Exxon CEO Rex Tillerson went to Wall Street with the twin goals of promoting Exxon’s stock and letting the public and Congress feel Exxon is putting its profits back into energy production. Tillerson said Exxon would be investing $20 billion in capital expenses to churn out more energy for Americans.
Here’s what Tillerson didn’t emphasize.
1. The major projects outlined by Tillerson don’t include alternative fuel development despite the recent P.R. push claiming Exxon wants to do its part to stop global warming and save the planet.
2. Exxon is not opening another American refinery, despite the fact that strained inventories are driving $3 per gallon gasoline prices out West in March, far off from the summer drive season, and $2.50 gallons across the rest of America. Instead, Exxon is focusing on crude development, much of which won’t find its way to America. And all the crude in the world won’t matter if there is not enough refinery capacity to turn it into an adequate supply of gasoline. Exxon knows that by keeping the system running on empty, it’s able to get top dollar for the scarce fuel it does produce.
3. $20 billion in capital expense from $40 billion in profits sounds like a lot, but Exxon spent $25 billion buying back its own stock to pump up its own stock price last year. If the proof is in spending, Exxon cares more about inflating its stock price than finding and producing energy in a world where it becomes scarcer and scarcer.