• With: John Hofmeister, former Shell Oil CEO

    This is a rush transcript from "Your World," February 27, 2012. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF "YOUR WORLD": All right, in case you are counting, 20 days, that is how long gas has been going up, up, up, now averaging -- now averaging about $3.70 a gallon.

    Well, you want to get these prices down? Well, Senator Chuck Schumer essentially said, drill, baby drill, just not here -- in Saudi Arabia. In a letter to Secretary of State Clinton, the New York Democrat writes -- and I quote -- "I urge the State Department to work with the government of Saudi Arabia to increase its oil production as they are currently producing well under their capacity."

    Former Shell Oil president John Hofmeister says Schumer has got it backwards. It’s not enough increasing oil production here; it's about increasing it, well, here, not there.

    John, they're not, though.

    JOHN HOFMEISTER, FORMER SHELL OIL CEO: Exactly. We're going the wrong direction.

    It makes no sense to ask somebody to do what we should be doing. Speaker Pelosi went over to Saudi Arabia when she -- a couple years ago, to say, please, can you pump more oil. At that time, the Saudis were pumping between eight and nine million barrels a day. They’re still -- there are about nine billion barrels a day today.

    I doubt if they have the excess capacity to actually produce more. This country used to produce 10 million barrels a day. We're under seven million. We have slipped three million barrels a day over the last 20 years, 30 years, and we're doing nothing about increasing it. We have had $4 gasoline before. The 111th Congress and a new president in 2009 could have started doing something that would have headed off this problem had they taken it seriously. No one page of legislation was passed with a super-majority of Democrats and a Democratic president.

    CAVUTO: Well, they say they are doing something. They say more oil than ever is being explored and drilled. You're saying a lot more could be.

    HOFMEISTER: They're convenient with the facts. We were at 10 million barrels. We are under seven today. To say more than ever? No. It's up a bit. But that’s because the Gulf of Mexico decline from the moratorium hasn't really hit yet.

    CAVUTO: Well, you say they blinked a little on Keystone. Explain.

    HOFMEISTER: Well, the southern Keystone extension was approved today by the White House, taking oil from Cushing, Oklahoma, where it's stored, to the Gulf Coast. It won't be finished until the middle of 2013 if all the permits are granted

    But suddenly with a rise in the gas price, I guess the Keystone is OK, not the part from Canada that really makes the difference, but the part from Cushing to the Gulf Coast.

    CAVUTO: But if you're going to blink at that, then if things get dicey enough, you could blink at the other stuff, too, right?

    HOFMEISTER: It's passive-reactive. How about some leadership? Some leadership would really be welcome. We have more oil than Saudi Arabia in this country, Neil. And we have more natural gas.

    We are the Saudi Arabia of natural gas.

    (CROSSTALK)

    CAVUTO: So the president, when he says he is addressing that, and people mistake his love of green technology and all this other stuff as divorcing himself from that, you don’t buy that. You say he is making our fossil fuels and the natural stuff we have a secondary issue.

    HOFMEISTER: He has taken traditional energy off the priority list until this year.

    Suddenly, we hear all in, all of the above. He could’ve been saying that for the last three years. But he has not. I'm very disappointed. I'm a registered Democrat. I'm extremely disappointed in the lack of leadership that we have not seen. And here we are. We’re going to have the highest gas prices in the history of the country this year, which will top last year's gas prices.

    CAVUTO: Well, he blames and others blame this growing friction with Iran as creating instability, that take that out of equation, prices wouldn't be this high. Do you buy that?

    HOFMEISTER: If we could take our own domestic resources and put them in our own marketplace and put Americans to work producing our own domestic resources, we could say to OPEC, we could say to the Iranians, hey, folks, take a hike. We don't need you. We’re taking care of our own needs.

    That should be our goal. And there’s every reason we can achieve it.

    CAVUTO: All right, John, thank you very, very much.

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