Does OilWatchdog troll gossip sites? Well, how else to stumble on the Conde Nast Portfolio cover of Sarah Palin, with leftover photos from her Vogue shoot and a bottom line that she’s not governing anything, including Alaska’s dreamed-of natural gas pipeline. But the real prize is another story in the same issue, by Peter Waldman, on Exxon and its dinosaurish, hole-digging CEO, "T Rex" Tillerson vs. the era of Obama.
Joe McGinnis’ Palin smackdown is the better gossip, for sure, including a profane description of her as "pathologic." But Waldman’s assessment of ExxonMobil and CEO Tillerson vs. President Obama (and Energy Secretary Steven Chu) is built brick by brick. Exxon looks a lot sicker than its last profit report.
Waldman starts with a deft juxtaposition: Obama vs. the version of Tillerson that speaks what he really believes, not his his newfound, for public-consumption-only, greenwash:
One afternoon earlier this year, Rex Tillerson, the chairman and CEO of Exxon Mobil Corp., and Barack Obama, then president-elect, laid out very different visions of America’s energy future. With the days counting down to his inauguration, Obama told a crowd at George Mason University of his plan to double U.S. production of renewable energy by 2012-"to finally spark the creation of a clean-energy economy," he said, to screams from the students in the audience. That pledge was a small part of a broad alternative-energy push that has swept into the White House along with Obama.
Nearby, at the Woodrow Wilson International Center for Scholars, Tillerson, a lanky Texan with a thick drawl and slicked-back silver hair, celebrated the earth’s "continued abundance" of oil, noting that humans have consumed barely a third of the planet’s available petroleum reserves. Oil and natural gas, he said, in a story line that Exxon Mobil has perfected over decades, will continue to supply nearly 60 percent of the world’s energy needs for the next 20 years. "Let’s be realistic," Tillerson scoffed, when asked about Obama’s green-energy visions. "Let’s don’t fool ourselves!"
Exxon is still making skip-loader profits, but Tillerson’s absolute resistance to anything but more oil will have a long term toll that should chill investors:
By refusing to seriously invest in a world beyond oil, Exxon Mobil marks itself not merely as politically incorrect but as a company that seems oddly indifferent to the business risks of its intransigence. It seems increasingly likely that Obama and Congress will slap a price on carbon in coming years that could put oil at a competitive disadvantage to such carbon-free energy sources as wind, solar, and biomass. That could reduce demand for crude, sharply cutting its price. …
Exxon Mobil’s 25-year "Outlook for Energy," an internal planning document, takes the trends of recent years and projects them forward, modeling the company’s worldview in a neat line that shows global energy consumption rising 1.2 percent a year for decades to come. By 2030, the world will use almost 40 percent more energy than it did in 2005, Exxon Mobil predicts. It says fossil fuels-oil, natural gas, and coal-will continue to meet about 80 percent of demand and will emit 28 percent more carbon dioxide into the atmosphere than they do today. In Exxon Mobil’s forecast, renewables-wind, solar, and biofuels-will supply just 2 percent of the world’s energy needs by 2030. With the company seeing such a minuscule market for renewables, Tillerson has publicly proclaimed, "We haven’t found an alternative to invest in."
Critics wonder if that comment will one day occupy a special place in corporate infamy, alongside other legendary scoffs. In the mid-19th century, Telegraph Co., the ancestor of Western Union, monopolized the national telegraph system. But when Alexander Graham Bell and his business partner offered to sell Bell’s telephone patents to Telegraph, executives there couldn’t be bothered by the "idiotic" technology. A Telegraph Co. committee reported its findings about Bell’s telephone proposal to company president Chauncey DePew: "Technically, we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles." And then there was Ken Olsen, founder and longtime president of mainframe-computing pioneer Digital Equipment Corp., who, in 1977, famously sniffed, "There is no reason for any individual to have a computer in his home."
That assessment is right in line with OilWatchdog’s response to a NY Times columnist who praised Exxon’s all-oil-forever strategy-Exxon’s acting like a buggy-whip maker.
Waldman also calls out Exxon on what it’s counting as its growing long-term reserves, particularly Canadian tar sands:
[B]y far [Exxon’s] single-biggest undeveloped deposit is the Canadian tar sands, the hydrocarbon muck found beneath northern Alberta’s vast boreal forest. Exxon Mobil and others are making plans to mine the region’s bitumen sand on an immense scale-with grim ramifications for the environment, near and far. Last year, were it not for newly reported reserves of 1.1 billion oil-equivalent barrels of Canadian bitumen, Exxon Mobil’s proved reserves would have significantly declined.
Separating the bitumen oil from the sand and clay that surrounds it requires a huge influx of energy in the form of heat and steam. Canada is burning vast amounts of natural gas for the job. The result: Every barrel of crude from tar sands releases three to five times as much carbon dioxide into the atmosphere as a barrel of oil produced conventionally. The process also sucks up enormous quantities of fresh_water and spews it out as tailings waste into giant lake beds of toxic sludge.
"We’re exchanging a clean-burning fuel"-natural gas-"for a dirty fuel, and we’re using freshwater to do it," says Philip Weiss, an energy analyst with Argus Research Co.
Exxon, while no longer directly funding single-issue think tanks that deny global warming altogether, has turned to something that I’d call "povertywashing," a new form of misdirection that pits the poor against the planet (As though Exxon really gives a rat’s ass about alleviating poverty).
Since taking over for Lee Raymond in 2006, Tillerson has softened his predecessor’s combative stance on global warming, but he certainly hasn’t replaced it. The company acknowledges that temperatures and greenhouse-gas levels are both rising, but Tillerson has said he isn’t convinced that there’s a causal link between the two. Still, recognizing the risks, Exxon Mobil now says it’s willing to entertain greenhouse-gas restrictions, as long as these efforts are on an equal footing with "other important world priorities, such as economic development, poverty eradication, and public health."
Bottom line?
Seeing Exxon Mobil at this moment, with its reserves dwindling and its management under assault by shareholders, it’s hard not to compare it to Wall Street, as least with regard to the public mood. Investment banks and old-line oil companies seem equally popular with the current occupant of the White House.
Exxon Mobil "allowed itself to be seen as a villain on climate change, as a company that’s more interested in throwing up roadblocks than finding solutions," says Elizabeth McGeveran of F&C Asset Management PLC, a London-based fund manager. "For any company in this globalizing world of ours, that type of reputation is a mistake."