Exxon CEO primes the pump
Somebody who understands global oil markets and commodity pricing has finally stepped forward to shed light on the forces pumping gasoline prices over the $3-per-gallon mark. Unfortunately, Rex Tillerson works for Exxon Mobil Corp., not us.
After weeks of woeful posturing by political leaders of Republican and Democratic stripe alike, it was refreshing to watch the chairman of the world’s largest corporation joust with co-anchor Matt Lauer Wednesday on “The Today Show.”
Tillerson was unapologetic, to say the least, about the $8.4 billion Exxon earned in the first quarter. The company is in business to make money, he said, and will take whatever the market allows. Two million individual shareholders, as well as many pension fund beneficiaries, count on the company to do just that.
Exxon’s responsibility to the public, he said, is to make sure the nation has the energy to go about its business
He dismissed many of the initiatives kicking around Washington, D.C., as misguided.
Invest in alternative energies? That’s for competitors like BP who flaunt their commitment to biofuels. Exxon finds oil, refines it, and delivers it to consumers.
What about more refining capacity, the chokepoint many blame for high gas prices? Exxon has increased capacity in the U.S. at an annual rate of 2 percent, faster than the increase in domestic gasoline consumption.
Pricing collusion? Repeated investigations have never found any. Although Tillerson did not mention it, those investigations include one done by Washington Attorney General Rob McKenna, who last week reported finding no evidence of wrongdoing by gasoline retailers.
What about providing Congress with Exxon tax records? Sure, and what lawmakers will find are tax payments that have quintupled from 2002 to 2005, while profits have tripled. If Exxon was earning windfall profits, Tillerson said, the government was collecting windfall taxes.
Tillerson’s major flub was his cockamamie defense of the $398 million retirement package awarded his predecessor, Lee Raymond. That, he said, was all determined by disinterested compensation committees and consultants. That claim holds up about as well as Vice President Cheney’s professions of disinterest in the affairs of Halliburton, his former employer.
Executive compensation awards in the U.S. are booty rendered by well-manicured hands washing one another.
It would have been interesting, too, if Lauer had asked Tillerson about Exxon’s dogged reluctance to close the book on the Exxon Valdez saga. The company continues to resist payment of $4.5 billion in punitive damages awarded for harm done by the 1989 oil spill that tainted miles of Alaskan coastline.
Irritating as some of Tillerson’s positions might be, at least they are straightforward and consistent, qualities almost totally absent from the humbug coming out of Washington, D.C. Rebates. A halt to filling the nation’s Strategic Petroleum Reserve. Tax holidays. Investigations. Increased mileage standards. And, golly, maybe even taking away some of the subsidies that have been lavished on the oil industry over the years, $2 billion worth in the Energy Bill passed by Congress last summer. It seemed like such a good idea — at the time.
Exxon’s defenders credit the company for sticking to a long-term strategy of finding and developing new resources whether oil is $10 per barrel, or $75. The result, as Lauer noted, is that the company has reported four of the five most profitable quarters ever by an American company. The company has also added to its reserves in each of the last five years.
Which is not to go overboard praising Exxon. To Raymond, global warming was a spoof. And there’s that Exxon Valdez thing. Tillerson, in charge only since January, has shown somewhat more sensitivity on environmental matters. We’ll see. And not that Congress is any better.
If Tillerson is the villain in this gas pump melodrama, the heroes are badly overmatched.