PRIVATE EMPIRE EXXONMOBIL AND AMERICAN POWER
The Penguin Press New York 2012
685 pp. $36 US $38 Canada
ISBN 978 1 59420 335 0
“-the corporation does more to shape our energy economy than our democratically elected government-” Steve Coll
I didn’t want to read this book and try to understand its meaning because I thought it would be too depressing but like SELF SERVE: HOW PETROCANADA DRAINED CANADIANS DRY by Peter Foster and SEVERE CONDITIONS: BIG OIL AND THE TRANSFORMATION OF ALASKA by John Strohmeyer, it’s irresistIble to me.
I’m interested in the oil business because I worked in the upstream (the exploration and production of raw oil) as a roughneck in Alberta and on the North Sea and in the downstream of the business (the manufacturing and selling of oil and gas on the wholesale and retail markets) as a yardman in the pipeline terminals of Esso (Exxon through Imperial Oil) and PetroCanada in Ottawa.
Steve Coll wrote the Pulitzer prize winning GHOST WARS, an account of the CIA’s activities in pre2001 Afghanistan. He has written six others including one called, THE BIN LADENS. He is a serious writer with a talent for telling a story from facts and events stretching over many years.
He has written about important historical events in present day America. When you read this book, you realize that he’s doing it again by documenting history as we live it.
In 1904 Ida Tarbell published The History of the Standard Oil Company. It was one of the first pieces of investigative journalism and described the ruthlessness of John D Rockefeller’s monopoly. It eventually led to the trust busting laws of 1911 which broke up Standard Oil.
One of the pieces of the Standard Oil breakup was Exxon. In PRIVATE EMPIRE Steve Coll has written a meticulously researched book of investigative journalism about it.
Exxon had always been shrouded in secrecy but, bit by bit, through the use of over four hundred interviews, more than one thousand pages of previously classified US documents obtained through the Freedom of Information Act and unexamined court records, the curtain is pulled back by Coll.
Exxon and Mobil were both originally parts of Standard Oil. They completed their merger in 2000.
Canada’s taken for granted. That was the feeling I got when I read the book. A kind of impotent outrage at being snubbed and the old realization that we in Canada aren’t that important even though Canada is by far the single biggest supplier of imported oil to the US, 1.9 million barrels per day in 2008.
It’s pretty clear that if the CEO of ExxonMobil can ignore, consult with or demand attention from the US government at any time, he isn’t too worried about what Canada’s government thinks.
PRIVATE EMPIRE is a book of 624 pages, with 61 pages of acknowledgements, notes, a bibliography,a complete Index and a Table of Contents into which the twenty eight chapters are divided into Part One: The End of Easy Oil and Part Two: The Risk Cycle. There are maps of Exxon’s and Mobil’s upstream investments before the merger, of the countries of Indonesia, Equatorial Guineau, Chad, and Venezuela and of the Exxon spill in Jacksonville, Maryland, where a gas station leaked 25,000 gallons of gasoline into a community’s water supply. It also contains a Cast of Characters listed by country; dictators, despots and enemies of the American government among them.
Canada and Alberta are dealt with in four pages. As Coll puts it, “Canada’s politics concerning the oil sands were complicated, but as a practical matter, there was virtually no chance that Alberta’s provincial politicians or the country’s national leaders in Ottawa would seriously limit Canada’s production in the years ahead.”
At the time of the writing and publishing of this book, ExxonMobil was trading places with Walmart as the biggest company in the US and with PetroChina as the company which was most valuable in the stock market. It was the most profitable corporation headquartered in the US.
The corporation’s K Street lobbyists in Washington DC spent more millions than everyone else except GE and Pactfic Gas and Electric shaping, influencing, and stalling regulatory legislation after 1998.
ExxonMobil, whose income dwarfed that of most countries, used the USA’s military and diplomatic channels to ensure smooth operations and ignored the politicians when they they wanted to. Rex Tillerson, who replaced Lee Raymond as the Chairman and Chief Executive of ExxonMobil in 2005, told the State Department, ” I had to do what was best for my shareholders.” after a $3.1 billion deal was announced between Vladimir Putin and ExxonMobil to develop oil beneath the Kara Sea in Russia. The deal could grow to $500 billion. The State Department was usually told first.
Steve Coll catalogues, in exhaustive detail , ExxonMobil’s refusal to take responsibility for the social and physical damage it caused in places like Aceh, Indonesia, the Niger Delta and Nigeria, Chad, and Equatorial Guinea. Places far away and unlikely to interest the American population. But, to be fair, as Coll is ,painstakingly, through this book, they were the only places on earth where the oil and gas supply was vast and available.
Lee Raymond, the CEO of ExxonMobil until he retired on January 1, 2006 with a four hundred milllion dollar package, was a midwest product, an engineer for 30 years at Exxon, an old time oil man. He was Machiavellian in that he didn’t hesitate to manipulate governments, politicians and their military power, regulators and environmentalists to his advantage. He was stubborn and short sighted in that he never believed in the science which claimed that climate change was due to the burning of fossil fuels. He employed many ethical scientists whose non disclosure contracts were tied up with pensions and retirement bonuses. No one really questions the character of the scientists but Coll and others point out that the management of the science is dubious.
Raymond’s tough style kicked in with the Exxon Valdez disaster in 1989 when the company’s reputation was in shreds and the regime of safety he instituted included how employees parked and required reporting of paper cuts. He personified the arrogance of ExxonMobil and was disliked by many but was an undeniable success in the business world.
