Private Empire: ExxonMobil and American Power (41 page)

In each country they also examined what types of energy were likely to be consumed—how much transportation fuel for cars and trucks, and how much energy for generating electric power. They assumed, based on the historical experiences of the United States and Europe, that as poor people around the world grew richer, they would buy more and more cars. They calculated that national populations would feel sated in their automobile consumption only when they reached about eight hundred cars per one thousand people, a rate of ownership that America and the European Union were approaching. The ExxonMobil forecasters made additional assumptions about the rate at which hybrid cars were likely to be adopted, the rate at which office buildings and refrigerators would become more energy efficient, the rate at which wind farms and nuclear power plants would be built, and the rate at which governments around the world would impose taxes on carbon-based fuels or caps on greenhouse gas emissions.

They concluded that worldwide energy demand would grow by about 35 percent overall by 2030 and that demand for oil and gas liquids would rise by about 22 percent, to 108 million barrels per day. Far from a green or clean energy future, they foresaw that energy-poor countries would burn fossil fuels increasingly as they industrialized. Flat or declining oil consumption in the United States and Europe, due in part to more efficient hybrid cars, would be more than offset by gasoline consumption in Asia’s fast-growing economies, particularly in China, where ExxonMobil’s forecasters expected that the number of cars and light trucks in service would grow from about 12 million in 2005 to about 110 million in 2030. (By comparison, there were about 220 million vehicles in the European Union in 2005, and about 240 million in the United States.)
⁷

The transportation sector—cars, pickup trucks, heavy trucks, airplanes, ships, and trains—was the most important factor in the global market for liquid oil. Three quarters of the roughly 20 million barrels of oil the United States consumed each day was as transportation fuel; the rest went to industrial uses, such as the manufacture of plastics. Virtually no oil went to generate electricity—coal, natural gas, hydroelectric, and nuclear energy provided the main sources of electric power generation. It drove the analysts and forecasters in ExxonMobil’s Strategic Planning department in Irving crazy when they heard radio talk-show hosts and politicians advocate that the United States should quickly build more windmills to free itself from dependency on oil imports from the Middle East; unless all-electric cars and vehicles spread very rapidly in the United States, windmill construction, whatever its pace, would have little impact on the amount of foreign oil the United States consumed.

Cohen’s public affairs colleagues digested the 2030 analysis into a series of PowerPoint slides and texts. After 2004, the forecast became the predominant topic of speeches and briefings delivered by ExxonMobil executives and managers around the United States and in Europe. ExxonMobil systematically scheduled private briefings with policymakers, background sessions at think tanks, talks at universities and colleges, presentations to Wall Street analysts, and speeches at economic clubs and chambers of commerce. The rollout had all the automated, charmless tone of other O.I.M.S.-influenced campaigns by the corporation—a tsunami of color-coded pie charts, bar graphs, and global maps, read out unemotionally by executives wearing dark suits. By placing ExxonMobil’s presentations, speeches, and lobbying briefs in a dense vernacular of statistics and economic forecasting, the 2030 campaign sought to reposition the corporation by eschewing political and ideological arguments that often provoked instant and emotional resistance from opponents. Instead, the corporation would let the facts, as ExxonMobil’s analysts conceived them, speak for them. “Realistic” and “reality check” became two of Lee Raymond’s favorite phrases as he presented and analyzed the 2030 forecast in public appearances.

“I note that Raymond is no longer seeking to gainsay the science behind climate change,” Andrew Warren, director of the Association for the Conservation of Energy in Great Britain, wrote in frustration after sitting through one of the chief executive’s presentations in London, early in 2005. “Instead he simply predicts an endless rise in the demand for the fossil fuels his company sells, and maintains that there is nothing that can be done to alter that.”
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This was, in crude summary, the judgment ExxonMobil sought to infuse through its elite-targeted education campaign. Hardly anyone outside of the industry truly grasped the gargantuan scale of global energy production. Titanic changes in the patterns of energy use over decades would be required to create even modest changes in fuel consumption patterns. ExxonMobil’s analysts did not downplay alternative energy’s prospects. They projected that solar, wind, and other rising alternative sources would grow very rapidly until 2030—by more than 10 percent per year. Yet, because of the concomitant increases in worldwide economic activity and population, at the end of the forecast period wind and solar would still make up only about 2 percent of total supply.

Growth in oil consumption was inevitable, ExxonMobil’s analysts held, because the movement of large numbers of poor people into wealthier lifestyles was also inevitable, particularly in Asia. Did anyone seriously expect middle-class Chinese or Indians to fashion their lifestyles and buy cars any differently from how Japanese, Koreans, Germans, or Californians had done? The oil industry’s growth patterns would shift toward Asia, but the industry’s expansion and profitability seemed assured.

E
xxonMobil’s 2030 exercise suggested, by implication, the distinctive role that climate policy would play in oil’s medium-term future. The essence of the forecast’s message was that the development of the global economy and population ensured that oil production would rise. By midcentury, some breakthrough in battery technology or solar panel arrays might reduce the costs of those energy sources so radically that they could compete economically with oil and coal in free markets, but ExxonMobil’s in-house scientists did not believe such a breakthrough was conceivable before 2030. Until then, there was only one unexpected development, one “black swan” intervention that could shift the curve of rising global oil demand: a decision by governments to limit greenhouse gas emissions by heavily taxing or capping the use of carbon-based fuels.

