The Heat Is Online

ExMo chief: Energy Independence is "Isolationist"

ExxonMobil attacks US energy drive

Financial Times, Nov. 13, 2006

Rex Tillerson, chairman and chief executive of Exxon Mobil, the biggest western oil company, has hit out at "isolationism" in energy policy, arguing that attempts to pursue energy independence are futile and counter-productive.


His remarks, made at the World Energy Congress in Rome, provided support for calls from Opec, the oil producers' cartel, for what the group calls "security of demand".

The Opec summit in
Riyadh, Saudi Arabia, this weekend is expected to urge consuming countries to provide assurances that they will need increased volumes of oil in the future, to justify investments by Opec member states in increased capacity for oil production.

Mr Tillerson was strongly critical of the drive in the
US for independence in energy supplies, arguing that US imports could be curbed by increasing energy efficiency and boosting oil production by allowing companies access to restricted areas. "Regardless, no conceivable combination of demand moderation or domestic supply development can realistically close the gap and eliminate Americans' need for imports," he said.

He warned that pursuing energy independence "can have a chilling effect on existing trading relations", and quoted a report by the US National Petroleum Council warning that policies intended to foster it "may create considerable uncertainty among international trading partners and hinder investment in international energy supply development".

He also criticised countries that have changed contracts with western oil companies or moved to nationalise their oil and gas industries.

"Resource nationalism threatens to stymie innovation and slow energy development critical to continuing economic progress worldwide. The long-term costs of such counterproductive policies are borne to a large degree by the people of resource-rich countries," he said.

He argued that global oil production in 2030 of about 116m barrels per day - up from today's 85m - as forecast by the International Energy Agency in its "business as usual scenario", was achievable but only if resource-rich countries allowed access to companies with the skills, technology and investment capital to exploit those resources fully.

Mr Tillerson also blamed uncertainty for the rise in oil prices to record levels at about $95. He said there was a tight balance of supply and demand because there had been neither a significant increase in supply nor a sharp fall in demand in response to high prices.

The weakness of the dollar had also had an effect, he said, estimating that the fall in the dollar against the euro accounted for about $22-$25 a barrel of the rise in prices.