[MUSIC] Now that the price of oil is declining, it's not what it used to be. Maybe some of the countries will find it easier to cut or eliminate the subsidies, what you think? >> I understand your point, in fact, it's clear what you say is true. In fact, in some countries, a number of oil producing countries are trying to reduce. By the way, something which is very well stressed in some studies but is very very important, who benefits from the subsidies of these? In fact, there is a lot of studies will show you that most of the subsidies, who win if you pay only $0.02 for the gasoline? If you don't have a car, you don't benefit from any subsidy. So it has been shown that most only the 20%, the poorest population just get something like 5 or 10% of the city subsidies, all of us so very, very limited. So you have to progressively, you have to reduce but of course, it's very difficult in some cases. I take always the example of Venezuela. In the 1990s, the government tried to increase and beat the price of gasoline and you had huge protests in Caracas. And as far as I remember, 1,000 people were killed in the streets. So you can imagine the top of government panicked them to increase the price and to reduce subsidies. A good example or so was the example of Nigeria, much more recent. Two or three years ago, as the price of gasoline is very low in Nigeria, they subsidize again. As the government tried to reduce by 60 or 70% the subsidy, so the price of gasoline was close to the market value. And in fact, the disaster was into neighboring countries because because of the subsidies. Of course, what happened you have a lot of smuggling around Nigeria. You have products coming and you have especially the case of Bina, which is both a province and state in Nigeria country close to Nigeria. In fact, for a few weeks, there was simply no gasoline in the country because most of the gasoline was coming by small ships from Nigeria. And of course, because of the increasing the price, the supply of gasoline stopped. So what happen in Nigeria is the government reduced by 60% in the first steps of the subsidies. At the end, it came back and say we just reduce the subsidies by 30%. But it was successful in increasing a bit the price of the product and reducing the total subsidies. >> Let's come back for a moment to Europe because in Europe we also have a problem derived from the fact that there is advanced diesalization of the car fleet. We rely a lot on cars that only run on diesel and the demand for gasoline has suffered from this. >> True, it's a complete change in your business. We've tried the example of France already for that but we try to do so because it is an extreme example. This is a country with the highest proportion of the diesel cars in the total car fleet, the car population. I have kept this in mind in, 20 years ago, the demand for gasoline was close to 20 million tons per year. Now the demand for gasoline is less than 10 million tons per year. At the same time, of course, you have a huge increase in the consumption of diesel. Not only because we have dieselization of the car population, but also because what happened that's the case in most countries. You have most of the additional transportation is made by trucks. So you have huge increases in the demand for diesel, first by the cars but also by the trucks and. >> But this must cause a problem because out of a barrel of oil, given the quality of oil, you get necessarily some gasoline, some diesel and so on. If the only thing that you can sell is the diesel, what are you going to do with the rest? >> This is a good question. You can perhaps, to put it simply, if you have the first refineries will be totally refineries we had before the offshore refineries which were never raised on a traditional coal like which is a typical I would say. You get 20, 30% gasoline, in 20, 30% diesel and the rest was fuel oil. And because of the falling for the demand of fuel oil is worth 10% of the market, something like that. Most of the market is for gasoline and diesel and petrochemical shale, so a light product. So what we can do in a refinery is transform the fuel oil which is heavy by definition into light products like gasoline and diesel, more or less. Any way that you are stuck with a minimum quantity of gasoline and a minimum quantity of diesel. And in fact, as we have discussed, we have too much gasoline and not enough diesel. So we have in Europe, and especially in France, that is in Europe, we have refineries on. Where you're seeing too much gasoline, not enough diesel oil, and too much fuel oil, so clearly this is a very difficult situation. This has very bad consequences on the economics of the refineries. And perhaps we could improve a bit the situation by implementing new process in the refineries. But this is all usually extremely costly, and since the economic situation of the refining industry in Europe is poor, you have no money to invest. People just try to keep the refineries open, and to manage to get a few cents from each barrels they produce, but they cannot do much more. >> So what happens with the gasoline that doesn't have a market in Europe? >> This is always something which is surprising me as a way refiners manage to take, in fact you cannot sell your product. You have too much gasoline, you have too much fuel oil, you cannot sow this into seeds, it's clear. >> [LAUGH] >> They're not allowed to do this. >> Thanks God. >> Thanks God. So as they manage to find some market and something or so which happened today, we have this new situation. I would say, it's a quite new situation. For long, what happened? I said as a joke ,of course, that every morning, that was ten, even five years ago. Refiners in Europe or the managers were coming in the morning and praying for the market for gasoline in the US remaining a large market. Because this is a reverse situation in the US. In the US, they consume very large of figures, 5% of the population in a world, 20 or 25% of the oil consumption. Which means something, is a range of 20 million barrels a day in total. And half of this is gasoline, so ten million barrels a day, and they are repeat very often. Out of two gallons of gasoline in the world, one is used in the US, the rest is used in only one in the rest of the world. So you had a huge market for gasoline. The problem now is that it's a different kind of the so called light type oil, which as the name indicates, a light crude. By the way, this is replacing all the crude oil coming from Nigeria, Angola, West Africa. With this light type oil, you get a lot of gasoline. And of course, reversal on the demand side, you had a lot of efforts by the US government in order to reduce gasoline consumption. They replaced a bit of the gasoline by ethanol. It's not very good from an environmental point of view, from an ecological point of view. But they give subsidies to the farmers, so everybody's happy more or less. You ever saw a new quote we call a new regulation to reduce the consumption of gasoline. Just to give you an example, for instance, some time ago, I'm not sure, but having these huge vehicles that some people like. With one gallon, which is four liters, you can drive only 10 or 20 kilometers, something like that. As they want to go to some to stand out, with one gallon, you can drive 40 or 50 kilometers or miles, something like. And of course, as a consequence of this, you have a reduction in the consumption of gasoline. >> You mentioned ethanol, that's very interesting, what is the situation with biofuels? Are they making progress? Is there progress being made with biodiesel, with ethanol? >> You see, I would say, ten years ago, biofuels was supposed to be a very good solution to the problem of. Of course, we knew that we could not produce all the gasoline and the diesel from biofuels but it was supposed to be good. All of a sudden, at the beginning of 2007, what happens? You had riots in Mexico because of poor people especially were very unhappy because the cost of the basic food increased tremendously. And why is the cost of the food increased? Simply because the ethanol which is produced in the US is produced from corn. >> Corn. >> And corn is a basic food for the Mexicans, the low income, the poor population in Mexico. So you have a pick an area. You have some competition between food and fuel. And that's why the consumption of the biofuels. Typically, I would say that at best, we have something like it was a target in Europe to have 5% or some 6% of ethanol in the gasoline. You have or in most countries, you can buy pure gasoline, you can buy gasoline with a small amount of the ethanol. It is not developed. So what we expect, what people expect is that we go from a single generation one which was made from corn, from sugar cane, for instance, which was an efficient way to do it in Brazil. To a second generation or to make some biofuels from algae from seaweed. And that is still in the research step and we don't know what will happen with this but typically, I don't expect any big development of ethanol. Looking at biodiesel is still more limited. This is some kind of palm oil is easy because any kind of vegetable oil can be used to fuel your diesel engine. I remember when the price of diesel was very high, in France especially. In fact, you had people coming to the supermarket and buying the typical vegetable oil, which was sold for less than $1 when the price of the diesel in the service station was between $1.50 and $2. You save money, it was no problem for the operation of the cars. >> The car would run.