Meeting the world’s energy challenges

Members of the venerable Executives’ Club of Chicago, a business forum for thought leadership and education since 1911, were an attentive audience for a speech delivered by ExxonMobil Chairman and CEO Rex W. Tillerson on December 11, 2008.

Chairman Tillerson began his speech by citing the new administration and the tense economic situation in the U.S.: “One month ago, Americans elected a new president and new Congress. It is a time of great anticipation for our nation. Although fuel prices have declined significantly from last summer, business balance sheets and household budgets are under immense pressure.” 

For more than a century, Tillerson added, the energy industry has collaborated with every administration and Congress to find the best ways to supply energy, manage the risks and challenges of new sources, and provide the fuel for economic growth and stability. ExxonMobil, he said, looks forward to working with the new administration and new Congress on the pressing energy issues that the country faces. 

The need for energy
Americans consume the equivalent of 50 million barrels of oil every day from all sources, and it is the energy industry that delivers this vital commodity. Tillerson illustrated the vast presence of the industry and the quality of its workforce by providing some impressive numbers: The energy industry employs 1.8 million people directly and another 4.6 million indirectly. And the industry is not just a major employer: oil and gas producers paid more than $90 billion in income taxes in 2006 – more than six times the total corporate income taxes they paid in 2002. Last year, ExxonMobil alone paid more than $14 billion in state and federal taxes.

Tillerson told the audience that Americans realize the country and the world face not one but multiple energy challenges: “No single source of energy, no single breakthrough technology, no single sector of our economy and no single policy initiative will enable the world to achieve the balance and progress we seek. Meeting the world’s multiple energy challenges requires long-range thinking and multiple solutions. There is no silver bullet.”

Teamwork is essential
Tillerson stressed that many solutions must work together to address our energy problems: “To meet our shared energy goals, we must pursue an integrated set of solutions that addresses supply, security, efficiency and environmental goals – and we must pursue them together. Integrated solutions are built on technology and teamwork.”

The most daunting reality we face, Tillerson said, is the enormous increase in energy demand that will occur worldwide. By 2030, the world’s energy needs will be 35 percent greater than they were in 2005. As this global energy demand is increasing, he added, so are greenhouse-gas emissions associated with energy use.

Addressing the issue of preserving the environment, Tillerson said that managing the risks from rising greenhouse-gas emissions is critically important at ExxonMobil: “We are taking action by first reducing greenhouse-gas emissions in our operations, by helping consumers reduce their emissions, by supporting research into technology breakthroughs and by participating in constructive dialogue on policy options with national grassroots organizations, industry and policymakers.”

Tillerson added that since 2004, ExxonMobil has invested more than $1.5 billion to improve efficiency and environmental performance at the company’s facilities worldwide, and will spend at least half a million dollars on additional initiatives over the next few years.

Long-term projects
These ambitious initiatives, said Tillerson, take long periods of time to execute: “The timeframes involved in the energy industry are enormous. While politicians think in terms of two-, four- or six-year election cycles, we in the energy business must think in terms of two, four or six decades based on the lifecycles of our capital-intensive investment projects. These long-term projects require massive, long-term investments.”

According to Tillerson, ExxonMobil plays a major role in this type of investment, devoting more than $355 billion worldwide from 1983 through 2007, which was more than the company’s earnings during this period.

Providing an example of ExxonMobil’s leadership in investing, Tillerson cited the company’s ongoing collaboration with automakers and engine manufacturers to develop new, energy-saving technologies, including:

• Film technologies that are expected to significantly enhance the power, safety and reliability of lithium-ion batteries
• A tire-lining technology that uses up to 80 percent less material in the manufacturing process, making tires lighter and keeping them properly inflated
• An engine technology called Homogeneous Charge Compression Ignition (HCCI) that combines the best features of gasoline- and diesel-powered engines
• A breakthrough technology that could advance the use of hydrogen fuel cells by converting traditional hydrocarbon fuels into hydrogen directly on board a vehicle

A secure future
In the years ahead, Tillerson noted, access to energy resources around the world will affect America’s energy security: “We will need international cooperation and free trade to ensure that we can bring the energy industry’s know-how, financial strength and innovative technologies to the task of accessing energy resources in hard-to-reach places.” 

He closed his speech with optimism for the future by quoting a famous American: “Over 150 years ago, Illinois’ favorite son, Abraham Lincoln, said that ‘If given the truth, the American people can be depended upon to meet any national crisis.’”

Tillerson said we should remember Lincoln’s words and example as we confront our current economic difficulties. “We must set aside our political differences and welcome the best ideas for addressing our nation’s energy challenges.”