Washington — Former ExxonMobil CEO Rex Tillerson was confirmed as US secretary of state Wednesday by a 56-43 Senate vote.
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Tillerson's statements during the nomination process signal how he might handle diplomatic relations and how those decisions could impact upstream oil and gas activity, international pipelines, nuclear energy and other commodity issues around the world. He likely takes office with more knowledge of global energy than any of his predecessors.
Highlights of Tillerson's energy-related comments at his January 11 confirmation hearing:
Tillerson said recent Russian actions have "disregarded American interests," but the US must keep an "open and frank dialog" with Moscow regarding its ambitions. He said sanctions remain a powerful, important tool of US foreign policy to prevent countries or individuals from taking bad actions or to punish them after the fact.
"We need a strong deterrent in our hand," he said.
Related: Jason Bordoff, founding director of Columbia University's Center on Global Energy, talks to the Capitol Crude podcast about what foreign relations will look like with former ExxonMobil CEO Rex Tillerson heading the State Department and more.
IRAN NUCLEAR DEAL
Tillerson said US/EU sanctions against Tehran were "extraordinarily effective because others joined in."
As for the 2015 deal that lifted sanctions on Iran's oil sector in exchange for nuclear concessions, Tillerson said he shared Trump's view that the agreement needs a "full review" to determine if Iran is meeting its obligations. "No one disagrees with the ultimate objective that Iran cannot have a nuclear weapon," he said. "The current agreement does freeze their ability to progress but it does not ultimately deny them the ability to have a nuclear weapon. My understanding is the current agreement for instance does not deny them the ability to purchase a nuclear weapon."
SOUTH CHINA SEA
Tillerson said China's island building in the South China Sea and declaration of control of airspace in waters over the disputed Senkaku/Diaoyu islands amounted to "illegal actions."
"Building islands and then putting military assets on those islands is akin to Russia's taking of Crimea," he said. "It's taking of territory that others lay claim to."
Tillerson said $5 trillion in trade flows through those waters, making the situation a threat to the entire global economy "if China is allowed to somehow dictate the terms of passage through these waters."
When asked if he would support a more aggressive posture in the South China Sea, Tillerson said: "We're going to have to send China a clear signal that first, the island-building stops, and second, your access to those islands also not going to be allowed."
US OIL, GAS EXPORTS
Senator John Barrasso, Republican-Wyoming, asked whether the Nord Stream-2 pipeline between Russia and Germany would undermine Western sanctions by making Europe more dependent on Russia.
Tillerson did not answer the question directly but said rising US oil and LNG exports will help allies.
"The more US supply, which comes from a stable country that live by our values, we can provide optionality to countries so that they cannot be held captive to a single source or to a dominant source," he said.
"From a policy standpoint, it's engaging with countries to make sure they understand they have choices and what those choices are. And what can we do in foreign policy to help them gain access to multiple choices so they're not captive to just one or a dominant source."
US OIL IMPORTS
Senator Ed Markey, Democrat-Massachusetts, asked if the US should work to reduce oil imports from Saudi Arabia and elsewhere in the Mideast, and whether that would enhance the secretary of state's foreign policy position in the region.
Tillerson disagreed. "Once a barrel of oil is loaded on a tanker, a barrel of oil is a barrel of oil," he said. "The end consumer doesn't really care where that barrel of oil came from because it's going to be priced in a global market. As long as they have free access to the barrels, and they have the ability to shop around for barrels. That is what's most supportive of their economic activity."
Tillerson said he supports bolstering US energy security but has never supported energy independence, pointing to Canada as a major supplier of oil imports.
Senator Tom Udall, Democrat-New Mexico, asked how Tillerson would navigate potential conflicts of interest given ExxonMobil's work with governments all over the world. For example, he said ExxonMobil was asking for tax dollars back from Australia, Equatorial Guinea, Malaysia, Nigeria, Qatar, Russia and the UK.
Tillerson said he does not expect to take calls from any business leaders. "In my prior role, I never called on the secretary of state directly. I called on the deputy often or the missions, primarily the ambassadors."
He said he would adhere to a statutory recusal period for any State Department matters that deal directly with ExxonMobil.
"Beyond that, though, in terms of broader issues dealing with the fact that it might involve the oil and natural gas industry itself, the scope of that is such that I would not expect to have to recuse myself," he said.
Tillerson said the "risk of climate change does exists, and the consequences of it could be serious enough that action should be taken." But he sparred with several Democratic senators about its link to human activity and whether addressing it should be a State Department priority.
"The increase in greenhouse gas concentrations in the atmosphere is having an effect," he said. "Our ability to predict that effect is very limited."
Tillerson said the US should keep a seat at the table of global climate talks to understand the impacts on Americans and US competitiveness.
Tillerson said a carbon tax represents the best option for reducing carbon emissions. He said he came to the conclusion at ExxonMobil while Congress was considering a cap-and-trade approach, "which in my view had not produced the result that everyone wanted in Europe."
A carbon tax represents, Tillerson said, a better solution if it has two features: That it is applied uniformly, replacing a hodgepodge of regulatory schemes across the country; and that it is revenue-neutral.
"All the revenues go back out into the economy through either reduced employee payroll taxes, because there will be impacts on jobs," he said. "So let's mitigate that by reducing the impact, by putting it back into the economy. So none of the money is held in the federal treasury for other purposes."
--Meghan Gordon, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com