Posted on 05/03/2006 5:30:45 AM PDT by governsleastgovernsbest
by Mark Finkelstein
May 3, 2006
Matt Lauer conducted a wide-ranging interview this morning with Rex Tillerson, Chairman and CEO of Exxon/Mobil. Lauer's tone was unantagonistic, and for that matter he was clearly grateful to Tillerson, the lone CEO among the Big Oil companies to accept Today's invitation. Still, there was some bad economics on display, along with a notable attempt by Matt Lauer to make the GOP look like ingrates to an industry with which they've been cozy. Tillerson put in a solid, undefensive performance.
Here are highlights:
Lauer: "Critics say the big oil companies crushed the competition and they are manipulating the prices. What is the truth?"
Tillerson: "Obviously the truth is we do not get together to manipulate prices. That would be illegal. There have been investigations in our industry over 30 years and none found price collusion."
Lauer: "The average price of gas is $2.92 for self-serve unleaded regular across the country. You can drive down the road here and see it for a lot higher -- $3.40. Up 60 cents a gallon from a month ago. Your company recorded record profits for the first quarter. $8.4 billion. People say wait a second? This doesn't sound right. What do you say to those people?"
Tillerson: "Our profits, it's a large number. You have to remember that Exxon-Mobil is a global corporation. 70 percent of our profits are earned outside of the United States. We do business in 200 countries the world over. So of the $8.4 billion only $2.3-billion was earned in the United States. Still a big number."
Lauer: "You have a responsibility to your shareholders. You are a public company. In announcing profits you announced a 32 cent per share dividend. You are meeting your responsibility to the shareholders. Does Exxon-Mobil have any responsibility to the other people in the general public when consumers are hurt by gas prices, companies and entire industries? The airline and automobile industry. Does Exxon-Mobil have any responsibility to curve profits and help out those people?"
Tillerson: "I think our responsibility is to ensure people have the energy to go about their daily lives and support the economy in this country and the world over. To do that, you have to have energy. I understand when people pull up to the pump, they don't like the price . . . I understand it's very difficult for a lot of families. But the alternative of not having the gasoline at all or having long lines, I don't think is one this people find attractive."
Lauer then displayed a question from a viewer complaining about "excess profits" and asking what constituted a "reasonable profit."
Tillerson: "Well, the profit we earn is what the market gives us. We do deal in a commodity. We deal in large volumes of that commodity. The price is set on the open market. It is traded down the street at the Mercantile Exchange and that's where the price is determined by what the market feels the commodity is worth. This commodity goes up. It goes down. I know a lot of people don't look back in history very far, but it was only in 1998 that the price of crude oil fell below $10 a barrel. It requires enormous investments to find and develop crude oil and the refining capacity to deliver the energy to consumers. That has to occur over a long period of time. We are going to have some good years and some years that are not so good."
Lauer: "Perhaps the poster child for all of this in the public relations side of this was the former CEO of Exxon-Mobil who left the company about a year ago [Lee Raymond]. According to the "New York Times" he was paid something in the neighborhood of 400 million dollars. Is that an appropriate amount?"
Tillerson acknowledged "It's a large amount of money," later distancing himself from it in this way: "that compensation is determined by a committee of independent directors of the corporation who are responsible to the shareholders and the management have no input."
Lauer then recited a laundry list of the ways in which the government is going after big oil, from Pres. Bush saying "the public won't accept . . . manipulation of the market and neither will I" to other actions by the Justice Department, the Federal Trade commission and the Senate, adding "some politicians are even discussing a windfall profits tax."
That's when Lauer not-so-subtly tied Big Oil and the GOP: "Do you think that some of the very same politicians who have been in your corner over the years are now turning on you to posture prior to elections?"
Tillerson: "There's no question we are in an election year. This is the top-of-the-mind issue for all the American public . . . but in terms of these investigations again as to price manipulation . . . there have been many investigations and never has any collusion ever been found. "
Lauer: "Do you think you're being made a scapegoat in Washington, the big oil companies?"
Tillerson: "I guess I never look at things that way, Matt. It's an important issue. In terms of the examination of our tax records, that's fine. I think what they will find is our profits from 2002 to 2005 went up 3-fold, our tax payments went up 4-fold. So to the extent we had a windfall profit, the government has had windfall taxes already."
In response to another viewer question suggesting big oil is intentionally restraining refinery capacity to keep prices high, Tillerson mentioned, among other things, that Exxo-Mobil has expanded refinery capacity in recent years at a rate greater than the expansion of demand.
Lauer: "Are we going to run out of oil someday?"
Tillerson: "We're not going to run out of oil any time in my lifetime or in yours. The resource base of the globe is enormous. It can support the current demand and it can support the future economic growth as well."
Lauer finished on a populist, some might say a demagogic note: "Would Exxon-Mobil be willing to lower profits over the summer to help out in this time of need and crisis as it's been described?"
Tillerson first responded with a bit of populism himself: "Well, we work for the shareholders. And the investors who own our stock are over two million Americans. A lot of pension plans, a lot of teacher retirement plans and our job is to go out and make the most money for those people so their pensions are secure so that they see the benefits of our work.
Lauer: "That's a no?"
