Steve Coll (SC)—[00:00:42:04] Yeah. It’s interesting.

I mean, the...both strands of the original Standard Oil mission are present in Exxon. And there are many people in the business who will say that, of all the baby Standards that evolved out of the 1911 break-up, Exxon has always been closest to the parent in its culture and its sense of itself: the most rigid; the most conservative; the most influenced still by religiosity in the workplace and in the culture of the corporation; and also the most hardline: the most ruthless; the most inclined to play hardball the way [John D.] Rockefeller did before he entered his philanthropic phase.

And so, you can still see this sense of conservative religious mission present in the corporation’s outlook on the world. But, they remain ideologically committed to capitalism above all else.

And...I mean, the current Chief Executive, Rex Tillerson, who was the son of a mid-level Boy Scout administrator in Texas and who grew up in an East Texas town, a very Boy Scout-driven and religious household, his mother was also deeply religious, and he’s now, you know very active in the Boy Scouts of America and active in his church and in the Republican party. All of that would be, ‘OK. That’s a corporate Texas life.’ Except, he recently told Scouting Magazine that his favorite book is Atlas Shrugged by Ayn Rand. And you think, ‘OK. Right. Now the colors are getting a little bit shaded over on another side.’

They hold on to their sort of original Baptist culture. But, they also are really mad at their enemies. And, they see the government as hostile to them. They see many other forces in society as not willing to give them a break or understand who they are. And that, I think, has impeded their potential to evolve in these directions—whether it was influence by the Rockefeller family’s example of broad-minded philanthropy or whether it was influence by other corporations’ different kinds of social responsibility strategies and so forth.

They’re down in a strategic crouch: Ready to shoot first and ask questions later.

[00:3:36:24] Is ExxonMobil’s assessment of the outside world as the enemy realistic?

[00:3:41:24] I wonder.

I mean, on the one hand, they would say, ‘Look at our numbers. What’s wrong with what we’re doing?’

And...but the answer is, I mean part of the explanation for their numbers, of course, much of the explanation is that the oil industry is a kind of utility that is pretty idiot-proof. If you can run it, if you can run an oil company reasonably well, you’re going to make lots of money—at least in this price environment. They run their company better than most, so they make even more money. And, they’re enormous, so they have enormous benefits of scale.

So, is that durable?

It has been durable. Will it be durable for another 30 or 40 years? There’s a couple of reasons to question.

One is, Chad, and the examples elsewhere in the book, of their position in troubled societies, which is not going to change—the resource nationalism that drove them into these settings is not going away—demonstrates, I think, and it’s not the only example, but it’s enough: The oil industry, the energy industry is increasingly a world of partnerships. It’s hard to do it yourself anymore. You’re going to have to partner with governments; you’re going to have to partner with communities, non-governmental organizations; you’re going to have to take account of the media. In this global environment, where information is flat, available to everyone, you cannot hide in a box. And, you can’t be a bad partner. And, they are seen as closed. And they’re not seen by even their industry peers as good partners. They’re prickly, arrogant and headstrong. And that is not a prescription, I don’t think, for success over 30 or 40 years in the world we’re moving into—especially a world where American relative power is in decline.

And, the other factor is that, we haven’t talked about this, but in order to compete against the very large state-owned oil companies in the world—because they’re the largest company headquartered in the United States but you make a list of oil companies worldwide, including those owned by governments, and they’re not even in the top ten—their competitive advantage is science and technology and engineering. They compete with the Chinese is Africa by saying, ‘We can do oil drilling that nobody else can do. We can do it in deeper water. We can do it in harsher climates. We can pipe it across landscapes that no one else can pipe it across. We can do that safely. And, we can do it on time and on budget and you’ll make lots of money.’ And that claim, which is valid in general terms, reflects their ability to stay ahead of global competition on science, engineering and geological exploration and insight. So, they’re a science company and an engineering company maybe even more.

