Industry sector: Consulting

Energy Dependence on Unfriendly Sources and Lack of Realistic Energy Policy

HOUSTON, December 12, 2007 -- While consumers and energy industry executives do not often agree on the solutions needed to solve America’s energy challenges, a new survey commissioned by Deloitte found some surprising areas of agreement, said Gary Adams, Vice Chairman, U.S. Oil & Gas Leader, Deloitte & Touche USA LLP.

The number one issue reported by both consumers and industry executives is dependence on oil from places unfriendly to U.S. interests, according to the survey. A total of 29 percent of oil and gas executives and 27 percent of consumers cited this as the most critical energy issue facing America.

“The majority of the world’s oil and gas reserves are located in places many consider unfriendly to the U.S. With the growing trend toward energy resource nationalism, it is easy to understand the anxiety about being too reliant on these sources,” noted Adams. “It is a troublesome trend for consumers and industry executives and ranks as their number one concern in the survey.”

The second highest concern among consumers and industry executives is a lack of realistic energy policy for America. It was tied for being the greatest concern among industry executives at 29 percent and also ranked number two among consumers with 18 percent.

“Regrettably, most of our national efforts to address long-term energy challenges have been politically inspired, piecemeal, short-term projects that fail to provide reassurance to the industry and consumers,” added Adams. “Clearly, there is a strong appetite for a more coherent and comprehensive national energy policy.”

Surprisingly, neither consumers nor industry executives reported much concern about energy conservation. A lack of energy conservation was reported as a concern by only nine percent of consumers and six percent of oil and gas executives in the survey.

Consumers did report concern about high gasoline prices (19 percent), while company executives reported angst about diminishing domestic oil and gas supplies (20 percent) – but neither was a shared concern by the other.

In capital funding for alternative energy investments, some 67 percent of the executives expect companies to allocate less than 20 percent of capital costs, while some 55 percent of consumers agree that the commitment will be less than 20 percent. Consumers expressed a strong desire (72 percent) for greater investments in developing alternative energy sources.

In another disconnect between consumers and the industry, some 57 percent of oil and gas company executives believe they are playing an important role in addressing and solving America’s energy challenges while only 27 percent of the public agree with that.

Oil and gas companies see themselves as the best at solving U.S. energy problems (37 percent) while consumers rate themselves (27 percent) as the best problem solvers. Interestingly, each group holds venture capitalists in high regard as problem-solvers in energy (21 percent for consumers and 20 percent among industry). Consumers also rated the federal government higher (at 17 percent) as a problem-solver than industry executives (10 percent).

“The survey showed that generally we still have some differing viewpoints between consumers and oil and gas companies,” added Adams. “The industry needs to become more communicative and collaborative if it is to win public support for its efforts directed at solving our energy challenges, and to improve alliances with consumers and politicians to develop a more coherent, long-term national energy policy.”

As if illustrating the divide, 73 percent of the executives surveyed had a positive view about industry efforts to solve America’s energy challenges while only 12 percent of the public supported that view. By contrast, 50 percent of the public had negative views of the U.S. oil and gas industry.

About the Survey
The Deloitte survey on “The Role of Oil & Gas Companies in Solving U.S. Energy Issues” was conducted by International Communications Research as a telephone survey in October 2007. A total of 504 consumers were polled with a sampling margin of error of +/- 4.4 percent, and a total of 200 oil and gas industry executives were surveyed with a margin of error of +/- 6.9 percent.

About Deloitte’s Energy & Resources Industry Group
Deloitte’s Energy & Resources industry group serves more than 300 clients across all segments of the industry – Oil and Gas, Power Generation, and Regulated Utilities – including 90 percent of the Fortune 500 energy companies and 24 of the top 25 Fortune 1000 energy companies. In Oil and Gas, Deloitte provides services to upstream, midstream and downstream companies, service and drilling companies and integrated multinational oil and gas majors and serves the top 25 oil and gas companies on the Fortune 1000. Deloitte is the independent auditor to 7 of the top 10 of the Fortune 1000 utilities and provides auditing and enterprise risk services to nearly 70 percent of the Fortune 1000 U.S. power and utilities companies. The dedicated practice of more than 1,400 professionals in the United States is unique among professional services firms in that it brings together practitioners from four businesses – Audit, Tax, Consulting, and Financial Advisory – both in the U.S. and across the Deloitte Touche Tohmatsu global network of member firms, to provide comprehensive solutions to complex industry issues. Learn more at www.deloitte.com/us/energy.

About Deloitte
As used in this document, “Deloitte” means Deloitte & Touche USA LLP. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte & Touche USA LLP and its subsidiaries.