Home / Business Focus
Sun, Nov 16, 2008 - Page 12 News List

Exxon places its bets on fossil fuels despite uncertain times

In terms of GDP, Exxon would rank between Austria and Greece as the 26th largest economy in the world. Since 2004, the company has made profits of US$180 billion

By Jad Mouawad  /  NY TIMES NEWS SERVICE , NEW YORK

ExxonMobil’s liquefied natural gas plant RasGas, in Qatar, is pictured in this undated photo.

PHOTO: NY TIMES NEWS SERVICE

Six years of relentlessly rising prices have showered the oil industry with record profits even as whipsawing energy costs have left many Americans alternately furious and baffled.

Now that the roller coaster ride appears to be screeching to a halt, one corporate giant remains confident it can weather the slowdown and uncertainty better than its rivals.

“It’s not that we like lower prices, but our competitive advantage is more obvious to people in a low-price environment,” said Rex Tillerson, the chairman and chief executive of Exxon Mobil, the world’s largest, mightiest oil company. “But in a high-price environment, our competitive advantage has been quite evident as well.”

However undaunted Exxon feels, it’s still facing more complicated scenarios than mere price shifts. It’s straining to adjust to a host of potentially seismic issues that raise pointed questions about its long-term strategy. Oil reserves are harder to find, resource-rich governments have become more assertive, and global warming concerns have spurred forceful calls to action on environmental matters.

Moreover, with the election of Barack Obama, a new chapter is about to open for the country’s energy policy. Obama says he wants to move away from oil dependence, and his policies are likely to emphasize conservation, alternative energy sources and new limits on the emissions of greenhouse gases responsible for climate change.

FUTURE

The question for Exxon, which Obama repeatedly singled out as an exemplar of corporate greed during the presidential campaign, is whether the model that has served the company so well for so long will keep it competitive — or whether it will still be producing hydrocarbons long after the world has moved away from dirty fuels.

Last year, Exxon, which is based in Irving, Texas, celebrated its 125th anniversary, marking a straight line that connects it to John Rockefeller’s original Standard Oil Trust before the government broke up the enterprise. While other oil companies try to paint themselves greener, Exxon’s executives believe their venerable model has been battle-tested. The company’s mantra is unwavering: brutal honesty about the need for oil and gas to power economies for decades to come.

“Over the years, there have been many predictions that our industry was in its twilight years, only to be proven wrong,” says Tillerson. “As Mark Twain said, the news of our demise has been greatly exaggerated.”

From a purely financial standpoint, there’s no doubt that Exxon’s business strategy has paid off. Despite the broader economic turmoil, Exxon is worth about US$375 billion — more than General Electric, Bank of America and Google combined — making it the world’s largest corporation.

Its balance sheet is pristine and its credit rating is better than that of most governments. If Exxon’s revenue were stacked against the world’s GDPs, it would rank between Austria and Greece as the 26th-largest economy. As oil prices peaked this summer, the company once again set a record as the most profitable American corporation, earning US$14.8 billion in the third quarter. Since 2004 alone, the company has rung up profits of about US$180 billion.

Throughout its various incarnations — the Standard Oil Trust, Standard Oil of New Jersey, Exxon Corp and now Exxon Mobil — the company has been an ambiguous fascination for many Americans. It is an enduring icon, as lasting as Coca-Cola or General Electric, but also a perennial corporate villain, one that reminds the country of its dependence on hydrocarbons.

This story has been viewed 3241 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top