coming up, why is gasoline so expensive and what can washington really do? the president of the western states petroleum association is my guest this morning. and later, nick woodman. his little video cameras make just about anybody look like a superstar. our reporters this week on "press: here." good morning, everyone. have you ever wondered as you

filled your gas tank where that gas comes from? few people realize it, but one-third of all the oil in california comes from california. >> gasoline. liquid power to run millions of automobiles everywhere. yet how many knows what happens to the gas after it is poured into the gas tank? >> you weres out f turns out th consumer doesn't know that much at all. for instance, is gas sold at this 76 station any different than the gas sold across the street? and why is it two pennies cheaper? did the 76 gas really come there a 76 refinery? >> i asked my attorney general to look into any cases of price gouging. so we can make sure nobody's being taken care of at the pump. >> politicil tisiticl tisiticia something, but can anything

really be done? we have the president of the western states petroleum association, an umbrella group recommended by big oil companies. and normally this when we start doing the questions. however you want to draw your attention to this and that is one of the big oil companies is chevron. chevron makes this show possible through its sponsorship. i'm the only guy who gets to decide what the questions are. that out of the way, good morning to you. >> good morning. >> let me start with this idea that americans love cars but they don't like the oil companies very much. oil companies are unpopular. is that fair? >> i don't think it's fair. but everybody travels every day to the gas station. and so that is something they deal with front and center in their lives.

and nobody likes to have to deal with high gas rises. hopefully we'll talk about why that is. >> and we will. but that goes to that theme of everybody gripes about high gas prices as they get in their car by themselves and they drive 50 miles to their work and say i don't understand why gas prices are so high. that's what i'm trying to get at. we are both your opponent sometimes and your biggest customer. >> and i think it's really important for folks to understand it's a complicated issue obviously, but when you peel away that onion, you begin to really understand what he's going on. and that's helpful i think for the consumers to understand that. and i think the reporting that's been going on about gas prices is getting better and better because everybody's getting educated. so you start with something like, well, looking at these recent strends, why are gas prices going up, why are they going down, what's causing that. and you start asking yourself really what impact does the oil -- or the crude prices have on the cost of what we all pay

at the gas pump. >> what impact does the price have on the cost of what we pay? >> two-thirds to these-quarters of what we pay at the gas pump is from the price much the cost of crude oil. so that's before it's ever refined or brought to a gas station. why is crude oil important? it is the raw product. comes out of ground. has to be made into something valuable. >> oil companies don't set oil prices. corn farmers don't set corn prices. they're as surprised as everybody else when they see the price go up sometimes. >> absolutely. and a lot of things impact the rice it at the pump. a lot of things impact the cost of crude oil.price it at the pu. a lot of things impact the cost of crude oil.it at the pump. a lot of things impact the cost of crude oil. at the pump. a lot of things impact the cost of crude oil. >> i remember stories of some traders trying to bump up to $100 the price of crude just so they could say it was $100 and then it fell.

there are people at one end of the system surely gaming the system and playing with prices at that end. >> well, look at the agencies that track this. as an association, we don't track price. we're in tnot allowed to. it's actually against the law. so you look at the agencies responsible. federal government, international agencies. and when they track the price of crude oil to and relative to the price we pay at the pump, it tracks very closely. and so things that influence that are where does the oiled come from. the oil comes from a lot of it comes from the middle east, we all know that, and so geopolitics play in this discussion. what's happening in those countries sets the stability in the marketplace. and that has a direct impact on what that cost of crude is to get it out of the ground. and that finds its direct way to the price at the pump. >> what's going on now? we're in the summer driving

season where prices normally tend to peak and it's actually seeming as though they've come off from their highs. what explains that? is. >> when you look at the spikes that we recently had in the gasoline price, a lot of those were tied directly to the activities in the middle east. north affair characterizatirica. it lends itself to people being very concerned about where will the next barrel of crude come from and will we have enough of it. so when you track those price spikes, they track exactly with the spikes in the price of gasoline. >> geopolitical is very important in that equation. >> doesn't oil become like a political football an awful lot of these oil producing countries? >> absolutely. >> in terms of how much they'll produce and put in the market. >> on when you look at opec who obviously controls about one-third of the oil he reserves

ins the world. and that's the 1 oil producing exports countries, they have a lot to say about that.3 oil pro exports countries, they have a lot to say about that.the world. and that's the 13 oil producing exports countries, they have a lot to say about that. >> they go both directions. do american companies increase and decrease the amount of oil they pump based on price, as well? >> we would love to increase our access to the united states. we have so much reserves here that we aren't able to access. right now we only have 6%. >> and i realize you represent the western states of the united states when it comes to big oil. but in general, we know opec turns a nobody, but do companies themselves ever do that? >> no. we own 6% of the world's oil at this point in time. not that we can't access more, but that's what we currently own. so that's a small percentage in the marketplace p so the market lays is set by those that own the oil. and that's the national oil

