December 11, 2008 / 9:23 PM / 11 years ago

UPDATE 2-Market-based energy policy would aid U.S.-Exxon CEO

(Adds CEO comments, background)

By Ben Klayman

CHICAGO, Dec 11 (Reuters) - Creation of a market-based energy policy would help secure U.S. energy supplies and support an economic recovery, Rex Tillerson, chairman and chief executive of Exxon Mobil Corp (XOM.N), said on Thursday.

Those policies would include a stable tax, legal and regulatory framework, access to resources for production, respect for the sanctity of contracts and promotion of free trade and investment, Tillerson said in a speech in Chicago.

“A long-term, growth-oriented policy approach, coupled with the American people’s support for increased access to domestic energy supplies, would enable the energy sector to contribute even more to the U.S. economy,” Tillerson told several hundred executives at a downtown Chicago hotel.

Exxon Mobil and other oil and gas producers have called on the U.S. government to open areas such as the eastern Gulf of Mexico, offshore regions on the East and West Coasts and new portions of Alaska for exploration of new energy reservoirs.

Environmental groups and many Democrats have opposed measures that would open new coastal areas and the Arctic National Wildlife Refuge in Alaska to drilling, citing the potential for damage to sensitive ecosystems.

President-elect Barack Obama has said he would support limited expanded offshore drilling.

Tillerson said opening new U.S. areas for production would also increase government revenue from oil and gas leases, royalties and taxes.

He pointed to the development of the Internet as the route to take for the development of U.S. energy policy — the private sector pushing innovation with some federal backing.

The chief of the world’s largest publicly traded oil company said that Exxon’s 5-year, more than $125 billion spending plan had yet to be affected by the global financial crisis and a drop in crude oil and natural gas prices.

He said this year’s capital spending would be about $25 billion, in line with the company’s long-term plan to spend $25 billion to $30 billion per year.

“We don’t see a need to make any cuts at this point,” Tillerson told reporters after the speech, similar to remarks he made in late October.

Tillerson also said the price of a barrel of oil — currently at almost $48 — is within the range the company uses for its internal planning. He sees a similar range for 2009, but did not disclose its parameters.

Tillerson added that gasoline prices in North America and Europe will remain under a lot of pressure as weakness in the economy continues to sap demand.

He said he favors a carbon tax to curb greenhouse gas emissions — rather than a cap and trade system using pollution credits — because the tax is more effective, less costly and easier to administer.

The CEO said the industry is taking a “wait-and-see” approach the expected energy policies of the incoming Obama administration. There is a clear interest in alternative forms of energy, but Tillerson said he hopes the new administration is realistic in its choices.

“We must not think in terms of quick fixes over the next few months or the next one or two years,” he said. (Additional reporting by Matt Daily; Editing by Phil Berlowitz)

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