The ExxonMobil forecast numbers suggested that to make an impact on oil demand, the world’s governments would have to reach a unified conclusion that climate change presented an emergency on the scale of the Second World War—a threat so profound and disruptive as to require massive national investments and taxes designed to change the global energy mix. European governments had come closest to attempting such a policy, and ExxonMobil’s forecasters had figured Europe’s carbon pricing policies and alternative energy subsidies into the 2030 numbers. To reshape the global oil industry, however, the governments of China, India, the United States, and many other countries would have to adopt similar or even more aggressive carbon taxing policies. ExxonMobil’s planners concluded that this was highly unlikely, if not all but impossible; they predicted, therefore, that CO
₂
emissions would rise by an additional 30 percent worldwide between 2005 and 2030.

The corporation’s forecasters assumed, essentially, that the world’s governments would lack the political will to tax fossil fuels heavily enough to force any big shift away from oil. The issue here was not whether the world had the technologies to forswear oil; it was whether governments, panicked about climate change, would intervene to change price incentives to favor clean energy, knowing that such an intervention might curtail overall economic growth, at least for a time. In August 2004, the Princeton University scientists Robert Socolow and Stephen Pacala published an influential article in
Science
that declared, optimistically, “Humanity already possesses the fundamental scientific, technical, and industrial know-how to solve the carbon and climate problem for the next half-century. A portfolio of technologies now exists to meet the world’s energy needs over the next 50 years and limit atmospheric CO
₂
to a trajectory that avoids a doubling of the preindustrial concentration. Every element in this portfolio has passed beyond the laboratory bench and demonstration project; many are already implemented somewhere at full industrial scale.” However, Socolow estimated that the technologies he and his coauthor had in mind—solar, wind, and nuclear power, among them—would require a carbon tax of about $100 per ton to be economically competitive fast enough to stabilize emissions before midcentury.
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For world governments to enact such a tax, or set equivalent caps on greenhouse gas emissions, they would have to be galvanized by deep fears about a warming world.

Raymond continued to fund advocacy groups that promoted skepticism of mainstream climate science; he considered such funding just another example of the corporation’s possessing the courage of its convictions when others lacked them. ExxonMobil traded spots from year to year with Walmart as the largest corporation in the United States, by revenue, and its reach and influence continued to exceed that of many of the world’s midsize governments. Its employees, retirees, shareholders, and customers numbered in the millions. Lee Raymond did not believe, however, that ExxonMobil’s scale required it to act as some sort of consensus-building institution on matters of public policy.

The criticism he received for funding anti-Kyoto groups was exaggerated, Raymond told a reporter. “The facts are you don’t have to spend a lot of money to aggravate the proponents” of greenhouse gas limitations. “We think we have a responsibility. If we think people are about to make some bad policy decisions that are going to have a big impact for a long period of time, somebody’s got to say something.”
¹⁰

W
illiam Freudenburg’s work as a sociologist at the University of Wisconsin touched upon environmentalism, law, and society. He had earned his doctoral degree at Yale University and had published over the years in academic journals on subjects such as risk assessment. “A funny thing happened to me one day when I picked up the telephone,” he recalled in an essay published in
Sociological Forum
in March 2005. “I learned something new about the mechanisms of corporate influence in science.”
¹¹

As ExxonMobil appealed the punitive damages verdict imposed against the corporation by Alaskan jurors in the
Exxon Valdez
oil spill case, it funded a complex, quiet campaign to bolster its prospects. The effort unfolded in tandem with Ken Cohen’s 2030 forecast campaign and the corporation’s residual attempts to seed doubts about climate science. Freudenburg’s experience was distinctive in part because it offered a rare, contemporaneously documented account of the strategic analysis that undergirded ExxonMobil’s most subtle forms of campaigning to shape policy and ideas.

One of the corporation’s executives telephoned Freudenburg to explore whether he might accept funding to develop an article about the impact of punitive damage awards on American society. “Naturally, we have a range of expert witnesses and so forth, but we find that it’s also helpful to have people working on articles that come out in academic publications,” the executive explained. “We’ve often worked with economists, for example. A lot of them feel that punitive damage awards are very inefficient, compared to other approaches such as regulation. . . . That’s a perspective we’re quite comfortable in supporting. But we’re exploring whether we might want to work with professors in publishing things from a few other perspectives, too.

“Basically, what we’re exploring is whether it’s feasible to get something published in a respectable academic journal, talking about what punitive damage awards do to society, or how they’re not really a very good approach,” the ExxonMobil executive continued. “Then, in our appeal, we can cite the article, and note that professor so-and-so has said in this academic journal, preferably a quite prestigious one, that punitive awards don’t make much sense. . . .”

Freudenburg scribbled notes; he decided that the details of corporate influence strategy he was absorbing might ultimately be more interesting than the commissioned consulting work ExxonMobil had in mind. He decided to string out the offer, not to undertake it, but to study its purpose.

His handler continued: “Or maybe it could be something along the lines of how difficult it is to prevent these kinds of things [accidents like the
Valdez
wreck] under any circumstances. It’s a little like the
Challenger
. . . . The people involved weren’t really all that venal.”

A few days later, Freudenburg spoke again with his ExxonMobil contact. He asked questions about how the corporation constructed its influence campaigns. He found that the ExxonMobil executive assigned to him “doesn’t come off at all like an ogre.” He was always careful to stress the corporation’s “interest in a rational approach.”

Freudenburg asked how publication of an essay in an obscure academic journal that hardly anyone read could be of any help to a corporation as large and well resourced as ExxonMobil. The executive admitted that such work “wouldn’t do much good” with trial juries, who tended to reach their verdicts on a “nonfactual” basis. Once a case was appealed to panels of judges, however, the prospects to shape their thinking improved. ExxonMobil would submit a copy of the academic journal article with its legal briefs. “The judges themselves don’t usually read them, but often their clerks will read them . . . and quite a few of the clerks, nowadays, are pretty open to these kinds of arguments. . . . Quite a few of them now come out of a law and economics program or something like that. . . .