As Exxon looks ahead, despite the current bargain basement price of oil, it still boasts of expansion plans in the Gulf of Mexico, eastern Canada, Indonesia, Australia, the Russian far east, Angola, and Nigeria. "The strength of our global organization allows us to explore across all geological and geographical environments, using industry-leading technology and capabilities." And its willingness to get in bed with just about any regime out there makes it even easier. Somewhere in his trophy case, for instance, Rex Tillerson has an Order of Friendship medal from one Vladimir Putin. All it took was a joint energy venture estimated to be worth $500 billion.
But, you say, that's what oil companies do, go find new oil, right? Unfortunately, that's precisely what we can't have them doing any more. About a decade ago, scientists first began figuring out a "carbon budget" for the planet -- an estimate for how much more carbon we could burn before we completely overheated the Earth. There are potentially many thousands of gigatons of carbon that could be extracted from the planet if we keep exploring. The fossil fuel industry has already identified at least 5,000 gigatons of carbon that it has told regulators, shareholders, and banks it plans to extract. However, we can only burn about another 900 gigatons of carbon before we disastrously overheat the planet. On our current trajectory, we'd burn through that "budget" in about a couple of decades. The carbon we've burned has already raised the planet's temperature a degree Celsius, and on our present course we'll burn enough to take us past two degrees in less than 20 years.
At this point, in fact, no climate scientist thinks that even a two-degree rise in temperature is a safe target, since one degree is already melting the ice caps. (Indeed, new data released this month shows that, if we hit the two-degree mark, we'll be living with drastically raised sea levels for, oh, twice as long as human civilization has existed to date.) That's why in November world leaders in Paris agreed to try to limit the planet's temperature rise to 1.5 degrees Celsius, or just under three degrees Fahrenheit. If you wanted to meet that target, however, you would need to be done burning fossil fuels by perhaps 2020, which is in technical terms just about now.
That's why it's wildly irresponsible for a company to be leading the world in oil exploration when, as scientists have carefully explained, we already have access to four or five times as much carbon in the Earth as we can safely burn. We have it, as it were, on the shelf. So why would we go looking for more? Scientists have even done us the useful service of identifying precisely the kinds of fossil fuels we should never dig up, and -- what do you know -- an awful lot of them are on Exxon's future wish list, including the tar sands of Canada, a particularly carbon-filthy, environmentally destructive fuel to produce and burn.
Even Exxon's one attempt to profit from stanching global warming has started to come apart. Several years ago, the company began a calculated pivot in the direction of natural gas, which produces less carbon than oil when burned. In 2009, Exxon acquired XTO Energy, a company that had mastered the art of extracting gas from shale via hydraulic fracturing. By now, Exxon has become America's leading fracker and a pioneer in natural gas markets around the world. The trouble with fracked natural gas -- other than what Tillerson once called "farmer Joe's lit his faucet on fire" -- is this: in recent years, it's become clear that the process of fracking for gas releases large amounts of methane into the atmosphere, and methane is a far more potent greenhouse gas than carbon dioxide. As Cornell University scientist Robert Howarth has recently established, burning natural gas to produce electricity probably warms the planet faster than burning coal or crude oil.
Exxon's insistence on finding and producing ever more fossil fuels certainly benefited its shareholders for a time, even if it cost the Earth dearly. Five of the 10 largest annual profits ever reported by any company belonged to Exxon in these years. Even the financial argument is now, however, weakening. Over the last five years, Exxon has lagged behind many of its competitors as well as the broader market, and a big reason, according to the Carbon Tracker Initiative (CTI), is its heavy investment in particularly expensive, hard-to-recover oil and gas.
In 2007, as CTI reported, Canadian tar sands and similar "heavy oil" deposits accounted for 7.5% of Exxon's proven reserves. By 2013, that number had risen to 17%. A smart business strategy for the company, according to CTI, would involve shrinking its exploration budget, concentrating on the oil fields it has access to that can still be pumped profitably at low prices, and using the cash flow to buy back shares or otherwise reward investors.
That would, however, mean exchanging Exxon's Texan-style big-is-good approach for something far more modest. And since we're speaking about what was the biggest company on the planet for a significant part of the twentieth century, Exxon seems to be set on continuing down that bigger-is-better path. They're betting that the price of oil will rise in the reasonably near future, that alternative energy won't develop fast enough, and that the world won't aggressively tackle climate change. And the company will keep trying to cover those bets by aggressively backing politicians capable of ensuring that nothing happens.
Can Exxon Be Pressured?
Next to that fierce stance on the planet's future, the mild requests of activists for the last 25 years seem... well, next to pointless. At the 2015 ExxonMobil shareholder meeting, for instance, religious shareholder activists asked for the umpteenth time that the company at least make public its plans for managing climate risks. Even BP, Shell, and Statoil had agreed to that much. Instead, Exxon's management campaigned against the resolution and it got only 9.6% of shareholder votes, a tally so low it can't even be brought up again for another three years. By which time we'll have burned through... oh, never mind.
What we need from Exxon is what they'll never give: a pledge to keep most of their reserves underground, an end to new exploration, and a promise to stay away from the political system. Don't hold your breath.
But if Exxon seems hopelessly set in its ways, revulsion is growing. The investigations by the New York and California attorneys general mean that the company will have to turn over lots of documents. If journalists could find out as much as they did about Exxon's deceit in public archives, think what someone with subpoena power might accomplish. Many other jurisdictions could jump in, too.
At the Paris climate talks in December, a panel of law professors led a well-attended session on the different legal theories that courts around the world might apply to the company's deceptive behavior. When that begins to happen, count on one thing: the spotlight won't shine exclusively on Exxon. As with the tobacco companies in the decades when they were covering up the dangers of cigarettes, there's a good chance that the Big Energy companies were in this together through their trade associations and other front groups. In fact, just before Christmas, Inside Climate News published some revealing new documents about the role that Texaco, Shell, and other majors played in an American Petroleum Institute study of climate change back in the early 1980s. A trial would be a transformative event -- a reckoning for the crime of the millennium.
But while we're waiting for the various investigations to play out, there's lots of organizing going at the state and local level when it comes to Exxon, climate change, and fossil fuels -- everything from politely asking more states to join the legal process to politely shutting down gas stations for a few hours to pointing out to New York and California that they might not want to hold millions of dollars of stock in a company they're investigating. It may even be starting to work.
Vermont Governor Peter Shumlin, for instance, singled Exxon out in his state of the state address last month. He called on the legislature to divest the state of its holdings in the company because of its deceptions. "This is a page right out of Big Tobacco," he said, "which for decades denied the health risks of their product as they were killing people. Owning ExxonMobil stock is not a business Vermont should be in."
The question is: Why on God's-not-so-green-Earth-anymore would anyone want to be Exxon's partner?
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