7 Responses to 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.