Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com. And its guest time and my guest this morning is John Hofmeister, former President of Shell Oil Company and now Founder and CEO of Citizens for Affordable Energy. John, welcome back to the BusinessMakers Show.

John: Thank you, Russ. Nice to be here.

Russ: You bet. Well, let's start by you telling us about Citizens for Affordable Energy.

John: If I learned one thing as the head of Shell, during my years of rising prices and failure to address the nation's energy policy as a nation, I learned that grassroots Americans need somebody looking out for them. So I'm trying to take the energy knowledge that I have with the corporate experience that I have, the government relations engagement experience that I've had, and I want to be the voice of grassroots Americans when it comes to what is the future of energy in these United States. Energy is a broad term. It's not just about gas prices, it's about the future of electricity, the future of our environment, the future of sources of all kinds of energy and so I founded a grassroots organization called Citizens for Affordable Energy.

Our purpose is to educate people where they live so that everyone in this country has a good understanding of what's at stake when it comes to our energy and environmental future. We predicate what we're doing on four principles. These are our so-called four mores. The first of the four mores is as a nation, we need more energy from all sources – whether it's hydrocarbons, nuclear, renewable like wind and solar and biofuels – we need more energy from all sources. We can't rule out any source at this stage because of the demands of our economy for affordable energy.

Secondly, we need more technology to drive efficiency in the use of energy. We waste a lot of energy today because of our old technology that we still employ, such as the internal combustion engine. To me, it's time as a nation, we should look beyond the internal combustion engine, which is 100 years old – only 20 percent efficient – and we ought to find new sources of power for vehicles like batteries or like hydrogen fuel cells, which puts internal combustion engines in the auto museum of history.

Russ: Okay.

John: Thirdly, we need to protect our environment and manage gaseous waste the way we manage physical waste and liquid waste. If we were not able to manage our physical waste, we as a society would be suffocated by now – we'd be drowning in it. If we didn't manage our liquid waste, we wouldn't be able to drink water because it would be poisoned by our liquid wastes that we now manage but we otherwise would put right into our water systems.

Russ: Okay.

John: So I think if we learned how to manage physical waste; we've learned how to manage liquid waste; I think it's time that as a society, we manage gaseous waste. I don't really get into the discussion of climate change or global warming because I don't know. I'm not a climatologist or a scientist of the climate but I do know that we're putting nasty, dirty, gaseous waste into the atmosphere that we create. I think we ought to deal with that.

John: Fourth is we have to build infrastructure to move energy from where it's produced to where it's consumed. If we don't build more transition lines, liquefied re-gasification terminals, more nuclear plants, more clean coal, more clean coal with carbon sequestration – all of this infrastructure to assure our future energy supplies – we're hurting ourselves. So affordability for citizens is premised on knowing what people need to know. We're simple, we're basic, we're web-enabled Citizens for Affordable Energy.org is our website and I'm convinced that if we practice these fore mores, we'll be successful and if hundreds of millions of American citizens recognize these four mores, they'll take care of public policy because they'll say to their elected officials, get with the program 'cause right now, we're not with a very good program at all.

In fact, I go on to say if we stay on our current course, within ten years, we won't have enough energy. We'll be standing in gas lines; we'll be rationing gasoline; we will have brownouts, blackouts like we've never seen in this country because the system is unable to keep up with what the demand of the future looks like on the course that we're on.

Russ: John, your mission is so refreshing, my goodness. There just seems to be an abundance of misinformation out there and it seems like even this misinformation is being championed by people that ought to be paying more attention. I love your four mores.

John: Well there's a problem in this country with political partisanship in which we divide everything into right-wing movements or left-wing movements and the middle of America, the big centrist bell curve of America, is missed by the right wing and left wing. So my message is neither right wing nor left wing. In fact, I've written a book. It's called Why We Hate the Oil Companies. It'll be published in the spring of 2010 and in the book; I say if we leave energy to the right wing, we'll destroy the earth. I also say if we leave energy to the left wing, we'll destroy society because neither extreme has a set of solutions that will work and what is politically correct is pragmatically impossible. And so political correctness is not gonna solve the day. The drill-baby-drill crowd are just as weird in what they're demanding as the no-more-coal-in-ten-year crowd and that's the right and the left extreme on this whole issue of energy.

So the only way we're gonna solve our energy future is to be pragmatic about it; to have a coherent, short-, medium- and long-term plan that people understand and gravitate toward and let's not be misled by either extreme on these issues.

Russ: My goodness. Do you get the ear of anybody in government and politics in Washington, DC?

