Transcript for June 11

MR. HOFMEISTER: Well, there’s, there’s two ways of looking at this, one is the ethanol blend, the ethanol blend of 5 to 10 percent ethanol is actually the solution we prefer when it comes to ethanol. If you get into the E85 product, you’re now getting into unknown territory. We’re starting a pilot project in Chicago with General Motors as a partner, VeraSun Energy as a partner, to test E85. One of the things that people don’t perhaps realize about E85 is you’re about 20 to 25 percent less miles per gallon using pure—this level of purity of ethanol, which people are going to have to pay perhaps even more than gasoline to get 25 percent less mileage. We need to test that as a commercial product and see if, if consumers are going to buy it.

Also on the biofuels side, one of the things that people also need to think about it is what generation of ethanol do they want to pursue? The corn-based or the sugar-based ethanol, which is called first-generation ethanol, is going right at the food costs. In other words, there’s only so much corn, and if oil companies are attacked for the price of gasoline—and we’ve seen ethanol go from $1.20 a gallon in 2005 to last week it was hitting $5 dollars a gallon on the spot market—if we start sucking up, as oil companies, all the ethanol, it’s going to hit the price of eggs, the price of bacon, the price of hamburger, the price of Doritos and Fritos, because there’s only so much corn to go around.

What we’re working on is second-generation ethanol, cellulosic ethanol. The president talked about it. And I think putting money into the second-generation ethanol takes the waste products, takes wood chips, takes other carbon fibers, and that is another form of biofuel that we should pursue.

MR. RUSSERT: In light of the national security interests of being so reliant on foreign oil, the environmental consequences and the alternative energies that are being developed, do you realistically ever see your company being totally free of oil in the next 10, 20, 30 years?

MR. O’REILLY: I don’t think in the next 20 or 30 years, Tim, but I think there is a transition opportunity here and that’s why we’re exploring these. We’re also running a trial program on E85 in California, for example.

California’s concerned about evaporative emissions because it’s more volatile.

So these things are being tested. We’re working on hydrogen. We’re working on many of the alternatives, a biodiesel plant that we’re investing in in the Houston area that will double U.S. biodiesel production. The problem with some of these alternatives is the scale is so small yet. You know, Brazil’s gasoline market is 3 percent of the size of the U.S. market. One ethanol plant makes in a year what a typical refinery will produce in gasoline in two days. So the scale is yet very, very small. So it’s going to take decades for us to make a transition. But this is the time to get started on evaluating these alternatives and developing them for the long term.

MR. RUSSERT: And you may, one day, ConocoPhillips may be oil-free.

MR. O’REILLY: They may be.

MR. RUSSERT: I mean, oil-free. But at, Chevron?

MR. O’REILLY: At Chevron, I don’t see it in 30 years, but we will, you know, 100 years from now, yes, we may well be oil-free. Yes.

MR. MULVA: Twenty to 30 years, 60 to 70 percent, at least, of energy provided in the world is going to come from fossil fuels. But I think it’s important that all of our companies, we evolve ourselves from just being an oil and gas company to an energy company.

I think it’s very important to point out something, though. It’s going to take a lot of technology and commitment to a long-term program of technology. It was just recently that China announced a 10-year program of about $170 billion dollars over the next 10 years to develop new and alternative and renewable fuels. We as a country ought to be working in joining countries like that in committing far more resources as a country to technology. Because that’s what we’re up against.

MR. RUSSERT: Has the president called you in and said, “I want to be free of foreign oil dependency. Let’s get busy”?

MR. HOFMEISTER: We have discussions with the White House quite frequently.

We haven’t had that kind of a specific discussion. And I frankly...

MR. RUSSERT: Have you met with the president?

MR. HOFMEISTER: No, I haven’t. Not on this subject. I think energy independence, Tim, is the wrong direction because the U.S. is not an island nation. We are interdependent on all of our global companies doing business all over the world, and I think the oil companies need to be interdependent as well. And I think that really is good for international relations. I think it’s good for the economy, actually, to have oil coming from wherever it can come from.

Now, we can do a lot more in this country, you know. The 102 billion barrels of known oil reserves and gas reserves that we don’t have access to in this country on federal land and outer continental shelf, we’d like to go produce that. And we know how to produce that. And I think we know how to produce it in environmentally sound ways.

MR. RUSSERT: But politically, that’s not feasible.

MR. HOFMEISTER: Well, we’d like to keep working on it. I spend a lot more time on Capitol Hill than I do at the White House. And frankly, the Capitol Hill—when you talk to people individually, I think they get it. But we have what is a very difficult partisanship issue right now going through the Congress, and getting the bipartisan support we need is very challenging.

MR. RUSSERT: Realistically, should consumers expect to pay more for gasoline at the pump this summer and still more next summer and more every year?

MR. O’REILLY: Well, Tim, I hope, I hope not because I do understand why consumers are concerned. The thing that concerns all of us, I think, is that we’re heading into hurricane season again. And you will recall that last year a significant amount of the refining capacity and oil and gas capacity was shut down. Now, much of that has been recovered, thanks to lots of hard work by thousands and thousands of people, but they’re vulnerable. Many of them are living in temporary housing on the Gulf Coast, FEMA trailers and the like. And they’re much more subject to having to evacuate if hurricanes were to recur.

So absent hurricanes, I’m optimistic, but I think it’s a cautionary note, and I think that’s why we need to look at energy as a valuable input to our economy, something that helps our quality of life. But let’s treat it as a valuable commodity, not something to be used in a wasteful manner. This is an important issue. We need to change the way we think about this.

MR. RUSSERT: We thank you all for coming and joining us and sharing your views with us this morning and helping the American people to understand this issue. And I hope you’ll come back. ConocoPhillips, Chevron, Shell. Thank you all.

MR. MULVA: Thank you.

MR. HOFMEISTER: Thank you.

MR. O’REILLY: Thank you, Tim.

MR. RUSSERT: And we’ll be right back.

(Announcements)

MR. RUSSERT: Start your day tomorrow on “Today,” and then the “NBC Nightly News” with Brian Williams.

That’s all for today. We’ll be back next week. If it’s Sunday, it’s MEET THE PRESS. Happy Father’s Day, everybody, particularly you, Big Russ. We’re watching the Nationals and the New York Yankees, and you’re going to be there.

MR. TIM RUSSERT:

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