“Bad Profits, rent-seeking, resource misallocation–it’s an upside down world, turning Ayn Rand’s dis-utopian world in Atlas Shrugged into reality one step at a time.”
“Manchin-Schumer leaves no special interest unrewarded,” wrote Robert Bryce. “The legislation is so broad and has so many carve outs that it has been lauded by Exxon Mobil and the Natural Resources Defense Council.”
The new law’s “lollipops” (Bryce) go to wind, solar, EVs, ethanol, carbon capture and storage, and hydrogen–all money losers on a real free market. Bad Profits, rent-seeking, resource misallocation–it’s an upside down world, turning Ayn Rand’s dis-utopian world in Atlas Shrugged into reality one step at a time.
It is a sad day when ExxonMobil, once a bastion of climate and energy realism and good business, goes all-in with the Inflation Reduction Act
of 2022. The transformation began when it surrendered the high ground on climate/energy early in Obama’s first term by embracing the CO2-is-bad narrative of the Deep Ecologists. Then came the company’s endorsement of a carbon tax. Strange predictions that all new passenger cars sold would be EVs by 2040.
And now this.
As reported by Kevin Crowley (July 29th) in Bloomberg, “Exxon CEO Loves What Manchin Did for Big Oil in $370 Billion Deal,”
In a recent conference call, ExxonMobil CEO Darren Woods supported H.R. as “a step in the right direction.” He added: “We’re pleased with the broader recognition that a more comprehensive set of solutions” is needed….
In prepared remarks accompanying Friday’s earnings release, Woods said the US needs “clear and consistent” policy that promotes the country’s resource development.
“It is encouraging to see the recognition and the desire to try to catalyze investment in this space because, as we’ve said, we think they’re going to be absolutely critical to society.”
Wrong, wrong, and wrong as far as the general welfare goes.
The descent into the political dungeon was a predictable “slippery slope.” Now the Left criticizes the company for greenwashing as it revvs up its oil and gas businesses, while investing in “green” pork such as carbon capture and storage, and biofuels.
Think of opportunity cost. The company could have stepped up its education about the benefits of global lukewarming and CO2 enrichment–and the importance of energy affordability and reliability for the masses.
ExxonMobil was hardly alone as Crowley’s piece documents. “I believe the permitting reform that’s currently being talked about in D.C. is a very positive development,” stated Cheniere Energy CEO, Jack Fusco.
At least Conoco CEO Ryan Lance threw in a caveat:
I’m not sure if it’s a good time ever to be increasing taxes and increasing government spending just as a general economic policy. At least the agreement recognizes that natural gas and oil are an important part of the energy transition and are going to be here for decades. So that’s a positive.”
Lance reminds me of what Enron’s Ken Lay said a quarter-century ago:
If there is one thing I have been impressed with over the last decades, it is that when the environmental community defines a number one priority, something happens. Not always something good—but something.
Occidental Petroleum CEO Vicki Hollub stated: “This is turning into a net positive bill for us [from tax benefits from carbon capture and storage], should it get passed.” Add to this benefits from oil and gas leasing in the Gulf of Mexico, she added.
Back to ExxonMobil’s Darren Woods, who noted that “clear and consistent” policy is needed to promote U.S. development. “This policy could include regular and predictable lease sales, as well as streamlined regulatory approvals and support for infrastructure such as pipelines.”
As part of its 2Q-2022 earnings press release, ExxonMobil had a section titled, Leading the Drive to Net Zero. The first part is on carbon capture and storage; the second on biofuels and hydrogen. It is reproduced verbatim.
I have regretfully reached the conclusion that ExxonMobil Corporation (of which I am a shareholder) doesn’t give a damn what policies Big Government adopts as long as Big Government crams the same policies down the throat of all Big Oil.
ExxonMobil understands that Big Government policies and regulations cements its place as a member of an oligopoly. Simply put, regulations and the immense capital requirements they impose make it all but certain that nobody will ever be able to build another refinery in the U.S. Big Government has placed a tremendous barrier to entry on the ability of anyone contemplating competing in the petrochemical industry or wanting to drill a well anywhere in the U.S. or its offshore areas.
What the spineless, craven managers of ExxonMobil, Royal Dutch, BP, Total, ConocoPhillips want more than anything is for the climate nutjobs and the extortionate politicians to leave them alone.
Those same managers are, of course, fooling themselves. Appeasement never works.