Private Empire: ExxonMobil And American Power

by Jason Tanz, via OnEarth Magazine

Perhaps you recall Milo Minderbinder, the ambitious World War II mess hall officer from Catch-22. An avatar of capitalist ambition, Minderbinder expands his modest operation into a full-fledged multinational corporation.

It starts innocently enough — Minderbinder starts buying eggs from Sicily, then arranges a series of increasingly ludicrous deals to turn a profit. The absurd logic of untrammeled capitalism soon drives him to outrageous action, including accepting money from the Germans to bomb his own platoon. He justifies his behavior by pointing out that, as everyone in the troop is an investor — “everybody has a share,” as his catchphrase has it — they are in fact profiting from their own demise.

In Steve Coll’s new book Private Empire, a history of ExxonMobil in the years since the March 24, 1989, Valdez spill in Alaska, CEO Lee Raymond doesn’t quite reach Minderbinderian levels of amorality, but he gets mighty close. His company pays the torture-happy Singaporean military to protect its oil fields from rebel forces. He hires a team of scientists to browbeat researchers attempting to assess the damage from Valdez. He publicly dismisses the very notion of climate change, even as his company explores how global warming might offer new opportunities for oil exploration and profit. “Don’t believe for a minute that ExxonMobil doesn’t think climate change is real,” Coll quotes a manager as saying.

Coll conducted hundreds of interviews to compile this exhaustive — sometimes exhausting — history of one of the world’s most secretive companies. In piercing Exxon’s crude-black veil, Coll is doing more than describing the inner operations of a successful multinational. He is investigating an organization that, in size and influence, may as well be its own nation with its own sovereign interests — a “corporate state within the American state,” as Coll puts it. In capturing the mind-boggling scope of Exxon’s activity, Coll also offers crash courses in the finer points of oil exploration, the bizarre and brutal history of Equatorial Guinea, the rise of piracy in Nigeria, the eco-guerilla movement, resource management in post-Soviet Russia, the finer points of campaign-finance law, the apportionment of oil field contracts in post-war Iraq, and the battle for Acehnese independence. (NB: This is a much-abridged list.)

It is to Coll’s credit that Raymond never comes across as a moustache-twirling supervillain. He is merely the master of a proudly cloistered society, one that values loyalty and rule-following over free thinking and flexibility. That kind of rigorous mindset is probably necessary to oversee a business as complicated and sprawling as Exxon. Routinely one of the most profitable companies in the U.S. — its quarterly earnings topped $10 billion last year — Exxon’s tradition of consistent financial performance belies the chaos inherent in practically every level of its operations. Like all oil concerns, Exxon is on a constant hunt for “reserve replacement” — finding enough new oil to make up for the huge amount that the company extracts every year — a requirement that has led Exxon into ever more far-flung (and unstable) parts of the world.

At the same time, the size of its balance sheet means that even modest legislative adjustments — a small tax increase, for instance — could result in billions in losses. Factor in the occasional class-action suit, oil leak, or executive kidnapping, and even the least sympathetic reader can have some appreciation for Raymond’s rigid, top-down culture. “[U]nless Raymond used his bully pulpit … to pound hard and even intimidate his employees,” Coll writes, “the natural drift and compromising tendencies of such a large workforce would produce mediocre results.”

Raymond takes a similarly uncompromising attitude toward his many critics. Alternative-energy proponents are dismissed as soft-headed idealists. SEC regulations that conflict with Exxon’s own accounting practices are glibly disregarded in its public statements. Human-rights compacts are refused, not because Exxon doesn’t agree with the ideals behind them but because, in the words of one executive, “We don’t sign on to other people’s principles.” Raymond, in other words, was well suited for the early 21st century Age of American Imperiousness, an attitude best personified by his close friend, Dick Cheney.

And woe to scientists who reach conclusions that Exxon finds distasteful. Government researchers studying how much oil still lurked beneath the beaches of Prince William Sound 12 years after the Valdez spill dug 7,000 holes on 91 beach segments — all while being trailed by Exxon-funded scientists on cruise ships and helicopters, who mapped their movements and double-checked their work. When the government’s team leader, Jeffrey Short, published his findings, Exxon rushed out a response, all but accusing the researchers of fraud. “We saw no evidence that Short dug 7,000 pits,” the paper stated. “Had thousands been dug, we would have located many more.” Exxon filed dozens of Freedom of Information Act requests, burying the scientists in paperwork, and representatives showed up at every public presentation to attack their work. Eventually, Short retired from his government post, in part because he was fed up with the harassment.

