 The City Club will, on occasion, feature recent speeches delivered before members and guests. These speeches are offered as a public service – and in furtherance of the dialogue of democracy.
The State of American Medicine
by Dr. J. Edward Hill
Immediate Past-President
American Medical Association
How the U.S Can Ensure Energy Supply for the Future
by John D. Hofmeister
President, Shell Oil Company
The State of American Medicine
Dr. J. Edward Hill
Immediate Past-President
American Medical Association
It is a privilege and an honor to speak to The City Club, an organization dedicated to the dialogue of democracy. Obviously, democracy works best with an informed electorate. And, speaking on behalf of the nation's physicians, I would add, democracy works best with a healthy electorate, as well.
It is a pleasure to be here and to represent the American Medical Association, and the nation's more than 800,000 physicians and surgeons. As I have traveled up and down the nation these last several months, I've listened to a large number of individuals, from presidents to ordinary citizens in every walk of life.
And I've learned a number of things:
* First, I've learned that average America is in real pain. Two trillion dollars a year is a mighty hefty price to pay for health care in this country. A Gallup poll tells us the second most important financial problem households face is health care costs, second only to the specter of bankruptcy, itself. But, when I dig down beyond the data to the people themselves, I have found some real surprises which I will share with you in a minute.
* Second, I've learned that nearly 47 million Americans without health care insurance constitute not a challenge so much as a national disgrace. That works out to 769,000 uninsured are right here in Colorado, 17 percent of your non-elderly population.
* Third, I've learned people are quite concerned about the future of Medicare and Medicaid, that when they learn that Congress has mandated cuts in the payments to be made to physicians under the Medicare system, and that those cuts translate into potential harm to seniors as more and more physicians can no longer afford to see new Medicare patients. When people learn that, they become very upset.
* And, fourth, I've learned people are going to have to take the initiative in dealing with these concerns, about costs, about the uninsured, about the fate of Medicare and Medicaid.
There is a broad streak of common sense and common decency in this great democracy of ours. And those two characteristics lead Americans to see that their health care system is tragically disordered, seemingly designed with a helter-skelter magnificence that gets in the way of patient care, and that this has got to change.
Uninsured
For some time now, the AMA has warned America of the dire consequences of the grow health insurance gap in this country.Today 46.6 million Americans are uninsured and another 15 million are under-insured; a fifth of the nation standing as living testimony to that prediction.
As I said, 770,000 of your neighbors live sicker and die younger for want of health care insurance coverage. That unpleasant truth today stares us in the face.
America's physicians have a plan to correct the situation. After years of study and analysis, the AMA has proposed a series of steps to leverage free-market economics in battling the uninsured problem.
First, we believe there should be direct cash payments to those least able to afford insurance, to give them the wherewithal to buy their own policies, minimum coverage, preventive care and coverage for their children.
That will mean, second, regulatory reform so that health insurance firms can come up with creative, tailored policies matching the special needs of those with the fewest resources.
Third, we've urged the states to take the lead in experimenting with these ideas, and several test-bed projects are under way.
Lastly, the AMA believes those who have the resources, but have not bought insurance, should be given incentive to buy coverage.
Specifically, we believe those making five times the Federal Poverty Level, that means individuals making $49,000 a year, or more, and families of four brining in $100,000 a year or more, These middle class Americans should be required to own health insurance.
All of these programs, taken together, would eliminate the billions of dollars drained from the economy every year by treating the uninsured only when they show up in the emergency rooms of America.
I admit, 47 million Americans is a large population to treat. But, trusting to free-market economics is a proven strategy, a winning strategy, and one we are advocating right now to begin wiping out this national disgrace.
Medicare
There is another potential national disgrace on the horizon. And it has the name "Medicare." As you well know, Medicare is our nation's experiment with socialized medicine. And, as with all so-called single payer systems, this approach has produced rising prices and shortages.
Strip away all the rhetoric about Medicare and single payer systems, and you'll find, at heart, they are just 25-dollar words for "price controls." And price controls produce only two things in any economy, anywhere, at any time in history. They produce shortages, which means Black Markets, and they produce higher prices, in the name of controlling costs.
