It wasn’t Vladimir Putin. Instead, the bungled rollout of emissions standards and other energy regulations led to the high prices people are paying today, and until investment catches back up in the industry, prices are likely to remain high. That’s the message being sent by ExxonMobil’s CEO, Darren Woods, in an interview with the Financial Times. FT reporters Tom Wilson and Justin Jacobs report:
ExxonMobil’s chief executive predicted a resurgence of investment in fossil fuel production as he blamed soaring oil and gas prices on pressure to move to cleaner energy at a time of relentless demand.
Darren Woods, the head of the biggest western oil and gas supermajor, said efforts to reduce emissions by cutting production before addressing consumption had left the world struggling to meet energy needs, pointing to an “optimistic view” about how quickly the energy transition can happen.
Governments had not only failed to deal “with the demand side of the equation” but also did not recognise “that you need a fairly robust set of alternative solutions if you’re going to reliably and affordably meet the needs of people”, Woods told the Financial Times.
Global crude prices have surged this year to well more than $100 a barrel as Russia’s invasion of Ukraine has tightened oil markets, fuelling decades-high inflation around the world. Brent crude was trading at about $115 a barrel on Monday.
Speaking to the FT on stage at a conference in Brussels organised by the German Marshall Fund, Woods said he expected the oil price to continue to climb until it spurs renewed investment in output.
“They always say that the cure to high prices is high prices. And that’s exactly what I think we’ll see. So it’s a question of how high prices eventually rise.”
Unlike its European rivals BP and Shell, which have committed to reduce oil and gas production over time to help lower emissions, Exxon has steadfastly resisted pressure to cut its production plans, and has large oil investments planned in the US, Brazil and Guyana.
Exxon came under pressure during the Covid-19 pandemic from activist investors who pushed the company to outline an energy transition strategy and successfully installed new directors to its board. The company has since announced a goal to reduce emissions from its own operations to net zero by 2050, but has resisted calls from to commit to reducing emissions created when its products are burnt.
Woods hit out at so-called “scope 3” targets for fuel consumption as “a crude approach” that would have unintended consequences.
“You’re going to drive the production and the growth in oil and gas out of the most visible . . . most responsible companies, into less visible, less transparent and potentially less responsible companies,” he said.
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