Private Empire: ExxonMobil and American Power

Private Empire: ExxonMobil and American Power

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by Steve Coll
     
 

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Winner of the Financial Times and Goldman Sachs Business Book of the Year Award 2012

An “extraordinary” and “monumental” exposé of Big Oil from two-time Pulitzer Prize winner Steve Coll (The Washington Post)

In Private Empire Steve Coll investigates the largest and most powerful private corporation in the

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Overview

Winner of the Financial Times and Goldman Sachs Business Book of the Year Award 2012

An “extraordinary” and “monumental” exposé of Big Oil from two-time Pulitzer Prize winner Steve Coll (The Washington Post)

In Private Empire Steve Coll investigates the largest and most powerful private corporation in the United States, revealing the true extent of its power. ExxonMobil’s annual revenues are larger than the economic activity in the great majority of countries. In many of the countries where it conducts business, ExxonMobil’s sway over politics and security is greater than that of the United States embassy. In Washington, ExxonMobil spends more money lobbying Congress and the White House than almost any other corporation. Yet despite its outsized influence, it is a black box.

Private Empire pulls back the curtain, tracking the corporation’s recent history and its central role on the world stage, beginning with the Exxon Valdez accident in 1989 and leading to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. The action spans the globe, moving from Moscow, to impoverished African capitals, Indonesia, and elsewhere in heart-stopping scenes that feature kidnapping cases, civil wars, and high-stakes struggles at the Kremlin. At home, Coll goes inside ExxonMobil’s K Street office and corporation headquarters in Irving, Texas, where top executives in the “God Pod” (as employees call it) oversee an extraordinary corporate culture of discipline and secrecy.

The narrative is driven by larger than life characters, including corporate legend Lee “Iron Ass” Raymond, ExxonMobil’s chief executive until 2005. A close friend of Dick Cheney’s, Raymond was both the most successful and effective oil executive of his era and an unabashed skeptic about climate change and government regulation.. This position proved difficult to maintain in the face of new science and political change and Raymond’s successor, current ExxonMobil chief executive Rex Tillerson, broke with Raymond’s programs in an effort to reset ExxonMobil’s public image. The larger cast includes countless world leaders, plutocrats, dictators, guerrillas, and corporate scientists who are part of ExxonMobil’s colossal story.

The first hard-hitting examination of ExxonMobil, Private Empire is the masterful result of Coll’s indefatigable reporting. He draws here on more than four hundred interviews; field reporting from the halls of Congress to the oil-laden swamps of the Niger Delta; more than one thousand pages of previously classified U.S. documents obtained under the Freedom of Information Act; heretofore unexamined court records; and many other sources. A penetrating, newsbreaking study, Private Empire is a defining portrait of ExxonMobil and the place of Big Oil in American politics and foreign policy.

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Editorial Reviews

From the Publisher
 “ExxonMobil has met its match in Coll, an elegant writer and dogged reporter… extraordinary… monumental.” —THE WASHINGTON POST

Fascinating… Private Empire is a book meticulously prepared as if for trial, a lawyerly accumulation of information that lets the facts speak for themselves… a compelling and elucidatory work.” —BLOOMBERG

Private Empire is meticulous, multi-angled and valuable… Mr. Coll’s prose sweeps the earth like an Imax camera.”
— Dwight Garner, THE NEW YORK TIMES

"ExxonMobil has cut a ruthless path through the Age of Oil. Yet intense secrecy has kept one of the world's largest companies a mystery, until now. Private Empire: ExxonMobil and American Power is a masterful study of Big Oil's biggest player… Coll's in-depth reporting, buttressed by his anecdotal prose, make Private Empire a must-read. Consider Private Empire a sequel of sorts to The Prize, Daniel Yergin's Pulitzer-winning history of the oil industry… Coll's portrait of ExxonMobil is both riveting and appalling… Yet Private Empire is not so much an indictment as a fascinating look into American business and politics. With each chapter as forceful as a New Yorker article, the book abounds in Dickensian characters.”
— SAN FRANCISCO CHRONICLE

"Coll makes clear in his magisterial account that Exxon is mighty almost beyond imagining, producing more profit than any American company in the history of profit, the ultimate corporation in 'an era of corporate ascendancy.' This history of its last two decades is therefore a revealing history of our time, a chronicle of the intersection between energy and politics."
—Bill McKibben, NEW YORK REVIEW OF BOOKS

"Groundbreaking... Masterful as a corporate portrait, Private Empire gushes with narrative."
— AMERICAN PROSPECT