John: Well, in my previous position as the President of Shell, I certainly walked the halls of Congress, spent time at the White House in the Executive Office Building and in different cabinet offices. Since I'm now the Founder and CEO of Citizens for Affordable Energy and we have a new administration, I'm still in Washington. I'm walking the halls of Congress. I'm visiting cabinet members who have been appointed by the new president. I've been in the White House to talk about these issues and I think that while we had the Bush administration on the one hand, we have the Obama administration on the other – I think there is selective listening to what I have to say.

Russ: Okay.

John: On both parts.

Russ: Okay.

John: In other words, the previous administration didn't like what I had to say about environmental protection.

Russ: Right.

John: The current administration struggles with what I have to say about the need for more hydrocarbons as part of all sources of energy.

Russ: Right.

John: Need to be in our supply system.

Russ: Right.

John: So, these are the political powers that be, I understand that but I think that as an energy expert, I owe them my honest opinion. I do protest loudly that I'm a pragmatist. I'm not particularly partial to either side, either political party. I care about what's good for America.

Russ: All right. We're talking with John Hofmeister, former President of Shell Oil Company and now Founder and CEO of Citizens for Affordable Energy and we'll be back with more with him after this. You're listening to the BusinessMakers Show, heard here and online at the BusinessMakers.com.

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Russ: This is the BusinessMakers Show, heard here and online at the BusinessMakers.com and continuing on with energy expert, John Hofmeister, former President of Shell Oil Company and now Founder and CEO of Citizens for Affordable Energy. Well, John, I love all the things you said in that first segment. I have to think that a lot of 'em are motivated strictly by the supply-slash-demand economics of energy, both today and the future. Can you talk about that a little bit?

John: Well, throughout my life, I've been very interested in and concerned about the business relationship to larger society and I believe that the principal of affordability of energy fits directly in line with the principal of social equality in our country. We cannot have energy haves and have-nots and continue to be a pluralistic country and society built on the principal of equal opportunity and the notion that we artificially make energy expensive by making it scarce because of manmade public policy is something I abhor. So, for example, there was absolutely no reason on this earth that this nation had to pay four dollars, plus for gasoline in 2008. It was all about harmful public policy, which prohibited the development of US domestic natural resources, such as oil and gas, when for 30 years, 85 percent of the outer continental shelf of this country was off limits for exploration and production of new oil and gas finds.

That's a manmade policy. I understand environmental sensitivities and I care deeply about how and what we drill, where we drill but the fact of the matter is, as Americans are complaining about high prices, our Congress is blasting away at the oil companies as though they are the problem. The problem is bad public policy and our Congress would not admit it. And so even the President at the time, President Bush, for seven and-a-half years of his administration, he had a presidential moratorium on exploring in areas that were off limits. It wasn't until seven and-a-half years into his term, and we're now into the 2008 election cycle, that he withdraws the presidential moratorium.

John: So we're paying too much for gasoline because of public policy. Electricity costs, skyrocketing, because we're not building new power plants. In the past five years, more than 100 coal-fired plants have been shelved. We haven't built a new nuclear plant in this country in almost 20 years and they only have a 30-year to 40-year lifespan. So we're about to have to shut down dozens, if not a hundred nuclear plants in the course of the next 10 to 20 years because we haven't built any new ones, unless we re-commission them, which is a very elaborate, long, drawn-out exercise. So we are causing electricity prices to rise by failing to invest in our infrastructure because of man-made reasons. This country has more energy than it can ever use. We're just not allowed to produce it.

On the demand side, I believe that the way you improve efficiency, which means conservation, is by changing some of the technologies that we're using. In the earlier portion, I talked about getting rid of the internal combustion engine. We could have building codes in this country that require much less use of energy. We could have codes for lighting, for appliances, that use much less electricity. HDTV is a good example of a popular product that people love because of the clarity of the screen. Most people don't know that HDTV uses twice as much electricity as the old TVs. Now there are ways to make it more energy efficient. I think there's good technology out there that could make HDTV possible and more energy efficient. So I think it's technology that will improve the demand side but it's nuts as a country to be prohibiting the development of natural resources and artificially raising the price of energy because what that drives you to are alternatives that are not commercial, that are taxpayer-subsidized and I have no objection to moving to alternatives but I think it should be for the right reasons, not by creating artificial inflation that drives us there. I think we can incentivize alternatives and move towards cleaner alternatives but only as part of a major systems change, not as a politically correct tactic to try to get votes.

Russ: Well, you mentioned politically correct tactic – back on the whole supply side, this public policy. That's totally politically driven, sensitive to the environment. You hear many politicians say that we have to break the addiction to fossil fuels. How do you keep the price low and not become just totally dependent and not looking for alternatives?

