Hofmeister's 'Tell-All'

"Top executives too far removed from retail customer, retail outlet"

HOUSTON -- Former Shell Oil president John Hofmeister has written a new book, Why We Hate the Oil Companies, in which he denounces the "parochialism" of the oil industry as well as politicians' "hollow" promises of energy independence, reported The Washington Post.

The 239-page book, to be published this week by Palgrave Macmillan and subtitled "Straight Talk from an Energy Insider," has 14 chapters, most of which are devoted to pointing out what Hofmeister believes is wrong, not only with oil companies, but with the entire energy sector, the nation's energy [image-nocss] policies and the politics that produces those policies, added a report by The Pittsburgh Post-Gazette.

A confrontational question from NBC's Tim Russert on Meet the Press"Do you know how disliked you are by the American people?" took Hofmeister aback. "I had never considered it that way," he said in retrospect, "but he gave me an insight and a perspective which I have been digging into ever since." That digging has produced Why We Hate the Oil Companies.

The Washington Post spoke with Hofmeister about a number of energy issues:

Why do we hate oil companies?

"The short answer is because the government has taught us to. Government's failure over many decades to make the difficult decisions and choices with respect to our energy future means they look for a scapegoat when things go wrong. The primary scapegoats they choose are the oil companies, whether about prices, environmental issues or supply issues; it's always the oil companies' fault."

Are the oil companies blameless?

"The oil companies have earned the disfavor of government by a.) choosing sides, preferring a particular party in general; and b.) maintaining a wall of silence, which ultimately comes back to hurt them."

You talk about some road trips you took to gas stations across the country. What was the most annoying moment?

"I was visiting Erie, Pa., to just take the measure of Shell gas stations. I drove up to this particular station and noticed how filthy it was outside. And when I went inside, it was even filthier. There was trash all over the coffee space where people mix cream and sugar. There was trash on the checkout counter. And there was the operator wearing his Shell shirt, who, as I approached him, turned his back to me. I asked, 'How's business?' He said, 'It's none of your business, that's how's business.'

"I asked, 'How are you dealing with high gas prices?' He said, 'Who are you?' I pulled out my business card and said, 'I'm Shell's president.' Then he started screaming at me: 'You're taking food off my family's table. You're making billions, and I'm pinching nickels. You have no right to treat us the way you're treating us.'

"We ended up having a long conversation.... We didn't part friends, but we parted politely."

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Hofmeister, who left Shell in 2008 to form the nonprofit Citizens for Affordable Energy, told the Post-Gazette that a lack of communication with the public on the part of the oil companies resulted from structural changes in the industry over the last 50 years. "They have chosen public relations paucity; they communicate as little as possible," he said.

"In the 1950s and 1960s, oil companies were giving away merchandise at their retail storeskitchen towels, glasses, steak knives"to build relationships with the public, he said. Today, the company-owned gas station where "you can trust your car to the man who wears the star" has been replaced by the company-branded, but independently owned convenience store.

Meanwhile, oil companies have become wholesalers whose concern for customers stops at the distribution level, he claimed. "Today a major oil company builds a legal wall between the retail customers and [itself]," he said. "Top executives are too far removed from the retail customer and the retail outlet."

But Hofmeister also assails what he calls "the politics of energy," said the report. "The politics of energy is the biggest issue this nation faces with respect to our energy future," he said. "The politics of energy is starving us of an energy future. I predict a coming energy abyssnot enough gas, not enough electricitywithin the decade because we can't get out of the politics of energy."

The three elements of the politics of energy: partisan paralysis, the differences between political time and energy time and the "structural dysfunctions of the federal government."

The paralysis, he said, arises from politicians focusing so strongly on staking out extreme positions and then attacking one another's positions that they cannot work together to navigate some middle path between "the reckless right and the ludicrous left."

Of energy legislation in recent years, he said: "All of those bills together do not and cannot secure our energy future. Because of partisan paralysis, they avoid the big issues of energy."

Those issues, said the report, include the need to produce more oil, coal and natural gas, and to build more nuclear power plants.

He contrasted "energy time," which requires that industry executives think and act with a decades-long view, with "political time," which makes politicians think in two- to four-year election cycles, the report said. "That means they don't make hard choices that people might not like but that the nation needs," he said.

The final side of the politics of energy triangle is "the structural dysfunction of the federal government." The executive branch alone has 13 energy-related agencies; Congress has 26 energy-related committees and subcommittees subject to change with elections every two years; and the judicial branch decides energy cases "completely separate and independent of the Congress and the White House. The combination of all three branches makes it impossible to get anything done of substance," he said.

With such structural dysfunctions in place, and with politicians who "whip up the consumers in an anti-energy frenzy for their own election purposes," Hofmeister said oil companies and others in the energy sector needed to work extra hard at connecting with consumers. "If they want to be able to build new infrastructure, they need to go live and be a part of a community," he said, "and invest the time it takes to demonstrate and to convince people that it is in their best interests to invest and to build new infrastructure. That sometimes requires years of communication, years of continuous outreach, the patience to explain over and over again why certain things are necessary."

He added, "Companies need a long-term view, and long-term actions, and they need to be also reaching out to all stakeholders, not just their friends."

The Post-Gazette asked, if energy companies already take a long-term approach to their capital investments, why don't they take such a view in their relationships with consumers?

"Because of the costs associated with the outreach," answered Hofmeister. "They would be paying salaries for people to engage communities for long periods of time.... That should be considered an investment in growth that is part of the cost of doing business."

The book calls for an even larger change in government, said the report: the creation of an independent agency, the Federal Energy Reserve Board. Modeled after the Federal Reserve Bank, this agency would draft plans and set policies to manage the nation's energy and energy-related environmental footprint.

But Hofmeister does not expect elected officials to go for the idea, at least not on their own. Thus, he told the paper, he wrote the book for "every citizen in America."

"They need to know what's wrong, what's not working, so they can do something about itso they can talk to their elected officials and say, 'I need energy. I need it affordable, I need it available. And if you can't do that for me, I need to find somebody [who] will'."