In the case of Medicare:
* Premiums that seniors pay will go up later this year. Medicare revenues aren't covering costs.
* Second, means-testing is inevitable and, combined with higher premiums, are the early warning signs of an impending financial tsunami.
* Medicare payments to physicians, meanwhile, are scheduled to be cut, nearly 40 percent by 2015, 5 percent next year alone, unless Congress acts.
Those statistics take on real meaning when translated into terms Coloradans can understand. From 2007 to 2015, Medicare payments in Colorado will be cut by $1.61 billion; $28 million of it next year alone.
Ten percent of your state population, 481,000 men and women are Medicare beneficiaries. Where will they get care if the physicians of this state can no longer afford to take new Medicare patients?
And a cumbersome, costly bureaucracy gobbles up tax dollars and, predictably, end up wasting from 30 to 40 cents of each Medicare dollar, according to two recent studies. Today we have shortages of primary care and key medical specialties, with a projected shortage of 166,000 doctors by the year 2020.
And we have yet to feel the impact of the Baby Boomers turning 65. The Center for Studying Health System Change tells us nearly 30 percent of American physicians cannot afford to accept new Medicare patients now. Imagine what the figure will be if Congress follows through on physician payment cuts now scheduled through the Year 2015, as much as 37 percent at the same time the costs of operating a practice are to increase 22 percent or more.
So, the AMA is working to establish reasonable prices, stable prices and predictable prices, in a badly under-funded Medicare system.
Trillion dollar solution
There is a third potential revolutionary change badly needed in this country. It's a trillion-dollar solution to part of the cost problem, as well.
I'm talking about the unhealthy lifestyle choices so many of our fellow Americans are making. We've compiled a list of estimates of the societal costs, not just health care costs but lost wages, lost taxes, lost investment from the eight scourges of public health:
* Violence and abuse, $300 billion in medical and societal costs;
* Alcohol and other drug abuse-another $246 billion;
* Traffic accidents, $150 billion;
* Work-related accidents, $156 billion;
* Tobacco, $182 billion;
* Obesity, as much as $102 billion.
* And, unfortunately, there are no estimates for the social impact of teen pregnancy, STDs and suicide.
Now, I must qualify these numbers by saying the sources are many and varied, and so are the methods used. But the magnitude is unmistakable.
The fact is that proper choices by individuals, can dramatically reduce those societal costs and the suffering and priceless loss of life. To change these behaviors, we have to change habits.
Take alcohol abuse. Drilling down into the numbers, you discover nearly 10 percent of 4th graders in this country, for example, one in 10, have started drinking. One study found that alcohol use among those 4th graders will triple by 6th grade.
That is an epidemic, and we don't seem to care. Well, I care. I am a passionate advocate for comprehensive school health education.
Children need to know how to read food labels, which now include information on things like fat content, an advance the AMA supported. Evidence suggests, that healthy habits must be set early, because by the age of 7 or 8, patterns have been set for a lifetime.
That's why we should start with pre-K students and go straight through high school. We need full funding for health education teachers, counselors, physicians, nurses and others, to develop classes and courses in everything, from the food pyramid to understanding what health insurance will mean for them when they get out in the real world. The Centers for Disease Control has developed and refined a comprehensive curriculum over the last 35 years.
Well, then, how can we afford such a new, major, labor-intensive addition to our school curriculum, staffing and budgets?
Here's an idea. Why not adapt the state-federal highway construction model to push funding for comprehensive programs? Why not give matching funds to states or school districts that fit a federal framework? And why not expect our children to profit from comprehensive health education?
The idea is apolitical. I've found interest in Washington from the left and the right, from Democrats and Republicans. Moreover, the idea does not rely totally on Washington. It's grassroots nature means it can bubble up rather than percolate down.
Further testimony to the power of individual action, individual accountability and the force of local activism.
Hollandale
I have seen local accountability work before. Way back in the 1960s, my new partner and I were opening our little clinic in Hollandale, Mississippi. For those of you unfamiliar with the area, Hollandale, Mississippi, was almost a forgotten third-world corner of America.