About halfway through Coll’s treatise, he loses his main character. In 2006, Raymond steps down. His replacement, Rex Tillerson, is chosen in part as a softer corrective to Raymond’s alienating ways. Coll unearths some great details from Tillerson’s reign, none more heartbreaking than the story of Tillerson’s ill-fated flirtation with support for a carbon tax. Tillerson ordered a review of the company’s climate strategy when he took the helm, which concluded that some form of carbon price hike was likely inevitable, and that a predictable tax was preferable to the gyrations and bureaucracy of a cap-and-trade system. Despite Exxon’s aggressive lobbying campaign, politicians pursued a cap-and-trade policy, which died in the Senate.

Still, without Raymond’s single-minded drive as an anchor for the story, Coll’s narrative falls prey to some of the same aimlessness and drift that Raymond feared would befall Exxon without his authoritarian touch. Regardless, the book concludes with a satisfying — if depressing — geometry. Coll begins his tale with an account of the Valdez spill, an event that the author credits for inspiring Exxon’s fierce discipline, giving the company “a sense that Exxon’s leaders might need to find new ways to exert greater control over the world in which they operated.” In the intervening years, Exxon succeeds remarkably at this goal, influencing US foreign policy, environmental regulations, and tax policy, all while negotiating successfully with an assortment of tin-pot dictators and executing the multibillion dollar purchases of Mobil and XTO.

And yet, at the book’s final chapter — an account of the Deepwater Horizon disaster, for which Exxon shared cleanup responsibilities — the company is no better prepared than it was for the Valdez spill. “When these things happen,” Tillerson admits before a congressional committee, “we are not well equipped to deal with them.” It’s hard to imagine the ever-arrogant Exxon making a similar confession about any other aspect of its business. Then again, it doesn’t seem to have mattered much. In the two years since Tillerson made that statement, Exxon’s stock has jumped 39 percent. And one way or another, everybody has a share.

Jason Tanz is the New York editor at Wired, where he heads up the magazine’s business coverage. This piece was originally published at OnEarth and was re-printed with permission.

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7 Responses to Private Empire: ExxonMobil And American Power

  1. Mike Roddy says:

    Exxon’s actions will doom their own grandchildren, too. That’s why they dwell on the dark side, and why their activity cannot be so easily dismissed as the habits of another money obsessed corporation.

    Many of us knew that their executives are perfectly aware of the dangers of global warming. Their culture is too thorough and disciplined to believe otherwise. Climate change denial is something for the rubes, and to provide cover for their machinations in Washington.

  2. And when climate change goes past the tipping point, do these guys think there will be somewhere to run and hide?

    Too bad Exxon, BP and the rest don’t see themselves in the energy business instead of the fossil fuel business. They could easily finance the rapid transition to renewable energy.

  3. Leif says:

    The GOP do not fund abortion. On the other hand, if I added all the taxes I have ever payed in my life, state, federal, property and miscellaneous, it would not cover one minute’s worth of tax subsidies payed to these extremely profitable ecocidal fossil behemoths… Go Figure!

  4. M Tucker says:

    “…the size of its balance sheet means that even modest legislative adjustments — a small tax increase, for instance — could result in billions in losses.”

    So are you saying that eliminating the federal subsidies to oil companies would hurt Exxon’s bottom line? This is not what representatives from the big 5 told congress, in 2005 I think.

    The important part is the fact that this is a crude oil company, not a wind turbine or solar or even a biofuel company. The illuminating behavior is that Exxon would much rather take all the risks involved with developing oil fields in African nations with all the inherent governmental corruption, lack of infrastructure necessary to develop the operation, lack of security, risk of kidnap, and expense getting the product to a refinery than seriously investing in alternative, renewable energy sources. They would rather invest in the latest and fastest supercomputers to help them find new oil deposits and new devices to recover sunken drilling platforms and continue with ultra deep water drilling for crude. They are a crude oil company and they will not change until all the oil has been sucked from the crust, hence the relentless pressure to drill in ANWR. They will not even invest in a fleet of oil spill recovery vessels large enough to station near all their offshore operations. It is obvious that they are only interested in investing in oil exploration for the next several decades.

  5. BBHY says:

    I have already read “Vulture’s Picnic” by Palast, so none of this comes as any surprise.

    It is not just Exxon, the entire oil industry is unimaginably powerful and corrupt.

    I drive an electric car for many reasons, but that is one of the major ones.

  6. Mark Shapiro says:

    What a hugely valuable work about vast power.

  7. sailrick says:

    These are Mitt Romney’s “people”

    Small businesses? Not so much

    Citizens United Bad for Small Business

    “A new poll released by the American Sustainable Business Council shows that two-thirds American small business owners view the Supreme Court’s decision in Citizens United as bad for small businesses and overwhelmingly believe that corporations have been given too much freedom to spend money to influence political campaigns.”

    People for the American Way