A Marine’s New Mission

What do tighter fuel standards mean for FedEx? Your company must be one of the largest consumers of petroleum in the United States.
We burn a lot of it, let's put it that way. But we got out of fuel hedging a long time ago. If prices rise beyond levels we set out explicitly, we simply pass along the surcharge to the consumers. A much bigger issue to us is the same issue that confronts the entire U.S. economy: what will [high oil prices] do to the overall growth and economic demand for business services? But if we don't act, the costs to our economy and prosperity are much greater. Look at the rising costs of commodities and food, much of which relates to the spike in energy prices.

You also want to tackle the supply of oil?
Unfortunately, we couldn't get the Congress to be bolder in opening up the outer continental shelf in Alaska to offshore oil drilling. There just wasn't much appetite to have one of these bruising fights over that issue. People's concerns are really unjustified. With today's technology, we could produce oil there away from anybody's daily visibility except a few sport fishermen.

With new energy-extraction techniques, you can access a lot more oil these days. Won't that increase supply without having to drill in Alaska?
I don't think there's any question about that. The real problem about some of this technology—for getting oil out of shale and so forth—is, you go and make these fantastic investments, and then the new field that Brazil found off its coast comes online, or OPEC decides it's not in their best interest to have a competitor making oil from shale, and they increase supply. It's very important to try to produce conventional petroleum from places like the outer continental shelf in Alaska, which doesn't have those incredibly high production costs.

Are you optimistic that the United States can reduce its dependence on foreign oil any time soon?
I am optimistic in the long and intermediate term for the very simple reason that I believe in the ingenuity of the free market. Silicon Valley is showering money on alternative fuel concepts of every stripe. People are talking about nuclear being a realistic option again. Battery technology is moving very rapidly. The oil markets have overshot, and this run-up in oil prices is creating a market-based reaction. But that shouldn't take the [spotlight] off the proposals that we made because they go to fundamental security issues.

© 2008