Welcome Steve Coll (NewAmericaFoundation) and Host Mike Magner (National Journal) (author – Poisoned Legacy)

Private Empire: ExxonMobil and American Power

If you’ve ever wondered why all the angry political rhetoric about high gasoline prices has so little effect when you’re paying around $4 a gallon, give a read to Steve Coll’s incredibly well-researched book, Private Empire: ExxonMobil and American Power.

At numerous points in the 685-page exposé of the largest U.S. energy company, Coll makes clear how ExxonMobil puts its interests behind no others, including those of the American public.

“I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.,” former ExxonMobil CEO Lee Raymond says on page 71.

“Energy made in America is not as important as energy made simply wherever it is most economic,” Raymond’s successor, Rex Tillerson, says on page 246 as he dismisses the idea that the United States needs to become less reliant on foreign oil.

And as the new Obama administration in 2009 met with oil companies to gauge their interest in addressing climate change by moving toward cleaner energy, one adviser described ExxonMobil’s attitude as “being firmly fixed in the ‘Fuck you, no apologies, oil-is-here-to-stay mode.’” (page 541).

The bottom line for ExxonMobil – as it was for BP leading up to its disastrous spill in the Gulf of Mexico and as it has been for Big Oil since John D. Rockefeller’s days at the Standard Oil Co. – is that shareholders and profits always come first. Even U.S. national-security interests don’t matter much if ExxonMobil needs oil resources to keep its reserves ahead of its outflow – a critical factor in maintaining a global oil company’s stock value.

In the West African nations of Chad and Equatorial Guinea, ExxonMobil pressured the U.S. government to maintain ties with repressive regimes in order to protect its access to lucrative oil and gas fields. In Iraq, ExxonMobil signed agreements to develop Kurdish oil fields despite fears in the Obama administration that doing so would infuriate Iraq’s Shia-led government. After the deals were reached prior to getting U.S. approval, Tillerson told State Department officials in a conference call, “I had to do what was best for my shareholders.” (p.623)

Of course most of the time ExxonMobil’s needs align with – and often help guide – U.S. policies. Iraq is a prime example. The Bush administration consulted regularly with the oil companies, and ExxonMobil CEO Lee Raymond in particular, as it plotted strategy for toppling Saddam Hussein and securing the country in a way that would provide access to its rich oil resources.

It was a close but cautious relationship. “Throughout his cultivation of the Bush administration, however, Raymond purposely kept ExxonMobil at arm’s length from the administration’s attempts to remake post-Saddam Hussein Iraq,” Coll writes on page 248. “It was not in ExxonMobil’s interests to become tainted by failed nation-building projects in a country that held one of the world’s largest unproduced oil and gas resource bases. American neoimperial ambition in Iraq might fail, but ExxonMobil’s private empire had its own enduring interests, and these should not be rushed.”

The company’s patience paid off big time. In late 2009 ExxonMobil Upstream Ventures closed a deal for exclusive access to Iraq’s West Qurna Phase One oil project, a field containing at least 8.7 billion barrels of oil, Coll writes on page 574. “Eighteen months later, ExxonMobil … was loading Iraqi crude into supertankers in the Persian Gulf that could hold 2 million barrels at a time.”

ExxonMobil isn’t always successful conducting its own foreign policy. The company’s efforts to develop gas contracts in Qatar and Saudi Arabia went bust, partly due to the arrogance of some of its top managers in the Middle East. Its hopes of joint ventures with Russia also fell flat, even with the help of former President George W. Bush, who tried to open doors for U.S. oil companies with President Vladimir Putin.

ExxonMobil’s “private empire” hasn’t just played a major role in world energy development. The company’s impact on the environment, both locally and globally, has been profound.

Coll opens and closes his book with two major oil spills: the Exxon Valdez accident in 1989 that devastated the Alaska coastline and the BP disaster in the Gulf in 2010. There are ironic connections between the two catastrophes – BP was responsible for the industry’s response to the Exxon spill in Alaska and failed miserably; ExxonMobil and BP had identical response plans in place for potential spills in the Gulf, and we know how well BP’s worked out.

At the local level, ExxonMobil was liable for damages from a 24,000-gallon fuel leak from a gas station near Baltimore in 2006 that affected homes and businesses within a half-mile radius of the spill. But the company’s lawyers have dragged out litigation in the case with appeal after appeal, making it unlikely that some of the victims will ever see compensation in their lifetimes.

Then there’s the matter of climate change. There may be no more significant reason why the United States today has no national policy to address global warming than the unrelenting opposition of former ExxonMobil CEO Lee Raymond. “The Earth is cooler today than it was twenty years ago,” Raymond said in a famous speech denying the existence of climate change in 1997.

And today in Washington, the temperature is approaching 100 degrees for the ninth time this summer in what is almost certain to be the hottest year on record.

 

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]

108 Responses to “FDL Book Salon Welcomes Steve Coll, Private Empire: ExxonMobil and American Power”

BevW July 28th, 2012 at 1:51 pm

Steve, Welcome to the Lake.

Mike, Welcome back to the Lake and Thank You for Hosting today’s Book Salon.

For our new readers/commenters:

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[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions.  Please take other conversations to a previous thread. - bev]

Mike Magner July 28th, 2012 at 1:57 pm

Hello, good to be back at the Lake. Looking forward to a good conversation again today about Big Oil

Mike Magner July 28th, 2012 at 1:58 pm

Steve, to get things started, I’d like to ask you how you got going on a book about ExxonMobil

dakine01 July 28th, 2012 at 2:01 pm

Good afternoon Steve and Mike and welcome to FDL this afternoon.

