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Exxon: The defiant one

Geoff Colvin, Fortune via CANN
Unlike its rivals, Exxon Mobil doesn’t much care about alternative fuels and doesn’t try to please the greens. Is CEO Rex Tillerson nuts – or shrewd?
Rex Tillerson is way out of line, and he knows it. “They want us to join the parade,” he says, referring to assorted environmentalists, scientists, politicians, investors and others who’ve been lambasting him and the company he heads, Exxon Mobil. He knows what they’re saying about him, and he repeats it: “Get in line. You’re outta line right now – get in line.”

Why Tillerson refuses to run Exxon (Charts) the way other CEOs are running other giant oil companies is for many people the most baffling and even infuriating question about the world’s most profitable corporation.

The basic model for managing an oil company in this eco-conscious age became clear a few years ago when Britain’s BP (Charts) loudly declared itself to be “beyond petroleum.” The other supermajors are all proclaiming their greenness and investing in biofuels, wind power and solar power. Exxon isn’t. It only recently acknowledged publicly that – brace yourself – the world is warming. Beyond petroleum? At Exxon it’s all petroleum.

It does seem strange that such a high-profile corporation could be so egregiously not with the program. The pressure to conform arguably increases because Exxon is doing so well. In 2006 it earned higher profits than any company in history: $39.5 billion. That’s more than the GDP of Yemen and Bahrain combined.

…[ExxonMobil] is shaped above all by a rigorous analytical culture. “Exxon Mobil is not a fun place to work,” says Fadel Gheit, the Oppenheimer & Co. oil industry analyst widely considered Wall Street’s best. “They’re not in the fun business,” he explains. “They’re in the profit business.”

Remember that. It means that Exxon understands the essence of capitalism: earning a return on capital that exceeds the cost of that capital. At this supremely important job, it is a world champion. All the major oil companies bear about the same capital cost, just over 6%. But Exxon earns a return that trounces its competitors.
(15 April 2007)
With a hard-as-nails culture like Exxon, one doesn’t get very far appealing to its idealistic side. A more effective strategy might be to change the RULES of the system (e.g. carbon taxes), so that in striving after profits, it moves in a more responsible direction. -BA

Target Global Warming, Target Exxon

Paul Rogat Loeb, Common Dreams
…the spokespeople who articulate [climate change skepticism and denial] in these venues and others more mainstream have been overwhelmingly sponsored by Exxon. As the Union of concerned Scientists explores in their meticulously detailed report, Smoke, Mirrors and Hot Air, and as George Monbiot examines in his powerful global warming book Heat, Exxon’s strategy of using a handful of industry-funded dissenters to cast doubt on an overwhelming scientific consensus was borrowed from the fight over tobacco regulation. In 1992, a major EPA report warned of the medical harm from second hand smoke. In response, Philip Morris hired the PR firm APCO to create a supposedly independent group, The Advancement of Sound Science Coalition (TASSC), to promote scientists who’d dispute this harm. Enlisting enough other corporate supporters so the effort didn’t seem just a tobacco industry creation, TASSC’s mission echoed the phrase from a memo of fellow tobacco company Brown and Williamson, “Doubt is our product.”

As part of creating that doubt, APCO’s Steven Milloy founded, which would later become a key website for global warming denial. Milloy also became associated with other key climate change denial organizations, like the Competitive Enterprise Institute (which has called the Kyoto accords “a power grab based on deception and fear”), and later become a columnist for Fox.

… Targeting Exxon pressures them and other corporations to stop trying to undermine the scientific consensus and to stop blocking attempts to rein in greenhouse gas emissions—as in a recent Competitive Enterprise Institute ad that proclaimed about CO2, “they call it pollution, we call it life.” It also highlights the roots of why so many Americans have resisted the reality of the crisis—how what many of us think this is just our personal skepticism is product of a deliberate disinformation campaign.

Some questionable companies are hard to boycott—where do you start with Haliburton? But ExxonMobil has a presence in every city in this country. Their gas stations are accessible for rallies and picketing. Every dollar that their stations lose and every bit of adverse press coverage will create further pressure.

Paul Rogat Loeb is the author of “The Impossible Will Take a Little While: A Citizen’s Guide to Hope in a Time of Fear,” named the #3 political book of 2004 by the History Channel and the American Book Association.
(18 Apr 2007)
In a February press conference (TOD), Exxon apparently agreed that “there was no real debate on the science that climate change was happening, humans were responsible in significant part, and something ought to be done.” That’s a step forward, but Exxon has quite a history to make up for, as Loeb indicates in this article. At some point, it may occur to shareholders and management that these retrograde political campaigns are costing the company money and reputation. -BA