John: You have a holistic, coherent short-, medium- and long-range plan. If we have a mad rush to biofuels, or a mad rush to wind or solar, rather than a planful, coherent, thoughtful way forward, we're gonna throw money against the wall and hope some of it sticks. That is a very inefficient use of money. There are many biofuels experiments going on right now where the money will be simply wasted because the technology is flawed. But because somebody can get a government grant, they're gonna do it. Because there's so much government money available, they're gonna apply for it. Rather than looking at the science of everything and talking through what works and what doesn't work, a good example is corn ethanol. What a waste of taxpayer money to use food products to make fuel products so that society suffers from rising food prices so that we can taxpayer-subsidize fuel which only is commercial if the taxpayers pay 45 cents a gallon. What many people don't realize with corn ethanol is that if it wasn't for the 45 cents a gallon of taxpayer subsidy, nobody would produce it because it's not commercial.

Russ: Oh, and I understand even the carbon emissions from corn ethanol, when you look at the life cycle, was higher than fossil fuel.

John: I think there's a lot of evidence that says that. I think I – in my own analysis it comes out about neutral but it means we're not gaining any ground.

Russ: Right.

John: Because it's a flawed product. It has 25 percent less efficiency than gasoline. There are other biofuels that have efficiency equal to gasoline – that's what we ought to pursue. Not biofuels that are less efficient than gasoline.

Russ: Right.

John: Particularly when the taxpayers' the one payin' the bill.

Russ: That's right. We're talking with John Hofmeister, former President of Shell Oil Company and now Founder and CEO of Citizens for Affordable Energy and we're gonna be back with more with John after this. You're listening to the BusinessMakers Show, heard here and online at the BusinessMakers.com.

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Russ: This is the BusinessMakers Show, heard here and online at the BusinessMakers.com and continuing on with John Hofmeister, former President of Shell Oil Company and now Founder and head of Citizens for Affordable Energy. Well you sound to make a lot of common sense on a very controversial subject, John. Let's say that all the governments in the world got together and decided that you knew exactly what you were talkin' about and said, "Let's just make John Hofmeister Energy Czar for the planet," what would you do?

John: Well, I'd come right back to the four mores that we started talking about in the beginning. Let's keep in mind – of all of the eight or so billion people in the world, only about two billion have the kind of lifestyle and energy supply that US citizens are accustomed to. About three billion people have just enough energy to get by but not enough to enjoy personal mobility, not enough to have a range of appliances and light or heating in their homes, or air conditioning. And there's over two billion people that don't have any energy at all, except wood or charcoal or dung. So if you look at the world as a whole, most of the world, five out of eight billion people, do not have what we have in America or the Europeans have in Europe or the Japanese, let's say, have in Japan. Why not? They should. They should enjoy the fruits of life of this earth and so there's a whole market out there for more energy. I believe that there is a supply system that can be created that is clean, efficient and sustainable that takes into account all forms of energy production, from nuclear, to hydropower, from geothermal to hydrogen, to biofuels, to hydrocarbons, including coal and gas and oil, solar, wind – all of the supplies of energy are possible and I think with a coherent, managed 10-, 20- 30-year plan, you could do all the above from a supply side.

John: From a distribution side, we know how to distribute energy. Through pipelines, through transmission lines, what have you. This can be well-done and well-managed from an environmental standpoint, I think we can have cleaner fuels with science and technology helping us. I think we can have cleaner use of fuels by the nature of how we use fuel. I think that the sustainability of the earth can be guaranteed by prudent stewardship of natural resources and the use of those natural resources. I think we can save a lot of energy per capita by changing how we use energy in terms of the efficiency requirements through all the means by which we use electrons and how we live our lives and I'm not saying that people should just stop using energy. I'm saying that by virtue of the technologies that use that energy, we can do it.

So I think there are solutions where eight billion people on this earth can enjoy the fruits of energy, the blessings of energy, the economic progress of energy and we can do it in sustainably clean ways.

Russ: Well unfortunately, we're out of time for the radio broadcast but there's quite a bit more I wanna talk with you about, John. I wanna talk about cap and trade. I wanna talk about cool technology in the energy area. I might even wanna touch on coal a little bit, too. But we're gonna have to do that as a Business Makers WebXtra. So for those of you listening to us on the radio, be sure and go to the BusinessMakers.com and look for the John Hofmeister WebXtra. You're listening to the BusinessMakers Show, heard here and online at the BusinessMakers.com.