Steve, I have not read your book so forgive me if you answer this but how does Exxon manage to not by boycotted for this type of crap?

Is their PR firm that good or do folks just not care?

Mike Magner July 28th, 2012 at 2:02 pm

I have to say that Steve’s book was really timely after the BP spill of 2010, and for those of you who haven’t read it there are a great many ties between ExxonMobil and BP that shed light on the Gulf of Mexico disaster

Steve Coll July 28th, 2012 at 2:03 pm

Hi Mike, glad to be here. When I started this project four or more years ago, I initially wanted to write about oil and American power in an age of limits (in both spheres) more broadly. But when I got about six months into the research I decided I needed to choose a single company to focus my work. ExxonMobil seemed the only natural choice for American audiences. It’s the largest corporation headquartered in the United States and it receives very little scrutiny.

Mike Magner July 28th, 2012 at 2:04 pm
In response to dakine01 @ 4

Boycotts never materialized against BP either after the Gulf spill. Maybe we’re just too hooked on oil

Mike Magner July 28th, 2012 at 2:05 pm

What has been the response from ExxonMobil to your book, Steve?

PeasantParty July 28th, 2012 at 2:05 pm

Steve, Welcome to the Lake. Mike, thanks for hosting. I am very glad to be a part of the Salon.

Steve Coll July 28th, 2012 at 2:06 pm

dakine01, I think Greenpeace did try to boycott Exxon in the U.K. but they decided that Americans were not ready for that kind of protest, so they devoted themselves to a more journalist role during the Bush Administration, investigating ExxonMobil’s funding of groups opposed to the Kyoto Accords. They did take one “direct action” as Greenpeace would call it, when they sent squads of activists dressed in tiger suits and other garb into ExxonMobil’s headquarters outside of Dallas. It was quite a scene. There were many arrests and Greenpeace ultimately signed a consent decree with ExxonMobil promising not to do that sort of thing for ten years – the agreement expires soon, I think.

Mike Magner July 28th, 2012 at 2:07 pm

It used to be said that what’s good for General Motors is good for America. Why has that never been said about ExxonMobil?

Peterr July 28th, 2012 at 2:07 pm
In response to Mike Magner @ 8

My guess is that you probably have the answer in that quote from page 541: “Fuck you, no apologies, oil-is-here-to-stay.”

Steve Coll July 28th, 2012 at 2:08 pm

ExxonMobil hasn’t communicated directly with me about the book. I understand they told employees not to buy it, although I know many employees did anyway – that might explain what my publisher describes as unusually high rates of e-book sales, so that employees can be discreet. When Exxon’s spokesman has been called up by journalists to ask the book, from what I understand, the comments have been sometimes respectful and sometimes less so. But I don’t have a first hand response from them.

Steve Coll July 28th, 2012 at 2:10 pm

I think ExxonMobil is like General Motors in the energy economy today, in the sense that its decisions as a private corporation have as much or more influence over American energy policy than what the federal government does. That was true about General Motors in the mid-twentieth century, concerning transportation policy. We got highways, not commuter trains, for example.

PeasantParty July 28th, 2012 at 2:10 pm

Steve,

Wow! You answers to Dakine are enlightening. I am very interested in your research during the time leading up to and during the Afghanistan and Iraq wars. I had read several articles at the time about a great oil and gas pipeline going through Afghanistan.

Mike Magner July 28th, 2012 at 2:10 pm
In response to Steve Coll @ 13

I had the same non-response from BP to my book and I’m pretty sure the company ignored all the other BP books after the spill. Their focus now is acting like the spill never happened and putting on a bright green patriotic image during the Olympics

Mike Magner July 28th, 2012 at 2:13 pm

Your point about ExxonMobil having more influence over energy policy than the government is right on, Steve. Do you think Exxon’s power has any positive aspects? I mean wasn’t the company in some ways more effective than governments at managing the world marketplace for oil after the turmoil following the end of the Cold War?

dakine01 July 28th, 2012 at 2:13 pm
In response to Steve Coll @ 10

As a technical note, there is a “Reply” button in the lower right hand corner of each comment. Pressing the “Reply” pre-fills the commenter name and comment number being relied to and makes it easier for folks to follow the conversation.

Note: some browsers don’t like to let Reply work correctly if pressed after a hard page refresh before the page completes loading

Steve Coll July 28th, 2012 at 2:14 pm

Peasant Party, Thanks. Yes, in the book I wrote that came out in 2004, “Ghost Wars: The Secret History of the C.I.A., Afghanistan and Bin Laden, from the Soviet Invasion to September 10, 2001,” (longest subtitle ever printed), there is a chapter about how Unocal tried to persuade the Taliban to let them build a pipeline through Afghanistan, connecting natural gas in Turkmenistan to markets in Pakistan. It didn’t work but it produced some very entertaining episodes, such as a visit by a Taliban delegation to Houston, to see the American oil industry at work.

Mike Magner July 28th, 2012 at 2:16 pm

ExxonMobil has been consistently opposed to alternative energy and efforts by the U.S. to reduce oil dependence. Does that make them anti-American?

PeasantParty July 28th, 2012 at 2:17 pm

Steve and Mike,

Have either of you been approached by politicians? I know they are in the pockets and some of the oil companies major stock holders. Mike, I remember your book. The CIA really needs to rethink what America’s strategic interests are.

Steve Coll July 28th, 2012 at 2:17 pm
In response to Mike Magner @ 17

Yes, I agree that they are much more efficient in their market and operating roles than any state-owned oil company would ever be. How much American consumers benefit from that is debatable, but there are certainly some benefits. The interesting thing about ExxonMobil is that it has a kind of utility function in our economy – drivers can’t escape from gasoline any more than an apartment dweller can escape from electricity, yet we let gasoline be served to us by an entirely private, and defiantly anti-governmental company like Exxon, whereas we insist that electricity be regulated to a public interest standard.

