ExxonMobil anxiously grasps its gigantic but unsustainable gold mines, pumps cash (much of it from your wallet to places far away), pours GHGs into the atmosphere, pushes its publicity machine, and doesn’t seem to comprehend the relationships between a healthy climate and the lives of our grandchildren. They try to confuse you in the process. Their actions delay the creation of millions of jobs and our ability to author a healthier future. And that’s putting it politely.
ExxonMobil will be holding its Annual Meeting of Shareholders this week, on May 26 in Dallas. If you get your news from the status quo media, you might not have a full picture of the company (see NYT suckered by ExxonMobil in puff piece titled “Green is for Sissies”).
Guest columnist, frequent commenter, and former Chevron employee, Jeff Huggins paints a poignant portrait of the petro-giant.
Huggins has worked for companies as diverse as Chevron, Disney, and McKinsey & Co. — he even had a job offer from Exxon at one point. Now he provides philosophical and strategic consulting to progressive companies, good causes, and individuals. His website is www.thewindingriver.org. For details of Exxon’s role in funding the disinformation campaign on climate science, see “Another ExxonMobil deceit: They are still funding climate science deniers despite public pledge.” See also this excellent commentary by award-winning journalist, Eric Pooley, “Exxon Works Up New Recipe for Frying the Planet.“
In concluding his speech to the Royal Institute for International Affairs, titled “Meeting Growing Energy Demand and Addressing Climate Risks” (June 21, 2007), ExxonMobil Chairman and CEO Rex Tillerson quoted Bertrand Russell and expressed these sentiments:
“The British philosopher and social activist Bertrand Russell once said, ‘We must care about the world of our children and grandchildren, a world we may never see.’
“Indeed, we cannot yet see our grandchildren’s world, its economy or its climate. But we must care about it. We must care enough to treat the risks of global poverty and global warming seriously. We must care enough to take actions to address them.”
Barely a year later, on July 19, 2008, The New York Times ran a short interview of Chairman Tillerson. In response to the questions, “Where do you see your company in 20 years? Will oil and gas still be your dominant business?”, he answered:
“Yes. In 2030, oil and gas will represent 60 percent of the world’s energy needs. My view is I am going to keep doing what we do better than anyone else in the world—finding, developing and delivering oil and gas to the world.”
(Petrarch wrote, “Anyone who wants a certain result, but is quite happy with the absence of what would bring it about, has obviously no understanding of either causes or effects.” Einstein observed, “The significant problems we have cannot be solved at the same level of thinking with which we created them.” But never mind them.)
I can’t say, definitively, whether these are the same Rex Tillersons, whether he misunderstood what Bertrand Russell meant, or whether Version 2008 forgot his 2007 speech or neglected to read the IPCC reports and the urgent statements from the world’s leading scientific organizations. Perhaps the news media should press him on the matter?
Given that I’m not a member of the media, however—and thus I have no fear that ExxonMobil will stop running ads on my front page or network—I thought I should offer a timely portrait of ExxonMobil to The American Public, as the big event nears.
The “big event”? ExxonMobil will be holding its Annual Meeting of Shareholders this week, on May 26 in Dallas.
Before I begin, I should say that the following is not meant to be financial investment advice and should not be taken as such. Harvard lawyers—some of them who are not already in Washington—advised me to say so. And, if any of this causes dizziness, or any unwanted symptoms that last more than 24 hours, you may want to see your doctor. Importantly, you should check any of the following factors and figures before using them to form any opinions of consequence. Yet, from a human and ethical standpoint, if you want to have your investments in companies that act responsibly with respect to humankind, other species, the planet, and your grandchildren, my suggestion would be to promptly dump Exxon. That said, you be the judge.
Let’s start with the big picture—and indeed it’s Big:
According to ExxonMobil’s 2009 Summary Annual Report, they had a “Total net production of liquids and natural gas available for sale of 3.9 million oil-equivalent barrels per day”.