One day, I became acutely aware of conditions that simply had to change. That day, a farmer called me at my clinic. The wife of one of his hands had delivered a baby at home two days earlier. She was still bleeding, and couldn't get out of bed.
When I got to the farm, I saw a woman couldn't lift her head without losing consciousness. Her blood pressure was too low to measure. I couldn't move her. We had no suitable emergency transportation. With some difficulty, I drew a tube of blood and sped back to town to have it typed and matched, and to get a bigger car.
When I returned, I hung a unit of blood from a nail in the wall. We then put the woman into our station wagon and drove her to Hollandale, where she quickly recovered.
That evening, I went home and turned on the television. It was July 20th, 1969, the day Neil Armstrong took that giant leap for humankind.
And I thought, "We have the technology to put a man on the moon. But here on earth, in the United States of America, a woman almost bled to death because she lacked access to the most basic medical care."
Things had to change in Washington County, Mississippi. It then was among the worst in America in infant death rates. So we went to work, with the state health department. We got donations from churches and from the March of Dimes, hired certified nurse midwives, and developed a very strict protocol under which they acted.
We trained women with not even a high school diploma to do home visiting including prenatal, perinatal and postnatal visits. We educated and communicated and, in short order, infant mortality rates dropped below the national average and have stayed there to this day.
Activism at the local level
The moral of the story: All health care is local.
And, when folks at the local level get moving, they solve their problems. First, at the local level, then across the continent. When we mobilize, the results can be revolutionary.
The American Medical Association recognizes that. And we have developed plans and programs that are beginning to ring true in the ears of America, an America that is ready for major change. America is asking, no pleading for leadership
And that is why this afternoon I want you to think about what I consider to be the coming revolution in U.S. health care.
In so many ways, the U.S. health care system is the envy of the world. Life expectancy is up significantly since we opened our clinic in Mississippi back in the 1960s, now 77.9 years, 12 percent longer life.
Americans might not know all the statistics. But, they value the quality of care they are receiving. Two statistics tell the story. And I would guess these are numbers you have not heard before.
The first one has to do with the trust Americans place in their physicians. The AMA and Harris Interactive conduct a quarterly survey, a rock-solid piece of research, asking Americans how much trust they have in their primary care physician.
Quarter by quarter, year-by-year, the numbers are the same: More than 85 percent of Americans trust their physician. A quarter say they have complete trust, and more than 40 percent, a great deal of trust.
I'm sure you're familiar with the kinds of trust numbers Congress and lawyers and other groups receive. Not even close to 85 percent.
But, a second statistic is even more dramatic, in my mind. And that has to do the value Americans place on their personal health care. Again, the AMA turned to Harris Interactive to measure just how Americans rate the value of each dollar they spend on health care.
One in 10 Americans told us they value their health care investment as an excellent investment. Twenty-seven percent rated it a good investment. Thirty-three percent, a fair investment.
That means 7 out of 10 Americans believe they are getting their money's worth.
To me, this is a dramatic finding, in the wake of all the negative press about rising health care costs, the waste in health care spending, the seemingly exorbitant profits of big health care insurers.
Those concerns are valid concerns, but maybe they are blown out of proportion. Just maybe a healthier and wealthier country sees additional spending as wise investment, not unreasonable cost.
Health care is a terrific investment but is locked between the jaws of two price control mechanisms, The Federal government's Medicare pricing mechanism and the insurance industry's pricing schedules that are a mirror image of it.
Nobel laureate Milton Friedman recently told an interviewer, "We have a socialist-communist system of distributing medical care. Instead of letting people hire their own physicians and pay them, no one pays his or her own medical bills. Instead, there's a third party payment system."
And, I would add, those third parties are very resistant to change. Their solution is not less regulation but more, not free-market pricing but price controls. Such that those who provide medical and health care have been eating the payment cuts they impose.
And everyone wonders, "How long can we sustain a system that relies on good will and the benevolence of physicians, nurses and others more interested in serving patients than in their own ledger sheets and quarterly earnings statements? "
Change
The forces of free market economics are working their magic in health care. We for our part have always trusted that our approach is the right one. One which welcomes change and embraces free-market forces. One which focuses on patient needs and the technology that best serves it.