Peterr July 28th, 2012 at 2:18 pm
In response to Steve Coll @ 14

Are you saying that the problem is that of “regulatory capture” whereby regulators that ought to be overseeing ExxonMobil are too close to those they are watching [i.e., "better check that policy change with EM first"] or that there is a lack of sufficient regulatory oversight to begin with?

Mauimom July 28th, 2012 at 2:18 pm

Steve and Mike, welcome.

Steve, I had to almost laugh [in a sad, desperate sort of way] when I read the opening story about the Exxon Valdez, and how the main contributors to its tragedy were lack of funding for government agencies, cost-cutting by Exxon, and lack of regulations.

Things certainly don’t change do they?

eCAHNomics July 28th, 2012 at 2:18 pm

What is ExxonMobil’s greatest weakness?

You can interpret that any or all ways that you want. For example, hubris or size & power in a political sense, environmental or other problems in a scientific sense, or any other weaknesses that you would care to mention.

Steve Coll July 28th, 2012 at 2:19 pm
In response to Mike Magner @ 20

They see themselves as very powerfully serving the interests of the United States by producing the cheapest energy available at scale, both oil for transportation and natural gas for electricity. If we want them to do something else, we will have to change our laws – and that is hard to do when most Americans don’t see climate change as a crisis, and when oil and coal lobbies have invested as they have in Washington.

Mauimom July 28th, 2012 at 2:19 pm
In response to Steve Coll @ 10

when they sent squads of activists dressed in tiger suits and other garb into ExxonMobil’s headquarters

That was an amazing story. Thanks for it.

eCAHNomics July 28th, 2012 at 2:19 pm

What is ExxonMobil’s lobbying budget and what is their ROR on it, i.e. how much do they get back for every dollar they shower on a politician?

Mike Magner July 28th, 2012 at 2:20 pm
In response to PeasantParty @ 21

Most politicians don’t go out of their way to talk to reporters, so no, I’ve never been approached by politicians except when they need press.

Steve Coll July 28th, 2012 at 2:21 pm
In response to eCAHNomics @ 25

Great question. They are great operators, very disciplined. But they are a very very closed system and they are not good partners, and my hypothesis would be that we are in a world, increasingly, where you have to work in open systems and act as a successful partner. The oil industry is very forgiving of ExxonMobil’s weaknesses because it is such a resiliently profitable business and XOM is so good at what they do. But over time, with international competition rising and domestic politics thickening, I think they’ll be hurt if they don’t figure out how to open themselves up more. Science is an example of this problem – over time, the best scientists are going to increasingly be women, for example, and ExxonMobil is not a very friendly place for women to work right now. So those sorts of weaknesses are all interconnected.

Mauimom July 28th, 2012 at 2:21 pm
In response to Steve Coll @ 26

Steve, as I read through chapter after chapter documenting Exxon’s atrocities, and viewed country after country that they raped and pillaged [including our own], it occurred to me that maybe “TBTF”, as applied to Exxon, stands for “Too Big To FIGHT.”

How do we fight something this big, this powerful, that has its tentacles into everything that might resist it?

Steve Coll July 28th, 2012 at 2:23 pm
In response to eCAHNomics @ 28

I’d have to dig out my spread sheets, but their disclosed budget is in the tens of millions annually in Washington. That’s just the money the law requires them to disclose. Worldwide, I’d guess half a billion annually – just a guess. But one tax provision in the United States alone will save them at least that much and probably more. They’re very numbers driven – I wouldn’t be surprised if they quietly ordered up an return-on-investment assessment internally at some point.

eCAHNomics July 28th, 2012 at 2:24 pm

Palast has argued that oil corps control of oil resources is more about preventing oversupply than other motives. I’m halfway thru Yergin’s The Prize, and that’s certainly the history of the industry.

It’s easier to make profits in oil by raising the price than be, ya know, actually drilling & producing oil.

Palast also says that a pool to challenge Ghawar in size is located in Iraq’s Sunni triangle, but has been redlined to keep it from being tapped since the Brits owned Iraq in the 1920s. (It’s been awhile since I read Armed Madhouse, so I could misremember.) What do you know about that?

Mike Magner July 28th, 2012 at 2:24 pm
In response to Steve Coll @ 26

Is one of the reasons Americans don’t see climate change as a crisis that the oil companies have held too much sway in the debate about it? In other words, do the climate deniers have the upper hand through Fox News, etc?

Steve Coll July 28th, 2012 at 2:26 pm
In response to Mauimom @ 31

Ultimately, if you want a corporation like ExxonMobil to change what it does, there are two levers: The shareholders who own the company, and the laws of the United States that shape the corporation’s choices. Shareholder activists have put some pressure on the company and forced it to stop funding groups that attacked climate science, for example. But their effectiveness has been limited. Popular opinion just doesn’t seemed seized by these issues right now. If we have a few terrible droughts and Americans begin to see global warming as a CURRENT threat – not something their grandchildren will deal with – that might change, but right now the oil companies enjoy a permissive political environment.

eCAHNomics July 28th, 2012 at 2:26 pm
In response to Steve Coll @ 32

One can guess. If they spend half a billion annually and get tens, if not hundreds of billions in gimmes like depletion allowances and other tax welfare, you can see that the ROR is in the thousands of percents.