Based on that figure, and according to a rough but easy estimate, that suggests that ExxonMobil products, when used, generate over One Trillion Pounds of CO2 each year. That’s from ExxonMobil products alone. In a single year. And it doesn’t even include another huge number, which is the amount of GHGs generated in ExxonMobil’s internal operations.
What’s the precise number? I don’t know. I’ve asked ExxonMobil, and they’ve corresponded with me, but they won’t provide it. Maybe The New York Times will think to ask them.
For now, suffice it to say that ExxonMobil products and operations generate well over One Trillion Pounds of CO2 per year and perhaps even more than Two Trillion Pounds per year (in CO2-equivalent terms) of total GHGs. In any case, the amount generated weighs considerably more than the weight of the entire human species living on Earth today—in other words, more than all 6.8 billion of us weigh, in total.
Yes, that’s a lot! Certainly enough to warrant a very, very heavy conscience!
That said, they do make money: ExxonMobil is the most profitable company in the U.S. and, possibly, in the galaxy. According to the recent Fortune 500 listing, ExxonMobil’s profits in 2009 were greater than the combined profits of the top fifteen companies in the motor vehicles and parts industry (Ford, GM, etc.), the top three apparel companies (Nike, etc.), the two major advertising conglomerates, the seven major entertainment companies (Disney, News Corp., Time Warner, etc.), and the five major networking and communications equipment companies (Cisco, Motorola, etc.) combined.
You read right: ExxonMobil’s earnings were greater than the net earnings of all of the leading companies in those industries combined!
And that was in a down year for ExxonMobil. Their net income in 2009 was $19.3 Billion. In 2008, it was $45.2 Billion.
(To avoid misinterpretation before we proceed, I’m not suggesting that healthy profits are unhealthy or ungood. Nor will I be suggesting, below, that a few other aspects of ExxonMobil’s modus operandi are problematic in and of themselves. Instead, it’s the combined picture and its outcomes that cause concerns.)
Yep, they’re the most profitable U.S. company. A huge American company—headquartered in Texas (land of the Cowboys) and incorporated in New Jersey (land of the Boss). But wait, where is the real action, according to the numbers?
Well, in 2009, only 20% of their capital and exploration expenditures were spent in the U.S. Eighty percent was spent in other countries. Over three quarters (76%) of their total average capital employed is employed outside of the U.S., aside from corporate-level financing stuff.
Here are a few other figures:
Only about 16% of their net production of crude oil and natural gas liquids occurred in the U.S.
Only about 14% of their “net natural gas production available for sale” occurred in the U.S.
Only a third (33%) of their refinery throughput occurred in U.S. refineries. (This actually surprised me: I had thought that at least their refining capacity was mostly in the U.S.)
About 39% of their petroleum product sales and chemical prime product sales occurred in the U.S.
And here’s an interesting one: Only one sixth (roughly 16.6%) of their earnings after income taxes were earned in the U.S. In other words, over eighty percent of ExxonMobil’s earnings after taxes were attributable to operations outside the U.S.—presumably anyhow. Only their tax accountant knows for sure.
Apparently, home for Exxon is not exactly Kansas!
Indeed, in their 2009 report, they list as a key highlight the “start-up of a world-scale, fully integrated refining and petrochemical complex in Fujian Province, China.”
And here I was, thinking that we should be trying to reduce our use of fossil fuels and encouraging China to do the same. Silly me!
Let’s now consider ExxonMobil’s apparent attitude toward employment. Set aside what those API ads would like you to believe—that the oil companies genuinely care about employment to the degree that they’d put their money where their mouth is—and let the numbers tell the story:
In 2009, ExxonMobil’s revenues were $301.5 Billion, their net income was $19.3 Billion, and they employed roughly 80,700 people worldwide. Eight years earlier, in 2001, revenues were about $210 Billion, income was roughly $15 Billion, and they employed about 98,000 people. In other words, in 2009 they employed roughly seventeen thousand fewer people than in 2001. During most of the recent decade, ExxonMobil has cut employment as its revenues and profits have soared, until the downturn of prices in 2009 from levels in 2008. (In 2008, revenues were a whopping $459.6 Billion, net income was $45.2 Billion, and they employed 79,900 people.)