The New York Times Book Review
…this book isn't so much a story of Exxon Mobil's influence over the American government. Rather, it's a picture of a corporation so large and powerful—operating in some 200 nations and territories—that it really has its own foreign policy…the book assuredly does what it sets out to do: show the inner workings of one of the Western world's most significant concentrations of unelected power.
—Adam Hochschild
The New York Times
[Coll's] new book, like his previous ones, is a big dig. Mountains of facts are mined, crushed and consumed as narrative fuel. If Mr. Coll were a corporation, you would want to impose a carbon tax on him. Private Empire is meticulous, multi-angled and valuable. It is also, perhaps surprisingly…impartial…It's among this book's achievements that it attempts to view a dysfunctional energy world, as often as not, through Exxon Mobil's eyes. The company is portrayed here, some egregious missteps aside, as possessing an honorable if rigid corporate culture that seeks to supply a product (unlike tobacco companies, to which it is often compared) that a functioning society actually must have.
—Dwight Garner
Ed Crooks
If there was ever a company that deserved a proper corporate biography, it is ExxonMobil.

As the world's largest non-governmental producer of oil and gas, and for several years the world's largest listed company by market capitalisation, it has been at the heart of many of the central issues of our time, from the debate over climate change to the war on terror. It is surprising that it has not been the subject of a serious book-length investigation until now.

The good news is that Private Empire is worth the wait. Meticulously researched and elegantly written, it is likely to be the definitive work on its subject for many years to come. Steve Coll, president of the centrist think-tank the New America Foundation, is honest about Exxon's strengths as well as its flaws, and presents both sides of the arguments with scrupulous even-handedness. Conclusions about whether the company is a force for good or ill in the world are left for the reader to decide.

The book does not trace Exxon's full history back to its roots as John D. Rockefeller's Standard Oil in the 1870s, which is in a way a shame: there are some instructive parallels to be drawn about the tensions between governments and the oil industry then and now.

But by choosing a shorter period - the 21 years between the 1989 Exxon Valdez oil spill in Alaska and BP's 2010 Deepwater Horizon disaster in the Gulf of Mexico - Coll is able to focus more sharply on the story of Exxon's remarkable success in the modern world.

In a series of episodes, jumping around the globe from Indonesia to Chad to Iraq to Washington, he tells the stories of how the company has advanced the interests of its shareholders in its dealings with democratic governments, dictators and in¬surgents. At every stop there are vivid anecdotes, sharp insights and telling details.

In one striking image, Coll compares the chief executive of Exxon with the president of France or the chancellor of Germany: broadly friendly to US interests, in other words, but not always perfectly aligned with them.

The company has always had close ties to the US government, and that was particularly true under president George W. Bush because of the good relationship between Dick Cheney, the vice-president, and Lee Raymond, Exxon's chief executive from 1993 to 2005. Even then, though, Exxon's leaders always insisted on putting the company's needs first, and clashed with the administration over issues such as relations with Hugo Chávez, president of Venezuela, and Bush's ambition to cure the US of its 'addiction' to foreign oil.

It is Raymond who emerges as the book's anti-hero. Ferociously bright and frequently just plain ferocious, he was the dominant force at Exxon even before he formally took command, and picked his successor Rex Tillerson, who still leads the company.

As Coll explains, Raymond was responsible for many of the central features that have defined the company over the past two decades, including the engineering rigour and focus on safety - exhaustively overhauled following the Exxon Valdez oil spill - that have made Exxon the industry's most admired company for operational excellence. He was also the inspiration behind the company's vigorous rejection of the need to take action to avert the threat of climate change. That line has been modified under Tillerson, but the company still insists on the central role fossil fuels will play in energy supplies for decades to come.

Exxon is in a sense a living fossil. In the 1950s its peers as rulers of the US corporate landscape were companies such as US Steel, IBM and General Motors, and while they have to varying degrees fallen by the wayside, Exxon has continued to prosper.

Its financial success is undeniable: the company now has a higher credit rating than the US government.

The price, as Coll puts it, may be that "global warming on a scale scientists describe today as dangerous will occur".
Financial Times (US energy and industry editor)

SAN FRANCISCO CHRONICLE

"ExxonMobil has cut a ruthless path through the Age of Oil. Yet intense secrecy has kept one of the world's largest companies a mystery, until now. Private Empire: ExxonMobil and American Power is a masterful study of Big Oil's biggest player… Coll's in-depth reporting, buttressed by his anecdotal prose, make Private Empire a must-read. Consider Private Empire a sequel of sorts to The Prize, Daniel Yergin's Pulitzer-winning history of the oil industry… Coll's portrait of ExxonMobil is both riveting and appalling… Yet Private Empire is not so much an indictment as a fascinating look into American business and politics. With each chapter as forceful as a New Yorker article, the book abounds in Dickensian characters.”