Steve Coll July 28th, 2012 at 2:29 pm
In response to eCAHNomics @ 33

The Prize is a great book but its treatment of cartel control of global oil prices is a little dated. It’s really set in the era of OPEC’s maximum power, in the late 1970s. After the Cold War, supply has become much looser and harder to manage. We had a big oversupply problem (from the perspective of companies and producers – not consumers!) in the late 1990s. Now it’s very hard to figure what moves prices in the short and medium run because the markets are so volatile and interconnected – you have a lot of hot “commodity fund” money pouring in and out of oil markets and sloshing the numbers around. Of course, there are fundamentals like Iraq’s turmoil and Chinese consumption, etc., but it’s a much more wired-together market, more sensitive and volatile, than in the era described by The Prize.

Steve Coll July 28th, 2012 at 2:31 pm
In response to Mike Magner @ 34

There’s no question that the denier side of the argument has achieved a lot of what it set out to achieve. I can’t think of another area of science that impacts public policy and public health where there is such a large gap between what the public believes and what 97 percent of qualified scientists believe than in global warming. That gap surely is part of all of this communications campaigning going back to the late 1990s, in which ExxonMobil was involved.

Tammany Tiger July 28th, 2012 at 2:32 pm

The price of natural gas has fallen sharply (though you’d never know it by looking at your gas bill). What effect has that had on the near- and long-term strategies of ExxonMobil and other oil companies?

Mauimom July 28th, 2012 at 2:32 pm
In response to Steve Coll @ 35

the laws of the United States that shape the corporation’s choices

It’s clear from what you wrote that Exxon-Mobil is EXCESSIVELY focused on the tax code, because their revenue is so huge, such that even a minor switch would mean big bucks to them.

However, I found it LAUGHABLE when [p. 80] Raymond dumped Exxon’s tentative venture into alternative energy, on the ground that

Any business that requires government subsidies is not for Exxon.

How convenient for them to be able to characterize their breaks via the tax code as “not a subsidy.”

Mike Magner July 28th, 2012 at 2:32 pm
In response to Steve Coll @ 37

Speaking of Iraq’s turmoil, I found the sections of the book about EM and the Bush administration’s conduct of the war to be fascinating. They (ExxonMobil) made out pretty well in the end, didn’t they?

PeasantParty July 28th, 2012 at 2:33 pm

Mike and Steve,

Following up on Ecahnomics #33, I have to ask this question without skirting around it. Aren’t our wars and military might being used directly to benefit the oil and gas industries? I’ve read several books from Ex-CIA and that is basically all I get from them. That our country spends billions to invade or prop up a dictator for the sole purposes of access to oil and gas should make any American cringe with shame.

Mike Magner July 28th, 2012 at 2:34 pm
In response to Steve Coll @ 38

I think the Republican Party has a big responsibility for that too. Lately even some conservatives in Congress (Jeff Flake for example) are showing signs of being embarrassed that so many in the party have their heads in the sand on climate change.

metamars July 28th, 2012 at 2:34 pm

I’ve been intending to write a diary called “The Exxon Mobil ‘Climate Change Denier’ Dog that Didn’t Bark”. Notice, please, the word “Didn’t”, not “Did”.

That’s because, with all their awesome revenues, I don’t see that Exxon Mobil – or any other oil company – is sponsoring any public education campaign about the science AGAINST catastrophic climate change due to human greenhouse gas emissions. (I mean TV ads, print ads, etc., not just piddling $$ to the Heartland Institute). Consequently, the general public is mostly ignorant both about science which casts doubt on catastrophic AGW*, as well as ignorant about both the flimsiness of so much of the so-called scientific basis of climate catastrophism propaganda.*** Hell, even teaching the public about the misleading “98% of climate scientists” claim would open a lot of people’s eyes.

Exxon Mobil has the $$ to address that, and yet, they don’t. I’d like to know why. Do you? I have speculated that they’ve been “cut in” by the Goldman Sachs** financial types, who (I presume) have more influence over the US government than even the oil companies.

I don’t have time to research this hypothesis, so my forthcoming diary will amount to informed speculation. However, hopefully you can say something about an Exxon Mobil / Goldman Sach axis of evil.

* See, e.g., Salby’s lecture here: http://www.youtube.com/watch?v=YrI03ts–9I , regarding which, if his results hold up, will be just devastating to the climate catastrophist position. (Not that the American public will ever become aware of this…).

** See A Climategate 2.0 / Goldman Sachs connection

*** This problem is partly exaggerated claims, partly invalid analysis, and partly suspicious/wrong/even fraudulent data manipulations.

Steve Coll July 28th, 2012 at 2:35 pm
In response to tammanytiger @ 39

ExxonMobil made a big bet on unconventional natural gas (the kind you extract by “fracking) in the United States in 2010, when they bought XTO, one of the largest American producers. It was their biggest purchase of another company since Mobil a decade earlier. Since then, gas prices have fallen so low that they are really hurting. Exxon will say it isn’t worried because it has a long-term plan, etc., but they look to a lot of their shareholders as they bought XTO at the top of the market and at the wrong price.

Mike Magner July 28th, 2012 at 2:36 pm
In response to tammanytiger @ 39

I’m very interested in this, too, Steve. I think you mentioned in the book that there could be a point in the near future where ExxonMobil has more revenues from natural gas than from oil, particularly with the current shale boom. Do you think that’s going to happen, that EM will be more gas than oil?

Steve Coll July 28th, 2012 at 2:37 pm
In response to Mike Magner @ 41

Yes they have a contract to rehabilitate one of the big oil fields in southern Iraq and they also have signed up to produce oil in Kurdistan, in the north of the country. As one Iraqi oil specialist I interviewed remarked, whatever the complicated motivations that drove the invasion in 2003, you can’t help but notice the result seven years later, with ExxonMobil able to book Iraqi oil for Wall Street in ways that it could not before the war.

