Usually when a company posts a great big honking profit it is pretty good news all the way around. Corporate profits are what get investors jazzed up and help the market. Helping the market go up is good news for most Americans–and for others around the world as the recent weakness once again demonstrates.
But it is not good news when an oil company does it–and particularly when all oil companies do it. It makes me shudder to think how the politicians will deal with this–and that was before I read Sen. Schumer’s sarcastic and totally populist remarks in this Bulldog report.
ExxonMobil is one of the most efficient, organized, impressively managed organizations in the world. The oil industry is without question the most scrutinized and investigated industry when it comes to compliance on all fronts–environmental, safety and anti-trust. There are continual investigations going on relating to price-fixing–and all come to the same conclusion. No evidence exists–(except for a few rare and largely inconsequential stupidities by lower level managers). Prices are set by the market. Oil prices are determined by supply and demand–supply is tight, demand is escalating.
But ExxonMobil does have some responsibility for the quagmire the oil industry is in being the least respected, least trusted of all industries. Even slightly worse than (gasp!) the media itself. It bears responsibility because as the giant in the industry it not only failed to lead in addressing the huge shortfall in public understanding of the industry, its benefits, its relatively modest ROI compared to other industries, etc., but it also stood in the way of the effort of other leaders to address this. Now it is not only ExxonMobil that is suffering from the most massive license to operate challenge, it is the entire industry. And if they don’t address it and address it fast, it is going to hurt all of us.
The loss of public confidence in an industry as important as this industry could be devastating. More oversight, more regulations, greatly increased cost of doing business, increased sending of our plants and facilities overseas, etc., etc. The strategic important to our country is immense, as is the economic impact of this wildly out of balance public perception. The crisis was on us already–and then we get these profit reports.
As I write this I am in Anchorage preparing to board a boat tomorrow for a trip to Valdez. It promises to be a beautiful ride–if the weather holds up–through famed or infamous Prince William Sound. I am here to observe and participate in a major oil spill drill. Something all oil companies do in cooperation with state and federal agencies every year. A requirement coming out of the Oil Pollution Act of 1990 and prompted by the Exxon Valdez accident.
Valdez has that ring of history to it. In the crisis management business few names or places, have more meaning than Valdez and Prince William Sound. It is hard to believe that that event was almost 20 years ago. How much has changed, and yet, in crisis management, there are some things that haven’t changed. Looking back on pivotal events such as this helps to understand what has changed and what hasn’t.
There are few examples that anyone can point to that were more damaging to a companies reputation than the Exxon Valdez incident. And few disasters more expensive. Yet, one thing that is interesting with the perspective of time is that to some degree it doesn’t seem to matter. ExxonMobil is the most profitable company in the world–in the history of the world. It is famed for its discipline, its almost military corporate culture, its rigorous focus on what it needs to do to meet the expectations of shareholders. It is highly respected. And yet, there is still a cloud. It can almost be felt in the halls of its corporate headquarters near Dallas. And the cloud hangs low like the overcast skies over Anchorage not just over this company, but over the entire industry.
Does the cloud matter? To shareholders? To fuel products consumers? To employees?
I have no answers. Just asking the questions. All I know is tomorrow I will see, as I have many many times over in the past ten years, a great many very good people working exceptionally hard to do all the right things. All the while knowing very well that the worst can happen. That too, is the legacy of Valdez and Prince William Sound.
Under former chairman Lee Raymond, ExxonMobil’s position on global warming tended toward the head in the sand perspective. With new chairman Rex Tillerson in place, the head is definitely being extracted. (see Houston Chronicle story) The question from a reputation stand point is was the sand tar sands–in other words, how dirty will the face of ExxonMobil be as it emerges?
Setting the record for profitability is a bit of a two edged sword when you are in the oil business. ExxonMobil is one of the most admired companies in the world by investors, financial managers and those who respect an incredibly disciplined and well-run organization. But, while making bookoo bucks makes the investors happy, it makes those who distrust big companies and particularly big oil companies feel justified in their view that all such companies care about is making money.
Lord Browne of BP recently commented that business needs to make money to stay in business, but the real business of business was to provide products or services that consumers need, want or demand. There is no question of all of our demand for oil products. John Hofmeister, CEO of Shell Oil Company recently said in Seattle that it is incumbent upon oil companies to better inform the public about the realities of global demand for energy and how that can and should be met in the future. Both of these statements need a much wider audience.
While it is very important that oil companies recognize the realities of stakeholder expectations (and good science), it is also very important that the media, our education institutions, our thought leaders, and fellow bloggers communicate the truth about energy. That truth is this: you cannot hate the people who supply what you need while you are busy gobbling up their products. My computer is on so I can blog because hundreds of thousands of good people around the world and working their butts off to try and deliver the energy you and I need and do so in a way that is most efficient. And now, more than ever, they are also working their butts off to make certain that delivery is not only efficient, but sustainable from a save the earth perspective. If you do not believe that, you clearly have not had the opportunity as I have over the past few years to talk to these people and see for yourself what they are doing.
I’m glad for the change I see in ExxonMobil–and also glad they are disciplined, hardworking and marvelously successful. It won’t change those who love to hate “big oil.” But nothing will change that, I am afraid, until they replace their wall socket with a gerbil in a cage running a generator.