Library Journal
Pulitzer Prize-winning journalist Coll (Ghost Wars) combines a corporate history of the world's biggest energy company with a survey of energy geopolitics. He begins with the Exxon Valdez oil spill in 1989, suggesting that the ongoing public criticism it generated fostered a corporate culture that is conservative, defensive, highly disciplined, and focused on cost and efficiency. While Coll covers corporate leadership and the Mobil and XTO mergers, he concentrates on the company's relentless pursuit of replacement oil reserves, its tactics to mitigate threats from environmentalism and alternative fuels, and its attempts to influence government policy. He follows the company's maneuvers in politically unstable parts of the world such as Africa and Indonesia and shows how it has coped with nationalism in Russia and Venezuela. He closes with BP's Deepwater Horizon debacle and a summary of where the United States stands today with regard to the environmental and economic costs of fossil fuel dependency. VERDICT In a very long work, Coll manages to keep his text clear, informative, and at times riveting. Highly recommended for students of the energy economy as well as for motivated general readers. [See Prepub Alert, 11/21/11.]—Lawrence Maxted, Gannon Univ., Erie, PA
Kirkus Reviews
A thorough, sobering study of the pernicious consolidation of Big Oil. With admirable restraint, New Yorker contributor and two-time Pulitzer winner Coll (The Bin Ladens: An Arabian Family in the American Century, 2008, etc.) demonstrates how the merger of Exxon and Mobil has allowed the company to wield more power and wealth than even the American government, in the manner of John D. Rockefeller. Exxon had functioned as an independent corporate state since its antitrust breakoff from Standard Oil in 1911, and was ranked by profit performance in the top five corporations from the 1950s through the end of the Cold War. With the catastrophic spill of the Valdez in Alaska in 1989, the network of secrecy and internal security within Exxon was exposed but hardly tempered. The iron chief who emerged from the crisis, Lee Raymond, reappraised risk and security within the organization and took a hard line against efforts to extract from it punitive damages. Moving the headquarters to Texas in 1993, the company retrenched in its nose-thumbing determination to encourage and supply America's thirst for oil, casting around at more far-flung spots in the world that could provide the crude--such as where Mobil held attractive assets, in places like West Africa, Venezuela, Kazakhstan and Abu Dhabi. The Exxon-Mobil merger in 1999 created a global behemoth and also provoked small wars at drilling spots where the poor and disenfranchised deeply resented the foreign workers on native soil and disrupted the extraction by violence and insurgency. Raymond and his cohorts' cynical spin on the denial of global warming and the role of the burning of fossil fuels makes for jaw-dropping reading, as does the company's cunning manipulations of the war in Iraq to garner an oil deal. The Obama administration's emphasis on renewable energy sources and environmental concerns has barely challenged the formidable political power of Big Oil. Leaks, reserves, PACs, hydrofracking, bloated corporate profits and more: all pertinent concerns nicely handled by Coll in this engaging, hard-hitting work.

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Product Details

ISBN-13:
9780143123545
Publisher:
Penguin Publishing Group
Publication date:
05/28/2013
Pages:
704
Sales rank:
188,940
Product dimensions:
5.40(w) x 8.30(h) x 1.60(d)
Age Range:
18 Years

Read an Excerpt

A few days before the Exxon Valdez ran onto Bligh Reef, tens of thousands of Hungarians marched through Budapest. The demonstrators turned the commemoration of an 1848 uprising against Austrian rule into a revolt against Soviet-backed communism. “Resign!” they shouted outside downtown buildings housing Communist Party bureaucrats. “Freedom! . . . No more shall we be slaves!” They carried flags from Hungary’s pre-Communist era and demanded the withdrawal of Soviet military forces. “Ivan, Aren’t You Homesick?” and “Legal State, Not a Police State” declared their protest signs.

The defiant march added to the cracks spreading that spring through the structures of global politics. The Berlin Wall fell a few months later, in November. The Soviet Union fissured and then disappeared. Democratic and free-market revolutions and revivals swept through Central Europe, Africa, Asia, and Latin America. Ethnic, religious, and territorial conflicts, long subdued by the cold war, erupted one after another. The world was remade, tossed, liberated—and reopened for international business.

The Valdez wreck stunned Exxon and its rising leader, Lee Raymond. The disaster would change the corporation profoundly. Internal reforms imposed by Raymond in response to the accident would turn one of America’s oldest, most rigid corporations into an even harder, leaner place of rule books and fear-inspiring management techniques. At the same time, Raymond and the rest of Exxon’s leaders would gradually pass through the introspection triggered by the Valdez spill and seek out the oil and gas plays that opened so unexpectedly after 1989. An age of empire beckoned America and Exxon alike.

