ExxonMobil boss: Oil demand does not justify price rise

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By Kristen Hays

DALLAS, TEXAS — Oil demand is still down while supply is robust, so those fundamentals don’t support the recent runup in crude prices to $60-plus from under $40 earlier this year, Exxon Mobil Corp. Chairman and CEO Rex Tillerson said Wednesday.

The weak dollar and market momentum could be contributing, but oil traders’ optimism is “just a bet on their part,” Tillerson he said after the company’s annual shareholder meeting.

“I think it’s too early to call this economy,” Tillerson said.

Light, sweet crude for July delivery rose $1 to settle at $63.45 a barrel today on the New York Mercantile Exchange–the highest close since November.

The shareholder meeting was more subdued than in previous years, with nary a protester in sight. Tillerson walked shareholders through the company’s performance last year, including its record-setting $45 billion annual profit.

Shareholders followed the board’s recommendation to reject 11 proposals, including repeat measures challenging Exxon Mobil’s commitment to renewable energy and to cutting greenhouse gas emissions. Those environment-oriented proposals gained no ground over previous years.

However, a “say on pay” bid to allow shareholders to voice opinions on executive pay with a non-binding advisory vote inched a bit higher in the support column. It rose to 41.4 percent in favor, up slightly from 40.7 percent last year.

Patricia Daly, a nun with the Sisters of St. Dominic of Caldwell, N.J., has repeatedly sponsored a proposal that Exxon set goals to cut emissions from its products and operations and issue a report to investors on that plan by Sept. 30.

The Sisters pulled the same proposal from the agenda for Chevron’s annual meeting, held today in San Ramon, Calif., when the company agreed to track and report on the carbon content of its products.

Daly said Exxon Mobil has improved energy efficiency, which has helped its bottom line. But given climate change policy initiatives driven by the new administration and Congress, she said, “We’re not confident our company is ready for the financial impact.”

The proposal garnered support from 29 percent of the 4 billion shares voted, a dip from 30.9 percent in favor last year.

Another shareholder, Tracey Rembert, representing the Service Employees International Union, pushed a repeat proposal that Exxon adopt a policy on renewable energy research, development and sourcing and report its progress to investors next year. She urged the board and Tillerson to be clearer about the company’s interest in renewables.

“We need clarity on this, particularly now with policy unfolding,” she said. “If you’re not going to pursue it, just say so.”

Tillerson reiterated the company’s outlook–which mirrors energy use projections from the U.S. Department of Energy and the Paris-based International Energy Agency–that fossil fuels will provide the vast majority of energy through at least 2030.

Although renewables and alternatives are growing, their overall piece of the energy mix will remain small until they reach the massive scale at which fossil fuels are used.

“The challenge is scale, the rate of penetration and the deployment,” Tillerson said. “Our approach to alternative energy in the near term is alternative ways to consume, which is less damaging. We do it as a serious risk management program.”

Shareholders gave the renewables proposal 27.3 percent of votes cast, a slight dip from 27.5 percent in favor last year.

Of other proposals, a repeat bid to split the roles of chairman and CEO, which unlike last year’s proposal would have been binding, lost a quarter of its support. The non-binding proposal garnered 39.5 percent of votes cast last year and 29.5 percent today.

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