And how do ExxonMobil’s employment figures compare to the big picture? Is ExxonMobil a major employer—a pro-employment employer—a champion for the American worker?
Well, not really. As mentioned, ExxonMobil employs about 80,700 people, worldwide. That compares to over 300,000 public school teachers employed by California alone, UPS’s 408,000 employees, General Electric’s 304,000 employees, HP’s 304,000 employees, GM’s 217,000 employees, Safeway’s 186,000 employees, Wal-Mart’s 2.1 Million employees, and over 6 Million teachers in the U.S.
The oil industry is a small employer, relatively speaking. (General Electric alone employs more people than ExxonMobil, Chevron, ConocoPhillips, Valero, Marathon, Sunoco, Hess, and Murphy combined, with room to spare.) Exceptions to this point include the Chinese and Russian oil and gas industries, which are huge employers there—all the more reason why we’ll need to take steps to end our own addiction to oil if we ever expect to have any credibility whatsoever in working globally to reduce GHG emissions.
Also, it’s unclear how many of ExxonMobil’s 80,700 employees are in the U.S. Remember, less than one quarter of ExxonMobil’s capital is employed within the U.S., and U.S. operations accounted for only one sixth of their earnings after taxes.
According to CBS News, General Motors’ employment in the U.S peaked in the late 1970s at over 600,000 employees—and about 850,000 worldwide. GM has lost far more employees during the last three decades than the total number of employees, worldwide, of ExxonMobil, Chevron, ConocoPhillips, Valero, and Marathon combined.
What about R&D? Again, stats speak: For every dollar of revenue, ExxonMobil spent substantially less than one penny on R&D. The figure in 2009 was 0.35 cents—about a third of a penny—spent on R&D, per dollar of sales.
And that’s total R&D, including all the conventional R&D that oil companies pursue regarding conventional hydrocarbon-based fuels, production and refining processes, additives, chemicals, and so forth. In other words, only a fraction of that fraction of one little penny is spent researching renewable sources of energy.
So, imagine paying ExxonMobil $3 for a gallon of gas. Of that $3, they spend about one penny on total R&D. Only a fraction of that little penny is spent researching renewables. Meanwhile, when you burn that gallon in your car, it generates about 20 pounds of CO2. (For example, burning just seven gallons of gasoline generates an amount of CO2 that weighs as much as a 140-pound person.) And where does the vast majority of your $3 go? Not into R&D, to be sure. Instead, most of it goes to places and people outside the U.S., where most of ExxonMobil’s capital is employed, most of their expenditures are made, and most of their oil and gas resources happen to be.
Here’s another way to assess ExxonMobil’s commitment to R&D, all things considered: ExxonMobil distributed more money to its shareholders in the recent five-year period alone—a total of over $150 Billion—than it would spend on R&D, at the current rate, in 142 years. That’s only slightly less than the time since the Civil War.
Does that sound like a company that’s genuinely “taking on the world’s toughest energy challenges” and acting responsibly to help address climate change?
In their 2009 Summary Annual Report, ExxonMobil tells us, “Energy-related carbon dioxide (CO2) emissions represent close to 60 percent of global GHG emissions attributed to human activities, and are expected to increase about 25 percent from 2005 to 2030.” Then, instead of telling us what we and they should do to make sure this increase doesn’t come to pass—after all, scientists inform us that we should decrease emissions, not increase them—ExxonMobil tells us that we’ll need more and more oil and gas. In essence, their strategy perpetuates the problem. Remember what Chairman Tillerson told The New York Times: “I am going to keep doing what we do better than anyone else in the world—finding, developing and delivering oil and gas to the world.” But the problem they perpetuate is the same one they tell us they care about!
