Oil prices baffle ExxonMobil boss

Rex Tillerson, rated the most powerful oilman in the world because he occupies the posts of chairman and chief executive officer at ExxonMobil, candidly admits he doesn’t have a clue where oil prices are headed.

He told a Calgary audience Sept. 7 that today’s price of US$70 per barrel is unjustified by fundamentals.

“I cannot explain why we have $70 oil,” he said. “We are not having trouble finding oil. There is something else going on that I don’t get.”

But he conceded there is a need to both continue finding new energy sources and to diversify supply sources to ease the impact of supply disruptions.

“The nationality of energy is irrelevant,” Tillerson said. “A diversity of sources mitigates the impact on total supply from disruptions in any region or any one source.” He said that for the United States to adopt a policy of protectionism and isolationism could, based on history, be counterproductive, leading to “inefficiencies, higher prices, supply shortages and at times even trade wars.”

Tillerson also attacked moves by Democrats in Congress to end tax breaks of $15 billion for companies exploring and producing oil overseas.

That would make companies like ExxonMobil and Chevron “less competitive in the international marketplace. It’s upside down.”

Hammering home his message of taking a global, rather than a national or continental approach to security of energy supply, he said that strategy will be vital as global demand for energy grows by 60 percent over the next 30 years, most of it coming from developing nations.

If the West’s needs are to be satisfied, there must be a greater level of cooperation on a global scale, he said.

Tillerson, despite ExxonMobil’s substantial writedown of assets in Venezuela, said it is better to deal with leaders like Hugo Chavez by offering western technological skills to help those countries expand their reserve bases.

—Gary Park