$80 for a fill up. gas prices are anything but regular. the head of western state's petroleum is my guest this morning. and later, the green technology that we do better than the chinese. our reporters kim mcnicholas and john schwartz of "usa today," this week on "press: here". good morning, everyone. i'm scott mcgrew. the question at the gas pump is

simple. what the heck is going on? the answers unfortunately are f far more complex. it's the iranians fault. tensions in the middle east. or its speculators, they are driving up prices. or it's the refineries which always seem to be under repair or switching to some new blend. maybe it's the dollar. the fed prints so many it takes more of them to pay for a barrel of oil. it's a pipeline problem, a lack of drilling. or higher gas prices are because of bigger demand from china. some even blame a political conspiracy. katherine boyd is president of the western states petroleum association. members of that association include chevron, bp, exxon mobile, shell, and a number of oil companies. joined by john schwartz and kim mcnicholas. a regular on the show.

she's now with pando daily. we'll talk about more of that later in the show. in the meantime, thank you for being here. let's start with actually a fact we touched on the last time you were here. so the viewer understands this. oil companies, much to peoples' surprise, don't set the price of oil. >> that's correct. as you've mentioned, there's many factors that go into what we pay at the pump. >> and other than the production of oil, oil companies don't even have a say in the pricing oil. you could turn off the oil. that would affect the price. but in that sense, in the market, you are not saying price it at this. >> yeah. and i think the first thing to start with in this conversation is really important is that we understand the frustration everybody is having over what it costs at the pump. i mean, obviously, it's a big topic today. but it's really important to sort of peel back the onion and sort of talk about what really goes into affecting that price. and many of the things you

mentioned do, but the single most important factor, 70% that goes into pricing a the the pump is the cost of crude oil. and you know, as consumers, what do we expect? every day to wake up and turn our lights on, heat and cool our homes. so it's on the minds of everybody. the cost of crude oil, which is what $106 a barrel right now. it's 70% of it. let's peel the onion a little bit. so if it's the cost of crude, what impacts the cost of crude? many things do. most importantly, as you have heard and you continue to hear and as the president continues to talk about, is the impact that iran is having. the geopolitical landscape does affect the cost of crude oil. why is that? it's for a lot of reasons.

and in particular, when you look at the unrest in the middle east, you look at, of course, the ability of someone like iran to be able to pull supply off the marketplace putting it through the canal to the persian gulf. that makes people extremely nervous about the ability of supply of crude oil to meet the demands of the u.s. and globally. >> the one thing that's really interesting. i worked for a company that covered oil and natural gas liquids. one of the things that i saw quite consistently are the paper trigs. the number of paper trades. it's not physical barrels trading hands that are driving up the price. a lot of it is speculators. >> it's funny. when prices are going up, we call them speculators. and when they are not, they are investors. they are a critical piece of any commodity trading. and when you talk to people who are really very deeply involved in that, it's a small piece.

it's probably less than 25% of even the conversation, but it's part of the conversation. >> it's a big part. >> do speculators -- when they are wrong, you'd think the free market would discourage wrong speculation. correct speculation is good. i think it's going to go up because iran is going to do this. if it's right, you get paid off. if you're wrong, you get pushed out of the market. i would think. >> and again, i don't want to get focused on it because in my opinion, it's a very small piece of the pie. and so again, the cost of crude oil is 70% of what you pay. that's raw material before you even make it into gasoline, diesel, any product that's usable. on top of of that, you have tax taxes. that's another 12-15%. before you even start talking about turning this material into something, you already have the

cost and taxes over 80% before we even do anything with it. >> so as a consumer, most people are wondering how high is the price going to go before it stabilizes we stabilizes? we're going to be north of $5. is there a magic things where things hit an inflection point? >> we don't speculate on what the price will be. what we can talk about is the cost. and the federal government and other people and energy commission certainly has views on this. but we do not and are prohibited by law to speculate on the price. but i do want t emphasize the cost of crude, taxes, the majority of the issue, and energy security plays in that. we can talk supply and demand as being part of the equation, but let's remember consumption is down. >> but the trend is heading in the same direction higher? >> i don't know. the cost of crude tracks very closely to the price of gasoline. very closely over time.

