affairs Council here last week, as part of his 46th stop on Shell’s 50-City Tour, the Contra Costa Times reported.

"Shell as a company has bet its biofuel future on future-generation biofuels. We are investing in cellulosic biofuel," Hofmeister said during his visit.

Shell is in a partnership with Montreal-based Iogen Corp., which may build a plant in Iowa to research the possibilities of future generation biofuels, the report stated. It's "possible that in 10 to 20 years there will be large quantities of ethanol from Shell for the market," he said, adding that it isn't certain this will happen at lower prices, the report stated.

Hofmeister also faced questions about the price of gas in the state. "The California market is robust. It's a strain to fully supply this market because there are potential unplanned outages of the supply of unsure duration. Refineries are running flat out, so if there's an outage, it makes an impact," he told attendees.

In response to a comment about market manipulation causing higher gas prices, Hofmeister said, "In terms of specification of manufactured product, there is not sufficient supply to rebuild inventory levels, even though that's our objective. There's not enough production capacity to put gas in tanks and let it sit there."

In addition, the state has a higher gas tax and stricter emissions standards, resulting in higher costs to produce California gasoline, and additional difficulties to bring in outside supply, the report stated.