The policy choices driving high oil and gas prices

Some excellent quotes highlighted by Tim Newman, from ExxonMobil President Rex Tillerson:

"High oil prices and perceptions of soaring industry profits have prompted many producing countries to give national oil companies more power to extract richer fiscal terms and greater control over resources, pushing out international players, Rex Tillerson, chief executive of US supermajor ExxonMobil, said.

Such policies will lead to tighter oil supplies as ExxonMobil and other majors stop deploying their technology, know-how and capital in some of those countries, he said.

“If there’s no room to share it then there is no role for us - it’s a simple as that,” he told business and political leaders at a meeting in Calgary, Reuters reported."

And:

"ExxonMobil boss Rex Tillerson, speaking in the wake of last week’s dire warnings from the International Energy Agency about unsustainable growth in energy use, sought to warn of the dangers of resource nationalism.

Talking about oil supply tightness, Tillerson told reporters during this week’s World Energy Congress in Rome that: “It’s not a resource problem. The world has plenty of oil.”

Instead, “it is an issue of whether or not the investment dollars, technology and the know-how to develop those resources in an efficient and reliable way…is going to be brought to bear on those resources”, he argued.

Tillerson talked about such nationalism as being counter-productive for the resource-rich countries where the people miss out on revenues and opportunities."

While Tillerson is talking about the really oil rich states very similar logic applies to the UK as well. Brown's response to rising oil prices was a big hike in taxation on North Sea oil. This will speed up the process of North Sea production winding down. This makes a small contribution to world supplies but makes our economy far more vulnerable to rising prices for oil and gas.

An unrelated, but fascinating, little fact in another post of Tim's:

"McDonalds is so highly thought of in Sakhalin that a few people we know there asked us to bring back a few McDonalds meals for them. At first I thought they were joking, but it turned out they genuinely wanted us to stick a load of McDonalds in the overhead locker for nine hours so they could reheat it and eat it on arrival. Madness."