One on One with Lee Raymond, Chairman of the National Petroleum Council
Wednesday, July 18, 2007
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SUSIE GHARIB: An oil industry group warned that oil and gas supplies are unlikely to keep up with global energy demand over the next 25 years. The study by the National Petroleum Council and commissioned by the U.S. Energy Department says the world needs to boost energy efficiency and develop alternative fuels. Joining us now to talk more about the group's findings, Lee Raymond, chairman of the National Petroleum Council and former chairman of ExxonMobil. Welcome back to NIGHTLY BUSINESS REPORT, Mr. Raymond.
LEE RAYMOND, CHAIRMAN, NATIONAL PETROLEUM COUNCIL: Thanks. Good to be here with you.
GHARIB: If you were to summarize the situation, what should we be most concerned about? Is it the shortage of oil or is it that it's just going to cost more to extract it from the ground?
RAYMOND: Well, I don't really -- I don't think it's either of those, Susie. What I think the point of the study with regard to oil and gas supply was that the group concluded that the resource base is more than adequate to meet what we would say is future demands through the year 2030. But there are a number of issues that are starting to develop and come together in a way we haven't seen in the past that are what we call above ground. Some of them are political. Some of them are technical. Whether or not the industry -- by that, I mean the supplier industry -- will have enough capability to be able to make the investments in a timely fashion such that we are concerned that the amount of oil and gas that we would traditionally from traditional resources that we would depend on, whether they will be there in a timely fashion.
GHARIB: Well, what are the areas that you may be referring to? I'm guessing there is about access to oil. I mean, we've seen countries, oil- rich countries like Venezuela make it much more restrictive for the oil industry to extract oil. How should the oil industry deal with that issue?
RAYMOND: Well, obviously the industry -- and I mean the industry in the broadest sense -- still provides capital and technical resources to be able to do that. Whether some of these countries are particularly interested in seeing it developed in that way, that's their sovereign right and they can conclude how they want to manage that. What we tried to do was look at the totality of all those issues around the world. And as we looked at them, we thought that the risk profile that's associated with assuming that all those things will go right probably in the environment we're in right now, is probably not a good bet for the consuming countries of the world to make.
GHARIB: So what is your number one recommendation to U.S. Energy Secretary Bodman?
RAYMOND: Well, there are really two that I would put in that category, Susie. One is this country has to continue to try and become more efficient in how it uses its energy. We did very well in that aspect after the embargo in 1973 and then after the shah left Iran in 1980. Over the last 10 or 15 years, we've somewhat slipped in continuing to make progress. Therefore, we have to become more efficient in how we use energy. Secondly, on the supply side, we have to try and have access to all available supplies. By that I mean conventional oil and gas, unconventional oil and gas, coal, nuclear, biofuels. Any energy supply source that can be economically competitive is something that we should try and develop and bring into the energy mix.
GHARIB: Many lawmakers are talking about energy independence for the United States. Is that a realistic goal?
RAYMOND: It is not a realistic goal. It's certainly not a realistic goal in the time frame we looked at which is over the next 25 years. Beyond that, I don't think it's probably a realistic goal either. However, we should recognize that energy independence is not synonymous with energy security. To that extent we have a lot of work to do in this country to try and improve our energy security through investing overseas and through policies pursued by the government in making sure that energy is included in the mix of all those issues that we have when we manage foreign policy.
GHARIB: We just have 20 seconds. Real quickly, we saw oil prices spike today. Do you think $80 a barrel oil is the new baseline price?
RAYMOND: You know, Susie, I don't worry about those things anymore. I'm not in the day-to-day business. Of course, the National Petroleum Council is not in the business of forecasting prices.
GHARIB: Fair enough.
RAYMOND: I watch with the same interest you have.
GHARIB: All right. We'll leave it there. It's great to see you, Mr. Raymond. Thank you so much for coming on the program.
RAYMOND: Thank you, Susie, for having me.
GHARIB: My guest tonight Lee Raymond, chairman of the National Petroleum Council.