Mauimom July 28th, 2012 at 2:37 pm
In response to Mike Magner @ 41

I also found useful your discussion of “equity oil” and “resource nationalism” — Exxon’s being pissed off at countries that DARE to want control over their resources. Thus their push to drill in the good ole’ friendly US.

And your point about their “assets” being those holes in the ground, therefore requiring physical control/access, helps decipher their outlook and strategy.

Steve Coll July 28th, 2012 at 2:39 pm
In response to Mike Magner @ 46

Yes, that day does seem like it is coming. Oil is a lot harder for them to access right now than gas, and they’re pretty close to fifty-fifty already both in reserves and production.

PeasantParty July 28th, 2012 at 2:41 pm

Steve and Mike,

Is there really a difference in market value for what they call Summer Oil for gasoline and winter oil? I am not sure of the blends but Light Sweet Crude and Brent Crude, etc. appears to be a smoked up reason to justify the high prices in the summer when the working class can take vacations.

Mike Magner July 28th, 2012 at 2:41 pm
In response to metamars @ 44

Read Steve’s book — ExxonMobil put a lot of money into research to try to counter evidence that climate change was occurring. And if there are more than 3 or 4 percent of actual scientists who deny climate change is occurring, we haven’t really heard from them

Steve Coll July 28th, 2012 at 2:42 pm
In response to Mauimom @ 48

Yes it was interesting to think about how the world looks to ExxonMobil that way. Because of resource nationalism, they can’t “own” oil or book it as equity reserves for Wall Street in most of the Middle East. (Iraq is a partial exception.) So where do you go to own oil? You can go to the free market countries like the United States, the U.K. or Australia where property rights are sacrosanct and you can buy what you want – but the problem is, until the gas boom, these were not big oil and gas plays. The second choice is to go to weak states like Chad, Equatorial Guinea or Angola in Africa – countries that are just too poor and badly governed to assert their own “resource nationalism,” and so they have to share their oil wealth with companies like Exxon. So it’s a strange portfolio of ownership – rich capitalist countries, and very weak ones in Africa and elsewhere.

PeasantParty July 28th, 2012 at 2:43 pm
In response to Mauimom @ 48

Hey, MMom.

They really, really hate Hugo Chavez!

Mike Magner July 28th, 2012 at 2:43 pm
In response to PeasantParty @ 50

there are some EPA requirements for cleaner gasoline in the summer that pushes up the price, but that’s probably not as important a factor as increased demand in the summer that causes prices to rise as soon as the big driving season starts.

PeasantParty July 28th, 2012 at 2:44 pm
In response to Steve Coll @ 52

Oh, Man! That reminds of the land problems and politics with ownership that has been brewing in Paraquay.

Mike Magner July 28th, 2012 at 2:45 pm

Steve, after researching the effects of the Valdez spill on Prince William Sound, what is your assessment of the impacts of the BP spill on the Gulf of Mexico?

Mauimom July 28th, 2012 at 2:47 pm
In response to Steve Coll @ 52

they can’t “own” oil or book it as equity reserves for Wall Street

I really learned a lot from reading your book. One fact was that oil companies need to “replace” [as an asset on their balance sheet] the oil they’ve pumped out of the ground. [Even when ignoring SEC accounting regs.] Thus the CONSTANT search for new oil they can “claim” as their own, that won’t be taken by some evil country nationalizing its resources.

And again, why “US oil” is so prized.

Steve Coll July 28th, 2012 at 2:49 pm
In response to Mike Magner @ 56

I didn’t have time to make a careful study of that. From what I read and heard from scientists who studied both Prince William Sound and the Gulf, it seems as if there are two big differences in the Gulf, which might help it recover faster than some parts of the Sound did. One is the warmer temperature of the water. Maybe more important is that oil has been seeping up from the Gulf seabed forever, so the ecosystem that endured the BP spill was one that had already incorporated the presence of dissolved and undissolved oil much more than the Prince William Sound had done. But really I’m cautious about these issues because I didn’t dig into them the way I dug into the questions that more directly concerned ExxonMobil. What do you think, Mike?

Mike Magner July 28th, 2012 at 2:51 pm
In response to Steve Coll @ 58

well one thing that caught my attention in your book was that Alaska refused to allow dispersants to be used on the Exxon Valdez spill, but they were widely used in the BP spill to minimize damage to coastal areas. It didn’t prevent the beaches from being harmed, but it did make cleanup easier. Does that suggest to you that Exxon was right that dispersants should have been used in Prince William Sound?

Mike Magner July 28th, 2012 at 2:52 pm

There are a number of places in the book where you describe tensions and animosity between ExxonMobil and BP. How would describe the relations between the two companies?

bmaz July 28th, 2012 at 2:53 pm

Steve,

Very nice job on the book. Not quite all the way through it, but it strikes me that it paints a picture of a malign entity that is neither a good corporate citizen of the US, nor the larger planet as a whole. Such is an increasingly prevalent problem with all corporate entities serving only the almighty “share value” over particular concerns for more long term beneficial behavior. None more pronounced than the energy sector though. Through your work have you been able to grasp anyway to shift this emphasis so as to make ExxonMobil more of a better citizen and willing to invest in long term benefits to society?

As an aside, I have been tasked with conveying greetings from the Celano family of Copenhaver, especially Casey and Liz.

