Fuelling the White House?
BUSINESS:Private Empire: ExxonMobil and American Power, By Steve Coll, Allen Lane, 685pp. £25
THIS IS A HUGE, thoroughly researched book about one of the largest US oil companies. It describes how Exxon was hived off from John D Rockefeller’s Standard Oil monopoly in 1911 and how it later merged with Mobil in an $81 billion deal. ExxonMobil is one of the biggest companies in the world, bigger than many national economies. It makes a profit of about $30 billion a year, and its chief executive is paid about $30 million. It employs more than 80,000 people around the globe. The last chief executive to retire, in 2005, was given a package of $400 million. The company’s top executives work in huge, plush offices known as the God Pod, and they can use any of nine corporate jets for any purpose they see fit.
The book begins with the Exxon Valdez oil spill, in the Gulf of Alaska in 1989, and ExxonMobil’s tightening up of its systems and regulations in the wake of that disaster. Other disasters are detailed dramatically, including the appalling leak in Jackson, Maryland, in 2006 and the subsequent litigation. Mention is also made of the more recent leak in the Gulf of Mexico: the culprit there was BP, not ExxonMobil, but the author points out that the difficulty in plugging that leak was caused in part by unstable cement provided by Halliburton, an oil-related company in which Dick Cheney had interests.
Lee Raymond was chief executive of ExxonMobil until 2005, when he was replaced by Rex Tillerson. The former denied global warming and objected to the Kyoto Protocol. Popular opinion forced his successor to accept the existence of some aspects of climate change; he was, latterly, in favour of carbon taxes rather than the alternative of caps and carbon-trading.
Both men scoffed at the idea that the world was running out of fossil fuels. They paid lip service to the notion of renewable sources of energy. But in private Tillerson referred to ethanol and biofuels as “moonshine”. It is not clear which side of that debate the author of this book is on. He seems to suggest that liquefied gas, coal, tar sands and fracking have given the extractive industries a new lease of life.
Both chief executives were well connected in Washington DC, interacting with both Bush presidents, Dick Cheney, Halliburton and, occasionally, the CIA. US embassies were also at their disposal. ExxonMobil clearly had the support of the US government, if only because of balance-of-payments considerations. Steve Coll says nothing specific about money and favours being exchanged. In 2010, however, the US supreme court reaffirmed the freedom of corporations to fund “political advocacy”!
The recurring dominant concerns of ExxonMobil were twofold. The first was to keep the return on capital employed as high as possible. The second was “reserve replacement”, meaning that new discoveries should at least replace the volume of oil that had been pumped the preceding year.
It is suggested that this second metric was occasionally massaged to please Wall Street and keep the share value up. But there is no doubt that reserve replacement was the factor that drove ExxonMobil into some of the most dangerous countries: Chad, Nigeria, Equatorial Guinea, Sumatra, Iraq and Venezuela. Long-drawn-out negotiations with Russia eventually paid off when ExxonMobil did a deal with Rosneft to develop oil beneath the Arctic Kara Sea.