Should ExxonMobil be broken up?

May 11, 2012

This book review was originally published in the American Prospect, and is republished here with permission.

Even granting that testifying to congressional committees is not on the list of an oil CEO’s favorite things to do, when ExxonMobil CEO Lee Raymond, known to his employees as “Iron Ass,” arrived at the Dirksen Senate Office building one morning in November 2005, he was in an especially reticent mood. Among other things, the Senate Energy Committee wanted to know about the corporation’s role in formulating policy with Vice President Dick Cheney’s energy task force. Raymond – who was chummy with Cheney and seven weeks away from his retirement, after 12 spectacularly profitable years at the helm first of Exxon and then Exxon-Mobil – did not think the committee needed to know. Thus when New Jersey Senator Frank Lautenberg asked Raymond whether he or any ExxonMobil executives participated in a 2001 meeting with Cheney, Raymond responded with a single syllable: “No.”

The truth of that statement was something only a lawyer or a comedian could love, but it was consistent with how the company prefers to be seen: independent, apolitical, above the muck of any particular political fight. Yet as Steve Coll documents in his groundbreaking investigation, Private Empire: ExxonMobil and American Power, sometimes even the aloof need a little assistance. Just days before the hearing, the company had found itself frustrated with the government of the United Arab Emirates (UAE), which seemed to be stalling on giving ExxonMobil its slice of a hugely valuable 50-billion-barrel oil field. The State Department did not seem to be pressing ExxonMobil’s case as hard as Raymond wanted, so he called Cheney and asked, according to Coll’s paraphrase, “What in the hell is with this country?” Cheney called the UAE government himself, and ExxonMobil got what it wanted.

Coll gained a unique perspective on the history of ExxonMobil’s power from his two-plus decades covering business and the Securities and Exchange Commission, Middle East politics, and national security – early on for The Washington Post, in recent years for The New Yorker, and most notably in Ghost Wars, his book on Afghanistan and the CIA. He approaches the company almost as if reporting on the State Department, finding a sprawling global network led by insular executives often unaware of what is being carried out in their name. At the heart lies a contradiction best illustrated by Raymond’s duplicity. The corporation long ago decided it was best to flex its immense muscle as discreetly as possible, because almost all publicity – whether it’s news of gas prices, climate change, or congressional fights over industry subsidies – is bad.

Indeed, ExxonMobil may have reached the point of being more powerful and entangled than any government. The company’s leaders look at an untapped oil or gas field as a relationship that might last a half-century or more; during that time, politicians and policies will come and go even in settled democracies. Its perspective is so geological, so Olympian, that it has been willing to anger sitting American governments – as in 1997, when Raymond, a Republican, challenged the Democratic administration’s policy with a speech in Beijing urging China’s communist rulers not to sign the Kyoto Protocol climate agreement. At the same time, because so much oil and natural gas is locked up in places with unstable regimes or unsavory leaders – from Equatorial Guinea to Indonesia to Russia – ExxonMobil often finds itself with more power to affect the local society than the best-intentioned State Department functionaries. In a nail-biting chapter on a showdown between the World Bank and the besieged government of Chad, Coll writes that “Exxon-Mobil had made its own choice clear: It was more interested in the survival of Chad’s oil production than it was in the World Bank’s experiment in nation building.”

Private Empire jumps around the globe to illustrate such conflicts, drawing on an impressive array of lawsuits, State Department cables, Freedom of Information Act documents, and interviews with 400 or so subjects, from former executives to tribal leaders who have sued the company. The image that emerges is of some kind of metabolically challenged creature unable to eat enough to sustain its weight. Because its production is so vast, the company is constantly depleting its existing energy supply. It is therefore under intense pressure to appear to book new reserves, to a degree that has encouraged some fudging on the math: For many years, the company would report actual figures to the Securities and Exchange Commission, then issue a press release announcing a bigger amount – a gambit that was technically illegal, though the company doesn’t seem to have ever paid a price (nor is it clear if anyone who matters was fooled).

The company’s culture is almost as strange as the places its engineers now have to go to find oil and gas. Exxon was so shaken by the fallout from the Valdez spill that it adopted safety procedures that sound like the handbook of a paranoid cult. Employees had to back their cars into garage parking spaces, minimizing difficulty if they needed to leave in a hurry. Executives were prohibited from pursuing dangerous behavior even outside the workplace and urged to confess publicly “near misses” they had, from shaky ladders to stones flying out of lawnmowers. Yet all these rituals didn’t keep 24,000 gallons of gas from leaking into the ground in Maryland in 2006, in an area where residents relied on well water, or any of the other countless mishaps that have occurred as part of ExxonMobil’s sprawling operations.

Masterful as a corporate portrait, Private Empire gushes with narrative. Yet it’s hard to resist the conclusion that Coll, a two-time Pulitzer Prize winner, could have pumped more out of this material. Discussing then-candidate Barack Obama’s frequent insistence in the spring and summer of 2008 that “we must end the age of oil in our time,” Coll hints that a pivotal historic moment might recently have been (and perhaps still is) at hand. He notes in passing that a century ago, after all, “trustbusters had broken up Standard Oil on moral as much as economic grounds.” Well, then: What exactly is the moral case against ExxonMobil today, and does it justify antitrust or other government intervention into how the company behaves?

The marketplace has changed over a century, and ExxonMobil’s corporate-citizenship sins don’t take the monopolistic form that doomed the old Standard Oil. That’s hardly the same as saying ExxonMobil’s sins aren’t worth remedying. Private Empire brilliantly chronicles what the company is, and perhaps the mere fact of bringing to light the stories is a form of advocacy. But the book spends no time addressing whether ExxonMobil should be as it is, and the overall effect of the meticulous documentation of company logic, strategy, and lobbying is to make you think there is little alternative to the status quo.

One can easily predict ExxonMobil’s argument that for all the environmental degradation, dancing with dictators, almost comical perversion of scientific research on climate change, and cynical manipulation of the American legislative process, the company is still the best option in the 21st century, as long as our energy increasingly depends on state-owned or -supported firms in places like Russia, China, Angola, or Venezuela. But could ExxonMobil be compelled to be a better global actor? It’s not much harder to imagine a broken-up ExxonMobil – or a slightly less profitable ExxonMobil run partly by and for the American people – than it is to imagine the CEO actually having to tell the truth to Congress or the public. If that sounds utopian, remember that the status quo is unsustainable. The era of “easy oil” is gone, replaced by the less reliable and far more expensive era of tar-sand extraction and natural-gas fracking. A combination of higher prices, continued environmental damage, political pressure, and alternative energies makes it seem entirely possible that ExxonMobil and its cohort will be pressed into a different future – one that will take another book to describe.

PHOTO: Gasoline (regular grade) prices hover at one-tenth of a cent under the $5 mark at an Exxon station in Washington, March 2, 2012. REUTERS/Gary Cameron

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