Well, can you really attract and retain, in a world—the Chinese are going to get better and better and better; the Russians are, you know, may not get better and better and better because of their political economy; but Indian and Chinese and other global...Brazilian competition is going to rise, the quality of that competition is going to rise. Can they maintain their edge with a workforce that is so closed, so insular, unfriendly to women, not very globalized, not where people go home to their Thanksgiving dinner and says, ‘I work at Exxon’ and everyone draws in their breath.

I don’t...you know what scientists are like. They’re not going to thrive, if they can’t open their open their windows a little bit, I think, and develop a talent culture that is a little bit less rigid than the one that they possess now. I mean, that’s at least a question that I raise.

[00:07:41:14] Does the insularity and hostility—to industry partners, to corporate social responsibility—you find at ExxonMobil also foreclose a competitive edge developing alternative energies?

[00:07:50:14] It does, to an extent. Although there, I think they...that’s at least inside the lines of what they do, which is energy. You know, so energy broadly defined.

They’re interested, I think, genuinely in watching the alternative energy space defensively. So, they study it very carefully.

They...you know, they’re an enormous incumbency that has a very profitable business model that presumes the role of oil in the transportation economy. They’re naturally going to resist changes in technology that would threaten the primacy of oil fuels in the global transportation economy. That’s a threat to them.

But other kinds of changes to the energy economy that might be enacted for environmental reasons, particularly a price on carbon to address the dangers of global warming, they’re already adjusting to that by...partly by necessity, partly by choice, by shifting towards natural gas, which, you know, they see as a winner in a carbon constrained twenty-first century. It’s easier for them to access gas anymore than it is for them to access oil. So, that, they’re making a virtue of a necessity to some extent by doubling down on gas.

Also, the United States is, of course, in the midst of a potential kind of unconventional natural gas boom. That allows them to come back into the free market West and enjoy the property rights of ownership. If they can find the gas here, they can own it in an uncomplicated way.

The political risk is different. Now they have to deal with environmentalists who are concerned about the damage that fracking industrialization causes.

So, anyway, it’s complicated.

I think their view of alternatives is that they have an incumbent business that they like and they don’t want to run themselves out of business.

As to wind and solar, that’s a power generation story. They’re not, you know...gas puts them in the power generation business. But, they don’t want to be...I don’t think there’s any philosophical reason why they wouldn’t incrementally go into power generation, whether it’s hydro or geothermal or solar or wind. It doesn’t threaten their business. It’s just not what they’re...they don’t see scale in it and profitability in it the way they see it in oil and gas.

—End of Part Three—

More GWorks Interviews: Steve Coll

to Part One: An Age of Limits & Change

Private Empire: ExxonMobil & American Power

and how to write about a crucial resource,

a reticent corporation and what they say

about America’s place in the world.

to Part Two: Chad: A Basic Dilemma

ExxonMobil’s search for oil

in increasingly unstable environments

and the challenges this poses to the

way ExxonMobil does business.

to Part Four: Coherence

ExxonMobil’s relationship to environmentalism

and government regulation and their place

in a political economy.

to Part Five: Valdez|Exxon

The impact of the 1989 Exxon Valdez

oil spill and the future of energy, energy companies

and American power.

For more interviews,

please visit GWorks Interviews

EDITOR’S NOTES

GWorks Interviews: Steve Coll was filmed Tuesday 26 June 2012 in the offices of New America Foundation in the District of Columbia. GWorks would like to thank Mr Coll for his generous participation and Victoria Collins for her work to make this interview happen.

Photo: Book Cover: Private Empire: ExxonMobil & American Power. Courtesy The Penguin Press.

Photo: Steve Coll. Lauren Shay Lavin. Courtesy The Penguin Press.

GWorks Interviews is a series dedicated to exploring governance issues of interest with persons given to thinking about and having relevant experience. GWorks invites a GWorks Interviewee to respond in depth to questions. GWorks does not edit the substance of what an interviewee says. GWorks edits GWorks Interviews only for editorial and technical considerations including style, length and productions issues.