encouraging energy investment

February 27, 2008

With many American consumers feeling the pinch at the pump, some are wondering if energy companies are doing enough to help by making investments to develop more supplies.

At ExxonMobil, we are investing over $20 billion annually, and plan to continue investing at record levels through the end of the decade to meet the growing demand for energy in this country and around the world.

This builds on a solid record of investment that goes back decades. In fact, between 1983 and 2007, our cumulative global investments totaled about $355 billion — which actually exceeded our cumulative earnings during that period. From 2003 to 2007 alone, ExxonMobil invested $89 billion, including nearly $25 billion in North America.

In the future, energy demand in the United States is expected to grow considerably. According to the U.S. Department of Energy, Americans will need approximately 20 percent more energy by 2030. Investments such as ours help meet these needs, while also advancing new technologies and reducing the environmental impact of our operations.

Stable tax policy plays a significant role in attracting this scale of investment. In the past five years alone, ExxonMobil’s total U.S. tax expenses were almost $65 billion — $18 billion more than our U.S.-based earnings over the period, and our tax payments have increased as oil prices have increased.

Today’s energy projects are typically massive, complex undertakings that involve enormous investments spanning decades. Energy companies can make the kind of long-range plans required for such projects — if they have the confidence that taxes will remain stable over the project’s life.

History backs this up. When energy companies were unexpectedly singled out in the United States for higher taxes in the 1980’s, investment declined. As a result, domestic oil production decreased and U.S. dependence on imported oil grew, according to a 2006 study done by the Congressional Research Service. Clearly, while tempting to some, raising taxes on energy companies, especially during periods of high prices, can be counterproductive.

With American consumers feeling the impact of higher fuel prices, no change should be made to tax policy that might impact them even further. Stable tax policies that enable energy companies to make long-term investments in new energy supplies are the kind of help American consumers need.