A simple approach I describe as care-based costs rather than cost-based care.
We believe millions of uninsured Americans can be taken from that list with a few simple changes.
We believe Medicare can be saved, can be put on a sound fiscal basis, by prior funding mechanisms rather than the hand-to-mouth system now in place.
We believe Medicare physician payments need to be fair and equitable, and an incentive for doctors to see new Medicare patients, not a penalty situation.
And, we believe healthy lifestyles, wholesome choices, can not only save hundreds of billions of dollars,
But make life richer and more meaningful for millions of Americans.
O.K. Corral
Let me wind things up with a brief lesson from history. On this day in 1881, 925 miles southwest of here, in Tombstone, Arizona, the Earp brothers shot it out with the Clanton-McLaury gang at the O.K. Corral.
Historians say both sides were looking for revenge for what they perceived as pretty serious insults over the years. It was a classic zero-sum game.
No one knows who drew first. But when the 30-second fight ended, The Earps were bloodied but alive. Billy Clanton and Tom and Frank McLaury lay dead or dying.
Well, today, I am not proposing a zero-sum O.K. Corral scenario. I'm proposing a win-win scenario.
One in which free-market solutions begin to take effect at the margin.
One that puts patients back in the driver's seat, determining for themselves how their dollars will be spent, how their trust will be used, how the future course of medicine should proceed.
One, finally, that eliminates waste and errors, embraces new technologies and innovation, and relies on local decisions not arbitrary dictates from Washington or a corporate headquarters.
One that relies on the innate intelligence of the American people not ledger sheets and earnings statements, not politics and tax revenues and Congressional spending impulse, but the good judgment of you and your neighbors.
The power of one
So the basic question, at last, becomes: Well Doctor Hill what can I do? What can just one person do?
Well, what could Rosa Parks do about segregation? What could Gandhi do about imperialism? What could you, one of our nation's leaders do?
The answer is: A great deal. Begin with your intellect and your circle of friends. Talk about these ideas, and especially talk about bringing comprehensive, and mandatory, health education back into the schools. Talk with your elected representatives, especially those in Washington.
The AMA has a very effective, million-person grass roots advocacy program you might consider. If you want to join, just go to www.ama-assn.org, and enter the words: "Patient Action Network" in the search box. You will find direct channels to e-mail your members of Congress. And you'll be adding your voice to the chorus of individuals call for change.
No issue is more critical and far-reaching in America today than health care. We are at a desperate time in history where leaders have to step up to the plate. Denver and Colorado and America need you. And, I salute you for your efforts We all need the absolute best that is in you.
5 January 2007
How the U.S Can Ensure Energy Supply for the Future
by John D. Hofmeister
President, Shell Oil Company
Introduction by George Mitrovich – President, The City Club of San Diego:
It’s a great privilege to welcome our special guest today. I always think about what I’m going to say at a moment like this. Some moments are more challenging than others, but one of the things that I thought about this morning is that sadly, in our country, we have these extraordinary divides, and they’re not good for America. And at some point, we need to figure out how do we come together to advance what is in the interest of America. Not of a political party, not of a particular business or profession, but what do we do to advance the interests of America. And that seems to be one of our major dilemmas of the moment. My hope is – my prayer is – that we’ll find a way to do that.
One of the things that I have discovered in having an opportunity to visit with our guest is what a truly thoughtful man he is. He heads a major American corporation; it is a corporation that has been at the center of great controversy. Why would you deny the obvious? Nobody likes the price we’re paying for gas, but like so many things in this life, it’s infinitely more complex than it may appear. I am persuaded that if there is one person within his terribly important, critical profession that can explain that to us, this is the man. Would you welcome, please, the President of Shell Oil, Mr. John Hofmeister.
Thank you, George. And thank you to the City Club for the opportunity to come and speak about, yes, what I would agree is a complex subject and a subject that is dividing our country and if we’re not successful in putting together the component divisive parts, we could be facing an even more difficult and complex situation in the world of tomorrow.