companies, audi arabia, not the investor owned companies like she have rhonest, exxon, bp. >> the price stays relatively flat. so when the price of oil change, propertieses can enormous or much smaller, but the cost of getting it out of the ground stays stable. >> i love it when the reports come out and they say everybody is making too much money. of course they make a lot of oil, gasoline, jet fuel about. so what gets reported is that. about but when you step back for everybody who looks at earning, it's always net income versus revenue sales.t but when you st everybody who looks at earning, it's always net income versus revenue sales. but when you ste everybody who looks at earning, it's always net income versus revenue sales.but when you step everybody who looks at earning, it's always net income versus revenue sales. but when you look at cents on the dollar, our companies are flat in the middle. so we make 6 to 7 cents on the dollar depends. u.s. average, all other industry, 6 to 7 cents on the

dollar. so there's just as many people who make more than the oil companies, just as many who make less. we're basically flat in the middle. >> let's take a quick break ironically for an ad for an oil company. and we address that had earlier. "press: here" will be back here in just a minute.

we're talking about oil. >> we have been talking a lot about pricing and obviously i come from a country or pet control is really expensive, double the price of what you pay here, so i think i'm getting a bargain. >> excellent. >> i do remember first coming here in 1996. but i want to slightly change the focus a little bit and ask you about reserves. because i know when this is a crunch or there's something happens in the middle east, then you have to look at using your own reserves. i'm interested in how much gas

or oil of in research for any kind of dire situations and what happens, what triggers the use of that kind of reserve. >> and the rope people talk so much about wanting to access who are reserves here everyone in california frankly is so that you have the ability to deal with those kinds of situations. we have such valuable reserves off the california coastline and we know they're technically recoverable. it's in ts no's not like we don they're will. >> you face a lot of opposition. >> and it's an interesting conversation to have because i have a lot of friend high school the environmental community and we have shall discussion. if you either produce it here or you import it, and if you don't produce it here and you're not for that, and you're not for imports, then it isn't going to it fall from the sky. so it's an interesting conversation to have and that's why people go to alternative

renewables so quickly in that conversation. which is fine. we need to diversify our portfolio. but right now what is safer? that's also obviously a wig issue right now given everything that's happened. but off the california coastline and just -- let's just take the united states. we have enough reserves that we can access that would power 60 million cars for 65 years we have enough natural gas that we know and can find that would heat and cool 60 million homes for another 160 years. we could replace all the imports to the yuunited states for 36 years. >> that's what you can access? >> yes. >> you mean reserves in barrels. s >> yes. so there's millions and millions of barrels. and trillions of cubic feet of natural gas at our fingertips. >> how long would that keep us going for here? >> i just give you an example.

right now we import 60 pur 60%. we could replace that for 16 years if we were able to access these reserves.36 years if we were able to access these reserves. >> i think she means specifically in barrels. the sort of thing that politicians say we ought to access like the strategic reserve. let me change the question a little bit. politicians often talk about with the economy we'll do something about it. i think it if they were honest they would say there's nothing really we can really do. gas prices are the same way. if you put me in office, we'll get it resolved. with can politicians do anything aside from taxes? >> aside from taxes because in california we have the highest taxes on our gasoline than anyone in the nation, but certainly they can. if you can allow about for more production, what does that mean? jobs, revenues, every barrel we

produce. some of that revenue goes to support the government and social services and everything else. so jobs and economy are absolutely essential. so they have a direct thing to do relative to that. they could allow us to use our own production, create our jobs here, increase our energy security. we'll never be energy independence when we import 60% of what we need, but we could be a lot more energy secure. and those politicians absolutely can do something right here in california, u.s. and every other state. >> let me ask, how big a setback was the bp disaster in the gulf of hex compamexico in terms of a climate that would allow the exportation of those reserves? >> i think it is a game changer. we will hopefully get back there, but it was a terrible event and obviously the individuals that lost their lives, the impact to the environment, that has shadowed a lot of the conversation. and so i think it -- lessons

learned, we brought all kinds ever good things out of that to help us in the future just like wewe had the 1969 oil spill in santd baa barbara. but it has been a game changer. we have to access those reserves. and how do we do it that is safe. >> we appreciate you being with us this morning. up flex on "press: here," what if you woke up one morning to find your biggest competitor called it quits? the strange story of the go pro camera founder joining us next.

well come back. someone once said we're the hero of our own story. i want to be the hero of my own movie. now, that's not me. but it could be. anyone with enough courage and $179 can do this. courage for the skiing, $179 for the go pro hero camera. a small solid state high definition camera that could be mounted to just about anything. >> go pro camera is about the size of a rice crispy treat. >> reporter: here this magazine reporter wears three goe pgo prs to capture a ride on an electric motorcycle. pros to capture a ride on an electric motorcycle.

