• With: John Hofmeister, former Shell Oil CEO

    This is a rush transcript from "Your World," August 6, 2012. This copy may not be in its final form and may be updated.

    STUART VARNEY, GUEST HOST: Gas spiking, and now the Saudis are reaching out to Iran. Is it time to start drilling here?

    Welcome, everyone. I'm Stuart Varney, in for Neil Cavuto. And this is "Your World."

    And the pain at the pump is getting even more painful today -- gas up another penny, up 24 cents in the last month alone, as oil continues to climb.

    And now word that Iran's president will be heading to Saudi Arabia for a summit next week, reportedly at the urging of King Abdullah.

    Former Shell Oil president John Hofmeister says that it is time to stop relying on the Middle East and get during right here.

    John, this meeting of Saudi Arabia and Iran seems like a sign instability in the Gulf. Do you think that we in America will take that as a signal to, yes, let's go and start drilling? Will we do that?

    JOHN HOFMEISTER, FORMER CEO, SHELL: Stuart, our dependence on the Middle East and particularly the Persian Gulf, has absolutely no sense whatsoever behind it.

    The fact that we know we have domestic natural resources here, in this country, and that we are not allowed to go after them by government edict, government policy is absurd, and the American people are paying through the nose for political whatever on the part of the administration. I call it political cowardice on the part of the administration to not allow Americans to have access to American natural resources.

    What could be wrong with that, Stuart?

    VARNEY: OK. But I want to know why. I think you are entirely right in saying that there is a very strong argument to say, yes, go out and drill. So, why don't we? Why are political forces stacked against this happening? I don't get it.

    HOFMEISTER: Because special interest money going into the president's campaign reelection fund comes from people who don't want to see more drilling.

    You follow the money every time, Stuart. I consider the American political system totally corrupted by special interest money, made legal only by the people who are collecting the money.

    (CROSSTALK)

    VARNEY: They always accuse you of being a special interest. They always said you, the big oil companies, you're the special interest that perverted economic policy.

    HOFMEISTER: There are special interests on all sides of the equation.

    With the current incumbent, the oil and gas industry, in general, is so unwelcome that I am sure they get very little money. And, meanwhile, the environmental groups who want to stop hydrocarbon production are putting a lot of money into the Obama campaign. I say stop both sides.

    Stop the special interest money from both sides and let the American people decide what kind of public policy they want, not special interests from either corporations, labor unions, environmental groups or anyone else. It's the American people who have the vote.

    VARNEY: All right.

    HOFMEISTER: Let them vote, up or down, on whether they want this or that candidate, with no private money.

    VARNEY: John, what do you make of this? The Obama administration has just announced that it will offer a $105 million loan guarantee to a California firm to convert household trash to ethanol, $105 million loan guarantee. That is public money which will go out there, but we will not build a pipeline with private money, costing the taxpayer nothing.

    HOFMEISTER: There is a desperate search for ethanol right now because the industry, the ethanol industry, has been unable to break the biochemical code.

    We are running short on ethanol, against the law that was passed several years ago. Oil companies are paying fines for not mixing enough ethanol in with gasoline because there isn't enough ethanol. Yet, they have to pay the fines.

    So, the administration is desperate to find more ethanol, so they don't have to change the law which was written too aggressively for what nature can produce. So, here is another loan going -- going out to somebody. I hope it is well -- I hope it has been well-researched, is all I can say.

    VARNEY: You managed to avoid using the word Solyndra. Very interesting.

    John Hofmeister, thank you very much indeed, sir.

    HOFMEISTER: Thank you.

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