Private Empire: ExxonMobil and American Power by Steve Coll - Book Review

Steve Coll's highly readable corporate biography of Exxon Mobil, the most profitable American corporation in history, opens with the grounding of the Exxon Valdez in Alaska in 1989 and ends with BP's blowout in the Gulf of Mexico aboard the Deepwater Horizon on April 19, 2010. During these twenty-one years in the long and complicated history of a great American industrial enterprise, everything changed and nothing did. Throughout much of its history the Standard Oil Company, founded by John D. Rockerfeller in the late nineteenth century and broken up by trust busters and the U.S. Supreme Court in 1911, and its successor companies have been able to keep a business perspective that reaches to the future forty, fifty, or more years away. This permits the reunited ExxonMobil Corporation (Standard Oil of New Jersey) and Mobil Oil (Standard Oil of New York) to nurture itself, usually without regard to the good of the country in which it developed or the ones in which it operates. Private Empire: Exxon Mobil and American Power is the story of this giant enterprise's response to the difficulties posed by the last decade of the twentieth century and first of the twenty-first as it faced the changes in business, international, and global environments. Steve Coll's Private Empire: Exxon Mobil and American Power is published by Penguin Press (2012). It is 685 pages long and retails for $36.00.

Some might find the length of this book to be daunting, but the oil industry is complex in every aspect, requiring detail to explain and numerous examples to understand. Coll provides these extensively. In order to come to help the reader understand this complexity, he makes clear that profits and continuing success in the oil industry require “booked proven reserves.” This means that oil companies are always in search of new sources of petroleum to assure their balance sheets never reflect the growing difficulty of finding oil. Since nearly all the easy to acquire oil has been found and partially depleted, it has become increasingly likely that new reserves will be found in unstable countries in the developing world or in high risk places under the sea or in the arctic. Each of these locales creates higher risk. High risk means expending more resources to acquire and develop the new sites. Thus, oil companies must improve their technological ability along with their corporate approach to dealing with the people and situations in these regions. The book details the risks and costs of doing business in this increasingly difficult environment.

Most Americans encounter oil companies at their local filling stations and understand them only as the company which increases their cost of living by charging exorbitant prices for a commodity to which we are, sadly, addicted. The familiar Exxon and Mobil gas stations, few of which are company owned but all of which are carefully controlled, are our most frequent contact. These stations are, however, the end of a large “downstream” business beginning at the refinery. American Empire, however, deals more extensively with the “upstream” end of the oil business, finding the petroleum, pumping it, and getting it to the refinery. Unfortunately, much of the un-exploited petroleum reserves are found in difficult environments ruled by autocratic dictators or wily, untrustworthy potential partners. Coll presents extensive case studies of ExxonMobil's efforts to extract oil in Aceh province Indonesia, the republics of Chad, Nigeria, and Equatorial Guinea in West Africa, Venezuela in Latin American, and war torn Iraq in the middle east, as well as extensive efforts to gain control of reserves in an emerging Russia.

Each of these places presents different and difficult geological and geopolitical challenges requiring deep knowledge of local culture and extensive technological expertise. While ExxonMobil is deeply imbued with the latter, it does not see the former as part of its portfolio, because, as the company says, nation building is not part of its “core business.” During the period covered by this book, ExxonMobil was under the leadership of Lee Raymond and then Rex Tillerson. Both are Texas born and trained engineers of high intelligence and a perspective limited to effectively running an oil business. After the Exxon Valdez oil spill in Alaska, Raymond obsessively (and intelligently) built a system designed to assure that safety was one of the highest priorities of the corporation. While never apologizing or explaining, he made sure that the risk of oil spills or personal danger were reduced to an absolute minimum by creating a rigidly enforced, top down system governed by guide books. He also made clear to all that the company's mission was to serve its stockholders, not the country in which it had grown and prospered. To do so, ExxonMobil employed armies of engineers to find and extract the oil and private armies to protect them from local insurgents or revolutionary movements. The story of ExxonMobil's efforts in third world countries is simply chilling.

It has become a well-accepted fact that the world's climate is warming, and that at least some of this increasingly alarming trend can be attributed to carbon dioxide emissions from burning and extracting oil. A major element of ExxonMobil's efforts over the past two decades have been devoted to muddying the waters and denying corporate responsibility for any of this. An intriguing part of the story details the many ways the company has worked to confuse the public and its elected representatives about the part oil has to play in this difficult issue. The company has sponsored its own research studies, often through the use of university researchers or think tanks in which the role of the petroleum industry as a major funder is either hidden or de-emphasized. It's lobbying arm (often referred to as K-street because of the location of the lobbying efforts in Washington) employs a legion of public relations specialists and former members of Congress to speak and cajole legislators as well as to use campaign contributions to aide those members who can be relied upon. Even as Tillerson succeeded Raymond and subtly changed ExxonMobil's posture from climate change deniers to a reluctant acceptance of the reality of global warming, the company proved successful at defeating carbon legislation and reducing regulation. The extent of the resources available to ExxonMobil for such delaying efforts easily outstripped the efforts of organizations or government to effect change. The coziness between the G.W. Bush administration and ExxonMobil management is always present, but not a certain source. The corporation views itself as having a much longer time horizon than any political entity, elected, hereditary, or seized.

Steve Coll

  Photo copyright Lauren Shay Lavin

Author Steve Coll is not an ideologue nor a conspiracy theory monger. The book is extensively researched, relying on hundreds of on- and off-the-record interviews, many of them with ExxonMobil employees, as well as public documents, speeches, and more. While having a clear point of view, Coll gives due credit to the leaders and employees for their many strengths and achievements. Nevertheless, the overall effect of the book is to raise one's level of consciousness about the company's reluctance to encourage change and reduce risk. Steve Coll is a Pulitzer Prize winning writer who currently serves as President of the non-partisan New America Foundation. He was previously the managing editor of the Washington Post and a staff writer at The New Yorker. His writing is thoughtful and clear. His goal, which he achieves, is to inform, not to inflame. Private Empire: Exxon Mobil and American Power (685 pages) is a 2012 publication of The Penguin Press. It retails for $36.00. The book was provided to me by the publisher through TLC Book Tours.

 

Other Stops on Steve Coll's Book Tour

Thursday, May 3rd: Broken Teepee

Friday, May 4th: Diamond Cut Life

Monday, May 7th: Alternative Matters

Tuesday, May 8th: This is what I like

Wednesday, May 9th: Man of La Book

Wednesday, May 16th: Nanxi Liu

TBD: EmSun

TBD: Just Joanna

TBD: Ted Lehmann’s Bluegrass, Books, and Brainstorms

TBD: Tom Hull – on the web

TBD: Poly Capitalist