Got to hear from Shell Oil Company President John Hofmeister at a luncheon today. He talked about three things involving energy security (not independent): 1) Access to fossil fuel resources, both conventional and unconvention, 2) Diversity in the type of energy, and 3) demand management.

Access, he would love to have access to the 100 billion plus recoverable barrells of fossil fuel available domestically in Alaska and off the west coast of Florida (eastern gulf of Mexico). Shell has utilized available technologies to responsibily access these resources. One example was how to leave minimum footprint in Wyoming by using offshore drilling techniques on dry flat prairie. Shell and Exxon are also exploring and drilling in east Russia. Shell also is exploring in Arkansas, Colorado, Washington and Wyoming.

Fossil fuel will continue to remain at the heart of the energy supply because of its abundance and efficiency. However, Shell is using its 25 billion/year profit, 6 billion profit this first quarter, beside heavily investing in finding new sources of fossil fuel, is committed to research in wind, hydrogen, and solar energy. Shell along with the governor of Hawaii will be unveiling a wind energy facility next month. Shell is working with California governor Schwarzenegger for a hydrogen highway between Los Angeles and San Francisco. Similarly a hydrogen highway is being worked out between New York and Washington DC. Mr. Hofmeister mentioned of the hydrogen refueling station in Washington DC that the president visited earlier this year. Shell has built the station in partnership with GM whose vans run on hydrogen fuel cell. Shell also has coal extraction project in 12 states. At the same time, Shell is committed in research for 2nd generation of ethanol, which is produced from corn stock, grass and tree instead of grain based first generation ethanol which is produced from corn and sugar. He said being blamed for gas is enough. Oil companies do not want to be blamed for driving up the prices of corn, which is used to feed cattle, chicken, and therefore driving up the prices of eggs and milk.

Managing demands includes partnering with Motiva in expanding capacity at the Port Authur refinery so that it becomes the largest refinery in the US. There has been no new refinery built in the US since 1976. Gas prices would go down if the tree huggers let us build more refinery plants. Daily, 85 million barrels of crude oil are produced and 84 million barrels are consumed so there is not a lack of crude oil supply. With China's and India's demand for energy grow at an exponential rate, the problem is only going to get worse from here on out.

The tree huggers would be please to hear that Shell has reduced carbon dioxide emission. Out of a dollar, 55 cents are the cost of crude oil, 18 cents are the cost of refining, 19 cents go toward taxes, and only 8 cents are profit, which go toward paying the share holders and reinvestment.