Energy investment is the only stimulus the economy needs, according to the founder and chief executive of Citizens for Affordable Energy.
John Hofmeister, also former president of Shell Oil Co., will present an outlook on the roles of energy in the U.S. economy on Friday at UC San Diego’s Economics Roundtable.
“What I will describe is an outlook that — using some metrics — an outlook that would offer the U.S. economy a 21st century energy set of solutions that will rewrite prosperity,” Hofmeister said. “For that to occur, some things need to happen in the governance of energy — the way in which state government, federal, municipal and county governments look at energy, and it does not require any taxpayer money.”
Hofmeister will describe an economic trajectory going forward for the United States that he said “most of the world would envy, because it’s real growth based on real investments, not on borrowed taxpayer money.”
In terms of government control, Hofmeister will promote policy enablers that he said don’t cost money and actually produce tax revenue in the form of investments, jobs, tax payments to the government from energy royalties and from higher employment and income tax from corporations.
“It is a serious reform of existing energy governance, which has frustrated, delayed, postponed and canceled energy investments over the last 20 to 30 years," Hofmeister said. "This has made us dependent on imports, to where we can’t get through the day without oil imports. It has created a very serious probability that the kind of black out San Diego had a year and a half ago could be repeated often in the future depending on the energy system.”
Through his work, Hofmeister said he’s trying to separate ideology and political, which he said has dominated the discussion of future energy. He started Citizens for Affordable Energy after feeling frustration with the “politicization of energy where politics dominates energy instead of energy being thought of as its own sake.”
“Politics is a curse on energy because it hides energy reality behind political ideology,” Hofmeister said. “And so we have created what I call an adversarial relationship among political officials on the future of energy. Because of the adversarial nature of dialogue, nothing happens.”
There has been a “dramatic” increase in oil prices for five years in a row, he said, because it is set by OPEC, “a cartel of a sovereign nations that’s taking advantage of America’s dependence on their oil to set high prices instead of what we should be doing — creating fuel competition.”
Hofmeister speaks with people all over the country and in different parts of the world in an attempt to raise awareness, and he said he is busier than ever due to high demand for the information he’s providing.
A turning point for change won’t come until the country is headed for a crisis — either of high prices or shortages, Hofmeister said.
“Politicians are too busy catering to special interests on various different topics and not worrying about what consumers are experiencing,” Hofmeister said, and noted that his foundation does not take any money from energy companies.
In his book, "Why We Hate the Oil Companies: Straight Talk from an Energy Insider," Hofmeister predicts the crisis to occur in 2017-18, but said he thinks it’s coming sooner.
“If Obama stays on his current course, we’ll see shortages while he’s still president,” Hofmeister said. “He has rhetoric, but so have the last seven presidents before him. He’s the eighth president to talk rhetoric. I’m just as critical of George W. Bush as I am Barack Obama. We will have gone 16 years by the time Obama finishes his term. Nothing substantive, nothing material has changed in the energy system in the 20th Century to make a 21st Century system to meet the needs because neither of them had a plan.”
The American people are the “losers,” Hofmeister said, with college graduates and senior citizens facing the most loss. College graduates will leave school and face high energy prices, an economy that can’t grow because people don’t have the money for other things. “The whole economy is flat growth — fewer jobs, flatter wages, flatter salaries — that’s not a very good outlook,” he said.
“Those two populations are the most worried and they should be. They’re the most harmed by politicians failing to do their jobs to create energy savings, which they have promised since the 1970s,” Hofmeister said. “More urgent, the world population demanding oil and demanding electricity has grown and the world can’t keep up. Particularly, if the U.S. can’t look after its own requirements, and is relying on other nations for the energy that we use, we’ve created an impossible cycle of ever higher costs.”
Hofmeister will present on Friday on why this will lead to shortages in the coming five years.
Hofmeister is a 35-year veteran of corporate American, having worked at General Electric (NYSE: GE), Nortel (NYSE: NTL) and AlliedSignal (now Honeywell International). He retired from Shell Oil in 2008 and then founded the not-for-profit Citizens for Affordable Energy. John Hofmeister is a member of the U.S. Energy Security Council and serves as the chairman of the National Urban League and is a member of the U.S. Department of Energy’s Hydrogen and Fuel Cell Technical Advisory Committee. Hofmeister also serves on the boards of the National Energy Security Council in Washington, D.C.; the Foreign Policy Association, New York; Strategic Partners, LLC; the Gas Technology Institute and the Center for Houston’s Future.