years and years of data dem sfrat that. it goes up, it goes down. >> it's the largest factor. >> absolutely. the biggest, sing factor. but that doesn't mean there aren't other factors. let's talk about california. obviously, california has its own issues. we make the cleanest burning gas on the planet, but it happens to cost more. so what's the average regular gasoline today? i mean, it's $4.35 for california and $3.35 nationally. so california obviously pays more for those reasons. also because it's the third-highest taxed. 37 cents is federal and state taxes. that's before you ever do anything with it. >> it's hard for consumers to understand. if these oil companies are passing on the cost of crude to consumers, then how are they

making money hand over fist? their profits continue to grow. >> we talked about this last time. let's talk about earnings. earnings are the way you measure a company's profit. blt. and earnings is net income cents over dollars and revenue. that's how everybody looks at a company's profitability. so our industry, 6 to 7 cents on the dollar. what's every other manufacturing? higher. 7 to 8 cents. so we are right in line. why does the media report high numbers? because we saw it in gasoline and diesel. but that's not how you pressure profitabili profitability. >> there is a frustration -- and i realize you probably share too, but i know how much an ipad costs. i go to the store. i know how much a tomato roughly costs. it might vary from time to time,

and i have no idea how much a gallon of gas is going to cost in six months, and yet it's the most important thing i buy. it feels like you're being tricked because you can't make sense of it. >> changing our habits and not driving anymore, i don't think there's any way to control that fact factor. >> it's the disconnect between understanding the two. >> it's interesting. when you look at other things people purchase. orange juice for instance. you could find orange juice at different places. but the difference is they have choice. they can choose which one they want. this is why diversification important. our companies are investing in algae, wind, solar, every alternative fuel you can think of. but that timing becomes important. you don't go from something

different right away. >> we have to take a quick break. we'll be back in a minute.

welcome back to "press: here." katherine boyd is representing the petroleum association. that's chevron and mobile and exxon. >> we're in a political camp right now. and the republicans as well as democrats are hand ringing over the price of gas. >> and blaming each other. >> they blame each other and obama. let's go to the president, the most powerful force. does he have much impact at all? >> i think he does relative to the policies that we all adopt and live under. so i think when you're talking about volatility in the market,

you want to try to find how you can make things as certain as possible. you want to take the uncertainty out of the equation. if you have uncertainty, you have uncomfortability. so you want to use all the resources at home. you not only make sure you have a secure supply, but you bring jobs to the economic recovery of the u.s. then you also look around for partners that are more stable. canada is the biggest exporter of crude oil to the united states. >> bigger than saudi arabia. >> way bigger. mexico is next. saudi arabia is next. but canada is our partner. so they will develop their oil source and they will sell it to someone. they would prefer to it to us. and china and india are waiting right behind us. so the keystone pipeline, in my opinion, is critical to what the the president could do to bring more stability to the marketplace for the united states.

>> any president can do those things. access domestic material. drill, baby, drill. >> better put. thank you. >> that's translation. are there things the president can do quickly? newt gingrich saying i can make $2.50 gas. ignoring the fact that it's here. are there high speed things that can be done or should they even be done? >> i mean, the problem is everyone wants the silver bullet and want it now and want it fixed. we're americans. we demand that. it's affordable energy. so i think it's really important that this is a time frame we're talking about that isn't overnight. you can't take the society we all enjoy in based on the products that we make and turn it into something else quickly. that's not an answer anyone

likes, but it's the answer. it does matter you put policies in place to sustain an energy policy that's diversified into the future and can actually help the situation. >> we can control the price by not buying it or cutting back on our use. right? >> will that help? >> remember, consumption is down in the united states certainly because people -- but why is that? because we're talking about a global commodity. not just a commod;t+ that's stuck in the united states. this is a global commodity. so when you have china and india thi thirsting for more energy -- >> if we don't use it, they will. >> absolute lu. it's a global commodity. we're not an island as the united states. >> katherine, if someone is disappointed by the way i didn't a sk a certain question, you've been on before. i will direct them to our website. chances are we have it there. we turn our attention to

electric cars. big potential ahead in the way those cars store their energy. america leads the way, but for how long? when "press: here" continues.

the american philosopher kermit the frog said it's not ea easy being green. that's been true for the obama administration, which has run into problem after problem promoting green energy. the chinese do it cheaper and faster. we are still ahead, though, in one key category. not only are we ahead, we will be hard to catch in the development of next generation energy storage. wind and solar are important, but so too is the development of efficient, cheap ways to put that power somewhere.

the south african entrepreneur behind the tesla electric car has said the future of storage is not in batteries, but ka pat to tors. the command for ka pastors is expected to blossom and is far ahead in developing the technology. mark mckue is going to give us an understanding of what is changing in electric vehicles. thanks for being with us. keep in mind, people are watching us on sunday morning so don't bore us. capacitors are in flashbulbs. so why do i care? >> well, a capacitor can make your car run better. we enable technologies like hybrid buss and more efficient wind turbines.

we are are green technology because we're a next generation storage device. e we make products that make the devices we're in more energy efficient. >> which made as much sense to me as the old commercials. >> we don't make the car, but we make the car better. >> so why is this a growing field? i have seen projections about the american capacity to make capacito capacitors. >> we're an example of that. we continue to expand our facilities. we bought a company in japan. that's helping us expand because the demand for our products in cars, hybrid buss, wind turbines, and other devices continue to grow. >> i have been visiting a bunch of labs around the country. one of the things i run into is the battery technology and what's going on in intel.

