Having just reached #1 on the Forbes Global 2000 list, ExxonMobil is the largest public company in the world. It can afford to spend more lobbying Congress than any other corporation, and in some countries its influence towers above the US Embassy. While unpopular among consumers, ExxonMobil is regarded by the energy industry as a highly efficient and profitable corporate machine. It’s powerful, and it’s secretive. What’s behind the curtain?
Steve Coll, Pulitzer Prize winning journalist; author, Private Empire: ExxonMobil and American Power; former managing editor of The Washington Post; currently president of the New America Foundation
According to Steve Coll, author of Private Empire,ExxonMobil has an economy about the size of Norway. Multinationals with that scale of influence have become increasingly untethered from their national settings. “They look like a country,” he said. “And that’s kind of how they see themselves. They organize themselves around a series of independent economic, foreign, and security policies; they see themselves as sovereign; their constituents are their shareholders; their framework is the rule of law.” He went on to say that, generally, they try to stay out of America’s way. “They have their own global system to attend to.”
In most corporations, people come in laterally from other companies to take top jobs. But at ExxonMobil, executives rise up together. The company has a closed, insular culture, “more like the marine corps,” Coll said. In 1993, four years after the Valdez oil spill, Lee Raymond had been with the company thirty years when he became CEO. Raymond was responsible for remaking the corporation. A major focus was reducing liability.
How has the company influenced US policy? Raymond had a close, personal friendship with Dick Cheney. They were neighbors in Dallas, hunted together, and had a like-minded view of global warming. Opening up its huge checkbook, ExxonMobil funded an “aggressive and surreptitious campaign” to “attack the credibility of the climate science itself,” Coll said. Was the campaign effective? Yes. “There’s a great deal more skepticism relative to science about this issue than virtually any other scientific issue that has public policy implications.”
But here’s the irony. Coll found that ExxonMobil did, in fact, believe global warming was real. As ExxonMobil attacked global warming publicly, geologists working within the company were examining how a warmer earth could create new business opportunities. One result: they recently signed an agreement with a Russian firm to develop oil and gas in the Arctic Circle, made possible through warming.
In another surreptitious campaign, this in the face of liability rulings from the Valdez oil spill, ExxonMobil funded emerging sociological research on corporate influence on the validity of punitive damages. Basically, learning what influences judges.
Looking to the future, has ExxonMobil joined the ranks of other oil companies investing in alternative energy sources? On the contrary. They are proud to remain an oil and gas purist. Their criteria, according to Coll, is that they won’t invest in anything that requires government subsidies to be competitive, that won’t offer returns consistent with the returns they can make with oil and gas, or that doesn’t scale to the national system.
The one technology they worry about is the battery. They believe a breakthrough in battery capacity could rapidly change the transportation fuels economy on a global scale.
What about opportunities? Given geopolitical challenges as well as technological challenges in finding new oil reserves, ExxonMobil’s portfolio mix has gone from being oil dominant to being evenly split with a bias toward natural gas. In 2010 they purchased XTO Energy in a $41B deal, and thus became the leading US producer of natural gas.
ExxonMobil is such an unpopular company, hated even. Does that matter to them? From their perspective, Coll said, no, it doesn’t matter. But he does see two areas where this could impact them in a business sense. First, they lose an awful lot of jury verdicts, though they do often win on appeal. Second, retaining technological and scientific talent may become difficult given ExxonMobil’s censure in the public space.
– Lucy Sanna
Photo: Ed Ritger Climate One, The Commonwealth Club HQ, San Francisco (May 8, 2012)