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ExxonMobil CEO: Energy Independence 'Not Realistic'

August 18, 2008
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Energy independence is "not realistic for the United States or almost any other country," and it may not be the best strategy to pursue, ExxonMobil CEO Rex Tillerson said last week.

Tillerson, who helms the world's largest publicly held company, discussed U.S. energy goals and defended his company's record profits in an interview with ABC News' Charles Gibson.

The United States, said Tillerson, "should be developing, again, all the supply sources and all the options that we can develop in a way that's efficient and is going to provide energy at a cost that Americans can afford" instead of focusing on independence from foreign energy supplies.

"I'm not sure that it's even desirable for the United States to pursue that as a goal," he said. "Our country's economy is so interdependent with the rest of the world in so many areas of, not just commodities, but capital markets...I'm not sure why we would view energy any differently than the way we view the rest of our economy."

Presumptive Democratic presidential nominee Sen. Barack Obama earlier this month said the United States could produce enough renewable energy to replace all U.S. imports of oil within 10 years (see NGI, Aug. 11). Tillerson challenged that claim.

"It's going to be very challenging to achieve that goal, in that period of time," he said. "And again, so much of the energy issue that the United States deals with and the world deals with, people I think do not have an appreciation for the lead times that are required."

Tillerson also challenged Sen. John McCain's solution that calls on energy companies to "drill now, drill here" (see NGI, June 23). McCain is expected to be nominated in September as the Republican presidential candidate.

"We can't drill our way out of this problem, just like we can't conserve our way out of this problem, just like we can't alternative fuels our way out of this problem," Tillerson said. "There is no one solution to this; there's an integrative set of solutions. And you have to undertake them all. So when the whole debate focuses around we have to choose this one solution or that, people are missing the point."

Energy policy, he said, is a big issue, and "for people or policymakers to pick one as being the winner is really shortsighted...And that does get to the question of are we doing everything here at home that we could be doing? And I think most people have come to the realization that, for many, many years, the United States has not fully developed its own natural resources."

ExxonMobil is investing billions to develop new oil and gas resources around the world. This year it already has spent around $12.5 billion for exploration and development, but about 55% of the company's profits were spent over that period to buy back stock.

"We haven't found an alternative to invest in that makes a lot of sense to us," said Tillerson. To make a "meaningful difference, we've really got to find a way to change those technologies to provide those alternative forms of energy on a much larger scale and at a cost that people can afford..It doesn't do the consumer a lot of good to substitute an alternative fuel that costs $5 for gasoline that costs $4."

In "20, 30, 50 years down the road," ExxonMobil plans to "continue to be the most efficient producer and most environmentally responsible producer of oil and natural gas, to develop the next generation -- which is not available today -- the next generation of replacement fuels for the future."

Tillerson during the interview also defended the oil giant's profits, explaining that the $11.68 billion earnings in 2Q2008 was matched by the size of the company's worldwide operations. ExxonMobil's quarterly earnings rose 14% from the same period of 2007 (see NGI, Aug. 4).

"I saw someone characterize our profits the other day in terms of $1,400 in profit per second," Tillerson said. "Well, they also need to understand we paid $4,000 a second in taxes, and we spent $15,000 a second in costs. We spend $1 billion a day just running our business. So this is a business where large numbers are just characteristic of it."

ExxonMobil's CEO said he could "understand why people are very upset and why they're very worried and concerned about their ability to deal with these high prices. It does bother me that much of that is directed at us. Our job is to provide energy, to provide it in a means that is reliable. And we hope we can provide it in a means that's convenient as well to the consumer."

By using new technology to increase energy supplies, oil and gas costs will come down, Tillerson said. "What we can do is add new supply and to provide means for people to use the energy more efficiently, which will help reduce demand. And that's what we're spending a lot of our effort doing, is working on both sides of the demand equation and the supply equation."

Energy diversity also is a key to energy security, he said. "And that means both in terms of geographic diversity. You want to expose yourself or certainly have access for the American people to as many different geographic sources of supply as possible. So the disruption in one area does not leave you...hostage to any one area."

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