Steve Coll July 28th, 2012 at 2:54 pm

Well, they probably were right in principle. But there weren’t actually a lot of dispersants around, the delivery was hampered by wind, and then this huge storm blew through, scattered all the oil, and made the whole question moot. Even if they had max’d out dispersants before the storm it wouldn’t have been decisive. Also, the precaution of the local fishing industry about the uncertain effects of dispersants on the spring salmon run certainly were not crazy concerns – it would have been an experiment that could have gone badly.

Mike Magner July 28th, 2012 at 2:57 pm

Lord Browne said he knew Exxon would drop to the bottom of the industry after the Valdez spill, and he was right at the time. Has the situation now reversed itself since the BP spill? Especially since ExxonMobil placed such enormous emphasis on safety after Valdez — it has put them at the top again at least in regard to employee safety. They haven’t killed 15 people in a refinery and 11 more on a drilling rig like BP.

hpschd July 28th, 2012 at 2:59 pm

I am curious about the business of royalties paid to countries/governments for oil extracted. How are these established, manipulated, and what is reasonable?
How do they compare over different countries?

Siun July 28th, 2012 at 2:59 pm

Welcome Steve and Mike,

I’m in the midst of reading this great book and really fascinated by the view inside Exxon culture that you offer. As corporations replace governments as the centers of power, understanding their internal cultures seems so essential if we want to understand where the points for leverage are (if any at all.)

Steve Coll July 28th, 2012 at 3:00 pm
In response to bmaz @ 61

Hi there. Greetings back to Liz and Casey. How is Casey, if you can say? We were next door neighbors for a while. Anyway, on your question, I do think this country’s sense of what corporate responsibility should be has a long way to go. In Australia and Europe there is a much fuller conversation about the kinds of questions you raise.

Steve Coll July 28th, 2012 at 3:02 pm
In response to Siun @ 65

Thanks Siun. I found ExxonMobil’s corporate culture truly fascinating. As I mentioned earlier, I didn’t start out to write the book about them – in a way, they chose me because I needed a single company to tell the story. When I made that turn in the research, I had no idea how peculiar and demanding their culture is – and it does shape their approach to politics, environmental issues and other subjects that matter to us all.

Steve Coll July 28th, 2012 at 3:05 pm
In response to hpschd @ 64

Companies and governments go to a lot of effort to keep those details secret. The amount of royalty the company pays depends in part on how much risk they are taking. Small risk, high royalty. High risk, low royalty. I think in Equatorial Guinea, where there was a coup attempt every month or so and everything seemed risky, ExxonMobil paid only 12 percent for a few years, until the costs of the initial investments were recouped. But in Nigeria, where conditions can be tough but there is a lot of desire by the companies to own parts of the country’s huge reserves, companies can pay as much as 97 percent – and still be happy!

bmaz July 28th, 2012 at 3:05 pm
In response to Steve Coll @ 66

She is great, lives in Knoxville. Will contact you off this list and fill you in. She went berserker excited when I told her my afternoon plans though. Sends her best.

Steve Coll July 28th, 2012 at 3:05 pm
In response to bmaz @ 69

Great – thanks – and give her my bests as well.

Mike Magner July 28th, 2012 at 3:08 pm
In response to Steve Coll @ 67

Siun does hit the nail on the head in saying “As corporations replace governments as the centers of power…” Is ExxonMobil the premier example of this, or just one of the biggest among many corporate superpowers that share the same approach?

hpschd July 28th, 2012 at 3:10 pm

How does Exxon justify the subsidies it gets?
What will it take to stop the subsidies?

Do other governments grant subsidies?

Siun July 28th, 2012 at 3:10 pm

I work in the area of corporate responsibility (was in fact at a major company this week where we shared a safety minute and I grinned thinking of your book) and certainly XOM has been behind many others here. American companies do not face the regulatory requirements imposed in Europe and elsewhere and so CR programs are completely voluntary and must be driven by an actual business case for the change in behavior. Some have the foresight to understand the opportunities and support for long-term profitability of becoming better corporate citizens, others … do not.

Steve Coll July 28th, 2012 at 3:10 pm

I’d say “just one of the biggest among many corporate superpowers” except that as you mentioned earlier, their business model is different from, say, McDonald’s or WalMart or even Google, which obviously has a lot of power over the world’s information. ExxonMobil drills holes in the ground all over the world and then tries to maintain production out of those wells for decades at a time – that sense that is literally “in the ground” means that it gets involved in wars, coups, and local politics in a way that a retailer or a media company never would.

Steve Coll July 28th, 2012 at 3:11 pm
In response to Siun @ 73

Yes, that is all well said. If it is to change, customers and shareholders and the public will have to make themselves felt in these areas the way they are in Europe.

PeasantParty July 28th, 2012 at 3:11 pm

Did your research show any interests in Paraquay?

Steve Coll July 28th, 2012 at 3:14 pm
In response to hpschd @ 72

Our energy economy is pretty unusual – more market-driven than most others. ExxonMobil justifies many of the subsidies it gets by pointing out that they are really broad “manufacturing” subsidies and that they deserve them because the “refining” of oil they do and the manufacture of chemicals and plastics out of oil and natural gas is no different than other kinds of manufacturing. But given the utility role they play and the fact that they are so deeply unpopular with the public, it’s not surprising that President Obama and others would say they should not get the benefit of these tax and manufacturing subsidies – ExxonMobil will make $40 billion or more in profits this year alone.

Steve Coll July 28th, 2012 at 3:14 pm
In response to PeasantParty @ 76

I did not come across that, no.

Mike Magner July 28th, 2012 at 3:15 pm

Is ExxonMobil still a blue chip investment in every respect? I’m asking in the context of what has happened to BP since the spill — the company’s financial performance is still behind where it was before April 2010. Is ExxonMobil — and all global corporations operating in risky environments, for that matter — always just one big mistake away from financial crisis?

