Former Shell CEO on President's Push to Raise Taxes on Oil Companies

This is a rush transcript from "Your World With Neil Cavuto," May 13, 2010. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: All right, well, oil and gas prices dropping this week, but that might not last too long. President Obama is now backing legislation to immediately hike taxes on oil companies. The funds would help clean up the BP oil spill, among other things.

Here now, former Shell CEO John Hofmeister.

John, where is this going?

JOHN HOFMEISTER, FORMER CEO, SHELL: Well, I think the government needs to demonstrate to the American people in its own mind that they're in charge of the situation and they want to take actions that they can self-promote what they're doing as government.

Does this really need more money? I don't know. BP has said they're going to be responsible for all of this expenditure, so I don't know that they need a tax on the industry to get this particular spill cleaned up.

CAVUTO: But is it overkill? It's sort of like ripping up a policy in the middle of your policy. It's one thing for future premium coverage after an accident, but this is backdating it and — and raising the fees.

There's a liability cap. One congressman is considering raising it from $75 million to $10 billion. That's a big adjustment, right?

HOFMEISTER: Yes. Well, there's clearly an urgency to take advantage of the situation. Look, keep in mind, as I say in my book coming out on May 25, "Why We Hate the Oil Companies," the...

CAVUTO: That's very good, John, how you worked that in, by the way.

Keep going.

HOFMEISTER: The industry — the industry lives in political purgatory. They live in political purgatory because they really have chosen sides over the history of time and have been friends with the Republicans. So, when the Democrats are in charge, they're going to be vulnerable to any bad public policy that might come down the pike, keeping in mind the ultimate person who pays for all of these costs are consumers, not the companies.

CAVUTO: Still, you win very few sympathizers when your industry makes a lot of money. And you can argue that on, you know, earning per revenue basis and all that, that it's not nearly as generous as it would appear. But you're a convenient scapegoat, right?

HOFMEISTER: Oh, absolutely. You're a scapegoat if you make too much money. You're a scapegoat if you make a mistake. You're a scapegoat because you're in an industry that has a lot of risk. By taking the risk to benefit our economy, to create jobs, to bring energy to the American people, there are some in high office who want to make a scapegoat out of you.

But, you know, we're all big boys and girls.

CAVUTO: Well, there's only one in high office — no, there's only one in high office right now who is saying that. That's the president. Do you not flip over him?

HOFMEISTER: Oh, I think there are some in Congress who are also saying it.



CAVUTO: Because let me ask you, John, the reason why I raise that is that, if we're going to in these, no Gulf pun intended here, rough waters for a while, and we still haven't gotten control of this leak, and now the message from Congress is BP isn't the only one that's going to be paying, all you guys are going to be paying essentially for the sins of one.

HOFMEISTER: Well, if you roll back the videotape to the campaign for 2008, it was all about: Get big oil. Make big oil pay more.

This has been an ongoing theme that is not going to go away. I think we have to live with it. The best thing the oil industry can do is do its job, deliver energy to the American people, keep costs as affordable as — keep costs as low as possible, so the American people benefit, and you know, we will get through this — this political purgatory.

CAVUTO: All right, John, good seeing you again. Thank you very much.

HOFMEISTER: Thank you.

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