ExxonMobil, extracting oil from tar sands in Alberta at Syncrude since 1978 through its Canadian affiliate, Imperial Oil,has Canadian contracts there reaching into 2035 and other interests in the tar sands.
ExxonMobil would never use the American miiItary, the consular services or the Washington lobbyists to force Canada to be the oil spigot for the American consumer, would it? It’s a question that needs to be asked. As unlikely as it seems, history shows otherwise.
The author is scrupulous in presenting both sides of the arguments, explaining ExxonMobil’s activities, good or bad, from their point of view, through their eyes.
Coll says, “Oil from Alberta, barrel for barrel, contributed one of the highest gas emissions of any source in the world” but the message Canada was getting from the American government under Bush was “ Produce as much of this oil as you can-we’ll buy all of it” There was never a problem with the environment and global warming when Bush and Cheney were in power. Cheney and Lee Raymond were close personal friends, both, like Bush, from an oil background, who met frequently in Cheney’s office.
When Obama took over, the oil industry was angry with his attitude and at the new California emission standards. They rallied some of the population with patriotic fervour, saying that if Canadian oil wasn’t sold to the US, it would be sold to the latest threat, China.
ExxonMobil was so confident in Canada as a friend and risk free oil source that it thought the many efforts of oil company lobbyists when Obama returned to Washington from his traditional first visit to Ottawa were a waste of time and money.
Their attitude was that if the US government cut itself off from Canadian oil, they would sell it elsewhere.
The problem is that exploiting the tar sands is more like strip mining than drilling with even higher costs to the environment and local people.
The time horizons of ExxonMobil’s investments far outlive the politicians who hold power for a few years and are gone. In some countries there might be war for years and changes of unstable governments or no governments at all.
It is no wonder that ExxonMobil had more influence in Chad than the US government. Where the American government gave $3 million to the country, ExxonMobil invested $4.1 billion.
ExxonMobil has been compared to the East India Company, and the Dutch East India Company who set out four centuries ago to colonize the New World. The irony is that four hundred years later, these gigantic multinational oil companies may be responsible for raising the very seas upon which the early explorers sailed, through global warming.
The corporation is compared to a Frankenstein monster in the statesman.com where Bruce Watson states, “Nowhere has ExxonMobil bullied the world more than in the global warming debate”
The Exxon Valdez disaster happened in 1989 and dumped 257,000 barrels of oil into Prince William Sound, more than had ever been spilled in American waters before. Lee Raymond instituted reform and Exxon produced an admirable safety record and record profits.
One would think a huge company investing gigantic sums in oil and gas plays all around the world would be vulnerable to the resource nationalism, partisan movements and blackmail which is commonplace in many countries but through an uncompromising array of legal action, shifting responsibility for human rights violations to militaries or to the World Bank and outright influence peddling, ExxonMobil has managed to avoid any Exxon Valdez type disasters so far. In 2005 Dick Cheney personally called the UAE government to enable ExxonMobil to win a contract to develop a field which held ten percent of the world’s oil and the fifth largest gas reserve.
Whether using the Indonesian military in Aceh (whose methods included torture, summary executions and burying insurgents’ bodies in mass graves with company equipment),the military torture chambers of Equatorial Guinea or the security forces in the craziness and piracy of the Niger Delta, ExxonMobil built its own foreign policy without the US government’s concern for human rights. It was there on the surface, they said all the right things and did their best to protect the corporation legally, but they knew about the human rights abuses and, for the most part, carried on anyway.
ExxonMobil Chemical is also dealt with in PRIVATE EMPIRE. About a quarter of American oil imports are used to manufacture commercial chemicals annually. A chapter of this book outlines the fight ExxonMobil and their spokesman-congressman, Joe Barton from Texas, waged to avoid having DINP (phthalates- See Ottawa Sun Aug 27, 2012 page 8) banned from children’s toys. It is a softener which makes vinyl more pliable but is suspected of being carcinogenic. Consumer advocates got some DINP banned but not all thanks to ExxonMobil’s lawyers and politicians.
The premise of it all, of course, is George Bush’s long awaited pronouncement that the US was “addicted” to oil. There has been no doubt about that for a long time and as unpalatable as it is to the oil industry to hear put that way, they can rest assured that they are safe in the short term and, judging from the performances of the governments of North America, equally unthreatened by long term solutions.
To understand the power of ExxonMobil, another George Bush quote is helpful. When the Indian prime minister asked why he didn’t just tell ExxonMobil to buy into an oil play in India, Bush replied,
“Nobody tells those guys what to do.”
The debate about climate change is something which Tillerson mulled over and investigated through ExxonMobil’s specially hired astrophysicists for three years. ExxonMobil finally admitted that global warming, at least in part, was caused by human activity, probably the burning of fossil fuels, when, for the first time in the company’s hundred year history, Tillerson supported a carbon tax in 2009.
When the Deepwater Horizon blowout happened to competitor, British Petroleum, in 2010, it was estimated that five million barrels of oil were released into the Gulf of Mexico.
Rex Tillerson commented, with a typical ExxonMobil attitude, “We would not have drilled the well the way they did”
The “energy independence” drum is being beaten as it is in every election and the “Drill, baby, drill” proponents are searching for a congressman or senator like Joe Barton.
ExxonMobil has unprecedented power in governments world wide.
Canadians who are happy that we’re in such a helpless position, can take comfort in knowing that ExxonMobil is in our oilpatch. They were ten, if not twenty years ahead of PetroCanada in the Ottawa pipeline terminals when I was there in 2000. It means that we have someone technologically brilliant and wildly successful businesswise, exporting our oil.
On the other hand, it is depressing.