Citizens for Affordable Energy Update

Dear Fellow Citizens:

Thank you for the many comments and messages of encouragement, advice and concern, that you have sent thus far. Based on my reading of many thousands of your inputs, it is clear to me that Citizens for Affordable Energy touches a nerve among our fellow citizens and offers content and direction which we should vigorously develop and pursue. I look forward to working with you. Our first priorities are education of our citizens and advocacy of sound energy policy through them for the nation. We will need to build understanding and purpose across a broad and deep membership base. For the present time we must hold off asking people to join. We do not yet have tax-exempt status and therefore contributions would not be tax deductible. However we can communicate with one another over the coming weeks and months, awaiting such status.

This thank you extends across the country and touches many seniors, students, managers, workers, unemployed, teachers, truckers, small business owners, farmers, corporate professionals, service workers, and people from all walks of life who live in virtually every state in the nation who have sent emails. And we are only just getting underway.

There are many references in your notes about individuals and organized groups that have turned energy and climate issues into partisanship or ideology. As such they present an image of being either "for" or "against" specific actions and solutions, predicated on their strongly held beliefs. In other words depending where a person stands on matters like drilling for oil and gas or whether or not they believe or accept the predictions coming from climate scientists (on both sides of the issues), there is intolerance for any other point of view. You describe how they tend to "shut down" wider discussion of alternatives, regardless of the short, medium or long term implications and impact on real people during such time frames.

It is my hope and expectation that in the coming months people who are interested in Citizens for Affordable Energy will see our efforts as "pragmatic" and having impact in real time. That is we will be neither partisan as regards any political party nor ideological as regards any particular belief system on the right or on the left. We simply work on what works. We know hydrocarbons, e.g. gas, oil and coal work. Yes, we also know they have emissions implications, which need to be addressed over time. We also anticipate the development and support many alternatives which deserve the chance to work, as well. We also know that we need to distribute energy to where it is needed. And so our practical approach is to be inclusive of sensible solutions that make energy affordable.

In my last note I described briefly the "Four Mores" of Citizens for Affordable Energy. Many have responded to them in a variety of ways. Many also have urged greater urgency, saying that we have no time to waste.

As a reminder the Four Mores include: more energy supply from all sources to improve near, medium and long term affordability; more efficiency in the use of technology and conservation to extend the life of our energy supplies; more environmental stewardship to ensure future generations enjoy the benefits of sustainability; more physical and legal infrastructure to move energy to where consumers need it.

We sense the urgency and will move forward as fast and as prudently as we can. We have had advice from all quarters to "stay out of election politics," if you want to succeed. I believe in that advice. Because the parties and the candidates are essentially locked into their positions for now, we are too small and new to make an impact on them for the next several months. Our timing to launch ourselves nationally between the election outcome and the new Administration and Congress in January should be about right, even though to many of you we will have lost several months. Reality suggests that no new legislation will be forthcoming in those months, given the "politics of partisan paralysis" that surrounds us. And so perhaps we will not lose ground and will instead position ourselves to move quickly with our new government.

Citizens for Affordable Energy will not endorse a Presidential or Congressional Candidate in this election. In the interests of non-partisanship, we will instead support the American political process. This does not however prevent employees or supporters of our Company from personally being involved in or supporting the candidates of their choice. In the spirit of full transparency my own personal funds will support candidates in both parties, including both Presidential candidates, in amounts roughly equal between the two parties. It is the way that I conducted my contributions during my time as President of Shell Oil Company and it enables me to give voice to my non-partisan views then and also in my new role as Founder and CEO of Citizens for Affordable Energy.

Some of you have asked how T. Boone Pickens' plan compares to Citizens for Affordable Energy. Certainly our motivations are similar. We should produce our own energy rather than transfer our dollars and wealth to oil-exporting countries in the manner that we are currently doing so. We should invest in our own economy rather than in the development of countries who don't like us. We should develop our own workforce of the future to deliver energy to the U.S. rather than rely on continued imports. We should consider all alternatives, including wind, solar, hydrogen, natural gas, etc. We don't differ too much. So therefore we compliment T. Boone Pickens for the work he is doing. I do however have doubts about the availability of natural gas to fuel tens of millions of automobiles for two reasons: we don't yet have the ability to drill for it in the quantities that would be needed; secondly in countries where compressed natural gas is available, it is not popular with consumers. Also we have so much invested electric power production in natural gas today and plans for more in the years to come that it is questionable whether we can produce enough of it to both power our electricity plants and fuel cars with the same product. We also must be concerned about the price of natural gas for both uses. Currently natural gas prices are four to five times higher than the previous ten year average due to restrictions on drilling and prohibitions on importing liquefied natural gas. We are seeing the price increase in our electric bills today. In addition it would require an entirely new infrastructure in gas stations across the country, at the same time gas station owners are being asked to put in infrastructure for bio-fuels (ethanol and bio-diesel) and possibly hydrogen, for hydrogen fuel cell vehicles. At some point gas station owners and car manufacturers may run out of space and ability to supply so many different platforms and products. Another difference is that the goal of T. Boone Pickens' plan to build a wind farm and transmission system in Texas, a worthy cause indeed, is on a for-profit basis. This is his unquestionable right as a business person, and he should be commended for his willingness to fund it himself. Citizens for Affordable Energy alternatively seeks to benefit all Americans on a not-for-profit basis across the entire spectrum of energy supplies. So we support the work that T. Boone Pickens is doing, wish him well and hope that we can work together with him in the future to further refine our respective agenda and priorities.

A few updates in closing: as you may know, Citizens for Affordable Energy is now a registered company in Washington, D.C. So we are legal and can do business. We will begin to seek not-for-profit exemption from the Internal Revenue Service in August with the help of our legal counsel. It may take three to six months to accomplish that objective. Hopefully sooner rather than later. We have turned on legal work to enable memberships in all fifty states and to also enable the establishment of state and local chapters in the months and years to come. Last week I had the pleasure of meeting with Senator Jeff Bingaman (NM) who is Chairman of the Senate Energy Committee, to explain the purpose of our new company. He was pleased to learn about it and said he hoped we could work together in the future in analyzing and reporting on policy alternatives. Also during August and September we will be seeking capital funding from philanthropic sources to pay for the information technology, marketing and media plans, and critical staff to begin to do work for the future. Likewise in August and September we will be approaching nationally known individuals to invite them to consider becoming Directors of our Company and joining our Board. So as many of you who have started companies and run them well know, the start up work of a new company is time intensive and proceeds as fast as we can obtain the agreements of those we need to help us.

We again thank you for your early support and suggestions and look forward to continuing to keep you informed as we progress.

Best wishes,

John Hofmeister
Founder and CEO

Citizens for Affordable Energy

1302 Waugh Drive No 708
Houston, TX
77019
US