Steve Coll July 28th, 2012 at 3:18 pm

I think the risk you mention is greater than the company will acknowledge – much greater. Deepwater Horizon shows how for all the major oil companies these days, every day is a bet-the-company day. In order to compete, these companies have to work more and more in frontier drilling environments – deep water, but also harsh climates, north of the Arctic circle, and so on. They can say – as ExxonMobil does – that they have it all under control, but the fact is that these are called frontier environments for a reason – a lot of the engineering and operating conditions are novel. Japan was pretty confident that its nuclear industry was impregnable, too, but if you were a complacent shareholder of Tokyo Electric, you are probably pretty sorry you never asked about their risk profile.

metamars July 28th, 2012 at 3:19 pm
In response to Mike Magner @ 51

Well, allow me to qualify. Why hasn’t Exxon Mobil RECENTLY put “a lot of money” into not just research, but also public advertising, to teach the public about the non-catastrophist viewpoint?

I’m aware that there was a first phase, which basically emulated the fraudulent pro smoking PR campaign that preceeded it. However, I want to know what has Exxon Mobil done lately? Especially since the generally sideways temperature data since 1999? Note that Salby’s lecture is from just last year, the initial deployment of 3,000 Argos buoys wasn’t completed until 2007, papers continue being written all the time, which contradict the catastrophist spin on things, such as this one, which came out recently, etc.

I’ll try and quickly find a reference for the two phase treatment of climate science by the fossil fuel industry. As I recall, the 2nd phase was to appear to go along with the green movement, but to keep pumping away.

If somebody claims that the 2nd phase is educating the public, I would instead suggest that we believe our lying eyes, and not an idea with observations to the contrary.

Mike Magner July 28th, 2012 at 3:19 pm
In response to Steve Coll @ 77

those subsidies have really become a partisan issue in this country today, with Obama’s party mostly aligned to try to strip them away from Big Oil and Republicans virtually unanimous that they can’t be touched. If there was ever an election where the public can make a choice on that issue, this is it.

bmaz July 28th, 2012 at 3:19 pm

Steve, moving from terrorism’s underpinnings and the security state response thereto in the Bin Ladens and Ghost Wars to the wielding of national and international power by ExxonMobil is a fascinating target shift for your reportage.

Can you tell us a little more about what motivated that shift in focus and what differences you encountered in working up your material here as opposed to the previous, somewhat related subjects in bin Laden and Ghost Wars?

hpschd July 28th, 2012 at 3:23 pm
In response to Steve Coll @ 77

Thanks.

No doubt you address all these issues in the book (which I have not read yet).

I am library dependant and the 24 copies are all on hold (I’m 56th out of 68 holds) – clearly a popular book in Toronto.

There 8 copies of the audiobook (I’m 12th in line)
20 hours long!

PeasantParty July 28th, 2012 at 3:23 pm
In response to metamars @ 81

Muhahahaaaaaaaaaaaaa!

I’ve always heard that when large corporations try to make you believe they are your friends, you need to run. Don’t stop at go either!

metamars July 28th, 2012 at 3:24 pm
In response to metamars @ 81

I’ll try and quickly find a reference for the two phase treatment of climate science by the fossil fuel industry. As I recall, the 2nd phase was to appear to go along with the green movement, but to keep pumping away

I believe these are the references (don’t want to re-read, now):
The Corporate Climate Coup. See also here.

Steve Coll July 28th, 2012 at 3:24 pm
In response to bmaz @ 83

Thanks. I know it seems like a shift but in my own experience there was some continuity. I started out as a Wall Street investigative reporter back in the 80s for the Washington Post and I wrote a book on the oil industry back then. After 9/11, I wanted to write a series of books about the deeper patterns and structures from which that shocking event arose. So Ghost Wars was about the twenty years preceding the attacks, how a series of small wars produced Al Qaeda, and then The Bin Ladens I intended as a book about how complicated Saudi Arabia is, using the story of the Bin Laden family to tell that specifically. Coming out of that project, I really wanted to write about oil, and America’s tangled dependency on oil, the way that shaped the country and its foreign policy. I didn’t start out to write about ExxonMobil specifically, but once I got going, I thought I needed a single narrative – like the Bin Laden family – to tell the larger story, so I chose the corporation, which after all is the largest headquartered in the United States and rarely is looked at in any depth.

Steve Coll July 28th, 2012 at 3:26 pm
In response to hpschd @ 84

Always good to hear that something you worked on that long is being read – of course, Canadians are great readers in general.

Mike Magner July 28th, 2012 at 3:27 pm
In response to metamars @ 81

I’m not sure they’ve put much money into climate research recently, but it may because the political environment has swung so much to the right they don’t need to. When they funded the Global Climate Coalition a decade or so ago, there were actually a lot of Republicans — John McCain and Mitt Romney, for instance — who accepted that climate change was real. Now almost the entire Republican Party is in climate-denial mode and have stymied action in Congress, so the oil companies don’t need to do anything but donate to GOP candidates to make their case.

Mike Magner July 28th, 2012 at 3:31 pm

Steve, I have to ask you about the very ending of your book, where you contrast the U.S. government’s massive deficit with ExxonMobil’s enormous profits. Is it fair to compare the financial situation of an organization whose primary mission is public service to one whose main responsibility is to make a profit?