i don't remember them talking much about capacitors. is that because i was taking poor notes? or is it part of the equation? i honestly don't know. >> a battery in a super capacitor look the same on the outside, but they operate differently. a super capacitor is much more powerful than a battery. you can charge and recharge a super capacitor a million times. >> in a few seconds. >> and you can do it very quickly. those characteristics make it a great compliment to a battery. it's like comparing a hammer versus a wrench. they are just different tools in a tool box. >> but it stores less energy than a battery. >> correct. >> you believe these are going to take the place of batteries in electric cars? >> no. we actually believe they are

going to compliment. they can reduce the number of batteries needed, but it can be like a base load energy storage device. and a super cap can be used to handle inrush currents generated from a braking action. >> the car when it brakes, it generates electricity. that has to go somewhere. >> a super cap can be used to make a conventional car more energy efficient. you can use the cap to turn the car back on when the engine is turned off at an intersection. it's actually more prevalent right now than your conventional hybrids. >> so i never -- when we go to a dealership, what are we supposed to be asking for in terms of electric vehicles. how do i walk up and say i want that ultracapacitor.

>> what i tell my scientists and my staff, we are energy in a box. at the end of the day, what the consumer wants is a low price, cost effective method of achieving high energy efficiency or better performance. what's going on behind the scenes, that engine is actually turned off at the intersection. so when you are at any length of stop, the engine turns off so it doesn't waste fuel. and when you hit the gas pedal, the engine turns back on and accelerates. that's what is one of the applications of using an ultracapacitor. >> we are ahead in this technology. how do we stay ahead? isn't it fairly simple device? how is it that the chinese won't catch up? >> we have to make a deal with china. >> it's deceptively simple.

companies spent years developing the processes used. we use to make our ka pat tor not only reliable, but energy dense so the more energy, the holy grail in our field is to have a higher energy density product. i don't foresee it entirely replacing the battery at that level. but as you improve the energy density of the ultracap, imagine a product that has an energy storage device on board. let's say an led device. the energy storage device never needs to be replaced. if you could do that with your cell phone or laptop, that's the kind of improvements you can target with higher energy density. >> don't make something that never needs to be replaced. how do we stay ahead of them? we got killed in solar here in silicon valley.

solar was a disaster. how do we stay ahead this time? >> well, simply put, we are continuing to invest in research and development. at my company, for instance, we spend more money on research and development than in any other aspect of our company. we're looking to improve the energy density of our products. and we build the products in the u.s. all our products are built here. the company i just mentioned to you that we acquired in japan, i'm relocating the production facilities to the united states. >> why? >> it makes good economic sense for us. we increased the high capital equipment and we can increase the throughput, our cost of goods goes down. we're taking their capacity and building all the cells for both production lines here in the u.s. we're going to bring all the machines and jobs right here. and also it helps us be very mindful of our property.

some of the ip we possess is not just in patents but in processes. as soon as you export those things overseas, that's when you set yourself up for competition. >> we have to leave it there. ceo, thank you for being with us. up next, pando daily and snow gliding. two words that sound made up. when "press: here" continues.

welcome back to "press: here." you are looking at, what are we calling this now? snow gliding? >> snow gliding. silicon valley tech executives are getting into this new sport. that's just being pulled by a kite as you're skiing. where it turns into snow gliding is when you get enough power and

mother nature takes you into the air and you fly. >> you will be doing a video report on this for pando daily. regular viewers know you were with forbes, but you have made this transition to pando daily. >> i did. i've always wanted to work for her. she's an amazing talent in terms of building her brand. >> she hired you in the last week. >> she did. >> why make the move? >> it was one of those opportunities i couldn't pass up. this would be the fifth time i had the opportunity to build a video department from scratch. and i love being in that startup mode. >> here's your free pub llicity shot. >> this is the official pando daily shirt. what does it say? >> i'm an investor in pando daily. >> what's the joke? tell us the joke as far as i'm an investor. >> because a lot of folks in silicon valley have invested in

pando daily. but at the same time, it's just full disclosure. it's like a reporter that invests in a stock. at the bottom, you say i invest in this particular company. but you know for all of us who have been hired, we're all really great journalists. we're going to report what we report. and we will fully disclose at the bottom and say this person invests, but that's not going to affect how i report. >> i realize you're not in management. you're one of the staff. you can't speak for management, which is sara lacy. but was it ever a factor that i'm going to be covering the people who fund the thing -- >> absolutely not. it's a fantastic blog. it provides great information. it fills a niche in technology, which i think was lost when purchased by aol.

>> so you'll be doing the same things you were doing for forbes. >> yeah. >> you do video well. >> i do video well. >> i just insulted her. >> that's our show for this week. my thanks to my guests. you can find this and every episode on our website. i'm scott mcgrew. thank you for making us a part of your sunday morning.