Banning fracking in the United States will aid foreign oil producers at the expense of the American economy, an Exxon executive said Friday.
“Any efforts to ban fracking or restrict supply will not remove demand for the resource,” Exxon vice president of investors relations Neil Hansen said on the company’s third quarter earnings conference call. “If anything, it will shift the economic benefit away from the U.S. to another country, and potentially impact the price of that commodity here and globally.”
He was asked specifically about how the company is evaluating political risk ahead of the 2020 election because Senator Elizabeth Warren has said that if elected, on her first day as president, she would ban all fracking and put a moratorium on new fossil fuel leases for drilling on offshore and public lands. Senator Bernie Sanders has said he would do the same.
Exxon has access to federal lands in New Mexico, Alaska, Delaware and the Gulf of Mexico. The oil-rich Permian Basin is a key center of production for the company. In the third quarter, production in the area grew 7%, and was up more than 70% year-over-year.
Analysts have warned that banning fracking could hurt smaller companies, particular those in the capital-intensive exploration and production areas of energy, while driving up global oil prices.
“I think any efforts obviously to ban fracking would have a negative impact on industry efforts to develop resources like the Permian. There’s no doubt in that,” Hansen said. He added that “it’s difficult to speculate on the impact of a policy without details on implementation.” He noted that Exxon’s global operations helps it mitigate risks in specific areas.
He said the company shares concerns about climate change and emissions reductions, but believes that there are more effective ways to curb emissions such as instituting a revenue-neutral carbon tax. “It’s uniform, it’s transparent, it will incentivize the market to find solutions,” he said.
On Friday, Exxon reported a 49% decline in third-quarter earnings as lower oil prices and higher costs pressure its bottom-line. The results, however, did slightly top Wall Street expectations and the shares were trading higher on Friday.