June 25, 2012
Book Review: Private Empire: ExxonMobil and American Power, by Steve Coll
by Robert Kropp
In a well-researched investigation into the inner workings of one of the world's largest and most
powerful corporations, author Steve Coll details ExxonMobil's efforts to discredit climate science
and extract resources in countries ruled by autocrats.
ExxonMobil has never been a favorite of most sustainable investors. The oil and gas industry is by
its nature unsustainable, exploiting finite natural resources. And as author Steve Coll describes
it in the prodigiously researched 600-plus pages of Private Empire:
ExxonMobil and American Power, the corporate culture of the oil and gas giant, especially under
former CEO Lee Raymond, has been notable for its regimented secrecy.
begins and ends with disasters. In 1989, the Exxon Valdez ran aground in Alaska's Prince William
Sound, spilling up to 750,000 barrels of oil into a formerly pristine natural landscape. The spill
remained the largest environmental disaster in American history until 2010, when a blowout at a
BP-owned deepwater well killed 11 workers and spilled more than four million barrels of oil into
the Gulf of Mexico.
During the years between those events, we see the world's most
profitable corporation funding research in efforts to discredit scientific findings on climate
change, and spending more on political expenditures and lobbying than any organization with the
notable exception of the US Chamber of Commerce. We see it keeping the US government at arm's
length while it cozies up to dictators in a single-minded effort to book enough oil and gas
reserves every year to keep the investment community satisfied. And we see its take-no-prisoners
approach at work in US courts as it uses its massive financial resources to fight a number of
"With its ideological allies," Coll wrote, "ExxonMobil funded the promotion of
public confusion about climate science by means that future employees and executives of the
corporation are likely to look back on with regret."
A defining moment in Coll's narrative
occurred in 1998, when Exxon and Mobil merged in an $81 billion deal. As a result of the merger,
ExxonMobil became "the world's largest nongovernmental producer of oil and gas," Coll wrote, and
soon became the largest corporation headquartered in the US. A consequence of the merger was
extensive holdings in countries that the company labeled as transitional; that is, often autocratic
nation-states with weak infrastructure and poor human rights records.
security guards hired by ExxonMobil were implicated in human rights abuses including torture and
murder. In Equatorial Guinea, the company lobbied to keep the US government out of security
measures for its offshore installations, while simultaneously supporting full recognition by the US
of the regime of Teodoro Obiang. Transparency International continues to rank
Equatorial Guinea as having one of the most corrupt regimes in the world.
Venezuela, ExxonMobil worked out a bond repurchase agreement with the government of Hugo Chavez, by
which it received $242 million; but at the same time, the corporation secretly obtained a court
order preventing Venezuela from accessing the $300 million due to it in the agreement.
ExxonMobil had an opportunity to update its corporate culture in 2005, when Raymond retired. A
close friend of Dick Cheney's, Raymond had overseen the move of the company's headquarters from New
York City to Texas; in the aftermath of Exxon Valdez, he instilled a by-the-book culture noteworthy
for its conservatism and, in the view of many, arrogance.
But Rex Tillerson, Raymond's
successor, has been handicapped by a number of factors. His predecessor's campaign to discredit
climate science forced him to proceed somewhat timidly in modernizing the company's position even
as scientific consensus coalesced around the issue. An oil-friendly Administration was replaced by
Barack Obama, who had campaigned on the necessity of addressing climate change. And ExxonMobil's
profits suffered at least a temporary decline as the industry was increasingly forced to pursue
more expensive unconventional methods of extracting oil and gas from the earth.
late in the game to natural gas, ExxonMobil sought to buy its way in with the $41 billion
acquisition of XTO Energy. However, "It looked to analysts and investors that Tillerson had
overpaid for Simpson's company and that ExxonMobil had made risky assumptions about future natural
gas prices," Coll wrote. "Investors hammered ExxonMobil's share price, relative to its peer group,
in a way the corporation had not experienced for many years."
Earlier this month,
ExxonMobil published its 2011 Corporate Citizenship Report. In
it, the corporation states, "We have ceased funding groups we believe were addressing the public
policy discussion by questioning the science of climate change as opposed to exploring solutions to
this complicated challenge."
Sustainable investors and other shareowner activists have won
considerable support with resolutions addressing corporate governance and environmental issues at
ExxonMobil. At this year's annual general meeting, 35% of shareowners supported the separation of
the positions of CEO and Chairman, both of which are currently held by Tillerson. Twenty-four
percent asked for a report on political contributions, 27% supported goals for greenhouse gas (GHG)
emissions reductions, and 30% requested that the company report on the impacts of hydraulic
But, as Coll implies, corporations like ExxonMobil continue to reap
disproportionate profits while society is left with the costs of environmental degradation. Until
those externalities are priced—an action, however necessary, that US lawmakers seem unlikely to
address anytime soon—ExxonMobil and its industry peers will continue to benefit even as the
mounting impacts of climate change threaten the planet.