Why Exxon Won't Produce More OIL!
Even with record profits
By Robert R. Barney
I have said this publicly for years now that the laws of supply and demand do not work when monopolies are involved. The press conference from Exxon to market analyst the other day absolutely proved me correct when Exxon's Chairman Rex Tillerson announced that Exxon will not increase production past the year 2012 because to do so would cut into their profits! That is what the man said! "We don't start with a volume target and then work backwards," Tillerson explained. Instead, he said, his team examines the available investment opportunities, figures out what prices they'll likely get for that output down the road, and places their bets accordingly. "It really goes back to what is an acceptable investment return for us," Tillerson said. In other words, producing incremental barrels just to ease prices for consumers is not part of the company's calculations. Last year, ExxonMobil led the industry with a return on capital of 32%.
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