Transcript: Shell President Marvin Odum’s testimony on Big Oil tax breaks
“I think it could be tempting to assume there’s something to gain by taking more from a few.”
“The surest way to address a challenge of this magnitude is to focus on what we can control, using what we know to safeguard against what we don’t.”
“The opportunity in front of us is to put policies in place that allow the energy industry to become an economic growth engine for America.”
“The bottom line is this: If we don’t develop our own energy sources, we’ll have to accept the costs, both financial and geopolitical, of bringing it into this country from places that can be less secure and less stable.”
Full Transcript of the May 14th Testimony:
Senate Finance Committee
Shell Oil U.S.
Thank you Chairman Baucus, ranking member Hatch, and members of the committee.
I’m Marvin Odum, president of Shell Oil Company. Shell’s a global energy company with more 90,000 employees in 90 countries. Approximately 19,000 of those are here in the U.S. working to discover, produce, market, and deliver to consumers today’s energy and tomorrow’s energy technology. Thank you for the opportunity to speak to you today.
I’d like to address right out front the issue on many American’s minds: the rising cost of energy, particularly the cost of gasoline. Because fuels are refined from crude oil, the biggest impact on the price of fuel is the price of crude oil. Everything from weather to politics and the global economy determines the price of oil and the fuels made from it.
Weak economic conditions in 2008 and 2009 lowered demand which helped push prices down. Now with worldwide economic recovery under way, demand is on the rise, sending prices upwards.
In addition, because oil is sold in U.S. dollars throughout much of the world, when the dollar becomes weaker, it takes more dollars to buy the same amount of oil.
Simply stated, oil is a global commodity. So while we can’t predict or control the price at the pump, we do know that we can increase the stability of our energy future through a combination of efficiency gains and increased supply. The surest way to address a challenge of this magnitude is to focus on what we can control, using what we know to safeguard against what we don’t.
Without question, our government is facing significant challenges right now, particularly in terms of economic and energy security. When you face a deficit, be it energy or financial, choices are usually straightforward. Get more or use less, and often it’s a combination of both that achieves the best results. There are choices on how to get more. I think it could be tempting to assume there’s something to gain by taking more from a few. However, one must also balance the implications of increased industry cost on both the supply and the cost of fuel.
The opportunity in front of us is to put policies in place that allow the energy industry to become an economic growth engine for America. Developing our own resources, we would see tens of thousands of new well-paying jobs and many, many billions of dollars of revenue for local, state, and federal governments.
So perspective. Last year, Shell reported global earnings of $18.86 billion. We also invested some $29 billion mostly in new projects to bring energy supply to the consumer. In addition, we spent more than $40 billion to run our existing businesses worldwide. Last year in the Gulf of Mexico, government policies cost Shell to defer some $700 million in capital expenditures. We expect to lose an additional or estimated 50,000 barrel equivalents per day in 2011 alone as a result of that. Now thinking about that impact to date, it represents lost gasoline production just to Shell, it could have powered on average 633,000 cars and light trucks everyday since January 1st.
Now here in the U.S. at the invitation of the federal government, we have invested more than $3.5 billion since 2005 to develop energy resources in Alaska. Six years later, we’ve been prevented from drilling a single exploration well due to the government’s inability to deliver timely permits to allow this potential new resource to be developed. During that time, we have drilled more than 400 exploration wells worldwide.
My point is this: Investments in our industry carry huge amounts of capital and risks. Policymakers must consider this when thinking about competitiveness of the U.S. relative to other regions. The President recently acknowledge that reducing dependence on certain imports was a national policy imperative. We agree. The U.S. is resource rich in many ways, especially in oil and gas. Yet, as a country, we import more than 60% of our petroleum at a cost of more than $350 billion a year.
The bottom line is this: If we don’t develop our own energy sources, we’ll have to accept the costs, both financial and geopolitical, of bringing it into this country from places that can be less secure and less stable.
In closing, Shell is grateful for the widespread recognition in Congress of the daunting energy challenge facing this nation. Although some of our opinions differ, we stand ready to work with you on developing a more secure, affordable, and efficient energy supply for this nation. Thank you.
- CSPAN.org: Oil executives defend tax breaks
- Associated Press: How the oil industry saves $4.4B a year on taxes
- Reuters.com: Exxon and Shell profits surge on higher oil prices
- Shell.us: Marvin Odum, President of Shell Oil Company
- Shell.com: First quarter 2011 earning results (PDF)