I’m here to talk about energy security. Shell decided, in the midst of the hurricane tragedies of last fall, that we had to do something different because we saw tens of thousands of our employees literally working 24/7 through awful conditions to bring energy to the American people, only to be mocked, chastised by those who did not understand what was actually happening. The system broke last September, but it was a system that had been teetering for quite some time ahead of those hurricanes. The system I’m referring to is the supply/demand balance in the availability of energy to the people who need it. And so if I define “Who is Shell?” for the purposes of our conversation today, Shell is the supply side. We are the people – tens of thousands of us – who get out of bed in the morning or at night to go bring energy to the American people. All forms of energy, as I will try to describe.
So, we are the supply side, and that’s what we do. We aren’t always perfect. We do make mistakes, but we are motivated by what we believe is a genuine desire to enable people to live life as they choose it with energy to support it.
You are the demand side. You are critically important to us as consumers, as customers, as voters because you help decide our future by virtue of choosing our products or not, by voting for people who enable the regulatory framework in which we operate or not, and the people who ultimately will tolerate, or allow, or welcome a Shell station, refinery, re-gas terminal or another form of energy infrastructure into a community.
What I’d like to cover today is the story of the supply/demand imbalance. Let me start where we are—at the global tipping point. And, it’s not just a U.S. issue. On the back of affordable energy, the world economy has grown materially for the last 20 years, and as a consequence of that growth, two things have happened that affect us every day.
One: more people with more means to use energy are doing so in China, India, and other parts of the developing world. But not just the developing world. Also Western Europe, also the United States of America. More people on the back of affordable energy and economic well-being are using more energy: point one.
Point two: what has always been an historic phenomenon since the foundation of OPEC in the early 1970s is something called excess production capacity. OPEC for decades, in the ‘70s, ‘80s, ‘90s, always had somewhere around 10 or more million barrels of un-utilized production capacity. Since 2002, with this continuous economic growth and demand for energy, that notion – that notional excess production capacity – has disappeared. Today the world will produce 85 million barrels of oil and gas equivalent. The world will use 84-plus million barrels of oil and gas equivalent, and the oil used is not in the same location as the oil produced. So there is movement of this oil all over the world, but the point is there’s no more. That’s it, and if there is any supply disruption, if there’s any weather event or geo-political event, or any other consequential issue in the geo-politics of the Earth, that supply/demand balance can flip to where there is not enough supply to meet the demand in the short term, or over the longer term. This is a global tipping point, and we have to ask ourselves, “What are we going to do about that?” I’d like to share with you what our plans are at Shell.
In the first instance, we are a major producer of conventional oil and gas in this country. We’re in the Gulf of Mexico. We’re developing offshore assets north of Alaska in the Outer Continental Shelf. We’re in Pinedale, Wyoming, producing gas. We’re in the Barnett Shale. We’re in a number of other states producing oil and gas. We will continue to develop those kinds of conventional oil and gas resources, and we were pleased to see Chevron’s announcement last week of the find in the Gulf of Mexico. We’re on both the western and the eastern edges of that region and we have discoveries that we have reported as well. It didn’t quite get the press attention because of the size of what was described last week, and we applaud Chevron’s efforts. Having said that, we will all be working to produce oil in water that is between 7 and 10 thousand feet deep, and producing oil that is in reservoirs anywhere from four to five miles under the surface of the earth – as somebody said earlier today, “through all that rock and dirt,” under the seabed. That is a challenging technical adventure for all of us who are in that region. But, even if you consider the size of the Chevron find, as someone calculated, that’s about three years worth of oil in current demand in the United States so it’s not a full solution. When we look at all of what the oil companies are doing – and Shell included – is there enough coming from conventional oil and gas to meet the needs of today and the future? The answer is no – it is not enough. We have to do more.
