This summer, we had the entertaining spectacle of scions of the Rockefeller family joining with environmental activists such as Greenpeace to urge a change in ExxonMobil’s corporate governance, including redirecting their investment towards green technologies. Part of their argument was that research ‘proved’ that the world would need these new techologies and that they would be economically viable soon.
As Joe Nocera’s excellent 5/31/08 column in the New York Times put it,
Exxon Mobil’s projections “depend on two critical but untested assumptions,” [Neva Rockefeller Goodwin] said, reading from notes. “First, developing countries will enjoy strong economic growth. And second, global consumption of oil and gas will significantly increase. This second assumption is wrong.” In her view, there was a high likelihood that new technologies would reduce the world’s reliance on oil and gas — and Exxon Mobil would suffer because of its stubborn refusal to spearhead new technologies back when it still had a chance.”
So, what has happened since? We find “Green Revolution Stalls on Cheap Oil” (Guardian 1/1/09) and Russell Gold in the Wall Street Journal (1/12/09), said “Exxon Mobil Corp. is riding high above its peers, its coffers filled by years of high oil prices. Now, energy investors are wondering if Exxon is ready to make a move.”
The salient point is that ExxonMobil learned its lesson in the early 1980s, when it listened to all the energy experts who said that oil prices could only go up and that supply was constrained by a limited resource, and the finance professors who argued for diversification. They developed a healthy skepticism towards so-called experts and so-called definitive analysis, and stuck to their knitting, which has made them the most successful private oil company.
And in the oil crises of the 1970s many more were enthusiastic about government, calling for major oil companies to be nationalized. Exxon and other diversified in part to have more employees and diverse political protection (i.e. jobs, votes and congressional seats representing their firms). I remember Exxon or Mobil in the camera distribution business. I would purchase expensive SLR cameras with a “120 day trial” period–then return them. No one talks about nationalizing oil companies today (just banks, I guess).
[…] owners seem to agree. And company profitability has confirmed this strategy, as Michael Lynch has noted at MasterResource. Moreover, Exxon Mobil’s stick-to-the-basics strategy is now in favor at […]