Exxon Slow Evolution of an Oil Giant
Some are frustrated with Exxon's pace in moving to more renewables
Later this year, the Rockefeller family is going to ask Exxon to level with them. The descendants of
The Rockefellers are preparing a resolution to present to shareholders at the company's annual meeting in
"We want to know what they are thinking," says
"It's perfectly possible Exxon is doing a lot of good thinking on this," she adds. "But they're not letting on."
What Exxon is thinking is an intriguing question, and it's one people have been mulling over for years, especially when they consider the future of energy. Exxon is the biggest American corporation in terms of revenue. (It shot past
A slow shift. This is not to say Exxon isn't doing anything. Last summer, it made its first serious foray into alternative fuels by plunking down
Then, late last year, Exxon acted again, bidding
Exxon historically has been more comfortable looking to the past, however. In 1997, BP and Shell broke with the industry and said, yes, there is a climate change problem, while Exxon held its ground. It's a saga that played out roughly 10 years ago as geological evidence showing that carbon emissions were a serious problem grew, recalls
Resistance. Goodwin recalls a meeting with an Exxon executive several years ago at which Rockefeller family members brought up their frustration with the company's approach. For years, Exxon had been using quarter-page newspaper ads "to put forth their skepticism that climate change was uncertain and [that] we don't know what's causing it," she says. The executive, she says, admitted, "We know we have a problem with the public. Someone ought to be fired." To which she said: "I'll tell you who ought to be fired: the person who does those quarter-page ads."
In 2006, Tillerson replaced Raymond as CEO, and because of some of its recent moves, Exxon is no longer an industry laggard, Lovell says. The question is whether the company has a responsibility to do more. Legally, of course, companies are beholden to their shareholders. "They first have to consider whether something has the potential to make money or not," says Tinker. "That isn't some greedy oil company idea. That is the first principle of running any company." But making money doesn't necessarily mean sticking to the status quo, and it's not incompatible with social responsibility. Most of the planning Exxon does is for projects that might not be running for 10 years--deep-water oil fields, for example, or hard-to-reach natural gas deposits. So Exxon, by the nature of its business, has to be looking at the long term, trying to figure out what is going to make money in 2020, not just in 2010.
Exxon has predicted that global energy demand will rise 35 percent between 2005 and 2030, with demand for transportation fuels in developing countries more than doubling. That growth, the company says, provides ample reason to continue investing heavily in oil. But what if the projections are wrong? "
If climate change hits developing countries hard, they might accelerate efforts to turn away from fossil fuels. How quickly that shift happens depends on many things--technology, oil prices, and politics, to name a few. Exxon, in its 2009 outlook, told shareholders "to remember . . . that these shifts happen slowly, over the course of decades." Regardless of the time frame, Goodwin says, "I am among those who think a serious shift is probable. And I believe it would greatly benefit Exxon if it were leading into the future."
By many accounts, Exxon is already feeling a pinch. Half a century ago, oil was the playground of private companies. Today, the vast majority of the world's reserves are under the control of government-owned oil companies, like
Even if the Rockefellers' resolution fails, as others put forth by the family have, Exxon will have to answer to someone else. Starting this year, the
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Energy - Exxon Slow Evolution of an Oil Giant | Kent Garber
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