And so, Shell is working in Colorado developing unconventional oil in the oil shale region of Colorado, where there are estimates of north of a trillion barrels of available oil and gas. A trillion barrels among Wyoming, Utah and Colorado, which we would develop with a different technology than mining; a technology in which we would drill holes into the oil shale about a thousand to two thousand feet deep, which for us is shallow compared to what we’re doing in the Gulf of Mexico. We would place heaters into the shafts. We would heat the oil in place until it drips out of the rock, and pump wet oil, liquid oil and natural gas out of the oil shale. We’ll make a commercial decision hopefully in 2010, but we need a regulatory framework, a royalty framework and the environmental impact requirements to make the project a go. Will that be enough? No. Not yet.
In addition, there are oil sands in Canada – some 1.3 trillion barrels of available oil in the oil sands of Canada – in which Shell Canada and also Shell Oil are working together, to try to bring hundreds of thousands of barrels per day to the marketplace of Canada, the United States and the world. Is that enough? No.
There’s liquefied natural gas not very far from here, in Baja. There is a re-gasification terminal being built. Our partner is Sempra. Shell and Sempra are working together to bring liquefied natural gas to the Mexican power production marketplace, and also to Southern California. We’re also working on re-gas terminals on the East Coast and the Gulf Coast, and I know others are working on other sites on the West Coast. Will they happen? We hope so because liquefied natural gas represents an augmentation of what is a declining natural gas supply in the United States. We have, through the 1990s, built hundreds of megawatts – thousands of megawatts I should say – of new gas-fired power generation plants, because they’re cleaner, they’re more efficient. That is taxing the natural gas supply, and we are not replacing reserves of natural gas fast enough. We need liquefied natural gas just to meet current demand, because there isn’t enough natural gas in the ground to be produced to meet current demand – let alone future demand. And, so we need these re-gas terminals, but now we have a dilemma – and we would welcome your point of view on this dilemma. The dilemma is: we know we need it, but many, many communities around the country say, “please, not here,” and that becomes the trickiest issue for us to manage locally, politically, as well as nationally in terms of where will these re-gas terminals go. Assuming we’re successful in putting these somewhere – a dozen or more re-gas terminals in the United States – is that enough to meet the energy demand of tomorrow? No. The answer is no.
We have a nation that has an abundance of coal. We believe that technology is a solution for using coal to move from what we’ve all previously termed “dirty coal” to clean coal. I grew up in Pennsylvania – I knew dirty coal in my youth, but recently I met with the Premier of Queensland, Australia, to encourage him to accept a commercial deal with Shell to produce with the utility in Queensland a 99.8 percent CO2 coal gasification power plant using Fisher-Tropes technology for producing gas from coal with Shell’s coal gasification technology. The gas would then be used to make electricity, and the CO2 would be piped to a sequestration spot under the continent of Australia where it will remain forever. He agreed to the deal and they’re off working it now. There are coal gasification power plants in China, where Shell has some 15 projects under way, in Europe and in Australia, but none in the United States. Not yet.
Coal gasification is an interesting process, but to explain it technically could take the rest of my time, so let me explain it in a non-technical fashion as a political scientist would describe it. Take coal; crush it, crush it to the consistency of talcum powder. The talcum powder is dried as you are crushing it so there’s no moisture left in it. Enter that talcum powder into a Shell gasifier with intense pressures and intense temperatures – well over 1,000 degrees Fahrenheit – and what happens? The pressure causes that talcum powder to explode into gas – the equivalent of natural gas. And, with the gasifier and certain membrane technology, enables the utility to separate the CO2, separate the nitrogen oxide, separate the sulfur, and the by-product is natural gas liquids that can be used as diesel – clean diesel with no sulfur. Very interesting technology that is available to us but, assuming we could make all of that go, is that enough to meet the energy requirements of the future? No, we think not. There is more that’s required, more that we can work on, because everything that I’ve described thus far is a pure hydrocarbon-based form of energy, and we believe that technology will take us in new directions. In Shell we have an expression, “The stone age did not end for the lack of rocks. The oil and gas era will not end for the lack of oil and gas.”
