Private Empire | Steve Coll

Summary of: Private Empire: ExxonMobil and American Power
By: Steve Coll

Introduction

Dive into the world of ExxonMobil, one of the largest and most powerful corporations in the United States, as revealed in Steve Coll’s ‘Private Empire: ExxonMobil and American Power’. This book provides a comprehensive look at the company’s early days as a Standard Oil offshoot to its eventual amalgamation with Mobil Oil, creating an energy giant. Key themes explored include the Rockefeller tradition, the unmatched leadership of Lee R. Raymond, ExxonMobil’s colossal global footprint, and its controversial stance on climate change. Get ready to unpack the intricate operations and global influence of this behemoth while understanding its position as a ‘private empire’ rather than a mere subsidiary of the United States.

The Fall and Rise of Standard Oil

At the peak of its success, Standard Oil held a 90% monopoly on the US oil market. However, the publication of The History of the Standard Oil Company led to calls for its breakup, which was eventually mandated by the US Supreme Court in 1911. Despite this, one of the company’s offspring, Standard Oil of New Jersey, continued to thrive for decades under various names before finally becoming Exxon, which quickly grew to become the largest oil company in the US. Exxon exemplified the Rockefeller tradition of discipline, rigor, and unsentimental competition and played a significant role in shaping America’s energy policy.

ExxonMobil’s Private Empire

Lee R. Raymond, an ardent free-market capitalist, managed ExxonMobil like a powerful sovereign, aligning the company’s operations with America’s global policies. It was not a subordinate US corporation but a corporate “private empire” operating like a “corporate state” that happened to be headquartered in the United States. ExxonMobil’s executives were seen as ruthless, self-isolating, and inscrutable, sharing a belief in the One Right Answer. The company was not a place for “restless free thinkers and habitual dissenters.”

Exxon Valdez: A Preventable Environmental Disaster

In 1989, the Exxon Valdez oil tanker ran aground, spilling 257,000 barrels of oil into the pristine waters of Prince William Sound. Exxon spent $2.1 billion on cleanup activities, but the public’s trust in oil companies was severely damaged. The accident revealed the risks that arise when industrial systems of enormous scale and consequence are entrusted to imperfect human beings without adequate safeguards. Exxon’s managers felt beleaguered, prompting the company to move its headquarters from New York City to Texas. After the accident, Exxon’s operations became tighter and more by-the-book, with “fear-inspiring management” becoming the norm. The firm began emphasizing “safety and risk management.” At every meeting, an employee discussed a safety issue during the “safety minute.” Despite the disaster, Exxon’s profits soared to record-breaking heights. The Exxon Valdez accident was preventable, underscoring the importance of safety measures in industrial operations of enormous scale.

ExxonMobil’s Consolidation

Learn how ExxonMobil’s consolidation and the leadership of CEO Lee Raymond solved the company’s reserves-replacement issue and made it the world’s largest nongovernmental producer of oil and gas.

ExxonMobil, the largest nongovernmental producer of oil and gas, had to replace over one billion barrels of reserves annually to avoid a collapse. CEO Lee Raymond proposed a merger with Mobil Oil, whose reserves were concentrated in Latin America, the Middle East, Africa, and Asia. The merger created a company with global reach capable of competing with state-owned oil companies worldwide. Raymond’s leadership style involved choosing his own performance metric, delivering profits, and ignoring criticism.

In 1999, ExxonMobil emerged as the largest corporation in the United States. Following the consolidation, the company was listed by the United Nations as the world’s 45th most powerful economic entity, including national governments. Raymond’s decision to appeal to a Chinese Communist government instead of a sitting American president was extraordinary. Moreover, Raymond recognized the need to rebalance risk-reward in many of the company’s operations following the Exxon Valdez oil spill episode. It was indeed a great time to be ExxonMobil with rising oil prices and Raymond’s unwavering leadership.

Exposing ExxonMobil’s Climate Change Denial

Despite overwhelming scientific evidence highlighting the detrimental impact of fossil fuels on the climate, ExxonMobil was determined to continue profiting from its global business activities. Raymond, the former CEO of ExxonMobil, was skeptical about climate change and government regulations, worrying about their impact on the company’s future. Rather than invest in cleaner energy alternatives, Raymond focused on buying American gas properties to strengthen the company’s position in the natural gas sector. His denial of the climate crisis has been compared to that of Dick Cheney, the former US Vice President, and the company’s efforts to spread doubt about climate change have been described as creating complete chaos in climate science debates. Raymond’s influence allowed ExxonMobil’s senior leaders to reject the evidence and dismiss the Kyoto Protocol, leading to further delays in addressing the growing environmental crisis.

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