Exxon Mobil To Cut Jobs Due To Low Oil Demand; Faith In Oil Still Intact, Says CEO

Exxon Mobil will take the ax to its nearly 75,000 workforce in the U.S. and Canada as low oil prices are forcing the company to delay major projects, chief executive Darren Woods told employees in an email Wednesday.

“These are difficult times. We are making tough decisions, some of which will result in friends and colleagues leaving the company,” Woods said in the email, posted on the company website.

The company joins its rivals BP and Chevron in job cuts as the energy industry in the U.S. faces a downturn, struggling to survive the roiling impact of the COVID-19 pandemic. Exxon, the largest U.S. oil company, lost nearly $1.7 billion in the first half of 2020, while analysts forecast another $1.17 billion loss in the third quarter.

Woods wrote that the company has exceeded target reductions in spending, deferring more than $10 billion in capital and cutting 15 percent of cash operating expenses. But the pandemic has “cut oil demand by 20%.”

The outlook for conventional energy companies has been dull in the past few years as socially conscious investors are more hopeful about companies that invest in renewable energy. Florida-based renewable energy company NextEra surpassed Exxon in market capitalization this month.

Woods, however, said in his email that he is not losing faith in oil and gas.

“In 2040, despite increasing investments in renewables and concerns with emissions, oil and gas are still projected to make up about 50% of the global energy mix,” he wrote, adding “today’s alternatives don’t offer energy density, scale, transportability and “most importantly, affordability.”

Exxon’s trajectory under Woods seems to be going against the global trend of turning towards clean energy. China has promised to be carbon neutral by 2060. Europe has also set an aim to eliminate greenhouse gases emission by 2050.

“We talk of companies having a higher purpose. I can think of no higher purpose than helping people and communities around the world grow in prosperity and achieve their aspirations for a better life through affordable energy,” Woods said.