In a bracingly short time, Anglo-American optimism and idealism about free markets, foreign investment, and the rule of law found adherents in the most unlikely world capitals. Brand-new nations brimming with oil and gas and others previously closed to Western corporations hung out FOR LEASE signs to lure geologists from Houston and London: Russia, Kazakhstan, Azerbaijan, Angola, Qatar, and tiny Equatorial Guinea, on the West African coast, soon to market itself through its Washington lobbyists as the “Kuwait of Africa.” These post–cold war opportunities for American, British, French, and Italian oil companies could be ambiguous, risky, and sometimes fleeting. Resentful nationalism and suspicion of the United States and Europe persisted in many capitals of the new oil powers. State-owned petroleum companies from China, India, Brazil, and elsewhere were rising quickly as competitors. Exxon might be America’s largest and most powerful oil corporation, but it would require all the political influence, financial resources, dazzling technology, speed, and stamina that its leaders could muster to seize the lucrative oil deals made possible by communism’s fall and global capitalism’s revival.

The United States now stood unchallenged as a worldwide military power. Exxon’s empire would increasingly overlap with America’s, but the two were hardly contiguous. Pentagon policy, after the Soviet Union’s demise, sought to keep international sea-lanes free; to reduce the global danger of nuclear war, terrorism, and transnational crime; to manage or contain Russia and China; to secure Israel; and to foster, against long odds, a stable Middle East from which oil supplies vital for global economic growth could flow freely. Exxon benefited from the new markets and global commerce that American military hegemony now protected. Yet the corporation’s activity also complicated American foreign policy; Exxon’s far-flung interests were at times distinct from Washington’s. Lee Raymond would manage Exxon’s global position after 1989 as a confident sovereign, a peer of the White House’s rotating occupants. Raymond aligned Exxon with America, but he was not always in sync; he was more akin to the president of France or the chancellor of Germany. He did not manage the corporation as a subordinate instrument of American foreign policy; his was a private empire.

Exxon’s power within the United States derived from an independent, even rebellious lineage. The corporation had been hived off from John D. Rockefeller’s Standard Oil monopoly in 1911, after a bruising antitrust campaign led by economic reformers and populist politicians. The visceral hostility toward Washington sometimes eschewed by Exxon executives eight decades later suggested some of them had still not gotten over it.

Exxon’s size and the nature of its business model meant that it functioned as a corporate state within the American state. Like its forebearer, Standard, Exxon proved across decades that it was one of the most powerful businesses ever produced by American capitalism. From the 1950s through the end of the cold war, Exxon ranked year after year as one of the country’s very largest and most profitable corporations, always in the top five of the annual Fortune 500 lists. Its profit performance proved far more consistent and durable than that of other great corporate behemoths of America’s postwar boom, such as General Motors, United States Steel, and I.B.M. In 1959, Exxon ranked as the second-largest American corporation by revenue and profit; four decades later it was third. And more than any of its corporate peers, Exxon’s trajectory now pointed straight up. The corporation’s revenues would grow fourfold during the two decades after the fall of the Berlin Wall, and its profits would smash all American records.

As it expanded, Exxon refined its own foreign, security, and economic policies. In some of the faraway countries where it did business, because of the scale of its investments, Exxon’s sway over local politics and security was greater than that of the United States embassy. In impoverished African countries increasingly important to Exxon’s strategy, such as Chad, the weight of the corporation’s investments and the cash flow it shared with local governments overwhelmed the economy and became the central prize in violent local contests for power. In Moscow and Beijing, Exxon’s independent power and negotiating agenda competed with and sometimes attracted more attention than the démarches issued by American secretaries of state. Yet the corporation could also be insular and even passive in the faraway places where it acquired and produced oil and gas. It fenced off local operations and separated its workforce from upheaval outside its gates. If its oil fl owed and its contract terms remained intact, then Exxon often followed a directive of minimal interference in local politics, especially if those politics were controversial, as in the case of the African dictatorships with which the corporation partnered, or the countries, such as Indonesia and Venezuela, where civil conflict swirled around Exxon properties. In Washington, Exxon was a more confident and explicit political actor. The corporation’s lobbyists bent and shaped American foreign policy, as well as economic, climate, chemical, and environmental regulation. Exxon maintained all-weather alliances with sympathetic American politicians while calling as little attention to its influence as possible.

