Book Review: “Why We Hate the Oil Companies”

Title: Review: Why We Hate the Oil Companies, by John Hofmeister; Publisher: Palgrave/Macmillan, 2010

Reviewed by: S. Duff Kerr

Publication: The Outcrop, May 2012, p. 20, 23

Hofmeister covers the industry’s long standing inability to communicate with the Public and Government at all levels. The author is not the typical Industry spokesperson. He had only a few years exposure before he retired as President of Shell Oil Co. in 2006.
He had joined the Royal Dutch Shell Group after 42 years with non-oil companies including General Electric, Nortel, and Allied Signal/Honeywell. He was taught the oil business at the highest levels of Shell, a company which, like most of its industry had
exclusively promoted its executives from within the organization. Thus, he brings a unique, outsider, viewpoint to assessing the oil industry. His viewpoint is largely driven by the lack of any real, current or historic National Energy Policy. He is aware of the deep lack of understanding of the Industry by the Public and most particularly by Political Leaders. Problems he recognized before 2010 have only been amplified in the short time since! Public concerns have generally been limited to the price being charged for products; how the price is determined is rarely known, and mostly not cared about until an upward spike occurs.

Environmental issues have come to the fore and reflect the competing forms of energy available for use. Drilling for new sources of hydrocarbons brings outcries from NIMBYists (and viewers of “Gasland” type propaganda… reviewer) to limit points or areas of access and add taxes and regulation on a local basis. Demands for “Green” (non-carbon or renewable) energy sources bring in many economic factors, largely ignored, into the puzzle of choice. Costs increase through the use of inefficient sources and compensating subsidies. All the many alternative energy sources each have their cadre of enthusiasts lobbying for adoption. Through this mélange of rants, choices ultimately become driven by politics rather than logic! Hofmeister states that the energy economy and its environmental consequences is the major domestic and international issue of our time. The author derides several popular concepts:

  • The concept of energy independence for the U.S. is a dream.
  • We will never run out of energy, unless we choose wrong policies or do not implement right policies.
  • “Clean Energy” is a misnomer. There are relative differences, but every known form of energy requires some modification to be useful.

Hofmeister lists and provides pro- and con- evaluations for the many possible alternative energy sources, first for electricity and second for transportation. With so many alternatives, his conclusion is that we will not be short of energy. Some of the alternates need research to become practical economically or environmentally acceptable,
eventually a reasonable choice will remain.

Furthermore, global warming and climate are succinctly dispatched. After considering what we do with liquid and solid waste, we dispose of them in various ways to avoid the pollution which could otherwise result. So, why not do the same with gaseous trash  (emissions)? Why not take it in the same manner and dispose of it efficiently? That course is necessary because the evidence is readily apparent that it is quite harmful to population and the entire planet. We can argue about global warming even while cleaning the atmosphere just because it must be done!

The last part of the book focuses on the political confrontations which mark much of the history of confrontations since World War II. His analysis concludes that Lawmakers
and Oil Industry operate on different time schemes: Political Time (in two and four year election cycles), and Energy Time (project cycles which, from idea to completed plan, last from months to as long as 20 years). The needs of the two rarely coincide! Under the chapter title, Our Government is Broken, he points out the internal interrelationships, or lack thereof, which preclude a lot of possible interaction between the branches of
government. Hofmeister’s conclusion is that no logical Energy Policy will ever make its way through Congress and the White House. Too many political traps and no interest in compromise among the Parties is the cause.

The author’s proposal is quite far-reaching. His proposal is modeled on the Federal Reserve Board, which was created 100 years ago to provide financial stability after several crises. He proposes creation of a Federal Energy Resources Board to regulate the energy system and related environmental issues. This agency would be funded by a fee on each unit of BTU or KWH produced, thus it could remain independent of Congress and the Executive because neither is responsible for funding, like the Federal Reserve Board. This is a tall order for a Congress nearly dysfunctional by partisanship and regionalism. Hofmeister proposes it be promoted as a grassroots issue by the electorate.

Let’s face it, a grassroots issue rarely gets far with Washington. True, it spans the entire Nation and involves issues affecting essentially every Citizen. It also involves the economic well-being of the entire Nation. Hofmeister is truly pessimistic about our ability to solve the problem under the present political situation. However,
the challenge of long-term energy flux, including new technology and competition among the nations of the world requires facing the present realities. In conclusion,
Hofmeister is basically optimistic about the ability of our nation to rise to the challenge, as it has before, and solve its energy problems.