Tillerson concluded on a refreshingly frank note: "That's not the business -- we're in the business to make money."
Today Show/NewsBusters gas-pump ping.
Or,would the Federal or state governments lower taxes to help out in this time of need?
Government is never the problem unless a conservative proposes something to limit government Matt Lauer and Today Show bump.
Would Matt Lauer donate his paycheck to a homeless shelter?
When would Exxon be "allowed" to resume normal pricing, Lauer??
Would Lauer switch biases in this time of need?
If the government is so damned concerned about gas prices perhaps they could LOWER THE TAXES? On any gallon of gas, government makes far more money than Exxon / Mobil / Shell etc...
Well Matt, there are a lot of hungry people out there. Would you like to give up your salary for a few years?
My thoughts, exactly!
Guys like Lauer were the same ones clamoring for a 50 cent per gallon extra gas tax to force a reduction in demand to combat global warming.
A lot of us are thinking along the same lines on this one.
Gosh Matt, maybe NBC will lower its' advertising rates to help out the companies doing business with it. In a pig's eye, that is!! What a complete dweeb Lauer is.
We'll soon be seeing just how efficient government-run oil companies are when Hugo "The Insane" Chavez nationalizes Venezula's oil companies, and his little mini-me in Bolivia, takes over oil production in that country. The US better get some drilling done off CA, FL, and in ANWAR, because Venezula and Bolivia will soon be having to import oil, rather than exporting it. That's what happens when peons vote for thugs who promise them property belonging to others in exchange for their votes. Latin America is no place for democracy because the brain power to make decent decisions is practically non-existent.
Additional interesting tidbit from interview:
In response to a question about Exxon's investment in alternative sources of energy, Tillerson drew an interesting distinction between Exxon's approach and that of some of his competitors.
Whereas some of the other companies are apparently investing directly in currently available alternative energy sources, Tillerson said "we do not see any of those alternatives as providing a meaningful alternative to oil and natural gas in the near term or the long term. What we do think is needed are some breakthroughs in the technology, so we've chosen to invest in technology that we hope will lead to some meaningful alternatives down the road."
The above is the essence of the fuel cost situation and many fail to get it. It is the same with corn, gold, etc. For the price to go down, its seems we have to use less or increase the supply!
LAUER: “When MY party retakes the White House... we're 'gonna nationalize your a$$, force you to learn Spanish and drive a Prius!
Will Matt give me a few bucks to tide me over till payday?
What a great interview!!! This guy should be all over television explaining the real deal to voters. As for Matt, he was such a wuss. Instead of asking tough (make that dumb) questions himself, he credited those questions to viewers. A foolish ploy! I mean, when's the last time Katie or Matt gave up air time to ask someone else's showboating questions? Answer: NEVER
It was a good interview because the guy came armed with honest facts, he was articulate in making them easily understood, he wasn't defensive, and he didn't take Matt's bait to go after politicians.
I like this Tillerson.
I guess the Company's could lower it 9 cents a gallon and break even, big help. When said and done would Loser Lauer then go after the 60 -70 cents the Goverment charges?
You bet... right after he calls for a crackdown on illegals and their employers.
"Put the government in charge of something and watch it fall apart." -Ronald Reagan
If Exxon has a bad year, will Matt ask if consumers can pay more to help them out?
Good point. Using Matt's own 'analysis', does he really 'need' all the millions he gets? Aren't there some more worthy souls who could use his 'excess profits'? Would it hurt him if we applied an 'excess profits' tax to celebrities raking in multi-millon dollar contracts?
I thought that was a great interview. Lauer asked questions the public wanted to hear, and he gave Tillerson a chance to answer every one. I thought Tillerson was very honest and direct as well, thought it was amusing that he tried to distance himself from the issue of the outgoing CEO.
Agreed on all counts.
Better yet, why not oursource his job to Bangladesh? If it's good for other jobs I can't imagine why this one would need to remain within the U.S.
"If you lay all the world's economists end to end, they still wouldn't reach a conclusion." --Ronald Reagan
Interesting comment since all I have heard from many here on FR and from folks like Rush is that we have not built new refineries or refining capacity ....
Why don't they go to thier parent company General Eelctric and ask them to help out in this time of need by donating money to those of us who can't afford gas. They should lead by example, shouldn't they? that makes sense to me!
It is pretty absurd to ask the Exxon's of this country to give up their profits. They should be applauded for running such a profitable organization. Especially when their profit margin is only around $.10 per gallon. At least Exxon reinvests it's money back into the American economy through taxes and R&D efforts to develop new and improved energy options.
Why doesn't Matt ask OPEC, as well as Russia and the rest of the countries that are making "obscene" profits, to return a portion in this time of crisis?
Why are public corporations like Exxon vilified while murderous and oppressive dictatorships get off with out a single voice on the left or in the media raising questions about the obscene profits they're making?
I agree with you. Piling on taxes is not a constructive solution. If we can enact energy policy that both lets oil companies continue to invest in R&D and also gives them the power to find domestic sources, we will be on our way to a solution.
I find it ironic that oil companies are the ones investing in R&D to develop cleaner fuels to help our environment, yet our government isn't exceeding or at least matching their investments.
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