Tuesday, June 05, 2012

Private Empire: ExxonMobil and American Power

Steve Coll’s massive volume (28 chapters, 684 pages, plus an extensive list of footnotes) on the history of ExxonMobil focuses primarily on the company’s last two decades.  That the decades are bookended by two the worst oil spill disasters in the history of the oil industry is no accident.  Coll is likely trying to make the point that oil companies learned little from the horror that was the 1989 Alaskan spill by the Exxon Valdez tanker.  Perhaps inadvertently, he also highlights just how complicated and dangerous is the business of exploring and transporting the energy that world economies will depend upon for several decades to come.  The odds are that we have not seen the last of such spills.   

John D. Rockerfeller’s Standard Oil Company became so dominant that dedicated “trust busters” and the U.S. Supreme Court, split it into several individual oil companies in 1911.  But as happened when AT&T broke apart several decades later, some of the pieces would decide it was smarter to recombine into mini-versions of the original parent company.  ExxonMobil, a combination of two companies split from the original Standard Oil all those years ago, is now the largest oil company in the world.

What makes Private Empire: ExxonMobil and American Power so intriguing is the author’s focus on the political and economic influence ExxonMobil exerts around the world.  The company’s revenues are, in fact, large enough to rank it the twenty-first largest “nation state” on the planet.  ExxonMobil’s ability to come into remote areas and create revenue streams to whatever government they find there makes it more powerful and influential in parts of the world than the U.S. government (or any other government, for that matter) can claim to be.  Lee Raymond, the man in charge for most of the period detailed in Private Empire, knew that he and his company would be around for the long haul – long after many government leaders, especially American presidents, had come and gone.  As Raymond watched the rotation of American presidents  – and spent ExxonMobil’s money to help those he favored remain in office as long as possible – he knew he could safely put the interests of ExxonMobil first, and those of the United States a distant second.  And there was little anyone could do about it even if they wanted to.

Steve Coll
Critics of Big Oil, especially those who criticize the industry because of its unwillingness to embrace fully the concept of global warming, will read much in the book that will anger them.  Lee Raymond was a nonbeliever, and he did everything in his power to delay any environmental action that would negatively impact ExxonMobil’s ability to do business as usual (as Coll points out, the company stance has changed since Raymond was succeeded by Rex Tillerson).  Raymond, on the other hand, did build, and rigidly enforce, a culture of safety that made oil spills and other environmental accidents as unlikely as they could possibly be.  The man understood the power of public opinion and he tried to keep it on his side.

It is impossible even to touch on all the issues contained in Private Empire.  There are whole chapters on ExxonMobil’s struggles with security problems around the world and how the efforts to keep employees and company assets secure often required the company’s close cooperation with some of the most brutal dictators in world history.  Other chapters look at the ultimate impact of all the cash the company poured into third world countries, particularly in Africa and the Middle East – what has become known as the “resource curse.”  Strikingly, when poor countries suddenly strike it rich in natural resources they often move backward rather than ahead, something akin to what happens to so many unprepared lottery winners.  ExxonMobil has seen this happen, first hand, more than once.

Readers willing to tackle Private Empire will be rewarded for their efforts.  As a forty-year veteran of the industry (with some of those years spent in third world countries), I was skeptical that ExxonMobil would get a fair shake in a book like this one.  Having now read it, I believe Private Empire to be as evenhanded as one could hope – and worthy of the attention it is getting.


  1. when poor countries suddenly strike it rich in natural resources they often move backward rather than ahead

    Wasn't that an issue for Spain when they got all that silver and gold from the new world? The king used the money to fight wars rather than investing in the country and it hurt it in the long run.

  2. I hadn't thought of Spanish history in that light, Factotum, but that is an excellent comparison, I think.

  3. I hadn't thought of Spanish history in that light, Factotum, but that is an excellent comparison, I think.