they not only bring you close to the action, they give the viewer an unusual perspective from, say, the end of a surfboard. the cameras are so good they're used by the discovery channel and by professional news photographers. and remember this shot from the rescue of the chilean min miner? that, too, was a go pro. nick thought it up while surfing. he and his then girlfriend now wife raised capital by selling belts made of seashells. so you sold seashells by the sea shore and you made a video camera out of it. normally i'd launch right into tell us about your hot moment. the biggest video camera seller in the world at one point was

cisco systems and their flip video camera and they just quit. tell me about that morning when somebody called you on the phone or you read on the internet your biggest competitor just disappeared. >> it's interesting introduced them as our biggest competitor. >> your biggest other competent that made a similar twidevice. >> it definitely helped. starting first that the flip camera wasn't really a camera to go pro in that consumers use our products for different reasons. a consumer would pick a flip camera to shoot a party or a graduation or something like that. whereas our customers are really use ago pro to capture their live's most passionate or engaging moments or activities, where a traditional camera is

just too inconvenient to use. if you're going rafting and you want to wear it on your helmet. you're surfing and you mound the camera on the board looking back at you. you would never use a traditional camera for that. >> people try. >> people try. >> do you think you picked up any sort of business from flip phone? >> well, the timing cooperate be better because we just launched into best buy nationally and they now have a big hole to fill. flip was a big business for them and that's going away. i think they'll sell out of product a little later this year. and those retailers now have a whole to fill and as go pro's trajectory is going up to the right in a quick and big way, we're an ideal filler for that hole in a flip left. perfect example of the

opportunity that's been created for us at best buy is later this summer, there is a go pro is giving a large end cap placement at best buy with terrific display showing the quality of our hd footage and that opportunity came to go pro quicker thanks to cisco's shuttering of flip. >> so what about the kind of general thing going with mobile phones obviously popularizing people taking video? this week i think applicationer had said their most popular camera for people was the iphone, iphone 4, 3g, 3gs. in terms of what people are doing, how much has that helped your business that people do want to take pictures of everything and take little videos of everything going on around them? >> it becomes a part of people's every day be may have to document their lives and share it online. and it's a way for people to enhance their social profile. >> so your timing has been really good in that respect.

>> fantastic. a smart phone or a flip camera is great for capturing stationery moments, let's call it. but when you're being active, you don't have your hands free to hold the device and capture yourself. let alone turn the -- mount the camera and turn around and get high quality footage. that's what a go pro is for. so we enable people to enhance their social profile by capturing and sharing footage of themselves during some of their most exciting moments this life and that helps them communicate more through facebook or youtube or what have you.ithis life and that helps them communicate more through facebook or youtube or what have you.nthis life and that helps them communicate more through facebook or youtube or what have you.and that helps them communi more through facebook or youtube or what have you. >> if you had shown this to us five or ten years ago, you would have said this is a $10,000 camera instead of $170 or something like that? >> ranges there $170 up to --

$180 up to $300. >> six years from now, that won't be a $170 camera. how do you ride to the bottom? at some point this is going to be -- it's cool now, but six years from now, it will be something, well, yeah, there's hd cameras in every pen now. just get them at the drug store. >> well, i don't know that that will be the case. we're not strategizing to ride it down to the bottom. we're straet guitegizing to gro there. go pro has an incredible opportunity through our accessories business. we built an ecosystem of products and accessories -- >> one on your wrist, one on the mount -- >> yes. the core camera is the world's smallest full 1080 p camera. >> a simple design. >> you ti >> and you have a waterproof mount there.

in some ways that is your biggest as set is all of cool things you can do with it, not really -- the camera is cool, too, but not the camera itself. >> the camera captures such incredible content that it sparks the imagination of our customer and they ask themselves what who are can i do with this camera. what new perspectives can i capture. so we make a lot of accessories that take it do it yourself out of that. so there is a limitless number of ways to use our product, so we position o we think our opportunity is very broad and go as long way to sustaining our margins. >> it almost sounds as though you don't really want that market of taking graduation pictures and that sort of hinge.

are you just willing to cede that to smart phones? >> yes, i think that go pro has been so successful because we've addressed a worldwide consumer problem of how do i capture content video and photos of myself and my friends during activities where i can't use another camera. it's incredible during all these decades that nobody addressed the simple problem of how do we make it easier for people to use a camera during their favorite sports and how do you turn it around on themselves. traditionally if you want any footage of yourself doing something, you need to have a friend shooting you. there's a problem, you need another person. and then they need to be willing to do it. but while you're out having fun, everybody wants to be engaged in the activity, not necessarily the one yoowoone using the came. so we've enabled people to be their own production company in a way and turn the camera around

on themselves and capture this incredible footage that is of a quality you really only see on tv. >> and one last question. did you an paticipate the broadt implications of this? i was watching 101 ways to leave a game show. there must have been dozens of your products in that show where regular television, the myth busters use them all the time, did you see that coming? >> we did. one of our goals is to make it easy for people to capture professional quantity content of themselves and their lives. and in doing so, we built a professional quality capture device that now is the best selling small form factor hd camera to hollywood and professional production companies. and it really validates the product that we built at go pro. we had some hint of it and now to see it explode like this has been fantastic. >> we appreciate you being with us here this morning. we'll be back in just a

applicants.

that's our show for this week. my thanks to my guests. back next week. thank you for making us part of

your sunday morning.