Steve Coll on Exxon Mobil's oil empire
Reuters, Sunday 6 May 2012
Exxon Mobil's vast size and massive profits have often put the oil giant in the crosshairs of critics, and its strict adherence to company protocols and philosophy has dubbed them as impervious to outside pressure

Private Empire: Exxon Mobil and American Power by Steve Coll, New York: The Penguin Press, 2012. 704pp.

Two-time Pulitzer Prize winner Steve Coll's new book "Private Empire: Exxon Mobil and American Power" sought to delve inside the Irving, Texas-based company to see how it thinks and what drives its decisions. The heavily-researched and reported story of the U.S. company details a business spread across the globe, from Indonesia and Chad, and to look at controversies such as its efforts to battle climate change pacts and its handling of the Exxon Valdez oil spill.

Coll spoke to Reuters about the company's corporate culture, its position on global warming and state-run oil companies.

Q: How would you characterize Exxon Mobil's strict culture and proscribed methods for dealing with virtually every aspect of its operations? Is it a benefit or a drag?

A: "It's obviously a huge benefit in the areas it was designed to shape. These global idiot-proof integrated systems have served them very well and influenced their peers over time.
"But is it really necessary to take that same operating discipline and mindset and apply it across every aspect of what the corporation does, including their political strategy, their public affairs strategy, their communications strategy? They basically have one system that they apply, a set of principles that they apply, in every aspect of their business. I came to think that was self-limiting.
"For a corporation of their place in the American system, they really are unusually insular. I think if you went down the Fortune 100 and you mapped the executive suites, I think you'd find a lot of lateral moves in there, people who came from high positions in another corporation, a competitor, another industry, a fresh pair of eyes. In Exxon Mobil, you have zero of those. It's much more like the military."

Q: Exxon was a critic of global warming science and it funded groups that sought to discredit that work. Yet about five years ago, it changed tack and said it would support a tax on carbon. How did this turn come about?

A: "They'll say they were ultimately transparent about it, but I don't think the history supports that. They did try to work through subterfuge and proxy groups to basically poison the science.
"Now was it cynical? I'm not sure. I think (former CEO) Lee Raymond really believed what he believed. He was a pretty advanced chemical engineer himself. After his era ... I think their initial concern was they didn't want to create unnecessary legal liability for themselves.
"They basically took that turn and said 'We were never wrong. We were only misunderstood. But to clarify this and to break up this misunderstanding, let's restate our position.'
"When they actually announced their support for a carbon tax, which I do think is significant change in the company's history even though it wasn't politically plausible, it does put them on record as saying a carbon price is necessary to address the risks of global warming."

Q: Exxon has in the past been criticized by human rights campaigners for its work with unsavory governments in places like Indonesia, Equatorial Guinea and Chad. How does Exxon Mobil view criticism about its behavior?

A: "There's a pattern in those cases, and they're very slow to see what's happening around them. They were very slow to adjust to those challenges that they mostly inherited from (their purchase of) Mobil ... they were not generally in high-risk environments. They kind of bought into the world of trouble when they bought Mobil.
"One guy from Human Rights Watch said when they finally got Exxon Mobil to implement the best practices for corporate citizenship around human rights standards ... he said it was like watching human rights being implemented by a police state, they were so thorough about it."

Q: Exxon has often been wary of being viewed as an American company, instead preferring to see itself as a global entity, but it has on occasion benefitted from Washington's help. How does it justify this?

A: "I came to understand they just don't try. They (seek government help) when it's in their interest, and they don't do it when it's not in their interest.
"Obviously they do put out a story that is incomplete. They like people to absorb the idea that they don't need favors from governments and they are capable of handling things on their own. That's their sort of self image. But what is interesting is to see that whenever they feel that a favor would benefit them, when they think the government can help, they go to the government. And they don't sound especially proud. They sound utterly parochial in those moments."

Q: Many countries have created national oil companies that are owned by the state. Does Exxon Mobil's business model make sense in a world where most of the planet's oil is owned by these government-run companies?

A: "I came to think of them as basically our state oil company, (set up) the way we in the United States would organize them, that is, with no government control, in fact maybe living in the state of active hostility to the U.S. government. That's our version of the state oil company.
"Their scale and their role in the American system and the percentage of economic activity they represent and the way they work around the world is probably closer to a state oil company than not. And we get the benefit of their efficiency and we get to deal with the fact that they are oppositional about regulation and oversight, so that's the tradeoff in comparison to a proper state-owned oil company."