Technology, we believe, will move us in a new direction. Such technology includes bio-fuels. Now when it comes to ethanol and biofuels, Shell prefers second, third generation ethanol over first generation ethanol. First generation ethanol is that ethanol that comes from corn or from sugarcane. The reason we prefer cellulosic ethanol – or ethanol from municipal waste or wood chips or dry biomass such as straw, grasses or cornstalks – is that is doesn’t take away from the food chain. The food chain of America is as in balance with Americans’ diet as the energy is in balance with energy’s demand for gasoline and other energy. And, if something upsets that balance, ladies and gentlemen, guess what? As we’ve seen with gasoline where the price goes up when the demand goes up, if the fuel companies are also buying up all of the ethanol from corn, who pays for the feedstocks for chickens and the eggs that they lay or the hogs and the bacon they produce or the cows and the hamburger they produce? The American people will look at the oil companies and say you’re not only charging us high prices for gas-- now our eggs, bacon and hamburgers cost more, too, thanks to you people. We’d rather not see that happen. We’d rather see cellulosic ethanol come into the marketplace. But, are bio-fuels enough? We think not. We think there are other technical forms of innovation and energy called wind, called solar, called hydrogen fuel cells that can make a material difference as well.
In the case of wind, thank goodness America has a lot of wind. There are many ways to interpret that. Wind farms do make a difference. At the right locations, wind farms can produce electricity some 60 percent of the time, which is quite efficient, and the wind farm produces no CO2.
Solar also represents opportunity for electricity from the sun. Now, Shell has moved past the silicon-based photovoltaic cell. We have instead adopted a new technology based upon a thin film chemical substrate that looks about the consistency of cling wrap or Saran Wrap, which is actually more efficient than silicon in producing electricity from the sun. It’s also ultimately, we believe, less expensive and less energy-intensive, because, let’s face it, silicon comes from sand. It takes a lot of energy to turn sand into silicon and then it takes a long time to produce that silicon-based photovoltaic cell to bring more energy back from the sun. So, we believe that CIS, copper indium diselenide thin film substrate, is a preferred alternative for solar power – and that’s why we’re investing.
And then there’s the hydrogen fuel cell. It is possible, not in the next five years, maybe not even in the next 10 or 15 years, but perhaps by 2030 to 2040, to see mass-produced, comfortable, efficient hydrogen fuel cell-powered vehicles as a vehicle of choice in this country. But there is no time like the present to try to move in that direction, because, ladies and gentlemen, if you think back to how long it took for the oil and gas infrastructure of this country to come along and to be developed to its efficiency level today – it is a hundred-year story And so for hydrogen fuel cell technology to somehow be an efficient, effective replacement at some future point, it could well take a hundred years. But there’s no time like the present to begin. Is that enough? Conventional oil and gas, unconventional oil and gas, clean coal, liquefied natural gas, alternative fuels, wind, solar, hydrogen? No.
There is one more element that Shell believes is critical for the energy balance of the future to keep supply and demand correlated. The last item is the most difficult, and that is to change hearts, minds and behaviors in this country with respect to energy usage. And what we call for is a “culture of conservation” where in our hearts, our minds, and our behaviors we as consumers select more efficient products by choice rather than by regulation: more efficient vehicles for transport, more efficient homes, more efficient school buildings; where communities around the country put more pressure on local officials for housing code requirements that drive more efficiency in the use of materials and in the manner in which construction happens and in the final product. If the designers and the technical innovation that is possible through engineering and design can drive in our buildings, our vehicles, and our lifestyle a better use of energy, we do believe that the combination of all of the above – all of the forms of hydrocarbons, all of the non-hydrocarbon forms of energy, and a culture of conservation – will deliver energy security for this country and, frankly, the world, as far into the future as our grandchildren’s grandchildren could imagine.
We believe it will take that, and we believe the time is now for an effort to try and achieve all of the above through national leadership, through industry leadership, and through consumer appreciation and understanding. Because if we don’t work together, we will see continuous unresolved issues that put the tension on the supply/demand relationship as far as we can see into the future where “those that have, get, and those that haven’t, don’t.” And that, to us, is not an answer for the future of energy security.
So, I hope it’s an optimistic message because it’s all there, and the technologies are evolving rapidly, many of which are available now. I hope you will join Shell in the effort to achieve energy security through energy diversity. Thank you.
15 September 2006
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