Since its birth as Standard Oil in the 19th century, ExxonMobil has been at once the most profitable, demonized, secretive and uncompromising corporation on the planet, a black box that muckraker Ida Tarbell famously penetrated in the early 1900s, and no one since has managed. After books on the CIA in Afghanistan and the family of Osama bin Ladin, two-time Pulitzer Prize winner Steve Coll describes Exxon as the most-resistent of all to inquiry. His new book, Private Empire: ExxonMobil and American Power goes on sale Tuesday. Below, Coll replies to questions from the Oil and the Glory.
O&G: Of all the oil companies targeted for grievances, Exxon seems unusually stigmatized. Is it deserving of such criticism?
Coll: Yes and no. On the yes side, they are unusually, fiercely partisan; for example, their Political Action Committee effectively acts as a finance arm of the Republican Party in the United States, and until about 2006 they made aggressive investments in free market groups trying to combat mainstream climate science that I personally think will look pretty embarrassing for years to come. These are not the kinds of aggressive, one-sided interventions in American politics that you would expect from the country's largest or near-largest corporation (depending on the year and the method of measure), a corporation that has diverse employees and is very broadly owned by individual shareholders, government pension funds, mutual funds, and so on. Also, they are their own worst enemy in public relations -- remorselessly aggressive, arrogant, and often self-defeating. So in that self-inflicted sense, they also deserve their reputation.
On the no side, they have a pretty impressive operating record since the  Valdez [tanker] spill, if not as perfect as they sometimes seem to claim for themselves, and their internal discipline has produced a better environmental and worker safety record than their peers. They deserve more credit for that than they get. They've taken human rights where they work in conflict zones more seriously, too, and although they were late, they have adopted some of the better corporate responsibility standards in that area, although they are nowhere near the leaders that they might be. Also, they are stigmatized just for being huge, and I am sympathetic to their arguments that a) while they make large profits in number terms, their profit-margins are not especially high; and b) they get blamed by the public for a lot of things they really can't control, like retail gasoline prices.
Former CEO Lee Raymond seems the most interesting character in the book. What is your take on him? And is he responsible for Mikhail Khodorkovsky's imprisonment in Russia?
He's a fascinating character, larger than life. As a writer, you love anyone who is truly comfortable in his own skin -- not trying to shade or hide himself from the world, and that is certainly Lee Raymond. He was ruthless, effective, difficult, sentimental, loyal and enormously successful as chairman and chief executive, certainly on the operating and profit-making side of the business, although he is criticized by some for not doing enough to position ExxonMobil for the future in the upstream, and on reserve replacement, an issue on which he struggled. Given my main interests in the corporation as a kind of independent sovereign, Raymond is fascinating because that is really how he carried out his role, how he acted in the world -- as a kind of head of state.
You mention the Khodorkovsky case, which is an example. Of course, [Russian leader] Vladimir Putin and his henchmen are responsible for Khodorkovsky's imprisonment, and Khodorkovsky himself miscalculated in the game of political chicken he played with Putin prior to his arrest. But Raymond figures in the story in a fascinating way. I don't want to give away too much of the fun stuff in the book. But in short, Raymond was negotiating to acquire a stake in Khodorkovsky's company, Yukos, in the weeks prior to his arrest. Raymond and Putin had a fascinating one-on-one at the New York Stock Exchange, which I recount, and which reads basically as an encounter between two very powerful men who see themselves as sovereigns.
Just how powerful is Exxon?
I think it depends on the setting. In some of the weak, poor countries where they produce oil -- a place like Chad, for example -- they are immensely powerful, almost comparable to the colonial powers of yore. Chad is one of the world's poorest countries -- Fourth World, really. The United States gives just a few million dollars a year in aid; ExxonMobil's tax and royalty checks in good years recently were higher than five hundred million dollars. If you're the president of Chad, whom do you care about, and whom are you going to listen to? In fact, ExxonMobil allowed Chad's authoritarian president, Idris Deby, to defy the Bush Administration and the World Bank during 2006 because of the sheer size of the cash flow the corporation delivered to Deby, and the way it collaborated with him at the Bush Administration's expense -- I found that an amazing story.
Overseas, in general, ExxonMobil finds its match when governments are well-funded and confident, such as in Russia, or where it is competing with other capable oil companies. It has more clout when it is the big fish in a smaller pond, as in Africa and in some of the weaker states in the Persian Gulf where it has established a huge presence, as in Qatar. Within the United States, ExxonMobil is powerful, yes, especially when it zeroes in to lobby in Congress on an issue that it really cares about, such as tax or climate, and when it is just trying to block legislative outcomes, rather than create them. In those circumstances the corporation can be very hard to defeat. But its power is constrained, as we were mentioning above, by its poor public reputation.
Go to the Jump for the rest of the Coll interview.
Your last two books involved tough subjects -- Afghanistan, the CIA, and the Bin Ladin family. But you say that Exxon was an even more daunting challenge.
They maintain remarkable discipline internally about most of what they do, but particularly about the media. They are not a corporation that welcomes serious or deep scrutiny from journalists, and they have been able to persuade -- and intimidate -- many of their managers, executives and even independent members of their board of directors, who by law are supposed to think for themselves, away from speaking independently to journalists. Most senior employees sign non-disclosure agreements that could put them in a vulnerable position with their pension or stock benefits if management concluded that they had talked to a reporter without authorization and had breached certain duties in doing so. They have a reputation for retaliating against people who cross them -- whether it is a fair reputation or not, they definitely have it. As you know from doing this sort of work yourself, you expect a certain percentage of the people you contact for interviews to decline to participate or to insist on not being identified. I had no trouble getting people around ExxonMobil to talk. But persuading current or former employees to help was harder than typically. Eventually, I got where I wanted to go in many cases, but it was exceptionally hard work and I was impressed by how worried people seemed to be about cooperating -- more worried than the average government intelligence officer I might approach, I would say, not that they are especially easy group, either.
Until recently, Exxon and other big oil companies were highly challenged to find new oil reserves. Now, almost every week we seem to read of a new oil find. Do these finds give Exxon a new lease on life, or is Big Oil still confronted by existential challenges?
I think it may depend on how big an opportunity shale oil and gas will really be over decades in free-market countries, including the United States. That's where ExxonMobil has the greatest strategic opportunity to own new reserves, if it can manage the political and environmental equations (which I sometimes wonder about, given its stiffness and capacity to defeat itself). I don't think anyone really knows what that opportunity will become, however, and factors like price and technology are just inherently hard to predict.
In conventional oil plays overseas and in deepwater, as ExxonMobil has always said, the problem is not geology but politics. I don't see the politics getting any easier. I would imagine ExxonMobil faces a future of continuing and deepening political risk in the upstream. The world is not about to get calmer. Nationalism, the effort to force super-majors into non-equity contracts, and the improving capabilities of competitive state-owned companies are challenges that are not going away.