Steve Coll July 28th, 2012 at 3:35 pm

Well, they obviously have different missions, but the comparison is interesting. ExxonMobil had a great decade after 2000 but the federal government did not. Some of that – recession and 9/11 – was beyond the government’s control, but some of the failure – the invasion of Iraq, for example – you might think of as voluntary. Anyway, ExxonMobil today has a AAA credit rating and the United States no longer does…

bluewombat July 28th, 2012 at 3:38 pm

Am a bit late to the party, but welcome to the Lake, Steve, from a fellow graduate of Occidental College (A.B. English Lit. 1974).

Don’t know if you’ve already answered this, but is there anything that can be done to rein in the power of ExxonMobil and other oil companies, or should we just send our paychecks directly to them?

Mike Magner July 28th, 2012 at 3:39 pm

Ironic, isn’t it, how the government went one direction and ExxonMobil the other in an era when the two were almost partners — I’m thinking of the close relationship between Dick Cheney and Lee Raymond for instance. Would you say ExxonMobil found the Bush administration to be not as useful or helpful as it first thought it would be? Everyone assumed the oilman Bush was in the pockets of Big Oil.

hpschd July 28th, 2012 at 3:40 pm

What effect did the crash of 2008 have on Exxon? Do they have a financial section (CDO, CDS)?

Certainly there is a lot of market speculation on oil futures. Are they able to influence the market?

bmaz July 28th, 2012 at 3:41 pm

A LOT of very detailed work went into Private Empire and obviously it tells a great story and conveys a lot of information. As you can tell, a lot of the people here are activist and result minded. There has been a lot of discussion of that in the various questions, but if you could envision a result or change that you hope to accomplish, above the telling of the story, what would that be and how can people such as those here best work to that end?

bmaz July 28th, 2012 at 3:43 pm
In response to Steve Coll @ 91

Anyway, ExxonMobil today has a AAA credit rating and the United States no longer does…

Heh, no, perhaps not. That said, with oil still pegged to the dollar, which in light of the Euro in distress looks to continue, does that really matter?

metamars July 28th, 2012 at 3:45 pm
In response to Mike Magner @ 89

Sounds reasonable. Perhaps the author can confirm your reasonable hypothesis.

However, let me throw this into the mix. From listening to online presentations during the latest Heartland climate change shindig, it’s clear that (at least according to them) the coal producers are being thrown under the bus by the Obama administration, using the EPA (as I recall, they are setting smoke stack emission standards so stringently that coal fired plants won’t be able to meet those standards.) However, the oil and gas producers are not being suppressed by the Obama administration.

There are plenty of reasons, besides CO2 emissions, to regulate coal emissions (e.g., burning coal emits birth defect causing mercury into the atmosphere). However, insofar as these regulations have CO2 mitigation as their purpose, having educated the public, all along, about the shabbiness of the CO2 catastrophist science, with it’s attendant propaganda spin, could have bought the coal producers some additional political capital.

More significantly, though, with the D/R duopoly so firmly in control, elections tend to be about capturing swing voters. Thus, it would be in the Republican Party’s interest to prod the fossil fuel industry to conduct an educational campaign. This advantage would be outweighed, if I’m correct, by the fact that doing so will also annoy their more powerful Goldman Sachs/Big Finance sponsors.

There appears to be a strong inhibitory force checking both the oil and gas industry, as well as the Republican Party (Senator Inhofe is an exception), from educating the public.

Mike Magner July 28th, 2012 at 3:47 pm

Before we get to the end, Steve, tell us what might be next for you. I’m sure a lot of your readers are wondering what to look for down the road. If you can’t be too specific to avoid having your ideas hijacked, maybe you could give us a hint.

Steve Coll July 28th, 2012 at 3:49 pm
In response to Mike Magner @ 98

Thanks Mike. I’m going to go back to the subjects I treated in Ghost Wars and try to bring them up to date. A kind of “Ghost Wars II” is what I have in mind.

Mike Magner July 28th, 2012 at 3:50 pm

Seems like there should be a movie in that subject matter too!

BevW July 28th, 2012 at 3:51 pm

As we come to the end of this Book Salon,

Steve, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book and the ExxonMobile Empire.

Mike, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:

Steve’s website (New America Foundation) and book (Private Empire)

Mike’s website (National Journal) and book (Poisoned Legacy)

Thanks all, Have a great weekend.

Tomorrow: Sanford Levinson / Framed: America’s 51 Constitutions and the Crisis of Governance; Hosted by Aziz Huq

If you would like to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

Steve Coll July 28th, 2012 at 3:51 pm
In response to bluewombat @ 92

Thanks – always glad to hear from an Oxy grad!

Steve Coll July 28th, 2012 at 3:52 pm

Thanks to everyone – have a good weekend.

Mike Magner July 28th, 2012 at 3:53 pm

Thanks all…this was a lot of fun as well as enlightening.

bmaz July 28th, 2012 at 3:53 pm
In response to Steve Coll @ 99

Great project. With the shift in emphasis of attacking terrorism, and the new and electronically omnipresent modalities used, there should be a lot to mine for such an update volume.

hpschd July 28th, 2012 at 3:55 pm
In response to Steve Coll @ 103

Thanks for being here, Mike too and Bev and all for an interesting Book Salon

juliania July 28th, 2012 at 4:27 pm
In response to bmaz @ 95

“A LOT of very detailed work went into Private Empire and obviously it tells a great story and conveys a lot of information. As you can tell, a lot of the people here are activist and result minded. There has been a lot of discussion of that in the various questions, but if you could envision a result or change that you hope to accomplish, above the telling of the story, what would that be and how can people such as those here best work to that end?”

Excellent question, bmaz.

Tammany Tiger July 28th, 2012 at 4:33 pm

Thanks, Mr. Coll. I’m looking forward to reading your book.

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