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An Unlikely Paul Revere


By Maria Bartiromo Oh, what a difference 20 months can make. When Lee Raymond retired in early 2006 after leading ExxonMobil (XOM) to record profits, he was the quintessential Texas oilman. If the notion of developing alternative fuels and putting pressure on Detroit to build more fuel-efficient cars ever crossed his mind, it didn't cross his lips. But as architect of a new study by the National Petroleum Council, a federal advisory group, Raymond has become a sort of Paul Revere of energy, warning of coming shortages by 2030 if America does not act now.

The NPC report says that world energy demand will increase by up to 60% in the next 25 years. Is production peaking?

What the report says is that there are more than adequate resources. The problems that the world faces are not related to what I call geologic risk. They're related to above-ground risk. They're related to political issues, access issues, financing issues, scale issues, technology issues. The important thing for people to understand is that major projects in this industry take a long time. So even in the most optimistic case, I suspect that the industry would have trouble keeping up with the growth in demand.

So how do we deal with that?

We make the point that it's all hands on deck. By that I mean all sources of energy that meet the competitive standard set by the market should be encouraged. That's coal, clean coal, nuclear, conventional oil and gas, nonconventional oil and gas, biofuels, solar. Anything that can clear the economic hurdle needs to be encouraged.

But when you were CEO of ExxonMobil, you said many times that there are few alternatives to oil when it comes to transportation. Do you still feel that way?

Well, the NPC study says that, yes. That's still one of the fundamental issues that the whole energy complex faces. When it comes to transportation fuels—for jets, ships, trains—the most transportable, economic fuels, and the fuels with the highest energy content, are those that come from oil and gas. To some extent, the liquid fuel supply can be augmented by some biofuels. But ethanol from corn, for example, has real limitations because it has an impact on the food supply.

Why has Detroit been so slow to build more fuel-efficient cars?

Well, you know, I have to be a little careful here, Maria. Some have suggested that one of the targets of this study is the automobile industry. In fact, that was never the intent. But I think it would be fair to say that [Detroit] ought to be strongly encouraged to move to the best available technology as fast as it can. Because even if it were to start doing so soon, it will be years before that results in a new car. As old Willie Sutton used to say: "The reason I go rob banks is, that's where the money is." If you want to improve the energy efficiency of this country, you ought to go to where most of the fuel is used, which is transportation.

Does it concern you that the Chinese are trying to lock up oil assets all around the globe?

I think the Chinese, as well as others who are in this global game, will recognize that, as I've said many times, we're all in this together. The Chinese can't be energy independent. The U.S. can't be energy independent. All the major users of energy are going to have to learn how to work together to make sure that there are adequate energy supplies.

Are you surprised that high-priced oil hasn't slowed down the U.S. economy more?

I won't say surprised, but I am a little bit taken aback. If you look over the past two or three years, the runup in oil prices hasn't had that much impact on demand, and it doesn't appear to have had that much impact on the economy in general. I guess what that tells us is that we're being a little more efficient in using oil than probably some of us had thought. And second, I guess we've demonstrated that it's not true—as people always thought—that adding a dollar-a-gallon tax on gas would have a significant impact on demand.

Maria Bartiromo is the anchor of CNBC's Closing Bell.


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