Fred Smith, a Very, Very Smart Man, Talks About Oil
A few days ago I had the opportunity to hear Alan Murray of the Wall Street Journal interview Fred Smith, the founder of FedEx. Murray is an exceptionally skilled interviewer, and every sentence he elicited from Smith proved fascinating--if you want to know what's going on in the world, ask a man whose company flies thousands of planes to hundreds of cities every day--but looking over my notes just now I found that Smith kept coming back to the importance of increasing domestic oil production.
In 2001, he said, the typical American family of four spent $1,500 a year on gasoline. Last year that figure had risen to $4,000. "What we've witnessed," Smith said, "is the largest transfer of wealth [a transfer from the West to the oil-producing nations] in the history of the world."
"If the U.S. gets any significant economic growth," Smith said, "you can count on the price of oil being raised to extract a large share of the value."
"The oil producers would do that intentionally?" Murray asked.
"Of course," Smith replied. "There are a lot of smart people in Riyadh."
Since oil represents a globally-traded commodity, Smith noted, increasing production here in the United States wouldn't affect the price. But instead of transferring them to oil-producing nations, he insisted, we should "keep all those dollars bouncing around the fifty states."
Smith lost his father when he was just four, grew up in small-town Mississippi, attended Yale before serving two tours of duty in Vietnam with the Marine Corps, and then founded and built one of the greatest companies in American business history. If Mitt Romney is still pulling together his vice presidential prospects, he could do a lot worse than to add Smith to the list.