BP CEO Discusses Global Energy Oil prices are destined to slip somewhat in the coming years, according to British Petroleum CEO Lord John Browne. Browne says that high inventories of crude oil prove "that the global supply system works rather well."
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BP CEO Discusses Global Energy

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BP CEO Discusses Global Energy

BP CEO Discusses Global Energy

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So much of our economy runs on oil that those numbers influence just almost everything else we do. The chief executive of the British company BP is in the business of anticipating where the numbers will move. John Browne, known as Lord Browne in Britain, has to look years ahead when deciding whether to risk billions in oil and gas exploration. Each company makes its own predictions, and we heard Lord Browne's when we met him at a hotel just across from the White House. He expects oil prices to slip somewhat in the coming years.

Lord JOHN BROWNE (CEO, BP): My sense says that the prices today are high and will not be sustained and they're likely to drop. And I think something around $40 a barrel is where we should expect prices to average in the median term.

INSKEEP: High enough to fundamentally change the economy and the way that we use energy?

Lord BROWNE: I don't think so. I mean, we are actually, as a world, getting more efficient. I don't think people just stand there and take it. Necessity, price, allows for innovation, invention and a different way of life.

INSKEEP: Your company is making news this week by announcing more investments in alternative energy sources. You're talking about a changing energy market. You've also given a speech this week in which you underlined something that you think will not change. The world gets a huge share of energy from Saudi Arabia, Iran and Iraq. What are the implications with that?

Lord BROWNE: It is inevitable that for oil, more and more imported oil will come from West Africa, Russia and the Middle East--Saudi Arabia, Iran and maybe one day Iraq. So there are implications, I think, in the way in which people think about security, but the biggest implication is to make sure that there are enough choices that people have of where to get oil, and these are balanced with the choices they have domestically. So it says, as Winston Churchill said, when he thought about buying the old BP in 1915, he said the point about oil supplies is diversification. That was a pretty good statement to make just about 90 years ago.

INSKEEP: But you're saying that the various efforts at diversification, to some degree, aren't going to work. Those same old countries will remain a huge share of the energy market.

Lord BROWNE: Well, they will remain a huge share of the oil market. There'll be diversification in supplies of natural gas and indeed diversification of the type and nature of energy supplies which don't come from oil and gas but come from coal and from alternative energy supplies.

INSKEEP: Do you assume that there will not be a significant cutoff or dramatic shift in energy supplies from Saudi Arabia, Iraq and Iran?

Lord BROWNE: Well, I think a lot is about making sure that the world trading system works effectively and that people are drawn into the fact that there needs to be reciprocity, that trade works two ways and that people need to believe that customers need to be there. I would say this, though, that we've gone through, even in 2005, the equivalent of a massive supply shock, with the tragedies of the hurricanes in the southern United States. And in spite of all these shocks, in spite of all these shocks where we lost millions of barrels a day of oil production and gas production and refinery capacity, it is the case that even today, inventories of most products and crude oil are at or above historic levels. This means that the global supply system works rather well, that inventories can be reduced, that supplies can come from elsewhere, that actually demand is responsive to price.

INSKEEP: You don't think that, for example, a change in government in Saudi Arabia would lead to an oil shock.

Lord BROWNE: What I would say is most nations need to feed their populations and most nations therefore focus on the thing that makes them money so to do.

INSKEEP: Your alternative energy investments in wind power and solar power, do you see those as part of a gradual dramatic change in the energy economy or as primarily a side business that's growing?

Lord BROWNE: No, the energy economy is changing. It continues to change. It continues to go to more gas, and it continues to have more technologies that provide alternative energies. Now how that will balance out in 50 years' time is, I think, in the realm of the--huge speculation.

What is clear, I think, is that customers want access to alternative energy. They want it because it can be made in a way which is much less damaging to the environment and indeed produces much less carbon dioxide so it takes precautionary action against climate change, but it's also domestic because most alternative energy is made in the country in which it's consumed.

INSKEEP: One other thing, Lord Browne. There's been much discussion in recent days here in the United States about Vice President Cheney's energy task force meetings in 2001. It's been disclosed that oil executives did, in fact, meet with Vice President Cheney including executives from BP America, your American branch. Did you meet with Vice President Cheney?

Lord BROWNE: Not on this matter.

INSKEEP: For the energy task force that he was heading?

Lord BROWNE: No, no. I didn't do that. I wouldn't normally do it. But of course I do meet Vice President Cheney from time to time. That's hardly surprising, given that 45 percent of BP's activity is in the United States and I'd expect to inform him about what we do.

INSKEEP: What have you been telling the vice president or other American officials that you want?

Lord BROWNE: I never ask. I always say, `This is what we're going to do, and the consequence of what we see is the following.' I've always found that's the better way. In the end, governments have to make up their own minds.

INSKEEP: Lord Browne of BP, thanks very much.

Lord BROWNE: Thank you.

INSKEEP: This is MORNING EDITION from NPR News. I'm Steve Inskeep.

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