1FILE - In this March 12, 2009 file photo, Rex W. Tillerson, Chairman and
Chief Executive Officer of Exxon Mobil, listens as President Barack Obama,
not pictured, addresses Business Roundtable, an association of chief
executive officers of leading U.S. companies, at a hotel in Washington.
Tillerson said Wednesday, March 9, 2011, he doesn't think the recent jump in
oil prices is hurting the U.S. economy just yet. But it's getting close.(AP
Photo/Charles Dharapak, file)
Chris Kahn, AP Energy Writer, On Wednesday March 9, 2011, 6:11 pm EST
NEW YORK (AP) -- Exxon Mobil CEO Rex Tillerson said Wednesday he doesn't
think the recent jump in oil prices is hurting the U.S. economy -- at least,
The head of the world's largest publicly traded oil company said that in
2008, when oil surged to near $150 per barrel, Americans didn't change their
driving and spending habits until gasoline prices topped $4 per gallon. Gas
peaked at $4.11 in July of that year.
"I don't know if that tip-over is still at the same $4 level or not,"
Tillerson told reporters at the New York Stock Exchange. "We'll see."
Oil is now about $104 per barrel after rising more than 20 percent over
three weeks because of civil unrest in Libya. Tillerson hasn't seen any
reduction in the demand for fuel from consumers or businesses.
The national average for gas has increased 40 cents to $3.52 per gallon at
the same time.
Drivers on the West Coast are already paying close to $4, however, and
prices are expected to rise through spring and summer.
At $4, gas "creates some real challenges" for average American families and
their household budgets. When gasoline rises above that, it's a "significant
emotional event for a lot of people," he said.
"Even if you're paying $50 a month (for gas), $50 a month is significant for
the way they have to manage their income."
Tillerson remembered that in 2008, Americans switched to taking the bus or
joining community carpools to save on gas costs.
Tom Kloza, publisher and chief oil analyst at Oil Price Information Service,
said Americans forced to live paycheck to paycheck are already cutting back
on driving, Kloza said. That's not just in states like California, where
gasoline is already above $3.90 per gallon.
The difference between now and 2008 is that many motorists remember getting
burned by high pump prices, Kloza said. They'll conserve now with the
expectation that gasoline will hit record levels this year.
"I think they're wrong to assume it'll get that high," he said. Kloza has
predicted the national average would peak at $3.75.
Output in Libya, which is a member of OPEC, has dropped significantly as
rebels battle the government of Moammar Gadhafi for control of the country.
Analysts are concerned the unrest could spread to bigger producers in the
region like Saudi Arabia.
Tillerson pinned the rise in oil prices on the perception of future
shortages rather than actual problems. He said traders are pricing in a "
risk premium" to account for Libya's political situation. Oil executives in
both Saudi Arabia and the U.S. have made similar statements.
At an energy conference in Houston, Youcef Yousfi, the Algerian Minister of
Energy and Mines, said, "There is no shortage of oil in the market."
"When people see that the supply is at a normal level, the price will go
down," he said.
Tillerson said Exxon Mobil Corp. was recently forced to stop buying Libyan
oil because of U.S.-imposed sanctions, yet the company didn't have trouble
finding other sources of crude.
"And we're unaware of anyone who is having difficulties."
Earlier, the CEO told Wall Street analysts that Exxon would spend nearly $
100 million per day over the next five years on capital investments, mostly
devoted to oil and natural gas production. Capital spending will range
between $33 billion and $37 billion annually between 2011 and 2015, he said.
At those levels, Exxon's oil and natural gas volumes should grow between 4
and 5 percent until 2014.
Another major disruption in global supplies could still send prices leaping
higher. But so far, "I'm not concerned about the ability of producers to
meet the market's demand."
AP Energy Writer Jonathan Fahey contributed to this report from Houston.