Using Tough Tactics to Divulge an Industry's Secrets

(A copy of the following top-secret memorandum was recently obtained from a senior White House official. Its authenticity could not be confirmed.)

TO: Director/National Clandestine Service/CIA

FROM: Chief of Station/Lagos, Nigeria

RE: Results of Interrogation of Exxon Mobil CEO

Above-named subject, Rex W. Tillerson, was apprehended while disembarking at Lagos airport and brought to Covert Interrogation Center #7. After a cocktail of Sodium Pentothal and Desoxyn was administered, subject suffered some disorientation but was able to answer questions on oil and gasoline pricing and company finances submitted by FTC/DOE/DOJ joint task force, pursuant to presidential directive of 26 April. Water-boarding proved unnecessary. After return to hotel, subject slept. The next morning, he appeared to have no recollection of the interrogation.

At outset of interrogation, subject became positively giddy when asked about 2005 financial results, which showed a profit of $36 billion on sales of $371 billion. He reported return on capital employed was 46 percent for upstream drilling and production operations, and 32 percent for refining and marketing -- hedge fund returns, he kept calling them. Four years ago, those same figures were 22 percent and 5 percent.

Subject showed no remorse about impact of higher prices on consumer finances, saying the recent results were merely "payback time" for all those years of lousy returns and all those years of having to live in Houston.

On the issue of recent spike in crude oil prices, subject said at least $15 a barrel reflected the increase in speculation in oil futures by pension funds and other non-industry investors. Two years ago, they had about $20 billion in the market. Today, it's $150 billion.

But the bigger factor, he acknowledged, was OPEC, which along with cooperating countries such as Russia and Mexico, has successfully limited the growth in production capacity in recent years so it lags behind global economic growth. That way, OPEC ministers can go to "those useless meetings in Vienna," as he called them, and say with a straight face that they are pumping "full out" -- when, in fact, they've held back on the number of wells they have to pump. The China and India booms have also played right into their hands by giving a plausible story of how an unexpected surge in demand for oil has overwhelmed supply.

Given OPEC's role in limiting global crude supply, subject was asked why he failed even to mention it once during his recent Senate testimony before the Senate Judiciary Committee. He said it was a game all the companies worked out years ago at a meeting of the American Petroleum Institute. That way they can avoid all the bad publicity and antitrust problems that might come from being seen as too close to a price-fixing cartel, while taking care not to antagonize the very people responsible for their windfall profits.

"You don't think we were able to earn $24 billion profit from $30 billion in upstream sales last year just because we're smart and work hard?" the subject said. "It's mostly just dumb luck. But don't tell that to the compensation committee."

On the question of the shortage of U.S. refining capacity, subject confessed it really wasn't all those environmental laws that prevented his and other companies from building new refineries. In fact, he said, the joke at the Petroleum Club is that they needed to keep the greens in business to have a handy excuse for disinvesting in refining.