The government is preventing the oil industry from creating more jobs. Rex Tillerson, CEO of ExxonMobil, said that his company would expand its workforce if the U.S. would allow it better access to federal lands. He addressed jobs, the economy, and challenges facing the energy industry in an interview with CNBC's Maria Bartiromo at the Washington Ideas forum on Thursday.
One focus of the discussion was jobs. What could his industry do to create more, Bartiromo wondered. "[By] allowing our industry to do the things we've done for decades in this country. That means access," Tillerson replied. He asserted that his company would be eager to expand its energy production, but it is constrained by government policy. Its refusal to allow it to acquire oil and natural gas from federal lands significantly limits its potential to produce, he said.
He explained that the attitude of the U.S. not to allow energy companies access to federal lands is actually an aberration in the global market. In other countries, governments want their natural resources developed, he said. But in the U.S., he characterized the government as asking: "What do we do to make it as difficult for you as we can?"
Access isn't the only issue facing the industry. Tillerson also stressed the importance of reforming the tax code. "We would love to see a very simple tax code," he said. But he also wants to see U.S. corporate taxes be more competitive with those levied by other nations. Tillerson also wants equal treatment across industries and for the government to stop picking winners.
What about all those loopholes and subsidies oil industry critics complain about? Tillerson characterized this as a reason why reform is necessary. Tax deductions have been put in place over the years to fix deficiencies in the tax code, he said.
Tax and regulatory uncertainty is also a problem that holds back growth in his sector, and ultimately hiring, according to Tillerson. He explained that when the rules aren't clear and concrete, making the sort of long-term investment that is necessary in his industry becomes difficult from a financial risk standpoint.
Bartiromo asked him about the environmental impact of his suggestion that the government open federal lands for oil and natural gas acquisition. Won't there be some negative impact? "You're never gonna bat 1,000," Tillerson said. But he asserted that the harm would be minor and that the benefits would be significant.
In particular, Tillerson took issue with the movement against fracking. This is the process of fracturing a rock layer to release oil or natural gas. He called the opposition against shale gas fracking "all manufactured fear." If you look at the facts, he said, there are no measurable health threats.
Falling Energy Prices
Tillerson also addressed the economy. Do falling energy prices foreshadow the global economy weakening? He said that prices had declined in part for this reason, but demand was only part of the equation. Earlier this year, the oil industry had experienced significant supply problems. One shock was caused by Libyan unrest. The industry also experienced problems in the North Sea. Since both of these problems have subsided, supply is in a much stronger position now than it was earlier this year. So it has also contributed to lower prices.
How does Tillerson feel about the economy in general? He's not as optimistic as he was six months ago. He still foresees positive growth but it won't be as robust as he had hoped.