The cold war’s end signaled a coming era when nongovernmental actors—corporations, philanthropies, terrorist cells, and media networks— all gained relative power. Exxon’s size, insularity, and ideology made its position distinct. Unlike Walmart or Google (to name two other multinational corporations that would rise after 1989 to global influence), the object of Exxon’s business model lay buried beneath the earth. Exxon drilled holes in the ground and then operated its oil and gas wells for many years, and so its business imperatives were linked to the control of physical territory. Increasingly, the oil and gas Exxon produced was located in poor or unstable countries. Its treasure was subject to capture or political theft by coup makers or guerrilla movements, and so the corporation became involved in small wars and kidnapping rackets that many other international companies could gratefully avoid.

The time horizons for Exxon’s investments stretched out longer than those of almost any government it lobbied. “We see governments come and go,” Lee Raymond once remarked, an observation that was particularly true of Washington, with its constitutionally term-limited presidency. Exxon’s investments in a particular oil and gas field could be premised on a production life span of forty or more years. During that time, the United States might change its president and its foreign and energy policies at least half a dozen times. Overseas, a project’s host country might pass through multiple coups and political upheavals during the same four decades. It behooved Exxon to develop influence and lobbying strategies to manage or evade political volatility.

American spies and diplomats who occasionally migrated to work at Exxon discovered a corporate system of secrecy, nondisclosure agreements, and internal security that matched some of the most compartmented black boxes of the world’s intelligence agencies. The corporation’s information control systems guarded proprietary industrial data but also sought to protect its long-term strategic position by minimizing its visibility. Exxon’s executives deflected press coverage; they withheld cooperation from congressional investigators, if the letter of the law allowed; and they typically spoke in public by reading out sanitized, carefully edited speeches or PowerPoint slides. Their strategy worked: Exxon made a fetish of rules, but it rarely had to justify or explain publicly how it operated when the rules were gray.

As the Valdez wreck made obvious, Exxon’s massive daily operations—soon to produce 1.5 billion barrels of oil and gas pumped from the ground each year, and 50 billion gallons of gasoline sold worldwide—posed huge environmental risks. After the Valdez, Exxon would become again, as it had been in the first decades of Standard Oil’s existence, the most hated oil company in America.

When gasoline prices soared, American commuters felt powerless before its influence. In effect, Exxon was America’s energy policy. Certainly there was no governmental policy of comparable coherence. After fitful, failed efforts to wean itself from imported oil during the 1970s, the United States had evolved no effective government-led energy strategy. Its de facto policy was the operation of free markets amid a jumble of patchwork subsidies, contradictory rules, and weak regulatory agencies. The very weakness of policy favored Exxon. As the public’s frustration grew over rising pump prices and dependence on oil imports that transferred billions of dollars to hostile regimes overseas, Exxon became a natural lightning rod. The corporation managed this criticism with the same coolheaded patience and indifference that it employed to endure political risk in tinpot African dictatorships. Compromise was not the Exxon way.

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What People are saying about this

From the Publisher
Winner of The Financial Times and Goldman Sachs Business Book of the Year Award

A 2012 National Book Critics Circle Award Finalist

One of Financial Times' Best Books of 2012
 
“ExxonMobil has met its match in Coll, an elegant writer and dogged reporter… extraordinary… monumental.
The Washington Post

Fascinating… Private Empire is a book meticulously prepared as if for trial, a lawyerly accumulation of information that lets the facts speak for themselves… a compelling and elucidatory work.”
Bloomberg

Private Empire is meticulous, multi-angled and valuable… Mr. Coll’s prose sweeps the earth like an Imax camera.”
—Dwight Garner, The New York Times

"ExxonMobil has cut a ruthless path through the Age of Oil. Yet intense secrecy has kept one of the world's largest companies a mystery, until now. Private Empire: ExxonMobil and American Power is a masterful study of Big Oil's biggest player… Coll's in-depth reporting, buttressed by his anecdotal prose, make Private Empire a must-read. Consider Private Empire a sequel of sorts to The Prize, Daniel Yergin's Pulitzer-winning history of the oil industry… Coll's portrait of ExxonMobil is both riveting and appalling… Yet Private Empire is not so much an indictment as a fascinating look into American business and politics. With each chapter as forceful as a New Yorker article, the book abounds in Dickensian characters.”
San Francisco Chronicle

"Coll makes clear in his magisterial account that Exxon is mighty almost beyond imagining, producing more profit than any American company in the history of profit, the ultimate corporation in 'an era of corporate ascendancy.' This history of its last two decades is therefore a revealing history of our time, a chronicle of the intersection between energy and politics."
—Bill McKibben, New York Review of Books

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