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John Hofmeister (JIM YOUNG)
John Hofmeister (JIM YOUNG)

Interview

Putting a human face on a hated industry Add to ...

The title alone may launch it onto a few bookshelves in Alberta. John Hofmeister, the former head of Shell Oil, is making the rounds with a new book called Why we hate the oil companies - a topic that seems particularly apropos given the volume of invective aimed at Fort McMurray these days.

Greenpeace and groups like it are moving investors to petition for greater transparency and even withdrawal from the oil sands - an effort that produced hotly debated shareholder petitions at Royal Dutch Shell PLC and Statoil ASA this week. A major risk-analysis firm has warned that investments in bitumen are uncertain. Former U.S. vice-president Al Gore doesn't like the oil sands and neither, it became clear this week, does that other great prophet of climate change, NASA's James Hansen.

Of course, however dirty they may be, the oil sands are pumping out a liquid few would be willing to live without - something that became acutely obvious to Mr. Hofmeister in his days as a senior oil executive.

Has your book won you many friends at Shell?

Even when I was Shell's president, I said the industry has a real serious problem. The industry lives in public relations solitude. It does very little to engage the consuming public or the voting public or really anybody except who they think is a key stakeholder in what they're doing. As a result, very few people know what the industry actually does.

Why?

Over many years the industry has moved away from its customers by creating retail systems that get sold off to independent business people. The oil companies now look at their business as a wholesale commodity business. They don't tend to put a human face out there for people to get to know.

Is that not the reality of being a resource industry? Mining and forestry don't have especially good consumer relations.

They don't, so it's a bigger problem than just oil and gas. But if you look at the track record of most oil executives, they tend to be of engineering or technical backgrounds. They are missing a big part of the business value proposition that they could otherwise bring by worrying and thinking about the consumer.

I think of the goodwill that exists, for example, between the electronics industry and the consuming public. All of those companies do nasty things. But yet the consumer doesn't think about that because they think about the value that the product gives to their lifestyles.

My point is, if energy companies would think about the value they bring to consumers and utilized that value, there would be a whole lot better impression on the part of consumers - who also happen to be voters, who happen to influence elected officials.

We hate the oil companies because they don't do anything to make us love them. Yet we all drive, we all have great holidays. We can do all kinds of things that make our lives better thanks to what the oil companies do. But then they treat us like we don't exist. So we treat them like we don't care what happens to them. They're nasty. They dig up the earth and make a mess of it. And they make too much money so we ought to tax them more heavily.

Do you see any reason for optimism? The natural gas industry, for example, is putting a concerted effort into marketing its benefits.

It's so little and it's so late. But it's a beginning. Each company in its own way has to do its part. And they can't just rely upon an association's advertising.

Oil and gas companies have said the public won't believe what they have to say if they get onto the stage and start talking. They don't have the credibility.

They don't have the courage. In the U.S. over an 18-month period I took 250 Shell managers to 50 U.S. cities. The feedback we got was incredibly positive. I met 25 governors, 15 major city mayors, city council members, state legislators, half the U.S. Senate, about half the U.S. House of Representatives. And to a person, they would all say: We appreciate what you're doing. Where's the rest of your industry?

What's the risk to the oil sands industry, in particular, of not engaging in this kind of work?

You could actually create the unfortunate outcome of closing down or reducing investments over nothing other than politically-correct initiatives which sound good but don't actually make sense.

What's important is less advertising but more outreach. That means more appearances by energy executives on TV talk shows and the evening news. I ended up spending 6 per cent of my time talking to media across the country. That wasn't a huge amount. But it was far more than any of my counterparts.

 

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