Are you dizzy yet?
Would Chairman Tillerson suggest that we “care about the world of our children and grandchildren” by pouring GHGs into the atmosphere, altering and destabilizing the climate, acidifying the oceans, sending boatloads of money overseas, and blindly protecting an industry that employs few people, relatively speaking? Or, would he admit that it would be much better to transition to clean energy sources, preserve the climate, keep our money here, generate brave new worlds of American jobs, and embrace a healthier future?
And consider this: When the U.S. House Select Committee on Energy Independence and Global Warming held its high-profile hearing back in 2008—on April Fools Day, no less—ExxonMobil sent one of its execs and Board members at the time, J.S. Simon, to deliver a prepared statement. Mr. Simon explained to the Committee that the oil industry depends on very high earnings when times are good in order to sustain a high level of investment in the business over the long-term, including during less-good times. In essence, he argued that enactment of the changes in tax law being considered—i.e., changes intended to encourage investment in clean energy—would unfairly reduce oil company cash flow and would “impact investment in future energy supplies”. Yet, in their written statement, ExxonMobil didn’t bother to tell the Committee about the many billions of dollars it distributes to shareholders each year as dividends and buybacks. (In their 2009 report, for example, they highlight the fact that they distributed a total of more than $150 Billion to shareholders in the last five years alone, including $26 Billion in 2009.) How is it that the oil industry truly depends on a continuation of favorable tax treatment, supposedly necessary to its ability to sustain investment in oil and gas, when it distributes so many billions of dollars each year instead of reinvesting them?
Another main point that Mr. Simon (ExxonMobil) wanted to convey to the Committee was that “all reliable and economic forms of energy are needed to meet growing needs—but the pursuit of alternative fuels must not detract from the development of oil and gas.” Minutes later, he wanted the Committee to understand a forecast that “renewable energy sources such as biofuels, wind, solar and geothermal will account for only about two percent of global energy supply in 2030”, adding “again, an indicator of the scale [of continuing investment in oil and gas] required.”
In essence, it seems that ExxonMobil told the Committee: Don’t dare change our tax treatment. We won’t find it attractive to continue to invest in our own business if you do. Never mind our huge cash distributions. And by the way, renewable energy sources aren’t going to amount to much anyhow. But thanks for asking!
(As a side note: Very soon after appearing before the Committee on ExxonMobil’s behalf, Mr. Simon announced his retirement.)
Of course, we haven’t even discussed ExxonMobil’s confusing and often misleading PR campaign, their lobbying efforts, and so forth.
So what’s up?
About 83% of ExxonMobil’s substantial “net proved developed and undeveloped reserves” of liquids is in countries other than the U.S. And about 82% of their “net proved developed and undeveloped reserves” of natural gas is in countries other than the U.S. In other words, the vast majority of ExxonMobil’s “black gold” mine is outside the U.S. Most of it isn’t “Texas tea” as we heard on the Beverly Hillbillies.
ExxonMobil anxiously grasps its gigantic but unsustainable gold mines, pumps cash (much of it from your wallet to places far away), pours GHGs into the atmosphere, pushes its publicity machine, and doesn’t seem to comprehend the relationships between a healthy climate and the lives of our grandchildren. They try to confuse you in the process. Their actions delay the creation of millions of jobs and our ability to author a healthier future. And that’s putting it politely.
Just think of the shiploads of money we’ll be sending overseas for years and years, the trillions of pounds of GHGs we’ll be pouring into the atmosphere, the lost opportunities to generate clean energy jobs here, and the world-class refineries that ExxonMobil will happily build in China, if we continue to foolishly follow the Exxonian way.
Then just say no!
(By the way, did I tell you the one about the new Chairman of General Motors who is also on ExxonMobil’s Board of Directors?)
Be Well—or at least Get Well Soon,
– Jeff Huggins
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